Page 1 Board of Directors Regular Meeting 2000 East Horsetooth Road, Fort Collins, Colorado Thursday, February 25, 2016, 9:00 a.m. Call to Order 1) Consent Agenda a. Minutes of the Regular Meeting of December 10, 2015 b. Transfer of 2015 Capital Budget Carryover to 2016 Budget c. GM/GC Annual Review Policy Revision d. Incorporation into the Record of Resolution 14-15 (2016 Regular Meeting Schedule) 2) Items Removed from Consent Agenda 3) Public Comment Motion to Approve Resolution 01-16 Annual Meeting 4) Platte River Power Authority Annual Meeting a. Annual Election of Officers b. Annual Retirement Committee Appointments c. 2015 Operations and Financial Review Resolution 02-16 Resolution 03-16 Other Action Items 5) Windy Gap Firming Project Funding Resolution Resolution 04-16 a. Fifth Interim Agreement, Windy Gap Firming Project – Design Phase Management Reports 6) Legal & Governmental Affairs Report 7) January 2016 Operating Report 8) January 2016 Financial Report a. Debt Financing Overview 9) Management Report a. Community Solar Update b. Headquarters Campus Discussion Executive Session 10) Headquarters Campus Discussion 11) Reconvene Regular Session Roundtable Adjournment Motion (2/3 vote required) Page 2 Page 3 2016 BOARD MEETING PLANNING CALENDAR FEBRUARY 25, 2016 Regular Board of Directors Meeting and Annual Meeting: • Transfer of 2015 Capital Budget Carryover to 2016 Budget • Incorporation into the Record of Resolution 14-15 (2016 Regular Meeting Schedule) • Election of Officers • Appointment of Retirement Committee Members • 2015 Operations Review • 2015 Financial Review • Debt Financing Overview • GM/GC Annual Review Policy Revision • Loveland FEMA Solar Review • HQ Campus discussion Retirement Committee Meeting APRIL 28, 2016 Regular Board of Directors Meeting: • Acceptance of 2015 Annual Report • Revision to TARIFF— SCHEDULE 4: Wholesale Transmission Service • Mountain West Transmission Group • Debt Financing Recap • Clean Power Plan Modeling Update • Water Policy Discussion MAY 26, 2016 Regular Board of Directors Meeting • Integrated Resource Plan (IRP) Update • Synopsis of State Legislation of Interest • Water Policy Discussion MARCH 31, 2016 Retirement Committee Meeting Regular Board of Directors Meeting: • Retirement Committee Report • 2015 BKD Audit Report and Fee Proposal/Contract Extension • Debt Financing Authorization • HQ Campus decision • FEMA Solar Approval • Community Solar Program Update • Water Policy Discussion • Fort Collins Substation Maintenance and Engineering Support Services IGA Calendar subject to change. Used for planning purposed only. JUNE 10 – 15, 2016 APPA National Conference Phoenix, AZ www.publicpower.org Last updated: February 2016 Page 4 2016 BOARD MEETING PLANNING CALENDAR JULY 28, 2016 Regular Board of Directors Meeting: • Retirement Committee Report • Energy Efficiency Program Update • Community Solar Program AUGUST 25, 2016 OCTOBER 27, 2016 Regular Board of Directors Meeting • 2017 Proposed Annual Budget Update (first public hearing) • 2017 Proposed Rate Tariff(s) • 2017 BKD Audit Plan • Rawhide rail contract • Water Philosophy and Policy Discussion • Clean Power Plan Update Regular Board of Directors Meeting • Wholesale Rate Forecast • Clean Power Plan Update NOVEMBER 18, 2016 Retirement Committee Meeting No Board of Directors Meeting Retirement Committee Meeting SEPTEMBER 29, 2016 Regular Board of Directors Meeting • Retirement Committee Report • 2017 Proposed Annual Budget Work Session • Demand Response Pilot Update • 2017 Draft Strategic Plan Calendar subject to change. Used for planning purposed only. DECEMBER 8, 2016 Regular Board of Directors Meeting • Retirement Committee Report • 2017 Annual Budget Review (second public hearing and adoption) • 2017 Proposed Board of Directors Regular Meeting Schedule • 2017 Strategic Plan (Approval) • Integrated Resource Plan (IRP) Update Last updated: February 2016 Page 5 2016 Board of Directors Term Expiration Town of Estes Park P.O. Box 1200, Estes Park, Colorado 80517 Mayor Bill Pinkham—Vice Chairman, Board of Directors Reuben Bergsten April 2016 December 2019 City of Fort Collins P.O. Box 580, Fort Collins, Colorado 80522 Mayor Wade Troxell Mayor Pro Tem Gerry Horak April 2017 December 2016 City of Longmont 350 Kimbark Street, Longmont, Colorado 80501 Mayor Dennis Coombs November 2017 Tom Roiniotis—Chairman, Board of Directors December 2018 City of Loveland 500 East Third Street, Suite 330, Loveland, Colorado 80537 Mayor Cecil Gutierrez—Secretary, Board of Directors November 2017 Steve Adams December 2017 Page 6 Page 7 Vision, Mission, and Values Vision: As a respected leader and responsible energy partner, improve the quality of life for the citizens served by our owner communities. Mission: Provide safe, reliable, environmentally responsible, and competitively priced energy and services. Values: • Safety – Working safely and protecting the public, our employees, and the assets we manage is non-negotiable. • Integrity – Being ethical and holding ourselves accountable to conduct business in a fair, honest, open, compliant, and environmentally responsible manner is at the core of what we do. • Customer Service – Providing quality service at a competitive price while being responsive to our owners’ needs creates added value and improves customer satisfaction. • Respect – Encouraging constructive dialogue that promotes a culture of inclusiveness, recognizes our differences, and accepts varying viewpoints will lead us to optimal solutions for even the most difficult challenges. • Operational Excellence – Engaging employees to strive for excellence and continuous improvement ensures that we provide reliable service while managing costs and creating a rewarding work environment. • Innovation – Supporting the development of technologies to promote the efficient use of electricity, protect the environment, and create a diversified energy supply portfolio mitigates risk and creates opportunities. • Sustainability – Maintaining financial integrity, minimizing our environmental impact, and supporting responsible economic development in our owner communities ensures the long-term viability of the organization and the communities we serve. 2000 East Horsetooth Road • Fort Collins, Colorado 80525-5721 970-226-4000 • www.prpa.org Page 8 Page 9 Regular Meeting Minutes of the Board of Directors 2000 East Horsetooth Road, Fort Collins, Colorado Thursday, December 10, 2015 ATTENDANCE Board Members Representing Estes Park: Mayor Bill Pinkham 1 and Reuben Bergsten Representing Fort Collins: Mayor Wade Troxell 2 and Mayor Pro Tem Gerry Horak Representing Longmont: Mayor Dennis Coombs and Tom Roiniotis Representing Loveland: Mayor Cecil Gutierrez 3 and Steve Adams 4 Platte River Staff Jackie Sargent (General Manager/CEO) Joe Wilson (General Counsel) Jason Frisbie (Chief Operating Officer) Dave Smalley (Chief Financial & Risk Officer) John Bleem (Strategic Planning & Customer Service Director) Karin Hollohan (Corporate Services Director) Pete Hoelscher (Communications & Marketing Director) Heather Banks (Fuels & Water Manager) Wade Hancock (Financial Planning Manager) Brodie Griffin (Facilities, Fleet & Security Manager) Jeff Menard (Facilities & Security Supervisor) Baird Cook (Facilities Project Coordinator) Chris Wood (Environmental Services Manager) Brad Decker (Strategic Planning Manager) Andy Cofas (Plant Manager) Shelley Nywall (Controller) Mindy Pfleiger (Sr. Accounting Analyst) Tracy Goodwin (Property & Fuel Accountant) Angela Walsh (Executive Assistant) Guests Kevin Gertig (Fort Collins Utilities Executive Director) Larry Rooz (Loveland Utility Commissioner) Robert Coker (CH2M Hill Senior Master Planner, Senior Project Manager) Jeff Cross (CH2M Hill Vice President Global Account Manager) Director Pinkham arrived at 10:20am during the Executive Session. Director Troxell dismissed himself at 11:28am. 3 Director Gutierrez dismissed himself at 12:01pm. 4 Director Adams dismissed himself at 12:49pm. 1 2 Page 10 Regular Board Meeting Minutes: December 10, 2015 CALL TO ORDER Chairman Roiniotis called the meeting to order at 9:01 a.m. A quorum of Board Members was present and the meeting, having been duly convened, was ready to proceed with business. Due to two Directors needing to leave by noon, Jackie Sargent, general manager and CEO, requested that all agenda items requiring approval and the executive session be moved up ahead of all reporting items on the agenda. A revised agenda was handed out reflecting the change of order. Director Gutierrez moved to approve the revised agenda as presented. Director Bergsten seconded, and the motion carried 7-0. ACTION ITEMS (1) Approval of the Regular Meeting Minutes of October 29, 2015 Director Adams moved to approve the Minutes as presented. Director Troxell seconded, and the motion carried 7-0. (2) Public Comment None. (3) Retirement Committee Report (presenter: Dave Smalley) Dave Smalley, chief financial & risk officer, reported the retirement committee met on Friday, November 20 at Platte River. The Defined Benefit Plan’s investment consultant provided performance reporting through September 2015 and also provided an educational session on the U.S. dollar, stocks and rising interest rates. The committee discussed making assumption changes to the Plan based on discussions with the Plan’s actuary, Platte River’s auditors, and investment advisors. The Plan’s actuary and attorney provided the recommended changes to the Plan document needed to maintain actuarial equivalence for the lump sum distributions. The committee approved a motion to present the modified plan to the full Board for consideration with a recommendation that the Board approve the modified plan. The revised plan is provided in the full Board packet. Director Coombs moved to accept Resolution No. 13-15, modifying the Defined Benefit Plan as presented. Director Adams seconded, and the motion carried 7-0. (4) 2016 Proposed Board of Directors Meeting Schedule (presenter: Jackie Sargent) The proposed dates for the 2016 Board of Directors Regular Meeting Schedule were outlined within the resolution. Director Gutierrez moved Resolution No. 14-15, accepting the 2016 Board of Directors meeting schedule as presented. Director Bergsten seconded, and the motion carried 7-0. Page 2 of 7 Page 11 Regular Board Meeting Minutes: December 10, 2015 (5) 2016 Proposed Annual Budget (Second Public Hearing) (presenter: Shelley Nywall) Staff presented the final updates to the 2016 Annual Budget. Ms. Nywall acknowledged staff for their team effort during the year long process to develop the 2016 Budget. Budget changes since the October Board meeting were: rate increase for reserve purchases from Xcel Energy resulting in an impact of $45K, fuel expenses for Craig Unit 1 and 2 are higher due to an effort to reduce coal inventory levels – spreading fixed costs over fewer tons – resulting in a $1.3 million increase, and professional services for assistance with modeling and support related to analysis of the Clean Power Plan resulting in a $0.1 million increase. Overall, the result of these changes is a $1.4 million increase in operating expenses. The impact of these changes in relation to the Strategic Financial Plan indicators are: net income is projected to be $10.7 million, debt service coverage of 1.53, and unrestricted days cash on hand of 224 days, all of which are above the strategic financial plan minimums. Budget revenues are projected to be $217.5 million from municipal sales, surplus sales, other income, and interest income. Expenses are projected to be $242.9 million representing all operating, debt and capital expenses. Key focus areas for the 2016 Budget are the same as in previous presentations: Tariff 1 rate increase of 4.5%, expanding renewable energy with the Rawhide solar generation addition, DSM/EE program expansion, Craig Unit 1 maintenance outage (6-weeks), headquarters facilities, staffing and surplus sales adjustments. Chairman Roiniotis stated the 2016 Proposed Annual Budget for Platte River Power Authority has been delivered in accordance with applicable law. He then declared the Second Public Hearing on the 2016 Proposed Annual Budget to be open and asked if any members of the public wished to comment on the proposed budget. Hearing none, the Chairman closed the hearing for the 2016 Proposed Annual Budget. Directors reiterated the importance of evaluating staffing projections and needs with Platte River providing that information to the Board in future discussions. Platte River’s staff consistently evaluates and will periodically update the Board on future staff planning. Director Coombs moved to approve Resolution No. 15-15: 2016 Annual Budget and Appropriation Resolution as presented. Director Troxell seconded, and the motion carried 7-0. (6) 2015 Budget Contingency Appropriation Transfer (presenter: Dave Smalley) As of the end of October capital additions were projected to be $100,000 under budget, however, completion of several projects will require a contingency transfer. Staff requests $2.3 million to cover these capital projects. The major projects are listed within the Board packet and have previously been discussed with the Board. These projects are either over budget or out of budget items for 2015. A contingency transfer was not requested previously as capital expenditures had been below budget, however at this time staff is requesting a transfer based on the latest estimates. A director asked for clarification on the item listed in the packet for deeper foundations at a substation. Staff responded that the water table was higher than projected which required more substantial foundations to support the equipment. Page 3 of 7 Page 12 Regular Board Meeting Minutes: December 10, 2015 Director Bergsten moved to approve Resolution No. 16-15: 2015 Budget Contingency Appropriation Transfer as presented. Director Adams seconded, and the motion carried 7-0. (7) 2016 Strategic Plan (presenter: Pete Hoelscher) Mr. Hoelscher, communications & marketing director, presented the 2016 Strategic Plan document. Key changes to the document since first presented to the Board at the October meeting included: improved design and graphics, a 10-year transmission summary table in the resource management section, updated planning information from Fort Collins and Longmont, clarification of language related to funding opportunities for 2016 and several minor corrections found during the final review process. Director Adams pointed out a correction on page 33 involving the location of the Loveland/Foothills substation and solar project. Staff thanked the Board for their participation and feedback provided during the review process. An updated version will be provided to the Board after corrections are made and an electronic version of the document will be posted on Platte River’s web site. The Board commended the staff for creating a document with useful information. Director Gutierrez moved to approve the 2016 Strategic Plan as presented. Director Coombs seconded, and the motion carried 7-0. (8) Annual Summary for General Manager/General Counsel (presenter: Jackie Sargent) Ms. Sargent summarized the annual review process and thanked the Board for their feedback. Ms. Sargent acknowledged the Board for their help and support as staff addressed the nine strategic initiatives highlighted in the review summary for the general manager included in the Board packet. The management team and employees worked to assure that all efforts were approached in a safe, reliable, environmentally responsible, and cost-effective manner. Joe Wilson, general counsel, also thanked the Board for their continued support and referred to the summary provided in the Board packet containing a brief overview of successes and outlook for the future. (9) Executive Session Director Coombs moved that the Board go into executive session for the purposes of considering personnel matters related to the annual review of the performance of the general manager and the general counsel. The general counsel has advised that an executive session is authorized in this instance pursuant to Colorado Revised Statutes, Section 24-6-402, subsection (4)(f); provided that, no formal action will be taken during the executive session. Director Gutierrez seconded, and the motion carried 7-0. Page 4 of 7 Page 13 Regular Board Meeting Minutes: December 10, 2015 (10) Reconvene Regular Session The Chairman reconvened the Regular Board Meeting. The Board is pleased with the performance of the general manager and general counsel as well as the entire organization. Director Horak made a motion to increase the general manager’s salary by four percent. Director Coombs seconded the motion. Further discussion took place and Director Horak requested to look at how the four percent increase may be put into deferred compensation if the employee (general manager) so wishes, making sure the base salary reflects the four percent number, whether or not treated as deferred compensation, so that the four percent increase is counted as base salary for market comparisons. The Board also requested more information regarding a car allowance program for the general manager in lieu of an assigned company vehicle. Staff was also directed to research and develop an appropriate companywide vehicle policy. Motion carried 8-0. Director Horak made a motion to give a three percent one-time payment to the general counsel. Director Bergsten seconded. Motion carried 8-0. Director Horak further stated that the Board is open to conducting future market salary surveys for the general counsel position. (11) Legal & Governmental Affairs Report (presenter: Joe Wilson) Mr. Wilson briefed the Board on the current legal and governmental affairs. The full report is in the Board packet. It was noted that on December 9, 2015 the FERC issued a deficiency letter regarding the revised JDA filing and has scheduled a technical conference for Tuesday, December 15, 2015. General counsel advised the Board that this was a positive sign, and that the technical conference was likely scheduled due to ex parte restrictions on communications. An update will be given at the February Board meeting. A director inquired about the Zayo counsel inadvertently neglecting to calendar depositions, and if this was a delay tactic. The general counsel responded that any delay would be minimal; depositions will be scheduled in January and mediation in Spring 2016. (12) Operating Report, October and November 2015 (presenter: Jason Frisbie) Mr. Frisbie, chief operating officer, reviewed the October and November operational budget variances and noted the full report for October was in the Board packet and the November report was handed out at the meeting. As outlined in the report, a few highlights for October and November includes Rawhide Unit 1 scheduled outage, Craig Unit 2 outage, one lost time injury in October, and Platte River completed the Rawhide outage with only one minor first aide injury. Platte River’s accounts payable staff took advantage of early payment discounts with vendors and because of early payments many of the expenses that were realized in October were actually budgeted in November. Year-to-date fuel costs continue to be under budget. Platte River’s peak demand for October occurred on October 1st at 436 megawatts, 1 megawatt under forecast, and peak demand for the month of November was on November 30 at 464 megawatts, 8 megawatts above forecast. Surplus sales continue to be below budget. Mr. Frisbie finished the report by commending staff for their hard work and long hours spent on one of the most ambitious Page 5 of 7 Page 14 Regular Board Meeting Minutes: December 10, 2015 outages for Platte River and having a general manager that has outage experience. The Board commended the outage results and hard work put forth by staff. (13) Financial Report, October and November 2015 (presenter: Dave Smalley) Mr. Smalley, chief financial & risk officer, highlighted the financial budget variances for October and November. The full report for October was in the Board packet and November results were handed out at the meeting. In October, operating