Quarterly Commission Update 1/8/19
Powering our way of life.
Power Production
Department Purpose and Goal
Purpose: Provide safe, secure, economical, reliable and compliant power generation under the Priest Rapid Project Federal Energy Regulatory Commission (FERC) License Project No. 2114 while supporting the Wanapum relationship.Goal: Execute the aforementioned tasks while championing a culture of safety and operational excellence with continuous focus on the guiding values of safety, innovation, service, teamwork, respect, integrity, and heritage.
Acronym List
• PP – Power Production• HPI – Human Performance Improvement• FOP – Forced Outage Percentage (unavailability as
classified as non operational due to an unexpected breakdown)
• RPIW – Rapid Process Improvement Workshop• PM – Preventative Maintenance• ODSP – Owners Dam Safety Program• PRRE – Priest Rapids Right Embankment
2018 Q4 Review
• Safety Update• PP Performance• Budget Review• Lean• Maximo Update• Q1 Forecast• HPI Update
Safety Update
65%
70%
75%
80%
85%
90%
95%
100%
105%
January February March April May June July August September October November
2018 PP Safety Meeting Attendance
Safety Update
Safety Update
PP Performance
60.00%
65.00%
70.00%
75.00%
80.00%
85.00%
90.00%
January February March April May June July August September October November December
2018 Availability By Month
Priest Wanapum Project Target
PP Performance
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
January February March April May June July August September October November December
2018 PP Forced Outage Percentage
Priest Wanapum Project Target
2018 Budget and ActualsCapital O&M
Budget $66,816,703 Directs $20,950,354
Actual $54,164,532 $16,768,157
Remain $12,652,171 $4,182,197
Budget $8,383,939 Labor $16,736,478
Actual $5,733,247 $19,811,972
Remain $2,650,692 -$3,075,494
Budget $75,200,642 Total $37,686,832
Actual $59,897,779 $36,580,129
Remain $15,302,863 $1,106,703
LEAN Update• Completed mapping and data gathering on current state of 2 processes
(switching and clearances and preventative maintenance
• Created vision of future state of both
• Identified and prioritized 6 areas of improvement for both (process standardization, clearance building, roles standardized, production boards, multi-week schedules)
• Will complete improvement events (RPIW)
• Strategic Plan Key Objective 1
• Lean puts customer needs first
• Lean empowers the people doing the work
Key Lean PrinciplesContinuous ImprovementThe relentless pursuit of reducing waste and increasing customer value
Respect for PeopleManagement system that is respects customers and employees
Relying on the expertise of the people who do the work to shape how the work is done
Creating problem solvers at ALL levels of the organization
PR Value Stream Current State Maps
Electronic Timekeeping
- Benchmarking evidence
- 1/25 pilot kick off at Priest Rapids
- Labor management discussions
- Understanding Payroll Needs and Financial Software Inputs
(time codes, etc)
Q1 Forecast
- Succession Planning (multiple retirements)
- ODSP Peer Review
- PRRE work
- Continuing to work on emergency procedures (testing, hatcheries, etc)
- Wanapum 07 outage warranty work on rotor, Priest 02 outage update,
Wanapum 08 returned to service
HPI Update
- Training ongoing with leadership
- Rollout to others
- Incorporating and complimenting
Powering our way of life.
Grant PUD Commission Meeting – January 8, 2019
Grant PUD Lands & Recreation 2019 Q1 Business Report
Powering our way of life.
Departmental Purpose and Goal• Purpose: Fulfill certain regulatory obligations under the District’s
FERC license, provide real estate support services for the District, and manage the District’s geographic information system (GIS) program.
• Goal: Execute the aforementioned tasks and services in light of the District’s Strategic Plan objectives related to maintaining a strong financial position, providing long-term low rates, providing excellent customer service, and attaining environmental compliance.
