OPALCO 2019 P R E L I M I N A R Y L O A D F O R E C A S T OPALCO

Board Meeting October 2018

Page

Oceanic Niño Index (ONI)

�2

Southern Hemisphere Pacific

La Niña(cooler)

El Niño(warmer)

Our winds prevail from the south, and the air temperature is influenced by southern hemisphere El Niño and La Niña cycles

Source: NOAA

Page

Oce

anic

Niñ

o In

dex

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.519

5019

5219

5419

5619

5819

6019

6219

6419

6619

6819

7019

7219

7419

7619

7819

8019

8219

8419

8619

8819

9019

9219

9419

9619

9820

0020

0220

0420

0620

0820

1020

1220

1420

1620

1820

20

Last year was a La Niña: La Niña cycle usually flips to El Niño

!3

Weak

Moderate

Strong

Very Strong

Weak

Moderate

Strong

El Niño

La Niña

63-64

65-6672-73 82-83 97-98 15-16

?

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Pacific Decadal Oscillation (PDO)

�4

Northern Hemisphere Pacific

Warm PDO(The “Blob” 2016)

Our air temperature is also influenced by northern hemisphere PDO which effects nearby ocean temperatures

Source: NOAA

Cold PDO

Page

ON

I and

PD

O In

dex

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.520

10

2011

2012

2013

2014

2015

2016

2017

2018

2019

The PDO can “amplify” (or temper) the Oceanic Niño Index

�5

Warmer than

Normal(drier too)

Colder than

Normal(wetter too)

PDOnorthern latitudes

extremely warm winter

extremely warm winter

extremely cold

winter

ONIsouthern latitudes

extremely cold

winter

The “Blob”

Extreme El Niño

extremely warm winter

warm PDO, cool ONI

Page �6

Northe

ast

Wind

!6

Normally our winds prevail from the south, but when the wind rotates from the north, temperatures can

plummet, as they did in mid-December 2016 and

mid-January 2017

Wind is a “wildcard”

Page �7

Monthly HDD and kWh Purchases Scatter Plot: 2008 to PresentM

onth

ly E

nerg

y Pu

rcha

ses

(kW

h)

10M

15M

20M

25M

30M

35M

Monthly Heating Degree Days (HDD)

0 100 200 300 400 500

Heating Degree Days (HDD) drive energy consumption

Variance Factorswind/stillrain/dry

gray/sunny

Summer

Winter

sunnystill

windgrayrain

Page �8

Load Forecast - Past: 2008 through 2017An

nual

kW

h Pu

rcha

sed

200M

205M

210M

215M

220M

225M

230M

Annual Heating Degree Days (HDD)

900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800

2010

2011

2012

2013

2014

2015

2016

Warmer Colder

2017

2008

!8

extreme wind and rain conditions can multiply

effects of HDD

2009

Notes • La Niña (cooler) condition has more

heating degree days (HDD) and larger electric load (kWh)

• El Niño (warmer) conditions have lower HDD and therefore less load

• 2017 extreme load spikeIn the northwest, during La Niña winters, strong, cold north winds are twice as likely as during El Niño winters, causing unpredictable increases in load (N.B.: preliminary study by staff, working with NOAA)

El Niño

La Niña

Page �9

HD

D

0

50

100

150

200

250

300

350

40020

0820

0920

1020

1120

1220

1320

1420

1520

1620

1720

18

Summer(Jun, Jul, Aug)

Winter(Dec, Jan, Feb)

Average Monthly HDD and Energy Purchased: Summer, Winter

Notes

• Summer: Jun, Jul, Aug

• Winter: Dec, Jan, Feb

• Winter is December of indicated year, and January/February of following year

• Note summer load has been flat, despite growth in county, thanks to efficiency initiatives, rebates, etc.

• Despite HDD warming trend, winter load has slowly increased.

• OPALCO has been winning market share thanks to the lower cost of heating with electricity, tempered by increased efficiency as resistance heating is converted to super efficient ductless heat pumps.