revenues were below budget due to surplus sales and operating expenses being over budget, resulting in $4.4 million loss - $3.5 million below the budget. Operating expenses were above budget primarily due to purchased power related to the outage and transmission outages as well as outage costs and timing. In November, operating revenues were below budget due to surplus sales, however operating expenses were under budget, resulting in a $2.2 million loss - $1.3 million better than the budgeted loss of $3.5 million. Year-to-date Platte River is at $6.4 million net income, $2.6 million below budget. For 2015, staff is estimating net income from $5.1 million to $6.5 million based on estimated results for the month of December. Platte River remains in solid financial position. Staff will provide year end results and trends at the February Board meeting. (14) Management Report (presenter: Jackie Sargent) Ms. Sargent referred to the safety, environmental, legal, operational, and financial updates that were covered in the Board packet. With two more presentations on the agenda she offered to answer any questions the Board may have, and with none she opened the floor to the first presentation. a. Rawhide Outage Report (presenter: Andy Cofas) Andy Cofas, plant manager, gave an overview of the Rawhide scheduled maintenance outage concluding November 27 with safety statistics, budget highlights, successes for major projects and concluding with lessons learned to apply towards future maintenance outages. Directors greatly appreciated their tour while the facility was offline and complimented the staff for their commitment and planning of the entire project, noting that this reflected back to great leadership for a well organized and successfully executed outage. b. Headquarters Campus (presenter: Karin Hollohan, Jeff Cross, Rob Coker) Ms. Sargent introduced a new Platte River staff member, Baird Cook, facilities project coordinator, and CH2M Hill staff members, Robert Coker, senior master planner/project manager, and Jeff Cross, vice president global account manager, to the Board. Karin Hollohan, corporate services director, pointed out that this presentation was strictly for informational purposes only and no decision would be made by the Board at this time. An overview of history at the current location, a high level summary of the external review and evaluation of the Page 6 of 7 Page 15 Regular Board Meeting Minutes: December 10, 2015 current headquarters facilities, and four potential options for the Board to consider at a future meeting were presented. Staff also provided a forecasted rate impact for the various headquarters campus options. Further discussions will be included, as needed, at the February and March utility directors meetings and Board meetings. (15) Roundtable Due to time constraints, no Board members shared news. ADJOURNMENT With no further business, the meeting adjourned at 12:56 p.m. The next regular Board meeting is scheduled for Thursday, February 25, 2016, at 9:00 a.m. in the Platte River Power Authority Board Room, 2000 East Horsetooth Road, Fort Collins, Colorado. AS WITNESS, I have executed my name as Assistant Secretary and have affixed the corporate day of , 2016. seal of the Platte River Power Authority this Assistant Secretary Page 7 of 7 Page 16 Page 17 Memorandum Date: February 17, 2016 To: Board of Directors From: Jackie A. Sargent, General Manager/CEO Shelley K. Nywall, Controller Subject: Transfer of 2015 Capital Budget Carryover to 2016 Capital Budget During 2015, capital expenditures ended the year $4.7 million under budget. This variance was due to construction schedule changes, contract delays, staff shortages, canceled projects, favorable pricing, and other projects taking priority (scheduled maintenance outage and the Rawhide Flats solar project). Resolution No. 15-15 (adopting the 2016 Annual Budget) authorizes the unexpended balance of funds for 2015 capital additions to be carried over to the 2016 Annual Budget. Staff is requesting a carryover amount of $4,425,830. The final capital budget for 2016 is as follows. $42,029,583 Original 2016 Budget 4,425,830 Capital carryover requests $46,455,413 Final 2016 Budget A detailed listing of the projects and amounts requiring carryover to 2016 is attached. Staff will be available to answer any questions you may have. Attachment Page 18 Page 19 Platte River Power Authority 2016 Capital Carryover Projects Project# Project Description Power Production 1010 Yampa Capital Projects 1598 Soldier Canyon 10" Line Modifications with New Raw Water Tank 1909 Windy Gap Firming Study 1555 Unit 1 Controls Network Cyber Security and Redundancy Upgrade 1639 Tripper Deck Expansion 1603 Tripper Floor Dust Collector System Modification - Unit 1 1497 Rotary Car Dumper Dust Collection System Upgrade 1492 MOV Replacement - Rawhide 24" Water Pipeline 1587 Inerting Steam Drain Line Addition - Unit 1 Carryover Amount $ Total Power Production Power Delivery 3295 Fiber Optic Route to Estes Park 2229 LaPorte Substation - 230kV Expansion 2153 Boyd 115/230kV Substation Transformer T2 Addition 3272 Digital Cross Connect Equipment Replacement (Comm. Room and DRC) 2228 LaPorte Substation - 115kV Adaptation and Refurbishment 2227 Emergency Storm Structures 2246 Solar Interconnection Transformer - Rawhide 2231 Transmission Line Vault Upgrades - Rogers Road 3274 Fiber Cable Replacement - Estes Park 2254 Breaker Replacement (2062/2066) and Relay Upgrades - Rawhide Substation 2206 Breaker Replacement - Boyd Breaker 2062, 3062, 3166 2177 Crossroads 115/230kV Substation Transformer T2 Addition 3285 Telephone VoIP Switch Replacement 2255 Generation Availability Transformer - Rawhide Substation 2218 Gore Pass-Blue River Additions (Tri-State Joint Facility Project) 2252 Foothills Substation 2247 Breaker Replacement - Richard Lake 562 Total Power Delivery Corporate Services 2235 Security - Longs Peak Substation 2234 Security - LaPorte Substation 3254 Engineering Document Management Software (EDMS) 2233 Security - Boyd Substation 1564 Conveyor Belt Fall Protection Guard Rails 3271 Corporate Firewall to Support V-LAN Segments 3276 Landscape Improvements - HQ Southeast Corner 3241 HQ Irrigation System Redesign and Construction 3253 Wireless Expansion 1,587,798 542,372 188,870 175,681 89,825 35,484 35,000 28,426 2,872 2,686,328 464,485 323,065 109,427 54,400 51,014 50,000 36,575 29,229 25,571 16,170 15,368 12,084 7,667 5,724 5,500 4,676 1,000 1,211,955 127,274 95,456 91,925 63,637 52,341 36,000 33,550 20,000 7,364 Total Corporate Services Total Capital Carryover Projects $ 527,547 4,425,830 Page 20 Page 21 Memorandum Date: February 17, 2016 To: Board of Directors From: Jackie A. Sargent, General Manager/CEO Joseph B. Wilson, General Counsel Subject: General Manager and General Counsel Annual Performance Review As previously discussed and agreed to by the Board of Directors, the proposed changes to this policy simply reflect a change in the timing of the annual reviews for the general manager and general counsel from December of each year to March of the following year. This change provides a more complete opportunity for both the general manager and general counsel to fully and comprehensively report on annual accomplishments. If adopted, the next annual performance reviews would be conducted in March 2017 for calendar year 2016. Page 22 Page 23 Policy Title: General Manager and General Counsel Annual Performance Review Process Version # 2.0 3.0 Category: Administrative/Board of Directors Effective date: 10/29/2015 02/25/2016 Post to Intranet: No Enter date of latest revision To be posted by responsible division 1-.-i PLATTE RIVER ~ POWER AUTHORITY Policy Policy Title: General Manager and General Counsel Annual Performance Review Process Original Approval Date: 3/27/2fil4 Enter date of original policy approval Enter Name of Polict1 Responsibility: Corporate Services Director Revision Approval Date: 10/ 29 / 2015 02/25/2016 Enter title of employee administering the policy including revie~ and revision Authority: Enter date of most current revision Review Frequency: As Needed Board of Directors \ Select One Counsel Review: Joe Wilson, General Co~~~ Review Date: No Date Enter General Counsel's name and obtain initials on printed Enter date NEXT review is required .... Route to General Counsel for review of subsequent procedures and/or processes: Yes Associated Procedures: Total Compensation Policy; Employee Handbook Enter titles of procedures associated to policy ''.. I.' I AS WITNESS, I have executed my name as Assistant Secretary and have affixed the corporate seal of the Platte River Power Authority this__a<i day of 2015. ,,,,,, ? ow'''' € ,, ,'' <v'?- ....... :1-: :r ~ - -_. 1-. _. . /:f ,,, . . . . . ~ .··~·oRAr~·&·."°'1C:', 2Q::'o~~~.:·. ~-;. =Lu : (.) rr=::- ("' •• :J: : H" - :a= UD .::o=..... o·'i • . - ~· ·o -:..,,,,<>' ···.OLoRr>-0 .• •• '\""'.......,:-' """'- . . .. ~,,., ,,, ,, . ,. *. ...*. .. Vers1on IStory: '11 1 1111 " ' ' Enter version history using the following standard convention: the number preceding the decimal is for major versions whil.e the number following the decimal is for minor changes or updates. For example: 1.01 (Format changes and other insignificant changes should not be . I : " Autho1 Action Version Date 1.0 3/27/2014 2.0 10/29/2015 3.0 02/25/2016 Revised by Board of Directors/ Approved by Board of Directors/ Resolution No. 6-14 Revised by Board of Directors/ Resolution No. 12-15 Resoluction No. __-16 . I Change Tracking (ne\\, re\ iew, re\ ision) Karin Hollohan New Karin Hollohan Revised Karin Hollohan Revised Page 1 of3 ELV7/2015 Page 24 Policy Title: General Manager and General Counsel Annual Performance Review Process Version # 2.0 3.0 Category: Administrative/Board of Directors Effective date: 10/29/2015 02/25/2016 Enter date of latest revision Post to Intranet: No To be posted by responsible division Purpose: The purpose of this policy is to establish the process by which the Board of Directors provides performance feedback to the General Manager and General Counsel (“appointees”), as direct reports to the Board. The intent of such feedback is to help ensure that both appointees are aware of the Board’s expectations, and to provide the support needed for both to be successful in their jobs. Implementing Parties and Assigned Responsibilities: The Board of Directors is responsible for carrying out this policy, and may delegate actions under this policy through the General Manager to internal Platte River staff. The Board Chairman and Vice Chairman, in conjunction with the General Manager, are responsible for identifying the appropriate internal support staff to assist with the process, for working with all Board members to determine the content and audience for any performance feedback survey, and to direct staff regarding any desired market survey to help determine compensation. Associated Items: Employee Total Compensation Policy originally adopted by the Board on March 28, 2013. Platte River’s Employee Handbook Policy: It is the Board’s policy to provide regular feedback on performance to both the General Manager and General Counsel, and to do so in a way that incorporates input from a variety of sources while focusing on Board expectations and strategies. An annual review with each appointee will be held in December March of each year. The focus of the review should be two-fold: First, accomplishments for the previous year should be reviewed individually with each appointee, and feedback provided regarding the quality, timeliness, and acceptability of their results;. Second, a discussion should take place regarding the Board’s expectations for the upcoming year. In preparation for that discussion, the Board will solicit input from all Board members and designated direct reports. The Board may further consider input from selected internal Platte River employees with whom either appointee may work. Such input will be solicited in November early March of each year, and reported to the Board prior to the December March meeting. If any Board member requests changes to the performance feedback survey, such discussion should take place by the full Board. Any changes should be adopted prior to November, ideally in the first quarter of the year so the appointees know the Board’s expectations. Staff will provide a copy of the prior year’s performance feedback survey to the Board Chairman in February. If any Board member wishes to make changes to the performance feedback survey, such proposal should be first brought to the full Board for discussion and approval. Since the content of the performance feedback survey incorporates Board expectations, any future changes to that survey should be made as early in the year as feasible in order to best provide guidance to the Board appointees. The Board may provide performance feedback to each appointee using the feedback surveys, the appointee’s annual reports, direct Board discussion or other means that appropriately reflect job performance. Copies of all written feedback will be provided to each direct report. Each appointee shall prepare a written memo style annual report including a self-evaluation prior to any performance discussions with the Board. In all situations, the Board is committed to following Platte River’s equal opportunity policy and will not discuss, allude to, or be influenced by non job related factors. Page 2 of 3 ELV 7/2015 Page 25 Policy Title: General Manager and General Counsel Annual Performance Review Process Version # 2.0 3.0 Category: Administrative/Board of Directors Effective date: 10/29/2015 02/25/2016 Enter date of latest revision Post to Intranet: No To be posted by responsible division As part of the annual performance review process, the Board will review the salaries of the appointees and shall determine any applicable adjustments. This review should be conducted in a manner consistent with the Board’s Employee Total Compensation Policy regarding market-based compensation practices and methodology. The Board may direct staff to either use the existing internal market survey process or may choose to use an external third party vendor to evaluate the market practices and current pay levels for the positions held by each appointee. In either case, the market survey should reflect a broad cross section of similarly situated generation and transmission utilities. Any changes in pay resulting from the survey should be communicated to each appointee during the December March Board meeting. Routing Instructions: 1. 2. 3. cc: Obtain Signatures (in order): Legal, Division Director, General Manager Publish to the intranet, if appropriate Send signed original to Central Files in Records (both hard copy & Word document) Records – Original Page 3 of 3 ELV 7/2015 Page 26 Page 27 Policy Title: General Manager and General Counsel Annual Performance Review Process Version # 3.0 Category: Administrative/Board of Directors Effective date: 2/25/2016 Enter date of latest revision Post to Intranet: No To be posted by responsible division Policy Policy Title: General Manager and General Counsel Annual Performance Review Process Enter Name of Policy Responsibility: Corporate Services Director 35T Enter date of most current revision Review Frequency: As Needed Board of Directors Counsel Review: Joe Wilson, General Counsel Enter date of original policy approval Revision Approval Date: 2/25/2016 Enter title of employee administering the policy including review and revision Authority: Original Approval Date: 3/27/2014 Select One Enter General Counsel's name and obtain initials on printed form Review Date: No Date Enter date NEXT review is required Route to General Counsel for review of subsequent procedures and/or processes: Yes Associated Procedures: Total Compensation Policy; Employee Handbook Enter titles of procedures associated to policy AS WITNESS, I have executed my name as Assistant Secretary and have affixed the corporate seal of the Platte River Power Authority this____ day of ___________________, 2016. __________________________________ Assistant Secretary Version History: Enter version history using the following standard convention: the number preceding the decimal is for major versions while the number following the decimal is for minor changes or updates. For example: 1.01 (Format changes and other insignificant changes should not be listed). Please do not include draft or works in progress in version history. Every version requires approval by the General Manager. Change Tracking Version Date Action Author (new, review, revision) Approved by Board of Directors/ 1.0 3/27/2014 Karin Hollohan New Resolution No. 6-14 Revised by Board of Directors/ 2.0 10/29/2015 Karin Hollohan Revised Resolution No. 12-15 Revised by Board of Directors/ 3.0 02/25/2016 Karin Hollohan Revised Resolution No. 1-16 Page 1 of 3 ELV 7/2015 Page 28 Policy Title: General Manager and General Counsel Annual Performance Review Process Version # 3.0 Category: Administrative/Board of Directors Effective date: 2/25/2016 Enter date of latest revision Post to Intranet: No To be posted by responsible division Purpose: The purpose of this policy is to establish the process by which the Board of Directors provides performance feedback to the General Manager and General Counsel (“appointees”), as direct reports to the Board. The intent of such feedback is to help ensure that both appointees are aware of the Board’s expectations, and to provide the support needed for both to be successful in their jobs. Implementing Parties and Assigned Responsibilities: The Board of Directors is responsible for carrying out this policy, and may delegate actions under this policy through the General Manager to internal Platte River staff. The Board Chairman and Vice Chairman, in conjunction with the General Manager, are responsible for identifying the appropriate internal support staff to assist with the process, for working with all Board members to determine the content and audience for any performance feedback survey, and to direct staff regarding any desired market survey to help determine compensation. Associated Items: Employee Total Compensation Policy originally adopted by the Board on March 28, 2013. Platte River’s Employee Handbook Policy: It is the Board’s policy to provide regular feedback on performance to both the General Manager and General Counsel, and to do so in a way that incorporates input from a variety of sources while focusing on Board expectations and strategies. An annual review with each appointee will be held in March of each year. The focus of the review should be two-fold: First, accomplishments for the previous year should be reviewed individually with each appointee, and feedback provided regarding the quality, timeliness, and acceptability of their results; Second, a discussion should take place regarding the Board’s expectations for the upcoming year. In preparation for that discussion, the Board will solicit input from all Board members and designated direct reports. The Board may further consider input from selected internal Platte River employees with whom either appointee may work. Such input will be solicited in early March of each year, and reported to the Board prior to the March meeting. If any Board member wishes to make changes to the performance feedback survey, such proposal should be first brought to the full Board for discussion and approval. Since the content of the performance feedback survey incorporates Board expectations, any future changes to that survey should be made as early in the year as feasible in order to best provide guidance to the Board appointees. The Board may provide performance feedback to each appointee using the feedback surveys, the appointee’s annual reports, direct Board discussion or other means that appropriately reflect job performance. Copies of all written feedback will be provided to each direct report. Each appointee shall prepare a written memo style annual report including a self-evaluation prior to any performance discussions with the Board. In all situations, the Board is committed to following Platte River’s equal opportunity policy and will not discuss, allude to, or be influenced by non job related factors. As part of the annual performance review process, the Board will review the salaries of the appointees and shall determine any applicable adjustments. This review should be conducted in a manner consistent with the Board’s Page 2 of 3 ELV 7/2015 Page 29 Policy Title: General Manager and General Counsel Annual Performance Review Process Version # 3.0 Category: Administrative/Board of Directors Effective date: 2/25/2016 Enter date of latest revision Post to Intranet: No To be posted by responsible division Employee Total Compensation Policy regarding market-based compensation practices and methodology. The Board may direct staff to either use the existing internal market survey process or may choose to use an external third party vendor to evaluate the market practices and current pay levels for the positions held by each appointee. In either case, the market survey should reflect a broad cross section of similarly situated generation and transmission utilities. Any changes in pay resulting from the survey should be communicated to each appointee during the March Board meeting. Routing Instructions: 1. 