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TRANSCRIPT
CRSP – MC Customer meeting
Welcome to the CRSP Annual Customer Meeting
May 23, 201711:00 am – 3:00 pm
The meeting will begin at 11:00 am MDTWe have logged on early for connectivity purposes
Please stand-by until the meeting begins.Please remember to keep your phone muted unless you have a
question or comment.
Handout Materials https://www.wapa.gov/regions/CRSP/rates/Pages/rates.aspx
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CRSP – MC Customer meeting
Welcome and Introductions
CRSP-MC Annual Customer MeetingMay 23, 2017
11:00 am – 3:00 pm
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CRSP – MC Customer meeting
11:00 – 11:05 am Welcome and Introductions
11:05 – 11:35 am Mark Gabriel, WAPA Administrator and Chief Executive Officer
11:35 – 12:05 am Dawn Roth Lindell, WAPA CIO & Senior VP
12:05 – 12:35 pm Budget update/Transparency EffortsDennis Sullivan, Acting CFO and Senior VP
12:35 – 12:45 am Break
12:45 – 1:05 pm Mountain West Transmission Group Update –
Parker Wicks, Contracts & Energy Services Manager
1:05 – 1:15 pm New Salt Lake City Office Location
Amy Cutler, Asset Manager
Agenda
3
CRSP – MC Customer meeting
1:15 – 1:25 pm Asset Management Update
Amy Cutler, Project Manager
1:25 – 1:35 pm Hydrology Update and ROD Implementation
Chrystal Dean, CRSP Project Manager
1:35 – 2:00 pm SLCA/IP and Olmsted Marketing Plan Updates
Steve Mullen/Lyle Johnson - CRSP Contracts
2:00 – 2:45 pm CRSP-MC Rates Presentation
Thomas Hackett/Tony Henriquez – CRSP Rates
2:45 pm Questions and Closing
Brent Osiek, CRSP Power Marketing Manager
Agenda (continued)
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WAPA’s position onindustry trendsCRSP Management Center Annual Customer MeetingMay 23, 2017 | Salt Lake City, UT
Mark A. GabrielAdministrator and CEO
CRSP-MC Customer Meeting, Position on industry trends | 6
The world is changing
CRSP-MC Customer Meeting, Position on industry trends | 7
• Formal transfer of government• Political appointee turnover• Deputy Secretary Senate hearing Thursday• WLO activity
New administration
CRSP-MC Customer Meeting, Position on industry trends | 8
Change is upon us
CRSP-MC Customer Meeting, Position on industry trends | 9
Change brings challenges• Aging infrastructure• Increased regulation• Intermittent resources• Decreased hydro
production• More customer-side
resources• Changing markets• Security
CRSP-MC Customer Meeting, Position on industry trends | 10
Fundamental changeThe challenge for the utility of today is not only
what is real but what is perceived as real.
CRSP-MC Customer Meeting, Position on industry trends | 11
Home tech drives benefits4.92 billion wireless devices globally / 66% penetrationSource: Hootsuite, January 2017
CRSP-MC Customer Meeting, Position on industry trends | 12
Radical thoughts …
• kWh is dead• All-you-can-eat electricity• Time-of-purchase rates NOT
time-of-use rates• Flexing your distribution
system with customers• Utility is the network provider
CRSP-MC Customer Meeting, Position on industry trends | 13
Mountain West update• Formed 2013• Evaluating options• Expected decision mid-2017• If applicable, market
implementation 2019• May 24 meeting with CEOs
CRSP-MC Customer Meeting, Position on industry trends | 14
What are we doing about it?
CRSP-MC Customer Meeting, Position on industry trends | 15
Shift in strategic thinking
• Broader perspective
• Data-driven decisions
• Industry impacts to customers
CRSP-MC Customer Meeting, Position on industry trends | 16
Increasing requirements• Investments in Security• NERC requirements
o CIP version 5o Audits, mock auditso Alertso Standardso FAC-003 & FAC-008o NATF peer reviews
• FITARA• FISMA modernization• OMB Circular A130
• New endangered species• DHS binding operational
directives• OSHA requirements
o Fall Protection 100% attachment
o Transient over-voltage compliance
• Formalized grounding cable procedures
• GPR monitor for t-lines
CRSP-MC Customer Meeting, Position on industry trends | 17
Physical security
• Consolidated office in 2013
• All-hazards approach• Assessing all subs
• 203/319 complete• Nearly tripled
investments since 2013• 40,000 hours on CIPv5
CRSP-MC Customer Meeting, Position on industry trends | 18
Lifecycle considerations
CRSP-MC Customer Meeting, Position on industry trends | 19
Cost containment
CRSP-MC Customer Meeting, Position on industry trends | 20
Transparency
CRSP-MC Customer Meeting, Position on industry trends | 21
Key takeaways
Focus on value and business excellence.Be aware of industry trends and changes.
Continue delivering on mission.
