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Hoover Coordinating committee

Western Area Power Administration Summary Report June 7, 2011 Presented by: Deborah Emler

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Hoover Coordinating committee

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  1. Western Area Power Administration Summary Report June 7, 2011 Presented by: Deborah Emler DSW, Power Marketing Manager Hoover Coordinating committee

  2. Topics of Discussion • Maintenance Update • Energy and Capacity Status, FY11 and FY12 • Resource Integration Exchange • Hoover Reconciliation Report • Rates Update • Finance Update • Other Western Activities

  3. Maintenance And Construction Update Hoover Relay Replacement • Western successfully replaced relays on the Mead-Hoover #7 line. • Relays on the Mead-Hoover #4 line still need to be replaced. • Outage for line replacement has been coordinated with the Bureau to coincide with planned unit outages in November 2011. • Project 25% complete for MH#4, still on target & below budget estimates. Basler Relay Replacement • Western successfully replaced two Basler relays. • Western still has 14 BCP relays to replace. • Plans to replace seven relays by 2012 and seven by 2013.

  4. Maintenance And Construction Update Transmission Line Erosion • Repairs required at five different locations along Hoover-Mead #6, 7, and 8 lines. • The erosion undercutting foundations of structures - could cause the structure to fail, if not corrected. • Estimated costs are $660k in FY12 and $551k in FY13. Change in Ownership and Operation of Equipment on the Powerhouse Roof from Reclamation to Western • Proposal would provide enhanced clarification of Transmission and Generation responsibilities of Western and Reclamation for NERC Compliance. • Target for completion is January 1, 2012. • Total estimated costs are $200k ($30k in FY11 & $170k in FY12). • Funding is to be re-allocated out of existing Capital Programs.

  5. Maintenance and Construction Update Dynamic Signal • Western, working with Reclamation, purchased required meters and provided to Reclamation for installation. • Installation of meters anticipated in the next two years with closeout anticipated by end of 2011. • Once meters are installed to bring the signal back, the remaining coordination will be done as a maintenance activity. Boulder City / US 93 Corridor Nevada Department of Transportation (NDOT) is moving forward: • Phase 1 which will require 5 of Western's T-Line Structures to be re-located near the Railroad Pass Casino. • NDOT will be financially responsible and a Construction Agreement may be complete as soon as September 2011. • Relocations are expected to be completed in calendar year 2012. • Phase 2 status – Western has no details at this time.

  6. Energy and Capacity Status • FY11 Energy Status: • Current FY11 • Final FY11 Master Schedule Master Schedule Published • Published Jun 28, 2010 Published May 17, 2011 (Draft 2) Difference • (MWH) (MWH) (MWH) • Total 3,810,978 3,805,101 (5,877) • Current FY11 energy through Apr 2011 is actual. • Current FY11 forecasted energy from May 2011 through Sep 2011 based on USBR projections (24-Month Study, dated 05/09/2011). • Hoover energy production is direct result of water released to meet downstream water demands, river regulation and Lake Mead elevation. • Final FY11 Master Schedule forecasted higher releases than actuals through 04/11. • Lake Mead elevations were unusually low during FY11 winter months - thus less energy was generated per acre feet of water released. • Forecast for remainder of Current FY11 is higher than Final FY11 Master Schedule due to higher forecasted lake elevations.

  7. Energy and Capacity Status • FY11 Capacity Status: • Current FY11 • Final FY11 Master Schedule Master Schedule • Published Jun 28, 2010 Published May 17, 2011 (Draft 2) Difference • (MWH) (MWH) (MWH) • Average: 1,650 1,651 (1) • Current FY11 capacities are actuals through Apr 2011; based on BOR’s capacity letters. • Hoover power plant generating capacity dependent on Lake Mead elevations, which were unusually low during FY11 winter months. In Nov 2010, Lake Mead elevation - 1081.94 ft. Lowest since May 1937, when Mead was being filled. • April 2011, Unit N3 was fitted with new stainless steel wicket gates. Increased until capacity by 9 MW at low lake elevations. • Lake Powell is operating under Equalization Tier for rest of FY11, which results in above average releases to Lake Mead. • Unit capacity letters issued when Lake Mead elevation decreases by 4 feet or rises by 2 feet. USBR 17-Month Operating Schedule dated 4/21/11 - basis for Current FY11 May through September capacity forecast.

