Board of Directors Regular Meeting · 2019-09-19 · Board of Directors Regular Meeting . 2000 E. Horsetooth Road, Fort Collins, CO 80525 . Thursday, September 26, 2019, 9:00 a.m

Board of Directors Regular Meeting

2000 E. Horsetooth Road, Fort Collins, CO 80525 Thursday, September 26, 2019, 9:00 a.m.

Call to order

1) Consent agenda Motion to approve a. Minutes of the regular meeting of August 29, 2019

Public comment Committee reports

2) Retirement committee report Board action items

3) Board appointment resolution Resolution 07-19 Management presentations

4) Mission, Vision and Values 5) 2020 rate tariff schedules - draft 6) Efficiency Works and DER strategy 7) 2020 proposed strategic budget work session

Management reports

8) Electric vehicle charging pilot 9) Staffing update

Monthly informational reports

10) Legal, environmental and compliance report 11) August 2019 operating report 12) August 2019 financial report 13) August general management report

Strategic discussions Adjournment

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Updated September 16, 2019

2019 BOARD MEETING PLANNING CALENDAR

October 31, 2019 Board action

items Management presentations

Management reports

Monthly informational

reports

2019 BKD audit plan 2020 Proposed strategic budget update – public hearing

Workforce updates Legal, environmental and compliance report

2020 Rate tariffs HQ campus September 2019 operating report

EV charging pilot September 2019 financial report

General management report

November, 2019 Retirement committee meeting

No board of directors meeting

December 5, 2019

Board action items

Management presentations

Management reports

Monthly informational

reports

Retirement committee report

2020 Annual budget update and review

Legal, environmental and compliance report

2020 Annual budget adoption

HQ campus October 2019 operating report (November 2019 report, if available)

2019 Board contingency appropriation transfer – capital additions (if required)

Workforce updates October 2019 financial report (November 2019, if available)

2020 Proposed board of directors regular meeting schedule

General management report

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Updated September 16, 2019

Topics to be scheduled:

• Debt financing update • Safety program review

* This calendar is for planning purposes only and may change at management’s discretion *

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2019 BOARD OF DIRECTORS

Owner communities Term expiration

Town of Estes Park P.O. Box 1200, Estes Park, Colorado 80517 Mayor Todd Jirsa—Chairman, Board of Directors April 2020 Reuben Bergsten December 2019

City of Fort Collins P.O. Box 580, Fort Collins, Colorado 80522 Mayor Wade Troxell—Vice Chair, Board of Directors April 2021 Ross Cunniff December 2020

City of Longmont 350 Kimbark Street, Longmont, Colorado 80501 Mayor Brian Bagley November 2019 David Hornbacher December 2022

City of Loveland 500 East Third Street, Suite 330, Loveland, Colorado 80537 Mayor Jacki Marsh November 2019 Joseph Bernosky December 2021

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Regular Meeting Minutes of the Board of Directors

2000 E. Horsetooth Road, Fort Collins, CO Thursday, August 29, 2019

ATTENDANCE Board members Representing Estes Park: Mayor Todd Jirsa and Reuben Bergsten1 Representing Fort Collins: Mayor Wade Troxell Representing Longmont: Mayor Brian Bagley and David Hornbacher Representing Loveland: Mayor Jacki Marsh and Joe Bernosky Absent Ross Cunniff Platte River staff Jason Frisbie (General Manager/CEO) Sarah Leonard (General Counsel) Dave Smalley (Chief Financial Officer and Deputy GM) Andy Butcher (Chief Operating Officer) Alyssa Clemsen Roberts (Chief Strategy Officer) Angela Walsh (Executive Assistant/Board Secretary) Steve Roalstad (Communications and Marketing Manager) Wade Hancock (Financial Planning and Rates Manager) Pat Connors (Vice President of Power Supply) Paul Davis (Energy Solutions Manager) Shelley Nywall (Director of Finance) Jeff Menard (HQ Campus Project Manager) Craig Johnson (Senior Deputy General Counsel) Heather Banks (Fuels and Water Manager) Masood Ahmad (Resource Planning Manager) Guests Tim McCollough (City of Fort Collins) Will Welch (Wm T. Welch Company) Kevin Jones (Fort Collins Chamber of Commerce) Marsha Marten (City of Longmont) Dave Mills (Loveland resident) Jane Cleavenger (Loveland resident) Karen Speed (Windsor resident) Charles Wescher (juwi) Ken Reggelson (Boulder resident)

1 Attended via Skype

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Regular board meeting minutes: August 29, 2019

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CALL TO ORDER Chairman Jirsa called the meeting to order at 9:02 a.m. A quorum of board members was present and the meeting, having been duly convened, proceeded with the business on the agenda. Pat Connors, vice president of power supply, introduced the new Resource Planning Manager, Masood Ahmad. ACTION ITEMS (1) Consent agenda

a. Approval of the regular meeting minutes of July 25, 2019

Director Bagley moved to approve the consent agenda as presented. Director Troxell seconded, and the motion carried 7-0. PUBLIC COMMENT Jane Cleavenger, Loveland resident, inquired about the seismic testing mentioned on page 97 in the legal report. Andy Butcher, chief operating officer, clarified that a third party completed the seismic testing on the site. Director Marsh asked if it would be a board decision on whether drilling would take place or not. Jason Frisbie, general manager and CEO responded that it wouldn’t be correct because Platte River doesn’t own all the mineral rights and Platte River would say no to drilling Platte River’s mineral rights, however, can’t stop other mineral rights owners from drilling. Discussion ensued among directors and staff regarding mineral rights and follow up items. Dave Mills, Loveland resident, asked about wind and solar generation. Director Troxell addressed the public comment regarding generation diversification within our communities. Karen Speed, Windsor resident, regarding oil extraction from Rawhide. Mr. Frisbie assured the board that Platte River Power Authority is not actively pursuing any oil or gas production with the mineral rights Platte River owns and noted that legal staff is working hard to prohibit access onto the Rawhide property however, there is no control over the mineral rights that Platte River does not own. Director Troxell noted a City of Fort Collins annexation north of Fort Collins. MANAGEMENT PRESENTATIONS (2) Board appointment resolution draft (presenter: Craig Johnson) Craig Johnson, senior deputy general counsel, recapped the board discussions at the last two board meetings and previewed the resolution draft reflecting the feedback received from the July meeting whitepaper discussion. Director Marsh commented on the desired skills supporting the three pillars. Mr. Frisbie noted that the skills should reflect the mission, vision and value statements as well. Mr. Johnson noted that the pillars are in the last whereas clause within the resolution. Director Bernosky complimented staff on the document and supports moving forward

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with the resolution. Director Troxell asked how the resolution addresses the four Mayors. Discussion ensued among directors and staff regarding the language within the Organic Contract that addresses the responsibilities for each appointed Mayor or Mayor appointed designee. Director Bergsten requested stronger language for having one elected official and one staffer with a goal of having political and industry representation. Director Bagley requested adding a preference for a utility director, a staffer in a similar capacity within the owner municipality, and if that person isn’t appointed, a person with the following qualifications would be considered. Director Bergsten followed up with the importance of a utility director on the board to help engage the Mayor and municipal staff. Director Troxell agreed with adding the default and agrees that the resolution provides clarity to the process. Director Bagley commented on eight elected directors would not be productive. Mr. Frisbie thanked the board for their feedback and participation. (3) HQ campus and Energy Engagement Center (presenter: Jeff Menard) Jeff Menard, HQ campus project manager, provided the current status of the HQ campus construction progress and a preview of the Energy Engagement Center with a timeline for construction and slated completion in late 2020. Director Troxell complimented staff on the planning for the Energy Engagement Center. Chair Jirsa asked about having a ribbon cutting date planned. Alyssa Clemsen Roberts, chief strategy officer, noted that staff is working with the Fort Collins Chamber of Commerce for a date in early January. (4) IRP update (presenter: Pat Connors)

Pat Connors, vice president of power supply, provided the current status of the integrated resource planning (IRP) process, outlined the supporting studies and modeling, and previewed the next round of community listening sessions. Director Marsh inquired about if the thermal study included geo thermal. Mr. Connors responded that the study was directed towards thermal generation like gas and coal and the focus was on future resource costs. Director Troxell asked where energy storage and distribution are being studied, discussed traditional vs active demand side management and adding carrier energy strategies. The listening session schedules have been posted to the website. MANAGEMENT REPORTS (5) 2020 Rate tariff schedules – draft (presenter: Wade Hancock)

Wade Hancock, financial planning and rates manager, provided an overview of the 2020 rate tariff schedule draft document and requested board feedback. A presentation will be provided at the September meeting and staff will seek approval following the presentation. Mr. Hancock discussed the Platte River Public Utilities Regulatory Policies Act (PURPA) policy included within the board packet. Mr. Frisbie added that Platte River staff has worked with the utility directors and the city staffs

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for implementing the new rate structures, noted that the four communities will continue to take the pro-rata share through 2020 of Tariff 7 and discussed the plan for the test energy coming from the Roundhouse wind project when it starts online mid-2020. (6) DER strategy update (presenter: Alyssa Clemsen Roberts)

Ms. Clemsen Roberts discussed the document included in the board packet and the work with city staffs to set up a strategy committee, develop a request for proposals (RFP) to hire a consultant to help align the four owner communities and Platte River to be a more integrated utility. More information will be presented at the September board meeting. Mr. Frisbie added that the distributed energy resources (DER) strategy committee will take at least two years with lots of work to determine how to integrate the whole system together and requested board support throughout the process. Director Bergsten added that support is needed from each municipalities’ support staff as well. Discussion ensued among directors and staff regarding support for the DER strategy, the committee and community engagement. (7) CSU economic impact study (presenter: Pat Connors)

Mr. Connors introduced the Colorado State University (CSU) economic impact study and noted the report covers a full range of rate impacts but in no way indicates where Platte River is heading. Mr. Connors offered to the board if they have questions regarding the study, CSU is willing to come present to the board in the future. Break: 10:07-10:20 MONTHLY INFORMATIONAL REPORTS (8) Legal, environmental and compliance report (presenter: Sarah Leonard) Sarah Leonard, general counsel, highlighted a few topics mentioned within the report including the Cloud Peak bankruptcy sale transaction and offered to take any questions the board may have. Director Marsh asked when the coal contract with Cloud Peak expires. Heather Banks, fuels and water manager, responded that the Rawhide coal contract expires in December of 2022 and mentioned that the owners have changed a few times over the course of Rawhide’s coal contracts and has had no issues and there’s time to develop relationships for the next coal contract. Mr. Frisbie added that contract negotiations are standard with index pricing, the gain in creating a relationship is when one-off requests are needed. Ms. Leonard added her appreciation toward staff, senior leadership team and the board for her welcome onboard and is enjoying the opportunity here at Platte River. (9) July operating report (presenter: Andy Butcher)

Mr. Butcher highlighted the operating results for the month of July including greater wind production and high surplus sales. (10) July financial report (presenter: Dave Smalley) Mr. Smalley highlighted the financial results for the month of July reflecting increased peaking

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unit sales and year to date show revenues are slightly under budget and expenditures are under budget. (11) General management report (presenter: Jason Frisbie) Mr. Frisbie thanked David Hornbacher for taking the time to attend the board orientation held August 28 and thanked the staff for their preparation to welcome each new board member to Platte River. Mr. Frisbie highlighted a few updates mentioned within the general management report including the key meetings staff has attended within owner communities over the past month. Ms. Clemsen Roberts handed out a press release highlighting the award Rawhide Unit 1 received for the coal combustion residuals (CCR) project by Engineering New Record as the best industrial project in the region. She also noted Mr. Frisbie presenting at a legislative committee chaired by Senator Foot and Representative Chris Hansen. Roundtable and strategic discussion topics Board members shared the latest news from the owner communities and discussion topics for future meetings. ADJOURNMENT With no further business, the meeting adjourned at 10:49 a.m. The next regular board meeting is scheduled for Thursday, September 26, at 9:00 a.m. at the Platte River Power Authority, 2000 E. Horsetooth Road, Fort Collins, Colorado. AS WITNESS, I have executed my name as Secretary and have affixed the corporate seal of the Platte River Power Authority this day of , 2019.

Secretary

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Memorandum

Date: 9/18/2019 To: Board of Directors From: Jason Frisbie, general manager and CEO Subject: Retirement committee report

The retirement committee held its quarterly meeting on August 29, 2019. The minutes of that meeting are included in the board packet.

At the board meeting, the committee chair, Joe Bernosky, will provide a summary of the August retirement committee meeting. No action of the board will be required.

Attachment

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Meeting Minutes of the Defined Benefit Plan Committee 2000 East Horsetooth Road, Fort Collins, Colorado

Thursday, August 29, 2019

ATTENDANCE Committee members Joseph J. Bernosky (chair) Jason Frisbie (plan administrator) Brian Bagley Todd Jirsa Dave Smalley Absent: Ross Cunniff Platte River staff Libby Clark (director of human resources and safety) Julie Depperman (director of treasury services) Kerry Fields (manager of internal audit) Caroline Schmiedt (deputy general counsel) Tracy Thompson (executive administrative assistant)

Guests Wade Troxell (Mayor of Fort Collins)1 Wendy Dominguez2, Peter Mustian and Gordon Tewell of Innovest Portfolio Solutions, LLC (“Innovest”)3 Jason Palmer, Jessica Hart, Daniel Phillips and Tim Stegner of Northern Trust Asset Management (“Northern Trust”)4 CALL TO ORDER The meeting was called to order at 12:28 p.m. A quorum was present and the meeting, having been duly convened, was ready to proceed with business. Because Wendy Dominguez would arrive late to the meeting, the committee agreed to switch the order of the agenda items education: hedging strategies and second quarter investment performance.

1 Excused himself at 12:52 p.m. after the education: hedging strategies portion of the meeting. 2 Arrived at 12:41. 3 Dismissed from the meeting at 1:14 p.m. prior to the request for proposals (RFP) for investment consulting services portion of the meeting. 4 Arrived at 1:38 p.m. during the request for proposals (RFP) for investment consulting services portion of the meeting; dismissed at 2:33 p.m. prior to the committee direction to staff on next steps for investment consulting services portion of the meeting.

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Defined benefit plan committee meeting minutes: August 29, 2019

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ACTION ITEMS (1) Review minutes of May 30, 2019, meeting. Chair Bernosky asked for a motion to approve the minutes from the May 30, 2019, meeting. Mr. Jirsa moved to approve the minutes as submitted. Mr. Bagley seconded, and the motion carried 5-0. (2) Education: hedging strategies. Gordon Tewell of Innovest provided education on hedging strategies. Innovest explained low correlated hedge funds, reviewed types of hedge fund strategies, and presented the advantages and disadvantages of the asset class. In addition to low correlation with other asset classes, advantages include lower volatility than global equities, as well as downside risk mitigation. Disadvantages include high management and performance fees, illiquidity and leverage. Innovest reviewed the plan’s hedge fund of funds, Blackstone Partners (Blackstone), and provided an overview of the firm, fund composition and strategy, investment process, and performance. Additionally, Innovest noted that the fees are favorable as Blackstone achieves low cost access to strong managers through their key partnerships. Blackstone has consistently outperformed the index while achieving a lower standard deviation. (3) Second quarter investment performance. Wendy Dominguez and Peter Mustian provided an overview of the market environment and reviewed the second quarter performance, highlighting the plan’s performance relative to its benchmarks (included in the meeting materials). As of June 30, 2019, plan assets totaled $105.3 million compared to $104.0 million on March 31, 2019. For the quarter, the portfolio gained 1.8%, below the Custom Index benchmark which gained 2%. The portfolio allocation as of June 30, 2019, was 20% U.S. equities, 15% non-U.S. equities, 8% fixed income, 7% floating rate corporate loans, 3% commodities, 15% real estate, 15% hedge fund-of-funds, 7% MLPs, 4% reinsurance, 5% private equity, and 1% money market accounts. For the quarter, the portfolio increased $1.3 million, which includes an investment gain of $1.9 million and outflows of $0.6 million consisting of payments to retirees partially offset by contributions. Innovest reviewed the manager scorecard on page 19 of the portfolio review booklet. Both Aberdeen and Credit Suisse have been downgraded to minor concerns due to decreases in asset base. Innovest estimated a decrease of 20% for Aberdeen primarily due to investors’ expectations of tariffs negatively impacting emerging markets. Credit Suisse has experienced outflows because commodities have been lagging equity markets. For both funds, Innovest stated the asset bases are still sizable. Eaton Vance remains a minor concern due to a portfolio manager change in March. However, Innovest believes the team remains strong. Tortoise remains a minor concern due to consolidation in the MLP industry. However, Innovest believes the asset class is still an appropriate investment for the plan as it provides good yield, strong performance, and is an inflation hedge. Lastly, Stone Ridge remains a minor concern due to poor performance leading to redemptions by some investors. However, Innovest still supports Stone Ridge as a long-term strategy due to the diversification it provides as well as the strong performance of the reinsurance industry overall. Additionally, Innovest explained that premiums are increasing anywhere from 5% to

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25% which is expected to have a positive impact on Stone Ridge’s future return. Lastly, Stone Ridge is able to control outflows through an imposed 5% redemption gate. Innovest and the committee discussed the gate in more detail. Of the funds highlighted in the manager scorecard review, three are on the watchlist: Eaton Vance and Stone Ridge remain on the watchlist, and Credit Suisse is new to the watchlist. Overall, Innovest is not concerned at this time and does not recommend any changes to the plan’s portfolio but will continue to monitor the funds. Innovest reviewed the table of returns beginning on page 21 of the portfolio review booklet which details the funds’ performance relative to their indices and peer groups. Innovest reviewed the performance of several funds and noted trends for the quarter. For the quarter, every fund except for one has outperformed the peer group median. While DFA has not, Innovest explained this is due to the allocation to international small cap stocks which have not been favorable in the recent market environment. Innovest provided a handout to supplement the table of returns which shows that the portfolio’s asset allocation is adding value in comparison to the risk equivalent benchmark developed by Innovest. Although the plan has underperformed in the short-term, it has outperformed in the long-term which attests to the plan’s diversification and asset strategy. Mr. Smalley asked if the benchmark has been adjusted to account for changes to the plan’s asset allocation over time. Innovest confirmed yes, the returns are linked for historical analysis. (4) Request for proposals (RFP) for investment consulting services. Julie Depperman provided an overview of the RFP process. The committee authorized staff to proceed with the RFP at the May meeting and the RFP was released on June 6 with 13 proposals received. The proposals demonstrated a broad spectrum of approaches including both traditional non-discretionary services and full discretionary outsourced chief investment officer (OCIO) services. Ms. Depperman provided more information and reviewed the key aspects under a discretionary OCIO approach. Based on the rating criteria discussed at the May meeting, staff ranked the proposals and interviewed the top six firms on August 6 and 7. Staff recommends that the committee interview and consider hiring Northern Trust to provide discretionary OCIO services. The recommendation is based on the firm’s strong A+ rating, experienced consulting team, low combined fees (lowest of all proposals), multi-asset class solution, and emphasis on downside risk protection while meeting or exceeding benchmarks. Compared to the current consultant, Northern Trust achieves comparable returns and additional liquidity without high fees and complexities of alternative funds such as hedge funds, reinsurance and MLPs. Staff believes a discretionary OCIO approach will be greatly beneficial to the plan and the committee as it is an effective and efficient model for implementing tactical allocation. It would enable the committee to focus on key decisions such as strategy, asset allocation, and defining constraints in the investment policy statement, while the consultant, acting as a co-fiduciary, focuses on portfolio implementation, investment selections, monitoring, reporting and rebalancing. Ms. Depperman discussed agility as another benefit of the discretionary OCIO approach. Through the traditional discretionary method, Platte River has experienced slow exit of funds which has negatively impacted the plan. For example, the committee decided to exit PIMCO Total Return and Systematic SMID Cap fund when the managers left the funds. Following the traditional discretionary method, it took months to exit the funds which caused greater losses.

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The discretionary OCIO approach would have allowed the committee to complete a much quicker change with the funds being exited and replaced within a matter of days. Chair Bernosky agreed with the importance of being able to change funds quickly. However, Mr. Bagley proposed the possibility of exiting too quickly when a fund could eventually rebound or recover from a period of losses. He asked about the controls for preventing premature or impulsive decisions. Staff explained that all decisions and changes must be within the bounds of the Investment Policy Statement (IPS) which places limitations on portfolio changes. Chair Bernosky expanded that a change would be in response to a specific fund underperforming or undergoing a change which is expected to have a negative impact, not in response to an overall market trend. Ms. Depperman differentiated between market timing and the discretionary OCIO approach; the discretionary OCIO approach allows for small tactical shifts once a dislocation in the market has been identified. Mr. Frisbie explained how the discretionary OCIO approach would allow the committee to focus at the policy level, which aligns with how the board of directors now operates. Mr. Frisbie noted the success and sustainability of this concept, noting that it provides an enhanced governance structure. Additionally, the committee has consistently supported the consultant’s recommendations in the past, however it takes a series of meetings and several months to enact the recommendation. The committee agreed the discretionary OCIO approach is appropriate and would benefit the plan as well as the committee’s operations. After the RFP and OCIO overview and discussion, Northern Trust joined the meeting. Following introductions, Northern Trust presented their qualifications to the committee for providing investment consulting services (Northern Trust’s presentation is included in the retirement committee materials and a handout was also provided). Northern Trust presented information including their firm’s qualifications, how their firm adds value, a proposed portfolio, an abbreviated quarterly report, and a summary of why Platte River should hire them. In addition, Northern Trust provided more information on the discretionary OCIO model. Discussion ensued. Chair Bernosky asked how often Northern Trust’s clients revert to a traditional non-discretionary approach after changing to the discretionary OCIO model. Northern Trust confirmed that once a plan sponsor changes to OCIO, they continue using the model due to the benefits experienced. After interviewing with staff and further understanding the needs of the plan, Northern Trust was able to offer a lower total fee than initially proposed. Northern Trust confirmed a typo on page 50 of their presentation; the total fee is 49 basis points. Mr. Bagley asked for more clarification on the quoted fees. While the consultant fee is comparably higher than Innovest’s, savings are achieved in other areas resulting in a significantly lower total fee than any of the other proposals Platte River received. Mr. Bagley asked if the investment return target of 7.5% is appropriate compared to the S&P 500 historical return of 8%. Mr. Smalley clarified that the 7.5% target has been established by the committee through the IPS. Northern Trust further explained that the target is based on forward-looking returns not just historical. Northern Trust anticipates a slower growth market environment and accounts for withdrawals and obligations which must be managed appropriately. Mr. Bernosky asked if the relationship with the current actuary would be maintained if the committee selects Northern Trust. Northern Trust responded they have significant experience working with Towers Watson and the relationship would be maintained; additionally, Northern Trust employs internal actuaries to assist as needed.

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Mr. Smalley asked if Northern Trust would support and manage the process for withdrawing from the reinsurance fund, which enforces a withdrawal gate. Northern Trust responded that yes, they would manage and optimize the process while building around the fund. Ms. Depperman asked if Northern Trust would act as fiduciary over the fund even though it is not a Northern Trust vehicle. Northern Trust confirmed they would act as fiduciary in all regards, including with respect to the reinsurance fund in question. Once the discussion ended and the committee was finished asking questions, Northern Trust was excused from the meeting. (5) Committee direction to staff on next steps for investment consulting services. The committee members expressed that they are impressed by the firm’s qualifications, experience, and proposed asset allocation, as well as their interaction with the committee. The committee asked Platte River staff if there has been any change or improvement in Innovest’s services and interactions since the RFP was initiated. Staff confirmed they have not observed any change or improvement. In addition, during interviews Innovest expressed that they do not have any recommended changes or process improvements. The committee and staff agreed that Northern Trust will better meet the needs of Platte River and the plan. Mr. Jirsa moved to direct staff to negotiate an agreement for investment consulting services with Northern Trust in a form acceptable to the general counsel, and to enter into that agreement effective November 1, 2019, after terminating the current consulting services agreement with Innovest in accordance with its terms. Mr. Bagley seconded, and the motion carried 5-0. (6) Other business. Mr. Frisbie recognized and commended Ms. Depperman for her work on the investment consulting services RFP. The next regular committee meeting is scheduled for November 15, 2019, at 1:00 p.m. in the Platte River Power Authority board room. The meeting adjourned at 2:45 p.m. Chair Joseph J. Bernosky

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Memorandum

Date: 9/18/2019 To: Board of Directors From: Jason Frisbie, general manager and CEO

Sarah Leonard, general counsel Craig Johnson, senior deputy general counsel

Subject: Board appointment resolution

At the August board meeting, staff received comments regarding the draft resolution to provide guidance to the governing bodies of the owner communities concerning the qualifications that should be considered for future board appointments. Those comments have been incorporated in the revised draft resolution included in the board packet. Staff will provide an overview of the substance of the most recent revisions, and, if the board is comfortable with the revised language, ask the board to formally adopt the resolution.

Attachments

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RESOLUTION NO. __-19

WHEREAS, pursuant to the Organic Contract, Platte River Power Authority (the

“Authority”) is governed by a board of directors (“Board”) consisting of representatives from its

four owner communities; and

WHEREAS, the original Organic Contract, dated June 17, 1975, provided for a four-

member board of directors appointed by the owner communities, but did not specify any

qualifications for the directors; however, the initial Board consisted primarily of the utility

directors of the owner communities; and

WHEREAS, in November 1976, the Organic Contract was amended to expand the

Board to eight members, including the mayors of each of the owner communities serving “ex

officio” and four additional members appointed by the governing bodies of the owner

communities, who “shall be selected for judgment, experience and expertise which makes them

particularly qualified to serve as the Director of an electric utility,” which evidenced an intent to

have a balance of political representation (reflecting the intent of the owner communities and

their ratepayers) and technical expertise in utilities matters on the Board; and

WHEREAS, in 2019, the Organic Contract was further amended to provide that the

appointed directors “shall be selected for judgment, experience, and expertise which makes

them qualified to serve on the Board of Directors of the Authority”; and

WHEREAS, although the 2019 amendment removed the requirement that an appointed

Board member be qualified to serve as “the Director of an electric utility,” it did not vitiate the

long-standing policy that there should be a balance of political representation and technical

expertise on the Board; and

WHEREAS, although the function of the Board is primarily establishing strategic policy

for the Authority rather than technical direction, in establishing policy the Board will confront a

myriad of issues for which technical and business expertise will be required, including

integration of renewable and carbon-free generation resources, integration of electric systems,

financing of major capital projects and participation in organized energy markets; and

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WHEREAS, the Board has determined that, in order to enhance the quality of decision

making, it is beneficial to have representation on the Board that not only reflects the diverse

interests of the Authority’s owner communities, but also has experience and expertise in

relevant fields; and

WHEREAS, it is vital that those entrusted to serve as Board members be committed to

maintaining the Authority’s three pillars of providing reliable, environmentally responsible and

financially sustainable electricity and services and adhere to policies previously adopted by the

Board, including those pertaining to Board governance;

NOW, THEREFORE, BE IT RESOLVED by the board of directors of Platte River Power

Authority that the following should be communicated to the governing bodies of the Authority’s

owner communities:

In appointing a member to the Board of the Authority (other than the mayor, who sits on

the Board ex officio), preference should be given to utility directors of the owner communities or

other municipal employees with similar duties and responsibilities. If the governing body elects

to consider other candidates, the governing bodies should consider the following qualifications:

1) The candidate’s experience in and knowledge of the industry in which the Authority

operates;

2) Any previous experience the candidate has as a director or in management of an

organization similar to the Authority or with a municipal entity;

3) The extent to which the candidate shares the mission, vision and values of the Authority;

and

4) Any technical or professional skills and knowledge possessed by the candidate to assist

with ongoing aspects of the Board’s role. AS WITNESS, I have executed my name as Secretary and have affixed the corporate seal of the Platte River Power Authority this day of , 2019. Secretary

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RESOLUTION NO. __-19

WHEREAS, pursuant to the Organic Contract, Platte River Power Authority (the

“Authority”) is governed by a board of directors (“Board”) consisting of representatives from its

four owner communities; and the governing bodies of the owner communities appoint four

members to the board of directors (Board) of the Platte River Power Authority (the “Authority”);

and

WHEREAS, the original Organic Contract, dated June 17, 1975, provided for a four-

member board of directors did not specify any qualifications for the directorsappointed by the

owner communities, but did not specify any qualifications for the directors; however, althoughthe

initial Board consisted primarily of the utility directors of the owner communities; and

WHEREAS, in November 1976, the Organic Contract was amended to expand the

Board to eight members, including the mayors of each of the owner communities serving “ex

officio” and four additional members appointed by the governing bodies of the owner

communities, who “shall be selected for judgment, experience and expertise which makes them

particularly qualified to serve as the Director of an electric utility,”; and

WHEREAS, the inclusion of language in the Organic Contract indicating that appointed

Board members shall be “qualified to serve as the Director of an electric utility” which evidenced

an intent to have a balance of political representation (reflecting the intent of the owner

communities and their ratepayers) and technical expertise in utilities matters on the Board; and

WHEREAS, in 2019, the Organic Contract was further amended to provide that the

appointed directors “shall be selected for judgment, experience, and expertise which makes

them qualified to serve on the Board of Directors of the Authority”; and

WHEREAS, although the 2019 amendment removed the requirement that an appointed

Board member be qualified to serve as “the Director of an electric utility,” it did not vitiate the

long-standing policy that there should be a balance of political representation and technical

expertise on the Board; and

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WHEREAS, although the function of the Board is primarily establishing strategic policy

for the Authority rather than technical direction, in establishing policy the Board will confront a

myriad of issues for which technical and business expertise will be required, including

integration of renewable and carbon-free generation resources, integration of electric systems,

financing of major capital projects and participation in organized energy markets; and

WHEREAS, the Board has determined that, in order to enhance the quality of decision

making, it is beneficial to have representation on the Board that not only reflects the diverse

interests of the Authority’s owner communities, but also has experience and expertise in

relevant fields; and

WHEREAS, it is vital that those entrusted to serve as Board members be committed to

maintaining the Authority’s three pillars of providing reliable, environmentally responsible and

financially sustainable electricity and services and adhere to policies previously adopted by the

Board, including those pertaining to Board governance;

NOW, THEREFORE, BE IT RESOLVED by the board of directors of Platte River Power

Authority that the following it should be communicated to the governing bodies of the Authority’s

owner communities:

that, inIn appointing a member to thedetermining what experience and expertise makes

a candidate “qualified to serve on the Board of Directors of the Authority (other than the mayor,

who sits on the Board ex officio),” preference should be given to utility directors of the owner

communities or other municipal employees with similar duties and responsibilities. If the

governing body elects to consider other candidates, the governing bodies should consider the

following qualifications:

1) The candidate’s experience in and knowledge of the industry in which the Authority

operates;

2) Any previous experience the candidate has as a director or in management of an

organization similar to the Authority or with a municipal entity;

3) The extent to which the candidate shares the mission, vision and values of the Authority;

and

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4) Any technical or professional skills and knowledge possessed by the candidate to assist

with ongoing aspects of the Board’s role.

AS WITNESS, I have executed my name as Secretary and have affixed the corporate seal of the Platte River Power Authority this day of , 2019. Secretary

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Memorandum


Alyssa Clemsen Roberts, chief strategy officer Subject: Mission, Vision and Values

In public and stakeholder communications, Platte River leadership has consistently recited the organization’s three core pillars of reliable, environmentally responsible and financially sustainable energy and services. These pillars are clearly defined in the Resource Diversification Policy, adopted by the board in December 2018.

To more directly align Platte River’s three pillars with its public facing messaging, staff has edited and updated a draft of the organization’s vision, mission and values statements. A presentation will be given to solicit board discussion and direction.

Attachments

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Platte River Power Authority Current mission, vision, values statements

Our mission

Provide safe, reliable, environmentally responsible and competitively priced energy and services.

Our vision

As a respected leader and responsible energy partner, improve the quality of life for the citizens served by our owner communities.

Our values

Safety Working safely to protect the public, our employees, contractors and the assets we manage. Integrity Being ethical and holding ourselves and contractors accountable to conduct business in a fair, honest, transparent, compliant, and environmentally responsible manner. Service Providing quality service at a competitive price while being responsive to our owners’ needs. Respect Encouraging constructive dialogue that promotes a culture of inclusiveness, recognizes our differences, and accepts differing viewpoints. Operational Excellence Engaging employees and contractors to strive for excellence and continuous improvement. Sustainability Maintaining financial integrity, minimizing our environmental impact, and supporting responsible economic development in our owner communities. Innovation Striving to be creative, pioneering and the best in class at solving tough challenges with resourcefulness and non-traditional approaches.

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Platte River vision, mission and values Our vision

(Statement of an organization’s overarching aspirations of what it hopes to achieve or to become) To be a respected leader and responsible power provider improving the region’s quality of life through a more efficient and sustainable energy future. Our mission

(Describes what the organization needs to do now to achieve the vision) While driving utility innovation, Platte River will safely provide reliable, environmentally responsible and financially sustainable energy and services to the owner communities of Estes Park, Fort Collins, Longmont and Loveland. Our values

(Code of ethics: directs the efforts of people in the organization. Defines what the organization believes in and how people in the organization are expected to behave. Typically more personal in nature)

Safety Without compromise, we will safeguard the public, our employees, contractors and assets we manage while fulfilling our mission. Integrity We will conduct business equitably, transparently and ethically while complying fully with all regulatory requirements. Service As a respected leader and responsible energy partner, we will empower our employees to provide energy and superior services to our owner communities. Respect We will embrace diversity and a culture of inclusion among employees, stakeholders and the public. Operational Excellence We will strive for continuous improvement and superior performance in all we do. Sustainability We will help our owner communities thrive while working to protect the environment we all share. Innovation We will proactively deliver creative solutions to generate best-in-class products, services and practices.

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Memorandum


Dave Smalley, chief financial officer and deputy general manager Shelley Nywall, director of finance Wade Hancock, financial planning and rates manager

Subject: 2020 rate tariff schedules - draft

At the October 2019 board of directors meeting, Platte River staff will request the adoption of the 2020 tariff schedules with a Jan. 1, 2020, effective date. In preparation of the October request, draft tariff materials and a memo explaining the changes were included in the August 2019 board materials. Additional edits were made since August, which are summarized below and included in your materials is the draft 2020 rate tariff schedules and a redline copy.

The adoption and implementation of the proposed charges will complete a multi-year collaborative project between Platte River and the owner communities’ staff to create a rates framework to improve transparency, flexibility and system benefits. The proposed rate structure is a philosophical change to revenue collection that is in-line with Platte River’s rate setting policy adopted by the board in 2018.

Tariff change summary The tariff proposal consolidates Platte River’s six current tariffs to four, visually represented in Figure 1. Tariff—Schedule 7: Renewable Energy Service and Tariff—Schedule 8: Standby Service will no longer be standalone tariffs, but instead, their services are combined with other tariffs for efficiency.

Figure 1: Proposed tariff matrix Proposed Current Firm Power Service (Tariff FP-20) Tariff—Schedule 1: Firm Resale Power Service

Tariff—Schedule 7: Renewable Energy Service Standard Offer Energy Purchase (Tariff SO-20)

Tariff—Schedule 3: Parallel Generation Tariff—Schedule 8: Standby Service

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Platte River Power Authority

2020 rate tariff schedules - draft

9/18/2019

2

Wholesale Transmission Service (Tariff WT-20)

Tariff—Schedule 4: Wholesale Transmission Service

Large Customer Service (Tariff LC-20) Tariff—Schedule 9: Large User Service

Firm Power Service (Tariff FP-20) Language has been added to the Firm Power Service Tariff to define terms including intermittent energy, dispatchable (non-intermittent energy), and the allocation of intermittent energy between the premium intermittent energy charge and the intermittent energy charge. Additionally, language explaining the allocation of energy produced by the Roundhouse Renewable Energy Project between the dispatchable variable cost energy charge and the intermittent energy charge is also included. To accommodate changes, Figure 2 has been updated to reflect the latest draft tariff language.

Figure 2: Firm Power Service monthly rates Monthly rates Applicability Owner community charge $9,979 per month per owner community

allocation Transmission demand charge $5.74 per kilowatt of non-coincident billing

demand Generation demand charge Summer season Non-summer season

$6.24 per kilowatt of coincident billing demand $4.34 per kilowatt of coincident billing demand

Fixed cost energy charge $0.01544 per kilowatt hour for all energy supplied Dispatchable variable cost energy charge $0.01779 per kilowatt-hour for all non-intermittent

energy supplied, as well as the Roundhouse apportionment

Premium intermittent energy charge (former Tariff 7)

$0.04279 per kilowatt hour for owner community’s allocated share of premium intermittent energy

Intermittent energy charge $0.04112 per kilowatt hour for owner community’s allocated share of intermittent energy

Roundhouse is anticipated to begin producing energy earlier in 2020 than was assumed during the rate setting process. Platte River has also agreed to sell the Spring Canyon Wind Energy Center (Spring Canyon) energy output to a third party upon execution of the contract while increasing the capacity under the Roundhouse agreement. At the time rates were established, it was assumed Spring Canyon energy would be delivered to the owner communities. For 2020 only, to adjust for this change, Platte River plans to replace the Spring Canyon energy that

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2020 rate tariff schedules - draft

9/18/2019

3

would have been delivered to the owner communities at the intermittent charge with equivalent kilowatt hours from Roundhouse. The remaining balance of Roundhouse energy will be sold at the dispatchable variable cost energy charge. Beyond 2020, the intermittent energy charge will be adjusted to include all Roundhouse energy and costs.

Conclusion Formal adoption of the proposed charges and the revised tariff language will be requested at the October board meeting with a Jan. 1, 2020, effective date.

Board adoption of the 2020 rates will complete the multi-year collaborative project between Platte River and the owner communities. Platte River considers rate design an ever-evolving process that will be revisited at regular intervals as the owner communities and electric industry continue to evolve.

Staff is available to support wholesale rate communications to stakeholders as requested by the owner communities. Platte River encourages the involvement of Platte River staff in these communications as a resource to owner community staff and management.

Attachments

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Draft 2020 Rate Tariff Schedules

Proposed redline

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Tariff—Schedule 1 FP-20: Adopted: Firm Resale Power Service Page 1 of 4 Effective:

Firm Power Service (Tariff FP-20)Tariff—schedule 1: firm resale power service

Applicability:

This TARIFF—SCHEDULE 1: FIRM RESALE POWER SERVICE (TARIFF—SCHEDULE 1)The Firm Power Service Tariff (Tariff FP-20) shall apply to electric power and energy all firm electric service of electricity furnished to an Municipality Owner Community for distribution and resale pursuant to its contract with Platte River Power Authority (Platte River), unless the Owner Community purchases another Tariff Schedule applies to a portion of an Owner Community’Sits electricity requirements provided by Platte Riverunder another tariff schedule. For the purposes of this tariff the “Owner Communities” shall mean the Town of Estes Park, the City of Fort Collins, the City of Longmont and the City of Loveland. This TARIFF—SCHEDULE 1Tariff FP-20 shall not be available to an Municipality Owner Community for service to (a) any retail customer that requests new service entrance capacity of 10,000 kilowatts or greater or (b) any retail customer that has a new load of an unusual nature that cannot be readily served from the Municipality’s Owner Community’s distribution system. Electric power and energy services that are provided to an Municipality Owner Community for resale to customers that are excluded from service under this Tariff FP-20 this TARIFF—SCHEDULE 1 shall be provided under the terms and conditions of TARIFF—SCHEDULE 9: LARGE USER SERVICETariff LC-20.

Character of Service:

Alternating current 60 hertz; three-phase; delivery at 115 kilovolt or at other voltages subject to conditions as agreed upon; metering at each delivery point.

Monthly Rate:

The Monthly Rate charged by Platte River to the Municipalities under this TARIFF—SCHEDULE 1 shall produce revenues, when combined with revenues from all other sources, sufficient to meet Platte River’s operation and maintenance costs, the cost of any purchased power, principal and interest payments on all indebtedness and provide an earnings margin adequate to meet all bond covenants and provide for the establishment and maintenance of necessary reserves. The Monthly Rate charged under this TARIFF—SCHEDULE 1 shall be as follows: The Monthly Rate charged to Owner Communities, as approved by the Platte River Board of Directors, shall be as follows: Owner Community Charge: Owner Community rate of $9,979 per month per Owner Community Allocation Transmission Demand Charge $5.74 per kilowatt of Non-Coincident Billing Demand Generation Demand Charge: Summer Season $11.796.24 per kilowatt of Coincident Billing Demand

Winter Non-Summer Season $8.994.34 per kilowatt of Coincident Billing Demand

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Fixed Cost Energy Charge: Summer Season $0.04370 per kilowatt-hour for all energy supplied$0.01544 per kilowatt hour for all energy supplied Winter Season $0.04191 per kilowatt-hour for all energy supplied

Dispatchable Variable Cost Energy Charge:

$0.01779 per kilowatt-hour for all Non-IntermittentDispatchable Energy supplied, as well as an apportionment of energy per the terms of Resolution No. __-19, the resolution adopting the 2020 tariffsthe Roundhouse Apportionment

Premium Intermittent Energy Charge (former Tariff 7):

$0.04279 per kilowatt hour for Owner Community’s Allocated Share of Premium Intermittent EnergyOwner Community’s Allocated Share Of Intermittent Resources Associated With Former Tariff 7

Intermittent Energy Charge:

$0.04112 per kilowatt hour for Owner Community’s Allocated Share of intermittent energy resources Intermittent EnergyNot Included In Premium Intermittent Energy Charge and an apportionment of energy per the terms of Resolution No. __-19, the resolution adopting the 2020 tariffs

Summer / Non-Summer Season:

The Summer Season shall be the period June 1 through August 31 September 30 of each year. The Winter Non-Summer Season shall be the period January 1 through May 31 and September October 1 through December 31. Owner Community Allocation: The Owner Community Allocation represents each Owner Community’s share of Platte River’s total Owner Community energy sales over the previous six-year period as determined at the end of the year. The Owner Community Allocation is calculated as the sum of each Owner Community’s energy sales over the previous six-year period divided by the total Owner Community energy sales during that time, utilizing the year-end sales values as determined by Platte River. The resulting ratio is multiplied by 100 to create a value to be utilized as the Owner Community Allocation which is multiplied by the Owner Community rate to determine the applicable Owner Community Charge.

Billing Demand:

The Coincident Billing Demand shall be the 60-minute average kilowatt demand of the electric system of the MunicipalityOwner Community, computed as the sum of 60-minute average kilowatt demands recorded simultaneously at all delivery points through which such Municipality Owner Community receives electric power and energy, measured coincident with the Monthly System Peak Demand for Platte River.

