Ascend’s PowerSimm Propels Riverside Utilities New IRP Over Finish Line

/ The Volt / Leave a comment

Riverside Public Utilities recently won final approval of its 2014-2033 Integrated Resource Plan, thanks in part to Ascend Analytics’s PowerSimm Planner, which provided its analytic backbone.

Utility officials put the software to the test, quantifying costs and risks associated with critical IRP components, including retirement of coal-generation plant InterMountain Power Project, capacity expansion planning, renewable resources and energy storage.

PowerSimm Planner, a complete analytics platform for energy portfolio planning, capacity expansion and financial analysis, is designed to help energy planners and financial managers model revenue requirements, optimize power expansion plans and compare their financial impacts.

“We’re thrilled to have had the opportunity to help RPU get the biggest bang for its customers’ bucks and solidify its bottom line,” said Ascend President Gary Dorris.  “We helped utility officials determine the best path forward for swapping out its InterMountain coal-fired power generation for less-carbon intensive electricity production.  It’s a win-win-win for everyone involved – the consumers, the utility and the environment.”

PowerSimm Planner helped Riverside officials quantify projected costs and risks arising from 12 different resource planning scenarios to make up for the lost generation resulting from IPP’s phase-out.

All of them involved making market-hedged purchases according to varying degrees of load growth rate (weak to strong), prospective IPP phase-out dates (2020 and 2025), and percentage of renewables required (33% and 40%) in the utility’s power generation mix.

PowerSimm’s analysis showed that the rate of load growth proved a significant factor in future costs. Weak load growth produced COSLN forecasts ranging from 10% to 14% higher through 2033.

The IRP plan concludes that combined effects of phasing out InterMountain too early and termination of its free carbon allowances could drive up electricity costs as much as 1¢/kWh.

“From a strictly economic perspective, it does not currently make sense to try and unilaterally terminate our IPP contract any earlier than necessary.  Rather, we should continue to support a market driven dispatch scheme that recognizes the inherent carbon cost embedded in this energy asset, while planning for a replacement option that can come online just a few years before the IPP contract terminates,” the IRP plan states.

In addition, Riverside officials, with PowerSimm’s help, considered five other non-market-forward alternatives to replace IPP’s lost generation.  Those included: 1) building a new 100 MW GE LMS-100 high-efficiency, simple cycle gas plant; 2) using five 9.3MW Warsila 20V34SG simple cycle internal combustion units stacked together in a 46.5 MW generation facility; 3) purchasing 50W of the 1,000 MW IPP Repower Project; 4) replacing 75MW of IPP coal energy with renewable resources through a new long-term contract; 5) acquiring a near-term 150MW commercial tolling contract, effective January, 2016.

Overall, four of five alternatives presented resulted in higher service costs, and all of them produced greater uncertainty than the market-hedge scenarios.

Read the plan

For more information on Ascend’s PowerSimm Software Suite, contact sales at info@ascendanalytics.com or (303) 415-1400.

Ascend Analytics Establishes New Approach for Determining QF Rates to Protect Ratepayers

/ The Volt / Leave a comment

Ascend Analytics delivers expert testimony on new approaches to develop Qualify Facility (QF) power contract rates that protected the ratepayers’ and utility’s interests.  The QF rates applied a novel new economic construct that followed FERC guidance under the Public Utilities Regulatory Act (PURPA).  During expert testimony, witness Dr. Gary Dorris, substantiated wind energy purchase rates through a Differential Revenue Requirement (DRR) approach using Ascend’s PowerSimm software.  The hourly avoided costs measured through DRR are the QF power contract rates.

The DRR approach differentiated between hours of power imports and exports to determine the hourly avoided cost to serve load.  Under import conditions, the model calculated avoided cost as a function of market price.  During export conditions, avoided costs were a function of the utilities own production cost from a lower cost power plant.  The result of utilizing market interactions to determine the avoided cost of production yielded the a more consistent and lower avoided cost over other approaches.

