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Fourth CTC Reset Compliance Filing

Fourth CTC Reset Compliance Filing. Fall 2009 Customer Meetings. Background. NMPC already submitted three separate filings to comply with the Merger Rate Plan: First filing on 8/1/2003 with new rates effective 1/1/2004 and 1/1/2005.

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Fourth CTC Reset Compliance Filing

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  1. Fourth CTC Reset Compliance Filing Fall 2009 Customer Meetings

  2. Background • NMPC already submitted three separate filings to comply with the Merger Rate Plan: • First filing on 8/1/2003 with new rates effective 1/1/2004 and 1/1/2005. • Second filing on 7/29/2005 with new rates effective 1/1/2006 and 1/1/2007. • Third filing on 8/1/2007 with new rates effective 1/1/2008 and 1/1/2009. • Fourth compliance filing was made on 8/3/2009 and, if approved, new rates will become effective 1/1/2010 and continue through 12/31/2011. Disclaimer – This presentation is a summary of the Fourth CTC Reset Filing. Final rates will likely be different than those filed and are scheduled to become effective January 1, 2010.

  3. Why We Do the CTC Reset • To Reset CTC Rates for updated commodity price forecast • Commodity costs are passed on to customers without any mark-up. • Market commodity costs are recognized in Supply Services on the bill, but forecasted over-market variable costs (OMVC) are included in the CTC rate, based on a forecast of commodity costs. • Every two years, CTC rates are reset so that forecasted OMVC revenues match forecasted OMVC expense. • This reset process is revenue neutral to NMPC but ensures that stranded costs are collected from customers in the manner envisioned by Power Choice.

  4. Why We Do the CTC Reset (continued) • To Adjust Deferral Account Recoveries • The 10 year rate plan allows us to collect or refund money in the deferral account, which tracks expenses that were difficult to forecast, such as storm expenses, pension costs and site investigation & remediation costs.

  5. Rates Are Forecast to Increase in 2010 • Commodity prices • Commodity prices are forecast to increase from 2009 to 2010 • For CTC rates, the 2010 forecast of commodity prices in this fourth reset is lower than the 2009 forecast of commodity prices in the third reset, creating an increase in over-market costs from 2009 to 2010. • Below-market purchase power agreement with Nine Mile 1 expires in 2009. • Below-market purchase power agreement with Nine Mile 2 is declining in value in 2010. • Cost of the legacy purchase power contracts (non-settling IPP’s) is increasing.

  6. Rates Are Forecast to Increase in 2010 (continued) • The forecast of non-residential billed kW in the fourth reset (2010-2011) is 9% lower than the third reset (2008-2009). • Deferral Account recoveries are forecast to increase $32 million from 2009 to 2010.

  7. Market Price Forecast – NYISO Central Zone Prices

  8. KWh Sales Forecast Summary • Residential kWh growth averaged 2.0% annually during the 2000-2005 housing boom. • Since 2005, residential kWh have declined 0.3% per year. • Growth is expected to average just 0.1% per year from 2008 to 2011 • This will keep residential kWh below the highs reached in 2005. • General Service kWh ytd decline continues through 2009 but shows solid recovery in 2010 and 2011, averaging growth of 1.1% per year. • Although General Service kWh have growth, total non-residential kWh sales have declined over the long term and remain well below 1990 levels.

  9. Deferral Account Impacts • The Third CTC Reset (2008 & 2009) included $124 million per year of deferral account recoveries. • The Fourth CTC Reset (2010 & 2011) proposes to include $156 million per year of deferral recoveries. • This is an increase of $32 million from 2009 to 2010. Over the two reset years (2010 and 2011), the increase is $64 million in total. • The increase is primarily due to recovery of storm expenses from 2008. The December 2008 Albany storm accounts for $47 million of the two year increase.

  10. Typical Bill Impacts • Refer to filing documents • The following slides are typical bill impacts for the central region: • SC2 Demand • SC3 Primary VDL • SC3A Transmission VDL

  11. SC-2D Typical Bill 2009-2010

  12. SC-3 Primary Typical Bill 2009-2010

  13. SC-3A Transmission Typical Bill 2009-2010

  14. SC-2D Typical Bill 2010-2011

  15. SC-3 Primary Typical Bill 2010-2011

  16. SC-3A Transmission Typical Bill 2010-2011

  17. Filing Schedule • August 3 – Filing Submitted • August 20 – Technical Conference • October – Supplemental Filings (Updates) • December – PSC Order & Compliance • Jan 1, 2010 and Jan 1, 2011 – New Rates

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