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2021 SPS New Mexico Integrated Resource Plan: 3rd Public Advisory Meeting
January 12, 2021

© 2020 Xcel Energy

1

© 2020 Xcel Energy

Topics For Discussion
· Introduction to the New Mexico Integrated Resource Plan · New Mexico Energy Efficiency and Load Management Programs · Sales and Load Forecasting · Questions and Discussion · Future Meeting Topics · Next IRP Public Meeting

© 2020 Xcel Energy

2

Introduction To The New Mexico Integrated Resource Plan
· Scope ­ Effective April 16, 2007, the NM IRP applies to all electric utilities subject to the NM Public Regulatory Commission's jurisdiction over integrated resource planning
· Objective ­ The purpose of the IRP is to set forth the Commission's requirements for the preparation, filing, review and acceptance of integrated resource plans by public utilities supplying electric service in New Mexico in order to identify the most cost-effective portfolio of resources to supply the energy needs of customers.
· Task ­ Public utilities supplying electric service to customers shall file an IRP, along with an action plan, with the commission every 3 years

© 2020 Xcel Energy

3

Introduction To The NM IRP Continued...
· Contents of the IRP
1) Description of existing electric supply-side and demand-side resources 2) Current load forecast as described in this rule 3) Load and resources table 4) Identification of resource options 5) Description of the resource and fuel diversity 6) Identification of critical facilities susceptible to supply-source or other failures 7) Determination of the most cost-effective resource portfolio and alternative portfolios 8) Description of public advisory process 9) Action plan, and 10) Other information that the utility finds may aid the commission in reviewing the utility's planning processes

· A copy of the current IRP rule can be found at the following link:

http://164.64.110.239/nmac/parts/title17/17.007.0003.htm

© 2020 Xcel Energy

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SPS NM ENERGY EFFICIENCY AND LOAD MANAGEMENT PROGRAMS
Jeremy Lovelady | Senior Regulatory Analyst
January 12, 2021

© 2020 Xcel Energy

5

OVERVIEW
· Efficient Use of Energy Act (EUEA) Updates · Recent EE/LM Plan Filing & Outcome · 2020-2022 Approved Program Forecasts · Upcoming Plan Filings

EFFICIENT USE OF ENERGY ACT (EUEA) HISTORY
· 2013 Legislation - SPS is required to achieve savings of no less than 8% of 2005 total retail kWh to New Mexico customers in 2020 as a result of energy efficiency and load management programs implemented starting in 2007
 SPS met the requirement following the 2018 savings evaluation (8.06%)
 SPS also met the requirement following the 2019 savings evaluation (8.54%)
· 2019 Legislation - SPS is required to achieve savings of no less than 5% of 2020 total retail kWh sales to New Mexico customer classes that have the opportunity to participate in calendar year 2025 as a result of energy efficiency and load management programs implemented in years 2021 through 2025

RECENT EE/LM PLAN FILINGS
· NMPRC Rule Change in 2017
 Required Utilities to file Triennial Plan Filings- Staggered
· SPS filed May 15, 2019
 Covered Plan Years 2020-2022  Removal of LM offerings  Saver's Switch, Thermostats, ICO  Addition of Heat Pump Water Heaters  Settlement- Final Order on Feb 19, 2020  Small program changes  Additional Market Research funding for Potential Study

2020 APPROVED PROGRAM FORECAST

2020 Residential Segment
Energy Feedback Heat Pump Water Heaters Home Energy Services: Residential and Low Income Home Lighting & Recycling Residential Cooling School Education Kits Smart Thermostats Residential Segment Total

Electric Budget

Net Customer
kW

Net Customer
kWh

$143,485 $44,500 $2,193,861 $1,199,817 $43,040 $145,417 $142,500 $3,912,620

866 25 904 973 39 10 0 2,785

4,720,924 185,716
8,963,155 5,642,488
125,177 376,378 825,149 20,853,234

Business Segment Business Comprehensive
Business Segment Total

$4,798,684 $4,798,684

2,263 15,985,365 2,263 15,985,365

Planning and Research Segment Consumer Education Market Research Measurement & Verification Planning & Administration Product Development
Planning & Research Segment Total PORTFOLIO TOTAL

$200,000 $110,000 $15,000 $285,000 $190,000 $800,000 $9,511,304

0 0 0 0 0 0 4,985

0 0 0 0 0 0 36,885,682

2021 APPROVED PROGRAM FORECAST

2021 Modified by Settlement Residential Segment Energy Feedback Heat Pump Water Heaters Home Energy Services: Residential and Low Income Home Lighting & Recycling Residential Cooling School Education Kits Smart Thermostats Residential Segment Total