Monthly System Peak Demand:

The Monthly System Peak Demand for Platte River shall be the maximum coincident sum of the hourly demands for the Municipalities Owner Communities recorded during the billing month subject to a minimum demand calculation. The minimum demand for the Coincident Billing Demand shall be equal to 75 percent of the Owner Community’s average maximum Coincident Demand during the three preceding summer periods beginning with the most recent completed year. Each summer period will have one peak Coincident Demand value, which is the peak

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Coincident Demand value during the summer period. The average is the total of the peak Coincident Demand values for the three preceding summer periods divided by 3 months. The Non-Coincident Billing Demand shall be the maximum 60-minute average kilowatt demand of the electric system of the Owner Community, computed as the sum of 60-minute average kilowatt demands recorded simultaneously at all delivery points through which such Owner Community receives electric power and energy, without regard to the timing of the Monthly System Peak Demand subject to a minimum demand calculation. The minimum demand for the Non-Coincident Billing Demand shall be equal to 75 percent of the Owner Community’s average maximum Non-Coincident Demand during the three preceding annual periods beginning with the most recent completed year. Similarly, each annual period will have one peak Non-Coincident Demand value, which is the peak Non-Coincident Demand value during that period. The average is the total of the Non-Coincident Demand values for the three preceding annual periods divided by 3 months. Both the Coincident Billing Demand and the Non-Coincident Billing Demand shall be subject to a minimum demand calculation. Minimum Demand – Coincident Billing Demand The minimum demand for the Coincident Billing Demand shall be equal to 75 percent of the Owner Community’s average maximum Coincident Demand during the three preceding summer periods beginning with the most recent completed year. Each summer period will have one peak Coincident Demand value, which is the peak Coincident Demand value during the summer period. The average is the total of the peak Coincident Demand values for the three preceding summer periods divided by 3 months. Minimum Demand – Non-Coincident Billing Demand The minimum demand for the Non-Coincident Billing Demand shall be equal to 75 percent of the Owner Community’s average maximum Non-Coincident Demand during the three preceding annual periods beginning with the most recent completed year. Similarly, each annual period will have one peak Non-Coincident Demand value, which is the peak Non-Coincident Demand value during that period. The average is the total of the Non-Coincident Demand values for the three preceding annual periods divided by 3 months. Energy: Intermittent Energy shall be the kilowatt-hours supplied to the Owner Communities from Platte River’s wind and solar energy resources excluding energy supplied from community solar resources. Dispatchable Energy shall be all kilowatt-hours supplied from all sources that are not Intermittent Energy, including energy supplied from community solar resources. Spring Canyon Apportionment shall be energy supplied by the Roundhouse Renewable Energy Project to replace energy sold to a third party from the Spring Canyon Wind Energy. The Spring Canyon Apportionment shall be equal to the kilowatt-hours sold commencing upon the effective date of the sale to the third party, measured on a monthly basis. Roundhouse Apportionment shall be the Roundhouse Renewable Energy Project kilowatt-hours less the Spring Canyon Apportionment, measured on a monthly basis.

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Owner Community’s Allocated Share of Premium Intermittent Energy shall be based on Owner Community’s previous requests for specific amounts of renewable energy, measured in megawatt hours, pursuant to the former Tariff 7. Owner Community’s Allocated Share of Intermittent Energy shall be all kilowatt-hours of Intermittent Energy, excluding the Owner Community’s Allocated Share of Premium Intermittent Energy and the Roundhouse Apportionment. Energy shall be allocated monthly based on each Owner Community’s pro rata share of the total kilowatt-hours of electricity sold to all of the Owner Communities for that month.

Power Factor Surcharge:

At any delivery point, Platte River will determine the ratio between the Coincident Billing Demand and reactive kilovolt-ampere demand at the time of the Monthly System Peak Demand. If in any billing month the 60-minute average reactive kilovolt-ampere demand is found to be in excess of 33% of the maximum kilowatt demand occurring at the same time, an additional monthly charge will be made at the rate of $0.38 for each reactive kilovolt-ampere of such excess.

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Tariff—Schedule 3 SO-20: Adopted: Parallel GenerationStandard Offer Energy Purchase Page 1 of 4 Effective:

Standard Offer Energy Purchase (Tariff SO-20)Tariff—schedule 3: parallel generation

Applicability:

This TARIFF—SCHEDULE 3: PARALLEL GENERATION (TARIFF—SCHEDULE 3)The Standard Offer Energy Purchase Tariff (Tariff SO-20) is applicable to the purchase of available electricity from power production facilities owned and operated by a retail customer that are electrically connected to and served by an Owner Community’s distribution system (referred to herein as “Retail Customer”)electrically in parallel with a Municipality’s electric system. For the purposes of this tariff the “Owner Communities” shall mean the Town of Estes Park, the City of Fort Collins, the City of Longmont and the City of Loveland. Terms of service under this TARIFF—SCHEDULE 3 Tariff SO-20 are dependent upon the size, type, and ownership of the power production facilities (Power Producer) and Platte River Power Authority (Platte River) reserves the right to review conditions of such service at least annuallyon an annual basis. Power Producers that have registered with the Federal Energy Regulatory Commission (FERC) production facilities as a Qualifying Facility(ties) as defined in Section 201 of the Public Utilities Regulatory Policies Act (PURPA) are subject to the policies and procedures for PURPA facilities in Platte River’s “Policy Governing Purchases from any PURPA Qualified Facility”, which is incorporated by reference into Tariff SO-20. Regardless of Qualified Facility registration status, Platte River refers to production facilities as follows.

Small Facility, where the operating maximum capacity of the facilities is less than 1,000 kilowatts (kW), or

Large Facility where the operating maximum capacity of the facilities is greater than or equal to 1,000 kilowatts (kW).

For each Small Facility or Large Facility, the Owner Community and/or the Retail Customer shall provide the following information to Platte River: (1) maximum output rating of the facility in kilowatts, (2) physical location of the facility (address), (3) expected output of the facility, (4) the date that the facility began operation, (5) type of facility (photovoltaic solar or other renewable energy source, reciprocating engine, steam turbine, etc.), (6) type of fuel (if any), and (7) any updates or changes to previously reported information. This information shall be provided to Platte River annually by March 31 for facilities installed during the prior calendar year.

Small Facilities:

Power All production facilities owned by a retail Retail customer Customer of a Municipality (Customer) with a maximum output rating of less than 1,000 kilowatts (kW), either individually or aggregated at a single Retail Customer service address, are herein defined collectively as Small Facilities or individually as a Small Facility. Small Facilities also include renewable energy generation facilities with a maximum output rating of less than 1,000 kilowatts (kW) that are subject to a financing arrangement under which the Customer holds beneficial title to the facilities. Renewable energy generation may include solar, wind, geothermal, small hydro, and biomass facilities. For each Small Facility, the Municipality shall provide the following information to Platte River: (1) maximum output rating of the facility in kilowatts, (2) physical location of the facility (address), (3) date that the facility began operation, (4) type of facility (photovoltaic solar or other renewable energy source, reciprocating engine, steam turbine, etc.), (5) type of fuel (if any), and (6) any

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updates or changes to previously reported information. This information shall be provided to Platte River annually by March 31 for facilities installed during the prior calendar year. No payment or other credit will be provided by Platte River for energy or capacity from Small Facilities and Small Facilities will not be subject to Standby or Ancillary Service fees from Platte River. Interconnection of Small Facilities to the Municipality’s distribution system will be at the sole discretion of the Municipality. The Municipality will negotiate details of interconnection, safety requirements, rates and payments, metering, and other arrangements. Platte River shall have the right to review the installation and metering of Small Facilities. Platte River will not purchase the energy or capacity of a Small Facility. Any output in excess of the Retail Customer’s load will be subject to the net meter policy of the Owner Community where the Retail Customer is located. Large Facilities:

Parallel powerAll generation facilities owned by a Retail Customer having a maximum output rating of 1,000 kilowatts (kW) or greater, either individually or aggregated at a single Retail Customer service address, are herein defined collectively as Large Facilities or individually as a Large Facility. At Platte River’s discretion, the terms and conditions for service to Large Facilities may be established by separate contract among with the Retail Customer, the MunicipalityOwner Community, and Platte River. Contracts for Large Facilities will be evaluated and negotiated on a case-by-case basis, with details of metering, communications, avoided energy and capacity payments, points of delivery, interconnection, generation scheduling, ancillary service fees, standby charges, generation scheduling, and other issues considered for each specific facility. Platte River may purchase the output from any Large Facility above the Retail Customer’s load requirements, from generation sources, individual or aggregated, located on the Retail Customer’s premises. Standby Capacity for any Large Facility will be provided by Platte River and invoiced by the Owner Community. Standby Capacity is the capacity, required by Platte River, to serve Retail Customer load in the event the Retail Customer’s on-site generation fails to operate and is applicable to Large Facilities only. The Standby Capacity is typically equal to the capacity provided by the Retail Customer’s on-site generation when it operates. Platte River will consult with the Owner Community in determining the actual quantity of Standby Capacity, measured in kilowatts, for which the Retail Customer will be responsible. The amount of Standby Capacity shall not exceed the total available output capability of the Retail Customer’s on-site generation equipment. Standby Capacity may be received by the Retail Customer by choice or by default.

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Other Facilities:

Terms and conditions for all other parallel generation facilities proposed for interconnection to a Municipality’s electric distribution system or proposed for direct interconnection with Platte River’s system, including Qualifying Facilities as defined below, shall be established by separate contract. Such contracts will be negotiated on a case-by-case basis, with details of metering, communications, avoided energy and capacity payments, term of agreement, points of delivery, interconnection, ancillary service fees, standby charges, generation scheduling, and other issues defined in each specific contract.

Qualifying Facilities:

Power production facilities that are Qualifying Facilities as defined in Section 201 of the Public Utilities Regulatory Policies Act may elect to be treated as such rather than as Small Facilities or Large Facilities as set forth above. Platte River shall purchase electric energy and capacity offered by Qualifying Facilities operating in the Municipalities. Operators of such facilities shall consult Platte River in advance of any construction activity, provide to Platte River a copy of a qualifying certificate for the proposed facility (from the Federal Energy Regulatory Commission), and obtain Platte River’s written opinion concerning feasibility of the facility, which opinion shall not be unreasonably withheld. Payment for electric energy and capacity from Qualifying Large Facilities may be based on Platte River’s avoided energy and capacity ratesrate, as follows:

Capacity: $4.03 per kilowatt per month Avoided Energy Rate for Large Facilities:

$0.02157 0.01791 per kilowatt-hour for electricity made available to Platte River. Capacity payments shall be based upon the 60-minute, average kilowatt capacity provided during the hour of Platte River’s monthly peak demand. Avoided energy and capacity payments set forth rates are based on Platte River’s current portfolio of generation resources and are subject to change on an annual basis, unless otherwise expressly stated in any a separate contract with a Retail Customer and as agreed to by Platte River. Qualifying Facility or a Large Facility shall be established based upon, but not be limited to, the following criteria: Platte River shall separately calculate its avoided capacity costs. The capacity value of firm power offered for sale to Platte River during periods where Platte River has no projected needs for additional capacity will be zero dollars ($0.00). During such periods, a Retail Customer offering to sell firm capacity to Platte River will not be entitled to any capacity payments, and will only be entitled to avoided energy costs, as appropriate for Large Facilities.

The ability of Platte River to dispatch the Large Facility or Qualifying Facility. The expected or demonstrated reliability of the Large Facility or Qualifying Facility. The terms of any contract or other legally enforceable obligation, including the duration of

the obligation, termination notice requirement, and sanctions for non-compliance. The extent to which scheduled outages of the Large Facility or Qualifying Facility can be

coordinated with scheduled outages of Platte River’s facilities. The availability and usefulness of capacity and energy supplied from a Large Facility or

Qualifying Facility during annual seasonal peak periods (typically June through August between 3 and 6 pm).

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The usefulness of energy supplied from a Large Facility or Qualifying Facility during -system emergencies, including its ability to separate its load from its generation.

The individual and aggregate value of energy and capacity from the Large Facility or Qualifying Facility on Platte River’s system.

The capacity increments and the lead times associated with additions of capacity from the Large Facility or Qualifying Facility.

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Tariff—Schedule 4 WT-20: Adopted: Wholesale Transmission Service Page 1 of 2 Effective:

Tariff—schedule 4: wWholesale tTransmission sService (Tariff WT-20)

Platte River Power Authority (Platte River) offers transmission service through this Wholesale Transmission Service Tariff (WT-20). Tariff WT-20 does not apply to any entity taking bundled service under Platte River’s Tariff FP-20; Tariff SO-20; or Tariff LC-20 service. Tariff WT-20 may or may not be equivalent to Platte River’s open access transmission service through this Open Access Transmission Tariff tariff (OATT). The complete OATT is , posted on Platte River’s Open Access Same-Time Information System (OASIS) web site. Any Eligible Customer (as defined in the OAT Tariff) may request transmission service from Platte River under the terms of the OAT Tariff. This OAT Tariff does not apply to any entity taking bundled service under Platte River’s TARIFF—SCHEDULE 1: FIRM RESALE POWER SERVICE; TARIFF—SCHEDULE 8: STANDBY SERVICE; OR TARIFF—SCHEDULE 9: LARGE USER SERVICE. In accordance with the OAT Tariff, Platte River reserves the right to offer a discounted transmission rate for transmission service posted on the OASIS for specific transmission paths. A summary of the charges within the OATT WT-20 Schedules follows. The Real Power Loss factor is 1.95%. (1) Scheduling, System Control, and Dispatch Service

No charge in addition to that for Transmission Service (Items 7 and 8 below). (2) Reactive Supply and Voltage Control from Generation Sources Service

$36.16 per megawatt (MW) of Reserved Capacity per month. (3) Regulation and Frequency Response Service

Platte River is not a balancing authority and does not offer this service. Upon written request, Platte River will assist in arranging for the local balancing authority operator to provide this service; however, Platte River makes no representation that the local balancing authority operator can or will provide the service. (4) Energy Imbalance Service

Platte River is not a balancing authority and does not offer this service. Upon written request, Platte River will assist in arranging for the local balancing authority operator to provide this service; however, Platte River makes no representation that the local balancing authority operator can or will provide the service. (5) Operating Reserve—Spinning Reserve Service

Platte River is not a balancing authority and does not offer this service. Upon written request, Platte River will assist in arranging for the local balancing authority operator to provide this service; however, Platte River makes no representation that the local balancing authority operator can or will provide the service. (6) Operating Reserve—Supplemental Reserve Service

Platte River is not a balancing authority and does not offer this service. Upon written request, Platte River will assist in arranging for the local balancing authority operator to provide this service; however, Platte River makes no representation that the local balancing authority operator can or will provide the service.

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Tariff—Schedule 4 WT-20: Adopted: Wholesale Transmission Service Page 2 of 2 Effective:

(7) Long-Term and Short-Term Firm Point-to-Point Transmission Service

The charges can be up to the following limits:

Yearly Delivery $77,384.76 per MW of Reserved Capacity per year Monthly Delivery $6,448.73 per MW of Reserved Capacity per month Weekly Delivery $1,488.17 per MW of Reserved Capacity per week Daily Delivery $297.63 per MW of Reserved Capacity per day Hourly Delivery $18.60 per MW of Reserved Capacity per hour

(8) Non-Firm Point-to-Point Transmission Service


Monthly Delivery $6,448.73 per MW of Reserved Capacity per month Weekly Delivery $1,488.17 per MW of Reserved Capacity per week Daily Delivery $297.63 per MW of Reserved Capacity per day Hourly Delivery $18.60 per MW of Reserved Capacity per hour

Transmission Revenue Requirement

The charge for Network Integration Transmission Service is calculated pursuant to the Federal Energy Regulatory Commission (FERC) Pro Forma Open Access Transmission Tariff Attachment H based on Platte River’s annual transmission revenue requirement of $43,688,135. This transmission revenue requirement is calculated in accordance with the FERC pro-forma Network Service Rate calculation requirement. Joint Dispatch Transmission Service

Joint Dispatch Transmission Service is applicable only to load serving entities in the Public Service Company of Colorado (PSCo) Balancing Authority Area that are signatories to a Joint Dispatch Agreement (JDA) under which: (1) participating generating resources of the parties are dispatched as a pool on a least-cost basis respecting transmission limitations; and (2) the Joint Dispatch Transmission Service Customers’ respective transmission service providers have provided within their OATT a transmission service schedule for energy dispatched pursuant to the JDA at a rate equal to zero dollars on a non-firm, as-available basis with the lowest curtailment priority.

Hourly delivery: $0.00 per MW of Reserved Capacity per hour

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Tariff—Schedule 7: Adopted: Renewable Energy Service Page 1 of 2 Effective:

Tariff—schedule 7: renewable energy service

Applicability:

This TARIFF—SCHEDULE 7: RENEWABLE ENERGY SERVICE (TARIFF—SCHEDULE 7) applies to those amounts of Qualified Renewable Energy (Renewable Energy) subscribed for in accordance with the Request Letter process outlined below, available for delivery by Platte River Power Authority (Platte River) to a Municipality for purchase and resale to retail customers of the Municipality (Customer). Renewable Energy supplied under this TARIFF—SCHEDULE 7 shall be above and beyond any Renewable Energy provided through TARIFF—SCHEDULE 1: FIRM RESALE POWER SERVICE. This TARIFF—SCHEDULE 7 provides that a Premium Charge for Renewable Energy subscribed for herein shall be added to the charges for firm energy established by TARIFF—SCHEDULE 1: FIRM RESALE POWER SERVICE. Renewable Energy includes two separate products, Wind Energy and Community Solar Energy, which may be requested individually and are delivered and charged individually. Although structured as Premium Charges, it is possible increases in market energy costs could lead to negative Premium Charges.


Alternating current: 60 hertz; three-phase; delivery at 115 kilovolts or at other voltages subject to conditions as agreed upon.

Request Letter and Confirmation:

In order to receive service under this TARIFF—SCHEDULE 7, a Municipality must submit a Request Letter requesting that Platte River deliver specific amounts of additional Wind Energy and Community Solar Energy to the Municipality. Requests for Wind Energy shall be for a specific volume of renewable energy to be delivered annually, measured in megawatt-hours. Requests for Community Solar Energy shall be for the energy output from a specific share of generation resource capacity that provides the energy, measured in kilowatts. Platte River shall confirm in writing the amount of such Wind Energy and Community Solar Energy to be delivered. Once confirmed, Platte River shall be obligated to sell and deliver and the requesting Municipality shall be obligated to take and pay for all Wind Energy and Community Solar Energy requested in the Request Letters.

Premium Charges:

A monthly Premium Charge for all Renewable Energy delivered to the Municipalities under this TARIFF—SCHEDULE 7, shall be assessed as follows: Wind Energy:

A net fixed charge of $0.025 per kilowatt-hour for all such Wind Energy supplied, which shall include an Energy Charge, estimated Energy Credit, and other credits or charges, as defined below:

An Energy Charge for the cost to procure and deliver the energy. An estimated Energy Credit intended to reflect the marginal energy benefit realized by the Platte River system, which could be one of the following for any given unit of energy provided by Wind Energy: avoided coal fuel cost, avoided natural gas fuel cost, avoided market purchase, or increased

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Tariff—Schedule 7: Adopted: Renewable Energy Service Page 2 of 2 Effective:

surplus sale revenue. At the end of the calendar year Platte River will review the actual marginal energy benefits and, if found to be different from the estimated Energy Credit, apply the difference between the actual and estimated Energy Credit to the fixed net charge in future years. Other credits or charges will be included if the future Wind Energy results in other system benefits or costs not included above. For example, Wind Energy may result in ancillary services costs or benefits, or may result in benefits due to avoided emissions.

Community Solar Energy:

Individual charges, including an Energy Charge, Capacity Credit, Energy Credit, and other charges and credits, shall be applied to all such Community Solar Energy, as defined below:

An Energy Charge of $XX per kilowatt-hour to procure and deliver the energy. A Capacity Credit intended to reflect the avoided future cost of marginal capacity anticipated to be realized by the Platte River system, based on the avoided capacity rate published in Platte River’s TARIFF—SCHEDULE 3: PARALLEL GENERATION and the estimated firm capacity provided by the Community Solar Energy project. An Energy Credit intended to reflect the marginal energy benefit realized by the Platte River system, which could be one of the following for any given unit of energy provided by Community Solar Energy: avoided coal fuel cost, avoided natural gas fuel cost, avoided market purchase, or increased surplus sale revenue. The Energy Credit will be determined one month in arrears based on the actual marginal energy benefits achieved during the prior month. Other credits or charges will be included if the future Community Solar Energy results in other system benefits or costs not included above. For example, Community Solar may result in ancillary services costs or benefits, or may result in benefits due to avoided emissions.

Suspension or Termination of Deliveries:

In the event Platte River is unable to deliver requested Renewable Energy due to Uncontrollable Forces as that term is defined in the Power Supply Agreements or due to contractual breach or default by third parties, Platte River reserves the right to suspend or terminate the delivery of Renewable Energy under this TARIFF—SCHEDULE 7. Qualified Renewable Energy:

Sources of Renewable Energy provided under this TARIFF – SCHEDULE 7 are limited to those listed in the Colorado Energy Standard; C.R.S. § 40-2-124. Renewable Energy delivered to Municipalities under this TARIFF—SCHEDULE 7 shall be comprised of either: (i) energy generated from Renewable Energy sources, inclusive of the Renewable Energy Certificates (RECs) associated with those sources, or (ii) Platte River system energy combined with RECs from qualified sources.

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Tariff—Schedule 8: Adopted: Standby Service Page 1 of 1 Effective:

Tariff—schedule 8: standby service

Applicability:

This TARIFF—SCHEDULE 8: STANDBY SERVICE shall apply to any retail customer of a Municipality (Customer) who opts to supply 1,000 kilowatts or more of electric power for other than emergency back-up purposes, from generation sources, individual or aggregated, located on the Customer’s premises and who receives Standby Capacity from the Municipality (whether Standby Capacity is received by choice or by default).

Monthly Charges:

Monthly Charges for Standby Capacity and related services shall be established by separate contract.

Standby Capacity:

Standby Capacity is the capacity, required by Platte River Power Authority (Platte River), to serve Customer load in the event the Customer’s on-site generation fails to operate. The Standby Capacity is typically equal to the capacity provided by the Customer’s on-site generation when it operates. Platte River will consult with the Municipality in determining the actual quantity of Standby Capacity, measured in kilowatts, to be invoiced to the Municipality on the Customer’s behalf. The amount of Standby Capacity shall not exceed the total available output capability of the Customer’s on-site generation equipment. Details of metering and other issues shall be established by contract among the Customer, the Municipality, and Platte River.

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Tariff—Schedule 9 LC-20: Adopted: Large UserCustomer Service Page 1 of 3 Effective:

Large Customer Service (Tariff LC-20)Tariff—schedule 9: large user service

Applicability:

This TARIFF—SCHEDULE 9: LARGE USER SERVICE (TARIFF—SCHEDULE 9) The Large Customer Service Tariff (Tariff LC-20) is available and may be required for firm and interruptible energy furnished by Platte River Power Authority (Platte River) to Municipalities Owner Communities for resale to Large UsersCustomers. For the purposes of this tariff the “Owner Communities” shall mean the Town of Estes Park, the City of Fort Collins, the City of Longmont and the City of Loveland. Large Users Customers are end-use customers meeting any of the following criteria:

Customer requests new service entrance capacity of 10,000 kilowatts (kW) or greater. Customer has a new load that cannot be readily served from the Municipality’s Owner

Community’s distribution system under TARIFF—SCHEDULE 1: FIRM RESALE POWER SERVICE Tariff FP-20 or its successor due to the unusual nature of the load.

Customer metered demand is anticipated to reach 1,000 kW at a single site within twelve (12) months of requesting such service as demonstrated to the Municipality’s Owner Community and Platte River’s satisfaction; provided, however, that if the metered demand does not reach 1,000 kW within a 12-month time frame, the customer must receive service under another tariff offered by the Owner Community until the metered demand reaches 1,000 kW for a continuous twelve (12) month period.

Customer with load at a single site with a single meter measuring a minimum metered demand of 1,000 kilowatts (kW) or greater.

Customer with load at a single site with multiple meters, where the sum of the coincident metered demand for such meters is 1,000 kW or greater.

Total load for a customer with multiple, non-contiguous sites aggregated under a single Service Agreement with the Owner Community provided that the customer has at least one site where the minimum metered demand is 1,000 kW or greater and all loads are located within the Municipality’s Owner Community’s service territory.

Prior to receiving service pursuant to this TARIFF—SCHEDULE 9Tariff LC-20, the Large User Customer must enter into an agreement for electric service (Service Agreement) with the Municipality Owner Community in which their load is located. The Service Agreement shall identify Platte River as a third-party beneficiary of the Service Agreement. The Service Agreement shall address, at a minimum, the following material terms:

Charge(s) for service, including responsibility for infrastructure costs Term of Service Agreement Initial date of service under this tariff Rate adjustments Amount and timing of curtailments or interruptions (if any) Standby provisions

Each of these terms and conditions shall be established in consultation with Platte River and shall be confirmed in a letter from the Platte River General Manager to the MunicipalityOwner Community. The Municipality Owner Community will negotiate the specific form of the Service Agreement with the Large UserCustomer.

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Charges for Service:

The monthly charges to an Municipality Owner Community for service by Platte River under this TARIFF—SCHEDULE 9 Tariff LC-20 shall be determined based on the unique load characteristics, and service requirements, and related costs to serve the Large UserCustomer and will be approved . In determining the charges for service, consideration will be given to the following cost of service issues posed by service to the Large User:

Investments for transmission system facilities and other infrastructure located at or near the Large User site;

Investments for unique transmission system facilities and other infrastructure necessary to provide service to the Large User;

The effect of the Large User load on the cost for adding new generation resources; and The effect of the Large User load on fuel use and fuel mix for power generation.

In order to adequately address the costs of service imposed by the Large User, unique rate structures and cost recovery mechanisms will be examined, including, but not limited to the following:

Initial fixed costs Monthly fixed cost charges Seasonal pricing Time of use pricing Marginal cost pricing Fuel adjustment charges

All charges shall at a minimum be sufficient to recover Platte River’s related cost of service, including expected operating and maintenance costs, related purchased power costs and related principal and interest on Platte River indebtedness over the term of the Service Agreement. All charges and material terms of service are subject to approval by the Platte River Board of Directors. Adjustment of Charges: Unless otherwise agreed, adjustments to the charges will be made on an annual basis at a minimum and will reflect actual changes in Platte River’s cost of service including, but not limited to, financing costs, fuel (including delivery), operation and maintenance, environmental management, and purchased power. Character of Service: Alternating current at approximately 60 hertz; three-phase; delivery at 115 kilovolts or at other voltages subject to conditions as agreed upon; metering at each delivery point. Metering, Invoicing and Losses: The Municipality Owner Community shall provide to Platte River the monthly demand, energy, power factor and other usage characteristics as may be required for billing the Municipality Owner Community on a calendar month basis, for the Large User Customer usage. The Owner Community should provide this information to Platte River within five (5) business days of obtaining such data. Following its receipt of the monthly billing data for the Large UserCustomer, Platte River shall prepare and send to the Municipality Owner Community an invoice for the

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electric power service provided to the Municipality Owner Community for the Large UserCustomer, with the appropriate charges. The MunicipalityOwner Community, at its discretion, may opt to include in the Large User’s Customer’s monthly energy usage the distribution losses that occur between the Platte River point of delivery to the Municipality Owner Community and the point of delivery to the Large UserCustomer. In such case, the Municipality Owner Community shall provide to Platte River the total energy usage including losses of the Large User Customer and an appropriate charge will be invoiced.

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Draft 2020 Rate Tariff Schedules

Proposed clean

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Tariff FP-20: Adopted: Firm Power Service Page 1 of 3 Effective:

Firm Power Service (Tariff FP-20)

Applicability:

The Firm Power Service Tariff (Tariff FP-20) shall apply to all firm electric service furnished to an Owner Community for distribution and resale pursuant to its contract with Platte River Power Authority (Platte River), unless the Owner Community purchases a portion of its electricity requirements under another tariff schedule. For the purposes of this tariff the “Owner Communities” shall mean the Town of Estes Park, the City of Fort Collins, the City of Longmont and the City of Loveland. Tariff FP-20 shall not be available to an Owner Community for service to (a) any retail customer that requests new service entrance capacity of 10,000 kilowatts or greater or (b) any retail customer that has a new load of an unusual nature that cannot be readily served from the Owner Community’s distribution system. Electric power and energy services that are provided to an Owner Community for resale to customers that are excluded from service under this Tariff FP-20 shall be provided under the terms and conditions of Tariff LC-20.


Alternating current 60 hertz; three-phase; delivery at 115 kilovolt or at other voltages subject to conditions as agreed upon; metering at each delivery point.

Monthly Rate:

The Monthly Rate charged to Owner Communities, as approved by the Platte River Board of Directors, shall be as follows: Owner Community Charge: Owner Community rate of $9,979 per month per Owner Community Allocation Transmission Demand Charge $5.74 per kilowatt of Non-Coincident Billing Demand Generation Demand Charge: Summer Season $6.24 per kilowatt of Coincident Billing Demand

Non-Summer Season $4.34 per kilowatt of Coincident Billing Demand Fixed Cost Energy Charge:

$0.01544 per kilowatt hour for all energy supplied

Dispatchable Variable Cost Energy Charge: $0.01779 per kilowatt-hour for all Dispatchable Energy supplied, as well as the Roundhouse Apportionment

Premium Intermittent Energy Charge (former Tariff 7):

$0.04279 per kilowatt hour for Owner Community’s Allocated Share of Premium Intermittent Energy

Intermittent Energy Charge:

$0.04112 per kilowatt hour for Owner Community’s Allocated Share of Intermittent Energy

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Summer / Non-Summer Season:

The Summer Season shall be the period June 1 through September 30 of each year. The Non-Summer Season shall be the period January 1 through May 31 and October 1 through December 31. Owner Community Allocation: The Owner Community Allocation represents each Owner Community’s share of Platte River’s total Owner Community energy sales over the previous six-year period as determined at the end of the year. The Owner Community Allocation is calculated as the sum of each Owner Community’s energy sales over the previous six-year period divided by the total Owner Community energy sales during that time, utilizing the year-end sales values as determined by Platte River. The resulting ratio is multiplied by 100 to create a value to be utilized as the Owner Community Allocation which is multiplied by the Owner Community Charge.

Billing Demand:

The Coincident Billing Demand shall be the 60-minute average kilowatt demand of the electric system of the Owner Community, computed as the sum of 60-minute average kilowatt demands recorded simultaneously at all delivery points through which such Owner Community receives electric power and energy, measured coincident with the Monthly System Peak Demand for Platte River. The Monthly System Peak Demand for Platte River shall be the maximum coincident sum of the hourly demands for the Owner Communities recorded during the billing month subject to a minimum demand calculation. The minimum demand for the Coincident Billing Demand shall be equal to 75 percent of the Owner Community’s average maximum Coincident Demand during the three preceding summer periods beginning with the most recent completed year. Each summer period will have one peak Coincident Demand value, which is the peak Coincident Demand value during the summer period. The average is the total of the peak Coincident Demand values for the three preceding summer periods divided by 3 months. The Non-Coincident Billing Demand shall be the maximum 60-minute average kilowatt demand of the electric system of the Owner Community, computed as the sum of 60-minute average kilowatt demands recorded simultaneously at all delivery points through which such Owner Community receives electric power and energy, without regard to the timing of the Monthly System Peak Demand subject to a minimum demand calculation. The minimum demand for the Non-Coincident Billing Demand shall be equal to 75 percent of the Owner Community’s average maximum Non-Coincident Demand during the three preceding annual periods beginning with the most recent completed year. Similarly, each annual period will have one peak Non-Coincident Demand value, which is the peak Non-Coincident Demand value during that period. The average is the total of the Non-Coincident Demand values for the three preceding annual periods divided by 3 months. Energy: Intermittent Energy shall be the kilowatt-hours supplied to the Owner Communities from Platte River’s wind and solar energy resources excluding energy supplied from community solar resources. Dispatchable Energy shall be all kilowatt-hours supplied from all sources that are not Intermittent Energy, including energy supplied from community solar resources. Spring Canyon Apportionment shall be energy supplied by the Roundhouse Renewable Energy Project to replace energy sold to a third party from the Spring Canyon Wind Energy. The Spring

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Canyon Apportionment shall be equal to the kilowatt-hours sold commencing upon the effective date of the sale to the third party, measured on a monthly basis. Roundhouse Apportionment shall be the Roundhouse Renewable Energy Project kilowatt-hours less the Spring Canyon Apportionment, measured on a monthly basis. Owner Community’s Allocated Share of Premium Intermittent Energy shall be based on Owner Community’s previous requests for specific amounts of renewable energy, measured in megawatt hours, pursuant to the former Tariff 7. Owner Community’s Allocated Share of Intermittent Energy shall be all kilowatt-hours of Intermittent Energy, excluding the Owner Community’s Allocated Share of Premium Intermittent Energy and the Roundhouse Apportionment. Energy shall be allocated monthly based on each Owner Community’s pro rata share of the total kilowatt-hours of electricity sold to all of the Owner Communities for that month.

Power Factor Surcharge:

At any delivery point, Platte River will determine the ratio between the Coincident Billing Demand and reactive kilovolt-ampere demand at the time of the Monthly System Peak Demand. If in any billing month the 60-minute average reactive kilovolt-ampere demand is found to be in excess of 33% of the maximum kilowatt demand occurring at the same time, an additional monthly charge will be made at the rate of $0.38 for each reactive kilovolt-ampere of such excess.

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Tariff SO-20: Adopted: Standard Offer Energy Purchase Page 1 of 2 Effective:

Standard Offer Energy Purchase (Tariff SO-20)

Applicability:

The Standard Offer Energy Purchase Tariff (Tariff SO-20) is applicable to the purchase of available electricity from power production facilities owned and operated by a retail customer that are electrically connected to and served by an Owner Community’s distribution system (referred to herein as “Retail Customer”). For the purposes of this tariff the “Owner Communities” shall mean the Town of Estes Park, the City of Fort Collins, the City of Longmont and the City of Loveland. Terms of service under Tariff SO-20 are dependent upon the size, type, and ownership of the power production facilities (Power Producer) and Platte River Power Authority (Platte River) reserves the right to review conditions of such service on an annual basis. Power Producers that have registered with the Federal Energy Regulatory Commission (FERC) production facilities as a Qualifying Facility(ties) as defined in Section 201 of the Public Utilities Regulatory Policies Act (PURPA) are subject to the policies and procedures for PURPA facilities in Platte River’s “Policy Governing Purchases from any PURPA Qualified Facility”, which is incorporated by reference into Tariff SO-20. Regardless of Qualified Facility registration status, Platte River refers to production facilities as follows.

Small Facility, where the operating maximum capacity of the facilities is less than 1,000 kilowatts (kW), or

Large Facility where the operating maximum capacity of the facilities is greater than or equal to 1,000 kilowatts (kW).

For each Small Facility or Large Facility, the Owner Community and/or the Retail Customer shall provide the following information to Platte River: (1) maximum output rating of the facility in kilowatts, (2) physical location of the facility (address), (3) expected output of the facility, (4) the date that the facility began operation, (5) type of facility (photovoltaic solar or other renewable energy source, reciprocating engine, steam turbine, etc.), (6) type of fuel (if any), and (7) any updates or changes to previously reported information. This information shall be provided to Platte River annually by March 31 for facilities installed during the prior calendar year.

Small Facilities:

All production facilities owned by a Retail Customer with a maximum output rating of less than 1,000 kW, either individually or aggregated at a single Retail Customer service address, are herein defined collectively as Small Facilities or individually as a Small Facility. Platte River will not purchase the energy or capacity of a Small Facility. Any output in excess of the Retail Customer’s load will be subject to the net meter policy of the Owner Community where the Retail Customer is located. Large Facilities:

All generation facilities owned by a Retail Customer having a maximum output rating of 1,000 kW or greater, either individually or aggregated at a single Retail Customer service address, are herein defined collectively as Large Facilities or individually as a Large Facility. At Platte River’s discretion, the terms and conditions for service to Large Facilities may be established by separate contract with the Retail Customer, the Owner Community, and Platte River. Contracts for Large Facilities will be evaluated and negotiated on a case-by-case basis, with details of metering, communications, points of delivery, interconnection, generation

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Tariff SO-20: Adopted: Standard Offer Energy Purchase Page 2 of 2 Effective:

scheduling, ancillary service fees, standby charges, and other issues considered for each specific facility. Platte River may purchase the output from any Large Facility above the Retail Customer’s load requirements, from generation sources, individual or aggregated, located on the Retail Customer’s premises. Standby Capacity for any Large Facility will be provided by Platte River and invoiced by the Owner Community. Standby Capacity is the capacity, required by Platte River, to serve Retail Customer load in the event the Retail Customer’s on-site generation fails to operate and is applicable to Large Facilities only. The Standby Capacity is typically equal to the capacity provided by the Retail Customer’s on-site generation when it operates. Platte River will consult with the Owner Community in determining the actual quantity of Standby Capacity, measured in kilowatts, for which the Retail Customer will be responsible. The amount of Standby Capacity shall not exceed the total available output capability of the Retail Customer’s on-site generation equipment. Standby Capacity may be received by the Retail Customer by choice or by default. Payment for electric energy from Large Facilities may be based on Platte River’s avoided energy rate, as follows:

Avoided Energy Rate for Large Facilities: $0.01791 per kilowatt-hour for electricity made available to Platte River.

Avoided energy rates are based on Platte River’s current portfolio of generation resources and are subject to change on an annual basis, unless otherwise expressly stated in a separate contract with a Retail Customer and as agreed to by Platte River. Platte River shall separately calculate its avoided capacity costs. The capacity value of firm power offered for sale to Platte River during periods where Platte River has no projected needs for additional capacity will be zero dollars ($0.00). During such periods, a Retail Customer offering to sell firm capacity to Platte River will not be entitled to any capacity payments, and will only be entitled to avoided energy costs, as appropriate for Large Facilities.

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Tariff WT-20: Adopted: Wholesale Transmission Service Page 1 of 2 Effective:

Wholesale Transmission Service (Tariff WT-20)

Platte River Power Authority (Platte River) offers transmission service through this Wholesale Transmission Service Tariff (WT-20). Tariff WT-20 does not apply to any entity taking bundled service under Platte River’s Tariff FP-20; Tariff SO-20; or Tariff LC-20 service. Tariff WT-20 may or may not be equivalent to Platte River’s open access transmission service tariff (OATT), posted on Platte River’s Open Access Same-Time Information System (OASIS) web site. A summary of the charges within the WT-20 Schedules follows. The Real Power Loss factor is 1.95%. (1) Scheduling, System Control, and Dispatch Service

No charge in addition to that for Transmission Service (Items 7 and 8 below). (2) Reactive Supply and Voltage Control from Generation Sources Service

$36.16 per megawatt (MW) of Reserved Capacity per month. (3) Regulation and Frequency Response Service

Platte River is not a balancing authority and does not offer this service. Upon written request, Platte River will assist in arranging for the local balancing authority operator to provide this service; however, Platte River makes no representation that the local balancing authority operator can or will provide the service. (4) Energy Imbalance Service

Platte River is not a balancing authority and does not offer this service. Upon written request, Platte River will assist in arranging for the local balancing authority operator to provide this service; however, Platte River makes no representation that the local balancing authority operator can or will provide the service. (5) Operating Reserve—Spinning Reserve Service

Platte River is not a balancing authority and does not offer this service. Upon written request, Platte River will assist in arranging for the local balancing authority operator to provide this service; however, Platte River makes no representation that the local balancing authority operator can or will provide the service. (6) Operating Reserve—Supplemental Reserve Service

Platte River is not a balancing authority and does not offer this service. Upon written request, Platte River will assist in arranging for the local balancing authority operator to provide this service; however, Platte River makes no representation that the local balancing authority operator can or will provide the service. (7) Long-Term and Short-Term Firm Point-to-Point Transmission Service


Yearly Delivery $77,384.76 per MW of Reserved Capacity per year Monthly Delivery $6,448.73 per MW of Reserved Capacity per month Weekly Delivery $1,488.17 per MW of Reserved Capacity per week Daily Delivery $297.63 per MW of Reserved Capacity per day

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Tariff WT-20: Adopted: Wholesale Transmission Service Page 2 of 2 Effective:

Hourly Delivery $18.60 per MW of Reserved Capacity per hour (8) Non-Firm Point-to-Point Transmission Service


Monthly Delivery $6,448.73 per MW of Reserved Capacity per month Weekly Delivery $1,488.17 per MW of Reserved Capacity per week Daily Delivery $297.63 per MW of Reserved Capacity per day Hourly Delivery $18.60 per MW of Reserved Capacity per hour

Transmission Revenue Requirement

The charge for Network Integration Transmission Service is calculated pursuant to the Federal Energy Regulatory Commission (FERC) Pro Forma Open Access Transmission Tariff Attachment H based on Platte River’s annual transmission revenue requirement of $43,688,135. This transmission revenue requirement is calculated in accordance with the FERC pro-forma Network Service Rate calculation requirement. Joint Dispatch Transmission Service

Joint Dispatch Transmission Service is applicable only to load serving entities in the Public Service Company of Colorado (PSCo) Balancing Authority Area that are signatories to a Joint Dispatch Agreement (JDA) under which: (1) participating generating resources of the parties are dispatched as a pool on a least-cost basis respecting transmission limitations; and (2) the Joint Dispatch Transmission Service Customers’ respective transmission service providers have provided within their OATT a transmission service schedule for energy dispatched pursuant to the JDA at a rate equal to zero dollars on a non-firm, as-available basis with the lowest curtailment priority.

Hourly delivery: $0.00 per MW of Reserved Capacity per hour

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Tariff LC-20: Adopted: Large Customer Service Page 1 of 2 Effective:

Large Customer Service (Tariff LC-20)

Applicability:

The Large Customer Service Tariff (Tariff LC-20) is available and may be required for firm and interruptible energy furnished by Platte River Power Authority (Platte River) to Owner Communities for resale to Large Customers. For the purposes of this tariff the “Owner Communities” shall mean the Town of Estes Park, the City of Fort Collins, the City of Longmont and the City of Loveland. Large Customers are end-use customers meeting any of the following criteria:

Customer requests new service entrance capacity of 10,000 kilowatts (kW) or greater. Customer has a new load that cannot be readily served from the Owner Community’s

distribution system under Tariff FP-20 or its successor due to the unusual nature of the load.

Customer metered demand is anticipated to reach 1,000 kW at a single site within twelve (12) months of requesting such service as demonstrated to the Owner Community and Platte River’s satisfaction; provided, however, that if the metered demand does not reach 1,000 kW within a 12-month time frame, the customer must receive service under another tariff offered by the Owner Community until the metered demand reaches 1,000 kW for a continuous twelve (12) month period.

Customer with load at a single site with a single meter measuring a minimum metered demand of 1,000 kilowatts (kW) or greater.

Customer with load at a single site with multiple meters, where the sum of the coincident metered demand for such meters is 1,000 kW or greater.

Total load for a customer with multiple, non-contiguous sites aggregated under a single Service Agreement with the Owner Community provided that the customer has at least one site where the minimum metered demand is 1,000 kW or greater and all loads are located within the Owner Community’s service territory.

