Chelan PUD

Energy Resources Quarterly Board Update

May 4, 2015

Energy Planning & Trading 2015 Q1

• Portfolio Overview (Gregg Carrington)

• Market Update (Gregg Carrington)

• Operations and Planning (Janet Jaspers)

– Lake Chelan – Streamflow and Pricing - Wanapum Drawdown Update

• Energy Efficiency Update (Andrew Grassell)

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District’s Load/Resource Balance (average MW)

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Market-based Hedges (average MW)

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5% slice awarded to Trans Alta on 4/28/15

Laddered Slice Approach Price Diversification

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Net Wholesale Revenue Projections

Columbia River Flow Update for 2015

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Mid-C Flat Annual Wholesale Electricity Prices

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May 2015 NYMEX Henry Hub Natural Gas Contract

1/1/2015 – 4/20/2015

Lackluster winter weather and accelerating natural gas production has bearishly impacted natural gas prices. The decline in oil prices has also pressured natural gas prices.

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MIDC Flat Forward Price Curve (ICE DA index prices for previous months)

4/22/2015 2015 Budget (11/19/2014)

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2015 2016 2017 2018 2019 2020

11/20/14 NWR forecast (budget) $123.6 $109.3 $109.6 $104.0 $102.9

4/23/2015 NWR forecast $126.6 $109.7 $110.0 $102.6 $94.3 $84.4

Delta (4/23/15 vs budget) $3.04 $0.41 $0.34 $(1.39) $(8.60)

11/19/14 MIDC prices (budget) $30.78 $31.40 $33.95 $37.27 $40.08 $42.61

4/22/2015 MIDC prices $23.18 $24.82 $27.52 $29.18 $31.87 $34.30

Delta (4/22/15 vs budget) ($7.60) ($6.58) ($6.43) ($8.09) ($8.21) ($8.31)

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11/20/2014 NWR forecast (budget) (dashed line)

4/23/2015 NWR forecast (solid line)

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California Snowpack No snow was found in the Sierra Nevada at the agency’s April 1 manual snowpack survey. This is the first time since measurements began in 1941 that no snow was found at the Phillips snow course in early April.

California Dept of Water Resources: April 1 statewide Percent of Normal snow water equivalent = 5%.

Market Info

PSE will join EIM, but keep working with NWPP MC

APS sees benefits in joining EIM Arizona’s largest utility, could save $7 million to $18.1 million in 2020 by participating in the EIM run by the California Independent System Operator.

PacifiCorp exploring joining CAISO PacifiCorp is exploring joining the California’s Independent System Operator as a participating transmission owner…

BPA, Alcoa working on Intalco Contract’s future Alcoa notified BPA late last month that it will exercise the termination provision of its 10-year 300 MW contract as of March 31, 2016. Alcoa says its action was driven by low aluminum prices, but BPA agreed part of the problem is that its wholesale rates are above market.

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SPS seeks approval for $42/MWh solar contracts Sharp drop in solar prices driven by solar developers desire to take advantage of federal investment tax credit and improved manufacturing efficiencies as wells as improved capacity factors.

March Genscape Commentary Solar at it again – CAISO solar is hitting new records. Yesterday total solar hit 5,777 MW HE11.

Renewable growth and negative prices Renewables growth leads to more negative prices. On-peak real-time prices during non-summer months have plummeted during periods when PV power supply surges, leading to the Cal-ISO’s infamous “duck curve.”

California looks at increasing RPS Governor calls for 50% RPS by 2050 which may lead to 2015-2016 legislative action.

Market Info

Natural gas prices continue to decline Even with expected reductions in capital expenditures and coal plant retirements, the huge supply of natural gas supply keeps natural gas prices depressed.

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Lake Chelan Elevation Haze ChartStudy GE101

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Scenario 2: Aimed Flat until May 1 (Implemented April 17th)(Chosen Alternative) •Change target curve, aim for:

•1092.3 ft until May 1 •1097.0 ft on June 1 •1099.2 ft on July 1

•Maintains confidence level to achieve License target elevations •Strategy is dynamic – provides the most flexibility for unknown weather and market conditions •10% chance of spilling to 2500 cfs •Expect to generate some HLH in May and June, with strike price •$40,000 revenue increase over base case •Modeled average lake levels:

•1092.7 ft on May 1 •1097.0 on June 1 •1099.3 on July 1

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Columbia – Grand Coulee Dam Inflow Forecasts

Wanapum Drawdown Update

• Wanapum forebay elevation to near full operating range of 560 – 571.5’ in mid March.

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Energy Efficiency-Savings Update

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Energy Efficiency Savings Through Q1 2015

Savings to

Date* (aMW)Cost

$/MWh

over life

Market value

over life

0.51 650,000$ 11.00 2,400,000$

* Based on completed projects, expected NEEA savings, and projects in the pipeline

Compliance target is 1.08 aMW Stretch target is 1.8 aMW

Questions?