NOVEMBER 6, 2017 THE MUNICIPAL FORUM OF NEW YORK

Transcription

1 NOVEMBER 6, 2017 THE MUNICIPAL FORUM OF NEW YORK

2 A PUBLIC-PRIVATE PARTNERSHIP 2

3 AT A GLANCE 3 LIPA IS THE THIRD LARGEST MUNICIPAL ELECTRIC DISTRIBUTION SYSTEM IN THE U.S. BY CUSTOMERS SERVES AS A POPULATION OF 3 MILLION $3.5 BILLION IN REVENUES SERVICE AREA INCLUDES 19 COLLEGES AND UNIVERSITIES, CORE RESEARCH INSTITUTIONS, AND TECHNOLOGY AND SCIENCE DEVELOPMENT CENTERS Promo%ng Affordability CLOSE PROXIMITY TO MANHATTAN Building a Clean Energy Future Enhancing Customer Service and Value LONG ISLAND T&D SYSTEM 1,366 MILES OF TRANSMISSION 13,715 (2,400 MILES EMPLOYEES) OF DISTRIBUTION 28 TRANSMISSION SUBSTATIONS 149 DISTRIBUTION SUBSTRATIONS Transi%oning to a 21st Century U%lity Exercising Fiscal Responsibility and Maximizing the Benefits of Public Ownership Inves%ng in the Reliability of Long Island s Electric Grid

4 4 PUBLIC-PRIVATE PARTNERSHIP BUSINESS MODEL (50 EMPLOYEES) SETS LONG TERM ENERGY POLICY OWNERS OF LONG ISLAND S ELECTRIC SYSTEM NOT-FOR-PROFIT & PUBLICLY OWNED EXEMPT FROM INCOME TAXES TAX-EXEMPT BONDS FEMA GRANT ELIGIBILITY FINANCIAL, LEGAL AND WHOLESALE MARKET FUNCTIONS OVERSEES PSEG LONG ISLAND OPERATIONS (2,400 EMPLOYEES) DAY-TO-DAY OPERATION OF LONG ISLAND T&D SYSTEM UNDER CONTRACT TO LIPA NAME AND FACE TO THE CUSTOMER STORM PREPAREDNESS, STORM RESPONSE INFRASTRUCTURE & IT IMPROVEMENTS POWER SUPPLY PLANNING BENCHMARKING AND BEST PRACTICES PERFORMANCE BASED COMPENSATION

5 NEW YORK MUNICIPAL FORUM 5 PERFORMANCE BASED CONTRACT OVER 75 METRICS IN A PERFORMANCE BASED CONTRACT WITH MULTI-YEAR IMPROVEMENT GOALS PSEG LONG ISLAND ACHIEVED 90% OF PERFORMANCE METRICS IN 2014, 86% IN 2015 AND 92% IN 2016 PSEG Long Island OSA 2017 Balanced Scorecard July YTD Month of July Operations Services Agreement Metrics OSA YE Target OSA YTD Target YTD Result OSA Forecast OSA Month Target Month Result Month Status People OSHA Recordable Incidence Rate OSHA Days Away Rate (Severity) L L JD Power Customer Satisfaction Survey (Residential) H 640 or 15th 640 or 15th or 15th 667 JD Power Customer Satisfaction Survey (Business) H 699 or 10th 699 or 10th or 10th 706 After Call Survey (Residential) H 88.0% 88.0% 94.2% 88.0% 94.4% After Call Survey (Business) H 85.0% 85.0% 94.1% 85.0% 95.6% Personal Contact Survey H 90.0% 90.0% 95.7% 90.0% 96.1% Average Speed of Answer L Safe, Reliable Abandonment Rate SAIFI CAIDI SAIDI L L L L 2.6% % % % % Interconnection Cycle Time % H 93.0% 93.0% 98.9% 93.0% 99.8% % AMI-measured Energy H 33.8% 29.7% 30.5% 0.8% 1.3% Long Term Estimates L 2,190 2,282 2,015 N/A N/A N/A Purchased Power Invoicing H 90.0% 90.0% 99.4% 90.0% 100.0% Customer Complaint Rate L Operating Budget ($M) L Economic Capital Budget ($M) Days Sales Outstanding Net Write-Offs per $100 Billed Revenue L L L Green Customer Self-Service Energy Efficiency Annualized Energy Savings Renewable Energy Generated H H H 31.6% 243,000 15, % 133,718 12, % 149,031 17,147 N/A 29, N/A 21,441 2,319 N/A Notes: Color Coding in YTD Result column represents current status versus YTD Plan. YE Forecast is a subjective estimate of whether each metric is expected to meet the YE Target. Month Status At or Be er than Plan Worse than Plan PSEG Confidential 1 N/A