Prior to receiving service pursuant to Tariff LC-20, the Large Customer must enter into an agreement for electric service (Service Agreement) with the Owner Community in which their load is located. The Service Agreement shall identify Platte River as a third-party beneficiary of the Service Agreement. The Service Agreement shall address, at a minimum, the following material terms:

Charge(s) for service, including responsibility for infrastructure costs Term of Service Agreement Initial date of service under this tariff Rate adjustments Amount and timing of curtailments or interruptions (if any) Standby provisions

Each of these terms and conditions shall be established in consultation with Platte River and shall be confirmed in a letter from the Platte River General Manager to the Owner Community. The Owner Community will negotiate the specific form of the Service Agreement with the Large Customer.

Charges for Service:

The monthly charges to an Owner Community for service by Platte River under Tariff LC-20 shall be determined based on the unique load characteristics, service requirements, and related costs to serve the Large Customer and will be approved by the Platte River Board of Directors.

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Tariff LC-20: Adopted: Large Customer Service Page 2 of 2 Effective:

Adjustment of Charges: Unless otherwise agreed, adjustments to the charges will be made on an annual basis at a minimum and will reflect actual changes in Platte River’s cost of service including, but not limited to, financing costs, fuel (including delivery), operation and maintenance, environmental management, and purchased power. Character of Service: Alternating current at approximately 60 hertz; three-phase; delivery at 115 kilovolts or at other voltages subject to conditions as agreed upon; metering at each delivery point. Metering, Invoicing and Losses: The Owner Community shall provide to Platte River the monthly demand, energy, power factor and other usage characteristics as may be required for billing the Owner Community on a calendar month basis, for the Large Customer usage. The Owner Community should provide this information to Platte River within five (5) business days of obtaining such data. Following its receipt of the monthly billing data for the Large Customer, Platte River shall prepare and send to the Owner Community an invoice for the electric power service provided to the Owner Community for the Large Customer, with the appropriate charges. The Owner Community, at its discretion, may opt to include in the Large Customer’s monthly energy usage the distribution losses that occur between the Platte River point of delivery to the Owner Community and the point of delivery to the Large Customer. In such case, the Owner Community shall provide to Platte River the total energy usage including losses of the Large Customer and an appropriate charge will be invoiced.

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Memorandum


Alyssa Clemsen Roberts, chief strategy officer Paul Davis, energy solutions manager

Subject: Energy Efficiency programs update

Platte River collaborates with the owner communities to offer efficiency programs under the Efficiency Works™ banner. Through Efficiency Works programs Platte River and its owner communities engage with retail customers and provide them with information, technical support and rebates to help them manage their energy use and costs. By managing customers’ energy use, Platte River is able to manage its load as well as the costs and risks associated with providing electricity.

As we look to the future, we would like to expand the collaborative approach used to develop and implement our efficiency programs to other areas of distributed energy resources (DER), such as demand response, distributed generation, distributed energy storage and beneficial electrification. Due to the distributed nature of these resources, the involvement of retail customers and the need for integrated planning and operation across the entire electric system, it is particularly important that Platte River and the owner communities collaborate on the development of this strategy.

During the board meeting staff will give a presentation and be available to answer questions relating to efficiency programs and the DER strategic planning process.

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Memorandum


Dave Smalley, chief financial officer and deputy general manager Shelley Nywall, director of finance Julie Ackerman, controller

Subject: 2020 proposed strategic budget work session

Attached is a copy of the 2020 proposed strategic budget for your review. We are pleased to present the budget document, which demonstrates how planned expenses for the upcoming year are aligned with our three core pillars, strategic initiatives and core operations. We continue to enhance the document and have added a new section describing the divisions and departments, along with their specific objectives for 2020. The budget document has four main areas of focus:

2020 budget summary – This section describes how the budget supports our three core pillars, strategic initiatives and core operations. Specific work planned in each area is described and related expenses are outlined. Financial review and budget schedules – This area consists of several sections including a summary of financial results, comparisons to the strategic financial plan, and consolidated budget schedules. Included are brief descriptions of the revenues, operating expenses, capital additions and debt expenditures, as well as detailed comparison schedules. Capital projects are also described along with project cost estimates.

Budget process – This section details the process for developing Platte River’s budget and includes an overall schedule.

Financial governance – This section serves as a reference to the financial policies that provide the framework for our financial activities and budget development.

Staff will give a presentation on the proposed budget at the board meeting reviewing the revenues and expenses related to the key activities planned for 2020. To provide you with a

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2020 proposed strategic budget work session

9/18/2019

2

comprehensive view of the budget, there will be detail slides and related trend information at the end of the slide deck for your reference but will not be presented.

We are continually refining the budget as the production cost model is updated each quarter and new information becomes available regarding operating and capital expenses. We are anticipating changes which are not yet quantified. The net change will not impact the 2020 proposed monthly charges of the new tariff rate structure but may impact resource allocations for each owner community. The changes and impact on the budget will be presented at the October board meeting. A second review session and the required public hearing are scheduled for October. Board adoption is scheduled for December.

Attachment

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2020 proposed strategic budget 1

2020 proposed strategic budget

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Message from board chair and general manager ................................................................... 5

Platte River at a glance .................................................................................................................. 7

2020 strategic budget at a glance .............................................................................................. 8

Board of directors .......................................................................................................................... 9

Mission, vision and values ........................................................................................................... 10

Our communities ......................................................................................................................... 11

Collaboration ................................................................................................................................. 13

Management team ....................................................................................................................... 14

Organizational structure ............................................................................................................. 15

2020 strategic budget summary .............................................................................................. 24

Strategic initiatives .................................................................................................................. 26

Core operations ...................................................................................................................... 35

Financial review ........................................................................................................................... 39

Consolidated budget schedules ............................................................................................... 41

Revenues ....................................................................................................................................... 50

Operating expenses .................................................................................................................... 58

Capital additions .......................................................................................................................... 78

Debt service expenditures ......................................................................................................... 99

Budget process .......................................................................................................................... 102

Financial governance ................................................................................................................ 107

Acronyms and terms ................................................................................................................. 112

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Message from board chair and general manager

The utility industry is undergoing a rapid transformation and Platte River Power Authority is committed to leading the change in Colorado. As a public power provider, we take seriously our responsibility to invest public funds in alignment with the needs and goals of our owner communities. We are pleased to present the 2020 annual budget as a reflection of that commitment.

The 2020 budget demonstrates how ongoing investments help support the resource diversification policy adopted last year, which calls for a 100% noncarbon energy mix by 2030. These investments support Platte River’s foundational pillars to safely provide reliable, environmentally responsible and financially sustainable energy and services to our owner communities, and are guided by our board-adopted strategic initiatives: 1) enhanced customer experience; 2) communications and community outreach; 3) resource diversification and alignment; and 4) infrastructure advancement and technology development.

More than $281 million in expenditures are planned for 2020, with approximately 72% of operating and capital budgets allocated for core operations and 28% contributing to strategic initiatives. Platte River will more than triple its wind power capacity, increase solar resources by 67% and add battery storage technology by the end of 2020. In addition, Platte River will deliver to our owner communities approximately 39% noncarbon energy. We also plan to invest $148.9 million in capital infrastructure from 2021 – 2024 in continued support of our strategic and core initiatives. Ongoing investments in Rawhide Unit 1 will also be made to enhance operational flexibility for additional noncarbon resource integration.

We continue to prioritize support for the efficient use of energy by residents and businesses with ongoing investments in the Efficiency Works program, which is an example of the successful collaboration between Platte River and its owner communities. This program provides the dual benefit of reducing the need for costly new generating capacity and saving customers money on monthly utility bills. Platte River and our owner communities are also collaborating on a systems integration strategy in 2020, which will include a focus on distributed energy resources. This joint effort is critical to the advancement of the resource diversification policy.

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Platte River’s commitment to community outreach and enhanced customer service will continue in 2020 with the completion of the integrated resource plan (IRP). Listening sessions in each of the owner communities will include a second round of scientific surveys to ensure we remain responsive to the desires of residents and business owners. Our rate restructuring process will be implemented in 2020, increasing transparency and enabling our owner communities to offer more options to their customers. Finally, investment in an enterprise resource planning system will provide the ability to implement next generation business process management that will integrate systems, streamline processes and provide better access to information.

Together with the strategic plan, annual report and IRP, this budget document provides a comprehensive and transparent look at Platte River’s current operations and future plans. Our leadership role in Colorado could not be achieved without the board’s guidance, our owner communities’ engagement and the commitment of our employees.

Todd Jirsa Jason Frisbie Board Chair General Manager/CEO

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Platte River at a glance Platte River Power Authority is a not-for-profit wholesale electricity generation and transmission provider that delivers safe, reliable, environmentally responsible, and financially sustainable energy and services to its owner communities of Estes Park, Fort Collins, Longmont and Loveland, Colorado, for delivery to their utility customers.

Resource capacity

Rawhide Unit 1 (coal) 280 MW

Rawhide units A, B, C, D, F (natural gas) 388 MW

Craig units 1 and 2 (coal) 151 MW

Hydropower 90 MW

Wind power 38 MW

Solar power 15 MW

Total summer effective capacity 962 MW

Note: For the effective capacity calculation, wind facilities are assigned firm capacity of 12.5% of their nameplate capacity of 303 MW and solar facilities are assigned 30% of their nameplate capacity of 50 MW. Platte River will also be testing a 2 MW battery in 2020.

Headquarters:

Fort Collins, Colorado

Began operations:

1973

General manager/CEO:

Jason FrisbieThe organization:

Platte River is a not-for-profit political subdivision of the State of Colorado.

Governance:

Platte River is governed by an eight-member board of directors comprised of each mayor or designee, and a person appointed by each community’s governing body.

Employees 2020 budget:

268 Transmission system:

Platte River has equipment in 27 substations, 263 miles of wholly owned and operated high-voltage lines, and 522 miles of high-voltage lines jointly owned with other utilities.

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Deliveries of energy2020 budget:

4,805,424 MWh

Peak owner communities demand2020 budget:

670 MW

Deliveries of energy to owner communities 2020 budget:

3,220,819 MWh

2020 strategic budget at a glance

Revenues $ 248.2M

Operating expenses $ 195M

Capital additions $ 63.9M

Debt expenditures $ 23.1M

Deliveries of energy to owner communities 2020 budget

Coal, 55%

Hydropower, 19%

Wind, 17%

Purchases, 5%

Solar, 3%

Natural gas, 1%

About 39% of the energy Platte River will deliver to its owner communities in 2020 is projected to come from noncarbon sources.

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Board of directors Platte River is governed by an eight-person board of directors designed to bring relevant expertise to the decision making process. The board includes two members from each owner community.

The mayor may serve or designate some other member of the governing board of their owner community to serve in their place on Platte River’s Board of Directors. Each of the other four directors is appointed to a four-year staggered term by the governing body of the owner community being represented by that director.

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Mission, vision and values

Mission Provide safe, reliable, environmentally responsible and financially sustainable energy and services to our owner communities of Estes Park, Fort Collins, Longmont and Loveland, Colorado, for their utility customers.

Vision As a respected leader and responsible energy partner, improve the quality of life for the citizens served by our owner communities.

Values The following values tangibly define our daily commitment to following the mission and vision of Platte River, which will strengthen our organization and improve the quality of life in the communities we serve.

Safety

Working safely to protect the public, our employees, contractors and the assets we manage.

Integrity

Service

Being ethical and holding ourselves accountable to conduct business in a fair, honest, transparent, compliant and environmentally responsible manner.

Providing quality service at a competitive price while being responsive to our owners’ needs.

Respect

Operational excellence

Encouraging constructive dialogue that promotes a culture of inclusiveness, recognizes our differences and accepts differing viewpoints.

Engaging employees to strive for excellence and continuous improvement.

Sustainability

Innovation

Maintaining financial integrity, minimizing our environmental impact and supporting responsible economic development in our owner communities.

Striving to be creative, pioneering and the best in class at solving tough challenges with resourcefulness.

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Our communities Platte River Power Authority is a Colorado political subdivision established to provide wholesale electric generation and transmission to the communities of Estes Park, Fort Collins, Longmont and Loveland.

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Town of Estes Park

Estimated population*: 6,352

Utility: Estes Park Power & Communications,

established in 1945

City of Fort Collins


Utility: Fort Collins Utilities,

established in 1938

City of Longmont


Utility: Longmont Power & Communications,

established in 1912

City of Loveland


Utility: Loveland Water and Power,

established in 1925

* Population data from U.S. Census Bureau

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Collaboration Working towards shared goals

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Management team Platte River operates under the direction of a general manager who serves at the pleasure of the board of directors. The general manager is the chief executive officer with full responsibility for planning, operations and the administrative affairs of Platte River.

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Organizational structure

Platte River’s organizational structure is comprised of divisions containing individual departments responsible for the critical elements necessary for safely delivering reliable, financially sustainable and environmentally responsible energy and services to the owner communities. Below is a brief description of each area including departmental objectives for 2020.

General manager

The general manager provides strategic leadership and direction for the safe, ethical and effective operation of Platte River. The general manager consults with, advises and makes recommendations to the board of directors concerning elements of Platte River’s strategic direction and operations, based upon Platte River’s foundational pillars of system reliability, financial sustainability and environmental responsibility. The general manager also provides supervision and direction for all centralized business and office management functions.

In addition to ongoing operational oversight, significant objectives for the general manager in 2020 include leading the organization to help owner communities accomplish their energy goals and the long-term success of Platte River through the IRP process; determining the future of Craig Unit 2, as well as Trapper Mine;

Andy ButcherChief operating officer

Generation and transmission

Dave SmalleyChief financial officer and deputy general manager

Financial and information technology services

Alyssa Clemsen RobertsChief strategy officer

Business strategies

Sarah LeonardGeneral counsel

General counsel and compliance

Platte River Power AuthorityBoard of Directors

Jason FrisbieGeneral manager/CEO

Angela WalshBoard secretary

Executive assistant to the general manager/CEO

Administrative services

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influencing future regional energy resource mixes; working with other chief executive officers to develop or join an energy imbalance market or regional transmission organization, which is essential for achieving the board-adopted resource diversification policy; and managing a smooth logistical transition to the new headquarters building.

General counsel and compliance

The general counsel dually reports to the board of directors and the general manager. The general counsel oversees Platte River’s legal, environmental compliance, reliability compliance and regulatory affairs functions which, along with significant departmental objectives for 2020, are described below.

Legal provides a broad range of services in support of Platte River operations, including contract negotiation and preparation, regulatory compliance, risk management and dispute resolution, human resource issues, and real estate transactions. The legal department also supervises relationships with retained counsel who assist in specialized areas of water law, public finance, pension and Federal Energy Regulatory Commission (FERC) regulations. In 2020, the legal department will emphasize support for the development of new noncarbon energy projects, support for the development of an energy imbalance market and management of Platte River’s water assets, including financing of the Windy Gap Firming Project.

Environmental compliance ensures Platte River remains in compliance with all federal, state and local regulatory requirements associated with utility operations. The department’s primary activities include obtaining and ensuring compliance with various permits, reporting key operational data to local, state and federal regulatory agencies; monitoring emissions; managing environmental projects; assessing emerging regulatory changes; and collaborating with trade groups and other utilities. Emphasis on environmental compliance concerning solid waste, groundwater monitoring, and upgrades to the engineering and operations plan for Rawhide Energy Station’s (Rawhide) monofill will drive significant efforts during 2020.

Reliability compliance provides oversight and guidance for all North American Electric Reliability Corporation (NERC) and Western Electricity Coordinating Council (WECC) reliability compliance obligations. These obligations are governed by FERC through the Energy Policy Act of 2005. The department activities include compliance risk analysis and monitoring, as well as compliance implementation guidance and support. Work in 2020 will highlight development of a culture emphasizing proactive risk analysis, compliance monitoring and internal controls identification. Staff will also begin preparations for the 2021 NERC reliability compliance audit.

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Business strategies

This division manages relationships critical to Platte River’s success. It collaborates with the community owners to inform leaders, stakeholders and residents about Platte River’s activities and actions, provides valuable energy efficiency products and services, manages human resource and benefits programs and regularly interfaces with stakeholders and elected officials at all levels. Below are the departments within business strategies along with their 2020 objectives.

Energy solutions provides services to the owner communities and their customers that support the financially sustainable and environmentally responsible use of electricity by retail customers. Energy solutions offers the Efficiency Works program, a common brand and set of programs designed to help customers invest in innovative technologies and use electricity wisely and cost-effectively. During 2020, Efficiency Works will strive to achieve 28,500 MWh of energy savings (approximately 0.9% of wholesale deliveries). In collaboration with the owner communities, the energy solutions team will lead a strategic integration project that will include a distributed energy resources strategy. The group will also evaluate the potential for additional energy efficiency, distributed energy resources and demand response and integrate the data within the IRP.

Communications and marketing provide information about the organization, its operations and activities to employees, stakeholders and the public. During 2020, the team will provide marketing services for the energy efficiency program. The department will also manage the production of key documents, further enhance digital communications capabilities and increase outreach to stakeholders and the public.

Governmental affairs cultivates productive and meaningful relationships among local, regional, state and federal elected officials. The department advances organizational objectives by developing and fostering strategic partnerships with external stakeholders and owner communities, delivers organizational messaging to lawmakers and manages a contract lobbyist who provides information concerning key state legislation. In 2020, the department will solidify relationships with stakeholders, develop a governmental policy and public relations strategy and establish an information reporting structure.

Human resources attracts, develops and retains talent within the organization, as well as partners with the operating departments to facilitate positive change in order to support Platte River’s mission and strategic initiatives. The department proactively identifies workforce needs and manages the employee life cycle from recruitment to retirement. During 2020, human resources will implement a total rewards strategy and program, transition Platte River to a new healthcare benefits provider and create an employee learning and development strategy. The department will also be engaged in the selection and implementation of an enterprise resource planning system.

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Safety administers and manages safety policies through employee training and education that emphasizes job-specific hazards and focuses on safe work practices. In 2020, the department will provide 24-hour support during the scheduled Rawhide Unit 1 minor outage. Safety will also continue to evaluate and acquire personal protective equipment and systems, develop interactive safety training programs and conduct annual occupational health testing.

Emergency response team (ERT) provides firefighting and emergency medical response services to employees and infrastructure at Rawhide. Through mutual aid agreements, the ERT provides coordinated resource response with Platte River’s owner communities and the Nunn Fire and Wellington Fire Protection Districts. The team is comprised of 25 employees who voluntarily serve as firefighters and emergency medical technicians. ERT members are responsible for the inspection and testing of fixed fire protection systems at Rawhide. The department will conduct trainings in 2020 to maintain certification and meet state requirements and National Fire Protection Association standards.

Financial and information technology services

As a services division, finance and information technology provide direct support and assistance to Platte River staff in day-to-day operations. They also work to improve overall processes, procedures and systems to ensure employees can work efficiently, effectively and securely. The departments and functional groups, as well as objectives of this division, are described below.

Financial services

Financial services ensures the near- and long-term financial sustainability of Platte River, manages the financial risk of the organization and supports organizational leadership. In addition to ongoing process improvements during 2020, significant resources will be devoted to selecting and implementing an enterprise resource planning system, which will provide increased efficiency and better reporting for the entire organization. The departmental focus in 2020 will also include supporting the financial aspects of the Windy Gap Firming Project. In addition, there will be continued support and oversight of the newly implemented rates structure which provides unbundled transmission and generation rates, and transparent renewable pricing information for retail utilities to establish noncarbon pricing options for retail customers. Finance is comprised of the following functional areas.

Accounting monitors and reports on Platte River’s financial status, providing managers, senior leaders and the board of directors with the tools and information needed to make informed decisions. The accounting team also coordinates Platte River’s annual financial audit and leads the budget process in compliance with Colorado State budget law.

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Internal audit evaluates organizational risks and controls with a focus on efficiency and effectiveness, organizational objectives, asset protection, and compliance with laws and policy. Internal audit assists management in understanding risks and controls and provides direction for improving processes and procedures to mitigate various types of organizational risk.

Financial planning, rates and risk management develops financial models and establishes metrics to ensure the organization remains financially sustainable. In collaboration with senior leadership and the board of directors, this team establishes rate strategy and design, maintains the rate setting policy and sets Platte River’s rate tariffs. Working with internal audit, this team also develops and supports the enterprise risk management plan.

Treasury manages Platte River’s cash, investments and debt to ensure the organization has sufficient financial resources to fund future projects and initiatives while meeting the organization’s financial targets. Treasury also manages the accounts payable, purchasing and contract administration functions of Platte River.

Information technology services

Information technology services enables stakeholder success through the integration, optimization and facilitation of technology solutions. During 2020, substantial efforts will be devoted to automating processes, streamlining and improving end-user experience, selecting and implementing an enterprise resource planning system, and deploying an enterprise business intelligence and reporting system. Additionally, developing and implementing a disaster recovery and business continuity plan and continuing the cybersecurity risk program will be a focus. Informational technology is comprised of the following departments.

Service desk deploys, manages and supports end-user personal computers, non-enterprise software, audio/visual systems, printers, mobile devices and all other technologies used by Platte River employees.

Enterprise applications manages the lifecycle of all corporate enterprise applications which include the data center and cloud-based applications such as the financial, time entry and maintenance management systems.

Infrastructure and cloud computing services manages the backend systems required to support enterprise applications and desktop computing.

Information and cyber governance develops and oversees the cybersecurity strategy and risk program. This includes developing monthly employee cybersecurity training to ensure Platte River staff are aware of potential threats and understand the actions to take if ever impacted.

Access control security designs, implements and manages the physical access controls which include key card systems to Platte River facilities and assets, radar-based intrusion detection systems and video surveillance.

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Generation and transmission

The generation and transmission division serves the core functions of Platte River – the generation of power and delivery of high voltage electricity to the owner communities. This division is comprised of several departments that collaborate continuously to fulfill Platte River’s promise to safely deliver reliable, environmentally responsible and financially sustainable energy and services to the owner communities.

Power production

Power production performs every job associated with the generation of electricity at Rawhide. Groups in this division manage plant operation and maintenance, fuel handling, control systems, design and engineering, and building and property maintenance. The power production departments are described below, along with their 2020 objectives.

Power production administration oversees the power production, plant operations, maintenance, engineering, fuel handling and facilities maintenance at Rawhide. Key goals for 2020 include oversight of work to increase the operational flexibility of Rawhide Unit 1 and the combustion turbines to improve market adaptation capabilities. In addition, employees will be engaged in the selection and implementation of an enterprise resource planning system.

Engineering supports operations and maintenance activities for Rawhide, completes critical inspections of plant equipment, identifies and manages capital projects and manages significant outage repairs. Work in 2020 will emphasize low load testing of Rawhide Unit 1 that will ultimately support the integration of more noncarbon resources while maintaining system reliability, safety and cost-effective operations.

Mechanical maintenance ensures the safe and effective maintenance of all plant mechanical equipment and systems in support of Rawhide. Additionally, mechanical maintenance plans and executes all outages and collaborates with engineering for the planning and execution of capital projects. Resources will be devoted to a scheduled Rawhide Unit 1 minor outage in 2020.

Instrumentation and electrical ensures the safe and effective maintenance of all low and medium voltage electrical instrumentation and control systems at Rawhide. The department performs electrical, instrumentation and control system troubleshooting and repair services for Rawhide Unit 1 and all combustion turbines. The department also supports capital additions and collaborates with other departments during all outages. During 2020, the department will support the scheduled Rawhide Unit 1 minor outage, combustion turbine inspections and capital additions.

Fuel handling manages the coal supply to Rawhide Unit 1. The group is responsible for operating the rotary car dumping system, suppressing dust in all plant areas, maintaining the Rawhide short line rail road system and managing fly and bottom ash from Rawhide Unit 1. Significant objectives for 2020 will be to maintain a rolling 75-

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day supply of coal, support the scheduled Rawhide Unit 1 maintenance outage and foster increased sales of ash for beneficial reuse.

Plant operations operates and maintains all systems and components of Rawhide Unit 1 and the five combustion turbines. In addition, the department supports operations of the water pump station that serves Rawhide. Rawhide operates around the clock to ensure reliable electrical generation to meet load demand. The primary goal in 2020 is to attain high reliability factors from Rawhide Unit 1 while emphasizing greater operational flexibility across all resources to meet evolving system demands.

Facilities maintenance at Rawhide maintains all buildings and structures, landscaping, and roads, as well as manages the rangeland and bison. During 2020, the department will support the scheduled Rawhide Unit 1 minor outage, maintain efficiency of the HVAC systems, and upgrade the instrumentation and electrical department's work area.

Fuels and water

Fuels and water ensures the availability and delivery of critical fuel and water resources necessary for existing and potential generation sources. Core activities include contract and agreement management, development of purchasing strategies to optimize coal and rail agreements, maintaining reliable water supply for generating facilities, and accurately planning for water and fuel needs. Significant objectives for 2020 are to ensure financial sustainability of the Windy Gap Firming Project and to continue studying the expansion of the storage capacity of process water supplies at Rawhide.

Power supply

Power supply manages the work necessary to meet customer energy needs, from current and near-term load obligations to long-term resource planning. Staff engage with regional utilities, use sophisticated technologies and collaborate with industry experts to meet customer energy needs and leadership objectives. Descriptions of the groups which make up power supply are listed below, and include significant departmental objectives for 2020.

Power markets and generation dispatch plans and schedules generating resources to reliably meet load requirements of the owner communities and other obligations. The department optimizes available resources and utilizes a bilateral energy market to create the most cost-effective energy supply possible and to generate unit stability through the sale of capacity and energy to third parties. During 2020, the department will continue to pursue Platte River’s strategy to participate in an energy imbalance market, which will support efficient integration of additional noncarbon resources and balance renewable energy. The team will also secure replacement generating capacity during scheduled and forced outages of Platte River’s resources.

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Resource planning provides analytical support to Platte River's management for near- and long-term generation, power supply planning and operation decisions. The department uses industry-standard systems and methods to provide flexible, high-level analysis to facilitate strategic decisions concerning complex issues. Through the IRP process, the department develops ranges of future energy scenarios and develops portfolios for each specific scenario. Consistent with board direction, the department initiated the current IRP in 2018 to conclude in 2020.

Power delivery

Power delivery manages the complex, minute-by-minute demands of Platte River’s high-voltage transmission system that delivers energy to the owner communities. Staff continually monitor thousands of system components to maximize performance and channel energy efficiently. Large amounts of data and long-range plans are used to design and build transmission systems to meet future customer demand. Power delivery will be a critical component in future work to better integrate Platte River’s transmission system with the delivery systems of the owner communities. Its groups and 2020 objectives include the following.

System engineering is responsible for designing a safe, reliable and cost-effective transmission system. The department provides long-range transmission system planning, system relaying protection, distribution system design and engineering services for Estes Park, Fort Collins and Loveland under intergovernmental agreements. In 2020, focus will be on maintaining a transmission system availability factor of more than 99.97%, while implementing projects to upgrade equipment and improve technology.

System operations is responsible for safely operating and maintaining the reliability of Platte River's transmission system service to its owner communities. The department conducts coordinated transmission operations with neighboring reliability operators while maintaining compliance with all required NERC and WECC reliability standards. In 2020, department staff will facilitate the transition to a new reliability coordinator and modernize systems operations tools and processes. The department will also obtain certification for and commence operation in the transmission control room at the new headquarters facility.

SCADA services manages the safety, maintenance, security and regulatory compliance of Platte River's SCADA control system which is used to control and monitor 263 miles of high-voltage transmission lines and 27 substations. The department provides transmission system asset control and situational awareness, as well as operations data exchange with critical partners. SCADA services also support control systems infrastructure and ensures NERC critical infrastructure protection compliance. Significant 2020 objectives include replacing infrastructure servers, as well as aged systems that provide long-term backup storage and data recovery services.

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Telecommunications is responsible for the safety, management, maintenance and security of Platte River's wide-area communication network which supports and protects the transmission system's operation. The telecommunication infrastructure supports SCADA, as well as other transmission system functions including real-time operations communication with interconnected utilities. During 2020, the department will initiate work to replace the synchronous optical network (SONET) system, which uses Platte River's fiber optic system to deliver real-time reliability data to electrical system operators.

Fiber optics manages operations and maintenance for the fiber optic network, which provides high-speed fiber optic connectivity between Platte River's generating assets, transmission system and community distribution systems. Fiber optic cables ring each of the owner communities and systems will be integrated more fully to provide telecommunication connectivity. Core department activities include maintenance of the physical fiber optic infrastructure and implementation of capital installation and relocation of fiber optic cable. While maintaining safe and reliable fiber services, the department plans to replace aged equipment and fortify routes at the Richard Lake Substation in support of the SONET system replacement.

Substations

Substations is responsible for building and maintaining all substation assets. The department manages equipment installations and inspections for capital projects, provides ongoing maintenance and conducts testing for all substation equipment. Primary work in 2020 will focus on transformer maintenance, vegetation management and the installation of air flow spoilers on Platte River transmission lines to improve system reliability during adverse weather conditions.

Facilities and fleet

Facilities and fleet manage all building and grounds maintenance at headquarters and substations facilities. Services include repairs, heating, ventilation and air conditioning replacements, vehicle maintenance and inspections and records management for fleet of transportation and construction/maintenance vehicles. Substantial work in 2020 will be devoted to transitioning personnel and equipment to the new headquarters building, as well as substation building maintenance.

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2020 strategic budget summary The Platte River Power Authority Strategic Budget is produced in alignment with the long-range strategic plan, under the direction of the organization’s leadership to provide community leaders, stakeholders and the public with a transparent roadmap of Platte River’s tactical operational and capital plans for the coming year.

The foundation for Platte River’s 2020 budget represents ongoing investments into transforming the organization, based upon the organization’s strategic plan and core operations. These are aligned with Platte River’s core pillars of system reliability, financial sustainability and environmental responsibility. The pillars guide the decision-making process which has directed the resource allocations, revenues and expenses detailed in the budget.

Expenses are managed from a broad perspective with the goal of operating the system in a safe, compliant and reliable manner while cost-effectively optimizing resources and expanding environmental stewardship. Platte River communicates and collaborates with the owner communities to align processes and outcomes to the benefit of all customers.

Platte River’s budget includes $248.2 million in revenues and $282 million in expenses consisting of operating, capital and debt. Of the $258.9 million in operating expenses and capital additions, approximately 28% and 72% is allocated to activities supporting strategic initiatives and core operations, respectively.

Operating expenses and capital additions: $258.9 million

Core operations, 72%

Strategic initiatives, 28%

Generation, 30%Fuel, 19%Transmission, 15%Contract renewables and hydropower, 15%General business, 8%Facilities, 5%Demand-side management, 5%Market purchases, 3%

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Core pillars System reliability ∞ Environmental responsibility ∞ Financial sustainability

Strategic initiatives

$73 million 28% of operating and capital

Enhanced customer experience, $12.9M, 5%

Communications and community outreach, $2M, 1%

Resource diversification and alignment, $32.1M, 12%

Infrastructure advancement and technology development, $26M, 10%

Activities

Distributed energy resource strategy, energy efficiency expansion, electric vehicle charging stations, demand response and wholesale rate redesign

Public engagement, effective internal and external communications and energy efficiency program marketing

Integrated resource plan, wind and solar projects, battery storage, operational flexibility and energy imbalance market research

Substation security and modifications, LED lighting, control systems, airflow spoilers, enterprise resource planning, cybersecurity, fiber optics and the Windy Gap Firming Project

The new headquarters campus and Energy Engagement Center will provide an easily accessible amenity to owner communities and the public while providing employees with the resources needed to operate more effectively and efficiently in a rapidly changing industry. The new facility includes a distributed solar system that will provide up to 50% of its power needs and a battery system integrated with grid operations.

Core operations

$185.9 million 72% of operating and capital

Generation including fuel, $123.6M, 48%

Transmission, $23.3M, 9% Purchases including hydropower,

wind and solar energy, $39M, 15%

Activities

Predictive maintenance strategies – Rawhide Unit 1, Craig Unit 2 and combustion turbine units scheduled maintenance outages and information technology investments

Proactive capital investments – monofill upgrades, fire protection, switchgear and oil breaker replacements, transformer upgrades and SONET replacement

Staffing additions are included to support the changing environment and focus on strategic initiatives. Increased requirements are associated with communications and marketing, information technology and transmission.

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Strategic initiatives

$73 million, 28% of operating and capital

Platte River adopted its most recent strategic plan in 2018 to provide high-level direction for implementing its mission and vision, under its foundational pillars to safely provide reliable, environmentally responsible and financially sustainable energy and services to the owner communities by focusing on organizational priorities over the following three to five years. The initiatives are intended to be clear, actionable and adaptable, and guide transformative decision-making that aligns resources and investments to achieve objectives. The 2018 strategic initiatives include:

Enhanced customer experience Communications and community outreach Resource diversification and alignment Infrastructure advancement and technology development

The following information highlights key investments that will be made during 2020 to support each strategic initiative.

Enhanced customer experience $12.9 million, 5%

As a leader in public power, Platte River commits to providing its owner communities and their customers with solutions and programs to achieve their varied energy goals. Platte River will collaborate with its owner communities to support the strategic initiative of enhanced customer experience through programs and services that improve energy efficiency, promote demand response and encourage effective use of distributed energy resources. A new rate structure will be implemented to address the existing and anticipated changes occurring in the utility industry and meet the needs of the owner communities. The 2020 budget supports the following initiatives.

Energy efficiency

Platte River will continue to expand its work with owner communities to increase customer efficiency in alignment with the load forecast and 2016 IRP. Programs through Efficiency Works will include new or enhanced services for both business and residential customers.

In 2020, $10.6 million is budgeted for energy efficiency programs to obtain approximately 28,500 MWh of additional energy savings along with 4 MW of demand reduction during the year, approximately 0.9% of wholesale deliveries. Funding will be used for the most cost-effective business and consumer product offerings. Energy solutions will also administer a home audit and rebate program on behalf of the owner communities using funding they provide. In addition, Platte River anticipates receiving supplemental funding from the owner communities to augment its budget

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and to administer programs of their individual design. Platte River will use its budget before accessing the supplemental funding to ensure each owner community receives its equity share of budgeted dollars. In order to make full use of the budgeted funds, the ability to overcommit projects is required and is estimated to be $0.6 million for 2020. Work done under approved agreements and rebate applications is completed on a timeline determined largely by program participants (customers and their contractors). As a result, it is likely that some work intended for the current budget year would move into the next budget year and funds would not be spent. However, if projects that were overcommitted materialize, a budget contingency transfer may be required to cover the expenses.

As part of the 2020 IRP, Platte River will establish a new estimate of cost-effective energy efficiency program potential based on an evaluation of existing program achievements and market saturation compared to potential opportunities. This data will be incorporated into the IRP in support of leadership’s goal to achieve greater energy diversity.

Distributed energy resources and demand response

Platte River continues to work with owner communities to develop new approaches to distributed energy resources and demand response, to provide net benefits to Platte River, the owner communities and their customers. Approximately $0.9 million is planned in 2020 to fund key initiatives. Platte River will continue to operate the demand response pilot program, which started in 2015. The pilot program provides Platte River’s system operators the ability to operate demand response resources developed by the cities of Longmont and Fort Collins, and its enlarged capabilities will enhance energy diversity options.

Platte River will continue its electric vehicle charging study to further encourage adoption of electric vehicle charging technologies that will help to develop demand response programs aimed at influencing the time of day when customers charge their electric vehicles. Study data is currently providing a greater understanding of charging load profiles within the owner communities and will enable the formulation of customer incentives to reduce demand during peak periods.

Wholesale rate redesign

During 2018, Platte River initiated a comprehensive review of its rate making practices to recognize and address the existing and anticipated changes occurring in the electric utility industry. Staff collaborated with the owner communities and rates experts throughout 2019 to create a new rate design, to achieve the following goals:

Improve value added of Platte River in support of owner communities Offer a desirable portfolio of services and rates that meet owner communities’

needs Better align wholesale time-of-use pricing signals with cost of service and

owner community retail pricing signals Send pricing signals that result in system benefits

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In 2020, Platte River will implement the new rate design which provides unbundled transmission and generation rates, and transparent renewable pricing information for retail utilities to establish noncarbon pricing options for retail customers. More information regarding the new rate design can be found at www.prpa.org/wholesale-rates.

Platte River considers rate design an ever-evolving process that will be revisited at regular intervals as the owner communities and electric industry continue to evolve.

Communications and community outreach $2 million, 1%

Internal and external communications and outreach provide employees, owner communities and key stakeholders with an accurate understanding of Platte River and its priorities as a trusted energy partner to drive greater collaboration among all parties to achieve shared goals. In support of the IRP process in 2019, Platte River surveyed residents and business leaders across its owner communities and learned that a majority were aware of the organization and supported its actions. Staff will leverage this information to further Platte River’s objectives in 2020.

Governmental affairs

Platte River will expand its engagement with public policy stakeholders during 2020 by re-establishing or strengthening relationships and developing an engagement plan in support of the organization’s objectives. Key to the success of a resurgent governmental affairs program will be the effective use of the contract lobbyist and the integration of communications assets that have been built in the past few years.

Communications and marketing

Communication tools were expanded in 2018 and 2019 to reach broader audiences with information about Platte River and to receive feedback from individuals and groups across its owner communities. Work in 2020 will include the use of video and interactive digital products. Staff will also increase direct outreach with business, educational, environmental and nonprofit audiences to convey key messaging through IRP listening sessions, formal presentations, event sponsorships and active participation on boards or committees of community organizations. This department will also begin managing all marketing efforts in support of the Efficiency Works program. Resources will also be devoted to the production of the organization’s core documents — annual report, annual budget, IRP and strategic plan.

Learning and development

Employees, including professional and skilled trades people, are Platte River’s greatest assets. In 2020, to attract and retain the best possible employees, Platte River will create, implement and deliver new learning and development initiatives. This work

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will be formulated into training modules that may be delivered electronically or in a classroom setting and will be aligned with the core responsibilities of the organization and its strategic initiatives. The modules will feature methods to ensure retention of lessons learned for practical, on-the-job use.

Resource diversification and alignment $32.1 million, 12%

Platte River’s future resource diversification and alignment efforts stem directly from the board-adopted resource diversification policy that calls for a 100% noncarbon energy mix by 2030. While significant strides toward this objective will take place in 2020 with the additional wind and solar resources, longer-term plans will be determined through the IRP process, which will be completed in 2020.

Resource planning

In addition to annual load forecasting and market outlooks that comprise Platte River’s power supply plan, approximately $0.4 million in contracted services will fund the research and development of Platte River’s 2020 IRP, which will formalize short- and long-term plans to meet carbon reduction goals. The IRP will include an analytical assessment of Platte River’s current and potential resource mix and will be produced with the support of industry experts. Consultants will provide studies concerning greenhouse gas emissions within Platte River’s supply chain, energy storage technology capabilities, plant operational flexibility, regional economic impacts, distributed resources and conservation technologies. Work will include the drafting and editing of the final plan. More information regarding the IRP can be found at www.prpa.org/irp.

Noncarbon resources

As part of the power purchase agreement for 150 MW of new wind capacity from the Roundhouse Renewable Energy Project (Roundhouse), Platte River was granted first rights to purchase an additional 75 MW from the planned 225 MW wind farm, located in southern Wyoming. In 2019, Platte River announced it would exercise its option to purchase the additional 75 MW, to replace 12 MW and 60 MW of more expensive wind. The existing 72 MW of wind has been or is planned to be sold under short-term power purchase agreements. The 60 MW sale is for 10 years, after which the 60 MW will return to Platte River as part of its noncarbon resource portfolio. Platte River will correspondingly invest approximately $20 million to purchase the project’s generator outlet transmission line, which will deliver the wind energy to the Rawhide’s transmission interconnection. The project is expected to be complete by mid-2020. Also in 2019, Platte River announced it would purchase energy from a 20 MW solar power installation with a battery storage component, to be built at Rawhide by spring of 2020.

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Developers of both projects have received permits from regulatory bodies to proceed with project development. Significant construction activities associated with the Roundhouse project are expected to commence late 2019 with a completion date by mid-2020. Construction on the solar installation, which began in the second half of 2019, is expected to conclude in the spring of 2020. Purchased power expenses for 2020 of approximately $6.5 million are expected when the new resources become commercial. Platte River has issued a request for proposal to explore purchasing 50 MW to 150 MW of additional solar. If negotiating a power purchase agreement is successful, the facility could be online as early as 2023.

Platte River’s new headquarters campus will have a distributed solar system with a battery component that will provide up to 50% of its power needs. The remaining energy required by the headquarters campus will be provided under a green/renewable energy tariff to be developed by the City of Fort Collins Utilities department. Despite a significant increase in square footage, the new headquarters campus is projected to use less energy than the current campus.

Energy imbalance market

To efficiently and effectively integrate additional noncarbon generation into Platte River’s resource mix, participation in an organized or enhanced energy imbalance market (EIM) remains a strong priority. During 2020, staff will continue research into potential options such as:

Expanding the joint dispatch agreement to include off-line capacity, additional participants and/or a third-party administrator;

Exploring opportunities with the California’s Western Energy Imbalance Market and;

Exploring the feasibility of developing and joining the Southwest Power Pool’s Western Energy Imbalance Services market.

Operational flexibility

To foster integration of additional noncarbon energy, output from Rawhide Unit 1 must become more flexible. Plant personnel began testing Rawhide Unit 1 systems under lower load conditions during 2019 and will continue evaluations in 2020. At this time, Rawhide Unit 1 can operate at 100 MW minimum output level in a safe and reliable manner. Further research will include assessments of stress and wear on critical components and continuous compliance with environmental standards while maintaining reliable, cost-effective energy output. In addition, after combining the energy from 225 MW of new wind and 20 MW of new solar capacity with existing output from Rawhide, the transmission interconnection at the site will reach its maximum capacity.

Beginning in 2020 and expected to be complete by 2021, improvements and modifications, including combustion upgrades and variable frequency drives to Rawhide Unit 1, will facilitate running the plant at lower loads. Combustion upgrades will allow for better nitrogen oxide and carbon monoxide control during both low

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and high load operations. The variable frequency drive project saves energy and provides benefits such as improved heat rate, management of load changes and a potentially faster ramp rate. The estimated investment for these two projects is $2.9 million in 2020 and $9.6 million in total.

Platte River has entered into two separate 25 MW long-term sales contracts that may be curtailed by Platte River for the loss of any one of the following coal units: Craig Unit 1, Craig Unit 2 or Rawhide Unit 1. These two sales will assist operations in accommodating the additional intermittent wind and solar output during times of light load conditions.

Distributed energy resources strategy

Platte River and its owner communities have begun a strategic planning development process for distributed energy resources with $0.3 million budgeted in 2020 towards this effort. This strategy will include any technologies, programs or resources implemented on the distribution system or within a customer’s facility, whether in front of or behind the retail meter. Distributed energy resources are being used in the broadest sense to apply to energy efficiency, demand response, distributed generation, distributed energy storage and beneficial electrification. Due to the distributed nature of these resources, the involvement of retail customers, and the need for integrated system planning and operation across the entire electric system, it is important that Platte River and the owner communities collaborate to develop a distributed energy resource strategy.

Infrastructure advancement and technology development $26 million, 10%

Platte River’s generation, transmission and support assets continue to perform extremely well, largely due to effective management that includes timely investments and proactive maintenance. Platte River will continue to pursue infrastructure advancements and technologies to provide secure, safe and reliable service to the owner communities and offer long-term strategic advantages for the owner communities and their customers. During 2020, significant emphasis, primarily capital projects, will be placed on the projects discussed below. While these are necessary investments for Platte River, they also have a strategic component.

