Utility Rates Issues Shawn Schukar Vice President, Strategic Initiatives

Transcription

1 Utility Rates Issues Shawn Schukar Vice President, Strategic Initiatives

2 Ameren s History 2

3 Ameren Today Regional electric and gas utility Missouri regulated generation & distribution Illinois regulated distribution & unregulated generation Diverse service territory and solid demand growth 2.4 million electric customers Nearly 1 million gas customers Low rates and solid customer service Competitive generation costs Ameren Generating Plants: Unregulated Regulated 3

4 Where do we stand? National Average Chicago, IL Cincinnati, OH Denver, CO Kansas City, MO AmerenUE (MO) 4

5 AmerenUE rate increase since % 30% 20% 10% 0% National average = about 30% 5

6 AmerenUE rates since % National average today = 10.8 /KWh AmerenUE rates today = 6.88 /KWh AmerenUE rates are about 40% lower than the national average 6

7 Facing rising demand Energy use by AmerenUE customers has increased by 50% since the 1990s Demand for electricity will continue to increase steadily projected 27% by 2025 AmerenUE will need major new sources of power around

8 What we ve heard Customer priorities Reliable power Low prices Excellent customer service Environmental protections Vision for meeting future needs Wise management of company and customer resources 8

9 Facing rising costs Rail shipping rates have risen 30-50% since 2004 and 40% this year alone Copper, aluminum & steel costs have doubled Fuel costs continue to rise 9

10 AmerenUE Rate Request Rate Request is important for several reasons Provides financial support to improve reliability Provides funds to cover rising fuel, material and labor cost Helps Company meet the growing demand of electricity while respecting the environment AmerenUE has requested a 12.1 percent rate increase from the Missouri Public Service Commission (PSC) Request must be approved by PSC Process takes about one year 10

11 Potential Future Impact on AmerenUE Rates Fuel and Transportation Cost Future Environmental Costs Current Legislation Future Legislation Carbon Continued Growth 11

12 Future Fuel Projections Forward Fuel Prices - NYMEX $ $ Oil ($/barrel) PRB ($/ton) Nat Gas ($/mmbtu) $21.00 $19.00 $ $ $17.00 $ $15.00 $ $ $13.00 $ $11.00 $ $ $9.00 $ November-08 February-09 May-09 August-09 November-09 February-10 May-10 August-10 November-10 February-11 May-11 August-11 November-11 February-12 May-12 August-12 November-12 February-13 May-13 August-13 November-13 February-14 May-14 August-14 November-14 $

13 Future Legislative Cost Climate Change Legislation

14 Definition of Terms Climate Legislation/Regulation 14

15 Federal Legislative Response Bill Type Allowances Offsets Safety Valve Scope Bingaman/Specter Cap & Trade Sector Allocation - 90% (declines over time) Yes - 3% of allowances Yes - $12 per ton w/ escalation Economy Wide Feinstein/Carper Cap & Trade Allocations - 85% 3% per year Yes, but limited - domestic and international projects No Power Sector Only Lieberman/McCain Cap & Trade Allocations - 85% 3% per year Yes - limit to use of sequestration No Economy Wide Sanders/Boxer Cap Trading may be allowed - option of Administration Yes No Transportation and Power Sectors Lieberman/Warner Cap & Trade Allocations based on historical emissions - declines over time Yes - 15% domestic and 15% international No 85+% of Economy including Power, Transportation, and Industrial 15

16 Lieberman-Warner S.2191/S.3036 Voted out of Committee December 5, 2007 (failed to pass June 2008) Economy Wide cap 19% below the 2005 level by 2020 ~71% reduction by 2050 Coal emissions regulated at point of combustion, oil and natural gas regulated at processing step (midstream) Low Carbon Fuel Standard Reduces carbon content in transportation fuel below 2008 levels by 5% in 2015 and 10% in 2020 Initial allocation of allowances to generators at 18% declining to 0% by 2031 Bonus allowance allocation for early deployment of carbon capture Allocation of allowances to LSE s set at 9.5% and LDC s set at 2% Auction proceeds distributed to several groups Offsets limited to 15% domestically and 15% international No safety valve or consumer protection 16

17 MMTonnes CO2e S.2191 U.S. GHG Cap 10,000 9,000 Non-Capped Non-CO2 8,000 7,000 6,000 Non- Capped Capped Non-CO2 Electric Power 5,000 4,000 Capped 3,000 S 2191 Cap Transportation 2,000 1,000 Industrial 0 Residential Commercial

18 CO2 Price (2005 $/metric ton) Comparison of Modeling Efforts of S.2191 Comparison of Study Results - CO 2 Price MIT ACCF/NAM EPA EPA w /o Of f sets CRA 18

