CITY OF SPRINGFIELD, ILLINOIS James O. LANGFELDER, Mayor Dove Brown, CHIEF UTILITY ENGINEER FAQs: CWLP IRP UPDATE December 11th, 2019 Public Utilities Committee Meeting The City of Springfield began a process for an Integrated Resource Plan (IRP), which would identify the best resource options for CWLP to provide reliable and competitively priced electrical power to meet Springfield's future energy needs. The Bnergy Authority, Inc. (TEA) conducted the IRP by compiling and analyzing ‘economic data of CWLP’s existing electric resources along with the economic data of other options such as wind, solar, and natural gas combustion turbine 1. Why did CWLP need an IRP? CWL?'s mission as a public power utility and operator of its own generation resources has long been to responsibly provide affordable and reliable electric service to its customer-owners. With an aging generation fleet, and a changing energy market and regulatory climate, it was necessary to conduct an in depth analysis to study the cost ofthe uliity’s current eleetri¢ resources, against what other options are available, The IRP was tasked with determining the best mix of electric resources, which are low cast and low tisk for CWLP customers’ future energy needs. 2. Which plants were considered in the IRP analysis? ‘The IRP considered all of CWLP's generating assets. DALLMANSIg. | COAL aw 1968 if DALLMAN 32, COAL eimw 1972 ; DALLMAN 337°" | COAL 172 MW ‘i978 29 UNITA ‘COAL 207 MW 2009 REYNOLDS, FUEL OIE Tuw | eas} 1970 FACTORY FUEL OIL 17 MW 1973 INTERSTATE FUEL OL & TOMW.,.- 1997, io NATURAL GAS) s 3. What did TEA recommend from IRP results? 'EA from its IRP study recommended retirement of Dallman 31, 32 and 33 in 2020; and keeping Unit 4 and the smaller combustion turbine units, Reynolds, Factory and Interstate, I also recommended issuing a Request for Proposal (RFP) for renewable energy, issuing a REP for energy and capacity to buy market power for a Purchase Power Agreement (PPA) and expanding energy efficiency programs at CWLP Bnorgy Services. Over the ong run, the IRP indicates CWLP will see a shrinking coal fleet with increased reliance of PPAs supplemented with existing combustion turbines and an ever-increasing mix of renewables. Why Is coal-fired generation more costly than other sources? In TEA’s IRP analysis of what would be the best and least cost energy resources to meet CWLP customers’ future electricity needs, Dallman 31, 32 and 33 generating units were found to be more costly compared to other energy resources available. ‘The lower efficiency and age of the units, 1968, 1972 and 1978, and regulatory costs, make these plants not cost competitive in today’s energy market. Dallman 31, 32 and 33 are operating 30% less than expected this year since they are not competitive in the market. Energy prives are lower largely from the decline in natural gas costs, which is the primary driver of the energy market5. Will retiring Dallman 31, 32, and 33 affect CWLP’s ability to supply electricity? Unit 4 and the combustion turbines ean cover all of CWLP customer load nearly 100 percent of the time, CWLP customers would experience no difference in their electric service t due to retiring units with the ability to import power as already done through market purchases and with @ Purchase Power Agrecment (PPA). Upgrades to the transmission system would be made prior to retiring Dallman 33 to improve import capability 6. Is there risk to buying market power instead of relying on CWLP’s own power generation? ‘The IRP identified purchasing power from the market is less risky and costly than operating Dallman 31, 32 and 33. The IRP studied the effects of many variables on the future price of energy and determined prices in the market for long-term Purchase Power Agreements (PAs) are lower and will remain lower than it costs to operate Daliman 31, 32 and 33. Energy prices would have to double and ‘capacity prices would have to triple in order for these units to become viable in the market again. 7. How much will it cost to retire the power plants? ‘The cost to retire Dallman Units 31 and 32 is estimated at $700,000, which includes the decommissioning costs for lube oil work and clesning, plus installing new building heat. In contrast, the savings compared to market prices from not operating Dallman 31 and 32 is $10M to $12M annually, Additional savings from retiring these units is $40M over the next five years for various work including dry ash conversion, boiler repairs, turbine overhauls and other major maintenance. ‘The costs associated with retiring Dallman 33 are estimated to be around 2M, which includes ‘raasmission upgrades, plus decommissioning costs for lube oil work and cleaning, In contrast, the savings from not operating Dallman 33 is $13M to $16M annually. Additional savings from retiring this unit is $29M over the next five years for various work including dry ash conversion, boiler repairs, and other major maintenance. 