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1976-01-06 Min - Board
8 JANUARY 6, 1976 The regular meeting of the Board of Directors of the Truckee-Donner Public Utility District was called to order by the Chairman at 7:30 P.M. in the District Conference Room. ROLL CALL: Waters , present; Sutton, absent at roll call but arrived at ...., approximately 7:35 P.M. ; Craig, present; Christensen , present; Anderson, present; EMPLOYEES PRESENT: Reed. OTHERS PRESENT Don Strand (Dart) , Sid Karsh (Dart) , Adolph Mos kovi tz (Dart) , Doug Hatch, Nancy Wilkins Mari gray Fish, Herbert Frahm, George Rasmussen , Jerry Golanty, Richard Hairston and Matt Gomez (Arthur Young & Company) , Roberta Huber and Stephen Frahm. MINUTES Director Waters moved that the minutes of November 24, December 2 and December 8, 1975 be approved. Seconded by Director Christensen. ROLL CALL: Waters , aye; Sutton, no; Craig, aye; Christensen, aye; Anderson, aye; SO MOVED. BILLS FOR BOARD APPROVAL Director Sutton asked that the record show she said "The last time he (the Manager) took time off I don't believe he notified the Board Chairman. In this case you (the President) were notified." Director Sutton moved the bills be paid with the exception of Universal • Computer Applications - Phase I . DEC 310 system charge in the amount of $2,056.00. Motion failed from lack of second. Director Christensen moved that the bills be paid. Seconded by Di rector Waters. ROLL CALL:_ Waters, aye; Sutton, no; Craig, aye; Christensen , aye; Anderson, ye; SO MOVED. OLD BUSINESS The Board agreed that the first three items of old business would be tabled to the meeting of January 20, 1976. PRESENTATION OF PHASE I OF RATE STUDY - ARTHUR YOUNG & COMPANY Richard Hairston from Arthur Young and Company reviewed for the Board the contents of the "Electric and Water Service Rate Study - Phase I Interim Report." A copy of that report is attached to these minutes for reference. MISCELLANEOUS OLD BUSINESS Ossian Butterfield with TTSA appeared before the Board regarding electric power to the TTSA plant site. He asked if it would be possible to use 300 kilowatts of power-for the next 2 years in lieu of the 100 kilowatts orig- inally requested. It was agreed by the Board that in the absence of the Manager the Board Chairman would contact R.W. Beck and Associates and determine the availability of power to the plant and that Mr. Merriman with R.W. Beck would contact Mr. Butterfield regarding the matter. PHASE I OF RATE STUDY It was agreed that the Board would further discuss the Phase I Interim Report at the January 20, 1976 Board meeting. Page 1 , January 6, 1976 2.3 MARTIN MCDONOUGH Proposal from Rate Engineer: Mr. McDonough spoke to the Board on the pending third rate increase proceeding by Sierra Pacific Power Co. and the affect of the case on the District and the importance of the District retaining a rate engineer to assist Mr. McDonough in the pro- ceeding in behalf of the District. McDonough stated that Mr. Kenneth Seeds with R.W. Beck had indicated the cost: to the District for their services in the matter would probably not be less than $15,000 but not likely more than .$30,000 McDonough recommended to the Board that they hire R.W. Beck & Associates. The Board discussed with Mr. McDonough the advantages of engaging Beck to assist in the rate proceeding. The Board instructed Martin McDonough to contact Kenneth Seeds from R.W. Beck and have him send to the District a formal proposal for services related to the rate increase proceeding. Director Sutton requested that the record show that the following information was, received from Martin McDonough: "The TDPUD has $1 ,239,448 under the existing tariff and $1 ,262,707 under the proposed tariff which is a 2/ increase. " Donner 'Lake Agreement with S.P.P.Co. : Martin McDonough discussed with the Board the problem of the separate accounting of the revenues and expenses of the Donner Lake System and the application of those revenues to the repayment of the debt to Sierra Pacific Power Co. He reviewed the 2 al'ternati ve solutions to the problem of the District' s failure to comply with the Contract between the District and S.P.P.Co. insofar as the separate accounting provisions are concerned. The matter was tabled to January 20, 1976, for possible Board action. -- LA MAIDA CORPORATION - OLD AIRPORT & I-80 DEVELOPMENT Herbert Frahm, a consulting engineer, presented to the Board in behalf of La Maida Corporation a proposed project located on the old airport property and consisting of a possible 200 acre planned unit develop- ment. Following discussion Frahm indicated that La Maida would be willing to provide a cash advance for costs related to legal fees and advance planning. The Manager, the attorney and the consulting engineer were asked to provide the Board with their idea of a nominal fee to be provided to the District by La Maida for such expenditures. The Board -i n.di-cated their willingness to work with La Maida Corporation in providing service to their proposed development. It was indicated they could work with the Manager and appear before the Board at a future meeting with more infor- mation for the Board to consider. Director Waters asked that the record show "that I do not agree with you that we are all in favor of serving those people. I for one am not." RESOLUTION - INTERIM RATE INCREASE It was moved by Director Waters that Resolution 7601 , "Providing for an Interim Increase in Electric and Water Rates" be adopted. Seconded by Director Christensen. _ Director Sutton asked that the record show "that on the purchase of 1170 .kwhrs on the present Dl A rate that customers are paying 15/ more than they would be=:o'n the Sierra Pacific rate in effect at the north end of the lake and that on the proposed rate with the 3 mil increase the customer would be paying 26/ more than the current rate on that number of kilowatt hours. On the flat residential rate the increase on the $5 will be a 30/ increase that the $6 rate will be a 25% increase, the $7 rate will be a 21% increase and the $8 rate will be a 18/ increase. On the commercial Page 2, January 6, 1976 /2 `� rate the increase is approximately 17/. I am opposed to this rate increase because I don't think we have had a proper justification, the justification was primarily based on newspaper article quotations of what Sierra Pacific and PG&E are proposing to do and I do not think that is a suf- ficient basis. I asked when this was first proposed that some effort be made to reduce expenditures. I asked specifically for a 15% reduction -poem in expenditures because I believe that when you can't afford steak you eat hamburger and that this District can't even afford hamburger and I think that if rates are going to increase we would have to have some effort made to reduce expenditures and I would call attention to .the fact that we have hired another employee and I don' t understand the necessity for an additional employee to be on the payroll in the winter months and I think that the Manager should provide more justification for the expenses of the District and for his proposal ." Director Waters asked that the record shoal "that Phase I of' the rate study indicatdd that our rates would go above those of the Sierra Pacific Power Co. in Phase I and that the $230,000.00 that the District is in arrears is the basic reason for increasing the rates." Director Sutton asked that the record show "that beginning in January we started including by hand the surcharge. Beginning in March we started including by hand the fuel charge. Until August we had basically one employee in the billing department. No more operations are being required now than were between March and August and as far as I .know not very many customers have been added on to the District'saccounts. We have now at least 3, and perhaps there is a new employee in that department also, we have at least 3 employees working on the billing. The bills are:-. as far as I can tell one month late throughout the District. They used to be until August on a schedule of time. The fact that bills .are one month late affect the cash flow of the District and the $236,000.00 that we owe right now and don't have the money to pay on bills that are mostly 3 months in arrears. The fact that the billing is late, although more employees are involved in it affects the cash flow and the debt might be less if this weren' t the case." Director Sutton suggested that this resolution be tabled. ROLL CALL: Waters , aye; Sutton, no; Craig, no; Christensen, aye; Anderson, aye; SO MOVED. MISCELLANEOUS NEW BUSINESS A member of the public Doug Hatch, presented to the Board "Petition For Submission to the Electors of the Truckee Donner Public Utility District the Matter of Accpetance of the Tahoe Donner Water Distribution System for Operation, Maintenance, and Repair Prior to Testing and Completion of Construction, and Pff or to Careful Examination of Problems and Liabilities , and Prior to Consultation with Independent Experts" with 230 signatures. It was agreed that if a Special Meeting was held next week the matter would 6e_ furthery di scus-sed. Joe Joynt was instructed to research the matter and determine the vailidity. A tentative meeting date was set for Monday, January 12, 1976, at 4:30 P.M. UNAUTHORIZED CONNECTION OF METERS BY DISTRICT CUSTOMERS This matter was tabled to January 20, 1976. ORDINANCE — DIRECTOR'S COMPENSATION Following discussion Di rector ,.Sutton moved that Ordinance 7601 be adopted. Seconded by Director Craig. ROLL CALL: Waters , no; Sutton,, aye; Craig, aye; Christensen, no; Anderson, no; MOTION FAILED. Page 3, January 6, 1976 /2S t RESOLUTION - QUORUM RULE Director Sutton moved that Resolution 7602, "Establishing a Quorum Rule for Transaction of Business" be adopted. Seconded by Director Craig. ROLL CALL: Waters, abstain; Sutton, aye; Craig, aye; Christensen, aye; Anderson, aye; SO MOVED. CAL WESTERN LIFE - NEW INVESTMENT CONTRACT Following discussion it was agreed that Joe Joynt would contact Ron Richardson and arrange a meeting date with him and the manager and an employee regarding the new investment contract. ADJUSTING CHANGE ORDER NO. 303 - TAHOE DONNER WATER LINES Director Sutton moved that this matter be tabled. Seconded by Director Craig., ROLL CALL: Waters, aye; Sutton, aye; Craig, aye; Christensen, aye; Anderson, aye; SO MOVED. MISCELLANEOUS OLD BUSINESS Director Waters discussed with the Board the matter of the employees improving their lunchroom facilities in the warehouse. It was agreed that the matter had been discussed before and that the secretary would determine if the matter had been discussed and any action taken. An estimate of the cost of.the improvements was requested also. MISCELLANEOUS NEW BUSINESS John Craig presented a copy of a legal notice, "Notice of Intention to Circulate Petition Seeking a Recall Election" to Director Anderson and Director Waters and asked that it be entered into the minutes also. Director Waters asked that the record show "that any voting with Tahoe Donner I will challenge your vote (Director Sutton) and I will challenge your vote (Director Craig) as being in conflict of interests." CORRESPONDENCE Director Sutton moved that the manager be authorized to sign the Federal Excise Tax Exemption Certificate. Seconded by Director Craig. Al 1 aye by voi ce vote. DISTRICT COUNSEL REPORT Joe Joynt discussed with the Board the matter of the failure to post an adjourned agenda following the meeting of December 16th when that meeting was adjourned to December 17th. It was discussed that a resolution be adopted to reaffirm the actions taken- on. December 17, 1975. The matter was put on the agenda for a Special Meeting on Monday, January 12, 1976, at 4:30 P.M. Director Sutton moved that the Board meet -on Monday, January 12, 1976, at 4:30 P.M. Seconded by Director Craig. All aye by voice vote. Director Waters moved to table the matter of reaffirming the meeting of December 17, 1975, to January 12, 1976. Seconded by Director Craig. ROLL CALL: Waters , aye; Sutton, aye; Craig, aye; Christensen, no; Anderson, no; SO MOVED. Verified Statement of the Financial Condition of the District: Joe Joynt discussed briefly with the Board his letter to the Board dated Page 4, January 6, 1976 /2�, December 10, 1975, on a verified statement of the financial condition of the District. Director Craig moved that the meeting adjourn. Seconded by Director Sutton. All aye by voice vote. The regular meeting of the Board of Directors of the Truckee-Donner �.... Public Utility District was adjourned by the Chairman at 1 :00 A.M. TRUC KEE-DONNER PUBLIC UTILITY DISTRICT By e An so , P s t of the Board J ne 0. Reed, Secretary Page 5, January 6, 1976 /Z7 a BALANCE OF ACCOUNTS PAYABLE December 30, 1975 Current Invs. Total Vendor Prior Oct. Nov. Dec. No Stmt. Recvd. Due Yet Addressograph Multigraph 33.88 33.88 Alpha Hardware 31.80 31.80 American Management Assoc. 80.00 80.00 *Arthur Young & Co. 8/75` 926.00 926.00 Bruning Division 31.80 31.80 Consolidated Electrical Supply 41.93 41.93 *Cook Associates 6,759.96 6,759.96 County of Nevada 4/76 1 5267.09 1 1267.09 Custom Office Supply 101.53 101.53 Electronic Calculator 24.00 25.00 49.00 Joseph Joynt 624.19 743.95 1 ,368.14 *Marti n McDonough 990.98 990.98 *O'Hair Supply 108.22 22.75 130.97 Osburn's Garage 12.60 12.60 Pad fi c Tel ephone Co. 337.31 337.31 Pitney Bowes 1/76 114.00 114.00 Sangamo 612.15 612.15 Si erra Paci fi c Power Co. 102,916.30 109 9764.82 2129,681.12 Southern Pacific Trans. Co. 175.00 175.00 Sun Printing 70.65 70.65 Sunrise Clinical 13.00 13.00 Superior Switchboard 200.98 118.72 319.70 Tahoe National Forest 188.76 188.76 Thol Fence 25897.34 2,897.34 Tom's TV 31.80 31.80 22.50 22.50 Truckee Donner Disposal USDA-REA 1/76 2,536.19 25536.19 George Wahn 3,656.03 3,656.03 Wedco 104.91 104.91 Western Nevada Supply 155.82 155.82 Xerox 148.31 143.10 291.41 1 5034.22 126 5204.36 15635.13 4,243.36 236 5033.37 1029916.30 N Balance of Accounts Payable December 30, 1975 Page 2 Comments: Arthur Young & Company $926.00 - Bill under dispute Cook Associates 6,759.96 - Billable to Dart $5,916.64 Martin McDonough 990.98 - Billable to Dart $405.00 0'Hair Supply 108.22 - All merchandise not received yet i jr - January 39 1976 TRUCKEE-DONNER PUBLIC UTILITY DISTRICT BALANCE SHEET ASSETS 1975 MARGINS AND LIABILITIES 1975 Utility plant, at cost: Margins: _ • Operating margins Plant in service _ - -1—��-� Other equities 5(0 5.., . Q Electric Water Year to date margi ns g 30 15 General Less accumulated depreciation Long-term debt: • REA bonds payable Net plant in service LT' ��.,_.... Construction in progress Note payable to Sierra Pacific _ �'"�.3� . Power Company oQ Plant an t acquisition adjustments '___`�___�.`•7 • Assessments a�, Net Utility plant (aD41aL6.— Other Non-utility property Restricted funds `1zl _(4 .. Current Liabilities: Current assets: Accounts payable Cash -=- Consumer deposits Notes Receivable _ ��►��-- liabilities Accrued ..��. Accounts receivable _ �, Total Current Liabilities Accounts receivable other _ �4 . t Materials and supplies Customer advances for construction ?S �_,` l C) Other current assets .. Tota � 1 n� r�e nt Assets . �1 97 J-1i 5. Page One TRUCKEE-DONNER PUBLIC UTILITY DISTRICT STATEMENT OF REVENUES AND EXPENSES For the month of and _-�-� months ended CURRENT MONTH YEAR TO DATE ELE RIC WATER TAL ACTUAL BUDGET ACTUAL BUDGET ACTUAL ACTUAL BUDGET r)4 0) Net Revenues f2r Operating n Expenses p 9 Maintenance Expenses Customer Accounts Expenses --- cp General and Administrative Expenses 1 ,4 (Oak(�t 59 i, �3a �A� l Total Budgeted ExpensesDac�j'co ---- 10. 0 Depreciation Interest Expense p Total Operating Margins S Other Income and Expenses Net Margins Net Revenues C ,�' . "),I Expenses 5 Total Budgeted Operating p "1 .. 5_ Total Additions to Plant Accounts � ���,aq ,3 c��a60.t� ap���,O�-� wor_'.W. re�r� t,.� d et Operation on ITS q-6.:�. Net Budget a Z2�3`C�� g p Paqe Two TRUCKEE-DONNER PUBLIC UTILITY DISTRICT � STATEMENT, OF REVENUES AND EXPENSES ^� For the month of and -' months ended I011 S CURRENT MONTH YEAR TO DATE ELECTRIC WATER TAL ACTUAL -,-B UDGET ' ' 'ACTUAL BUDGET ACTUALACTUAL BUDGET Revenue • t 16 1 ►..{ 6 a 19 Residential Sales 41505. Commercial Sales -� 4 ocn-lo Public Street Lighting -- -- , . Sales to Publ i-c Authorities Fuel Charge Miscellaneous Rents Other Revenues ' 1 � � (n. o Fees for Changing and Connecting i i Interdepartmental Sales y � IS2. —�-- --- `-- Gross Revenues ° i Allowances Donated.Revenues I C1 �-{-t ..I m S i 3 I 1 1 Net Revenues « '� Paae Three __ TRUCKEE-DONNER PUBLIC UTILITY SIC I STATEMENT OF REVENUES AND EXPENSES For the month of and months ended 2 ' •. - YEAR TO DATE CURRENT MONTH ELECTRIC � � WATER TOTAL ACTUAL BUDGET ACTUA � BUDGET ACTUAL ACTUAL BUDGET Operating Expenses G t0 q Purchas-ed Power Station Expense QL Distribution Expense �---~ i. htin RQ � Street L g g . � r n2z Eh Meter Expenses - -- ` Right of Way - RentsHA �(� • ion Ex � a- 3,38 "� —' Misc. Distribution ease p erati n Expense t" q G� a'5 o8d 1�►5 3,5� Total Op g p Maintenance Expenses Supervision Structures 1 L�)5 Station Equipment Staa(� Distribution Equipment Line Transformers t al o a.. t0o Street Li ghti nq-and Hydrants Meters � 1 0 �$► r . Distribution Plant ----- Total Mai r 4"'" Expenses �i 10RUCKEE-DONNER PUBLIC UTILITY DISTRICT STATEMENT OF REVENUES AND EXPENSES For the. month of and months ended n2il= ^A T CURRENT MONTH YEAR TO DATE 1 ELECTRIC WATER TOTAL BUDGET ACTUAL BUDGET ACTUALACTUAL BUDGET ACTUAL Customer account Expenses Reading Meter R 9 Records and Collection 3 O? Uncollectib1e Accounts -- -- �• Advertising p eras_ Ex e l r Total Customer Accounts Expense 3 -- --+Z General and Admi ni strati ve Expense i Admi ni strati ve Salaries ao 2.4gaa Office Supplies and Expenses -- Outside Services _ Property Insur..ance -- Injuries -and Damages *Employee Penston and Benefits -3 n4 4,Na Misc. General Expense . S n 0- Maintenance of-General Plants 3 ----��- ' 551, *Transportati on Expense Total General and112 34S.0 �. ao, c Administrative Expenses * Overhead Accounts - charoad to labor distribution monthly. Page Fi wn., r TRUC KEE-DONNER PUBLIC UTILITY DISTRICT STATEMENT OF REVENUES AND EXPENSES For the month of and''' months ended CURRENT MONTH YEAR TO DATE ELECTRIC WATER TOTAL BUDGET ACTUAL BUDGET ACTUAL ACTUAL BUDGET ACTUAL Other Income and Expense Taxes Contract Work Non-utility Operations � ___— �"' `�"` �...� `�`�"' • r Q 1 r Interest Income Depreciation - �+- Total Other Income and ----- ._........ Expense (q, 1 I Page Six STATEMENT OF GENERAL FUND January 1 , 1976 Bank Balance - December 11 , 1975 $56 9224.86 Truckee Electric Revenue 709577.15 Truckee Water Revenue 6 5012.99 Donner Lake Electric Revenue 199855.22 ,..,., Miscellaneous Billings Revenue 29 ,396.60 Miscellaneous Revenue 1 ,523.11 $183,589.93 Allowances $ 308.01 Approved Billings: Submitted $41 9306.67 Less Unapproved (926.00) 409380.67 George Cattan 258.75 Directors 500.00 Petty Cash 97.50 U.S. Post Office 300.00 IBEW 129.50 ($419974.43) PAYROLL 12/15/75 O.T. D.T. Standby Gross Net Hobensack 985.50 765.19 Reynolds 149.40 34.00 79.00 957.60 757.58 Silva 51 .00 34.00 85.00 918.00 716.68 Kinzie 222.87 735.91 530.34 Lopez 29.62 724.82 563.30 Straub 695.20 541 . 38 Grow 41 .47 673.47 564.15 Drace 47.02 668.03 501 .69 Barry 556.88 433.89 Connell , M. 538.56 394.52 Chapman 95.94 528.90 393.24 Reed 68.25 7.00 383.25 266.21 Connell , V. 302.75 240.41 Kent 215.25 179.71 Sweet _ _ 72.50 64.53 ($69912.82) 705.57 75.00 164.00 85956.62 69912.82 PAYROLL 12/31/75 O.T. D.T. Standby Gross Net Hobensack 985.50 766.24 Silva 25.50 127.50 969.00 769.74 Lopez 65.18 79.00 902.58 688.82 Grow 53.33 811 .73 669.77 Drace 69.70 795.95 588.14 Straub 782.10 609.14 Kinzie 166.25 52.47 778.40 566:70 Reynolds 758.40 630.64 Connell , M. 569.16 430.60 Barry 567.36 448.91 Chapman 51 .66 39.36 563.34 425.12 Reed 28.88 336.88 243.64 Kent 5.25 313.25 250.30 Connel 1 ,V. 294.00 235.46 -- Rose 196.00 163.17 Sweet 161 .25 132.31 ($7,618. 70) 396.05 91 .83 276.20 9,784.90 79618.70 Bank Balance - January 1 , 1976 $127 9083.98 1. Bills for Board Approval Ace Hardware - Washers , Cap screws, bolts , nuts $ 49. 70 Alpha Hardware - Links , hack saw, wrenches 59.60 American Public Power Assoc. - Annual Service Fee 10/1/75 - 9/30/76 420.64 Armanko - Office Supplies 93.44 *Arthur Young & Company -- See Comments 19504.00 Blue Cross - Health insurance premium - January 693.12 Bruning Division - Office equipment rental 31 .80 California Assoc. of Employers - Assoc. dues - 10/1-12/31 75.00 Camellia Valley Supply - service charge 9.65 Consolidated Electrical Supply - Meter socket, contact points 53.23 Crown Life Insurance - Life & Disability insurance premiums 12/75 141 .59 Custom Office Supply - Office supplies 57.35 Electronic Calculator Co. - Calculator 264.95 General Electric - Engineer services - oil analysis 729.40 R.J. Hansen Assoc. Inc. - Consulting services - R. Reark 1 ,287.00 IVC Printing - office supplies 68. 70 Joseph Joynt - legal services , 10/75 709.80 Ken's Tire Center - Flat repairs & tires 824.24 Theo Kohler, Jr. Election costs , 11/4/75 356. 76 Magi Chem - Oi 1 & Grease absorbant 22.10 *Martin McDonough - See Comments 574.55 Nevada Safety Supply - Safety glasses 11 . 70 Osburn's Garage - vehicle. repairs 77. 85 Pacific Telephone .Co. - Phone charges thru 11/7/75 332.43 Pitney Bowes - Office machine rental 36.57 Rosebud News - Office supplies 8.00 Rural i to - October safety training 65.00 Sangamo - Demand meter 206.44 Sierra Pacific Power Co. - Power bill - Sept. usage 889126.53 Sierra Sun Bonanza - Legal notice - interim rate increase 5.00 *Slater Electric Co. - See Comments 22 9660.76 State Comp Ins. Fund - Premium Audit Adjustment 184.56 Sti ce & Wells - Insurance, new truck 358.00 Sun Printing - Finance Charge 1 .36 Sunrise Clinical - Water analysis , October 16.25 Tahoe Pyramid Ins. - Insurance audit adjustment 292.00 Taylor Tire Shop - Flat repairs 17.00 Tom's TV - Cassette tapes, cable rent 46. 35 Truckee Auto Parts - Misc. vehicle parts & repairs 15.88 Truckee Donner Disposal - two months garbage service 45.00 Universal Computer Applications - Phase I . DEC 310 system 2,056.00 US Leasing - Office equipment rental 55.52 George Wah n - Wi re, Transformers 35700. 77 Xerox - copy machine rental 184.80 ($126,530.32) Comments: Arthur Young & Company $19504.00 - Rate Study - Phase I , 10/1/75 - 10/31/75 McDonough $ 574.55 - Billed $53.94 to Dart Slater Electric $22,660.76 - Billed $22,660.76 to TTSA - reimbursed Balance of account after payment of above $ 553.59 Balance of accounts payable $2369033.37 Necessary funds to clear accounts payable to date $235 9479.78 /.3 7 T�� intention to circulate retition seeking - :Tot l c e o f reca.11 election given that the Proronent desic-np ted j.,oti ce is hereby c i ; rc ul-2te within the, Truckee Donner below intends., to _ Utility District, County of I�Tevada , Mate of Public • a r�etition seeking a recall elec Lion. Cal_iforr,l� , . • will reek to recall Directors of the The election �-1 Truckee Donner Public Uti]_ity ;District , 1) Fex Anderson, and./or 2) Roy It ate rs . . ddres�° of the rro-�oner_t for the rUr-nose The rare and �- • r rerli.es , and other coTr munication of -rece•�vlr_� noece�:t ,rerfardln� - • UC�''L recall is: John At Crai�,Box J , Truckee , ,. California , Dated: Jan, Kth, 1Q76. f Signed: John A . Cram a • statement, for the inf orrnation of voters ,regarding recall election seeking recall of directors , Truckee Donner � Public Utility District; Rex Anderson and/or Roy Waters . 'Durir.� the Nov. 4, 1975 election the "Slate .ex Anderson, rc� Roy `'Paters , Bob Christensen, received ZT of the total vote or ?58 votes while the other .five candidates received 047 votes . This m?ke s ire believe the majority of the voters wTanted a change on the board. The larpre number of candidates prevented. the Desired change . For the follo-wing reasons Rex Anderson and/or Roy Waters should be recalled: Voted for rate increases with no action to solve the dis- . ; tri ctes financial Drobler-s . Voted to accent the Tahoe Bonner water system. �ehile dis- __ { re-garding serious financial effects ( such as wpivi ng f 160, 000. 00 in hook-ur/0101* i Voted to retain rranatTe. ent elr-rloyees long- after it fad been shown they were liabilities to the district. Abdicated board resronsibility by having the manager r-.el- ectivly distribute a.11 incoming mail. Yaintaining need of Donner Lake water by 1980. signed John A . Cra i.F, Lox J, Truckke e , ca. Q ' y N 1.?7 t 4 ♦ DRAFT 11/25/75 JQJ - a ORDINANCE N0. By TRUCKEE-DONNER PUBLIC UTILITY DISTRICT ,... ESTABLISHING NEW TERMS AND CONDITIONS FOR { COMPENSATION OF BOARD MEMBERS, AND REVOKING ORDINANCE NO. 74-01 WHEREAS, Section 16002 of the Public Utilities Code, applicable to this District, permits an ordinance establishing compensation to be received by the Board of Directors thereof; and WHEREAS, the Board of Directors now desire to establish new terms and conditions for such compensation to its directors; NOW, THEREFORE, BE IT ENACTED by the Board of Directors of TRUCKEE-DONNER PUBLIC UTILITY DISTRICT, as follows : 1. Effective with the effective date of this ordinance, Ordinance No. 74-01, and any and all prior ordinances or amendments thereto establishing a rate of compensation for members of the Board of Directors of the District, are hereby revoked and set 4 aside. 2. The duly elected, qualified, and acting members of the Board of Directors of the District shall be entitled to receive compensatim pursuant to the following rules: a) Compensation is declared to be dependent upon attendance at meetings. b) In no event may compensation per member exceed one hundred dollars ($100. 00) per month and not more than fifty dollars ($50. 00) per meeting. c) To receive compensation for any given meeting, regular or special, a member must be in attendance a minimum of sixty percent (60%) of the regularly seduled meeting time. { d) In the event that more than two (2) meetings are held in any calendar month, the compensation receivable by any member shall be prorated by dividing the maximum monthly compensation ($100. 00) by the number of meetings; the actual sum f f i i f i Page 1. to be received in compensation shall then be payable at such rate to those members meeting the said attendance requirements, i e) Compensation shall not be received for attendance at committee meetings. 3. This ordinance shall become effective on the lst day of the month after the lapse of thirty (3 0) days from the date of adoption. The Clerk of the District shall irmediately cause a copy of this ordinance to be published once in the local newspaper and copies shall be posted in at least three (3) public places within the District, Passed and adopted by the Board of Directors of the TRUCKEE- DONNER PUBLIC UTILITY DISTRICT at a regular meeting thereof duly i called and held in the District on the day of G�►�. 19 , by the following roll call vote : f AYES : , G i NOES 4 j i i ABSENT: TRUCKEE-DONNER PUBLIC UTI TY DISTRICT ' By _ S ENT BOARD ATTEST: CLERK THEREOF j i f i gage 2. I-3� .1l 6/76 JI)J RESOLUTION NO. 76�_ OF TRUCKEE-DONNER PUBLIC UTILITY DISTRICT PROVIDING FOR AN INTERIM INCREASE IN ELECTRIC AND WATER RATES WHEREAS, on December 21 1975 it was proposed to the Board of Directors at its regular meeting that certain increases be made on an interim basis in electric and water rates, pending the rate study commenced by the District in 1975; and, WHEREAS, said interim rate increases were proposed to take effect on January 1, 1976; and, WHEREAS, a notice of public hearing thereon was duly published and posted and the public hearing was held on December 16 , 1975 at which time members of the public and utility customers were afforded the opportunity to be heard; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of TRUCKEE-DONNER PUBLIC UTILITY DISTRICT, as follows: --- 1. The Board of Directors finds that an interim increase in rates and charges in electric and water service is reasonable and necessary. 2. That said interim increases shall apply and be effective as of January 1, 1976. 