CRSP-MC Customer Meeting, Position on industry trends | 22
Contact/follow me
Mark A. [email protected]
wapa.gov
@westernareapowr@MarkAGabriel
Mark Gabriel
WesternAreaPower1
Subject, Office or event
Cyber Security updateDawn Roth Lindell, Senior Vice President and Chief Information Officer
May 23, 2017CRSP Management Center, Annual Customer Meeting
Subject, Office or event
WAPA Blocks by Country for April
24CRSP-MC Customer Meeting
Subject, Office or event
WAPA Blocks by Country- April exclude US
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Source Geographic
Country/Region
Count
United States 1141425China 162962France 64807Bulgaria 64007Germany 41076Russia 39390Hong Kong 36723United Kingdom 31663Canada 28287Czech Republic 27161India 22296Republic of Korea 21554Vietnam 9960
CRSP-MC Customer Meeting
Subject, Office or event
WannaCry Ransomware, May 12, 2017
• What?• Worldwide attack• 200,000+ victims in 150 countries• Encrypts all data on the system, pay to unlock it
• How?• Phishing, visiting infected websites• Worm – spread using Eternal Blue, leaked NSA exploit• Infected machine scans subnet• Sends same exploit to all other
vulnerable machines
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Source: “WannaCrypt Malware Analysis” reported on Blueliv.com on 5/15/2017
CRSP-MC Customer Meeting
Subject, Office or event
WannaCry Ransomware, May 12, 2017
• Who?• Perpetrators are likely North Korean• Hardest hit – Russia, Taiwan, Ukraine, India• Anyone with outdated, unsupported or pirated versions
of MS Windows
27CRSP-MC Customer Meeting
Subject, Office or event
What can we learn?STOP. THINK. Connect.Four part cybersecurity plan• Predict – perform exposure analysis• Prevent – deploy defensive solution to reduce
attack surface• Detect – monitor infrastructure for intrusion,
suspicious activity• Respond – identify how attack happened,
impact on system, remediation
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Source: “Ransomware made you Wannacry? 10 things the Disaster Taught” by Cigniti.com on 5/21/2017
CRSP-MC Customer Meeting
Subject, Office or event
What can we learn?STOP. THINK. Connect.• Open attachments with extreme caution• Do not take fake tech support calls• Use robust anti virus protection• Keep everything patched and updated• Clean the system of old stuff• Dependable back up needed
29CRSP-MC Customer Meeting
Subject, Office or event
2016 Key Attacks
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Security Week, Verizon’s Data Breech Digest, “Attackers Alter Water Treatment Systems in Utility Hack: Report”, reported in 3/22/16 Security Week by Eduard Kovacs
• Unnamed Water UtilityDiscovered during a vulnerability
assessmentHacktivist IP address connected to
payment systemStole 2.5 million customer records
Accessed SCADAAltered water flow & treatment chemical
ratio
CRSP-MC Customer Meeting
Subject, Office or event
How?• Online connection to payment systemExploited a known vulnerability
• Poor architectureSame IBM AS/400 for financial &
operational tech systems• Old OT technology• At least 4 separate connections in prior
60 days
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Verizon’s Data Breech Digest “Attackers Alter Water Treatment Systems in Utility Hack: Report”, reported in Mar. 22, 2016 Security Week by Eduard Kovacs
CRSP-MC Customer Meeting
Subject, Office or event
2016 Key Attacks
March 24, 2016• Bowman Avenue Dam in Rye, NY, attacked
by IraniansDid not gain control Did gain access to process/network diagrams
32
Tripwire Site Article, “3 ICS Security Incidents that Rocked 2016 & What We Should Learn from Them”, Oct. 31, 2016, reported by David Bisson
CRSP-MC Customer Meeting
Subject, Office or event
2016 Key AttacksAugust 2016• Operation Ghoul Uncovered by researchers at Kaspersky Lab 130 victims- Navy, other military, aerospace, petrochemical,
machine industries
• Spear-phishing campaign targeting industrial organizations in the middle east Email appeared to come from Emirates NBD (a bank) Came with Hawkeye (malware) or with a linkCollects keystrokes, clipboard data, other data
33
Tripwire Site Article, “3 ICS Security Incidents that Rocked 2016 & What We Should Learn from Them”, Oct. 31, 2016, reported by David Bisson
CRSP-MC Customer Meeting
Subject, Office or event
How?• Exploit the human –
spear phishing• Commercial off the
shelf malware
34
Tripwire Site Article, “3 ICS Security Incidents that Rocked 2016 & What We Should Learn from Them”, Oct. 31, 2016, reported by David Bisson
CRSP-MC Customer Meeting
Subject, Office or event
2016 Key AttacksOctober 21, 2016• Attack on Dyn- Internet infrastructure company• Provides critical tech services to Twitter, Amazon,
Tumblr, Reddit, Spotify and Netflix among others• DDOS• Mirai Malware
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Krebs on Security, “Hacked Cameras, DVRs Powered Today’s Massive Internet Outage”, October 21, 2016, by Brian Krebs
CRSP-MC Customer Meeting
Subject, Office or event
How?