6 6 INVESTING IN CUSTOMER SERVICE & RELIABILITY

7 7 MOST IMPROVED UTILITY IN THE NATION Change in JD Power & Associates Residential Customer Satisfaction Scores (2013 vs 2017)

8 8 $2.8 BILLION INVESTMENT IN RELIABILITY & RESILIENCY 3 YEAR RATE PLAN & FEMA GRANTS FUND RECORD INVESTMENTS IN RELIABILITY, RESILIENCY AND STORM RESPONSE $2.8 BILLION DOLLAR INVESTMENT IN LONG ISLAND T & D INFRASTRUCTURE SINCE 2014 $730 MILLION FEMA STORM HARDENING GRANT TO REBUILD MAINLINE CIRCUITS, RAISE SUBSTATIONS AND HARDEN INFRASTRUCTURE

9 9

10 10 A SMARTER ELECTRIC GRID

11 11 SMART METERS COMING TO LONG ISLAND CUSTOMER BENEFITS ACCURATE BILLS FASTER OUTAGE DETECTION INSTALL COMMUNICATIONS NETWORK ROLLOUT 50,000 INITIAL METERS IMPLEMENT LABOR AGREEMENTS TRAIN WORKFORCE ON SMART METERS INSTALL 50,000 METERS ENGAGE CUSTOMERS DEVELOP SMART METER CAPABILITIES ROADMAP REVIEW & UPDATE PROCESSES FULL-SCALE IMPLEMENTATION 250,000 PER YEAR = AUTOMATIC HIGH-BILL ALERTS ONLINE PORTAL TO VIEW ENERGY USE NEW PRICING OPTIONS BETTER GRID MANAGEMENT PAYS FOR ITSELF THROUGH O & M SAVINGS

12 12 MANAGING RATES & DEBT

13 13 RECORD OF MODEST RATE ADJUSTMENTS THEY HAVE POSITIVE MOMENTUM AND HAVE THE POSSIBILITY OF ADDITIONAL CREDIT RATING UPGRADES IN TWO TO THREE YEARS. LIPA MANAGEMENT HAS DONE A GREAT JOB DISPLAYING VISION FOR THE COMPANY AND KEEPING RATES LOW FOR RATEPAYERS. THE MANAGEMENT TEAM IS LASER FOCUSED. - MOODY S MAY ELECTRIC RATE INCREASES LOWEST IN REGION ELECTRIC RATES LOWEST IN 10 YEARS

14 14 How Public Ownership of LIPA Reduces Your Electric Bill More Than 20 Percent: Not-for-Profit Utility We sell electric to our customers at our cost. No Shareholders All your dollars are retained and reinvested in improving your electric service. No Income Taxes Exempt from federal and state income taxes. Tax-Exempt Bonds Our bonds pay lower interest rates because the income received by investors is exempt from taxes. Federal Grants As a government entity, LIPA is eligible for federal disaster relief grants that can reimburse 75 to 90 percent of the costs of a major storm. These Savings Are Passed On to Our Customer-Owners

