SUMMER OPERATIONS RECAP INTRODUCTION BY: Cris Eugster Chief Operating Officer (COO) PRESENTED B Y: Operations Executives October 29, 2018 Informational Update
AGENDA RECORD SUMMER TEMPERATURES GREAT PLANT PERFORMANCE MARKET & FINANCIAL PERFORMANCE DELIVERY & RELIABILITY PERFORMANCE GAS SYSTEM 2
OPERATIONS TEAM Cris Eugster Chief Operating Officer (COO) Power Generation Commercial Operations Energy Delivery Services Benny Ethridge Sr. Vice Pres Environmental Planning & Compliance Climate & Sustainability Frank Almaraz Sr. Vice Pres John Bonnin Vice Pres ESMO Rudy Garza Sr. Vice Pres Distrib Svs & Ops Nuclear Oversight Paul Barham Sr. Vice Pres DEIPST CSI Program Speaking Today Kim Stoker Sr. Director Angela Rodriguez Director Don Stanton Sr. Director Gas Delivery Larry Blaylock Sr. Director Krista Davis Director 3
STARS ALIGNED STRONG OPERATIONAL & FINANCIAL PERFORMANCE Plants & Resources The Market Our People 4
RECORD SUMMER TEMPERATURES May 2018 S M T W T F 1 2 3 4 5 84 87 90 75 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 S 85 90 90 89 88 89 90 93 91 90 91 94 96 97 99 95 87 89 92 91 93 94 98 97 97 97 98 July 2018 S M T W T F S 1 2 3 4 5 6 7 102 100 100 100 92 96 93 8 9 10 11 12 13 14 93 80 93 93 95 94 15 16 17 18 19 20 21 95 97 97 99 99 100 99 22 23 24 25 26 27 28 103 105 102 98 97 98 29 30 31 100 100 93 95 98 June 2018 S M T W T F S S 95 August 2018 M T W T F S 1 2 3 4 99 96 97 97 5 6 7 8 9 10 11 93 97 96 98 99 95 88 12 13 14 15 16 17 18 83 96 97 98 100 100 19 20 21 22 23 24 25 26 27 28 29 30 31 1 2 100 101 99 95 100 101 99 98 97 27 days above 100 3 4 5 6 7 8 9 10 11 12 13 14 15 16 99 98 98 96 97 96 95 17 18 19 20 21 22 23 96 92 80 86 93 98 24 25 26 27 28 29 30 99 94 98 100 98 99 100 99 100 97 100 101 100 100 100 99 100 100 100 98 96 99 85 days above 95 July was 3.8 hotter than average 95 to <100 100 or above Indicates record for that day 5
CPS Energy Peak Demand - MW ERCOT Peak Demand - MW CPS ENERGY & ERCOT HIT RECORD USAGE 5,200 CPSE Peak Demand MW ERCOT Peak Demand MW 74,000 5,100 69,000 5,000 4,900 64,000 4,800 59,000 4,700 54,000 4,600 4,500 49,000 4,400 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 44,000 Previous demand records broken Both ERCOT and CPS Energy broke all-time peak demand records in July 2018 6
MW REDUCING THE PEAK THROUGH DEMAND RESPONSE 5,400 5,200 5,000 4,800 4,600 4,400 4,200 7/3 7/19 7/23 8/16 8/17 8/23 CPS Energy Peak Load Demand Response CPS Energy successfully partnered with 140,000 residential & 560 Commercial & Industrial customers across our community to manage demand during the hottest days 7
GENERATION PERSPECTIVE PRESENTED B Y: Benny Ethridge Senior Vice President, Power Generation 8
STRONG DIVERSITY DELIVERING OPERATIONS EXCELLENCE CPS Wind Plants (PPA) 1,059 MW Wind CPS Solar Plants (PPAs) 550 MW Solar Braunig Plants 859 MW Gas Milton B Lee Plants 373 MW Gas Plants delivered during the Summer run Spruce Plants 1,345 MW Coal Sommers Plants 830 MW Gas Deely Plants 840 MW Coal Rio Nogales Plant 785 MW Gas AVR Plant 492 MW Gas 9
GENERATION AVAILABILITY MAY THRU SEPTEMBER PERFORMANCE 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Traditional Fleet Renewables Top Quartile 99.0% 97.6% 92.7% 86.9% 92.9% 92.5% 28.2% 30.6% O&M Procedures & Checklists Behavioral Based Safety Near-miss Reporting & Review Solar Wind Coal Reliability-Centered Combined Gas Maintenance GT Budget Cycle management Steam & controls Peakers Asset 360 monitoring program JKS We also delivered when market prices were high with Summer Portfolio Commercial Availability at 94.5% Traditional Fleet Plant Benchmarks: Top Decile: 96.7% Top Quartile: 92.5% Median: 85.5% 10
MWs OUR PLANTS ARE AGING 7,000 6,000 5,000 4,000 Almost 40% of our capacity comes from plants that are 40+ years old 1,093 531 2,082 447 6,579 3,000 2,000 1,459 1,000 0 976 0-9 10-19 20-29 30-39 40-49 50 + All Years Years in Service (Total Capacity) MLB 5-8 Spruce 2 MLB 1-4 Rio AVR Spruce 1 STP 2 STP 1 Deely 1 & 2 Sommers 1 & 2 Braunig 3 Braunig 1 & 2 Proactive maintenance and solid budget controls are required to effectively manage investments in aging units 11
2018 SUMMER DRIVING OPERATIONS EXCELLENCE PEOPLE PROCESS Plant-centric structure Subject matter experts Enhanced training Procedures & checklists Work management system Behavioral-based safety Peer-to-peer checks Accountability & execution Safe & consistent work practices Reliable, competitively priced power to meet the needs of our Customers PLANT On-line monitoring Condition-based maintenance Strategic outages Reliability 12