19 Electricity Price (% Increase) Comparison of Modeling Efforts of S.2191 Comparison of Study Results - Electricity Price MIT ACCF/NAM EPA CRA 19

20 Natural Gas Price (% Increase) Comparison of Modeling Efforts of S.2191 Comparison of Study Results - Natural Gas Price 150% 125% 100% 75% 50% 25% 0% MIT ACCF/NAM EPA CRA 20

21 Real Percent increase in Customer Rates (Relative to no Legislation) Impact on AmerenUE (MO) Customer Rates 80% 70% 60% 50% 40% 30% 20% 10% 0% L/W Bill 25 $/Ton Safety Valve $/Ton Safety Valve 21

22 Real Percent Increase in Customer Rates (Relative to No Legislation) Impact on AmerenUE (MO) Customer Rates Different Allocation Frameworks 100% 80% 60% 40% 20% 0% -20% L/W - Bill Alloc L/W - 100% Auction L/W 100% Alloc 22

23 Other Potential Impacts to AmerenUE rates State Level or Regional Climate Activities Midwest Governors Accord Renewable Portfolio Standards Current Ballot Initiative in Missouri Resource Requirements New Generation Energy Efficiency 23

24 Questions

25 Energy Efficiency: Transforming the Market to Support Missouri s Energy Independence Greg Lovett Managing Supervisor, MO Energy Efficiency

26 Meeting Rising Demand Goal of reducing demand and energy growth by: 10% of growth by 2009/ % of growth by 2011/ % of growth by 2013/2014; and 25% of growth by 2015/2016 2

27 Facing rising costs Rail shipping rates have risen 30-50% since 2004 and 40% this year alone Copper, aluminum, steel costs have doubled Fuel costs continue to rise 3

28 Anticipating carbon constraint Pressure on carbon emissions - $$/ton CO 2 4

29 Integrated Resource Plan (IRP) Formal planning effort strikes an economic balance between demand-side and supply-side resources Governed by Commission Rules Considerable stakeholder review & input from the beginning Sources to meet customer growth by year % Energy Efficiency & Demand Response 15% Renewable Generation 57% Future Generation 5

30 The Future First Fuel Invisible powerhouse Least cost resource Levelized Cost of EE ~ 1.4 /kwh (79% less expensive than lowest cost supply side option) Immediate impact No Carbon - clean energy option Energy Efficiency Programs Coal Nuclear Hydro Natural Gas 6

31 Energy Efficiency Increase customer choice/satisfaction Reduce emissions Large, untapped low-cost energy resource Equivalent of creating new sources of power Creates local jobs Improves energy security 50% Air conditioning and heating 20% Water heater 10% Lighting, small appliances 8% Refrigeration 4% Cooking 3% Clothes dryer 5% Other Source: DOE 7

32 Meeting the Challenge Initial Three Year Energy Efficiency Portfolio Energy Efficiency Programs for all Customer Classes 9 Residential Programs 7 Business Programs Phased in over next several months Long Term Plan by 2025 Goal of 540 MW Reduction Requires Investment of $880M Savings Greater than the Investment 8

33 Energy Efficiency / Demand Response Programs Prime Contractor Prime Contractor Residential Business Sub-Contractors Sub-Contractors To Customers Program Deliveries, Incentives, Buy-downs To Customers Program Deliveries, Incentives, Buy-downs HVAC Diagnostics & Tune-Up New HVAC Lighting/ Appliances Demand Response CPP w/ Smart Thermostat Direct Load Control Energy STAR Homes Program Home Energy Performance Multifamily Buildings Low Income Custom Incentives Standard Incentives Retrocommissioning Commercial New Construction Demand Response CPP w/ Smart Thermostat Demand Credit Industrial Interruptible Tariff 9

34 Phase 1: Standard Business Programs Provides rebates for energy efficiency improvements to commercial and industrial customers that: Are readily available in the marketplace to a large number of customers. Targets equipment for which energy savings can be reliably calculated. Examples include Lighting measures Premium efficiency motors Air compressor systems Variable frequency drives Basic refrigeration equipment Vending machine sensors 10

35 Phase 1: Custom Business Programs Available to all existing commercial and industrial customers with cost effective efficiency opportunities for which standard incentives are not available. Provides assistance to support implementation of high-efficiency opportunities which are available at the time of new equipment purchases, facility modernization, and industrial process improvement. The incentives will be customized based on estimated energy savings. 11

36 Phase 1: Residential Lighting & Appliances Encourages sales of ENERGY STAR qualified appliances and lighting products to all residential customers. Provides financial incentives to retail outlets which will then encourage consumers to purchase efficient lighting and consumer appliances. The lighting program will generally follow the Change-a-Light model working with a regional contractor to arrange product price discounts or point-of-sale rebates. Strategies for appliances will likely be time-limited promotions and discounts. 12

