CELEBRATING STEP SUCCESS

PRESENTED BY:

Rick LunaInterim Director, Technology & Product Innovation

November 18, 2019

In fo rmat iona l Upda te

OBJECTIVES & TAKEAWAYS

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• REVIEW THE HISTORY OF STEP• CELEBRATE ACHIEVEMENT OF OUR

COMMITMENT• HIGHLIGHT THE CUSTOMER & COMMUNITY

VALUE OF OUR INVESTMENT• LOOK AHEAD TO FlexSTEP

AGENDA

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• THE VISION OF STEP• STEP ACHIEVED• BROAD PORTFOLIO OF CHOICES• BENEFITING CUSTOMERS• PROGRAM HIGHLIGHTS• COST RECOVERY & ROI• BENCHMARKING• LOOKING AHEAD

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THE VISION OF STEPAligned with City of San Antonio & Mayor Hardberger’s Mission Verde Initiative• Promoted a sustainability vision for San

Antonio• Placed us at forefront of New Energy Era• Created green jobs locally with new skillsEmbraced Conservation as the “Fifth Fuel”• Created additional diversity to our generation

mix• Avoided need for a power plant• Reduced dependence on fossil fuels

Responding to the community, we developed the STEP Program, a comprehensive energy efficiency & conservation

portfolio of products & services

Natural Gas

Coal

Conservation/Demand Response

Renewables

Nuclear

“The Fifth Fuel”

• Approved by the Board & City Council in 2009• Created an ordinance based on the program

presented• Designed to deliver benefits:

– Delaying or avoiding the need for new generation capacity & transmission infrastructure

– Leverage emerging technologies– Help customers manage their energy

consumption– Support job creation & economic growth– Reduce carbon emission & air pollution

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THE HISTORY OF STEP

Original Presentation to City Council

ENERGY TRANSITION

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2009 Approach(Traditional)

• Large Baseload Assets• 40+ year

commitments• 5-year lead time• $1B+ Investment

2019 Approach(Flexible Path)

• Smaller Investments• More Agile & Dynamic• More Renewables• Energy Storage• New Technologies on

the Horizon

STEP bridged the transition to our diverse generation portfolio and is key to our Flexible Path strategy

STEP

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CUSTOMER EXPERIENCEThe timing of STEP allowed us to leverage the technologies

transforming the industry & the customer experience

Digital Experience

Efficient Technologies

Distributed Generation

Smart Grid

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STEP ACHIEVEDSUCCESS FOR OUR COMMUNITY!!

One year ahead of schedule

More energy savings

Under budget Higher ROI per

dollar invested

We achieved our 771 MW STEP goal in August

$12$32 $60

$99$158

$222$290

$361

$473

$562

$641

$719

40

162221

273318

345 352

463522

620

714

>771

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

0

100

200

300

400

500

600

700

800

900

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

Dol

lars

in M

illio

ns

MW

STEP Cumulative Expenditures STEP Cumulative MWs

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OUR PATH TO SUCCESS

$s Supporting Conservation: STEP < $1B Capital for New Power

Plant + O&M for 30-40 years

STEP has delivered >771 MW without debt or capital spend

for 13 years!

Projected

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HIGHLIGHTSSTEP PROGRAM REVIEW

1.4 TWh of gross electricity savings in FY 2019 - enough energy to power 104,000 Greater San Antonio Area households for the year. Over the life of STEP so far, it has yielded 6.3 TWh of electricity savings.

680 estimated annual jobs and $28 million in annual income from FY 2009 to FY 2019. In total, STEP generated 7,500 local job-years and$312 million in labor income.

3.3 million (short) tons of CO2emissions reductions. Additionally, STEP has reduced SO2emissions by 6.6 million lbs. and NOXemissions by 3.1 million lbs.

