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HomeMy WebLinkAboutTIC 2017-06-13 Item 1 - Presentation - Puget Sound Energy Green DirectCity of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Transportation & Infrastructure Committee FROM: Laurel Humphrey, Council Analyst CC: Mayor Ekberg DATE: June 7, 2017 SUBJECT: Puget Sound Energy - Green Direct ISSUE Presentation from Puget Sound Energy on Green Direct DISCUSSION The following information was provided by Puget Sound Energy: Background Schedule 139, Voluntary Long Term Renewable Energy Purchase Rider, was approved by the Washington Utilities and Transportation Commission (WUTC) and became effective on September30, 2016. The tariff, referred to as Green Direct, falls under the rules governing utility green pricing options found in Washington RCW 19.29A - Voluntary Option to Purchase Qualified Alternative Energy Resources. Puget Sound Energy (PSE) already offered three products consistent with the state law: the Green Power Program (Schedule 135) for residential and small - commercial customers; Large Volume Green Power (Schedule 136) which provides a volume discount for purchases of at least 1,000 MWh, annually; and Bulk Renewable Energy Credit (REC) Purchases whereby customers can acquire a minimum of 10,000 MWh of excess RECs from PSE's wind projects. All three of these products involve the sale of RECs. However, PSE found that many of our large commercial and municipal customers were looking for something different to help them meet their goal of lowering their carbon footprint with cost - effective alternatives to the PSE portfolio. They wanted the benefit of long -term pricing and direct access to new renewable energy projects. As a result of numerous discussions and stakeholder input, PSE created Green Direct - a product that allows the utility to procure and sell fully bundled renewable energy to large commercial and municipal customers, from a specified wind resource, and within the Washington regulatory framework. Defining Principles During the creation of this product, PSE met with many commercial and municipal customers to gauge their interest and align the key components. In addition to customer discussions, PSE also conferred with representatives from the World Resources Institute (WRI) as well as the Edison Electric Institute (EEO. The WRI and the World Wildlife Fund (WWF) started a discussion with some of the country's best known commercial firms, which resulted in the "Corporate Renewable Energy Buyers' Principles." The principles are consistent with PSE's findings and provide support for PSE's plan to provide a few new choices. The top priorities in the principles are: 1 INFORMATIONAL MEMO Page 2 • Greater choice in procurement options for renewable energy, • More access to cost competitive options, • Access to longer -term and fixed price contracts, • Access to new projects that reduce emissions beyond business as usual, • Streamlined third -party financing, and • Opportunity to work with utilities and regulators to ensure fairness in costs and benefits. RECOMMENDATION Discussion ATTACHMENTS • Green Direct PowerPoint • Tukwila Model 2 Voluntary Renewable Energy Option — Green Direct PUGET SOUND ENERGY January, 2017 Customer Choices for Renewable Energy Green Power