8. What is the plan for affected employees? Minimizing the impact to our employees continues to be a primary concern. Our plant employees represent one of our most valued and specielized skill groups, which has been key to such a vital setviee to the city for so many years, Discussions have begun to see that we implement a timeline that is fair and that reorganization and transition to other jobs can happen where possible. Options for severance and retirement incentives are being considered as well 9. What are CWLP’s next steps? What if plant retirements are delayed? Retiring Dallman 31 and 32 and beginning the planning and transition process for employees assigned to those units, is CWLP"s preferred first step to implementing some of the IRP recommendations, Beyond not being cost competitive in the energy market (610M-$12M annual loss), upcoming capital expenditures for Dallmen 31 and 32 to comply with a number of ‘environmental regulations and maintenance is expected to be S40M over next $ years and should be avoided for these smaller, older units, For Dallman 33, dates for its retirement and decommissioning need to be finalized for short-term and long-term planning by the endl of January 2020 to avoid a number of significant costs for environmental compliance and maintenance proj algo operates ata loss to market ($13M-$16M annvally) and similarly faces upcor expenditures for compliance and maintenance projects, $29M over the next § years. More Information: www.cwlp.com/IRPCITY OF SPRINGFIELD, ILLINOIS JAMES O. LANGFELDER, MAYOR DoUG BROWN, CHIEF UTILITY ENGINEER DECEMBER 11%, 2019 PUBLIC UTILITIES COMMITTEE MEETING Plant Retirement/Retainment Consideration: Retain Unit 4 & Combustion Turbines + Unit 4 ¥ Most efficient and economical Y Lowers Risk + Combustion Turbine Units Y Factory, Reynolds & Interstate Cover Peak if needed Retain Dallman 33 + Incur $29M in Costs over next 5 years ¥ Coal Ash Regulations ¥ Boiler Repairs ¥- Major Maintenance Y Excludes $ for ELG FGD Blowdown '13-L6M/year loss vs Market * Reiain Jobs tart Dry Fly Ash Engineering * Start New FGD Blowdown ‘Treatment Facility Engineering + Provides backup to Unit 4 but at large cost Retire Dallman 31 & 32 + Avoid $40M in Costs in next 5 years ¥ Coal Ash Regulations Y Boiler Repairs ¥ Turbine Overhauls ¥ Major Maintenance + Avoid $10-12M/year loss vs Market + Decommissioning cost $700k Y Lube Oil, Cleaning, Building Heat + 15 employees would be transitioned. Attrition and not filling vacancies has lowered the impact from 25 total positions Retire Dallman 33 + Avoid § 29M in Costs in next 5 years ¥ Coal Ash Regulations Y Boiler Repairs Major Maintenance Avoid $13-16M/year loss vs Market Decommissioning cost $2M '¥ Transmission Upgrades, Lube Oil and Cleaning + 50 employees would be transitioned. Attrition can lower the impact. + No Earlier Retirement than Fall of 2021 + No Later Retirement than Fall of 2023, Reliability, Risk & Other Financial Considerations environmental compliance costs and other major capital expenses for repairs and major maintenance, if Dallman Units 31, 32 & 33 retired, consider: + CWLP customer load! is covered with Unit 4 and combustion turbines almost 100% of the time. + ‘Transmission upgrades will improve ability to import power when additional capacity needed, + CWLP Energy & Capacity Revenue keeps decreasing ¥ Energy Prices need to double in order to make Dallman 31, 32 and 33 viable. Capacity Prices need to triple in order to make Dallman 31, 32 and 33 viable. Y Units are running 30% less and revenues are $2M less than expected through October FY20. + CWLP can seok Energy & Capecity Purchases ¥ Lowest Cost is the market ¥ Purchase Power Agreements, Bi-lateral Transactions, Real Time/Day Ahead + Detnolition of Dallman Units 31, 32 and 33 is a sunk cost ($7.5M-$10M) and not recommended singe complex is still used for offices and inventory space.Decommissioning Plan November 2019 Table of Contents + Plan Overview + Project Objectives + Planning Approach + Planning Guidelines + Roles and Accountabilties + Decommissioning Pian Summary * Next Steps ® 12/11/2019Decommissioning Plan Overview Daliman Units 1, 2, and 3 are economically stressed due to deteriorating market conditions and relatively high capital and operating costs + Arecent IRP recommended shutting down these units + CWLP and city leadership held public review and comment meetings to obtain input and insights into the decision + CWLP has prepared a decommissioning plan, which if approved will be how the units will be shut down, + Plan was cteated by a small, cross-functional team from C\WLP and the City of Springfield + CWLP partnored with ScottMaddon, which assisted functional areas in identifying and thinking through deliverables, timing, and building the plan + The recent forced outage event at Dallman 3 has introduced new variables, the impact of which has not yet beer fully analyzed. @ 8 scotmadion Decommissioning Plan Overview * This document together with an Excel based implementation plan represent the proposed high-level decommissioning plan + Presents the planning objectives, approach, and guidelines + Presents a summary overview of the plan + Highlights strategic considerations for planning specific: decommissioning dates + The decommissioning plan was reviewed, revised and approved by CWLP leadership + Plan to be reviewed with input by Aldermen/Alderwomen + Final decommissioning approval by the mayor ® clodien 12/11/2019Project Objectives + Prepare a comprehensive technical decommissioning project plan in two phases + Create a formal, sustainable framework to plan and execute the retirements of Units 31, 32, and 33 at Dallman + Identify all supporting tasks, activities, and actions necessary for decommissioning + Provide mechanisms for functional areas to oross-coordinate activities and to ensure consistency in timing, messaging, approvals, and implementation + Align across all impacted functional areas at CWLP s determined tht for planning purposes, the final stale ing plan includ making the unit and Decommissioning Planning Approach ‘A three phased planning and execution approach Is shown below, the plan presented is Phase 1 Detailed Plan + Retin pan aod or High Level Plan repered by smalteam Delersbies erties {Plan comentment tee ‘attished Execution + Exeeut the plan + hac progress and port resuts ve: plan ‘pptowal process + Prepare more reese level fat + Ingato actos between funconal ees 12/11/2019Planning Guidelines The planning team recognizes the myriad implications to decommissioning a long: standing Paseload power plant in Springfield, ang will conduct all glanning efforts using the following guidelines: * We wil mantzn planning confidentiality and communicate professionally with one voice as a project + This is organized as a cohesive project and integrated across Various fuinctions. + Employees willbe informed of timelines and their options, and they will be engaged with CWLP's core values throughout this, process All operational, reguatoy,Jegal, and financial requirements will be met on time and ia ful + Planning focus is on decommissioning Daliman Units 34, 32, and 33 (assuming governance approval), but we wil consider collaleral impacts and needs of the plant, CWLP, the grid, and customers ® sete Project Roles and Accountabilities Establish project appreach and paco Dect panning fis Review al plas or approve + Recommend plan components *Roviow rommendetons wih Fetal ar Lead + Support Piet Core Tes + Corie naval coal area pans en Assigned SMES fr oach Funlonat rea + ony al somponente of ‘decommiesering in + Propare ihlwe pln Phace 1), delves, ouners, ere ‘be dates 12/11/2019V 22/11/2019 Decommissioning Plan Summary The specific decommissioning plan is Excel based and too large fe show in this presentation, A summary of the plan is shows below * »Bach deliverable has a description 4 Deliverables} 220m, ster date, ang completion date Identified] # Plans developtdibased on 7 key. 2-4 sMlosthe'dsing 1 qq wctional | “Phase t plan dis version a high eq lines Toye oin odevelop aime rake ° Deliverables pena | Per fia i 1 H Functionat 4 if | i i Area Mootbaabel bat YEE E fd ee eon © Bern Decommissioning Plan Summary (cont'd) J Uiay Milestones drive the decommissioning plan. Once dates for these events are finalized, the plan will auto-populate Employes abing Decom Fri Ampounetments «tution acevo en ei ‘an ance aso of he docom flor camming to ne irae ‘cose eenten atearg rine “cme erent “na Deskion ws mans ‘roemans form toda cae tpn comets ar ot soot Sad aera ‘soso ee oem Sut ip ah seottmarden cir amataeanueicaseiostntinn anus ene!Next Steps End of December Decision Date + 1 month GE provides extent of ondiion of Uni 29 Announcoments and Costo Repair en ial ae Dec 10-11 January Plan and drivers Final Decommissioning Teviewod with Dates Established Aldermen/Alderwomen ‘and Mayor ® .£ Det Gene a Following Announcements, Support locations. ‘and programs Taunched 12/11/2019