Mirai Malware via the internet• Creator released source code• Looks for IoT with factory default
usernames/passwords DVR’s Cameras- especially with components from
XiongMai Technologies Password is hardcoded into the firmware- web
credentials• Gains access, uploads DDOS flood
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Krebs on Security, “Hacked Cameras, DVRs Powered Today’s Massive Internet Outage”, October 21, 2016, by Brian Krebs
CRSP-MC Customer Meeting
Subject, Office or event
How?Researchers at Flashpoint scanned the internet on Oct 6, 2016Found 515,000+ instances
with the vulnerabilityBackdoor to network
WAPA: 37 cameras with the default passwords
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Krebs on Security, “Hacked Cameras, DVRs Powered Today’s Massive Internet Outage”, October 21, 2016, by Brian Krebs
CRSP-MC Customer Meeting
Subject, Office or event
2016 Key Attacks
December 18, 2016• Ukraine outage or UkrEnegro “North”
substation Removed 1/5 of Kiev’s energy 75 minute outage
• Note: in the last two months- 6500 Russian attempts on Ukrainian State Institutions per Ukrainian President
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Washington Post, “Russian operation hacked a Vermont utility, showing risk to U.S. electrical grid security, officials say”, Dec. 31, 2016. Alice Crites, Carol Morello and Ellen Nakashima contributed to this report, also By Juliet Eilperin and Adam Entous
CRSP-MC Customer Meeting
Subject, Office or event
How?• Initial assessment points to cyber attackSCADA logs show “close” then “open”
commands to breakersUkraine blames Russia
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Washington Post, “Russian operation hacked a Vermont utility, showing risk to U.S. electrical grid security, officials say”, Dec. 31, 2016. Alice Crites, Carol Morello and Ellen Nakashima contributed to this report, also By Juliet Eilperin and Adam Entous
CRSP-MC Customer Meeting
Subject, Office or event
ICS Vulnerability Analyses
• Fire Eye Analysis, Jan 2000 – April 2016• 123 vendors affected by vulnerability
disclosures 90% between 2011 – 2015
• 1,552 separate vulnerabilities
33% still not patched
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Fire Eye, “Sight Intelligence 2016 ICS Vulnerabilities report, Overload: Critical Lessons from 15 Years of ICS Vulnerabilities” by Sean McBride, Jeffrey Ashcraft, & Nathan Belk
CRSP-MC Customer Meeting
Subject, Office or event
ICS Vulnerabilities• Study by Positive Research Center, October 2015• 146,136 ICS components web accessible• Found 691 vulnerabilities in ICS components 58% high severity 39% medium severity
• By Vendor: Siemens – 124 Schneider Electric – 96 Advantech – 51 GE - 31
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Subject, Office or event
So how do we tackle these issues?
First: SANS Top 20, #1, #2• Inventory hardware• Inventory software
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IT and OT have the same cyber security needs.
CRSP-MC Customer Meeting
Subject, Office or event
So how do we tackle these issues?Challenges:• Collaboration required- mutual respect is critical• Our OT technology is shockingly old Identify first Prioritize based on impact, simplicity of exploit, patchable?
• Embedded tech Asset list Actually embedded
• ICS vendors have been slow- we must push!
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Subject, Office or event
So how do we tackle these issues?• Threat Intelligence is a must
• Need analysis continuously• Must address across industries• Must share- there is NO shame
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APPALPPCE- ISAC
Vendor serviceWAPA pilotFBI Infraguard
CRSP-MC Customer Meeting
Subject, Office or event
So how do we tackle these issues?• Segment network• WAPA: Secure Enclave Support Center for
substations• Network considerations• Prioritize based on CIP
• Of course- separate business from SCADA• Enforce this• Educate field folks• Data transfer
45CRSP-MC Customer Meeting
Subject, Office or event
So how do we tackle these issues?
• Complete vulnerability assessmentWAPA results of our red teamOnly way to know truly where your
risk isPhysicalCyber
Visibility to InternetWAPA
- old blog site- video conferencing equipment
46CRSP-MC Customer Meeting
Subject, Office or event
So how do we tackle these issues?• Inadvertent insider Anti phishing campaignsWAPA Results
47
Campaign Sent Users who clicked
Users whocompleted training
1 33 0 N/A2 59 11 43 58 18 64 184 37 8
CRSP-MC Customer Meeting
Subject, Office or event
We, in this industry, must recognize we are:
•Vulnerable•Under attack•At risk•Responsible to harden our assets• In need of rapid information sharing
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Subject, Office or event
Questions?
