Tennessee Valley Authority · NYSE:TVC
Tennessee Valley Authority — Investor Presentation (May 2014)
45 slides from Tennessee Valley Authority's investor presentation, May 13, 2014
Slide 1: Tennessee Valley Authority Regional Energy Resource Council
Tennessee Valley Authority Regional Energy Resource Council Nashville, Tennessee May 13, 2014
Slide 2: Welcoming Comments
Welcoming Comments
Slide 3: Agenda
Agenda 8:30 Continental Breakfast 9:00 Welcome - Introductions & New Dus Rogers, Council Chair Member Recognition Agenda Review Jo Anne Lavender, Facilitator 9:15 Meeting Purpose Joe Hoagland, Designated Federal Officer 9:30 IRP Update: Strategies Gary Brinkworth, Senior Program Manager, IRP 10:30 B
Slide 4: RERC Meeting Protocols
RERC Meeting Protocols Agenda prepared and approved by the Designated Federal Officer (DFO) in Agenda consultation with Council Chair Agenda distributed to Council and published in the Federal Register prior to each meeting Topics may be submitted to the DFO by any member of the Council, or no
Slide 5: Safety First
[1] Safety First
Slide 6: Meeting Purpose
Meeting Purpose
Slide 7: May 2014 Meeting Purpose
May 2014 Meeting Purpose Most RERC meetings include discussion and formation of advice for TVA. However, this meeting is primarily informational: • Update the RERC on progress of the IRP • Gain your input on the strategies • Gain ideas for the structure and content of the scorecard 7
Slide 8: IRP Working Group
IRP Working Group 18 Members Meets ~ Monthly 2 2 State Agencies LPCs / TVPPA 3 Engaged in details of the 4 Industrial / AVI, TVIC IRP Env./Energy NGO’s Academia / Research Encourages dialogue Econ Dev / Business between stakeholders 4 and diverse opinions to 3 TVA LPC= Local Power Companies
Slide 9: Energy Resource Decisions
Energy Resource Decisions Financial Health Rates Reliability Other Strategic Resiliency Considerations TVA Leadership Environmental Internal/External Stewardship Stakeholder Input Specific ‘Lane’ decided by TVA Leadership with IRP establishes Business direction for Considerations ‘The Highway’ 9
Slide 10: 2015 IRP Project Update: Strategies
2015 IRP Project Update: Strategies
Slide 11: The Purpose of Resource Planning
The Purpose of Resource Planning Resource Planning: The application of economic and engineering analyses to the resource adequacy problem, specifically, making investment decisions to minimize fixed and variable costs, while maintaining appropriate resource adequacy. ‘Resource adequacy’ is typically
Slide 12: Solving the Energy Puzzle at TVA
Solving the Energy Puzzle at TVA The Integrated Resource Planning (IRP) process at TVA follows a least-regret planning approach that considers a broad range of supply-side and customer service options, using multiple evaluation criteria, involving the public, and considering uncertainty associated
Slide 13: 2015 IRP/SEIS Schedule: Major Phases and Milestones
2015 IRP/SEIS Schedule: Major Phases and Milestones The 2015 IRP is intended to ensure transparency and enable stakeholder involvement. Spring/Summer Fall/Winter Spring Summer Fall Fall/Winter Spring 2013 2013 2014 2014 2014 2014 2015 Develop Identify Analyze & Present Initial Incorporate Prep Scopi
Slide 14: RERC Proposed Engagement: 2015 IRP
RERC Proposed Engagement: 2015 IRP Oct Jan May Oct Jan Mar 2013 2014 2014 2014 2015 2015 Framework Process Inputs & Draft Public Review of & Briefing Framework Results Comments Findings Scorecard Review IRP Review & Briefing on the Review draft Share summary Present final process – for feedback on p
Slide 15: How the Resource Planning Model Works
How the Resource Planning Model Works The result of a strategy evaluated in a scenario How uncertainty impacts the Portfolio results Standardized metrics to compare Portfolios 15
Slide 16: Scenarios and Strategies - the Modeling Framework
