Public Service Company Of New Mexico · OTC:PNMXO
Public Service Company Of New Mexico — Technical Presentation (December 2022)
83 slides from Public Service Company Of New Mexico's technical presentation, Dec 15, 2022
Slide 1: PNM 2023-2042 IRP: Siemens Market Price Outlook, Itron Load Forecast, and Pricing topics
PNM 2023-2042 IRP: Siemens Market Price Outlook, Itron Load Forecast, and Pricing topics STEERING MEETING #9 DECEMBER 15, 2022
Slide 2: Disclosure Regarding Forward Looking Statements
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS The information provided in this presentation contains scenario planning assumptions to assist in the Integrated Resource Plan public process and should not be considered statements of the company’s actual plans. Any assumptions and projections contain
Slide 3: Meeting Ground Rules
MEETING GROUND RULES THE FOCUS OF THE MEETING IS THE DEVELOPMENT OF THE 2023 IRP • Questions and comments are welcome – One Person Speaks at a Time 01 • Reminder; today’s presentation is not PNM’s plan or a financial forecast, it is an illustration of the IRP process 02 • When asking a question, ple
Slide 4: Technical Session
TECHNICAL SESSION THE FOCUS OF THE MEETING IS THE DEVELOPMENT OF THE 2023 IRP The technical sessions are about discussing the advantages and disadvantages regarding the application of different technical methodologies within the IRP modeling framework. We are not here to focus on the results or driv
Slide 5: Agenda
AGENDA • Welcome & Introductions • Siemens – Price Outlook • Itron – Load Forecast • PNM Pricing topics – TOU & TOD rates, modern rate design • Next Steps SL IDE 5 | DECEM BER 1 5 , 2 0 2 2
Slide 6: Price Outlook
Price Outlook Public Service New Mexico December 2022 © Siemens 2022© Siemens AG 2022 Unrestricted Page 6 Siemens Energy Business Advisory
Slide 7: Introduction
Introduction ▪ Siemens PTI developed market assumptions for PNM in July 2022 ▪ Market forecast of natural gas, carbon emission price, and capital costs were developed to assist PNM with its 2023 Integrated Resource Plan (discussion at a prior stakeholder meeting) ▪ The forecast for each of these com
Slide 8: Market Drivers
Market Drivers Gas and CO2 price scenarios Unrestricted © Siemens AG 2022 Page 8 Siemens Energy Business Advisory
Slide 9: Natural Gas Price Scenarios – Henry Hub
Natural Gas Price Scenarios – Henry Hub HH Natural Gas Price Scenarios, $2021/MMBtu Henry Hub Low and High Cases $9 Low Case –Reflects an outlook based on a $8 statistical analysis of historical at the 10% $7 confidence internal. Prices settle around $6 $3/MMBtu longer term $5 $4 $3 High Case – Refl
Slide 10: Carbon Price Scenarios – Federal
Carbon Price Scenarios – Federal • Range of federal carbon prices reflects uncertain U.S. Carbon Price Scenarios outlook for carbon policy and resulting pricing in western states Federal CO2 Price Scenarios, 2021$/Ton 80 70 • Baseline scenario assumes a carbon policy 60 starting in 2025 to achieve 8
Slide 11: Capital cost forecast for select technologies incorporates regional factors
Capital cost forecast for select technologies incorporates regional factors to build in New Mexico *Costs outlook does not reflect incentives provided by the Inflation Reduction Act 2022 Combustion Turbine - $2021/kW Solar PV Tracking - $2021/kW 1,800 1,800 1,600 1,600 1,400 1,400 1,200 1,200 1,000
Slide 12: Power Price Outlook
Power Price Outlook Unrestricted © Siemens AG 2022 Page 12 Siemens Energy Business Advisory
Slide 13: Baseline Zonal Energy Prices – Annual
Baseline Zonal Energy Prices – Annual ▪ Near Term – High pricing reflected in recent and forward market pricing supported by higher natural gas prices and scarcity pricing due to supply chain issues ▪ Mid-Term – On-peak energy prices decline driven by an increase in solar capacity, reducing prices i
