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Rate Analysis & Cost of Service Study Powder River Energy Corporation May 21, 2013 Presented by: David Hedrick Guernsey


Objectives  Review 2012 Rate Analysis and Cost of Service Study  Review financial goals and objectives  Review objectives for general rate filing - Additional rate revenue required - Class revenue requirements - Rate design changes

2


Rate Philosophy Balance Conflicting Concerns

Financial Objectives versus

Minimizing Member Impact

3


Steps in the Cost of Service Study Process Define the System Revenue Requirement Define the Rate Class Revenue Requirement Define the Customer Revenue Requirement Coordinate Rate Design with the Line Extension Policy Monitor Performance

4


Cost of Service Study:

DEFINE SYSTEM REVENUE REQUIREMENT

5


Define the System Revenue Requirement Make adjustments to test year financial information for changes that are known, measurable and continuing in nature Determine margin required to meet long-range financial goals

6


Development of Adjusted Test Year  Test year ending December 31, 2012  Historical test year with adjustments - Revenue adjustments - Applied existing rates and current COPA to adjusted billing units - Sales adjustments: - Decline in sales for GS-CBM, LP-CBM, LPT and LPT-CBM

- Removed deferred revenue

- Purchased power adjustments - Applied 2013 wholesale rates

7


Development of Adjusted Test Year  Historical test year with adjustments - Payroll expense reflects current employees and budgeted positions - Benefits expense reflects increased benefit premium for 2013 - Existing plant in service - Includes $6.5 million of electric plant completed and in service but not classified at end of test year - Future plant additions not included

- Depreciation expense reflects additional $6.5 million of plant and removal of regulatory debit - Interest expense adjustment - No new borrowing

8


Large Power Contracts: Minimum Billing Demand and Zero Usage  COSS adjusted to reflect contracts that expired at the end of 2012  681 Large Power CBM accounts  Removed 358,247 Billed kW

9


Usage Adjustments Test Year 2012 kWh Residential

Budget 2013 kWh

Change

202,505,034

210,008,531

3.7%

Seasonal

8,631,442

8,200,000

-5.0%

Irrigation

4,425,396

2,500,000

-43.5%

139,993,411

142,909,871

2.1%

79,160,604

66,261,032

-16.3%

LP

440,889,881

466,600,400

5.7%

LP-CBM

579,824,495

431,747,000

-25.5%

1,227,007,339

1,121,946,000

-8.6%

LPT-CBM

102,816,544

80,874,000

-21.3%

LPC-CBM

31,754,186

33,754,000

6.3%

3,016,414

3,016,414

0.0%

2,821,093,279

2,568,830,490

-8.9%

GS GS-CBM

LPT

Lighting Totals

10


Primary Concerns in Developing Test Year Data  Proper matching of expenses and billing units  Costs, billing units and resulting unit rates are forward looking  Data can be supported if it is: - Known - Measurable - Continuing in nature

 Unit rates reflect “normal” conditions

11


Financial Criteria Required to Define Return  Board Objectives - Recover adjusted test year expenses - Equity objective - Capital credit refund - General funds level - Coverage ratios

 Other Factors - Level of plant additions - Cost of debt

12


System Capitalization Test Year

2007 Long-Term Debt Equity Total Capitalization

$ $

Other Allocated Patronage Long-Term Debt Equity Excluding Other Patronage Capital Total Capitalization

Equity as % of Total Assets

99,912,033 $ 124,341,131 224,253,164 $

121,455,518 $ 147,555,680 269,011,198 $

46,772,384

69,761,229

2009

2010

2011

12/31/2012

118,298,169 $ 121,509,046 $ 117,567,179 $ 121,417,323 161,407,373 166,150,963 174,121,844 182,106,139 279,705,542 $ 287,660,009 $ 291,689,023 $ 303,523,462 79,517,757

84,534,897

90,900,223

101,394,141

$

99,912,033 $

121,455,518 $

118,298,169 $ 121,509,046 $ 117,567,179 $ 121,417,323

$

77,568,747 177,480,780 $

77,794,451 199,249,969 $

81,889,616 81,616,066 83,221,621 80,711,998 200,187,785 $ 203,125,112 $ 200,788,800 $ 202,129,321

Percent Capitalization Long-Term Debt Equity Total Total Assets

2008

44.55% 55.45% 100.00% $

289,759,636 $

334,046,557 $

42.29% 57.71% 100.00%

42.24% 57.76% 100.00%

40.31% 59.69% 100.00%

40.00% 60.00% 100.00%

345,227,193 $ 359,530,407 $ 362,040,082 $ 373,448,492

44.17%

46.75%

46.21%

48.09%

48.76%

Percent Capitalization Excluding Other Patronage Captial Long-Term Debt 56.29% 60.96% Equity 43.71% 39.04% Total 100.00% 100.00%

