RSH 11/19/03

Los Angeles Department of Water and Power

INTEGRATED RESOURCE PLAN

Presented to: Senate Energy, Utilities and Communications Committee

November 19, 2003

Los Angeles Department of Water and Power

INTEGRATED RESOURCE PLAN

Presented to: Senate Energy, Utilities and Communications Committee

November 19, 2003

RSH 11/19/03

OverviewOverview

• LADWP Power System Background• Goals and Achievements of LADWP

Integrated Resource Plan• Risk Management and IPP Unit 3• Considerations of Renewable Portfolio

Standard for LADWP• LADWP Future Outlook

• LADWP Power System Background• Goals and Achievements of LADWP

Integrated Resource Plan• Risk Management and IPP Unit 3• Considerations of Renewable Portfolio

Standard for LADWP• LADWP Future Outlook

RSH 11/19/03

LADWP SystemLADWP System• Largest municipal utility in US• 465 sq. mile service territory:

LA & Owens Valley• 3.8 million residents• 7000 MW generation capacity:

hydro, coal, natural gas, nuclear, and renewables

• 25,000 GWH production• Extensive transmission &

distribution network

• Largest municipal utility in US• 465 sq. mile service territory:

LA & Owens Valley• 3.8 million residents• 7000 MW generation capacity:

hydro, coal, natural gas, nuclear, and renewables

• 25,000 GWH production• Extensive transmission &

distribution network

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LADWP Resources

LADWP Resources

Goals and Achievements of LADWP Integrated

Resource Plan

Goals and Achievements of LADWP Integrated

Resource Plan

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The Integrated Resource Plan (IRP)

The Integrated Resource Plan (IRP)

• IRP is a blueprint that defines future resource plan and development activities of a utility and is developed through a comprehensive planning process.

• In August 2000 the City Council adopted the LADWP’s 2000 IRP.

• The 2000 IRP is the basis for the ongoing LADWP resource development activities.

• IRP is a blueprint that defines future resource plan and development activities of a utility and is developed through a comprehensive planning process.

• In August 2000 the City Council adopted the LADWP’s 2000 IRP.

• The 2000 IRP is the basis for the ongoing LADWP resource development activities.

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LADWP Strategic Objectives

LADWP Strategic Objectives

Electric RateFinancial Stability

Contribution to CityEconomic DevelopmentAir Quality

Water QualityFuel Diversity

Renewable ResourcesEnergy Efficiency

Distributed Generation

Reliable Electric Service

Competitive Electric Rates

EnvironmentalLeadership

Service ObligationResource AdequacyReliability Standards

Energy Risk Management

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Integrated Resource Planning Process

Least Cost Plan

Supply-Side Alternatives

Demand-Side Alternatives

System Profile

External Influence

Risk/Environmental

Assessment

Financial/Rate

Analysis

Resource Plan

Integration

Transmission Alternatives

System Load Forecast

Situation Analysis/

Goal Setting

Historical & Forecasted Peak Demand Cases Sample

4000

4500

5000

5500

6000

6500

7000

7500

8000

1995 2000 2005 2010 2015 2020 2025

MW

Actual Weather Normalized Normal Case Cool 1-in-40

Hot 1-in-40 Hot 1-in-10 Hot 1-in-5

NPV Compaison

12 ,700 12 ,80 0 12 ,90 0 13 ,000 13 ,100 13 ,20 0 13 ,30 0

2 :50% MHV w/LEX+IPP3 490

4 :50 % MHV w/LEX+IPP3 4 90 + RPWR delay

8 :50 % MHV 2 005+IPP3 490

10 :50% MHV 20 05+IPP3 4 90 + RPWR delay

3 :50 % MHV w/LEX+IPP3 250

5:50% MHV w/LEX+IPP3 250 + RPWR delay

11:50 % MHV 2 00 5+IPP3 250 + RPWR delay

9 :50 % MHV w/LEX+IPP3 250

6 :50% MHV w/LEX + RPWR delay

1:50 % MHV w/LEX

13 :50% MHV w/LEX+IPP3 100

12 :50 % MHV 2 00 5 + RPWR delay

7:50% MHV 20 05

14 :50% MHV 2 005+IPP3 100

$(00

0,00

0)

NPV Compaison

12 ,700 12 ,80 0 12 ,90 0 13 ,000 13 ,100 13 ,20 0 13 ,30 0

2 :50% MHV w/LEX+IPP3 490

4 :50 % MHV w/LEX+IPP3 4 90 + RPWR delay

8 :50 % MHV 2 005+IPP3 490

10 :50% MHV 20 05+IPP3 4 90 + RPWR delay

3 :50 % MHV w/LEX+IPP3 250

5:50% MHV w/LEX+IPP3 250 + RPWR delay

11:50 % MHV 2 00 5+IPP3 250 + RPWR delay

9 :50 % MHV w/LEX+IPP3 250

6 :50% MHV w/LEX + RPWR delay

1:50 % MHV w/LEX

13 :50% MHV w/LEX+IPP3 100

12 :50 % MHV 2 00 5 + RPWR delay

7:50% MHV 20 05

14 :50% MHV 2 005+IPP3 100

$(00

0,00

0)

NPV Comparison NPV Comparison Sample

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IRP Goals (1)IRP Goals (1)

• Continue to be self-sufficient in serving the City’s customers (native load).

