Electric Utility Commission Regular Meeting of the Electric Utility Commission - Hybrid meeting, to be held at AE HQ, 4815 Mueller Blvd

Agenda — original pdf

Electric Utility Commission November 8, 2021  6:00 PM Austin Energy Headquarters; 1st Floor; Shudde Fath Conference Room 4815 Mueller Blvd, Austin TX 78723 (Note: Some members of the Electric Utility Commission may be participating by videoconference.) AGENDA Members: Marty Hopkins, Chair (Casar) Dave Tuttle, Vice Chair (Alter) Marshall Bowen (Kelly) Randy Chapman (Pool) Cary Ferchill (Adler) Erik Funkhouser (Fuentes) Karen Hadden (Kitchen) Cyrus Reed (Tovo) Kay Trostle (Ellis) Vacancy (Harper-Madison) Vacancy (Renteria) For more information, please visit: www.austintexas.gov/euc Reading and Action on Consent Agenda: Items 2-17 may be acted upon by one motion. No separate discussion or action on any of the items is necessary unless desired by a Commissioner. CALL MEETING TO ORDER CITIZEN COMMUNICATION: GENERAL Speaker must be present and will be allowed up to three minutes to provide their comments. 1. APPROVAL OF MINUTES – Approve minutes of the August 19, 2021 special-called meeting. NEW BUSINESS – CONSENT ( ) = Target Council Meeting Date; [ ] = RCA Type 2. (11/18) [Purchasing] Authorize award of a contract with KBS Electrical Distributors Inc. to provide a station service voltage transformer in an amount not to exceed $67,000. 3. (11/18) [Purchasing] Ratify a contract with Control Components Inc, to provide an intermediate pressure drum control valve and spare parts, in the amount of $75,400. 4. (11/18) [Capital Contracting] Authorize negotiation and execution of a construction contract with MasTec North America, Inc., for Underground Electrical Civil Construction Indefinite Delivery/ Indefinite Quantity contract in the amount of $24,000,000 for an initial 2-year term, with four 1-year extensions of $12,000,000, for a total contract amount not to exceed $72,000,000. 5. (12/2) [Purchasing Multi Departmental; AE’s estimated portion is $6.3M] Authorize award of two contracts with Community Trucking LLC, and Green Dream International d/b/a GDI, to provide flexible base, surface rock and 3x5 rock, each for a term of five years for total contract amounts not to exceed $7,570,000, divided between the contractors. 6. (12/2) [Purchasing] Authorize an amendment to a contract with Texas Electric Cooperatives, for the continued purchase of electric meters for use throughout the Austin Energy service area, to increase the amount by $10,000,000 and to extend the term by 18 months, for a revised total contract amount not to exceed $40,000,000. 7. (12/2) [Purchasing] Ratify a contract with Techline Inc. to provide distribution steel poles, in an amount of $750,000. 8. (12/2) [Purchasing] Authorize additional expenditures to …

Item 18: Generation Portfolio Update — original pdf

Item 18 Generation Portfolio Update Fayette Power Project, Decker Unit 2 and Nacogdoches Power Project Pat Sweeney Vice President, Power Production Nov. 8, 2021 © 2021 Austin Energy Announcement Highlights • Negotiations stall over Fayette Power Project • Decker 2 steam unit to shut down in March 2022 • Nacogdoches biomass plant to be available year-round Fayette Power Project Photo courtesy LCRA Decker Creek Power Station Nacogdoches Power Project 2 Negotiations stall over Fayette Power Project (FPP) • Background: Austin Energy co-owns FPP with LCRA; Austin Energy’s portion is 50% of two of the three units; LCRA manages the plant. • Joint ownership agreement does not set out how one party can retire only its share of the project. • Unable to reach terms that would allow Austin Energy to shut down its share. 3 Negotiations stall over Fayette Power Project • What’s next? • Austin Energy will continue to run its portion of FPP but will minimize scheduled output using REACH • The REACH strategy considers the cost of carbon in utility’s offers to sell generation from FPP. • Continue to negotiate with LCRA to retire Austin Energy’s share of FPP. 4 Decker Steam Unit 2 to Close March 2022 City Council approved closure in 2017 Age Less Efficient Lower Carbon Emissions Increasing difficult to maintain, secure replacement parts and technical expertise Requires more natural gas per megawatt hour of power compared to newer, more efficient units Part of comprehensive resource plan and commitment to lower carbon footprint 5 Decker Steam Unit 2 to Close March 2022 City Council approved closure in 2017 • Notice of Suspension of Operations (NSO) to ERCOT • Required at least 150 days prior to anticipated retirement date. • Effective retirement date: March 31, 2022. • If ERCOT determines unit needs to continue operating, it can pursue a Reliability Must-Run (RMR) commitment with Austin Energy. • What’s next? • Decker’s four 50 MW gas turbines continue to be available and can be quickly dispatched when needed. 6 Nacogdoches Biomass Plant Available Year-Round • Background: • Plant powered by wood waste fuel. • Previously under “seasonable mothball” status, meaning it was made available to run only during high energy demand summer months. • Utility purchased plant in 2019. • Purchasing the plant saved the utility ~$275M in additional costs over the remaining term of a previous agreement. • Improved operations + current market conditions = …