59.09% 40.91% 100.00%

59.82% 40.18% 100.00%

58.55% 41.45% 100.00%

60.07% 39.93% 100.00%

Total Assets Excluding Other Patronage Captial Equity as % of Total Assets

42.91%

45.15% 54.85% 100.00%

242,987,252

264,285,328

265,709,436

274,995,510

271,139,859

272,054,351

31.92%

29.44%

30.82%

29.68%

30.69%

29.67%

13


Capital Credits Retired

Special 2002

$

127,766

General $

2,899,856

Total $

3,027,622

2003

173,652

1,471,899

1,645,551

2004

184,767

1,499,609

1,684,376

2005

209,669

1,499,999

1,709,668

2006

287,587

1,900,000

2,187,587

2007

205,269

2,127,398

2,332,667

2008

158,927

1,900,000

2,058,927

2009

374,550

2,127,398

2,501,948

2010

309,515

1,976,845

2,286,360

2011

320,002

1,965,305

2,285,307

2012

365,416

1,925,087

2,290,503

Total

$

2,717,120

$

21,293,396

$

24,010,516

14


Calculation of Desired General Funds

Purchased Power Payroll Benefits Payroll Taxes Interest Principal Payments Total

$

$

144,828,777 7,950,808 6,847,849 951,346 5,936,620 5,267,269 171,782,670

Plant Balance

$

339,548,741

Desired General Funds:

Estimated General Funds

Days

Ratio to Plant

Amount

15 30 45

2.08% 4.16% 6.24%

$7,059,562 $14,119,124 $21,178,685

42

5.88%

$19,969,430

15


Growth Rate in Net Plant

Additions December 31, 2003 December 31, 2004 December 31, 2005 December 31, 2006 December 31, 2007 December 31, 2008 December 31, 2009 December 31, 2010 December 31, 2011 December 31, 2012

20,440,477 32,152,491 19,858,942 24,135,751 28,080,809 20,041,003 16,844,680 13,707,045 8,734,849 8,573,986

Retirements 1,586,707 1,022,700 2,328,982 1,420,437 1,898,814 3,716,594 814,776 3,829,381 2,770,526 2,832,453

Utility Plant 188,053,851 219,183,642 236,713,602 259,428,916 285,610,911 301,935,320 317,965,224 327,842,888 333,807,211 339,548,744

Accum. Deprec. 64,145,809 69,620,963 74,685,320 81,874,600 90,118,561 97,673,097 107,996,279 118,065,334 128,393,859 139,223,634

Net Plant 123,908,042 149,562,679 162,028,282 177,554,316 195,492,350 204,262,223 209,968,945 209,777,554 205,413,352 200,325,110

Compound Growth 2003-2012 Compound Growth 2007-2012 Projected 12/31/2013 Projected 12/31/2014 Projected 12/31/2015 Projected 12/31/2016 Projected 12/31/2017

Percent Change

20.70% 8.33% 9.58% 10.10% 4.49% 2.79% -0.09% -2.08% -2.48% 5.48% 0.49%

18,500,000 9,574,726 9,715,059 9,509,460 5,635,285

3,000,000 3,000,000 3,000,000 3,000,000 3,000,000

355,048,744 361,623,470 368,338,529 374,847,989 377,483,274

145,579,029 148,274,834 151,028,179 153,697,224 154,777,758

209,469,715 213,348,636 217,310,350 221,150,765 222,705,516

4.56% 1.85% 1.86% 1.77% 0.70%

16


Long-Term Debt Adjusted Principal Outstanding RUS 2%

Interest

448,873

2.000%

6,526,739 4,334,804 5,430,894 11,322,050 11,774,293 8,490,879

4.638% 4.850% 4.280% 4.690% 4.720% 4.430%

302,710 210,238 232,442 531,004 555,747 376,146

1,915,280 276,942

6.100% 6.100%

116,832 16,893

Other H0010 H0015 H0020 F0025 F0030 Additional Loan Funds

186,449 25,866 20,872,281 48,316,222 17,707,748

7.773% 7.378% 3.245% 3.602% 3.821% 3.670%

14,493 1,908 677,306 1,740,350 676,613 0

RI0323T03

12,669,242

3.670%

464,961

1,000,000

1.00%

10,000

RUS Other 1B520 1B521 1B522 1B530 1B531 1B532 CFC 9007 9009

Economic Development Total

$

Interest Rate

$ 151,298,563

$

$

Test Year Expense Adjustment Average Interest Rate

8,977

5,936,620 6,296,290

$

(359,670) 3.92%

17


Cash Revenue Requirement – Cash Basis  Where does cash come from? - Cash margin from operations - Cash capital credit retirements from others - Cash from line extension contributions - Cash from CBM mitigation policies - Borrowing

 Where must cash go? - Pay operating expenses including interest - Pay principal on long-term debt - Pay for plant additions

18


Cash Revenue Requirement – Cash Basis  Other possible uses for cash - Build equity by financing plant additions - Retire capital credits - Build cash reserves by increasing Cash-General Funds level - Pay principal on short-term borrowing

19


Cash Revenue Requirement Cash Requirement

Development of Cash-General Fund Level

Plant Additions Desired Equity

$

12,596,595 60.00%

Cash Requirement for Plant

$

7,557,957

Capital Credit Retirements Principal Payments Cash to Attain Desired Level Total

$

2,325,000 5,267,269 0 15,150,226

Adj Depreciation Expense Post Retirement Benefits Operating Margins (Adjusted) Interest Income/Capital Credits Cash Net Cash from Operations

