Proposed Rate Policy Changes. Tom Habashi Roseville Electric Utility Director March 18, 2009

Transcription

1 Proposed Rate Policy Changes Tom Habashi Roseville Electric Utility Director March 18, 2009

2 Recommendations Adopt annual adjustment to the electric bill to reflect hydro conditions Reduce the lower range of the Rate Stabilization Fund from 60 to 40% of Operating Expenses Change the basis for charging Climate Change Mitigation Fee from flat to consumption based Exempt Green Roseville Customers from paying Climate Change Mitigation Fee

3 Hydroelectric Adjustment What it is An annual adjustment (surcharge or credit) that applies for 12 months A function of water precipitation deviation from average What it is not A permanent rate adjustment A means to stabilize long-term gap between revenues and expenses

4 Power Supply Cost Drivers Demand Forecast Generally within 1% Natural Gas Prices Very dynamic, but risk is routinely being managed Availability of Hydroelectric Generation Depends on water conditions

5 Historical Precipitation vs Average

6 The Issue Two hydroelectric resources meeting 16% of the City s consumption in an average water year Nearly 100% of the cost of hydroelectric resources is fixed Large deviations from normal hydro year cause sizable deficits/surpluses

7 Recommended Solution Recommending 1%-5% automatic hydroelectric adjustment (surcharge or credit) Annual calculation based on water precipitation and cost of replacement energy

8 Implementation Process Use state measurement for snow water content in mid Spring Determine deviation from average precipitation and thus hydro generation Calculate power supply cost increase/decrease Calculate % surcharge or credit

9 Measured and reported as the Northern Sierra 8 Station Index (NS8) Precipitation Measurement

10 Water To Energy Conversion Average July-June precipitation = 52 inches Average water year generates 222 GWH 222 GWH / 52 inches = 4.3 GWH / inch Hydro generation deviation in GWH = 4.3 * precipitation deviation in inches

11 Impact on Bottom Line Use forward market prices published by the Energy Market Report Power supply cost deviation = generation deviation in GWH * forward market prices Surcharge/credit = cost deviation / retail revenues (within 1 to 5% range)

12 Precipitation and Hydro Scenarios Very dry Current Very wet Precipitation in inches Energy in GWH: Deficit or Surplus Surcharge Impact on Rates +5.0% +2.0% -5.0% Reserve Transfers -$6.7 mil None $9.3 mil Notes: Impact based on FY10 revenues of $140 mil and energy supply of 1,400 GWH. Replacement 10 cents/kwh. 50 year precipitation extremes: Very dry = 1977 and Very wet = Current = July 08 March 09 actual, plus spring average. Wet reserve impact and transfers if RSF above funding limit.

13 Residential Very dry Current Very wet Rate Adjustment per kwh +$ $ $ Monthly bill impact / house +$5.20 +$1.90 -$5.20 Monthly bill impact / apartment +$2.60 +$1.00 -$2.60 Notes: Impact based on 11,400 and 5,700 kwh. Replacement 10 cents/kwh. 50 year precipitation extremes: Very dry = 1977 and Very wet = Recent = Wet reserve impact if RSF above funding limit.

14 Small Business: Gift Shop Rate Impact Very dry Current Very wet Rate Adjustment per kwh +$ $ $ Monthly Bill Impact +$8 +$3 -$8 Notes: 18,500 KWH / year. Replacement 10 cents/kwh. 50 year precipitation extremes: Very dry = 1977 and Very wet = Recent = Wet reserve impact if RSF above funding limit.

15 Medium Business: Restaurant Rate Impact Very dry Current Very wet Rate Adjustment per kwh +$ $ $ Monthly Bill Impact +$135 +$51 -$135 Notes: 300,000 KWH / year. Replacement 10 cents/kwh. 50 year precipitation extremes: Very dry = 1977 and Very wet = Recent = Wet reserve impact if RSF above funding limit.

16 What Other Utilities Have Done UTILITY SMUD Lodi Turlock Modesto Riverside LADWP Glendale Anaheim Burbank Pasadena Imperial Roseville (proposed) TYPE Hydro Power Power Under analysis Power Energy Fuel Power Energy Power Energy Hydro FREQUENCY 1x / Year Monthly 2x / Year 4x or 2x / Year 1x / Year 4x / Year 2x / Year 4x / Year Monthly Monthly Yearly 1x/year

17 Rate Stabilization Fund Balance Recommending to lower the floor on the balance of the Fund from 60% to 40% of the operating expenses

18 Existing Climate Change Mitigation Per Meter Charge $4 per month for Residential and Small Commercial $25 per month for Medium and Large Commercial customers

19 Residential Proposed Climate Change Mitigation Fee $0.005 (half a cent) per kwh Average home impact vs Flat Fee method = + $0.75 / month Average apartment impact vs Flat Fee method = - $1.60 / month

20 Green Roseville And Climate Mitigation Fee Green Roseville customers pay 1.5 cents/kwh more to green 100% of their energy use All other residents pay 0.5 cents/kwh to green some of their energy use

21 Reliability Outage Frequency 1.8 PG&E SMUD ROSEVILLE Once Every 14 Years

22 Reliability Outage Duration PG&E SMUD ROSEVILLE Up to 20 Times Better Than Neighboring Utilities

23 $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $- Average System Rates $0.145 $0.097 $0.105 Santa Clara Palo Alto Roseville Turlock Redding SMUD Modesto Merced Alameda Lodi PG&E No. 3 in N. California in kwh Pricing

24 Average Residential Rates $0.18 $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $- $0.16 $0.11 $0.11 Santa Clara Palo Alto Redding Roseville SMUD Alameda Turlock Merced PG&E Modesto Lodi Among the Most Affordable Rates in N. California

25 Monthly Residential Bills $160 $140 $154 $120 $100 $80 $60 $40 $20 $112 $104 $0 PG&E '07 SMUD '08 RE '08 Our Customers Monthly Bills are the Lowest

26 Small & Medium Commercial Rates $0.16 $0.16 $0.12 $0.10 $0.11 $0.08 $0.04 Palo Alto Roseville SMUD Redding Turlock $- Santa Clara Merced Alameda Modesto Lodi PG&E Our Customers Have the Lowest Energy Costs

27 Average Large Commercial Rates $0.12 $0.115 $0.08 $0.076 $0.087 $0.04 $- Roseville Modesto Turlock Santa Clara SMUD Palo Alto Merced Lodi Redding Alameda PG&E No Utility Beats Our Large Business Rate!

28 Summary Automatic small annual adjustments negate the need for sizable rate changes due to hydro condition Lowering the floor of the RSF prevents a sizable rate increase The more you consume, the more you ll pay to climate mitigation Customers won t pay twice to green Roseville