HomeMy WebLinkAboutMemo - Mail Packet - 12/1/2015 - Memorandum From Kevin R. Gertig Re: Edits To City Of Fort Collins Section: Draft Platte River Power Authority 2016-2026 Strategic PlanDRAFT
OUR VISION: As a respected leader and responsible energy partner,
improve the quality of life for the citizens served by our owner
communities.
OUR MISSION: Provide safe, reliable, environmentally responsible,
and competitively-priced energy and services.
STRATEGIC PLAN –
2016-2026
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TABLE OF CONTENTS
Values ...................................................................................................................................................................................
3
Message From The General Manager ........................................................................................................................... 4
Board Of Directors ............................................................................................................................................................. 5
Senior Management Team ................................................................................................................................................ 6
Strategic Initiatives ............................................................................................................................................................. 7
Strengths, Weaknesses, Opportunities And Threats (SWOT) .................................................................................... 8
Key Operational Goals And Activities ........................................................................................................................... 9
Resource Planning ............................................................................................................................................................ 10
Risk Management ............................................................................................................................................................ 12
Financial Management ................................................................................................................................................... 13
Environmental Management .......................................................................................................................................... 14
Legislative And Regulatory Planning ........................................................................................................................... 15
Municipal Planning .......................................................................................................................................................... 16
Town Of Estes Park ..................................................................................................................................................... 16
City Of Fort Collins ..................................................................................................................................................... 16
City Of Longmont .............................................................................................................................................. 191917
City Of Loveland ............................................................................................................................................... 192018
Appendices ............................................................................................................................................................. 212120
Appendix A. Resource Planning Update ...................................................................................................... 222221
Appendix B. Risk Management Plan ............................................................................................................. 333332
Appendix C. Strategic Financial Plan ........................................................................................................... 444442
Appendix D. Environmental Regulation Issues And Positions .................................................................... 464644
Appendix E. Legislative And Regulatory Issues And Positions ................................................................. 505048
Acronyms ................................................................................................................................................................. 525250
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VALUES
SAFETY
What is non-negotiable? Working safely to protect the public, our employees, and the assets we manage.
INTEGRITY
What is at the core of what we do? Being ethical and holding ourselves accountable to conduct business in
a fair, honest, open, compliant, and environmentally responsible manner.
CUSTOMER SERVICE
What creates added value and improves customer satisfaction? Providing quality service at a
competitive price while being responsive to our owners’ needs.
RESPECT
What leads us to optimal solutions for even the most difficult challenges? Encouraging constructive
dialogue that promotes a culture of inclusiveness, recognizes our differences, and accepts varying
viewpoints.
OPERATIONAL EXCELLENCE
How do we provide reliable service while managing costs and creating a rewarding work
environment? By engaging employees to strive for excellence and continuous improvement.
SUSTAINABILITY
How do we ensure long-term viability of the organization and the communities we serve? By
maintaining financial integrity, minimizing our environmental impact, and supporting responsible economic
development in our owner communities.
INNOVATION
How do we mitigate risk and create opportunities? By becoming an early adopter of technologies
proven to improve electric efficiency, protect the environment, and create a diversified energy supply
portfolio.
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MESSAGE FROM THE GENERAL MANAGER
Hello.
I am pleased to share Platte River Power Authority’s 2016-2026 Strategic Plan with you. It illustrates the
progress we continue to make in refining our processes and planning. In the following pages, you will get a
clear picture of how we’ve organized our strategy and established the groundwork for each strategic
initiative. You will see that our approach leverages new technologies, price trends and advancements over
time. You will find our values, including safety, sustainability, innovation, integrity, and operational
excellence, are the lens through which we focus our decision making.
These are clearly interesting times for our industry. The pace and amount of change is the most I’ve seen in
my 27-plus-year career. Data and artificial intelligence increases the accuracy of wind and solar
generation forecasts. The Internet of Things promises to connect devices like never before. The rapid
evolution of 3-D printing could mean that utilities will someday produce their own spare parts. Change is
occurring so rapidly it is predicted the amount of technological advancement that occurred in the year
2000 will occur every 30 seconds in 2020. The combination of speed and scale create potentially
disruptive technologies for our industry but also provide opportunities. To ensure that we continue to
deliver value in this environment, our strategy must be adaptive.
We would not have realized progress in our strategic planning process without our dedicated Board of
Directors. They consistently provide policy-level guidance and engage in an active and collaborative
fashion. This bi-directional connection increases clarity for staff in selecting the areas of focus that will best
support our long-term success. I want to personally thank each director for their continued support and
engagement.
Of course, any strategy is only as good as its execution. Platte River succeeds because our employees
transform plans into reality. Their unwavering dedication to Platte River and to our owner communities
results in exceptional value being delivered day-in and day-out. I appreciate all of our employees for
their commitment to service.
Our strategic process is just that – a process. It does not end. Changes in the industry, both known and
unknown, require an organization to be flexible and to adjust over time. Continued refinements,
investments in modeling, and a thoughtful approach give us confidence that we will continue to deliver
safe, reliable, environmentally responsible, and competitively-priced energy and services to our owner
communities of Estes Park, Fort Collins, Longmont, and Loveland, Colorado.
Sincerely,
Jackie
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BOARD OF DIRECTORS
Platte River Power Authority is a joint action agency and political subdivision of the State of Colorado. It is
governed by an independent eight-member board of directors that provides local decision making and
control.
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SENIOR MANAGEMENT TEAM
Platte River Power Authority operates under the direction of a general manager who serves at the
pleasure of the board of directors. Platte River’s senior management has extensive experience, with an
average of over 25 years of service in the utility industry.
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STRATEGIC INITIATIVES
Platte River’s strategic initiatives for 2016 and beyond have been refined and clarified from the 2015-
2025 plan. These statements provide high-level direction and focus for all divisions within Platte River.
SAFETY
Promote a culture where no job is so important
and no service so critical that employees must
compromise their own safety to perform their
job.
COMPLIANCE
Promote a culture of compliance where all
employees conduct business with the highest
standards of ethics and integrity. Meet or
exceed all policy and regulatory requirements.
FINANCIAL STABILITY
Generate adequate cash flows, maintain access
to low-cost capital, provide stable and
competitive wholesale rates, and effectively
manage financial risks, all with a focus on
continually improving our financial processes.
OPERATIONAL EXCELLENCE
Design, construct, operate, and maintain safe,
reliable, and environmentally-responsible
generation and transmission assets in a cost-
effective manner.
EXCEPTIONAL CUSTOMER SERVICE
Provide exceptional service for internal and
external customers with a focus on continuous
improvement through relationships, knowledge
of customer needs and preferences, key
performance metrics, and future program
development.
EMPLOYEE ENGAGEMENT
Create a work environment that encourages
employee engagement at all levels through a
framework of effective communication. Make
investments to leverage diversity, grow internal
talent, develop innovative skills, and maintain
high standards.
RESOURCE MANAGEMENT
Employ an adaptive strategy to cost-effectively
maintain reliability, manage risks, and ensure
regulatory compliance.
COLLABORATION AND COMMUNICATION
Continuously improve collaboration and
communication internally and externally to
enable successful projects and services, build
stakeholder relationships, and articulate value.
TECHNOLOGICAL INNOVATION AND
SUSTAINABILITY
Actively monitor and adopt new, proven
technologies that cost-effectively enhance
performance and promote the long-term
viability of Platte River, the municipalities, and
their customers.
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STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT)
To help ensure the long-term success of Platte River and its municipalities, a SWOT analysis is reviewed
and updated each year. To expand employee engagement in planning efforts, all employees were invited
to participate in a SWOT work session during 2015. Figure 1 reflects some of the most recent input from
employees. This exercise will continue as part of the ongoing strategic planning process. As a result, the list
may change over time as Platte River’s business evolves to meet new challenges and requirements.
FIGURE 1. SWOT SUMMARY
STRENGTHS (Internal Focus) WEAKNESSES (Internal Focus)
Financial position
Environmental compliance
Technical and operational expertise
Station generation and transmission
infrastructure
Competitive wholesale rates
Industry reputation
Dedication to operational excellence
Commitment to safety
Diversity in electricity resources
Succession planning and knowledge transfer
Leadership development
Operational experience in potential structured
energy markets
Alignment between culture and strategic
direction
Internal communications
OPPORTUNITIES (External Focus) THREATS (External Focus)
Community involvement
Optimization of physical assets and market
operations
Communication and educational outreach
Collaboration with municipal owners and other
regional entities
Deployment of innovative technologies
Regulatory and legislative uncertainty
Unpredictability of long-term water supply
Potential loss of tax-exempt financing
Litigation
Operational and market uncertainties
Physical and cyber security risks
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KEY OPERATIONAL GOALS AND ACTIVITIES
Key operational goals and activities for 2016 and beyond are summarized in this section. All are focused
toward meeting strategic initiatives. Platte River will periodically report to the board of directors any
notable progress toward these goals.
RENEWABLE ENERGY SUPPLY INTEGRATION
Optimize integration of the 60 MW Spring Canyon
wind resource and 30 MW Rawhide Solar Flats
project into Platte River's operations.
NEW WATER POLICY
Manage water resources through a policy that
facilitates utilization and optimization.
TALENT MANAGEMENT
Develop programs focused on succession planning,
employee development, knowledge transfer, and
attracting and retaining top talent.
PROJECT MANAGEMENT
Focus on maturing project management processes,
with special emphasis on tools and training.
EPA CLEAN POWER PLAN
Actively engage in Colorado’s stakeholder
process to help shape the State Implementation
Plan (SIP) so it aligns with Platte River’s strategic
direction.
DEBT FINANCING
Remain focused on analyzing debt financing
options for capital improvements at the Rawhide
Energy Station, for the Windy Gap Firming
project, and for electric facilities.
FUNDING OPPORTUNITIES
Develop a plan to pursue external funding
opportunities that support Platte River’s strategic
initiatives.
CLIMATE CHANGE AND RESILIENCE
Assess risk and uncertainty due to climate change,
and then develop plans to improve electric system
infrastructure resiliency.
EMPLOYEE ENGAGEMENT
Ensure availability of appropriate tools,
technology, training, and resources for optimal
work effectiveness.
RESOURCE PLANNING
Develop and implement a strategy to exit
ownership of Craig Unit 1, expand system-wide
energy efficiency programs, implement a system-
wide demand response technology pilot, and
develop a distributed resource strategy.
RATE PLANNING AND COORDINATION
Continue collaborating with the owner
municipalities, including exploring long-term rate
development and potential changes to rate
structure.
REGIONAL WHOLESALE MARKET INITIATIVES
Proactively engage in the design and
development of organized markets in the Rocky
Mountain region to help ensure that the market
structure is workable for all participants.
CYBERSECURITY
Continue to enhance a robust cybersecurity
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RESOURCE PLANNING
Resource planning and management is a cross-
functional activity involving many departments
throughout the organization. This effort is
continuous and ever-changing as market,
regulatory, and other planning variables evolve.
This section provides a high-level overview of
resource management. Details on resource
planning activities and insights appear in
Appendix A. Resource Planning Update.
During its August 2015 work session, the board
of directors reached consensus on replacing
historical resource planning guidelines with the
following new statement of direction:
GREATER FLEXIBILITY
The new statement gives staff more flexibility to
recommend resource actions going forward –
relative to the detailed set of resource planning
guidelines included in prior strategic plans. It also
directs Platte River to position itself for
compliance with the Clean Power Plan (CPP), with
the potential to go beyond CPP requirements if
cost-effective.
Going forward, “Resource Management” has
replaced “Diversified Energy Supply Portfolio”
as the strategic initiative statement associated
with resource planning and management. This
change reflects a broader focus on all aspects of
generation resource management, including
portfolio diversity.
