Loading...
HomeMy WebLinkAbout5 Electric Fees Agenda Item # iriwt � M Memorandum To: Board of Directors From: Stephen Hollabaugh Date: February 26, 2003 Date of Board Meeting: March 5, 2003 Subject: Consideration of an ordinance setting electric facilites fees. 1. WHY THIS MATTER IS BEFORE THE BOARD This item concerns the adoption of an ordinance setting electric facilities fees for the purpose of financing new public electric system facilities to mitigate the impacts of additional demands on the existing electric system caused by new development within the District's electric service area. Only the Board can adopt an ordinance. 2. HISTORY The District discussed this in a workshop on February 19, 2003 and held a public hearing on that date. The public hearing will be held open till the March 5, 2003 board meeting. The Electric System Master Plan update was adopted by the Board in July 2002, This Master Plan included the capital improvement projects required due to new development within the District. At the August 7, 2002 Board meeting, a public hearing was held to discuss electric facilities fees. The District had involved CATT within the electric facilities fee discussions. The District proposed a calculation method of the new electric facilities fee. During that public hearing, CATT requested that the District tier the fee structure or investigate some other methods of collecting the fee and asked that the District continue discussions. The Board directed the General Manager to continue discussions with CATT to explore options and possibilities. The Board moved that the Public Hearing be held over until a future Board meeting. 3. NEW INFORMATION The District staff has investigated various methods to calculate the electric facilities fee. Some of the methods evaluated a tiered fee over time. After much discussion, we propose that the methodology and schedule of fees as outlined in the attached white paper "Electric Facility Fees 2003 - Proposed Schedule of Fees and Calculation Methodology" and reflected in the proposed ordinance be adopted by the board. Note that a significant change from the previous proposed ordinance is in the area of how the District collects the facilities fees. The following explanation briefly summarizes the language contained in the proposed ordinance. For new residential developments, the developer will pay electric facilities fees to the District upon signature of the development agreement. This will shift the facilities fee burden to the developer at the beginning of a project and off of the individual homebuiider. Within existing residential areas, the developer or owner who builds a home on a vacant parcel will pay the difference in facility fees between the current facility fee and whatever fee was paid for that particular parcel at the time the residential area was originally developed. The commercial fees will be paid upon signature of the development agreement. 4. RECOMMENDATION I recommend that the board adopt the ordinance establishing electric facilities fees. ELECTRIC FACILITY FEES 2003 Proposed Schedule of Fees and Calculation Methodology A. Introduction and Summary Electric facilities fees have remained unchanged since being adopted by the Board on March 16, 1982, a period of over 20 years. Current fees are out of date and do not produce the funds necessary for the District to install and provide adequate electric capacity due to load growth. The 2002 Electric System Master Plan, adopted by the Board in July of 2002, identifies the capital improvement projects necessary to provide adequate electric capacity for anticipated load growth due to new development over the next 15 years. A proposed schedule of facility fees for both residential and commercial customers, based on the current Electric System Master Plan is summarized in Table 1. The methodology used to calculate the proposed facility fees is explained in detail below. B. Calculation Methodology B.1. Facility Fees Capital improvements to the District's system will be required to provide for the projected load growth over the 15-year planning period from 2003 to 2017 as shown in the Electric System Master Plan. The 15-year total cost, in 2002 dollars, of all capital improvement projects is $9,390,400. The average cost to the District to implement the proposed capital improvements is approximately $626,000 per year. Individual capital projects are listed by year in an order that reflects projected load growth over time using our best engineering judgment. However, it is recognized that the tinting of projects is contingent upon when and where new development occurs in the District. If development occurs differently than assumed in the Master Plan, the timing of individual capital improvement projects may shift from year to year. Therefore we believe using average cost values over a 15-year period is both appropriate and practical for planning purposes. It is recognized that a portion of the proposed capital improvement projects will incidentally benefit the District's existing customers. It is also true that new development and new customers take advantage of the fact that excess electric system capacity is in place and available for use prior to them connecting to the system. This excess capacity exists due to prudent system planning and design practices that build redundancies into the electric system. For example, upon the loss or outage of any one substation, the District's