Security, transmission and plant operations

Installation of surveillance and access control systems at the City of Loveland substations will take place over the next few years once new block walls are completed. These projects will enable the City of Loveland to monitor and protect their critical substation assets. This is a shared expense with the City of Loveland. Platte River’s portion for one substation in 2020 is approximately $0.1 million. Further,

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Platte River will invest $0.1 million in 2020 to replace traditional hard keys at substations with smart keys. The smart keys provide greater control for access to the substations.

Key modifications or improvements to targeted substations will also be made bringing systems in conformity with current engineering standards. The Harmony Substation project will be completed and includes upgrades to circuit switchers, breakers, relays and transformers. The project is expected to be complete in 2021 for a total project cost estimate of $0.8 million. The 2020 budgeted amount is $0.1 million. New circuits and associated protection will also be installed at Linden Tech Substation and County Line Substation. Both projects are expected to be completed for a total of $0.6 million and $0.3 million, respectively.

The transmission line airflow spoiler installations prevent icing and galloping on the transmission lines and increase reliability. Installation of all the airflow spoilers is expected to be completed by 2022 for an estimated total project cost of $1.9 million; the 2020 cost estimate for four installations is $0.4 million.

The distributed control system of Rawhide Unit 1 was previously upgraded to unify the controls onto a single platform. The control system upgrade also positively impacted compliance requirements and cybersecurity. In 2020, the controls for the Owl Creek gas yard will also be upgraded and will be consistent with the new plant control system. The planned cost for 2020 is $0.3 million.

Rawhide’s high-pressure sodium lighting will be replaced with more efficient LED lighting. This is expected to save electricity consumption and reduce maintenance costs. The project began in 2016 and will continue to 2022 for an estimated project cost of $0.7 million. The 2020 budget is for $0.1 million.

Enterprise resource planning

The software programs that perform Platte River’s critical business functions have reached the end of their useful lives, with several having been maintained well beyond design functionality. Coordinating many necessary functions between software programs is often managed manually creating significant challenges as the scope and complexity of business operations grow. To begin a multi-year process, planned upgrades will better align the needs of the following departments:

Human resources (benefits, time entry, payroll) Financial services (general ledger, accounting, fixed assets, cash management,

purchasing, budgeting, forecasting and reporting) Facilities and fleet (materials/maintenance management, fleet tracking)

A more integrated software solution will improve employee efficiency and reporting accuracy. The project will also enable improved business intelligence and reporting that will lead to more timely and effective business decisions.

In 2019, Platte River engaged a consulting firm to assist in the development of a request for proposal (RFP) to find an enterprise resource planning system to replace

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the current environment. At this time, the scope, schedule and budget are uncertain until the RFP process is complete and a decision is made. Due to these uncertainties, an amount is not included in the 2020 budget.

Cybersecurity

The digital operating systems for business and power production are increasingly sophisticated and efficiently manage more functions, thereby enabling greater workforce productivity. Increased sophistication must be matched by more effective technologies which protect highly sensitive systems that drive the generation and transmission of energy to the owner communities and critical business operations. Following the development of a cybersecurity risk program, Platte River will embark on a five-year project to implement security controls adopted from federal and industry group principles. During 2020, systems will be installed to perform the following functions with an investment of approximately $0.2 million.

Multi-factor authentication to provide a more robust method of confirming a network user’s identity. The functionality will improve defenses against attackers who may attempt to gain access to sensitive systems.

Identity and access management to enable the right individual to access the correct resources at the right time for appropriate business reasons. The system will further protect sensitive systems from unwarranted access.

A password management “vault” to securely hold user password information and encourage individuals to use diverse passwords for different applications.

Accurate domain, host and internet protocol management to eliminate existing vulnerabilities by ensuring computer names match IP addresses when performing software updates and installations, performing backups, monitoring hardware inventories and troubleshooting network issues.

Data loss prevention solution to prevent the release of personally identifiable information or other confidential information.

Fiber optics

Platte River’s regional fiber optic network plays an essential role in the reliable operation of Platte River’s transmission system and provides telecommunications connectivity within the owner communities. During 2019, Platte River completed the installation of a new long-haul connection from Loveland to Estes Park to improve system reliability. In 2019, the ownership of excess fiber contained within the local loops was transferred to the owner communities and agreements were approved that define how the fiber optic system will be managed. In 2020, Platte River’s activities focus on coordinating fiber work with the owner communities with enhancing fiber connectivity at key locations and defining a fiber work process. Approximately $0.2 million will be invested in capital projects to enhance the reliability of the fiber optic network. A new fiber optic lateral at the Richard Lake Substation will expand system reliability and data communications diversity between the substation and the control center. A new lateral between Valley Substation and the long-haul west will provide connectivity needed for the SONET replacement capital project.

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Windy Gap Firming Project

Seeking to increase water resource reliability for electric generation operations, Platte River will follow the board’s directive and collaborate with its partners to continue development of the Windy Gap Firming Project through the construction of the proposed Chimney Hollow Reservoir. The majority of the 2020 budgeted amount of $15.6 million will be placed in escrow by the project developer, Northern Water, and will be devoted to construction operations currently scheduled to begin early in the year. Platte River’s share of the total project is estimated to be $109.2 million and is to be completed by 2024. The approximately $100 million in Series KK bonds to be issued in 2020 is planned to be allocated for this project. As the Windy Gap Firming Project nears completion, Platte River may seek to sell additional units to achieve an optimal balance of unit ownership and firming project storage while further reducing future debt obligations.

Headquarters campus project

The main headquarters campus project will conclude in early 2020. The new campus will provide Platte River with a consolidated facility for employees and an accessible amenity to owner communities and the general public. An investment of $2.8 million is planned for 2020 to complete the project for a total estimated project cost of $50.4 million.

During the headquarters construction review process, Platte River determined a need to increase the size of the board room to enable greater public engagement. Enlarging the board room reduced other spaces, which eliminated the potential to host large internal, regional and community meetings. For a projected investment of approximately $5.4 million, Platte River will build the Energy Engagement Center, an additional 6,500 square feet of meeting and conference space that will be attached to the east end of the new headquarters building, which will increase Platte River’s presence and connection with the public. The Energy Engagement Center will provide the ability to host large meetings and conferences and enable members of the owner communities to learn more about the energy issues confronting the region and state. Construction on the center will commence after staff occupy the new building and the old headquarters facility is decommissioned.

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Core operations $185.9 million, 72% of operating and capital

Continued investment in Platte River’s core business of power production and transmission facilities is necessary to ensure reliability, compliance and safety. To diversify Platte River’s resource portfolio, power purchase agreements are in place for hydropower, wind and solar. With a focus on preventive and predictive maintenance strategies, the core operating and maintenance expenses are relatively consistent from year to year. Key highlights, including capital projects for 2020 are described below.

Generation

For 2020, over 50% of deliveries to the owner communities are derived from Platte River’s baseload coal-fired resources. However, Platte River is active in western energy markets and may choose to purchase power if prices are lower than the cost to generate, resulting in higher purchased power expense and lower fuel expense. The joint dispatch agreement is an example of a market Platte River utilizes to purchase and sell energy. This agreement works similarly to an energy imbalance market, thus creating access to low cost energy.

Rawhide Energy Station

A minor outage is scheduled for Rawhide Unit 1 in early 2020. After significant work was successfully executed in 2018, with systems testing and further upgrades in 2019, the 2020 outage will be used to inspect major equipment and to conduct preventive and corrective maintenance that cannot be completed while Rawhide Unit 1 is online. The operations and maintenance costs are estimated to be $1.7 million. During the scheduled outage, approximately $1.8 million in modifications will also be made to the rotary car dumping system to improve its overall reliability and efficiency. This will complete the project for an estimated $2.4 million. Also in 2020, an investment of approximately $5.3 million will be made on several projects in preparation of the 2021 scheduled major outage. A significant project to be completed is the replacement of the generator step-up transformer which is described in the transmission section. As a result of the scheduled minor outage and additional noncarbon resources, fuel expense for Rawhide Unit 1 is expected to decrease in 2020 as the unit will operate at a lower capacity factor.

To ensure compliance with state regulations and the EPA’s Coal Combustion Residuals (CCR) Rule, Platte River has embarked on a multi-year effort to upgrade the Rawhide monofill, which holds Rawhide Unit 1’s bottom and fly ash. Permits for proposed updates are expected in 2020 along with project design and the purchase of the liner, leachate and cover systems. Construction of the first phase will follow thereafter. Approximately $6 million is budgeted for the project in 2020, with a total project cost of approximately $6.9 million.

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Other capital investments at Rawhide include the following and more details can be found in the capital additions section.

Installation of modern fire suppression equipment and controlling agent to replace the aged carbon dioxide-based fire suppression system to improve safety and reduce limitations during emergency events

Replacement of the aged switchgear at the pump station that fills Hamilton Reservoir with a safer, more efficient and reliable automated breaker system

Two combustion turbines will complete their first scheduled maintenance outages since inception for approximately $0.5 million. To ensure continued reliability, significant maintenance is required on combustion turbines after a predefined number of starts has been achieved. The other units are approaching their limits and will require scheduled maintenance outages in the coming years. Also in 2020, natural gas consumption for the combustion turbines is expected to increase as a result of a projected increase in market prices for sales for resale. Additional revenue generated helps lower rates to the owner communities.

Craig Generating Station

Craig Unit 2 will undergo a two-week outage in 2020 to perform needed maintenance on turbine valves, repair water wall tube erosion in the boiler and make repairs in the low-nitrogen oxide burners. Plant operators will also evaluate the need for work on the selective catalytic reduction system. Crews will also rebuild one set of forced draft and induced draft fans and a boiler feed pump. Following the outage will be a 10-day effort to clean the unit’s boiler. Platte River’s share of the outages is anticipated to be $1.5 million which is made up of $1.1 million and $0.4 million in maintenance and capital projects, respectively. Expenses and investments continue to be reviewed as we approach the closure of Craig Unit 1; as a result, general operations and maintenance expenses were reduced by $0.6 million in 2020. Although coal prices are decreasing, the fuel expense for the Craig units is expected to increase as a result of additional generation for the long-term contract sales and a projected increase in market prices for sales for resale.

Transmission

Necessary transmission capital projects are determined by the assessment of the annual 10-year load study which identifies areas that must be addressed to meet operational standards. Collaboration and coordination with owner communities is required to schedule future delivery points. Significant transmission related capital projects planned for 2020 are listed below. More details can be found in the capital additions section.

Rawhide Unit 1’s generator step-up transformer, which elevates output voltage from 13,800 volts to the transmission system’s 230,000 volts, has reached the end of its 35-year life and requires replacement. Replacing the single unit with multiple units will improve overall system reliability and enhance the ability to manage additional, potentially noncarbon, generating resources. Platte River will invest approximately $2.2 million in 2020 for the down payment for the

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transformer. The project is expected to be completed during the 2021 scheduled maintenance outage for a total project cost of approximately $11.7 million.

To improve safety, reliability and environmental performance, existing oil circuit breakers have been replaced with more efficient and reliable gas circuit breakers. The final replacements will take place in 2020 at the Rawhide substation for approximately $0.9 million.

Platte River will initiate a multi-year project to replace the aging SONET system, which uses Platte River’s fiber optic system to deliver real-time reliability data to electrical system operators. Approximately $0.5 million will be devoted in 2020 to begin efforts to divide the system into two networks, one that will support data transmission over long distances for the bulk electric system and the other to support data transmission for the owner communities’ distribution and fiber optic systems. The project is expected to be completed by 2021 for $1.3 million.

Other expenses

Approximately 25% of the operating expense budget relates to employee salaries and benefits which are primarily retirement, medical and dental. Combined, the expenses are expected to rise approximately 10% from 2019. With the changing environment and focus on the strategic initiatives, the need for new positions has been accelerated and additional staff is required in 2020. A total of four full-time employees will be added to Platte River staff, three of whom will serve within the administrative and general services departments, specifically in communications and marketing and information technology. The fourth position will serve in the transmission area as a power system operator trainee. Also included in 2020 is the 3.2% salary market adjustment.

Benefits for employees are spread across all functional areas as a percentage of salaries. Platte River has undergone a comprehensive evaluation of benefits and as a result changed the benefits broker in 2019. This change in brokers aligns Platte River’s strategy of continuing to provide competitive benefits while remaining financially sustainable. Discussions are underway to provide Platte River with a three-year strategic roadmap to implement changes within benefit offerings to achieve desired goals. Based on claims experience in recent years, an increase is expected in medical expenses and may continue into future years.

Contributions to the defined benefit plan has increased in 2020 based on the most recent actuarial valuation, primarily as a result of market returns in 2018.

Significant investment in information technology has taken place and will continue over the coming years. Investments include upgrading, replacing or deploying new hardware, software and management systems, as well as staff training and certifications. In addition to cybersecurity, numerous infrastructure replacement/upgrade projects, information technology asset management and deployment automation technologies will be a focus.

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Revenues

Approximately $248.2 million in revenue is anticipated during 2020. The majority of revenues are derived from sales to the owner communities and sales for resale. Based on the latest load forecast, owner communities’ loads are not expected to grow in 2020. More revenues of approximately $4.7 million are expected to be generated from market sales as prices are projected to be higher than the prior year. The most significant increase in revenues of $13.7 million relate to the long-term sales contracts from coal-fired resources, which were initiated to manage the influx of wind and solar from the new power purchase agreements.

Platte River provides stable and competitive wholesale rates — currently the lowest wholesale rates in Colorado. Platte River’s rate philosophy includes implementing incremental increases to its owner communities to provide a more predictable path of smaller, more consistent annual rate increases. Due to the implementation of the new rate structure in 2020, there will not be a rate increase. The new rate structure provides unbundled transmission and generation rates, and transparent noncarbon pricing information for owner utilities to establish options, including noncarbon pricing for their retail customers. The new rate structure will be revenue neutral for Platte River but will add value to owner communities by offering a more desirable portfolio of services and rates that meet community needs, more accurately align wholesale time-of-use pricing signals with costs of service and send clear pricing signals that lead to system benefits.

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Financial review In addition to the budget items discussed, the financial results shown below are compared to the strategic financial plan (SFP) metrics. In the years represented, all financial metrics were or are expected to be met. Depreciation expense is a non-budgeted expense and is expected to increase in 2020 by $2 million primarily as a result of accelerating depreciation on the Craig Unit 1 assets for closure of the unit by Dec. 31, 2025. In recent years depreciation expense declined as original plant assets have become fully depreciated, as well as due to the accounting treatment of the sale of Windy Gap water units. During 2017 through January 2019, Platte River sold water units generating $75.9 million in proceeds. According to the Federal Energy Regulatory Commission accounting guidelines, the sale will be recognized through 2046, which is the projected remaining useful life of Rawhide Unit 1. Completed sales will increase net income by approximately $2.6 million each year. The sale proceeds also increase available reserves, which reduces future debt financing requirements.

Key financial indicators

Minimum SFP targets

2018 actual

2019 budget

2019 estimate (1)

2020 budget

Net income ($000)3% of projected annual

operating expenses 32,885$ 23,013$ 28,909$ 21,269$ Fixed obligation charge coverage ratio 1.50 times 3.01x 2.60x 2.94x 2.31x

Debt ratio 50% or lower 26% 36% 24% 34%Unrestricted days cash on hand 200 362 313 294 255

Other selected data ($000)

Accumulated net position 560,587$ 584,366$ 589,496$ 610,765$

Dedicated reserves and available funds 170,975$ 245,360$ 151,350$ 217,435$

Long-term debt, net 205,474$ 291,747$ 191,747$ 278,225$

Capital additions 64,419$ 54,720$ 53,776$ 63,922$

(1) 2019 estimate represents seven months actual and five months budget adjusted for revised projections on all budget schedules.

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expenses, and changes in net position

2018 actual

2019 budget

2019 estimate

2020 budget

Operating revenues

Sales to owner communities 196,411,260$ 200,595,408$ 196,018,919$ 198,750,401$

Sales for resale - contract 222,588 745,351 2,816,637 14,453,567

Sales for resale - short-term 20,183,418 20,318,850 25,030,444 24,967,744

Wheeling 5,296,690 5,385,508 5,534,659 5,917,670

Total operating revenues 222,113,956 227,045,117 229,400,659 244,089,382

Operating expenses

Purchased power 41,140,420 36,918,802 37,217,816 45,483,070

Fuel 42,258,655 47,986,111 49,186,872 48,829,001

Operations and maintenance (1) 56,797,375 64,817,100 63,096,011 66,087,975

Administrative and general (1) 17,288,415 20,715,140 19,989,411 22,722,880

Demand-side management (1) 7,864,070 10,200,935 9,650,522 11,844,110

Depreciation (1) 21,834,079 20,701,265 20,284,011 22,660,082

Total operating expenses 187,183,014 201,339,353 199,424,643 217,627,118

Operating income 34,930,942 25,705,764 29,976,016 26,462,264 Nonoperating revenues (expenses)

Interest income 2,987,949 4,210,780 3,776,111 4,112,944

Other income 507,176 37,824 223,066 25,971

Interest expense (8,729,475) (9,129,275) (8,129,275) (11,397,089) Amortization of bond financing costs (1) 2,193,015 2,166,981 2,166,981 2,049,139 Allowance for funds used during construction 821,032 - - - Net increase in fair value of investments (1) 174,387 21,320 896,561 15,639

Total nonoperating revenues (expenses) (2,045,916) (2,692,370) (1,066,556) (5,193,396)

Income 32,885,026$ 23,013,394$ 28,909,460$ 21,268,868$

Statements of revenues,

(1) Actual and estimate include nonappropriated expenses of vacation accrual, depreciation expense, amortization of bond financing costs, and unrealized investment holding gains and losses.

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Consolidated budget schedules

Source and use of funds2018

actual2019

budget2019

estimate2020

budget

Source of fundsOperating revenues

Sales to owner communities 196,411,260$ 200,595,408$ 196,018,919$ 198,750,401$ Sales for resale - contract 222,588 745,351 2,816,637 14,453,567 Sales for resale - short-term 20,183,418 20,318,850 25,030,444 24,967,744 Wheeling 5,296,690 5,385,508 5,534,659 5,917,670

Total operating revenues 222,113,956 227,045,117 229,400,659 244,089,382 Other revenues

Interest income 2,983,338 4,232,100 3,797,431 4,128,583 Other income 507,176 37,824 223,066 25,971

Total other revenues 3,490,514 4,269,924 4,020,497 4,154,554

Total revenues 225,604,470 231,315,041 233,421,156 248,243,936 Funds from prior reserves and debt financing 23,683,846 46,518,214 18,302,972 59,754,604

Total sources 249,288,316$ 277,833,255$ 251,724,128$ 307,998,540$

Use of fundsOperating expenses

Purchased power 41,140,420$ 36,918,802$ 37,217,816$ 45,483,070$ Fuel 42,258,655 47,986,111 49,186,872 48,829,001 Production 41,145,259 48,122,593 46,871,588 48,571,725 Transmission 15,373,786 16,694,507 16,538,655 17,516,250 Administrative and general 17,075,341 20,715,140 20,106,755 22,722,880 Demand-side management 7,864,070 10,200,935 9,576,925 11,844,110

Total operating expenses 164,857,531 180,638,088 179,498,611 194,967,036 Capital additions

Production 41,483,087 17,109,648 15,326,530 30,086,960 Transmission 4,658,064 2,721,015 2,753,350 24,439,408 General 18,277,439 34,889,818 35,695,951 9,395,133

Total capital additions 64,418,590 54,720,481 53,775,831 63,921,501

Total operating expenses and capital additions 229,276,121 235,358,569 233,274,442 258,888,537

Debt service expenditures

Principal 12,103,752 10,345,411 10,320,411 11,712,914 Interest expense 8,729,475 9,129,275 8,129,275 11,397,089 Allowance for funds used during construction (821,032) - - -

Total debt serviceexpenditures 20,012,195 19,474,686 18,449,686 23,110,003

Total expenditures 249,288,316 254,833,255 251,724,128 281,998,540 Contingency appropriation - 23,000,000 - 26,000,000

Total uses 249,288,316$ 277,833,255$ 251,724,128$ 307,998,540$

(1) Excludes projections for contingency transfer for capital projects to be requested at the December 2019 board of directors meeting.

(1)

(1)

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$226 $231 $233$248

-

50

100

150

200

250

300

2018 actual 2019 budget 2019 estimate 2020 budget

$ millionsRevenues and expenditures

Operating expenses Debt service expenditures Capital additions Revenues

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2020 sources

65%Sales to owner communities 198,750,401$

8%Sales for resale - short-term 24,967,744

5%Sales for resale - contract 14,453,567

2% Wheeling 5,917,670

1%Interest and other income 4,154,554

Total revenues 248,243,936

19%Funds from prior reserves and debt financing 59,754,604

Total sources 307,998,540$

2020 uses

21% Capital additions 63,921,501$

16% Fuel 48,829,001

16% Production 48,571,725

15% Purchased power 45,483,070

7%Debt service expenditures 23,110,003

7%Administrative and general 22,722,880

6% Transmission 17,516,250

4%Demand-side management 11,844,110

Total expenditures 281,998,540

8% Board contingency 26,000,000

Total uses 307,998,540$

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Revenue and expenditure detail

2018actual

2019budget

2019estimate

2020budget

Revenues

Sales to owner communities 196,411,260$ 200,595,408$ 196,018,919$ 198,750,401$

Sales for resale - contract 222,588 745,351 2,816,637 14,453,567 Sales for resale - short-term 20,183,418 20,318,850 25,030,444 24,967,744

Wheeling 5,296,690 5,385,508 5,534,659 5,917,670

Interest income 2,983,338 4,232,100 3,797,431 4,128,583

Other income 507,176 37,824 223,066 25,971

Total revenues 225,604,470 231,315,041 233,421,156 248,243,936 Funds from prior reserves and debt financing 23,683,846 46,518,214 18,302,972 59,754,604

Total revenues and prior funds 249,288,316$ 277,833,255$ 251,724,128$ 307,998,540$

Expenditures

Personnel expenses

Salaries

Regular wages 26,852,432$ 28,807,968$ 27,843,488$ 30,574,410$ Overtime wages 2,425,645 1,362,358 1,447,985 1,560,290

Total salaries 29,278,077 30,170,326 29,291,473 32,134,700 Benefits

Pension - defined contribution 960,356 1,033,236 1,030,795 1,183,806 Pension - defined benefit 5,145,689 4,798,371 4,983,201 6,110,613 Social security 2,095,368 2,225,633 2,159,565 2,369,582 Long-term disability 154,515 160,000 159,493 160,000 Medical and dental 3,989,169 7,409,500 5,721,238 7,625,950

Recruiting 74,913 207,500 194,180 205,000

Life insurance 164,489 160,000 164,979 160,000

Accidental death 22,715 25,000 23,992 25,000

Workers' compensation 161,034 220,000 146,752 180,000

Unemployment compensation 27,127 5,000 33,658 15,000

Salary and pension services 320,995 381,678 324,968 299,384

Total benefits 13,116,370 16,625,918 14,942,821 18,334,335

Total personnel expenses 42,394,447 46,796,244 44,234,294 50,469,035 Less charged to capital and other 3,071,491 2,902,148 952,275 2,348,788

Total operating personnel expenses 39,322,956 43,894,096 43,282,019 48,120,247

Materials and other expenses

Office expenses 51,702 61,250 62,411 75,575

Safety expenses 238,992 216,949 201,250 204,675

Furniture and equipment 43,660 51,250 56,608 44,100

Local business expense 336,078 270,978 260,460 315,511

Postage and deliveries 29,159 36,268 29,903 31,600

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Revenue and expenditure detail (continued)

2018actual

2019budget

2019estimate

2020budget

Materials and other expenses (continued)

Rawhide O&M materials 5,117,789$ 4,444,262$ 3,626,853$ 4,347,093$ Other O&M materials 284,492 779,434 856,784 317,712

Rawhide coal 23,811,669 31,020,084 28,711,674 29,921,020

Craig units 1 and 2 coal 14,704,560 15,068,298 17,568,289 15,514,947

Oil 314,074 81,000 211,876 105,000 Natural gas (Rawhide Units A, B, C, D and F) 2,740,953 1,054,116 1,945,385 2,455,983

Natural gas (Craig units startup) 75,481 110,000 72,999 105,000

Gasoline and diesel 164,645 149,235 147,793 162,800 Tools, shop, and garage equipment 186,262 144,526 113,016 150,050

Purchased power 43,230,572 36,385,788 36,684,802 44,326,257 Craig units 1 and 2 operating expenses 9,870,129 10,972,963 11,128,191 10,351,090

Computer equipment 815,732 325,850 398,797 637,924 Wheeling expense 4,058,708 3,772,370 3,741,986 3,810,875 Outage accrual (9,124,033) 4,321,964 4,321,964 5,391,040

Total materials and other expenses 96,950,624 109,266,585 110,141,041 118,268,252

Contractual services

Rawhide contracted services 11,318,467 5,285,684 5,082,187 4,669,136

Other contracted services 7,054,588 9,358,113 9,155,964 10,558,178

Insurance 1,151,376 1,396,100 1,430,381 1,755,800

Travel and training 705,259 749,540 720,505 843,086

Telephone services 206,901 195,503 193,152 199,300 Utilities 574,786 663,510 533,999 579,560 Dues, memberships and fees 684,445 758,271 785,432 770,840

Trustees fees 26,123 25,500 24,000 19,500

Water leases and rents 378,350 721,194 449,973 607,000

Other leases and rents 103,695 103,017 110,431 102,409

Economic development 60,000 100,000 100,000 100,000

Fiscal impact payment 61,099 62,932 62,932 36,217 Rebates/incentives for retail customers 5,973,957 7,847,500 7,222,776 7,557,611 Rebates/incentives to owner communities 248,926 163,433 167,119 245,200 Audits/assessments for retail customers - - - 490,000

Total contractual services 28,547,972 27,430,297 26,038,851 28,533,837

Capital additions

Personnel expenses 2,703,663 2,391,676 2,433,020 1,770,811

Capital expenditures 61,212,911 52,458,959 51,618,135 62,538,434 Capital reimbursements and trade-in value (319,016) (130,154) (275,324) (387,744)

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Revenue and expenditure detail (continued)

2018actual

2019budget

2019estimate

2020budget

Capital additions (continued)

Allowance for funds used during construction 821,032$ -$ -$ -$

Total capital additions 64,418,590 54,720,481 53,775,831 63,921,501

Financing expenses

Principal 12,103,752 10,345,411 10,320,411 11,712,914

Interest expense 8,729,475 9,129,275 8,129,275 11,397,089 Allowance for funds used during construction (821,032) - - - Other financing expenses 35,979 47,110 36,700 44,700

Total financing expenses 20,048,174 19,521,796 18,486,386 23,154,703

Total expenditures 249,288,316 254,833,255 251,724,128 281,998,540

Contingency appropriation - 23,000,000 - 26,000,000

Total expenditures and contingency 249,288,316$ 277,833,255$ 251,724,128$ 307,998,540$

(1) Excludes projections for contingency transfer for capital projects to be requested at the December 2019 board of directors meeting.

(1)

(1)

ResourcesRawhide Unit 1 (2,196 GWh)

Craig units 1 and 2 (807 GWh)

Wind (701 GWh)

Hydropower (612 GWh)

Joint dispatch agreement purchases (201 GWh)

Solar (104 GWh)

Other purchases (86 GWh)

Combustion turbines (73 GWh)

Forced outage exchange (25 GWh)

Total resources = 4,805 GWh

Deliveries

Owner communities (3,221 GWh)

Sales for resale (1,491 GWh)

Losses and other (68 GWh)

Forced outage exchange (25 GWh)

Total deliveries = 4,805 GWh

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Power operationsresources

2018 actual

2019 budget

2019 estimate

2020 budget

Rawhide Unit 1 (280 MW)

Generation (GWh) 1,804 2,303 2,121 2,196

Capacity factor 73.5% 93.9% 86.5% 89.3%

Fuel cost ($/MWh) $ 13.6 $ 13.6 $ 13.8 $ 13.9

O&M cost ($/MWh) 19.4 12.6 13.0 13.4

Total Rawhide ($/MWh) $ 33.0 $ 26.2 $ 26.8 $ 27.3

Craig units 1 and 2 (151 MW) (1)

Generation (GWh) 772 742 853 807

Capacity factor 57.5% 56.1% 64.5% 60.9%

Fuel cost ($/MWh) $ 19.5 $ 21.0 $ 21.1 $ 19.7

O&M cost ($/MWh) 12.3 14.2 12.6 12.3

Total Craig ($/MWh) $ 31.8 $ 35.2 $ 33.7 $ 32.0

Combustion turbines

(388 MW) (2)


Capacity factor 2.0% 0.9% 1.1% 2.1%

Fuel cost ($/MWh) $ 41.0 $ 34.6 $ 34.7 $ 33.7

O&M cost ($/MWh) 18.8 72.1 38.6 28.3

Total combustion turbines ($/MWh) $ 59.8 $ 106.7 $ 73.3 $ 62.0

(1) Craig Unit 1 = 77 MW, Craig Unit 2 = 74 MW. Prior to October 2018, Craig units 1 and 2 = 77 MW each for 154 MW total.

(2) Rawhide Units A, B, C, D = 260 MW, Rawhide Unit F = 128 MW.

-

500

1,000

1,500

2,000

2,500

3,000

3,500


Generation output

Rawhide Unit 1 Craig units 1 and 2 Combustion turbines

GWh

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Purchased powerresources

2018 actual

2019 budget

2019 estimate

2020 budget

HydropowerWAPA-CRSP (106 MW-summer/ 136 MW-winter) (1)

Generation (GWh) 502 502 502 502Capacity factor 47.4% 47.4% 47.4% 47.4%

Total WAPA-CRSP ($/MWh) $ 27.1 $ 27.1 $ 27.1 $ 27.1WAPA-LAP (30 MW-summer/ 32 MW-winter) (2)


Capacity factor 42.2% 40.3% 40.3% 40.3%

Total WAPA-LAP ($/MWh) $ 29.1 $ 29.7 $ 29.7 $ 29.7

Total hydropower (136 MW-summer/ 168 MW-winter)Generation (GWh) 617 612 612 612

Capacity factor 46.3% 46.0% 46.0% 46.0%

Total hydropower ($/MWh) $ 27.5 $ 27.6 $ 27.6 $ 27.6

WindSpring Canyon II and III

(60 MW) (3)


Capacity factor 44.8% 45.7% 41.7% 46.0%Total Spring Canyon ($/MWh) - delivered $ 44.8 $ 45.6 $ 47.2 $ 46.6

Silver Sage (12 MW) (4)


Capacity factor 33.7% 35.5% 30.9% 35.5%Total Silver Sage ($/MWh) - delivered $ 75.7 $ 60.5 $ 59.6 $ 62.0

Medicine Bow (6 MW)Generation (GWh) 17 18 15 20

Capacity factor 33.2% 34.6% 29.4% 37.2%Total Medicine Bow ($/MWh) - delivered $ 47.8 $ 48.8 $ 51.6 $ 46.7

Roundhouse (225 MW)Generation (GWh) - - - 402

Capacity factor 0.0% 0.0% 0.0% 40.4%

Total Roundhouse ($/MWh) (5) $ - $ - $ - $ 12.8

Total wind (303 MW)Generation (GWh) 288 295 267 701Capacity factor 42.2% 43.2% 39.1% 41.8%

Total wind ($/MWh) $ 48.8 $ 47.7 $ 49.0 $ 28.0

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Purchased power resources (continued)

2018 actual

2019 budget

2019 estimate

2020 budget

Solar

Rawhide Flats Solar (30 MW)Generation (GWh) 64 63 57 62

Capacity factor 24.5% 24.1% 21.8% 23.6%Total Rawhide Flats Solar ($/MWh) - including ancillary services $ 54.3 $ 54.3 $ 55.2 $ 54.3

Rawhide Prairie Solar (20 MW) (6)

Generation (GWh) - - - 42

Capacity factor 0.0% 0.0% 0.0% 31.5%Total Rawhide Prairie Solar ($/MWh) $ - $ - $ - $ 29.7

Total solar (50 MW)Generation (GWh) 64 63 57 104Capacity factor 24.5% 24.1% 21.8% 26.2%

Total solar ($/MWh) $ 54.3 $ 54.3 $ 55.2 $ 44.5Joint dispatch agreement purchases

Energy (GWh) 242 166 240 201

Total JDA purchases ($/MWh) $ 16.3 $ 16.2 $ 14.7 $ 14.6

Other purchasesEnergy (GWh) 252 27 53 77

Total other purchases($/MWh) $ 26.5 $ 28.3 $ 30.8 $ 24.2

Owner community solar

programs (4.5 MW) (7)


Capacity factor 18.0% 23.3% 17.7% 23.8%Total owner communitiessolar programs ($/MWh) $ 38.8 $ 33.1 $ 33.7 $ 33.9

(7) Owner community solar programs: Fort Collins = 4 MW, Loveland = 0.5MW. The owner communities retain the renewable attribute.

(6) Rawhide Prairie Solar includes solar energy purchases and interconnection expenses.

(5) The Roundhouse Renewable Energy Project is expected to be online mid-2020, earlier than the commercial operation date of December 2020. The energy received prior to the commercial operation date is at a discounted rate.

(1) WAPA-CRSP (Western Area Power Administration - Colorado River Storage Project) capacity amounts shown represent the contract rate of delivery. Actual capacity available varies by month. During the summer season, available capacity ranges from 51 MW to 60 MW. In the winter season, available capacity ranges from 72 MW to 85 MW.

(4) Effective October 2018, Silver Sage energy and the renewable attribute have been sold to a third party and, therefore, cannot be claimed as a renewable resource by Platte River or its owner communities.

(2) LAP - Loveland Area Projects. Actual capacity available varies by month. During the summer season, available capacity ranges from 23 MW to 30 MW. In the winter season, available capacity ranges from 26 MW to 32 MW.

(3) Spring Canyon II and III energy and the renewable attribute are to be sold to a third party and, therefore, would not be claimed as a renewable resource by Platte River or its owner communities. This is expected to occur mid-2020 when the Roundhouse Renewable Energy Project becomes operational.

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Revenues Operating revenues

Platte River’s operating revenues consist of sales to owner communities, sales for resale and wheeling revenues. The production cost model determines the forecast of revenues for the budget; however, actual results are strongly impacted by weather and market conditions and can vary from budget. to owner communities

Sales to owner communities

Budgeted revenues from sales to owner communities are based on Platte River’s load forecast and wholesale rates. The load forecast was adjusted in 2020 for high-side metering and rates were adjusted to remain revenue neutral to Platte River. Rate increases, when applicable, support Platte River’s core functions and strategic direction. Sales to the owner communities represent the largest source of revenue.

Sales for resale

Sales for resale can include contract sales or short-term sales. Contract sales are for a term greater than one year. Short-term sales are for a term of one year or less and include seasonal, monthly, hourly spot market and joint dispatch agreement sales. Sales are also made from the combustion turbines. The assumed spot market prices are based on current market projections. The production cost model determines the level of sales for resale for the budget. Typically, sales for resale are made when energy available exceeds requirements of the owner communities and prices are higher than the cost to generate. Sales for resale provide additional revenue and help to keep rates low for our owner communities. More information on the joint dispatch agreement is included in the operating expenses section.

Wheeling revenue

Wheeling revenues represent payments from other utilities for the use of Platte River’s transmission system. There is a limited amount of demand for usage of the system; thus, it represents a smaller portion of the budget. Platte River charges other utilities for the use of its transmission system per the Wholesale Transmission Service tariff. The wheeling revenues include charges for network transmission service for delivery to various Xcel Energy and Tri-State Generation and Transmission, Inc., (Tri-State) substations over Platte River’s transmission system. Also included is a long-term contract with PacifiCorp for 25 MW of capacity on the Craig-Bonanza transmission line. The transmission system usage rates are adjusted annually based on the prior year’s actual transmission system costs and loads.

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Other revenues

Interest and other income

Interest and other income represent a small portion of the revenue budget. Interest income fluctuates with cash balances and interest rates. Cash balances have been favorably impacted by the sale of the Windy Gap water units over the past few years. Other income includes fiber and tower leases, in addition to other miscellaneous revenues. With the transfer of ownership of the fiber assets from Platte River to the owner communities in 2019, Platte River will administer the fiber leases on behalf of the owner communities but will no longer receive fiber revenue on the assets transferred, creating a reduction in other income.

Total revenues ($000)

2018 actual

2019 budget

2019 estimate

2020 budget

Operating revenues

Sales to owner communities 196,411$ 200,595$ 196,019$ 198,750$

Sales for resale - contract 223 745 2,817 14,453 Sales for resale - short-term 20,183 20,319 25,030 24,968

Wheeling

Craig-Bonanza 975 946 946 948

Network and other 4,322 4,440 4,589 4,970

Total wheeling revenues 5,297 5,386 5,535 5,918

Total operating revenues 222,114 227,045 229,401 244,089

Other revenues

Interest income 2,983 4,232 3,797 4,129

Other income 507 38 223 26

Total interest and other income 3,490 4,270 4,020 4,155

Total revenues 225,604$ 231,315$ 233,421$ 248,244$

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80%

10%6%

2%

2%

-

50

100

150

200

250


$ millionsTotal revenues

Sales to owner communities Sales for resale - short-termSales for resale - contract WheelingInterest and other income

$60.84 $62.11 $61.74 $61.71

$26.37 $22.34

$27.40 $26.44

-

10

20

30

40

50

60

70


Average owner community rate & sales for resale price

Owner communities Sales for resale

$/MWh

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-

50

100

150

200

250

300

350

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Owner communities' energy usage

2018 actual 2019 estimate 2020 budget

GWh

Owner communities' loads

2018 actual

2019 budget

2019 estimate

2020budget

Summer peak demand (MW) (1) 688 674 662 670

Nonsummer peak demand (MW) (1) 590 596 573 511

Coincident billing demand (MW) (2) 6,234 6,339 6,055 6,584 Energy (GWh) 3,228 3,230 3,175 3,221

Sales for resaleEnergy (GWh) (3) 774 943 1,016 1,491

(3) Includes contract and short-term sales.

(1) Effective January 2020, the summer season will be June through September. The nonsummer season will be January through May, and October through December. Previously September was included in the nonsummer season.

(2) Prior to 2020, billing demand was equal to the sum of monthly coincident peaks of the owner communities. In 2020, the coincident billing demand is subject to a monthly minimum demand charge.

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Sales to owner communities2018

actual2019

budget2019

estimate2020

budget

Fort Collins

Owner community allocation 47.5%

Coincident billing demand (MW) - generation (1) 2,922 2,987 2,829 3,023 Non-coincident billing demand (MW) - transmission - - - 3,032

Energy MWh

Dispatchable - - - 1,189,991

Intermittent (2) - - - 259,655

Premium intermittent 76,000 76,000 76,000 76,000 Energy - previous years 1,469,583 1,469,962 1,438,991 -

Total energy delivered 1,545,583 1,545,962 1,514,991 1,525,646

Owner community charge -$ -$ -$ 5,683,284$

Demand

Generation demand charge -$ -$ -$ 15,345,348$ Transmission demand charge - - - 17,357,863 Demand charge - previous years 28,225,455 29,408,142 27,821,853 -

Total demand charges 28,225,455$ 29,408,142$ 27,821,853$ 32,703,211$ Energy

Fixed cost energy charge -$ -$ -$ 23,555,981$ Dispatchable variable cost energy charge - - - 23,579,268 Intermittent energy charge - - - 5,116,787 Premium intermittent energy charge (3) 1,899,993 1,900,000 1,900,000 3,252,039 Energy charge - previous years 64,257,944 65,556,244 64,225,762 -

Total energy charges 66,157,937$ 67,456,244$ 66,125,762$ 55,504,075$

Total charges 94,383,392$ 96,864,386$ 93,947,615$ 93,890,570$ Longmont



Energy MWh

Dispatchable - - - 655,036

Intermittent (2) - - - 138,787 Premium intermittent 21,639 21,639 21,639 21,639 Energy - previous years 785,579 789,103 777,824 -

Total energy delivered 807,218 810,742 799,463 815,462

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Sales to owner communities (continued)

2018 actual

2019 budget

2019 estimate

2020 budget

Longmont (continued)

Owner community charge -$ -$ -$ 3,016,476$

Demand

Generation demand charge -$ -$ -$ 8,966,331$

Transmission demand charge - - - 10,227,965 Demand charge - previous years 15,611,710 16,144,638 15,642,973 -

Total demand charges 15,611,710$ 16,144,638$ 15,642,973$ 19,194,296$

Energy

Fixed cost energy charge -$ -$ -$ 12,590,737$ Dispatchable variable cost energy charge - - - 12,944,102

Intermittent energy charge - - - 2,727,508 Premium intermittent energy charge (3) 540,973 540,975 540,975 925,933 Energy charge - previous years 33,573,851 34,390,198 33,907,409 -


Total charges 49,726,534$ 51,075,811$ 50,091,357$ 51,399,052$ Loveland



Energy MWh



Premium intermittent 5,500 5,500 5,500 5,500

Energy - previous years 737,517 735,656 719,812 - Additional sales - large customer - - - 24,420


Owner community charge -$ -$ -$ 2,785,356$ Demand


Transmission demand charge - - - 8,963,099

Demand charge - previous years 13,026,960 13,261,886 12,680,355 -

Reserve credit - large customer - - - (200,076)


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2018 actual

2019 budget

2019 estimate

2020 budget

Loveland (continued)

Energy


Intermittent energy charge - - - 2,421,641 Premium intermittent energy charge (3) 137,499 137,500 137,500 235,345

Energy charge - previous years 31,467,150 31,442,763 31,173,620 - Additional sales - large customer - - - 675,191


Total charges 44,631,609$ 44,842,149$ 43,991,475$ 45,738,167$ Estes Park


Coincident billing demand (MW) - generation (1) 224 226 230 221 Non-coincident billing demand (MW) - transmission - - - 255

Energy MWh




Energy - previous years 130,261 129,405 132,759 -


Owner community charge -$ -$ -$ 489,768$

Demand

Generation demand charge -$ -$ -$ 1,081,957$ Transmission demand charge - - - 1,467,306 Demand charge - previous years 2,115,778 2,170,968 2,209,180 -

Total demand charges 2,115,778$ 2,170,968$ 2,209,180$ 2,549,263$ Energy

Fixed cost energy charge -$ -$ -$ 2,029,831$ Dispatchable variable cost energy charge - - - 2,102,305 Intermittent energy charge - - - 446,139 Premium intermittent energy charge (3) 61,525 61,525 61,525 105,306 Energy charge - previous years 5,492,422 5,580,569 5,717,767 -


Total charges 7,669,725$ 7,813,062$ 7,988,472$ 7,722,612$

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2018 actual

2019 budget

2019 estimate

2020 budget

Total owner communities

Owner community allocation 100.0%Coincident billing demand (MW) - generation (1) 6,234 6,339 6,055 6,584 Non-coincident billing demand (MW) - transmission - - - 6,632

Energy MWh

Dispatchable - - - 2,546,792



Energy - previous years 3,122,940 3,124,126 3,069,386 -

Additional sales - large customer - - - 24,420

Total energy delivered 3,228,540 3,229,726 3,174,986 3,220,819

Owner community charge -$ -$ -$ 11,974,884$ Demand


Transmission demand charge - - - 38,016,233

Demand charge - previous years 58,979,903 60,985,634 58,354,361 -

Reserve credit - large customer - - - (200,076)


Energy


Intermittent energy charge - - - 10,712,075 Premium intermittent energy charge (3) 2,639,990 2,640,000 2,640,000 4,518,623

Energy charge - previous years 134,791,367 136,969,774 135,024,558 -

Additional sales - large customer - - - 675,191


Total charges 196,411,260$ 200,595,408$ 196,018,919$ 198,750,401$

(2) Approximately 52% of the intermittent energy represents an allocation of the first year generation of Roundhouse Renewable Energy Project charged at the dispatchable variable cost energy charge. Fort Collins = 135,431 MWh, Longmont = 72,569 MWh, Loveland = 64,398 MWh, Estes Park = 11,544 MWh.