2. 3. cc: Obtain Signatures (in order): Legal, Division Director, General Manager Publish to the intranet, if appropriate Send signed original to Central Files in Records (both hard copy & Word document) Records – Original Page 3 of 3 ELV 7/2015 Page 30 Page 31 RESOLUTION NO. __-16 WHEREAS, through Resolution No. 6-14 the Board adopted a General Manager and General Counsel Annual Performance Review Process Policy, to which modifications were made through Resolution No. 12-15; and WHEREAS, based on experience with the annual review process the suggestion has been made by Board members that an annual performance review in March – rather than December - may allow a better assessment of the prior year achievements; and WHEREAS, to effect this change in the review cycle the existing policy must be modified. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of Platte River Power Authority that the General Manager and General Counsel Annual Performance Review Process, as attached to this Resolution, is hereby modified and adopted. AS WITNESS, I have executed my name as Assistant Secretary and have affixed the corporate seal of the Platte River Power Authority this day of , 2016. Assistant Secretary Resolution No. __-15: Compensation Policy Resolution Page 1 of 1 Page 32 Page 33 Memorandum Date: February 17, 2016 To: Board of Directors From: Jackie A. Sargent, General Manager/CEO Joseph B. Wilson, General Counsel Subject: Incorporation into Record of Resolution No, 14-15 Colorado law, CRS § 24-6-402(2)(c), specifically requires that the place for the posting of meeting notices be established each year during the first meeting of the governing body. It has been the practice of the Platte River Board of Directors to approve the Regular Meeting Schedule for the upcoming year and the place for the posting of notices at the last meeting of the then-current year and to include the following provision in such Resolution (see e.g., Resolution No. 14-15, approved by the Board on December 10, 2015): For purposes of CRS § 24-6-402(2)(c), this action shall be deemed to have occurred at the first Regular Meeting of the Board of Directors in calendar year 2016 and shall be incorporated into the records of that meeting. The purpose of this Consent Agenda item is simply to comply with the language of the above-quoted Resolution by incorporating the Regular Meeting Schedule of the Board of Directors for 2016 and the location for the posting of notices of meetings into the record of the first meeting of 2016. Page 34 Page 35 No materials at this time. Page 36 Page 37 There are no materials for this section. Page 38 Page 39 Memorandum Date: February 17, 2016 To: Board of Directors From: Jackie A. Sargent, General Manager/CEO Joseph B. Wilson, General Counsel Subject: Platte River Power Authority Annual Meeting Item 4 on the Agenda is the Annual Meeting of Platte River Power Authority. Sections 2.3.7 and 2.4.1 of the ORGANIC CONTRACT ESTABLISHING PLATTE RIVER require that an Annual Meeting of the Board of Directors be held within the first 120 days in each year to elect officers, to pass on reports for the preceding fiscal year, and to transact such other business as may come before the meeting. The first order of business under Agenda Item 4 is the election of officers to serve until the next Annual Meeting. For ease of reference, the current officers are listed: 2015 Platte River Officers Elected Officers: Tom Roiniotis, Chairman Bill Pinkham, Vice Chairman Cecil Gutierrez, Secretary David Smalley, Treasurer Jackie A. Sargent, General Manager Authorized Assistant Officers: Angela Walsh; Joe Wilson, Assistant Secretaries Management suggests that Joe Wilson and Angela Walsh be re-appointed as Assistant Secretaries. Officers are appointed through resolution and the Board Chair will open the floor for nominations. The second order of business is the appointment of Directors and members of management to serve on Platte River’s Retirement Committee. For ease of reference, the current Directors and management members are listed below. No changes are proposed for the 2016 management members. 2015 Retirement Committee Members Management Members: Director Members: Bill Pinkham Dennis Coombs Gerry Horak Steve Adams Jackie A. Sargent David Smalley Again, the Retirement Committee members are appointed by resolution and the Board Chair will entertain nominations. The last order of business under Agenda Item 4 is the “2015 Operations and Financial Review.” Page 40 Page 41 RESOLUTION NO. __- 16 WHEREAS, Section 2.4.1 of the AMENDED AND RESTATED ORGANIC CONTRACT ESTABLISHING PLATTE RIVER POWER AUTHORITY requires that the officers of Platte River Power Authority (Platte River) be elected annually by the Board of Directors at the Annual Meeting. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of Platte River that: (1) , be, and hereby is, elected Chairman of the Platte River Power Authority; (2) be, and hereby is, elected Vice Chairman of the Platte River Power Authority; (3) David Smalley be, and hereby is, elected Treasurer of the Platte River Power Authority; and (4) ______________ be, and hereby is, elected Secretary of the Platte River Power Authority, with Angela Walsh and Joe Wilson hereby appointed as Assistant Secretaries; and (5) Jackie A. Sargent be, and hereby is, elected General Manager and Chief Executive Officer of the Platte River Power Authority. The terms of all officers elected and appointed to office hereby shall commence immediately upon passage of this Resolution, and shall remain in force until the next Annual Meeting of the Board of Directors. The Assistant Secretaries are delegated the authority to authenticate the documents of Platte River. AS WITNESS, I have executed my name as Assistant Secretary and have affixed the corporate seal of the Platte River Power Authority this day of , 2016. Assistant Secretary Page 42 Page 43 RESOLUTION NO. __ -16 WHEREAS, the Board of Directors of Platte River has established a Retirement Committee under the Platte River Defined Benefit (DB) Plan, consisting of four (4) Directors and two (2) members of management to administer the Platte River Defined Benefit Plan; and WHEREAS, the Director members of the Retirement Committee are appointed each year at the Annual Meeting. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of Platte River that the following Directors are hereby appointed to serve on the Retirement Committee: , , , . AND IT IS ACKNOWLEDGED by the Board of Directors that the following members of management have been selected to serve on the Retirement Committee until the next Annual Meeting: Jackie A. Sargent David Smalley AS WITNESS, I have executed my name as Assistant Secretary and have affixed the corporate seal of the Platte River Power Authority this day of , 2016. Assistant Secretary Page 44 Page 45 2015 Operating Report – Annual Review EXECUTIVE SUMMARY 2015 was a very productive and challenging year for Platte River Operations. With the addition of 60 megawatts of new wind, two very ambitious major outages (Rawhide Unit 1 and Craig Station Unit 2), and a continued soft surplus sales market, staff was challenged to minimize costs, increase productivity and seek out new market sales opportunities. Municipal demand was slightly below budget for the year while energy usage came in at budget for 2015. Baseload generation was below budget primarily due to the Craig Unit 2 and Rawhide Unit 1 extended planned outages. The soft surplus sales market also contributed to reduced output on the units because, at times, market prices fell below unit operating costs. We experienced a significant decline in energy market pricing and that impact was felt throughout the year, adversely affecting surplus sales. Despite the extended major outages at both Rawhide and Craig, dispatch costs came in below budget for the year due to favorable Trapper coal pricing at the Craig Station and significantly below budget non-outage O&M costs at both Rawhide and the Craig Station. Surplus sales volume and pricing were significantly below budget due to historically low natural gas prices, extended planned outages at Rawhide and the Craig Station, and numerous shaft sharing obligations throughout the year. Below is an operational summary for the month of December and the year. Additional details regarding each category are provided in the sections that follow. Category December Variance YTD Variance (2.8%) (1.1%) 0.1% (0.0%) Baseload Generation (6.9%) (5.1%) Wind Generation (2.0%) (7.8%) Surplus Sales Volume (32.3%) (16.5%) Surplus Sales Price (35.9%) (21.0%) 9.3% 2.6% Municipal Demand Municipal Energy Dispatch Cost Variance Key: Favorable: >2% | Near budget: +/- 2% | Unfavorable: <-2% 2015 Operating Report – Annual Review 1 Page 46 OPERATIONAL OVERVIEW Safety. There was one lost time accident reported in 2015. The injury occurred in August and was a result of a severe strain to a joint that ultimately required surgery in October. 2015 Goal December Actual 0 0 YTD Total 1 System Disturbances. There was one loss of city load for the year. The event occurred in April 2015 while Platte River technicians were performing preventative maintenance for the City of Longmont at Rogers Road Substation. A failure to isolate all equipment resulted in a blackout, dropping service to the Longmont customers served by this substation for approximately 20 minutes. 2015 Goal December Actual 0 0 YTD Total 1 Peak Day Obligation. December: Peak demand for the month was 487 megawatts, which occurred on Tuesday, December 15, 2015, at 18:00 hours and was 14 megawatts below budget. Platte River’s total obligations at the time of the peak were 571 megawatts. 2015: Peak demand for the year was 639 megawatts, which occurred on Monday, July 27, 2015, at 17:00 hours and was 7 megawatts below budget. Platte River’s total obligations at the time of the peak were 661 megawatts. 2015 Peak Day - July 27, 2015 Total Obligation 661 700 650 Forecast Demand 646 600 550 Municipal Obligation 639 500 450 MW 400 350 300 250 200 150 100 50 0 1 2 3 4 5 6 7 Hydro 8 9 Wind 2015 Operating Report – Annual Review 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour Rawhide Craig CTs Purchases 2 Page 47 POWER GENERATION Rawhide Performance. For 2015 the equivalent availability and net capacity factors were slightly below budget primarily due to the extended planned outage of Unit 1 and required unit tuning and testing after the outage. Rawhide Equivalent Availiability Budget Rawhide Net Capacity Factor Actual Budget 100% 100% 95% 95% 90% 90% 85% 85% 80% 80% 75% 75% 70% 70% 65% 65% 60% 60% Actual 55% 55% 50% 50% December December YTD YTD Rawhide emissions levels were well below allowable limits for the year: SO2 (lbs/MBtu) Limit Hg (lbs/GWh) NOx (lbs/MBtu) Actual Limit Actual Limit 0.10 0.16 0.014 0.09 0.14 0.012 0.08 0.12 0.07 0.06 0.10 0.05 0.08 0.04 0.06 Actual 0.010 0.008 0.006 0.03 0.004 0.04 0.02 0.002 0.02 0.01 0.00 0.00 December YTD 2015 Operating Report – Annual Review 0.000 December YTD December YTD 3 Page 48 Craig Station Performance. For 2015 equivalent availability factor was slightly below budget primarily due to the extended planned outage of Unit 2. Net capacity factor was below budget for December and the year due to ongoing soft market pricing. Craig Equivalent Availability Budget Craig Station Net Capacity Factor Actual Budget 100% 100% 95% 95% 90% 90% 85% 85% 80% 80% 75% 75% 70% 70% 65% 65% 60% 60% 55% 55% 50% Actual 50% December YTD December YTD Peaking. CT generation was above budget in 2015 due to Rawhide CT F supporting the Rawhide Unit 1 planned outage and summer peaking sales. Overall pricing for CT generation was below budget due to low natural gas pricing throughout the year. MWhs 450 CT Generation Budget Actual $/MBtu 60,000 $5.00 Natural Gas Pricing Budget Actual $4.50 400 50,000 350 300 40,000 $4.00 $3.50 $3.00 250 30,000 200 $2.50 $2.00 150 20,000 100 10,000 50 $1.50 $1.00 $0.50 0 0 December YTD 2015 Operating Report – Annual Review $December YTD 4 Page 49 Renewable Supply. Hydro allocations were received as budgeted. Wind generation continued its trend of below budget generation throughout the year due to lower than anticipated wind levels. MWh (000's) MWh (000's) Hydro Generation Wind Generation Budget Actual 700 35 60 600 30 300 50 500 25 250 40 400 20 200 30 300 15 150 20 200 10 100 10 100 5 50 0 0 70 Budget Actual 0 December YTD 350 0 December YTD SALES AND PURCHASES Surplus Sales. Surplus sales volume and pricing continued to decline throughout 2015 due to a depressed market and excess capacity within the western interconnect. Demand in December was reduced even lower due to higher than expected wind output throughout the region along with low natural gas prices. MWh (000's) Sales Volume Budget $/MWh Budget Actual 100 900 $40 90 800 $35 80 700 $30 70 600 60 Average Sales Price Actual $25 500 $20 50 400 40 300 30 $15 $10 20 200 10 100 $5 0 $0 0 December YTD 2015 Operating Report – Annual Review December YTD 5 Page 50 Purchases. The volume of purchased power in 2015 was significantly above budget due to planned outage extensions at both Rawhide and the Craig Station. Purchase power pricing, however, was significantly below budget, resulting in favorable purchase power costs for the year. Energy Purchases MWhs Budget 1,200 Actual 1,000 $/MWh 250,000 $60 200,000 $50 800 Average Purchase Price Budget Actual $40 150,000 600 $30 100,000 400 $20 50,000 200 0 0 December $10 $0 YTD December YTD DISPATCH COST Dispatch Cost. Rawhide’s December costs were slightly above budget due to ongoing O&M costs associated with unit tuning and testing after the planned outage. As mentioned previously, purchased power prices continued to be lower than budgeted. Craig costs for the month were significantly below budget due to an annual coal price adjustment from the Trapper Mine, which contributed to average dispatch costs being well below budget for December. December Dispatch Cost by Resource Budget $600 Blended Actual Resource Average Actual $60 $50 $/MWh $40 $30 $20 $10 $0 Rawhide Craig LAP CRSP Purchases Wind CTs $29.64 Blended Budget | $26.89 Blended Actual 2015 Operating Report – Annual Review 6 Page 51 Non-outage O&M costs at both Rawhide and the Craig Station were significantly below budget during the year. Fuel costs at Craig Station, specifically the Trapper Mine, were also significantly below budget for 2015. These positive variances more than offset the additional expenses incurred during the extended planned outages at both Rawhide and the Craig Station. Purchased power prices ended the year well below budget due to the ongoing soft sales market. Low natural gas prices contributed to CT costs being significantly below budget for the year. In a year with two major planned outages, total dispatch costs for 2015 still came in below budget. YTD Dispatch Cost by Resource Budget $140 Actual Resource Average Blended Actual $120 $/MWh $100 $80 $60 $40 $20 $0 Rawhide Craig LAP CRSP Purchases Wind CTs $34.12 Blended Budget | $33.22 Blended Actual POWER DELIVERY Major System Operations Projects Benefitting the Municipalities: Location Estimated Finish Date Percent Complete Loveland 01/2016 90% Crossroads city transformer addition Fort Collins 05/2016 85% Laporte substation 230kv expansion Fort Collins 05/2016 80% Laporte substation 115kv adaptations and refurbishments Estes Park 07/2016 90% Fiber loop replacement Rawhide 08/2016 38% Rawhide solar project Estes Park 11/2015 100% New SCADA system Fort Collins 07/2015 100% Rawhide – Laporte OPGW Fort Collins 07/2015 100% Rawhide – I-25 OPGW Fort Collins 06/2015 100% Linden 115kV breaker addition Rawhide 05/2015 100% Rawhide 230kV breaker replacements 2015 Operating Report – Annual Review Description 7 Page 52 EVENTS OF SIGNIFICANCE Power Production: • Rawhide Unit 1 set a record consecutive day run at 393 days. The previous record was 292 days. • Successfully completed the planned major maintenance outage of Rawhide Unit 1. • Installed the Emerson Ovation DCS process control computer system with high performance graphics and analytics. • Rolled out new Rawhide controls network to improve cyber security and reliability. • Completed the tripper deck dust collection project. • Completed the variable frequency drive project at Rawhide pump station to increase energy efficiency while improving water utilization. • All of the CT units performed well in 2015. The EA units had a starting reliability of 93.3% and CT-F was successfully run during the Unit 1 outage for over 100 hours, which is one of the longer run times on record. • The Rawhide coal pile level was successfully brought back up to target inventory levels. • An extension to the Rawhide coal contract was executed in November 2015, which will secure all of Rawhide’s coal needs through 2022. Power Delivery: • Reorganized the Power Delivery division to better align employee strengths with business needs. • Re-filed a new version of Joint Dispatch (JDA) with FERC to create a long term market opportunity for our excess generation. • Experienced a soft energy market throughout the year, resulting in extremely low gas and surplus sales pricing. • Municipal demand and energy were close to budget. • Entered into a purchase power agreement (PPA) for 30 megawatts of solar at Rawhide Flats Solar Facility. • First full year of Spring Canyon wind (60 MW). • Successfully completed a WECC/NERC reliable audit and NATF Peer Review. 