Slide 14: Increased Solar Penetration Exacerbates Duck Curve
Increased Solar Penetration Exacerbates Duck Curve Resulting in Lower On-Peak Energy Prices ▪ With growth in solar generation expected to exceed electricity demand growth, the duck curve is expected to increase. ▪ Peak solar hours, from 8 A.M. to 5 P.M., will experience price drop while the balance
Slide 15: Base Case Pricing and Market Fundamentals Summary
Base Case Pricing and Market Fundamentals Summary ▪ Forward pricing for Four Corners and Palo Verde are currently higher than historical values due to scarcity pricing and high fuel costs ▪ RPS and carbon reduction requirements are expected to support high renewable adoption resulting in lower on-pe
Slide 16: Zonal Energy Price Scenarios – Four Corners and Palo Verde
Zonal Energy Price Scenarios – Four Corners and Palo Verde ▪ Higher natural gas prices in the mid-and long-term as well as higher carbon prices in the long-term support higher energy pricing in the High Case ▪ The absence of a carbon price and sustained lower natural gas prices over the forecast per
Slide 17: Contact
© Siemens 2022 Contact Anuj Patel Chelsea LaRicci Principal Project Manager Mobile: (281) 939-2144 Email: Anuj@siemens.com Email: Chelsea.Laricci@siemens.com Unrestricted © Siemens AG 2022 Page 17 Siemens Energy Business Advisory
Slide 18: Draft PNM Integrated Resource Plan Forecast Scenarios
Draft PNM Integrated Resource Plan Forecast Scenarios Stuart McMenamin Itron, Inc. December, 2022
Slide 19: Agenda
Agenda » Economic Data and Forecasts » Weather Data, Normal and Extreme Weather » Behind the Meter PV Data and Forecasts » Electric Vehicle Forecast » Other Scenario Inputs (Electrification, TOU) » Energy Modeling and Forecasts • Customer growth forecast • Statistically Adjusted End Use (SAE) Method
Slide 20: Economic Data and Forecasts
Economic Data and Forecasts
Slide 21: Economic Data and Forecast
Economic Data and Forecast » Forecast provided by Woods and Poole » Annual history from 1950 to 2021 » Annual forecast to 2050 » State and County level data » Used data for PNM counties: • North: Bernalillo, San Miguel, Sandoval Santa Fe, Union, Valencia • South: Grant, Hidalgo, Luna, Otero » Annual
Slide 22: Economic Scenarios
Economic Scenarios » Population Annual Gains • High Case: 14,400 • Base Case: 9,400 • Low Case: 4,400 » Non Mfg. Employment Annual Gains • High Case: 9,300 • Base Case: 5,800 • Low Case: 2,800 » Real Per Capita Income Growth • High Case: 1.8% • Base Case: 1.5% • Low Case: 1.1% PNM Integrated Resourc
Slide 23: Comparison with Prior IRP
Comparison with Prior IRP » Main drivers of growth are Population and Nonmanufacturing Employment » Current forecasts are slightly weaker • Population in 2042 down 28k • Employment in 2042 down 19k » Most of the difference is in place by the end of 2022, so gains beyond 2022 are about the same. PNM
Slide 24: Weather Data and Normal Weather
Weather Data and Normal Weather
Slide 25: Weather Data and Daily Scenarios
Weather Data and Daily Scenarios » Hourly weather data from AccuWeather • Temperature – Used to compute Degree Days • Global horizontal irradiation (GHI) – Used for solar generation » 4 Stations • North: Albuquerque (KABQ), Santa Fe (KSAF) • South: Deming (KDMN), Alamogordo (KALM) » Station weights
Slide 26: Hottest Days 2002 to 2021 (Rank by Season)
Hottest Days 2002 to 2021 (Rank by Season) Used in Base Scenario Used in Extreme Scenario PNM Integrated Resource Plan Forecast Scenarios | ‹#›
Slide 27: Coldest Days 2002-2021 (Rank by Season)
Coldest Days 2002-2021 (Rank by Season) Used in Base Scenario Used in Extreme Scenario PNM Integrated Resource Plan Forecast Scenarios | ‹#›
