power production - grant pud · 4/9/2019 · pp – power production ... • ferc filings by grant...

Quarterly Commission Update 4/9/19

Powering our way of life.

Power Production

Department Purpose and Goal

Purpose: Provide safe, secure, economical, reliable and compliant power generation under the Priest Rapid Project Federal Energy Regulatory Commission (FERC) License Project No. 2114 while supporting the Wanapum relationship.Goal: Execute the aforementioned tasks while championing a culture of safety and operational excellence with continuous focus on the guiding values of safety, innovation, service, teamwork, respect, integrity, and heritage.

Acronym List

• PP – Power Production• HPI – Human Performance Improvement• AWS – Attraction Water Supply• LB – Left Bank• RPIW – Rapid Process Improvement Workshop• ODSP – Owners Dam Safety Program• PRREIP – Priest Rapids Right Embankment Improvement

Project• JHA – Job Hazard Analysis• FOER – Forced Outage Event Report

2019 Q1 Review

• Safety Update• PP Performance• Budget Review• ODSP Final Report Out• Maximo Update/Electronic Timekeeping• Q2 Forecast• LEAN update

Safety Update

65%

70%

75%

80%

85%

90%

95%

100%

January February March April May June July August September October November

2019 PP Safety Meeting Attendance

Safety Update

• LB AWS work• 2 days to install• No negative impact to

schedule• Gained safety and

efficiencies • No more man basket work

for activity and associated stoppages

Safety UpdatePressurized Equipment

Perform Isolation – LOTO, Pipe Blinding, etc. Depressurize, drain, purge, and ventRelieve trapped pressureAnticipate residual pressure and fluidsAvoid line of fire exposureVerify Pressure is Relieved

Poor Lighting/Visibility - IndoorProvide alternative lighting FlashlightHead lampTemporary Lighting

Poor Lighting/Visibility - OutdoorProvide alternative lighting Wait or defer until visibility improves.FlashlightHead lampTemporary Lighting

Confined Space (Non-Permit Required)Review Confined Space PolicyDiscuss confined space entry safe work practicesConduct atmospheric testing (if required)Monitor access or entry (if required)Do not locate mobile engines near confined spaceProvide observer (if required)I.D. CommunicationRadioEmergency Contact NumbersClearance Tags/LOTOConfirm equipment energy sources are isolatedFlashlightRequired PPEHead LampCell PhoneDistrict PhoneEmergency Contact NumbersConfined Space PermitConfirm Retrieval EquipmentMSDS Review (if applicable)Confined Space Hazard Assessment Form

Confined Space (Hazards eliminated and atmospheric mitigated)Review Confined Space PolicyMSDS Review (if applicable)Discuss confined space entry safe work practicesConduct atmospheric testingRadioRequired PPE

• Hazard and Precaution Table

• Maximo Input ongoing• Conversion of existing

JHA’s into Job Plans• ~1600 job plans

PP Performance

60.00%

65.00%

70.00%

75.00%

80.00%

85.00%

90.00%

January February March April May June July August September October November December

2019 Availability By Month

Priest Wanapum Project Target

PP Performance

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%

0.40%

0.45%

0.50%

January February March April May June July August September October November December

2019 PP Forced Outage Percentage

Priest Wanapum Project Target

PP Performance 2018 recap

2019 Budget and Actuals

Capital O&M

Budget $25,609,386 Directs $23,189,755

Actual $845,665 $1,374,665

Remain $24,763,731 $21,815,090

Budget $4,226,729 Labor $21,549,431

Actual $695,454 $3,104,455

Remain $3,531,275 $18,444,976

Budget $29,836,115 Total $44,739,186

Actual $1,541,119 $4,479,121

Remain $28,295,006 $1,106,703

ODSP Final Report• Multiple ODSP document updates recommended

• Program roles• Definitions and acronyms• List of references updated to include other documents• Renaming of sections to add clarity• FERC specific guidance versus what we had documented