  8. FY12 Forecasted Energy and Capacity • Current Master Schedule for FY12 • May 17, 2011 (Draft 2) • Energy Capacity • (MWH) (MW) • Total/Average: 4,003,666 1,731 •  ======================================================= • The total energy & monthly capacity forecasted for FY12 are greater than Current FY11 actual & forecasted capacity & energy. • Increase based on the current 24-month study which forecasts higher Mead elevations for FY12. • Sept 2011 elevation forecasted at 1,115 ft and for Sept 2012 is 1,129 ft. • Energy values are based on the 05/09/2011 24-Month Study and capacity values were taken from the 04/21/11 17-Month Operating Schedule.

  9. RESOURCE INTEGRATION EXCHANGE • Stages 1 & 2 • Stage 1 • Resource Integration Exchange for FY12 between BCP customers could not be facilitated. • Stage 2 • Resource Integration Exchange for FY12 between BCP & PDP contractors was facilitated in the amount of 2,051 MWH.

  10. HOOVER ENERGY RECONCILIATION REPORT * Energy Entitlement (Scheduled A+B) 3,625,573 FY09 Accumulated Deviation MWH (253) Net Under Runs/Redistribution of Under Runs MWH (3) Total Adjusted Entitlement MWH 3,625,317 Total Energy Delivered MWH 3,619,844 FY10 Accumulated Deviation MWH 5,473 *More details on Word document.

  11. BC FY11 Rate Process For FY12 Base Charge & Rates • Public Meetings held in April 2011 • -Informal Public Information meeting 3/10/11 • -Public Information Forum 4/6/11 • -Public Comment Forum 4/27/11 • Official Comment Period Ended 5/16/11 • Main Base Charge and Rates Drivers: Revenue Requirement. Although energy and capacity sales are slightly increasing from the previous year, the significant increase in the revenue requirement is impacting the energy and capacity rates. • The FY11 Final Master Schedule forecasted energy was: 3,810,978 MWH • The FY12 forecasted energy schedule is: (3/2011) 3,886,896 MWH • The FY11 revenue requirement is: $75.183 million The FY12 revenue requirement is: $85.234 million • This reflects an increase of $10.051 million • Proposed Base Charge for FY 12: $85,233,729 (*13.37% increase) • Existing Base Charge for FY 11: $75,182,522 • * Increase due to limited carryover, additional replacement projects and increased expenses. Percentage increase without carryover is 16.07%. The cost components creating the additional expenses are: Western’s OM&R and Reclamation’s Maintenance, Extra-Ordinary Maintenance, A&GE and Replacements.

  12. FY12 & FY11 Rate Comparisons • Capacity Rate: FY12 proposed $2.06/kW month • FY11 existing $1.90/kW month 8% change • Energy Rate: FY 12 proposed 10.96 mills/kWh • FY 11 existing 9.86 mills/kWh 11% change • Composite Rate: FY12 proposed 21.93 mills/kWh • FY11 existing 19.73 mills/kWh 11% change • Energy Sales: FY12 proposed3,886,896 mWh • FY11 existing3,810,978 mWh 2% change • Capacity Sales: FY12 proposed1,727,000 kW • FY11 existing1,645,000 kW 5% change

  13. FY 12 & FY 11 Rate Information • Security Costs • The base charge and rates above reflect $5.61 mil in security costs projected to be collected in FY12. • Rates above include $5.46 mil in security costs for FY11. • Other Revenue • The current FY11 estimate for Western’s other revenues in the Power Repayment Study is $1.171 mil. To date (Mar 2011) we have collected $868k; 74% of the estimated amount. We tend to keep our projections conservative. • Below is a breakdown of the year-to-date revenues: • Ancillary Services - reactive supply and voltage control - $387k • Ancillary Services - regulation - $455k • Ancillary Services - spinning reserves - $0.3k • Miscellaneous - blackstartcharges- $26k • Proposed FY12 Base Charge & Rates will likely change based on the outcome of the Final Master Schedule for Energy & Capacity Sales & confirmation of the FY12 Uprating Scheduled Payments Program.

