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ITP10 Fuel Cost Determination

ITP10 Fuel Cost Determination. April 19, 2011 ESWG Teleconference. Team & Purpose. Team of stakeholders formed during the March 28, 2011 ESWG meeting to determine fuel costs for use in the 2011 ITP10. Bennie Weeks (Xcel Energy) Paul Dietz (Westar Energy)

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ITP10 Fuel Cost Determination

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  1. ITP10 Fuel Cost Determination April 19, 2011 ESWG Teleconference

  2. Team & Purpose • Team of stakeholders formed during the March 28, 2011 ESWG meeting to determine fuel costs for use in the 2011 ITP10. • Bennie Weeks (Xcel Energy) • Paul Dietz (Westar Energy) • David Ried (Omaha Public Power District) • Determining reasonable costs in 2022 for the primary fuels of interest: • Coal, Natural Gas, Uranium and Fuel Oil

  3. Meetings & Topics • April 4th • Decided on uranium & fuel oil prices in 2022 • Discussed methodologies behind the values • April 6th • Decided coal & natural gas prices in 2022 • Discussed market indicators and their validity • April 19th • Presenting the groups results to the ESWG for review

  4. Uranium • Price in 2022: $1.2104 / MMBtu • Applies to the whole eastern interconnect • Held constant throughout the year • Reasons behind this value: • Nuclear units will provide power despite slight changes in the fuel cost • Experience in economic studies that any transmission development will not change the output of the nuclear plants

  5. Fuel Oil • Price in 2022: • Held constant throughout the year • Reasons behind these values: • Fracking for gas & liquids has increased domestic oil production and the price of mid-continent oil prices • Baseline of Kansas City Rack Rate for crude in 2022 • Transportation cost is included

  6. Coal • Price in 2022: $1.20 / MMBtu • Powder River Basin as primary SPP source • Held constant throughout the year • Reasons behind this value: • Value matches expectations and has the appropriate relative difference from gas price

  7. Coal Prices in the Eastern Interconnect • Importance: • Appalachian coal competitive with gas • Influences propensity for exports out of SPP • Reasons for these values: • Based upon current NYMEX trades • 2.4% growth and discount rates applied

  8. Delivered Price of Coal • Delivery to individual plants through the footprint is a unique cost • Starting value provided by Ventyx • Verified and modified by SPP based on geographic distance from mine

  9. Natural Gas • Price in 2022: $8.24 • Henry Hub, no transport cost • Varies by month • Reasons behind this value: • Average of NYMEX futures trading for 2022 as of Apr 1st • A dependable price that is traded in markets everyday

  10. Delivered Price of Natural Gas • Five SPP regions with unique natural gas price adjustments • Nebraska, $-0.20/MMBtu • North SPP, $-0.36/MMBtu • Central SPP, $-0.46/MMBtu • West SPP, $-0.36/MMBtu • South SPP, $-0.13/MMBtu

  11. Fuel Input Approval – Next Steps • Finalize the reference fuel prices the ITP10 and begin benchmarking • Next steps • Benchmarking of data inputs • Determine gas prices in sensitivities

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