“Scenarios” and “Strategies” - the Modeling Framework Scenarios Planning Strategies Describe potential outcomes of factors Test various business options within (uncertainties) outside of TVA’s control TVA’s control Represent possible conditions and are not predictions of the future Defined b
Slide 17: Recap: Scenarios Create Diverse Planning Futures
Recap: Scenarios Create Diverse Planning Futures Scenario Design Focus Captures the current outlook for the future Current TVA is using for resource planning studies Outlook Prolonged Stagnant economy results in flat to Stagnant negative growth, delaying the need for National new generation Economy
Slide 18: Process for Building Strategies
Process for Building Strategies Brainstorming – resource mix goals & objectives The process starts by considering the current resource mix and how the mix might need to change over time 1 Identification of key attributes Then certain components of the resource mix are selected as potential strat
Slide 19: Power Resource Stack
Resource Mix & Strategy Attribute List 1 Transmission Grid Improvements Seasonal Market Power This list includes resources currently 2 Purchased Power Agreements in TVA’s portfolio as well as (PPA) components that could be part of the 3 Distributed Generation (DG) future power supply mix Options N
Slide 20: Ten Design Parameters for Strategies
Ten Design Parameters for Strategies Attributes Description Constraints related to the existing nuclear fleet; EPUs are considered part of Existing Nuclear existing nuclear Limitations on technologies and timing related to the addition of new nuclear Nuclear Additions capacity; Watts Bar 2, SMRs, A/
Slide 21: Developing Planning Strategies
Developing Planning Strategies Design Guide: Planning Strategies The strategies are designed to test various business options on how to address capacity needs over the study period Planning strategies are defined by a Candidate Planning Strategies combination of resource assumptions A “Tradition
Slide 22: Strategy Classification into Categories
Strategy Classification into Categories The proposed strategies can be classified in three categories according to the approach in the use of some of the candidate resources: “Promoting” Strategy ( P ): Contains attributes that incentivize the use of a particular resource/s “Constraining” Strate
Slide 23: Seeking a Preferred Set of Planning Strategies
Seeking a Preferred Set of Planning Strategies Stakeholders were given the option to express their preference on the proposed strategies in terms of “Yes, No or Maybe” instead or ranking them in an order of preference The following graphs display the composite results of 16 respondents (11 IRPWG
Slide 24: IRP 2015 Selected Strategies
IRP 2015 Selected Strategies STRATEGY DESCRIPTION A - “Traditional” Least • All resource options available for selection; traditional utility “least cost optimization” Cost Planning case • Resources selected to create lower emitting portfolio instead of focusing only on a traditional least cost appr
Slide 25: Next Steps: Ongoing RERC IRP Engagement
Next Steps: Ongoing RERC IRP Engagement The 2015 IRP Schedule (major phases) Spring/Summer Fall/Winter Spring Summer Fall Fall/Winter Spring 2013 2013 2014 2014 2014 2014 2015 Develop Identify Analyze & Present Initial Incorporate Prep Scoping ** Inputs & Preferred Evaluate Results ** Input Framewor
Slide 26: Break
Break 26
Slide 27: Public Comment Period
Public Comment Period • Public participation is appreciated • This is a listening session; responses are typically not provided • Members of the public have a set number of minutes for their comments 27
Slide 28: Public Comment Period
Public Comment Period 28
Slide 29: Lunch
Lunch 29
Slide 30: 2015 IRP Project Update: Scorecard
2015 IRP Project Update: Scorecard
Slide 31: How the Resource Planning Model Works
How the Resource Planning Model Works The result of a strategy evaluated in a scenario How uncertainty impacts the Portfolio results Standardized metrics to compare Portfolios 31
Slide 32: Good, Better, Best: Choosing the Right Resource Plan