Recent Ascend Analytics “Best Practices” Course A Rousing Success

/ The Volt / Leave a comment

Have you ever wondered how good Ascend Analytics’ Best Practices In Risk-Based Resource Planning Course is?  The latest round of attendees in San Francisco, California, offered nothing but high praise for the course’s material and its instructor, Ascend CEO Gary Dorris.

“I will be a much smarter regulator because of this course,” said California Public Utilities Commission analyst Alexander Cole; and David Miller, a senior regulatory analyst at CPUC, summed it up as “succinct relevant material expertly delivered.

The course came at just the right time for Ken Wong and his employer, Hawaiian Electric Company, where he serves as senior corporate energy planning engineer.  “We are very pleased with the conference as the time was perfect.  For several years we wanted to move toward incorporating stochastic analysis in our planning work so we could assess the variability of uncertainties we face.  We just didn’t have the software tools,” Wong said.  “We are looking to you to help train us by doing a stochastic analysis of our recent planning effort using your software.”

Redding Electric Utility Selects Ascend Analytics’ PowerSimm Software for Advanced Resource Planning

/ The Volt / Leave a comment

Ascend Analytics is pleased to announce that Redding Electric Utility (REU) has selected Ascend’s PowerSimm energy risk management software to provide its resource planning analysis.  Ascend’s ability to scale PowerSimm to the needs of our clients provides REU the advanced analytics utilized by larger organization, such as AEP and NRG, at a cost that fits the City’s budget.

Ascend Analytics’ PowerSimm software solutions will provide REU’s Resource Planning Group, run by REU Assistant Director Dan Beans, a complete platform for critical energy decision analysis, portfolio management, and long-term planning.  REU will be equipped with the analytic and data infrastructure to support the decision analysis needed to prepare the City for a broad set of Planning uncertainties.

REU’s Planning Group requires a comprehensive analytical framework, PowerSimm gets the details right through accurately representing the physical and financial dynamics of the energy supply markets.  PowerSimm’s output reporting will provide REU the tools to make critical decisions to decrease the uncertainty of the City’s cash flows, improve its energy position analysis, provide insights for detailed asset valuations, and most importantly – the necessary tools to provide reliable, safe, low cost power to the City of Redding.

We believe Barry Tippin, Assistant City Manager and REU Director, stated it best when presenting the decision to the Redding City Council:

“The increasingly complex markets and ever-changing utility industry have increased the need for comprehensive analytics and risk analysis to assist in making informed decisions on long-term resource planning. The proposed software will provide Redding Electric Utility (REU) Resources Division staff the ability to:

  • Evaluate a range of alternative resource strategies and specific new opportunities
  • Support REU’s hedging and risk management activities
  • Provide input to the budget as well as regular reporting to management and operations
  • Analyze proposed legislative and regulatory mandates that may affect existing and new resources

There is a select group of software/modeling companies that can provide the products and services to meet the utility industry’s needs in resource planning.  REU’s Resources Division has actively pursued and evaluated these companies and their software packages.  Through this process, Ascend Analytics distinguished itself with the capability to provide the needed software and support services required to meet REU’s needs.”

Gary Dorris, President and CEO of Ascend, reiterates Barry’s thoughts “Ascend is very pleased that our new “Software as a Service” offering can conveniently deliver to Redding the same quality analytics we provide to America’s top three electric utilities.  Ascend’s PowerSimm software will provide the analytic intelligence and insights necessary to support complex critical decision analysis posed to today’s municipalities.  We look forward to building a long lasting relationship with the City of Redding and providing solutions that will further enable Redding to continue to provide consistently low rates to their customer base.”

Ascend is excited about the REU implementation project ahead.  Ascend looks forward to meeting, and exceeding, the current and future analytic needs of Redding Electric Utility.  For more information on PowerSimm Planner, please contact Ascend Analytics’ Sales at info@ascendanalytics.com or (303) 415-1400.