15 15 REDUCING HIGH DEBT LEVELS NEW FINANCIAL PLAN REDUCES BORROWING & INCREASES CREDIT RATES OVER FIVE YEARS FIRST CREDIT RATING UPGRADE BY MOODY S IN 11 YEARS - UPGRADED LIPA FROM BAA1 TO A3 IN LATE 2016 $450 MILLION SAVINGS FROM DEBT REFINANCING PROGRAM REINVESTED INTO RELIABILITY & CUSTOMER SERVICE HIGH LEVERAGE - ACQUISITION OF LILCO FINANCED 100% WITH DEBT LIPA S DEBT-TO-CAPITAL RATIO WILL DECLINE TO LEVEL OF A-RATED OVER 10 YEARS S&P AND FITCH CHANGED LIPA OUTLOOK FROM NEGATIVE TO STABLE 110% LIPA Debt to Capital Ra<o Declines to Industry Standards Over 10 Years 100% 90% 80% 70% 60% 50% LIPA's Debt to Capital Ra3o A-Ra3ng Category 40%

16 16 A CHANGING ELECTRIC GRID

17 17 UTILITY INDUSTRY TRENDS FLAT OR DECLINING ELECTRIC SALES DUE TO GREATER ENERGY EFFICIENCY AND PV SOLAR RAPIDLY DECLINING COST OF CLEAN ENERGY & BATTERY STORAGE WITH INNOVATION & ECONOMIES OF SCALE ILLUSTRATION BY RUTGER PAULUSSE

18 18 CONSUMERS USING LESS ELECTRICITY NATIONWIDE ELECTRICITY CONSUMPTION REMAINS FLAT EVEN AS AMERICANS BUILT LARGER HOMES, CONSTRUCTED NEW COMMERCIAL BUILDING SPACE, BUILT NEW INFORMATION TECHNOLOGY INFRASTRUCTURE, [RAN] MORE HEAT AND AIR CONDITIONING, AND SPENT MORE TIME IN FRONT OF LARGE, BRIGHT SCREENS. ENERGY EFFICIENT APPLIANCES DR. COREY TYREE, PH.D - DIRECTOR OF ENERGY & ENVIRONMENT - ENERGY INSTITUTE OF ALABAMA ROOFTOP SOLAR ANNUAL ENERGY OUTLOOK U.S. ENERGY INFORMATION ADMINISTRATION

19 19 COST OF CLEAN ENERGY RAPIDLY DECLINING BLOOMBERG S NEW ENERGY OUTLOOK - JUNE 2017 BY 2023 ONSHORE WIND & SOLAR ARE COMPETITIVE WITH NEW-BUILD GAS PLANTS OFF-SHORE WIND: PROJECTED COST DECLINE 71% BY 2040 SOLAR: PROJECTED COST DECLINE OF 66% BY 2040 BATTERY STORAGE: PROJECTED COST DECLINE OF 70% BY 2030 ANNUAL ENERGY OUTLOOK U.S. ENERGY INFORMATION ADMINISTRATION

20 20 OFFSHORE WIND CONTINUES TO DECLINE IN COST EUROPEAN MARKETS SHOW STEADY DECLINE IN THE PRICE OF OFF-SHORE WIND US PRICES ARE EXPECTED TO FOLLOW A DOWNWARD TREND DUE TO DECLINING TECHNOLOGY COSTS AND GROWING SCALE SOURCE: NYSERDA

21 21 OFF-SHORE WIND IN THE UNITED STATES SCALE & COMPETITION WILL DEVELOP THE INDUSTRY AND REDUCE COST DEVELOPMENTS SINCE BLOCK ISLAND WIND FARM OPERATIONAL - LIPA S SOUTH FORK WIND FARM APPROVED - NEW YORK 2,400MW OSW GOAL - NYSERDA S OSW MASTER PLAN TO DEVELOP 2,400 MW - MARYLAND APPROVES 375MW OSW - VIRGINIA APPROVES 16MW DEMO-PROJECT - MASSACHUSETTS DONG ENERGY & OFFSHORE MW SITE ASSESSMENT PLANS APPROVED - MASSACHUSETTS ISSUES 1,600MW RFP - NEW JERSEY LEASES EXECUTED - NEW YORK STATOIL LEASE AWARDED - ADDITIONAL LEASES REQUESTED BY PNE WIND

