1 / 19

Poudre Valley REA Annual Meeting

Poudre Valley REA Annual Meeting. Marty Blake The Prime Group, LLC. Ratemaking Process. Rates should reflect the cost of serving customers when the rates will be in effect, i.e. the future Based on historical costs during a 12 month test year

marlo
Download Presentation

Poudre Valley REA Annual Meeting

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Poudre Valley REAAnnual Meeting Marty Blake The Prime Group, LLC

  2. Ratemaking Process • Rates should reflect the cost of serving customers when the rates will be in effect, i.e. the future • Based on historical costs during a 12 month test year • Pro forma adjustments to reflect known and measurable changes

  3. Cost of Service Study • Allocates the cooperative’s costs to customers as fairly as possible based on their energy usage patterns • Ensures that customers only have to pay for what they are actually using

  4. Poudre Valley’s Costs • Cost of purchased power from Tri-State G&T • Covers the generation and transmission plant necessary to meet customer needs • Covers the fuel and operations and maintenance costs necessary to produce and transmit electric energy • These are a pass through with no mark up or margin in Poudre Valley’s proposed rates

  5. Poudre Valley’s Costs • Distribution System • The equipment necessary to deliver electric energy from Tri-State’s transmission lines to customers • Almost all of these distribution system costs are fixed costs that do not change with customer usage

  6. Facility Charge • A fixed charge per meter per month that covers the fixed cost of the minimum amount of equipment necessary to provide a customer with electrical service • Meter • Service drop from transformer to meter • Transformer • Poles and minimum amount of conductor to distribution substation

  7. Facility Charge • Much higher for cooperatives because they cannot spread fixed costs over as many customers • Generally between $20 and $35 per customer per month for cooperatives

  8. Facility Charge • Example, the $30,000 per mile cost of single phase distribution line • Poudre Valley spreads this over about 9.4 customers per mile which would be $3,191 per customer • Xcel Energy over about 58 customers per mile which would be $517 per customer

  9. Proposed Facility Charges Type of Service Current Proposed Farm and Home $14.50 $24.50 Farm and Home TOU $18.00 $26.00 Commercial TOU $30.00 $32.00

  10. Farm and Home Facility Charge • The current facility charge “variablizes” about $10 per customer per month of fixed cost recovery by recovering these fixed costs through an energy charge assessed on a kWh basis • This puts about $3.7 million of fixed cost recovery at risk for Poudre Valley depending on kWh sales

  11. Farm and Home Facility Charge • With 353,330,026 kWh in sales to Farm and Home customers, there is about 1 cent of fixed cost recovery in every kWh that Poudre Valley sells • Misalignment of interests • Poudre Valley has an incentive to sell more kWh in order to recover its fixed costs • Customers want to reduce kWh purchases to reduce their energy bills

  12. Revenue Variability Revenue Time

  13. Farm and Home Facility Charge • This misalignment can be corrected by a rate design that recovers Poudre Valley’s fixed costs through a monthly fixed charge rather than through a kWh charge • This frees Poudre Valley to work cooperatively with its customers in reducing their energy usage and energy bills without financially harming the cooperative.

  14. Facility Charge Comparisons • Comcast XFINITY TV – $29.99/month • Comcast XFINITY TV/Internet – $69.99/month • DirecTV - Choice – $29.99/month • Dish Network – Dish America – $34.99/month • AT&T - Home phone & Internet – $40.00/month

  15. Proposed Energy Charge (per kWh) Type of Service Current Proposed Farm and Home 8.918¢ 8.352¢ Farm and Home/Commercial TOU Rates - On-Peak 14.885¢ 14.885¢ Off-Peak 4.854¢ 4.750¢

  16. On-Peak vs. Off-Peak • On-peak is 6 to 9 AM and 4 to 9 PM Monday through Friday excluding six holidays • Farm & Home TOU • Commercial TOU • Electric Vehicle Rate • 2,040 on-peak hours (23.3%) • 6,720 off peak hours (76.7%)

  17. Potential Savings • Savings of 10.135¢ / kWh for each kWh shifted from on-peak to off-peak • A customer would need to shift about 49 kWh from on-peak to off-peak to save $5.00

  18. Appliance Energy Usage • Clothes dryer – 5 kW • Water heater – 4.5 kW • Electric Oven – 3.5 kW • Electric Range (large element) – 2.3 kW • Dishwasher – 1.8 kW • Portable heater – 1.5 kW • Vacuum cleaner - 1.6 kW • Washing machine – 0.5 kW

  19. Energy Bill Savings • With an on-peak rate of 14.885¢/kWh and an off-peak rate of 4.75¢/kWh, a customer can save: • 50.5¢ by shifting one hour of clothes drying from on-peak to off-peak (14.885¢ - 4.75¢) x 5 kWh • 18.25¢ by shifting one hour of dish washing from on-peak to off-peak • 5¢ by shifting one hour of clothes washing from on-peak to off-peak

More Related