Ascend Analytics achieves “Best Practices” through Evergreen Economics Report

/ The Volt / Leave a comment

Ascend Analytics is proud to announce that it has achieved “best practices” through an Evergreen Economics Report.  In January 2014, the State of Montana Public Service Commission engaged Evergreen Economics, a third party consulting firm, to assist Commission staff in reviewing analysis conducted by NorthWestern Energy (NWE) and Ascend Analytics in support of NWE’s $900 million bid to acquire 11 hydroelectric generation assets from PPL Montana.  Through a systematic and thorough evaluation of Ascend’s software models and analysis, Evergreen Economics recognized Ascend’s models’ consistency and completeness with industry “best practices.”  It is highly unusual for a third party to give high praise in an evaluation, therefore Ascend is pleased with the outcome of this assessment.  Evergreen’s report further solidifies Ascend as a leader in portfolio management and long-term resource planning.  Ascend continues to stand apart from the competition by offering industry recognized “best practice” models and analysis, which enable power producers to better evaluate their portfolios, assess their risks, and maximize their revenues.

Gary Dorris Called to Provide Expert Testimony on behalf of NorthWestern Energy to the Montana Public Service Commission

/ The Volt / Leave a comment

Gary Dorris to provide expert testimony on behalf of NorthWestern Energy to the Montana Public Service Commission

 

On July 9, 2014, Gary Dorris, the President of Ascend Analytics, delivered expert testimony on behalf of NorthWestern Energy during a hearing held by the Montana Public Service Commission regarding NorthWestern Energy’s bid to purchase $900 million of hydroelectric assets from PPL Montana.  Ascend’s team, and its PowerSimm software, consulted and modeled the acquisition and potential impacts to NorthWestern Energy’s ratepayers.  Ascend Analytics concluded that NorthWestern Energy’s proposed purchase of 11 hydroelectric dams will initially increase rates, but these rates will ultimately become more stable and reliable for consumers according to a longer-term forecast.  Dr. Dorris handled cross examination with great deftness, furthering the economic merit of the hydro asset acquisition.

California PUC Request Ascend Training on Risk Based Resource Planning and Opens Seminar to the Public

/ The Volt / Leave a comment

Ascend Analytics to present Best Practices in Risk Based Resource Planning
October 20-21, 2014

This course builds on the success of Ascend’s new risk based modeling approach for resource planning that has been utilized in regulatory filings in MT and CA.

Dr. Gary Dorris our President at Ascend Analytics, will be presenting at the upcoming EUCI course to speak on the Best Practices in Risk Based Resource Planning.

Dr. Dorris has been a pioneer of innovative solutions for energy planning and risk. Gary has introduced utilities to new solutions to model and analyze planning portfolios. His analytic innovations and expertise are sought by industry leaders including expert testimony in some of the most prominent resource planning and risk management proceedings in the country. His company’s software solutions are used by 3 of the top 5 utilities in America and more COOPs and municipalities.

For more information about this upcoming conference:  Best Practices in Risk Based Resource Planning

Coal Piles as Inventory to Model

/ The Volt / Leave a comment

That pile of coal in the generation yard is more than the sum of its tons.  Two lumps of coal in the same shovel load might present two points on a graph of constantly fluctuating uncertainty.

Coal piles loom as data-dense aggregates of source, grade, contract pricing, spot price, emission qualities, projected dispatch load and storage cost.  But while the complexity in that pile of coal could seem overwhelming, it’s not immeasurable.  Ascend Analytics PowerSimm will take that pile apart lump by lump and reassemble it in a model that gives utility managers a view of supply, cost, emissions, hedge pricing and projected dispatch.  It’s a view they are not going to find anywhere else.

“Nobody else can do this,” says Ascend Energy Analyst Trevor Rehm, explaining that competing software fails to project dispatch price accurately because the programs can’t dissect the coal pile the way PowerSimm does.