Item 20: Quarterly Operations Rpt — original pdf

Item 20 Austin Energy Operational Update Q4 FY21 Sidney Jackson Chief Operating Officer, Austin Energy November 2021 © 2018 Austin Energy 1 Austin Energy Operational Update Discussion Topics Performance Carbon Footprint On-Site Energy Resources Future State 2 Austin Energy Operational Update Performance 3 Commercial Availability & Start Success Commercial Availability Generation Resource Target Seasonal Commercial % Availability Commercial Availability Actuals (%) Q3 FY21 AVG Q4 FY21 AVG 94 64 90 87 96 95 99 100 * 95 95 97 100 Decker Steam Units Sand Hill Combined Cycle Fayette Units South Texas Project Start Success Commercial Availability values reflect maintenance or refueling outages typical for this period Start Success Target(%) Start Success Actuals (%) Q4 FY21 AVG Q3 FY21 AVG Simple Cycle Start Success 99 100 100 4 Net Generation and Load Analysis FY 2021 Q4 Power Generation Cost by Fuel Type CONSUMPTION VS. GENERATION (MWH) Nuclear Coal NG Renewable 7% 4% 16% 45% 28% Nuclear Coal NG Renewable Biomass *Costs include fuel for generation, fuel transportation, renewable Power purchases agreements Historical FY21 Q4 System Peak Demand (MW) G E N E R A T I O N L O A D RENEWABLE POWER AS PERCENT OF CONSUMPTION 1,743,775 662,300 1,132,501 919,566 Non-Renewable 58% 4,181,418 Renewable 42% 2,900 2,850 2,800 2,750 2,700 2,650 2,600 2,550 2,500 2018 2019 2020 2021 This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on 5 System Reliability CAIDIs w/o MED CAIDI = Customer Average Interruption Duration Index Average time to restore service. SAIDI = System Average Interruption Duration Index Total duration of interruptions for the average customer, during a period of time. SAIFI = System Average Interruption Frequency Index How often the average customer experiences a sustain interruption, over a period of time. MED = Major Event Days 65 60 55 50 45 40 I F O N O T A R U D L A T O T I S N O T P U R R E T N I 55.96 45.50 61.39 45.50 82.29 68.51 0.68 0.57 E R O T S E R O T E M T I . G V A I E C V R E S 90 85 80 75 70 65 60 0.75 0.7 0.65 0.6 0.55 0.5 0.45 F O R E B M U N . G V A R …

