Item 4: REACH Update Presentation — original pdf

Backup

Item 4 2020 REACH Update Resource Management Commission Briefing Erika Bierschbach VP, Energy Market Operations & Resource Planning April 20, 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 2020 after plan approval was expected to be 1.36 million metric tons • REACH was designed to reduce the utility’s carbon emissions by 30% or approximately 4 million metric tons between now and Austin Energy’s exit from FPP. • Thereafter, the REACH plan is expected to reduce carbon emissions by 8% each year while maintaining the flexibility to protect our customers’ rates in periods of high prices in the wholesale market until achieving zero carbon emissions by 2035. 2 Resource Plan Carbon Emission Forecast vs. REACH CO2 Reduction 5,928,016 MT - CY2020 Resource Plan Carbon Emission Forecast 4,570,050 MT - CY2020 REACH Plan Carbon Emission Forecast DECKER STEAM UNITS RETIRE FPP EXIT ZERO FOSSIL ASSETS (2035 or sooner if economics dictate) 3 2020 Distribution of Price – Resource Plan Forecast v Actual Forecasted Average SPP = $28.36 Actual Average SPP = $21.61 s e c n e r u c c O f o # 1,000 900 800 700 600 500 400 300 200 100 0 4 Model to Market •Resource Plan Forecast - August 2019 • Goals derived from Base Forecast and Assumptions •COVID-19 Impacts Demand for Energy • Crude oil has negative monthly settlement for the first time in history •Natural Gas prices 26% lower than base assumption by ~25% • July NYMEX Natural Gas Settles $1.495 •Extremely mild 2020 Winter and mild end to the summer • 17th coolest September on record (out of 126) 5 NYMEX Natural Gas Daily Settlements $3.00 $2.80 $2.60 $2.40 $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 $1.00 11/1/2019 12/1/2019 1/1/2020 2/1/2020 3/1/2020 6 LZ_AEN 15 Minute Real-time SPP ~ 97% of the intervals were below $30 per MWH s e c n e r u c c O f o # 450 400 350 300 250 200 150 100 50 0 7 Overall REACH Performance Resource Plan Forecast Emissions Economic (Tonnes) Emissions Actual (Tonnes) Emission Reduction (Tonnes) Percentage Below Forecast Total Coal 5,928,010 4,806,255 3,992,107 1,935,903 4,516,877 3,684,190 2,870,042 1,646,835 Natural Gas 1,411,133 1,122,065 1,122,065 289,068 32.5% 36.5% 20.5% 8 REACH Performance Explained Emission Reduction Explained - 2020 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 ) 2 O C ( s e n n o T c i r t e M 2,000,000 1,000,000 - Projection Reach Impact Outage Impact Model to Market Actual 9 FPP REACH Performance Resource Plan Forecast Emissions Economic (Tonnes) Emissions Actual (Tonnes) Reduction (Tonnes) Net Revenue Foregone Cost per Tonne Total FPP1 FPP2 4,516,877 3,684,190 2,870,042 814,148 $2,696,670 2,266,964 1,749,506 1,320,370 429,136 $1,443,911 2,249,913 1,934,684 1,549,672 385,012 $1,252,759 $3.31 $3.36 $3.25 10 ©2018 Austin Energy. All rights reserved. Austin Energy and the Austin Energy logo and combinations thereof are trademarks ofAustin Energy, the electric department of the City of Austin, Texas. Other names are for informational purposes only and may be trademarks of their respective owners.