FortisBC Inc. (FBC) Application for Approval of Advanced Metering Infrastructure (AMI) Enabled Billing Options FBC Final Submission

Transcription

1 Dennis Swanson Director, Regulatory Affairs FortisBC Inc. Suite Springfield Road Kelowna, BC V1Y 7V7 Tel: (250) Fax: Regulatory Affairs Correspondence September 29, 2014 Via Original via Mail British Columbia Utilities Commission Sixth Floor 900 Howe Street Vancouver, B.C. V6Z 2N3 Attention: Ms. Erica M. Hamilton, Commission Secretary Dear Ms. Hamilton: Re: FortisBC Inc. (FBC) Application for Approval of Advanced Metering Infrastructure (AMI) Enabled Billing Options FBC Final Submission On July 18, 2014, FBC filed the Application as referenced above. In accordance with Commission Order G setting out the Regulatory Timetable for the review of the Application, attached is the Final Submission of FBC. If further information is required, please contact the undersigned. Sincerely, FORTISBC INC. Original signed: Dennis Swanson Attachment cc ( only): Registered Parties

2 BRITISH COLUMBIA UTILITIES COMMISSION IN THE MATTER OF the Utilities Commission Act, R.S.B.C. 1996, Chapter 473 (the Act ) and An Application by FortisBC Inc. for Approval of Advanced Metering Infrastructure Enabled Billing Options FINAL SUBMISSION OF FORTISBC INC. September 29, 2014

3 - i - TABLE OF CONTENTS A. Introduction... 1 B. AMI-Enabled Billing Options... 1 C. Monthly Billing Based on Verified Reads... 2 D. Pick Your Bill Date Option... 4 E. Additional Benefits of Automated Metering Reading... 5 F. Accounting Treatment of Benefits and Costs Associated with AMI Billing Options... 6 G. Conclusion... 7

4 - 1 - A. INTRODUCTION 1. On July 18, 2014, FortisBC Inc. (FBC or the Company) filed an application with the British Columbia Utilities Commission (BCUC or the Commission) for approval of Advanced Metering Infrastructure (AMI) Enabled Billing Options (the Application). 2. FBC seeks approval of the Application (Exhibit B-1) under sections of the Utilities Commission Act, R.S.B.C. 1996, c.473 (the UCA). Specifically, FBC is requesting approval to: a. Amend the Terms and Conditions of the FBC Electric Tariff No. 2 to allow for a pick your bill date option for customers; b. Modify Rate Schedule 1 (Residential Service), Rate Schedule 3 (Exempt Residential Service), Rate Schedule 3A (Exempt Residential Service), and Rate Schedule 20 (Commercial Service) to include monthly rates for the Customer Charge and the restriction of monthly billing to paperless only. 3. FBC is also seeking specific accounting treatment approvals addressed in detail in section F of these submissions. B. AMI-ENABLED BILLING OPTIONS 4. The billing options available to customers currently are limited by labour-intensive manual meter reading. Customer meters are currently read approximately once every two months. 1 Automated meter reading is enabled by the Advanced Metering Infrastructure project and will provide FBC with the ability to offer customers more options regarding their billing and payment of bills. 2 The issues and options addressed by this Application are: a. Bi-monthly manual meter reading for the majority of FBC s customers means that for customers on existing monthly options, such as the Equal Payment Plan (EPP), every second bill the customer receives is based on an estimate. This issue cannot be addressed by manually reading meters on a monthly basis, as there are high costs associated with increasing the frequency of meter reads obtained manually. In addition, estimates on every second bill for existing monthly customers results in increased call 1 2 Exhibit B-1, section 3.1, p. 4 Exhibit B-1, section 3.2, p. 5

5 - 2 - volume from customers inquiring about bill estimates. 3 Automated meter reading will enable the Company to bill customers monthly based on verified reads and is expected to positively impact customer satisfaction. 4 This option is discussed further in section C. b. Manual meter reading also means that a customer s billing and payment date are tied to when the meter is scheduled to be read. 5 Automated meter reading will allow FBC to accommodate customer requests for a billing/payment date that suits their needs. 6 This option is discussed further in section D. c. Manual meter reading also limits FBC s ability to consolidate bills for customers with multiple electricity accounts. Consolidation of bills has been limited to the small amount of customers with electricity accounts that have the same meter reading date. 7 Automated meter reading will expand FBC s ability to offer customers with multiple electricity accounts consolidated billing. 8 This option is discussed in further detail in section E. C. MONTHLY BILLING BASED ON VERIFIED READS 5. Automated meter reading allows FBC to offer customers monthly billing based on verified reads. FBC believes that many of its customers will view enhanced billing options, such as monthly billing on verified reads, as an important benefit of the AMI infrastructure FBC is proposing to introduce monthly billing to customers on a paperless basis only. 10 Monthly billing will increase the number of bills a customer receives per year. On a paper basis, this will result in increased bill production costs. Bill production costs include postage, envelopes, printing, billing stock, forms management and insertion costs Exhibit B-1, section 3.1, p. 4 Exhibit B-1, section 3.2, p. 5 and Exhibit B-5, FBC response to CEC IR Exhibit B-1, section 3.1, p. 4 Exhibit B-1, section 3.2, p. 5 Exhibit B-1, section 3.1, p. 4 Exhibit B-1, section 3.2, p. 5 Exhibit B-5, FBC Response to CEC IR Exhibit B-1, section 4, p. 6 Exhibit B-5, FBC Response to CEC IR