MARKET PERSPECTIVE PRESENTED BY: John Bonnin Vice President, Energy Supply & Market Operations (ESMO) 13
POWER GENERATION AND ESMO PARTNERSHIP ENERGY SUPPLY & MARKET OPERATIONS (ESMO) POWER GENERATION 14
2018 SUMMER AVAILABILITY WHEN PRICES RISING 100% 90% 80% 70% Plant Availability When Prices Exceed $75 per MWh 100% 96% 91% 88% 72% 60% 50% 40% 30% 25% 20% 10% 0% COAL GAS CC GAS PEAKERS GAS STEAM SOLAR WIND 15
1-Jun 8-Jun 15-Jun 22-Jun 29-Jun 6-Jul 13-Jul 20-Jul 27-Jul 3-Aug 10-Aug 17-Aug 24-Aug 31-Aug 7-Sep 14-Sep 21-Sep 28-Sep $/MWH $ (Millions) FINANCIAL RESULTS 400 350 300 ERCOT Daily Average Prices 140 120 100 Wholesale Revenue net Fuel ($M) $123.6 250 80 200 150 100 60 40 $42.8 $52.3 50 0 20 0 FY2017 FY2018 FY2019 FY2019 Forecast LE High prices in the ERCOT market provided opportunity to earn revenue from off system sales 16
MW DIVERSITY = RESILIENCE 6,000 5,000 Highest Usage Hour 5,080* 4,744 4,900 4,968 23% 24% 24% 35% 4,000 3,000 39% 41% 42% 33% 2,000 16% 14% 12% 13% 1,000 22% 21% 20% 21% 0 May 31st 5-6 PM June 5th 5-6 PM July 23rd 6-7 PM August 22nd 5-6 PM We work to ensure our transmission lines and power plants are online & available when usage is highest Nuclear Renewables Coal Gas Our diverse generation portfolio protects customers from high prices caused by the tight reserves position. Peak load is reduced by demand response programs. *Demand Response programs: 197 MW; without it peak would have been 5,134 MW in hour 4-5 PM 17
ELECTRIC DELIVERY PERSPECTIVE PRESENTED B Y: Paul Barham Senior Vice President, Delivery Engineering, Integrated Planning, Substation & Transmission & Rudy Garza Senior Vice President, Distribution Services & Operations 18
SUMMER READINESS SUMMER PREPAREDNESS ACTIVITIES Safety Training Operational Equipment/Vehicle Snake bite awareness Heat Stress Hydration Inspections & testing Load shed plan updates Load flow analysis Inventory checks Personal voltage detector checks Vehicle checks Preparation for high heat levels reinforced system performance in the Summer months. 19
TRANSMISSION PERFORMANCE Close coordination with ERCOT during Summer months No events impacted customer load Good performance through Summer storms Transmission crew re-insulating a tower Cagnon-Kendall Transmission Line 20
DISTRIBUTION 24/7/365 Summer heat stressed the system Hot summer transitioned into September storms System reliability was challenged Service Restoration repairing damaged pole top equipment Service Restoration climbing poles to restore power Overall system performance is favorable. 21
RELIABILITY METRICS SEPTEMBER LIGHTNING & RAIN IMPACT SAIFI Top Quartile Sept. Lightning Strikes FY18 127 FY19 10,000 Month Rainfall SAIDI SAIFI Sep. FY18 2.8 in 4.67 0.07 Sep. FY19 16.82 in 8.41 0.12 Metric % Increase 80% 71% 0.88 0.87 0.86 0.85 0.84 0.83 0.82 0.81 # of minutes 75.00 65.00 55.00 0.83 FY18 SAIDI Metric Target =.86 0.87 FY19 Projection Top Decile Metric Target = 61.00 SAIFI reliability metric is at risk due to weather impacts 45.00 35.00 25.00 15.00 5.00 53.97 FY18 54.75 FY19 Projection Weather headlines retrieved from http://www.ksat.com Combined Benchmarking First Quartile & Southern Company 2016 Data 22
USING TECHNOLOGY TO IMPROVE RESTORATION VIDEO 23
GAS PERSPECTIVE PRESENTED B Y : Frank Almaraz Senior Vice President, Commercial Operations 24
2018 SUMMER COMMUNITY SAFETY & PREVENTATIVE MAINTENANCE Safety meetings Lunch truck Loncheras Trench safety for contractors As construction activity increases in the summer, Gas Delivery focuses on Public & Employee Safety Awareness & preventative maintenance activities 25
GAS DELIVERY CONTINUOUSLY IMPROVING COMMUNITY SAFETY Response Time to Odor Complaints (% < 30 Mins) 95.0% Top Decile 90.0% 87.3% 87.8% 89.44% 85.0% 80.0% 75.0% 70.0% CY16 CY17 YTD CY18 CPS Energy ranks #1 among our Big 4 peers in Texas in Response Time metric performance Source: 2017 American Gas Association Annual Benchmark Study 26
WINTER IS GAS PEAK SEASON WINTER PREPAREDNESS ACTIVITIES People System Operations Equipment Gas Delivery is currently underway with seasonal preparedness activities for their winter peak season 27
GREAT EXECUTION = SUCCESSFUL PERFORMANCE Plants & Resources The Market Our People 28
Thank You