Presentation Transcript

1. CRSP Access to Capital

   Annual Customer Meeting Presentation May 23, 2013
2. Agenda Agenda & Meeting Format Lynn Administrator’s Vision and Context Mark/Linda Access to Capital Initiative Linda Overview of CRSP System Lynn Project Funding Sources & Uses Lynn Partnerships & Joint Ownership Adam Open Dialog & Discussion Lynn Next Steps Lynn

3. Western’s Administrator

   Mark Gabriel
4. Context for Access to Capital Energy industry in general Power Marketing Administrations Federal landscape: policy, process, budget Meeting our needs: All Customers & Western
5. Vision for Western What we value Where we are headed Our challenges Top priorities
6. Purpose of Access to Capital Develop a sustainable funding strategy that: Funds system needs identified in 5- and 10-Yr Plans Funds emergency infrastructure needs Ensures reliable power and transmission delivery Maintains and upgrades transmission infrastructure Ensures compliance with safety and security standards Maintains excellent NERC compliance record Maintains lowest rates possible Enables operations in event of reduced appropriations
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8. Access to Capital and Governance Regional System Needs/ Western Requirements Current Capital Options Net Zero DSW CRSP Alternative Financing UGP Appropriations Budget Request SNR Customer Engaged Roadmaps and Plans Congressional Authorization Customer Engagement RMR Revolving Fund* Mandates TIP/1222 * CRSP, Fort Peck, BCP
9. Access to Capital and Governance Regional System Needs/ Western Requirements Expanded Capital Options Net Zero DSW CRSP Alternative Financing UGP Appropriations Budget Request SNR Customer Engaged Roadmaps and Plans Customer Engagement Congressional Authorization RMR Retain Receipts Mandates Capital Bonding TIP/1222 Revolving Fund* * CRSP, Fort Peck, BCP
10. Balancing customer and Western’s Needs Customer Partnership Providing access to low cost hydro power for preference customers Ensuring continued safe and reliable operations Meeting legislated and regulatory mandates Effective use of the transmission resource Safety, Security, Reliability Strategic/ Technical Leadership Regulatory Requirements 10

11. Access to Capital Update

    Linda Kimberling Chief Financial Officer
12. Access to Capital Timeline Began in July 2012 for FY-15 budget consideration Many stakeholders involved Proposing a funding mechanism is one line item in the budget Governance process decisions are long-term and ongoing Opportunities to refine along the way
13. Access to Capital Timeline
14. Recap of New Funding Options Recapturing Receipts for Capital Expenditures Borrowing Authority – U.S. Treasury Borrowing Authority – Federal Finance Bank Borrowing Authority – Third-Party CapitalMarkets Public Enterprise Fund Capital Leasing Authority
15. Evaluating the Funding Options Guiding Principles Beneficiary pays Transparency Economic efficiency Support of customers, DOE & OMB Criteria Life cycle cost Funding certainty Funding sufficiency Achievability
16. Evaluating the Funding Options Process Core-analytical team convened Identified objective criteria & weighting strategies Consulted with Executive Steering Committee Subteams: subject matter experts conducted analysis 1 team for each criterion -- evaluated all options Results to core-analytical team for consolidation Final results to Project Manager for due diligence check Validated results to Executive Sponsor & Administrator
17. Results of Funding Options Evaluation
18. Next Steps Regional customer meetings: seeking regional ideas Expand existing mechanisms within regions Identify additional funding options for evaluation Roll up to a Western-Wide sustainable solution FY-15 Budget Cycle (June timeline) No decision yet; many stakeholder needs to consider Deliberations and examination of options continue Discussions with DOE & OMB continue Refining appropriations language is a possibility
19. Questions ???