Good, Better, Best: Choosing the Right Resource Plan The challenge is not insufficient data, but rather sorting through all the results to identify the preferred resource plan So how do you know when the plan is “good”? When is it “best” or “preferred”? And who decides that? Are the decision-m
Slide 33: Metrics Facilitate Selecting a Plan Consistent with Goals
Metrics Facilitate Selecting a Plan Consistent with Goals TVA Strategic Imperatives Metrics help focus the evaluation of plan results, if done correctly Metrics need to reflect the utility and stakeholder goals and priorities — TVA’s broader mission requires the use of metrics that go beyond typ
Slide 34: IRP Metrics Used by Peers
IRP Metrics Used by Peers The table below provides a comparison of the IRP evaluation criteria used by each of the utilities. On average, utilities consider Evaluation Criteria DEC FPL GPC PCQ PEC DOM ETR APS three to four criteria when 2013 2013 2012 2013 2012 2013 2012 2012 Financial Measures ev
Slide 35: To Be Effective, Metrics Need a Scorecard
To Be Effective, Metrics Need a Scorecard Metrics facilitate discussion/debate about trade-offs that lead to the selection of the preferred resource plan Scenario Analysis Scenarios At TVA, we use a scorecard approach to packaging the #1 #2 #3 #4 #5 #6 #7 metrics, so that stakeholders and decisi
Slide 36: A Scorecard Enables Consideration of Several Metrics
A Scorecard Enables Consideration of Several Metrics Ranking Metrics Energy Supply Short-Term PVRR Total Plan PVRR PVRR Risk Rate Impact Risk/Benefit Score Scenarios 1 99.00 95.13 100.00 99.53 98.36 2 100.00 95.58 99.40 95.30 97.85 3 100.00 100.00 99.81 89.37 97.56 4 100.00 97.40 100.00 95.37 98.36
Slide 37: Scorecards Make Dialogue & Engagement Possible
Scorecards Make Dialogue & Engagement Possible Recommended Planning Strategy Former Planning Strategy C Ranking Metrics Ranking Metrics Energy Supply Energy Supply Short-Term PVRR Total Plan Short-Term PVRR Total Plan PVRR PVRR Risk PVRR PVRR Risk Rate Impact Risk/Benefit Score Rate Impact Risk/Bene
Slide 38: Proposed Scorecard Categories
Proposed Scorecard Categories Polling of the RERC in January 2014 in response to a general question about energy IRP Evaluation Categories policy priorities for TVA customers gives some insight into priorities that might be used in evaluating the study results from the IRP Costs - both long term E
Slide 39: Summary - Candidate Metrics by Category
Summary - Candidate Metrics by Category Category Description of Proposed Scorecard Metrics Cost A combination of total plan cost (revenue requirements) over the study period and average system costs ($/MWh) over the nearer term Risk A composite of measures that reflects the uncertainty around the co
Slide 40: Good Metrics + Clear Scorecards = A Successful IRP
Good Metrics + Clear Scorecards = A Successful IRP Policy objectives and goals frame the IRP study. That framework has to be understood and sanctioned by both stakeholders and decision-makers in order for the outcome of the IRP analysis to be credible Stakeholder engagement is the key to a succe
Slide 41: RERC Proposed Engagement: 2015 IRP
RERC Proposed Engagement: 2015 IRP Oct Jan May Oct Jan Mar 2013 2014 2014 2014 2015 2015 Framework Process Inputs & Draft Public Review of & Briefing Framework Results Comments Findings Scorecard Review IRP Review & Briefing on the Review draft Share summary Present final process – for feedback on p
Slide 42: Break
Break 42
Slide 43: Council Discussion
Council Discussion 43
Slide 44: Wrap Up & Adjourn
Wrap Up & Adjourn 44
Slide 45: Next Steps: Upcoming Meetings
Next Steps: Upcoming Meetings • Fall Meeting: Oct 15 and 16, 2014 (new dates) Location: Knoxville Topic: Draft IRP review and feedback • Winter Meeting: January 2015 Location: TBD Topic: Draft IRP pubic comments review and feedback • Spring Meeting: March 2015 Location: TBD Topic: Final IRP review a
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