item 21: Quarterly Financial Rpt — original pdf

Item 21 Austin Energy Quarterly Financial Report 4th Quarter FY 2021 (July - September) Mark Dombroski Chief Financial Officer November 8, 2021 © 2018 Austin Energy Disclaimer Certain information set forth in this presentation contains forecasted financial information. Forecasts necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance. Although the forecasted financial information contained in this presentation is based upon what Austin Energy management believes are reasonable assumptions, there can be no assurance that forecasted financial information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forecasts. In addition, this presentation contains unaudited information and should be read in conjunction with the audited Annual Comprehensive Financial Reports for the City of Austin, which was published on March 18, 2021: https://assets.austintexas.gov/financeonline/downloads/comprehensive_annual_financial_report/comprehensi ve_annual_financial_report_2020.pdf 2 QUARTERLY Financial Report Agenda Executive Summary Financial Policy Compliance Financial Performance Measures Actual to Budget Analysis Financial Statements Market and Industry Analyses 3 Austin Energy Quarterly Financial Report Executive Summary 4 Executive Summary Generally compliant with all financial policies. Contingency and Capital Reserve balances below minimums but total cash above minimum of $457m. $ 1,287 Million Revenues Operating revenues at September are 9% under budget due to decreased Power Supply Revenue due to the February winter storm as well as decreased Base revenue. Balance sheet is liquid and adequately capitalized. Working Capital decreased $72M primarily due to funding CIP and decreased base revenue. Generally meeting financial metrics supporting AA credit rating. $937 Million Expenses Operating expenses are 10% under budget due to lower Power Supply costs due to the February winter storm. Market competitiveness – System average rates remain consistent at 2.5% below state average for CY 2020. This information is unaudited and should be read in conjunction with the audited Comprehensive Financial Reports for the City of Austin, when published on https://assets.austintexas.gov/financeonline/downloads/comprehensive_annual_financial_report/comprehensive_annual_financial_report_2020.pdf 5 Austin Energy Quarterly Financial Report Financial Policy Compliance 6 Financial Policy Compliance Financial policies are memorialized and adopted by ordinance each year during the budgeting process Compliance Debt Reserves Operating Non-Compliance Debt Policies Reserves Policies Operating Policies Partial Compliance Partial Compliance Full Compliance Debt Service Coverage 2.0x at September Contingency and Capital Reserve balance below minimums but total cash above minimum of $457m This information is unaudited and should be read in conjunction with the …

Item 22: Draft Recommendation re FPP Resource Plan Working Group — original pdf

Draft Resolution/Recommendation for November 8, 2021 EUC Item 22 Whereas the Austin City Council unanimously approved the 2030 Austin Energy Generation Plan in March of 2020, which commits Austin Energy to a zero-carbon goal by 2035; Whereas a key strategy of the 2030 Plan, as well as previous plans such as the 2014 and 2017 Generation Plans, was to commit Austin Energy to cease the burning of coal at the portion of the Fayette Coal Plant owned by Austin Energy by the end of 2022: Whereas Austin Energy has been working on negotiating a solution with the Lower Colorado River Authority, which co-own the plant for several years; Whereas Austin Energy, after consulting with City Council, officially announced on November 1st, 2021 that it had been unable to reach a reasonable and beneficial agreement with LCRA on how to assure retirement of either one unit at Fayette, or a virtual retirement of the approximately 600 MWs of coal owned by Austin Energy by the end of 2022; Whereas emissions of carbon dioxide from the Fayette Power Plant account for approximately 80% of the emissions controlled by Austin Energy and there is no way to meet the goals of the Austin Energy 2030 Resource Plan without ending our use of coal; Therefore, Resolved, the Electric Utility Commission forms a Fayette Power Plant Resource Plan Working Group that will collaborate with Austin Energy to explore options for reducing and ending our use of coal as soon as possible, including:  Continued negotiations with the LCRA to either shut down a unit at Fayette, or virtually shut down the equivalent amount of coal-fired power plants through running the unit less by the end of 2022, or another date in the near future, such as 2023 or 2024;  Expanded use of REACH to bid into the market at a higher price, and therefore reduce the use of coal;  Expansion of zero-carbon resources such as solar and storage at or near the Fayette plant to help in the transition away from coal sooner. Resolved, to the extent the Resource Management Commission also takes a similar action, the EUC working group can meet in person or virtually with members of the RMC to discuss these options, and jointly consider solutions. Resolved, the Fayette Power Plant Resource Plan working group will present recommendations to the full EUC for possible action no later than January 31st, …