20. CRSP Region Access To Capital

    Lynn Jeka, CRSP-MC Manager

21. CRSP Projects Overview

    CRSP Main Stem Projects Salt Lake City Area Integrated Projects Participating Irrigation Projects
22. CRSP Main Stem Projects Glen Canyon – 1,320 MW (1964 - Colorado River) Flaming Gorge – 152 MW (1963 - Green River) Aspinall Units (Gunnison River) Blue Mesa (1967) – 86 MW Morrow Point (1970) – 162 MW Crystal (1978) – 32 MW Note: Main Stem Projects generate approximately 97% of CRSP energy (1752 MW of 1816 MW total)
23. SLC Area Integrated Projects Rio Grande Project (1940 - Rio Grand River south-central NM) Elephant Butte - 28 MW Collbran Project (1962 - Plateau Creek near Grand Junction, CO) Upper Molina - 9 MW Lower Molina - 5 MW Seedskadee Project ** (1968 - Green River southwest WY) Fontenelle– 13 MW Dolores Project ** (1993 – Dolores River in southwest Colorado) McPhee - 1 MW Towaoc - 11 MW ** Participating Projects
24. Participating Projects Irrigation Projects Central Utah (initial phase) - Utah Emery County - Utah Lyman - Wyoming and Utah Seedskadee – Wyoming Florida - Colorado Paonia - Colorado Silt - Colorado Smith Fork - Colorado Hammond - New Mexico
25. More Participating Projects More participating irrigation projects authorized in subsequent legislation: Bostwick Park - Colorado Dallas Creek - Colorado Dolores - Colorado San Juan-Chama - Colorado and New Mexico Navajo Indian Irrigation Project - New Mexico Eden - Wyoming Participating Municipal & Industrial (M&I) Projects No power responsibility Navajo-Gallup Water Supply Project Animas-La Plata - Colorado (formerly irrigation)
26. CRSP Ten-Year Plan (TYP) The CRSP TYP is a component of the DSW and RMR plans Approximately $14 million per year average need over next ten years Primarily funded from Basin Fund
27. Projects and Funding Sources Basin Fund Main stem & participating projects replacements Appropriations Integrated projects Reclamation (generation assets) Collbran & Rio Grande transmission replacements Any new construction
28. Integrated Projects - Appropriations CRSP investment is minimal but requires appropriations for replacements Reclamation is the primary owner of these projects CRSP replacement costs in the integrated projects from inception to FYE 2012 totals around $160K FY2013 CRSP will fund about $300K for a breaker replacement in Collbran project
29. CRSP Issues Cash management for Basin Fund Increased purchase power due to poor water Cost Recovery Charge (CRC) Shortage Criteria Trigger (Glen Canyon < 8.23 maf) Significant replacements Waterflow Phase Shifters for $24M) Olmsted power plant With -0- appropriations, no funding available for integrated project transmission replacements

30. Partnerships & Joint Ownership

    Adam Arellano, CRSP Counsel
31. Partnerships & Joint Ownership Goal today is a dialog and obtaining feedback Western has engaged in joint or shared partnership in the past Western will continue to explore joint partnerships when mutually beneficial Western’s funding mechanisms are the lowest cost source Costs normally remain in the rate even if funded or financed by a third party
32. Partnerships & Joint OwnershipConsiderations General -- Facility development subject to Reclamation Law and Federal "Property" Law.  Each proposal evaluated on a case-by-case basis. Joint Ownership -- Western may not jointly own (as tenants in common) property with another entity.  Western can participate in projects with others, but property must be solely owned by either Western or the other entity. Nature of Property -- Distinguish between real property and personal property.  Western's personal property generally not placed on real property of another entity. 
33. Partnerships & Joint OwnershipConsiderations Facilities in Western Substations, Taps, and Switchyards:  Any equipment that becomes integral part of Western-owned facilities is typically owned by Western.  Necessary to protect the integrity of the Federal transmission system. Transformer Replacement:  Transformers may be replaced if it avoids construction of duplicate facilities and Western retains/gains capacity rights in the new transformer.
34. Open Dialog and Discussion
35. Next Steps June 4 Policy Meeting Governance Discussions FY 2015 Budget due end of June