“We are able to deliver two different train loads of coal from different places at two different prices, blend the fuels, blend the emissions and price the whole thing optimized to dispatch to maximize profits.” – Trevor Rehm

The competitors’ models also lack Ascend’s sophisticated forward price simulations that include the market’s current liquid forward strip correlated to historical data and calculated volatilities.  Two trainloads would be a simple exercise. The PowerSimm coal inventory module can blend price and emissions grade from as many sources as there are lumps in the coal pile.  That feature offers an unprecedented advantage for portfolio managers who know that coal has cost beyond the spot and contract prices. It costs money to store coal and move coal.  With forward purchase contracts, it even costs money to leave coal in the ground.

At the same time, without an adequate supply in contracts, utility managers are forced to make spot purchases at higher rates.  For optimum profits, the coal pile has to be just the right size and that “just-right” size fluctuates constantly. “That pile is going to grow over time with deliveries and it’s going to shrink at the same time with coal burn,” Trehm points out.  With PowerSimm, portfolio managers can match the height of the pile to the depth of the demand: a pair of synchronized curves on a color-coded graph with spot market purchases ideally relegated to a sliver in the portfolio. PowerSimm simulations allow users to see that dynamic relationship and run additional simulations for changing market conditions.

Getting the size of their coal piles just right is why utilities like Tucson Electric Power are buying PowerSimm.  Where competing software products run on deterministic analysis, Ascend Analytics offer precise projections using state space modeling.  The effect is dramatic, especially now, with natural gas prices at portfolio rattling lows.  Coal plants that may have been running off peak while gas-fired generators sat idle, are now kept off line with utilities relying on lower-emission natural gas for bigger chunks of the day.  As a result, coal piles in the East and Southeast grow ominously high with costs climbing to match.  New PowerSimm features in development will warn portfolio managers long before that happens, indicating a cost penalty when forward-purchase contracts rise above an optimum threshold.  PowerSimm’s more accurate simulations coupled with the exclusive ability to view a coal pile in all its intricacy provide a competitive advantage to portfolio managers who can use hedge pricing to optimize contract purchases and see the risk exposure on the spot market.  Viewed from the loading yard, it may look like a great mass of black and soot, but PowerSimm users see the coal pile more accurately: as a set of numbers.  Competing software product might see tons.  What they see beyond that can’t match the accuracy of Ascend products.  “They don’t model the coal pile,” Rehm says.  “Or even how it became a coal pile.”  PowerSimm, Rehm says, sees the pile in all its intricacy, from the mine to the fire box, and every step in between.

Accounting for Customer Attrition

/ The Volt / Leave a comment

Electricity customers buy on price and customer services, switching suppliers as a direct function of competiveness of price.

Despite the fact that the Retail Energy Supply Association claims that only 50 percent of residential consumers know they have a choice in where they buy their power, customer loyalty has been a relatively negligible factor.

Knowing that, customer attrition is an almost inevitable blotch in a power retailer’s profit/loss statement but planning for that attrition, with proper hedging and risk assessment, can determine the color of that blotch.  Not enough customers, combined with long contracts on power, turns that blotch dark red.  Setting the right rate and buying forward contracts for the right load quantity can keep the books in the black: the kind of outcome Ascend Analytics software users have come to expect.

Planning against customer attrition isn’t easy.  Guessing on the wrong assumptions with an unsophisticated deterministic model sets utility retailers on a high-risk trajectory.  With Ascend’s PowerSimm state-space modeling simulations, retailers gain a confident outlook of not only the expected impact of customer attrition on revenues, but also a clear idea of the uncertainty surrounding this revenue impact.  Using this information, a retailer can keep risks to a minimum.  “You know how much to contract for,” explains Ascend analyst Scott Nelson.  “You know how to hedge your loads properly.”