(3) Prior to 2020, the amounts shown represent the premium component of Tariff—Schedule 7: Renewable Energy Service commitments charged in addition to Tariff—Schedule 1: Firm Resale Power Service.

(1) Prior to 2020, billing demand was equal to the sum of monthly coincident peaks of the owner communities. In 2020, the coincident billing demand is subject to a monthly minimum demand charge.

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Operating expenses Expenses incurred to perform the operations of generating and delivering electricity include purchased power, fuel, production, transmission, and administrative and general. In addition, operating expenses include investments in demand-side management. The production cost model determines the budgeted expense for purchased power and fuel, whereas expenses for production, transmission, administrative and general, and demand-side management are predominately determined by departmental budgets. Emphasis is placed on predictive and preventive maintenance resulting in the ability to control expenses.

Purchased power

Purchased power is one of the largest operating expenses. Purchased power includes purchases made under long-term contracts for hydropower, wind and solar energy. Spot market purchases and joint dispatch agreement purchases provide additional energy required. An accrual for estimated future replacement power costs during specified maintenance outages is also included. Purchased power fluctuates with outages and market conditions. When market prices are low, Platte River may decide, for economic reasons, to purchase rather than generate from a coal-fired or natural gas facility. Through the joint dispatch agreement, the lowest cost resource is dispatched and Platte River is able to take advantage of low-cost energy.

Platte River continues to diversify its resource portfolio by adding more noncarbon resources, moving away from coal-fired resources through power purchase agreements. The current purchased power arrangements are listed below.

Hydropower

Hydropower is received under two long-term contracts with Western Area Power Administration. Colorado River Storage Project contract rate of delivery amounts are 106 MW in the summer and 136 MW in the winter. Actual capacity available varies by month. During the summer season, available capacity ranges from 51 MW to 60 MW. In the winter season, available capacity ranges from 72 MW to 85 MW. Loveland Area Projects capacity is 30 MW in the summer and 32 MW in the winter. Similar to the Colorado River Storage Project, the available capacity from the Loveland Area Projects varies from 23 MW to 30 MW in the summer season, and 26 MW to 32 MW in the winter season. The hydropower contracts are subject to annual price changes. The Colorado River Storage Project and Loveland Area Projects contracts end Sept. 30, 2057, and Sept. 30, 2054, respectively.

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Wind

Wind generation includes 303 MW provided under long-term power purchase agreements. The agreements are for deliveries from the following facilities.

Roundhouse Renewable Energy Project (225 MW) in Wyoming; contract ends May 31, 2042. This facility is expected to be operational mid-2020.

Spring Canyon Wind Energy Center Phase II and III (60 MW) in Colorado; contract ends Oct. 31, 2039, and Dec. 10, 2039, respectively. To accommodate additional wind energy available from the Roundhouse wind power purchase agreement and reduce ancillary services expense, the energy and renewable attribute from this site will be sold under a 10-year long-term contract beginning in 2020. Therefore, it is not delivered to the owner communities for the term of the sales contract. At the end of the sales contract, the energy will return to Platte River.

Silver Sage Windpower Project (12 MW) in Wyoming; contract ends Sept. 30, 2029. To accommodate additional wind energy available from the Roundhouse wind power purchase agreement and reduce transmission expense, the energy and renewable attribute from this site have been sold under a long-term contract. Therefore, it is not delivered to the owner communities.

Medicine Bow Wind Project (6 MW) in Wyoming; contract ends Dec. 30, 2033.

Solar and battery storage

Solar generation includes 50 MW with 2 MW of battery storage provided under long-term power purchase agreements. The agreements are for deliveries from the following facilities.

Rawhide Flats Solar facility (30 MW) located at Rawhide; contract ends Dec. 14, 2041.

Rawhide Prairie Solar facility (20 MW) located at Rawhide; contract ends 20 years from the date of commercial operation which is expected to be spring 2020. Battery storage system of 2 MW will be integrated with this project.

Joint dispatch agreement

The joint dispatch agreement is between Xcel Energy, Black Hills Corporation and Platte River and operates similarly to an energy imbalance market. It is anticipated that Colorado Springs Utilities will be joining the joint dispatch agreement. This agreement provides access to lower cost resources and increases operational efficiencies while enhancing reliability. The agreement renews annually.

Other purchases

Spot market purchases provide energy to satisfy loads, replace power during outages and meet reserve requirements.

Page 129


Capacity of approximately 4 MW and 0.5 MW is purchased from Fort Collins and Loveland community solar facilities, respectively. For these two facilities, the owner communities retain the renewable attribute and the facilities are not part of Platte River’s noncarbon resource portfolio.

Forced outage exchange agreement

Platte River has a forced outage exchange agreement with Tri-State, whereby in the event that either Rawhide Unit 1 or Tri-State’s Craig Unit 3 is out of service the other utility will provide 100 MW of generation on a short-term basis. The agreement is in effect until March 31, 2024.

Maintenance outage accrual policy

This policy allows the costs of replacement power for Rawhide Unit 1 scheduled maintenance outage costs exceeding $5 million to be spread over the interim period between outages to smooth rate impacts to the owner communities.

Fuel

Fuel expense is typically the largest operating expense. Fuel expense includes coal purchased for Rawhide Unit 1, Craig units 1 and 2 and natural gas expense for the combustion turbines. The production cost model determines the majority of fuel expense for the budget year and fluctuates with resource availability primarily due to outages and market conditions.

Rawhide Unit 1 (280 MW) is Platte River’s largest baseload and lowest cost resource; thus, it is operated at a high capacity factor. As Platte River adds more noncarbon energy to the resource portfolio, Rawhide Unit 1 will operate at lower load levels to accommodate potentially higher levels of noncarbon resources on the system. The full impact of this change in operations continues to be assessed.

Coal for Rawhide Unit 1 is purchased under a long-term market-based contract to secure all of Rawhide Unit 1’s coal needs through 2022. The coal price defaults to a market index unless Platte River chooses to utilize price lock provisions outlined in the contract. The current Rawhide coal contract is with Cloud Peak Energy; however, Cloud Peak Energy’s mine assets and associated contracts are transferring ownership to Navajo Transitional Energy Company through a sales transaction that is expected to be complete in late 2019. A long-term transportation agreement through 2022 with BNSF Railway establishes a base rate per ton, which is subject to an annual adjustment in accordance with specified indices and a fuel adjustment charge.

Platte River has 18% ownership in Craig units 1 and 2 (151 MW combined). Coal for the Craig units is purchased under the long-term contract with Trapper Mining, Inc., through 2020. Platte River’s ownership share of the mine is 19.93%. In early 2020, work will be done on structuring a new fuel supply contract to align with operations and the planned closure timeline of Craig Unit 1 and the future needs of Craig Unit 2.

Natural gas-fired combustion turbines include five simple cycle combustion turbines, which includes four GE 7EAs (Rawhide Units A, B, C and D, 65 MW each) and one GE

Page 130


7FA (Rawhide Unit F, 128 MW). The combustion turbines are used to meet peak load demand, provide reserves during outages of the coal-fired units and make short-term sales for resale. Natural gas is purchased at market prices as needed. Natural gas needs fluctuate with load growth, market energy prices and the addition of noncarbon energy resources.

Production

Production expenses include operating and maintenance expenses (excluding fuel) incurred at Rawhide, Craig Generating Station and power operations. The Rawhide expenses are predominately determined by departmental budgets. The Craig expenses are determined by Tri-State, the operating agent, and approved by the engineering and operations committee. An accrual for estimated future costs during specified Rawhide maintenance outages is also included.

Rawhide Energy Station

Because Rawhide is Platte River’s largest and lowest-cost resource, Platte River continues to invest in preventive and predictive maintenance to ensure the resources at Rawhide are reliable, safe and compliant. Through this proactive and planned approach, ongoing operations and maintenance expenses have been consistent from year to year. Regular outages are required to ensure the plant remains operable and reliable. An accrual for estimated future costs during specified maintenance outages is also included and smooths out the cost of those outages over a longer period. Major outages are performed every three years with a minor outage every 18 months. Scheduled maintenance outages are also required for the combustion turbines, which are determined on the number of starts of the units. Personnel expenses that are charged to operations and maintenance can fluctuate with the amount of labor charged to capital projects in any given year.

Craig Generating Station

Similar to Rawhide, routine operating and maintenance expenses for Craig units 1 and 2 have been consistent from year to year. The scheduled maintenance outages, however, cause increases in expenses. Based on the desire to diversify the resource portfolio and limit reliance on coal-fired resources, Platte River plans to exit Craig Unit 1 by the end of 2025. As a result, participants have been prudent about the amount of investment in Craig Unit 1 to ensure reliability until exit.

Power operations

Power operations relates to managing resources to meet load and obligations. The focus is to ensure the owner communities have a reliable energy supply, cost-effectively optimize resources, and create additional value through the sale of available energy and capacity to third parties.

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Transmission

Transmission maintenance is important to support the safe and reliable delivery of power across Platte River’s regional transmission system. These expenses also include Platte River’s share of operating and maintaining jointly owned transmission facilities, ancillary services for regulation of wind and solar, and wheeling expenses paid to Western Area Power Administration and/or others for wind and a portion of Platte River’s load. Transmission expenses are primarily developed by departmental budgets. Personnel expenses that are charged to operations and maintenance can fluctuate with the amount of labor charged to capital projects in any given year.

Administrative and general

Administrative and general expenses include all expenses incurred that are not directly allocated to capital or assignable to fuel, production or transmission. These expenses are budgeted by operations and maintenance and include expenses related to human resources, finance, communications, facilities, community and government relations, information technology, general counsel and the general manager. The largest component of this expense is personnel which includes salaries and benefits. With the changing environment and continued focus on operational excellence, Platte River has made investments and will continue to invest in employees to ensure the strategic initiatives and goals can be achieved. Emphasis has been placed on resource planning, technology and communications.

Demand-side management

Demand-side management expenses include all expenses applicable to the administration and implementation of Platte River’s demand-side management programs. These programs began in 2002 with a budget of $0.4 million and increased energy efficiency investment continues as programs have been very successful. Development and testing continue with other distributed energy resources and demand response programs.

Operating expenses ($000)

2018 actual

2019 budget

2019 estimate

2020 budget

Purchased power 41,140$ 36,919$ 37,218$ 45,483$

Fuel 42,259 47,986 49,187 48,829

Production 41,145 48,123 46,872 48,572

Transmission 15,374 16,694 16,538 17,516

Administrative and general 17,075 20,715 20,107 22,723

Demand-side management 7,864 10,201 9,577 11,844

Total operating expenses 164,857$ 180,638$ 179,499$ 194,967$

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25%

25%

23%

12%

9%6%

-

50

100

150

200


Operating expenses

Fuel ProductionPurchased power Administrative and generalTransmission Demand-side management

$ millions

Page 133


Purchased power2018

actual2019

budget2019

estimate2020

budget

Hydropower

WAPA-CRSP

Demand (kW-Mo) 1,450,002 1,450,002 1,450,002 1,450,002

Demand $ 7,511,010$ 7,511,010$ 7,511,010$ 7,511,010$

Energy (kWh) 502,466,838 502,466,838 502,466,838 502,466,838

Energy $ 6,125,071$ 6,125,071$ 6,125,071$ 6,125,071$

Total CRSP 13,636,081$ 13,636,081$ 13,636,081$ 13,636,081$

WAPA-LAPDemand (kW-Mo) 372,606 372,606 372,606 372,606

Demand $ 1,535,137$ 1,535,136$ 1,535,136$ 1,535,136$

Energy (kWh) 114,648,421 109,536,421 109,536,421 109,536,421

Energy $ 1,802,273$ 1,721,911$ 1,721,911$ 1,721,911$

Total LAP 3,337,410$ 3,257,047$ 3,257,047$ 3,257,047$

Total hydropower

Demand (kW-Mo) 1,822,608 1,822,608 1,822,608 1,822,608

Demand $ 9,046,147$ 9,046,146$ 9,046,146$ 9,046,146$

Energy (kWh) 617,115,259 612,003,259 612,003,259 612,003,259

Energy $ 7,927,344$ 7,846,982$ 7,846,982$ 7,846,982$

Total $ 16,973,491$ 16,893,128$ 16,893,128$ 16,893,128$

Wind

Spring Canyon II (1)

Energy (kWh) 126,763,645 129,985,343 118,557,817 131,251,695

Energy $ 3,697,189$ 3,884,623$ 3,543,254$ 4,020,572$

Spring Canyon III (1)

Energy (kWh) 108,629,608 109,987,596 100,801,921 111,059,126

Energy $ 3,158,401$ 3,279,955$ 3,006,084$ 3,395,549$

Silver Sage (2)

Energy (kWh) 35,476,423 37,267,472 32,461,597 37,437,002

Energy $ 2,095,407$ 2,255,638$ 1,965,722$ 2,322,430$

Medicine Bow

Energy (kWh) 17,439,146 18,165,905 15,458,279 19,585,345

Energy $ 686,685$ 744,801$ 633,769$ 802,997$

Roundhouse

Energy (kWh) - - - 401,554,195

Energy $ -$ -$ -$ 5,140,439$

Total wind

Energy (kWh) 288,308,822 295,406,316 267,279,614 700,887,363

Energy $ 9,637,682$ 10,165,017$ 9,148,829$ 15,681,987$

Solar

Rawhide Flats Solar

Energy (kWh) 64,355,662 63,273,450 57,170,471 62,168,148

Energy $ 3,439,808$ 3,381,967$ 3,091,368$ 3,322,888$

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Purchased power (continued)

2018 actual

2019 budget

2019 estimate

2020 budget

Solar (continued)

Rawhide Prairie Solar

Energy (kWh) - - - 41,600,624

Energy $ -$ -$ -$ 1,236,218$

Total solar

Energy (kWh) 64,355,662 63,273,450 57,170,471 103,768,772

Energy $ 3,439,808$ 3,381,967$ 3,091,368$ 4,559,106$

Battery storage $ -$ -$ -$ 124,801$

Joint dispatch agreement purchases

Energy (kWh) 242,238,000 166,200,422 239,646,189 200,791,702

Energy $ 3,952,652$ 2,697,089$ 3,528,836$ 2,925,498$

Other purchases

Energy (kWh) 252,325,000 26,650,660 52,863,013 76,670,415

Energy $ 6,692,028$ 755,156$ 1,629,935$ 1,853,826$

Reserves $ 2,263,195$ 1,640,317$ 1,581,408$ 1,419,392$

Owner community solar programs (3)

Energy (kWh) 7,105,627 9,171,840 6,978,838 9,406,294

Energy $ 275,364$ 303,134$ 235,495$ 318,539$

Forced outage exchange (563,258)$ -$ 25,823$ -$

Other power charges 9,631$ -$ -$ -$

Renewable energy credits 549,980$ 549,980$ 549,980$ 549,980$

Replacement power outage accrual

(2,090,153)$ 533,014$ 533,014$ 1,156,813$

Total purchased power 41,140,420$ 36,918,802$ 37,217,816$ 45,483,070$

(3) The owner communities retain the renewable attribute.

(1) Spring Canyon II and III energy and the renewable attribute are to be sold to a third party and, therefore, would not be claimed as a renewable resource by Platte River or its owner communities. This is expected to occur mid 2020 when the Roundhouse Renewable Energy Project becomes operational.

(2) Effective October 2018, Silver Sage energy and the renewable attribute have been sold to a third party and, therefore, cannot be claimed as a renewable resource by Platte River or its owner communities.

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(5)

-

5

10

15

20

25

30

35

40

45

50


Purchased power

Hydropower Wind

Solar and battery storage Other and forced outage exchange

Joint dispatch agreement Outage accrual

Renewable energy credits Owner community solar programs

$ millions

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800


Energy purchased

Hydropower Wind

Joint dispatch agreement Solar and battery storage

Other Owner community solar programs

GWh

No energy is associated with renewable energy credits and outage accrual.

Page 136


Fuel2018 actual

2019 budget

2019 estimate

2020 budget

Rawhide Unit 1Coal burned MBtu 18,184,635 23,299,088 21,594,592 22,228,302

$/MBtu 1.31$ 1.33$ 1.24$ 1.35$

Coal expense 23,799,067$ 31,000,084$ 28,698,174$ 29,903,020$

Car lease and other 12,602 20,000 13,500 18,000

Oil 302,977 65,000 200,257 90,000

Fuel ash disposal (58,850) (55,000) (52,278) (55,000)

Fuel handling 302,510 297,843 368,901 415,917

Testing and analysis 86,320 56,000 35,785 56,000

Total Rawhide Unit 1 24,444,626$ 31,383,927$ 29,264,339$ 30,427,937$

Craig units 1 and 2Coal burned MBtu 8,032,363 7,566,337 9,038,194 8,237,226

$/MBtu 1.83$ 1.99$ 1.94$ 1.88$

Coal expense 14,724,631$ 15,068,298$ 17,496,508$ 15,464,947$

Trapper post-miningreclamation (20,071) - 71,781 50,000

Oil 11,096 16,000 11,619 15,000

Natural gas 75,481 110,000 72,999 105,000

Fuel handling 281,939 353,770 324,241 310,134

Total Craig units 1 and 2 15,073,076$ 15,548,068$ 17,977,148$ 15,945,081$

Rawhide units A, B, C, D and F (combustion turbines)

Gas burned MBtu 820,883 375,629 715,458 868,715

$/MBtu 3.34$ 2.76$ 2.70$ 2.81$

Natural gas expense 2,738,883$ 1,035,452$ 1,928,202$ 2,436,829$

Other gas expense 2,070 18,664 17,183 19,154

Total natural gas 2,740,953$ 1,054,116$ 1,945,385$ 2,455,983$

Total fuel 42,258,655$ 47,986,111$ 49,186,872$ 48,829,001$

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-

5

10

15

20

25

30

35

2018actual

2019budget

2019estimate

2020budget

$ millions

Fuel


-

1

2

3

4

2018actual

2019budget

2019estimate

2020budget

Fuel unit cost per MBtu


$/MBtu

Page 138


Production2018

actual2019

budget2019

estimate2020

budget

Rawhide Unit 1Personnel expenses

Regular wages 9,747,270$ 10,088,681$ 9,998,089$ 10,535,116$

Overtime wages 1,515,423 660,662 702,249 879,511

Benefits allocation 4,865,170 5,794,650 5,932,304 6,373,372

Total personnel expenses 16,127,863 16,543,993 16,632,642 17,787,999

Operations and maintenance

Office expenses 16,610 21,430 17,546 22,680

Safety expenses 134,159 114,025 103,469 99,660




O&M materials and supplies 5,328,870 4,729,823 3,900,223 4,662,287

Gasoline and diesel 105,283 72,600 92,412 89,000

Tools and shop equipment 151,209 92,050 64,635 92,550

Computer equipment 226,420 - - - Total operations and maintenance 6,080,446 5,085,596 4,241,403 5,024,627


Contracted services 11,232,148 5,230,728 4,931,837 4,613,136 Insurance 464,898 563,100 577,637 707,900 Travel and training expenses 166,853 195,584 184,871 199,744 Telephone services 65,241 63,496 65,837 65,259 Utilities 426,803 515,920 388,528 433,920 Dues, memberships and fees 51,230 45,055 46,345 53,170 Outage accrual (7,033,880) 3,788,950 3,788,950 4,234,227


Windy Gap

Rawhide operating portion 378,350 721,194 449,973 607,000

Total Rawhide Unit 1 production 27,959,952 32,753,616 31,308,023 33,726,982

Craig units 1 and 2

Operating expenses 9,401,420 10,465,079 10,646,364 9,891,203

Fiscal impact payment 61,099 62,932 62,932 36,217

Total Craig units 1 and 2 production 9,462,519 10,528,011 10,709,296 9,927,420

Total thermal production 37,422,471 43,281,627 42,017,319 43,654,402 Rawhide units A, B, C, D and F (combustion turbines)

Regular wages 401,490 420,859 387,053 454,879 Overtime wages 37,919 42,829 45,620 47,313 Benefits allocation 205,469 250,703 240,632 280,884 O&M materials and supplies 145,948 535,633 569,517 139,588 Contracted services 181,619 643,111 624,562 784,091 Insurance 260,701 285,300 291,624 331,400

Page 139


Production (continued)

2018 actual

2019 budget

2019 estimate

2020 budget

Rawhide units A, B, C, D and F (combustion turbines) (continued)

Travel and training expenses 19,820$ 13,400$ 11,416$ 16,000$

Telephone services 560 600 583 600

Utilities 2,002 2,000 1,078 2,000

Dues, memberships and fees 6,333 6,000 5,478 6,000

Total Rawhide Units A, B, C, D and F production 1,261,861 2,200,435 2,177,563 2,062,755

Power operations

Regular wages 1,455,518 1,455,736 1,482,630 1,550,019

Overtime wages 48,367 61,780 51,716 61,086

Benefits allocation 672,427 809,792 836,299 890,118


O&M materials and supplies 5,010 2,000 1,000 2,325 Craig units 1 and 2 operating expenses 25,852 37,560 32,200 39,228

Computer equipment 9,989 - - -

Contracted services 190,175 208,588 209,722 252,140

Travel and training expenses 35,104 49,800 47,425 42,700

Telephone expenses 12,783 10,250 10,647 10,852


Total power operations expenses 2,460,927 2,640,531 2,676,706 2,854,568

Total production 41,145,259$ 48,122,593$ 46,871,588$ 48,571,725$

-

10

20

30

40

50


Production

Rawhide Unit 1 Craig units 1 and 2 Power operations Combustion turbines

$ millions

Page 140


Transmission2018

actual2019

budget2019

estimate2020

budget

Personnel expenses

Regular wages 4,770,504$ 5,446,215$ 5,203,477$ 5,896,233$

Overtime wages 330,141 395,368 385,557 397,733



Materials and other expenses

Office supplies 12,587 6,550 5,153 6,050

Safety expenses 6,688 13,250 17,952 15,350



O&M materials and supplies 166,022 241,368 306,122 267,301



Computer equipment 45,773 73,350 71,708 26,100

Total materials and other expenses 305,786 415,778 463,250 398,367


Contracted services 2,799,304 2,642,008 2,788,327 2,687,914


Telephone services 64,521 62,279 56,540 60,608

Utilities 27,753 14,070 16,195 12,120


Leases and rents 103,694 103,017 110,431 102,409 Craig units 1 and 2 transmission expenses

160,919 149,707 158,162 143,678


Total operations and maintenance 11,315,078 12,922,137 12,796,669 13,705,375

Transmission by others

Wheeling expense

Load 631,150 674,839 645,431 653,399 Spring Canyon Wind Energy Center 2,922,210 3,030,828 3,029,778 3,120,090 Silver Sage WindpowerProject 439,570 - - - Medicine Bow Wind Project 65,778 66,703 66,777 37,386

Total wheeling expense 4,058,708 3,772,370 3,741,986 3,810,875

Total transmission 15,373,786$ 16,694,507$ 16,538,655$ 17,516,250$

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2

4

6

8

10

12

14

16

18


Transmission

Personnel expenses Wheeling Contractual services Materials and other expenses

$ millions

Page 142



2018 actual

2019 budget

2019 estimate

2020 budget

OperationsPersonnel expenses

Regular wages 7,959,349$ 8,886,868$ 8,494,644$ 9,629,536$

Overtime wages 45,679 34,380 33,445 33,264



Office operations and other expenses

Office expenses 17,381 27,270 31,074 38,845






Total office operations and other expenses 696,237 447,873 509,343 830,664

Safety and training expenses

Safety expenses 25,443 6,650 11,412 6,265

Local business expense 13,982 2,000 835 3,000


Dues, memberships and fees 764 1,050 1,394 675

Wellness and incentive program 145,935 145,974 128,192 145,400


Total safety and training expenses 514,586 417,327 426,604 509,352





Utilities 118,229 131,520 128,198 131,520


Other financing expenses 35,979 47,110 36,700 44,700

Total contractual services 902,111 1,127,933 953,295 956,850

Insurance 425,777 547,700 561,120 716,500

Board and enterprise expenses




Trustees fees 26,123 25,500 24,000 19,500

Owner community economic development

60,000 100,000 100,000 100,000

Total board and enterprise expenses 261,001 305,620 313,007 315,595

Page 143


Administrative and general (continued)

2018 actual

2019 budget

2019 estimate

2020 budget

Operations (continued)

Reporting and other expenses

Office expenses 5,124$ 6,000$ 8,585$ 8,000$



Total reporting and other expenses 194,596 223,465 198,002 318,900

Planning and customer service expenses

Contracted services 431,878 919,475 883,194 619,654 Travel and training expenses 3,415 - - -

Total planning and customer service expenses 435,293 919,475 883,194 619,654

Compliance expenses


Contracted services 31,845 34,200 26,250 33,500 Travel and training expenses 19,890 26,900 45,729 36,100

Total compliance expenses 60,735 76,100 80,392 75,500

Total administrative and general operations 15,082,395 17,847,055 17,165,766 19,395,915

MaintenanceBuilding and grounds maintenance

Materials and supplies 74,079 66,068 55,400 51,480



Total buildings and grounds maintenance 330,690 343,494 353,585 264,380

Computer maintenance

Contracted services 1,447,908 2,251,170 2,308,270 2,740,536

Total computer maintenance 1,447,908 2,251,170 2,308,270 2,740,536

Office equipment maintenance

Contracted services 853 1,000 735 1,000


Total office equipment maintenance 21,562 18,949 20,317 18,949

Vehicle maintenanceMaterials and supplies 8,678 20,400 20,400 18,000 Tools and shop equipment 7,459 16,180 14,884 16,200 Contracted services 42,817 25,200 34,563 4,000

Total vehicle maintenance 58,954 61,780 69,847 38,200

Page 144


Administrative and general (continued)

2018 actual

2019 budget

2019 estimate

2020 budget

Maintenance (continued)

Security maintenance

Materials and supplies 13,715$ 15,700$ 15,934$ 14,500$


Computer equipment - minor - - - -


Total security maintenance 133,832 192,692 188,970 264,900

Total administrative and general maintenance 1,992,946 2,868,085 2,940,989 3,326,965

Total administrative and general 17,075,341$ 20,715,140$ 20,106,755$ 22,722,880$

-

3

6

9

12

15

18

21

24



Personnel expenses Operations Maintenance

$ millions

Page 145


Demand-side management2018 actual

2019 budget

2019 estimate

2020 budget

Personnel expenses

Regular wages 590,409$ 600,419$ 647,306$ 872,470$

Benefits allocation 254,972 324,055 357,499 484,819

Total personnel expenses 845,381 924,474 1,004,805 1,357,289 Distributed energy resources strategy

Contracted services - - - 300,000

Total distributed energy resources strategy expenses - - - 300,000

Energy efficiency

Contracted services 742,182 1,054,968 1,058,322 1,458,800 Rebates/incentives for retail customers 5,973,957 7,817,500 7,206,112 7,557,611 Audits/assessments for retail customers - - - 490,000

Total energy efficiency expenses 6,716,139 8,872,468 8,264,434 9,506,411

Distributed energy resources

General expenses

Contracted services 26,500 - 253 118,000 Dues, memberships and fees - 32,560 32,083 37,810

Total general expenses 26,500 32,560 32,336 155,810

Demand responseContracted services 27,120 75,000 33,335 35,000 Rebates/incentives to owner communities 248,926 163,433 167,119 245,200

Total demand response expenses 276,046 238,433 200,454 280,200

Electric vehiclesContracted services 4 75,000 48,900 148,000 Rebates/incentives for retail customers - 25,000 13,888 -

Total electric vehicles expenses 4 100,000 62,788 148,000

Smart thermostatContracted services - 28,000 9,332 96,400 Rebates/incentives for retail customers - 5,000 2,776 -

Total smart thermostat expenses - 33,000 12,108 96,400

Total distributed energy resources 302,550 403,993 307,686 680,410

Total demand-side management expenses 7,864,070$ 10,200,935$ 9,576,925$ 11,844,110$

Page 146


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2

4

6

8

10

12

14


Demand-side management

Energy efficiency expenses Personnel expensesDistributed energy resources Distributed energy resources strategy

$ millions

Page 147


Capital additions Capital projects are viewed strategically with a five-to-ten-year outlook in support of Platte River’s three pillars to safely provide reliable, environmentally responsible and financially sustainable energy and services to the owner communities, and in support of the strategic initiatives and core operations. Capital additions generally consist of projects aimed at ensuring and improving system reliability, replacing and upgrading aging infrastructure, implementing technology improvements, maintaining compliance, improving efficiency and completing replacements due to assets reaching the end of useful life. These projects are necessary to maintain a reliable low-cost energy system.

Production capital additions include power plant upgrades, equipment purchases and replacements as well as compliance related projects at the Rawhide and Craig generating stations. Also included in production additions is the Windy Gap Firming Project. Transmission capital additions include transmission lines, substations and supporting equipment. Projects are based on transmission studies and consultation with the owner communities’ staff through the joint technical advisory committee. These projects will provide enhanced system reliability and add capacity to serve new and existing loads. General plant capital additions include computer hardware and software, communication equipment, vehicle replacements, building and grounds modifications, compliance projects and other general plant equipment purchases.

The five-year capital forecast is developed to outline future investment in capital projects. Capital planning is an ongoing effort as needs change, thus the plan is reviewed and updated three times a year along with financial projections. The plan is the basis for each budget year. Production projects focus on plant equipment improvements, including major outages, control system upgrades, dust collection system replacements and fire protection system replacements. Transmission projects include coordinating and planning owner community requests for substation work, investing in a generator outlet transmission line for the Roundhouse wind resource, in addition to completing Platte River’s transmission and substation projects. Future general projects include replacing information technology equipment and the SONET system, investing in security improvements and implementing an enterprise resource planning system that will benefit the entire organization.

Project management continues to be a focus. In the past few years, emphasis has been placed on resource availability, as well as improving project planning and execution. This process will continue to evolve, striving towards operational excellence. Projects typically experience schedule changes for various reasons; therefore, a portion of unspent 2019 budget capital additions will be requested to be carried over into the 2020 budget.

The next pages include brief project descriptions, as well as estimated project cost and carryover amounts. The projects supporting the strategic initiatives of infrastructure advancement and technology development or resource diversification are also identified.

Page 148


Capital additions ($000)

2018actual

2019budget

2019estimate

2020budget

Production 41,483$ 17,109$ 15,327$ 30,087$

Transmission 4,658 2,721 2,753 24,440

General plant 18,278 34,890 35,696 9,395

Total capital additions 64,419$ 54,720$ 53,776$ 63,922$

-

20

40

60

80


Capital additions

Production Transmission General plant

$ millions

Page 149


2020 Capital additions: $63.9 million

Strategic initiatives, 75%

Core operations, 25%

Capital additions: $63.9 million

Generator outlet transmission line*, 31%

Windy Gap Firming Project*, 24%

HQ campus & energy engagement center*, 12%

Rawhide outages, 11%

Compliance (monofill), 9%

Strategic*, 8%

Craig units 1 and 2, 2%

Asset management and maintenance, 2%

Purchases, 1%

* Strategic projects

Page 150


Capital five-year forecast2020-2024$216 million

Windy Gap Firming Project, 48%

Transmission and substations, 13%

Generator outlet transmission line, 10%

Rawhide, 8%

Rawhide outages, 8%

HQ campus & energy engagement center, 4%

Asset management and maintenance, 3%

Craig units 1 and 2, 3%

Compliance, 3%

Page 151

Production capital additions2020

budgetTotal cost estimate(1)

Rawhide projects

Monofill upgrades - Rawhide 5,997,275$ 6,867,000$ Fire protection system upgrade

Combustion turbine Unit A 418,927 Combustion turbine Unit B 418,927

Switchgear replacement - Rawhide pump station 362,157 441,000 Controls upgrade to ovation - Owl Creek gas yard 260,766 Fuel oil unloading containment - Rawhide Unit 1 212,788 HVAC units - combustion turbine yard 200,770 374,000 Combustion upgrades - Rawhide Unit 1 145,860 1,913,000 LED lighting 100,000 733,000 Station service battery bank replacement - Combustion turbine Unit A 59,580 Continuous emissions monitoring system programmable logic controllers replacement

Combustion turbine units A-D 43,342 Combustion turbine Unit F 10,837

Total Rawhide projects 8,231,229 Rawhide outage projects

Variable frequency drive upgrade - Rawhide Unit 1 2,747,445 7,716,000

Rotary car dumper drive conversion to variable frequency drives 1,849,115 2,363,000

Dust collector upgrade - Rawhide active yard silo 184,058 1,300,000

Soot blower replacement(2) 86,361 1,485,000

Turbine blade replacement - Rawhide Unit 1 22,949 495,000 Total Rawhide outage projects 4,889,928

Rawhide purchases

Vacuum truck replacement 400,000 Hearing testing booth replacement 6,087 Teleskid track skid steer 2,620

Total Rawhide purchases 408,707

Total Rawhide capital additions 13,529,864 Other production projects

Windy Gap Firming Project(2) 15,568,120 109,163,000

Craig units 1 and 2 projects(3) 988,976 14,699,000

Total other production projects 16,557,096

Total production capital additions 30,086,960$


Page 152

Transmission capital additions2020


Transmission projects

Oil breaker (2042, 2046, 2052) replacements - Rawhide Substation 857,745$ 878,000$ Circuit switcher (T1,T2) addition - Linden Tech Substation(2)

556,599 613,000 Airflow spoilers 429,887 1,905,000 Transformer T3 addition - County Line Substation 213,628 266,000 HVAC unit replacements - substations 69,570 597,000 Circuit switcher (T2,T4) addition and relay upgrade - Harmony Substation 62,107 762,000

Total transmission projects 2,189,536 Transmission outage projects

Generator step up and unit auxiliary transformer replacements - Rawhide 2,215,872 11,726,000

Transmission purchases

Generator outlet transmission line - Roundhouse to Rawhide 20,000,000 20,110,000

Relay test set 34,000

Total transmission purchases 20,034,000

Total transmission capital additions $ 24,439,408

General plant capital additions2020


General plant projects

Energy engagement center 4,642,731$ 5,400,000$ Headquarters campus 2,795,453 50,440,000 SONET communications system replacement 460,835 1,314,000

Network replacement - Rawhide 325,000 Fiber optic lateral - Valley to Long-Haul West Loveland 127,966 Smart key system - substations 107,279 Fiber optic lateral - Richard Lake Substation 102,702 DDI management system - headquarters 95,000 Server replacements - headquarters 75,000 SCADA periodic server equipment replacement 74,548 287,000 Security - Loveland substation walls(2)

67,248 126,000 Identity and access management solution 50,000 Key management system - headquarters 33,211

Voice recorder upgrade 28,458

Multi-factor authentication solution 20,000

Telephone router replacement 17,012

SCADA periodic storage equipment replacement 10,747 172,000 Enterprise resource planning software -

Total general plant projects 9,033,190$


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General plant capital additions (continued)2020


General plant purchases

Vehicle fleet replacements 203,046$ Floor machine - street sweeper - headquarters 50,000

SCADA periodic software license purchase 19,916 Copiers - headquarters 18,000 Snowrator plowing machine 15,000 Fire extinguisher training simulator 14,300

Spotter training equipment 14,000

Fiber optic splicer replacement 10,695

Fiber optic identifiers 10,586

Fiber optic cable lasher 6,400

Total general plant purchases 361,943

Total general plant capital additions 9,395,133

Total capital additions 63,921,501$

Project supports strategic initiative.

(2) Projects with estimated unspent 2019 funds that will be requested to be carried over to the 2020 budget.

(1) If no amount is shown, the 2020 budget amount represents the total project cost estimate.

(3) The total cost estimate for Craig units 1 and 2 consist of the projects identified in their 10-year capital plan.


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Rawhide projects

$ 5,997,275

Project time frame: 2018-2020

Total cost estimate: $6,867,000

Fire protection system upgradeCombustion turbine Unit A 418,927$ Combustion turbine Unit B 418,927

837,854$

Switchgear replacement - Rawhide pump station 362,157 Project time frame: 2019-2020

Total cost estimate: $441,000

∞ Controls upgrade to ovation - Owl Creek gas yard 260,766

Monofill upgrades - Rawhide

Production capital additions

Replace the Allen Bradley programmable logic controllers at the Owl Creek gas yard and gas yard bath heaters in the combustion turbine yard at Rawhide. The new equipment will match the existing Emerson ovation distributed control system platform. This is among the last of several isolated systems remaining to be converted to ovation controls, which is a continuation of a multi-year initiative to have Rawhide Unit 1, all five combustion turbines

Update and implement the monofill engineering design and operations plan to ensure compliance with Colorado Department of Public Health and Environment regulations and the Environmental Protection Agency coal combustion residuals rule. An engineering design and operations plan was submitted in March 2019 to the Colorado Department of Public Health and Environment with approval expected to be received in 2020. Construction planning and bidding will begin in early 2020 following approval of the updated engineering design and operations plan. The monofill upgrade will include the design of the liner, leachate and cover system as well as geotechnical and geological investigations. Construction of the first phase of the liner, leachate, collection systems and any balance of plant connections is also included in the project.

Replace Rawhide pump station switchgear in the substation which has reached the end of its useful life. The switchgear will have an automated breaker scheme that has automatic transfer abilities making it safer than the current version.

Build a climate controlled building to house the fire suppression agent at both units. NOVEC 1230 will be replacing carbon dioxide as the fire suppression agent. As part of the project, conduit and cable will be run to the packaged electrical equipment control component where a notifier control panel will be located. This control panel will be tied to the plant-wide fire detection and alarm system. In addition, a suppression circuit will be added to the exciter compartment that is now unprotected. Currently, if there is a discharge of carbon dioxide, the concentration reaches 34 percent which creates a life safety hazard. By replacing the carbon dioxide agent with NOVEC 1230 the hazard will be eliminated.


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Fuel oil unloading containment - Rawhide Unit 1 212,788$

HVAC units - combustion turbine yard 200,770 Project time frame: 2019-2020


∞ Combustion upgrades - Rawhide Unit 1 145,860



∞ LED lighting 100,000



Upgrade several boiler combustion components to provide more operational flexibility. Modifications include increasing the number of oxygen probes at the air heater inlet, installing a new carbon monoxide instrumentation grid at the air heater inlet, replacing the pneumatic separated over fire air tilt drives with electric Beck drives and decoupling and providing individual tilt drives for the underfire air tips. In addition, distributed control systems integration and control curve development will be performed as part of the project. Platte River is adding more intermittent generating resources which is requiring Rawhide Unit 1 to operate in load ranges lower than it has historically. Rawhide’s combustion tuner consultant has recommended several improvements that will allow for better nitrogen oxide and carbon monoxide control during both low and high load operations. Rawhide also believes these improvements will allow better flexibility in coal mill operation by providing more heat to the spray dry absorber improving sulfur dioxide emissions controls at reduced load.

Replace all exterior and interior lighting throughout the plant with LED lighting which is more energy efficient and requires less maintenance than the standard high pressure sodium lighting currently installed. The LED lights have a 10 year warranty, thus reducing maintenance costs for that time period.

Replace 11 existing air conditioning units in continuous emissions monitoring system and the relay rooms with updated five-ton SunAir wall mounted units. The current R-22 units are reaching the end of their useful life and are becoming increasingly difficult and expensive to maintain.

and all balance of plant equipment on one common platform. This project will allow both the Owl Creek inlet station and the bath heaters to communicate with Rawhide’s control room at a higher speed, increasing reliability of the technology, as well as more troubleshooting visibility to plant personnel to address issues.

Design and install a fuel oil containment area designed to unload a 6,000 gallon fuel oil tanker truck. As part of the project, the fuel oil piping will be modified to allow filling through the original tank fill location. Currently, trucks are filled on a tee on the suction side of the fuel oil pumps, which means staff cannot fill the tank and use it at the same time.


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Station service battery bank replacement - combustion turbine Unit A 59,580$

Continuous emissions monitoring system programmable logic controllers replacementCombustion turbine units A-D 43,342$ Combustion turbine Unit F 10,837

54,179$

Total Rawhide projects 8,231,229$

Rawhide outage projects

∞ 2,747,445



Rotary car dumper drive conversion to variable frequency drives 1,849,115



Replace the combustion turbine unit A, B, C, D and F's continuous emissions monitoring systems GE Fanuc processors and Allen Bradley input/output cards with Cemtek's Source Emissions Air Logger (SEAL) control units. GE is no longer supporting the Fanuc processors making them obsolete. The new Cemtek SEAL control units will replace both the GE processors and the Allen Bradley input/output cards. The new SEAL controls will give technicians more programming flexibility as well as easier access for remote support.

Replace the station service battery bank for combustion turbine Unit A. Fiamm batteries have a 15-20 year life span and the Unit A batteries were installed in 2001. The batteries are integral to operating power circuit breakers and protecting the generator through the use of relaying. If the combustion turbine unit trips, the batteries are the sole energy source to run oil pumps and other protective equipment. Failure of the batteries to perform during a black-plant scenario can result in catastrophic damage to the entire turbine generator set.

Upgrade and modify the rotary car dumper (RCD) so that it can handle the additional weight of fully loaded aluminum railcars. Currently, the RCD is only able to dump cars at approximately 90 percent of their capacity. Any cars loaded over 90 percent capacity at the mine put excessive stress on the system. These upgrades will extend the life of the components, improve reliability of the system and result in better control of the equipment.

Variable frequency drive upgrade - Rawhide Unit 1

Install variable frequency drives (VFD) on induced draft fans, boiler feed pumps, condensate pumps and VFD enclosures at outbuildings. As part of the project, new lube oil skids for the induced draft fans and boiler feed pumps will be installed to replace the existing hydrokinetic fluid drives. New power cables and control cables will be installed to integrate systems into the distributed control system. These improvements will save energy and provide benefits such as improved heat rate, management of load changes and a potentially faster ramp rate. Engineering design will begin in late 2019 followed by a request for proposal in early 2020. The variable VFDs will be purchased in 2020 and installed during the 2021 fall outage.