2015 Operating Report – Annual Review 8 Page 53 PLATTE RIVER POWER AUTHORITY – Financial Highlights Year-to-Date December 2015 Platte River’s financial position remains stable although unfavorable results were reported compared to budget. Net income of $6.8 million exceeded the strategic financial plan target; however it was $3.1 million below budget. Revenues were the main driver of the overall lower net income primarily due to the surplus sales market conditions, as overall expenses have been under budget. Key Financial Res ults ($ Millio ns) Net Inc o m e December Budget Ac tual $ $ 1.81x Debt Co verage To tal Revenues 1.0 0.4 $ (0.6) (60.0%) 1.64x (.17x) (9.4%) $ (1.6) (8.9%) $211.7 0.7% 176.6 $ 17.9 $ 16.3 14.4 14.5 0.1 (1.7) Municipal Sales Revenue Year to Date Budget Actual Favo rable (Unfavo rable) $ 9.9 1.60x $ 6.8 (3.1) (31.3%) (.09x) $201.1 $ (10.6) (5.6%) 0 0% (5.0%) $ 211.7 176.0 (0.6) (0.3%) 176.6 (10.0) 1.51x $ 3.5 1.8 (48.6%) 35.1 25.1 $ 14.0 $ 12.5 $ 1.5 10.7% $165.8 $157.3 Purchased Power 3.1 2.8 0.3 9.7% 33.3 32.5 Fuel Expense 4.8 2.9 1.9 39.6% 51.1 Operations and Maintenance 5.0 5.5 (0.5) (10.0%) 65.1 Administrative and General 1.1 1.3 (0.2) (18.2%) 4.4 35.3% Surplus Sales and Other Revenue To tal Operating Expens es Capital Additio ns $ 6.8 $ $ 2.4 Annual Budget Favo rable (Unfavo rable) $ 9.9 1.60x (28.5%) 35.1 8.5 5.1% $ 165.8 0.8 2.4% 33.3 46.4 4.7 9.2% 51.1 62.7 2.4 3.7% 65.1 16.3 15.7 $ 37.8 $ 33.1 $ $ 0.6 3.7% 16.3 4.7 12.4% $ 37.8 Below is a summary of key financial drivers year to date: Below-Budget Surplus Sales Revenues: As a result of lower generation due to a soft surplus sales market, mild weather, and maintenance issues of the Craig units, surplus sales revenues were $9.9 million below budget. The Craig units and Rawhide Unit 1 produced 125 GWh and 29 GWh less energy, respectively. This contributed approximately $3.8 million to the lower revenues, based on current surplus sales prices. Below-Budget Operating Expenses: Overall operating expenses were 5.1% below budget mainly due to the items listed below. o Purchased power expenses were below budget due to energy provided to Tri-State under the Forced Outage Assistance Agreement, unfavorable wind conditions resulting in lower generation and fewer reserve purchases. These below-budget expenses were partially offset by above-budget supplemental purchases, which were required mainly due to extending the scheduled maintenance outages. Purchases were also made to take advantage of the favorable pricing, which helped maintain contract sales. o Fuel expenses were below budget as a result of below-budget generation and lower coal prices. A soft surplus sales market, mild weather, the extended scheduled outage of Craig Unit 2, and maintenance issues impacted generation of the Craig units. Lower coal prices from the Trapper and Colowyo mines also contributed to lower fuel expenses. In addition, Rawhide Unit 1 fuel expenses were below budget as the final coal price determined under the contract and the fuel surcharge were less than originally budgeted. The ten-day extension of the scheduled outage also impacted Rawhide Unit 1’s generation. Natural gas expense partially offsets the below-budget coal expense. Natural gas is above budget due to operating the combustion turbines to meet load requirements and surplus sales. o Operations and maintenance expenses were below budget mainly due to the below-budget Yampa operating expenses, lower personnel expenses due to vacant positions, and lower production and transmission maintenance expenses. o Administrative and general expenses were below budget mainly due to personnel expenses from vacant positions, planning expenses, professional services, and computer expenses. Below-Budget Capital Additions: Capital additions were below budget $4.4 million due to scheduling changes, contractor delays, and staffing constraints. As a result $4.4 million of this variance will be requested to be carried over to the 2016 budget. See page 9 for details of significant projects. Page 1 of 13 Page 54 PLATTE RIVER POWER AUTHORITY SCHEDULE OF REVENUES AND EXPENDITURES, BUDGET TO ACTUAL December 2015 Non-GAAP Budgetary Basis (In Thousands) Month of December Budget Actual Favorable (Unfavorable) REVENUES ELECTRIC OPERATING REVENUES Municipal sales $ Short-term surplus sales and wheeling Total operating revenues 14,404 $ 14,503 $ 99 3,408 1,667 (1,741) 17,812 16,170 (1,642) OTHER REVENUES Interest income (1) 62 74 12 Other income 19 54 35 Total other revenues 81 128 47 Total Revenues $ 17,893 $ 16,298 $ $ 3,056 $ 2,775 $ (1,595) EXPENDITURES OPERATING EXPENSES Purchased power 281 Fuel expense 4,793 2,938 Production expenses 3,917 4,214 Transmission expenses 1,056 1,252 (196) Administrative and general 1,148 1,355 (207) 13,970 12,534 Total operating expenses 1,855 (297) 1,436 DEBT EXPENSE Interest expense 779 779 - Principal 1,385 1,385 - Total debt expense 2,164 2,164 - Production 2,581 2,608 Transmission 2,992 1,082 1,910 General 1,212 738 474 Total capital additions 6,785 4,428 2,357 CAPITAL ADDITIONS (27) Total Expenditures $ 22,919 $ 19,126 $ 3,793 Revenues Less Expenditures $ (5,026) $ (2,828) $ 2,198 (1) Excludes unrealized investment gains and losses. Page 2 of 13 Page 55 PLATTE RIVER POWER AUTHORITY SCHEDULE OF REVENUES AND EXPENDITURES, BUDGET TO ACTUAL December 2015 - YEAR TO DATE Non-GAAP Budgetary Basis (In Thousands) December Year to Date Budget Actual Favorable (Unfavorable) Annual Budget REVENUES ELECTRIC OPERATING REVENUES Municipal sales $ Contract surplus sales Short-term surplus sales and wheeling Total operating revenues 176,586 $ 175,998 $ (588) $ 176,586 1,219 1,219 - 1,219 32,380 22,216 (10,164) 32,380 210,185 199,433 (10,752) 210,185 OTHER REVENUES Interest income (1) 713 772 59 713 Other income 788 900 112 788 1,501 1,672 171 1,501 Total other revenues Total Revenues $ 211,686 $ 201,105 $ $ 33,305 $ 32,548 $ (10,581) $ 211,686 EXPENDITURES OPERATING EXPENSES Purchased power 757 $ 33,305 Fuel expense 51,111 46,446 4,665 51,111 Production expenses 51,800 49,959 1,841 51,800 Transmission expenses 13,264 12,633 631 13,264 Administrative and general 16,280 15,723 557 16,280 165,760 157,309 8,451 165,760 Total operating expenses DEBT EXPENSE Interest expense 9,787 9,787 - 9,787 Principal 18,850 18,850 - 18,850 Total debt expense 28,637 28,637 - 28,637 25,015 CAPITAL ADDITIONS Production 25,015 22,896 2,119 Transmission 9,027 7,519 1,508 9,027 General 3,759 2,715 1,044 3,759 37,801 33,130 4,671 37,801 Total capital additions Total Expenditure Budget $ Contingency Reserved to Board 232,198 $ - 219,076 $ - 13,122 $ - 232,198 13,360 Total Expenditures $ 232,198 $ 219,076 $ 13,122 $ 245,558 Revenues Less Expenditures $ (20,512) $ (17,971) $ 2,541 $ (33,872) (1) Excludes unrealized investment gains and losses. Page 3 of 13 Page 56 PLATTE RIVER POWER AUTHORITY STATEMENTS OF NET POSITION Unaudited (In Thousands) December 31 2015 2014 ASSETS Utility Plant, at original cost Land and land rights Plant and equipment in service Less - Accumulated depreciation and amortization $ Construction work in progress Total utility plant 14,515 1,275,987 (759,951) 530,551 43,902 574,453 $ 14,515 1,270,710 (733,588) 551,637 19,603 571,240 Special Funds and Investments Restricted funds and investments Dedicated funds and investments Total special funds and investments 22,201 57,766 79,967 25,425 69,660 95,085 10,126 20,711 14,503 7,501 13,590 12,362 1,364 80,157 24,234 20,238 14,230 7,260 7,612 12,278 1,346 87,198 2,437 1,355 3,792 738,369 3,054 1,511 4,565 758,088 1,033 5,141 6,174 1,908 1,908 183,559 3,229 6,693 9,682 203,163 201,572 6,292 9,372 217,236 16,615 3,063 19,297 780 1,343 41,098 244,261 21,980 2,775 11,686 867 1,764 39,072 256,308 1,006 613 1,619 8,780 8,780 366,412 21,421 110,830 498,663 339,567 24,559 130,782 494,908 Current Assets Cash and cash equivalents Other temporary investments Accounts receivable - municipalities Accounts receivable - other Fuel inventory, at last-in, first-out cost Materials and supplies inventory, at average cost Prepayments and other assets Total current assets Non-Current Assets Regulatory assets Other long-term assets Total non-current assets Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred loss on debt refundings Pension deferrals Total deferred outflows of resources LIABILITIES Non-Current Liabilities Long-term debt, net Capitalized lease obligation Net pension liability Other liabilities and credits Total non-current liabilities Current Liabilities Current maturities of long-term debt Current portion of capitalized lease obligation Accounts payable Accrued interest Accrued liabilities and other Total current liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Regulatory liabilities and credits Pension deferrals Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for debt related purposes Unrestricted Total net position $ $ Page 4 of 13 Page 57 PLATTE RIVER POWER AUTHORITY STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Unaudited (In Thousands) Twelve Months Ended December 31 2014 2015 Month of December OPERATING REVENUES Sales to municipalities Sales for resale and other $ Total operating revenues 14,503 1,667 $ 175,998 23,435 $ 169,773 30,094 16,170 199,433 199,867 2,775 2,938 5,608 1,439 2,298 32,548 46,446 62,854 15,906 26,987 26,904 49,975 55,337 14,395 28,374 15,058 184,741 174,985 1,112 14,692 24,882 OPERATING EXPENSES Purchased power Fuel Operations and maintenance Administrative and general Depreciation Total operating expenses Operating income NONOPERATING REVENUES AND EXPENSES Interest income Other income Interest expense Allowance for funds used during construction Amortization of bond financing costs Net (decrease)/increase in fair value of investments 63 54 (779) 29 (87) 745 900 (9,787) 349 (112) 641 1,368 (10,788) 97 367 39 Total nonoperating revenues and expenses (720) (7,905) (8,276) 392 6,787 16,606 INCOME BEFORE CONTRIBUTIONS - Contribution of assets to municipalities CHANGE IN NET POSITION 392 NET POSITION AT BEGINNING OF PERIOD NET POSITION AT BEGINNING OF PERIOD, ADJUSTED $ 498,663 (155) 6,632 501,148 (2,877) 498,271 Adjustment for change in accouning principle NET POSITION AT END OF PERIOD (155) 16,451 494,908 (2,877) 492,031 $ 498,663 478,457 478,457 $ 494,908 Page 5 of 13 Page 58 PLATTE RIVER POWER AUTHORITY STATEMENTS OF CASH FLOWS Unaudited (In Thousands) Twelve Months Ended December 31 2014 2015 Month of December CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments for operating goods and services Payments for employee services $ Net cash (used in)/provided by operating activities 12,216 (17,390) (3,905) $ 199,008 $ (136,175) (32,472) 198,451 (109,152) (29,932) (9,079) 30,361 59,367 954 (2,548) (4,676) (27,747) (962) (21,980) (9,874) (15,829) (942) (21,060) (10,866) (6,270) (60,563) (48,697) 2,289 124 14,505 1,589 (6,459) 1,931 2,413 16,094 (4,528) (12,936) (14,108) 6,142 23,062 24,234 18,092 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Additions to electric utility plant Payments from accounts payable incurred for electric utility plant additions Principal payments on long-term debt Interest payments on long-term debt Net cash used in capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases and sales of temporary and restricted investments, net Interest and other income, including realized gains and losses Net cash provided by/(used in) investing activities (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS BALANCE AT BEGINNING OF PERIOD IN CASH AND CASH EQUIVALENTS BALANCE AT END OF PERIOD IN CASH AND AND CASH EQUIVALENTS $ 10,126 $ 10,126 $ 24,234 $ 1,112 $ 14,692 $ 24,882 RECONCILIATION OF NET OPERATING INCOME TO NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES Operating income Adjustments to reconcile net operating income to net cash (used in)/provided by operating activities: Depreciation Changes in assets and liabilities which provided/(used) cash: Accounts receivable Fuel and materials and supplies inventories Prepayments and other assets Deferred outflows of resources Accounts payable Net pension liability Other liabilities Deferred inflows of resources Net cash (used in)/provided by operating activities $ 2,298 26,987 28,374 (4,003) (149) 62 (5,141) (5,607) 3,816 (3,086) 1,619 (514) (6,062) 582 (5,141) 5,965 3,816 (2,803) (7,161) (1,349) 2,843 601 419 (2,304) 5,901 (9,079) $ 30,361 $ 59,367 Page 6 of 13 Page 59 PLATTE RIVER POWER AUTHORITY SCHEDULE OF NET REVENUES FOR DEBT SERVICE Unaudited (In Thousands) Twelve Months Ended December 31 2014 2015 Month of December NET REVENUES Operating revenues $ Operations and maintenance expenses, excluding depreciation and amortization Net operating revenues Plus interest income on bond accounts and other income Net revenues before rate stabilization Rate stabilization Deposits Withdrawals 16,170 $ 199,433 $ 199,867 12,760 157,754 146,611 3,410 41,679 53,256 128 1,672 2,013 3,538 43,351 55,269 - - - $ 3,538 $ 43,351 $ 55,269 Power revenue bonds Allowance for funds used during construction $ 2,164 - $ 28,637 - $ 32,385 (97) NET REVENUE BOND SERVICE $ 2,164 $ 28,637 $ 32,288 TOTAL NET REVENUES BOND SERVICE COVERAGE Power revenue bond coverage ratio 1.64 1.51 1.71 Page 7 of 13 Page 60 Platte River Power Authority Operating Expenses Variances Exceeding $100,000 - December 2015 Description Favorable (Unfavorable) Coal Coal was below budget due to lower generation and coal price for the Craig units. Generation was below budget as a result of surplus sales market conditions and curtailments on the units for maintenance issues. The coal price from Trapper Mine was significantly less than budget due to adjustments from an audit and favorable mining operations. The Rawhide coal price was also below budget as the final coal price determined under the contract and the fuel surcharge were less than originally budgeted. $ 1,758,304 Purchased Power Purchased power was below budget due to several factors. Energy was provided to TriState under the Forced Outage Assistance Agreement for Craig Unit 3's forced outage. Purchased reserves were lower due to an adjustment for a true-up of rates for the prior year from Xcel Energy. Wind purchases were also under budget as a result of lower generation due to wind conditions. $ 280,725 O&M Materials and Supplies O&M materials and supplies were below budget due to lower lime deliveries and reclassifications of Rawhide Unit 1 scheduled outage expenses. $ 132,833 Overtime Wages Overtime wages were above budget mainly due to the extension of the Rawhide Unit 1 scheduled outage. $ (404,784) Medical and Dental Claims were more than anticipated. Timing of medical expenses is difficult to predict and large claims can cause swings in this expense. $ (538,473) Page 8 of 13 Page 61 Platte River Power Authority Capital Additions Variances - December 2015 Capital expenditures at the end of the year were $4.7 million below budget. Of this variance, $4.4 million will be requested to be carried over to the 2016 budget. The projects listed below ended the year with a budget variance of more than $100,000. In addition, the amounts below are costs for 2015 and may not represent the total cost of the project. Project ($ in Thousands) POWER PRODUCTION Yampa Work Orders (Platte River's Share) - The Yampa environmental, controls and other capital projects were below budget at the end of the year. The remaining funds will be carried over into 2016. Budget Actual Favorable (Unfavorable) Carryover Request $ 12,016 $ 10,428 $ 1,588 $ 1,588 Soldier Canyon 10" Line Modifications with New Raw Water Tank - This project was delayed due to the scheduled outage taking priority causing the project to carryover into 2016. $ 1,399 $ 856 $ 543 $ 543 Voltage Regulator Replacement - Unit 1 - This project was placed on hold as it could not be completed during the scheduled outage due to vendor delays. The project will be rebudgeted for the 2017 spring outage. $ 319 $ 121 $ 198 $ - $ 349 $ 160 $ 189 $ 189 Unit 1 Controls Network Cyber Security and Redundancy Upgrade - This project was delayed due to the scheduled outage taking priority causing the project to carryover into 2016. $ 894 $ 718 $ 176 $ 176 SUS Communications - This project was canceled due to staffing constraints. $ 111 $ - $ 111 $ - - $ 132 $ (132) $ - $ 200 $ (141) $ - - $ 210 $ (210) $ - $ 277 $ (277) $ Windy Gap Firming Project - The costs for 2015 were for mitigation and ranchers settlements. The most recent data from Northern Colorado Water Conservancy District shows the mitigation costs will be incurred in 2016. Conveyor 2 Gearbox Motor Replacement - This out-of-budget project replaced a motor essential for unloading coal from the train. $ Conveyor 2 Gearbox Replacement - This project was above budget due to purchasing a second gearbox as a spare. Additional funds of $141K were required to complete the purchase and installation of the original gearbox. $ Tripper Deck Expansion - This out-of-budget project for $299K allows safer access and a larger work area for both the new dust collector and the conveyor 10A gearbox. The final door will be installed in 2016 during the screen outage. $ Generator Lead Bushing Enhancements - This out-of-budget project for $330K replaced the generator lead bushings with enhanced bushings to ensure reliability and address overheating concerns. The project is under the original projection due to installation labor being less than expected. $ 59 Page 9 of 13 89 - Page 62 Platte River Power Authority Capital Additions Variances - December 2015 Project ($ in Thousands) POWER DELIVERY Fiber Optic Route to Estes Park - This project is required to provide redundancy for Platte River's transmission operations with Estes Park, enable retirement of the antiquated digital microwave technology, ensure continued ability of Estes Park to receive broadband communications, and has the potential to provide Estes Park redundancy in the case of a fiber outage. Costs were for the route design, six miles of underground fiber conduit, and vaults along County Road 43 between Drake and Glen Haven. The project was initially delayed due to obtaining the right of way along County Road 43, then experienced weather issues. The project will carryover into 2016. Budget Favorable (Unfavorable) Actual Carryover Request $ 1,212 $ 747 $ 465 $ 465 Optical Ground Wire Rawhide to LaPorte - The construction contract for this project was below budget due to favorable pricing received from the vendor. $ 958 $ 585 $ 373 $ - Crossroads 115/230kV Substation Transformer T2 Addition - The construction contract for this project was below budget due to favorable pricing from the vendor. A relay panel design change also resulted in lower costs. As-built drawings will be completed and the project will be finalized in 2016. $ 890 $ 667 $ 223 $ 12 LaPorte Substation - 230kV Expansion - This project was below budget due to weather delays and difficulties with installation of the foundations. Additional over budget funds of $162K were required to complete the project, which will be included in the carryover amount into 2016. $ 5,087 $ 4,926 $ 161 $ 323 Emergency Storm Structures - This project was delayed due to a change in project scope. Staff is working with a consultant to update the emergency storm structures plan for transmission lines. $ 120 $ 9 $ 111 $ 50 Boyd 115/230kV Substation Transformer T2 Addition - The design costs for this project are delayed until 2016 as a result of staffing constraints. $ 120 $ 10 $ 110 $ 110 Breaker Replacement - Richard Lake Breaker 562 - This out-of-budget project for $157K was to replace the failing breaker to prevent loss of load. The total project costs was less than the original projection due to less labor than expected and will be finalized in 2016. $ - $ 141 $ (141) $ 1 Station Service Replacement - Ault Substation (Western Joint Facilities) This out-of-budget project for $191K is a result of Platte River's joint ownership in the Ault Substation. $ - $ 191 $ (191) $ CORPORATE SERVICES Storage Array Replacement - This project was below budget due to favorable pricing received from the vendor. $ 411 $ 196 $ 215 $ Landscape Improvements - Headquarters Southeast Corner - This project was below budget due to a reduction in scope necessary as a result of the construction of the new intersection at Horsetooth and Timberline. Final landscape improvements will be done in 2016. $ 175 $ 32 $ 143 $ Page 10 of 13 - - 34 Page 63 Platte River Power Authority Capital Additions Variances - December 2015 Project ($ in Thousands) Budget Favorable (Unfavorable) Actual Substation Security Projects - The remainder of this project has been canceled. The needs of the overall security system will be evaluated. $ 151 $ Security - Longs Peak Substation - This project was delayed due to staffing constraints and will be done in 2016. $ 127 $ 9 - Carryover Request $ 142 $ - $ 127 $ 127 Page 11 of 13 Page 64 PLATTE RIVER POWER AUTHORITY MONTHLY STATISTICS December 2015 December Budget Actual 12 Months Rolling Favorable (Unfavorable) Budget Favorable (Unfavorable) Actual Resources (MWh) Net Generation Rawhide Craig Peaking Units Wind 188,445 94,185 399 30,094 188,862 74,244 29,506 417 (19,941) (399) (588) 1,962,240 1,080,716 19,128 296,519 1,933,476 955,723 56,963 273,432 (28,764) (124,993) 37,835 (23,087) Purchases Western LAP Western CRSP Other Purchases Forced Outage Exchange Interchange Received Total Receipts 10,461 51,146 263 374,993 10,461 51,146 998 (990) 354,227 735 (990) (20,766) 109,536 502,467 140,798 4,111,404 109,536 502,467 232,653 2,500 (594) 4,066,156 91,855 2,500 (594) (45,248) 13,774 131,685 71,342 65,473 282,274 13,887 135,416 70,179 63,077 282,559 113 3,731 (1,163) (2,396) 285 131,169 1,506,358 