$ $

$

13,588,082 179,361 (6,220,915) 2,390,459 9,936,987

Annual Additional Cash Required

$

5,213,239

Proposed Rate Change

$

6,873,943

Cash-General Funds $ Special Deposits Temporary Investments Other Investments & Special Funds Total $ Total Utility Plant in Service Current Level %

$

5,305,807 0 14,663,622 0 19,969,430 339,548,741 5.88%

Desired Level % Desired Level $

$

0 19,969,430

Desired Total Increase

$

0

$

0 0

Years to Increase Desired Annual Cash Increase

20


Financial Ratios Test Year

Adjusted Test Year

Proposed Test Year

Operating TIER

1.10

-.05

1.11

Net TIER

2.46

1.40

2.55

Net TIER w/o Cap Credits

1.45

.33

1.49

RUS OTIER

1.14

-.01

1.15

DSC

2.78

1.95

2.57

RUS ODSC

2.03

1.21

1.82

3.48%

0.02%

3.33%

Rate of Return

21


Components of Revenue Requirement  Revenues - Energy Sales - Other - Total Revenue

 Expenses - Purchased Power - Transmission/Distribution O&M - Consumer Accounting & Sales - Administrative & General - Depreciation - Taxes

22


Components of Revenue Requirement  Return  Interest Expense & Other Deductions  Operating Margin  Non-Operating Income  Net Margin

23


Income Statement – For 12/31/12 Operating Revenues Base Revenue $ COPA Deferred Revenue Other Total $

Test Year 12/31/12 (a) 160,698,575 $ 28,206,376 (700,000) 1,814,643 190,019,594 $

Adjustments (b) (15,646,465) $ 3,470,110 700,000 0 (11,476,356) $

Adjusted Test Year (c) 145,052,110 $ 31,676,486 0 1,814,643 178,543,239 $

Rate Change (d) 38,550,429 $ (31,676,486) 0 0 6,873,943 $

Adjusted w/ Rate Change (e) 183,602,539 0 0 1,814,643 185,417,182

Operating Expenses Purchased Power $ Transmission O&M Distribution-Ops Distribution-Maint. Cons Acctg Cust Service Admin & General Depreciation Tax Total $

144,828,777 $ 1,215,136 8,937,681 3,398,313 2,542,471 81,154 5,664,905 15,632,332 484,376 182,785,146 $

(4,413,927) $ (144,711) 320,340 312,571 288,497 3,317 455,408 (2,044,250) 932,000 (4,290,756) $

140,414,851 $ 1,070,425 9,258,021 3,710,884 2,830,968 84,471 6,120,313 13,588,082 1,416,376 178,494,391 $

$

0$

140,414,851 1,070,425 9,258,021 3,710,884 2,830,968 84,471 6,120,313 13,588,082 1,416,376 178,494,391

7,234,448 $

(7,185,600) $

48,848 $

6,873,943 $

6,922,791

(359,670) $ 0

$

(359,670) $

5,936,620 $ 108,778 224,365 6,269,763 $

0$

5,936,620 108,778 224,365 6,269,763

Return

$

Interest & Other Deductions Interest on L-T Debt Interest-Other Other Deductions Total

$

$

6,296,290 $ 108,778 224,365 6,629,433 $

Operating Margin

$

605,015 $

(6,825,930) $

(6,220,915) $

6,873,943 $

653,028

Non-Operating Margins Interest Income $ Other Margins G&T Capital Credits Other Capital Credits Total $

2,140,098 $ 28,040 6,316,539 88,028 8,572,705 $

$

$

0$

2,140,098 $ 28,040 6,316,539 88,028 8,572,705 $

0$

2,140,098 28,040 6,316,539 88,028 8,572,705

Net Margins

9,177,720 $

(6,825,930) $

2,351,790 $

6,873,943 $

9,225,733

$

24


What is driving the Revenue Requirement  Reduced Operating Margins - Decline in sales - Expiration of minimum bill contracts - Increase in operating expenses - Increased maintenance expenses

 Sufficient cash for general funds, financing plant additions and maintain equity and paying capital credits  RUS OTIER minumum obligation

25


Cost of Service Study:

DEFINE CLASS REVENUE REQUIREMENT

26


Cost of Service Allocation  Allocates plant investment and operating expenses to the various rate classes  Identifies the return (margin) provided under existing rates  Identifies the required revenue change (increase or decrease) for each rate class

27


Customers Grouped Together  A Rate or Customer Class is usually defined by: - Existing rate schedule - Proposed rate schedule

 Customers are grouped together if they: - Use energy in similar ways - Cause similar types of costs

28


Steps in Development of Cost of Service Study

1. 2. 3. 4.