• “Program so much better than document indicated”• “Heads and tails above others than have seen/saw”• “Well executed dam safety program just not reflected in ODSP”• EAP document• DSSMP

• Program roles• Definitions and acronyms• List of references updated to include other documents• Renaming of sections to add clarity

Electronic Timekeeping

• Priest Rapids Electricians live 3/8• Facilities live on 3/22• Priest Rapids Mechanics live on 4/5• All of PP hourly employees by end of June• Work on ingestion of labor report from Maximo direct in Great Plains

Q2 Forecast• Human Performance Trainings• Plant Manager Hirings• Lessons Learned

P08 GCB RCAWAN W-10 Isophase ExplosionWAN Spillway Gate Left Open on ClearancePR DS Gantry Crane Wire Rope GripPR Spooling wire on drumWAN DT Slip/FallWAN Foot and Cart InjuryWAN Wicket Gate Slip Trip and FallsWAN Oil Spill in DT from left open nose cone valveWAN Powerhouse FirePR Airborne Lead ReleasePR US Gantry Crane Wire Rope FailureQC Penstock Painting Clearance- Final VersionPR Rotor Inspection Contractor deathPR GSU XMFR Fire

LEAN Update

Grant PUD Commission Meeting – April 9, 2019

Grant PUD Lands & Recreation 2019 Q2 Business Report


Departmental Purpose and Goal• Purpose: Fulfill certain regulatory obligations under the District’s

FERC license, provide real estate support services for the District, and manage the District’s geographic information system (GIS) program.

• Goal: Execute the aforementioned tasks and services in light of the District’s Strategic Plan objectives related to maintaining a strong financial position, providing long-term low rates, providing excellent customer service, and attaining environmental compliance.

Q1 Business Review• Safety

• Non-recordable incidents = 0• Recordable incidents = 0• Safety meeting attendance = 100%

• Regulatory Review• FERC filings by Grant PUD = 0• Submitted on time = N/A• FERC approvals/orders = 1• Summary/listing of major filings:

• FERC approval of the Recreation Resources Management Plan

2019 Q1 Review• Projects & Work Activities

• SMP consultation and Commission approval

• Commission approval - Central Washington Management Group 3-year contract

• Recruitment for LRM Workers and Aides, LR Tech, Lands Specialist positions

• Campground reservation system overhaul – live March 25!

• Columbia Cliffs Land Use Application and Public Recreation Development Plan

• Crescent Bar Well 1B drilling

• Complete engineering turnover packages for CB water/wastewater systems

• Continued encroachment removal/prep for vegetation management activities

• Continued real estate, vegetation management, and GIS support

2019 Q2 Forecast• Safety Goals

• Non-recordable incidents = 0• Recordable incidents = 0• Safety meeting attendance =

100%• Full review of JHAs• Crew training

• Regulatory Outlook• Anticipated FERC filings = 3• Anticipated FERC approvals = 0 • Any regulatory threats or risks =

none known/anticipated

2019 Q2 Forecast• Projects & Work Activities

• Shoreline Management Plan submittal to FERC

• Onboard/train LRM Workers and Aides, LRM Visitors Center support position

• Prep for recreation season external stakeholder meeting

• Recruit Lands Specialist position, determine coverage for Vanessa’s tasks

• Manage Crescent Bar bio-swales and Teal Rd. crosswalk projects

• Go live with new campground reservation system

• Complete Columbia Cliffs PRDP and Encroachment Removal Plan

• Continued encroachment removal and restoration Project-wide

• Continued real estate, vegetation management, and GIS support

2019 Q2 Forecast

• Potential Management Challenges• Vantage Recreation Area• Denial of land-use applications that lack public access

• Potential Efficiency Opportunities• Succession planning• Crew support for multiple areas of recreation and shoreline

responsibilities - rec site O&M, vegetation management, encroachment removals

YTD budget-to-actuals (through Feb. 28)

2018 BudgetActuals as of 2/28/2019

Budget Remaining

% of Budget Spent Q4 YEP

% Budget to YEP

CAP $37,500 $129,498 ($91,998) 345.33% $825,080 2200.21%

O&M $1,321,606 ($21,435) $1,343,041 -1.62% $1,846,015 139.68%

Labor $1,136,019 $138,810 $997,209 12.22% $1,136,109 100.01%

TOTAL $2,495,125 $246,873 $2,248,252 9.89% $3,807,204 152.59%

Questions?