Program — Retail RE EXISTING GREEN POWER PROGRAM (SCH 135, 136) • REC purchases • 40,000 customers • residential, commercial, municipal lib BULK REC PURCHASES • Excess PSE RECs • 10,000,000 kWh • lar a business g my _■ t ∎l SOLAR CHOICE (SCH 135) • Solar RECs from central plant with high productivity • residential and small commercial GREEN DIRECT (SCH 139) • Long -term partnership with PSE for dedicated energy resources • large commercial, municipal 1 2 PUGET PSE ENE Green Power Program at PSE UTC Approval of Schedule 135, December 12, 2001 • Source: Stateline Wind RECs from Bonneville Environmental Foundation • Rates: $0.02 /kWh • Schedule 136 launched July, 2005 • Initial rate: $0.01 /kWh • Minimum Purchase is 1,000,000 kWh /year, for minimum of 1 year • Schedule 135 & 136 Rate Reduction effective April l , 2007 • Schedule 135: $0.0125 /kWh • Schedule 136: $0.006 /kWh • Green -e Energy certified by the Center for Resource Solutions in May, 2007 • WREGIS tracking system utilized by PSE with 2013 sales • Today : PSE contracts with 20 small, distributed northwest projects, including 18 in the PSE service area. Other regional RECs purchased through aggregators. • Schedule 135 & 136 Rate Reduction proposed September 22, 2016 • Schedule 135: $0.010 /kWh • Schedule 136: $0.0035 /kWh PUGET SOUND ENERGY 1 3 • • WWF New Resources, Cost Competitive, Long Term Price, Utility -Based Renewable Energy Buyers Alliance WORLD RESOURCES INSTITUTE CS) Bloomberg tra nova nordislc IVIARS r � Y,NSiA PFft&IMI ME• Go gle AVERY (41,1 DENNISON Pucf SOtN ENERGY . r D Sprint 3M ARUP Tel Adobe Jig vreirAL Rumors' d�..F'. it3 CFt 6F7 AUTODESK work cloy. EMC King County Bellevue Redmond Kirkland Issaquah Snoqualmie 1 eb Hewlett Packard Enterprise ro=. ro Et sy Niicrosoit adidos P&G OIL GROUP EOUINIX ezza Wairart °' in 'uii HILTON AHIOO! Co TARGET star -wood amaa on GM gr'izednyja 1 F1' Ce I } Genentech 5ec1_e1 pr CISCO Sammamish Tukwila Mercer Island Normandy Park Burien Bainbridge Island ♦9�itJ6 ;,r�; i # @ s I Cn Anacortes Bellingham WWU Olympia Lacey Evergreen Green Direct Billing (Schedule 139) Electric Detail Information: 12345 POWER AVE S, Bellevue Rate Schedule Meter # Start Date End Date Multiplier Kilowatt Hours (kWh) Electric Demand (kVA) Reactive Power (kVAR) Meter Read Type Read Read Commercial 24 Z012345678 1/21 2/20 10 2,300 — — Actual Read 12456 12686 Your Electric Charge Details (30 days) 2,300 kWh used for service 1122/2015 - 2/20/2015 Basic Charge Electric Energy Charge Other Electric Charges & Credits Electric Cons. Program Charge Power Cost Adjustment Merger Credit Federal Wind Power Credit Renewable Energy Credit Premium Green Energy Credit Premium Green Charge (139.101 Wind Blend) Subtotal Taxes State Utility Tax ($10.23 included in above charges) Effect of Bellevue City Tax Current Electric Charges PUGrr SOUND ENERGY Rate x Unit = Charge Your Usage Information $25.81 per month $ 25.81 0.095073 2,300 kWh 218.67 - a 320 W a 240 0.004620 2,300 kWh - 0.001375 2,300 kWh - 0.000315 2,300 kWh - 0.002478 2,300 kWh - 0.000165 2,300 kWh --0 047010 2,300 kWh 0.048500 2,300 kWh 3.873% 6.250% $248.58 10.63 -3.16 - 0.72 -5.70 - 0.38 - 108.12 111.55 248.58 15.54 $ 264.12 Electric 400 U" a 160 00 0 - - �- Temperature I ro rete}z -lon_ F>ozm w 4 a¢ J D, D w O O w< €u