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Home My WebLink About9 Power Point Draft Electric COSA and Green Rate Study with EES Slides November 3, 2021 Study100% Green Energy Rate and Consideration of the Draft Electric Utility COSA 9ACTION ITEM # •3%2.7%3%3%2%IncreaseFY21FY20FY19FY18FY17Fiscal Year BACKGROUND / HISTORYBACKGROUND / HISTORY Study% Green Energy &100COSA Draft Consideration Study% Green Energy &100COSA Draft Consideration POUsmany for experience in providing financial consulting Extensive •Consulting)Consulting, Inc. (EES October 7, 2020, the Board approved a contract with EES On •tableincreases are summarized in the following These •-FY20increased electric rates for 01 -2019Ordinance •-FY17electric rates for increased 01 -2016Ordinance •Ordinanceadopted by Board and retail rates are set by the Electric •NEW INFORMATIONNEW INFORMATION COSA &100% Green Energy StudyDraft -Consideration COSA &100% Green Energy StudyDraft -Consideration option% green energy rate the 100and design,retail rate COSA study, an overview and summary of the , Managing Director of EES Consulting, will present GschwendAmber •optionenergy, retail rate renewable (green) 100% •updateretail rate design and Analysis (COSA) Electric Utility Cost of Service Comprehensive •followingConsulting was tasked with developing the EES PRESENTED BY EES CONSULTING November 3, 2021 EES ConsultingAmber Gschwend, Managing DirectorPresented by AND DRAFT RESULTSCOST OF SERVICE OVERVIEW EES CONSULTING RENEWABLE RATEDRAFT COSA ASSUMPTIONS AND RESULTSCOST OF SERVICE OVERVIEW COST OF SERVICE a GDS Associates Company EES CONSULTING PlanningFinancialPlanningFinancialCapital BudgetCapital BudgetO&MO&MActual/ForecastCustomer/LoadActual/ForecastCustomer/LoadServiceCost of ServiceCost of DesignRateDesignRateRequiremen tRevenueRequirementRevenue 6 OVERVIEW OF UTILITY PLANNING PROCESS a GDS Associates Company EES CONSULTING Rates Implement -Step 4 collect?)(How to Design Rates -Step 3 should pay?)Study (Who of Service Perform Cost -Step 2 (How much?)Requirement Revenue Aggregate -Step 1 7 Design ratesAllocate–Classify–Functionalize–Load and customer data–Develop cost of service analysisRevenue requirement (expenses)–Retail rate revenues at present rates–Develop revenue requirementsSelect time period(s) for studyEstablish management goals and objectivesCOST OF SERVICE/RATE DESIGN STEPS a GDS Associates Company EES CONSULTING8Can Provide Accurate Price SignalsRevenue is Aligned with CostsAvoids Interclass SubsidiesGenerally Accepted as Fair and EquitableWHY COST OF SERVICE?a GDS Associates Company EES CONSULTING9 May not send right price signals–May not reflect significant changes–Widely used–Relatively simple to perform and explain–Reflects costs in the test year (historic or future)–Pros and cons–Unit costs per cost component–Cost of service per customer class by cost component–Results–Tied to one specific test year (historic or forecast)–Revenue requirement equals actual or forecast annual cost–Rate base equals historic costs (accounting basis)–Cost basis–Average Embedded Cost of ServiceTYPES OF COST OF SERVICE STUDIES a GDS Associates Company EES CONSULTING10 Costs may change quicker than rates–Good for power supply when there are significant cost fluctuations–More accurate price signals–Pros and cons–May be appropriate for new types of service (i.e., home security system)–system since no added cost)May not reflect share of costs when incremental costs equals zero (i.e., no share of billing –Need to adjust to get appropriate rate level–Results in costs different than revenue requirements–based power supply costs-Market–Cost to install new poles, wires, etc.