6 If all bi-monthly customers currently receiving paper bills were to elect the monthly billing option, on a paper basis, Operating and Maintenance (O&M) costs related to additional printing and postage would increase by approximately $0.5 million If all bi-monthly customers currently receiving paper bills were to elect the monthly billing option, on a paperless basis, O&M costs related to reduced printing and postage would decrease by approximately $0.5 million The monthly billing option will also impact revenue lag, which in turn impacts working capital requirements. Revenue lag is made up of three components: a. Consumption lag is the amount of time between when a customer begins consuming electricity during a billing cycle and when the customer is read and consumption recorded. An increase in the number of annual billing periods from 6 (bi-monthly) to 12 (monthly) will decrease consumption lag; b. Billing lag is the time between when a customer s meter is read and when the bill is produced. There is no change to billing lag as a result of customers moving to monthly billing; c. Collection lag is the time between the bill date and the due date for payment of the bill. An increase in customers being billed monthly instead of bi-monthly will decrease collection lag FBC does not have a forecast of how many customers will elect to move to monthly billing in any given year. FBC does not anticipate that all residential and commercial customers currently billed bimonthly will transition to a monthly bill schedule in one year. However, it is possible that all those customers will transition over time. 15 Assuming full take-up of monthly billing, savings to the annual revenue requirement associated working capital requirements by approximately $0.6 million would be realized Exhibit B-1, section 4.1, p. 6 Exhibit B-5, FBC Response to CEC IR Exhibit B-1, section 4.2, pp. 6-7 Exhibit B-2, FBC Response to BCUC IR Exhibit B-5, FBC Response to CEC IR

7 Customers electing the AMI Radio-off Meter Option (and those customers with a non-connected AMI meter) will be eligible for monthly paperless billing, but every second bill will still be based on an estimate Customers currently on FBC s Equal Payment Plan (EPP) receive monthly bills, with every second bill based on a system estimated read. Automated metering reading will enable verified reads on every monthly bill. 18 EPP customers billed on a paper basis will continue receiving bills on a paper basis unless they opt into receiving an e-bill. 19 D. PICK YOUR BILL DATE OPTION 13. Automated meter reading will also allow customers to choose a billing/payment date that better meets their needs. FBC has proposed in this Application to offer customers a Pick Your Bill Date option Customers can choose their preferred billing date, which is expected to help customers who currently have difficulty in making prompt payment based on the billing date that is dictated by the manual meter reading schedule. The Pick Your Bill Date option can also help to reduce late payment charges for those customers. 21 FBC does not expect any material change to the amount of disconnects and reconnects that occur as a result of customer non-payment of accounts The Pick Your Bill Date option does not require that customers move to e-billing Radio-off customers (and those customers with a non-connected AMI meter) will not be eligible for the Pick Your Bill Date option. Bill dates for customers with a radio-off AMI meter will continue to be determined by the scheduled manual meter reading date FBC has proposed changes to its Electric Tariff Terms and Conditions to accommodate the Pick Your Bill Date option Exhibit B-4, FBC Response to BCSEA IR Exhibit B-4, FBC Response to BCSEA IR Exhibit B-3, FBC Responses to BCOAPO IR and Exhibit B-1, section 3.2, p. 5, lines Exhibit B-1, section 3.2, p. 5, lines Exhibit B-3, FBC Response to BCOAPO IR Exhibit B-5, FBC Response to CEC Exhibit B-1, section 5, p. 9, lines 14-19

8 - 5 - E. ADDITIONAL BENEFITS OF AUTOMATED METERING READING 18. An additional benefit of automated meter reading is the ability to consolidate bills for customers with multiple electricity accounts. With manual meter reading, consolidation of bills is limited to the small amount of accounts where meters are scheduled to be read on the same day Approximately 78,000 bills could potentially be eliminated by bill consolidation. If all customers with multiple accounts subscribe to consolidated billing, bill production costs would be reduced by approximately $0.1 million. 27 The consolidated bill option does not require that customers move to e- billing There are no incremental O&M costs anticipated to implement the consolidated billing option. FBC is planning a staged roll-out of the AMI billing options to mitigate any call centre or billing department labour O&M cost impacts Consolidated billing will have no impact to revenue. Customers who elect to consolidate their accounts for billing purposes will still be billed a customer charge for each account Radio-off customers (and those customers with a non-connected AMI meter) will not be eligible for the consolidated bill option FBC has not proposed changes to its Electric Tariff Terms and Conditions with respect to the consolidated billing option. Automated meter reading allows expansion of consolidated billing to all customers with multiple accounts (except Radio-off customers and customers with a non-connected AMI meter) and not just for those accounts that are scheduled to be read on the same day. The expanded consolidated billing option can be accommodated under the existing Terms and Conditions Exhibit B-1, Appendix B Exhibit B-1, section 3.2, p. 5, lines Exhibit B-1, section 4.3, p. 7, lines Exhibit B-5, FBC Response to CEC IR Exhibit B-2, FBC Response to BCUC IR and Exhibit B-3, FBC Response to BCOAPO IR Exhibit B-1, section 3.2, p. 5, lines Exhibit B-4, FBC Response to BCSEA IR Exhibit B-2, FBC Response to BCUC IR 1.2.3