Electric Budget

Net Customer
kW

Net Customer
kWh

$143,485 $78,500 $2,213,861 $1,169,217 $43,040 $145,917 $122,500 $3,916,520

778 45 904 951 39 10 0 2,733

4,291,520 337,666
8,963,155 5,514,523
125,177 376,378 698,746 20,320,915

Business Segment Business Comprehensive
Business Segment Total

$5,682,482 $5,682,482

2,764 19,763,161 2,764 19,763,161

Planning and Research Segment Consumer Education Market Research Measurement & Verification Planning & Administration Product Development
Planning & Research Segment Total PORTFOLIO TOTAL

$200,000 $360,000 $15,000 $290,000 $190,000 $1,055,000 $10,654,002

0 0 0 0 0 0 5,425

0 0 0 0 0 0 40,134,737

2022 APPROVED PROGRAM FORECAST

2022 Modified by Settlement Residential Segment Energy Feedback Heat Pump Water Heaters Home Energy Services: Residential and Low Income Home Lighting & Recycling Residential Cooling School Education Kits Smart Thermostats Residential Segment Total

Electric Budget

Net Customer
kW

Net Customer
kWh

$144,485 $68,500 $2,163,861 $1,158,151 $68,540 $166,417 $82,500 $3,852,454

708 57 904 914 39 10 0 2,637

3,947,163 422,082
8,963,155 5,300,679
125,177 376,378 742,417 19,890,259

Business Segment Business Comprehensive
Business Segment Total

$5,741,548 $5,741,548

2,797 20,111,128 2,797 20,111,128

Planning and Research Segment Consumer Education Market Research Measurement & Verification Planning & Administration Product Development
Planning & Research Segment Total PORTFOLIO TOTAL

$200,000 $360,000 $15,000 $295,000 $190,000 $1,060,000 $10,654,002

0 0 0 0 0 0 5,363

0 0 0 0 0 0 40,052,074

UPCOMING PLAN FILINGS
· 2021 Limited Filing
 Filing of SPS's proposed EUEA goal ­ based on 2020 Sales  Present Potential Study  Update PY 2022 program offerings and goals
· SPS 2022 Triennial Plan Filing
 Covering PY 2023-2025  Program updates/inclusions based on Potential Study recommendations.

CONTACT INFORMATION
Jeremy Lovelady: 303-294-2201 Jeremy.m.lovelady@xcelenergy.com

Southwestern Public Service Company Sales and Load Forecasting
New Mexico Resource Plan Public Advisory Meeting January 12, 2021

Agenda · Energy and peak demand forecasting process · Forecast assumptions · Energy and peak demand forecast results
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FORECASTING PROCESS
· Develop 30-year forecasts of monthly customers, sales, and peak demand.
· Regression analysis, trend analysis, input from Account Management, contract terms, and load factor analysis.
· Includes adjustments for demand-side management, electric vehicles, individual large customer information.
· Retail sales are forecast by major class and by state. · Retail peak demand is forecast at the aggregated company level. · Wholesale sales and peak demand are forecast by individual
customer.
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REGRESSION ANALYSIS
A statistical process for estimating the relationship between monthly sales (or customers or demand) and explanatory variables such as economics, weather, customers, and price of electricity. The regression analysis result is an equation that weights the explanatory variables.
- For example: Residential Sales = (C1 x Personal Income per Household) + (C2 x heating weather) + (C3 x cooling weather)
Once a statistical relationship is established from historical data, the relationship is applied to the forecast of the explanatory variables to derive a forecast.
Strengths: industry standard, robust, test results, defines relationships, adaptable/flexible.
Weaknesses: historical relationships can change, limited by available data, extremes can create challenges.
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Assumptions

Economic and Demographic Assumptions
Economic and demographic data obtained from IHS Markit (both historical and forecast) for U.S., state and counties. County level data is aggregated to service territory. Economic and demographic variables used in modeling include service area employment, households, personal income, population, and Gross County Product; U.S. Gross Domestic Product, and oil and gas extraction and drilling index. Current economic outlook shows significant COVID-19 impacts in 2020 with impacts moderating through 2024/2025.
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Texas and New Mexico Service Area Gross County Product Growth

10.0% 5.0% 0.0% -5.0%
-10.0% -15.0%

Service Area Gross County Product Annual % Change

Service Area Gross County Product is expected to return to pre-pandemic levels by late 2023 (NM) and in 2025 (TX).