• Functionalize Costs • Classify Costs • Develop Allocation Factors • Allocate Investment & Responsibility

29


Classify Costs  Classification of Costs - Fixed (demand) - Variable (energy) - Customer - Direct

 Concepts - System is designed to serve customer load - Load is defined in terms of: - Peak demand - Energy requirements - Number of customers served

30


Allocation Factors  Energy - Sales - Adjust for losses

 Customer - Actual Customers - Weighted Customers

 Capacity / Demand - Coincident Peak (CP) and Non-Coincident Peak (NCP) - Purchased Power - System

31


Allocation Factors  Consistent methodology and assumptions  Allocation factors updated with current costs and reflect changing relationships between the classes - Meter equipment costs were identified through continuing property records - Single phase and three phase meter equipment costs were allocated to appropriate classes

32


Customer Subsidies  Inter-Class Subsidies - Charging one group of customers more than their share as compared to other member groups

 Intra-Class Subsidies - Charging one or more members within a group more than their share as compared to other members of the group

33


Cost Allocation Summary – Existing Rates

34


Cost Allocation Summary – Existing Rates

35


Comparison of Cost Allocation Summaries Res Existing Rates - TY Ending 12/31/96 Operating Revenue Rev deficiency Uniform ROR = 2.00 Deficiency % of class revenue

Seasonal

GS

LP

LP-Trans

GS-CBM

LP-CBM

LPT-CBM

6,238,933 1,674,539 26.84%

437,021 528,298 120.89%

7,470,998 15,135,910 26,681,004 1,288,104 (608,968) (5,154,500) 17.24% -4.02% -19.32%

Existing Rates - TY Ending 12/31/06 Operating Revenue 10,604,425 Rev deficiency Uniform ROR = 3.716 515,347 Deficiency % of class revenue 4.86%

1,035,474 342,928 33.12%

7,500,487 15,675,264 35,607,745 10,138,065 37,680,083 3,549,055 240,411 (107,551) (636,505) (331,909) 422,410 49,927 3.21% -0.69% -1.79% -3.27% 1.12% 1.41%

Existing Rates - TY Ending 12/31/07 Operating Revenue Rev deficiency Uniform ROR = 3.765 Deficiency % of class revenue

15,160,816 76,480 0.50%

1,356,968 186,435 13.74%

9,727,716 20,694,724 51,773,592 10,551,203 51,103,688 8,066,543 414,654 (463,427) 10,179 (150,003) (78,767) (76,266) 4.26% -2.24% 0.02% -1.42% -0.15% -0.95%

Existing Rates - TY Ending 12/31/08 Operating Revenue Rev deficiency Uniform ROR = 3.216 Deficiency % of class revenue

14,610,228 80,423 0.55%

1,384,428 108,230 7.82%

9,557,552 19,786,810 49,784,528 10,885,300 49,273,116 6,970,359 109,280 (520,496) 26,890 198,021 899,654 (22,635) 1.14% -2.63% 0.05% 1.82% 1.83% -0.33%

Existing Rates - TY Ending 12/31/09 Operating Revenue Rev deficiency Uniform ROR = 3.527 Deficiency % of class revenue

16,793,259 30,866 0.18%

9,599,952 22,085,634 53,227,058 (157,334) (205,316) (807,087) -1.64% -0.93% -1.52%

9,047,092 51,086,857 8,171,482 493,374 736,360 (101,645) 5.45% 1.44% -1.24%

Existing Rates - TY Ending 12/31/12 Operating Revenue Rev deficiency Uniform ROR = 3.527 Deficiency % of class revenue

19,052,362 1,281,164 6.72%

11,184,261 31,301,699 64,037,299 1,048,218 1,285,610 52,497 9.37% 4.11% 0.08%

6,567,580 39,130,246 4,449,335 805,359 2,263,877 104,175 12.26% 5.79% 2.34%

36


Comparison of Plant Allocations Total

Resi

GS

LP

Irrig

Lights

GS-CBM

LP-CBM

LPT-CBM

LPC-CBM

All CBM

LP-Trans

Existing Rates - TY Ending 12/31/06 Transmission 55,731,117 1,598,165 1,207,790 3,787,314 Distribution 181,199,640 42,796,321 23,834,655 23,794,204 General 18,785,716 4,620,271 2,136,077 1,895,913 Total 255,716,473 49,014,757 27,178,522 29,477,431 % of Total 100.00% 19.17% 10.63% 11.53%

24,900 546,666 43,321 614,887 0.24%

23,708 3,258,327 15,625,451 4,123,408 272,225 19,231,540 68,903,922 126,116 3,063,179 6,643,371 18,816 422,049 25,553,046 91,172,744 4,142,224 0.17% 9.99% 35.65% 1.62%

23,007,186 26,082,054 88,135,462 1,820,107 9,725,366 238,652 120,868,014 28,140,813 47.27% 11.00%

Existing Rates - TY Ending 12/31/07 Transmission 60,082,429 2,078,934 1,449,877 3,874,019 Distribution 188,701,460 43,753,564 24,180,176 23,030,843 General 22,047,433 5,321,246 2,437,468 2,187,273 Total 270,831,322 51,153,744 28,067,521 29,092,135 % of Total 100.00% 18.89% 10.36% 10.74%

30,155 576,727 53,310 660,192 0.24%

23,585 3,098,068 17,318,865 3,793,795 264,383 18,367,075 76,429,378 150,885 3,143,405 8,482,565 15,708 438,853 24,608,548 102,230,808 3,809,503 0.16% 9.09% 37.75% 1.41%

24,210,728 28,415,131 94,796,453 2,099,314 11,641,678 255,573 130,648,859 30,770,018 48.24% 11.36%

Existing Rates - TY Ending 12/31/08 Transmission 61,875,558 2,245,256 1,570,015 4,250,622 Distribution 208,778,305 47,297,408 24,601,016 24,908,809 General 23,949,739 5,574,843 2,487,635 2,337,637 Total 294,603,602 55,117,507 28,658,666 31,497,068 % of Total 100.00% 18.71% 9.73% 10.69%