815,648 748,995 3,202,170 129,634 1,516,550 801,097 753,920 3,201,201 (1,535) 10,192 (14,551) 4,925 (969) 87,920 87,920 59,489 59,489 (28,431) (28,431) 854,797 854,797 713,449 713,449 (141,348) (141,348) 4,799 3,600 8,579 3,600 3,780 54,437 62,800 88,706 62,800 34,269 374,993 354,227 4,111,404 4,066,156 Deliveries (MWh) Municipal Sales Estes Park Fort Collins Longmont Loveland Total Municipal Sales Surplus Sales Short-Term Surplus Sales Total Surplus Sales Forced Outage Exchange Losses and Other Total Deliveries (20,766) December Budget Actual (45,248) 12 Months Rolling Favorable (Unfavorable) Budget Actual Favorable (Unfavorable) Coincidental Demand (kW) Estes Park Fort Collins Longmont Loveland Total Coincidental Demand 25,041 232,934 126,941 116,050 500,966 21,948 233,428 121,521 110,035 486,932 (3,093) 494 (5,420) (6,015) (14,034) 217,400 2,841,614 1,589,037 1,460,014 6,108,065 214,912 2,819,554 1,545,606 1,447,234 6,027,306 (2,488) (22,060) (43,431) (12,780) (80,759) Non-Coincidental Demand (kW) Estes Park Fort Collins Longmont Loveland 25,799 233,428 121,521 110,350 239,641 2,822,704 1,560,153 1,451,236 Page 12 of 13 Page 65 Platte River Power Authority December 2015 - Payments of $50,000 or More Vendor Description Payment Amount Operations and Maintenance Payments Non-Recurring O&M Payments TEI Construction Services Inc Kennametal DBA Conforma Clad Western Refractory Georgia Western Inc Power Flow Engineering RMS Energy Co LLC Capcorp - Conveyor Aggregate Products Corp Power Technical Services LLC Alstom Power Precision Industrial Contractors Inc Miller Insulation Co Inc Structural Integrity Associates Inc Non-Recurring O&M Payments Total RH outage boiler RH outage boiler support RH outage refractory work RH outage valve repair RH outage runner and shaft assembly RH outage isophase inspection RH outage conveyor belt replacements RH outage coordinator scheduler RH outage boiler support and parts RH outage balance support RH outage insulation RH outage high energy piping inspection $1,847,806 239,270 219,933 212,316 140,000 76,000 73,735 65,022 57,925 53,425 51,820 50,895 $3,088,147 Regular Recurring O&M Payments Cloud Peak Energy Resources LLC BNSF Railway Company Trapper Mining Inc Colowyo Coal Company Spring Canyon Energy II LLC Duke Energy Retail Sales LLC Medicine Bow Wind LLC Mieco Inc Xcel Energy Graymont Western Us Inc Tri-State G & T Western Area Pwr Adm-DOE Public Service Co of Colorado Cargill Power Markets LLC Basin Electric Power Coop Black Hills Power Inc Xcel Energy Wells Fargo First Bankcard Center Western States Power Corporation City of Fort Collins Clearesult Consulting, Inc. Leidos, Inc. Co Dept of Public Health & Environment Regular Recurring O&M Payments Total Total O&M Payments Coal delivery Coal delivery Coal delivery Coal delivery Spring Canyon wind energy Silver Sage wind energy Medicine Bow wind energy Natural gas Natural gas transportation Lime Yampa O&M Purchased power (October 2015 CRSP and LAP) Purchased power Purchased power Purchased power Purchased power Ancillary services Pension contribution Platte River's credit card payment Project E Utility payments Energy efficiency, DSM Energy efficiency, DSM Annual emission fee $2,060,086 1,172,185 842,491 411,719 441,578 153,924 51,030 351,000 113,382 62,342 2,005,591 1,913,800 1,751,295 608,281 353,253 120,194 301,116 275,000 71,292 174,600 55,859 93,276 50,000 58,748 $13,492,042 $16,580,189 Capital Payments Dis-Tran Packaged Substations LLC Air Cure Incorporated Addison Construction Co American Civil Constructors Exponential Engineering Company Emerson Process Management Power & Water Western United Electric Supply Corp Selcon Utility Inc Interstates Construction Services Inc Lightriver Technologies H & H Industrial Total Capital Payments GRAND TOTAL: PAYMENTS OF $50,000 OR MORE Substation structures and equipment Tripper dust collection replacement Substation construction Fiber optic conduit and vault installation Electrical engineering support RH Unit 1 DSC replacement LaPorte substation - control cables Fiber optic replacement - Estes Park Electrical services DXC equipment in EO and DRC RH outage balance support $1,105,207 501,059 479,221 191,407 183,015 152,364 147,609 125,927 100,432 60,118 50,145 $3,096,504 $19,676,693 Page 13 of 13 Page 66 Page 67 Memorandum Date: February 17, 2016 To: Board of Directors From: Jackie A. Sargent, General Manager/CEO Jason Frisbie, Chief Operating Officer Heather Banks, Fuels and Water Manager Subject: Windy Gap Firming Project – Fifth Interim Agreement This memo provides information regarding a request for funding to start Phase V of the Windy Gap Firming Project. The funding request is from the Municipal Subdistrict, Northern Colorado Water Conservancy District acting by and through the Windy Gap Firming Project Water Activity Enterprise. Phase V of the project includes detailed engineering design, continuation of permitting, additional land acquisition at the proposed Chimney Hollow Reservoir site, planning and implementation of required mitigation and enhancement measures, and the development of contracts and other agreements that will be required to integrate the Firming Project with the Windy Gap Project. The last executed agreement and associated payment made to the Windy Gap Firming Project Enterprise Fund was in 2014. Phase V will be divided into two phases, with an anticipated amendment for additional work and funding in 2017. This phase, which is focused on the engineering design, is scheduled to be completed in 2017. Fifth Interim Agreement: The Fifth Interim Agreement requests $13.7 million to begin Phase V. Of that total, approximately 70 percent of the payment is reserved for design, and the remaining funding will be spent on the other components of Phase V. Attached is the agreement for the funding, with an associated exhibit showing the allocation of costs for the Fifth Interim Agreement. Included in your packet is a resolution approving payment of Platte River’s pro rata share, which is $1,918,211 of the $13.7 million requested from all participants (detailed in Exhibit A). This amount is included in the approved 2016 Platte River budget. Including this request, Platte River will have invested $4.8 million in the Windy Gap Firming Project through the first half of Phase V. The anticipated Platte River expenditure in 2017 is $790,569, which would complete Phase V (design phase). The revised estimated cost of the overall project at this time is $399.5 million, of which Platte River’s share is $55.8 million. To allow the project to move forward into the next phase, staff recommends adoption of the associated resolution, and will be available to answer any questions you may have. Attachment Page 68 Page 69 RESOLUTION NO. __-16 WHEREAS, Platte River Power Authority (Platte River) holds 160 units of the Windy Gap Project, constructed and operated by the Municipal Subdistrict, Northern Colorado Water Conservancy District (MS–NCWCD); and WHEREAS, Platte River has participated in efforts to develop a firming reservoir, commonly referred to as the Windy Gap Firming Project, which would provide greater delivery assurance for the Windy Gap resource; and WHEREAS, Platte River has provided funding for the Windy Gap Firming Project through a number of Interim Agreements approved by the Board; and WHEREAS, MS–NCWCD informed Platte River that a new Fifth Interim Agreement has been developed to continue activities involving engineering and design of the firming project and related expenses; and WHEREAS, capital funds exist in the 2016 budget to contribute the Platte River pro rata share for the completion of activities under the Fifth Interim Agreement; and WHEREAS, Platte River’s management recommends that the Platte River Board of Directors authorize the execution of the Fifth Interim Agreement in order to continue the firming project development process. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of Platte River Power Authority that the General Manager is authorized to execute the Fifth Interim Agreement with the MS-NCWCD. AS WITNESS, I have executed my name as Assistant Secretary and have affixed the corporate seal of the Platte River Power Authority this day of , 2016. Assistant Secretary Page 70 Page 71 Page 72 Page 73 Page 74 Page 75 Page 76 Page 77 PLATTE RIVER POWER AUTHORITY LEGAL AND GOVERNMENTAL AFFAIRS REPORT FEBRUARY 2016 BOARD MEETING The following legal issues and governmental/legislative matters were addressed during the reporting period; bold-faced type is used to highlight recent or significant developments. LEGAL ISSUES: CURRENT OR THREATENED LITIGATION Longmont Excavation Damage — The Zayo Group damaged the 115 kV Terry St. – Fordham underground transmission structure. Sturgeon Electric Company was the contractor for installation and Rapid Wire LLC was the excavation subcontractor. These parties were notified immediately. Repairs were completed and the line was placed in service on April 7, 2014. Two itemized accountings of costs were sent to Zayo Group in a total amount of $728,088.33 with payment due May 15. Platte River filed a complaint against Zayo on May 27, 2014, initiating litigation. Initially Zayo joined Sturgeon and Rapid Wire as third-party defendants, and more recently joined Safe Sites, a contractor for Rapid Wire that assisted in developing the boring plan resulting in the damage. Platte River is in the process of developing expert witness reports in support of its litigation position. The discovery process is ongoing. Some depositions were conducted during December 2015 and additional depositions are scheduled during February and March. The parties are attempting to identify a mutually agreeable mediator. A trial date has been assigned for July 2016. Water Rights Diligence Application — As owners of conditional water rights (in this case, water rights associated with the Reuse Plan), Platte River and Fort Collins are required by statute to file an application for finding of reasonable diligence every six years. Although most of the water rights associated with the Reuse Plan have been made absolute in prior filings, some rights remain conditional. On May 27, 2015, Platte River and the City of Fort Collins filed such an application in Water Court, Division One. The application seeks only to continue the water rights as conditional, and does not request any portion of the water rights to be made absolute. In accordance with Colorado law, notice of the application was published in the Water Court Resume and The Coloradoan. Five parties timely filed statements of opposition to the application: 1. 2. 3. 4. 5. Northern Colorado Water Conservancy District City of Greeley Water Supply and Storage Company Larimer & Weld Irrigation Company Cache La Poudre Water Users Association North Poudre Irrigation Co. (“NPIC”) filed a motion to intervene in the case after the deadline for filing statements of opposition had passed. Platte River consented to the motion because it is likely the motion would be granted by the water referee even if we objected, and NPIC’s concerns with the application appear to be narrow. An initial telephone status conference between Platte River’s water counsel, counsel for opposers, and the Water Referee was held on September 1, 2015. Platte River provided a draft ruling to legal counsel for opposers on September 25, 2015. By order of the water court referee, opposers had until November 30, 2015 to provide comments on the draft ruling. All opposers, Page 78 except Water Supply and Storage Co., submitted comments on the proposed decree. The comments received can generally be classified into two categories. The first question the need and operation of the remaining conditional exchanges. The second relate to certain opposers request to remove mention of their structures in the propose decree. It is primarily the ditch company opposers making this request, in particular The Larimer & Weld Irrigation Company (“LWIC”). Retained counsel and counsel for Fort Collins have exchanged written correspondence in an effort to address LWIC’s concerns. No settlement has been reached yet and the applicants will continue to negotiate with LWIC counsel. A second telephone status conference was held on December 17, 2015 between the applicants and the opposers before the water referee. The referee set a deadline of March 31, 2016 for the applicants to respond to opposers’ comments. On August 31, 2015, the Division Engineer submitted its Summary of Consultation report to the Water Referee and all parties as required under the uniform local rules for water court. The Division Engineer presented three issues for the Referee’s consideration, two of which are routinely included in Consultation reports. The third requires a showing that Platte River has steadily applied work towards perfecting the water rights. Platte River’s evidence should satisfy this standard. Platte River will respond to the Summary of Consultation prior to the entry of decree in this case. The application will likely be on the Water Referee’s Docket until at least July 31, 2016, and possibly longer. During this time, Platte River and Fort Collins will make initial disclosures regarding the application to the Water Court and opposing parties in an effort to explore settlement. All prior reasonable diligence filings have been settled. If no settlement is reached before the Water Referee, the application will be re-referred to the Water Judge and the matter will be set for trial at that time. ONGOING AND CURRENT MATTERS OF SIGNIFICANCE Estes Park Long-Haul Fiber Link — During 2004 Platte River, Northern Colorado Water Conservancy District and Western Area Power Administration constructed a 72 strand fiber line from Loveland to Estes Park. The line was attached to existing Western transmission infrastructure and Western holds nominal title to the fiber. Each party funded an agreed share of the costs of the fiber and received a perpetual license to use their respective share. Platte River paid the costs of 36 strands. After construction was complete, Platte River transferred 24 fibers to Estes Park and received payment in an amount of $287,106.42. This occurred in 2005 and there is no documentation for this transaction other than an invoice and cancelled check. Platte River uses the 12 strands it retained for SCADA and Estes Park uses some of its 24 strands for municipal operations and has leased some of the strands to various telecommunications providers. Due to the destruction which occurred in the Big Thompson and St. Vrain canyons in 2013, these fibers are now the only telecommunication link to Estes Park. A lightning strike in 2011 damaged the fiber and Platte River looked to its agreement with Estes Park to determine cost responsibility. At that time Platte River and Estes Park realized there was no agreement in place that outlined rights and obligations. This in turn led to a review of the initial partnering agreement between Platte River, Northern and Western. It became clear that Western retained the right to consent to any assignment of fibers by Platte River, which process had not occurred in 2005 when the fiber was transferred to Estes Park. In March of 2014 Platte River sought such consent from Western and was informed that Western would not consent to any assignment that allowed “commercial” use of the fiber. Western cited federal law as support for its position. This position was different than the prior reading of various federal statutes that Platte River Power Authority 2 February 2016 Legal and Governmental Affairs Report Page 79 had been used to justify commercial leasing of fiber on federal infrastructure and would eliminate broadband, land line telecommunications and 911 service to Estes Park all of which are now entirely dependent upon the fibers assigned to Estes Park. Numerous meetings occurred between Western, Estes Park, and Platte River to explore solutions to this problem. Recently Platte River was notified that Western had re-evaluated its legal position and is now of the opinion that commercial uses of fiber on transmission structures are allowed. To resolve the issues Western requested that Estes Park provide a legal opinion that the uses of the 24 fibers in the Estes Park bundles were authorized under state law. The attorneys representing Western, Estes Park and Platte River discussed the nature of the opinion being requested, and the Estes Park town attorney is preparing such opinion. Environmental Protection Agency Clean Power Plan — On February 9 the Supreme Court stayed the Clean Power Plan rule pending full judicial review. It is unlikely that such review will be complete until 2017 or possibly 2018. This creates significant uncertainty about future compliance planning efforts. Governor Hickenlooper announced that the state planning process will continue during the stay, but opponents have threatened both legislative and judicial action to effect the stay. Commodity Futures Trading Commission (“CFTC”) Proposed Rule — The CFTC has announced a proposed rule eliminating the requirement that entities that are not Swap Dealers or Major Swap Participants file an annual Form TO disclosing otherwise unreported trade options. Currently, Platte River undertakes an annual review of transactions necessary to assess potential reporting obligations. Platte River filed a Form TO for 2014 reporting transactions that could be considered trade options. This relief will eliminate the time consuming annual review of transactions necessary to assess potential reporting obligations. The proposed rule has not yet been adopted. Consequently, Platte River will file a Form TO for 2015 reporting transactions that could be considered trade options. Operations at Glen Canyon Dam — The Bureau of Reclamation and National Park Service are jointly preparing an Environmental Impact Statement (“EIS”) to evaluate operations at Glen Canyon Dam over the next twenty (20) years. In this instance the EIS process is referred to as the Long-Term Experimental and Management Plan, or LTEMP. Glen Canyon is the largest hydropower facility in the family of the Colorado River Storage Project (“CRSP”) hydropower units, which also includes the Aspinall Units on the Gunnison River and Flaming Gorge on the Green River. The outcome of the LTEMP process is important to Platte River because the selected alternative could reduce operational flexibility and reduce available hydropower for purchase. The EIS addresses a number of factors related to releases from Glen Canyon and flow levels down river through Grand Canyon National Park, including hydropower, endangered fish recovery, recreation, and sediment transport. In accordance with the National Environmental Policy Act, Reclamation and the Park Service have developed seven alternatives that are being evaluated in the EIS. The alternatives range from a “No Action” alternative to implementation of “steady flows.” Reclamation and the Park Service publicly released the LTEMP EIS on January 7, 2016. Reclamation and the Park Service have chosen “Alternative D”, also known as the “hybrid approach”, as their preferred alternative. The hybrid approach provides greater hydropower benefits than other alternatives. For example, the monthly release pattern under the hybrid approach would be proportional to the contract rate of delivery for hydropower, except that releases in August and September would be higher and the daily range would be increased (greater ramp up and ramp down rates compared to the steady flow alternative). However, Platte River Power Authority 3 February 2016 Legal and Governmental Affairs Report Page 80 operational issues exist with the hybrid approach, especially in relation to the lack of correlation of hydro generation with load curves. There is a 90-day comment period on the draft. The co-lead agencies must consider and respond to these comments prior to publishing the final decision. Several electric utilities have, or are considering requesting an extension of time to review the LTEMP EIS, a document that is over 1,000 pages in length. Platte River submitted such a request to allow staff time to fully review the proposed