Ascend Analytics products operate at the state-of-the-art edge of statistical modeling.  With PowerSimm, retailers input their own predicted customer attrition curves.  These curves are then combined with the load and price simulations rigorously benchmarked to capture the key structural weather-load-price relationships and aligned to the current market outlook.  Within each simulation path, the incumbent rate is compared to the market price, and based on that differential, a percentage of the contracted load will likely leave.  The value of PowerSimm is in the precise quantification of the uncertainty surrounding this revenue impact.  Software that generates simulations using deterministic modeling can’t quantify the uncertainty of this revenue risk, since deterministic models fail to capture the uncertainty in volumetric risk, price risk and the correlations between the two.

Retailers often find themselves in a situation where a competitor can make a strategic decision to lower rates.  The shoppers might walk out of the store.  “All that revenue is basically at risk due to attrition,” Nelson notes.  Retailers cannot predict every competitor’s move but a robust simulation of market price can help anticipate the likelihood of such rate changes, allowing retail managers to plan accordingly.  “You might want to look into basically setting up some kind of hedge to mitigate that risk,” Nelson adds.  “You can’t actually model very effectively what rate a competitor is going to put together but you can say ‘this is where the market is and this is where it’s going.’”  If a retailer has an idea of where wholesale power prices are headed, that manager may be able to set a rate that slows or eliminates customer attrition.

So while customer attrition may be inevitable, the uncertainty around its impact can be calculated.  PowerSimm does that accurately, and automatically.  The customers might still walk out the door.  But when their departure is accounted for in Ascend’s PowerSimm, they won’t take the profits with them.

Plug-In Hybrids and Plugged-in Headaches

/ The Volt / Leave a comment

With estimates of new electric vehicles and plug-in hybrids climbing in every research report, you can already hear politicians boasting about “electric highways” with charging stations sprouting out of the ground outside every Starbucks.

But the truth is most EV owners are going to charge up at home and how long and when they charge will ripple across the power industry, affecting everybody from early adopters accessing “smart house” applications with their iPhones to coal miners shaking the dust out of their boots.  Ascend Analytics’s PowerSimm and Curve Developer programs can help portfolio managers keep that ripple from splashing over their profits.  Modeling for load, regulations and fuel prices, Ascend products factor risk and uncertainty into decision analysis.  Electric vehicles owners promise plenty of both.

A report released in July by the Electric Power Research Institute placed their mid-range prediction at 35 million electric vehicles on the road by 2030 and pegged the annual power consumption for those cars at 80 terawatt hours.

EPRI’s more optimistic estimate brought the number of EVs on the road up to 65 million, more than doubling the electricity demand.

At either number, the impact could be dramatic when residential customers start plugging their cars into high-amp chargers all timed to click on at 9 p.m. spiking the load on a system tuned to off-peak evening hours (a study released in September noted that 89 percent of customers intend to charge their cars at home).  Businesses running fleets of EVs and plug-in hybrids could be switching their chargers to “on” at entirely different times.

Utility managers know that off-peak and on-peak load can be served by different mixes of generation assets and they know that mix will shift constantly over time with fuel prices, regulation costs, transmission upgrades and new renewables coming on line.  Ascend Analytics products can handle all of that with precision, tallying uncertainty and optimizing financial performance.

With simulations for load, spot market fuel costs, renewables, forward option volatility, weather and regulation modeled in short-term and long-range runs, utility executives can optimize their portfolio to meet the potential growth in off-peak demand.  PowerSimm models load by the hour and into the years, with portfolio managers able to look at dispatch scenarios constrained to meet a user-selected set of inputs.  PowerSimm also models renewables by site so a manager might know that the night wind picks up at a particular wind farm just in time to charge a factory fleet of plug-in hybrids.

That kind of data granularity will be indispensable to utilities and retailers customizing rate plans for homes equipped with smart meters and vehicle charging stations or business fleets drawing power under demand resource contracts.

Nobody is predicting electric vehicles will replace internal combustion autos tomorrow, but with Ascend Analytics software, portfolio managers can be ready for those changes today.