exhibit to agenda item #1c - smud

Powering forward. Together.

Board Finance & Audit Committee Meeting and Special SMUD Board of

Directors Meeting – Budget 2019

Wednesday, November 7, 2018 scheduled to begin at 5:00 p.m.

Customer Service Center, Rubicon Room

Exhibit to Agenda Item #1c

Energy Delivery

2019 Proposed Budget & Initiatives

Frankie McDermott

Chief Energy Delivery Officer

Chief Energy Delivery Officer Organization

Note: SMUD resources support

Business Unit processes regardless

of organization/functional affiliation.

CHIEF

WORKFORCE

OFFICER

CHIEF

LEGAL

OFFICER

Dir, Reliability

Comp & Coord

Dir, Accounting &

Controller

Director, Planning,

Pricing & Ent Perf

Director, Treasury

Director, Facilities

& Security Ops

Dir, Substn,

Telecom, & Mtrg

Director, Power

Generation

Dir, Commercial

Development

Dir, Procurement

Whse & Fleet

Dir, HR, Diversity

& Inclusion

Dir, Org Capability

& Effectiveness

Dir, Environmental

Safety & Real Est

Deputy General

Counsel

BOARD OF DIRECTORSSpecial Asst to Board of Directors

Director, Audit

Services

CHIEF GRID

STRATEGY &

OPERATIONS

OFFICER

Director,

Grid Operations

Director,

Grid Planning

Director, Energy

Strat, R&D

Dir, Distribution

System Ops

CHIEF

CUSTOMER

OFFICER

Director,

Revenue Ops

Dir, Marketing &

Corp Communic

Dir, Adv Energy

Solutions

Dir, Retail Prod

Del & Sales

CHIEF

INFORMATION

OFFICER

Dir, IT Infrastruc

& Operations

Director, Energy

Trading & Contract

Manager, Executive Department

Director, Resource

& New Bus Strat

CHIEF

FINANCIAL

OFFICER

Dir, IT

Applications

Dir, IT Strategic

Initiatives

Dir, IT Information

Security

Deputy General

Counsel

Dir, Customer

Care

Director, Strategic

Services

Director, Line

Assets

Dir, Community

Energy Svcs

CHIEF EXECUTIVE OFFICER

& GENERAL MANAGER

CHIEF ENERGY

DELIVERY

OFFICER

November 7, 2018 3 Board Finance & Audit Committee Meeting and Special

SMUD Board of Directors Meeting - Budget 2019

Energy Delivery Business Unit

Power Generation Line Assets

Substation,

Telecom &

Network

Commercial

DevelopmentStrategic Services

Hydro GenerationNew Services/Local

Agency

Substation Design &

Construction

Commercial

Development

Business Process &

Solutions

License

ImplementationLine Maintenance

Substation / Network

Maintenance &

Hazardous Material

Sacramento Power

Academy

Thermal Generation

Line Design,

Construction, &

Replacement

Telecommunications

Renewable GenerationVegetation

Management

Field Metering &

Power Quality

Gas Pipeline

Civil Engineering &

Const. Management

Inspection

Regulatory Compliance

Rancho Seco Fuel

Storage

Project Development



2019 Proposed Budget by Theme



$345.0

$4.1

$40.0

$37.0

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

2019 Proposed

$M

Keeping the Lights On Optimization/Operational Excellence

Risk Mitigation Embracing the Future

$426.1M

*Excludes Allocated costs

Keeping the Lights On

3,200New Residential Lots

In 2018 vs. 355 in 2012

80Commercial ProjectsIn 2018 vs. 15 in 2016

370K FeetCable Replacement

In 2018 vs. 213k Feet in 2012

1,127Poles Replaced

In 2017 vs. 453 in 2012

241Vehicle vs. Assets

Notifications

In 2017 vs 125 in 2010

92,628Trees (Veg Mgmt)

In 2017 vs. 57k in 2012

• Safety and the pursuit of

zero injuries

• Customer expectations

are increasing

• Core work continues to

grow

• Significant capital spend

on load serving

capability, aging

infrastructure and

customer driven

projects2 13

64

05

10152025

2012-2016 2017-2021

New / Upgraded Substations(Transmission and Distribution)

Dist. Substations (Non-IC) Dist. Substations (IC Related)

Transmission Substations




▪ Safety and the Pursuit of Zero Injuries (SD-6)

▪ Grid Substation Improvements & New Capacity:

Substation E, Franklin Bulk Substation and Substation G

(SD-4)

▪ Proactive Retirement and Replacement of Circuit Breakers

and Transformers

(SD-4)

▪ Capacity and Performance Upgrades at Cosumnes Power

Plant (CPP) & Sacramento Power Authority (SPA)