• Provide sufficient generation reserves to meet system reliability requirements.

• Install quick-start natural gas combustion turbine units to support super peak energy uses.

• Enhance black-start capability to mitigate system blackout impacts.

• Continue to be self-sufficient in serving the City’s customers (native load).

• Provide sufficient generation reserves to meet system reliability requirements.

• Install quick-start natural gas combustion turbine units to support super peak energy uses.

• Enhance black-start capability to mitigate system blackout impacts.

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IRP Goals (2)IRP Goals (2)

• Meet 50% of load growth with conservation & energy efficiency, distributed generation, and renewable resources.

• Reduce CO2 emissions to 5 percent below 1990 levels by 2008-12.

• Support the City’s Climate Action Plan of 30% CO2 reduction by 2010.

• Install emission controls to reduce NOx in the LA Basin.

• Meet 50% of load growth with conservation & energy efficiency, distributed generation, and renewable resources.

• Reduce CO2 emissions to 5 percent below 1990 levels by 2008-12.

• Support the City’s Climate Action Plan of 30% CO2 reduction by 2010.

• Install emission controls to reduce NOx in the LA Basin.

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IRP Goals (3)IRP Goals (3)

• Repower Basin generation to increase generation efficiency by 30% and provide substantial emission reduction.

• Divest 158 MW of Mohave interest.• Maintain stable electric rate and transfer

to the City.

• Repower Basin generation to increase generation efficiency by 30% and provide substantial emission reduction.

• Divest 158 MW of Mohave interest.• Maintain stable electric rate and transfer

to the City.

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Meeting 50% of Load Growth withDSM, DG & Renewable ResourcesMeeting 50% of Load Growth withDSM, DG & Renewable Resources

0

100

200

300

400

500

600

700

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

MW

Renew able Resources

Distributed Generation

Demand Side Management

50% of Load Grow th Goal

DDR Achieved/Targeted

0

100

200

300

400

500

600

700

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

MW

Renew able Resources

Distributed Generation

Demand Side Management

50% of Load Grow th Goal

DDR Achieved/Targeted

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Monthly Electric Bill Comparison

$0.00 $50.00 $100.00 $150.00 $200.00

1,000 kw h

500 kw h

SG&E SCE PG&E LADWP SMUD

Monthly Electric Bill Comparison

$0.00 $50.00 $100.00 $150.00 $200.00

1,000 kw h

500 kw h

SG&E SCE PG&E LADWP SMUD

Monthly Electric Bill ($/MW)Monthly Electric Bill ($/MW)

Low & Stable

Electric Rate

Low & Stable

Electric Rate

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

1980 1985 1990 1995 2000

SCE SDG&E LADWP

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

1980 1985 1990 1995 2000

SCE SDG&E LADWP

System Average Rate (cents/KWh)System Average Rate (cents/KWh)

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10

12

14

16

18

20

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

CO

2 Em

issi

ons

(Mill

ion

tons

).

10

12

14

16

18

20

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

CO

2 Em

issi

ons

(Mill

ion

tons

).

Projected Decrease in CO2Emissions

Projected Decrease in CO2Emissions

Historical Emissions Projected Emissions

1990 Baseline

Goal: 5% below baseline by 2008-2012

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0

1,000

2,000

3,000

4,000

5,000

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

CALENDAR YEARS

NOX

EMIS

SIONS

(tons

)

Harbor

Valley

Scattergood

Haynes

RECLAIM ALLOCATION

Basin Generation NOx Emissions

Basin Generation NOx Emissions

- IRP resulted in 75% NOx reduction in 3 years- Overall 90% NOx reduction over 13 years

- IRP resulted in 75% NOx reduction in 3 years- Overall 90% NOx reduction over 13 years

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4,800 tonsNOx

NOx Emission ReductionNOx Emission Reduction

= 25,000 cars

19891989

4,800 tonsNOx

20022002

360 tonsNOx

Equivalent to Removing

230,000 Cars from the Road

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J.D. Power & Associates Award

J.D. Power & Associates Award

• LADWP ranks first in the Western U.S. in J.D. Power Mid Size Business Customer Satisfaction Study