Ener

gy P

urch

ased

(kW

h)

0M

5M

10M

15M

20M

25M

30M

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Summer(Jun, Jul, Aug)

Winter(Dec, Jan, Feb)

Page �10

Load Forecast - Present: 2018 Budget to ActualAn

nual

kW

h Pu

rcha

sed

200M

205M

210M

215M

220M

225M

230M

Annual Heating Degree Days (HDD)

900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800

2008 - 2017 Actual2018 Budget/Projected

2010

2011

2012

2013

2014

2015

2018 Budget

2016

Warmer Colder

2017

2008

!10

2009

2018 Projected

Notes • A weak La Niña (cooler) quickly

transitioned to neutral, and now appears to be transitioning to El Niño (warmer) conditions

El Niño

La Niña

Page !11

Monthly SJC HDD: 10 Year Average, Max, MinH

eatin

g D

egre

e D

ays

(HD

D)

0

100

200

300

400

500Au

g

Sep

Oct

Nov

Dec Jan

Feb

Mar Ap

r

May Jun

Jul

Aug

Sep

Oct

Nov

Dec

2017 - 2018 ActualMaxMinAvg

Notes • Max, Min and Average are 2008

through 2017

• Min line driven by strong El Niño winters (warm), Max line driven by strong La Niña winters (cold)

Page !12

Monthly SJC HDD: 2018 ActualH

eatin

g D

egre

e D

ays

(HD

D)

0

100

200

300

400

500Au

g

Sep

Oct

Nov

Dec Jan

Feb

Mar Ap

r

May Jun

Jul

Aug

Sep

Oct

Nov

Dec

2017 - 2018 ActualMaxMinAvg

Notes • Though this past winter was a

projected to be weak La Niña, note uncharacteristic warm January and warmer spring.

• This may have been driven by northern hemisphere PDO which was in weak warming cycle.

• We project that the rest of 2018 will be warmer than normal as we transition to an El Niño cycle

2017

warm January

2018 2019

cold February

warmspring

Page

ON

I and

PD

O In

dex

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.520

10

2011

2012

2013

2014

2015

2016

2017

2018

Oceanic Niño Index and Pacific Decadal Oscillation: Neutral

�13

Warmer than

Normal(drier too)

Colder than

Normal(wetter too)

PDOnorthern latitudes

extremely warm winter

extremely warm winter

extremely cold

winter

ONIsouthern latitudes

extremely cold

winter

The “Blob”

Extreme El Niño

extremely warm winter

warm PDO, cool ONI

Page

What’s projected for this coming winter? NOAA Update (9 October 2018)

!14Source: NOAA

Notes • Warmer El Niño winter is higher

probability (73%) than cooler La Niña winter (1%)

• El Niño/Southern Oscillation (ENSO)

• Global perspective - influences NW, but other factors pertain too - e.g. Pacific Decadal Oscillation (PDO), local wind, sun, rain, overcast, etc.

73% probability of warmer El Niño by end of year

JUN

DEC

DEC

May Forecast October Forecast

Page �15

Load Forecast - Future: 2019 Forecast - warmer than normalAn

nual

kW

h Pu

rcha

sed

200M

205M

210M

215M

220M

225M

230M

Annual Heating Degree Days (HDD)

900 1,000 1,100 1,200 1,300 1,400 1,500 1,600 1,700 1,800

2010

2011

2012

2013

2014

2015

2016

Warmer Colder

2017

2008

!15

2009

El Niño

La Niña

2018 Projected

Notes • NOAA has been increasing the

probability of El Niño for the coming winter and spring. Combining that expected warming weather with the longterm climate changed HDD downward warming trend, we are erring on the conservative side of winter heating load.

2019 Forecast

Page �16

each 1 million kWh sold = $150,000 in revenue = $100,000 incremental margin

Rule of Thumb

each 1% rate increase ~= $250,000 in revenue

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Page �17

Thank You!