Item 23: Proposed 2022 EUC Meeting Schedule — original pdf

Item 23 Electric Utility Commission 2022 Meeting Schedule The Electric Utility Commission meets monthly on the second Monday of the month, unless otherwise determined by the Commission. the regular meeting day conflicts with a holiday, the meeting will be held on the following Monday. Meetings are held at 6:00 p.m. in the Shudde Fath Conference Room at Austin Energy HQ, 4815 Mueller Blvd. Changes to the above regarding date, time or location will be noted on meeting agendas. If MEETING DATES January 10, 2022 February 14, 2022 March 21, 2022 April 11, 2022 May 9, 2022 June 13, 2022 July 11, 2022 August 8, 2022 September 12, 2022 October 17, 2022 November 14, 2022 CANCELLED DATES March 14, 2022* October 10, 2022** December 12, 2022*** *AISD/UT/etc. Spring Break **Columbus/Indigineous Peoples Day ***No subsequent Council Meetings in Dec

Items 2 - 17: Draft RCAs — original pdf

Item 2 Posting Language ..Title Authorize award of a contract with KBS Electrical Distributors Inc., to provide a station service voltage transformer, in an amount not to exceed $67,000. (Note: This solicitation was reviewed for subcontracting opportunities in accordance with City Code Chapter 2-9D Minority Owned and Women Owned Business Enterprise Procurement Program. For the goods required for this solicitation, there were no subcontracting opportunities; therefore, no subcontracting goals were established). ..Body Lead Department Purchasing Office. Client Department(s) Austin Energy. Fiscal Note Funding is available in the Fiscal Year 2021-2022 Operating Budget of Austin Energy. Purchasing Language: The Purchasing Office issued an Invitation for Bids (IFB) 1100 PMC1001REBID for this good. The solicitation was issued on July 12, 2021 and closed on July 27, 2021. Of the four offers received, the recommended contractor submitted the lowest responsive offer. A complete solicitation package, including a tabulation of the bids received, is available for viewing on the City’s Financial Services website, Austin Finance Online. Solicitation Documents. Prior Council Action: For More Information: Inquiries should be directed to the City Manager’s Agenda Office, at 512-974-2991 or AgendaOffice@austintexas.gov NOTE: Respondents to this solicitation, and their representatives, shall continue to direct inquiries to the solicitation’s Authorized Contact Persons: Perla Colon at, 512-322-3550 or Perla.Colon@austintexas.gov or Liz Lock at, 512-322-6251 or Liz.Lock@austintexas.gov. Council Committee, Boards and Commission Action: November 8, 2021 - To be reviewed by the Electric Utilities Commission. Additional Backup Information: The contract will provide a 362kV class oil-free station service voltage transformer (SSVT). This transformer is cleaner and environmentally responsible, preventing oil spills throughout the substation and eliminating the need to dispose of oil. The SSVT will be installed inside Austin Energy’s new Cistern substation interconnecting solar energy to Austin Energy’s transmission system. This SSVT will reduce voltage, while increasing the electrical current required for the proper functioning of air conditioning and protective relays. ..Strategic Outcome(s) Strategic Outcome(s): Government that Works for All. Item 3 Posting Language ..Title Ratify a contract with Control Components Inc., to provide an intermediate pressure drum control valve and spare parts, in the amount of $75,400. (Note: This contract is exempt from the City Code Chapter 2-9D Minority Owned and Women Owned Business Enterprise Procurement Program; therefore, no subcontracting goals were established). ..Body Lead Department Purchasing Office. Client Department(s) Austin Energy. Purchasing Language: Ratification. Prior Council Action: Fiscal Note Funding was available in the Fiscal Year 2020-2021 Capital …

