1. Data Work Group(DWG) TEPPC 2026 Common Case - Fuel Prices November 17, 2015 Jamie Austin, PacifiCorp

2. Overview Updating Fuel Prices for the TEPPC 2026 Common Case – Approved Methodology For Natural Gas Prices – Coal and Other Fuel Prices 2

3. TEPPC 2024CC - TAS Approved Transitioning from the Council based Burner-Tip price to Hybrid California Energy Commission (CEC) /Northwest Power & Conservation Council (NPCC) – Use CEC Major and Minor Hub Prices* – Use Council monthly shapes – Use CEC local transport fee* *Note: CEC NAMGas Reference Case June 24, 2013

4. NG: Compare Models NPCCCEC (NAM Gas Model) A regression model based on historic data: Market based Henry Hub Market based Major Hubs Burner-Tip price (EIA-923 data) Based on the World Gas Trade Model (WGTM) with the following changes: Use only North America Reconfigure for a California focus Relationship between Hubs and Burner- Tip is derived econometrically A equilibrium model; Key Drivers: Supply cost curves Price elasticity Producer price Natural gas demand NPCC is a public domain modelCEC can distribute results but not the model

5. NG: Pipeline System & Hubs Henry Hub Major Hubs AECO Sumas Rockies San Juan Permian Minor Hubs Stanfield Malin Topock SoCalGas PG&E CG Burner-Tip:= Henry Hub + Basis to Hub + Local Transport Fee

6. Major Hub Prices: Compare Burner-Tip TEPPC 2024CC Burner-Tip Price Units: $/MMBtu, in 2014 Dollars 20142024 Henry Hub~4.07~5.38 San Juan3.654.83 Permian3.754.90 Rockies3.774.95 Sumas3.754.66 AECO3.734.67 Area2022 Common Case Common Case Incr. Price Proposed Price Proposed Incr. Price PNM6.885.47 APS6.23-0.655.940.47 SCE5.86-0.376.670.73

7. TEPPC 2026 Common Case – Natural Gas Prices Gas and power markets are undergoing revolutionary change – Tremendous growth in natural gas production – Major restructuring of gas transmission systems in Canada, Eastern US, Mexico – Increasingly severe regulation of emissions, including, for the first time, CO2 – Large increases in renewable energy and gas-fired generation with increasing coal-fired plant shut- downs 7

8. Total Energy Supply, Disposition and Prices Outlook For Coal 2015 8 (dollars per million Btu) 201220132014201520162017201820192020202120222023202420252026 Natural Gas Price at Henry Hub 2.793.734.373.693.703.804.214.554.885.025.095.255.355.46 5.67 Coal Price Delivered 2.632.502.41 2.422.442.472.502.542.582.612.652.682.71 2.73 Prices (2013 dollars per unit)

9. Coal & Other Fuel Prices 9

10. Coal Prices ($/MMBtu) EIA (923) 2013 Forecast Ventyx Forecast 2013 Forecast NPCC 2013 Forecast Coal Plants Revised Name201420242014202420142024 Cholla, Springerville, Coronado, Apache & Navajo AZ 2.14 2.072.381.982.03 Pawnee, Comanche, Arapahoe, Valmont, Cherokee, Rawhide, Noxon & Drake CO - East 1.90 1.792.151.621.70 Craig, Hayden, Bonanza & Cameo CO - West 1.90 1.962.141.621.73 Colstrip, & Corrette MT 1.021.331.341.45 Four Corners, San Juan & Escalante NM 2.41 2.342.201.922.10 Reid Gardner & North Valmy NV 2.88 2.513.112.322.57 Boardman & Centralia PNW 2.31 2.142.611.531.75 Hunter, Huntington, Carbon UT 1.91 1.651.911.531.77 Dave Johnston & Laramie River WY - E 1.47 1.021.491.061.26 Wyodak, Wygen & Simpson WY - PRB 0.70.951.061.28 Bridger & Naughton WY - SW 1.962.071.061.30 PAC 2013 IRP has $1.70/MMBtu for Medium-Average-System Coal Fuel Cost (2014 nominal $), compared inequivalent to: $1.33 Ventyx, $1.69 eia and $ 1.18 NPCC). Other Fuel Prices TEPPC 2024CC - Coal Prices (2014 Dollars)

11. TEPPC 2024CC – Other Fuel Prices NPCC Forecast (2014 Dollars) Fuel IDFuel NameFuel TypeFuel Units20142024202520302035 BMASWoody ResidueBIO2014 $/MMBtu2.972.682.662.55 UDFOUtility distillate fuel oilFO2014 $/MMBtu20.3320.9621.0621.5221.61 UDFOUtility distillate fuel oilFO2014 $/MMBtu25.1127.9528.1629.1929.31 UDFOUtility distillate fuel oilFO2014 $/MMBtu16.2713.2113.0512.2912.33 PetCokePetroleum CokePC2014 $/MMBtu1.281.31 1.33 REFURefuseREF2014 $/MMBtu-1.05 URANUraniumUR2014 $/MMBtu0.720.81 0.79 LandfillGasLandfill gasLFG2014 $/MMBtu2.10

12. Forecasting Delivered Coal & Other Fuel Prices Data sources for delivered coal prices – Energy Information Administration (EIA) publishes delivered coal prices per mmBtu for regulated power plants EIA delivered coal prices are not a good basis for forecasting future prices – Current delivered coal prices reflect contract price for coal and freight, not market price – Power companies dispatch coal plants based upon market price 12

13. Range of Delivered Coal Prices EI A – Outlook For Coal 2015, 2013 Dollars 2015 average coal price by state ranges from $13.70 to $39.30 per MWh – 11 states have delivered coal prices below $2.00 per mmBtu – $20 per MWh – 10 states have delivered coal prices above $2.80 per mmBtu - $28 per MWh 13

14. US Coal Market Price have been Falling Outlook For Coal 2015 Since mid-2014, all regional prices are down 15% - 25% – CAPP 12,500 Btu rail below $45; PRB 8,800 Btu down to $10 per ton 14

15. Markets Expect Continued Gas Supply Growth Outlook For Coal 2015 Balanced market price used to be about $4.00 per mmBtu at Henry Hub – Above-normal storage would push prices down; below-normal would cause spike Growing gas supply has changed the balanced-market price – Long-term gas futures have fallen below $3.50 per mmBtu – Is $3.00 the new normal gas price? 15

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