(SD-4)

▪ Generation Equipment, Overhauls and Maintenance (SD-4)

Franklin Bulk Substation Transformer Cosumnes Power Plant Gas Turbine Rotor White Rock Tunnel




▪ Cable & Pole Replacement Work (SD-4)

▪ Distribution Vegetation Management / Routine Tree Trimming (SD-4)

▪ 230kV Shunt Capacitor Installations (SD-4)

▪ Rancho Seco Switchyard Expansion (Design) (SD-4)

Cable Replacement Work Shunt Capacitors at Foothill Substation Vehicle vs. Pole Replacement



Optimization and Operational Excellence

Demonstrated cost savings and examples of our continued focus on

Operational Excellence (SD-2, SD-4)

▪ Vegetation Mgmt

▪ GO-165 Corrective Maintenance

▪ Cable Replacement (including emergency)

▪ UG Fault Repairs

▪ Pole Replacement

▪ Annual Line Patrol

▪ Field Force Training Process Efficiency gains

▪ Equipment Efficiency improvements at Cosumnes Power Plant (e.g. ECOMAX, TRU-CURVE,

Combustion Hardware)

▪ Aux Boiler Operations (SCA – Procter Co-Gen, CVFA – Carson Co-Gen)

▪ Solano 2 Wind Turbine Efficiency

▪ Advanced Gas Path & DLN 2.6+ upgrades at Cosumnes Power Plant (CPP)



2017 to 2021

Forecasted

Savings of

$42.1M is

built into the

plan

Optimization and Operational

Excellence

▪ Use of objective technologies such as Light Detection and

Ranging (LiDAR) and Pole Test Resistograph data to pin-point

where investments make the most significant impact

(SD-4,10,17)

▪ White Rock Control Upgrades (SD-4)

▪ Jaybird High Pressure Lift (SD-4)

▪ Upper American River Project (UARP) Dissolved Gas

Analyzers & Bushing Monitoring

(SD-4)

Light Detection and Ranging (LiDAR) Pole Test Resistograph Dissolved Gas Analyzer & Bushing

Monitoring



Optimization and Operational

Excellence

▪ Workforce Optimization (WFO): improvement projects in

support of Energy Delivery and Customer Service

(SD-2,4,5)

▪ SAP Enterprise Asset Management (EAM) (SD-2,4)

▪ Design Tool / Compatible Units (SD-2,5)

Workforce Optimization – ClickSoftware Scheduling ModuleSAP Enterprise Asset Management

(EAM)



Risk Mitigation

Risks

• Regulatory requirements

(e.g. clearance / fire mitigation

standards) (SD-2, SD-4, SD-17)

• Robust economy is increasing our

core work (SD-2, SD-6)

• Lack of availability of vegetation

management crews nationwide (SD-2, SD-4, SD-17)

• Supply and demand issues driving

up the cost of materials and labor (SD-2)

• Leadership / experience turnover (SD-8)

• Condition based corrective

maintenance / mechanical

discovery (SD-4)

• Disruptions from process and

technology changes (SD-8)

Mitigation Strategies

• Drive to exceed clearance and fire

mitigation requirements (SD-17)

• Leverage performance based

maintenance capabilities (e.g. asset

analytics) (SD-4)

• Continued focus on safety programs,

training and processes (SD-6)

• Launch new leader development

initiatives (SD-8)

• Implementation of cost reduction

and/or cost avoidance opportunities (SD-2)

• Overall hour reduction is our focus

(e.g. unit cost reductions)

• Workforce Optimization

• Consolidation opportunities within

our Business Unit and across SMUD

• Drive efficiencies in our workforce

training



Risk Mitigation

▪ UARP Road Reconstruction (SD-4,17)

▪ Hydro License Implementation Cost (SD-4,9,17)

▪ UARP Easement Widening (SD-4,17)

▪ LiDAR Vegetation Management (SD-4,17)

▪ Loon Lake Fire Protection (SD-4,17)

Hydro License Implementation workUARP Road Reconstruction SMUD Line Crews – Carr Fire Mutual Aid



Risk Mitigation

▪ Re-Routing Gas Pipeline Body Cavity Vents (SD-4,6,17)

▪ Indoor Cultivation Projects (SD-4,5,9)

▪ Transmission Line Splice X-Ray (SD-4,17)

▪ Rancho Seco Nuclear Fuel Storage (SD-7,17)

Gas Pipeline Body Cavity Vents Rancho Seco Nuclear Fuel StorageIndoor Cultivation



Embracing the Future

▪ Renewable project development such as Solano Wind,

South Fork Powerhouse and Rancho Seco Photovoltaic

Solar (PV2)