action and the potential effects to our operations. Staff continues to work with our utility colleagues through the Colorado River Energy Distributors Association (“CREDA”) to analyze the hydropower impact of the LTEMP. GOVERNMENTAL AFFAIRS: Colorado General Assembly — The 2016 session of the General Assembly commenced on January 13, 2016. The split in control of the legislative houses in combination with the upcoming election has led most commentators to believe that this will be an unproductive session. The deadlines for bill introduction, absent late-bill approval from leadership, have passed and as of February 12 there are 261 bills pending in the House and 124 bills in the Senate. Three bills pertain either directly to Clean Power Plan implementation or to climaterelated emission mandates. On the Senate side, S.B. 16-046 seeks to modify the process for state implementation of the Clean Power Plan by mandating Public Utilities Commission involvement and requiring plan approval from both houses of the General Assembly through joint resolution. This bill also contains a provision that would stay any state implementation efforts during the pendency of any stay of the Clean Power Plan imposed by the courts. The profile of this bill increased with the stay granted by the Supreme Court on February 9. S.B. 16-046 is sponsored by Senator Cooke from Weld County as is the other Clean Power Plan bill in the Senate – S.B. 16-061. This latter bill seeks to protect utility customers from rate increases associated with the Clean Power Plan by creating a state fund to directly reimburse utilities from monies appropriated by the legislature. House Bill 016-1004 would require the inclusion of measurable greenhouse gas reduction goals in future iterations of the state climate action plan. Representative Arndt is a co-sponsor. Like S.B. 16-046, the profile of H.B. 16-1004 was heightened due to the Clean Power Plan stay. This bill has passed out of the House, but is expected to die in the Senate. Another bill with a local sponsor is S.B. 016-037, sponsored by Senator Kefalas. This bill would modify the Colorado Open Records Act to require political subdivisions to provide records stored in an electronic format in a “native” electronic format when so requested. Concerns have been raised about the continued integrity of records provided electronically as well as on the implementation costs, although to date no fiscal note has been filed. United States Congress — The Energy Bill seems to have stalled in the Senate due to the large number of filed amendments and complications involving the Flint, Michigan water crisis. Due to the fact that 2016 is an election year there is a shorter calendar for “policy” bills, and commentators suggest that if the bill doesn’t pass by April the window will have closed. The Senate calendar is crowded with other matters, but the sponsors are still trying to push the bill. Platte River Power Authority 4 February 2016 Legal and Governmental Affairs Report Page 81 January 2016 Operating Report EXECUTIVE SUMMARY Municipal demand was significantly below budget in January, but energy came in close to budget. Baseload generation was significantly below budget for the month due to the timing of a minor scheduled outage on Rawhide Unit 1 to remove protective turbine screens (originally scheduled in December 2015), two forced outages on Craig Unit 2 for controls issues and a tube leak, and unit generation held back due to ongoing soft market pricing. Wind generation outperformed budget in January. The soft market (excess regional capacity and low natural gas prices) continues to adversely affect surplus sales volume and pricing. Below budget generation at the Craig Station significantly increased the per-megawatt-hour operating costs at the facility for the month, which resulted in slightly above budget total dispatch costs for January. Category January Variance Municipal Demand (6.0%) Municipal Energy (0.8%) (21.1%) 6.2% Surplus Sales Volume (49.7%) Surplus Sales Price (11.4%) (1.5%) Baseload Generation Wind Generation Resource Cost Variance Key: Favorable: >2% | Near budget: +/- 2% | Unfavorable: <-2% January 2016 Operating Report 1 Page 82 OPERATIONAL OVERVIEW Safety. There were no lost time accidents in the month of January. 2016 Goal January Actual 0 0 YTD Total 0 System Disturbances. There was no loss of interconnected utility or city load in the month of January. 2015 Goal January Actual 0 0 YTD Total 0 Peak Day Obligation. Peak demand for the month was 463 megawatts, which occurred on January 11, 2016, at 19:00 hours and was 29 megawatts below budget. Platte River’s total obligations at the time of the peak were 523 megawatts. Peak Day Obligation: January 11, 2016 650 600 550 Total Obligation 523 Forecast Demand 492 500 450 Municipal Obligation 463 MW 400 350 300 250 200 150 100 50 0 1 2 3 4 5 6 7 8 Hydro January 2016 Operating Report 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour Wind Rawhide Craig CTs 2 Page 83 POWER GENERATION Rawhide Performance. Unit 1 was off-line at the end of the month to remove protective turbine screens that were installed after the major outage, resulting in below budget equivalent availability. Net capacity factor was below budget due to the minor screen outage as well as required testing and tuning after completion of the major outage last year. Rawhide Equivalent Availability Budget Rawhide Net Capacity Factor Actual Budget 100% 100% 95% 95% 90% 90% 85% 85% 80% 80% 75% 75% 70% 70% 65% 65% 60% 60% Actual 55% 55% 50% 50% January January YTD YTD Rawhide emissions levels were below compliance limits for the month of January: SO2 (lbs/MBtu) Limit NOx (lbs/MBtu) Actual Limit Hg (lbs/GWh) Actual Limit 0.10 0.16 0.014 0.09 0.14 0.012 0.08 0.12 0.07 0.06 0.10 0.05 0.08 0.04 0.06 Actual 0.010 0.008 0.006 0.03 0.004 0.04 0.02 0.002 0.02 0.01 0.00 0.00 January YTD January 2016 Operating Report 0.000 January YTD January YTD 3 Page 84 Craig Station Performance. Equivalent availability factor was below budget due to separate forced outages on Craig Unit 2 both caused by control system issues. A tube leak was discovered, requiring a repair after the first trip. Net capacity factor was significantly below budget due to Craig Unit 2 forced outages and low off-peak market pricing. Craig Equivalent Availability Budget Craig Net Capacity Factor Actual Budget 100% 100% 95% 95% 90% 90% 85% 85% 80% 80% 75% 75% 70% 70% 65% 65% 60% 60% 55% 55% 50% Actual 50% January YTD January YTD Peaking. CT units were run in January to facilitate surplus sales and to complete required quarterly testing. Natural gas burns were not budgeted for January, however pricing continues to be favorable. MWhs 1,200 CT Generation Budget Actual 1,000 $/MBtu 1,200 1,000 $3.50 Natural Gas Pricing Budget Actual $3.00 $2.50 800 800 $2.00 600 600 $1.50 400 400 200 200 0 0 January January 2016 Operating Report YTD $1.00 $0.50 $January YTD 4 Page 85 Renewable Supply. Hydro allocations were received as budgeted. Wind generation was above budget due to higher than expected wind output. MWh (000's) MWh (000's) Hydro Generation 70 Budget Actual Wind Generation Budget 35 60 30 50 25 40 20 30 15 20 10 10 5 0 Actual 0 January YTD January YTD SALES AND PURCHASES Surplus Sales. Surplus sales volume and pricing were significantly below budget due to the ongoing depressed regional market caused by excess capacity within the western interconnect and historically low natural gas pricing. MWh (000's) Sales Volume Budget 120 $/MWh Actual $30 100 $25 80 $20 60 $15 40 $10 20 $5 Average Sales Price Budget Actual $0 0 January January 2016 Operating Report YTD January YTD 5 Page 86 Purchases. There were no purchases budgeted for January, however market pricing was at times below unit operating costs and was utilized to cover Municipal load. Energy Purchases MWhs Budget 12,000 $/MWh Actual 12,000 10,000 Average Purchase Price Budget $25 Actual 10,000 $20 8,000 8,000 6,000 6,000 4,000 4,000 2,000 2,000 $5 0 $0 $15 $10 0 January YTD January YTD DISPATCH COST Dispatch Cost. January dispatch costs were slightly above budget primarily due to below budget capacity factor operations at the Craig Station. January Dispatch Cost by Resource $60 Budget Actual Blended Actual $50 $/MWh $40 $30 $20 $10 $0 Rawhide Craig LAP CRSP Purchases Wind CTs Blended Budget: $28.32 | Blended Actual: $28.75 January 2016 Operating Report 6 Page 87 POWER DELIVERY Major System Operations Projects Benefitting the Municipalities: Location Estimated Finish Date Percent Complete Loveland 01/2016 90% Crossroads city transformer addition Fort Collins 05/2016 85% Laporte substation 230kv expansion Fort Collins 05/2016 80% Laporte substation 115kv adaptations and refurbishments Estes Park 07/2016 90% Fiber loop replacement Rawhide 08/2016 42% Rawhide solar project Estes Park 11/2015 100% New SCADA system Description EVENTS OF SIGNIFICANCE Power Production: • Rawhide Unit 1 was taken off-line January 28 to begin a planned outage for the removal of the protective screens from the main steam valves. This outage is considered an extension of the 2015 fall planned major maintenance outage. Scheduled projects included the removal of the protective screens on the main steam valves, unit wash down, replacement of the LVDT’s on the main steam throttle valves, and the inspection, reworking and resetting of the steam turbine seal oil drain regulator. Power Delivery: • During the month of January several purchases were made at market pricing that were significantly below operating costs, enabling us to utilize this energy to cover Municipal load. • During January Platte River was able to self supply 16 megawatts of spinning reserves. This resulted in a monthly net savings of nearly $100,000. January 2016 Operating Report 7 Page 88 Page 89 PLATTE RIVER POWER AUTHORITY – Financial Highlights Year-to-Date January 2016 Platte River reported favorable results. Net income was $0.5 million and was above budget $0.2 million due to belowbudget operating expenses, partially offset by below-budget revenues. Revenues were lower primarily due to the surplus sales market conditions, as overall expenses were under budget. There was also $0.2 million unrealized gain on investments impacting net income. Details are described below. Results for the end of the year vary due to municipal load variations, market conditions, operation and maintenance expenses. At this point, it is estimated that year end net income would be approximately $10.0 million but could vary between $6.7 and $11.7 million depending on the magnitude of these factors. Ke y Fina nc ia l R e s ults ($ Millio ns ) J a nua ry N e t Inc o me D e b t Co v e ra g e B ud g e t Ac tua l $ 0.3 $ 0.5 1.53x 1.54x T o ta l R e v e nue s $ Municipal Sales Revenue Surplus Sales and Other Revenue T o ta l Op e ra ting E xp e ns e s Purchased Power Fuel Expense Operations and Maintenance Administrative and General Ca p ita l Ad d itio ns $ $ 18.4 15.1 3.3 15.1 3.1 5.1 5.3 1.6 2.7 $ $ $ 16.6 14.8 1.8 13.1 3.3 3.7 4.8 1.3 1.2 A nnua l Fa v o ra b le (U nfa v o ra b le ) $ 0.2 66.7% .01x 0.7% B ud g e t $ 10.7 1.53x $ (1.8) (0.3) (1.5) $ 2.0 (0.2) 1.4 0.5 0.3 $ 217.5 185.6 31.9 $ 169.9 34.3 55.0 61.7 18.9 $ 1.5 (9.8%) (2.0%) (45.5%) 13.2% (6.5%) 27.5% 9.4% 18.8% 55.6% $ 46.5 >2% Favorable | 2% to -2% At or Near Budget | <-2% Unfavorable Below is a summary of key financial variances year to date: Below-Budget Operating Expenses: Overall operating expenses were 13.2% below budget mainly due to the items listed below. o Purchased power expenses were above budget due to supplemental purchases, which were required during the screen outage at Rawhide and the maintenance issues experienced by the Craig Units. Wind generation was also above budget. These above-budget expenses were partially offset by belowbudget purchased reserves as additional reserves were held on the Craig Units rather than held by Xcel Energy. o Fuel expenses were below budget as a result of below-budget generation and lower coal prices. A soft surplus sales market, the screen outage at Rawhide, and maintenance issues of the Craig Units impacted generation. Coal prices from the Trapper and Colowyo mines for the Craig Units and transportation costs for Rawhide Unit 1 also contributed to lower fuel expenses. Natural gas is also below budget due to over estimating costs for required testing of the combustion turbines. o Operations and maintenance expenses were below budget mainly due to the lower operations and maintenance expenses for Rawhide, including chemical purchases and rail car parts. o Administrative and general expenses were below budget mainly due to demand side management expenses as a result of the unpredictability of the completion of customer’s energy efficiency projects. Below-Budget Capital Additions: Capital additions were below budget $1.5 million mainly due to scheduling changes. At this time, projects are estimated to be at budget at the end of the year. Below-Budget Surplus Sales Revenues: As a result of lower generation due to a soft surplus sales market, the screen outage at Rawhide, and maintenance issues of the Craig units, surplus sales revenues were $1.5 million below budget. The Craig units and Rawhide Unit 1 produced 38 GWh and 24 GWh less energy, respectively. This contributed approximately $1.4 million to the lower revenues, based on current surplus sales prices. Page 1 of 9 Page 90 PLATTE RIVER POWER AUTHORITY SCHEDULE OF REVENUES AND EXPENDITURES, BUDGET TO ACTUAL January 2016 Non-GAAP Budgetary Basis (In Thousands) Month of January Budget Actual Favorable (Unfavorable) REVENUES ELECTRIC OPERATING REVENUES Municipal sales $ Short-term surplus sales and wheeling Total operating revenues 15,129 $ 14,863 $ (266) 3,024 1,536 (1,488) 18,153 16,399 (1,754) OTHER REVENUES Interest income (1) 64 57 (7) Other income 175 184 9 Total other revenues 239 241 2 Total Revenues $ 18,392 $ 16,640 $ $ 3,137 $ 3,290 $ (1,752) EXPENDITURES OPERATING EXPENSES Purchased power (153) Fuel expense 5,056 3,747 1,309 Production expenses 3,858 3,418 440 Transmission expenses 1,433 1,399 34 Administrative and general 1,597 1,270 327 15,081 13,124 1,957 Total operating expenses DEBT EXPENSE Interest expense 779 779 - Principal 1,385 1,385 - Total debt expense 2,164 2,164 - CAPITAL ADDITIONS Production 1,979 602 1,377 Transmission 629 459 170 General 125 173 (48) 2,733 1,234 Total capital additions 1,499 Total Expenditures $ 19,978 $ 16,522 $ 3,456 Revenues Less Expenditures $ (1,586) $ 118 $ 1,704 (1) Excludes unrealized investment gains and losses. Page 2 of 9 Page 91 PLATTE RIVER POWER AUTHORITY STATEMENTS OF NET POSITION Unaudited (In Thousands) January 31 2016 2015 ASSETS Utility Plant, at original cost Land and land rights Plant and equipment in service Less - Accumulated depreciation and amortization $ Construction work in progress Total utility plant 14,515 1,275,987 (762,209) 528,293 45,136 573,429 $ 14,515 1,270,710 (735,830) 549,395 20,337 569,732 Special Funds and Investments Restricted funds and investments Dedicated funds and investments Total special funds and investments 24,404 49,429 73,833 28,171 69,860 98,031 18,104 16,308 14,853 6,926 14,410 12,575 2,900 86,076 24,992 20,491 14,140 7,091 8,121 12,303 1,801 88,939 2,389 1,128 3,517 736,855 3,003 1,343 4,346 761,048 981 5,141 6,122 1,835 1,835 183,465 3,228 6,693 9,642 203,028 201,456 6,291 9,332 217,079 16,615 3,063 15,838 1,559 1,762 38,837 241,865 21,980 2,775 13,034 1,733 1,286 40,808 257,887 1,323 613 1,936 9,490 9,490 366,712 22,845 109,619 499,176 338,426 26,438 130,642 495,506 Current Assets Cash and cash equivalents Other temporary investments Accounts receivable - municipalities Accounts receivable - other Fuel inventory, at last-in, first-out cost Materials and supplies inventory, at average cost Prepayments and other assets Total current assets Non-Current Assets Regulatory assets Other long-term assets Total non-current assets Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred loss on debt refundings Pension deferrals Total deferred outflows of resources LIABILITIES Non-Current Liabilities Long-term debt, net Capitalized lease obligation Net pension liability Other liabilities and credits Total non-current liabilities Current Liabilities Current maturities of long-term debt Current portion of capitalized lease obligation Accounts payable Accrued interest Accrued liabilities and other Total current liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Regulatory liabilities and credits Pension deferrals Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for debt related purposes Unrestricted Total net position $ $ Page 3 of 9 Page 92 PLATTE RIVER POWER AUTHORITY STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Unaudited (In Thousands) Twelve Months Ended January 31 2015 2016 Month of January OPERATING REVENUES Sales to municipalities Sales for resale and other $ 14,863 1,536 $ 176,711 22,356 $ 169,970 29,429 16,399 199,067 199,399 3,290 3,747 4,961 1,312 2,257 32,848 46,119 62,648 15,886 27,002 27,500 49,166 55,836 14,632 27,913 15,567 184,503 175,047 832 14,564 24,352 Interest income Other income Interest expense Allowance for funds used during construction Amortization of bond financing costs Net increase/(decrease) in fair value of investments 62 184 (779) 31 183 749 918 (9,700) 351 (180) 651 1,073 (10,710) 83 365 206 Total nonoperating revenues and expenses (319) (7,862) (8,332) 513 6,702 16,020 Total operating revenues OPERATING EXPENSES Purchased power Fuel Operations and maintenance Administrative and general Depreciation Total operating expenses Operating income NONOPERATING REVENUES AND EXPENSES INCOME BEFORE CONTRIBUTIONS - Contribution of assets to municipalities CHANGE IN NET POSITION 513 NET POSITION AT BEGINNING OF PERIOD NET POSITION AT BEGINNING OF PERIOD, ADJUSTED $ 499,176 (155) 6,547 498,663 498,663 Adjustment for change in accounting principle NET POSITION AT END OF PERIOD (155) 15,865 495,506 (2,877) 492,629 $ 499,176 479,641 479,641 $ 495,506 Page 4 of 9 Page 93 PLATTE RIVER POWER AUTHORITY STATEMENTS OF CASH FLOWS Unaudited (In Thousands) Twelve Months Ended January 31 2015 2016 Month of January CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments for operating goods and services Payments for employee services $ 16,624 (14,496) (2,572) $ (444) Net cash (used in)/provided by operating activities 198,609 $ (141,290) (31,981) 198,753 (105,968) (30,192) 25,338 62,593 93 (2,607) - (29,527) (639) (21,980) (9,874) (15,683) (663) (21,060) (10,866) (2,514) (62,020) (48,272) 10,726 210 28,179 1,615 (6,676) 1,641 10,936 29,794 (5,035) 7,978 (6,888) 9,286 10,126 24,992 15,706 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Additions to electric utility plant Payments from accounts payable incurred for electric utility plant additions Principal payments on long-term debt Interest payments on long-term debt Net cash used in capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases and sales of temporary and restricted investments, net Interest and other income, including realized gains and losses Net cash provided by/(used in) investing activities INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS BALANCE AT BEGINNING OF PERIOD IN CASH AND CASH EQUIVALENTS BALANCE AT END OF PERIOD IN CASH AND AND CASH EQUIVALENTS $ 18,104 $ 18,104 $ 24,992 $ 832 $ 14,564 $ 24,352 RECONCILIATION OF NET OPERATING INCOME TO NET CASH (USED IN)/PROVIDED BY OPERATING ACTIVITIES Operating income Adjustments to reconcile net operating income to net cash provided by operating activities: Depreciation Changes in assets and liabilities which provided/(used) cash: Accounts receivable Fuel and materials and supplies inventories Prepayments and other assets Deferred outflows of resources Accounts payable Net pension liability Other liabilities Deferred inflows of resources Net cash (used in)/provided by operating activities $ 2,257 27,002 27,913 225 (1,033) (1,272) (2,178) 408 317 (548) (6,561) (440) (5,141) 2,116 3,816 (1,916) (7,554) (388) 1,940 1,404 3,511 (2,248) 6,109 (444) $ 25,338 $ 62,593 Page 5 of 9 Page 94 PLATTE RIVER POWER AUTHORITY SCHEDULE OF NET REVENUES FOR DEBT