Slide 28: Weather Scenarios
WEATHER SCENARIOS » Daily weather for hourly models • For each year, rank daily data by season Ranked daily avg temperatures for 20 -- Hottest day to coldest day historical years • Base/Normal = Average for each rank -- Thick black line in the chart -- Typical Hottest day: 85.8 -- Typical Coldest da
Slide 29: Normal Monthly Weather
Normal Monthly Weather » Normal Weather: 20-year normal • Compute daily average temperature • Compute daily CD (base 55, 60, 65, 70, 75) • Compute daily HD (base 60, 55, 50, 45) 20 Year Average • Average by date for energy forecast 2000 to 2019: 1443 2002 to 2021: 1452 -- Avg Jan 1 values, Jan 2 val
Slide 30: Weather Response Modeling
WEATHER RESPONSE MODELING ltrdn
Slide 31: Weather Response Analysis
Weather Response Analysis Residential Daily Sales Per Customer » Load Research data provide hourly and daily use estimates for a statistical sample » Daily use shows a strong response to daily weather » Response of load to weather is non linear » Load research data are used to calculate HD and CD we
Slide 32: Behind the Meter (BTM) Solar Data and Forecasts
Behind the Meter (BTM) Solar Data and Forecasts
Slide 33: Behind the Meter (BTM) Solar Capacity and Generation
Behind the Meter (BTM) Solar Capacity and Generation » Solar Generation Capacity (KW) • Output capacity (AC) for new systems in KW • Aggregated by month (Res & NonRes) Total • Forecasted through 2042 Res » Solar Generation Data (KWh) NonRes • All solar customers have generation output meters • Data
Slide 34: Global Horizontal Irradiation (GHI) Data
Global Horizontal Irradiation (GHI) Data » Global Horizontal Irradiation (GHI) from AccuWeather • Hourly GHI data for four weather stations Hourly GHI ABQ on Clear Day SAF • Daily sums and monthly sums used in modeling ALM DMN » 2018 pattern used for daily & hourly forecasting • 2018 Annual GHI with
Slide 35: PV Scenarios
PV Scenarios » Base Forecast is consistent with recent Annual High PV Base Low PV Energy Outlook forecasts for the region assuming continuation of investment tax credits. » 2022 Generation Capacity: 243 MW AC » Annual PV Capacity Additions 2022 to 2040 • High PV: 45 MW/year • Base PV: ~35 MW/year Hi
Slide 36: Use vs. Sales
Use vs. Sales » The presence of BTM Solar masks customer loads (end-use consumption). Total Use » This impact is biggest for the residential class. » Measured sales is the part of use that is supplied by utility generation. » Models forecast customer use. Subtract generation to forecast utility sale
Slide 37: Electric Vehicle Forecast
Electric Vehicle Forecast ltrdn
Slide 38: Electric Vehicle Forecast
ELECTRIC VEHICLE FORECAST » Forecasts are based on fractions of new car sales • Total New Mexico annual car sales are about 87,000 • US EV adoption forecast is the main driver • Rapidly increasing share of new cars (5% now, 60% by 2042) • NM adoption is about 41% of US adoption • 75% of NM adoptions
Slide 39: EV Scenarios
EV SCENARIOS » Annual EV Additions 2023 to 2042 High EV • High EV: Grows to 27,000 by 2042 Base Low EV • Base EV: Grows to 18,000 by 2042 • Low EV: Grows to 13,000 by 2042 » 2042 Electric Vehicle Count • High EV: 304,000 • Base EV: 209,000 • Low EV: 138,000 High EV » Higher than prior IRP forecast B
Slide 40: Other Scenario Inputs
Other Scenario Inputs ltrdn
Slide 41: Building Electrification
Building Electrification » New homes starting in 2025 2040 Incremental Hourly • Natural Gas and Propane not allowed Heating Load (MW) • Electric heat share goes from 15% to 90% • Mostly heat pumps, 80% of the increase • Less evaporative cooling, more central air » Existing homes converted to heat pu
Slide 42: Residential Time of Use Rates