(SD-2,4,7,9)

▪ Removing barriers to new service connections (SD-4,5)

▪ Using analytics to predict failure (SD-2,4)

Solano WindfarmPredictive AnalyticsRancho Seco Photovoltaic Solar Project

(PV2)



Embracing the Future

▪ The way we manage work will change

(Workforce Optimization)

(SD-2,4)

▪ Improved customer notification for SMUD work (SD-5)

▪ Commercial Development (SD-4,5,13)

▪ Sacramento Power Academy (External) (SD-6,19)

1430 Q Street -- an 8-story mixed-use

projectCommercial Development Workshop

focused on new and emerging

energy-related technologies

Line Instruction at the Sacramento Power

Academy



Energy Delivery2019 Proposed Budget



$0

$50

$100

$150

$200

$250

$300

2018 Plan 2018Forecast

2019 Prop 2018 Plan 2018Forecast

2019 Prop

O&M Capital

$M

Keeping the Lights On Optimization/Operational Excellence

Risk Mitigation Embracing the Future

Allocated Costs

$200.4 $196.7$192.5

$283.9 $281.2$231.2

Powering forward. Together.

Exhibit to Agenda Item #2

Board Finance & Audit Committee Meeting and Special SMUD Board of

Directors Meeting – Budget 2019

Wednesday, November 7, 2018 scheduled to begin at 5:00 p.m.

Customer Service Center, Rubicon Room

Energy Delivery – Power Plant JPAs

Major Objectives

▪ Provide electrical power in accordance with SMUD’s dispatch and per the

applicable Power Purchase Agreement (PPA).

▪ Provide steam to the steam host per the applicable agreement (Commodity /

Thermal / Steam Sales).

▪ Maintain debt service payments per the applicable Bond Indenture

Agreement.

Management

▪ All four JPA’s are supported through SMUD staff and management.

▪ Operations and Maintenance (O&M) at all four JPA’s are conducted through

O&M services contracts. Ethos Energy Power Plant Services has the

contract for all plants; Carson Ice (CVFA), Procter & Gamble (SCA),

Campbell Soup (SPA), including McClellan and Cosumnes (SFA).



Energy Delivery 2019 JPA Budget Summary

O&M

Interest,

Principal &

Distribution

Expenditures

O&M

Interest,

Principal &

Distribution

Expenditures

O&M

Interest,

Principal &

Distribution

Expenditures

O&M

Interest,

Principal &

Distribution

Expenditures

Total Fuel 13,655,995$ 25,558,393$ 28,494,416$ 119,365,016$

Total Plant O&M 9,752,850$ 6,862,581$ 9,804,536$ 17,483,449$

Total Administrative & General 1,526,380$ 1,578,248$ 1,560,721$ 2,243,898$

Interest on Bonds 413,938$ 829,838$ -$ 6,332,375$

Bond Principal Repayment 5,295,000$ 6,162,500$ -$ 10,207,500$

Plant Betterments / Capital

Expenditures-$ -$ 2,185,000$ 14,500,000$

Current Year Released Fund

Contribution

TOTAL 24,935,225$ 5,708,938$ 33,999,222$ 6,992,338$ 39,859,673$ 2,185,000$ 139,092,363$ 31,039,875$

Expenses

SFA

(Cosumnes)

SCA

(Procter & Gamble)

SPA

(Campbell's & McClellan)

CVFA

(Carson)

% Change

Generation

(MWh)

Total O&M

expenses

(incl. fuel)

Cost,

$/MWh

Generation

(MWh)

Total O&M

expenses

(incl. Fuel)

Cost,

$/MWh

Cost,

$/MWh

CVFA (Carson Ice) 372,996 $21,704,539 $58.19 343,863 $24,935,225 $72.51 24.6%

SCA (P&G) 842,351 $43,208,600 $51.30 760,778 $33,999,222 $44.69 -12.9%

SPA (Campbell's & McClellan) 975,475 $33,863,290 $34.71 915,647 $39,859,673 $43.53 25.4%

SFA (Cosumnes) 3,561,199 $172,564,671 $48.46 3,452,054 $139,092,363 $40.29 -16.8%

TOTAL 5,752,020 $271,341,100 $47.17 5,472,342 $237,886,483 $43.47 -7.8%

2018

JPA

2019



Northern California Gas Authority No.1(NCGA No.1)

▪ Created in 2007 as joint powers agency for a prepaid gas

transaction in support of commodity purchases.

▪ Board Authorizes debt service and authorizes payments.

▪ Timing of payments generates net income/(loss) of ($0.2 million) in

2019. 2018 budget = ($0.8M) net loss.



exhibit to agenda item #1c - smud

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