HomeMy WebLinkAbout7 Electric Rate schedule -.--............... ..
Agenda Item # 7
.� DONNER
Public Utility District
Staff Report
To: Board of Directors
From: Stephen Hollabaugh—Assistant General Manager
Date: May 31, 2001
Retail Electric Rate Schedule
In our last Board meeting, we discussed the District's wholesale power costs from now to
the end of 2009. Some of the additional information requested is contained herein.
TDPUD Power Supply Costs $/MWhr: This graph shows how our wholesale price has
increased from 2000 through 2009. In 2000 we were paying $35.35 per MWhr (megawatt
hour), which is the same as 3.535 cents per KWHr (kilowatt hour). In 2001 the wholesale
price went to 4.602 cents per kilowatt-hour. In 2002 it will go to 7.054 cents per kilowatt-
hour. Finally, in 2003 it will go to 8.25 cents per kilowatt-hour.
So, in 2002 we will have to be paying an additional 2.452 cents for wholesale power. Our
retail rates will need to go up a like amount by January 2002.
The next year our wholesale power costs will go up another 1.196 cents per kilowatt hour,
and our retail rates will again need to go up by that amount.
Review of retail rates: Our current residential retail electric rate is 6.811 cents per kilowatt-
hour. By January 2002 it will need to be increased to 9.263 cents, and by January 2003 it
will need to be increased to 10.459 cents.
Rate Stabilization Fund: The current balance in the rate stabilization fund is $653,800.
The overall plan is to add to this fund during the first and possible second year of our Idaho
contract by selling our surplus for more than the flat cost of the energy and use this fund for
the shortages that will occur within the last six years of the contract. In order to do this, the
fund must be increased substantially between now and the end of 2003. Increasing our
electric rate now would add approximately$625,200 to the rate stabilization fund, increasing
its balance to approximately$1,279,000 by the end of the year.
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Proposal A, Increase 50% now, 50% January 2002: The District would split the increase
of 2.452 cents per KWhr into two equal increases, an increase of 1.226 cents per KWHr in
August of 2001 and another 1.226 increase to begin January 2002. The revenue produced
between August and December 2001 would be put into the rate stabilization fund. This
amount is estimated to be$625,200. The proposed rates would be:
Current Rate August 2001 January 2002
Domestic Electric Rates: Permanent Residents
Rate P10
Customer Charge: per month $4.00 $4.00 $4.00
Energy Charge per kilowatt-hour $0.06811 $0.08037 $0.09263
Domestic Electric Rates: Non-Permanent Residents
Rate S10
Customer Charge: per month $4.00 $4.00 $4.00
Energy Charge per kilowatt-hour $0.08196 $0.09422 $0.10648
Small Commercial Rates
Rate 15
Customer Charge: per month $8.00 $8.00 $8.00
Energy Charge per kilowatt-hour $0.08821 $0.10047 $0.11273
Medium Commercial Rates
Rate 20
Customer Charge: per month $80.00 $80.00 $80.00
Energy Charge per kilowatt-hour $0.03990 $0.05216 $0.06476
Demand Charge per kilowatt of demand $9.77 $9.77 $9.77
Lange Commercial Rates
Rate 25
Customer Charge: per month $350.00 $350.00 $350.00
Energy Charge per kilowatt-hour $0.04139 $0.05365 $0.06591
Demand Charge per kilowatt of demand $9.27 $9.27 $9.27
Proposal B, 100% January 2002: The District would increase of 2.452 cents per KWhr to
begin January 2002. This proposal would not increase the rate stabilization fund at all. This
could leave the District vulnerable to shortages that might occur during the first two quarters
of 2002 when wholesale prices are historically lower than the summer months. The District
would still sell its surplus power during 2002 and any excess would go to the rate
stabilization fund. The proposed rates would be:
Current Rate January 2002
Domestic Electric Rates: Permanent Residents
Rate P10
Customer Charge: per month $4.00 $4.00
Energy Charge per kilowatt-hour $0.06811 $0.09263
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Domestic Electric Rates: Non-Permanent Residents
Rate S10
Customer Charge: per month $4.00 $4.00
Energy Charge per kilowatt-hour $0.08196 $0.10648
Small Commercial Rates
Rate 15
Customer Charge: per month $8.00 $8.00
Energy Charge per kilowatt-hour $0.08821 $0.11273
Medium Commercial Rates
Rate 20
Customer Charge: per month $80.00 $80.00
Energy Charge per kilowatt-hour $0.03990 $0.06476
Demand Charge per kilowatt of demand $9.77 $9.77
Large Commercial Rates
Rate 25
Customer Charge: per month $350.00 $350.00
Energy Charge per kilowatt-hour $0.04139 $0.06591
Demand Charge per kilowatt of demand $9.27 $9.27
Other Options to lower Overall Wholesale Costs:
Transmission Alternatives:
I have been working with Sierra Pacific on some transmission options and with cooperation
with Idaho Power, may decrease overall Wholesale costs. These may start during the fourth
(0) quarter of 2001. 1 would propose that any savings from this would be put into the Rate
Stabilization fund. I will inform you of the details prior to the fourth quarter of this year.