3. That all prior resolutions or actions fixing and adopting rates are hereby ratified and affirmed except for the rate increases as fixed by this resolution. 4. Said electric and water rate charges will be increased pursuant to Exhibit "A" , attached hereto, and made a part hereof. 5. Said increases shall remain in effect until changed or rescinded by later action by the Board of Directors of the District. Passed and adopted by the Board of Directors of the TRUCKEE-DONNER PUBLIC UTILITY DISTRICT at a regular meeting thereof duly called and held in the District on the 6 day of January, 1976 , by the following roll call vote: 1 i 4 i II I Page 1. �y� ' s AYES: A c- s ► � `,-,�� ,�� s � ► � , NOES: .� ► c�-; ► ► I ABSENT: ` TRUCKEE-DONN PUBLV UTILITY DISTRICT i By S , President ATTEST: i AUL HOBS SACK CLERK I l i i f i r i I i i i i i Page 2. !y r ELECTRIC INTERIM INCREASE The electric rates and charges of all electric users, applicable to all rates and schedules of rates shall be ,..., increased by $0. 0 0 3 (3 mils) per KWH. i WATER -INTERIM INCREASE Water flat rates per residential customer of single family unit and trailer park residents shall be increased $1. 50 per month. Commercial water rates shall be increased, as follows: i ; Service Size New Rate 3/4" $7. 00 1" 9. 00 1 1/4" 11. 50 1 1/2" 14. 10 2" 20. 75 3" 37. 20 i 4" 54. 90 i e E I ; EXHIBIT "A" ; I i ; t I RESOLUTION NO. 76 Cp Z. OF TRUCKEE-DONNER PUBLIC UTILITY DISTRICT i ESTABLISHING A QUORUM RULE FOR TRANSACTION OF BUSINESS WHEREAS, the Board of Directors of TRUCKEE-DONNER PUBLIC UTILITY DISTRICT does not have a rule fixing a quorum for the transaction of business, but wishes to establish such a rule; NOW, THEREFORE, BE IT RESOLVED, as follows : i 1. A majority of the members of the Board constitute a quorum for the transaction of business. No act of the Board shall be valid or binding unless a majority of all the members concur therein. Passed and adopted by the Board of Directors of TRUCKEE- j DONNER PUBLIC UTILITY DISTRICT at a meeting thereof held within the District this j day of a , 1976 , by the following roll call vote: j AYES: � ...�T+� rC-"�•c CL.r ; .X I NOES: ABSENT: TRUCKEE-DONNER PUB C UTILITY DISTRICT By REX S , Presiders ATTEST: PAUL HOBENSACK, Clerk 3 f f f; i I • 1 YJ Aft TRUCKEE-DONNER PUBLIC UTILITY DISTRICT ELECTRIC AND WATER SERVICE RATE STUDY PHASE I INTERIM REPORT • a v JANUARY 1976 ARTHUR YOUNG & COMPANY ARTH UR YOUNG & COMPANY ,ems 555 CAPITOL MALL SACRAMENTO, CALIFORNIA 95814 January 6, 1976 Board of Directors Truckee-Donner Public Utility District Post Office Box 309 Truckee, California 95734 Dear Members of the. Board: We are pleased to submit to you our interim report covering Phase I of the District ' s rate study. This report describes and analyzes four alternative rate structures for your consideration. These are: Declining Block (as currently used) Cast-of-Service (includes seasonal rates) Lifeline Conservation We have also discussed the significant issues related to financing capital expenditures through current revenues. In deciding which of the alternative structures is best suited to the District, we feel that you .should give particular consideration to the following factors. Ease of Implementation and Maintenance Rate development is necessarily a highly complicated process, but certain structures require considerably more work than others. Rates should also be revised frequently in light of rapidly changing costs. You should choose a structure that is comfortably within the capability of the District to administer. It is, for example, much easier to conceptually and practically work with a rate structure that is similar to the District ' s cost structure. ARTHUR YOUNG & COMPANY Board of Directors -2- January 6, 1976 District Cash Needs The District' s financial position should be improved as rapidly as possible. It should be a foregone conclusion that significant overall rate increases are necessary. Your deliberations should be devoted to selecting a structure and policies that will generate strong cash Oak flows with a high degree of certainty. Given the District' s current financial position, it may even be necessary to temporarily raise TDPUD rates above those of Sierra Pacific in order to regain financial equil- ibrium, Consistency with Board Philosophy You should select a structure that spreads the burden of District costs among customers in a manner consistent with the Board's philosophies. Significant potential . inequities exist with lifeline rates, the current D-1-B rate, and within existing commercial rates. The District' s Electrical Cost Structure TDPUD's cost structure is substantially different from the structure of utilities that generate part or all of their own power. This difference is detailed in our report. It is noteworthy at this point because it means that the District cannot successfully adopt the same rate structures as those used by other electric utility companies. ,� we are confident that careful consideration of these factors along with the alternatives outlined in this report will result in selection of a rate structure that will alleviate many of the District's current financial difficulties. We are prepared to begin Phase II of the study as soon as you reach a decision regarding the most desireable rate struc- ture, If you have any questions regarding this report, please call Mr. Ronald G. W'itcosky or Mr. Richard M. Hairston, in Sacramento, at 443-6756. Very truly yours, TABLE OF CONTENTS SECTION PAGE I . INTRODUCTION . , 1 1 . RATE MAKING OVERVIEW 2 2. STUDY OBJECTIVES , 3 3. KEY FACTORS 4 II . QUESTIONNAIRE SURVEY RESULTS 7 III . RATE STRUCTURE ALTERNATIVES 8 ., 1 . OPERATING ESTIMATES AND ANALYTICAL ASSUMPTIONS 8 2. ALTERNATIVE RATE STRUCTURES 8 3. WATER RATES 14 IV. PHASE II STUDY PLAN , 17 1. TASK PLAN 17 TASK 1 - REVIEW 1975 OPERATIONS AND 1976 BUDGETS , 17 TASK 2 - ANALYZE COSTS FOR FUNCTIONAL ALLOCATION 18 TASK 3 - ALLOCATE FUNCTIONAL COSTS TO CUSTOMER CLASSES 18 TASK 4 - REVIEW AND REVISE CLASSES AS APPROPRIATE . . . . . , . , . . , . 18 TASK 5 - DETERMINE CUSTOMER CLASS REVENUE REQUIREMENTS 19 TASK 6 - DEVELOP BASIC RATES FOR EACH SELECTED STRUCTURE 19 TASK 7 - DETERMINE ADDITIONAL CHARGES 19 TASK 8 - PREPARE AND PRESENT FINAL REPORT 19 2. STAFFING, TIME SCHEDULE, AND COSTS 19 w*. LIST OF EXHIBITS FOLLOWING NUMBER TITLE PAGE I SUMMARY OF QUESTIONNAIRE RESPONSES 7 II TRUCKEE-DONNER PUBLIC UTILITY DISTRICT: EXAMPLE FUNCTIONAL ALLOCATION OF ESTIMATED 1976 ELECTRIC �--; SERVICE BUDGET . . 8 zII TRUCKEE-DONNER PUBLIC UTILITY DISTRICT: ESTIMATED 1976 FUNCTIONAL COST ALLOCATIONS TO CUSTOMER CLASSES 8 IV PRESENT D-1-A RESIDENTIAL ELECTRIC SERVICE RATE STRUCTURE . . 0 . . . . & . . . & . . . . . . . 9 V RESIDENTIAL COST-OF-SERVICE ELECTRIC SERVICE RATE STRUCTURE . 10 VI RESIDENTIAL LIFELINE ELECTRIC SERVICE RATE STRUCTURE. . . . . . . . . . . . 0 . . . . . . . 11 VII RESIDENTIAL CONSERVATION ELECTRIC SERVICE RATE STRUCTURE 12 VIII WEIGHTED AVERAGE OF CURRENT GS-1, GS-2, AND GS-3 ELECTRIC SERVICE RATES . . . . . . . . . 13 _lX COMMERCIAL COST-OF-SERVICE ELECTRIC SERVICE RATE STRUCTURE . . 13 X RESIDENTIAL COST-OF-SERVICE STRUCTURE WITH A CONSERVATION TAIL 14 A le".. I . INTRODUCTION I. INTRODUCTION L• The following study report sets forth alternative electric and water service rate structures for detailed consideration by the Board of Directors of the Truckee-Donner Public Utility District (referred to as the TDPUD or the District, throughout this r=- report) . This report is the culmination of Phase I of the overall study effort to develop revised electric and water service rates and rate structures, as needed, for the District. It is anticipated that the Board of Directors will select the rate structure(s) that they find most desirable from those presented here. The second and final phase of this study will be devoted to deter- mining the actual rates , or prices, to be charged District cus- tomers for water and electric service. This report is presented in four major sections, as shown below. I . ' 'INTRODUCTION - This section is devoted to an overview .of the activities involved in rate--making, a review of the objectives in setting District rates, and key considerations in developing rate structures. Aga II . ' QUESTIONNAIRE' SURVEY RESULTS - This section summarizes the results of our survey of members of the Board of Directors regarding their opinions on Truckee-Donner rates III. RATE STRUCTURE ALTERNATIVES - Alternative rate struc- tures are presented in this section. Generally, each is portrayed both graphically and by narrative descrip- tion. We strongly caution however, against proceeding directly to read this section without first having fully read sections I and II . The assumptions , consid- erations, and methodologies that lie behind the alter- natives are critical inputs to a full understanding of the structures themselves. IV. ' PHASE II "STUDY PLAN - This final section contains our study plan for actually developing rate levels for use in the selected structure(s) . �. -1- 1 RATE MAKING OVERVIEW The basic steps involved in rate making are conceptually straightforward. They are : . Determine the cost of providing service to customers, generally on an annual basis. This is the rate "floors', or minimum amount of revenue that the District must collect . Determine the price elasticity of demand for services along with the availability, price, and suitability of substitutes. This establishes the rate "ceilings', maximum amount that customers are willing to pay for service. Formulate a tariff and rate structures , and set actual rates between the "floor" and "ceilings so as to achieve the various goals of the Board .of Directors. In practice, however, it is an exceedingly complex project to complete these steps The exact level of complexity depends .