remaining three substations can carry the entire District load.This excess system capacity is a tangible benefit to new customers.We believe that the benefits to existing customers from the proposed capital improvements and the benefits that new customers enjoy by taking advantage of excess system capacity are essentially 02/12/2003 Page 1 of 4 equal and offset each other. Therefore, new development's share of the cost of capital improvement projects is the full amount of $9,390,400. The average cost over 15 years is $626,000 per year. To summarize so far: Total Cost of Capital Improvements $9,390,400 Planning Period (years) 15 Average Cost of Capital Improvements per year $626,000 The calculation of the proposed facilities fee, to be collected from new development projects, has both residential and commercial components. We will calculate the residential fee first, and then use that amount as the basis to calculate commercial fees in Section B2. To calculate the residential component, we start from the fact that approximately 54% of total District-wide energy sales are to residential customers, and approximately 300 new residential services are connected each year. Therefore, multiplying the average cost of capital improvements per year times the residential energy factor gives us that portion of the capital cost attributable to residential growth on a per-year basis. Dividing this amount by the number of new residential services per year give us the facility fee required from a single residential customer. We summarize as follows: Residential kWh (energy) sales compared to Total kWh sales, 1996 to 2001: Residential Factor - yearly average 54.04% Residential Factor - yearly average, deleting high and low values 53.87% Residential new service connections, 1996 to 2001: Number of Services - yearly average 300 Number of Services - yearly average, deleting high and low values 272 Fee Calculation: Residential Facility Fee=Average Cost of Capital Improvements per year multiplied by the Residential Factor, and then divided by the average number of new yearly residential services Residential Facility Fee = [$626,000 x 54.04% ] / 300 = $1,127.63 Residential Facility Fee = [ $626,000 x 53.87% ] / 272 = $1,239.80 The second residential facility fee calculation uses the `Residential Factor' and `Number of Services' average with the `high and low values deleted' numbers as shown above. This is a slightly more conservative method of calculating averages. We therefore recommend setting the proposed fee closer to the value calculated with this method due to uncertainties over the 15-year planning period. Proposed Residential Facility Fee: $1,200 02/12/2003 Page 2 of 4 B.2. Commercial Fees Using the proposed residential fee of$1200 as a starting point, we can calculate commercial fees according to the following methodology. Since the typical residential electric panel size is 200 amps, a "dollar per amp" value can be determined by dividing $1200 by 200 amps that yields a result of$6 per amp. Total commercial facility fees can therefore be calculated for the wide range of commercial-type electric panels with varying amperage sizes and voltage levels by using this $6 per amp value as the basis for setting the fees. Proposed commercial facility fees, for a range of panel sizes are depicted in Table 1. For comparison purposes, Table 1 also depicts existing commercial fees. The proposed commercial fees represent an increase of 56.3% over existing fees. A 56.3% increase after 20 years is equivalent to an average annual increase of 2.25% applied for each of the past 20 years, approximately equivalent to or less than the average rate of inflation over that period. C. Collection of Facility Fees For new residential developments, the developer will pay $1200 per residential parcel upon signature of the development agreement. Within existing residential areas, the developer or owner who builds a home on a vacant parcel will pay the difference in facility fees between the current facility fee and whatever fee was paid for that particular parcel at the time the residential area was originally developed. In addition, if the developer or owner who builds a home on a vacant parcel desires to install a electric service larger than a 200 amp single phase panel, the developer or owner will pay the difference in facility fees between the larger panel and a 200 amp panel. This methodology also applies to existing residential customers.For example, a customer who wants to increase their existing panel size will pay the difference in facility fees, at the current fee schedule, between the larger panel and whatever facility fee was paid at the time the existing panel was installed. For new commercial developments, facility fees will be due and payable upon signature of the development agreement with the District. Facility fees will be charged according to the voltage, panel size, and phasing requirements as requested and noted in the development application submitted to the District by the developer. When a commercial customer desires to modify an existing service due to any change of voltage, panel size, and/or phasing, the customer will pay the difference in facility fees, at the current fee schedule, between the proposed panel and whatever facility fee was paid at the time the existing panel was installed. District staff will periodically review the facility fee structure and propose any changes as may be necessary in the future to provide for capital improvements due to load growth. 