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HomeMy WebLinkAbout11, Rate Design Workshop Attachment 1 © 2014 HDR, all rights reserved.January 16, 2019 Truckee Donner PUD Electric Rate StudySummary of the Comprehensive Purpose of the Presentation Receive Board direction on next stepsReceive Board Feedback and input on the resultsRequirement, COSA, and proposed Rate DesignsPresent the draft results of the Revenue Overview of the rate setting process 2 Development of Cost RatesProposed ResultsDraft Final Revenue Requirement AnalysisCost of Service AnalysisRate Design 3 Based Electric Rates- Targeted Outcomes of the Electric Rate Study resultstarget revenue from the revenue requirement Develop proposed rate designs to collect the methodologiesDevelop utilizing generally accepted (reserves, DSC, rate funded capital)Reflect prudent financial planning criteria customer class characteristics)based rates (reflect -Develop equitable and costmaintain the PUD’s electric infrastructureProvide sufficient revenue to operate and 4 Revenue AnalysisRequirement Key Assumptions of the Revenue Requirement Analysis policyMaintained prudent financial metrics based on industry standards and PUD Prudent rate funding of renewal and replacement capital projects•Target debt service coverage•Capital Funding = No new debt, pay as you go basis (rate funded)Projected expenses based on Budget FY 2019 Escalated based on inflationary factors•AB 32 revenues will stop after 2021Rate revenues, rates Jan. 1, 2019, and customer characteristicsyear projection from 2020 to 2024-52021-Focus is on two year period of 2020 •6 Key Assumptions of the Revenue Requirement Analysis $2 millionReserve = Target is Unfunded Liability Purchased PowerTarget is 180 Days Rate Reserve = Depreciation= Target is Annual Capital Replacement purchased powerof O&M including Target is 180 Days Operating Reserve = minimumscloser to target target levels to be Increased reserve 7(Continued)– Key Assumptions of the Revenue Requirement Analysis 8(Continued)– Summary of the Projected Revenue Requirements 2.7%2.7%2.7%2.7%2.7%Needed to Meet ExpensesRevenue Adjustment FY 2024FY 20232022FYFY 2021FY 2020 9 Conclusions on the Projected Revenue Requirements Maintains a financially healthy and sustainable utilityProposed transition plan maintains key financial criteriaMoves closer to target reserve balances•Meets debt service coverage ratios•capital needs of the electric utilityRate adjustments are necessary to prudently fund the overall operating and Fund inflationary increases in O&M expenses•Fund necessary annual capital improvements•Propose annual rate adjustments of 2.7% for 2020 and 2021Future rate adjustments are projected at similar levels•10 Cost of Service Analysis Overview of a Cost of Service Analysis Develop average unit costs•Determine if subsidies exist•Objectives of Cost of Service Can provide an accurate price signal•Revenues track costs•Avoids subsidies•Generally accepted as “fair and equitable”•Why cost of service?various customer classes of serviceAnalysis to equitably allocate the revenue requirement to the •What is cost of service?12 •13 Conclusions on the Cost of Service Analysis classes of serviceProposed rate adjustment across all the 2020 test yearNo significant cost of service issues in Review of customer classesLarge (more than 200 kW demand)•200 Kw demand)–Medium (50 •Small (under 50 Kw demand)•Commercial•Permanent Residents-Non•Permanent Residents Rate Design 15 Current Rates–Residential Customers combined to one class?Permanent Residents be -Should Permanent and Non$0.151/kWh–Energy Charge $14.10/Month–Customer Charge Permanent Residents-$0.132/kWh–En ergy Charge $14.10/Month–Customer Charge Permanent Residents Residential NCP FactorKwh Sales at Meter Permanent Residents-Non 200.0180.0160.0140.0120.0100.080.060.040.020.00.0NCP FactorKwh Sales at Meter Permanent Residents 180.0160.0140.0120.0100.080.060.040. 020.00.0 16 kwh Sales at Meter and NCP Factor (cont’d)- Proposed Year 2023 the energy charge would be $0.138/kWh for all•same energy charge for all residentialAlternative 2 the energy charge is a 3 Year transition to the •17 Alternative 1 and 2Customer Charge Adjustment–Residential Rates 2020 Proposed Residential Bill Comparisons Rate design shows rate adjustment in the customer charge only•18 Status Quo–Alternative 1 – 2020 Proposed Residential Bill Comparisons energy charge by year 2023Rate design energy charge transitions over three years to same •Rate design shows rate adjustment in the customer charge only•19 Year 1 of 3 Year Transition to Same Energy Charge Permanent-Combined Permanent & Non–Alternative 2 – 20 Current Rates–Customers Commercial $12.29/kW–Demand Charge $0.097/kWh–Energy Charge $1,196.79/Month–Customer Charge Large Commercial$12.86/kW–Demand Charge $0.103/kWh–Energy Charge $272.84/Month–Customer Charge Medium Commercial$0.159/kWh–Energy Charge $27.32/Month–Customer Charge Small Commercial Commercial NCP FactorkWh Sales at Meter Large Commercial 140.0120.0100.080.060.040.020.00.0NCP FactorkWh Sales at Meter Medium Commercial 140.0120.0100.080.060.040.020.00.0NCP FactorKwh Sales at Meter Small Commercial 140.0120.0100.080.060.040.020.00.0 21 cont’d)Sales at Meter and NCP Factor (kwh - Proposed Commercial Rates 22 Energy and Demand Charge Adjustment– 2020 Proposed Commercial Bill Comparisons Rate design shows rate adjustment in the energy charge only•23 Small Commercial - 2020 Proposed Commercial Bill Comparisons Rate design shows rate adjustment in the energy and demand charge only•24 Medium Commercial - 2020 Proposed Commercial Bill Comparisons Rate design shows rate adjustment in the energy and demand charge only•25 Large Commercial - 26 Conclusions on the Rate Design rate structureRecommend maintaining Commercial •Commercial rate year transition-Energy charge 3»ratePermanent into one Residential -Combine Permanent and -Alternative 2 •Remain status quo–Alternative 1 •Residential rate the rate structureNeed to determine any changes in practices and approachescontemporary and reflect industry Overall rate structures are 27 Next Steps 2019 rate setting processrecommendationsPresent findings and Finalize technical analysesthe Boardinput and feedback from Receive Discussion 28