31,919 644,702 57,087 733,708 0.25%

27,907 3,214,710 17,226,759 3,735,891 285,287 21,318,314 87,614,619 136,690 3,426,792 9,640,260 13,215 449,884 27,959,816 114,481,638 3,749,106 0.15% 9.49% 38.86% 1.27%

24,177,360 29,572,479 108,932,933 2,108,150 13,080,267 275,580 146,190,560 31,956,209 49.62% 10.85%

Existing Rates - TY Ending 12/31/09 Transmission 60,860,389 2,259,742 1,415,773 4,527,861 Distribution 219,116,205 46,709,053 23,512,819 29,495,482 General 25,899,388 4,469,537 2,201,137 3,120,164 Total 305,875,982 53,438,332 27,129,729 37,143,507 % of Total 100.00% 17.47% 8.87% 12.14%

40,678 717,326 49,262 807,266 0.26%

28,164 2,639,768 298,746 18,477,275 126,554 3,319,168 453,464 24,436,211 0.15% 7.99%

16,751,804 3,501,127 97,311,007 49,495 12,083,714 56,593 126,146,525 3,607,215 41.24% 1.18%

189,523 24,748 11,296 225,567 0.07%

23,082,222 29,505,949 115,862,525 2,520,254 15,470,771 461,963 154,415,518 32,488,166 50.48% 10.62%

Existing Rates - TY Ending 12/31/12 Transmission 62,280,555 2,747,481 1,687,433 5,934,343 Distribution 245,321,047 56,173,697 31,853,153 47,817,067 General 30,499,923 6,771,065 3,743,527 4,927,784 Total 338,101,525 65,692,243 37,284,113 58,679,194 % of Total 100.00% 19.43% 11.03% 17.36%

35,413 884,620 75,724 995,757 0.29%

32,483 1,929,053 441,067 15,846,488 147,152 3,096,187 620,702 20,871,728 0.18% 6.17%

13,297,888 4,404,746 89,697,868 126,886 11,206,856 67,561 114,202,612 4,599,193 33.78% 1.36%

917,210 50,754 24,031 991,995 0.29%

20,548,897 31,294,505 105,721,996 2,429,447 14,394,635 440,036 140,665,528 34,163,988 41.60% 10.10%

37


Proposed Rate Change Summary Consumers Residential Residential ToD Residential Heat Rate Residential

kWh Sold

Adjusted

Proposed

Revenue

Revenue

Percent Change

Change

14,199 130 122 14,451

203,662,298 3,693,686 2,652,547 210,008,531

16,950,672 248,902 178,629 17,378,204

18,102,654 256,121 183,598 18,542,373

1,151,982 7,219 4,969 1,164,170

6.80% 2.90% 2.78% 6.70%

Seasonal

3,360

8,200,000

1,435,328

1,481,710

46,382

3.23%

Irrigation

170

2,500,000

226,848

245,530

18,682

8.24%

General Service

5,555

142,909,871

11,100,595

12,180,376

1,079,781

9.73%

General Service - CBM

1,467

66,261,032

6,503,814

7,309,305

805,491

12.38%

848

466,600,400

31,042,895

32,387,290

1,344,395

4.33%

1,702

431,747,000

38,700,710

40,967,780

2,267,069

5.86%

13

1,121,946,000

63,309,141

63,340,341

31,200

0.05%

LP Trans CBM

5

80,874,000

4,410,408

4,516,513

106,104

2.41%

LP Compression CBM

2

33,754,000

2,293,950

2,293,950

0

0.00%

Black Hills

2

1,001,405

45,738

45,738

0

0.00%

0 30 30

2,109,828 911,000 3,020,828

203,274 77,690 280,964

210,439 80,122 290,561

7,165 2,432 9,597

3.52% 3.13% 3.42%

28,249

2,568,823,067

176,728,596

183,601,467

6,872,871

3.89%

Other Revenue

1,814,643

1,814,643

0

0.00%

Total Revenue

178,543,239

185,416,110

6,872,871

3.85%

Large Power Large Power CBM Large Power Trans

Security Lighting Street Lighting Lighting Total Energy Sales

38


Cost Allocation Summary – Proposed Rates

39


Cost Allocation Summary – Proposed Rates

40


Cost of Service Study:

DEFINE CUSTOMER REVENUE REQUIREMENT

41


Rate Evaluation Criteria  Fair / non-discriminatory  Customer impact  Competitive  Proper pricing signal  Understandable  Encourage proper usage

42


Components of Expenses

43


Components of Expenses

44


Primary Rate Change Objectives  Overall system rate increase of 3.85%  Rebase Cost of Power Adjustment to zero  Use Cost of Service Study as guide for rate changes by class - All classes require an increase except LPC-CBM

