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HomeMy WebLinkAbout09252017 City Council Work Session Notes - ElectricRateStudy WORK SESSION NOTES ON Ufr1(A?O 1 i ( i"- Purpose: Present: �/ Council Members Present: u „ t , (O , 1 ,in , day=oiT r �.e +l ) c, uir% Earn /Iaik )FW Ea'bin Qr M< <cve A -frim ra.� rard0 Ny Called by: Coo to/ (*Yick-- \5'coh Date: q/2_2 17 Pf o ************** *************************************** _ Toyl cans, d Cpotkrirk i ye n b as Epo d Chyi,u(iP� ri„WYC1 rv► lig Lona fdCr"?-- n plAbliC, -F, riU nct'Of IrtiteiriI rAxviii sc haeir.vn1PyPr Too/pal M ► Ca Vo0 .0 'rib AJ Iiovd DUnI1atM __ u colt LawYf 7CC- Lioda tR-CdTA— 1 Introduction: September 11, 2017 Follow-Up: September 25, 2017 Electric Rate Overview the F inancial E ngineering C ompany 2 decrease •Without CPI increase for 2018, inflationary pressures on expenses will be greater with a seasonal rate“average” customerwould result in net operating loss and negative cash flows percentage of annual use) than the average customer, annual costs ••Another scenario might be taking into account anticipated 2.0% CEA rate Council requested to look at non-seasonal rates for Residential and Small •Council requested to see a scenario with no CPI increase ••Seasonal rates work and works out to be revenue neutral for the For those customers using more energy in the summer (as a Take AwaysFrom Previous Presentation 3 ••Want to keep rates lowto understandincome/low usage customersMust maintain financial health fixedof the utility •Easy to understand •••••Recognize most costs are Seasonal rates may be difficult Seasonal customersHigh fixed charges may hurt low Fair to all Setting Rates is a Balancing Act 4 uses no energy or 1,000 kWh/monthshifts cost recovery to other customers •Other than fuel/purchased power, a utility’s costs are primarily fixed •••Costs the same to provide service to a meter whether that customer May not be all that significant for Residential customersSeasonal customer using little or no energy during certain months Seasonal Customers 5 energy consumed during the remainder of the year ••Existing seasonal rate based on approximately 25% discount during winter for ResidentialCould lower discount to something less to ease the transition from winter to summer •May not be acceptable to ratepayers •High monthly fixed cost charge ••Low income customers typically use less energy and harmful to themDoes not fully address the inequities •••Does not fully address the inequitiesHigher rate for those that use more energy during specified months than Low winter/high summer rates ••High cutSeasonal rates-off/hook-up charges Methods to Address Inequities 6 Customer ChargeFuelDemand ChargeEnergy ChargeFuel Cost AdjustmentWhere Includedin SES RatesBase RatesBase RatesBase Rates ••Purchased power from CEA contains several elementscannot be sure costs will be fully recovered (or overBy including much of the costs in the Base Rate, ratepayers -recovered) •When CEA changes rates, Base Rates must be adjusted, and Another Concern 7 Cost of Power Adjustment = 0.037 + 0.056 = 0.093 What the customer sees on bill •Include all CEA costs in a Cost of Power Adjustment and only SES costs in the Base Rates •For example…. Solution 8 •Residential ••Seasonal (15% Winter discount instead of 25%)Seasonal (10% winter discount) ••••Flat for entire yearSeparate rate for high summer usersFlat for entire yearSeparate rate for high summer users •Small General Service Rate Options 9 Cost of Power Adjustment •Based on current rates rates and Fuel Cost Adjustmentpassed–actual rates would be dependent on budget ••Current rate structure of including purchased power costs in base Residential Examples 10 Residential Rate Structure Options 11 •Implement high disconnect/connect feesoperational health of utility •Staff now working on this ••••Include all purchased power costs in a costSet rates commensurate with budgetWork with staff on rate structuresStaff continue working on budget that maintains financial and -of-power adjustment Going Forward 12 ?? Questions ??