02/12/2003 Page 3 of 4 TABLE 1 ELECTRICAL FACILITIES FEES PROPOSED FEE SCHEDULE Residential _._.__........1 Phase Existing Proposed Voltage Panel Size Fee Fee 120/240 200 or less $200 $1,200 400 $400 $2,400 Commercial 1 Phase 3 Phase Existing Proposed Existing Proposed Voltage Panel Size Fee Fee Fee Fee 120/240 200 or less $768 $1,200 $1,330 $2,078 120/240 400 $1,536 $2,400 $2,660 $4,157 120/240 600 $2,304 $3,600 $3,991 $6,235 120/240 800 $3,072 $4,800 $5,321 $8,314 120/240 1000 $3,840 $6,000 $6,651 $10,392 120/240 1200 $4,608 $7,200 $7,981 $12,471 120/240 1400 $5,376 $8,400 $9,312 $14,549 120/240 1600 $6,144 $9,600 $10,642 $16,628 120/208 200 or less $666 $1,040 $1,153 $1,801 120/208 400 $1,331 $2,080 $2,306 $3,603 120/208 600 $1,997 $3,120 $3,459 $5,404 120/208 800 $2,662 $4,160 $4,611 $7,205 120/208 1000 $3,328 $5,200 $5,764 $9,007 120/208 1200 $3,994 $6,240 $6,917 $10,808 120/208 1400 $4,659 $7,280 $8,070 $12,609 120/208 1600 $5,325 $8,320 $9,223 $14,411 120/208 2000 $6,656 $10,400 $11,529 $18,013 277/480 200 or less $1,536 $2,400 $2,660 $4,157 277/480 400 $3,072 $4,800 $5,321 $8,314 277/480 600 $4,608 $7,200 $7,981 $12,471 277/480 800 $6,144 $9,600 $10,642 $16,628 277/480 1000 $7,680 $12,000 $13,302 $20,785 277/480 1200 $9,216 $14,400 $15,963 $24,942 277/480 1400 $10,752 $16,800 $18,623 $29,098 277/480 1600 $12,288 $19,200 $21,283 $33,255 277/480 2000 $15,360 $24,000 $26,604 $41,569 02/12/2003 Page 4 of 4 ONNER PublicI I� Utility District I Ordinance No. 2003 - Establishing electric facilities fees WHEREAS, a study was conducted to determine the capital improvements required to provide for projected load growth over the 15-year planning period, increased system capacity, and expansion or maintenance of the operating flexibility of the electric system. The study is the District's 2002 Electric System Master Plan Update; and WHEREAS, the 2002 Electric System Master Plan Update was available for public inspection and review for more than ten (10) days prior to this public hearing and notice was given in compliance with Government Code Section 66016; and WHEREAS, a public hearing, noticed pursuant to and in compliance with Government Code Sections 66018 and 6062a, was held at a regularly scheduled meeting of the Board of Directors; and WHEREAS the purpose of the facilities fees is to finance public electric system facilities to mitigate the impacts of additional demands on the existing electric system caused by new development within the District's electric service area; and WHEREAS the electric facilities fees collected pursuant to this ordinance shall be used to finance the public facilities described or identified in the 2002 Electric System Master Plan Update; and WHEREAS after considering the Electric System Master Plan Update and analysis prepared by District Staff,the Board finds that the new development in the electric service area will generate additional need for new electric system facilities; and WHEREAS in compliance with the California Environmental Quality Act, following a properly noticed public hearing held at a regularly scheduled meeting of the Board of Directors, the Board did adopt a Negative Declaration for the adoption of the Electric System Master Plan Update. A Notice of Determination was filed with both the Nevada and Placer County Clerks in July of 2002; and WHEREAS the cost estimates set forth in the 2002 Electric Master Plan Update are reasonable cost estimates for recommended capital improvements and the fees expected to be generated by new development will not exceed the total of these costs. NOW, THEREFORE, BE IT ORDAINED that the Board of Directors of the Truckee Donner Public Utility District does hereby enact the following: 1. Adoption of Findings - The Board of Directors hereby adopts the above recitals as its findings. 2. Payment and Collection of Facilities Fees - The customer shall pay and the District will collect the facilities fees upon the submission of an application for new service or modification to an existing service. When the District requires a development agreement, the customer shall pay and the District shall collect the facilities fees upon execution of a development agreement between the District and the customer. 3. Amount of Facilities Fees - A. Residential Facilities Fees 1. New Residential Areas: The amount of the electric facilities fees shall be based according to panel size as follows: a. 200A or less - $1,200. b. 400A - $2,400. 2. Existing Residential Areas: Within existing residential areas, the developer or owner who builds an improvement on a vacant parcel will pay the difference in facility fees between the current facility fee and the fee that was paid for that particular parcel at the time the residential area was originally developed. In addition, if the developer or owner who builds an improvement on a vacant parcel desires to install a electric service larger than a 200 amp single phase panel, the developer or owner will pay the difference in facility fees between the larger panel and a 200 amp panel. 