Investing Our Energy In You Traverse City Light & Power Electric Generation TCL&P Study Session December 1, 2009

Investing Our Energy In You

Traverse City Light & Power

Electric Generation

TCL&P Study SessionDecember 1, 2009


Electric Supply Economics

• Electric Generation prices are based on a supply and demand and commodity pricing concepts.

• Electric energy cannot be stored. It must be used as it is produced.

• All electric utilities must annually forecast their loads on an hourly basis (8760 projections) to MISO.

• All electric utilities must have enough dedicated generation, including a 15% reserve margin, to cover their peak electric demand.


Regional Available Electric Generation

Baseload

Intermediate

Peaking

Generation available on the day ahead of market (MISO - Mich, Wisc, Ind, Ill, Ohio) on an hourly basis.

Utilities reserve some intermediate generation for their own native load and offer, on a short term basis, to other generation deficient utilities.

The lowest cost baseload generation is reserved by the owning utility to serve their own native load. Excess may be offered to the market on short term contracts.

ConclusionTo achieve the best pricing cost and stability, utilities should either own generation or acquire long term baseload power purchase agreements.


99% fossil fuel based


Natural Gas

Coal



TCL&P Electric Energy Supply Considerations

• Acquire long term base load electric generation to replace current contract set to expire on 12/31/2010• Prepare L&P for pending Federal Legislation

• Cap & Trade – Tax on fossil fuel based generation• Copenhagen CO2 reduction for global warming

- 17% by 2020- 30% by 2025- 42% by 2030

- 83% by 2050• Continue Traverse City to be a leader in “green energy” production• Diversify TCL&P electric generation assets

-Wind -Wood fueled biomass -Natural Gas-Landfill gas -Energy Conservation-Solar -Coal


TCL&P Electric Energy Supply Considerations (Cont.)

• Provide local generation for improved reliability• Reduce dependency on foreign oil• Continue to provide competitively priced electricity to all customer classes• Create increased opportunity for economic development through competitively priced electricity• Create local construction jobs• Create long term employment • Develop Combine Heat & Power concepts for improved generation efficiencies• Reduce exposure to expenses associated with transmission system• Local generation reduces L&P carbon footprint


TCL&P Electric Energy Supply Plan Development

Citizen Input • L&P Public Forums – Sept 2008• Strategic Planning – Open Meeting January 2009• COFAC• Public Comment at L&P Board Meetings• L&P Capital Plan Presentation at open L&P Board Meetings• L&P/City Commission Study Session to discuss planned generation acquisition • L&P Capital Plan Presentation/Approval by City Commission• L&P Customer Survey – 67.7% support for local biomass generation


TCL&P Electric Energy Supply Plan Development (Cont.)

Other Stakeholder Input• Sierra Club Representatives• Michigan Land Use Institute• SEEDS• Grand Traverse Band of Ottawa & Chippewa Indians• Re-Power America• Grand Vision Energy Committee• TCAPS• Northwestern Michigan College

Letters of Support• U.S. Senator Levin• U.S. Senator Stabenow• U.S. Representative Camp


Stakeholder Expectations - Summary

• Reliable electricity• Reasonable and consistent prices• A focus on renewable generation• A diversified electric generation portfolio• A focus for local generation

- Supports local economy- Provides for some generation security


Vision Statement

The Vision of TCL&P is to enhance the local quality of life by securing our energy future.

Mission Statement

TCL&P is a customer focused utility that provides reliable and competitively priced energy services that benefit the

community.


2. Achieve 30% of our electric power requirements through renewable energy resources by 2020, as financially responsible.• Achieve PA295 RPS requirements (KF/ER)

2012 – 2%2013 – 5%2014 – 9%2015 – 10%

• Develop 10MW of installed wind generation by 1/1/14 (KF/ER)

• Develop 30 MW of installed biomass generation by 12/31/19 (KF/ER)10MW – 201510MW – 201710MW – 2019

• Develop 2MW of installed solar generation by 1/1/14 (DZ/JC/ER)


6. Establish TCL&P as a leader in sustainable energy strategies.• Implement the PA295 EO plan by 1/1/10 (JC)

• Implement feed in tariff and net metering processes by 6/1/10 (JC/TA)

• Install solar panels on Hastings Street Service Center by 6/1/10 (DZ)(Pending an engineering evaluation)


8. Acquire diversified electric generation assets, including local generation.

• Install biomass, solar and wind generation by 12/31/19 (staff)

• Acquire local renewable generation sites per following schedule: (KF/ER)

1st site – 1/102nd site – 1/113rd site – 1/134th site – 1/15







Documents

Investing Our Energy In You Traverse City Light & Power Electric Generation TCL&P Study Session December 1, 2009