MARKET RATES UPDATE I N T R O D U C T I O N BY: Paula Gold-Williams President & Chief Executive Officer (CEO) P R E S E N T E D BY: Cory Kuchinsky Interim Vice President, Financial Services September 24, 2018 I n f o r m a t i o n a l U p d a t e
AGENDA OVERVIEW OF MARKET INTELLIGENCE PROGRAM DRIVERS & RECENT TRENDS RESIDENTIAL USAGE LEVELS TEXAS CITIES COMPARISON 2
MARKET INTELLIGENCE PROGRAM CPS ENERGY COMPARES OUR RATES TO THOSE OF OTHER UTILITIES ON A MONTHLY BASIS Electric & gas utilities Texas cities comparison Top 20 cities in the country Publicly available information Utility websites Other industry recognized sources (e.g., PowertoChoose.org) CPS Energy ensures value for our community by comparing rates to other prominent utilities 3
TRACKING THE DEREGULATED MARKET THE PUCT OWNS & OPERATES POWERTOCHOOSE.ORG AS A COMPARISON RESOURCE FOR DEREGULATED MARKETS Historically, we have utilized a report published monthly by the PUC; report was discontinued in April 2018 Our new approach is more comprehensive & informative Data captured daily from PowerToChoose.org Long-term plans offered by retailers w/ comparable customer service levels Documented & consistently applied Current tracking method is an industry standard approach 4
$/MWh WHOLESALE MARKET TRENDS $300 $250 $200 $150 $100 $50 Forward Price for August 2018 Power by Quote Day Reserve margins reduced by plant retirements Weather Market prices practically doubled in spring of 2018 $0 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Wholesale market has been influenced by available generation and weather 1 Forward price view from www.snl.com for ERCOT South Zone for the month of August 2018 5
kwh RESIDENTIAL USAGE PATTERNS 1,800 1,600 1,400 1,200 1,000 800 600 400 200-773 Average Usage of CPS Energy Residential Customers By Month 1 712 Summer Peak 829 910 1,274 1,561 1,541 1,429 1,068 Winter Peak 833 846 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 1,251 1,086 kwh = CPS Energy FYE 2018 Average Use Per Bill Average Consumption While the annual average usage is approximately 1,000 kwh/month, peaks are experienced during extreme weather swings 1 Average usage data from FYE 2018 6
Call Volume and Retail Load CUSTOMER SERVICE LEVELS 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 Call Volumes and Customer Service Levels Summer Peaks 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Electric (MWh) - retail Call Volumes Service Levels Summer peaks are consistently experienced across out entire system 7
TEXAS CITIES COMBINED RESIDENTIAL BILL COMPARISON TRAILING TWELVE MONTHS ENDING AUGUST 2018 San Antonio 1,000 kwh & 5 MCF CPS Energy avg 2 is ~1,086 kwh $150.41 Austin $154.95 Dallas¹ $164.25 El Paso $166.07 Houston¹ $167.30 Corpus Christi¹ $168.62 Gas Bill Electric Bill 1 Electric bill based on Power To Choose data for 12-month offers with a 4 and 5 Star rating for May-August 2018, all other months based on PUCT report. 2 Average monthly residential consumption for FYE 2018 8
TEXAS CITIES COMBINED RESIDENTIAL BILL COMPARISON TRAILING TWELVE MONTHS ENDING AUGUST 2018 2,000 kwh and 6 MCF San Antonio $262.96 Dallas¹ $275.18 Houston¹ $287.18 Corpus Christi¹ $287.50 El Paso $288.51 Austin $294.39 Gas Bill Electric Bill 1 Electric bill based on Power To Choose data for 12-month offers with a 4 and 5 Star rating for May-August 2018, all other months based on PUCT report. 9
INTERESTING CUSTOMER USAGE PATTERNS Annual Summer Smooth Peak Focus 10
% of Total RESIDENTIAL ELECTRIC USAGE DISTRIBUTION % of Residential Bills by Average Monthly Usage Level for FYE 2018 1 ~55% < 1,000 kwh 20% 15% 10% 5% 9% 14% 17% 15% 12% 9% 7% 5% ~10% > 2,000 kwh A 3% 2% 5% 0% kwh A Annually: Less than 10% of our residential customers use more than 2,000 kwh per month 1 Usage data from FYE 2018 11
% of Total RESIDENTIAL ELECTRIC SUMMER USAGE DISTRIBUTION % of Residential Bills by Average Monthly Usage Level for Summer Months 1 14% 12% 10% 8% 6% 4% 2% 0% 6% 7% 9% 11% 12% 12% Summer Average Monthly Usage = ~1,451 kwh 11% 9% ~25% > 2,000 kwh A 7% 5% 11% A kwh Summer Only: 25% of our residential customers use more than 2,000 kwh per month during the summer months 1 Usage data from June September of FYE 2018 12
SIMPLE SUMMER SAVINGS Conservation Matters 13
CONCLUSIONS Our benchmarking process is comprehensive, follows a standard industry approach & incorporates timely data from transparent sources. Our rates continue to remain competitive while delivering great value and service to our customers and community. Conservation activities continue to be important for our customers and community, especially in summer months 14
Thank You