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HomeMy WebLinkAbout11 Draft Electric Utility Cost of Service StudyTRUCKEE DONNER Public Utility District WORKSHOP To: Board of Directors From: Lisa Hall Date: January 16, 2019 Subject: Consideration of the Draft Electric Utility Cost of Service Study 1. WHY THIS MATTER IS BEFORE THE BOARD The purpose of this workshop is to present the Electric Utility rate study peformed by the District's outside consultant, furthermore, to review the process for potential adoption of revised rates and fees. 2. HISTORY The District has contracted with HDR Engineering, Inc., in the past to review the District's revenue requirements, cost of service, and to provide rate design for both the Electric and Water Utilities. The last Electric Utility comprehensive rate study was commissioned in 2010 and resulted in no rate increases. In 2016, HDR Engineering provided a limited electric rate structure design review and recommended increasing the customer charge. The Board adopted Ordinance 2016-01 increasing electric rates for the years 2017, 2018, and 2019 by 2%, 3%, and 3%, respectively. The entire increase was applied to the fixed customer charge. During the FY18 & FY19 budget adoption process, staff presented the10-year Financial Master Plan which informed the Board of the need to consider increased revenue requirements to pay for operations and to meet reserves goals. The Board, at its July 18, 2018 meeting, approved the contract with HDR Engineering to provide a comprehensive Electric Cost of Service and Rate Study. 3. NEW INFORMATION A team of District staff began working with HDR Engineering in August, 2018 to develop a cost of service study for the Electric Utility. Shawn Koorn of HDR Engineering will present a summary of the results. Attachment 1 is a draft of the presentation. Important highlights of the rate study include: • Analyzes rate design for FY20 through FY24 in order to prepare the District for changes in regulations, technology, and industry shifts; • Focuses primarily on a two-year time frame of FY20 & FY21; • Analyzes fixed infrastructure maintenance and operation costs proportionate to rates; • Evaluates rate increase applied to the customer charge; and • Analyzes each rate category individually and collectively to ensure adequate cost recovery. 4. FISCAL IMPACT There is no fiscal impact associated with this workshop item. The fiscal impact of changes to electric rates and fees will be considered at future Board meetings. 5. RECOMMENDATION Provide input and feedback to staff. A� 0-, � afl Lisa Hall Administrative Services Director /�' 2, , & �' , 44�� �' - Michael D. Holley General Manager I a LM C. 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