Residential Time of Use Rates » Introduce Residential TOU in 2030 • Pilots through 2029 • Full Opt-out program in 2030 • On-peak 5-8 AM, 5-8 PM. • Assume 20% opt out, 80% do not • Applies also to EV not on WHEV rate » EV impacts modeled separately » Energy impact levels from summary report by ACEEE
Slide 43: Energy Modeling and Forecasts
Energy Modeling and Forecasts
Slide 44: PNM Customer Forecast
PNM Customer Forecast » Residential trend model through 2024 • Population elasticity model after 2024 » Small Power trend model through 2024 • Pop/Emp elasticity model after 2024 » Regression model for General Power (GP) • Population and Non-Manufacturing Employment » Elasticity model for Large Powe
Slide 45: Energy Use and Energy Sales
Energy Use and Energy Sales Sales » Same approach as in prior IRP » Monthly sales and monthly energy use: + PV • Sales = net delivery of energy through the customer meter • Energy use = consumption of appliances and equipment Energy Use • Energy use is bigger than sales because of PV generation • Mo
Slide 46: Statistically Adjusted End-Use Framework
Statistically Adjusted End-Use Framework » Residential and commercial models use Statistically Adjusted End-Use (SAE) Model » SAE models account for: • Appliance saturation and equipment density • Appliance and equipment efficiency • Thermal efficiency of buildings » Efficiency and saturation data i
Slide 47: Residential SAE Modeling Framework
Residential SAE Modeling Framework SAE = Statistically Adjusted End-Use Saturation Levels End Use Stock Thermal Efficiency Thermal Efficiency Home Square Footage Water Heat Home Square Footage Appliances AC Saturation Heating Saturation Lighting Densities Central Resistance Office Equipment Room AC
Slide 48: Energy Forecast Summary
Energy Forecast Summary Excludes LS36B and incremental economic development loads PNM Resources Rate Case Analysis & Long-Term Forecast | 48
Slide 49: Energy Sales Forecast by Customer Class
Energy Sales Forecast by Customer Class Commercial is Small Power + General Power Industrial is Large Power + Large Service Other is Irrigation, Water, and Lighting Industrial excludes LS30B and incremental economic development loads PNM Integrated Resource Plan Forecast Scenarios | 49
Slide 50: Hourly Load and Peak Demand Forecast
Hourly Load and Peak Demand Forecast
Slide 51: Hourly Load and Peak Load Forecasts
Hourly Load and Peak Load Forecasts » Hourly load models for each class Hourly Class Profile Forecasts Calendar Month Class Sales w/o • Estimated with hourly load research data for 2015 to 6/2022 w/o Inc EV or PV + Inc EV or PV • Forecasted using normal daily weather pattern » Hourly shapes for EV a
Slide 52: Hourly Loads
Hourly Loads System Peak 2198 MW 19:00 to 20:00 » Bottom-up process depiction • Class loads are at the meter • Excludes rate class LS36 and post 2024 economic development loads • Loss estimate based on loss factors by delivery voltage • Includes allocation of UFE » Solar is total BTM generation at t
Slide 53: Forecast Scenarios
Forecast Scenarios ltrdn
Slide 54: Scenario Definitions
Scenario Definitions PNM Integrated Resource Plan Forecast Scenarios | 54
Slide 55: Annual System Energy Scenarios
Annual System Energy Scenarios PNM Integrated Resource Plan Forecast Scenarios | 55
Slide 56: Growth Scenarios
Growth Scenarios » Reference Case Prior » High Economic Growth IRP • High Population, Employment, Income • High Miscellaneous end-use growth » Low Economic Growth • Low Population, Employment, Income • Low Miscellaneous end-use growth PNM Integrated Resource Plan Forecast Scenarios | 56
Slide 57: Behind the Meter PV Scenarios