• Second year in-a-row• LADWP ranked the highest in several key

areas, including: Power Quality and Reliability; Price and Value; Company Image; Billing and Payment; and Customer Service

• LADWP ranks first in the Western U.S. in J.D. Power Mid Size Business Customer Satisfaction Study

• Second year in-a-row• LADWP ranked the highest in several key

areas, including: Power Quality and Reliability; Price and Value; Company Image; Billing and Payment; and Customer Service

LADWP Risk Management LADWP Risk Management

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$0

$10

$20

$30

$40

$50

$60

Jul-9

9

Aug

-99

Sep

-99

Oct

-99

Nov

-99

Dec

-99

Jan-

00

Feb-

00

Mar

-00

Apr

-00

May

-00

Jun-

00

Jul-0

0

Aug

-00

Sep

-00

Oct

-00

Nov

-00

Dec

-00

Jan-

01

Feb-

01

Mar

-01

Apr

-01

May

-01

Jun-

01

Jul-0

1

Aug

-01

$/M

MB

TU

$0

$10

$20

$30

$40

$50

$60

Jul-9

9

Aug

-99

Sep

-99

Oct

-99

Nov

-99

Dec

-99

Jan-

00

Feb-

00

Mar

-00

Apr

-00

May

-00

Jun-

00

Jul-0

0

Aug

-00

Sep

-00

Oct

-00

Nov

-00

Dec

-00

Jan-

01

Feb-

01

Mar

-01

Apr

-01

May

-01

Jun-

01

Jul-0

1

Aug

-01

$/M

MB

TU

Fuel Price SensitivityFuel Price Sensitivity

Historical Coal Price History

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1949

1952

1955

1958

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

$/M

MBT

UHistorical Coal Price History

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1949

1952

1955

1958

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

$/M

MBT

U

Generation Capacity

Coal24%

Natural Gas46%

Large Hydro24%

Renewable1%

Nuclear5%

Generation Capacity

Coal24%

Natural Gas46%

Large Hydro24%

Renewable1%

Nuclear5%

Energy Production

Coal50%

Natural Gas24%

Renewable3%

Nuclear13%

Large Hydro10%

Energy Production

Coal50%

Natural Gas24%

Renewable3%

Nuclear13%

Large Hydro10%

Gas Prices (July 99 – August 01 )

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Natural Gas Risk Management Program

Natural Gas Risk Management Program

• Approved by City Council August 2002.• Purpose is to minimize exposure to price volatility

– Rate stability– City transfer

• Hedge up to 75 percent of annual gas requirements.– Financial hedges of up to $15 million/yr.– Physical gas

• Approved by City Council August 2002.• Purpose is to minimize exposure to price volatility

– Rate stability– City transfer

• Hedge up to 75 percent of annual gas requirements.– Financial hedges of up to $15 million/yr.– Physical gas

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Coal Resource Risk Management

Coal Resource Risk Management

• Uncertainty of Mohave generation station (158 MW)

• Uncertainty of IPP excess power contract recall (300 MW)

• Uncertainty of Mohave generation station (158 MW)

• Uncertainty of IPP excess power contract recall (300 MW)

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Consideration for IPP Unit 3Consideration for IPP Unit 3

• To extend existing contract beyond 2027 • Permanently set power recall level of the

excess power contract • Replace power loss from excess power

contract recall• Monetize existing “common facilities”• Establish equity position on Unit 3.

• To extend existing contract beyond 2027 • Permanently set power recall level of the

excess power contract • Replace power loss from excess power

contract recall• Monetize existing “common facilities”• Establish equity position on Unit 3.

Considerations of Renewable Portfolio Standard for LADWP

Considerations of Renewable Portfolio Standard for LADWP

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SB 1078 Renewable Portfolio Standard Program

SB 1078 Renewable Portfolio Standard Program

• IOU’s are required to supply 20% of their load from eligible renewable resources by year 2017 (Subject to funding availability)

• Funding for above market costs for renewables are limited to $135 million/year for the three major IOUs in the state

• SB1078 excludes municipal utilities from the 20% requirement

• IOU’s are required to supply 20% of their load from eligible renewable resources by year 2017 (Subject to funding availability)

• Funding for above market costs for renewables are limited to $135 million/year for the three major IOUs in the state

• SB1078 excludes municipal utilities from the 20% requirement

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SB 1078 RPS Program Municipal ApplicationSB 1078 RPS Program Municipal Application

• The bill does require the governing body to implement and enforce an RPS that “recognizes the intent of the legislature to encourage renewable resources, subject to other critical considerations, such as rates, reliability, financial resources and environmental improvements.”

• The bill does require the governing body to implement and enforce an RPS that “recognizes the intent of the legislature to encourage renewable resources, subject to other critical considerations, such as rates, reliability, financial resources and environmental improvements.”