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041

Texas New Mexico
Source: IHS Markit
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2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041

Texas and New Mexico Job Growth

8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0%

Service Area Employment Annual % Change

Source: IHS Markit

Texas New Mexico

Service Area Employment is expected to return to pre-pandemic levels by mid-2022.
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2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041

Oil and Gas Extraction and Drilling
Industrial Production Index - Oil & Gas Extraction & Drilling; Annual % Change
20.0% 15.0% 10.0%
5.0% 0.0% -5.0% -10.0% -15.0%
Source: IHS Markit

Oil & Gas extraction and drilling continues, but at a slower rate of growth than seen historically.
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Weather Assumptions
Weather data is collected from NOAA for Amarillo, Lubbock, and Roswell. Forecast assumes normal weather defined as 30-year rolling average.
· Includes temperature, Heating Degree Days (HDD), Cooling Degree Days (CDD), and precipitation.
· Historical sales and peak demand are weather normalized for variance analysis.
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Electric Vehicle Forecast Process
· Adoption scenarios through 2035 developed using several different modeling techniques (Bass Diffusion and Econometric models).
· Models based on annual data through 2019. · COVID and Recession reduces the new EV sales as well as the average miles
driven.
· Forecast includes light, medium and heavy-duty vehicles. · Peak demand impact is based on hourly charging curve.
· Charging profile switches from Unmanaged to Managed in 2022.
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Electric Vehicle Sales and Loads

Cumulative # of EV Sales

Consumption (MWh)

Peak Demand

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

LDV
525 650 887 1,463 2,960 4,603 6,239 8,402 11,360 15,642 21,739 30,244 41,656 56,894 77,031 101,887 128,099

MDV
0 0 0 0 18 62 137 247 396 568 763 1,001 1,266 1,559 1,879 2,228 2,606

HDV

Total

LDV

MDV

HDV

Total

% of Retail Sales

MW

% of Retail Peak

1

526

1,897

0

65

1,963

0.0%

0

2

652

2,287

1

268

2,556

0.0%

0

5

892

3,206

2

642

3,851

0.0%

0

9

1,472

4,905

7

1,224

6,136

0.0%

1

22

3,000

9,236

309

2,665

12,210

0.1%

1

47

4,712

15,797

1,298

5,816

22,911

0.1%

3

88

6,463

22,649

3,182

11,229

37,059

0.2%

4

156

8,804

30,586

6,118

20,228

56,932

0.2%

6

257

12,013

41,288

10,233

34,135

85,657

0.4%

9

393

16,603

56,417

15,317

53,525

125,259

0.5%

13

551

23,053

78,103

21,149

77,164

176,416

0.7%

18

746

31,991

108,615

28,062

105,092 241,768

1.0%

25

966

43,889

150,234

35,900

136,707 322,841

1.3%

34

1,215

59,668

205,919

44,541

171,354 421,813

1.7%

46

1,492

80,403

279,836

53,982

208,830 542,648

2.2%

61

1,799

105,915 373,852

64,237

249,084 687,173

2.7%

79

2,133

132,838 480,561

75,328

292,442 848,330

3.3%

100

0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.1% 0.2% 0.2% 0.3% 0.4% 0.6% 0.8% 1.1% 1.5% 1.9% 2.4%

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DEMAND-SIDE MANAGEMENT
Sales and peak demand forecasts are adjusted to account for expected incremental DSM savings.
· Incremental DSM is projected DSM savings less the amount of historical DSM savings embedded in sales and peak demand.
DSM savings are based on approved DSM filings. Residential programs: residential lighting (LEDs), weatherization, school kits, and smart thermostats. C&I programs: motor replacement, custom projects, business lighting, and cooling.
26

SPS New O&G Load
· SPS Key Account Managers provide potential new load that has been identified through conversations with the customer.
· No new O&G load in TX.
· Total potential new load adjusted for actual achievement and timing risks.
· Only highly probable loads are included (>=80% probability)
- Probability of achieving highly probable loads declines over time.
· Assumed to be online the quarter after service is requested. · Ramps up to full requested capacity over 3 quarters. · Load factor applied to derive energy impacts.
27

Forecast Results

SPS Forecast Key Take-Aways
· Near-term Residential use per customer is higher than recent past and Small C/I use per customer is lower.
· Both Residential and Small C/I use per customer begin to return to long-term trends after 2020 but take several years to return to prior levels.
· Assume losses in Small C/I sector due to business closures in "experience economy" sectors (Arts and Entertainment, Restaurants and Bars, Retail).
· Large C/I gradually recovers.
· Slowdown in Oil and Gas extraction/drilling in 2020. · Additional negative impacts in 2020 and into 2021 for other mining/manufacturing
customers.
· Continued declines in Wholesale as contracts ramp down/expire.
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CUSTOMER FORECAST

500,000 400,000 300,000 200,000 100,000

SPS Total Retail Customers
2020 Customer Counts: Residential - 313,000 Total C&I ­ 78,000 Other ­ 6,300 Total SPS ­ 397,000

