HomeMy WebLinkAbout9 Consideration of Draft Electric COSA and Green Rate Study
AGENDA ITEM # 9
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MEETING DATE: November 3, 2021
TO: Board of Directors
FROM: Joe Horvath P.E., Electric Utility Director/Assistant GM
SUBJECT: Consideration of the Draft Electric Utility Cost of Service
Analysis and 100% Green Energy Rate Study
APPROVED BY______________________________
Brian C. Wright, General Manager
RECOMMENDATION:
A) Provide input to staff on the Draft Electric Utility Cost of Service Analysis and 100%
Green Energy Rate Study.
B) Schedule a public hearing at the regularly scheduled District Board Meeting on
December 1, 2021 at 6:00 PM, or as soon thereafter, for the purpose of receiving
input on the adoption of proposed Electric rate increases and a new 100% Green
Energy rate.
BACKGROUND:
The District’s electric retail rates are set by the Board of Directors and adopted by
Ordinance. In 2016, the Board adopted Ordinance 2016-01 increasing electric rates for
FY17-19. In 2019, the Board adopted Ordinance 2019-01 increasing electric rates for
FY20-21. These increases are summarized in the following table:
Fiscal Year FY17 FY18 FY19 FY20 FY21
Increase 2% 3% 3% 2.7% 3%
The electric rate increases for FY20-21 were based on a Cost of Service Analysis (COSA)
completed in early 2019. In advance of the efforts to prepare the FY22-23 budget, staff
anticipated the need for consultant assistance to support the District’s possible
establishment of the next cost-justified electric rates starting in FY22. The Board, at its
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October 7, 2020 meeting, approved a contract with EES Consulting, Inc. (EES Consulting)
to prepare a comprehensive Electric Utility COSA and retail rate design update. EES
Consulting has extensive experience in providing financial consulting services, including
COSA and rate design services for many Publically Owned Utilities (POUs), including
POUs of similar size to the District, across California and other western states. In addition,
EES Consulting was also tasked with developing a 100% renewable energy, or 100%
green energy, retail rate option. This task leverages cost of service principals to support a
proposed 100% green energy rate option.
A team of District staff has been working with EES Consulting to develop a cost of service
study, and a potential 100% green energy rate option, for the Electric Utility. Amber
Gschwend, Managing Director of EES Consulting, will present an overview and summary
of the rate study and 100% green energy rate option (Attachment 1). Important highlights
of the rate study include:
Analyzes rate design for FY22 and FY23;
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.
Furthermore, a public hearing regarding the proposed Electric Utility rate increases and a
new 100% Green Energy rate is requested for December 1, 2021. If the Board adopts new
rates for future years the following schedule will be implemented:
Schedule a public hearing for the proposed Electric Utility rate increases and a new
100% Green Energy rate - November 3, 2021 (tonight);
Conduct a workshop to review the proposed Electric Utility rate increases and a new
100% Green Energy rate - November 3, 2021 (tonight);
Hold a public hearing regarding proposed rates - December 1, 2021;
Consideration of an Ordinance to increase Electric rates and adopt a new 100%
Green Energy rate - December 1, 2021; and
Rates would be effective with the first bill printed after January 2nd of each year
beginning in 2022.
This item is in support of the following objectives and goals identified by the District.
1.05.020 Objectives:
1. Responsibly serve the public.
5. Manage the District in an environmentally sound manner.
6. Manage the District in an effective, efficient and fiscally responsible manner.
1.05.030 Goals:
1. Manage for Financial Stability and Resiliency.
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2. Environmental Stewardship: Create a sustainable resilient environment for all of
our communities.
FISCAL IMPACT:
There is no fiscal impact associated with this workshop item. The fiscal impact of changes
to electric rates, and the possible addition of a new 100% green energy rate, will be
considered at future Board meetings.
ATTACHMENT:
1. EES Consulting – Overview of Electric COSA and 100% Green Energy Rate Study