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LADWP Renewable Resource Investments (1)

LADWP Renewable Resource Investments (1)• Installed 6.7 MW of Photovoltaics, 1.9 MW

of microturbines, and 0.95 MW of fuel cells in 2000-2003

• Modernizing the San Francisquito Power Plant 2, a 17 MW hydro plant to be in-service by 2005

• Developing 120 MW of wind power

• Installed 6.7 MW of Photovoltaics, 1.9 MW of microturbines, and 0.95 MW of fuel cells in 2000-2003

• Modernizing the San Francisquito Power Plant 2, a 17 MW hydro plant to be in-service by 2005

• Developing 120 MW of wind power

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LADWP Renewable Resource Investments (2)

LADWP Renewable Resource Investments (2)• Processing a power purchase agreement for 40

MW from a biomass (energy generation from digestion/biogas) facility

• Assessment of 30 MW of geothermal resource• Conducting feasibility assessment for 4 MW of

small hydro in the LADWP water system• 10 year, $150 million commitment for solar

(photovoltaic) programs

• Processing a power purchase agreement for 40 MW from a biomass (energy generation from digestion/biogas) facility

• Assessment of 30 MW of geothermal resource• Conducting feasibility assessment for 4 MW of

small hydro in the LADWP water system• 10 year, $150 million commitment for solar

(photovoltaic) programs

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JFB INSTALLED PHOTOVOLTAIC PANELS

LADWP Renewable Resource Investments (3)

LADWP Renewable Resource Investments (3)

LOPEZ CANYON MICROTURBINES USING LANDFILL GAS

PINE TREE WIND DEVLOPMENT PROJECT – UNDER DEVELOPMENT

BIOCONVERTER BIOGAS PROJECT – UNDER DEVELOPMNET

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LADWP Actions to Achieve Emission Reductions (1)

LADWP Actions to Achieve Emission Reductions (1)• Divestiture of Colstrip generating station

contract for 105 MW• Divestiture of 50% of LADWP’s

ownership in Mohave totaling 158 MW• Reduction of over 150 MW of peak load

demand through conservation and energy efficiency programs since 2000

• Installation of 280 MW of peaking units

• Divestiture of Colstrip generating station contract for 105 MW

• Divestiture of 50% of LADWP’s ownership in Mohave totaling 158 MW

• Reduction of over 150 MW of peak load demand through conservation and energy efficiency programs since 2000

• Installation of 280 MW of peaking units

RSH 11/19/03

LADWP Actions to Achieve Emission Reductions (2)

LADWP Actions to Achieve Emission Reductions (2)• Installed four Selective Catalytic Reduction

devices on our large in-basin units• Four repowering projects to replace 10 in-basin

generating units• The first two repowerings will be in service in

early 2004 and 2005• Repowering will creating over 1000

construction jobs• “Trees for a green LA” program, with a goal of

planting 200,000 trees

• Installed four Selective Catalytic Reduction devices on our large in-basin units

• Four repowering projects to replace 10 in-basin generating units

• The first two repowerings will be in service in early 2004 and 2005

• Repowering will creating over 1000 construction jobs

• “Trees for a green LA” program, with a goal of planting 200,000 trees

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LADWP Actions to Achieve Emission Reductions (3)

LADWP Actions to Achieve Emission Reductions (3)• Modernization of Castaic pumped hydro power

plant to increase efficiency and reliability• Modernization of the Sylmar converter station

to improve reliability and access to hydro and other renewable energy from the Pacific Northwest

• Initiated Alternative Maritime Power (AMP) Program to reduce emissions from container vessels docked in the Los Angeles Harbor

• Modernization of Castaic pumped hydro power plant to increase efficiency and reliability

• Modernization of the Sylmar converter station to improve reliability and access to hydro and other renewable energy from the Pacific Northwest

• Initiated Alternative Maritime Power (AMP) Program to reduce emissions from container vessels docked in the Los Angeles Harbor

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Castaic Pump Storage Plant

Castaic Pump Storage Plant

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Combustion Turbine Peaker Units

Combustion Turbine Peaker Units

VALLEY PEAKER

HARBOR PEAKERS

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Valley Plant RepoweringValley Plant Repowering

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Haynes Units 3&4 Repowering

Haynes Units 3&4 Repowering

Future Outlook Future Outlook

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Next StepsNext Steps

• Develop RPS• Update IRP with inclusion of RPS• Approval updated IRP by Board and

City Council• Issue RFP for procurement of new

renewables

• Develop RPS• Update IRP with inclusion of RPS• Approval updated IRP by Board and

City Council• Issue RFP for procurement of new

renewables

Questions &

Answers

Questions &

Answers

Thank You!Thank You!