FUTURE RESOURCE MANAGEMENT
Platte River faces future resource management
decisions from a position of strength. Generation
and transmission facilities owned and operated
by Platte River have performed well. Platte River
has significant surplus capacity based on
updated load forecasts and continues to expand
energy efficiency and other demand-side
programs to manage growth and provide
services to customers in our owner communities.
Renewable energy supply to the municipalities
already exceeds the Colorado Renewable
Energy Standard and 30 MW of new renewable
supply will come from the Rawhide Flats facility
during 2016. Finally, given its location and
collaboration with owner municipalities, Platte
River can select from several renewable resource
options going forward.
The board of directors has supported multiple
activities related to resource management,
including:
Continued expansion of energy
efficiency programs
Integration of significant wind and solar
resource additions (increased from 18
MW in 2013 to 108 MW by 2016)
Development of a strategy for exiting
ownership of Craig Unit 1
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RESOURCE MODELING TOOLS
Beginning in 2014, with board support, Platte
River acquired software and put into practice
new resource
modeling
tools that
help evaluate potential future resource scenarios.
We completed a screening process to identify all
potential resources, prioritize them, and develop
an initial range of options for the mid-term time
frame.
The resource analysis was recently updated to
include evaluation of costs for integration of
intermittent renewable resources (wind and
solar). Based on overall analysis to date it
appears Platte River has a solid range of
practical options for meeting the CPP and future
energy/capacity requirements.
However, wholesale rate increases could be
significant, with a range of potential impacts
depending on the final implementation rules for
CPP in Colorado as outlined in the Financial
Management section and in Appendix A.
Platte River will develop a more detailed
resource analysis and communicate the results
when the mechanisms for CPP implementation in
Colorado become more clear. This will help us
evaluate how various CPP scenarios may change
the relative wholesale rate differences between
Platte River and other Colorado wholesale
suppliers. The analysis will also support
retail/wholesale rate coordination and
communications.
FORMAL INTEGRATED RESOURCE PLAN
Platte River is due to file its next formal
Integrated Resource Plan (IRP) with Western
Area Power Administration in June 2017.
Management contemplated developing a
resource plan earlier than this date in our 2015
Strategic Plan. However, in early 2015, the
board agreed with staff’s recommendation that
following the normal schedule for the next IRP
was more appropriate. Reasons for this included:
(1) the delay in need for new capacity resources
associated with an updated load forecast and
expanded Energy Efficiency (EE)/Demand Side
Management (DSM), (2) uncertainties related to
working with four other joint owners to develop
decisions for the Craig station coal units, and (3)
release of the CPP rule.
Communications have been ongoing with
stakeholders regarding the IRP schedule and
other key resource planning considerations
including the CPP and evolution of new
technology options over time.
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RISK MANAGEMENT
The Risk Oversight Committee (ROC) consists of the general manager, senior management, and key staff
members. It is charged with managing Platte River’s risks and the Risk Management Plan. The Risk
Management Plan (see Appendix B) is a summary of Platte River’s proactive efforts to identify, evaluate,
rank, and mitigate risks significant to Platte River. These are risks that could negatively impact electric
supply, finances, reputation, and safety.
Using a bottom-up approach, Platte River’s risk management process
provides the framework to identify and assess specific risks by soliciting input
directly from subject matter experts (SMEs) throughout the organization and
developing mitigation strategies. This approach has increased employee
engagement, resulting in more accurate risk assessment and mitigation
development.
For example, perspectives from SMEs resulted in expanding cybersecurity
assessments. This expansion included identifying risks specific to separate
facilities and areas of operation, and subsequent mitigations related to each
respective area. SMEs also refined the risk assessment process for unplanned
capital requirements, emphasizing project planning as well as cost
projections.
Proactive efforts to improve Platte River’s risk management are continuous.
The 2015 Annual Budget includes funds for a third-party review of the Risk
Management Plan and risk mitigation activities, which is scheduled to begin in
the fourth quarter of 2015. The third-party review will include a thorough
examination of Platte River’s risk ranking methodology and metrics, risk
assessment development and review processes, and best practices for
managing business risk. The third party will provide a detailed report summarizing the assessment, Platte
River strengths and weaknesses, and recommendations. Findings from the review will be incorporated into
the 2017-2027 Risk Management Plan.
Platte River’s risk
management
approach has
increased
employee
engagement,
resulting in more
accurate risk
assessment and
mitigation
development.
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FINANCIAL MANAGEMENT
Platte River’s Strategic Financial Plan (SFP, see Appendix C) provides direction for creating long-term
financial stability. The plan’s priorities include generating adequate cash flows, maintaining access to low
cost capital, providing stable and competitive wholesale rates, and effectively managing financial risk. The
board of directors reviews the SFP policies, goals, and financial projections at least annually.
Many of the SFP goals establish targets used in setting municipal wholesale rates. The SFP is designed to
maintain Platte River’s current AA senior lien debt credit rating by all three rating agencies: Fitch Ratings
(AA), Moody’s Rating Service (Aa2), and Standard & Poor’s Rating Service (AA).
The SFP policies and goals are interrelated. Achieving the targets for debt service, net income, and days
unrestricted cash on hand should result in adequate cash flows to meet liquidity targets, exceeding the
debt-to-capitalization goal, and maintaining access to low-cost capital.
Maintaining the minimum unrestricted days cash-on-hand ensures a strong cash position, significantly
enhancing future operating and financing flexibility. The Rate Stabilization Fund goals are met if an
unforeseen event were to occur, such as an extended unplanned Rawhide outage. The remaining financial
goals focus on providing competitive wholesale rates to the municipalities, prudently investing capital, and
establishing appropriate and cost effective programs to manage Platte River’s risk against catastrophic
losses.
10-YEAR RATE PROJECTIONS
To continue meeting SFP goals, Platte River’s board of directors increases rates when necessary. Currently,
wholesale rates are projected to increase between 22 percent and 70 percent from 2015 to 2025,
depending on the CPP implementation and other factors. To minimize single-year rate impacts, Platte River
will continue rate-smoothing strategies; currently 4.5 percent rate increases are projected in 2016 and
2017.
Beyond 2017, rate projections indicate a range of 1.4 percent to 5.7 percent annual increases from 2018
to 2025. The range is due to the significant uncertainty regarding implementation of the CPP provisions –
from no CPP (1.4 percent/yr) to a 50 percent reduction of carbon dioxide (CO2) emissions via carbon tax
on all emissions (5.7 percent/yr). Platte River will review and revise future rate projections and smoothing
strategies, at least annually, based on the financial forecasts and the latest information including the
impacts and timing of the CPP.
FIGURE 2. 2014 AVERAGE WHOLESALE RATES COMPARISON
53.82
71.40 75.47
104.22
0
20
40
60
80
100
120
Platte River Tri-State PSCo ARPA
$/MWh
2014 Average Wholesale Rates
Platte River’s
customers enjoy
the lowest rates
among
wholesale
power providers
in the State of
Colorado.
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ENVIRONMENTAL MANAGEMENT
Platte River has a longstanding commitment to being a good steward of the environment, as demonstrated
by the organization’s record of consistently meeting or exceeding regulatory requirements. By continuing
to look for ways to improve plant performance and making investments in technology, Platte River is able
to operate its generation and transmission systems at high levels of reliability and environmental
compliance.
Figures 3 and 4 show a comparison of emissions performance for Platte River’s Rawhide Generating
Station relative to other US coal plants. Rawhide is a top performer among comparable coal plants.
FIGURE 3. 2014 AVERAGE EMISSION RATES OF SO2 + NOX (COAL-FIRED PLANTS IN THE US)
FIGURE 4. 2014 AVERAGE EMISSION RATES OF CO2 (COAL-FIRED PLANTS IN THE US)
When new legislation and regulations are proposed, Platte River takes an active role in discussions. This
helps shape the final outcome so that reliability, risk, and costs are fully considered. This is consistent with
the organization’s strategic direction and essential to meeting its mission.
Appendix D highlights the environmental-based principles that are central to the organization’s planning
guidelines. It also gives context to major areas of environmental focus and consideration, including recently
released CPP and Ozone regulations.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
lb/mmBtu
Source: EPA
Rawhide
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
lb/MWh
Source: EPA
Rawhide
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LEGISLATIVE AND REGULATORY PLANNING
Platte River’s legislative and regulatory efforts at the state and federal levels support our mission to
provide safe, reliable, and competitively-priced energy and services, while simultaneously recognizing and
mitigating the environmental impacts of power generation.
Platte River strives to maintain positive relationships with members of Colorado’s congressional delegation,
the governor’s office, the Colorado General Assembly, as well as with state and federal regulators and
legislators. In addition to direct issue-related communication with governmental decision makers, Platte
River is an active participant in trade associations, such as the American Public Power Association (APPA),
the Large Public Power Council (LPPC), and the Colorado Association of Municipal Utilities (CAMU).
These associations offer a cost-effective means to participate in legislative and regulatory proceedings.
Platte River management and staff actively participate with these organizations to ensure our positions are
appropriately reflected by these organizations.
Appendix E provides a summary of pending issues and positions such as the CPP and ozone regulations.
The appendix also includes specific environmental policies and principles that provide guidance to Platte
River management and staff.
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MUNICIPAL PLANNING
A summary of current planning activities within the municipalities is provided on the following pages based
on input provided by representatives from each of the municipalities.
TOWN OF ESTES PARK
Cost-Sensitivity. The Town of Estes Park is
cost sensitive because of its larger service
territory with fewer customers, which make its
rates higher (relative to large municipalities).
Rates are still lower than regional investor
owned or rural electric utilities. Cost
consciousness will impact future planning.
Environmental Advocacy. Significant
environmental advocacy exists within the
Town and there is interest in providing
information about the cost impacts of
renewable energy or other environmental
initiatives.
Capital Investment. The current focus is
toward capital investment. Other areas of
focus include cost management, identifying
risks/opportunities, and prioritization.
Key Initiatives. The following are some key
initiatives currently underway or being
considered: economic development, land use,
and water/energy planning – part of an
overall planning process.
Renewables. The Town is cost conscious and
supports renewables. Its municipal operations
participate in the voluntary renewable
program to achieve 100 percent power from
renewable energy.
CITY OF FORT COLLINS
City Plan and Transportation Master Plan.
The City Plan is the comprehensive plan for
the City of Fort Collins. It illustrates how the
community envisions Fort Collins over the next
25 years and beyond. The Transportation
Master Plan defines a bold vision for a
long-term, multi-modal transportation system
that supports Fort Collins well into the future.
Plan Fort Collins. The name Plan Fort
Collins refers to the integrated process to
prepare major updates to two key
documents: City Plan and the
Transportation Master Plan. City Plan is the
comprehensive plan for the City of Fort
Collins, and illustrates how the community
envisions Fort Collins over the next 25 years
and beyond. The Transportation Master
Plan (TMP) serves to document a bold
vision for the long-term multimodal
transportation system that will support the
Fort Collins community well into the future.
The TMP provides policy direction for
decisions regarding the implementation of
the transportation system to achieve the
community’s vision. The process for
updating two distinct plans, City Plan and
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sustainability, and connections. This meant
the long range visions and policies for City
Plan and the Transportation Master Plan
would become mutually supportive and
comprehensive. In 2010, the process for
updating the two plans above was unified
around the tenets of innovation,
sustainability, and connections. This meant the
long range visions and policies for City Plan
and the Transportation Master Plan would
become mutually supportive and
comprehensive. Re-branding these two
efforts as Plan Fort Collins created a
simpler and more recognizable name,
resulting in greater public awareness and
understanding of the two projects. The 2010
update was prepared with extensive
involvement from City Utilities, leading to
closer integration of a variety of topics such
as energy, water, and storm water. Note: The
previous City Plan had incorporated those
topics in a more cursory manner.
