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ELECTRICITY RATES AND CHARGES

ELECTRICITY RATES AND CHARGES. A presentation for BVICCHA By: Margaret A. Penn, Chairperson – BVIEC Leroy A. E. Abraham, General Manager - BVIEC. Contents. Purpose of rates and charges for electricity Rates and Charges for electricity Crude oil’s effect on fuel prices

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ELECTRICITY RATES AND CHARGES

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  1. ELECTRICITY RATES AND CHARGES A presentation for BVICCHA By: Margaret A. Penn, Chairperson – BVIEC Leroy A. E. Abraham, General Manager - BVIEC

  2. Contents • Purpose of rates and charges for electricity • Rates and Charges for electricity • Crude oil’s effect on fuel prices • Effects of rising fuel cost on electricity bills • Energy conservation • BVIEC’s new bill format • Questions and Answers

  3. Purpose of Electricity Rates and Charges • Electricity rates and charges serve two primary functions:- • They raise revenue for the utility to cover operating costs and depreciation of plant • They signal to customers the cost of consuming electricity

  4. Rates and Charges for Electricity • Rates for energy consumed are as follows • 0-60 Kwh at 24 cents per unit • 61-25,000 Kwh at 22.5 cents per unit • 25,001-100,000 Kwh at 19 cents per unit • Over 100,000 Kwh at 16.75 cents per unit • Plus • A fixed service charge per consumer at two dollars and fifty cents ($2.50) for each month or part of a month during which energy is supplied

  5. Fuel Variation Surcharge Formula • FVS = (Average cost of fuel - $0.815) * (Quantity of fuel used to generate, transmit and distribute one unit of electricity (1KWh))

  6. Fuel Variation Surcharge Base Rate • In 1980 when the electricity rates were set the average price of fuel in April of that year was $0.985 • In 2000 when the fuel variation surcharge base rate was changed to $0.815 the average price of fuel in April of that year was $0.881

  7. Graph of crude oil changes

  8. Causes of Escalating Oil Prices • Supply and demand issues • Fuel & Oil speculation trading

  9. Rise of Crude Oil Prices • The table shows the cost per barrel of crude oil between 1998 and 2008

  10. Rise of Crude Oil Prices

  11. BVIEC Average Fuel Costs • The table shows the Year average fuel cost to the BVIEC between 1998 and 2008

  12. BVIEC Average Fuel Costs

  13. Comparing BVIEC Average Fuel Costs to Crude Oil Costs

  14. Effect of average fuel cost of $0.75 on customer’s bill with 30,460Kwh Usage • Using the current rates • 0-60 Kwh @ $0.24 • 60 * $0.24 = $14.40 • 61-25,000 Kwh @ $0.225 • 24,940 * $0.225 = $5611.50 • 25,001 – 100,000 Kwh @ $0.19 • 5,460 * $0.19 = $1,037.40 Total units cost = $14.40 + $5,611.50 + $1037.40 = $6,663.30 • Fuel Variation Surcharge at $0.75 • ($0.75 - $0.815) * 0.065 = (-0.004225) * (30,460Kwh) = -$128.69 • Total due from the customer = $6,663.30 + (-$128.69) = $6,534.61

  15. Effect of average fuel cost of $1.50 on customer’s bill with 30,460Kwh Usage • Using the current rates • 0-60 Kwh @ $0.24 • 60 * $0.24 = $14.40 • 61-25,000 Kwh @ $0.225 • 24,940 * $0.225 = $5,611.50 • 25,001 – 100,000 Kwh @ $0.19 • 5,460 * $0.19 = $1,037.40 Total units cost = $14.40 + $5,611.50 + $1,037.40 = $6,663.30 • Fuel Variation Surcharge at $1.50 • ($1.50 - $0.815) * 0.065 = (0.044525) * (30,460Kwh) = $1,356.23 • Total due from customer = $6,663.30 + $1,356.23 = $8,019.53

  16. Effect of average fuel cost of $2.50 on customer’s bill with 460Kwh Usage • Using the current rates • 0-60 Kwh @ $0.24 • 60 * $0.24 = $14.40 • 61-25,000 Kwh @ $0.225 • 24,940 * $0.225 = $5,611.50 • 25,001 – 100,000 Kwh @ $0.19 • 5,460 * $0.19 = $1,037.40 Total units cost = $14.40 + $5,611.50 + $1,037.40 = $6,663.30 • Fuel Variation Surcharge at $2.50 • ($2.50 - $0.815) * 0.065 = (0.109525) * (30,460Kwh) = $3,336.13 • Total due from customer = $6,663.30 + $3,336.13 = $9,999.43

  17. Effect of average fuel cost of $3.50 on customer’s bill with 30,460Kwh Usage • Using the current rates • 0-60 Kwh @ $0.24 • 60 * $0.24 = $14.40 • 61-25,000 Kwh @ $0.225 • 24,940 * $0.225 = $5,611.50 • 25,001 – 100,000 Kwh @ $0.19 • 5,460 * $0.19 = $1,037.40 Total units cost = $14.40 + $5,611.50 + $1,037.40 = $6,663.30 • Fuel Variation Surcharge at $3.50 • ($3.50 - $0.815) * 0.065 = (0.174525) * (30,460Kwh) = $5,316.03 • Total due from customer = $6,663.30 + $5316.03 = $11,979.33

  18. FVS as a Percentage of Total Bill • The table indicates what percentage of the total bill is the Fuel Variation Surcharge based on the fuel cost averages from the examples

  19. How to mitigate the extraordinary increases in fuel prices • Make adjustments across all areas of your business • Learn to conserve energy through; • Lighting retrofits • Replacing old less efficient equipment with newer more efficient equipment • Utilizing air conditioning systems more efficiently • Utilizing Energy Star equipment

  20. A Penny Saved Is A Penny Earned • A 20% reduction in energy usage at current fuel prices (approx $2.50) will have the following result on the bottom line • Commercial consumer utilizing 30,460kwh • Bill = $9,999.43 • A 20% reduction in consumption will translate to 24,368Kwh • Bill = $8,152.61 Savings $1,846.82

  21. BVIEC’s New Bill Format

  22. The End

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