2018 Business Review• Safety
• Non-recordable incidents = 6• Recordable incidents = 0• Safety meeting attendance = 100%
• Regulatory Review• FERC filings by Grant PUD = 3• Submitted on time = 3• FERC approvals/orders = 6• Summary/listing of major filings:
• FERC approval of Riverstone Marina (non-project use of project lands)• FERC approval of EOTs to file PR Water Trail As-Builts and construct Wanapum Lower
Boat Launch (pending RRMP approval and liquefaction studies)• Grant PUD files Crescent Bar As-Builts
2018 Business Review• Projects & Work Activities
• Recreation site operations and maintenance• Watershed weekend success• Installed 17 picnic shade shelters• Completion of Crescent Bar’s Riverbend Boat
Launch• Start-up of Crescent Bar water/wastewater
systems• Recreation monitoring surveys• Continued encroachment removals• PR Right Embankment project support• 2019 Shoreline Management Plan update • Supported revamp of Grant PUD website• Began working with Columbia Cliffs
community for shoreline compliance
YTD budget-to-actuals (through November 30)
2018 BudgetActuals as of
11/30/18Budget
Remaining
% of Budget Spent Q4 YEP
% Budget to YEP
CAP $7,540,673 $525,092 $7,015,581 6.96% $8,745,498 115.98%
O&M $1,172,290 $1,039,497 $132,793 88.67% $1,633,818 139.37%
Labor $1,067,854 $1,058,184 $9,670 99.09% $1,067,854 100.00%
TOTAL $9,780,817 $2,622,773 $7,158,044 26.82% $11,447,170 117.04%
2019 Q1 Forecast• Planned Projects & Work Activities
• Central Washington Management Group contract• SMP update consultation / Board review and request for approval• Crescent Bar Well 1B drilling• Crescent Bar swales, Teal Rd. crosswalk, rock placement• Contracting for PRRA maintenance dredging• Columbia Cliffs Public Recreation Development Plan• Encroachment removal/prep for spring restoration activities• Continue real estate, vegetation management, and GIS support • Evaluate long-term facility maintenance programs• Recruitment for open Lands Specialist position
2019 Q1 Forecast• Safety Goals
• Non-recordable incidents = 0• Recordable incidents = 0• Safety meeting attendance =
100%• Regulatory Outlook
• Anticipated FERC filings = 2• Anticipated FERC approvals = 1
(RRMP)• Any regulatory threats or risks =
none known/anticipated
2019 Q1 Forecast• Potential Management Challenges
• District use of Sunland Estates Lot 51 • Agricultural leasing of project lands
• Potential Efficiency Opportunities• Succession planning• Crew support for rec site O&M, vegetation management,
encroachment removals
Q1 Spotlight – Crescent Bar
Crescent Bar history…• 1962 – Leased to the Port of Quincy
• 1973 – Residential development begins
• 2010 – Commission votes to expire lease with Port of Quincy
• 2011 – Island residents sue Grant PUD for right to stay
• 2015 – Commission votes to approve settlement agreement, litigation ends, 80% of island returned to public use
• 2016 – Fair market rent payments and recreation construction begins
• 2018 – Renovation of Crescent Bar Recreation Area completed
Before – Oct. 20, 2016
Before – August 2016
After – June 1, 2018
After –Chinook Park
After –RiverbendPark
Water/wastewater system upgrades
Financials – capital expenses (2009-2018)
• Capital spending to date (through 11/28/18) $35,996,994• Estimated remaining capital expenditures ~$350,000• Total estimated capital costs $36,346,994*
*Does not include the cost of financing or long-term capital upgrades. *Does not consider water/wastewater cost share reimbursement from leaseholders.
2018 Crescent Bar O&M Expenses and RevenuesCWMG Expenses Grant PUD Expenses Total Expenses Grant PUD Revenues
Campground and day-use areas $ 223,877 $ 223,877 $ 113,243 Marina & fuel $ 36,647 $ 75,259 $ 112,407 $ 110,311 Golf course $ 251,795 $ 251,795 $ 112,407 Admin, overhead, etc.* $ 345,829 $ 345,829 Other O&M (public works repairs, security) $ 243,905 $ 243,905 Grant PUD labor (L&R/LRMs) $ 55,697 $ 55,697 Leases $ - $ 1,460,442 WS/WWTP payments $ - $ -Special events $ - $ 17,145 Total 2018 $ 858,148 $ 374,861 $ 1,233,510 $ 1,813,548 *excludes taxes
CWMG Expenses Grant PUD Expenses Total Expenses Grant PUD RevenuesCampground and day-use areas 409,131$ 409,131$ 125,000$ Marina & fuel 73,198$ 80,000$ 153,198$ 110,000$ Golf course 507,047$ 507,047$ 115,000$ CWMG admin, overhead, etc.* 294,492$ 294,492$ Non-CWMG O&M (public works repairs, security, office trailer rental) 281,000$ 281,000$ Grant PUD staff labor (L&R, LRMs) 55,120$ 55,120$ Leases -$ 1,532,712$ WS/WWTP payments -$ 581,884$ Special events -$ 20,000$ Total 2019 1,283,868$ 416,120$ 1,699,988$ 2,484,596$ *excludes taxes