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Dust collector upgrade - Rawhide active yard silo 184,058$ Project time frame: 2020-2021


Soot blower replacement 86,361



Carryover estimate: $28,000

Turbine blade replacement - Rawhide Unit 1 22,949 Project time frame: 2020-2021


Total Rawhide outage projects 4,889,928$

Upgrade the upper active yard silo dust collector to be compliant with current regulations set by the National Fire Protection Association and Occupational Safety and Health Administration. The upgrades include new deflagration relief panels that vent to the outside, a new exhaust fan, new filter housing and bags, and cleaning blowers. Electrical work for the project includes upgrades to wiring, the motor control center buckets and porting the Air-Cure narrative to the ovation distributed control system.

Replace intermediate pressure turbine blades 1C and 1R on the Rawhide Unit 1 steam turbine. This replacement was a recommendation based off of Performance Engineering LLC's steam path audit conducted in 2015. Replacing the damaged blades will improve the steam path and allow Rawhide Unit 1 to regain lost output and heat rate. This project will be completed as part of the 2021 outage as the project requires full disassembly to access the turbine rotor.

Replace all existing retractable soot blowers for the Rawhide Unit 1 boiler to ensure unit heat rate and reliability. The current soot blowers are obsolete and require frequent maintenance while replacement parts are becoming scarce. Currently, Rawhide Unit 1 has three models from two vendors installed. Once the project is complete, Rawhide Unit 1 will have standardized equipment from one vendor. This allows for fewer inventory parts and reduced maintenance due to a rack-and-pinion style drive as opposed to the current chain driven equipment.


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Rawhide purchases

Vacuum truck replacement 400,000$

Hearing testing booth replacement 6,087

Teleskid track skid steer 2,620

Total Rawhide purchases 408,707$

Total Rawhide capital additions 13,529,864$

Other production projects

∞ Windy Gap Firming Project 15,568,120



Carryover estimate: $2,004,000

Purchase a teleskid track skid steer to perform functions such as loading, snow removal, feeding hay to the bison, performing corral and fence work, road work, landscaping, forklift tasks and sweeping. As part of this project three pieces of equipment will be traded in, thus significantly reducing the total project cost.

Platte River is participating in the Windy Gap Firming Project storage system to support long-term reliable delivery of Platte River's Windy Gap water. The Windy Gap system currently has very limited water storage capability, putting Rawhide at risk. There is currently no dedicated storage for Windy Gap water requiring Platter River to find an alternative water supply in both wet and dry years as the Windy Gap water cannot be pumped during wet periods (no storage), or during dry periods (no water in priority to pump). Therefore, this project will provide storage and help ensure a continuous water supply in both wet and dry years. Platte River's share in the project is currently 16,000 acre-feet of the total 90,000 acre-feet of storage. The project is moving into the final design phase and construction is estimated to be complete with the reservoir ready to fill in 2024. The amounts shown represent Platte River’s share of the project.

Replace the existing sound booth which has reached the end of useful life. This will allow for enhanced test functionality and tracking of employee hearing test history.

Purchase a vacuum truck to replace the existing truck that has reached the end of its useful life. The truck will be used for various tasks including, but not limited to, pulling ash from baghouse piping, duct cleaning and de-watering electrical vaults.


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Craig units 1 and 2 projects 988,976$


Total cost estimate: $14,699,000 (10-year capital plan)

Total other production projects 16,557,096$

Total production capital additions 30,086,960$

The engineering and operating committee approved capital projects for plant improvements and additions at Craig Generating Station. The budget includes expenses for various projects for Craig units 1 and 2 including a boiler waterwall, condenser circulating water isolation valve and generator high voltage bushings, stand-off insulators, and line side current transformers replacements on unit 2 along with a scrubber thickening system upgrade and work on the 230kV bay in the switchyard. The amount shown represents Platte River’s ownership share responsibility.


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Transmission projects

Oil breaker (2042, 2046, 2052) replacements - Rawhide Substation 857,745$



∞ Circuit switcher (T1,T2) addition - Linden Tech Substation 556,599




∞ Airflow spoilers 429,887 Project time frame: 2017-2021


∞ Transformer T3 addition - County Line Substation 213,628



Transmission capital additions

Install a new 115/12.47 kV transformer, circuit switcher and associated protection at County Line Substation. To conform with system engineering's standards and the power supply agreement, Platte River will install the new circuit switcher and associated protection to

Install new airflow spoilers where galloping has resulted in damage or outages in the past. The new airflow spoilers will minimize conductor icing thus reducing galloping. Installation of the airflow spoilers will increase transmission system reliability by preventing system faults, as well as reduce maintenance costs.

Replace existing oil circuit breakers and associated disconnect switchers located at Rawhide Substation. In addition, replace Timberline coupling voltage transformers and line disconnect switch as well as permanently remove from the system Timberline wavetrap and ground switch. The existing oil circuit breakers are approaching the end of their useful life and it is becoming difficult to find spare parts since the industry is moving away from these installations. The disconnect switches are aging, testing poorly and becoming hard to operate. Wave traps and ground switches are the original equipment installed in the substation and are no longer used for system operations. Removing these from the system limits potential points of failure and prevents Platte River from completing maintenance on equipment that is not necessary for system operations, while at the same time bringing the lines up to current system standards.

Replace existing motor operated disconnect (MOD) switches on T1 and T2 with a circuit switcher that has a built-in disconnect switch to conform with current engineering design standards. Replacing the MOD switches will minimize North American Electric Reliability Corporation's standard requirements for the City of Fort Collins while providing equipment maintenance benefits to Platte River. The project includes adding dual winding slipover bushing current transformers to transformers T1 and T2 and adding circuit switcher failure protection, overcurrent relaying and bus protection to T1 and T2.


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HVAC unit replacements - substations 69,570$



∞ Circuit switcher (T2,T4) addition and relay upgrade - Harmony Substation 62,107



Total transmission projects 2,189,536$

Transmission outage projects

Generator step up and unit auxiliary transformer replacements - Rawhide 2,215,872$ Project time frame: 2019-2021


Replace the existing single-phase generator step up (GSU) transformers with single-phase GSUs and replace the unit auxiliary transformers with three-phase transformers during the major plant outage in 2021. The Rawhide Unit 1 GSU and unit auxiliary transformers are reaching the end of their useful life as they were put into service in 1984. Replacement of these transformers will increase the reliability of Rawhide Unit 1.

Install heating, ventilating and air conditioning (HVAC) units at the Linden Tech and Richard Lake substations. The units are quickly deteriorating and are at the end of their service lives. A second HVAC unit will be added at both locations to act as a redundant safety measure to further ensure the protection of Platte River assets within the buildings.

maintain separation from the bulk electric system for the City of Longmont. The City of Longmont will reimburse Platte River for expenses associated with the transformer.

Replace the existing T2 MOD switch with a circuit switcher and add dual winding slipover bushing current transformers to transformer T2. Circuit switcher failure protections, T2 overcurrent relaying, and T2 bus protection will also be installed. Replacing the MOD with a circuit switcher will provide a separation point between the City of Fort Collins and Platte River while also minimizing North American Electric Reliability Corporation's compliance standards for the City of Fort Collins and providing equipment maintenance benefits for Platte River. Dual winding slipover bushing current transformers need to be added to transformer T2 in order for the relaying and protection upgrades to be completed. The relay and protection replacement associated with this project will add reliability to the system by upgrading outdated protection elements and adding secondary relaying to important substation components.


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Transmission purchases

∞ Generator outlet transmission line - Roundhouse to Rawhide 20,000,000$



∞ Relay test set 34,000

Total transmission purchases 20,034,000$

Total transmission capital additions 24,439,408$

Purchase of a new Omicron test set that will provide system engineering a means to test relay settings prior to field installation. This set will also provide a way to test metering software to simulate loads being input into a local remote terminal unit (RTU). The test set will improve system reliability by improving installation time in the field. Utilizing an Omicron test set will provide system engineering training for relay, metering and RTU functionality.

Purchase of approximately 19 miles of 230 kV transmission line from the Roundhouse Renewable Energy Project to the Rawhide Substation to deliver the 225 MW of wind added in 2020. With the purchase of this line, Platte River will save approximately $1.2 million in purchased power expenses per year. In addition, Platte River will have more options for lower cost noncarbon resources in the future with the purchase of this transmission line.


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General plant projects

∞ Energy engagement center 4,642,731$



∞ Headquarters campus 2,795,453



SONET communications system replacement 460,835



Network replacement - Rawhide 325,000

General plant capital additions

Design and build a cost effective and viable headquarters campus to better keep pace with advancements in the industry. The new campus will more accurately reflect Platte River's values while providing an easily accessible amenity to owner communities and the general public. An updated headquarters campus will provide a consolidated facility to currently separated work groups while accommodating future growth for decades to come. The project will allow Platte River to capitalize on new technologies and provide staff with the resources needed to operate more effectively and efficiently in a rapidly changing industry. The campus will also provide the community with better access to the region’s energy experts and policy leaders who will guide a cleaner and more diverse energy future. Owner, contractors, design and bid contingencies are built into the project costs. More information on the project can be found on Platte River's website at www.prpa.org/headquarters.

Replace obsolete fiber optic SONET equipment with Schweitzer ICON for bulk electric and dense wave division multiplexing equipment for the customer data network. Current Alcatel DMX equipment has reached the end of its useful life and is no longer supported by the manufacturer. The new Schweitzer equipment has a 10-year warranty, which will reduce operations and maintenance costs.

Replace current enterprise network equipment that has reached end of its useful life and is no longer supported by the vendor. This project is part of a five-year replacement cycle in order to ensure compatibility, security, reliability and keep annual support and maintenance costs from vendors down.

Add an additional estimated 6,500 square feet of meeting and conference space onto the east end of the new headquarters campus building. This addition will provide the ability to host large public and regional utility meetings, internal employee functions, and assist in education outreach about energy issues confronting the region and state.


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∞ Fiber optic lateral - Valley to Long-Haul West Loveland 127,966$

∞ Smart key system - substations 107,279

∞ Fiber optic lateral - Richard Lake Substation 102,702

∞ DDI management system - headquarters 95,000

Server replacements - headquarters 75,000

74,548



Install a new DDI system (domain naming services (DNS), dynamic host configuring protocol (DHCP), and internet protocol (IP) address). This solution will provide advanced DNS security, real-time distributed DNS database and IP address management, audit history, central manageability, a better user interface, troubleshooting tools, network insight, domain name system security extensions support, distributed denial of service protection, and detection and mitigation support. This project will address numerous vulnerabilities in Platte River's strategic five-year cybersecurity risk program.

Install a new electronic lock system that includes the installation of cores at the substations, programming of keys for the owner communities and deployment of the new system. The new system will provide logging capabilities if the need arises for audits or investigations. In addition, the system can deactivate keys due to lost credentials instead of physically re-keying sites when a key is lost.

Install fiber optic cable and extend existing conduit between the Valley Substation and the Long-Haul West at the intersection of Highway 402 and Taft in Loveland. Building this section of fiber will enable more efficient connectivity between the Estes Park Long-Haul, Long-Haul West and the Loveland local loop cables. All three cables pass within a half mile of each other, but currently there is no efficient method to cross connect fibers between the cables. The installation of this short section of fiber optic cable will allow for the transition between the Estes Park Long-Haul and the Long-Haul West without having to use Loveland local loop fibers. The new fiber cable will enable more options to reconfigure the fiber system in the future and is needed for the SONET replacement project.

Replace multiple servers that have reached the end of useful life. This project is part of a five-year replacement cycle in order to ensure compatibility, security, reliability and keep annual support and maintenance costs from vendors down.

Replace server equipment that has reached end of its useful life and is no longer supported by the vendor. The SCADA systems' reliability, security and compliance rely on stable hardware in addition to the availability of security patches and manufacturer support.

SCADA periodic server equipment replacement

Add fiber optic tie to Richard Lake Substation which will expand capabilities with the new bulk electric communication transport network. The tie will remove collapsed ring issues and add redundancy when building new fiber rings for the bulk electric network.


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∞ Security - Loveland substation walls 67,248$




∞ Identity and access management solution 50,000

∞ Key management system - headquarters 33,211

Voice recorder upgrade 28,458

∞ Multi-factor authentication solution 20,000

Telephone router replacement 17,012

Install an identity and access management system. The system will ensure the right individuals access the right resources at the right times and for the right reasons. This project was a recommendation from the Neo Prime Cyber Risk assessment and is a requirement of the Platte River cybersecurity framework.

Install surveillance and radar at a City of Loveland substation. This installation will be done in conjunction with the installation of the new block walls. The project will enable the City of Loveland to monitor the substation with video and radar systems. The City of Loveland has requested exterior and interior security surveillance. The interior surveillance will be viewable by both Platte River and the City of Loveland while the exterior will be solely viewable by the City of Loveland.

Upgrade the voice recorder hardware and the operating system from Windows Server to the latest version.

Install a multi-factor authentication solution. The solution provides an additional layer of security by strengthening the authentication requirements to access Platte River's systems. This project was a recommendation from the Neo Prime Cyber Risk assessment and is a requirement of the Platte River cybersecurity framework.

Install a key management cabinet that integrates with Platte River's current key card system with the ability to track physical keys. The system will log the time the key was taken and by whom. The key cabinet will provide an enhanced key control, removing the need for employees to carry physical keys for emergencies, thus limiting the opportunity for lost or misplaced keys. This will significantly decrease the potential need to re-key sites due to a lost credential.

Replace end of life telecommunications routers at Rawhide and headquarters that are no longer supported by the vendor.


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SCADA periodic storage equipment replacement 10,747$



∞ Enterprise resource planning software -

Project time frame: 2020-TBD

Total cost estimate: TBD

Total general plant projects 9,033,190$

General plant purchases

Vehicle fleet replacements 203,046

Floor machine - street sweeper - headquarters 50,000

SCADA periodic software license purchase 19,916

Replace multiple systems that have reached the end of their useful life. The scope of applications to be replaced include the benefits, time entry, and payroll systems for human resources, the general ledger, accounting, fixed assets, cash management, purchasing, budgeting, forecasting and reporting systems for financial services, and the materials/maintenance management and fleet tracking systems for facilities and fleet. The new software will allow employees to work more efficiently with access to real time data needed to make business decisions. In addition, new functionality within the selected system will offer modernized features to employees. After the vendor process review and software recommendation, a budget, scope and schedule will be determined.

Replace operations technology storage equipment that is at the end of its useful life and is no longer supported by the manufacturer. The SCADA systems' reliability, security and compliance rely on stable hardware in addition to the availability of security patches and manufacturer support.

Purchase a floor sweeper with a package that includes a solid dump hopper, solid tires, single point electronic controls, safety lighting and backup alarm. The new headquarters campus will have a greater amount of roadways, parking areas, and interior parking surfaces that need to be maintained. The current attachments used are undersized to efficiently upkeep the added surfaces.

Replace vehicles which meet or exceed Platte River’s vehicle replacement criteria of twelve years or 90,000 miles. Platte River utilizes a fleet team to review fleet replacement processes and criteria. Platte River’s vehicle replacement criteria has been evaluated and is in line with owner community practices. Replacement of these vehicles will help bring the fleet up to standards.

Purchase Microsoft Windows licenses to upgrade the legacy operating systems. The Microsoft Windows operating system installed on SCADA access control and monitoring


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Copiers - headquarters 18,000$

Snowrator plowing machine 15,000

Fire extinguisher training simulator 14,300

∞ Spotter training equipment 14,000

Fiber optic splicer replacement 10,695

∞ Fiber optic identifiers 10,586

Fiber optic cable lasher 6,400

Total general plant purchases 361,943$

Total general plant capital additions 9,395,133$

Total 2020 capital additions 63,921,501$

Purchase an aerial cable lasher to support aerial cables in Estes Park, Longmont, Loveland and Highway 34.

virtual servers are reaching end-of-support. This license will allow all virtual servers to be upgraded to the latest version of the operating system.

Purchase an S70 telecommunications fiber optic splicer to replace the current S50 fiber optic splicer. The current splicer is outdated making it difficult to find replacement parts.

Purchase two fiber optic identifiers that will allow technicians to identify fiber between two locations without having to cause an outage to the bulk electric system or to customers.

Purchase spotter equipment for training, setup configuration and troubleshooting. This equipment will provide Platte River an opportunity to train on all aspects of the spotter equipment and software without jeopardizing already configured radar sites.

Purchase a fire extinguisher training simulator consisting of a digital monitor panel, training extinguishers and a shipping case. This simulator will eliminate hazards associated with having a live fire extinguisher training.

Purchase a snowrator plowing machine with a granular ice melt spreading system, de-icing spray system, zero turn radius controls and a 48-inch plow blade. The new headquarters campus will have a greater amount of roadways, parking areas, side walks and building edges that need to be maintained in order to allow visitors and employees to travel safely around the campus. The current plow and blower attachment are not sized to efficiently maintain the added surfaces.

Purchase and install additional copiers in the new headquarters campus building to allow easy access to a copier for all employees.


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Debt service expenditures Long-term financial projections in line with SFP financial metrics determine the need and timing of debt financings. Debt proceeds historically have been used to finance production and transmission assets. Outstanding long-term debt consists of fixed-rate debt issued under Platte River’s general power bond resolution. The debt service expenditures include principal repayments and interest expense based on scheduled debt payments. Of the $159.1 million debt outstanding, approximately 85% and 15% relate to transmission and Rawhide projects, respectively. A new Series KK debt financing of approximately $100 million is planned for 2020 to fund the Windy Gap Firming Project. The weighted average cost of debt during 2020 is forecast to be approximately 3.4%.

Credit ratings for power revenue bonds

Platte River is committed to maintaining a strong credit rating, which is a significant factor in determining cost of debt. The senior lien debt credit is rated AA by all three credit rating agencies: Moody’s, Fitch and Standard & Poor’s (S&P). The key factors in determining these ratings are the diversity and economic strengths of the owner communities, Platte River’s financial position, management expertise and overall competitive position.

Debt service expenditures ($000)

2018 actual

2019 budget

2019 estimate

2020 budget

Principal 12,104$ 10,346$ 10,320$ 11,713$

Interest expense 8,729 9,129 8,130 11,397

Power revenue bond service 20,833 19,475 18,450 23,110 Allowance for funds used during construction (821) - - -

Net debt service expenditures 20,012$ 19,475$ 18,450$ 23,110$

Bond issue Moody's Fitch S&P

Series II Aa2 AA AA

Series JJ - (1)AA AA

(1) A credit rating was not obtained from Moody's for the Series JJ debt issuance.

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-

10

20

30


Power revenue bond service

Principal Interest expense

$ millions

Long-term debt outstanding

2018 actual

2019 budget

2019 estimate

2020 budget

Col

Power revenue bonds

Series HH 7,985,000$ -$ -$ -$

Series II maturing 6/1/2037 26,170,000 25,530,000 25,530,000 24,865,000

Series JJ maturing 6/1/2036 145,605,000 143,895,000 143,895,000 134,250,000

Series KK - 100,000,000 - 100,000,000

Total power revenue bonds 179,760,000 269,425,000 169,425,000 259,115,000

Unamortized bond premium 25,713,536 22,321,896 22,321,896 19,109,995

Total net long-term debt 205,473,536$ 291,746,896$ 191,746,896$ 278,224,995$

(1) Series II remaining amount outstanding relates to transmission assets.

(2) Series JJ remaining amount outstanding relates to transmission assets and Rawhide assets of $109.6 million (82%) and $24.6 million (18%), respectively.

(3) Estimated amount of Series KK debt issuance. Issuance was delayed in 2019 and is planned for 2020.

(1)

(2)

(3)

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Bond service coverage2018 actual

2019 budget

2019 estimate

2020 budget

Net revenues

Operating revenues 222,113,956$ 227,045,117$ 229,400,659$ 244,089,382$ Operating expenses, excluding depreciation (165,348,935) (180,638,088) (179,140,632) (194,967,036)

Net operating revenues 56,765,021 46,407,029 50,260,027 49,122,346 Plus interest and otherincome 3,490,514 4,269,924 4,020,497 4,154,554

Net revenues before rate stabilization 60,255,535 50,676,953 54,280,524 53,276,900

Rate stabilization

Deposits - - - -

Withdrawals - - - -

Total net revenues 60,255,535$ 50,676,953$ 54,280,524$ 53,276,900$

Bond service

Power revenue bonds 20,833,227$ 19,474,686$ 18,449,686$ 23,110,003$ Allowance for funds used during construction (821,032) - - -

Net revenue bond service 20,012,195$ 19,474,686$ 18,449,686$ 23,110,003$

Coverage

Power revenue bonds 3.01x 2.60x 2.94x 2.31x

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Budget process Platte River is a political subdivision of the State of Colorado and is subject to the Local Government Budget Law, C.R.S § 29-1-101, et seq. Platte River is not subject to Colorado’s Taxpayer’s Bill of Rights provisions because it operates as a proprietary fund. The statutory deadline for submission of Platte River’s annual budget to its board of directors is Oct. 15 of each year. By that date, a notice is published in newspapers of general circulation stating that the annual budget is available for inspection by the public. The date and time for the public hearing is also published. The budget document can be found on Platte River’s website at www.prpa.org and at Platte River’s headquarters at 2000 East Horsetooth Road, Fort Collins, Colorado.

The budget was developed in alignment with the strategic initiatives and in compliance with the financial framework described in the financial governance section. The budget was also developed with an adaptive strategy to effectively maintain system reliability, ensure environmental responsibility and regulatory compliance, as well as manage risk. Below explains how the budget is developed, reviewed and approved.

Owner communities load forecast

Platte River’s long-range load forecast is developed using an econometric model that incorporates independent variables including population, distributed solar, electric vehicle usage and weather. The forecast also includes a trend for demand and energy changes anticipated from energy efficiency programs. The budgeted monthly demand and energy load projections were based on the 10-year official load forecast.

Production cost model

The major revenue and expense categories (sales for resale, purchased power and fuel) are developed from the results of an hourly production cost simulation model, Aurora. Generation by resource is determined using assumptions for resource availability and performance, fuel and transportation contract costs, power purchase contract terms and market prices for sales for resale, supplemental purchased power and natural gas.

Personnel budget

The salaries budget is developed in accordance with the board policy on employee total compensation. A market adjustment is included in regular wages based on data from a variety of published sources, both regional general industry and from other utilities. Position step increases and new positions are also included in the budget. New positions are requested by department managers who submit a position description and justification. The senior management team reviews the requests and decides the positions for the upcoming year based on the greatest need and value to Platte River. As positions become vacant, they are evaluated to determine if

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replacement is required or if the position can be allocated to another area. All incremental headcount is approved by the board of directors through the budget process. Overtime and capital labor are budgeted by the individual departments as a component of total salaries. The remaining operating salaries are allocated to the functional accounts based on recent historical data. Medical and dental expenses are based on a mid-year projection provided by Alliant Employee Benefits using historical claims and industry cost projections. All projected benefit costs are applied to the budgeted labor charges.

Departmental budgets

Each department must submit a budget on an account-by-account basis along with justifications, explanations and statistical information supporting the budget. Department managers develop internal goals and work plans and align their activities with Platte River’s strategic initiatives. Through internal work sessions, the department budgets are reviewed and approved by division managers and senior management.

Craig units 1 and 2 budget

The participation agreement provides for the joint ownership of Craig units 1 and 2, of which Platte River owns 18%. Tri-State, as the operating agent of Craig Generating Station, is responsible for the daily management, administration, operation and maintenance of Craig units 1 and 2 and related transmission facilities. All costs of operation and maintenance, other than fuel costs, are shared on a pro rata ownership basis. Participants are obligated to advance funds to the operating agent as required to make payments of operating and maintenance costs when due. The engineering and operating committee works closely with Tri-State staff to develop capital and operations and maintenance budgets to ensure future plant reliability through the life of the project.

Joint transmission

Platte River’s share of joint ownership projects include costs for the Ault-Fort St. Vrain, Craig-Bonanza, Hayden-Blue River and Craig-Ault transmission lines, as well as Craig units 1 and 2 transmission costs. The joint ownership project budgets are developed by the operating agents and approved by the participants through the engineering and operating committees.

Billable projects

Platte River performs services on behalf of its owner communities. The services are structured under intergovernmental agreements and are billed directly to each owner community. Examples of services provided include customer information systems, distribution, SCADA, substation security and fiber management. These activities are shown in the collaboration diagram.

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Capital budget

Capital projects are developed based on a five-to-ten-year planning horizon. With each budget cycle, projects are submitted with a project description and justification. Projects are planned based on resource availability and are categorized, ranked, prioritized and strategic projects are identified. A long-term capital forecast is also prepared, reviewed and updated three times a year. The long-term capital forecast is used for long-range financial planning to determine rates, cash flows and the timing of debt financings.

Budget contingency

The budget contingency can be used to meet unexpected expenditures that could not be foreseen at the time the budget was prepared. Events that may require the use of the contingency include unplanned generation or transmission outages, significant increases in power market or natural gas prices, unplanned expenses to maintain power supply to the owner communities or the adoption of an accounting policy which impacts expenditures. It may also be used for existing capital projects that require expenditures above those budgeted as the result of scheduling changes, payment timing differences, changes in work scope, price fluctuations or new projects the board of directors deem important to start before the next budget year. A contingency transfer is not unusual for capital projects. Prior to transferring contingency to an expense category, staff must notify the board of directors of the need for the transfer and present a resolution proposed for adoption. The budget contingency appropriation amount represents approximately 10% of the operating expenses and capital additions to align with fluctuations in the budget.

Year

Contingency appropriation budget ($000)

Appropriated amount ($000) % Purpose of transfer

2010 $20,000 $6,000 30%Additional expenditures for timing changes related to the 230kV transmission expansion capital projects.

2011 $20,000 $5,407 27% Cost overruns for the 230kV transmission capital projects.

2012 $20,000 - -2013 $20,000 - -2014 $20,000 - -

2015 $20,000 $6,640 33%

Additional expenditures for several capital projects including the Craig Unit 2 nitrogen oxide removal, the fiber route to Estes Park, and the control room for the digital control system, as well as ancillary services related to additional wind generation.

2016 $20,000 $1,200 6%

Additional expenditures for the initial progress payments for the generator rotor replacement project and the generator stator rewind project completed during the 2018 planned maintenance outage.

2017 $20,000 $1,100 6%Additional expenditures for the initial progress payments for the bottom ash and reclaim pond project completed during the 2018 planned maintenance outage.

2018 $23,000 - -

2019 $23,000 - (2)

(2) A contingency transfer for capital projects is planned to be requested at the December 2019 board of directors meeting.(1) Prior to 2018, the budgeted contingency was a fixed amount.

(1)

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Management review

Financial statements, budget summary, budget detail and division/department budget reports are prepared and analyzed for management review. A proposed budget work session with the managers and the general manager/CEO is held to provide discussion and analysis of the budget and to ensure that expenditures for the budget year are consistent with goals, objectives and strategic initiatives, and conform to the rate structure and SFP. This discussion and analysis may result in revisions, deletions, reductions or additions of budget items. The budget is revised accordingly, and the reports are revised and distributed to management for further review.

Budget document

The annual budget document is a comprehensive document used by Platte River’s management as a planning tool and a means of communicating to the board of directors and the public. The budget document is prepared in compliance with the Local Government Budget Law of Colorado and is submitted to the state no later than 30 days following the beginning of the fiscal year of the adopted budget. The budget document must show: all proposed expenditures as well as all sources of anticipated income; estimated beginning and ending fund balances; the corresponding actual figures for the prior fiscal year and estimated figures projected through the end of the current fiscal year; a written budget message; and explanatory schedules or statements.

Board review and adoption

The proposed budget is distributed to the board of directors in September and a budget work session is scheduled at the September board meeting. Legal notices are published in the four owner communities’ newspapers stating: the budget has been delivered to the board of directors; it is available for public inspection; the date and time of a public hearing which is scheduled at the October board meeting; and that the adoption of the proposed budget will be considered at the December board meeting. Revisions to the budget during the board of directors work session or other revisions arising from unanticipated changes are reviewed with the board of directors at the October board meeting. Final adjustments to the proposed budget may be made before board adoption in December.

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Budget Schedule

Jan Feb Mar Apr May June July Aug Oct NovSep

Formulate key goals and objectives

Identify major budget assumptions

Develop preliminary capital budget and

initial operating budget

Review and analysis of budget by staff

Prepare budget documentation

Budget work session with

board

Hold public hearing and

budget review by board of directors

Finalize proposed

budget

Dec

Adoption of budget by board

File budget with State

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Financial governance The Local Government Budget Law of Colorado, in addition to the policies listed below, provide the framework for Platte River’s financial activities and budget development.

Fiscal resolution

The resolution is adopted as a requirement of the organic contract that governs the financial transactions of Platte River.

Strategic financial plan

Platte River Power Authority’s SFP provides direction to create long-term financial sustainability, manage financial risk and support Platte River’s mission, vision and values. The priorities of the SFP are to generate adequate cash flows, maintain access to low-cost capital, provide wholesale rate stability and maintain sufficient liquidity for operational stability. To achieve long-term financial sustainability and the lowest practical cost of debt necessary to finance Platte River’s long-term capital program, financial metrics have been established in consideration of rating agency guidelines. Additionally, to manage financial assets and risk, staff will continue to implement and maintain prudent business practices in the management of reserves, maintain the enterprise risk management program and comply with financial policies and procedures. Staff reviews the SFP annually and makes recommendations to the board as necessary.

Rate requirements and practices

The general powers of Platte River, as stated by C.R.S § 29-1-204(3)(j), “include the right to fix, maintain, and revise fees, rates, and charges for functions, services, or facilities provided.” Platte River’s Board of Directors has the exclusive authority to establish electric rates.

The power supply agreements with the owner communities require the board to review rates at least once each calendar year. The agreements also require that rates be sufficient to cover all operating and maintenance expenses, purchased power costs, debt service expenses and to provide reasonable reserves and adequate earnings margins so Platte River may obtain favorable debt financing.

The general power bond resolution requires that rates be sufficient to generate net revenues that cover debt service expense at a minimum 1.10 times. The general power bond resolution also requires Platte River to review rates and charges as necessary, no less than once each calendar year.

Platte River strives to maintain long-term competitive rates relative to regional peer wholesale electric providers. Competitive wholesale rates provide the owner communities an economic advantage for their residential, commercial and industrial customers.

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Platte River’s board adopted rate setting policy and accompanying rate setting reference document describes an approach to rate making including objectives to be achieved both in the near‐term and over the long‐term planning horizons.

It is the policy of Platte River to establish service offerings and supporting rate structures that complement the strategic objectives, underlying policies and values of the organization. Platte River has identified the following goals important to the rate setting process. These goals are as follows:

Improve value added of Platte River in support of owner communities Offer a desirable portfolio of services and rates that meet owner communities’

needs Better align wholesale time of use pricing signals with cost of service and

owner community retail pricing signals Send pricing signals that result in system benefits

Platte River’s tariffs and charges will be established to achieve SFP targeted financial metrics. Multi-year rate smoothing strategies will also be utilized, as deemed appropriate, to avoid greater single year rate impacts or to accomplish specified financial objectives.

Financial metrics

The financial metrics outlined below aid in achieving long-term financial sustainability (liquidity, leverage, cash flow, earnings). Additionally, achieving strong financial metrics provides Platte River the flexibility to implement necessary rate changes and to change rates over longer periods of time to minimize short-term rate impacts. While the financial metrics are established and evaluated on an annual basis, multi-year performance is considered during the evaluation of rate action and decision making.

Generate minimum 1.50 times fixed obligation charge coverage ratio Generate minimum net income equal to 3% of projected annual operating

expenses Target debt ratio less than 50% Target minimum 200 days unrestricted cash on hand

Rate stabilization account

Under the general power bond resolution, Platte River has established a rate stabilization reserve account. Deposits to this account are a reduction to current net revenues for purposes of computing bond service coverage. Future withdrawals will increase net revenues for purposes of computing bond service coverage and could assist Platte River, at such time, in meeting its wholesale rate covenant. Withdrawals from the reserve account have not occurred to meet bond service coverage in Platte River’s history and the current rate stabilization reserve account is a balance sheet item of $20 million. Risk analysis is performed annually to determine the appropriate level to maintain in the account.

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Power supply agreements

The power supply agreements define the terms and conditions for the sale and purchase of electricity by Platte River to its owner communities. Currently all four power supply agreements run through 2060.

General power bond resolution

The general power bond resolution allows bonds to be issued and sold for a specific purpose and establishes the rights and responsibilities of each party in a bond contract (the issuer and the bondholder). The bonds represent money loaned and entitle the holder to interest payments and the return of principal.

Bond service coverage

Bond service coverage is a key indicator of financial strength and is reviewed by the credit rating agencies when assessing Platte River’s credit quality. Bond service coverage is a measure of Platte River’s ability to generate cash to pay bondholders. Under the general power bond resolution, Platte River is required to charge wholesale electric energy rates to the owner communities that are reasonably expected to yield net revenues for the forthcoming 12-month period that are at least equal to 1.10 times total power bond service requirements.

Use of restricted and unrestricted resources

The use of restricted and unrestricted resources is based on the intended purposes as indicated in the bond resolutions.

Investments

Platte River’s investment policy provides a framework for managing its investments. Platte River shall invest and manage assets as a prudent investor would, by considering the purposes, cash requirements and terms of the various funds. In satisfying this standard, the chief financial officer shall exercise reasonable care, skill and caution. Investment and management decisions will be evaluated not in isolation but in the context of the portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to Platte River. The primary objectives of investment activities shall be safety, liquidity and yield. Platte River only invests in obligations of the United States government and its agencies and other investments permitted under Colorado law.

Risk management

Platte River’s risk oversight committee consists of the general manager/CEO, senior management and key staff members. Platte River identifies, evaluates, ranks and mitigates risks significant to Platte River. These are risks that could negatively impact electric supply, finances, reputation and safety. The risk management process is

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continually evolving and currently provides the framework to identify and assess specific risks by soliciting input directly from subject matter experts throughout the organization and developing mitigation strategies.

Platte River maintains several different types of insurance including auto liability, commercial crime, cyber liability, directors and officer’s liability, fiduciary liability, excess liability, medical professional, property, employee health and workers’ compensation. The aggregate property casualty limits are $200 million. Platte River self-insures the first one million dollars of general liability exposure with an excess liability policy of $35 million. Platte River carries directors and officer’s liability insurance of $10 million and the cyber liability limits are $50 million. A stop loss insurance policy covers medical claims in excess of $175 thousand per participant, limiting Platte River’s exposure to significant claims in any given year; however, exceptions can and may be applied by the insurance carrier.

Basis of accounting

Platte River accounts for its financial operations as a proprietary fund and financial statements are prepared using the accrual method of accounting in conformity with accounting principles generally accepted in the United States of America. Platte River’s accounts are maintained in accordance with the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission.

As a board-regulated entity, Platte River is subject to the provisions of Governmental Accounting Standards Board Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-Nov. 30, 1989, FASB and AICPA Pronouncements, Regulated Operations, paragraphs 476–500, which requires the effects of the rate making process to be recorded in the financial statements. Accordingly, certain expenses and revenues normally reflected in the statements of revenues, expenses and changes in net position as incurred are recognized when they are included in Platte River’s wholesale rates. Platte River has board approved accounting policies for specific activities following this standard.

Operating revenues and expenses

Operating revenues and expenses consist of those revenues and costs directly related to the generation, purchase and transmission of electricity. Operating revenues are billed and recorded at the end of each month for all electricity delivered. Revenues and expenses related to financing, investing and other activities are considered to be nonoperating.

Capital

Capital additions include expenditures of five thousand dollars or more for property, equipment or construction projects with an estimated useful life greater than two years. Expenditures less than five thousand dollars are reflected within the operations

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and maintenance expense budget. The Craig units 1 and 2 capital budget was prepared by the operating agent, Tri-State, and has been approved by the engineering and operating committee of which Platte River is a member. Depreciation is recorded using the straight-line method over the estimated useful lives of the various classes of plant in service.

Platte River management has placed an emphasis on project management, specifically reviewing resource availability, as well as improving project planning and execution. This process will continue to evolve, striving towards operational excellence.

Capital projects can be delayed for various reasons. The previous year unexpended amounts may be due to construction delays, change in scope or payment timing differences and will be determined after the Dec. 31 year-end closing. Budget law allows Platte River to carry over into the next year any unexpended balance of funds appropriated for the previous year expenditures. The amounts required in the next year to complete the previous year projects will then be transferred to the appropriate budget categories in the next year. This is termed the carryover process and is preferred versus re-budgeting the funds. The capital additions will be funded either from current operations and/or proceeds from debt financings.

As unplanned projects come up throughout the course of the year, project managers follow the internal out-of-budget or over budget process to submit the project for consideration. Each project is described, justified and other impacts are evaluated. The project is then reviewed on merit by the general manager/CEO. If the project is approved, overall project schedules may change to accommodate the new or revised project. Given the amount of variability and uncertainty with projects, funding is tracked closely, and the carryover process is implemented if a project cannot be completed in the given year. If additional funds are required, a contingency transfer will be requested of the board to move funds into the capital budget.

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Acronyms and terms

2019 estimate Current estimate of revenues and expenditures to reflect actual revenues and expenditures (January through July) and budget revenues and expenditures (August through December). Some modifications were made to reflect more accurate projections.

A&G Administrative and general.

Accrual An expense is recognized when incurred, before cash is paid out.

Amortization Gradual reduction of book value for a non-depreciable asset.

Bond service See debt service.

Bond service coverage Net revenues divided by debt service.

Capacity factor The ratio of the average load on a generator for the period of time considered to the capacity rating of the generator.

Capital and debt management fund

A dedicated fund authorized by Platte River’s strategic financial plan to be used in managing debt and to provide reserves for future capital additions.

CIP Critical Infrastructure Protection – regulated by NERC.

Contingency An appropriation of funds to cover unforeseen expenditures which may occur during the budget year.

CRSP Colorado River Storage Project – division of Western Area Power Administration.

Debt ratio Long-term debt, net divided by total electric utility plant plus net working capital, as defined in the general power revenue resolution.

Debt service Bond interest and principal. Also referred to as bond service.

Depreciation That portion of the cost of a fixed asset expensed to operations to allow for lost usefulness.

DER Distributed energy resources – a demand-side management program.

DR Demand response – a distributed energy resources program.

DSM Demand-side management.

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Enterprise resource

planning (ERP)

Enterprise resource planning is the integrated management of main business processes, often in real-time and mediated by software and technology. Many ERP software applications exist to help organizations implement resource planning by integrating all of the processes needed to run an organization with a single system.

FERC Federal Energy Regulatory Commission.

Fiscal resolution A resolution that governs the financial transactions of Platte River.

Fixed obligation coverage charge ratio

The fixed obligation charge coverage ratio (FOCCR) is a measurement of cash flows and the ability to repay annual debt service costs from recurring revenues net of recurring expenses excluding one-time revenues or extraordinary charges. FOCCR also incorporates debt-like obligations either related to the ownership of resource assets through take-or-pay contracts or off-balance-sheet financings. A minimum 1.50 times FOCCR provides sufficient annual cash flows to meet the legal minimum 1.10 times bond service coverage ratio requirement, partially fund future capital additions and maintain favorable credit ratings.

General power bond resolution

A resolution for providing the issuance of power revenue bonds.

GW One thousand megawatts; one million kilowatts.

GWh One gigawatt of power delivered steadily for one hour.

High-side metering Measuring the current and voltage quantities on the high side of the transformer.

IRP Integrated resource plan.

kW Kilowatt; one thousand watts.

kW-Mo The maximum kW reached during a calendar month used for billing demand.

kWh One kilowatt of power delivered steadily for one hour.

kV Kilovolt; one thousand volts.

LAP Loveland Area Projects – division of the Western Area Power Administration.

MBtu One million Btu. A Btu is a British thermal unit and is the standard unit for measuring quantity of heat energy and represents the amount of heat energy necessary to raise the temperature of one pound of water one degree Fahrenheit.

MW Megawatt; one thousand kilowatts.

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MWh One megawatt of power delivered steadily for one hour.

NERC North American Electric Reliability Corporation.

Net income Revenues less operating costs, depreciation, amortization and interest expense.

Net revenue Total revenues less operation and maintenance expenses during a period.

O&M Operations and maintenance.

Owner communities Estes Park, Fort Collins, Longmont and Loveland. The four owner communities of Platte River.

Projected Estimate of revenues and expenditures based on past trends, current economic conditions and future financial forecasts.

Rate stabilization fund An account provided for by Platte River’s general power bond resolution and funded in accordance with Platte River’s strategic financial plan.

Restricted assets Cash and investment accounts restricted to use by bond covenants or laws and regulations.

Sales for resale – contract

Firm sales of energy intended to have assured availability as set forth by a contract with duration greater than a year.

Sales for resale – short-term

Sales of electric energy having limited or no assured availability for a period of one year or less.

SCADA Supervisory control and data acquisition.

SFP Strategic financial plan.

WAPA Western Area Power Administration.

WECC Western Electricity Coordinating Council

Wheeling Use of transmission facilities of other utilities.

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Memorandum


Andy Butcher, chief operating officer Joel Danforth, distributed energy resource manager

Subject: Electric vehicle charging pilot

Staff from the power supply division have prepared an interim whitepaper on the electric vehicle distributed charging study which includes updates on the status of the study, some early observations on data collected to-date, and explores some options for managed EV-charging services in the future.

Attachment

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Electric vehicle charging pilot

Sept. 12, 2019

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Contents

I. Introduction ............................................................................................................................ 1 II. EV study overview ................................................................................................................. 1

Project charter ....................................................................................................................... 1 EV study marketing ............................................................................................................... 3 EV study enrollments ............................................................................................................ 3

II. Early results ........................................................................................................................... 4 Results by participant ............................................................................................................ 4 Aggregated results ................................................................................................................ 7

III. Next steps .............................................................................................................................. 8 Increasing participation in the study ...................................................................................... 8 Energy price modeling......................................................................................................... 10 Managed charging options and future plans ....................................................................... 11

List of figures Figure 1 – EV study enrollments by month ................................................................................... 3 Figure 2 – EV study enrollments by community ............................................................................ 4 Figure 3 – EV study load diversity: charging days ........................................................................ 4 Figure 4 – EV study load profiles .................................................................................................. 6 Figure 5 – EV study charging summary to-date ............................................................................ 7 Figure 6 – EV study charging snapshot ........................................................................................ 7 Figure 7 – Enel-X product roadmap .............................................................................................. 9 Figure 8 – 2018 Joint Dispatch Agreement prices ...................................................................... 10

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I. Introduction

The electrification of the transportation sector is perhaps one of the most significant opportunities facing the changing utility industry, if managed appropriately. Electric vehicles (EVs) are an entirely new load being added to the grid and represent new growth potential for utilities willing to foster that growth in this sector. EVs can help reduce overall emissions in communities where they replace conventional gasoline-powered vehicles. EVs can also provide flexibility to grid operations, if properly integrated into the system. One example of this is through leveraging intelligent EV charging to help add more renewables to the grid.

Platte River estimates EV energy usage may exceed 70 GWh per year by 2030 and peak demand for EV charging may be 33 MW, assuming that 25% of EVs are charged simultaneously, or more if these potentially beneficial loads are not adequately managed.

This whitepaper serves as an interim report on the status of the EV distributed charging study (the EV study) which seeks to quantify trends in EV energy usage and explore methods of managing EV charging for Platte River and its owner communities. A final report at the conclusion of Phase 1 of the study will be released in early 2020.

