1. Mike Mumper & Brian Kick Good afternoon
My name is Matt Handel and I have responsibility for NextEra’s Solar development program
Mike Mumper &
Brian Kick

2. Company Background Gexa Energy / NextEra Energy Services
Parent company is NextEra Energy Inc.,
largest sustainable energy provider in the world
Over 1,000,000 customers
Approximately 5,000 employees 2

3. Why are we presenting this topic?

4. Definitions EDC – Electric Distribution Company (wires company)
Supplier – the company that procures the commodity
ISO – Independent System Operator – in our area = PJM
CSP – Curtailment Service Provider

5. How is capicity different from demand response?
DR requires participation with a CSP
DR events may or may not be called in a particular year
Payments for participation are typically shared with the CSP
Capacity impacts the cost per kwh for a full year
If managed properly, all of the savings from reducing capacity can be received by the customer

6. Typical bill components

7. Typical bill components

8. Typical bill components

9. What makes up the cost/kwh?
Energy – power consumed over time (kWh)
Capacity – Your share of the ISO’s cost to meet the ISO’s peak demand.  A function of your capacity tag * the utility’s reserve requirement * daily capacity price * number of days.
Transmission or NITS – Your share of the utility’s cost to manage their peak transmission.  NITS = Network Integrated Transmission Service.  A function of your NITO (NITS obligation, same as a cap-tag but for transmission) * daily NITS rate published by utility * number of days.
Ancillary Services – the ability of the grid to maintain a stable frequency and maintain reserves (Ancillaries always include the “grab bag” of intermittent charges like RMR, aka Generation Deactivation.  Some suppliers call them out, others leave them in the “ancillaries” bucket.) 
Renewable Energy Credits – state or PUC-mandated charge to spur renewable energy investment

10. Today’s key point How does this portion of the bill
relate to this one?
And why does it matter?

11. 20%

12. What do customers know about capcity?
Installed Capacity (called cap tag) (PLC) x Unforced Capacity (reserve requirement) x $/MWDay x Days in the period (365) = Capacity Charge
Capacity charge paid by the supplier is? Lump sum? Or per kwh used that year?
Who holds the risk?
What can the customer control?

13. Capacity and transmission market overview
Capacity is a fixed daily charge. Every meter has a Peak Load Contribution (PLC) which is the first step in determining what that charge is.
There are 5 PJM Coincident Peaks (CP) that occur during the summer months, most of the time in July and August. A CP is when the system load hits its highest demands for the season.
2017 PJM CPs
6/12/2017 Hour Ending 18
6/13/2017 Hour Ending 17
7/19/2017 Hour Ending 18
7/20/2017 Hour Ending 17
7/21/2017 Hour Ending 17
For an interval metered customer, most EDCs take the meter’s recordings for those intervals, grosses them up for distribution losses, and takes an average and that becomes the PLC. There is an additional factor that some have that accounts for matching what the EDC measures their total load as during the 5 CPs and what PJM says it is (the EDC’s value is typically less due to unaccounted for energy).

14. Capacity and Transmission Market Overview
Capacity – PJM
PJM's capacity market, called the Reliability Pricing Model, ensures long-term grid reliability by securing the appropriate amount of power supply resources needed to meet predicted energy demand in the future.
Capacity is priced by the zone in PJM. Since each EDC is it’s own zone, the price of capacity varies by utility.
Capacity prices and reserve requirements are set initially during an auction that takes place in June three years before the delivery year begins (called the Base Residual Auction).
Both components are adjusted in three subsequent auctions
1st Incremental Auction – September, two years prior to the PY beginning
2nd Incremental Auction – July, one year prior to the PY beginning
3rd Incremental Auction – March, three months prior to the PY beginning

15. PJM Capacity Prices by EDC and Planning Year
PJM cleared its Base Residual Auction for Planning Year 21/22 on May 23, 2018.
Most zones cleared significantly higher than PY 20/21
BGE zone saw the largest increase

16. What makes up the cost/kwh?
Energy – power consumed over time (kWh)
Capacity – Your share of the ISO’s cost to meet the ISO’s peak demand.  A function of your capacity tag * the utility’s reserve requirement * daily capacity price * number of days.
Transmission or NITS – Your share of the utility’s cost to manage their peak transmission.  NITS = Network Integrated Transmission Service.  A function of your NITO (NITS obligation, same as a cap-tag but for transmission) * daily NITS rate published by utility * number of days.
Ancillary Services – the ability of the grid to maintain a stable frequency and maintain reserves (Ancillaries always include the “grab bag” of intermittent charges like RMR, aka Generation Deactivation.  Some suppliers call them out, others leave them in the “ancillaries” bucket.) 
Renewable Energy Credits – state or PUC-mandated charge to spur renewable energy investment

17. NITS The portion of the total kwh charge varies by load size
The individual utility also has impact on the NITS charge
The key is that it is tied to / calculated from the measured demand for an individual customer

18. Example of a Cap and Trans Pass-through bill

19. How to caculate the monthly cost
(Tag x rate (text should read “per kw day”) x number of days billed = monthly cost
(57.87 x ) x 30 = $285.95

20. Making a comprison to an “all in” rate

21. Contract Structures Is “fixed price” really fixed?
What does PCA mean or similar terms?
What can trigger a price adjustment on a fixed price product?
What role does swing and band width play?

22. NES PLC Notifications
NextEra Energy Services (NES) will provide notifications to participants highlighting the probability that a given day will be a peak.
The first notification will be delivered in the morning (via ).
On days of higher probability, a second notice will be sent in the early afternoon specifying whether load should be curtailed and the times when curtailment should occur.

23. PLC Notifications and Action Plan
How accurate are the PLC notifications?
What can you do on a predicted peak day?
When will you see the benefit?
Will you see the full financial benefit of capacity management?

25. Questions?