49CRSP-MC Customer Meeting
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Budgets & Transparency
Date: 05/23/20172016
Dennis R. SullivanInterim Chief Financial Officer
Budgets & Transparency
• Annual budgets• FYs 17, 18, 19• Improving MOU work plan discussions• Future annual budget guidance
• HQ 10-year capital plans• FY 20 plan meeting September 12th (tentative)• Discuss projects > $1M• Regional beneficiaries participate in evaluation
• WAPA Transparency Act51CRSP-MC Customer Meeting
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Mountain West Transmission Group Update – CRSP Customer Meeting
Date: 05/23/20172016
Parker Wicks
• Letter to LAP and CRSP Customers• Transmission Cost Shift Mitigation Update• Brattle Study Results• Argonne Results • CRSP Cost Benefit Analysis• Mitigation• Customer Meetings• Federal Register Notice
Overview
53CRSP-MC Customer Meeting
• LAP and CRSP sent letter to customers January 5th, 2017
• Outlined that Mountain West Participants intended to begin in-depth discussion with the Southwest Power Pool (SPP)
• After issuance of letter, main focus has been on discussions with SPP and working to ensure SPP understands what Mountain West is asking
• MISO and PJM may still be considered if discussion with SPP don’t prove fruitful
Letter To Customers
54CRSP-MC Customer Meeting
• Entities have been working to update the Transmission Cost Shift Mitigation Analysis
• Originally used 2013 data• Updated with 2016 data to include “Known and
Measurable” items
• As update has been finalized, has become necessary to revisit cost shift mitigation
• Entities continuing to work on revised cost shift mitigation plan
Transmission Cost Shift Mitigation
55CRSP-MC Customer Meeting
• Final Report Released to the public• Available here:
https://www.wapa.gov/About/keytopics/Documents/Brattle-Final-Mountain-West-Report_031217.pdf
• Overall Results:
Brattle Study Results
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• CRSP Results:
Brattle Study Results
57CRSP-MC Customer Meeting
2016 Adjusted Production Cost Model – CRSP Results:
CRSP
TWh $/MWh Total ($m/yr)
Case A Case CMR∗CMR-A
Difference Case A Case CMR*C-A
Difference Case A Case CMR*
C-ADiffere
nceProduction 4.38 4.38 0.00 $1.76 $1.76 ($0.00) $7.70 $7.70 $0.00Purchases 1.28 1.28 0.00 $22.24 $21.19 ($2.19) $28.54 $25.73 ($2.81)Sales 0.18 0.18 0.00 $19.35 $18.25 ($1.10) $3.40 $3.21 ($0.19)Total 5.49 5.49 0.00 $5.98 $5.50 ($0.48) $32.85 $30.22 ($2.62)∗CMR=Coal Must Run, this modeled coal units without any additional flexibility and is more reflective of how the coal units operate today.
2024 Adjusted Production Cost Model – CRSP Results:
CRSP
TWh $/MWh Total ($m/yr)
Case A Case CC-A
Difference Case A Case CC-A
Difference Case A Case C
C-ADiffere
nceProduction 5.49 5.49 0.00 $1.76 $1.76 ($0.00) $9.63 $9.63 $0.00Purchases 0.64 0.64 0.00 $25.14 $23.60 ($1.54) $15.98 $15.00 ($0.98)Sales 0.47 0.47 0.00 $28.93 $27.88 ($1.05) $13.72 $13.22 ($0.50)Total 5.65 5.65 0.00 $2.11 $2.02 ($0.09) $11.90 $11.42 ($0.48)
• More in-depth analysis of impact of market operations on CRSP
• Utilized GT Max Model and same modeling assumptions used for LTEMP EIS
• Economic dispatch vs. static schedule
• Showing a cost to CRSP from market participation• Driven by two aspects
• Revenue from sales smaller in a market• Correction to loss calculations from how Brattle modeled them
• Also looking at market costs associated with maintaining Grandfathered and Exchange Agreements
Argonne Analysis
58CRSP-MC Customer Meeting
• Currently estimating cost to CRSP is approx. $12M the first 3 years then dropping to approx. $8M in out years
• Half of this cost driven by estimated admin fees (approx.)
• Other cost driven by • Market Cost• Meter/Comm/IT upgrades• D.C. Tie Revenue Requirement• Miscellaneous Market Charges
• Still working to refine estimates of market charges for Grandfathered and Exchange Agreements
CRSP Cost/Benefit Analysis
59CRSP-MC Customer Meeting
• Due to current estimated cost, CRSP must receive mitigation in order to continue to participate
• Three aspects to current mitigation efforts:• 1 – Receive first distribution of ROTR revenue distribution for
approx. half of CRSP estimated costs• 2 – For other half of costs, establish bi-lateral agreements
with specific entities to ensure CRSP mitigated for any costs not mitigated through ROTR
• 3 – Continue to work to reduce costs where ever possible• Reduction in Admin Fee for WAPA• Working to extend Federal Service Exemption to Grandfathered
and Exchange Agreements• Any other areas discovered as analysis and discussions continue
CRSP Mitigation
60CRSP-MC Customer Meeting
• After mitigation proposal is finalized and accepted, CRSP planning to hold customer meetings
• Format still not determined – may be in person, WebEx, or combination of both
• Will need to hold meetings soon after mitigation finalized
Upcoming Customer Meetings
61CRSP-MC Customer Meeting
• After mitigation principles agreed upon, WAPA plans to issue FRN recommending LAP and CRSP pursue formal negotiations with SPP
• Planning a 45 day comment period • Conduct public meetings • Final decision will then be posted to websites and
sent out to customers• Similar to UGP process
Federal Register Notice
62CRSP-MC Customer Meeting
• CRSP Mitigation needs to be accepted• CRSP customer meetings• FRN process completed and final decision made• CRSP would begin formal negotiations with SPP• Mountain West participants would work with SPP,
SPP members and each other to draft changes to tariff
• Barring any significant issues, membership agreement could be signed Jan-Feb of 2018
• Go live – could be Spring of 2019
Next Steps
63CRSP-MC Customer Meeting
Questions?
