Transforming the U.S. Electric System: Where State & Federal Initiatives Meet. October 27, 2016 Washington DC

Transcription

1 Transforming the U.S. Electric System: Where State & Federal Initiatives Meet October 27, 2016 Washington DC

2 e21 Initiative: Developing a 21st Century Electric System in Minnesota And a regulatory framework that better aligns how utilities earn revenue with customer demands and public policy goals.

3 e21 is in Response to a Changing Industry Graphic courtesy of Center for Energy & Environment.

4 e21 s Distinguishing Features MN e21 Stakeholders via Voluntary Collaboration Fully Regulated Average Rates Driven By Regulatory Model Rates relative to US Average NY REV Regulators via Commission Order Deregulated High Rates Winter is Coming Preparation Urgency of Action Urgent Response to Sandy and deferred maintenance Primarily Utilities Means to Achieve Policy Outcomes Primarily Markets

5 After a year s worth of effort... Phase I report issued in December 2014 Followed by Xcel Energy s e21 Letter to the Commission e21 proposed shifting toward a performance-based utility business model & regulatory framework.

6 Phase I: Toward a Customer-Centric Framework BEFORE Build More, Sell More Few customer choices AFTER At least a portion of earnings tied to performance More customer options

7 e21 Phase 2: From Blueprint to Building the House e21 established three subgroups: 1. Grid Modernization 2. Integrated System Planning. 3. Performance-Based Utility Compensation.

8 Integrated System Planning Increase stakeholder collaboration in advance of formal filings reducing transaction costs for all parties. Transition to End to End approach that considers how all resource types may contribute to meeting system needs. Including better information about customer-driven resources. Modeling of rate impacts for the different resource options/scenarios being considered. Better balance between reliance on resource modeling and policy/strategic considerations in charting path forward.

9 Integrated System Planning Performance-Based Utility Compensation Transition to a utility compensation model that: Makes utilities increasingly agnostic financially as to how needs are met (central station vs DG vs non-wire) and by whom (utility or 3 rd party). Capture declines in real costs over time as utilities are incentivized to optimize between generation and demand-side resources. Explicitly begins to tie utility financial incentives to utility performance on specified public policy outcomes.

10 Integrated System Planning Performance-Based Utility Compensation Grid Modernization Five objectives for modernizing Minnesota s grid: 1. Maintain/enhance reliability, safety, security and resilience. 2. Enable greater customer engagement and empowerment. 3. Enhance ability to integrate DERs and new products. 4. Improve environmental performance. 5. Promote optimized utilization of grid assets.

11 Looking Ahead to Phase III Shift from generating ideas to focus on implementation Work product will be 1-3 Innovation Projects each year Pilots, Projects, Programs that put e21 concepts into practice Increase engagement of regulators to shorten the distance between good idea and implementation. Increase participation of national experts to help identify gaps and emerging best practices. Continue multi-interest stakeholder engagement, and increase consumer advocate participation.

12 Unofficial e21 Motto If you want to go fast, go alone; if You want to go far, go together. African Proverb

13 THANK YOU! Rolf Nordstrom President & CEO

14 M I N N E S OTA S E 2 1 P R O J E C T: X C E L E N E R G Y P E R S P E C T I V E AMY FREDREGILL OCTOBER 27, 2016 TRANSFORMING THE US ELECTRIC SYSTEM CONFERENCE

15 AGENDA Xcel Energy Overview Trends in the Energy Industry Key Xcel Energy Initiatives Regulatory Reform Principles Xcel Energy Vision for the Future Questions 17

16 WHO WE ARE: VERTICALLY INTEGRATED OPERATIONS IN 8 STATES Customers 1.3 million electric 500,000 natural gas Jobs Public Service Company of Colorado Employees 6,000 Contractors 3,700 Corporate Giving $6.5 million Southwestern Public Service Company Northern States Power Company Minnesota Northern States Power Company Wisconsin 18