Source: ICF, STEP Program Review, November 2019

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INDUSTRY AWARDSTHROUGH THE YEARS

2019 Alliance to Save Energy Chairman’s Award (STEP Program)

2019 American Public PowerAssociation (APPA) Smart Energy Provider

2018 APPA Demonstration of Energy & Efficiency Developments (DEED)

Energy Innovator Award (SAVENOW Programs)

2017 POWERGRID International Project of the Year (Demand Response)

2016 APPA Demonstration of Energy & Efficiency Developments (DEED)

Energy Innovator Award (Solar Programs)

2016 Peak Load Management Alliance Thought Leadership Award (Demand Response)

Our STEP programs have been recognized many times nationally for their thought leadership and innovation

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BROAD PORTFOLIO OF CHOICES

Customers have 20+ product choices, many delivered through partnerships with leading technology providers

Energy Efficiency - Residential• Casa Verde (Weatherization)• Home Efficiency• New Home Construction• Retail Partners• Home Energy Assessments• Schools 2 Home• Cool Roof

Energy Efficiency - Commercial• Commercial & Industrial Solutions• Schools & Institutions• Small Business Solutions• Whole Building Optimization

Demand Response• Commercial & Industrial Demand

Response• Automated Demand Response• Smart Thermostat• My Thermostat Rewards• Reduce My Use

Solar• Solar Rebates• Roofless Solar• Solar Host

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17KSolar Rooftop Systems

300KReduce My UseCustomers

150KSmart Thermostats

236KEnergy Efficiency Rebates

261MWStudents reached through School 2 Home

Demand Response Capacity

BENEFITING CUSTOMERS

We drive tremendous value for our community through diverse programs & partnerships

36K

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DELIVERING ON WEATHERIZATION

(1) as of Sep 30, 2019(2) Income eligibility for Weatherization is based on <200% of federal poverty level

• By end of FY20, we’ll have weatherized 29,000 homes under STEP and ARRA

• Total Weatherization spending to date:

ARRA $ 17.0 MSTEP(1) $125.5 M

$142.5 M• Another 26,000 applied but were

disqualified due to income(2) or structural issues.

Program YearTotal Homes Weatherized

ARRA 3,320 FY 2013 815 FY 2014 3,202 FY 2015 2,956 FY 2016 4,051 FY 2017 3,905 FY 2018 3,624 FY 2019 3,608 FY 2020(1) 2,380

Total 27,861

STEP Annual Reports can be found at:https://www.sanantonio.gov/sustainability/Environment/SaveForTomorrowReports

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STEP COST RECOVERY• We are compensated for STEP

program costs • Expenses are recovered after 3rd party

validation of energy savings• Annual Reports evaluate performance

relative to:– Estimated energy & demand

savings– Cost effectiveness– Recommendations for program

improvements

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TECHNOLOGY TRANSFORMEDLIGHTING EXAMPLE

Technology Technology improvement

+ Declining

cost =

The price at which

customers will adopt

new technology

Sources: energyearth.com, U.S. Department of Energy

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INCREASING RETURN ON INVESTMENT

Since FY 2010, the STEP program has delivered $1.92 ROI for every $1 invested!

1.51

1.72 1.86

2.25

2.68

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Met

ric/

Ind

ex (

1)

FY15 FY16 FY17 FY18 FY19

STEP Return per Dollar InvestedMeasured by Utility Cost Test (UCT)

1.92

(1) Utility Cost Test

$0.48$0.60

$0.97$1.41

$1.90

$2.83

$3.39$3.54 $3.80

$5.08 $5.15

$4.39

$2.78

$0

$1

$2

$3

$4

$5

$6

FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020

Mon

thly

Bill

Im

pac

t ($

)

Fiscal YearMonthly Average

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IMPACT TO CUSTOMER BILLS

Residential Bill Impact from STEPBased on an average of 1,000 kWh/month Everyone pays

for STEP as it provides societal

benefits to all customers and the community

$4.39

$3.48

$1.02$0.76 $0.69 $0.56

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

San Antonio Austin El Paso Dallas Houston Corpus Christi

Mon

thly

Bill

Im

pac

t ($

)

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BENCHMARKINGConservation Programs Bill Comparison (1)

Based on an average of 1,000 kWh/month

(1) Based on an average of 1,000 kWh/month; Bills reflect 12-month average pricing through September 2019. Energy efficiency costs sourced from PUCT tariffs.

