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HomeMy WebLinkAbout10 Recession Electric Revenues Agenda Item # 10 -UCKEE . Public Utility District 1 WORKSHOP To: Board of Directors From: Stephen Hollabaugh Date: April 15, 2009 Subject: Discussion of the Economic Impact of Recession on District Electric Revenues 1. WHY THIS MATTER IS BEFORE THE BOARD The Board requested a workshop concerning this subject. 2. HISTORY The Board was given a news release from SMUD concerning their proposed rate increase. Within that news release, SMUD stated that the economic recession has greatly impacted electricity revenue, while turmoil in the credit markets has caused borrowing costs to rise and interest earnings to plunge. There were other factors that have adversely affected SMUD's budget such as reduced reserve funds, increased costs for securing contracts for more renewable energy, needed upgrades to aging infrastructure, and increased replacement costs for natural gas contracts executed in 2008. These factors are not common to Truckee Donner PUD's situation. 3. NEW INFORMATION The District receives 45% of its revenues from commercial customers and 55% from residential customers. The economic impact of the current recession on commercial electric usage has not negatively affected the Districts' revenues. The District's commercial customers fall into three rate categories, small, medium and large commercial. The three commercial rate categories are defined as: Small Commercial Electric: (under 50 KW demand) Medium Commercial Electric: (50 - 200 KW demand) Large Commercial Electric: (more than 200 KW demand) The 2007 and 2008 commercial customer counts and KWH sales are listed in the table below: 2008 KWH Summary Dec 31 Customer Count All Small Commercial Electric 28,390,007 1381 All Medium Commercial Electric 14,840,954 65 All Large Commercial Electric 28,771,721 18 Totals 72,002,721 1464 2007 KWH Summary Dec 31 Customer Count All Small Commercial Electric 39,065,591 1377 All Medium Commercial Electric 11,551,175 49 All Large Commercial Electric 21,408,800 10 Totals 72,025,566 1436 As can be seen, the number of commercial customers has not declined over the past two years and the KWH sold is relatively the same. The main variables concerning commercial customer KWH sales within the District are weather and temperature. The five largest electric customers by load are: Type of Business KWH Sold 12 Month Elec Billings Water Utility 10,536,252 $1,499,238 Sewer Plant 7,898,715 $ 927,115 Hospital 5,482,731 $ 680,122 Education 3,206,405 $ 413,931 Private Sector 2,146,500 $ 347,849 As can be seen, the five largest customers are not at a high risk to leave the system. Residential customer counts and KWH sales are 11,402 and 74,009,589 for 2007 and 11,550 and 75,000,000 for 2008, respectively. Residential statistics follow a similar pattern to the commercial data with only a slight increase to the number of customers and approximately equal KWH sales. In addition to weather factors, the main variable for residential sales is usage by second home owners during weekends and holidays. From a cost of services perspective, the District has a diversified electric purchase power portfolio that tries to balance risk that may include resources, cost and load needs. Electric conservation and energy efficiency improvements to customer loads will continue to have lower their costs and energy needs. 4. FISCAL IMPACT This is an informational item and does not have any fiscal impact. 5. RECOMMENDATION Receive and co jnent on this rPoort. Stephen Hollabaugh Michael .o ley Assistant General Manager General Manager