3. Modification to Existing Residential Service: A customer desiring to modify the size of an existing panel for a residential service will pay the difference in facility fees, at the current fee schedule, between the larger panel and the facility fee that was paid at the time the existing panel was installed. B. Commercial Facilities Fees 1. New Commercial Development: For new commercial development, facility fees will be due and payable upon execution of a development agreement with the District. Facility fees will be charged according to the voltage, panel size, and phasing requirements as requested and noted in the development application submitted to the District by the developer. The amount of commercial electric facilities fees shall be charged according to the following schedule: Voltage Panel Size 1 Phase Fee 3 Phase Fee 120/240 200A or less $1,200 $2,078 120/240 400 $2,400 $4,157 120/240 600 $3,600 $6,235 120/240 800 $4,800 $8,314 120/240 1000 $6,000 $10,392 120/240 1200 $7,200 $12,471 120/240 1400 $8,400 $14,549 120/240 1600 $9,600 $16,628 120/208 200Aorless $1,040 $1,801 120/208 400 $2,080 $3,603 120/208 600 $3,120 $5,404 120/208 800 $4,160 $7,205 120/208 1000 $5,200 $9,007 120/208 1200 $6,240 $10,808 120/208 1400 $7,280 $12,609 120/208 1600 $8,320 $14,411 120/208 2000 $10,400 $18,013 277/480 200A or less $2,400 $4,157 277/480 400 $4,800 $8,314 277/480 600 $7,200 $12,471 277/480 800 $9,600 $16,628 277/480 1000 $12,000 $20,785 277/480 1200 $14,400 $24,942 277/480 1400 $16,800 $29,098 277/480 1600 $19,200 $33,255 277/480 2000 $24,000 $41,569 2. Modification to Existing Commercial Service: A customer desiring to modify an existing commercial service due to any change of voltage, panel size, and/or phasing,the customer will pay the difference in facility fees, at the current fee schedule, between the proposed panel and the facility fee that was paid at the time the existing panel was installed. I For panel sizes not listed in the previous sections, the facility fee will be calculated by interpolating between or extrapolating from the listed values as appropriate. 4. Use of Facilities Fees-Facilities fee shall be solely used to pay for all costs associated with the public facilities described or identified in the 2002 Electric Master Plan Update constructed by the District. 5. Effective with the effective date of this Ordinance, all prior resolutions and ordinance pertaining to Electric Department facilities fees are rescinded and of no further force and effect. 6. This ordinance shall be effective sixty (60)days after the date it was adopted by the Board of Directors. 7. The Clerk of the District shall immediately cause a copy of this ordinance to be published in a newspaper of general circulation and posted in three places within the District. PASSED AND ADOPTED by the Board of Directors at a meeting duly called and held within the District on the 5th day of March 2003 by the following roll call vote: AYES: NOES: ABSENT: TRUCKEE DONNER PUBLIC UTILITY DISTRICT By J Ron Hemig, President ATTEST: Peter L. Holzmeister, Clerk of the Board ELECTIC FACILITIES FEES —A COMPARISON OF HISTORIC APPROACHES The question: How did the District finance growth-induced system improvements at various times? The Tahoe Donner Model: When Tahoe Donner was proposed, an agreement was entered into between Dart and the District Dart and the District would cooperate in design of the electric distribution system Dart would build it and the District would inspect it, accept it and operate it from that point on. The facilities included all primary and secondary distribution lines the development. The agreement did not require the developer to build or pay for the substation. The First Facilities Fee Ordinance: In 1982 the District adopted its first facilities fee ordinance. The District had just completed construction of the Martis Valley substation using funds on hand, and wished to recoup its investment. The facilities fee was based on the cost to construct the Martis Valley substation. The AB 1600 Model: The State of California adopted AB 1600 in 1988 Established standards for adoption of developer impact fees. The basic principal established by AB 1600 - a nexus between the fee and the developer's impact on the electric system. The District has adopted a process by which we prepare a master plan to identify the facilities needed to maintain a level of service as growth occurs. We then develop a facilities fee to charge the developer for construction of the facilities identified in the master plan. The developer must still construct on-site distribution facilities needed to serve the development, and pay a facilities fee to contribute a fair share to construction of off-site system backbone Discussion of the Methods: Tahoe Donner Model We did not take a look at the system-wide impact of growth. It was not based on a system-wide master plan. There was no facilities fee at all. We simply required the developer to build the onsite distribution system. The District rate payers paid to construct the off-site backbone system to maintain service levels. First Facilities Fee Model There was no system-wide analysis of the impacts of growth. The fee was based on one element of the District's electric system, the Martis Valley substation. AB 1600 Model We perform system-wide analysis to identify developer impact on entire electric system We comply with AB 1600 Developer pays for on-site distribution system We collect a facilities fee for construction of off-site facilities identified in the master plan to maintain service levels The developer's share of impacts is reviewed periodically to reflect changing pattern of development within our service area. Developer's impact is averaged with all other developer impacts.