37 Phase 1: Residential Multi-family Delivers cost-effective conservation services to the owners, managers and developers of multifamily housing (three or more units). Provides installation of measures in tenant spaces related to central AC unit diagnostics and tune-up. Provides incentives for installation of more efficient common-area lighting such as compact fluorescent fixtures and Light Emitting Diode (LED) exit signs. More expensive or complex measures such as windows and roof-top AC units would be subject to an energy analysis to validate cost-effectiveness and incentive levels. 13

38 Long-Term Benefits To All Customers Together we can reduce your carbon foot print and greenhouse gas emissions from our power plants to help protect our environment. The easiest way to reduce emissions is to not create them. Over the long run, all electricity customers will benefit because reduced electricity usage will defer the need for new power generation, transmission and distribution investment. Thus minimizing future rate increases. 14

39 Your Next Steps Establish an energy usage baseline Identify cost effective Energy Efficiency Projects Secure conditional internal approvals Stay tuned for Phase 1 launch announcements over the next several months 15

40 At UE, we pledge to connect Missouri by providing reliable power, dedicated customer service and vision for the future. Through Energy Efficiency We listen. We Respond. We Deliver. 16

41 BEST PRACTICES IN ENERGY EFFICIENCY Anne Hill Murphy Company Energy Solutions

42 Agenda Benefits of an Energy Project Best Practices for Conducting an Energy Project Current Incentives ISO 9001:2000 Certified Quality System

43 Benefits of an Energy Project

44 Economic Benefits of Energy Projects: 1. Lower Operating Costs = Increased Profitability Example: Murphy Company Energy Project Savings = $9000 annually Net margins for construction industry = 3% Equivalent Sales to Generate $9000 in profit = $300,000 ISO 9001:2000 Certified Quality System

45 Economic Benefits of Energy Projects 2. Lower Utility Costs = Increased Budget for Other Departments or Projects Example: Private School $20,000 in annual utility savings converted into additional money for teacher salaries Example: Hospital $100,000 in annual utility savings results in more budget for other projects. ISO 9001:2000 Certified Quality System

46 Economic Benefits of Energy Projects: 3. Good Use of Capital / Good Return on Investment The average energy project has a return on investment of 20% or more. Example: Consumer Products Manufacturer Energy Project Cost = $100,000 Energy Project Savings = $30,000 annually Return on Investment = 30% ISO 9001:2000 Certified Quality System

47 Economic Benefits of Energy Projects: 4. Increased Asset Value for Property Owners NOI / cap rate = Building Value before: $100,000 / 10% = $1,000,000 after: $101,000 / 10% = $1,010,000 A $1000 reduction in energy costs, results in an increase in the building value by $10,000. ISO 9001:2000 Certified Quality System

48 Will my building benefit from an Energy Project? Almost every commercial building can have its energy costs reduced by at least 10 percent with measures that pay for themselves in less than three years ISO 9001:2000 Certified Quality System

49 Recent Murphy Projects CUSTOMER ENERGY PROJECT COST ANNUAL SAVINGS 10 YEAR IRR PAYBACK PERIOD (YRS) Office $ 20,000 $ 10,500 57% 1.90 Hotel 56,000 15,000 28% 3.73 Manufacturer* 60,000 20,000 36% 3.00 School* 61,000 12,000 19% 5.08 Manufacturer* 70,000 22,000 34% 3.18 School* 71,000 13,000 17% 5.46 Retailer 101,900 39,000 41% 2.61 Manufacturer* 133,000 32,000 25% 4.16 Office 193,500 63,500 35% 3.05 Office 206,500 59,500 31% 3.47 School 220,500 71,500 35% 3.08 Manufacturer 240,000 60,000 26% 4.00 Office 255,000 65,000 27% 3.92 Manufacturer 300, ,000 36% 3.00 Manufacturer* 382,000 89,000 24% 4.29 Retailer* 385, ,000 29% 3.63 *Customer qualified for additional incentives ISO 9001:2000 Certified Quality System

50 ENERGY PROJECT BEST PRACTICES

51 Energy Audit Energy Project ISO 9001:2000 Certified Quality System

52 Assemble Energy Team Internal Team Members Financial Decision maker Facility Director Maintenance Staff Operations Manager Energy Partner ISO 9001:2000 Certified Quality System

53 Selecting an Energy Partner Partnering Ability Scope & Capabilities Product Ties Depth of analysis Cost of Services Ameren VPN, Federal Government Certified, Energy Star Partner, AEE CEM ISO 9001:2000 Certified Quality System