GCPUD Enterprise RiskQ2 2019 Update

Agenda• Current Business• Strategic Market Risk• District Wide Risk

Assessment• Work plan – Schedule

Adjustments

GCPUD ERM: Current Business

• 2019 Budget

KEY DETAILSThe Risk Department budget is dominated by insurance premiums.

GCPUD ERM: Current Business

• Completion of Insurance brokerage RFP• Under budget• National firms

• Preparation of CESS Claim• 2-year cross-disciplinary effort• Strategy recommendation

KEY DETAILSCompletion of overhanging work and reorientation of loss control and other programs.

Strategic Market Risk

California Power Demand: California Imports

KEY DETAILS2010 data, in millions of MWH. California imported a quarter of its needs at publication.Graph source: https://www.realclearenergy.org/charticles/2012/01/30/california_must_import_one-quarter_of_its_electricity.html

• Power generally flows north to south, east to west

• Canadian entitlement• California import

demand is a prime mover for western power prices.

California Power Demand: Supply Dynamics

KEY DETAILSHypothetical regional supply stack; the greater the energy demanded from the market, the higher the clearing price.Graph source: https://www.eia.gov/todayinenergy/detail.php?id=7590

California Power Demand: 2007 CAISO Load

KEY DETAILSRegular climb to a broad, wide peak – supports higher HLH prices.Graphic Source: https://www.caiso.com/Documents/2007AnnualReportonMarketIssuesandPerformance.pdf

California Power Demand: 2007 CAISO Load

KEY DETAILSRegular climb to a broad, wide peak – supports higher HLH prices. Graphic Source: https://www.caiso.com/Documents/2007AnnualReportonMarketIssuesandPerformance.pdf

HLH Hours

California Power Demand: Load Dynamics

KEY DETAILSThis load data includes DG (behind-the-meter) solar installations.

California Power: Renewable Generation

KEY DETAILSThis data represents solar, wind, and other wholesale renewable plants within California.



Wind



Wind

Solar

California Power Demand: Imports

KEY DETAILSImports are a function of the net load minus the wholesale renewable generation.

California Power Demand: Imports

KEY DETAILSEnergy Efficiency, DG and Wholesale solar within California are causing bulk imports to ebb, placing pressure on western HLH bulk power prices.

• California added 3-4mm people between 2007 and 2018

• >15% Increase in GDP

• Energy Efficiency• Seattle and

Portland reducing load and demand growth

District-Wide Risks

GCPUD Risk ProfileEnterprise Dashboard•All Functional Areas•A key goal is to inform the decision-making with boots-on-the-ground risk information•Warmer colors prone to move

QUADRANT ANALYSISThe center of the grid is a $100,000 impact and 50% likelihood.

GCPUD Risk ProfileEnterprise Dashboard•Functional Areas•Warmer colors prone to move

QUADRANT ANALYSISThe center of the grid is a $100,000 impact and 50% likelihood.

Danger Zone

GCPUD Risk AssessmentData Gathering•Risks are actually causes•321 risks offered•319 chosen across 54 functional areas

RISK CATALOGWe tailored the list of risks for GCPUD through management interviews and industry-specific data supplied by Logic Manager.

GCPUD Risk AssessmentData Gathering•Risks are actually causes•321 risks offered•303 chosen across 54 functional areas

RISK CATALOGWe tailored the list of risks for GCPUD through management interviews and industry-specific data supplied by Logic Manager.

