Colorado Springs Utilities Spring 2016 Update. CEO Jerry Forte Leon Young Service Center, April 13, 2016

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1 Colorado Springs Utilities Spring 2016 Update CEO Jerry Forte Leon Young Service Center, April 13,

2 Spring 2016 Update Today s Discussion 2015 highlights Bright energy future Cleaner air Southern Delivery System completion Stormwater agreement Ensuring a long-term water supply Helping customers be more efficient Economic engine Quality and efficiency initiatives Rates projections Local control: Governance review 2

3 Spring 2016 Update Our Mission To provide safe, reliable, competitively-priced electric, natural gas, water and wastewater services to the citizen owners and customers of Colorado Springs Utilities. 3

4 Spring 2016 Update 2015 Highlights High Reliability Exceeded reliability targets for all 4 services Electric: average of 37.8 minutes without power for the year less than half the national average Contributes to customer productivity 4

5 Spring 2016 Update 2015 Highlights High Reliability SAIDI: Average number of minutes a typical customer is without power during the year. Colorado Springs Utilities for 2015: 37.8 minutes IEEE Reliability Benchmarking Study. Colorado Springs Utilities #8 nationally Colorado Springs Utilities

6 Spring 2016 Update 2015 Highlights Outstanding Customer Service #2 in residential customer satisfaction #1 in business customer satisfaction 6

7 Spring 2016 Update 2015 Highlights Strong Financial Position Increased financial capacity for future system improvements Maintained AA credit rating low-cost financing 7

8 Spring 2016 Update 2015 Highlights Declining Fuel Costs Typical Commercial Customer Bill Electric Natural gas Typical Industrial Customer Bill $799 $659 $659 $32,530 $32,530 $32,050 $31,665 $29,620 $541 $522 $522 $515 $510 $474 $428 $7,772 $6,291 $6,291 $5,108 $3,983 1/1/2015 2/1/2015 4/1/2016 1/1/2016 2/1/2016 1/1/2015 2/1/2015 4/1/2016 1/1/2016 2/1/2016 8

9 Spring 2016 Update Competitive Rates Typical Commercial Customer Electric Bill $1,200 $1,000 $1,028 $800 $600 $474 $596 $677 $400 $200 6,000 kwh per month. $0 Colorado Springs Xcel - Denver Mountain View Black Hills Pueblo Rates in effect March 31,

10 Spring 2016 Update Competitive Rates Typical Industrial Customer Electric Bill $60,000 $53,254 $50,000 $40,000 $30,000 $20,000 $29,620 $34,085 $38,766 88,000 on-peak kwh and 312,000 off-peak kwh, 1,000 kw on-peak demand $10,000 $0 Colorado Springs Xcel - Denver Mountain View Black Hills Pueblo Rates in effect March 31,

11 Spring 2016 Update Electric Integrated Resource Plan Bright Energy Future: EIRP and our Energy Vision 12% reduction in average customer use (DSM) by % renewables by 2020 Decommission entire Drake plant by 2035 Solar and natural gas generation additions Bill caps: 2% on DSM, 1% on qualifying renewables 11

12 Spring 2016 Update Electric Integrated Resource Plan MWh per year Reduced Energy Use 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Projected cumulative effect of DSM and customer-side renewable energy over Energy Vision Period Forecasted energy use without DSM investments Energy reduction due to past and projected DSM and customer side RE investments Forecasted total energy use 12

13 Spring 2016 Update Energy Planning New Solar Array 125 acres, Clear Spring Ranch Single axis array 10-megawatt capacity 3-time multiplier Operational this fall 13

14 Spring 2016 Update Energy Planning A Cleaner, More Diverse Portfolio 2015 Installed Capacity Total: 1,159 MW Solar 1% Projected 2035 Installed Capacity Total: 1,389 MW Hydro 10% Solar 19% Coal 14% Natural Gas 49% Coal 40% Hydro 8% Natural Gas 59% Based on approved 2016 EIRP Portfolio D 14

15 Spring 2016 Update Energy Planning Dramatically Reduced Emissions NO X Emissions SO 2 Emissions CO 2 Emissions , ,000 4,000 3,000 2,000 1, Based on historical and projected emissions reductions and approved EIRP Portfolio D 15

16 Spring 2016 Update Emissions Controls Regional Haze Plan: Compliance and Implementation Constituent / Unit Compliance Deadline Implementation NOx / Drake Ultra low NOx burners/over fire air NOx / Drake Ultra low NOx burners/over fire air NOx / Nixon Ultra low NOx burners SO 2 / Drake SO 2 scrubber /2016 SO 2 / Drake SO 2 scrubber SO 2 / Nixon SO 2 scrubber

17 Drake Sulfur Dioxide (SO 2 ) Emissions Controls Sorbent Processing System Building Drake Unit 7 Capture System Drake Unit 6 Capture System 17