54 2. Determine Project Goals Reduce Energy Consumption Lower Operating Costs / Increase Profit Upgrade Facility in an Energy Efficient Manner Protect the Environment / Environmentally Friendly Image Comply with Energy Regulations LEED Certification, Energy Star Certification ISO 9001:2000 Certified Quality System

55 3. Perform Utility Analysis 2-3 years of monthly data Understand utility costs ISO 9001:2000 Certified Quality System

56 Understanding Your Utility Bill ISO 9001:2000 Certified Quality System

57 3. Perform Utility Analysis 2-3 years of monthly data Understand utility costs Normalize Data weather, production, rate structure ISO 9001:2000 Certified Quality System

58 kwh Annual Electricity Usage J F M A M J J A S O N D ISO 9001:2000 Certified Quality System

59 USD in Thousands LBS in Millions Normalize Data for Production Natural Gas Cost Comparison 2005-*2007 $140 $120 $100 $80 $60 $40 $20 $- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Month ISO 9001:2000 Certified 2005 Cost 2006 Cost 2007 Cost 2005 LBS 2006 LBS 2007 Quality LBS System

60 3. Perform Utility Analysis 2-3 years of monthly data Understand utility costs Normalize Data weather, production, rate structure Benchmarking internal, external ISO 9001:2000 Certified Quality System

61 Benchmarking Standard Facilities ISO 9001:2000 Certified Quality System

62 Benchmarking Internal Facilities Rank by kbtu/sf Annual Electric Annual Gas kbtu/ sf Annual $ % above/ Gas + Store # SQ Foot kwh $ $ / kwh KWH / sf Therms $ $ / Therm Therm / sf Absolute below avg Electric Costs Annual Maintenance Costs Customer Traffic ,490 2,704,779 $142, $8, % $150,989 high medium ,352 4,615,680 $267, ,153 $24, % $291,348 high medium ,394 2,219,447 $175, ,556 $36, % $212,133 low medium ,303 3,757,259 $249, ,260 $12, % $262,192 low high ,822 3,135,712 $228, ,522 $16, % $245,287 low high ,400 3,469,482 $261, ,189 $16, % $278,147 medium low ,653 3,289,100 $251, ,418 $34, % $286,439 high low ,326 4,330,187 $325, ,876 $29, % $355,110 high medium ,196 4,405,049 $327, ,369 $27, % $355,760 high low ,105 3,432,166 $257, ,900 $28, % $286,571 medium high ,840 4,113,469 $234, ,364 $13, % $247,956 medium medium ,447 3,616,800 $302, ,894 $22, % $324,689 medium high ,922 3,760,401 $279, ,546 $16, % $296,459 high high ,074 2,711,699 $184, $9, % $193,869 low low ISO 9001:2000 Certified Quality System ,554 3,599,915 $267, ,254 $23, % $291,081 medium high ,848 3,935,681 $297, $ % $297,999 low high

63 4. Conduct Facility Audit Gather Data Interview Tools Data loggers Infrared camera Light meters ISO 9001:2000 Certified Quality System

64 4. Conduct Facility Audit Consider implications on other areas of business Production / productivity Quality Comfort Safety Maintenance Customer Experience ISO 9001:2000 Certified Quality System

65 4. Conduct Facility Audit Energy Calculations Modeling software vs. Spreadsheet calculations Minimize and Verify Assumptions! Secondary Impacts Construction Costs Be wary of Means data Involve experienced contractors Constructability issues!!! Disposal costs, Permits, Fees, Taxes ISO 9001:2000 Certified Quality System

66 5. Implement Recommendations Time is Money This is where Energy Audits get hung up If clear goals & criteria laid out up front, this should not be a problem ISO 9001:2000 Certified Quality System

67 6. Communicate, Track & Maintain Communicate Importance of Energy Project behavioral change new equipment, software, etc. Track In house or 3 rd party Energy Star Database Catch errors proactively Maintain Revisit ECMs every few years New technologies ISO 9001:2000 Certified Quality System

68 Current Incentive Programs

69 Current Incentive Programs Ameren Programs Federal EPAct % tax credit for fuel cells, micro turbines and solar equipment Tax deduction of up to $1.80 per sf for achieving energy efficient targets State MO Manufacturer Senate Bill 30 Laclede Programs $750 for a qualified appliance, up to $10,000 per facility ISO 9001:2000 Certified Quality System

70 NOW is the time for an Energy Project Utilities are one of the largest controllable expenses for any business... And utility costs are continuing to rise! There is an unprecedented number of incentives available for our market. Energy projects have a high return on investment and help your business remain competitive and profitable in a slow economy. Time is money!! ISO 9001:2000 Certified Quality System

71 THANK YOU Questions