City Strategic Plan. The City of Fort Collins
aspires to provide world-class services to the
community while cultivating a world class
organizational culture for its employees. In
order to achieve this vision, both internal and
external services are data-driven and
implemented according to organizational
values. Residents can not only expect to
receive exceptional service, but also to have
the opportunity to engage with decision
makers, provide input regarding the way
City resources are allocated, and have
access to government information in a timely
and transparent manner. The City of Fort
Collins works to continuously improve seven
key outcome areas: Community and
Neighborhood Livability, Culture and
Recreation, Economic Health, Environmental
Health, Safety, Transportation, and High
Performing Government. The City budget is
divided among these seven areas, and
revenue is allocated to support policies and
initiatives that drive improvement in
outcomes. While each outcome area has
unique defining characteristics, City
investment in a single objective regularly
impacts more than one outcome area.
Energy Policy. The Energy Policy was
updated between 2014-2015 to address
the broader scope of all energy use in the
community and to align with the Climate
Action Plan (CAP) Framework. The City of
Fort Collins’ Energy Policy reflects the
community’s values of reliability, safety,
affordability, greenhouse gas (GHG)
emissions reduction, pollution prevention and
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implementation plans that foster the policy
outcomes for residents, businesses, and other
organizations.
Climate Action Plan. During 2014-2015
Fort Collins developed a new CAP
Framework document and adopted new
carbon reduction goals to reduce community
carbon emissions as follows: reduce by 20
percent below 2005 levels by 2020, by 80
percent below 2005 levels by 2030, and
achieve carbon neutrality by 2050. The
2015 CAP Framework lays out a number of
high level strategies in the areas of building,
mobility, energy supply and waste reduction.
Next steps for 2015 and 2016 will involve
developing implementation details to
prioritize actions and associated near-term
budget requests needed to meet the 2020
greenhouse gas goals and longer-term
targets, and continue public engagement.
Strategic Financial Plan. A Strategic
Financial Plan will be published in 2016.
The purpose of the Plan is to manage Utilities
financial resources to achieve business
objectives and maximize customer value for
each utility service. The Plan will encompass
the full range of Utilities finances, from
setting out objectives and identifying
resources, analyzing data and making
financial decisions that support the City
Strategic Plan. A Strategic Financial Plan
will be published in 2015 for each utility
service. The plan focuses on maintaining the
financial resiliency of each utility for the next
decade, while implementing a formal asset
management program to ensure the
operational reliability and integrity of the
utilities.
2009 IT Strategic Road Map. The Strategic
Road Map is a 10-year plan for IT
development. This initiative ties to the utilities’
smart-grid efforts and other work involving
information technologies. The IT Strategic
Plan was recently updated to account for
already accomplished work and to look
forward for the next ten years.
High-Speed Broadband. As the demand for
more advanced, reliable and affordable
broadband service rises, the City must define
its ongoing role in ensuring access is
provided. "Next generation" high-speed
internet services are becoming important
infrastructure for communities in the 21st
century. This demand for service is
challenging local communities to develop
effective strategies for connecting citizens,
businesses and institutions. On November 3,
2015 Fort Collins voters overturned Senate
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CITY OF LONGMONT
Focus on Longmont. This plan sets direction
at a city level and is included in the city’s
annual budget process. Five key
categories/initiatives with general goals
include: (1) healthy business climate, (2)
education, (3) community identity,
(4) enhance the natural environment, and
(5) revitalize downtown. The city is also
working on incorporating a budget
prioritization model into the plan. Longmont
Power & Communications (LPC) has a tie to
“healthy business climate” (low rates as an
economic driver), “enhance the natural
environment” (energy efficiency programs,
energy mix, etc.), and other areas (reliability
and customer satisfaction). LPC provides
related reporting statistics – definitive goals
are not included as a part of this plan.
Comprehensive Plan. Longmont uses the
city’s Comprehensive Plan to identify long
range capacity requirements. The plan
provides a model for staff to predict
average loads based on specific densities
and land development types. New for 2015,
Envision Longmont is a community-wide
planning effort by the city to update and
integrate the Longmont Area Comprehensive
Plan and the Longmont Multi-Modal
Transportation Plan. The plans were last
updated in 2003 and 2005, respectively.
The updated plan will serve as a policy
guide for the city over the next ten to twenty
years. Envision Longmont will be a
collaborative and inclusive process in which
all citizens are encouraged to participate.
LPC’s planning strategy includes distribution
and substation needs for the complete build
out of the community. As the Comprehensive
Plan is modified, LPC reviews and updates
planning strategies accordingly.
Sustainability Plan. The city has
incorporated sustainability policies and
programs across various departments
throughout its history. In the latter part of
2015, the city plans to begin updating a
sustainability strategy. The Sustainability
Plan will incorporate LPC’s programs
including: Efficiency Works, LED replacement
in street lighting, electric vehicles and
charging stations, renewable energy options,
and others.
NextLightTM Broadband Services. LPC
began offering 100 percent fiber-to-the-
premise services as a pilot during 2013. A
full build-out of the community began in
2014 and network infrastructure installation
is expected to be complete near the end of
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DRAFT 2016-2026 Strategic Plan 20
Management, Staff, and Funding. The
Utility Commission provides direction to
management/staff and is engaged in
planning efforts. City Council conducts an
annual retreat for planning purposes.
The city manager has set initiatives in the
areas of improved communication/
coordination of city direction, and conducting
meetings with the management team
(expanding to mid-management).
In Process. Loveland is in the process of
identifying all major initiatives, projects, and
programs for the water, wastewater, and
power utilities in 2016. Loveland currently
has a general fund plan for setting financial
priorities.
Comprehensive Plan. City Council is
currently updating the 2005 Comprehensive
Plan, which serves as a guide for aspects of
Loveland’s planning. The goal is to have this
completed by 2015. It provides mission/
vision statements and is mostly focused on
land-use planning. From a utility perspective,
it includes water conservation through land
use, efficient utility service through higher
density planning, coordination of the utility
needs to support downtown redevelopment,
and undergrounding power lines.
Economic Development Strategic Plan.
Loveland adopted an Economic
Development Strategic Plan and Incentive
Policy in February 2012. That plan is still in
place.
Key Planning. Key planning items for
Loveland include cost control, demand-side
management, demand response, renewable
supply integration, new rate designs,
economic development, energy efficiency
programs, workforce planning, public
outreach, operational excellence,
progressive technologies, regional
cooperation, customer service, broadband
service, water capital program, long-range
planning, and addressing aging
infrastructure.
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APPENDICES
Appendix A Resource Planning Update
Appendix B Risk Management Plan
Appendix C Strategic Financial Plan
Appendix D Environmental Regulation Issues and Positions
Appendix E Legislative and Regulatory Issues and Positions
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DRAFT 2016-2026 Strategic Plan 22
APPENDIX A. RESOURCE PLANNING UPDATE
CURRENT RESOURCES
Platte River owns and contracts for a mix of
fossil-fueled and renewable generation. The
existing portfolio of owned resources includes
coal-fired generation located at the Rawhide
and Craig stations, and natural gas-fired
combustion turbines at the Rawhide site. Platte
River also receives energy through Federal
contracts for hydropower. Deliveries from
hydropower sources depend on local and
regional hydrology conditions, which vary over
time.
Wind energy is supplied to Platte River through
contracts from the Medicine Bow and Silver Sage
wind projects in southeast Wyoming, and the
Spring Canyon site in northeast Colorado.
This mix of resources has performed well,
particularly the generation units at the Rawhide
Energy Station. During the last few years,
performance of the Craig units has declined from
longer-term historical levels.
Platte River has a diversified resource mix from
a capacity (MW) perspective; however, about
three-fourths of energy (MWh) delivered by
Platte River to the municipalities is generated by
coal plants. Platte River also has a gap in its
current resource lineup—it lacks flexible,
intermediate resources that can complement
existing resources and help integrate more
intermittent renewable sources over the long term.
Platte River’s renewable resources have grown
significantly over the past few years. Wind
power accounts for 78 MW and about 9 percent
of delivered energy (2015), while solar will
account for 30 MW and roughly 1.5 percent of
total delivered energy by 2017. To meet the
CPP, the use of renewable generation will need
to expand significantly, requiring expanded
management of intermittent resources.
FIGURE 5. RENEWABLE ENERGY FROM EXISTING WIND AND PROJECTED SOLAR SOURCES
NOTE: actual energy production shown through 2014: forecast through 2017
-
100,000
200,000
300,000
400,000
500,000
1998 2001 2004 2007 2010 2013 2016
MWh
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The current mix of resources has delivered roughly 3,300 GWh annually to the four municipalities that
Platte River serves (last five years). Surplus energy produced by Platte River is sold to third parties, and
typically averages about 750 GWh per year, primarily from Platte River’s share of the Craig units.
FIGURE 6. 2014 ENERGY MIX
ELECTRIC LOAD FORECAST
Platte River’s system electric load forecast is one of the primary drivers in the resource planning process.
Platte River’s statistical model uses multiple variables to predict demand and energy growth in the owner
municipalities. These variables include population, employment, and weather.
Peak load growth increased rapidly during the 1990s into the 2000s, due primarily to expanded use of
air conditioning and strong economic growth. Future peak load growth is expected to be lower than
growth prior to the “Great Recession”. Slower growth is due in part to the fact that most homes and
businesses now have air conditioning. Additionally, lower economic growth and increased energy efficiency
(EE) efforts over the last few years have reduced electric load growth in the municipalities.
Platte River’s EE programs continue to evolve and are planned to expand in the future. The cumulative
impact of EE is expected to reduce energy needs by approximately 788 GWh through 2035, relative to
the total 2035 load projection of 3,937 GWh.
FIGURE 7. PEAK ELECTRICITY DEMAND
Rawhide
280
Craig
154
Gas
388
Hydro
91
Wind
78
Capacity, MW
Rawhide
Craig
Gas
Hydro
Wind
Energy, MWh
Purchases
200
400
600
800
1,000
1995 2000 2005 2010 2015 2020 2025 2030 2035
Peak Demand (MW) 1995-2035
Actual Base Case (no efficiency) Existing Efficiency Expanded efficiency
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FIGURE 8. ANNUAL AVERAGE ENERGY CONSUMPTION
Note: The 2015 load forecast projects an annual average growth rate of 1.2 percent in energy consumption
over the course of the ten-year forecasting horizon. Peak demand is forecast to grow at an average rate of
1.3 percent during the same period.
CAPACITY PLANNING
Platte River currently has excess capacity. Projections indicate new firm capacity is not required until about
2030 assuming expanded energy efficiency and exit from Craig Unit 1. Decisions regarding options to
reduce CO2 emissions will likely be more significant than those related to needs for new firm capacity.
The decision to add a new capacity resource is based on ensuring an adequate balance between loads
and resources at all times. Platte River uses a combination of industry-standard and business-specific
techniques to evaluate capacity needs:
Maintain a minimum planning reserve margin of 15 percent.
Use recognized North American Electric Reliability Corporation (NERC) conventions in capacity
planning methods, including loss-of-load probability analysis.
Carry operational reserves or have access to firm capacity that is sufficient to meet load
obligations whenever the Rawhide coal unit is out of service.
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1995 2000 2005 2010 2015 2020 2025 2030 2035
Annual Energy (GWh) 1995-2035
Actual Base Case (no efficiency) Existing Efficiency Expanded efficiency
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FIGURE 9. PLATTE RIVER LOADS AND RESOURCES
Platte River also evaluates renewable energy needs to support municipality compliance with state
mandates. According to the Colorado Renewable Energy Standard, approximately 10 percent of energy
deliveries to municipalities with over 40,000 customers must be supplied by qualified renewable resources.
Deliveries from Platte River currently exceed the state requirements and we expect to deliver
approximately 12 percent of total municipal energy requirements via qualified renewable sources by
2017.