45


Comparison of Existing and Proposed Residential Rates kWh Usage

Consumers in Block

Customer Charge kWh COPA Factor, per kWh Total kWh Charge, per kWh

Existing

Proposed

Change

Percent Change

$22.50

$22.50

$0.00

0.00%

$0.053520 $0.010824 $0.064344

$0.070000 $0.000000 $0.070000

$0.016480 ($0.010824) $0.005656

30.79% -100.00% 8.79%

50

601

$25.72

$26.00

$0.28

1.09%

100

364

$28.93

$29.50

$0.57

1.97%

300

1,029

$41.80

$43.50

$1.70

4.07%

500

1,120

$54.67

$57.50

$2.83

5.18%

800

1,806

$73.97

$78.50

$4.53

6.12%

1,000

1,418

$86.84

$92.50

$5.66

6.52%

2,000

4,276

$151.19

$162.50

$11.31

7.48%

3,000

1,311

$215.53

$232.50

$16.97

7.87%

4,000

453

$279.87

$302.50

$22.63

8.09%

5,000

174

$344.22

$372.50

$28.28

8.22%

$97.65

$104.26

$6.61

6.77%

1,168

Average

46


Comparison of Existing and Proposed Seasonal Annual kWh Usage

Existing

Customer Charge

Proposed

Change

Percent Change

$270.00

$270.00

$0.00

0.00%

$0.053520 $0.010824 $0.064344

$0.070000 $0.000000 $0.070000

$0.016480 ($0.010824) $0.005656

30.79% -100.00% 8.79%

250

$286.09

$287.50

$1.41

0.49%

500

$302.17

$305.00

$2.83

0.94%

750

$318.26

$322.50

$4.24

1.33%

1,000

$334.34

$340.00

$5.66

1.69%

1,500

$366.52

$375.00

$8.48

2.31%

2,000

$398.69

$410.00

$11.31

2.84%

2,500

$430.86

$445.00

$14.14

3.28%

3,000

$463.03

$480.00

$16.97

3.66%

4,000

$527.37

$550.00

$22.63

4.29%

5,000

$591.72

$620.00

$28.28

4.78%

$427.32

$441.15

$13.83

3.24%

Energy Charge, per kWh COPA Factor, per kWh Total kWh Charge, per kWh

2,445

Average

47


Comparison of Existing and Proposed General Service kWh Usage

Consumers in Block

Existing

Proposed

Change

Percent Change

Customer Charge, Single Phase Customer Charge, Three Phase Energy Charge, per kWh COPA Factor, per kWh

$27.00 $32.00 $0.053020 $0.010824

$30.00 $35.00 $0.070000 $0.000000

$3.00 $3.00 $0.016980 ($0.010824)

11.11% 9.38% 32.03% -100.00%

Total kWh, per kWh

$0.063844

$0.070000

$0.006156

9.64%

50 100 300 500 800 1,000 1,500 2,000 3,000 5,000 1,119

50 100 300 500 800 1,000 1,500 4,000 6,000 8,000 3,076

301 201 439 221 213 100 325 176 92 56

Single Phase $30.19 $33.38 $46.15 $58.92 $78.07 $90.84 $122.77 $154.69 $218.53 $346.22 $98.44

$33.50 $37.00 $51.00 $65.00 $86.00 $100.00 $135.00 $170.00 $240.00 $380.00 $108.33

$3.31 $3.62 $4.85 $6.08 $7.93 $9.16 $12.23 $15.31 $21.47 $33.78 $9.89

10.96% 10.84% 10.51% 10.32% 10.16% 10.08% 9.96% 9.90% 9.82% 9.76% 10.05%

155 134 378 174 157 86 314 398 219 136

Three Phase $35.19 $38.38 $51.15 $63.92 $83.07 $95.84 $127.77 $287.37 $415.06 $542.75 $228.38

$38.50 $42.00 $56.00 $70.00 $91.00 $105.00 $140.00 $315.00 $455.00 $595.00 $250.32