Tiered Rates:
The idea of a tiered rate structure has been suggested as a way to generate additional
revenues without imposing the new costs on customers who conserve. We looked into a
tiered rate structure and have found some issues with them due the unique load profile of
the District. Tiered rates would only apply to Domestic Permanent Rates, because the
second homeowner would not be eligible for a "base line allowance". This structure would
raise rates for other Rate classes in order to acquire the revenue to cover the wholesale
power cost increases. We also wouldn't be able in implement this sort of billing for an
August increase in rates because it requires considerable study to design the rate properly.
A tiered rate could hamper our efforts to promote ground source heat pumps. We would like
to keep our rates competitive with the price of natural gas.
We should talk about this a little more at the Board meeting.
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Recommendation
1. 1 recommend that the Board choose the phased approach to the rate increase to
ease into higher rates and to build the rate stabilization fund.
2. 1 recommend that the Board schedule a public hearing to receive input regarding a
proposed electric rate increase.
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TDPUD Power Supply Costs $/MWhr
90.00
sf
80.00
70.00
a
60.00
50.00 °
$/MWhr
40.00
30.00
20.00
ti
t
10.00
0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
O Energy Fixed Price,--.... 37.42 62.10 74.25 74.25 74.25 74.25 74.25 74.25 74.25
❑NCPAScheduling 0.22 0.22 0.22 0.19 0.19 0.18 0.17 0.17 0.16 0.16
®Demand 3.13 3.13 3.12 3.13 3.13 3.13 3.13 3.13 3.13 3.13
®Transmission 5.25 5.25 5.25 5.00 5.00 5.00 5.00 5.00 5.00 5.00
-----------------
®Transmission 0 Demand ❑NCPA Scheduling 0 Energy Fixed Price
Dear PUD Customers
Summer is here and the newspaper headlines in California warn of rolling blackouts and higher electricity bills.
How will this energy crisis affect Truckee Donner PUD customers?
First of all, we are fortunate that we are NOT a part of the California electric grid. We receive power from Idaho
Power Company through the Nevada grid. Therefore the PUD is not required to participate in rolling blackouts.
The power in Truckee will remain on this summer. However, we may experience local outages due to isolated
events such as a squirrel or bird tangling with the wires, a car taking out a power pole, or a transformer failure. Our
crews will be on the scene rapidly to take care of these issues. The only cataclysmic event which might affect PUD
customers is a major failure of the western states' electric grid taking out power in several states as occurred in July
1996. We have no control over this.
Second, like all the private and public utilities in California, we are experiencing increases in wholesale power
costs. Our District has been fortunate in keeping retail electric rates low. We have not had a general rate increase
since 1986. In 1997 we secured a low-cost wholesale power contract from Idaho Power Company at very favorable
rates. As a result, we were able to pass an 11%wholesale credit along to you. But that contract expired and we had
to discontinue the wholesale energy credit.
As we looked to renew purchase power contracts we were faced with increased power costs directly associated with
the energy crisis in California. Your PUD Board and staff have been proactive in addressing the electric cost issue.
As a result,we have secured a long-term power contract with Idaho Power Company. The wholesale cost for
purchasing power will increase to 7.2 cents per kilowatt-hour. This is more than the current PUD retail rate of 6.8
cents. This new wholesale rate is long-term and won't expire in 2009. With this contract in place we can assure
you of reliable power at a stable price for the next several years.
However, retail and commercial electric rates for TDPUD customers will need to be adjusted to cover the new
wholesale rates. Your PUD Board and staff are currently reviewing several rate increase options. Before any final
decision is made we will hold a public hearing at 7:OOPM on June 20, 2001 in the district Board Room at 11570
Donner Pass Road. Your input during this process,and at that public hearing, is greatly appreciated.
Based upon all available data involving the current electric rate issues in California, it appears that when the dust
settles, electric rates paid by TDPUD customers will still remain among the lowest in California.
I appreciate you taking the time to read this energy crisis update. If you have any questions or comments feel free
to contact the district's general manager, Peter Holzmeister at 582-3916 or PeterHolzmeister@tdpud.org.
Sincerely,
James A. Maass
President of the Board
jmaass@tdpud.org