PORTFOLIO ANALYSIS
Platte River uses the AURORAxmp Electric Market Model (“Aurora”), developed by EPIS Inc., to perform
modeling related to system dispatch and production cost analysis. Aurora simulates the hourly operation of
Platte River’s generation system and its management within regional energy markets. The model also
captures fixed costs and capital costs which are necessary for evaluating the full cost of potential new
generation alternatives. Inputs for the model are collected from a variety of resources including internal
and external experts. Internal experts review data supplied by consultants to ensure it is reasonable.
Since the model cannot evaluate every potential combination of portfolios, the pool of candidates is
narrowed to a reasonable number of the most promising technologies. The screening process is outlined in
Figure 10.
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Loads
Foundation Forecast 648 659 670 681 693 705 717 729 741 754 767 780 794 807 821 835
DSM -4 -8 -13 -19 -25 -32 -39 -46 -53 -60 -68 -75 -82 -89 -97 -104
Municipal Loads (Base) 644 651 657 662 667 672 677 683 689 694 699 705 711 718 724 731
Losses 13 13 14 14 14 14 14 14 14 14 14 15 15 15 15 15
Total Loads 658 664 671 676 681 686 691 697 703 708 714 722 729 737 744 752
Planning Reserves (15%) 99 100 101 101 102 103 104 105 105 106 107 108 109 111 112 113
Load Plus Planning Reserves 756 764 771 777 783 789 795 801 808 814 821 830 838 847 855 865
Resources
Rawhide 280 280 280 280 280 280 280 280 280 280 280 280 280 280 280 280
Craig 154 154 154 154 154 154 154 154 154 154 154 154 154 154 154 154
CRSP 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60 60
LAP 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30
Wind ELCC 10 10 10 10 10 10 10 10 10 10 10 10 10 10 9 8
Solar ELCC 0 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9
Peaking 388 388 388 388 388 388 388 388 388 388 389 390 391 392 393 394
Total Resources 922 922 931 931 931 931 931 931 931 931 932 933 934 935 935 935
Surplus (Above Planning Reserve
Requirements) 165 158 159 153 147 142 136 130 123 117 110 103 96 87 79 70
Reserve Margin 40% 39% 39% 38% 37% 36% 35% 34% 32% 31% 30% 29% 28% 27% 26% 24%
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FIGURE 10. ILLUSTRATION OF PORTFOLIO EVALUATION PROCESS
Evaluate Planning Metrics
• Reliability
• Rates
• Environmental Impact
Assess Viability
• Technology Maturity
• Capital Costs
• Resource Constraints
Screen 1
Screen 3
Screen 2
Test Performance Across Ranges
• Loads
• Fuel Costs
• Markets
Develop Full Set of Portfolios
• Craig
• Rawhide
• Natural Gas
• Renewables
• Storage
• Distributed Energy Resources
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CLEAN POWER PLAN
On August 3, 2015, the Environmental Protection Agency (EPA) finalized its rule to reduce CO2 emissions
from electric generating units through the Clean Power Plan (CPP). The CPP establishes state-by-state
targets for CO2 emissions reductions, and delegates implementation of the rule to the states. The EPA
specifies reductions based on rate or mass, with the approach determined by individual states.
The final version of the rule requires the State of Colorado to reduce CO2 emissions on a rate basis to
1,174 lb/MWh in 2030, a 40 percent reduction relative to 2012 levels. On a mass basis, Colorado
would be required to reduce emissions from 41.8 million tons in 2012 to 29.9 million tons in 2030 (roughly
28 percent).
For Platte River, the 2030 CO2 rate standard would amount to a 45 percent decrease in CO2 relative to
2012 levels; whereas, a proportionate mass decrease would require Platte River to reduce emissions from
approximately 3.4 million tons in 2012 to about 2.4 million tons in 2030 (nearly 30 percent).
The CPP is a complex set of regulations that will involve detailed analysis. As a result of the EPA rule,
Platte River is considering compliance strategies that position it for future CO2 reduction requirements,
including assessment of rate- or mass-based strategies using tax imposition, trading of allowances, or
command/control implementation methods. Early planning around CO2 reduction is a critical component of
Platte River’s resource planning efforts.
Key uncertainties remain regarding the new rule: levels/timing of CO2 reduction required specifically for
Platte River, and the implementation method that will be used in Colorado for compliance.
Refer to Appendix D for more information on the CPP.
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CRAIG UNIT 1 EXIT STRATEGY
Platte River is a partial owner of Craig Units 1 and 2 (also referred to as the Yampa Project). Units 1 and
2 typically generate approximately one-fourth of all Platte River energy sales and about one-third of
CO2 emissions. In 2015, Platte River studied three primary strategies, including:
1) Exiting Craig Unit 1 by 2020 and both Craig units by 2030, or
2) Exiting both units by 2020, or
3) Operating the two units at minimum contractual capacities during most of the year.
Platte River’s board of directors approved staff’s recommendation to develop a strategy to exit
Craig Unit 1. Rationale for the recommendation includes lower costs, potential for significant emission
reductions, and need for more flexible resources to replace base load coal.
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DEMAND SIDE MANAGEMENT
Demand Side Management (DSM) refers to programs offered by utilities that influence end-use demand
for electricity. DSM goals for the near-term include expanding energy efficiency programs, implementing
a system-wide Demand Response (DR) pilot program, and developing a distributed resource strategy.
Expanded Energy Efficiency Programs
Based on studies conducted by Platte River and its consultants, we anticipate that about 788 GWh of
cumulative energy efficiency savings can be achieved through 2035.
FIGURE 11. CUMULATIVE ENERGY SAVINGS FROM EXPANDED ENERGY EFFICIENCY PROGRAMS
Demand Response Pilot Program
DR has the potential to provide net capacity for
use in a variety of ways, including the ability to
avoid or delay new generation capacity, to shift
energy use from peak times to off-peak times, or
to provide reserves (where permitted by the
Balancing Authority or regional market). An
emerging use of DR is to help integrate
intermittent renewable generation, such as wind
and solar.
Platte River and its consultants estimate that 19
to 49 MW of demand response can be achieved
in the municipalities at a present value cost of
$13 to $26 million. The present value of the
benefits is estimated at $8 to $19 million. More
information on potential benefits and costs for
DR will be gathered as part of the pilot
program.
-
200,000
400,000
600,000
800,000
2015 2020 2025 2030
Cumulative Energy Savings, MWh
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Distributed Resource Strategy
For 2016 forward, Platte River and the
municipalities will work together to develop a
more formal strategy for implementing and
integrating distributed resources. Aspects of this
strategy may include:
Maintain an up-to-date distributed
generation database that includes
proposed projects.
Integrate lessons learned from the
system DR pilot program into overall
strategy.
Work with other entities experienced in
distributed resource implementation.
Enhance modeling capabilities to
analyze distributed resources from
wholesale, distribution and customer
perspectives.
Consider a range of distributed
resources including generation (such as
combined heat and power (CHP)), load
management (including DR) and energy
storage.
Evaluate benefits in an integrated
fashion, including the generation and
transmission system, distribution system,
and end-use customers.
Solar photovoltaic (PV) and CHP are the two
types of distributed generation most likely to be
used in the near future.
PVs can be installed at an end-user’s
facility or provided by larger-scale
installations at the distribution or
wholesale utility level. Platte River
retained Nexant (a consultant) to
evaluate the potential for roof-mounted
PV in the region, based on roof
orientation, capacity factors and
economics. Nexant suggested that PV
installations could grow to an estimated
output of over 50 MW in the next 20
years (by 2035) – if utility incentives are
provided to cover the majority of the
cost.
Considering all PV systems already
installed on homes and businesses (about
480 systems), the Loveland solar project
(funded via FEMA), solar programs in
Fort Collins, and a potential system-wide
community solar program – total
distributed PV installations could exceed
12 MW by 2017.
CHP refers to a generation system that
uses a fuel—typically natural gas or
biofuel—to generate electricity and
incorporates a heat recovery system that
captures waste thermal energy for
beneficial use, making steam or hot
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RENEWABLES INTEGRATION
In the coming years, Platte River will continue to focus on integrating renewable energy resources within its
resource mix. Key areas of emphasis include expanding operating expertise with wind resources (78 MW
total), gaining experience with managing and integrating 30 MW of new solar, and modeling operational
aspects of renewable resource integration. Platte River will also continue to monitor regional renewable
resource opportunities at the wholesale level and include distributed renewable sources in system planning
activities.
Intermittency
Preparing to manage the intermittency of
renewable generation will be an important
effort for Platte River in the coming years. The
currently approved 108 MW of wind/solar in
Platte River’s portfolio is anticipated to grow
substantially to meet 2030 EPA CPP compliance
requirements.
Currently, Platte River lacks sufficient flexible
generation resources to manage the intermittency
of wind and solar generation. Platte River
contracts for balancing services through PSCo
(Xcel), as the regional balancing authority. Future
balancing authority costs are uncertain, and total
reliance on these services may create
uncontrollable financial risks for large amounts of
renewable resources.
Integration Study
To evaluate the system cost and performance
impacts from higher levels of intermittent
generation, Platte River engaged HDR to conduct
a renewable integration study at a “sub-hourly”
level (Platte River’s Aurora model analyzes
generation at an hourly level).
The study was designed to determine the
expected incremental cost of balancing Platte
River’s system at various levels of solar and wind
penetration (ranging from 7.5 percent to 30
percent of Platte River’s total energy deliveries).
The study concluded that at lower levels of
renewable penetration, Platte River could expect
additional integration costs of about $5-
$7/MWh. As the penetration of renewables
increases to 30 percent of total energy supply,
the expected cost could rise to over $30/MWh.
These preliminary cost estimates were included in
Platte River’s modeling efforts to date. Further
analysis is required to more accurately
determine potential costs for renewable source
integration.
Platte River plans to continue to work closely with
Xcel to better collaborate regarding large scale
integration of renewable sources. Efforts will also
expand with the National Renewable Energy
Laboratory and other subject matter experts in
this area.
Platte River expects to bring expertise related to
sub-hourly modeling in-house over time, similar to
the approach for hourly production cost
modeling using Aurora.
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MODELING RESULTS–WHOLESALE RATE PROJECTIONS
Figure 12 shows preliminary wholesale rate estimates for portfolio options considered to meet various CO2
reduction needs. Each of the three portfolio options was evaluated with and without a CO2 tax assumption.
FIGURE 12. PRELIMINARY WHOLESALE RATE ESTIMATES
Path A results in the lowest rate impacts of the CO2 reduction scenarios; however, Path A’s CO2
compliance prior to 2030 is unclear due to the uncertain implementation of the EPA’s CPP rule.
Path B, where Platte River exits ownership in both Craig units by 2020, results in earlier
wholesale rate increases because of the need to install lower-emissions replacement capacity by
2021. Emission reduction by 2030 is 35percent in this scenario.
Path C, which assumes a 50 percent CO2 reduction requirement, yields the highest long-term rate
increases. This option requires additional renewable resource expenditures to maintain CO2
compliance at this higher reduction level.
Currently, wholesale rates are projected to increase between 22 percent and 70 percent from 2015 to
2025, depending on the CPP implementation and other factors. To minimize single-year rate impacts,
Platte River will continue rate-smoothing strategies; currently 4.5 percent rate increases are projected in
2016 and 2017.
50
70
90
110
130
150
170
2015 2020 2025 2030 2035
$/MWh
Path A (tax)
Path A (no tax)
Path B (tax)
Path B (no tax)
Path C (tax)
Path C (no tax)
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APPENDIX B. RISK MANAGEMENT PLAN
The Risk Management Plan summarizes Platte River’s proactive efforts to identify, evaluate, rank, and
mitigate risks that could negatively impact electric supply, finances, reputation, and safety requirements.