Behind the Meter PV Scenarios » PV Capacity in 2042 • Base – 1,141 MW • High – 958 MW • Low – 765 MW • No Incremental – 243 MW (same as 2022) » Peak Hour » Without PV, hour ending 18 (5 pm to 6 pm) » With PV, hour ending 20 (7 pm to 8 pm) PNM Integrated Resource Plan Forecast Scenarios | 57
Slide 58: Electric Vehicle Scenarios
Electric Vehicle Scenarios » The Reference forecast includes base levels of EV adoption. In the three scenarios, the number of vehicles in 2042 are as follows: • High PV: 304,000 • Base PV: 209,000 • Low PV: 150,000 » Annual sales and peak results are summarized below PNM Integrated Resource Plan Fo
Slide 59: Residential Electrification
Residential Electrification » Residential Electrification Scenario • Gas/Propane not allowed in new homes • Conversion incentives for existing homes • Electric heat share rises from 15% to 45% • Increased cooling loads as heat pumps replace evaporative cooling PNM Integrated Resource Plan Forecast S
Slide 60: TOU Scenario
TOU Scenario » The TOU scenario introduces residential TOU rate pilots in 2025, and full programs in 2030 » Whole house EV Rate (10 pm to 5 am) » Opt-out TOU Rate (5-8 am, 5-8 pm) » EV impacts based on EVPro profiles and PNM rate parameters. » Non EV impacts based on TOU rate impact studies. PNM Int
Slide 61: Complex Scenarios
Complex Scenarios » Strong Growth Scenario • High Econ Growth, Weak PV, Strong EV, Residential Electrification » Weak Growth • Low Econ Growth, Strong PV, Weak EV » Aggressive Environmental Regulation • Strong PV, Strong EV, Residential Electrification PNM Integrated Resource Plan Forecast Scenarios
Slide 62: Extreme Weather
EXTREME WEATHER » Reference uses rank and average » Extreme uses rank and average of top 2 » Summer peak day is 2.6 degrees warmer » Winter peak day is 12.2 degrees colder » Monthly HDD60 is 17% higher than normal » Monthly CDD65 is 17% higher than normal PNM Integrated Resource Plan Forecast Scenar
Slide 63: Putting EE on the Supply Side
Putting EE on the Supply Side » The forecast scenarios all include strong impacts from continued energy efficiency gains. » To put EE on an equal footing with supply-side options, the scenario forecasts are adjusted upward to remove the impacts of incremental program Chart will be updated. activity,
Slide 64: Thank You
THANK YOU stuart.mcmenamin@itron.com david.simons@itron.com forecasting@itron.com www.itron.com
Slide 65: Pricing and Rate Design Issues
Pricing and Rate Design Issues Heidi Pitts – Lead Pricing Analyst IRP STAKEHOLDERS DECEMBER 15, 2022 DECEMBER 15, 2022
Slide 66: Discussion Topics
DISCUSSION TOPICS Time-of-Day pilot rate details • How does the pricing incentive differ for residential customers? • Proposed on-peak/off-peak hours • Bill guarantee • Rates and ratios Pricing Advisory Committee (“PRAC”) • What has been accomplished so far? • What are future goals? • Modern Rate De
Slide 67: Time-of-Day Pilot
TIME-OF-DAY PILOT Comparison of current TOU vs. proposed TOD SLIDE 67 | DECEMBER 15, 2022
Slide 68: Rate Case Proposals: Time-of-Use and Time-of-Day
RATE CASE PROPOSALS: TIME-OF-USE AND TIME-OF-DAY Current Time-of-Use (TOU) rates will continue • However, Rates 1B Residential TOU and 2B Small Power TOU will be closed to new customers. • Current TOU on-peak/off-peak hours will stay the same Time-of-Day pilot proposed in rate case • Updated on-peak
Slide 69: Current Time-of-Use Reflects Historical Usage Patterns
CURRENT TIME-OF-USE REFLECTS HISTORICAL USAGE PATTERNS 2018 Example Energy Use 1,600 1,400 1,200 1,000 Energy 800 600 400 Historical energy use 200 changed more gradually - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Time of Day Summer Winter SLIDE 69 | DECEMBER 15, 2022
Slide 70: Current Time-of-Use Rates