2019 Crescent Bar Estimated Expenses and Revenues
2018
2018 Crescent Bar O&M Expenses and Revenues
CWMG ExpensesGrant PUD ExpensesTotal ExpensesGrant PUD Revenues
Campground and day-use areas$ 223,877$ 223,877$ 113,243
Marina & fuel$ 36,647$ 75,259$ 112,407$ 110,311
Golf course$ 251,795$ 251,795$ 112,407
Admin, overhead, etc.*$ 345,829$ 345,829
Other O&M (public works repairs, security)$ 243,905$ 243,905
Grant PUD labor (L&R/LRMs)$ 55,697$ 55,697
Leases$ - 0$ 1,460,442
WS/WWTP payments$ - 0$ - 0
Special events$ - 0$ 17,145
Total 2018$ 858,148$ 374,861$ 1,233,510$ 1,813,548
*excludes taxes
2019
2019 Crescent Bar Estimated Expenses and Revenues
CWMG ExpensesGrant PUD ExpensesTotal ExpensesGrant PUD Revenues
Campground and day-use areas$ 409,131$ 409,131$ 125,000
Marina & fuel$ 73,198$ 80,000$ 153,198$ 110,000
Golf course$ 507,047$ 507,047$ 115,000
CWMG admin, overhead, etc.*$ 294,492$ 294,492
Non-CWMG O&M (public works repairs, security, office trailer rental)$ 281,000$ 281,000
Grant PUD staff labor (L&R, LRMs)$ 55,120$ 55,120
Leases$ - 0$ 1,532,712
WS/WWTP payments$ - 0$ 581,884
Special events$ - 0$ 20,000
Total 2019$ 1,283,868$ 416,120$ 1,699,988$ 2,484,596
*excludes taxes
Central Washington Management Group• Selected through a Request for Proposals process conducted in spring 2018• Demonstrated expertise (Crescent Bar O&M since 2016)• Positive relationship with Grant PUD staff, recreating public, and Crescent
Bar residents• Allows time for continued evaluation of long-term O&M strategy• Contract price ~$450K annual increase
• Added maintenance work - Chinook Park, well houses, and wastewater plant• Added bonding and insurance costs
Questions?
GCPUD Enterprise RiskQ1 2019 Update
Agenda• Current Business• Strategic Market Risks• Capital Planning Support• Risk Appetite• Work plan – Schedule
Adjustments
GCPUD ERM: Current Business
• Insurance brokerage RFP
• Insurance process improvement
KEY DETAILSThe Risk Department budget is dominated by insurance premiums.
GCPUD ERM: Current Business
• 2019 Budget
KEY DETAILSThe Risk Department budget is dominated by insurance premiums.
Strategic Market Risk
Premium Power Prices: Gas Power
KEY DETAILSNatural gas prices have informed premium power prices across America for decades.
Premium Power Prices: Gas Power
KEY DETAILSFour-year-average storage numbers suggest there is a practical top informing production behavior.
Strategic Market Risk: Gas Supply
KEY DETAILSThe last 15 years’ storage data seems to clarify the pre-and post-fracking paradigms.
Strategic Market Risk: Gas Supply
KEY DETAILSHenry Hub gas prices seem responsive to the gas top.
Strategic Market Risk: Gas Supply
KEY DETAILSMid-Columbia power prices seem responsive to the gas prices.
Strategic Market Risk: Gas Supply
KEY DETAILSRising production costs and apparently capped wholesale power prices have put a squeeze on the traditional value of hydro generating assets.
Strategic Market Risk: Gas Supply
KEY DETAILSThe 2018 rate forecast suggests GCPUD’s retail service rates offer revenue potentially as good as wholesale markets were in their heyday.
Strategic Market Risk: Gas Supply
KEY DETAILSThe recent typical wholesale gross margin is represented in the turquoise arrow, and current gas market fundamentals offer little to suggest this will change in the District’s current planning horizon.
Strategic Market Risk: Gas Supply
KEY DETAILSWith continual improvements in operation and business execution, growth in the volume of retail rates paid may offer ratepayers greater stability.
Capital Planning Support
GCPUD ERM: Capital Planning Support
• Enterprise Risk Data will collect and refresh data used to inform risk-based decision-making
• Continued practice should result in gradually higher quality data
KEY DETAILSUse of the data encourages its review and cements its value to those submitting it; refreshing the data with audit findings better supports future decision-making.
GCPUD ERM: Capital Planning Support
• Enterprise Risk Data supports Capital planning ands allocation
KEY DETAILSUse of the data encourages its review and cements its value to those submitting it; refreshing the data with audit findings better supports future decision-making.