Platte River’s risk management process provides a framework to identify and assess specific risks by
soliciting staff input and following an assessment and documentation process.
Identified risks are evaluated through a risk assessment process coordinated by the chief financial and risk
Officer, financial planning staff, and a Risk Oversight Committee (ROC) consisting of the general manager,
senior management, and key staff members.
The ROC identifies subject matter experts throughout Platte River to provide expertise and information
regarding each identified risk and to alert the ROC of additional risks. As risks are identified, a detailed
risk review process assesses risk magnitude and probably based on Platte River data, industry data, staff
and management experience, and evaluation.
The ROC assigns magnitude and probability ranks based on specific criteria (see Risk Definitions: Figure
13 and Figure 14). Higher rated risks are prioritized for the development and implementation of
mitigation strategies when possible. Mitigation strategies include but are not limited to insurance coverage,
financial and physical contracts, operational business practices, and monitoring processes. The ROC re-
assesses all identified risks and the effectiveness of mitigation strategies. The Financial Planning staff
maintains all assessment documentation and supporting analysis, and the ROC reviews those materials.
All identified risks are listed in a risk inventory (see Figure 15). The chief financial and risk officer
approves all risks included in the Risk Inventory, along with assessments, and supporting documentation.
Since the first iteration of the Risk Management Plan in 2004, Platte River has assessed risks on a five-year
planning horizon. Beginning in 2016, the Risk Management Plan will transition to a ten-year planning
horizon. The longer planning horizon will better capture risks associated with resource planning, the impacts
of proposed CO2 legislation, and will be consistent with Platte River’s strategic planning horizon.
Additionally, the 2015 Annual Budget includes funds for a third-party review of the Risk Management Plan
and risk mitigation activities. The review will include a thorough examination of Platte River’s risk-ranking
methodology and metrics, risk assessment development and review processes, and best practices for
business risk. A third party will provide a detailed report summarizing the assessment, Platte River’s
strengths and weaknesses, and recommendations.
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DRAFT 2016-2026 Strategic Plan 34
RISK DEFINITIONS
Platte River’s identified risks are analyzed and assigned a magnitude and probability classification as
defined in Figure 13 and Figure 14, respectively.
FIGURE 13. RISK MAGNITUDE
Magnitude Rank Electric Supply Safety Financial Reputation and
Interests
HIGH Loss of supply to an
entire city
Loss of life or serious
bodily injury
Significant impact
>$10 million
Significant long-term
damage
MEDIUM Loss of supply to part
of a city
Bodily injury Limited impact
$5 - $10 million
Short-term damage
LOW Momentary loss to a
city substation
No injury Modest impact
<$5 million
No appreciable
damage
FIGURE 14. RISK PROBABILITY
Probability Rank Probability Rank Definition
HIGH The Identified Risk is likely to occur within five (5) years.
MEDIUM The Identified Risk could occur within five (5) years and should be anticipated.
LOW The Identified Risk is unlikely to occur within five (5) years.
Identified Risk
Risks identified as significant to Platte River that
could negatively impact electric supply, finances,
reputation, and safety requirements.
Magnitude
The impact of an identified risk occurring.
Ranking classifications are detailed in Figure 13.
Probability
The likelihood of an identified risk occurring
within a specified time period. Ranking
classifications are detailed in Figure 14.
Risk Oversight Committee
A committee consisting of the general manager,
senior management, and key staff members,
charged with managing Platte River’s risks and
developing the Risk Management Plan.
Risk Management Plan
A document included as an integral part of
Platte River’s Strategic Plan summarizing Platte
River’s identified risks and risk mitigation
strategies.
Risk Inventory
A table within the Risk Management Plan
summarizing the magnitudes and probabilities of
identified risks.
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DRAFT 2016-2026 Strategic Plan 35
RISKS & MITIGATION STRATEGIES
FIGURE 15. RISK INVENTORY
The number assigned to each risk does not indicate a priority or level of severity. It is designed to make it
easier to find the related detail of that risk on the following pages.
# Identified Risk Magnitude Probability
1 New Mandated Emission Reductions High High
2 Business Cybersecurity System Intrusions Medium Medium
3 Commodity Market Volatility Medium Medium
4 Corporate Conduct Medium Medium
5 Damage by Outside Contractor Employees Medium Medium
6 Defined Benefit Plan Investment Under-Performance Medium Medium
7 Employee Errors Resulting in Loss of Electric Service Medium Medium
8 Interest Rate Changes Medium Medium
9 Mandated Renewable Energy Standard Medium Medium
10 Physical Threats Affecting Reliability or Human Life Medium Medium
11 EPA Coal Combustion Residuals Rule Implementation Medium Medium
12 Cybersecurity: Generation Combustion Turbines High Low
13 Cybersecurity: Generation Unit 1 and Gas Yard Balance of Plant High Low
14 Cybersecurity: System Operations High Low
15 Environmental Violations High Low
16 Extended Baseload Forced Outage: Rawhide High Low
17 Interruption of Coal Supply (Fuel and Rail, Trapper Mine) High Low
18 Interruption of Water Supply for Rawhide Generation High Low
19 Unplanned Capital Requirements High Low
20 Increased Turnover of Employees (Knowledge Loss) Low High
21 Credit Risk Medium Low
22 Financial Internal Controls Medium Low
23 Interruption of Natural Gas Supply (Fuel and Pipe) Medium Low
24 Electric Facility Siting Constraints Low Medium
25 Extended Baseload Forced Outage: Craig Low Medium
26 FERC/NERC Regulatory Compliance Violation Low Medium
27 General Liability Low Medium
28 Increased Federal Oversight Low Medium
29 Changes to Tax Exempt Status of Newly Issued Power Revenue Bonds Low Low
30 Increased State Regulatory Oversight Low Low
31 Loss of Communication Systems Low Low
32 Misalignment of Capacity Resources and System Loads Low Low
33 Physical Property Loss Low Low
34 Transmission Interruption Low Low
35 Wholesale Electric Market Manipulation Low Low
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DRAFT 2016-2026 Strategic Plan 36
A brief summary of each risk and its mitigation strategies follows. Each mitigation strategy requires the
ROC’s attention and follow-up to evaluate alternative courses of action.
1. New Mandated Emission Reductions
Platte River generation facilities consistently
operate below existing emission permit limits for
all regulated pollutants, and the emission levels
from Rawhide and Craig are among the lowest
for coal units in the United States.
Evolving operational and environmental
standards may require further reductions in
emission levels; staff will continue monitoring
regulatory developments and analyze various
mitigation strategies. Emission reductions are also
evaluated as part of a larger strategic planning
process currently underway.
2. Business Cybersecurity System Intrusions
Platte River cyber systems experience a number
of intrusion attempts on a daily basis, but
measures to harden and segment infrastructure
along with new software tools have prevented
any attempts to penetrate Platte River cyber
systems to date.
Platte River will continue to conduct vulnerability
assessments to identify potential weaknesses and
minimize exposure, while also developing
standardized procedures for implementation and
upgrading of business system infrastructure.
3. Commodity Market Volatility
Combined coal expenses at Rawhide and Craig
currently represent 26.5 percent of total
expenses budgeted, with projections increasing
to 28.9 percent by 2019. The recent pricing
trend among coal companies reflects greater
reliance upon market pricing, rather than
traditional long-term pricing fixed by contract,
thus reducing the accuracy of expense forecasts.
Platte River will continue to monitor coal markets
for future opportunities to remove price volatility
and fix forward pricing.
4. Corporate Conduct
Ethics violations typically receive highly negative
publicity, which could damage Platte River’s
reputation and result in legal action. As a result,
Platte River has incorporated a “Code of
Conduct” within the Employee Handbook,
providing guidance and ethical principles
applicable to all employee behavior.
Platte River will provide workforce training on
ethics guidelines and review the Employee
Handbook annually. Staff will implement a
compliance hotline for reporting potential
violations.
5. Damage by Outside Contractor Employees
The responsibility for screening contractors’
employees rests with the contractors themselves.
However, Platte River personnel responsible for
administering contracts must account for the risk
posed by contractors.
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DRAFT 2016-2026 Strategic Plan 37
and authority. These terms and conditions include,
but are not limited to, contract termination,
safety assessments, indemnification, or surety
bond requirements.
6. Defined Benefit Plan Investment Under-
performance
Investment earnings on the Defined Benefit Plan
are subject to volatility. Platte River closed the
Defined Benefit Plan to employees hired on or
after September 1, 2010, which reduced future
Defined Benefit Plan funding requirements. The
reinstated lump sum distribution, combined with
modified plan assumptions scheduled for 2016,
further reduces the risk of investment under-
performance.
The Retirement Committee, in conjunction with
investment advisors, meets quarterly to monitor
investment diversity and performance, and
evaluate and update investment strategies.
7. Employee Errors Resulting in Loss of
Electric Service
Reliance upon human behavior introduces the
unavoidable element of human error.
To reduce errors and minimize their impacts,
Platte River implemented job training focused on
acquiring and maintaining skills. The training
includes updating apprenticeship step
progression requirements, regular refresher
training on specialized processes or activities,
and documenting processes. Time is scheduled to
review job hazards before starting work, which
minimizes the potential for errors and
standardizes safety procedures and practices.
8. Interest Rate Changes
Interest income and financing costs are
divergently impacted by interest rate volatility.
A laddered maturity strategy based on cash
flow projections mitigates the impact of interest
rate volatility on investments. Staff analyzes
various debt options to help mitigate potential
rising rates during times of potential debt
issuance.
9. Mandated Renewable Energy Standard
The Colorado Renewable Energy Standard (RES)
currently does not apply to Platte River, but
requires municipal utilities with more than 40,000
customers to provide 10 percent of their energy
from qualified renewable resources by 2020;
currently one owner municipality qualifies. Future
mandates, from both federal and state
governments, may require additional renewable
resources in Platte River’s portfolio.
Platte River will continue to proactively diversify
its resource portfolio, while monitoring the
regulatory landscape and analyzing potential
scenarios for future compliance.
10. Physical Threats Affecting Reliability or
Human Life
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groundwater monitoring wells at Rawhide to
detect problems early, establish baseline
conditions, and track natural variations.
Additional monitoring and assessment is planned
to determine what changes may be necessary, if
any, to current operations in order to show initial
and ongoing compliance with the new standards
Platte River will monitor initial implementation of
the rule across the country, including industry best
practices and enforcement actions. Participation
will also continue in stakeholder meetings and
public process coordinated by Colorado
Department of Public Health and Environment
concerning possible changes to state regulations
to incorporate the new Federal standards.
12. Cybersecurity: Generation Combustion
Turbines
CIP reliability standards from NERC, Federal
Energy Regulatory Commission (FERC), and
Western Electricity Coordinating Council (WECC)
require significant cyber oversight, resulting in
the installation of system hardware and software
to protect generation combustion turbines. The
most recent audit found no potential violations,
and cited no areas of concerns or
recommendations.
The Controls Network Administrator maintains
reliability and security of the controls network
and all cyber assets connected to it, including the
combustion turbines. Multiple layers of
cybersecurity protection exist, along with built-in
redundant and independent protections. The
presence of five smaller, independent,
generation units better mitigates risk relative to
having all peaking capacity on a single unit.
13. Cybersecurity: Generation Unit 1 and Gas
Yard Balance of Plant
In the event of a severe cyber breach, a loss of
generation infrastructure could cause a system
outage, as well as potential personnel and
equipment damage until manual restoration
occurred.
CIP reliability standards from NERC, FERC, and
WECC do not currently apply to Unit 1 and Gas
Yard Balance of Plant. An initial cybersecurity
assessment demonstrated areas needing
improvement.
Staff identified and implemented strategies to
address concerns, and will continue assessing
future security needs.
