Innovative Technologies Update EEI Property Accounting & Valuation Committee Meeting May, 2016

Transcription

1 Innovative Technologies Update EEI Property Accounting & Valuation Committee Meeting May, 2016 Ryan Risse Manager, Plant Accounting Ameren Corporation Curtis Kirkeby Fellow Engineer Avista Utilities 0

2 AGENDA Overview Avista Presentation Ameren Presentation 1

3 OVERVIEW Change is coming 2

4 OVERVIEW (con t) Innovative technologies are changing the way utilities do business 3

5 OVERVIEW (con t) Property Accounting is uniquely positioned to be a valuable part of this change Accounting point-of-contact for business segments Knowledge of utility operations Knowledge of regulatory accounting and rates issues 4

6 OVERVIEW (con t) Purpose of presentation Examples of innovative technologies How innovative technologies impact grid operations Discuss potential accounting issues caused by innovation No answers provided 5

7 Who is Avista Utilities? Founded in 1889 as Washington Water Power Company Changed name in 1999 Celebrated 125 th Anniversary in 2014 Investor-owned, regulated gas and electric utility Headquarters in Spokane, WA 1,680 employees 369,000 Electric customers 329,000 Natural Gas customers Serves Washington, Idaho and Oregon

8 Avista s 126 Year History of Innovation 1903 Longest transmission line in the world 1910 Automatic control for electric range 1911 Automatic electric water heater 1915 Largest dam in the world with largest generator 1977 Established Itron 1983 First bio-mass plant in the world 1991 Developed first client-server CIS 1995 Established Ecova (sold to GDF Suez) 1996 Established Reli-On fuel cell company (sold to Plug Power) 2001 Developed the first GIS based OMS Three ARRA smart grid grants 2015 Largest vanadium flow battery in north America and Europe 2015 Largest community solar in WA state

9 Building a Foundation for our Future Overall ARRA Project Results: Improve reliability: fewer and shorter outages for customers, 2.5M customer outage minutes avoided Reduce losses & improve energy efficiency: 42,000 Mwh saved annually Lessons inform how we upgrade & operate our systems

10 Planning for the Utility of the Future Focus on 3 areas Customer Engagement Understand range of engagement levels: From just pay my bill All the way to participate in grid Understand what drives /motivates customers Save me time. Save me money. AND Save the planet. Grid Operations Shift from economies of scale TO Economies of SCOPE Workforce Be willing to try new things and open to doing things differently

11 Avista s Energy Storage Project Explore how energy storage can help our electrical grid become more flexible, reliable and resilient 1MW, 3.2MWh battery storage system $7M project $3.2M Clean Energy Fund $3.8M Avista matching Operating since April 2015 in Pullman, WA Largest operating flow battery in North America & Europe

12 Avista s Energy Storage Project

13 Stacking & Optimizing Value Stacked Values in $/Year 400, , , ,000 0 Resiliency Reliability Energy Risk Energy O&M Operations Negative Pricing Flex Market CVR Off-Peak CVR On-Peak Ancillary Services Avoided Cost Capacity Year

14 Micro-grid For The Shared Economy Shared DER s

15 A Grid Within A Grid Economies of Scope Ancillary Services Economies of Location T&D and G Offsets Reactive Support Power Quality Shared Economy Community Microgrid Building Fleet Efficiencies Optimize DER Utilization Flexible Grid Resiliency Productization OEM Model Transactive Economy Participation Model - Prosumer

16 What Life? What Retirement Unit? 10 Year 5 Year 8 Year 20 Year 12 Year 2 Year 7 Year 5 Year 25 Year 20 Year

17 How Do You Account For These Assets? Other Production 340 Land and land rights. 341 Structures and improvements (solar supports, foundations, panel houses). 343 Prime movers (solar panels, CHP, battery, EV) 344 Generators (inverter, CHP). 345 Accessory electric equipment. (charger) 346 Miscellaneous power plant equipment. (auto transfer switch) 348 Energy Storage Equipment Production

18 How Do You Account For These Assets? Transmission Plant 350 Land and land rights. 352 Structures and improvements. 353 Station equipment. 354 Towers and fixtures. 355 Poles and fixtures. 356 Overhead conductors and devices. 357 Underground conduit. 358 Underground conductors and devices.

19 How Do You Account For These Assets? Distribution Plant 360 Land and land rights. 361 Structures and improvements (solar supports, foundations, panel houses). 362 Station equipment. 363 Storage battery equipment (battery, inverter). 364 Poles, towers and fixtures (solar panel supports). 365 Overhead conductors and devices 366 Underground conduit. 367 Underground conductors and devices (interconnection) 368 Line transformers (step-up transformer). 369 Services (interconnection). 370 Meters (inverter, battery management system). 371 Installations on customers' premises 372 Leased property on customers' premises.

20 How Do You Account For These Assets? Regional Transmission and Market Operation Plant 380 Land and land rights. 381 Structures and improvements. 382 Computer hardware. 383 Computer software. 384 Communication Equipment.