CURRENT TIME-OF-USE RATES Current time-of-use rate (Residential 1B), $/kWh Current TOU peak hours and rates, proposed effective 1/1/2024 $0.20 $0.16 First, current time-of-use rate. What does it look like? $0.12 $0.08 $0.04 $0.00 off off off off off off off off ON ON ON ON ON ON ON ON ON ON ON ON of
Slide 71: Time-of-Day Overview
TIME-OF-DAY OVERVIEW • Limited customer participation • 7,500 residential / 2,500 non-residential (all customer classes except 6, 20, 36B) • Bill guarantee for residential and small power customers • On peak M-F, June-Aug: • Residential: 5:00 to 8:00pm (15 hours/week) • Non-residential: 5:00 to 10:0
Slide 72: Pilot Time-of-Day Will Reflect Future Daytime Energy Cost
PILOT TIME-OF-DAY WILL REFLECT FUTURE DAYTIME ENERGY COST 2023 Example Summer Energy Cost 1,600 1.00 0.90 1,400 Future costs will be lowest during daylight hours. Customer usage 0.80 1,200 drops due to solar. 0.70 1,000 0.60 Energy Cost 800 0.50 0.40 600 0.30 400 0.20 200 0.10 - - 1 2 3 4 5 6 7 8 9
Slide 73: Energy Cost During the Day – Moving Forward
ENERGY COST DURING THE DAY – MOVING FORWARD 2023 Example Winter Energy Cost 1,600 1.00 0.90 1,400 0.80 1,200 0.70 1,000 0.60 Energy Cost 800 0.50 0.40 600 0.30 400 0.20 Future costs will be lowest 200 during daylight hours. 0.10 - - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Time
Slide 74: Result Is a Time-of-Day (TOD) Rate Design
RESULT IS A TIME-OF-DAY (TOD) RATE DESIGN When customers use energy will inform the rate they pay, rather than how much they use. SLIDE 74 | DECEMBER 15, 2022
Slide 75: Pricing Advisory Committee
Pricing Advisory Committee Accomplishments and future goals SLIDE 75 | DECEMBER 15, 2022
Slide 76: Pricing Advisory Committee (PRAC)
PRICING ADVISORY COMMITTEE (“PRAC”) • Goal: a group to discuss Modern Rate Design issues • Met in June, August, and September; plan to meet every 3-4 months going forward • Topics of discussion to date: • Modern Rate Design • Low income customers, how to define and analyze • Inter-class subsidies •
Slide 77: PRAC – Modern Rate Design Issues to Consider
PRAC – MODERN RATE DESIGN ISSUES TO CONSIDER • Price signal should encourage consumption to help balance the grid (excess solar or at night) • Net metering • Customer choices • Class subsidies • Intermittent generation from renewable resources • Energy Storage • PPAs. Will more customers bring their
Slide 78: Modern Rate Design – Rate Structures
MODERN RATE DESIGN – RATE STRUCTURES • Cellular interval meters • Pilot Whole House Electric Vehicle (WHEV) rate • Pilot Non-residential charging station • Pilot Time-of-Day rate (proposed in current rate case) • AMI meters • TOD rates could be offered to all customers • Real time pricing • Critical
Slide 79: Questions
Questions?????? SLIDE 79 | DECEMBER 15, 2022
Slide 80: Near-Term Schedule
NEAR-TERM SCHEDULE* FUTURE MEETING TIME & LOCATION When: January 17, 2023 (Tentative) Topic: AEG EE bundles, PNM EE program & highlights, ELCC & PRM study results, Summer 2022 review Start Time: 9:00 AM Location: Virtual *meeting dates and topics are subject to change based on presenter’s availabili
Slide 81: Next Meeting
NEXT MEETING We encourage you to send in your thoughts ahead of time to IRP@pnm.com so that we can summarize them and address them in a future next meeting. Please have your submissions in by January 13, 2023. SL IDE 8 1 | DECEM BE R 1 5 , 2 0 2 2
Slide 82: Make Sure We Have Up to Date Contact Information for You
MAKE SURE WE HAVE UP TO DATE CONTACT INFORMATION FOR YOU www.pnm.com/irp for documents IRP@pnm.com for e-mails Register your email on sign-in sheets to receive alerts of upcoming meetings and notices that we have posted to the website. SL IDE 8 2 | DECEM BE R 1 5 , 2 0 2 2
Slide 83: Thank you
Thank you pr aio OO@
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