14. Cybersecurity: System Operations
System Operations uses a SCADA system to
monitor and control the Platte River Bulk Electric
System (BES) assets. The technology used by the
SCADA system and personnel with access may
introduce vulnerabilities. A breach of the SCADA
system cybersecurity could cause a loss of control
or situational awareness, resulting in the loss of
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15. Environmental Violations
Operation of a BES requires compliance with
numerous environmental regulations with
increasing complexity. Non-compliance during
the operation of generation and transmission
facilities may result in financial penalties and/or
mandated system upgrades.
Platte River remains proactive in environmental
compliance, and continually trains staff to ensure
environmental compliance. Training programs
are enhanced as regulations and other
requirements evolve.
16. Extended Baseload Forced Outage:
Rawhide
Historical performance of Rawhide Unit 1, along
with staff analysis defines an extended
baseload outage as a two-week outage. An
outage of this duration would not jeopardize
Platte River’s ability to serve load because
excess capacity has been constructed to meet
peak summer demands and ensure electric
supply during outages.
The primary exposure is the cost to replace
baseload generation. Replacement resources
available include natural gas combustion
turbines, wholesale market purchases, and a
forced outage assistance agreement. Excellent
maintenance practices and operating standards
will continue to sustain the unit reliability.
17. Interruption of Coal Supply (Fuel and Rail,
Trapper Mine)
The absence of coal for baseload generation
would result in replacement power purchased, or
peaking generation, both potentially higher cost
alternatives to Platte River’s baseload units. The
proximity of mines, coal mine diversity, and
adequate stockpile inventories reduce the
chances of interruption.
To avoid an interruption, Platte River will
continue to seek long-term coal supply and rail
contracts, while maintaining strong relationships
with coal and rail providers. Platte River targets
a minimum of 75 days of stockpile inventory at
Craig and Rawhide to mitigate supply
disruptions.
18. Interruption of Water Supply for Rawhide
Generation
Without a reliable water supply, Platte River
could experience sustained curtailments of
generation from the Rawhide coal unit. The
Windy Gap Project is the primary source of
water for Rawhide generation, and historically
produces adequate water for operational needs.
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To mitigate the risk of water shortages, Platte
River is participating in the Windy Gap Firming
Project to improve reliability of the Windy Gap
water supply. The permitting process is
underway and current projections indicate the
firming project will be completed and begin
filling by 2021. In the interim, Platte River will
continue researching alternative water supplies
for Rawhide coal unit operations.
19. Unplanned Capital Requirements
Capital expenditures are planned and
prioritized annually to determine capital funding
requirements over the next several years.
Significant variances over planned project
expenses can produce financial strain and rate
pressure.
Platte River is implementing best practices for
project management to improve cost projections.
20. Increased Turnover of Employees
(Knowledge Loss)
The demographics and tenure of a portion of
Platte River’s workforce suggest many employees
may consider retirement in the near future,
resulting in a loss of significant institutional and
operational knowledge.
Platte River workforce development is currently
focused on expanding the knowledge base
within the organization. Departments with
increased risk of retirements will receive
additional evaluation through workplace
analytics. Additional preparations include
strengthening of the recruitment and selection
process and expansion of workforce training.
21. Credit Risk
Platte River invests in a number of Government
Sponsored Enterprises (“agencies”) that present
credit risk. Default of any agency debt could
result in substantial loss of investment principal.
Platte River diversifies its portfolio by purchasing
different types of securities allowed under
Colorado State Statute: agency debt, treasury
notes, investment pools, bank deposits, and
money market accounts. Within direct purchase
agency debt, Platte River limits its exposure to
each individual agency to less than 20 percent
(subject to review by the chief financial and risk
officer). Platte River will continue to maintain a
diversified investment portfolio while monitoring
the Federal Housing Finance Agency reports to
ensure the counterparties remain stable.
22. Financial Internal Controls
A financial loss due to fraud or embezzlement is
limited by strong financial internal controls and
separation of financial duties. An internal auditor
is on staff, and policies and procedures exist to
support internal financial controls. The Internal
Audit Committee prioritizes the internal audit
program, reviews audit findings, and
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reliability of the pipeline, and Platte River
maintains a consistent and reliable
interconnection with Xcel Energy. In the event a
natural gas disruption occurred, Platte River
could sustain a loss of load depending on the
timing and duration of the event.
Regular inspection and maintenance of natural
gas pipeline infrastructure, including the
Colorado Interstate Gas interconnects, will
continue to ensure reliability. Staff remains
familiar with scheduling procedures on Colorado
Interstate Gas’ pipeline as an alternate source,
while monitoring potential alternative supply
sources, including natural gas storage.
24. Electric Facility Siting Constraints
Installation of new electric facilities (generation
and transmission) requires extensive time for
planning, design, permitting, and construction.
To mitigate delays associated with siting and
permitting, Platte River performs analysis using
strategic planning tools that forecast the timing
of a new facility, combined with proper project
planning.
25. Extended Baseload Forced Outage: Craig
In the event a forced outage exceeding two
weeks occurred at either of the Craig units,
Platte River’s ability to serve load would not be
curtailed. This is due to the presence of Platte
River’s natural gas peaking units, availability of
other generation resources in the region, and the
wholesale market.
The primary exposure is the cost to replace
baseload generation with a combination of
natural gas fueled combustion turbines and
wholesale market purchases. To represent Platte
River’s interests, Platte River employees serve on
the Yampa Engineering and Operating
Committee and the Yampa Coordinating
Committee.
26. FERC/NERC Regulatory Compliance
Violation
Platte River is subject to the NERC Compliance
Monitoring and Enforcement program for
mandatory and enforceable Reliability
Standards. This requires annual self-certifications
and compliance audits every three years. FERC
has the authority to issue civil penalties for
violations.
Platte River’s Reliability Compliance Program
and well-documented internal compliance
program operate independently of areas
responsible for reliability standards compliance.
Responsibilities are assigned to relevant staff,
and numerous policies, processes, procedures,
and internal controls have been implemented.
27. General Liability
Due to risks associated with the hazardous nature
of Platte River business activities, Platte River
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benefits, land and water development, and
wildlife protection.
Platte River remains active in monitoring changes
to the legislative and regulatory landscape, and
communicates its positions to legislators and
regulators, when necessary. In addition, Platte
River is an active member of coalitions that
monitor and participate in the legislative and
regulatory process.
29. Changes to Tax Exempt Status of Newly
Issued Power Revenue Bonds
Platte River’s ability to issue tax-exempt debt
lowers financing costs, which benefits rate
payers. Modifications to tax-exempt financing
are being considered as part of federal tax
reform.
Platte River will continue to support APPA and
LPPC in their efforts to ensure the continuance of
tax-exempt financing. Staff will continue
analyzing various debt options that could be
used if tax exempt financing is modified.
30. Increased State Regulatory Oversight
Historically, Platte River has not been subject to
any significant degree of regulatory oversight
by the Colorado Public Utilities Commission
(CPUC) due to its status as a political subdivision
and municipally-owned utility.
Platte River will continue actively monitoring
changes to the legislative and regulatory
landscape, and communicate Platte River’s
positions to legislators and regulators, when
necessary.
31. Loss of Communication Systems
Communication losses have been quickly
repaired with minimal impact. Communication
reliability is maintained through system
redundancies, emergency backup systems, and
continued maintenance.
32. Misalignment of Capacity Resources and
System Loads
Platte River has two significant risks related to
capacity resources and load: (1) resources are
insufficient to serve loads (short capacity), or (2)
Platte River costs increase due to underutilized
generation resources (long capacity).
Platte River updates the load forecast annually
to include recent load trends. Resource planning
efforts are underway to analyze the timing of
future capacity expansion.
33. Physical Property Loss
Platte River has experienced few instances of
property damage or loss because of its
maintenance procedures, training programs, and
safety standards. Platte River’s property
insurance, which is reviewed annually, limits
financial exposure to policy deductibles.
34. Transmission Interruption
Forced outages on overhead transmission lines
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Platte River’s redundant transmission system is
continually reviewed for opportunities to
decrease system constraints in the event an
outage.
35. Wholesale Electric Market Manipulation
The jurisdiction of the FERC was expanded to
include oversight preventing market
manipulation, subject to fines and penalties.
Platte River policy prohibits market manipulation.
We have a compliance audit program and use
internal controls to minimize the likelihood of
market manipulation.
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APPENDIX C. STRATEGIC FINANCIAL PLAN
Platte River’s Strategic Financial Plan (SFP, see Appendix C) provides direction to create long-term financial
stability. The priorities of the SFP are to generate adequate cash flows, maintain access to low cost capital,
provide stable and competitive wholesale rates, and effectively manage financial risk. The board of
directors reviews the SFP policies, goals, and financial projections at least annually.
RATE REQUIREMENTS
Under Colorado law, Platte River’s board of directors has the exclusive authority to establish electric rates.
The Power Supply Agreements (PSAs) with the municipalities require the board to review rates at least
once each calendar year.
The PSAs with the municipalities and the General Power Bond Resolution contain specific provisions
governing Platte River’s rate setting. The PSAs require that rates be sufficient to cover all operating and
maintenance expenses, purchase power costs, debt service expenses, and to provide reasonable reserves
and adequate earnings margins so Platte River may obtain favorable debt financing. The General Power
Bond Resolution requires that rates be sufficient to generate net revenues that cover debt service expense
at a minimum 1.10 times.
POLICIES AND GOALS
The policies and goals listed below are described in detail on the next page.
Generate minimum debt service coverage of 1.50 times
Generate minimum net income equal to $6 million
Target minimum 200 unrestricted days cash-on-hand
Maintain $20 million in the Rate Stabilization Fund
Target debt to capitalization ratio less than 50 percent
Provide stable and competitive wholesale rates
Maintain access to low cost capital and favorable credit ratings
Maintain bond required reserves
Prudently manage and invest reserves
Variable rate debt managed in accordance with interest rate risk management policy
Manage financial risk
The listed and goals are interrelated. By achieving the minimum target for debt service coverage of 1.50
times, the net income target of $6 million, and the minimum 200 days unrestricted cash-on-hand, Platte
River should generate adequate cash flows to meet liquidity targets, exceed its debt-to-capitalization
goal, and maintain access to low-cost capital.
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Generate Minimum Debt Service Coverage of
1.50 Times
While the legal requirement for debt service
coverage is 1.10 times, coverage at this level
does not generate adequate cash flows. It also
increases future debt issuance and significantly
impacts Platte River’s credit rating, which
increases the cost of future financings. Target
debt service coverage of 1.50 times provides
sufficient annual cash flows to partially fund
future capital additions as well as maintain
favorable credit ratings.
Generate Minimum Net Income of $6 Million
PSAs with the municipalities require Platte River
to have an adequate earnings margin to obtain
revenue bond financing on favorable terms. A
target minimum of $6 million net income is a
sufficient earnings margin to maintain cash
balances, meet liquidity requirements, and
provide financial flexibility.
Target Minimum 200 Days Unrestricted Cash-
on-Hand
A minimum 200 days unrestricted cash-on-hand
target ensures that adequate cash is generated
and maintained, thus ensuring Platte River’s
financial flexibility, strength, and liquidity.
Included in the days unrestricted cash-on-hand
target is a Rate Stabilization Fund target of $20
million. The purpose of the Rate Stabilization
Fund is to reduce or eliminate the rate impact
due to an unforeseen event that affects Platte
River’s ability to meet the minimum legal debt
service coverage requirement.
Target Debt to Capitalization Less Than 50
Percent
A debt-to-capitalization ratio less than 50
percent provides Platte River with a strong
balance sheet. It also reduces the risk of
becoming over leveraged in the debt market.
Maintain Access to Low Cost Capital and
Favorable Credit Ratings
Interest rates between various credit ratings can
fluctuate significantly depending on market
conditions. Maintaining a strong credit rating
provides access to low-cost capital and
favorable financing terms, resulting in lower
overall debt service expense.