• primarily upon two factors : (1) the level of detail desired in cost and demand analyses with respect to common classes of customers (residential, commercial, etc. ) ; and (2) the quality and detail of readily available historical operating records (both financial and engineering) and estimates of future operating conditions (primarily cost and consumption budgets) . Factor number one, in particular, determines the extent to which each class of customer pays its "fair share's of operating costs . It can also determine and set rates that are the maximum charge that the traffic will bear in each class, irrespective of relative service costs. Various regulatory bodies have historically pushed rates in the direction of charging individual customers a pro-rata share of the actual ,�.. .costs of serving their class of customer. These costs are deter- mined by performing a cost-of-service analysis. A detailed "cost-of-service" analysis is now a routine, but highly complicated, step in rate making. Generally this analysis consists of making two breakdowns of costs. First , costs are functionally segregated into the three commonly accepted �.. -2- categories of consumer, capacity, and production costs; and second, costs in each functional category are spread through the various customer classes on a 1/fair sharer' basis. Some costs are easily and logically categorized and spread, others must be arbitrarily allocated. Rate structures and individual rates evolve from the decisions of the Board of Directors as to how the costs in each functional category should be recovered from each customer class. For example, since consumer costs and capacity costs are largely fixed (regardless of consumption levels in the short run) the Board might choose to recover these in a lump sum, fixed monthly charge to each customer. In the context of this study, a detailed cost--of-service analysis must be carried out as a part of setting rates in Phase II . So far as we could determine, no such analysis has ever been performed at TDPUD. As a part of developing and displaying alternative rate structures in Phase I , we have prepared hypothetical allocations of a sample 1976 cost budget (Section III) . This is not a formal cost-of-service analysis . The accuracy of these allo- cations is altogether unknown , and they can not be used as a basis for setting rates. The hypothetical allocations do provide a set of numbers for use in developing alternative structures that are similar in many respects to what the District might expect. Thus they facilitate realistic comparisons of alternative rate structures by the Board. 2. ' STUDY OBJECTIVES Ok Based upon our understanding of the District 's needs, our discussions with the Board and the General Manager, and our survey of Board opinions , we feel that the following statement of the objectives of the total rate making study effort is most appropriate. AIM The study objective is to develop customer class definitions , rate structures and rate levels, and necessary rules for each class that best suit the -3- low operating and growth needs of the district. The study products should meet the following individual criteria. Class definitions , structures , and rates should emanate from a detailed cost-of-service analysis. - There should be specific recommendations for updating rates; including time intervals and methodologies. �• - Rate levels should reflect the feelings of the Board of Directors regarding the appropriate rate of return (if any) for the District, and the level of capital expenditures to be financed by current revenues. Rate structures should include a means for charging seasonal customers their "fair share" of operating expenses. -- There should be a clearly delineated means of recovering all costs associated with installing service hook-ups. - Rates should reflect the cash flow needs of the District. Ak Phase I of the study has been directed toward achieving this objective. The objective and product of Phase I was the develop- ment and presentation of potential alternative rate structures. The Board must now select the alternative(s) that it feels is .. most in keeping with the rate philosophy of the District . In addition, the Board must specify the desired rate of return for the District and the desired level of capital expenditure financing from current revenues. These decisions can then be incorporated into the meeting of the overall study objective. 3. KEY FACTORS The following factors are circumstances or conditions related to the District ' s operating environment that we feel play a major role in shaping rate structures and levels. District Rates Must Increase Significantly A review of 1974 and 1975 operating results to date clearly indicate the need for a significant rate -4- eW increase. The size of this increase , for the short run, depends upon several factors. These are : -- The Board' s assessment of future cost trends. The Board's philosophy regarding the appropriate rate of return for the District . The Board' s determination of the cash position required for proper District operation. - Decisions regarding capital expenditure financing through current revenues. In the longer term,. generating extra cash to replace currently depleted working capital should not be neces- �' sorry. Tb'e District "s' El'e'ctrical' Cost Structure Does Not Follow a Declining Block' Pattern Overall , the District ' s cost of . providing electrical AOL service may be viewed as consisting of two elements. One includes all consumer costs and capacity costs. The other includes the energy or production cost which consists solely of the energy charge portion of the Sierra Pacific purchased power bill . The first element , given a fixed-size customer base , is a fixed cost in the short run regardless of consumption levels. The second element stems from a flat charge per kilowatt- hour by Sierra Pacific for energy consumed. This rate per kwh is constant , regardless of consumption (excepting the first 450 kwh per month which is trivial), and does .• not follow the declining block pattern. The District ' s marginal cost of energy increments is thus fixed; . unlike the cost structure of utilities which generate part or all of their own power. Off-Peak Priding 'i's Not Practical ,, in' the Immediate_ Futures for Residential Service The capital cost and administrative difficulty of estab- lishing an off-peak residential metering system preclude its adoption within the next one to two years. In addition, we feel that a detailed analysis of residential consumption patterns is needed in order to justify off- peak pricing. In any case this would be a fine-tuning of District rates that should come after major problems are addressed. There is No Currently valid Basis for the D-1-A, �- D--1-B Residential Rate Distinction The price discount currently offered to customers with electric water heaters (D-1-B) is altogether inconsistent _5- Aeft with the District ' s cost structure. It might in fact be argued that the charge to customers with water heaters should be higher since they are theoretically responsible for increased capacity needs and costs. Fuel Charge Adjustment Pass Through Should Be Retained in the New District Rates TDPUD has no control over fuel surcharges on purchased ,., power and it is impossible to predict the timing or magnitude of these charges with any degree of certainty. Therefore we feel that it is appropriate for the District to maintain a cost pass-through for these charges. Consideration Should be Given to Developing' Individual •- Rates for the District ' s Largest Customers Our preliminary analysis indicates that it may be feasible to charge certain large customers directly on the basis of costs incurred in providing them service. This is particularly applicable with respect to capacity charges. Such a system would eliminate some of the financial uncertainty that automatically accompanies general rate structures. The Demand 'for' water Service is Relatively Inelastic Consumption of water in the District is not likely to fluctuate greatly with changing rates. There are no substitutes for water and conservation efforts are not likely to result in significant decreases in consumption in the Truckee-Donner Area. The District should therefore readily adopt rates that will fully recover all costs. It is .desireable to meter water consumption as a deterrent to waste. t Rates Should Insure Certain Cash Flows Because of the current financial position of the District and its propensity to operate with a minimum rate of return, we feel that the rate structure(s) selected should insure generous cash flows and certain recovery of all relatively fixed expenses. This means that these latter costs should be recovered as either fixed charges or very early in any scheme of blocked rates. The above factors must be carefully considered by the reader in reviewing the alternative rate structures set forth in Section ,M III of this report . ,� -6_ Aft. II . QUESTIONNAIRE SURVEY RESULTS Ask II . QUESTIONNAIRE SURVEY RESULTS The first step in our Phase I study effort was to conduct a questionnaire survey of the Board members , the General Manager and the District Counsel. The purpose of the survey was to determine the feelings and opinions of these individuals regarding a number of rate related concerns in the District. In particular, it was necessary to determine the alternative rate structures that were of greatest interest for development and analysis in study A Phase I . Following completion of the questionnaires we attended a Board meeting to discuss the responses. As a result of this meeting we determined that the following structures were of greatest interest to the Board. .R Cost-of-Service Conservation Lifeline .