We invest significantly more in energy efficiency programs relative to other parts of the state

$140.52

$151.69$154.08 $156.88

$168.88

$175.33

$120

$130

$140

$150

$160

$170

$180

San Antonio Austin El Paso Dallas Houston Corpus Christi

Tota

l Bill

Am

oun

t

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BENCHMARKING

We invest more in energy efficiency programs and still have among the lowest electric and gas bills in Texas

(1) Based on an average of 1,000 kWh/month and 5 MCF/month; Bills reflect 12-month average pricing through September 2019.

Texas Cities Combined Residential Bill Comparison(1)

– Trailing Twelve Months (TTM) September 2019

Electric & Gas Bill

Energy Efficiency

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• Leveraging the success of STEP to create FlexSTEP, our next generation energy management program

• Further expand options available to our customers and support market and economic growth

• Currently, we are packaging options for FlexSTEP based on feedback from stakeholders and customers

LOOKING AHEAD

Thank You

Appendix

MEASURING COST EFFECTIVENESS

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$ Value of Avoided kW & kWh(Avoided fuel costs & plant capital) --------------------------------

$ Program Costs

UCT* =

Continuing to improve performance of the STEP program & provide value to the community

Examples UCTBring Your Own Thermostat 5.67Small Business Solutions 4.20Residential Solar Rebates 3.30C&I Demand Response 2.26New Home Construction 1.47Casa Verde (Weatherization) 0.86Portfolio UCT (FY19) 2.68*UCT (Utility Cost Test)

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GLOSSARY / DEFINITIONSAcronym or Word Definition

APPA American Public Power Association

ARRA American Recovery and Reinvestment Act. Signed into law by President Obama in February 2009.

Casa Verde CPS Energy’s branded version of the Weatherization program, which applies to CPS Energy customers with incomes within 200% of the federal poverty guidelines.

CFL Compact fluorescent light is a fluorescent lamp designed to replace an incandescent light bulb

CO2 Carbon Dioxide

DEED Demonstration of Energy & Efficiency Developments

Demand Response (DR) Demand Response is a change in the power consumption of electric customers to better match the demand for power with the supply. Customers may adjust power demand by reducing or shifting tasks that require large amounts of electric power.

Energy Efficiency (EE) Energy Efficiency is using technology or services that requires less energy to perform the same function.

Fiscal Year (FY) For CPS Energy, February 1 to January 31.

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Acronym or Word Definition

Kilowatt (kW) A measure of capacity to produce electric power. A kilowatt equals 1,000 watts.

Kilowatt Hour (kWh) A measure of energy generated. 1 kWh is equivalent to 1,000 watts.

LED An LED light bulb is an electric light for use in light fixtures that produces light using one or more light-emitting diodes.

Megawatt (MW) A measure of capacity to produce electric power. A megawatt equals 1,000 kilowatts or 1,000,000 watts.

NOx Nitrogen oxide

O&M Operation & maintenance

ROI Return on investment

Solar A solar system employs solar modules to generate electrical power.

SO2 Sulfur dioxide

GLOSSARY / DEFINITIONS

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Acronym or Word Definition

STEP CPS Energy’s Save for Tomorrow Energy Plan (STEP) is an aggressive energy conservation program. The goal of the program is to save 771 MW of electricity between 2009 and 2020.

TTM Trailing twelve months

Terawatt Hour (TWh) A measure of energy generated. 1 TWh is equivalent to 1,000,000 MwH.

Utility Cost Test (UCT) Utility Cost Test measures cost-effectiveness from the viewpoint of the sponsoring utility or program administrator. A UCT>1.0 means avoided capacity and energy costs exceed the costs incurred to operate a program.

Weatherization (WX) Weatherization is the process of modifying a building to reduce energy consumption and optimize energy efficiency.

GLOSSARY / DEFINITIONS