Provide Stable and Competitive Wholesale
Rates
The board develops and reviews rate projections
at least annually. To provide more stable rates
from year to year, Platte River may smooth the
projected rate modifications over several years
to meet SFP criteria.
Platte River uses rate comparisons with other
utilities in the region to measure the
competitiveness of wholesale rates charged to
the municipalities.
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APPENDIX D. ENVIRONMENTAL REGULATION ISSUES AND POSITIONS
Platte River uses state-of-the-art air quality control systems at its power generation stations and meets or
exceeds all applicable environmental laws and regulations. As new legislation and regulations are
proposed, Platte River participates in public processes and supports additional control requirements where
costs are commensurate with measurable environmental benefits. In addition, as technology improves and
opportunities arise, Platte River will be proactive in evaluating and implementing improvements in its
power operations that balance environmental and other socio-economic concerns.
PRINCIPLES
The following principles are used to guide Platte River’s decision making and operations:
Consider environmental factors in planning, design, construction, and operations decisions
Ensure compliance with applicable laws, rules, regulations, and permits
Conserve natural resources
Reduce environmental risks
Encourage pollution prevention
Communicate environmental values
Encourage public participation
Support cost-effective programs to conserve energy
Coordinate generation and transmission planning with neighboring utilities
Consider environmental progressive technologies to meet future generation needs
CLEAN POWER PLAN
On August 3, 2015, the EPA issued a set of rules regulating the emission of CO2from new, modified and
reconstructed, and existing fossil fuel-fired electric generating units (EGUs) under section 111 of the Clean
Air Act (CAA). Nationwide, EPA projects that the set of rules will reduce emissions from the power sector
by 32 percent (from 2005 levels), by the year 2030.
Set of Rules
1) A final rule under section 111(b) of the CAA setting emission standards for new EGUs, based on the
“partial” application of carbon capture and sequestration for coal-fired EGUs
2) In the same rule, emission standards for modified and reconstructed EGUs, which are not based on
carbon capture and sequestration for coal-fired EGUs
3) The final “Clean Power Plan (CPP),” a rule under section 111(d) of the CAA that establishes state-by-
state CO2 emission reduction “goals” starting in 2022. It directs each state to submit for EPA approval
a plan demonstrating how the state’s affected EGUs will meet its reduction goals.
In addition, EPA released a proposed federal plan that would establish unit-by-unit emission reduction
obligations for affected EGUs in states that did not submit an approvable state plan. The proposed
federal plan also includes presumably approvable model trading frameworks for states submitting their
own plans.
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State Responsibilities
As with many other CAA regulatory programs,
section 111(d) gives states the primary
responsibility to meet their reduction obligation
by adopting state plans that limit emissions at
regulated facilities. The CPP sets state-specific
CO2 emission goals to reduce statewide emission
from the power sector.
These goals consist of an Interim Goal, which
must be met on average during the years of
2022-2029, and a Final Goal for 2030 and
beyond.
However, the EPA proposes to allow states to
determine when and how quickly individual EGUs
in the state must reduce their emissions. The EPA
allows states to demonstrate progress either
through multi-year “step down” goals or through
a state-determined “glide-path” approach.
Three Forms of Goals
EPA specifically set state goals in three forms,
which it deems equivalent:
1) a rate-based goal measured in pounds of
CO2 per megawatt hour (lb CO2 /MWh) of
generation by the electric power sector
2) a mass-based goal covering the mass
emission of only existing affected EGUs
within the state, measured in tons of CO2
3) a mass-based with new source
complement, measured in tons of CO2, which
includes emissions from both existing and
new affected EGUs.
States choose the goal they want to use when
designing and submitting their plans. The CPP
requires states to submit their initial plans by
September 6, 2016. Note: The EPA may grant a
state an extension for as many as two years,
provided its initial submission meets certain
specified criteria for progress and consultation.
States must submit their final plans by September
2018.
EPA Changes
Reacting to significant public comment, EPA has
adopted a number of changes to address
reliability concerns. These changes include:
A requirement that each state plan
demonstrate that is has considered reliability
A way for a state to revise its plan in the
face of unanticipated reliability challenges
A temporary “safety-valve” for individual
EGUs when CPP requirements conflict with
reliability obligations
An agreement between EPA, the Department
of Energy, and the Federal Regulatory
Commission to coordinate and monitor
implementation of the rule in order to ensure
reliability.
Staff are preparing for these new requirements
and coordinating with peer utilities, trade
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1. More difficult and complicated permitting requirements. With the current 75 ppb standard the
North Front Range ozone non-attainment area does not quite reach Rawhide. However, this new
standard increases the likelihood that the Rawhide site will be included in the future.
2. Further State-level rulemaking for additional reductions. If the State is unable to show that
sufficient emissions reductions can be achieved to meet this standard through existing programs or
other less expensive alternatives, we could see new reduction mandates for existing units through
additional rulemaking. Depending on the magnitude, impacts at Rawhide could range from a
simple air permit change to expensive new controls including installation of Selective Catalytic
Reduction (SCR).
Potential Nonattainment Boundaries
At present, the Rawhide Energy Station is in an
area that attains the 75 ppb standard. Based on
2011-2013 monitoring data, EPA indicates that
at 70 ppb, 358 counties nationwide would
violate the standard. Extension of the
nonattainment area depends on the 2014-2016
monitoring data and modeling results. At 70
ppb, if ozone monitoring data shows favorable
results, the North Front Range nonattainment
area may not be extended. The EPA will make
attainment boundary recommendations in
October 2016, and designation of nonattainment
areas are expected in October 2017.
Permitting for new resources located in a
nonattainment area is considerably more difficult
and complicated. NOx emission offsets must be
obtained from existing sources within the
nonattainment area for any new emissions. New
units must also be constructed with lowest
achievable emission reduction controls and limits.
Any additional NOX produced from new
generation units at the Rawhide site may involve
committing to lower emissions from Rawhide coal.
Depending on the designation of nonattainment
areas and the ability of the State to show that
sufficient reductions are possible with existing
programs, the Rawhide coal unit may be
required through future rulemaking processes to
make additional emissions reductions. The cost of
additional NOx controls, in the form of SCR or
Selective non-catalytic reduction (SNCR), would
be significant.
DISPOSAL OF COMBUSTION RESIDUALS FROM ELECTRIC UTILITIES RULE (CCR RULE)
On April 17, 2015 the EPA posted to the Federal Register a final rule including new regulations affecting
Coal Combustion Residuals (CCR). The regulations come into effect October 17, 2015.
The CCR Rule includes comprehensive requirements for design, monitoring, and reporting; with
requirements for new and existing CCR disposal facilities.
Platte River operates two bottom ash transfer ponds and an ash monofill that are subject to the rule, all
located at Rawhide. There is still considerable uncertainty as to exactly how the new standards will be
enforced, what the state’s role will be, and how some important details will be interpreted. In the face of
such uncertainty, below is a list of actions Platte River expects to be required to take during the initial 42-
month implementation period:
Expand the existing groundwater monitoring plan.
Demonstrate that all existing operations meet the new standards, and make contingency plans in
case they do not.
Comply with expanded inspection requirements (weekly, monthly, and annually).
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Comply with expanded recordkeeping requirements.
Comply with a new requirement to post compliance information to a public website.
Staff are preparing for these new requirements and coordinating with peer utilities, trade groups, and
consultants to determine possible effects to Rawhide operations, and to determine best practices for
compliance going forward.
In response to the CCR Rule, the Colorado Department of Public Health and Environment is planning to
update their solid waste regulations and incorporate the new EPA requirements. Staff is planning to
participate in any related rulemaking stakeholder processes to communicate the need for achievable
standards with clear expectations and include flexibility for operations.
Craig is not subject to the CCR rule as it is primarily managed as backfill material at Trapper Mine. This
type of CCR management is specifically exempt from the current rule, however similar standards are
expected in the future through the Office of Surface Mining.
MERCURY (STATE AND FEDERAL REGULATIONS)
On June 29, 2015 the Supreme Court held that EPA violated the CAA when it determined that regulation
of mercury and other hazardous air pollutants from certain power plants was “appropriate and
necessary” without considering costs. The decision overturned a contrary decision from the D.C. Circuit and
raises questions about the fate of the Federal Mercury and Air Toxics (MATS) Rule for power plants.
However, the MATS Rule is still in effect, and will continue be in effect until the D.C. Circuit acts.
Although federal efforts to regulate mercury have been temporarily blocked, Colorado adopted rules to
implement mercury reductions in early 2007. These regulations, also known as the Colorado Utilities
Mercury Reduction Program, are still in effect as state-only requirements. Platte River installed mercury
monitoring equipment at Rawhide in 2008 and it was certified for operation to meet the state regulatory
deadline of January 1, 2009. The equipment was placed in service in November 2010.
A mercury emission limit of 0.0174 lb/GWh was required under the state program at Rawhide by 2012.
Platte River is in compliance with the 2012 requirements and will meet the 2018 emission reduction
requirements.
Due to the type of coal burned, boiler chemistry, and other factors, mercury emissions from the Craig
Station are low and no emission control equipment is currently required for that facility.
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APPENDIX E. LEGISLATIVE AND REGULATORY ISSUES AND POSITIONS
CLEAN POWER PLAN REGULATIONS
The CPP regulations focus the electric industry’s
attention on the issue of carbon emissions in a
new and dramatic fashion. The regulations pose
a number of unique challenges, many of which
will be addressed through the creation of a
State Plan for Colorado. Platte River will work
with industry participants, stakeholders,
legislators, and regulators in a positive manner
with the goal of crafting an implementation plan
that meets compliance goals in the most
reasonable, equitable and cost effective manner.
OZONE REGULATION
The new ozone standards may expand the
nonattainment areas within Colorado. In turn, this
may create operational issues for existing
sources of NOx emissions as well as for new
sources, including resources that may be
necessary meet regional load growth and
compliance with the CPP. Revisions to the
boundaries of the nonattainment areas may take
a number of years identify. Platte River will
actively monitor this process and participate as
necessary.
DODD-FRANK REFORM
The Dodd-Frank legislation and subsequent
rulemakings affect a number of Platte River
business practices. Platte River has complied with
new Dodd-Frank protocols for natural gas
hedging. Platte River supports on-going
legislative and statutory efforts to limit the
application of Dodd-Frank requirements to public
power business transactions unrelated to the
types of transactions that led to the 2008
financial crisis.
TAX-FREE STATUS OF MUNICIPAL BONDS
Federal budget concerns have put the tax-free
status of municipal bonds at risk.
The unique tax-exempt status of public financings
dates back to the inception of the income tax,
and recognizes the public nature of the capital
projects funded by municipal bonds. Platte River
has issued $2.4 billion in debt during its history.
The issuance of this debt has been critical for
developing the infrastructure necessary to meet
the needs of the growing populations in our
owner municipalities. The reduced interest costs
associated with tax-exempt financings are
passed directly to electric utility customers in
these communities.
Platte River strongly opposes repealing or
altering the current tax-exempt status of
municipal bonds.
TRANSMISSION ACCESS AND PLANNING
REFORM
FERC requires jurisdictional utilities to operate
their transmission systems as common carriers.
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the proper mix of renewable resources for
power generation and delivery. Platte River
supports the continuation of federal financial
incentives to encourage the development of
renewable energy.
Renewable energy incentives should continue, be
expanded, and be made available on an equal
basis to municipal power systems, rural electric
cooperatives, and investor-owned utilities.
FUEL AND RESOURCE DIVERSITY
Platte River supports policies that promote
improved technology for all electricity
generation sources including coal, natural gas,
hydro, nuclear, wind, solar, geothermal, and
biomass as vital components of the country’s
energy portfolio. Efforts at the federal level to
encourage diversity should provide clean coal
technology funding, increased research and
development funds addressing the integration of
renewable resources, and innovative distributed
generation, particularly as these issues and
technologies apply to smaller utilities.
