HomeMy WebLinkAbout5 Electric Facilities Fees Agenda Item # 5
Memorandum
To: Board of Directors
From: Stephen Hollabaugh
Date: February 12, 2003
Date of Board Meeting: February 19, 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 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 homebuilder. 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
BA. 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 timing 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
ELECTRICAL FACILITIES FEES
PROPOSED FEE SCHEDULE
Residential
1 Phase
Existing Proposed
Voltage Panel Size Fee Fee
Commercial
1 Phase 3 Phase
Pro
fExisting Proposed Existing Proposed
Voltage Panel Size Fee Fee Fee Fee
ExIstin Proposed
Fee Fee
120/240 400 $1,536 M$2,4OO $2,660 $4,157
120/240 1000 g$3,840 $6,000 $6,651 $10,392
fi
120/200 200orless
120/208 400
120/208 GDO
120/208 000
120/100 1000
120/200 1200
120/208 1400
120/208 1600
120/208 2000
177/480 20Onrless
277/480 400
277/480 600
277/480 800
277/480 1000
277/480 1200
277/480 1400
277/480 1600
277/480 2000
02/12/2003 Page 4of4
. ... . .. . .. .. . ......... . . .
DistrictPublic Utility
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:
r
;j
Volta e Panel Size 1 Phase Fee 3 Phase Fee
120/240 200A or less $1,200 $2,078
120/240 400 $2,400 $4,157 {
120l240 600 $3,600 $6,235
120/240 800 $4,800 $8,314
120/240 1000 $6,000 $10,392
120/240 1200 $7,200 Sol zii1
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 k$33,255
277/480 400 $4,800
277/480 600 $7,200
277/480 800 $9,600
277/480 1000 $12,000
277/480 1200 $14,400
277/480 1400 $16,800
2771480 1600 $19,200
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.
3. 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 t
of Directors.
7. The Clerk of the District shall immediately cause a copy of this ordinance to be published in a r
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
t
District on the 19`"day of February 2003 by the following roll call vote:
AYES:
NOES:
ABSENT:
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
By
J Ronald Hemig, President
ATTEST:
Peter L. Holzmeister, Clerk of the Board