Residential Comm & Ind Other
Retail Avg. Annual % Ch.: 2011-2020 = 0.6% 2021­2041 = 0.4%
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SALES FORECAST

30,000 20,000 10,000
0

SPS Total Sales (GWh)

Residential Comm & Ind Other Wholesale

Retail Avg. Annual % Ch.: 2011-2020 = 1.0% 2021­2041 = 1.3%

SPS Total Avg. Annual % Ch.: 2011-2020 = -2.4% 2021-2041 = 1.0%

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SALES FORECAST COMPARISONS

40,000 30,000 20,000 10,000

SPS Retail Sales (GWh)

History

2020F

2019F

2018F

2017F

2016F

2015F

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PEAK DEMAND FORECAST

6,000 5,000 4,000 3,000 2,000 1,000
0

SPS Total Peak Demand (MW)

Retail Full Req Wholesale Part Req Wholesale

Retail Avg. Annual % Ch.: 2011-2020 = 1.2% 2021­2041 = 0.9%

SPS Total Avg. Annual % Ch.: 2011-2020 = -2.3% 2021-2041 = 0.6%

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Forecast Scenarios
Probability distributions are developed by conducting Monte Carlo simulations on the main drivers of energy and peak demand forecasts (e.g., weather and economics) . Low-growth scenario is equivalent to the 15th percentile probability distribution. High-growth scenario is equivalent to the 85th percentile probability distribution.
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FORECAST SCENARIOS

40,000 30,000 20,000 10,000

SPS Total Energy (GWh)

Low Base High

SPS Total Peak Demand (MW)
6,000 5,000 4,000 3,000 2,000

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041

Low Base High

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Appendix

SPS Retail Sales

26,000 24,000

SPS Total Retail Sales (GWh)
History Forecast

22,000

20,000 18,000

2015-2019 CAGR = 1.9% 2020-2030 CAGR = 1.5%

4,500 4,000 3,500 3,000 2,500

SPS Residential Sales (GWh)
History Forecast
Use per Customer declines from high 2020 levels

2014 2016 2018 2020 2022 2024 2026 2028 2030 2014 2016 2018 2020 2022 2024 2026 2028 2030

6,000 5,500

SPS Small C&I Sales (GWh)
History Forecast

16,000 14,000

SPS Large C&I Sales (GWh)
History Forecast

2014 2016 2018 2020 2022 2024 2026 2028 2030 2014 2016 2018 2020 2022 2024 2026 2028 2030

5,000 4,500 4,000

Declines in use per customer and number of customers; takes several years to return to prior levels

12,000 10,000
8,000

Significant slowdown in mid-2020, with some recovery in 2021
37

SPS System Peak Demand

MW
MW 2014 2016 2018 2020 2022 2024 2026 2028 2030

2014 2016 2018 2020 2022 2024 2026 2028 2030
MW 2014 2016 2018 2020 2022 2024 2026 2028 2030

6,000 5,000 4,000 3,000

Total Net Peak Demand
(Retail, Full Req Whls, and Partial Req Whls)

History

Forecast

4,500 4,000 3,500 3,000 2,500

Retail Peak Demand

1,600 1,200
800 400
-

History

Forecast

Wholesale Peak Demand

History

Forecast

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QUESTIONS & DISCUSSION
© 2020 Xcel Energy

TOPICS FOR FUTURE MEETINGS
· Gas & Power Markets · Coal Supply · Energy Storage

© 2020 Xcel Energy

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NM IRP DETAILS

· Web Page -
https://www.xcelenergy.com/company/rates_and_regulations/resource_plans/2022_new_mexico _integrated_resource_plan

* Note: For the Service Area, click on New Mexico. At the bottom of the page click on the Public Advisory Meeting tab, then click on the date for the first public meeting
· Resource Planning Contacts ­
- Bennie Weeks | Manager of Resource Planning & Bidding | Bennie.Weeks@xcelenergy.com - Ben Elsey | Resource Planning Analyst | Ben.R.Elsey@xcelenergy.com - Ashley Gibbons | Resource Planning Analyst | Ashley.Gibbons@xcelenergy.com
· Regulatory Contacts ­
- Linda Hudgins | Case Specialist II | Linda.L.Hudgins@xcelenergy.com - Mario Contreras | Rate Case Manager | Mario.A.Contreras@xcelenergy.com

© 2020 Xcel Energy

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SPS New Mexico 4th IRP Public Meeting
Date: March 23, 2021 Time: 10:00 AM ­ 12:00 PM Mountain Time Location: Zoom Meeting
© 2020 Xcel Energy

© 2020 Xcel Energy

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