64CRSP-MC Customer Meeting
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SLC Office MoveTentatively September 2017
CRSP Customer Meeting
May 23, 2017
Amy Cutler
We are moving to• 299 South Main Street
Suite 200
• The “Wells Fargo” Building
• Next to Gallivan Plaza UTA Trax Station – Direct line to SL Airport
66CRSP-MC Customer Meeting
New Building and General Info
• We are reducing our footprint by 28%
• Open work environment • With hoteling concept• Multiple collaboration
areas• Likely move in date:
September 2017
67CRSP-MC Customer Meeting
Office Photos
68CRSP-MC Customer Meeting
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Office Layout
CRSP-MC Customer Meeting
Subject, Office or eventCRSP-MC Customer Meeting
Subject, Office or eventCRSP-MC Customer Meeting
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Asset Management Update
CRSP Customer Meeting
May 23, 2017
Amy Cutler
Asset Management 2.0• Areas of Focus
• Data Collection and Management• Risk management• Industry Trends and Market Analysis• Maintenance Technical Support• Reliability Centered Maintenance Program• Project Management
73CRSP-MC Customer Meeting
FY2017 FocusTier I Asset Analysis
• Includes transformers, breakers and T-lines• Metric – Measures Health Index (HI) and Consequence
Score• Major activity – Improve T-Line HI
AM Data Usage• Maintained risk threshold • Metric –Contingency plans• Major activity – Establish Service Request/Mitigation
plans for assets with higher consequences
74CRSP-MC Customer Meeting
FY2017 Focus ContinuedStrategic Asset Management Plan
• Additional asset classes• Reviewing asset classes with SME• Document new recommendations for improvements
Asset Life Cycle Management/Cost Analysis• Coordination and collaboration • Minimum data set required
75CRSP-MC Customer Meeting
T-Line HI condition values
Wood Steel Lattice Steel/Concrete PolePole Goat Head PoleCrossarm Arm/Bridge CrossarmBrace K Member/Window BracePole Hardware Body Extension Pole HardwareGuy Leg Member GuyAnchor Foundation AnchorInsulator Guy FoundationPhase/Conductor Anchor InsulatorVibration Damper Insulator Phase/ConductorStatic Wire Phase/Conductor Vibration DamperOPGW Vibration Damper Static WireSigns* Static Wire OPGWDistribution Apparatus* OPGW Signs*
Signs* Distribution Apparatus** Not planning on using in HI Calculations
76CRSP-MC Customer Meeting
Strategic Asset Management Plan• Additional Asset Class
Instrument Transformer Review complete Batteries – SME input received, report drafted Helicopters Switches (including Circuit Switchers and Interrupters) Transmission Lines lower Voltages (30kV to 100kV) Breakers (30kV to 100kV) Right-of-Ways (ROWs) Non-GSA Vehicles and Heavy Equipment
77CRSP-MC Customer Meeting
Asset Groups identified for futureInvestigation
• Communications Systems• Relay & Metering• Remaining Substation
Equipment• Buildings and Equipment• Operations Centers• Information Technology
Assets
CRSP-MC Customer Meeting
Project OverviewCRSP Annual Customer Meeting
May 23rd, 2017
Chrystal DeanCRSP Project Manager
Montrose, CO
CRSP-MC Customer Meeting | 80
Glen Canyon Record Of Decision (ROD) Implementation
• The ROD was signed by Reclamation in December 2016– Major differences:
• Monthly Release volumes• Ramp rates• Environmental Experiments
• Began implementing monthly release volume criteria in January 2017– Yet to implement additional scheduling requirements– ROD states it will be implemented prior to the end of the WY
• WAPA and BOR are working collaboratively on updating Operational guidelines.– Waiting to receive comments back from Reclamation and begin steps to
finalize both
CRSP-MC Customer Meeting | 81
WY 17 Spring Recap• Early season precipitation was good for all the major
basins– Created above average snowpack and inflows
• Gunnison River Basin - Aspinall Units• 144% of average• Currently spilling at all three units to meet ROD targets
– Green River - Flaming Gorge Dam• Green River 236% of average
– Lake Powell - Glen Canyon Dam• 130% of average• WY17 nearly triggered equalization
CRSP-MC Customer Meeting | 82
Current 24 mo. indicates a possibility forEqualization in WY18
CRSP-MC Customer Meeting | 83
Planned Maintenance• Aspinall
– Morrow Point Station Service work July – August– Morrow Point and Blue Mesa exciter replacement in the
future – extended outage for each unit
• Flaming Gorge and Fontenelle– Standard Maintenance
• Glen Canyon– Unit #2 rewind should be finished August 2017– Unit #3 will begin August 2017 – May 2018 – last rewind
on this contract
CRSP-MC Customer Meeting | 84
Other information• Overall the energy market has been relatively stable.