II. EV study overview

Project charter

The goals of the EV distributed charging study are to help Platte River and its owner communities: 1) gather data on customers’ EV charging patterns, 2) build a direct relationship with the emerging class of EV customers, and 3) test new EV technology that may facilitate future programs aimed at managing customers’ charging that provide grid benefits of systems integration between the local distribution, transmission and generation systems.

Key success criteria identified for the EV distributed charging study include:

• Platte River and the communities establish a relationship with EV customers and customers are satisfied with participation in the study.

• A representative sample of data on EV charging loads is collected and analyzed.1 • The study provides data that helps to establish early adopter EV charging behaviors and

energy/power consumption.

1 To achieve a 5% margin of error/95% confidence interval, we would need to have a sample size of 302 study participants. A 5% margin of error/90% confidence interval would require 226. https://www.surveymonkey.com/mp/sample-size-calculator/

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https://www.surveymonkey.com/mp/sample-size-calculator/

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• Strategies for maximizing the value and minimizing the impact of EV loads are identified in the report.

The EV study will be implemented in two phases. Each phase consists of the following:

EV study phase 1 (February 2019 – February 2020)

• Platte River procurement of up to 350 charging load monitoring and control devices and associated software services. The initial phase of the study is included in the 2019 Platte River budget.

• In coordination with each of the municipalities, marketing and outreach to EV customers via newsletters, social media and digital marketing, direct communication with known charging station customers and EV dealerships, as well as the EV enthusiast community.

• Enrollment of EV customers in the study via wifi services. The population of participants enrolled in the study may include residential, fleet and workplace EV customers proportional to each municipality to the extent practical.

• Collection of data on EV charging load profiles from participants over a one-year period. The study will also include a survey of participants to better understand the energy requirements of the customer (such as vehicle type, daily commute, charging equipment, etc.), demographic information, satisfaction with the study, and interest in participation in later phases which allow active control by Platte River and/or the member distribution systems.

• Analysis of charging behaviors to better understand: 1) usage patterns, 2) power demand over time, 3) retail and wholesale revenues due to charging, and 4) the potential value of controlled charging at the distribution and wholesale levels.

• Report on findings. The report will summarize time-based and locational usage patterns, power demand over time, retail and wholesale revenue due to charging, and the potential future net value of controlled EV charging through demand response and time of day pricing (e.g., rate design, direct load control, and automation). The report will make recommendations, based on data collection and analysis, for Phase 2 of the study with participants. Separate reports of EV loads by distribution feeder and/or transformer may also be provided, subject to available data from the municipalities (i.e. a map of account number or address to distribution feeder/transformer).

EV study phase 2 (beginning 2020)

• Continue with Phase 1 rebates, marketing, enrollments and data collection. • Provide a managed charging service offering to participants enrolled in the EV study with an

incentive structure built around wholesale energy price schedules and ancillary demand response services.

• Expand managed charging service offering to workplace and fleet charging environments not already included in Phase 1.

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EV study marketing

Upon its launch, the EV study had an initial splash with local media including the Coloradoan, the Town of Estes Park, the Longmont Observer, the Longmont Times Call, and BizWest. In addition, several national entities picked up the story, including PublicPower.org, CleanTechnica, Business Insider, SmartGridToday, GreenCarReports, and the Electrification Coalition. In addition, the study has been presented at several local and regional forums including the Northern Colorado EV Enthusiasts, the Fort Collins Energy Board, the Northern Colorado Renewable Energy Society, Renewables Now Loveland, the Fort Collins Car Show of the Future, the Colorado EV Coalition, the American Public Power Association, and the Grid Modernization Forum.

The primary channel used for marketing the study has been social media campaigns. The February and June Facebook campaigns yielded the following results:

• February: 982 times ad on screen; 90 clicks; 29 likes/comments/shares • June: 3,141 times ad on screen; 1,871 people saw ad at least once; 20 click-throughs

Lastly, EV study fliers have been distributed to regional EV dealerships to encourage participation in the study at the EV point-of-sale. This will be one area of emphasis for future marketing efforts.

EV study enrollments

Figure 1 below provides a monthly summary of enrollments in the EV study. The initial splash with earned news media during the launch of the study helped boost initial enrollments, however, the rate of adoption has slowed in the subsequent months.

Figure 1 – EV study enrollments by month Month Participants Offline2

Feb 12 2

Mar 12 4

Apr 6 1

May 9 1

Jun 7 3

Jul 5 1

Aug 5 2

Total 58 14

2 “Offline” refers to units that have been purchased but not yet installed, connected to wifi, or connected to the JuiceNet app.

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Figure 2 below provides a breakdown of total enrollments by community. As a stretch-goal, Platte River will also seek to reach a representative sample in each of the four owner communities.

Figure 2 – EV study enrollments by community Communities Participants

Fort Collins 29

Longmont 15

Loveland 9

Estes Park 1

III. Early results

As previously indicated, this report provides an interim update on the status of the EV distributed charging study. The initial data available from enrolled EVs covers the period from May 20, 2019, through Aug. 31, 2019. As shown in Figure 1, some of the smart chargers purchased have yet to connect to wifi to upload usage data and monthly reminders are sent to those participants with instructions on how to download the smart-phone app and complete the enrollment process. Due to some participants not yet having the wifi and software configured, data is presently available from approximately 75% of participants enrolled in the study. While the results collected to date are useful for showing current trends, we will need many more participants, and several more months of data, to arrive at a representative sample of EV charging.

Results by participant

Data collected for the period from May through August has revealed a surprising level of diversity in the days and hours when people charge, how many kilowatts their EV draws, and the duration of charging sessions. For example, not every EV driver has a daily charging routine – most appear to charge a few days per week – making a clear “peak EV charging” period difficult to define. Figure 3 below shows some examples of this load diversity during the period from mid-May to mid-June:

Figure 3 – EV study load diversity: charging days

Infrequent top-off charger: weekends

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The first example from Figure 3 above shows an infrequent charging behavior; the EV is only charged on weekends and is either driven infrequently or may also be charging elsewhere. The second example shows charging behavior which one might expect to see from a daily commuter; the EV is charged on most weekdays and adheres to a fairly regular charging schedule. The third example shows an EV which has gone a long period without charging, followed by a long charging event, similar to the old west cowboy riding his horse across the desert before tying it off at the water trough outside the local saloon. This EV was thirsty!

Figure 4 below provides a zoomed-in view of the load profile for individual charging sessions. Customer A likely has an older EV which has a charge rate limited to 3.6 kilowatts with a pair of charging events during the morning hours. Customer B has an EV with a higher charge rate approaching 9.3 kilowatts with one charging event in the early afternoon, followed by a second charge in the evening. Customer C, the water trough charger, had a seven-hour over-night charging event at a fairly typical rate of 7.5 kilowatts and pulled a total of 45.6 kilowatt-hours during the charging period.

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Water trough charger: weekdays

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Figure 4 – EV study load profiles

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Aggregated results

It is important to note that a representative sample of EV charging has not yet been collected at this early point in the study. However, some aggregated results and charging snapshots may serve to inform future planning related to the study. Figure 5 below provides a summary of average charging behaviors observed so far. These results are likely to change as more EV customers enroll and additional months of data are collected.

Figure 5 – EV study charging summary to-date Average charging load 3.46 kW Maximum charging load 9.61 kW

Average charge time 2-4 hours Average charge energy 6.9-13.8 kWh

Figure 6 below is a snapshot of all enrolled EV chargers on June 6. As discussed in a previous section, only approximately 25% of participants happened to be charging during the nighttime hours on June 6. Extrapolating this snapshot to 25% of all EVs in the owner communities, the total load at 21:45 would have been approximately 2 MW.

Figure 6 – EV study charging snapshot

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IV. Next steps

Increasing participation in the study

Several new marketing channels are being explored to increase enrollments in the study. A Google ads campaign is being planned as an alternative to the social media marketing in an attempt to help reach a more appropriate demographic. The Platte River marketing and communications group has also been working with the owner communities to expand our marketing efforts into the local utility newsletters, websites and direct mailing. The study will also be advertised during the 2019 National Drive Electric Week events in September. As previously noted, a more direct marketing relationship with regional EV dealerships will also be developed in 2020.

The increased marketing presence will be necessary as the Enel X manufacturer rebates of $154.00 are phased out in the coming months. Following its acquisition by Enel, eMotorWerks, now Enel-X, will be rebranded and the flagship JuiceBox product will also be updated with improved aesthetics and upgraded user interface which should make the product more appealing to prospective participants.

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Figure 7 – Enel-X product roadmap

JuicePlan

One opportunity for lowering the barrier-to-entry for new participants is a new “charging as a service” program being launched by Enel-X. The JuicePlan includes a JuiceBox Pro 40 smart home charger, the JuiceNet app and dashboard, and a professional installation by a certified electrician.

This service starts at $0 down and $19 per month, although the fee may vary depending on the cost of installation quoted by local electricians certified to participate in the service.

How it works

1. Answer a few simple questions about your home EV installation needs.

2. Get an instant quote for your monthly JuicePlan.

3. Sign up for JuicePlan, agree to the terms and provide your credit card information to begin your subscription. We’ll send your JuiceBox to you.

4. The installation partner will reach out to you to schedule and complete the charging station installation.

Platte River is also exploring options to improve the online marketplace user experience. In 2020, a survey will be sent to participants which will help Platte River assess the energy requirements of each customer such as vehicle type, daily commute, charging behaviors, etc.; demographic information; satisfaction with the study; and interest in participation in a managed charging program.

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Workplace and fleet charging

Another area of emphasis for future EV charging services is workplace and fleet environments. After residential charging, workplace and fleet EV charging environments are likely to see the highest usage and the most consistent charging patterns. Fleet charging is likely to be similar to residential charging, which appears to occur predominantly in the evening and nighttime hours, while workplace charging will tend to take place during business hours in the daytime. A managed charging service for these chargers can provide grid benefits as more workplaces provide charging for their employees and more electric fleets, such as Loveland-based Lightning Systems3, are introduced on the grid.

Energy price modeling

Figure 8 below provides an hourly summary of Joint Dispatch Agreement (JDA) prices per megawatt-hour during calendar year 2018. While JDA prices don’t necessarily reflect the marginal cost of energy for Platte River, they serve as a good proxy of price variability, both for modeling and real-time purposes. The third column in this table shows the number of hours during the year corresponding to the hours when JDA prices were $0 per megawatt-hour (free energy!). These are the hours we would like to encourage EV customers to maximize their charging. Conversely, the columns on the right side of the table show the number of hours where JDA prices were greater than $40 per megawatt-hour. These are the hours when we would like EV customers to minimize EV charging.

Figure 8 – 2018 Joint Dispatch Agreement prices Hour

ending Hourly

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1 $14.95 34 0 13 $19.39 21 10

2 $14.03 48 0 14 $19.58 22 8

3 $13.59 55 0 15 $19.91 23 12

4 $13.47 62 0 16 $20.72 18 18

5 $14.03 54 0 17 $22.72 10 31

6 $15.76 30 1 18 $23.87 8 35

7 $18.43 18 8 19 $23.36 4 25

8 $19.28 15 7 20 $22.06 4 10

9 $18.90 11 5 21 $20.70 5 7

10 $18.80 16 5 22 $19.41 3 2

11 $19.26 14 8 23 $17.42 11 0

12 $19.78 11 10 24 $16.04 22 0 Full

Year: $18.56 519 202

3 Lightning Systems converts fleet vehicles from diesel and gasoline to fully electric drivetrains. Their customers include conversions of Ford Transit delivery vans, box trucks, buses, and garbage trucks: https://lightningsystems.com

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Based upon this pricing information, a simple EV time-of-use rate would seek to allow unlimited charging between 11 p.m. (hour ending 23) and 6 a.m. Each EV that shifts from charging during the four-hour price peak between 4 p.m. (hour ending 16) and 8 p.m. (hour ending 20) to charging during the four-hour price minimum between 1 – 5 a.m. would save $0.005 per kilowatt-hour (between $0.07 per charge, assuming a 3.3 kW charge for four hours, and $0.2 per charge, assuming a 9.3 kW charge for four hours).

To encourage participation in this service as well as to further leverage opportunities in ancillary service benefits and integrate more renewables, it may be appropriate to increase this incentive from $0.005 per kilowatt-hour to $0.01 per kilowatt-hour. Under this scenario, the customer charging at a rate of 3.3 kW would save $0.14 per charge and the customer charging at a rate of 9.3 kW would save $0.40 per charge.

The all-in net present value of costs for smart charger rebates ($200 each), the software contract and monthly per-device fees ranges between $0.74 and $2.10 per kilowatt-month over the next seven-year period, assuming a 5% hurdle rate. The per kilowatt-month cost is for charging in the range from 3.3 to 9.3 kW for 300 EVs. Levelizing these fixed costs over the seven-year period comes to $0.016 per kilowatt-hour of charging.

Managed charging options and future plans

From a systems integration perspective, it will also be necessary to leverage more than just a price signal for managed EV charging. In addition to encouraging charging EVs during light load and times of low cost energy, controlling the charging of EVs will enable opportunities to provide ancillary service benefits and potentially allow for the integration of additional renewable resources. As we collect more data through this study and begin understanding consumer behavior, we will be better able to provide these services to EV customers and successfully integrate them into the grid.

The JuiceNet software provides significant flexibility for managed charging services. In addition to the time-of-use price scheduling noted in the previous section, the software can be used for demand response services. For example, this would be useful in helping smooth the new peak which emerges at the start of off-peak periods. The software can also be used to limit the number of amps drawn by groups of EV customers for certain periods of time. This functionality may be useful to increase or decrease charging rates to help integrate intermittent renewables.

Distribution system benefits

Another opportunity which warrants further investigation, beyond the wholesale system benefits explored herein, is the potential for savings on the distribution system. As more EVs are added on distribution feeders, there may be opportunities to delay or avoid transformer upgrades through managed charging. As part of this study, Platte River will work with the owner communities to map EV loads from participants to distribution system assets. Through this type of analysis, the distribution

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benefits of managed charging could be identified and quantified to help further define the scope and incentives for managed charging.

Given that EVs are projected to provide significant load growth for utilities in the future, Platte River and its member utilities need to explore options for managing this load growth in such a way that provides system benefits at both the wholesale generation and transmission level and the distribution level. Further details on study results and proposed next steps will be defined in the next report in early 2020.

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Memorandum


Alyssa Clemsen Roberts, chief strategy officer Libby Clark, director of human resources and safety

Subject: Staffing update

Platte River senior leadership has conducted a review of its staffing plan and recommends adding four positions in 2020. Following discussions within the organization and in consideration of the evolving needs of our owner communities, this memorandum provides you with a brief update regarding the organization’s 2020 staffing plan. Staffing analysis Our senior leadership team analyzes and reviews staffing requests regularly from an organizational-wide perspective, as they are identified. An annual staffing review takes place prior to the budget session. Our review includes an examination of historic information as well as an analysis of the short-, intermediate- and long-term business needs both within the organization, and from our owner communities. We review all vacancies as they occur to determine whether each should be refilled, eliminated or redesigned to meet other needs. During our analysis, we may also consider restructuring departments to better support current or planned operational needs and requirements. In late 2018 for example, we conducted an analysis of the organizational structure following the retirement of the chief corporate services officer and, in early 2019, we initiated a major reorganization that eliminated the executive position and created two director level positions, one in finance and the other for government affairs. This realignment of resources better positions Platte River to achieve our strategic objectives. Evolving business model The energy industry’s evolution is accelerating, and Platte River’s role continues to expand beyond historic core business functions. Greater technological sophistication, cybersecurity and communications/marketing are required to meet Platte River’s strategic objectives.

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Platte River will move forward more rapidly to meet community needs by adding resources to: • Fully engage communications and marketing efforts associated with the Efficiency

Works program to support increased energy efficiency goals established by the board, and to augment ongoing stakeholder outreach for the organization

• Fully secure the cyber environment to protect our physical and digital assets to ensure safe, reliable, and uninterrupted service to the organization and owner communities

• Support advancing technologies used by Platte River’s workforce to mitigate vulnerabilities and maximize productivity and return on investment

• Advance the data driven decision making of the organization with the technologies needed to operate a modern organization

Based on the strategic priorities outlined above, we intend to add the following positions in 2020:

• Communications and marketing specialist • Application administrator and developer • Information security analyst • Applications and database administrator

Summary Platte River management continually evaluates staffing levels and needs to ensure human resources meet the evolving needs of the owner communities, remaining mindful of the need to maintain the financial sustainability of the organization. The pursuit of strategic initiatives and the rapidly evolving energy environment are driving the need to moderately accelerate staffing additions. The number of new positions planned for 2020 nevertheless aligns with our multi-year staffing plan.

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Date: 9/18/2019 To: Board of Directors From: Sarah Leonard, general counsel Subject: Legal, Environmental and Compliance Report – September board meeting

LEGAL ISSUES:

CURRENT OR THREATENED LITIGATION INVOLVING PLATTE RIVER Potential Claim A demand letter was sent out in connection with the potential claim against a contractor vendor discussed in executive session at the July board meeting. Platte River did not receive a response to this demand and sent a further demand on September 10, 2019 asking for a reply within ten business days. We will provide further updates as additional information becomes available. If Platte River does not receive a response, staff will recommend an executive session for the next board meeting to discuss options. LITIGATION MATTERS OF INTEREST TO PLATTE RIVER In re: Cloud Peak Energy, Inc., et al. (Bankr. D. Del. No. 19-11047-KG) Background: Platte River currently purchases coal for the operation of Rawhide Unit 1 from the Antelope Mine, which was owned by Cloud Peak Energy, Inc. On May 10, 2019, Cloud Peak and its subsidiary entities filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. Chapter 11 bankruptcy allows a debtor to reorganize, restructure debt and shed uneconomic contracts in order to continue operations, unlike a Chapter 7 bankruptcy which provides for a shut down and liquidation of the debtor entity. On May 13, 2019, Cloud Peak filed a motion to approve procedures for an auction to sell the assets of the debtor companies, including the rights to executory contracts, such as the Platte River coal supply contract. The Bankruptcy Court granted this motion on June 13, 2019. Antelope Mine continues to perform its obligations under the coal supply contract with Platte River, and the bankruptcy

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is not expected to interfere with the coal supply for Rawhide Unit 1. Cloud Peak’s assets were auctioned off on August 16, 2019, with Navajo Transition Energy Company (NTEC) submitting the successful bid. NTEC also owns the Navajo Mine in Farmington, New Mexico. NTEC’s purchase of the debtor’s assets was approved by the bankruptcy court at a hearing on August 19, although a written order has not been signed. Current status: NTEC and the debtor are still working out the terms of the purchase agreement. The bankruptcy court is waiting for the parties to submit the purchase agreement to the court before signing the order approving the sale, which will be a requirement for the closing. We expect the agreement will be finalized and the order approving it will be signed within the next 30 days. Save the Colorado, et al. v. United States Bureau of Reclamation (D. Colo. No. 17-cv-2563-REB) Background As a member of the Municipal Subdistrict of the Northern Colorado Water Conservancy District, Platte River is a participant in the Windy Gap Firming Project (the “Firming Project”), which seeks to secure delivery of water from the Western Slope to the Front Range. The centerpiece of the Firming Project is Chimney Hollow Reservoir, a 90,000 acre-foot reservoir adjacent to Carter Lake, which will store water delivered from the Colorado River and certain tributaries for future use by Platte River and the other project participants. The Firming Project was permitted by the U.S. Bureau of Reclamation and the Army Corps of Engineers after an extensive environmental review pursuant to the National Environmental Policy Act (“NEPA”). On October 26, 2017, several environmental groups filed a legal action challenging the adequacy of the NEPA review for the Firming Project and seeking to invalidate the permits for the project. Unlike a typical civil lawsuit, the case will be heard by a court without pretrial discovery, and the court’s review will be limited to whether there is adequate support in the administrative record to justify the agencies’ actions on the permits for the project. The Bureau of Reclamation and Army Corps of Engineers filed an Answer on January 16, 2018, denying the allegations of the Complaint. Northern Water and several other parties moved to intervene, and those motions were granted. The administrative record has been filed and the matter has been fully briefed. The case has been assigned to U.S. District Judge William Martinez for a decision on the merits, and we are hopeful that the court will issue its ruling by the end of 2019 or early 2020. Current Status There have been no new developments in this matter since the last report.

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El Paso Electric Co. vs. Federal Energy Regulatory Commission, (5th Cir. No. 18-60575) Background: FERC Order 1000, issued in 2011, requires FERC-jurisdictional utilities to create regional transmission planning organizations with authority to plan transmission expansions and allocate costs to the beneficiaries of the new transmission projects. Although Platte River is not subject to FERC jurisdiction, Platte River participates in the Order 1000 planning process through WestConnect, a planning organization covering a region generally corresponding with boundaries of the states of Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming. Platte River is a party to the WestConnect Planning and Participation Agreement along with other FERC-jurisdictional and non-jurisdictional utilities in the planning region. The current dispute concerns the cost allocation provisions of the Planning and Participation Agreement, which allow non-FERC jurisdictional utilities (referred to as “Coordinating Transmission Owners” or “CTOs”) to opt out of cost allocation for regional transmission projects. El Paso Electric Co. and several other FERC-jurisdictional utilities filed appeals challenging FERC’s approval of the WestConnect cost allocation provisions, asserting that permitting CTOs to opt out of cost allocation would result in rates to other utilities that are unjust and unreasonable. On August 8, 2016 the Fifth Circuit Court of Appeals agreed with El Paso and remanded the case to FERC. On remand, FERC re-affirmed its decision to accept the WestConnect cost allocation proposal. In so doing it reiterated the unique jurisdictional characteristics of the Western Interconnect and explained that the WestConnect proposal contained sufficient incentives for non-jurisdictional utilities to accept cost allocation responsibilities. The Commissioners also noted that they could resort to their authority under Section 211A of the Federal Power Act if non-jurisdictional utilities’ refusal to participate in cost allocation would result in rates that were not just and reasonable. On August 17, 2018, El Paso Electric Company filed a review action with the Fifth Circuit Court of Appeals. Platte River is not a party to the action but may coordinate with other affected, non-jurisdictional utilities in filing an amicus brief. Platte River is also participating in ongoing settlement negotiations between the jurisdictional and non-jurisdictional utilities regarding modifications to the cost allocation and governance provisions of the Planning and Participation Agreement. On July 18, 2019, the Court granted FERC’s motion to hold the matter in abeyance for an additional 120 days to facilitate settlement discussions. Current Status Settlement discussions among the jurisdictional and non-jurisdictional utilities are ongoing.

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ONGOING AND CURRENT MATTERS OF SIGNIFICANCE Grand Lake Clarity NEPA Process Background: The water Platte River receives from the Windy Gap Project is stored in a three-lake system, including Lake Granby, Shadow Mountain Reservoir, and Grand Lake, before it is pumped to the Front Range via the Alva Adams Tunnel. The Northern Colorado Water Conservancy District operates the system. Concerns have arisen about the impact stored water from the Windy Gap Project and larger Colorado-Big Thompson Project have on the clarity of water in Grand Lake, largely due to the deposit of nutrients in the lakes, which contributes to algal growth. The U.S. Bureau of Reclamation (Bureau) started a NEPA process to address this water clarity issue. Platte River is a coordinating agency in the NEPA process. The outcome of the NEPA process could affect Platte River both as a participant in the Windy Gap Project and as a power customer of the Western Area Power Administration. At present the matter will proceed as an Environmental Assessment, but may convert to an Environmental Impact Statement, which entails a higher standard of review. A “visioning process” conducted by the Bureau yielded a number of capital projects that may address the clarity issue, but the range of alternatives has been substantially narrowed through subsequent review and discussion and ongoing discussions may further revise the final range of alternatives. The alternatives currently under discussion include (1) dredging and deepening Shadow Mountain Reservoir; (2) extending the Alva Adams Tunnel to tie directly into Shadow Mountain Reservoir; or (3) installing a high-pressure piping system to bypass Shadow Mountain Reservoir. The draft report summarizing these options is expected in mid-September 2019 with a final report to follow. Additionally, a range of smaller-scale options that could be implemented either separately or in conjunction with one of the large-scale alternatives is being evaluated. Public scoping and outreach have not been scheduled but are anticipated to begin the summer of 2020 at the earliest. Current Status: There have been no new developments since the last report. The next cooperating agency meeting is expected in October 2019.

Western Wholesale Market Activities Background: Since negotiations between the Mountain West Transmission Group and the Southwest Power Pool ended in 2018, Platte River has been focusing primarily on market operations under the Joint Dispatch Agreement (“JDA”) among Platte River, Black Hills Energy and Public Service Company of Colorado. The JDA has been in place since June, 2017 and provides a market for the participants to purchase and sell energy intra hour using zero-cost transmission. The JDA is currently limited to utilities in the Public Service Company balancing authority and does not have sufficient resources to allow the parties

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to fully balance significant amounts of energy from intermittent resources. However, it may provide a platform for an enhanced market in the future. On June 20, 2019, FERC approved changes to the JDA Tariff necessary to authorize Colorado Springs’ participation in the JDA market. It is likely Colorado Springs will begin to participate in the JDA market in November 2019. Platte River and other members of the former Mountain West Transmission Group are also evaluating proposals from the California Independent System Operator (California ISO) and Southwest Power Pool to provide energy imbalance market services in the West. Market governance rules, startup costs, and costs for transmission service have been significant issues in these discussions. While many large utilities in the West (including Salt River Project and Pacificorp) have joined the California ISO energy imbalance market, former Mountain West Transmission Group members Tri-State, Basin Electric, and WAPA’s Rocky Mountain Region have not followed suit. Current status: On September 9, 2019, the Southwest Power Pool announced that Basin Electric Power Cooperative, Tri-State Generation and Transmission Association, and the Western Area Power Administration have committed to join the Southwest Power Pool’s western energy imbalance service, which is anticipated to begin operations in February 2021. The Southwest Power Pool has invited additional utility commitments through October 25, 2019. Platte River and the other participants in the JDA have engaged the Brattle Group to analyze the costs and benefits of the California ISO and Southwest Power Pool energy imbalance service proposals. The results of this study are expected in early to mid-October, after which Platte River, Xcel Energy, Black Hills Energy, and Colorado Springs Utilities expect to decide which of these energy imbalance markets to join. Fiber Utilization and Telecommunications Background: Following a work session on June 7, 2018, Platte River and the municipal staff members working on broadband issues agreed to move forward with Platte River transferring title of excess fiber within the local fiber loops to the Town of Estes Park, the City of Fort Collins, and the City of Loveland. (The City of Longmont took ownership of its excess fiber in 1998.) The Board approved resolutions authorizing the general manager to convey excess fiber in the local loops to Estes Park, Fort Collins and Loveland at its September 2018 meeting, as well as a resolution authorizing the general manager to convey assets supporting the fiber cable in the local Longmont loop to the City of Longmont. The Board approved a Fiber Management Intergovernmental Agreement (“IGA”) at its December 2018 meeting. The IGA was approved by the Fort Collins City Council on December 4, 2018, by the Longmont City Council on January 22, 2019, by the Estes Park Town Board on February 12, 2019, and by the Loveland City Council on February 19, 2019.

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The IGA was fully executed on May 15, 2019. The Technical Committee met on July 9, 2019 and approved an updated version of the System-wide Fiber Maintenance Protocol document (the protocols for accessing the fiber) and a draft Acknowledgement of Asset Transfer document, which has been sent to each community for review. Once finalized, the asset transfer documents will be executed by Platte River’s general manager/CEO. The fiber management Executive Committee created through the IGA continues to meet and hold strategic discussions. The last meeting was held July 12, 2019. Current status: There have been no new developments since the last report. CONTRACTUAL MATTERS Solar and Storage Power Purchase Agreement Background: On February 13, 2019, Platte River entered into a Solar Renewable Energy and Storage Power Purchase Agreement (Solar Purchase Agreement) for the construction of a 20 MW solar facility with a 2 MW battery at the Rawhide Energy Station. The term of the Solar Purchase Agreement is 20 years, with an option to extend the term to 40 years. At its meeting on June 10, 2019, the Larimer County Commission gave final approval to the permit for the construction of the solar and battery storage facility. Platte River and DEPCOM, the project developer, entered into an interconnect agreement for the project on June 12, 2019. Current status: Because of difficulties in siting the solar facilities, in order to maintain the economics of the project without an increase in the cost of energy, Platte River and the project developer agreed to increase the capacity of the project from 20 MW to 22 MW. An amendment to the Solar Purchase Agreement was executed effective as of August 29, 2019. The developer continues to work with the county on site-plan approvals and its building permit and anticipates breaking ground on the project later this month. Roundhouse Energy Project Background: On January 22, 2018, Platte River entered into a Renewable Energy Power Purchase Agreement with Roundhouse Renewable Energy, LLC, pursuant to which Platte River agreed to purchase 150 MW of wind energy from the Roundhouse wind energy project to be constructed in southern Wyoming. The energy will be delivered to Platte River via a 230-kV generation interconnect transmission line to be constructed by the project developer. On July 10, 2019, Platte River and the project developer entered into a Fifth Amendment to the Power Purchase Agreement to increase the amount of energy purchased

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from 150 MW to 225 MW. In addition, Platte River entered into an asset purchase agreement to acquire the generation interconnect transmission line when the project achieves commercial operation, which is anticipated to occur no later than December 1, 2020. Platte River is working out the terms of an interconnection agreement with the developer of the project. In addition, Platte River and the project developer are working to acquire easements from the last landowners along the transmission path. Most of these agreements should be finalized within the next month, but we have noted potential concerns with rights for at least one parcel, which may take longer to resolve. Current status: There have been no new developments since the last report. Oil and Gas Exploration at the Rawhide Energy Station Background: Although Platte River owns all surface rights to the Rawhide Energy Station property, Platte River has full ownership rights to only a portion of the mineral rights under the Rawhide property. Other parties have full or partial ownership of remaining portions. King Operating Corporation (“King”), a Texas-based oil and gas company, approached Platte River to explore for oil and gas under the Rawhide property on behalf of several of these other mineral rights holders. Platte River granted King a permit to conduct a seismic survey exploring for oil and gas, which was completed in March 2019. King has notified Platte River that it is in the planning stages for wells to extract oil and gas from reservoirs underneath the Rawhide property. Platte River has been coordinating with King regarding its extraction plans. King has also approached Platte River regarding a potential lease of Platte River’s mineral rights. Platte River management is assessing the potential advantages and disadvantages of King’s request. A potential benefit could be greater control (through negotiated agreements) of King’s oil and gas extraction activities near the Rawhide Energy Station. In June 2019, King approached Platte River to request water to support its proposed fracking activities. Platte River has declined this request. Current Status: There are no new developments in this matter since the last report. ENVIRONMENTAL MATTERS EPA Affordable Clean Energy Rule/Colorado Air Quality Statute Implementation Background: On June 19, 2019, the EPA issued its final Affordable Clean Energy (ACE) Rule, which establishes guidelines for states to use when developing plans to limit carbon dioxide (CO2) emissions at coal-fired

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power plants. The ACE Rule focuses on heat rate improvements or efficiency improvements as the best system of emission reduction (“best reduction systems”) for CO2 emissions from coal-fired power plants. The best reduction systems are determined based on technical feasibility, cost, non-air quality health and environmental impacts and energy requirements. In addition to improvements to operation and maintenance practices, the ACE Rule identifies several “candidate technologies” for best reduction systems, including neutral network/intelligent sootblowers, boiler feed pumps, air heater and leakage control, variable frequency drives, blade path upgrades, and economizer improvements. Primary responsibility for implementation of the ACE Rule is delegated to the states, and states will be expected to establish unit-specific standards of performance that reflect the emissions limitation achievable through application of the best reduction system technologies. States will have three years to submit implementation plans to EPA. At least one lawsuit has been filed challenging the ACE Rule, and we anticipate more lawsuits will be filed in the near future. At the same time EPA was finalizing the ACE Rule, the Colorado General Assembly adopted a number of aggressive air quality statutes, including SB 19-096 (which established goals for the reduction of greenhouse gas emissions) and HB 19-1261 (which granted the Colorado Air Quality Commission (Air Commission) broad rulemaking authority to implement greenhouse gas reduction goals). These measures were discussed in more detail at the May 2019 board meeting. Unlike the ACE Rule, which is focused on technology-based emissions reductions, the new Colorado statutes focus on overall emissions reductions without regard to technology. The Air Commission has begun to hold stakeholder meetings on the new emissions reduction statutes. Although development and implementation of new rules is many months away, Air Commission staff made clear that, to meet the aggressive greenhouse gas emissions reduction goals, it will require a greater reduction of greenhouse gases from the electric utility sector than it will from other sectors over which it lacks effective regulatory control. We will provide further updates on these rules as more information becomes available. Current status: There are no new developments in this matter since the last report. Regional Haze Review Background:

Under the Federal Clean Air Act, the State of Colorado must evaluate regional haze in the front range every ten years to determine if reasonable progress is being made to reduce haze. As part of this process, the state requires emitters of NOx (a principal contributor to haze) and other emissions to analyze technologies that could be employed to reduce those emissions. Platte River received a letter from the Colorado Department of Public Health and Environment (Health Department) on May 14, 2019 asking Platte River to perform a four-factor analysis for all applicable emission units at Rawhide. The four-factor analysis assesses the financial cost and technical logistics of control technologies on

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emission sources, including, for example, the addition of further emissions controls (such as selective catalytic reduction systems) and repowering the unit to fire natural gas. Platte River has engaged Burns & McDonnell to conduct this analysis, and we anticipate submitting the analysis to the state in October 2019. If the Health Department determines that additional control measures are economically feasible, it may require new technologies to reduce NOx and other emissions. In the past, the Health Department used a cost threshold of $5,000 per ton of NOx reduction to determine feasibility, which was less than half of the cost of adding selective catalytic reduction systems at the time. We anticipate that the cost threshold for feasibility applied by the state will be significantly higher this year. Going forward, the Health Department will include new requirements in state regulations to be approved by the Air Commission. The commitment for additional reductions will also be incorporated in to a new State Implementation Plan, which will be reviewed by the State Legislature and then submitted to EPA for approval.

Current Status:

Platte River staff is working to complete the four-factor analysis report and is participating in the rulemaking stakeholder process recently initiated by the Health Department.

Coal Combustion Residuals Rule Implementation Background: The EPA Administrator signed the Disposal of Coal Combustion Residuals from Electric Utilities final rule (“Residuals Rule”) on December 19, 2014, and it was published in the Federal Register on April 17, 2015. This rule finalized national regulations to provide a comprehensive set of requirements for the safe disposal of combustion residuals, primarily coal ash, from coal-fired power plants. On March 1, 2018 the EPA issued proposed revisions to the 2015 final Residuals Rule, which remains in litigation before the U.S. Court of Appeals for the D.C. Circuit. The proposed revisions address several provisions of the 2015 Residuals Rule that had been challenged in previous litigation, as well as additional provisions in response to comments received since the final rule went into effect. Many of the proposed revisions would allow state regulatory programs more flexibility to establish equivalent standards considering site-specific conditions. For now, the State of Colorado has indicated that it does not intend to promulgate its own set of regulations for coal combustion residuals. As previously reported, Platte River has taken steps to update its operational plan to comply with the requirements of the Residuals Rule and Colorado solid waste regulations. These steps include increased groundwater monitoring and evaluating the existing topsoil cover at the monofill where ash had previously been disposed of. Concurrently, Platte River obtained approval from the Health Department to close the reclaim pond and bottom ash ponds, which are being replaced with installation of a concrete settling tank with two separate cells. Following discussions between the Deputy General Counsel and the Larimer County Attorney, the County staff have determined that no building permit will be required for the concrete settling tank. Rawhide staff are moving forward to bring the settling tank

Page 213


9/18/2019

10

into service, with final testing underway. The tank is expected to be fully operational within the month of September 2019. Additional revisions to the Residuals Rule may modify current deadlines, allowing additional time for groundwater monitoring and analysis. However, even if these modifications are adopted, they will not alter Platte River’s chosen path to compliance. Current status: Groundwater monitoring data was recently released for monitoring wells near the monofill and decommissioned settling ponds. The data shows a statistically significant increase above background levels of one metal in one well near the monofill and one metal in one well near the bottom ash ponds. With this finding Platte River is required to complete an assessment of corrective measures and to hold a public meeting to accept comment from the public. The assessment of corrective measures will include consideration of the planned impoundment closures, planned monofill upgrades, and any additional measures as deemed appropriate. The assessment of corrective measures will be posted in September and the public meeting is tentatively planned for November. COMPLIANCE MATTERS

Reliability compliance staff, along with representatives from multiple departments, are preparing to conduct an internal audit of Platte River’s adherence to multiple North American Electric Reliability Corporation (NERC) reliability standards. This exercise is conducted annually to assess compliance levels with the associated Critical Infrastructure Protection and Operations and Planning standards applicable to Platte River. Like a NERC audit, staff will spend several days reviewing evidence, conducting random sampling, and interviewing subject-matter experts to ensure compliance obligations are being met. Compliance staff use a comprehensive risk matrix to determine the standards subject to the internal audit. The matrix includes criteria that calculate risk internally to Platte River, as well as externally to support the reliability and security of the Bulk Electric System.

Compliance staff will formally document results from the internal audit and address any action items.

Page 214

Executive summary

Category August variance YTD variance

Municipal demand 1.0% u (4.1%) n

Municipal energy 4.1% l (2.1%) n

Baseload generation (8.7%) n (10.0%) n

Wind generation (6.4%) n (9.5%) n

Solar generation 10.7% l (7.2%) n

Surplus sales volume (23.2%) n (9.3%) n

Surplus sales price 47.3% l 34.4% l

Dispatch cost 2.9% n (0.3%) u

Variance key: Favorable: l >2% | Near budget: u +/- 2% | Unfavorable: n <-2%

August 2019

operating report

Municipal demand came in near budget and energy came in above budget, as a result of unusually

warm weather, during the month of August. Demand and energy remain below budget, year to date.

Baseload generation came in well below budget, as JDA energy purchases displaced generation

during conditions of light load and high wind output. Rawhide equivalent availability factor came in

above budget, while net capacity factor came in well below budget. Year to date, Rawhide equivalent

availability factor is slightly above budget, while net capacity factor remains well below budget.

Despite a brief outage on both units and a three-day forced outage on Craig 2 to repair a tube leak,

the Craig units ran well throughout the month. Craig equivalent availability factor came in near

budget, while net capacity factor came in above. Year to date, Craig equivalent availability factor is

near budget, while net capacity factors is above budget.

Wind generation came in below budget for the month, while solar came in well above budget. A

noteworthy occurrence took place during the August peak hour, when we had 45 MW of wind on the

system serving load. However, overall wind generation produced more typical minimal output on

other warm days. Year to date, wind and solar remain below budget.

Sales volume was well below budget, due to soft market prices during the early morning hours, when

pricing was frequently below generation costs. Sales pricing, however, came in significantly above

budget. Year to date, volume is well below budget while pricing is significantly above budget.

Dispatch costs were above budget for the month, mainly due to a true-up on Rawhide's O&M costs,

which resulted in above budget dispatch costs. Year to date, dispatch costs remain near budget.

Page 215

Operational overview

2019 goal

0 l 0 l 0 l

System disturbances. There were no system disturbances resulting in loss of load during the month

of August.

Peak day obligation. Peak demand for the month was 649 megawatts which occurred on Aug. 20,

2019, at hour ending 17:00 and was 6 megawatts above budget. Demand response and voltage

reduction were not called upon at the time of the peak. Platte River’s obligation at the time of the

peak totaled 728 megawatts.

August actual YTD total

*Silver Sage RECs and associated energy have been sold to another utility and, therefore, cannot be claimed as a renewable resource by Platte River or its owner communities

Forecast demand643

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

850

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MW

Hour

Peak day obligation: Aug. 20, 2019

Hydro Wind* Solar Rawhide Craig CTs Purchases

Total obligation728

Municipal obligation

649

August 2019 operating report Page 1

Page 216

Municipal loads

August budget August actual

Total coincident demand (MW) 643 649 1.0% u

Estes Park 16 16 (1.5%) u

Fort Collins 304 289 (4.9%) n

Longmont 171 185 8.3% l

Loveland 153 160 4.7% l

Total energy sales (MWh) 299,185 311,438 4.1% l

Estes Park 10,246 9,847 (3.9%) n

Fort Collins 143,469 146,340 2.0% u

Longmont 76,463 82,810 8.3% l

Loveland 69,008 72,442 5.0% l

Variance key: Favorable: l >2% | Near budget: u +/- 2% | Unfavorable: n <-2%

Variance

Municipal demand came in near budget and energy came in above budget for the month of

August and remain below budget, year to date.

Estes Park16

Fort Collins

289

Longmont185

Loveland160

Actual August coincident demand = 649 MW

Estes Park9,847

Fort Collins146,340

Longmont82,810

Loveland72,442

Actual August energy sales = 311,438 MWh


Page 217

Source of supply variance

Overall resource production came in near budget for the month and remain below budget, year to date.

August variance in production from energy resources

Year-to-date variance in production from energy resources (MWh)

*Silver Sage RECs and associated energy have been sold to another utility and, therefore, cannot be claimed as a renewable resource by Platte River or its owner communities


Page 218

Source of delivery variance

Loads and obligations came in near budget for the month and remain below budget, year to date.

August variance in deliveries for loads and obligations

Year-to-date variance in deliveries for loads and obligations


Page 219

Power generation - Rawhide

Rawhide ran extremely well throughout the month of August. Baseload generation came in well below

budget, as the result of having been displaced with JDA energy purchases during conditions of light load and

high wind output. As a result, Rawhide equivalent availability factor came in above budget, while net capacity

factor came in well below budget. Year to date, Rawhide equivalent availability factor is slightly above budget,

while net capacity factor remains well below budget.

Rawhide emission levels were below compliance limits for the month of August.

96.00% 93.10%81.00% 80.00%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

August YTD

Net capacity factor

Budget Actual

97.00% 95.74%99.99% 97.38%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

August YTD

Equivalent availability factor

Budget Actual

0.0087 0.00870.0062 0.0064

0.000

0.002

0.004

0.006

0.008

0.010

0.012

0.014

August YTD

Hg (lb/GWh)

Limit Actual

0.1450 0.14500.1110 0.1170

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

August YTD

NOx (lb/MBtu)

Limit Actual

0.0900 0.09000.0800 0.0780

0.00

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

0.10

August YTD

SO2 (lb/MBtu)

Limit Actual


Page 220

Power generation - Craig

Craig 1 and 2 both experienced a brief forced outage and Craig 2 also experienced a three-day forced

outage, due to a tube leak, during the month of August. The units ran well, despite the outages, and were

kept at higher minimums in order to manage the coal stockpile, while they also had the opportunity to

dispatch lower when JDA had favorable pricing. Craig equivalent availability factor came in near budget, for

the month, while net capacity factor came in above budget. Year to date, Craig equivalent availability factor is

near budget, while net capacity factor is above budget.