18 Spring 2016 Update Drake SO 2 Emissions Controls Flat Jet Technology Emissions Testing Drake Unit 7 Average SO 2 Emitted Over 24 Hours ppm SO Feb 2-Feb 3-Feb 4-Feb 5-Feb 6-Feb 7-Feb 8-Feb 9-Feb 10-Feb 11-Feb 12-Feb 13-Feb 14-Feb 15-Feb 16-Feb 17-Feb 18-Feb 19-Feb 20-Feb 21-Feb 22-Feb 23-Feb 24-Feb 25-Feb 26-Feb 27-Feb 28-Feb 29-Feb 18

19 Spring 2016 Update Drake SO 2 Emissions Controls Drake SO 2 Controls - Next Steps Drake unit 7 Continue operational testing Drake unit 6 Complete mechanical tie in spring 2016 Drake unit 6 Testing summer 2016 Full system testing fall

20 Spring 2016 Update Southern Delivery System SDS Progress Overview Dam connection complete Pipeline complete Treatment plant, three pump stations nearing completion Plan to begin operation late April,

21 Spring 2016 Update Southern Delivery System Edward W. Bailey Water Treatment Plant Tours provided following this meeting Shuttles to the treatment plant, returning to Leon Young Service Center 21

22 Spring 2016 Update Southern Delivery System SDS Economic Benefits 500+ businesses involved in building SDS $585 million has benefited Colorado businesses including: El Paso County, $287 million Pueblo County, $75 million $160 million under budget Fewer rate increases for customers 22

23 Spring 2016 Update Stormwater Stormwater Intergovernmental Agreement Draft agreement between the City of Colorado Springs, Colorado Springs Utilities and Pueblo County 71 projects to benefit our community and downstream neighbors Some projects already underway $460M over 20 years including $3M - $3.9M annually from Colorado Springs Utilities Monument Creek 23

24 Spring 2016 Update Stormwater Stormwater Intergovernmental Agreement, Continued First of five $10M payments to the Fountain Creek Watershed District within 30 days of final agreement $1M annually for Pueblo levee repair and improvement work with matching contributions from Pueblo Colorado Springs City Council and the Pueblo County Commissioners are expected to approved the agreement the last week of April Fountain Creek 24

25 Spring 2016 Update Water Planning Integrated Water Resource Plan (IWRP) Last plan completed nearly 20 years ago Road map for the future Long-range plan ~ 50+ years Examines water supply, water demand, water quality, infrastructure, energy, regulatory, legal issues, and public opinion Recommendations to Utilities Board in

26 Spring 2016 Update Water Planning Water System Storage No Water Restrictions Expected Percent of Capacity 62.2% 61.6% 78.9% 81.6% Mar. 27, Average Mar. 27, 2014 Mar. 27, 2015 Mar. 27,

27 Spring 2016 Update Energy and Water Efficiency Helping Customers Be More efficient - On-site energy audits - Rebates Lighting and occupancy sensors Windows Showerheads Builder incentives Heating and cooling Motors, belts and pulleys Custom electric efficiency program Renewable Energy Contact your account manager to get started 27

28 Spring 2016 Update Looking Forward Economic Engine At the table on key community projects Eliminate reconnection charges Allow transfer of development charge credit Increase access to Utilities GIS data Establish a Utilities development solutions team 28

29 Spring 2016 Update Looking Forward Quality and Efficiency Initiatives Collaboration with the municipal government Asset management Strategic sourcing Project delivery excellence Organizational review Succession planning and leadership training 29

30 Spring 2016 Update Looking Forward Rates Projections Potential rate adjustments for ETL, ETX, E8S, ECD to bring rates closer to cost of service Expected increases in ECA and GCA rates 30

31 Spring 2016 Update Looking Forward Separate Line Items on the Bill Renewable energy and demand side management investments are already included in the bill Will propose separate line items for qualifying renewable and DSM investments Provides transparency 31

32 Spring 2016 Update Governance Review Governance Review City Council, through its role as Utilities Board, currently governs Colorado Springs Utilities Review to determine if a change in governance process and structure could potentially benefit the citizen-owners and the utility Review led by Utilities Board. APPA consultant facilitation. Input from Colorado Springs Forward, the RBA, CONO and the public. Review through fall 2016, with potential ballot April

33 Spring 2016 Update Governance Review 33

34 Spring 2016 Update Governance Review Draft Criteria to Evaluate Governance Structures Act in the long-term best interest of Colorado Springs Utilities and its citizen-owners Be fully accountable to its citizen-owners and customers Have the authority and responsibility to carry out the board s statutory and governance duties Be comprised of individuals who have the knowledge and experience to effectively govern Colorado Springs Utilities 34

35 Spring 2016 Update Governance Review Governance Models Elected Appointed Hybrid 35

36 Spring 2016 Update Questions? 36