– Experienced one period of a price spike in early May due to warm weather and a major unit outage on the system.
• This time last year we were being vigilant to the possibility of providing Aliso Canyon emergency assistance – Never needed to respond– Doesn’t seem to be a concern this year.
• Been working with our internal GTMax Superlite expert to get up-to-speed on monthly hydro modeling to better project seasonal purchases
•Power Marketing Contracts
Lyle Johnson & Steve Mullen
CRSP Customer Meeting
May 23, 2017
Olmsted Powerplant Replacement Project• The Olmsted Powerplant was acquired by the
United States in 1990• Secured Olmsted Powerplant water rights for the
Central Utah Project• Existing Olmsted Powerplant is over 100 years old• Replacement facility is being constructed
87CRSP Customer Meeting
Proposed Olmsted Power Marketing Plan
• WAPA will be responsible for marketing the energy from the replacement Olmsted Powerplant, which should begin operation in the Summer of 2018.
• The Department of Interior will own the replacement Olmsted Powerplant.
• Energy production will average 27,000 MWh/year.
88CRSP Customer Meeting
Olmsted Proposal cont’d
• WAPA set forth its Proposed Olmsted Power Marketing Plan in 81 FR 87035 (December 2, 2016).
• Final Marketing Criteria and Call for Applications to be published soon
89CRSP Customer Meeting
Olmsted Proposal cont’d
• Proposed point will be the 12.47-kV bus at PacifiCorp’s Hale Substation
• or another substation that may be identified which can be electrically interconnected to the Project.
90CRSP Customer Meeting
Olmsted Proposal cont’d
• Proposed Marketing Area encompasses the following counties in Utah:
• Davis, Morgan, Salt Lake, Summit, Utah, Wasatch, and Weber.
• Proposed that priority will be given to the Central Utah Water Conservancy District as the operator of the Olmsted Powerplant.
• WAPA will take into consideration all existing Federal hydropower allocations an applicant is currently receiving when determining each allocation.
91CRSP Customer Meeting
Contacts
92
Parker WicksContracts and EnergyServices [email protected]
Lyle JohnsonPublic Utilities Specialist [email protected]
Subject, Office or event
Upcoming 2025 ContractsSteven Mullen | Public Utilities Specialist
05/23/2017
CRSP Customer MeetingSalt Lake City, UT
Subject, Office or event
SLCA/IP 2025 Marketing Plan
Final Power Marketing Plan • Published November 29, 2016, at 81 FR 85946
• 40-year term for Firm Electric Service (FES) contracts
• Existing Post-89 FES Contracts will serve as the basis for new 2025 FES Contracts
94CRSP Customer Meeting
Subject, Office or event
SLCA/IP Contracts
Existing Post-1989 and Upcoming 2025 FES Contracts • Post-1989 FES Contracts
• Expire 09/30/2024
• 2025 FES Contracts• Provide existing Contract Rate of Delivery (CROD)
commitments with associated energy to current SLCA/IP customers
• Performance period will be 10/01/2024 to 09/30/2057
• Benefit Crediting Contracts will be available to deliver the benefit of Federal hydropower allocations to tribes
95CRSP Customer Meeting
Subject, Office or event
SLCA/IP Contracts
2025 FES Contract• Drafting phase
• Initial 60-day customer comment and review • 02/03/2017 to 04/03/2017
• Additional 30-day customer comment and review• Pending: WAPA will distribute the revised template soon
• Signature phase • Contracts finalized 09/01/2017 (tentative)• Begin executing contracts 09/30/2017 (tentative)
96CRSP Customer Meeting
Annual Rates UpdateThomas Hackett & Tony Henriquez
CRSP – MC Customer meeting
1. Transmission Rate
2. Status of Repayment
3. SLCA/IP Firm Power Rate (SLIP-F10)
4. Revenue Requirements Comparison Table
5. SLCA/IP Rate
SLCA/IP Rate
99
CRSP – MC Customer meeting
Calculate True-UpFY2017 Transmission Rate
BOOKED TO PLANT
ROOs Schedule 1FY15 FY16
GGCR $ 80,956,013 81,235,580.25 JJCR $ 152,998,295 164,099,219.09 LLCR $ 446,870,716 446,659,164.20
Total $ 680,825,024 $ 691,993,964
Non-Transmission Investment (Plant)FY15 FY16
Loveland Area Office $ 961,464 $ 961,464 Loveland PMOC $ 6,928,498 $ 6,928,498 Montrose Operations Center $ 23,508,963 $ 23,508,963
Total $ 31,398,925 $ 31,398,925
Network CreditOriginal to Back out $ 8,972,499 $ 8,972,499