GCPUD ERM: Company-Wide Risks

Data*Annual Contributory Risk: $10MM Average Assurance: 6Functional Areas: Forecasting/Planning, Bond Compliance, Accounting, Audit, HR, PMO, Records, IT, Distribution Automation, Origination/Contract ManagementMitigation Requests: Data Warehouse/Lake, further leverage existing systems, broaden access, improve data culture/discipline through training

KEY DETAILSInformation Silos, Lack of a Single Source System, Multiple Sources of “Truth”, Inability to Organize/Integrate Data, Lack of Historical Data


Lack of IT Automation/IntegrationAnnual Contributory Risk: $8MMAverage Assurance: 6Functional Areas: All PMO, Electric Shop, HR Compensation/Benefits, Transportation, Procurement, Records, ITMitigation Requests: Better leverage existing systems, better define what a ‘complete’ IT implementation will do for the team.

KEY DETAILSObsolescence/lagging behind market, Integration difficulties, Lack of adequate automation, Cybersecurity


Staffing*Annual Contributory Risk: $7MM Average Assurance: 6Functional Areas: Forecasting/Planning, Accounting, Network Operations, Priest Rapids, Power Production Maintenance, Electric Shop, Security Mitigation Requests: Improve automation/data management, cultivate analysis of situations rather than processing through hiring and development

KEY DETAILSLoss of institutional knowledge through attrition (+), Lack of trained backup individuals, Market salaries increasing faster than revenues, Declining employee morale, Overworked staff


Unreliable EquipmentAnnual Contributory Risk: $6MM Average Assurance: 6Functional Areas: Electric Shop, Wanapum Operations, Priest Rapids Operations, Security, Transportation, Facilities, Distribution AutomationMitigation Requests: Continue reinvestment and better organization of asset management and maintenance.

KEY DETAILSAge and condition – increases noted in Facilities and Distribution


Business Continuity/RecoveryAnnual Contributory Risk: $6MM Average Assurance: 6Functional Areas: Distribution Automation, IT Network Operations, IT Systems & Programming, Transportation, Facilities, Telecom Engineering Mitigation Requests: Create plan with hierarchies of need and function so all participants are aligned. Consider exercises or stress tests.

KEY DETAILSLack of planning, Cyberattack Risk, Seismic Risk, Terrorism threat. Changes noted in Security and IT.


Retail Market PressureAnnual Contributory Risk: $6MM Average Assurance: 5Functional Areas: Forecasting/Planning, Power Delivery PMO, Large Customer Care, Origination, Retail Product DevelopmentMitigation Requests: communicate company and customers’ respective positions better to key areas, trigger “Good Profit” culture

KEY DETAILSCustomer needs are not understood and prioritized, Stakeholders unwilling to compromise, Competitive retail markets/customer migration


Lack of Cooperation**Annual Contributory Risk : $9MM Average Assurance: 5Functional Areas: Project Management, Procurement, Transportation, Safety, Facilities, Electric Shop, Audit, Forecasting Planning/AnalysisMitigation Requests: Clarify functional area alignment with central ownership of corporate roles, Foster inter-unit cooperation and documentation.

KEY DETAILSConflicting priorities or agendas, Ineffective Coordination, Scheduling rigidity, Plans not socialized across disciplines ahead of time, Users not involved in establishing priorities. Improvements in Finance, Safety, Meter Reading.


Analysis Decision Support Errors*Annual Contributory Risk: $5MM Average Assurance: 5Functional Areas: Safety, Telecom Engineering, Accounting, Forecasting/Planning, Records, all PMOMitigation Requests: Increase delegation of decision making and ownership, Foster culture of analysis rather than processing alone, solve data problems

KEY DETAILSInadequate forecasting and budgeting, Inappropriate use of leading/lagging indicators, Lack of due diligence, Ineffective risk identification, Inadequate Correction for Deficiencies. Moved on improved assurance in financial functions.


