Nrg Energy, Inc. · NYSE:NRG
Nrg Energy — Investor Presentation (October 2024)
17 slides from Nrg Energy's investor presentation, Oct 8, 2024
Slide 1: Time of Use Rates: Considerations for Maine
Time of Use Rates: Considerations for Maine Travis Kavulla Vice President of Regulatory Affairs, NRG Maine PUC Docket No. 2024-00231 Oct. 8, 2024 © 2021 NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 1
Slide 2: AMI is Widely Deployed, but Rarely Used for Retail Pricing
AMI is Widely Deployed, but Rarely Used for Retail Pricing Order Implement CA 2015 2018-2022 MI 2019, 2022 2021, 2023 CO 2020 2025 HI 2022 2024 MI MO 2023 2023, 2024 Long LI 2023 2024 CA Island CO Smart Meters MO Installed (%) 0 – 15% 15 – 50% 50 – 75% HI 75 – 100% TOU States TOU Opt-Out Smart meter
Slide 3: The Imperative for Time-Varying Prices
The Imperative for Time-Varying Prices © 2021 NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 3
Slide 4: Managing Costs of Demand Growth & the Energy Transition
Managing Costs of Demand Growth & the Energy Transition Demand has increasingly obvious role to play in shaping itself • Full electrification of heating and transportation would lead to a 57GW peak for ISO-NE. (See figure to right.1) • Costs of transmission are even higher at margin. ($0.75B per GW
Slide 5: Has the Purpose of Utility Regulation Changed?
Has the Purpose of Utility Regulation Changed? • Cost-of-service regulation’s prices tend not to be time-varying, and are thus attenuated from the realities of any element of service whose costs vary with time. Can we really call this “cost-of- service regulation” at all? • This crude “flat” approac
Slide 6: In Maine, Nearly All Costs Vary with Time and Demand
In Maine, Nearly All Costs Vary with Time and Demand • Transmission is a 12-Coincident Peak demand-allocated cost through ISO-established revenue requirements • MPUC retail ratemaking eliminates the demand-related nature for most customers by creating a flat price • Unlike other restructured states
Slide 7: Maine's Existing Opt-In TOU Rates
Maine’s Existing Opt-In TOU Rates Central Maine Power’s • Rates residential opt-in TOU product • CMP’s TOU has a ~2:1 differential for T&D costs, while SOS is has fewer than 5,000 customers, priced flat. No variation in SOS, so a <2:1 differential < 1% of total • Versant’s TOU is much steeper, ~9:1
Slide 8: Considerations for an Opt-Out TOU for Maine
Considerations for an Opt-Out TOU for Maine © 2021 NRG Energy, Inc. All rights reserved. / Proprietary and Confidential Information 8
Slide 9: Takeaways from Opt-Out TOU Jurisdictions
Takeaways from Opt-Out TOU Jurisdictions Regarding pricing Regarding participation • Sending a comprehensive but easily understood • Opt-in rates show extremely low levels of enrollment price signal is crucial. “Too many one-off special- • Low-income customers sometimes carved out; when purpose rate
Slide 10: What Could a TOU Rate Look Like in Maine?
What Could a TOU Rate Look Like in Maine? Annual • An annual product matching SOS Winter 2.7 x procurement (left) vs. seasonal Transmission product (right) 3.1 x • Supply prices based on monthly Distribution average day-ahead prices for on-peak Transmission and off-peak for years 2018-2024 Supply Su
Slide 11: Critical Peak Pricing (or Peak-Time Rebates)
Critical Peak Pricing (or Peak-Time Rebates) • TOU generally a fit for the wider trends of system costs, but unlikely to cover Oil-fired generation as a % of total supply in ISO-NE 01/2021 to 08/2024 dramatic excursions that last only a few 12% hours in wholesale energy pricing 10% • For these excur
Slide 12: Creating the Conditions for VPPs to Capture TOU Value
Creating the Conditions for VPPs to Capture TOU Value • Often left undiscussed in rate design Utility Charges discussions is how to ensure a third-party Transmission marketplace develops to encourage automation in responding to retail price signals Distribution • One way of doing this is to have all
Slide 13: Policy Details: Time Periods (Tiers) of TOU Rate Design
Policy Details: Time Periods (Tiers) of TOU Rate Design • Wholesale energy markets in New England specify on-peak (conventionally, 7 a.m. to 11 p.m.) and off-peak (11 p.m. to 7 a.m.) periods. These could establish the time periods of the retail TOU rate • Alternatively, Maine customer-class load sha
Slide 14: Policy Details: Differentials (Ratios) Between On-/Off-Peak Periods
Policy Details: Differentials (Ratios) Between On-/Off-Peak Periods • Commission could specify differentials (e.g., 3:1) based on a combination of its own ratemaking practices and forward-looking observations. Then through SOS bidding, the pricing of these on-/off- peak periods is established, but c
Slide 15: Policy Details: Seasonality in TOU Rate Design
Policy Details: Seasonality in TOU Rate Design • SOS currently an annual product • Transmission is a 12-CP product (allocated across all months) • Distribution Non-Coincident Peak for certain customer classes likely already occur during winter • ISO-NE capacity is a 1-CP product, set currently by a
Slide 16: Policy Details: Critical Peak Pricing / Peak Time Rebate
Policy Details: Critical Peak Pricing / Peak Time Rebate • SOS suppliers or another party could have a limited option to call a “Critical Peak Price” or “Peak Time Rebate” in order to reflect significant excursions • Critical Peak Pricing is a higher, temporary rate that drives greater demand respon
Slide 17: Conclusion: Ingredients for a Successful Time-Varying Rate in Maine
Conclusion: 3 Ingredients for a Successful Time-Varying Rate in Maine An Opt-Out TOU to capture the long-run and repeatable short-run marginal cost 1 variations in transmission, distribution, energy+capacity pricing costs A Critical Peak Price / Peak Time Rebate to capture real-time excursions in en