Recouped to date $ 554,797 $ 1,508,260
Adjusted Booked PlantFY15 FY16
$ 641,008,396 $ 653,130,799
CRSP – MC Customer meeting
Calculate True-UpFY2017 Transmission Rate
Adjusted Booked PlantFY15 FY16
$ 641,008,396 $ 653,130,799
PROJECTED TO BOOK IN FY
ProjectionsFY17 FY18
Projection Projected Booked to Plant in FY2017 $ 7,370,468 $ 8,000,000
Network Credit Projections $ 765,349 $ 901,290
Projections + Plant $ 649,144,214 $ 662,032,090
Projected to Actual Comparison $ 3,986,586 NA
True – Up for FY2018 Rate NA $ 3,986,586
ADJUSTED TOTAL PLANT
Adjusted Total Plant – FY18 Rate NA $ 666,018,675
CRSP – MC Customer meeting
Calculate True-UpFY2017 Transmission Rate
ATRR Rate(kW-month)
Projected: FY 16 $ 77,765,008 $ 1.483 Based on Projected Investments
Actual: FY 16 $ 77,987,659 $ 1.487 Based on Booked to Plant
Difference: $ (222,651) $ -0.0041
To be collected in FY18’s Transmission rate
CRSP – MC Customer meeting
FY2018 Projected Transmission Rate With True-Up
ATRR Rate(kW-month)
Projected: FY 17 $ 77,758,426 $ 1.434 Based on Projected Investments
True Up: FY 16 $ 222,651 $ 0.0041 Based on Booked to Plant
Projected Total FY18 ATRR: $ 77,981,077 $ 1.438 = FY2018 Projected Rate*
*pending evaluation of FY2017 investment projection in August
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Transmission Rate, Historical
$1.44 kW Month is Projected, pending final
2011 Equalization
2013 Glen Canyon Cost Reallocation
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SLCA/IP Rate
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SLCA/IP Status of RepaymentAs of September 30, 2016
Investment Repaid
Project Investment Amount($million) ($million) Percent
CRSP (Power Only) 1,304,527 1,174,381 90.02%
CRSP Irrigation/Aid 1,153,695 110.556 9.58%
Collbran 27,088 22,868 84.42%
Dolores 38,386 12,134 31.61%
Rio Grande 25,769 24,737 96.0%
Seedskadee 9,676 9,676 100.0%
(tab 2)
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SLCA/IP Rate
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SLCA/IP Firm Power Rate
Firm Power Rate (SLIP-F10, Tab 3)• Effective Oct. 1, 2015 • Energy: 12.19 mills/kWh• Capacity: $5.18 kW/month• Composite Rate: 29.42 mills/kWh
Expires September 30, 2020Cost Recovery Charge – (Tab 17)
• 0.00 mills/kWh projected for FY2018
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History of SLIP RatesEffective Capacity Energy Composite
Date (CY) $/kW mills/kWh mills/kWh
1993 3.54 8.40 18.70
1995 3.83 8.90 20.17
1998 3.44 8.10 17.57
2002 4.04 9.50 20.72
2005 4.43 10.43 25.28
2008 4.70 11.06 26.80
2009 (FY10) 5.18 12.19 29.62
2015 5.18 12.19 29.42
Step 1
Step 2
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SLCA/IP Energy Generated Percentages Based on FY 2016 Data
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Generated - MWh % of Generation
CRSP 5,268,234 96.99%
Glen Canyon 3,971,663 73.12%
Flaming Gorge 545,432 10.04%
Aspinall 751,140 13.83%
Participating / Integrated Projects
Dolores 24,129 0.44%
Seedskadee 56,220 1.04%
Collbran 40,044 0.74%
Rio Grande 42,834 0.79%
Total Generation: 5,431,461 100.00%
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SLCA/IP Energy Generated
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Generated - MWh
2011 2012 2013 2014 2015 2016 6 Yr Avg
CRSP 7,223,614 5,495,989 4,244,867 4,059,817 5,089,414 5,268,234 5,222,740
Glen Canyon 5,713,930 4,307,399 3,507,375 3,109,906 3,863,803 3,971,663 4,100,483
Flaming Gorge 640,925 528,976 307,251 361,789 504,135 545,432 468,615
Aspinall 868,760 659,614 430,241 588,123 721,475 751,140 653,643
-
Participating / Integrated Projects-
Dolores 22,241.72 20,803.95 10,046.54 21,364.85 21,118.76 24,129.14 19,115.16
Seedskadee 55,107.28 56,818.26 35,222.49 58,587.86 75,558.54 56,219.66 56,258.89
Collbran 49,599.29 37,226.72 13,850.23 43,754.13 39,247.68 40,044.21 36,735.61
Rio Grande 33,882.82 28,861.26 9,377.32 12,767.88 37,642.42 42,833.55 24,506.34 -
Total Generation: 7,384,445 5,639,699 4,313,363 4,196,292 5,262,981 5,431,461 5,359,356
Annual Revenue RequirementsComparison Table (Tab 5)
Values in 1,000’sWAPA 169 FY 2017 Change
Item 2017 Workplan 2019 Workplan Amount PercentRate Setting Period:
Beginning year 2016 2018Pinchpoint year 2025 2025Number of rate setting years 10 8