Regulatory RisksAnnual Contributory Risk: $6MM Average Assurance: 4Functional Areas: Priest Rapids Operations, Power Production Maintenance, Regulatory Affairs, IT Network Operations, Bond Compliance, Audit, OriginationMitigation Requests: proactively engage governmental stakeholders, make realistic promises, steep understanding of the positions through more key areas

KEY DETAILSNew and more expensive NERC/FERC regulatory requirements, new WA state requirements, changing political environment

Work Plans

Work Plan

PROGRESSDemonstrate measurable accomplishment of goals with demonstrable value to the District.

• By end of 2019:Q1• 2018 Major risk analysis

• By end of 2019:Q2• Risk - Middle Office functional framework

• By end of 2019:Q3• Task-based ERM Platform

• By end of 2019• Integration report – Audit, Capital activity

Thank you.Devon WilliamsRisk Manager

[email protected] grantpud.org

2018 Audit ResultsApril 9, 2019

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Public Utility District No. 2 of Grant County, Washington

Board of Commissioners

Dear Commissioners:

Thank you for your engagement of Moss Adams LLP. We are pleased

to have the opportunity to meet with you to discuss the results of our

audit of the financial statements of the District as of and for the year

ended December 31, 2018.

The accompanying presentation, which is intended solely for the use

of the Board of Commissioners and Management, and not intended to

be and should not be used by anyone other than these specified

parties, presents important information regarding the District’s

financial statements and our audit that we believe will be of interest to

you.

We conducted our audit with the objectivity and independence that

you expect. We received the full support and assistance of District

personnel. We are pleased to serve and be associated with the

District as its independent public accountants and look forward to our

continued relationship.

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1. Audit Reports Issued

2. Areas of Audit Emphasis

3. Matters Required to be Communicated

4. Upcoming Accounting Pronouncements

5. Acknowledgements and Other Information

Agenda

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Audit Reports Issued• Unmodified opinions on financial statements of Grant County Public

Utility District, which are presented fairly and in accordance with U.S. Generally Accepted Accounting Principles

• Audit and report on internal control and compliance over financial reporting in accordance with Government Auditing Standards

o No material weaknesses notedo No significant deficiencies identifiedo No compliance findings noted

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Areas of Audit Emphasis• Capital assets & Construction in Process

o Consideration of capitalization policies and potential impairment, as well as testing of additions, retirements, overhead application, capitalized interest and depreciation

• Bond Activityo Tests of revenue and refunding bonds, debt repayments, discounts and

premiums, capitalized interest, and compliance with covenantso Third-party confirmations with financial institutions

• Power Sales Transactions o Tests of sales to power purchasers, including via third party confirmationso Tests of wholesale power transactions to Shell Energy North America (U.S.), L.P.

and Avangrid Renewables, Inco Review of cash receipts and timing of revenue recognition

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Areas of Audit Emphasis (continued)• Retail Energy Sales

o Vouching of cash receipts and timing of revenue recognitiono Third-party confirmations with largest commercial power purchasers

• Net Position Classificationo Tests of classification of net investment in capital assets, restricted and

unrestricted

• Information Technology (IT) General Computer Controlso Our IT specialists tested the IT applications and IT general computer controls that

support the various financial reporting systems

• Financial Statement Footnote Disclosureso Review of the footnote disclosures for completeness and accuracy in accordance

with authoritative disclosure checklists and our knowledge of industry best practices

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Communications with Those Charged with Governance

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Our Responsibility Under U.S. Generally Accepted Auditing Standards and Government Auditing Standards

To express our opinion on whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, and in accordance with U.S. GAAP. However, our audit does not relieve you or management of your responsibilities.

To consider internal control over financial reportingas a basis for designing audit procedures but not for the purpose of expressing an opinion on its effectiveness or to provide assurance concerning such internal control.