–Cost basis equals replacement/market price–Marginal (Incremental) Cost of ServiceTYPES OF COST OF SERVICE STUDIES (CONT’D)a GDS Associates Company EES CONSULTING11 Number of kW in class/total kW–Number of kWh in class/total kWh–Number of customers in class/total customers–Calculate Allocation Factorsrelated-related / energy-related / demand-Customer–Classify Costs to Cost ComponentsFunctionalize Costs (Revenue Requirement)Customer service specifications–hour sales / kilowatt sales-Kilowatt–Number of customers–Collect Load and Customer DataSTEP APPROACH-BY-STEP–DEVELOPING A COSA a GDS Associates Company EES CONSULTING 12 12 ALLOCATION BUCKETS–COST OF SERVICE ANALYSIS a GDS Associates Company EES CONSULTING13 Will place more costs on larger consumers (Large General Service)–system demandDistribution system costs allocated based on customer class share of total –100% DemandWill place more costs on classes with larger number of customers (Residential)–50% Customer, 50% Demand–system regardless of load sizeDistribution is in place due to the fact that there are customers using the –MINIMUM SYSTEM OR 100% DEMANDDISTRIBUTION SYSTEM CLASSIFICATION: a GDS Associates Company EES CONSULTING14 Distribution–Transmission–Production–Calculate Unbundled Cost by Class of Service$/customer/month–¢/kWh–$/kW–Calculate Unit Costs by Class of ServiceDetermine Revenue Excess or Shortfall by ClassAllocate Assets and Expenses to Each Class on the Basis of Cost Causation(CONT’D)STEP APPROACH-BY-STEP–DEVELOP A COSA a GDS Associates Company EES CONSULTING customerProvide revenue stability to the utility and rate stability to the –Conform to generally accepted rate setting techniques–Be easy to understand and administer–“fair and equitable”–Be “just, reasonable and not unduly discriminatory or preferential” –based-Be cost–Meet revenue requirement–Rates Should15 TRADITIONAL RATE SETTING PRINCIPLES a GDS Associates Company EES CONSULTING Expenses: 100% Demand 42%Energy44%Demand14%Customer Retail Revenues 80%Energy7%Demand13%Customer16 AND RELATED COSTS KEY TO RATE DESIGN IS ALIGNING REVENUES a GDS Associates Company EES CONSULTING17 RESULTSDRAFT ELECTRIC COSA DONNER PUD -TRUCKEE a GDS Associates Company EES CONSULTING DRAFT 1%ServiceDebt 27%CapitalFunded Rate 13%and GeneralAdministration 5%Servicesand Accounts Customer 18%Distribution36%SupplyPower 6.5%(Decrease)IncreaseRateRetailRequired($1,842,882 )Fundsin(Deficiency)Surplus$31,997,664ExpensesTotal($6,150,187)Reserves(From)ToTransfer$476,290ServiceDebt$10,397,910CapitalFundedRate$4,876,340GeneralandAdministration$1,955,730ServicesandAccountsCu stomer$6,782,308Distribution$13,659,000SupplyPowerExpenses$30,154,781RevenuesTotal1,919,840IncomeOther$28,234,941RevenuesRateRetailPresentRevenuesCY 2022 REVENUE REQUIREMENT a GDS Associates Company EES CONSULTING DRAFT 2025-Power Escalation for 2024-3.5% Non2022 and 2023 Expenses as Budgeted19 17.2%22.0%10.9%6.5%Rate Change over Current Rates$33,930,954$34,962,307$31,469,067$30,077,824Forecas t Revenue Requirement$28,946,476$28,659,877$28,376,116$28,234,941Retail Rate Revenue at Current Rates 2025202420232022 FORECAST REVENUE REQUIREMENT a GDS Associates Company EES CONSULTING DRAFT 20 6.5%93.9%($1,842,882)$30,077,824 $28,234,941 TOTAL 7.8%92.8%(2,375)32,83130,456 Sec Lights 35.6%73.8%(12,969)49,41236,443 Temp Power 6.6%93.8%(85,183)1,381,6301,296,447 Pumping/Water Dept 11.7%-113.3%411,628 3,092,3953,504,02323.3%81.1%(308,337)1,631,0311,322,6948.2%-108.9%155,336 1,736,5131,891,849 Medium Commercial 15.0%-117.7%614,792 3,476,6374,091,42921.5%82.3% (1,839,434)10,391,0598,551,625 Permanent Residents-Non 10.3%90.6%($776,342)$8,286,316 $7,509,975 Permanent ResidentsChangeRate Cost RatioRevenue to Present Rates(Deficiency) in Surplus/ RequirementNet Revenue RevenuesPresent Rate COSA RESULTS: MINIMUM SYSTEM a GDS Associates Company EES CONSULTING DRAFT 21 6.5%93.9%($1,842,882)$30,077,824 $28,234,941 TOTAL8.8%91.9%(2,673)33,12930,456Sec Lights35.9%73.6%(13,071)49,51436,443Temp Power22.6%81.6%(293,197)1,589,6431,296,447Pumping/Wa ter Dept4.0%-104.2%141,163 3,362,8603,504,02345.4%68.8%(600,030)1,922,7241,322,6942.8%97.2%(53,802)1,945,6511,891,849Medium