Annual Revenue Requirements:Expenses
Operation and Maintenance:Western $52,630 $54,482 $1,852 4%Reclamation $34,535 $33,103 ($1,432) -4%
Total O&M $87,165 $87,585 $420 0%
Purchased Power $10,280 $5,279 ($5,001) -49%Transmission $10,421 $8,276 ($2,145) -21%Integrated Projects requirements $8,610 $8,899 $289 3%Interest $4,706 $6,257 $1,551 33%Other $14,587 $14,540 ($47) 0%
Total Expenses $135,769 $130,836 ($4,933) -4%
Principal paymentsDeficits $0 $0 $0 0%Replacements $30,037 $39,428 $9,391 31%Original Project and Additions $3,937 $5,027 $1,090 28%Irrigation $14,130 $8,731 ($5,399) -38%
Total principal payments $48,104 $53,186 $5,082 11%Total Annual Revenue Requirements $183,873 $184,022 $149 0%
(Less Offsetting Annual Revenue:)Transmission (firm and non-firm) $19,640 $21,302 $1,662 8%Merchant Function $9,918 $7,954 ($1,964) -20%Other $5,118 $5,145 $27 1%
Total Offsetting Annual Revenue $34,676 $34,401 ($275) -1%Net Annual Revenue Requirements $149,197 $149,621 $424 0%
Energy Sales 5,071,804 5,186,871 115,067 2%Capacity Sales 1,407,920 1,415,675 7,755 1%Composite Rate 29.42 28.85 -0.57 -1.9%
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ExpensesMay 2017 UpdateValues in 1,000’s
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2017 Workplan
2019 Workplan Amount Percent
ExpensesOperation and Maintenance: (tab 6)
Western $52,630 $54,482 $1,852 4%
Reclamation $34,535 $33,103 ($1,432) -4%
Total O&M $87,165 $87,585 $420 0%
Purchased Power (tab 7) $10,280 $5,279 ($5,001) -49%
Transmission (tab 9) $10,421 $8,276 ($2,145) -21%
Integrated Projects requirements (tab 10) $8,610 $8,899 $289 3%
Interest $4,706 $6,257 $1,551 33%
MOA, Salinity and Other (tab 11) $14,587 $14,540 ($47) 0%
Total Expenses $135,769 $130,836 ($4,933) -4%
RepaymentMay 2016 UpdateValues in 1,000’s
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2017 Workplan 2019 Workplan Amount Percent
Principal payments
Deficits $0 $0 $0 0%
Replacements $30,037 $39,428 $9,391 31%
Original Project and Additions $3,937 $5,027 $1,090 28%
Irrigation (tab 12) $14,130 $8,731 ($5,399) -38%
Total principal payments $48,104 $53,186 $5,082 11%
Total Annual Revenue Requirements $183,873 $184,022 $149 0%
Offsetting RevenuesMay 2016 Update
Values in 1,000’s
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2017 Workplan
2019 Workplan Amount Percent
(Less Offsetting Annual Revenue:)Transmission (firm and non-firm, tab 13) $19,640 $21,302 $1,662 8%
Merchant Function (tab 14)$9,918 $7,954 ($1,964) -20%
Ancillary Services and Other (tab 14) $5,118 $5,145 $27 1%
Total Offsetting Annual Revenue $34,676 $34,401 ($275) -1%
Revenue RequirementsMay 2016 Update
Values in 1,000’s
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WAPA 169 FY 2017 Change
Item 2017 Workplan 2019 Workplan Amount Percent
Rate Setting Period:
Beginning year 2016 2018
Pinchpoint year 2025 2025
Number of rate setting years 10 8
Total Expenses : $135,769 $130,836 ($4,933) -4%
Total principal payments : $48,104 $53,186 $5,082 11%
Total Annual Revenue Requirements : $183,873 $184,022 $149 0%
Less Total Offsetting Annual Revenue: $34,676 $34,401 ($275) -1%
Net Annual Revenue Requirements: $149,197 $149,621 $424 0%
Energy Sales 5,071,804 5,186,871 115,067 2%
Capacity Sales 1,407,920 1,415,675 7,755 1%
Composite Rate 29.42 28.85 -0.57 -1.9%
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Next StepsNo Rate Action Proposed for the SLCA/IP Olmsted Rate Action to establish a rate
Each applicant who receives an allocation will pay its proportional share of the annual expenses of the Project based on their proportional share of the energy produced
Rather than pay a stated rate per kWh for energy, applicants who receive an allocation will pay their proportional share of the Project’s allocable investment and total annual OM&R expenses via an annual installment
Work with LAP on ancillary services
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CRSP MC Rates Team
Thomas Hackett 801-524-5503
Brent Osiek – Power Marketing Manager801-524-5495
Tony Henriquez801-524-6388
https://www.wapa.gov/regions/CRSP/rates/Pages/rates.aspx
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Discussion&
Comments
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