Item 19: REACH Update — original pdf

Item 19 2021 REACH Update Electric Utility Commission Briefing Erika Bierschbach VP, Energy Market Operations & Resource Planning November 8, 2021 © 2018 Austin Energy Carbon Reduction - REACH • Reduce Emissions Affordably for Climate Health (“REACH”) incorporates a cost of carbon in the generation dispatch price and reduces generation output during low-margin periods while making resources available for high-margin periods. • Allocate an annual budget amount of approximately 2% of the prior year’s PSA • The savings for 2021 was expected to be 1.29 million metric tons • REACH was designed to reduce the utility’s carbon emissions by 30% or approximately 4 million metric tons between March 26,2020 and December 31,2022. 2 Operational Factors Impacting REACH Goals • Reclaim Pond • Heavy May/June rainstorms caused FPP plant director to declare emergency for low freeboard levels at FPP ponds • Required need to run FPP at elevated levels to help pond's evaporation efforts • Coal Pile Runoff Pond • Heavy rainstorms caused coal pile runoff pond to compromise operational limits • Required need to run FPP at elevated levels to help pond's evaporation efforts • Elevated Coal Pile 3 Operational Factors Impacting REACH Goals (cont.) • Volatile and High Natural Gas Prices • Rising global demand and shifts in supply/demand fundamentals • NYMEX Natural Gas $5.00 - $6.00 range this fall • Higher gas prices require increases in carbon adder to reach targets NYMEX Natural Gas Monthly Settlements $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $- Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 4 Environmental Cost Adder REACH Adder 2021 2.5 1.5 2 1 0 0.5 January February March April May June July August September October November 5 Overall REACH Performance January 1, 2021 – October 31, 2021 Resource Plan Forecast Emissions Economic (Tonnes) Emissions Actual (Tonnes) Emission Reduction (Tonnes) Percentage Below Forecast 4,612,929 4,463,226 3,950,149 662,780 Total Coal 3,592,227 3,475,430 2,962,353 Natural Gas 1,020,702 978,367 978,367 629,874 32,905 14.37% 17.53% 3.22% 6 REACH Performance Explained Emission Reduction Explained - 2021 ) 2 O C ( s e n n o T c i r t e M 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - Projection Reach Impact Outage Impact Model to Market Actual 7 FPP REACH Performance Resource Plan Forecast Emissions Economic (Tonnes) Emissions Actual (Tonnes) Reduction (Tonnes) Cost per Tonne Total FPP1 FPP2 3,592,227 3,475,430 2,962,353 513,077 1,884,255 1,792,651 …

Recommendation 20211108-022 Forming a FPP Resource Plan Working Group — original pdf

BOARD/COMMISSION RECOMMENDATION Electric Utility Commission Recommendation No. 20211108-022 FPP Resource Plan Working Group Date: November 8, 2021 Subject: FPP Resource Plan Working Group Motioned: Cyrus Reed Seconded: Cary Ferchill Recommendation: Whereas the Austin City Council unanimously approved the 2030 Austin Energy Generation Plan in March of 2020, which commits Austin Energy to a zero-carbon goal by 2035; Whereas a key strategy of the 2030 Plan, as well as previous plans such as the 2014 and 2017 Generation Plans, was to commit Austin Energy to cease the burning of coal at the portion of the Fayette Coal Plant owned by Austin Energy by the end of 2022: Whereas Austin Energy has been working on negotiating a solution with the Lower Colorado River Authority, which co-own the plant for several years; Whereas Austin Energy, after consulting with City Council, officially announced on November 1st, 2021 that it had been unable to reach a reasonable and beneficial agreement with LCRA on how to assure retirement of either one unit at Fayette, or a virtual retirement of the approximately 600 MWs of coal owned by Austin Energy by the end of 2022; Whereas emissions of carbon dioxide from the Fayette Power Plant account for approximately 80% of the emissions controlled by Austin Energy and there is no way to meet the goals of the Austin Energy 2030 Resource Plan without ending our use of coal; Therefore, Resolved, the Electric Utility Commission forms a Fayette Power Plant Resource Plan Working Group that will collaborate with Austin Energy to explore options for reducing and ending our use of coal as soon as possible, including but not limited to:  Continued negotiations with the LCRA to either shut down a unit at Fayette, or virtually shut down the equivalent amount of coal-fired power plants through running the unit less by the end of 2022, or another date in the near future, such as 2023 or 2024;  Expanded use of REACH to bid into the market at a higher price, and therefore reduce the use of coal;  Expansion of zero-carbon resources such as solar and storage at or near the Fayette plant to help in the transition away from coal sooner. Be it further resolved that the working group provide the EUC with bill impact analysis of each recommendation if available; Resolved, to the extent the Resource Management Commission also takes a similar action, the EUC …