g42��4cnOzb�� 2014 2015 100 LL a0 60 ° a 40° w I- 0 Last Year This Year Average daily kilowatts 64.67 73.00 Average daily cost $6.92 $8.31 Days in billing cycle 30 30 Average temperature 39 °F 48 °F Green Direct Energy Credit INCLUDED Energy - Related Power Costs PUGET SOUND ENERGY NOT INCLUDED Demand - Related Power Costs Transmission and Distribution Billing, Meters, Meter Reading, Customer Accounting and Services 1 6 Green Direct Charge Cost of Energy and RECs Billing system updates PUGET SOUND ENERGY Losses Taxes Annual reporting of Renewable Energy Certificates for customers, WREGIS, Green -e 1 7 REC Tracking & RCW 19.285 RCW 19.285 in 2020 Load: 2,600 aMW RPS = 15% 390 aMW RCW 19.285 + Premium Green Load: 2,600 aMW Total = 18% 75 aMW 390 aMW PSE will retire the RECs on behalf of the customers, or if the customer has a WREGIS account PSE will transfer PUGET the RECs for them to retire. SOUND ENE1 V Power Prices —Past and Future PSE Rate History 2000 - Schedule 2013 24 3.4% 25 2.8% 26 2.8% 31 4.3% 43 3.6% 49 4.7% Average 3.6% • Full volumetric rate -- $ /kWh • Includes some demand and delivery costs Energy Bears Low Gas Prices Flat Demand PUGET SOUND ENEI V PSE IRP 2015 Electricity 20 Yr 6.0% EIA 2015 Electricity 28 Yr 2.4% PSE IRP 2015 Nat Gas 20 Yr 4.3% EIA 2015 Nat Gas 28 Yr 4.7% Energy Bulls Federal CPP Washington CAR Coal Plant shut downs (135 in 2015 -16) Climate Change: Snow Pack & Summer NG Drilling + Exports Renewable Energy Bulls RPS in OR: 15% today, 20% by 2020, 50% by 2040 RPS in CA State and federal rules link price of carbon ($ /ton) to price of RECs 9 NW Wind RECs— Trending Market $6.00 $5.00 $4.00 $3.00 $2.00 - $1.00 1 2012 2013 2014 2015 2016 2017 2018 2019 2020 2012 -2018 Based on PSE sales data 2019 -2020 Based on PSE market checks Washington Clean Air Rules link RECs to carbon reductions Oregon RPS: 15% today; 20% by 2020; 50% by 2040 N PUGET SOUND ENERGY I 10 Low - priced US gas to be exported to high -price world markets 1UGET SOUND ENEIrGY North American LNG Import /Export Terminals Approved US Jurisdiction • FERC ▪ MARADIUSCG As of August 3, 2016 Import Terminals U.S. APPROVED - UNDER CONSTRUCTION - FERC 1 Corpus Christi. TX: 0.4 Bcfd (Cfreniere - Corpus Christi LNG) (CP12 -507) APPROVED - NOT UNDER CONSTRUCTION - FERC 2. Salinas. PR: 0.6 Bcfd (Aguirre Offshore GasPort, LC) (CP13.193) APPROVED - NOT UNDER CONSTRUCTION - MARADICoast Guard 3. Gulf of Mexico: 1.0 Bcfd (Main Pass McMoRan Exp.) 4. Gulf of Mexico: 1 4 Bold (TORP Technology- Boenvilie LNG) Export Terminals U.S. APPROVED - UNDER CONSTRUCTION - FERC 5. Sabine, LA: 2.1 Bdd (ChenierelSabine Pass LNG) (CP11 -72 & CP14.12) 6. Hackberry. LA: 2.1 Bdd (Serr ra- Cameron LNG) (CP13 -25) 7. Freeport. TX: 2.14 Odd (Freeport LNG DeviFreeport LNG Expansion&FLNG Liquefaction) (CP12509) (CP15.518) 8. Cove Point. MD: 0.82 Bdd (Donwpon-Cove Point LNG) (CP13 -113) 9. Corpus Christi. TX: 2.14 Bold (Cheniere- Corpus Christi LNG) (CFI.