Commercial13.2%-115.2%539,214 3,552,2154,091,42913.7%88.0%(1,168,256)9,719, 8828,551,625Permanent Residents-Non5.2%95.0%($392,230)$7,902,205 $7,509,975 Permanent ResidentsChangeRate Cost RatioRevenue to Present Rates(Deficiency) in Surplus/ RequirementNet Revenue RevenuesPresent Rate COSA RESULTS: 100% DEMAND a GDS Associates Company EES CONSULTING22 small changes will mitigate customer bill impactsMinimize rate design changes when making large rate adjustments. These Phase in large rate changes over timeRECOMENDATIONS a GDS Associates Company EES CONSULTING23 RENEWABLE RATE a GDS Associates Company EES CONSULTING24$0.008/kWh SurchargeGreen Tariff 100% Renewable(Hetch Hetchy)San Francisco Water Power Sewer Based on Feed In Tariff (FIT)$0.01/kWh surchargeStandard RatesLocal Sol 100% Local SolarDeep Green 100% RenewableLight Green 60% RenewableMarin Clean Energy$20/month for 1 MWh block Commercial$0.002/kWh surcharge Residential100% RenewableVoluntary Renewable Power Program Alameda Municipal PowerSurcharge/month8$Surcharge/month4$Renewable%100Renewable%50Greenergy(SMUD)Sacramento Municipal Utility District surcharge/kWh002.0$Renewable%100ProgramGreenCity of Palo AltoRateNameProgramEntityServingLoad GREEN RATE PROGRAMS IN CA a GDS Associates Company EES CONSULTING 8%Unspecified5%CHP27%Wind6%Natural Gas31%PurchasesMarket 8%Stampede)and Hydro (Small 15%Landfill Gas 25$64.66$10,896,172Total$300,962-Misc. (WREGIS, Margin)$6.88$1,160,001Transmission$ 47.64$4,015,767Other Pooled Costs$96.09$684,573VEYO Heat Recovery$72.21$3,015,181Wind$90.15$2,079,990Landfill Gas$19.71$241,622Stampede$/MWhCost DISTRICT 2019 POWER COSTS a GDS Associates Company EES CONSULTING$0.0200GasLandfill:ResourceSpecific$/kWh AdderRateRecommended 26$69.30Total Power Supply$9.79$79.10$4.15$73.45Wind Only$20.13$89.43Landfill Only$/MWhDifferential $/MWhAverage Cost 2020-RESOURCES: AVERAGE COSTS 2016 a GDS Associates Company EES CONSULTING the District’s annual retail load. The energy represented in the table is 2,500,000 kWh or about 1.5% of 27$50,137138Total$22,8271Large Commercial$5,7871Medium Commercial$4,46112Small Commercial$8,14876Secondary Residential$8,91548Primary Residential$0.02/kWhGreen Rate CustomersParticipating Customer Class REVENUE IMPACTS, 1.0% PARTICIPATION a GDS Associates Company THANK YOU 28 •NEW INFORMATIONNEW INFORMATION COSA &100% Green Energy StudyDraft -Consideration COSA &100% Green Energy StudyDraft -Consideration 2022each year beginning in Rates would be effective with the first bill printed after January 2nd of •December 1, 2021-new 100% Green Energy rate Consideration of an Ordinance to increase Electric rates and adopt a •2021December 1, -Hold a public hearing regarding proposed rates •recommendation)November 3, 2021 (-and new 100% Green Energy rate Schedule a public hearing for the proposed Electric Utility rate increases •2021November 3, -Green Energy rate the proposed Electric Utility rate increases and a new 100% Review •implementedwill be the Board adopts new rates for future years the following schedule If •FISCAL IMPACTFISCAL IMPACT COSA &100% Green Energy StudyDraft -Consideration COSA &100% Green Energy StudyDraft -Consideration Board meetingsaddition of a new 100% green energy rate, will be considered at future fiscal impact of changes to electric rates, and the possible The •itemis no fiscal impact associated with this There •RECOMMENDATIONRECOMMENDATION COSA &100% Green Energy StudyDraft -Consideration COSA &100% Green Energy StudyDraft -Consideration rate increases and a new 100% Green Energy ratethe purpose of receiving input on the adoption of proposed Electric Meeting on December 1, 2021 at 6:00 PM, or as soon thereafter, for Schedule a public hearing at the regularly scheduled District Board •StudyAnalysis and 100% Green Energy Rate input to staff on the Draft Electric Utility Cost of Service Provide