• The Present Declining Block In addition there was substantial interest in seasonal pricing, methods of reducing the District ' s cash flow problems, and the discrepancy between the D-1-A and D-1-B residential rates. Exhibit I , following this page, lists additional concerns expressed in questionnaire responses. The four rate structures dft listed above are developed and analyzed in Section III of this report. tow ,.. -7- EXH1131T 1 Page 1 of 2 SUMMARY OF QUESTIONNAIRE RESPONSES -PRIMARY STUDY CONCERNS/ISSUES Lack of sufficient operating margins Cash flow -- Rate rules and regulations 4 RATE STRUCTURE PHILOSOPHIES/APPROACHES OF INTEREST ELECTRIC Peak-load pricing Flat rates - Flat rates with incentives to discourage peaks Cost pass-through only Cost-basis for power expense plus flat rate for overhead, maintenance, operations, etc. - Conservation incentive (inverted rates) Seasonal pricing (second homeowners) Continually increasing charge for non-use (second homeowners) Lifeline-minimum charge includes "essential" power usage (low income) WATER Based on metered usage PERCEIVED PROBLEMS/INEQUITIES IN CURRENT RATES Declining-block electric rates do not encourage conservation -- Commercial electric rates too low for large users/ high voltage customers Rates for customers with electric water heaters (D-1-B) lower than customers without (D-1-A) AW EXHIBIT I Page 2 of 2 - Water expenses probably being financed by electric revenues Residential water service f lat rate is inequitable and doesn ' t encourage conservation Some commercial water customers don' t have operable meters - Electric & water service connection charges have inequities , . Don't reflect true costs . . Street -crossings , . . Single customer at end Lof distribution line . . Low charge for 3-phase service connection . . Need charge for repair of broken or vandalized meters FINANCING CONSIDERATIONS Service expansions/improvements through operating revenue . , Part through use of depreciation charges 00 Expansions financed by developers 00 May not be possible in current financial condition Sources for outside financing . . REA . . District revenue bonds . . Taxing power ,� . . Sale of excess land • - Restrictions on use of excess land sale funds Donner Lake debt Construct/renew water limes . . No operating costs . . None DISTRICT FINANCIAL NEEDS - Impact of fuel adjustment charges Auk Impact of standby charges Five-year plan . . Power costs ow - Other operations, maintenance, and debt service costs . , Donner Lake acquisition . . District-finances expansion and improvement needs -- Water--Cook Associates Electric--R. W. Beck . . Revenue requirements and sources Aft r AM tow jowk III. RATE STRUCTURE ALTERNATIVES III. RATE STRUCTURE ALTERNATIVES AW This section of the report contains detailed descriptions of the various alternative rate structures developed and analyzed in illustration, only electric rates study Phase I . For purposes of are used in example discussions. The same general principles and ..• structures apply to water rates, which are discussed in the final subsection of this section. 1. ' OPERATINGESTIMATES AND* ANALYTICAL ASSUMPTIONS Each of the alternative structures are based upon a common estimate of TDPUD operating levels for calendar 1976 , as shown in Exhibits II and III following this page. These estimates include both financial and power consumption data. Preliminary functional allocations (consumer capacity, energy) of 1976 estimated costs were made in accordance with general rate-making practices and experiences, pending detailed analysis of TDPUD costs. Likewise, customer class allocations are tentative pending a detailed cost analysis. it is important to recognize that the cost and consumption AMI estimates , and their allocations , are included solely in order to provide a frame of reference for display of alternative rate structures. These estimates are not based upon a detailed analysis of TDPUD operations nor are they a reflection of the Board of Director's or Management 's expectations or desires. We feel that the estimates are somewhat close to the levels that the District is likely to .experience. A detailed cost-of-service analysis am must however preceed the setting of final rates. 2. ' ALTERNATIVE RATE STRUCTURES AM This subsection includes descriptions and discussions of the following alternative electrical rate structures : _g_ tAllIbI I t ,f•. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT EXAMPLE FUNCTIONAL ALLOCATION OF ESTIMATED 1976 ELECTRIC SERVICE BUDGET ESTIMATED EXAMPLE FUNCTIONAL ALLOCATION Aft 1976 OF ESTIMATED 1976 EXPENSES BUDGET CUSTOMER . DEMAND ENERGY OPERATING EXPENSES Purchased Power $lv7009000 $340,000 $1 ,360,000 Station Expense 12500 1 ,500 low Distribution Expense 11 ,000 $5,500 59500 Street Lighting 400 400 Meter Expenses 13,000 13,000 Right-of-Way Rents 22000 29000 Misc. 2,500 2,500 ' TOTAL OPERATING EXPENSE $12730,350 $21 ,400 $349,000 $12360,000 MAINTENANCE EXPENSES Supervision $ 92500 $ 32500 $ 61000 Structures �. Station Equipment 3,800 MOO Distribution Equipment 28,500 18,500 102000 Line Transfers 600 600 Street Lighting and Hydrants 21000 22000 Meters 700 700 -Distribution Plant 900 900 TOTAL MAINTENANCE EXPENSES $462000 $25,300 $203,700 CUSTOMER ACCOUNT EXPENSES - Meter Reading $33 000 $33,000 Records and Collection 48,000 489000 Aft Uncollectible Accounts 8,95001 8,500 Advertising Expense 500 500 TOTAL CUSTOMER ACCOUNTS EXPENSE $90,000 $90,000 GENERAL AND ADMINISTRATIVE EXPENSE Administrative Salaries $17,000 $ 8,500 $ 8,500 Office. Supplies and Expense 179000 101,000 7,000 Outside Services 502.000 102000 40,o00 Property Insurance 63,000 29000 41000 Misc. 111000 119000 General Plant Maintenance 900 900 TOTAL G. AND A. EXPENSE $101 ,900 $41 ,500 $60v4OO Depreciation $1001)000 $1009000 Interest 89000 89000 TOTAL ALL EXPENSES $2,076,300 $178,200 $538,100 $19360,000 r i i i i # i ) �► ) 1 i r Y TRUCKEE-DONNER PUBLIC UTILITY DISTRICT ESTIMATED 1976 FUNCTIONAL COST ALLOCATIONS TO CUSTOMER CLASSES SECURITY PUBLIC TOTALS RESIDENTIAL COMMERgIAL LIGHTS BLDGS. Average Estimated Monthly Customer Count 39488 2,750 450 275 13 Percentage of Total 100% 79% 13% 7.5% •5% Average Monthly KWH Consumption/Customer 850 4,200 75 29500 COST ALLOCATIONS a. Total Customer Cost $178,200 $1409500 $22,900 $142050 $660 Cost/Consumer/Month $4.25 $4.25 4.25 $4.25 b. Total Demand Cost $538,100 $2959955 $231 ,345 $ 5,400 $5.400 Cost/Consumer/Month $9.00 $43.00 $1 .65 $34.65 C. Total Energy Cost 19360v000 $714,000 $625,600 $ 6,800 $13,600 Average Cost/KWH $.0265 $.0265 $.0265 $.0265 Cost/Consumer/Month $21 .65 $115.85 $2.05 $87.20 d. Total All Costs (From Ex. II) 2,076,300 $1tl502455 $879,935 $26,250 $19,660 Percentage of All Costs 100% 55% 42 1% 2% Cost/Consumer/Month $34.90 $163.10 $7.95 $126.10 rn Note: The Cost/Cutomer/Month i s the minimum required average revenue per month for breakeven. x s — Auk Residential -- Present D-1-A - Cost-of-Service - Lifeline ` ,. - Conservation Commercial Weighted Average of Present GS-1, GS-2, and GS-3 Cost-of-Service AM The residential and commercial customer classes provide over 95% of the District ' s basic rate revenue (not including fuel surcharges) . Both graphical and/or narrative descriptions are provided for each structure, as appropriate. Outstanding features (good and bad) are discussed after each description. All rates are based upon estimated average monthly costs and consumptions for customer classes. - As shown in Exhibit III , this means a minimum average cost recovery of $35.00 per month at 850 kwh consumption for each residential customer; and a minimum average recovery of about $165.00 per month at 4,200 kwh consump- tion for each commercial customer. We recognize and emphasize the fact that there are serious potential shortcomings in such broad averaging of costs and consumption in actual rate development. Such techniques do, however, facilitate the display of relative differences and impacts of alternative .structures. (1) ' Residential' - Present D-1-A The present TDPUD D-1-A rate structure is graphically �. depicted in Exhibit IV, following this page. The D-1-B rate is not shown since it is structurally identical to the D-1-A; the only difference being the actual energy block price levels. All features of the D-1-A apply to the D-1-B. Overall, the D-1-A structure is the extremely common and well accepted declining block, promotional structure that is in widespread use throughout the nation. _g_ EXHIBIT IV PRESENT D-1-A RESIDENTIAL ELECTRIC SERVICE RATE STRUCTURE Monthly Rate r Per Hundred Kilowatt-Hours $10 $9 $8 $7 $b Total Revenue - $25.35 $5 �•. $4 i $3 r � t 1 �.. $Z $ 0 1 ! %° 1 �O V O V 00 00 1k.0 O O o 0 0 0 0 0 0 %�n 0 0 0 0 0 0 0 0 0 0 0 0 0 Energy Consumed in Kilowatt-Hours per Month AV Related only to TDPUD it has the following features: - It does not mirror the cost structure of the District . Unlike utility companies that generate part or all of their own power, the District does not have a true declining block cost structure. There is no apparent historical basis for the D-1-A structure in the District . . The structure has a high degree of consumer acceptance. The implicit spreading of customer and capacity costs through energy blocks makes price setting and revision more difficult . Accurate break-even analysis and con- sumption forecasting are critical to .successful use of this structure. It is impossible to charge seasonal customers their full cost under this structure. (2) Residential - Cost-of-service A potential cost-of-service structure is depicted graphically in Exhibit V, following this page. The reader should be aware that it is not practical to charge each and every District customer according to the exact cost of providing service. Each customer costs a different amount to serve simply because of their location in the District ' s physical distribution system. Therefore, many individual elements of the cost-of-service price components are in fact averages of total costs that apply to a customer class. For example, it may be cheaper to read the meter of a customer Located next to the District ' s administrative offices than it is to travel several miles to read another customer' s meter. Nevertheless, each customer is required to pay an equal average share of the total meter reading cost . The cost-of-service structure does, however, provide for recovery of District costs from the customer classes responsible for them (in the case of certain commerical customers--directly from the individual customer) and in a EXHIBIT V RESIDENTIAL COST-OF-SERVICE ELECTRIC SERVICE RATE STRUCTURE Monthly Rate Per Hundred Kilowatt-Hours $10 9.10 $8 $7 $6 Total Revenue - $36.00 OOW _c s � $5 c c o o E E L . L 4? r a 0 0 o o $3 ' $2.70 N N 0 0 $2 L 4 23.00 o u .J (U $1 CL U U 1 v 00 00 %.0 0 0 0 0 0 0 0 0 o v, C) 0 CO 0 0 0 0 0 0 0 0 0 0 Energy Consumed in Kilowatt-Hours per Month ,m. manner that reflects the District 's cost structure. The structure has the following features. It can mirror the District ' s cost structure. Setting and revising prices is easier that it is with any other structure. OWIL The accuracy of break-even analysis and consumption 4_ •.. forecasting is less critical than with any other struc- ture. Seasonal customers can be charged their full cost through a minimum annual charge for seasonal service that would include capacity and some portion of customer costs. Customers may resist paying the relatively high fixed monthly charge associated with customer and capacity costs. (3) Residential* Lifeline A potential lifeline structure is shown graphically in Exhibit VI, following this page. The lifeline concept has been promulgated in California by the State Legislature. Lifeline has been generally defined as the "minimum energy needs of the average residential user for the following end uses; space and water heating, lighting, cooking and food refrigeration . . . 011 & At this time the practical p aspects and ramifications of a lifeline rate are not known. It is likely, however, that the rate will simply result in commer- cial and certain residential customers subsidizing customers who stay within the lifeline limit. The structure shown in Exhibit VI reflects a subsidy of lifeline customers (assumed to be 250 of all residential customers) by non-lifeline residential customers. The lifeline structure features J.nclude the following: It in no way reflects the District 's cost structure. Depending upon final Public Utilities Commission lifeline rules and which customers subsidize lifeline customers _11_ EXHIBIT VI d.. RESIDENTIAL LIFELINE ELECTRIC SERVICE RATE STRUCTURE Monthly Rate �• Per Hundred Kilowatt-Hours $10 Total Revenue From Lifeline Customers - $9.00 Total Revenue From Non-Lifeline Customer - $44.50 $9 (Assume that 25% of customers are lifeline customers) $8 $7 low $b E $5 f AW r f } $4 . { } Lifeline $3 , } r t 1 t � 2 o I o o o I o I o 0 1 �n m i .o Cv f r� 0` V 00 00 %.0 O 0 0 0 0 0 0 0 6 %-n o a 0 0 0 0 0 0 o a o 0 0 Energy Consumed in Kilowatt-Hours per Month (residential or commercial) , the structure may be highly acceptable to and desired by, residential consumers. Price setting and revision appear as though they will be more difficult and complex with this structure than with any other. Break-even and consumption analysis accuracy are highly critical. If large numbers of customers conserve energy in order to stay within the lifeline billing, the District will not be able to recover its costs. TDPUD will probably not be required to institute a lifeline structure. The District may eventually be subsidizing residental lifeline customers of Sierra Pacific Power Company through their resale rates. (4) Residential - Conservation A potential conservation structure is shown in Exhibit VII , following this page. The purpose of a conservation structure is to change the consumption behavior of residential customers. Depending upon the behavior change objectives, the rate structure could take on a variety of shapes and energy block price relationships. The Lifeline structure of Exhibit VI , for example, will probably act as a conservation structure '' at certain consumption levels. Unfortunately, at this time, no one knows what the demand elasticity of residential customers is with respect to price. It is therefore most difficult to estimate the likely impact of a conservation structure. Its features related to TDPUD include the following: It does not reflect the District 's cost structure. Break-even and consumption forecasts are extremely critical yet , at the same time, extremely difficult . Under the inverted block structure, if consumption does decrease significantly the District may not recover its fixed costs Consumer resistance to the inverted block structure is Likely to be quite high. l -12- L_ni11Lori 1 Y I I RESIDENTIAL CONSERVATION ELECTRIC SERVICE RATE STRUCTURE Monthly Rate PIK Per Hundred Kilowatt-Hours ' . 1 $10 $9 $8 $7 Total Revenue - $36.00 $6 ! t $5 $4 saw .�. $2 t CDP o o f o c; � i Ec� 4- N W i,,n ON V 00 q 4D O O o 0 0 0 0 0 0 %n o 0 0 0 0 0 0 - o O o 0 0 0 Energy Consumed, in Kilowatt-Hours per Month Ad (5) Commercial Rate Structures Commercial rate structures (including security lights and public building) are similar in shape to those illus- trated earlier for residential application. Likewise, the features of the residential structures cited earlier apply, with the following exceptions and additions. Commercial rates can practically allow for a pass through of certain direct costs to appropriate indiv- idual customers. .� Capacity requirements of many commercial customers can be metered and billed accordingly. This may not neces- sarily be desirable, but it is practically feasible. . Lifeline rates , by legislative definition, do not apply to commercial customers. Certain conservation structures may result in a simple increase in the price of merchandise sold in the com- munity by commercial customers, instead of a reduction in energy consumption. Exhibits VIII and IX, following this page, show the average of the present commercial structures and a potential cost-of- service structure respectively. (6) Capital Expenditures Financing There are three basic ways to modify rate levels , within any structure, to generate cash that can be used for capital expenditures. These are: Energy Use Surcharge This is simply an additional charge per kilowatt-hour consumed that is over and above the basic rate. Fixed Charge* Assessment A fixed monthly charge to each customer can be made in a manner similar to a customer or capacity charge under a cost-of-service structure. -13- EXHIBIT VIII WEIGHTED AVERAGE OF CURRENT GS-1 , GS-2, AND GS-3 ELECTRIC SERVICE RATES Monthly Rate Per Hundred Ki Iowa-tt-Hours $10 j $ 1 9 I i $8 El ' LI 91 Total Revenue - $150.51 0 0 C $b v ' L c° $5 $4.77 s U Ask $4 U fu CLI [0 $3 $2 . LA co V p %.n p o o N 0 0 0 0 0 0 0 0 0 0 0 o a C o 0 Energy Consumed. in Kilowatt-Hours per Month EXHIBIT IX COMMERCIAL COST-OF-SERVICE ELECTRIC SERVICE RATE STRUCTURE �• _ Monthly Rate I Per Hundred 1Kilowat -Hours 1 1 1 ! $10 1 i $9 $8 s C $7 E Total Revenue - $162.50 L a $b s o � o C M sr> $5 L a � 0 o U 1 40- •- U 1 y m o m $3 $2.70 U V . I L E $2 0 $115.50 t V'n O O C) O O O o 0 C) 0 0 © o 0 0 ,-Energy -Consumed in Kilowatt-Hours per Month Conservation Charges_ Conservation pricing may be built into any rate struc- ture and the resulting excess of revenues over expenses Pok devoted to capital expenditures financing. Exhibit X, following this page, depicts an example of a conservation "tail" attached to the residential cost-of-service structure. The shaded area in the tail represents money that could apply to capital expenditures. Regardless of the method chosen to collect any monies for capital expenditures, we recommend that they be clearly separated from normal revenue. Likewise assets purchased using this money ., should be depreciated and charged functionally to the proper cus- tomer classes . This practice will preserve and perpetuate a capital expenditures fund such that it may be possible in the future to eliminate the capital expenditures charge. It should be noted . that the concept of financing expenditures through current revenues generally does not conform to a strict cost-of-service pricing structure. �. The annual capital expenditure requirements of the District for plant replacements have been estimated at about $170,000 per year for electric plant and $130,000 per year for water plant . The electric plant expenditures could be financed through an average price increase of 8-107o over the estimated 1976 expense levels. Water plant expenditure requirements, on the other hand, equal about 100% of the total current water revenues. This means that rates would have to be doubled, on the average, to meet expenditure requirements from current revenues. water rates are discussed in greater detail in the following subsection. 