GCPUD ERM: Internal Audit Feedback
• Enterprise Risk Data supports Audit planning
• Successful capital projects should alter the organizational risk profile, in total
KEY DETAILSUse of the data encourages its review and cements its value to those submitting it; refreshing the data with audit findings better supports future decision-making.
Capital Integration – 2017 Risks
ALIGNMENT ANALYSISAlignment between the risks present to the team and capital allocation is sure to produce benefits.
Capital Integration – 2018 Capital
ALIGNMENT ANALYSISAlignment between the risks present to the team and capital allocation is sure to produce benefits.
Capital Integration – 2018 Risks
ALIGNMENT ANALYSISAlignment between the risks present to the team and capital allocation is sure to produce benefits.
Capital Integration – 2019 Capital
ALIGNMENT ANALYSISAlignment between the risks present to the team and capital allocation is sure to produce benefits.
Risk Appetite
GCPUD ERM: Risk Capacity
• Analyze financial forecast and operational capital for top-down approach
• Include free cash flow, prioritization of eligible projects for delay
KEY DETAILSHigh-level targets and day-to-day practices should conform to one another. Checking our risk capacity and appetite is one of those ways we can assure fit.
GCPUD ERM: Imputed Risk Appetite• Hydro event - $2.5mm• ES event - $6.3mm• Environmental - $2.5mm• Facilities - $2.5mm• Fleet - $2.0mm• Tech - $5mm• Wholesale - $10mm• Retail - $9mm
$16mm
KEY DETAILSThat the imputed risk appetite is less than the capacity speaks to a conservative management philosophy.
Work Plans
Work Plan
PROGRESSDemonstrate measurable accomplishment of goals with demonstrable value to the District.
• By end of 2019:Q1• 2018 Major risk analysis
• By end of 2019:Q2• Financial function risk framework
• By end of 2019:Q3• Task-based ERM Platform
• By end of 2019• Integration report – Audit, Capital activity
Thank you.Devon WilliamsRisk Manager
[email protected] grantpud.org
Powering our way of life.
2018 Q4 NERC Compliance Update
NERC Compliance
Compliance Overview
NERC BackgroundGrant ProgramPast Performance The Path Forward
Authorities
Federal Energy Policy Act of 2005• Tasked FERC to develop an Electric Reliability Organization • NERC executed delegation agreements with Regional Entities • Regional Entities carry out Electric Reliability Compliance activities• Registered Entities required to meet Reliability Compliance Standards
FERC NERC WECC Grant
NERC Compliance Scope
Bulk Electric System (BES)• Transmission elements at 100kV or higher• Real Power and Reactive Power connected at 100kV or higher
Operations and Planning• System operations• System planning• Maintenance• Continuity and Recovery
Critical Infrastructure Protection• Cyber Security• Physical Security• Continuity and Recovery
Grant PUD Compliance Organization
CIP Senior Manager: Kevin
Marshall
CFO: Jeff Bishop
RC Manager: TBD
(Interim)
Compliance Specialist:
Karla Weaver
RC Internal Auditor:
Alex Ybarra
Grant PUD Compliance Program
$369,488
$47,400
$302,088
$20,000
$205,674
$7,645
$178,230
$19,799
$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
Total O&M Labor Travel and Training
2018 Budget
Budget Actual
Grant PUD Violation History
0
2
4
6
8
10
12
2013 2014 2015 2016 2017* 2018
Self Report Audit Finding
* Pending adjudication from WECC Enforcement
$176,000$49,500
$45,000 $15,000TBD
$0
Compliance Violation Impacts
Penalties and Sanctions• Up to $1M/violation/day• $275,500 in penalties to date
Mitigations• Violations must be mitigated• Failure to mitigate will incur further penalties and sanctions
Cumulative Impacts• Violation history influences penalties and sanctions• Risk-based enforcement
Self-Report: CIP-010-2 R3.1• GCPD did not conduct Vulnerability Assessments by the due date• Self-Report and mitigation plan submitted
2018 Accomplishments
Participated in WAPA Rocky Mountain Region mock audit• Increased technical and audit knowledge• Information sharing• Network building
Aligned Standard Owners to org chart where practicalParticipated in the Reliability and Security Workshop Initiated Requirement-based internal controls program
2018 Goals
Update Internal Compliance Program RACI modelAlign responsibilities to positions
