Entergy Louisiana LLC · NYSE:ELC
Entergy Louisiana — Investor Presentation (2005)
23 slides from Entergy Louisiana's investor presentation, 2005
Slide 1: The Experimental Market Valued Energy Reduction Service (MVER) Rider
The Experimental Market Valued Energy Reduction Service (MVER) Rider for Arkansas and Louisiana 2005 update Page 1
Slide 2: Presentation Contents
Presentation Contents Background Market Valued Energy Reduction (Schedule MVER) Market Valued Call Option (MVCO) Service Market Valued Energy (MVE) Service Sources of Information Page 2
Slide 3: Background
Background An airline has oversold a flight by five seats Passengers with “firm” reservations can not be bumped against their will provided they have checked in prior to 10 minutes before departure The airline has made a conscious decision to meet high demand despite having a fixed supply of s
Slide 4: Background: Potential solutions
Background Potential solutions 1. Request another plane to take the five passengers 2. Have their maintenance crew add five more seats to the plane 3. Randomly draw five names and not let those passengers board 4. Not sell those last five tickets 5. Provide a financial incentive to five customers
Slide 5: Background: How the airline analogy fits
Background How does the airline analogy fit? – First, our motive is not to generate profit, but to lower the total delivered cost of power to our customers – Entergy uses both generation and purchased power to meet our customer’s energy needs on a real-time basis – We have no control over real-tim
Slide 6: 1998 & 1999 Into Entergy Energy Prices
Background 1998 & 1999 Into Entergy Energy Prices* Energy Price for Firm 16-hour Block of Power $10,000 $1,000 1999 $100 1998 $10 1 10 19 28 37 46 55 64 73 82 Highest to Lowest Business Day of the Summer * Represents firm delivery of a 16-hour (6 a.m. - 10 p.m.) block of power scheduled “day ahead
Slide 7: Is your site a good candidate for MVER?
Background Is your site(s) a good candidate for MVER? – Do I meet the applicability section in the rider? – Do I have (1) discretionary load that can be shed with one-day notice, (2) a back-up diesel or gas-fired generator(s)* or (3) a load management system in place today? – Would anything preven
Slide 8: Schedule MVER: Two unique options
Schedule MVER Two unique options under MVER Market Valued Energy Reduction Market Valued Call Option (MVCO) Market Valued Energy (MVE) Service Service Participants bid “day ahead” for a Participants bid prior to the summer curtailment on the following day for a specific “package” of curtailments B
Slide 9: Schedule MVER: Criteria to participate
Schedule MVER Criteria to participate – Participants must deliver at least 1 MW of curtailable load at each participating site* – Appropriate metering must be in place for monitoring and verification of hourly load data – A customer may participate in MVER via: Submitting a successful bid under
Slide 10: Schedule MVER: Additional program features
Schedule MVER Additional program features – MVER runs year-round for MVE; May - September for MVCO – Payments made under MVER will appear as credits on your May - September energy bills – There is no “buy-through” provision under either program (i.e., once a bid has been accepted, you have obligat
Slide 11: MVCO Service
MVCO Service MVCO = Market Valued Call Option – You would sell Entergy the right, but not the obligation, to purchase a curtailment in the future at a specific energy price for a predetermined number of occurrences for each summer month – In return for selling Entergy this right, you will receive
Slide 12: How does MVCO work?
MVCO Service * Call option price is shown for illustrative purposes only! How does MVCO work? – Step 1 -- You submit a bid between Mar 1 - Mar 31 (bid includes applicable site(s), Call Option Premium, MVCO Firm Demand and an estimate of curtailable load) – Step 2 -- If the bid is accepted (mid Apr
Slide 13: Advantages and disadvantages of MVCO
MVCO Service Advantages of MVCO – More Certainty -- Successful bidders will receive their Call Option Premium bid and will also know up-front exactly what energy prices will be paid for any curtailments – Aggregation* -- Allows sites to be aggregated, which may appeal to certain types of customers
Slide 14: MVCO: Aggregated sites
MVCO Service Aggregated sites Highest Maximum Concurrent Demand Demand Company aggregates three sites under Site (kW) (kW) MVCO and bids to curtail to a net A 9,000 5,000 firm demand of 5.0 MW. It doesn’t B 7,000 3,000 matter which sites curtail as long as C 4,000 2,000 net demand during a curtail
Slide 15: How is MVCO credit calculated?
MVCO Service * Call option price is shown for illustrative purposes only! How is MVCO credit calculated? Call Option Premium Payment (5.113 MW)($2,500/MW-month)* = $12,782.50 Total Load (MW) Curtailable Billing Energy Credit (5.113 MW)(8 hrs)($100/MWH)(5 days) = $20,452.00 Total Credit for July =
Slide 16: What happens if you exceed the MVCO Firm Contract Demand?
MVCO Service * Call option price is shown for illustrative purposes only! What happens if you exceed the MVCO Firm Contract Demand during a curtailment? Call Option Premium Payment Penalty Demand (5.113 MW)($2,500/MW-month)* 6.500 MW - 5.000 MW = $12,782.50 = 1.500 MW Step 2 Curtailable Billing En
Slide 17: MVE Service
MVE Service MVE = Market Valued Energy – MVE does not require any commitment up-front to participate, only an enabling agreement which allows you to bid day ahead How does MVE work? – Step 1 -- Each weekday of the year, you decide if you want to bid between 8 a.m. - noon into the “day ahead” mar
Slide 18: MVE: Curtailment hours
MVE Service Curtailment hours – Arkansas and Louisiana have different winter peaks. The curtailment hours are shown below: Curtailment Arkansas Louisiana hours Summer Noon to 8:00 p.m. Winter 1:00 – 9:00 p.m. 2:00 – 10:00 p.m. Page 18
Slide 19: Advantages and disadvantages of MVE
MVE Service Advantages of MVE – Flexibility -- Ability to tailor a bid each day to your site’s operational needs/constraints, market conditions, etc. – Opt-In/Opt-Out -- The only commitment being made when you sign an enabling agreement is that you will comply with the terms and conditions of the
Slide 20: How is MVE credit calculated?
MVE Service * Energy price is shown for illustrative purposes only! How is MVE credit calculated? Load Data for One July Curtailment Firm load of 5.0 MW (dark blue line) Load on day of bid (light blue bars) Load on day of curtailment (red bars) Total Load (MW) MVE Curtailable Billing Energy Paymen
Slide 21: What happens if you exceed the MVE Firm Demand?
MVE Service * Energy price is shown for illustrative purposes only! What happens if you exceed the MVE Firm Demand during a curtailment? MVE Curtailable Billing Energy Payment Penalty Amount Assume bid of $500/MWH* (1.500 MW)(8 hrs)(5)($500/MWH) (40.9 MWH)($500/MWH) = $30,000.00 = $20,450.00 Step
Slide 22: Sources of Information: E-mail/Fax Services
Sources of Information E-mail/Fax Services – MegaWatt Daily Daily update sent by e-mail or fax Financial Times Energy - 1600 Wilson Blvd., Suite 600, Arlington, VA 22209; (800) 424-2908; www.ftenergy.com – Energy Market Report Daily update sent by e-mail Economic Insight, Inc. - 3004 SW Fi
Slide 23: Sources of Information: On-Line Services
Sources of Information On-Line Services – Bloomberg Energy www.bloomberg.com/energy/index.html Call them at (609) 806-1349 for subscription information – Altra Energy Technologies www.altra.com/home.html Altra Energy Technologies, Inc., 1221 Lamar, Suite 950, Houston, TX 77010; (713) 210-8