3. WATER RATES In general, the same types of rate structures can be used . for water service that- apply to electric service. Also, the same cost-of-service analytical procedures are an integral part of rate setting, There are however important differences in the cost structure and customer demand patterns, related to water service, _14_ .,.� EXHIBIT x Oft RESIDENTIAL COST-OF-SERVICE STRUCTURE WITH A CONSERVATION TAIL Monthly Rate Per Hundred Kilowatt-Hours • $10 Total Revenue - $51 .30 $8 Cost of Service - $45.40 Available Capital - $5.90 $7 $6 1 s s � . c o $5 0 x CL 0 • 0 $3 N t , 0 ++ f o $2 l 1 u � � o � o � E � $1 t ! � j s i t v � v %.n cr% V OD W O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Energy Consumed in Kilowatt-Hours per Month -16- AM- that should be considered in rate setting. These include: Demand for water is relatively inelastic. Customers have minimum requirements that must be met and there are no substitutes. Investment in fixed assets is normally very high rela- tive to operating expenses leading to high depreciation AM. charges and/or high on-going plant replacement costs. Nearly all water utility expenses are fixed on an annual basis. Only electricity and fuel costs related to pump- ing are likely to vary much with the volume of water sold. Metering of service helps to control wasting of water. Given the predictability of water service demand and the fact that service metering is preferred to flat rates, it is practical and relatively easy to develop blocked rate structures for service. It still may be desireable however to levy minimum charges so as to reduce the uncertainty associated with collecting revenues to r meet fixed out-of-pocket expenses. Specific, well planned approaches are necessary to meet capital expenditure requirements. As noted in the previous sub- section, it has been estimated that the District will have to spend an average of $130, 000 per year in order to repair portions of the existing plant. In addition, the current plant that is in service will require normal replacement at the end of its useful life. Most of this plant is not reflected on the District 's financial balance sheet and thus it is not being (and cannot be) depreciated. According to Cook Associates estimate, amortization of this unrecorded plant over its useful life amounts to over $500,000 per year. Given the magnitude of cash that is and will be needed for capital expenditures the Board should decide as soon as possible on a policy for acquiring the needed funds. Alternative courses of action include, among others : -15- Set water rates on the basis of the annual , cash water service budget Finance all or part of capital expenditures through loans and/or bonds . Rates must then include debt service requirements. Collect part of the needed funds through property tax assessments. This might logically cover capacity related costs, thereby charging a share of costs to vacant lot owners on the basis of the fact that the District stands #'"� ready to serve them as a result of capacity investments . This concludes our Phase I report materials. The following section outlines our Phase II study plan . It is necessary at this point for the Board of Directors to answer the following questions. Which of the alternative rate structures are desireable for water and electric service? What overall rate of return is desired by the Board for the District? What policies do the Board of Directors wish to follow in funding capital expenditures? -16- r A J� Apo^ IV. PHASE II STUDY PLAN r w. Oft Oak- low IV. PHASE II STUDY PLAN .• The second and final phase of this study consists of determining the actual rates to be charged the District 's water and electric service customers. These rates will be based upon the rate structure(s) selected by the Board for various customer classes. This section of our Phase I report outlines our Phase II Task Plan. 1. TASK PLAN The following steps will be carried out in order to develop ,., a final set of rates for the District . Unless otherwise noted, each task must be carried out for both water rate development and electric rate development . In all cases however, the personnel time devoted to water is much less than that devoted to electricity. ,�. In general, the rates developed in this phase will apply to the 1976 calendar year and should be reviewed each year in light of the new year's budget forecasts. •- TASK 1. REVIEW 1975 OPERATIONS AND 1976 BUDGETS We will gather and review 1976 financial and operations budgets in light of 1975 results. We will examine the techniques employed in developing the new budgets and suggest any improvements that are appropriate. If we find significant shortcomings in any part of the budget development process we may ask for a re- estimate of affected items. It will also be necessary for the District to prepare an estimate of water and electric consumption for 1976 as a basis for allocating certain costs to consumer groups. These forecasts must include capacity requirements, product consumption, and numbers of customers in each class. Forecasts should be on a A -17- AVft monthly basis. We will provide limited assistance in the prepa- ration of these forecasts but the bulk of the work must be done by District personnel. TASK 2. ANALYZE COSTS FOR FUNCTIONAL ALLOCATION Each expense account in the 1976 budget will be analyzed in detail so that its components can be properly classed as either consumer, capacity, or production costs. Wherever possible and practical, costs that result solely from serving an individual customer will be isolated and allocated to the particular customer. The consumer cost category will also be divided between recurring costs and those associated with installing new services. TASK 3. ALLOCATE FUNCTIONAL COSTS TO CUSTOMER CLASSES We will analyze each of the functional cost allocations in each. expense account and assign appropriate portions of each amount to the proper customer classes. The previously prepared consumption forecasts will facilitate this cost assignment . TASK 4. REVIEW AND REVISE CUSTOMER CLASSES AS APPROPRIATE Based upon the cost allocations and projected consumptions, we will review the existing customer classes and revise them as necessary with the approval of the Board and the General Manager. The objective will be to develop reasonably homogeneous classes of customers with respect to some or all of the following criteria. Peak Demand Average Consumption Seasonality Estimated Load Factor Estimated Power Factor • Overall Cost of Providing Service ?•. - - _�g_ s The output of this task will be a complete cost-of-service analysis according to the most appropriate customer classes. ... TASK 5. DETERMINE CUSTOMER CLASS REVENUE REQUIREMENTS The Board' s desired rate of return will be combined with the completed cost-of-service analysis to determine the minimum amount of revenue required from each class of customer; and, perhaps i in some cases, individual customers. TASK 6. DEVELOP BASIC RATES FOR EACH SELECTED STRUCTURE Within this task, the actual basic rate levels for the selected structure(s) will be developed based upon the minimum revenue requirements set forth in the previous task for each customer class. These basic rates will not include fuel sur- charges, any charges earmarked for capital expenditures, or any installation costs. TASK 7. DETERMINE ADDITIONAL CHARGES This task will be devoted to developing appropriate instal- Aft' lation charges and special charges that will go toward funding capital expenditures. In addition we will review the District 's purchased power fuel surcharge and suggest any appropriate improvements to its form. TASK 8. PREPARE AND PRESENT FINAL REPORT Our final report containing new, detailed schedule of water and electric rates will be prepared and presented to the Board. We will include specific recommendations for updating rates periodically. 2. STAFFING, TIME SCHEDULE, AND COSTS As was indicated earlier, it is necessary for the Board of Directors to make certain decisions regarding the desired -19- rate-of-return, the preferred rate structure, and the level of capital expenditure financing policy. The outcome of these decisions, as well as the state of the 1976 budget and consumption low forecasts, will substantially affect our estimates of time and fees required to complete Phase II . We therefore must delay preparation of these estimates until the Board has indicated its preferences. Auk "" -20-