Begin Internal Controls ProgramIdentify and mitigate potential failure pointsMeasure against controls rather than StandardsCompliance becomes a byproduct
Meet external reporting requirementsQuarterly to NERCQuarterly and Annual to WECC
2018 Work Plan
Q1 Align Responsibilities• Formalize RC Staff Position changes• Standard ownership at appropriate level
Q2 Complete Standard Teams• All Standard Owners “onboarded”• Subject Matter Experts assigned to teams
Q3 Internal Controls Development• Driven by Standard Owners• Supported by RC Staff and Archer Security Group• Developed at Requirement level
Q4 Internal Controls Review• Conducted by RC Staff and external parties as appropriate
Internal Controls Plan
Work with Standard Owners and SMEs to develop internal controls for each NERC requirement
• No single points of failure• Documented in Controls Matrix
RC Staff will review internal controls • Ideally with assistance from WECC
Internal audit focused on controlsRoot Cause Analysis and After Action Review will be conducted and
documented on all controls violationsControls scheme will identify areas of compliance risk prior to violation
2019 First Quarter – Self Certification
Annually WECC requires GCPD to Self-Cert whether we were compliant in 2018 of some Standard Requirements
• All RSAWs and evidence of compliance will be reviewed by SOs• R&C Staff will conduct final review
GCPD’s internal compliance program requires all Standard Requirements be self-certified
2018 Accomplishments/Challenges
Personnel• 1 FTR on RC Staff• 1 FTR position filled (Q4)• 1 FTR in approval process• CIP Standard Owners and SMEs changes• Mitigation: Reliability and Compliance consultant• Mitigation: Evaluating technology efficiencies
FERC Commissioners• Anticipate complete turnover of FERC Commission from 2016-2018• Unknown agenda and viewpoints• Mitigation: Remain active in industry groups• Mitigation: Ensure internal controls exceed minimum standards
WECC Support• Provides assistance and guidance on internal controls programs• WECC CEO resigned to accept NERC CEO position• WECC hired a new Director of Compliance• Mitigation: Reliability and Compliance consultant• Mitigation: Peer support with other utilities• Mitigation: Active participation in Western Interconnection Compliance Forum (WICF)
Powering our way of life.
2019-01-08 Power Production Performance ReportSlide Number 1Department Purpose and GoalAcronym List2018 Q4 ReviewSafety UpdateSafety UpdateSafety UpdatePP PerformancePP Performance2018 Budget and ActualsLEAN UpdateKey Lean PrinciplesSlide Number 13Electronic TimekeepingQ1 ForecastHPI UpdateSlide Number 17
2019-01-08 Lands and Recreation Program ReportSlide Number 1Departmental Purpose and Goal2018 Business Review2018 Business ReviewYTD budget-to-actuals (through November 30)2019 Q1 Forecast2019 Q1 Forecast2019 Q1 ForecastSlide Number 9Slide Number 10Before – Oct. 20, 2016Before – August 2016After – June 1, 2018After –�Chinook Park �After – �Riverbend�ParkWater/wastewater system upgradesFinancials – capital expenses (2009-2018)Slide Number 18Slide Number 19Slide Number 20Slide Number 21
2019-01-08 Enterprise Risk Program ReportGCPUD Enterprise RiskAgendaGCPUD ERM: Current BusinessGCPUD ERM: Current BusinessStrategic Market RiskPremium Power Prices: Gas PowerPremium Power Prices: Gas PowerStrategic Market Risk: Gas SupplyStrategic Market Risk: Gas SupplyStrategic Market Risk: Gas SupplyStrategic Market Risk: Gas SupplyStrategic Market Risk: Gas SupplyStrategic Market Risk: Gas SupplyStrategic Market Risk: Gas SupplyCapital Planning SupportGCPUD ERM: Capital Planning SupportGCPUD ERM: Capital Planning SupportGCPUD ERM: Internal Audit FeedbackCapital Integration – 2017 RisksCapital Integration – 2018 CapitalCapital Integration – 2018 RisksCapital Integration – 2019 CapitalRisk AppetiteGCPUD ERM: Risk CapacityGCPUD ERM: Imputed Risk AppetiteWork PlansWork PlanThank you.
2019-01-08 NERC-WECC R&C Program ReportNERC ComplianceCompliance OverviewAuthoritiesNERC Compliance ScopeGrant PUD Compliance OrganizationGrant PUD Compliance ProgramGrant PUD Violation HistoryCompliance Violation Impacts2018 Accomplishments2018 Goals2018 Work PlanInternal Controls Plan2019 First Quarter – Self Certification2018 Accomplishments/ChallengesSlide Number 15