21 How Do You Account For These Assets? General Plant 396 Power operated equipment. 397 Communications equipment. 398 Miscellaneous equipment

22 Determine LMP & LMV at Every Node FDR 1 XFR FDR 2 XFR 1-10 Avista FDR 3 XFR 1-10 LMP = Localized Marginal Price LMV = Localized Marginal Value FDR XFR

23 Innovation Begins When We Ask..

24 AMEREN OVERVIEW Market Cap of $12B Fully rate-regulated electric and gas utility 2.4 million electric and 900,000 gas customers 10,300 megawatts (MW) of regulated electric generation capability 7,400 circuit miles of U.S. Federal Energy Regulatory Commission (FERC) regulated electric transmission Ameren Corporation Ameren Missouri Electric generation, transmission and delivery and gas delivery business Serves 1.2 million electric and 127,000 gas customers 10,300 MW of total generation capability 5,400 MW baseload coal 1,200 MW baseload nuclear 800 MW renewables 2,600 MW gas peaking Regulated by Missouri Public Service Commission Ameren Illinois Electric and gas delivery and electric transmission business Serves 1.2 million electric and 807,000 gas customers Regulated by Illinois Commerce Commission Transmission Ameren Transmission Company of Illinois invests in regional multi-value projects Regulated by FERC 23

25 Innovative Technologies Initiative

26 Technology costs are declining rapidly, making them more attractive to customers and competitive with conventional power in 5-10 years Four disruptive innovations that will shape the future of utilities... Installed costs down from 45 /kwh in 04 to 20 /kwh today; further cost decline to ~6.5 /kwh or less expected by 2030 Cost decline will drive retail rate parity by Technological breakthroughs in heating/air-conditioning and lighting costs have come down by >90% in just 10 years Smart appliances enable 3 rd parties to innovate Accelerating adoption of building codes and appliance standards Even very high adoption (50% of new vehicles) will not offset load loss from other innovations Significant adoption could disrupt distribution grid stability Battery pack costs down from 92 /kwh in 2007 to 35 /kwh today; could hit ~9.2 /kwh by 2030 (90% decline in <25 years) Storage, combined with solar, energy efficiency and a small back-up generator, could make grid defection economic for a small group of customers as early as

27 Innovation Action Team Investment Areas Team Work Streams Description Customer Loyalty 1 Customer insights Next-gen customer segmentation and understanding of customer needs using advanced analytics 2 Customer journeys Technology/capabilities needed to close gaps between prioritized journeys and envisioned end states 3 Brand health Understanding of product/ service value proposition against services Grid/New Growth 4 New grid products and infrastructure New grid-related capabilities, products and infrastructure 5 New customer-facing services New behind the meter / customer facing / 3rd party services 6 Core grid investments and load growth Investments in the "core" - G,T,D and Load Growth Competitive Rates 7 Revenue requirement analysis Detailed view of revenue requirements with understanding of drivers and how to apply technology 8 Value stream mapping Comprehensive list of operational journeys, rev. requirement contribution and prioritization across customer, gen., delivery, B&CS 9 Value stream deep dive Line inspection, supply chain deep dive into what new journey should look like IT/Digital 10 I-Team alignment: rates, Grid/Growth, Customer 11 Business segment alignment prioritization and delivery 12 Cyber security data architecture and process Dedicated team support to ensure IT coverage for other Innovation Teams (lighter touch on Regulatory) Project prioritization, metrics, delivery methods and governance Breaking down siloes, data usage / governance and analytics user cases 13 Workforce and skill sets Tools / capabilities / skills in IT and Ops Regulatory 14 PBR/Decoupling Performance based revenue and decoupling options 15 Product/Service unbundling Working with regulatory / legislative construct to provide tailored service options 16 Promotional practices Legislation and regulatory actions to help spur growth 26

28 Ameren Innovation Innovation Space 27

29 Innovative Tech Personal protective equipment vending machines instead bins 28

30 Innovative Tech (Con t) Drones instead of helicopters and bucket trucks 29

31 Innovative Tech (Con t) Sensors instead of manual inspections Tilt, acceleration, acoustics, ambient weather conditions 30

32 Innovative Tech (Con t) Robotics instead of putting people in dangerous work environments 31

33 Innovative Tech (Con t) Augmented reality instead training guides 32

34 Innovative Tech (Con t) 3D printing instead of storerooms 33

35 Innovative Tech (Con t) Artificial Intelligence instead of call centers 34

36 Innovative Tech (Con t) Electric vehicles instead of petrol 35

37 Innovative Tech (Con t) Innovation video 36

38 Innovative Tech (Con t) Change is happening and the pace is accelerating 37

39 Accounting Issues Accounting Rules in CFR have not kept up with change Account 397 (Communication Equipment): This account shall include the cost installed of telephone, telegraph, and wireless equipment for general use in connection with utility operations. Antennae Booths Cables Distributing boards Extension cords Gongs Hand sets, manual and dial Insulators Intercommunicating sets Loading coils Operators' desks Radio transmitting and receiving sets Remote control equipment and lines Sending keys Storage batteries Switchboards Telegraph receiving sets Telephone and telegraph circuits Testing instruments Towers 38

40 Accounting Issues (Con t) Communication Equipment is becoming specialized to specific applications. Transmission line routers, data collectors, repeaters. What FERC account? If recorded in 397 Attachment O uses a general plant allocation. General plant jurisdictional rate differences State and FERC rate calculations may treat general plant differently resulting is assets being double counted or not counted at all Example: FERC Attachment O may only allow a percentage of total general plant in rate base 39

41 Accounting Issues (Con t) Shared assets (undivided interest) Drones that inspect transmission and generation assets. Smart-grid communication equipment that supports transmission, distribution and generation. EV charging stations Distribution asset? What happens when they can support transmission load? Who gets the revenue from charging? Utility or rate payers? Revenue sharing? Substation batteries and Microgrids Located at a distribution substation with ability to send power to distribution or transmission customers. 40