To perform an audit in accordance with generally accepted auditing standards issued by the AICPA and Government Auditing Standards issued by the Comptroller General of the United States, and design the audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement.

To communicate findings that, in our judgment, are relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.

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• Our audit was performed according to the planned scope

• Significant accounting policies are summarized in Note 1 to the financial statements o There were no changes to significant accounting policies for the year ended

December 31, 2018

o Implementation of Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions

• No difficulties were encountered during the performance of our audit

• Financial statement disclosures were consistent, clear and understandable

• During the audit, there were no adjusting journal entries proposed or posted

Required Communications

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• Potential Effect on the Financial Statements of Significant Risks, Exposures & Uncertaintieso The District is subject to potential legal proceedings and claims that arise in the

ordinary course of business, which are disclosed in the notes to the financial statements in Note 10

• There were no disagreements with managemento Weekly meetings were held between Moss Adams and District management and

staff throughout the audit term

• Ability to continue as a going concern (no disclosure deemed necessary)• Consideration of fraud in a financial statement audit

o We are not aware of any instances of fraud or noncompliance with laws and regulations.

• Moss Adams is independent with respect to the District

Required Communications (continued)

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D Upcoming Accounting Pronouncements

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• Addresses accounting and financial reporting for certain asset retirement obligations.

• Effective for 2019 financial statements

GASB 83 –Asset

Retirement Obligations

• Addresses accounting and financial reporting for leases recognizing that leases are financings of the right to use an underlying asset.

• Effective for 2020 financial statements

GASB 87 -Leases

• The audit progressed on time and in an orderly fashion; requested schedules and draft financial statements were received on a timely basis.

• All District personnel across all departments were courteous, responsive, and fulfilled all of our requests in a timely manner.

• ‘Tone at the Top’ and attitude from management was one of helpfulness and openness in response to audit requests and discussion points.

Thank you!

Acknowledgements

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Contact Us

Reliability Compliance Program 2019 – 2020

Gene AustinCompliance ManagerApril 09, 2019

O v e r v i e w

•RC Program Assessment•How we Manage Risk Today•Risk-Based Reliability Initiative•How we Manage Risk Tomorrow •Budget to Actual

April 09, 2019

Reliability Compliance Program

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RC Program Assessment• Review of Policy, & Program Documentation• Interviews with Staff, Management, Owners, SMEs

• 98% strong culture of compliance • Registrations – WECC, NERC, Peak-RC• Organizational Structure

oEHQ – RnC, Engineering, IT, ServiceDesk, Internal AuditoPower ProductionoPower Delivery

• NERC Reliability Programs beyond Standards

April 09, 2019


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How we Manage Risk Today

• Strict Compliance Audit Approacho100% Review of documentation & Evidence

~650 Level 1 Requirements (~ 1,300 Total Reqmts)

oDetailed Review of 23 Self-Certification Requirementso80/20 Initial Review of Balance – 1st Review

• Detailed Review of Balance – 2nd Review on-going• 5 Self-Reported PNC’s – Open Enforcement Actions

(2) new (1) Q4-2018 (2) 2017 Audit

April 09, 2019


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Risk-Based Approach to Reliability

April 09, 2019


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How we Manage Risk Tomorrow• 2019 – Work Plan, Reliability Compliance

o Risk-Based Internal Compliance Program o Policies, Tools, Train, Tech. Forums, Streamline & Simplifyo Ancillary District Programs to Reliability Compliance

Internal Controls, Root Cause Analysis

o Close OEAs; Audit Recommendations

• 2020 - Audit Readiness• Inherent Risk Assessment• WECC ‘ICE’ Review • Consistency in Documentation & Evidence• Zero Findings of Non-Compliance – Audit and beyond

April 09, 2019


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2019 Budget and Actual 3/21/2019

$998,314

$550,448

$83,600

$333,766

$30,500 $78,537

$0 $10,402 $67,410

$725

Total CAP O&M Labor Travel and Training

April 09, 2019


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