17 ACCOMPLISHMENTS No. 1 wind provider in America Building Solar Capacity A Leader in Conservation Storm Response 30% Carbon Reduction A Leader in Transmission Strong Reliability A Leader in Emission Reductions 19

18 TRENDS IN THE ENERGY INDUSTRY Changing Economics Growing Customer Expectations Transformational Resource Plan 1,500 MW Wind RFP Evolving Rate Design Creating Customer Options: EV Charging Rate Price Certainty Renewable Products Changing Policy Landscape Multi-Year Rate Plans Federal and State Policy Compliance Regulatory Reform Efforts Emerging Technologies Grid Modernization Smart Thermostats Battery Storage Pilot Projects 20

19 WHAT WE RE DOING: KEY INITIATIVES Transformative Resource Plans Multi-Year Rate Plans Customer Solutions Grid Modernization 21

20 XCEL ENERGY REGULATORY REFORM PRINCIPLES Cost-causation in rate design Value of the grid Role of the Utility Cost-effective emissions reductions Managing the transition 22

21 OUR FUTURE Our Customers Competitive price Our System Satisfied Meet Community needs More choice Cost-effective carbon reductions Renewables Coal Nuclear More distributed resources Robust, reliable, resilient grid Our Role Enable the transformation Balance multiple interests Achieve each state s policy objectives Regulatory Framework Policy Focused Fair Efficient Incentives Collaborative 23

22 Thanks! Amy Fredregill Manager, Resource Planning and Strategy

23 Great River Energy Will Kaul Vice President, Transmission

24 Overview of Great River Energy Generation and transmission cooperative $4.0B total consolidated assets $983M 2015 utility revenue 3,700+ MW generation 700+ MW renewables 2,608 MW peak load 7/20/16 5,400+ miles transmission lines* 900+ employees (MN and ND) Member of MISO Member of ACES Rates not regulated by state or FERC Long-term power supply and transmission contracts 665,000 member-consumers 85% residential 1.7M people 90,000 miles of distribution line 2015 total revenue $1.35B 2015 member equity/cap 48% 2015 load 55.4% residential 1.5% seasonal 43.1% C & I Diverse customer base * Includes lines partially owned by GRE 26

25 STATE REGULATORY PERSPECTIVE ON MINNESOTA S E21 PROJECT Dan Lipschultz, Commissioner Minnesota Public Utilities Commission

26 WHAT DO I SEE? Reasonable Rates, Reliable Service, Public Policy Achievement Minnesota National Traditional Core Measures Reasonable Rates 9.52c/kWh 10.44c/kWh Relatively Low Bills $97/month $114/month High Reliability Newer Policy Objectives Successful Conservation More Renewables Less Carbon 91 outage mins (Xcel SAIDI) 0.88 interrupts/pc (Xcel SAIFI) 10 th (ACEE Eff Rank) Renwables % 21% Coal Generation % 44% Carbon Emissions By over 20% 111 outage mins(iee Median) 1.1 interrupts/pc (IEE Median)

27 I SEE INCREASINGLY DIVERSE GENERATION MIX

28 I SEE SATISFIED CUSTOMERS Company or Industry 2015 ACSI Rating Looking Good Xcel Energy 76 Investor-Owned Utilities 74 Majority: (Wireless, Department Stores, Banks, Internet Search Engines, FF Restaurants, Cell Phones) Not So Good AT&T Wireline Phone 65 Time Warner Cable/Broadband 51/58 Comcast Cable/Broadband 54/56

29 WHAT I MIGHT NOT SEE Flat Sales-DR, EE, SEG System Inefficiency

30 WHAT WE RE DOING MPUC AWAKENING Grid Modernization 3 Workshops Staff Report 3/16 Final Workshop 10/24/16 Action Step 1 st Q 2017 Possibly More to Come: Distribution System Planning Alternative Ratemaking/PBR Rate Design Reform First Workshop 5/16 Next Workshop 11/4/16 Staff Report Interconnection Std. Updates Workshop 10/7/16