22 22 BUILDING A MODERN ELECTRIC GRID

23 23 LIPA CLIMATE GOALS 350, MW RESEARCH PARTNERSHIP NEW YORK S CES ADDS LIPA 800MW TO POWER OF CLEAN 350,000 POWER MORE ON HOMES LONG WITH ISLAND RENEWABLE BY ENOUGH GENERATION TO POWER 350,000 HOMES ROOFTOP SOLAR & ENERGY EFFICIENCY EXPECTED TO LOWER ELECTRICITY DEMAND BY 950MW LIPA TO STUDY GENERATION AND TRANSMISSION NEEDS ON LONG ISLAND TO SUPPORT STATE S 2,400 MW OSW GOAL LIPA SIGNED MOU WITH NYSERDA TO ACHIEVE ECONOMIES OF SCALE IN OFF-SHORE WIND & BENEFITS TO STATE

24 24 LONG ISLAND S PEAK LOAD FORECAST SHOWS DRAMATIC REDUCTIONS FORECAST NEED FOR POWER PLANTS IN 2030 HAS DECLINED BY 1,700MW OR (24%) ENERGY EFFICIENCY & ROOFTOP SOLAR WILL REDUCE LOAD BY 950MW THROUGH 2030

25 25 SOURCES OF ELECTRICITY TO POWER LONG ISLAND THREE LARGE LEGACY GENERATION PLANTS (PSA STEAM UNITS) REPRESENT 40% OF LIPA S MAXIMUM ELECTRIC PRODUCTION CAPABILITY WHILE ONLY GENERATING 21% OF ITS ENERGY

26 26 LIPA HAS SURPLUS GENERATION THROUGH 2035 WITH FLAT LOAD GROWTH AND THE ADDITION OF RENEWABLE GENERATION, LIPA HAS EXCESS GENERATION THROUGH % OF LIPA S GENERATION CONTRACTS ARE UP FOR RENEWAL BY 2030

27 27 RUN-TIME OF STEAM PLANTS FORECAST TO DECLINE RENEWABLES REDUCE USAGE & EMISSIONS OF FOSSIL FUEL PLANTS

28 28 CUSTOMERS USING LESS ELECTRICITY + A GROWING BASE OF RENEWABLES = DECREASE RUN-TIME OF LONG ISLAND S OLD STEAM PLANTS & NEED TO STUDY LIPA S PEAKING GENERATION

29 29 FAIR PROPERTY TAXES FOR LONG ISLAND ELECTRIC CUSTOMERS

30 30 COST DRIVERS OF CUSTOMER BILLS 15% OF CUSTOMER BILLS ARE TAXES & FEES - 3X THE NATIONAL AVERAGE LIPA ELECTRIC RATES WOULD BE 10% LOWER IF TAXES WERE EQUAL TO THE NATIONAL AVERAGE

31 31 THE MUNICIPAL FORUM OF NEW YORK CUSTOMERS PAY OVER $535 MILLION PER YEAR IN TAXES Northport Glenwood Property Taxes: $17,000,000 Property Taxes: $80,800, ,589 MW Max Output MW Max Output Port Jefferson LIPA Long Island Power Authority Property Taxes: $32,700, MW Max Output Caithness Property Taxes: $9,700, MW Max Output Barrett Property Taxes: $42,600, MW Max Output Bowline Rockland County NY Property Taxes: $2,700, ,135 MW Max Output

32 32 SUMMARY Promo%ng Affordability Building a Clean Energy Future Enhancing Customer Service and Value Transi%oning to a 21st Century U%lity Inves%ng in the Reliability of Long Island s Electric Grid Exercising Fiscal Responsibility and Maximizing the Benefits of Public Ownership

33 CONTACT US 33 JOSEPH BRANCA, CFO THOMAS TRAN, MANAGER OF FINANCE ANN HULKA, MANAGER OF FINANCIAL ANALYSIS