PREVENTING MARKET ABUSES
The Energy Policy Act of 2005 (EPAct 2005)
grants FERC expanded jurisdiction to address
market manipulation, including authority over
public power systems. In 2006, Platte River
adopted a policy prohibiting market
manipulation and implemented training and
audit programs in pursuit of this policy. Platte
River conducts bi-annual market manipulation
audits, and none of the audits have revealed any
market manipulation by Platte River employees.
Platte River encourages continued FERC oversight
of market abuses, and recognizes that this will
become an increasingly important issue as
organized markets evolve in the West.
SYSTEM RELIABILITY
In 2007, FERC adopted electric reliability
standards with the force and effect of law.
Platte River is registered to perform ten functions
under the reliability protocols adopted by FERC,
and the municipalities are registered as
distribution providers. Platte River has a well
established Reliability Compliance Program and
promotes a culture of compliance. Platte River
continues to assist the municipalities with
reliability compliance.
PHYSICAL AND CYBERSECURITY
There is an increasing recognition of the
importance of physical and cybersecurity for the
interconnected bulk power system. Platte River is
engaged in national discussions of these issues
before the relevant legislative and regulatory
bodies as this issue matures.
FEDERAL HYDROPOWER
Federal hydropower comprises a significant
portion of the electricity delivered to the
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ACRONYMS
Term Definition
APPA American Public Power Association
ARPA Arkansas River Power Authority
CAA Clean Air Act
CAMU Colorado Association of Municipal Utilities
CAP Climate Action Plan
CCR Coal Combustion Residuals
CHP Combined Heat and Power
CIP Critical Infrastructure Protection
CO2 Carbon Dioxide
CPP Clean Power Plan
CPUC Colorado Public Utilities Commission
DR Demand Response
DSM Demand Side Management
EE Energy Efficiency
EGU Electric Generating Unit
EPA Environmental Protection Agency
EPAct 2005 The Energy Policy Act of 2005
FERC Federal Energy Regulatory Commission
GHG Greenhouse Gases
GWh Gigawatt-hour
IRP Integrated Resource Plan
IT Information Technology
LPC Longmont Power & Communications
LPPC Large Public Power Council
MATS Mercury and Air Toxics Standard
MW Megawatt
MWh Megawatt Hour
NERC North American Electric Reliability Corporation
NOx Nitrogen Oxides
PMA Power Marketing Administrations
ppb Part Per Billion
PSA Power Service Agreement
PSCo Public Service Company of Colorado
PV Photovoltaic
RES Renewable Energy Standard
ROC Risk Oversight Committee
SCADA Supervisory Control and Data Acquisition
SCR Selective Catalytic Reduction
SFP Strategic Financial Plan
SIP State Implementation Plan
SNCR Selective Non-Catalytic Reduction
SO2 Sulfur Dioxide
SWOT Strengths, Weaknesses, Opportunities, and Threats
TRI-STATE Tri-State Generation and Transmission Association, Inc.
VOC Volatile Organic Compound
WECC Western Electricity Coordinating Council
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municipalities. Platte River supports continued
federal ownership and management of
hydropower resources through regional Power
Marketing Administrations (PMAs). Platte River
supports the continued operation of the PMAs
within the constraints set forth by Congress
through authorizing legislation, including the
rate-setting guidance contained therein. Platte
River recognizes that hydropower dams create
unique environmental challenges and supports a
reasonable balance between species recovery
and operational flexibility.
MUNICIPAL ANNEXATION AND UTILITY
SERVICE TERRITORY
Colorado’s Constitution and the existing state
statutes regarding electric service provision in
newly annexed areas are equitable to all
parties. Any proposed changes will be closely
scrutinized to ensure that equity is maintained.
Platte River is non-jurisdictional, but voluntarily
adopted an open access transmission tariff. The
Platte River open access tariff is modeled after
the FERC pro forma tariff with rates consistent
with the FERC rate setting formula.
FERC also requires jurisdictional utilities to
engage in regional transmission planning. Platte
River is a member of WestConnect, a regional
transmission planning organization. Platte River is
presently involved in efforts associated with
regional joint dispatch and transmission tariff
reform. Platte River is a member of the Colorado
Coordinated Planning Group and the Foothills
Planning Group, and has established a
transmission planning process as part of its open
access transmission tariff. Platte River supports
regional transmission planning as a means to
assist in the development and integration of
renewable resources and enhance grid resilience.
RENEWABLE ENERGY STANDARD AND
INCENTIVES
Platte River believes locally owned and
controlled utilities are best suited to determine
groups, and consultants to determine possible
effects on Rawhide operations and determine
best practices for compliance going forward.
OZONE STANDARDS
On November 25, 2014 the EPA issued a proposed rule under the National Ambient Air Quality
Standards program to tighten the primary and secondary standards for ground level ozone. NOx
emissions from combustion sources and volatile organic compounds (VOCs) are the major contributors to
ozone. Major NOX sources include vehicles, commercial/industrial activities, and electric generation. The
main contributors to VOC emissions are oil and gas operations.
On October 1, 2015, the EPA announced revisions for ground-level ozone. The standard has been
changed from 75 part per billion (ppb) to 70 ppb, which is at the top of the 60 ppb to 70 ppb range that
was proposed. The change has no immediate effect on Platte River operations but may have some future
implications:
Maintain Bond Required Reserves
The General Power Bond Resolution requires
Platte River to maintain a Reserve and
Contingency Fund at a minimum of 2 percent of
net plant. Bond service and bond reserve funds
are maintained as required.
Prudently Manage and Invest Reserves
Platte River’s investments will be managed
according to Platte River’s Investment Policy. The
primary objectives of the investment activities
are safety, liquidity, and yield, while achieving
market returns comparable to benchmark
performance.
Variable Rate Debt Managed In Accordance
With Interest Rate Risk Management Policy
The board-approved Interest Rate Risk
Management Policy has established guidelines
that govern variable rate debt.
Manage Financial Risk
Platte River’s financial risks are managed
according to, but not limited to, the following
board-approved documents: Energy Risk
Management Policy, General Power Bond
Resolution, Interest Rate Risk Management Policy,
and PSAs. The Energy Risk Management
Committee and the ROC are charged with
managing Platte River’s business risks.
are typically of short duration. Inventories of
temporary transmission equipment exist to
quickly recover from a forced outage.
purchases various insurance products to mitigate
financial risk. With the assistance of insurance
brokers, appropriate insurance policies are
maintained.
Platte River promotes a culture of high safety
standards, starting with the general manager,
with a focus on continuously improving business
policies and procedures.
28. Increased Federal Oversight
As a political subdivision of Colorado, many
federal legislative and regulatory reforms that
apply to private businesses do not apply to
Platte River. Increasingly Platte River is subject to
federal oversight in areas such as employment,
finance, business transactions, employment
recommends action items.
Additionally, Platte River will implement a
confidential hotline, operated by external
auditors, for employees to report suspicious
activity. Platte River also maintains insurance
policies to mitigate financial loss.
23. Interruption of Natural Gas Supply (Fuel
and Pipe)
Natural gas is currently used only on an
intermittent basis. Regular inspections ensure
load to one or more of the owner municipalities.
Platte River will address threats and regulatory
requirements specific to SCADA systems through
internal controls improvement, capital investment,
employee training, and proper staffing to adapt
to evolving technology.
Generation and transmission facilities include
high-value assets in multiple locations serving the
owner municipalities. This exposes Platte River to
increasing physical security threats.
Platte River implements the NERC Critical
Infrastructure Protection (CIP) reliability
standards as required, and uses them as a
roadmap for physical security practices in other
areas. Platte River also established a committee
to develop a comprehensive security policy.
11. EPA Coal Combustion Residuals Rule
Implementation
In April 2015, the EPA finalized new rules
resulting in increased regulation of coal
combustion residuals (CCR). The new rules include
standards for new and existing facilities,
applicable to operations at Rawhide.
Proactively, Platte River established
The contractor screening, selection, and bidding
process helps mitigate the risk. Contract terms
and conditions further mitigate risks and
reinforce administrative personnel’s responsibility
water. Nexant evaluated the potential
for several CHP technology applications
and concluded that cost effective
potential for CHP was fairly low – less
than 5 MW of system wide capacity.
This preliminary assessment did not
include detailed evaluation of specific
larger projects at individual customer
facilities such as Colorado State
University, breweries, and regional
hospitals. These larger, case-by-case
projects will be evaluated in more detail
going forward.
2016. LPC currently provides a 10-gigabit
wide-area network to the St. Vrain Valley
School District, internet speeds up to a
symmetrical Gig for residents, and both
standard and custom speeds for commercial
customers. Digital voice service is offered as
well. Customer demand is high, significantly
exceeding study projections. Network and
customer installations are taking place in
phases throughout the city.
CITY OF LOVELAND
Bill 152, SB-152, removing legal barriers to
the City’s involvement in providing residents
telecommunication services. With the vote,
the City will continue researching practices in
other communities and the feasibility of a
range of business models for
telecommunications. Staff plans to work with
the public throughout 2016 to gauge what
role the City should play in broadband
services if any. In 2015, the city began to
study the best approach for implementing
high-speed broadband in the community. A
strategic examination of potential models, a
feasibility and business case review of the
most likely structures, and development of an
action plan to move forward will be
presented for voter consideration in
November 2015.
Other Plans. Other plans include a
Roadmap for Green Building and Road to
Zero Waste Plan.
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energy independence with the vision of “Fort
Collins is a leader in the transition to
sustainable and resilient local energy systems
to serve the community’s 2050 carbon
neutral future.” The policy provides goals for
the prioritization of decision making,
programs and services related to the
quantity of use and the sources of energy for
electricity, thermal end-uses and
transportation. The Energy Policy uses a
systems approach to energy production and
consumption, as well as triple bottom line
metrics (economy, society and environment),
to guide City government in the development
of plans promoting policy outcomes for
residents, businesses and other organizations.
The policy supports Fort Collins leadership in
solutions at a community scale. The Energy
Policy was updated in 2015 to address the
broader scope of all energy use in the
community and to align with the 2015
Climate Action Plan (CAP) Framework. The
policy provides objectives for the sources
and uses of energy to generate electricity,
meet thermal needs, and power
transportation. It also supports reductions of
the community’s Greenhouse Gas (GHG)
emissions from energy use in accordance with
the CAP. The Energy Policy uses a systems
approach to the production and consumption
of energy, along with triple bottom line
metrics of economy, society, and
environment. The policy supports Fort Collins
leadership in solutions at a community scale.
It also guides Fort Collins city government in
developing strategic and tactical
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the Transportation Master Plan, was unified
around the tenets of innovation,
Development of a Demand Response
pilot program
Several collaborative efforts related to
distributed resources
These activities will be a focus during 2016 and
over the short-term planning horizon, through
2020. Fortunately, Platte River does not need to
make short-term decisions regarding new
resources to meet peak capacity needs. We can
plan capacity additions as part of a broader
long-term resource strategy that integrates
positioning for CPP compliance.
“Platte River Power Authority
employs an adaptive strategy
to cost-effectively maintain
reliability, manage risks, and
ensure regulatory compliance.”
program.
HEADQUARTERS CAMPUS DESIGN AND
ENGINEERING
Select a cost effective and viable headquarters
campus space alternative that will meet projected
space needs for staff, technology, and equipment
for the next 30 years, incorporate energy
efficiency principles; and initiate permitting,
design, engineering, and construction.
LEGISLATIVE POLICY ENGAGEMENT
Establish core messaging and an engagement
plan at both the state and federal levels to
encourage a favorable political climate for our
continued operations.