$3.31 $3.62 $4.85 $6.08 $7.93 $9.16 $12.23 $27.63 $39.94 $52.25 $21.94

9.41% 9.43% 9.48% 9.51% 9.55% 9.56% 9.57% 9.61% 9.62% 9.63% 9.61%

Average

Average

48


Comparison of Existing and Proposed Irrigation Load Factor

Installed HP

kW

Annual kWh

Existing Rate

Proposed Rate

Change

Percent Change

Installed HP Energy Charge, per kWh Energy Charge, per kWh

$15.50

$18.50

$3.00

19.35%

$0.047900

$0.060000

25.26%

COPA Factor, per kWh Total kWh Charge, per kWh

$0.010824 $0.058724

$0.000000 $0.060000

$0.012100 ($0.010824 ) $0.001276

-100.00% 2.17%

5.00% 10.00% 20.00% 30.00% 50.00%

10.00 10.00 10.00 10.00 10.00

7.46 7.46 7.46 7.46 7.46

4,380 8,760 17,520 26,280 43,800

$412.21 $669.42 $1,183.84 $1,698.26 $2,727.10

$447.80 $710.60 $1,236.20 $1,761.80 $2,813.00

$35.59 $41.18 $52.36 $63.54 $85.90

8.63% 6.15% 4.42% 3.74% 3.15%

5.00% 10.00% 20.00% 30.00% 50.00%

25.00 25.00 25.00 25.00 25.00

18.65 18.65 18.65 18.65 18.65

10,950 21,900 43,800 65,700 109,500

$1,030.52 $1,673.55 $2,959.60 $4,245.64 $6,817.74

$1,119.50 $1,776.50 $3,090.50 $4,404.50 $7,032.50

$88.98 $102.95 $130.90 $158.86 $214.76

8.63% 6.15% 4.42% 3.74% 3.15%

5.00% 10.00% 20.00% 30.00% 50.00%

50.00 50.00 50.00 50.00 50.00

37.30 37.30 37.30 37.30 37.30

21,900 43,800 87,600 131,400 219,000

$2,061.05 $3,347.10 $5,919.19 $8,491.29 $13,635.48

$2,239.00 $3,553.00 $6,181.00 $8,809.00 $14,065.00

$177.95 $205.90 $261.81 $317.71 $429.52

8.63% 6.15% 4.42% 3.74% 3.15%

5.00% 10.00% 20.00% 30.00% 50.00%

75.00 75.00 75.00 75.00 75.00

55.95 55.95 55.95 55.95 55.95

32,850 65,700 131,400 197,100 328,500

$3,091.57 $5,020.64 $8,878.79 $12,736.93 $20,453.22

$3,358.50 $5,329.50 $9,271.50 $13,213.50 $21,097.50

$266.93 $308.86 $392.71 $476.57 $644.28

8.63% 6.15% 4.42% 3.74% 3.15%

49


Comparison of Existing and Proposed Large Power Load Factor

Billing kW

kWh

Customer Charge Demand Charge, per Billing kW First 50 Billing kW Next 50 Billing kW Energy Charge, per kWh First 200 kWh per Billing kW Over 200 kWh per Billing kW COPA Factor, per kWh

Existing Rate

Proposed Rate

Change

Percent Change

$90.00

$90.00

$0.00

0.00%

$2.65 $5.35

$2.65 $5.35

$0.00 $0.00

0.00% 0.00%

$0.051310 $0.031310 $0.010824

$0.068550 $0.042000 $0.000000

$0.017240 $0.010690 ($0.010824)

33.60% 34.14% -100.00%

10.00% 30.00% 50.00% 70.00% 90.00%

50 50 50 50 50

3,650 10,950 18,250 25,550 32,850

$449.29 $883.86 $1,191.44 $1,499.02 $1,806.59

$472.71 $947.90 $1,254.50 $1,561.10 $1,867.70

$23.42 $64.04 $63.06 $62.08 $61.11

5.21% 7.25% 5.29% 4.14% 3.38%

10.00% 30.00% 50.00% 70.00% 90.00%

75 75 75 75 75

5,475 16,425 27,375 38,325 49,275

$696.43 $1,348.30 $1,809.66 $2,271.02 $2,732.39

$731.56 $1,444.35 $1,904.25 $2,364.15 $2,824.05

$35.13 $96.05 $94.59 $93.13 $91.66

5.04% 7.12% 5.23% 4.10% 3.35%

10.00% 30.00% 50.00% 70.00% 90.00%

150 150 150 150 150

10,950 32,850 54,750 76,650 98,550

$1,437.86 $2,741.59 $3,664.32 $4,587.05 $5,509.77

$1,508.12 $2,933.70 $3,853.50 $4,773.30 $5,693.10

$70.26 $192.11 $189.18 $186.25 $183.33

4.89% 7.01% 5.16% 4.06% 3.33%

10.00% 30.00% 50.00% 70.00% 90.00%

250 250 250 250 250

18,250 54,750 91,250 127,750 164,250

$2,426.44 $4,599.32 $6,137.20 $7,675.08 $9,212.95

$2,543.54 $4,919.50 $6,452.50 $7,985.50 $9,518.50

$117.10 $320.18 $315.30 $310.42 $305.55

4.83% 6.96% 5.14% 4.04% 3.32%

33.38% Avg

108

26,317

$2,073.63

$2,211.59

$137.96

6.65%

50


Comparison of Existing and Proposed General Service - CBM kWh Usage

Consumers in Block

Customer Charge, Single Phase Customer Charge, Three Phase Energy Charge, per kWh COPA Factor, per kWh Total kWh Charge, per kWh

Existing

Change

Percent Change

$35.00 $40.00 $0.082300 $0.000000 $0.082300

$0.00 $0.00 $0.022980 ($0.010824) $0.012156

0.00% 0.00% 38.74% -100.00% 17.33%

Proposed

$35.00 $40.00 $0.059320 $0.010824 $0.070144

50 100 300 500 800 1,000 2,000 3,000 4,000 5,000 2,675 Average

18 7 7 4 8 4 14 9 5 4

Single Phase $38.51 $42.01 $56.04 $70.07 $91.11 $105.14 $175.29 $245.43 $315.57 $385.72 $222.63

$39.12 $43.23 $59.69 $76.15 $100.84 $117.30 $199.60 $281.90 $364.20 $446.50 $255.15

$0.61 $1.22 $3.65 $6.08 $9.73 $12.16 $24.31 $36.47 $48.63 $60.78 $32.52

1.58% 2.90% 6.51% 8.68% 10.68% 11.57% 13.87% 14.86% 15.41% 15.76% 14.61%

50 100 300 500 800 1,000 2,000 4,000 6,000 8,000 3,869 Average

161 57 103 56 65 39 157 241 150 98

Three Phase $43.51 $47.01 $61.04 $75.07 $96.11 $110.14 $180.29 $320.57 $460.86 $601.15 $311.39