  14. Financial Update • FY10 Overview. • WAPA expenses for FY10, prior to audit adjustments, were $4.1 mil. • Total FY10 expenses were 105% of original FY10 budget: $3.9 mil & 99% of our re-allocated FY10 budget of $4.2 mil. • Spending decreased $492,866 between FY09 and FY10; mainly due to a decrease in the Retirements, Replacements & Additions (RRADs) work performed between the two years. • Four of our budget activities had variances which were more than $20,000 higher than their re-allocated FY2010 Budget. Activities/Overages were: • General Western Allocation, $33,561 • Transmission Line Maintenance, $35,599, consists mainly of Insulator Replacements on Hoover-Mead #3 • Substation Maintenance, $23,937 • Multi-project Costs, $37,512; re-allocated budget was based on most current Multi-Project cost schedule (FY09). • Funds for these items were found within the existing Operations and Maintenance Program.

  15. Financial Update, Cont’d • FY2011 Overview. • As of April 30, 2011, (58% of year completed), we are at 50% execution. Three budget activities are currently over-executing: • Transmission Line Maintenance is $35.4k over budget due 2 factors: • Unexpected repair requiring the use of helicopter due to accessibility. • jumper repairs on Hoover-Mead #6 & 8 • insulator repairs on Hoover-Mead #7 & 8 • Most of work completed by April during scheduled outages. Expenses for ground and air patrols, training and emergencies will be incurred through remainder of year. • Substation Maintenance is 86% of budget. Still some normal costs to be incurred; testing/calibrating meters to be installed & bring the dynamic signal back through SCADA. Anticipate this budget activity will be over budget. • Power Billing is over budget by $17.6k. Billing system conversion scheduled for FY12 was accelerated and much of costs will be incurred in FY11, rather than FY12. The entire contract has been expensed, so the only additional expenses for FY11 will be normal billing and labor expenses.

  16. Financial Update, Cont’d FY2011 Overview. Every effort will be made to stay within the re-allocated Budget of $4.5 mil However, overall conditions suggest that current year execution may be approximately $4.6 mil, which would equal our re-allocated FY11 budget, PLUS The funds needed to perform assessments required by the NERC Facilities Rating Alert, as discussed at the E&OC meeting on May 18, 2011. **After 2/3 budget review which should occur later this month, we should have a better idea of whether additional funds will be needed. If a need is identified, we will ask Reclamation to hold a special BC E&OC meeting to inform you of the need and acquire the additional funds.

  17. BCP Post 2017 Remarketing Summary • 11/20/09 Federal Register Notice (FRN) that proposed: • Application of Power Marketing Initiative (PMI) • Marketable Capacity & Energy • 5 % Resource Pool • 30-year Contract Terms • 12/09 – 1/10 Held Public Information & Comment Forums on Proposals • 4/16/10 FRN Extended Comment Period from 1/29/10 to 9/30/10 • 4/27/11 FRN Announcing Decisions & Proposals • PMI to Apply to BCP Decision • 30-year Contract Term Decision • Adjusted Energy & Capacity Proposal • 5% Resource Pool Proposal • Excess Energy Proposal • 5/24/11 FRN Extensions • Extended the Effective Dates of the 4/27/11 Decisions from 5/27/11 to 12/31/11 • Extended the Close of the 4/27/11 Comment Period from 6/16/11 to 9/1/11 • Established Public Information Forum for 7/13/11 in Phoenix • Established Public Comment Forum for 8/17/11 in Phoenix • http://www.wapa.gov/dsw/pwrmkt/BCP_Remarketing/BCP_Remarketing.htm

  18. Operations Consolidation Implementation • Standard Operating Procedures update and consolidation is completed. SCADA upgrade in progress. • Dispatch training begun using newly operational Dispatch Training Simulator. Provides a real time look at the live transmission and generating system. • Custom code testing is the primary focus in the next month. • Communications is fully operational to locate the Phoenix backup SCADA in Loveland.