9 - 6 - F. ACCOUNTING TREATMENT OF BENEFITS AND COSTS ASSOCIATED WITH AMI BILLING OPTIONS 24. The O&M savings associated with full take-up of monthly billing on a paperless basis and consolidated billing is approximately $0.5 million and $0.1 million respectively If the Commission approves FBC s request for monthly billing, but on a paper basis, full take-up of monthly billing will increase O&M by approximately $0.5 million as a result of increased bill production costs FBC is proposing Z Factor treatment for the O&M costs and savings associated with the AMI Billing options. 35 O&M costs and savings that would be considered for Z Factor treatment are: a. O&M savings associated with decreased printing and postage costs related to customers that are currently billed on a bi-monthly paper basis electing monthly billing on a paperless basis (this scenario assumes Commission approval of the AMI Billing Option as applied for; monthly billing on a paperless basis); b. O&M costs associated with increased bill production costs related to customers that are currently billed on a bi-monthly paper basis electing monthly billing on a paper basis (this scenario assumes Commission approval of the AMI Monthly Billing Option on a paper basis); and c. O&M savings associated with decreased bill production costs related to customers choosing to consolidate their bills FBC does not expect increased O&M costs related to call centre or billing department staff labour. FBC will be undertaking a staged implementation of the billing options to help manage staffing costs Subsequent to the filing of the Application, Commission Decision and Order G in FBC s Application for Approval of a Multi-Year Performance Based Ratemaking Plan for the years 2014 through Exhibit B-5, FBC Response to CEC IR Exhibit B-1, section 4.1, p. 6 Exhibit B-2, FBC Response to BCUC IR Exhibit B-2, FBC Response to BCUC IR Exhibit B-2, FBC Response to BCUC IR 1.2.1

10 ( PBR Plan) established criteria for the evaluation of whether an event qualifies for Z Factor treatment. 38 The increased/decreased O&M costs as a result of the AMI billing options may not meet certain of the criteria; however FBC submits that Z Factor treatment is the best treatment of these O&M costs Z Factor treatment of any O&M costs or savings will flow the financial impact directly to customers, and customers will receive all of the net benefit of the implementation of the AMI billing options If the Commission does not agree that Z Factor treatment is warranted for these O&M costs or savings, FBC proposes that O&M costs associated with the AMI Billing options could be tracked separately as part of the AMI project outside of the PBR formula If all residential and commercial customers who are currently billed bi-monthly were transitioned to a monthly bill schedule, revenue lag days would decrease, which will in turn decrease the annual revenue requirement associated working capital requirements by approximately $0.6 million. Reduced working capital requirements decreases annual revenue requirements to the benefit of customers Since FBC does not have an accurate forecast of customer uptake of the monthly billing option in any given year, the Company proposes to adjust the working capital allowance on a test year basis annually. For clarity, working capital will be adjusted in 2016 revenue requirements to reflect the actual number of customers that transition to monthly billing in G. CONCLUSION 33. In light of the evidentiary record and the submissions made above, FBC repeats its request for the approvals outlined in paragraph 2, namely: FBC Multi-Year Performance Based Ratemaking Plan for Application, Order G , Reasons for Decision, p. 94 Exhibit B-2, FBC response to BCUC IR Exhibit B-2, FBC response to BCUC IR Exhibit B-2, FBC response to BCUC IR Exhibit B-2, FBC response to BCUC IR Exhibit B-2, FBC response to BCUC IR 1.1.5

11 - 8 - a. Pursuant to sections of the UCA, approval to amend the Terms and Conditions of the FBC Electric Tariff No. 2 to allow for a pick your bill date option for customers; and b. Pursuant to sections of the UCA, approval to modify Rate Schedule 1 (Residential Service), Rate Schedule 3 (Exempt Residential Service), Rate Schedule 3A (Exempt Residential Service), and Rate Schedule 20 (Commercial Service) to include monthly rates for the Customer Charge and the restriction of monthly billing to paperless only. 34. ALL OF WHICH IS RESPECTFULLY SUBMITTED. Dated: September 29, 2014 [original signed] Dennis Swanson