$44.12 $48.23 $64.69 $81.15 $105.84 $122.30 $204.60 $369.20 $533.80 $698.40 $358.42

$0.61 $1.22 $3.65 $6.08 $9.73 $12.16 $24.31 $48.63 $72.94 $97.25 $47.03

1.40% 2.60% 5.98% 8.10% 10.12% 11.04% 13.48% 15.17% 15.83% 16.18% 15.10%

51


Comparison of Existing and Proposed Large Power - CBM Load Factor

Billing kW

kWh

Customer Charge Demand Charge, per Billing kW First 50 Billing kW Next 50 Billing kW Energy Charge, per kWh First 200 kWh per Billing kW Over 200 kWh per Billing kW COPA Factor, per kWh

Existing Rate

Proposed Rate

Change

Percent Change

$100.00

$100.00

$0.00

0.00%

$3.00 $7.00

$3.00 $7.00

$0.00 $0.00

0.00% 0.00%

$0.049200 $0.029200 $0.010824

$0.067600 $0.042000 $0.000000

$0.018400 $0.012800 ($0.010824)

37.40% 43.84% -100.00%

10.00% 30.00% 50.00% 70.00% 90.00%

50 50 50 50 50

3,650 10,950 18,250 25,550 32,850

$469.09 $888.26 $1,180.43 $1,472.60 $1,764.78

$496.74 $965.90 $1,272.50 $1,579.10 $1,885.70

$27.65 $77.64 $92.07 $106.50 $120.92

5.89% 8.74% 7.80% 7.23% 6.85%

10.00% 30.00% 50.00% 70.00% 90.00%

75 75 75 75 75

5,475 16,425 27,375 38,325 49,275

$753.63 $1,382.39 $1,820.65 $2,258.91 $2,697.17

$795.11 $1,498.85 $1,958.75 $2,418.65 $2,878.55

$41.48 $116.46 $138.10 $159.74 $181.38

5.50% 8.42% 7.59% 7.07% 6.72%

10.00% 30.00% 50.00% 70.00% 90.00%

150 150 150 150 150

10,950 32,850 54,750 76,650 98,550

$1,607.26 $2,864.78 $3,741.30 $4,617.81 $5,494.33

$1,690.22 $3,097.70 $4,017.50 $4,937.30 $5,857.10

$82.96 $232.92 $276.20 $319.49 $362.77

5.16% 8.13% 7.38% 6.92% 6.60%

10.00% 30.00% 50.00% 70.00% 90.00%

250 250 250 250 250

18,250 54,750 91,250 127,750 164,250

$2,745.43 $4,841.30 $6,302.16 $7,763.02 $9,223.89

$2,883.70 $5,229.50 $6,762.50 $8,295.50 $9,828.50

$138.27 $388.20 $460.34 $532.48 $604.61

5.04% 8.02% 7.30% 6.86% 6.55%

83

17,268

$1,504.13

$1,631.22

$127.09

8.45%

28.50% Avg

52


Comparison of Existing and Proposed Large Power - CBM

53


Comparison of Existing and Proposed Lighting

Existing Base Rate

Lamp

COPA per kWh

Proposed Billing w/ COPA

Base Rate

COPA per kWh

Billing w/ COPA

Change

Percent Change

100 Watts HPS 150 Watts HPS 175 Watts MV 400 Watts MV 400 Watts HPS

52 kWh 78 kWh 82 kWh 172 kWh 188 kWh

$6.95 $6.95 $6.95 $12.05 $12.05

Street Lighting $0.010824 $7.51 $0.010824 $7.79 $0.010824 $7.84 $0.010824 $13.91 $0.010824 $14.08

$8.10 $8.10 $8.10 $14.40 $14.40

$0.000000 $0.000000 $0.000000 $0.000000 $0.000000

$8.10 $8.10 $8.10 $14.40 $14.40

$0.59 $0.31 $0.26 $0.49 $0.32

7.86% 3.98% 3.32% 3.52% 2.27%

100 Watts HPS 150 Watts HPS 175 Watts MV 400 Watts MV 400 Watts HPS

52 kWh 78 kWh 82 kWh 172 kWh 188 kWh

$6.95 $6.95 $6.95 $12.05 $12.05

Outdoor Lighitng $0.010824 $7.51 $0.010824 $7.79 $0.010824 $7.84 $0.010824 $13.91 $0.010824 $14.08

$8.10 $8.10 $8.10 $14.40 $14.40

$0.000000 $0.000000 $0.000000 $0.000000 $0.000000

$8.10 $8.10 $8.10 $14.40 $14.40

$0.59 $0.31 $0.26 $0.49 $0.32

7.86% 3.98% 3.32% 3.52% 2.27%

54


Cost of Service Study:

BALANCING FINANCIAL OBJECTIVES & RATES CHARGED TO MEMBERS

55


Recommendations  System rate increase of $6,873,943 (3.85%)  Rebase rates to reflect Basin’s 2013 rates and reset COPA to zero  Make necessary rate changes to classes based on Cost of Service Study  Make changes to miscellaneous service fees to move closer to actual costs

56


Board Action Items  Decide whether to proceed with general rate application in 2013  Approve amount of rate change  Approve changes to rate design

57


2013-coss-board-presentation-may-2013