  19. Operations Consolidation Implementation (Cont’d) CRSP reconfiguration • Progress made to establish a preliminary task list. • The time line will be evaluated and determined in the next month. Scheduling Tool • Solicitation has been awarded. • Significant project milestones will allow development of implementation plan. • Contractor has provided dates of delivery. Historian System • Consolidated system project is scheduled to begin late spring

  20. Cost Allocation Project • Business Need • Determine best approach for long-term cost allocation among projects for Operational functions. Ensure each project pays the proper share of overall costs. • Success Factors • Logically tie allocations to workload within 4 functional areas in the Operations organization: AGC, TSS (scheduling), TSO (switching), and Operations Support (engineering). • Develop sound approach for outyears. • Develop cost shift transition methods to mitigate any rate impacts. • Seek method to minimize implementation impact; staffing and cost resources to annually perform cost allocation. • Ensure dissemination of information among customers of all projects in a consistent manner.

  21. Cost Allocation Project, Cont’d Three phased project approach: • Proposals should be formulated on technical foundations for cost allocations. Technical proposals will be presented to Senior Sponsors for approval to proceed and then provided to DSW, RMR, and CRSP management for feedback, guidance, and validation. • DSW and RMR, Budget and Finance, would split all J4000 costs into same functional groups of AGC, TSS, TSO and Operations Support. • Budget dollars would be implemented into agreed upon split methodology. • Inform customers simultaneously of proposal developed and request comments to consider prior to implementation.

  22. Compliance Activities: WAPA-DSW and RMR Elements Supporting a Single Program

  23. Compliance Activities: WAPA-DSW and RMR (Cont’d) Communication/Coordination • Through WebEx, Videoconferencing and Daily meetings Common Reporting • Monday manager and staff meetings (RMR/DSW/CRSP) • Direct Regional Manager Interaction Common Tools • OATI Web Compliance Tool and Common Office Tools • DocuShare • WECC Compliance Portal • Western Workflow (under development) Common Processes • • Common RSAW Review • • Self-Certification and Self-Reports • • RSAW template and other compliance training • • Peer Review process

  24. Compliance Activities: WAPA-DSW and RMR (Cont’d) Westernwide Integration • Reliability Standards Compliance Team (RSCT) • Responsibility Matrix • Western Reliability Standards Program Manager (CSO) • Peer Review Process • Alignment of regional processes with Western processes, where practical Benefits • Consistent compliance processes across both RMR and DSW • Leveraging best practices from both locations • Provide adequate response times to WECC/NERC • Move from a “project” to a “program” approach

  25. Compliance Activities: WAPA-DSW and RMR (Cont’d) 2011 DSW Audit Both CIP and Operations/Maintenance Standards • Mock Audit week of June 27 • Electronic Submittal September 3 • Offsite Audit October 3 • On-Site Audit October 10 • Planning on a large number of CIP data requests • Will have support from RMR as well as other Western Regions

  26. CONCLUSION This presentation and a separate document that provides more details will be posted to our DSW website http://www.wapa.gov/dsw/pwrmkt/ within the next week. Please feel free to contact me at any time to follow up on issues presented. Darrick Moe, DSW Regional Manager, 602-605-2453 Debby Emler, Power Marketing Manager, 602-605-2555 Rick Hillis, Maintenance and Construction Manager, 602-605-2440 Darren Buck, Operations Manager, 970-461-7693 Ron Moulton, Transmission Services Manager, 602-605-2668 Jack Murray, Rates Manager, 602-605-2442 Brent Sessions, Compliance Officer, 602-605-2652

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