SERVICE Unaudited (In Thousands) Twelve Months Ended January 31 2015 2016 Month of January NET REVENUES Operating revenues $ Operations and maintenance expenses, excluding depreciation and amortization Net operating revenues Plus interest income on bond accounts and other income Net revenues before rate stabilization Rate stabilization Deposits Withdrawals 16,399 $ 199,067 $ 199,399 13,310 157,501 147,134 3,089 41,566 52,265 241 1,689 1,725 3,330 43,255 53,990 - - - $ 3,330 $ 43,255 $ 53,990 Power revenue bonds Allowance for funds used during construction $ 2,164 - $ 28,103 - $ 32,383 (83) NET REVENUE BOND SERVICE $ 2,164 $ 28,103 $ 32,300 TOTAL NET REVENUES BOND SERVICE COVERAGE Power revenue bond coverage ratio 1.54 1.54 1.67 Page 6 of 9 Page 95 Platte River Power Authority Operating Expenses Variances Exceeding $100,000 - January 2016 Description Favorable (Unfavorable) Coal Coal was below budget due to generation and price at Craig and Rawhide. Generation was below budget as the Craig Units were held back due to the surplus sales market and experienced maintenance issues. Rawhide Unit 1's generation was below budget due to the screen outage. The coal prices were also below budget. Trapper Mine coal prices will be below budget for the remainder of the year as the price was revised to reflect recent estimates for operations of the mine for 2016. Rawhide Unit 1's coal price was below budget as a result of lower than expected transportation prices. $ 1,134,652 Contracted Services Contracted services were below budget mainly due to lower operations and maintenance expenses at Rawhide, Headquarters, and joint facilities. There were also timing and delays of energy efficiency projects, website design, and software maintenance and support. $ 316,005 O&M Materials and Supplies O&M materials and supplies were below budget due to operations and maintenance expenses at Rawhide and Headquarters, rail car repair parts, ash pond chemicals, and miscellaneous supplies were not required. Timing of lime, PRS chemical, and BPAC deliveries also contributed to the belowbudget variance. $ 171,657 Natural Gas Natural gas was below budget as a result of over estimating costs for the required testing of the combustion turbines. $ 137,075 Professional Services Professional services were below budget due to the marketing and emissions outlooks project and Rawhide engineering services. Legal services were not required as anticipated. Lastly, the 4160 & 480 volt breaker/relay coordination has been delayed until the second quarter. $ 130,243 Energy Efficiency - Rebates/Incentives These expenses were below budget due to the unpredictability of the completion of customer's energy efficiency projects. $ 109,063 Purchased Power Purchased power was above budget due to supplemental purchases, which were required during the screen outage at Rawhide and Craig Unit 2 being off-line several days. Wind generation was also above budget. Partially offsetting the above-budget variance were below-budget purchased reserves as a result of holding additional reserves on the Craig Units. $ (153,545) Medical and Dental Claims were more than anticipated. Timing of medical expenses is difficult to predict and large claims can cause swings in this expense. $ (189,628) Page 7 of 9 Page 96 PLATTE RIVER POWER AUTHORITY MONTHLY STATISTICS January 2016 January Budget 12 Months Rolling Favorable (Unfavorable) Actual Budget Favorable (Unfavorable) Actual Resources (MWh) Net Generation Rawhide Craig Peaking Units Wind Solar Purchases Western LAP Western CRSP Other Purchases Forced Outage Exchange Interchange Received Total Receipts 196,491 101,130 30,589 172,204 62,767 1,014 32,481 - - (24,287) (38,363) 1,014 1,892 - 1,970,286 1,087,712 18,866 296,354 1,924,215 934,766 57,977 274,154 - (46,071) (152,946) 39,111 (22,200) - - 10,178 51,663 390,051 10,178 51,663 10,403 (858) 339,852 10,403 (858) (50,199) 109,536 502,467 140,460 4,125,681 109,536 502,467 242,716 2,500 (4,561) 4,043,770 102,256 2,500 (4,561) (81,911) Municipal Sales Estes Park Fort Collins Longmont Loveland Total Municipal Sales 13,224 131,342 70,980 64,616 280,162 13,390 133,688 69,340 61,600 278,018 166 2,346 (1,640) (3,016) (2,144) 131,126 1,506,927 816,818 749,652 3,204,523 130,185 1,521,006 801,873 749,628 3,202,692 (941) 14,079 (14,945) (24) (1,831) Surplus Sales Short-Term Surplus Sales Total Surplus Sales 104,005 104,005 52,291 52,291 (51,714) (51,714) 865,561 865,561 687,059 687,059 (178,502) (178,502) 5,884 9,543 3,659 55,597 62,800 91,219 62,800 35,622 390,051 339,852 4,125,681 4,043,770 Deliveries (MWh) Forced Outage Exchange Losses and Other Total Deliveries (50,199) January Budget Actual (81,911) 12 Months Rolling Favorable (Unfavorable) Budget Actual Favorable (Unfavorable) Coincidental Demand (kW) Estes Park Fort Collins Longmont Loveland Total Coincidental Demand 21,835 228,294 127,632 114,652 492,413 20,733 221,306 116,665 104,205 462,909 (1,102) (6,988) (10,967) (10,447) (29,504) 215,386 2,840,506 1,593,409 1,462,856 6,112,157 216,948 2,819,528 1,543,683 1,439,293 6,019,452 1,562 (20,978) (49,726) (23,563) (92,705) Non-Coincidental Demand (kW) Estes Park Fort Collins Longmont Loveland 24,941 221,306 116,665 104,205 240,125 2,822,678 1,557,418 1,443,295 Page 8 of 9 Page 97 Platte River Power Authority January 2016 - Payments of $50,000 or More Vendor Description Payment Amount Operations and Maintenance Payments Non-Recurring O&M Payments Siemens Energy Inc TIC-The Industrial Company Wyoming District Turbo Filtration LLC Miller Insulation Co Inc Bently Nevada Inc Applied Control Equipment LLLP Non-Recurring O&M Payments Total RH outage turbine work Harmony security wall installation RH outage high velocity oil flush RH outage insulation RH outage 7x prox replacement RH outage rebuild Fischer actuators $4,244,836 331,474 139,380 84,396 69,272 62,124 $4,931,482 Regular Recurring O&M Payments BNSF Railway Company Cloud Peak Energy Resources LLC Colowyo Coal Company Spring Canyon Energy II LLC Duke Energy Retail Sales LLC Medicine Bow Wind LLC Tri-State G & T Western Area Pwr Adm-DOE Xcel Energy Wells Fargo Municipal Subdistrict No CO Water Conservancy Dist Western States Power Corporation City of Fort Collins Clearesult Consulting, Inc. LED Lighting Specialists Colorado State University Larimer County Fort Collins Marriott Western Electricity Coordinating Council (WECC) Large Public Power Council Nexant Inc/Schiller Associates AEGIS Insurance Services Inc Rex Oil Company Inc Peak Reliability Schneider Electric Software, LLC GC3 Regular Recurring O&M Payments Total Total O&M Payments Coal delivery Coal delivery Coal delivery Spring Canyon wind energy Silver Sage wind energy Medicine Bow wind energy Yampa O&M Purchased power (November 2015 CRSP and LAP) Ancillary services Pension contribution Windy Gap carriage cost Project E Utility payments Energy efficiency, DSM Energy efficiency, DSM Energy efficiency, DSM Energy efficiency, DSM Energy efficiency, DSM 2014 annual net energy for load & 2016 assessments 2016 annual dues SAAS 3 year software agreement Excess liability insurance premium (annual) B20 bio-diesel Annual dues & RTCA service fee Avantis maintenance dues (annual) RH chemicals $1,254,547 824,019 262,876 650,463 224,559 63,595 1,184,688 1,888,443 409,162 243,828 112,314 174,600 61,546 75,425 70,835 61,854 57,427 51,450 140,683 66,344 75,000 435,750 86,612 251,067 63,820 53,909 $8,844,816 $13,776,298 Capital Payments Emerson Process Management Power & Water Electrical Power Products Inc Dis-Tran Packaged Substations LLC Tanco Engineering Inc Sanity Solutions Inc Haynes Mechanical Systems Inc Black & Veatch Total Capital Payments GRAND TOTAL: PAYMENTS OF $50,000 OR MORE RH Unit 1 DSC replacement LaPorte substation - 230kV control/relay panels Substation structures and equipment RH fire water tank Internet firewall EO building upgrade, other mechanical engineering services Engineering services $528,769 405,274 370,000 95,000 86,905 75,145 61,810 $1,622,903 $15,399,201 Page 9 of 9 Page 98 Page 99 Memorandum Date: February 17, 2016 To: Board of Directors From: Jackie A. Sargent, General Manager/CEO Dave Smalley, Chief Financial and Risk Officer Julie Depperman, Treasury Manager Subject: Debt Financing Overview Financing Plan Staff and Platte River’s financial advisor, Public Financial Management (PFM), have been preparing a financing plan for a possible advance refunding of a portion of the outstanding Series HH Bonds and a new money transaction for capital projects. At the February Board Meeting, staff will present an overview of the debt market and discuss the financing plan. The plan contains the following two components: Refund a substantial portion of the outstanding Series HH Bonds. • • • • Total outstanding bonds available for refunding is $105.4 million. Outstanding maturities have coupon rates of 5.0%. Maturity dates range from 2020 through 2029. If savings goals are met, pricing is planned to occur in April 2016. The savings from the advance refunding is interest rate dependent, but we will proceed as though the refunding portion will take place. Platte River will have the opportunity to include or exclude the refunding up to 48 hours prior to pricing. Common practice for refunding is to consider a refunding when savings are greater than 5% and greater than 50% escrow efficiency. Based on recent estimates, the refunding metrics exceed these targets and net present value savings are in excess of $11 million for $105 million in outstanding bonds. At the Board meeting, more details will be provided on the potential refunding savings. New money component to fund capital projects • • • • Total new money portion of $60 million. A reimbursement resolution was put in place in October of 2014 to enable Platte River to issue bonds at a later date for up to $60 million of proceeds. Projects from the capital plan span 2014 – 2018 for both Rawhide and transmission improvements and are included in Platte River’s five year capital plan. Major projects include the Rawhide Unit 1 DCS replacement, superheater tube replacement, dust collection system upgrades, Boyd 115/230kV substation transformer, LaPorte substation 230kV expansion, Foothills substation, and many smaller projects. Page 100 Current Market Indications Market interest rates have improved since last fall. Projections provided from November 2015 for the new money component indicated an all-in True Interest Cost of 3.6% and net present value savings from the refunding at $6.5 million. Below is a summary of financing results based on current market conditions. All-in True Interest Cost (TIC) Average Life (In Years) Final Maturity Par Bond Issued (In Millions) Proceeds (In Millions) Combined Results 2.4% 10.1 2036 $152.5 $180.1 New Money 2.8% 12.4 2036 $52.6 $60.4 Refunding 2.1% 9.0 2029 $99.8 $119.7 Schedule • • • • January – March o Draft a Preliminary Official Statement and Notice of Sale. o Prepare marketing documents. o Rating Agency meetings (March). February Board Meeting o Update of the financing plan. March Board Meeting o Approval of Preliminary Official Statement, Notice of Sale, and other authorizing resolutions. April o Price Bonds o Bond Closing o April Board Meeting – review final bond financing Staff and Dan Hartman with PFM will be presenting the financing plan at the Board meeting as well as providing an update on current market conditions. Page 101 February 2016 Management Report CORPORATE SERVICES Safety. 2015 Safety statistics have been compiled and are shown below. As you can see, Platte River’s safety record continues to improve. Much of the credit goes to our employees who actively focus on safety throughout their day, and to the leadership who continue to reinforce the “safety first” message. Recordable Incident Rate Lost Time Case Rate DART (Days away restricted) 2013 4.5 1.0 3.5 2014 3.5 0.5 1.0 2015 2.19 0.44 0.87 Human Resources. As previously reported, a compliance hotline was rolled out to all employees at the February business meetings. Additionally, an updated ethics and compliance statement will be published in the Employee Handbook, and training will be provided to all employees. The compliance hotline simply offers one more avenue for employees to report concerns in the areas of accounting, auditing, and financial reporting; business integrity; human resources, diversity and workplace respect; environment, health and safety; and misuse or misappropriation of funds. Information Technology. The focus on heightened cyber security continues, especially in light of a recent NERC alert advising all electric utilities to maintain their vigilance. As an added layer of security network monitoring and cyber intrusion detection services were budgeted for 2016, and will be implemented later in the year. In addition, IT has developed a prioritized list of cyber security practices for our business enterprise systems that we will focus on this year. ENVIRONMENTAL SERVICES & COMPLIANCE EPA Clean Power Plan. Implementation of the Federal Clean Power Plan was put on hold by the Supreme Court on February 9 through a stay order. Platte River staff is monitoring this change and is continuing to analyze the rule in order to remain prepared in case all or part of it is upheld. The State of Colorado has announced they intend to proceed with development of a State Plan according to the requirements and schedules included in the Clean Power Plan. Significant uncertainty surrounds this topic, however, Platte River will continue to be engaged in the process at all levels including participating in stakeholder meetings, assessing impact of various factors through modeling, and commenting on issues as appropriate. Coal Combustion Residuals (CCR) Rule Implementation. Platte River is moving forward with compliance activities under the new EPA CCR Rule, which became effective October 19, 2015. Additional monitoring wells are being installed in the vicinity of the Rawhide CCR landfill and the bottom ash transfer ponds in order to assess and more closely monitor the hydrogeological conditions in the vicinity of these features. The State of Colorado intends to update existing state regulations related to landfills and impoundments, including adoption of the requirements of the EPA CCR rule. Environmental Services staff is working closely with CDPHE and other utilities in a stakeholder process to help develop these changes and ensure Platte River interests are considered. Page 102 2015 Financial Audit. On February 1, 2016 staff from BKD, LLP began fieldwork on the 2015 year-end financial audit. The fieldwork is expected to be completed on February 12, 2016, with a draft of the financial report issued by March 10, 2016, and the final report issued on March 17, 2016. Rob MaCoy from BKD will present the results of the audit at the March 2016 Board Meeting. Critical Infrastructure Protection (CIP) Transition Status. Staff continues to work towards transitioning to the new versions of the CIP requirements which become enforceable April 1, 2016 and July 1, 2016. Platte River is on track and expects to be fully transitioned and compliant by that time. Platte River is required to submit a Self-Certification stating our compliance status with the Western Electricity Coordinating Council (WECC). FINANCE 2015 Year End and Financial Audit. The 2015 year end books have been closed. The financial auditors were on site in early February. As a result, the accounting staff prepared audit schedules and were available to respond to audit inquiries. Standard & Poor’s Rating Review. In December 2015, after completing their annual surveillance, Standard & Poor’s Ratings published a ratings review of Platte River. Standard & Poor’s affirmed its “AA” long-term rating and underlying rating on Platte River’s outstanding power revenue bonds. The outlook is stable. The credit profile reflects Standard & Poor’s view of Platte River’s continued strong debt service coverage, maintenance of strong liquidity, strong financial and operational policies, efficient low-cost generating resources that enable Platte River to maintain a very competitive wholesale rate, and low debt burden. However, Standard & Poor’s views that Platte River’s risks related to increasing stringent emissions standards and Platte River’s plans to issue an additional $130 million of bonds could put pressure on coverage metrics and increase system leverage. Fitch Rating Review. Fitch completed their annual surveillance of Platte River in January. Since Platte River is close to issuing new bonds, Platte River and Fitch agreed to not issue a press release at this time, but instead issued a “Review - No Action” statement. This is standard practice for Fitch when not issuing a formal press release. Fitch will release a formal rating and press release with Platte River’s upcoming bond issue. Insurance Renewals. The excess liability policy renewed with AEGIS for the December 31, 2015 to December 31, 2016, policy period. The excess liability policy has a $1 million per occurrence deductible and coverage limits of $35 million per occurrence; $70 million aggregate. The property policy renewed with AIG for the January 19, 2016 to January 19, 2017, policy period. The property policy has a $750 thousand per occurrence deductible and coverage limits per occurrence and an aggregate of $150 million. Platte River’s property policy covers acts of terrorism. Risk Management Review. Beginning in November 2015, Navigant Consulting, Inc. was contracted to conduct an independent review of Platte River’s current Risk Management Plan and Enterprise Risk Management (ERM) program. The review evaluates Platte River’s program to “best practice” ERM standards as determined by various regulatory agencies and oversight organizations, as well as standards specifically defined for companies across the global energy industry, and more specifically, the public power sector. In 2016, staff will review and develop an implementation plan based on Navigant’s recommendations. Platte River Power Authority 2 February 2016 Management Report Page 103 COMMUNICATIONS & MARKETING Media. We worked with a reporter from the North Forty News on Platte River’s approach to managing coal combustion residuals, arranging an interview with our subject matter experts and then correcting errors in the initial articles. We also worked with a reporter at the Coloradoan to have corrections made on an article that details Platte River’s resource management direction and the City of Fort Collin’s CAP. On the social media front, our Facebook posts generated an average of 220 daily impressions. We are working with a vendor to establish automated media monitoring report to ensure timely and complete reporting of media mentions across all channels. Marketing. Work on the 2015 Annual Report project is underway with initial design set. We are taking an approach that will make the report more engaging for readers. The first draft of the Auditor’s Report and Financial Statements are complete. Community. Platte River sponsored a table at the Loveland Chamber of Commerce annual business dinner. We also sponsored a table at the Larimer County Boys and Girls Club Youth of the Year breakfast. Rawhide tours were given to the Larimer County Conservation Corps, PVREA Safety Team, and Poudre High School advanced physics and chemistry students. City Outreach and Collaboration. Staff presented a Resource Management update to the Longmont utility staff and to the Fort Collins CAP Executive Team. Efficiency WorksTM. Our work continues on a residential promotion video. Staff also updated the EW website to improve access to rebate summaries for businesses. OPERATIONS Windy Gap Firming Project Update. There have been positive steps made in the past couple of months on the firming project. Progress has been made on the permitting work, specifically with the 401 Certification (state water quality certification under the federal Clean Water Act section 401). Northern Water met with the Colorado Department of Public Health and Environment (“CDPHE”) in late January, and the CDPHE provided a conditional (draft) certification. This document is currently being reviewed by