-507) 10 Sabine Pass. LA: 1.40 Bcfd (Sabre Pass Liquefaction) (CP13552) APPROVED - NOT UNDER CONSTRUCTION - FERC 11. Lake Charles. LA: 2.2 Bcfd (Soulhem Union- Lake Charles LNG) (CP14-120) 12 Lake Charles, LA: 1.08 Bcfd (Magnolia LNG) (CP14 -347) 13. Hackberry. LA: 1.41 Bdd (Sempra- Cameron LNG) (CP15 560) 14. Elba Island. GA: 0.35 Bdd (Southern LNG Company) (CP14 -103) Canada APPROVED - NOT UNDER CONSTRUCTION 15 Port Hawkesbury, NS: 0.5 Bcfd (Bear Head LNG) 16. Kitimat. BC: 3.23 Bcfd (LNG Canada) 17. Squamish, BC: 029 Bdd (Woodfibre LNG Ltd) * Trains 5 & 6 with Train 5 under construction Green Direct Charge and Credit pucET SOUND mane 12 12.00 10.00 8.00 s i s E 6.00 c u 4.00 2.00 4% Annual Increase 2.5%Annual Increase Credit = Energy - related power costs of PSE portfolio Green Direct contract price with 2% annual escalator 1.5 %Annual Increase 2017 GRC Proposed 5.3% increase New Resource — making a difference Cost Competitive -- green power priced fair to system power Long -Term Price — for a long term resource Utility -Based — no hassle, reliable and certified. 0.00 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 pucET SOUND mane 12 TUKWILA 71 Accounts 2016 Total Electricity 2,725,125 kWh Annual Cost $ 292,134 Elec Costa Green Direct' 2,658,103 kWh Assumptions Rate Load Growth2 0.0% Annual Elec Costa 3.0% Annual Green Direct 2.0% Annual REC Price4 (2017 -18 $1.00 per MWh 2018 GRC "Credit'' $0.048 per KWh Scenario Tester Change the assumptions in the orange cells to compare future cases for electric rates and RECs. Green Direct Charge' $ /kWh 10 Year 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 $ 0.05111 $ 0.05213 $ 0.05318 $ 0.05424 $ 0.05532 $ 0.05643 $ 0.05756 $ 0.05871 $ 0.05989 $ 0.06108 Credits $ (0.0496)1 $ (0.0511)1 $ (0.0526) $ (0.0542) $ (0.0558) $ (0.0575) $ (0.0592) $ (0.0610) $ (0.0628) $ (0.0647) Baseline Case 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Electricity $ 292,134 $ 292,134 $ 300,898 $ 309,924 $ 319,222 $ 328,799 $ 338,663 $ 348,823 $ 359,287 $ 370,066 $ 381,168 $ 392,603 $ 404,381 RECs $ 2,725 $ 2,725 $ 2,725 $ 2,725 $ 2,725 $ 2,725 $ 2,725 $ 2,725 $ 2,725 $ 2,725 $ 2,725 $ 2,725 $ 2,725 Total $ 294,859 $ 294,859 $ 303,623 $ 312,650 $ 321,947 $ 331,524 $ 341,388 $ 351,548 $ 362,013 $ 372,791 $ 383,893 $ 395,328 $ 407,106 Green Direct 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Electricity $ 292,134 $ 292,134 $ 300,898 $ 309,924 $ 319,222 $ 328,799 $ 338,663 $ 348,823 $ 359,287 $ 370,066 $ 381,168 $ 392,603 $ 404,381 Credits $ (131,767) $ (135,720) $ (139,792) $ (143,985) $ (148,305) $ (152,754) $ (157,337) $ (162,057) $ (166,919) $ (171,926) Charge6 $ 135,856 $ 138,567 $ 141,358 $ 144,175 $ 147,046 $ 149,997 $ 153,000 $ 156,057 $ 159,194 $ 162,357 Total $ 314,013 $ 322,069 $ 330,365 $ 338,853 $ 347,564 $ 356,530 $ 365,730 $ 375,168 $ 384,878 $ 394,812 Delta (Savings) $ 1,363 $ 122 $ (1,159) $ (2,535) $ (3,984) $ (5,483) $ (7,061) $ (8,725) $ (10,450) $ (12,294) Percent Change 0.440% 0.038% - 0.352% - 0.749% - 1.142% - 1.526% - 1.908% - 2.289% - 2.662% - 3.040% Notes 1. Green Direct -- not all accounts are eligible to participate, such as Schedule 7 and 8. 2. Load Growth -- future load growth is offset by energy efficiency improvements on average 3. Electric Costs -- 3% is assumed by Northwest Power and Conservation Council. 4. REC Price -- $1.50 reflects current price for national RECs. Local RECs are priced significantly higher. There is no long -term market for RECs so assume price stability. 5. Credit -- Energy - Related Power Costs of PSE portfolio of energy supplies 6. 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