95.00% 88.65%94.20% 88.70%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

August YTD

Equivalent availability factor

Budget Actual

70.40% 54.60%76.50% 55.90%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

August YTD

Net capacity factor

Budget Actual


Page 221

Power generation - CTs

Combustion turbine production came in significantly above budget for the month, as they were primarily run

to cover surplus sales. A significant contributing factor was the low wind output during several days of high

loads in the region. Natural gas pricing came in below budget, for the month. Year to date, combustion

turbine generation production is significantly above budget, while natural gas pricing is near budget.

$2.75 $2.75$2.64 $2.78

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

August YTD

$/MBtuNatural gas pricing

Budget Actual

2019 annual budgeted pricing = $2.76/MBtu

2,556.8428,444.5220,751.00 52,525.87

0

10,000

20,000

30,000

40,000

50,000

60,000

August YTD

MWh CT generation

Budget Actual


Page 222

Power generation - renewables

Wind generation came in below budget for the month, while solar came in well above budget. A noteworthy

occurrence took place during the August peak hour, when we had 45 MW of wind on the system serving

load. However, overall wind generation produced more typical minimal output on other warm days. Year to

date, wind and solar remain below budget.

6.32 47.277.00 43.85

-

5

10

15

20

25

30

35

40

45

50

August YTD

MWh(000s)

Solar generation

16.75 15.58

2.192.15

-

5

10

15

20

25

30

35

40

45

50

Augustbudget

Augustactual

MWh(000s)

170.05 154.99

23.94

20.50

-

20

40

60

80

100

120

140

160

180

200

YTDbudget

YTDactual

MWh(000s)

Wind generation

n Budget n Actual n Silver Sage*

*Silver Sage RECs and associated energy have been sold to another utility and, therefore, cannot be claimed as a renewable

resource by Platte River or its owner communities

n Budget n Actual

August 2019 Operating report Page 8

Page 223

Market sales

Surplus sales volume was well below budget, mainly due to soft market prices during the early morning

hours, when pricing was frequently below generation costs. However, sales pricing came in significantly

above budget which resulted in favorable peaking sales made from the combustion turbines during times of

energy constraints throughout the region. Year to date, volume remains well below budget while pricing

remains significantly above budget.

Market purchases

Purchases came in well above budget for the month, as they were required to cover load, sales and system

issues. JDA purchases came in well above budget. Pricing, however, came in well below budget for the

month. Purchases remain considerably above budget, while pricing remains below budget, year to date.

$22.29 $16.07

$0

$5

$10

$15

$20

$25

$30

$35

$40

Augustbudget

Augustactual

$/MWh

$18.61 $17.50

$0

$5

$10

$15

$20

$25

$30

$35

$40

YTDbudget

YTDactual

$/MWh

Average purchase price

2,624 2,259

10,900

19,209

-

5,000

10,000

15,000

20,000

25,000

Augustbudget

Augustactual

MWh

22,281 48,128

123,636

205,391

-

50,000

100,000

150,000

200,000

250,000

300,000

YTDbudget

YTDactual

Th

ou

sa

nd

s

MWh

Energy purchases

n Budget n Actual n JDA

$24.27 $35.75

$0

$5

$10

$15

$20

$25

$30

$35

$40

Augustbudget

Augustactual

$/MWh

$22.45 $30.18

$0

$5

$10

$15

$20

$25

$30

$35

$40

YTDbudget

YTDactual

$/MWhAverage sales price

n Budget n Actual

58.27 41.80

1.97

4.00

2.19

2.15

-

10

20

30

40

50

60

70

80

90

100

Augustbudget

Augustactual

MWh(000s)

527.27 485.58

34.28

24.97

23.94

20.50

-

100

200

300

400

500

600

700

YTDbudget

YTDactual

MWh (000s)

Sales volume

n Budget n Actual n JDA n SSW

n Budget n Actual

The actual average sales price includes the Silver Sage sale


Page 224

Dispatch cost

Dispatch costs were above budget for the month, mainly due to a true-up on Rawhide's operations and

maintenance costs, which resulted in above budget dispatch costs. Year to date, dispatch costs remain near

budget.

$25.54 $32.97 $26.62 $29.08 $37.29 $17.90 $50.72 $54.18 $37.12$28.21 $30.80 $26.62 $29.08 $30.74 $12.66 $51.91 $54.12 $38.03

$0

$10

$20

$30

$40

$50

$60

Rawhide Craig CRSP LAP Purchases JDApurchases

Wind* Rawhidesolar

CTs

$/M

Wh

August resource cost

Budget Actual Blended Actual

$26.81 $35.67 $27.22 $29.62 $28.16 $16.15 $47.40 $54.24 $39.31$27.31 $35.71 $27.22 $29.62 $30.62 $14.01 $48.48 $55.11 $40.59

$0

$10

$20

$30

$40

$50

$60

Rawhide Craig CRSP LAP Purchases JDApurchases

Wind* Rawhidesolar

CTs

$/M

Wh

YTD resource cost

Budget Actual Blended Actual

Blended budget: $29.32 | Blended actual: $30.16

YTD blended budget: $30.33 | YTD blended actual: $30.23

*Silver Sage RECs and associated energy have been sold to another utility and, therefore, cannot be claimed as a renewable re source by Platte River or its owner communities


Page 225

Power delivery

Major system operations projects benefitting the municipalities:

Estimated finish date Status Description

December 2019 65% completeHarmony circuit breaker replacements and

circuit switcher additions, T1 and T3

December 2019 70% complete Revenue meter replacements

December 2020 5% completeCounty Line Substation, T3 transformer

addition for Longmont

Events of significance

•

•

• Several facilities and maintenance projects were completed during the month of August. Completed

projects included transformer testing and maintenance at the Laporte Substation on T1 and T2, a

battery bank replacement at the Airport Substation for the City of Loveland and transformer oil testing

for all Platte River substation transformer locations.

Location

Construction for the Roundhouse generator outlet has begun, with deliveries and preliminary site

work still in process.

Longmont

The Buffalo Flats Solar project mobilized in August. Construction will begin once the Larimer County

permitting process is complete.

System

Fort Collins


Page 226

Financial reportAugust 2019

Page 227

Page 2 of 17

Page 228

Financial highlights year-to-date

Key budget variances year-to-date

Platte River reported favorable results year to date. Net income of $27.2 million was favorable by $9.7 million compared to budget due to above-budget revenues and below-budget expenses. Details of the financial results year-to-date are described below.

The current estimate for year-end net income is between $27 million and $29 million. This forecast includes overall lower expense and higher surplus sales projections, including future contract sales, which are more than offsetting the projected lower-than-budget owner community revenues. Current surplus sales revenues were higher than anticipated from the improvement of the market prices during the first quarter, as well as sales from the combustion turbines in the summer months. However, surplus sales volumes are below budget. Platte River continues to take advantage of lower-cost joint dispatch purchases, which replaces base load generation and lowers expenses. The estimate also assumes operations and maintenance expenses vary from no variance to a 2% favorable variance. Additionally, the Series KK bond issuance has been delayed to 2020, resulting in lower net financing costs.

Total revenuesSales to owner communities were below budget $3 million. Energy revenues were $1.3 million or 1.4% below budget and demand revenues were $1.5 million or 3.5% below budget. In addition, renewable energy sales were approximately $0.2 million or 10.6% below budget due to below-budget wind generation.

Key financial results Annual($ millions) Budget Actual Budget Actual budget

Net income/(loss) 5.2$ 6.6$ 1.4$ 26.9% 17.5$ 27.2$ 9.7$ 55.4% 23.0$

Fixed obligation charge coverage 4.87x 5.58x .71x 14.6% 2.85x 3.52x .67x 23.5% 2.60x

Budget results

Total revenues 23.0$ 23.9$ 0.9$ 3.9% 157.1$ 157.4$ 0.3$ 0.2% 231.3$

Sales to owner communities 20.7 21.4 0.7 3.4% 137.9 134.9 (3.0) (2.2%) 200.6

Sales for resale 1.5 1.7 0.2 13.3% 13.1 16.0 2.9 22.1% 21.0

Wheeling 0.5 0.5 - 0.0% 3.6 3.8 0.2 5.6% 5.4

Interest and other income 0.3 0.3 - 0.0% 2.5 2.7 0.2 8.0% 4.3

Total operating expenses 15.6$ 15.5$ 0.1$ 0.6% 121.9$ 114.3$ 7.6$ 6.2% 180.6$

Purchased power 2.9 2.9 - 0.0% 24.5 25.5 (1.0) (4.1%) 36.9

Fuel 4.7 4.7 - 0.0% 31.7 30.0 1.7 5.4% 48.0

Production 3.7 4.0 (0.3) (8.1%) 32.5 30.2 2.3 7.1% 48.1

Transmission 1.3 1.3 - 0.0% 11.3 10.9 0.4 3.5% 16.7

Administrative and general 2.0 1.8 0.2 10.0% 14.2 12.7 1.5 10.6% 20.7

Demand-side management 1.0 0.8 0.2 20.0% 7.7 5.0 2.7 35.1% 10.2

Capital additions 4.0$ 3.9$ 0.1$ 2.5% 40.9$ 33.2$ 7.7$ 18.8% 54.7$

August Favorable(unfavorable)

Year to date Favorable(unfavorable)

>2% Favorable | 2% to -2% At or near budget | <-2% Unfavorable

Page 3 of 17

Page 229

Personnel expenses were below budget $1.6 million due to lower than anticipated medical and dental claims and lower wages primarily as a result of vacant positions.

Rawhide Unit 1: 165% of the overall variance, $2.8 million below budget: Generation was below budget due to low load testing to meet operational flexibility initiatives to accommodate more renewable resources, forced outages, as well as generation being replaced by lower cost joint dispatch purchases. Craig Units: (18)% of the overall variance, $0.3 million above budget:Generation was above-budget due to an improved surplus sales market earlier in the year and implementing strategies to manage the coal stockpile and optimize sales. Partially offsetting the above-budget variance were below-budget coal prices updated from the latest Trapper Mine forecast.Natural Gas: (47)% of the overall variance, $0.8 million above budget: The combustion turbine units were utilized to meet load requirements and to make sales resulting in above-budget generation.

Sales for resale were above budget $2.9 million primarily due to market prices. The average price was approximately 34.4% above budget or $4.1 million of the variance, partially offset by $1.2 million due to 9.3% below-budget sales volume, as mentioned above.

Wheeling was above budget $0.2 million due to higher customer loads, unplanned point-to-point sales and a rate increase effective in June.

Interest and other income was above budget $0.2 million due to revenue from unplanned extensions of tower leases, as well as revenue from fiber leases, which represents Platte River's revenue prior to execution of the intergovernmental agreement for fiber management.

Total operating expensesSeveral expenses were below budget with a net impact of approximately $2.8 million. Some of these expenses are expected to be incurred before year end. The below-budget expenses include: 1) chemical purchases at Rawhide, 2) parts returned to the warehouse from the 2018 major outage, 3) IRP studies and outreach, 4) water expenses, 5) consulting services, 6) non-routine projects, 7) utilities, 8) legal services, 9) wall restoration and reinforcement project at Rawhide, 10) information technology outsourcing, 11) Danfield parking lot mill overlay and 12) other smaller projects. Expenses above budget include: 1) joint facilities and 2) impoundment closure costs at Rawhide.

Demand-side management program expenses were $2.7 million below budget primarily due to the unpredictability of the completion of customers' energy efficiency projects. The funds, less the $0.6 million contingency, are expected to be spent by the end of the year.

Fuel expenses were $1.7 million below budget.

Page 4 of 17

Page 230

Yampa expenses were $0.2 million above budget.

Purchased power expenses were above budget $1 million. Purchases were made under the joint dispatch agreement because of favorable pricing, which replaces base load generation. Other supplemental purchases were made for Rawhide Unit 1's screen outage at higher-than-budgeted prices and replacement of generation during Rawhide Unit 1's low-load testing and forced outages. Due to surplus sales market prices, reserves were also above budget as it was more economical to purchase than hold reserves on the Craig units. Below-budget wind and solar generation partially offset the additional purchases.

Other financial activitiesWindy Gap unit sales - accounting treatment - There were two units of Windy Gap water sold in 2019 for $5.2 million, which will impact net income. As a result of these transactions, a net gain of $5.2 million will be recognized, as the assets were fully depreciated. This amount will be amortized over the remaining useful life of the facility, which is currently 2046. Over this period, the current estimate of the net impact as a reduction to depreciation expense for these transactions is $0.2 million annually (or $5.2 million in total), which will be added to previous sales for a total impact of approximately $2.6 million annually. The reduction in depreciation results in a corresponding increase in net income over this time frame. Debt - The table below shows current debt outstanding. The remaining outstanding principal for Series II and JJ represents debt associated with the Rawhide Energy Station ($25 million) and transmission assets ($144 million). Principal and interest payments are made June 1 and interest only payments are made Dec. 1. The final payment for Series HH was made in June. The Series KK bond issuance scheduled for October 2019 to fund the Windy Gap Firming Project is planned to be issued in 2020 due to potential delays in the construction project.

Series

Debt outstanding $/thousands

Par issued $/thousands

True interest

costMaturity

dateCallable

date Purpose

Series II - February 2012 $ 25,530 65,475$ 3.2% 6/1/2037 6/1/2022

$30M new money for transmission projects & refund remaining of Series EE ($4.6M NPV/10.9%)

Series JJ - April 2016 143,895 147,230$ 2.2% 6/1/2036 6/1/2026

$60M new money for Rawhide & transmission projects & refund portion of Series HH ($13.7M NPV/12.9%)

Total par outstanding 169,425 Unamortized bond premium 23,441

Total revenue bonds outstanding

192,866

Less: due within one year (10,310)

Total long-term debt, net $ 182,556 Fixed rate bond premium costs are amortized over the terms of the related bond issues.

Page 5 of 17

Page 231

Project ($ in thousands) Budget EstimateFavorable

(unfavorable) Carryover

request

Below budget projects* Windy Gap Firming Project - This project will be below

budget due to construction delays. The remaining below-budget funds will be requested to be carried over into 2020. 3,796$ 1,787$ 2,009$ 2,009$

** Grading and drainage improvements - Rawhide - This project will be below budget due to resource constraints. The remaining below-budget funds will be requested to be carried over into 2020. 702$ 62$ 640$ 640$

* Rack and pinion elevator replacement - ash silo - This project will be below budget due to resource constraints, as well as an estimated six-month lead time for materials. The remaining below-budget funds will be requested to be carried over into 2020. 385$ 8$ 377$ 377$

** Real time tools - This project will be below budget due to resource constraints and software development delays. The remaining below-budget funds will be requested to be carried over into 2020. 569$ 263$ 306$ 306$ Engine 12 replacement - This purchase was originally planned as a one-time purchase; however, due to the amount of time to build the engine, it resulted in a multi-year project. Funds were appropriated in 2018 and the majority of the below-budget amount was carried over to be used for the 2019 milestone payment. The remaining below-budget funds will be requested to be carried over into 2020 to complete the purchase. 343$ 127$ 216$ 216$

** Transmission line vault upgrades - Rogers Road - This project will be below budget due to design scheduling delays and difficulty finding bidders due to the size of the project. The remaining below-budget funds will be requested to be carried over into 2020. 175$ 20$ 155$ 155$

* Oil breaker (362) replacement - Valley Substation - This project was delayed to accommodate additional resources required to complete other higher priority projects. The below-budget funds will be requested to be carried over into 2020. 215$ 65$ 150$ 150$

Above budget projects* Soldier Canyon 10 inch waterline reroute - CR 70 & 17

bridge - This project is being done in conjunction with a bridge replacement by Larimer County. The project will be above budget due to additional design details, bedding and backfill, and an increase in costs for materials and concrete lined pipe. 214$ 625$ (411)$

Capital additions (year-end estimates as of August 2019)The projects listed below are projected to end the year with a budget variance of more than $100,000. In addition, the amounts below are costs for 2019 and may not represent the total cost of the project. Further changes to capital projections are anticipated and staff will continue to monitor spending estimates to ensure capital projects are appropriately funded.

Page 6 of 17

Page 232

Project ($ in thousands) Budget EstimateFavorable

(unfavorable) Carryover

request

** Rotary car dumper drive conversion to variable frequency drives - This project will be above budget due to an agreed upon payment schedule which requires a larger than anticipated payment in 2019. This reduces the 2020 portion of the project. 514$ 901$ (387)$ Circuit switcher (T1) (T3) addition, breaker replacement, relay upgrade - Harmony Substation - This project will be above budget due to an extension to perform isolations, wiring and checkout to minimize the risk of system disturbances. 676$ 1,035$ (359)$ Virtual machine host replacement - This project will be above budget to include redundant equipment for testing, as well as to replace obsolete servers at Rawhide and the disaster recovery center. The new servers will improve overall system reliability. 66$ 277$ (211)$

Out-of-budget projects

Energy Engagement Center - This project is the construction of an addition of approximately 6,500 square feet to the east end of the south bar of the new headquarters campus. The purpose of the conference center is to house public meetings for community engagement and outreach, regional utility meetings, as well as internal employee functions. Out-of-budget funds are required to begin the design process in 2019. -$ 537$ (537)$ Air compliance database software - This project was originally planned in 2019 to be a software as a service which is an operating expense. The software was determined to be capital as a result of selecting a customized software which Platte River will own. Funds are required to develop a software/database that will store and manage air quality data for Rawhide operations. The software/database will provide better security for data in addition to transparent and real-time evaluations. -$ 182$ (182)$

* Generator outlet line purchase - Roundhouse Wind Farm to Rawhide - Funds will be used for preliminary design and construction review of the 230kV generator outlet line. Design costs for 2019 are less than anticipated. Funds of $0.1 million were requested in 2019, of which a portion will be requested to be carried over into 2020. -$ 25$ (25)$ 85$

Delayed projects

Oil breaker (2082) replacement - Longs Peak Substation - This project was delayed to accommodate additional resources required to complete other higher priority projects. The below-budget funds will be requested to be carried over into 2020. 237$ -$ 237$ 237$

* Project details or amounts have changed since last report.

** Project is new to the report.

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Budget schedules

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August 2019Non-GAAP budgetary basis (in thousands)

Favorable

Budget Actual (unfavorable)

Revenues

Operating revenues

Sales to owner communities 20,700$ 21,428$ 728$

Sales for resale 1,515 1,715 200

Wheeling 460 493 33

Total operating revenues 22,675 23,636 961

Other revenues

Interest income(1) 317 293 (24)

Other income 4 14 10

Total other revenues 321 307 (14)

Total revenues 22,996$ 23,943$ 947$

Expenditures

Operating expenses

Purchased power 2,857$ 2,896$ (39)$

Fuel 4,712 4,693 19

Production 3,724 4,051 (327)

Transmission 1,307 1,310 (3)

Administrative and general 1,964 1,802 162

Demand-side management 1,034 779 255

Total operating expenses 15,598 15,531 67

Capital additions

Production 808 1,195 (387)

Transmission 215 73 142

General 3,001 2,602 399

Total capital additions 4,024 3,870 154

Debt expense

Principal 859 859 -

Interest expense 660 660 -

Total debt expense 1,519 1,519 -

Total expenditures 21,141$ 20,920$ 221$

Revenues less expenditures 1,855$ 3,023$ 1,168$

(1) Excludes unrealized holding gains and losses on investments.

Month of August

Schedule of revenues and expenditures, budget to actual

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August 2019 year-to-dateNon-GAAP budgetary basis (in thousands)

Favorable Annual

Budget Actual (unfavorable) budget

Revenues

Operating revenues

Sales to owner communities 137,901$ 134,913$ (2,988)$ 200,595$

Sales for resale 13,146 16,026 2,880 21,064

Wheeling 3,558 3,740 182 5,386

Total operating revenues 154,605 154,679 74 227,045

Other revenues

Interest income(1) 2,441 2,434 (7) 4,232

Other income 44 239 195 38

Total other revenues 2,485 2,673 188 4,270

Total revenues 157,090$ 157,352$ 262$ 231,315$

Expenditures

Operating expenses

Purchased power 24,490$ 25,488$ (998)$ 36,919$

Fuel 31,695 29,998 1,697 47,986

Production 32,448 30,192 2,256 48,123

Transmission 11,333 10,859 474 16,694

Administrative and general 14,236 12,721 1,515 20,715

Demand-side management 7,666 5,005 2,661 10,201

Total operating expenses 121,868 114,263 7,605 180,638

Capital additions

Production 13,099 9,166 3,933 17,109

Transmission 1,635 1,436 199 2,721

General 26,202 22,568 3,634 34,890

Total capital additions 40,936 33,170 7,766 54,720

Debt expense

Principal 6,884 6,884 - 10,346

Interest expense 5,490 5,490 - 9,129

Total debt expense 12,374 12,374 - 19,475

Total expenditures 175,178$ 159,807$ 15,371$ 254,833$

Contingency reserved to board - - - 23,000

Total expenditures 175,178$ 159,807$ 15,371$ 277,833$

Revenues less expenditures (18,088)$ (2,455)$ 15,633$ (46,518)$


August year to date

Schedule of revenues and expenditures, budget to actual

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Financial statements

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Unaudited (in thousands)

2019 2018AssetsElectric plant, at original cost

Land and land rights 16,997$ 16,997$ Plant and equipment in service 1,360,833 1,302,626 Less: accumulated depreciation and amortization (898,950) (860,801)

Plant in service, net 478,880 458,822 Construction work in progress 99,026 100,635

Total electric plant 577,906 559,457

Special funds and investmentsRestricted funds and investments 16,297 24,440 Dedicated funds and investments 100,449 89,891

Total special funds and investments 116,746 114,331

Current assetsCash and cash equivalents 18,143 28,928 Other temporary investments 36,446 35,154 Accounts receivable - owner communities 21,363 19,547 Accounts receivable - other 4,789 5,991 Fuel inventory, at last-in, first-out cost 17,606 16,017 Materials and supplies inventory, at average cost 14,996 14,466 Prepayments and other assets 2,921 2,096

Total current assets 116,264 122,199

Noncurrent assetsRegulatory assets 10,794 9,865 Other long-term assets 5,315 5,970

Total noncurrent assets 16,109 15,835

Total assets 827,025 811,822 Deferred outflows of resources

Deferred loss on debt refundings 6,446 7,591

Pension deferrals 10,356 889

Total deferred outflows of resources 16,802 8,480

LiabilitiesNoncurrent liabilities

Long-term debt, net 182,556 196,296 Net pension liability 24,071 6,819 Other liabilities and credits 16,740 16,108

Total noncurrent liabilities 223,367 219,223 Current liabilities

Current maturities of long-term debt 10,310 10,335 Accounts payable 14,057 12,881 Accrued interest 1,979 2,107 Accrued liabilities and other 1,746 2,021

Total current liabilities 28,092 27,344

Total liabilities 251,459 246,567

Deferred inflows of resourcesRegulatory credits 4,298 13,831 Pension deferrals 256 5,769

Total deferred inflows of resources 4,554 19,600 Net position

Net investment in capital assets 386,879 365,433 Restricted 14,318 14,278 Unrestricted 186,617 174,424

Total net position 587,814$ 554,135$

Statements of net position

August 31

Note: Certain prior year line items have changed due to restatement of 2017 financial statements.

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Twelve months endedMonth of August 31August 2019 2018

Operating revenuesSales to owner communities 21,428$ 195,807$ 195,254$ Sales for resale 1,715 20,879 22,955 Wheeling 493 5,532 5,121

Total operating revenues 23,636 222,218 223,330

Operating expensesPurchased power 2,896 41,834 36,153 Fuel 4,693 40,048 48,363 Operations and maintenance 5,275 57,830 60,215 Administrative and general 1,817 18,539 17,122 Demand-side management 779 8,623 7,117 Depreciation 1,874 21,592 22,556

Total operating expenses 17,334 188,466 191,526

Operating income 6,302 33,752 31,804

Nonoperating revenues (expenses)Interest income 293 3,590 2,551 Other income 14 427 554 Interest expense (660) (8,300) (8,971) Amortization of bond financing costs 178 2,201 2,154 Allowance for funds used during construction - 329 746 Net increase/(decrease) in fair value of investments 450 1,680 (793)

Total nonoperating revenues (expenses) 275 (73) (3,759)

Income before contributions 6,577 33,679 28,045

Contribution of assets to owner communities - - (137)

Change in net position 6,577 33,679 27,908

Net position at beginning of period, as previously reported 581,237 554,135 528,817 Restatement for change in accounting principle - - (2,590)

Net position at beginning of period, adjusted 581,237 554,135 526,227

Net position at end of period 587,814$ 587,814$ 554,135$

net positionStatements of revenues, expenses and changes in

Note: Certain prior year line items have changed due to restatement of 2017 financial statements and to conform with current year presentation.

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Month ofAugust 2019 2018

Cash flows from operating activitiesReceipts from customers 24,075$ 222,098$ 220,068$ Payments for operating goods and services (12,347) (138,710) (126,022) Payments for employee services (3,082) (39,175) (38,102)

Net cash provided by operating activities 8,646 44,213 55,944

Cash flows from capital and related financing activitiesReductions/(additions) to electric utility plant 699 (66,337) (33,714) Payments from accounts payable incurred for electric utility plant additions (7,007) (3,039) (2,153) Proceeds from disposal of electric utility plant 106 31,217 26,197 Principal payments on long-term debt - (10,335) (14,580) Interest payments on long-term debt - (8,427) (9,153)

Net cash used in capital and related financing activities (6,202) (56,921) (33,403)

Cash flows from investing activitiesPurchases and sales of temporary and restricted investments, net (1,839) (2,035) (21,686) Interest and other income, including realized gains and losses 301 3,958 3,108

Net cash (used in)/provided by investing activities (1,538) 1,923 (18,578)

Increase/(decrease) in cash and cash equivalents 906 (10,785) 3,963 Balance at beginning of period in cash and cash equivalents 17,237 28,928 24,965

Balance at end of period in cash and cash equivalents 18,143$ 18,143$ 28,928$

Reconciliation of net operating income to net cash

provided by operating activitiesOperating income 6,302$ 33,752$ 31,804$

Adjustments to reconcile operating income to net cash provided by operating activities

Depreciation 1,874 21,592 22,556 Changes in assets and liabilities which provided/(used) cash

Accounts receivable 440 (614) (2,884) Fuel and materials and supplies inventories 97 (2,120) (1,811) Prepayments and other assets 458 (1,182) (4,673) Deferred outflows of resources - (9,467) 12,966 Accounts payable (1,048) (377) (132) Net pension liability - 17,252 (12,576) Other liabilities 158 423 489 Deferred inflows of resources 365 (15,046) 10,205

Net cash provided by operating activities 8,646$ 44,213$ 55,944$

Note: Certain prior year line items have changed due to restatement of 2017 financial statements.

Twelve months endedAugust 31

Statements of cash flows

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Twelve months endedMonth of August 31August 2019 2018

Net revenuesOperating revenues 23,636$ 222,218$ 223,330$ Operations and maintenance expenses,excluding depreciation and amortization 15,460 166,874 168,970

Net operating revenues 8,176 55,344 54,360 Plus interest income on bond accounts

and other income (1) 307 4,024 3,099

Net revenues before rate stabilization 8,483 59,368 57,459 Rate stabilization

Deposits - - - Withdrawals - - -

Total net revenues 8,483$ 59,368$ 57,459$

Bond servicePower revenue bonds 1,519$ 18,628$ 22,490$ Allowance for funds used during construction - (329) (746)

Net revenue bond service 1,519$ 18,299$ 21,744$

CoverageFixed obligation charge coverage ratio 5.58 3.24 2.64


Schedule of net revenues for debt service

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AUGUST 2019 GENERAL MANAGEMENT REPORT BUSINESS STRATEGIES Communications and marketing. Staff led the development and implementation of plans for the annual United Way campaign and supervised the editing of key branding/recruiting videos that will be imbedded within the recently redeveloped human resources web pages. The department also began active planning for the October IRP community listening sessions and produced the first of several planned online training modules for the Efficiency Works program. Staff maintained information updates about Platte River activities through various internal communication tools. Community engagement. Staff continues to build and fortify relationships with stakeholders by expanding engagement with community partners and organizations. Key meetings attended include:

• 8/1 House Select Committee on Climate Crisis • 8/1 Town Hall Meeting with US Congressman Joe Neguse hosted by Rep. Sonya

Jaquez Lewis and Sen. Mike Foote • 8/6 Longmont Sustainability Coalition meeting • 8/6 Longmont City Council study session • 8/8 Meeting with Kevin Gertig, executive director, City of Fort Collins Utilities • 8/9 Longmont City Council work session • 8/13 Estes Park Town Board meeting • 8/15 Business after-hours multi-chamber event held at CSU • 8/16 Meeting with Dave Hornbacher, executive director of electric services, Longmont

Power & Communications • 8/16 Update meeting with Sandra Solin, contract lobbyist • 8/19 Follow-up meeting with Dave Hornbacher, executive director of electric services,

Longmont Power & Communications • 8/20 Unity in the Community volunteer training • 8/20 Fort Collins City Council meeting • 8/21 Meeting with Larimer County Commissioner John Kefalas • 8/22 Meeting with Rep. Chris Hansen • 8/22 Colorado Congressional Luncheon • 8/23 Colorado PUC “Getting to 100% Renewable Energy” meeting • 8/23 Meeting with Sen. Mike Foote • 8/23 Volunteered at Longmont Chamber’s Unity in the Community event • 8/24 Longmont’s Coffee with the Council • 8/27 Loveland City Council study session

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Platte River Power Authority 2 August 2019 Management Report

• 8/29 Meeting with Rep. Jeni Arndt Human Resources. Wellness activities included the annual wellness fair at both Rawhide and headquarters where employees and spouses could engage in various booth activities, get blood test results and skin cancer screenings. Community involvement included a presentation on succession planning given by director of human resources & safety, Libby Clark at the RMEL leadership conference. Employee engagement focused on the annual summer picnic with nearly 250 employees, retirees and guests in attendance. Safety. Employee occupational health testing completed in August. The testing consisted of a spirometry test for those required to wear respiratory protection and a hearing assessment. A total of 104 employees were tested. First aid training received at Platte River recently provided two Rawhide employees the skills to recognize potential serious injury, initiate proper care and render first aid to the driver of a motor vehicle accident prior to the arrival of the emergency response team. Safety staff hosted Poudre Fire Authority officer training with a tour of the current HQ building. The building will potentially be used as a structure for rescue and response training before it is demolished. PFA and safety staff identified scenarios for training and agreed to collaborate on training opportunities with the Emergency Response Team. There were no recordable injuries. 2017 2018 YTD

August 2018 YTD August 2019

Recordable injury rate 0.43 1.67 0.60 0.67 DART 0.00 0.00 0.00 0.00 Lost time rate 0.00 0.00 0.00 0.00

HQ construction project. There were no lost time or recordable injuries reported. Safety continues to work closely with the construction contractor through weekly project update meetings and site safety walkdowns. The safety planning process continues with development of a revised emergency evacuation policy for employees, contractors and visitors at the new campus and associated buildings. ERT. Members of the emergency response team attended required annual confined space rescue training where they were trained on how to safely respond to confined space emergencies. ERT members responded to an overturned fuel tanker driven by a contractor of Burlington Northern at Rawhide wherein the driver was uninjured. The entire incident was safely mitigated without injury to responders or release of product. Energy solutions. Year-to-date, Efficiency Works programs combined have:

• Achieved 13,600 MWh of energy savings and 2.0 MW demand savings at a cost of $5.5 million (including program administration costs).

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• Collectively committed $9.6 million of program funding, including the $5.5 million spent, which is expected to result in 22,300 MWh of energy savings and 3.3 MW demand savings.

A total of $12.2 million has been budgeted by Platte River and the owner communities for common efficiency programs, consisting of approximately $11.2 million in program spending for contracted services and rebates and $1 million for Platte River to administer the programs. Platte River is expected to provide $9 million and the owner communities will provide $3.2 million to fund the Efficiency Works programs. The goal for 2019 is to grow our programs consistent with the long-term forecast: 38,000 MWh of new energy savings and 6.5 MW of new demand savings. However, it is becoming apparent that we will not meet the 2019 goal for energy savings and will have some unspent owner community funding remaining at the end of the year. Note that this long-term forecast was based on analysis performed for our last Integrated Resources Plan indicating achievable potential of 44,000 MWh by 2021 (23% annual program growth). While we did achieve significant program growth between 2015 and 2018 (31% annual growth), continuing the predicted growth has proven challenging. Our updated forecast for this year anticipates achieving energy savings similar to last year’s results of 29,600 MWh. Staff is currently coordinating with owner community staff on targeted outreach and services to customers in an effort to maximize energy savings during the remainder of 2019 while making use of available owner community funding, particularly in Longmont and Fort Collins. Looking forward to 2020, Platte River has budgeted to achieve 28,500 MWh. In addition, we estimate we may be able to achieve an additional 5,500 MWh savings with funds provided by the owner communities, bringing our total energy savings to 34,000 MWh. Platte River and owner community staff meet regularly to discuss how to improve program performance and increase customer participation and are already working on plans for 2020. We are circulating a draft update to the Intergovernmental Agreement (IGA) for Demand Side Management and Distributed Energy Resource Program Partnership, which was executed September 2016. The IGA is being updated to add “non-electric sustainability services” to the types of services that Platte River and the owner communities can offer through Efficiency Works. Under terms of the draft IGA, the owner communities can request non-electric sustainability service, such as water rebates, be added to Efficiency Works programs to provide more comprehensive services to customers, provided that the owner communities pay Platte River for the services provided, including administrative costs. Fort Collins, Longmont and Loveland have all expressed interest in providing water rebates through Efficiency Works. The IGA is also being updated to remove obsolete language. The draft is currently in the review process and owner community staff will soon be bringing the document to boards and councils required for IGA approval. We anticipate bringing this to the Platte River Board of Directors in the future for approval.

FINANCIAL AND INFORMATION TECHNOLOGY SERVICES 2019 capital additions – board contingency. Capital projects are tracked closely throughout the year and revisions are expected as projects’ scope and schedules change, and new projects arise. At this time, capital expenditures are estimated to be approximately $1.8 million below budget at the end of the year. Some projects will not be completed during 2019 and the

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remaining funds for those projects, approximately $4.4 million, will need to be carried over into 2020. Thus far in 2019, several additional requests for funds have occurred due to changes in the schedule and scope of projects. As a result of the need to carry over funds to 2020, current estimates show $2.6 million may be required as a budget contingency appropriation to cover the additional capital project expenses. However, further changes to capital projections are anticipated and staff will continue to monitor spending estimates to determine the appropriate amount needed. Details of these changes in capital projects are also summarized in the financial report included in the board packet. Project managers are continuously improving work planning and budgeting by better aligning scope, schedules and available resources. The following table represents the estimates for capital expenditures as of Aug. 31, 2019.

2020 budget preparation. The proposed 2020 strategic budget is included in this month’s board materials. Staff will present at the board meeting to review the budget highlights, key revenue and expenditure areas, as well as updates to the budget document. A public hearing is scheduled in October. Below is a condensed schedule of the overall budget process.

March-May Kickoff presentations and preparation of budget details by departments

May-June Data compilation, reporting and meetings with division managers July Senior management and GM/CEO budget review August Refine budget and document preparation September Budget work session with board October Public hearing and board review of budget modifications November Prepare final budget document December Final budget review with board and request adoption

Accounting standards. Platte River follows governmental accounting standards board (GASB) pronouncements. Currently, two new standards will be applicable and implemented in 2019 and 2020. Staff is conducting research for both standards and the impacts are not yet determined.

• GASB 83 – The asset retirement obligation standard is to be implemented in 2019. The standard requires obligations arising from a legally enforceable regulation, contract or court judgement related to a tangible capital asset to be estimated and recorded as a liability with a corresponding deferred outflow of resources. The deferred outflow of resources will be expensed over the life of the related capital asset.

Capital summary $ million 2019 capital budget 54.7$ Estimated capital expenses at 8/31/19 52.9 Under budget variance 1.8$ Estimated capital carryovers from 2019 to 2020 (4.4) Estimated contingency transfer request (2.6)$

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• GASB 87 – The lease standard is to be implemented in 2020. This standard states that leasing an asset is a financing of the right to use an underlying asset. As such, a lessee is required to recognize a lease liability and an intangible right-to-use leased asset, and a lessor is required to recognize a lease receivable and a deferred outflow of resources. The deferred outflow of resources will be expensed over the lease term.

RFP for defined benefit plan investment consulting services. The retirement committee selected Northern Trust Investments Inc. as the investment consultant for the defined benefit plan. Northern Trust’s services will begin Nov. 1, 2019. Cybersecurity updates. In July and August, Platte River employees achieved 100% completion of our monthly cybersecurity training. Support from management and staff across the organization has been instrumental in achieving our year-to-date completion rate of 98.5%, which far exceeds our 2018 average completion rate of 58%. In addition, our cybersecurity team awarded the first quarterly ‘human firewall award.’ This award is a traveling trophy and is awarded to an employee in the end-user community who goes above and beyond in protecting the organization from cyber threats. We also completed the privilege access cleanup project, a two-year project to remove privileged access from standard user accounts and ensure formal requests for privileged access are submitted, reviewed and approved. As part of the project, a regular review/renewal/revoke process has been put in place. This project is a major accomplishment as part of our five-year cyber security risk program. Headquarters campus project. Construction continues to progress well, and we are currently tracking right on the projected schedule. All trades are working to turn over the critical rooms for Platte River to begin implementing our equipment by the middle of September. This is a major milestone for the project, and we are excited to start bringing our equipment into the new building.

As we continue to work through the construction of the building, we are tracking through the Leadership in Energy and Environmental Design (LEED) process. We have targeted a LEED Silver rating and continue to diligently track this process with the Institute for the Built Environment (IBE). We continue to pursue sustainable practices both in the construction process, as well as how the building will operate once occupied.

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In 2017, through the course of design and value engineering processes, it was determined to eliminate from the design overhead doors from approximately 60% of the outbuilding garage areas. Since we were uncertain of the ongoing feasibility of eliminating the overhead doors, the building was designed to accommodate overhead doors at a future date. After utilizing this space this year and experiencing a significant weather event, we have determined it is preferable to add the overhead doors back into the project to protect our assets. This change is estimated to add approximately $650,000 into the overall headquarters campus project and will be incorporated into the 2020 budget.

OPERATIONS Fuels and water. September is the final month of the 2019 Windy Gap water year, which has seen conditions that have varied significantly over the course of the year. Platte River began the water year with slightly more than 1,700 acre-feet of pumped Windy Gap water. However, these supplies were insufficient to supply full reuse operations with the City of Fort Collins. As a result, staff developed a plan to supply a reduced amount of Windy Gap water to the city until the spring, when the Windy Gap Project would pump or C-BT rental water would become available. While the Windy Gap Project did pump in the spring, the above-average snowpack in the region led to the majority of this water spilling from Lake Granby, in July 2019. Fortunately, Platte River was able to secure sufficient rental water from regional water partners via rental options that were secured as part of the Windy Gap unit sales process from the previous two years. Moving into the 2020 water year, it is likely that Platte River and Fort Collins will enter Windy Gap short operations, a special arrangement with the City of Fort Collins for the Reuse Plan and MOU requirements, until either 2020 C-BT rental water becomes available or Windy Gap water pumps. Staff will continue to monitor conditions through the remainder of the 2019 water year and make the necessary preparations for 2020. The Windy Gap Firming Project design phase continues its progress toward final acceptance by the Colorado Division of Water Resources’ Dam Safety Section. Stantec, the Windy Gap Firming Project design engineer, continues to incorporate final comments from the Colorado State Engineer’s Office as well as answering questions from prospective contractors, ahead of the final bid phase. Technical proposals were received in mid-August and are being reviewed by a well-rounded bid review committee that consists of personnel from Northern Water,

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Stantec, Windy Gap Firming Project participant representatives, Black & Veatch (the project construction engineering firm), and a number of subject-matter experts. Final pricing proposals are due from contractors in early October. Meanwhile, broader project activities continue in preparation for construction which is anticipated to begin in 2020. Chimney Hollow site access improvements, Three-Lakes System nutrient mitigation program development and the Colorado River connectivity channel design process are all underway. The current federal court case has been fully briefed and is pending the judge’s ruling. Upon its resolution (assuming a favorable ruling), project construction will begin and last approximately four years. Rawhide Prairie Solar project. DEPCOM has started to mobilize equipment and deliver materials to Rawhide. DEPCOM will begin construction as soon as the final construction permit is issued by Larimer County. Platte River and DEPCOM have agreed to increase the project to a maximum output of 20 MW to 22 MW with an expected first full year delivery amount of 54,160 MWh, due to some project design changes. The battery installation is expected to be a Tesla Megapack with an initial energy storage amount of 2 MWh and maximum charge and discharge rate of 1 MW. Platte River operations will have the ability to fully charge and discharge the battery on a daily basis. At this time, the project is on schedule, with an expected commercial operation date of spring 2020. NextEra generator outlet and Roundhouse wind project status. NextEra received the final remaining approval to construct and operate the Roundhouse wind project and its corresponding generator outlet facilities from the Wyoming Industrial Siting Council, on June 14. NextEra is still working with three property owners to obtain an easement for the remainder of the preferred transmission route. NextEra has recently started to mobilize construction equipment and materials to begin construction in the next few weeks. At this time, the project is ahead of schedule with a commercial operation date expected by the summer of 2020. Resource planning and forecasting. The second quarter power supply plan was recently completed, and the underlying analysis is being used to develop a revised 2020 budget. A few of the key changes being made to the 2020 budget are the inclusion of: (1) the wind option purchased from Roundhouse and the associated sale of Spring Canyon wind through May 31, 2030; (2) two near-term sales to facilitate wind integration; (3) a revised power pricing methodology to rely on explicit hourly prices from our consultant’s regional model, rather than monthly forward prices; and (4) the testing of new lower minimums at Rawhide. The lower minimums have been successfully tested a few times, warranting an update of the model. At the July 2019 board meeting, staff discussed a possible request for proposals (RFP) to procure 50 MW to 150 MW of nameplate solar capacity and its associated energy. Pursuant to the board’s approval, Platte River issued the solar RFP on Sept. 11, 2019. Based on research confirmed by several solar developers, staff understands that the solar investment tax credit (ITC) does not phase out the same way as the wind production tax credit does. We now estimate that the cost of solar will materially increase in 2024 and not 2026, as previously reported at the July board meeting, assuming that the solar ITC is not extended by the federal government. 2020 integrated resource plan (IRP). Platte River staff has spent a significant amount of time developing modeling scenarios and sensitivities which will be included in the IRP study. Platte River consultants have finalized key inputs for planning models which will allow staff to

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complete the planning model build-out and begin running studies. Staff has scheduled community listening sessions in October to get feedback on the IRP.

EV distributed charging study. The board packet contains an interim whitepaper which addresses the first six-month period of the EV study. An update on the status of the study will be presented at the October board meeting. Campus solar project. Namaste Solar, the subcontractor selected for the solar installation on the new headquarters and warehouse buildings, is updating the design drawings based upon as-built specifications, including safety ties, from the building. Construction is scheduled to commence this fall. Quotes for the battery installation have been collected and are being reviewed by project stakeholders.

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Documents

Board of Directors Regular Meeting · 2019-09-19 · Board of Directors Regular Meeting . 2000 E. Horsetooth Road, Fort Collins, CO 80525 . Thursday, September 26, 2019, 9:00 a.m