Northern, and it is estimated that the final 401 Certification will be awarded by the CDPHE by March 31, 2016. The completion of the 401 Certification opens the door for the final work to be done on the U.S. Army Corps of Engineers’ Section 404 Permit (Federal Clean Water navigable waters/wetlands permit), which focuses on mitigation efforts. The 404 Permit cannot be completed prior to the 401 Certification, so it is anticipated that the Corps of Engineers will grant the 404 Permit by mid-2016. Efforts are also being made with respect to project financing. In January a sub-committee was formed to investigate the various financing options available for a project of this scope with multiple municipal participants. Platte River representatives are participating on this sub-committee. It was determined that a Municipal Advisor should be hired to assist with this effort, and the sub-committee has recently issued a request for proposal (RFP) to select a vendor to perform this function. Work is now moving forward to start the engineering design phase of the project. As mentioned in the December Board Management Report, this phase of the project will require execution of the Fifth Interim Agreement with Northern Water, which will require additional funding from project participants. The specifics of this agreement are addressed in a separate memo and resolution which are included in the February Board packet starting on page 67. The design phase will commence in March, and the Platte River Power Authority 3 February 2016 Management Report Page 104 first step will be to solicit bids from engineering firms through an RFP process. The draft RFP document is currently being reviewed by participants. Design is scheduled to continue for approximately two years, and construction is planned to begin in 2018. The firming project is estimated to be complete and ready to begin filling by the spring of 2021. Rawhide Water Supply Update. With the lack of Windy Gap water, Platte River is continuing to operate in an alternate water supply mode. In this situation, leased C-BT water is being used as collateral for in-lieu Windy Gap water to meet the critical process water needs. For the cooling water needs, Windy Gap Short operations are in place (special arrangement with the City of Fort Collins for the Reuse Plan and MOU requirements). Resources are sufficient to supply the process water and cooling water needs through at least May of 2016. Thus far, the impacts of Windy Gap Short operations to Platte River have been minimized due to free river conditions (utilizing junior Poudre River water rights) and storage of some effluent in Fossil Creek Reservoir, which can be pumped at a later time to the Rawhide cooling reservoir. Staff will continue to monitor the water conditions and rental water market, with the hopes of either utilizing pumped Windy Gap water if that later becomes available, or leasing additional C-BT water later this spring. The next opportunity to pump Windy Gap water will be the spring of 2016, although pumping will be dependent upon the C-BT system conditions at that time. Platte River Coal Supply. On January 15, 2016, the administration announced a moratorium on new coal leases on federal lands to allow for a comprehensive review of the program. The moratorium is effective immediately, and is anticipated to remain in effect at least through 2016. The administration stated that coal reserves already under federal lease can continue to be mined. Platte River staff reached out to the mines that supply fuel for both Rawhide and the Craig station and were assured that this moratorium will not have an impact on coal supplies for either facility in the near or intermediate future. PLANNING & CUSTOMER SERVICE Next Strategic Plan. Platte River distributed its Board-approved 2016-26 Strategic Plan in December, and made the document available via Platte River’s website. Coordination for the 2017-27 Strategic Plan has begun; initial meetings will take place in March to engage employees in the overall process. Like last year, the process will start with updating the SWOT analysis to assess Platte River’s current situation and business environment. Development of goals and activities for 2017 forward will be coordinated with the 2017 budget process. Resource Planning Update. The Clean Power Plan continues to be the focus of much of Platte River’s resource planning efforts. A modeling charter and schedule to assess the potential impacts of the CPP has been developed. Platte River will evaluate two options for implementation of the CPP: (1) massbased compliance (total CO 2 tons) and, (2) rate-based compliance (CO 2 per MWh)—to determine which option to advocate in State stakeholder proceedings. We will study the potential impacts for Platte River, as well as evaluate potential impacts for other Colorado generators. Pace Global has been engaged to assist in the model design, and will deliver an operating AURORA model and database for future internal use by Platte River staff. Energy Efficiency (EE) Programs. A total of nearly $5.2 million was spent on common efficiency programs in 2015, with $2.4 million from Platte River and $2.8 million from the municipalities. Total energy and demand savings are estimated as 12,900 MWh and 1.8 MW respectively (2015). Year to date in 2016, a total of $107,000 has been spent on common efficiency programs, resulting in 360 MWh of new energy savings and 60 kW of new summer peak demand reduction. By year’s end, total efficiency program spending is estimated to be $6.5 million, with $3.3 million from Platte River’s budget Platte River Power Authority 4 February 2016 Management Report Page 105 and the remainder from Municipality budgets (estimated to save over 20,000 MWh/yr and 3.6 MW). The following table summarizes services provided during 2015 and year-to-date 2016, as well as projected results for 2016. Customer Segment Service provided 2015 Results Commercial & Industrial 2016 Results YTD 0 2016 Results projected by year end* 400 Efficiency assessments 326 Efficiency project 830 35 760 rebates Energy savings (MWh) 11,100 360 17,600 Residential Efficiency assessments 801 0 800 Discounted efficient 107,900 0 200,000 lighting products Energy savings (MWh) 1,800 0 3,000 Totals Energy savings (MWh) 12,900 360 20,600 * Projected results are based on available budgets and estimates of customer participation. Demand Side Management (DSM) Program Management Software Update. Work continues on implementation of the DSM Program Management Software by Platte River staff, Municipal staff and Nexant (project consultant and vendor). The new system is now expected to be implemented May 2016. This software will enable customers and their contractors to apply for rebates and check on rebate status via the internet. In addition, it will improve administration efficiency and accuracy of rebate application review, processing, reporting, and information sharing among Platte River and Municipal staff. Training and presentations on the new software have been provided for Platte River, Municipal staff and contractors/trade allies. This will allow for information sharing and system testing prior to full launch of the system. A Software as a Service (SaaS) agreement will provide terms and conditions for Platte River’s and the Municipalities’ staffs’ use of the software. Since Municipality staff will be using the software, Platte River and the Municipalities will need to execute this agreement with Nexant. This agreement has being circulated among the Municipalities’ DSM staff for review and comment, and is now being reviewed by Nexant. Efficiency Works Neighborhoods Pilot support. Platte River staff is supporting implementation of Fort Collins’s Efficiency Works Neighborhoods Pilot program. This program is being funded primarily by Fort Collins and an APPA DEED grant in an effort to offer streamlined efficiency projects for residential customers. It is based on the Efficiency Works Homes program, which is a Common efficiency program, funded by the four municipalities, offering residential efficiency assessments and technical advising by CLEAResult (under contract with Platte River). The Neighborhoods pilot simplifies completion of energy efficiency projects by providing customers with a set of recommended efficiency improvements, as well as a list of pre-selected residential efficiency service providers who have agreed to focus on implementing these improvements. On-bill financing options are also provided by Fort Collins. Fort Collins is also considering adding rooftop solar as an option within the program. Platte River and Fort Collins staffs are in discussions to consider how this could be implemented. Demand Response (DR) Pilot Program. Work continues on implementation of Phase I of the DR Pilot Program. Phase I includes delivery by Comverge of view-only access into Fort Collins’s IntelliSource demand response management system. Fort Collins has executed an amendment to its services agreement with Comverge as well as a sublicense agreement with Platte River to allow this view-only access. Platte River’s Power System Operators have received introductory training on Demand Response and instruction on Phase I of the pilot. Due to technical delays with the release of the latest Platte River Power Authority 5 February 2016 Management Report Page 106 software version, the agreed-upon access has been delayed to begin in March. Concurrently, a work plan has been developed to implement the SCADA updates necessary to support incorporation of Longmont’s voltage reduction system into the pilot. Phase II of the pilot, which includes control of selected DR resources by Platte River Operations staff and was originally scheduled to begin Q2 2016, is now expected in Q4 2016. Platte River and municipality staff will use this time to update the software sublicense and to develop operating procedures for Phase II. Community Solar Pilot Program. Staff will present a status update to the Board during the February meeting. A separate memo on this program is included in the Board packet. Medicine Bow Wind Project Potential Sale. Commonwealth Bay, the current owner of the Medicine Bow Wind Project, notified staff that they are in preliminary discussions with two separate potential buyers of the Project. (Commonwealth has requested that the names of the buyers not be disclosed publicly at this stage of discussions.) Platte River staff held a conference call with one of the buyers to discuss the site’s history, the current structure of the power purchase agreement and the Project’s recent performance. No definite timeline for the pending sale was discussed. Combined Heat and Power (CHP) Study. Staff is working with the City of Fort Collins, Colorado State University and local consultants to study the feasibility of using a CHP plant as a distributed energy resource. Existing boilers will need to be replaced in the next few years and a CHP facility could provide both steam and electricity for the main campus. The project supports strategic goals of CSU, the City of Fort Collins Utilities and Platte River. The $60,000 study cost is being shared (one-third each for CSU, the City and Platte River). A Project Charter and purchase orders have been completed and the team will be meeting twice next month at CSU (March 1 and March 16). The consulting team will model power, heating and cooling loads, and analyze the viability of alternatives. Constructability and economic issues will also be considered. CSU will provide detailed historical load data to be used in the modeling. Team review will occur through the study schedule, with the study expected to conclude this summer (including a final report and recommendations for next steps). Foothills Solar Project (Loveland). Loveland’s City-owned hydro generation was destroyed during the 2013 flood and the City is working with FEMA on replacing the hydro with a solar facility. The new solar facility will be owned by the City (a FEMA requirement) so no Investment Tax Credit is available. The system will be interconnected at distribution voltage (12.47 kV), with metering and communications to allow system monitoring, scheduling and operations coordination. Platte River staff is working with the City to provide direction regarding the implication of the solar installation on existing power supply contract. Two factors are being considered: (1) Loveland using the 1% of peak “exemption” in the power supply contract, and (2) Loveland replacing the city-owned hydro capacity with city-owned solar capacity. There is no precedent concerning this second issue, but replacement seems reasonable under the circumstances. Loveland’s maximum peak to date is about 160 MW, so 1% of this value would be about 1.6 MW and the rating of the hydro is 0.9 MW (two 450 kW units). The total of these two values is approximately 2.5 MW. Loveland is still evaluating design options for the site and solar system, including identifying the final nameplate capacity. An update on this project and a recommendation to formalize the maximum allowable size of this city-owned solar project will be provided at the March Board meeting. RESOLUTIONS & POLICY REVIEW Windy Gap Firming Project Funding Resolution. As mentioned in the Windy Gap Firming Project update, there is a resolution for the Fifth Interim Agreement to start the fifth phase of the project, which will focus on engineering design. The specifics of this agreement are included in a separate memo and Platte River Power Authority 6 February 2016 Management Report Page 107 resolution starting on page 67 of the packet. Platte River Water Policy Review. Discussions on the water policy project will resume starting with the March Board meeting. The focus for water policy efforts in 2016 will be working towards making high level water decisions that will ultimately lead to the development of a comprehensive water policy. The goal is to have a Board-approved Water Policy and Resolution by the end of 2016. This Water Policy will be used to guide future Platte River water decisions. Staff is in the process of updating and finalizing the Platte River Water Resources Reference document, which will be included in the March Board packet. This document will serve as a refresher and will aid in discussions starting in March. Discussions will revolve around philosophical principals and decision points. Staff will suggest some potential approaches to this process such as holding separate meetings and involving key municipal staff members. Time is of the essence for these discussions, as some of the key decision points are nearing milestones, such as the Windy Gap Firming Project. GENERAL & FOLLOW UP ITEMS Fort Collins Substation Maintenance and Engineering Support Services IGA. As previously mentioned to the Utility Directors last March during the Utility Director Services Status Updates, Platte River is in the process of finalizing an Intergovernmental Agreement (IGA) with Fort Collins Utilities to provide backup support for maintenance and engineering issues in case Fort Collins staff are not available. Support will include engineering assistance for load restoration and maintenance support for items such as transformer testing and racking distribution breakers in and out of the switchgear cubicle. We are discussing a few remaining clarifications with the Fort Collins legal team to finalize the document. We plan on bringing this agreement to the March Board meeting for consideration. Rawhide Flats Solar. As anticipated, juwi sold the project assets to a third party that can take advantage of the tax credit. Ownership of Bison Solar, the limited liability corporation that holds the project assets, was sold to Public Service Enterprise Group (also known as Public Service Electric and Gas out of New Jersey or PSEG). Juwi remains the Engineering, Procurement, and Construction (EPC) contractor as well as the operations and maintenance contractor. Equipment procurement is on schedule and a License Agreement for the interconnection should be executed shortly. Platte River personnel are working on a variety of tasks related to facility access, operations, control, and metering. Juwi is expecting site plan approval from the county shortly with significant on-site work starting in February. The Platte River owned interconnection transformer is expected to be on a newly poured pad in February. As part of the construction phase, water is needed for dust mitigation and site compaction. Although it wasn’t a contractual obligation for Platte River to supply this water, Platte River staff worked to acquire the additional water needed to support this project, and will be reimbursed by juwi for the costs incurred to procure and deliver this water. Without this water supply at Rawhide, juwi would have needed to find water elsewhere, which most likely would have involved trucking it in from an off-site location. Being able to provide this water directly at the construction site is a benefit from both a cost and environmental perspective. HQ Campus. Work continues on this project. A separate memo is included on page 111 of the packet. Platte River Power Authority 7 February 2016 Management Report Page 108 Page 109 Memorandum Date: February 17, 2016 To: Board of Directors From: Jackie A. Sargent, General Manager/CEO John Bleem, Director of Strategic Planning and Customer Service Paul Davis, Customer Services Manager Subject: Community Solar Update Platte River and municipality staff have been meeting regularly for several months to develop potential design elements of a “system wide” community solar pilot program (one that could serve residential customers in all four municipalities). A single 1 MW facility is being considered, which is anticipated to serve approximately 300 to 400 customers. The concept behind community solar is to “provide power and/or financial benefit to multiple community members” (NREL 1). A primary reason for considering a system wide community solar program is growing interest from customers in the four municipalities. Other reasons include providing a means of transitioning from net metering toward programs that provide improved allocation of cost and benefits, improving integration of distributed solar generation into Platte River system operations, expanding joint PRPA / municipal utility experience in delivering solar energy services and positioning for longer-term future strategies related to distributed generation resources. A presentation will be provided during the February Board meeting to summarize program planning to date, and to provide a draft schedule for potential future activities. Staff will be available to answer any questions the Board may have. No formal action is required at this time. Funding approval for the pilot program and approval of any agreements required for the pilot program may be requested at future meetings. 1 “A Guide to Community Shared Solar: Utility, Private, and Nonprofit Project Development” (National Renewable Energy Laboratory – NREL). Page 110 Page 111 Memorandum Date: February 17, 2016 To: Board of Directors From: Jackie A. Sargent, General Manager/CEO Karin Hollohan, Corporate Services Director Subject: Headquarters Campus Discussion In December, a comprehensive presentation on the Headquarters Campus future alternatives was shared with the Board of Directors. Staff will be prepared to discuss the consultant’s recommendation at the February Board meeting. There will be a presentation to help facilitate the discussion. No decision needs to be made at the February meeting. The discussion this month will simply provide an opportunity for the Directors to review the project status to date, and to request any additional information that might be needed in order for the Board to effectively review this project as it moves forward. Staff also requests that the Board hold an executive session to review property appraisal information and for the purpose of receiving legal advice concerning the project. Page 112 Page 113 Materials for this section will be provided separately. Page 114 Page 115 There are no additional materials for this section. Page 116