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Jefferson County PUD

Jefferson County PUD. Commission Briefing on Cost of Service and Rate Design Issues September 10, 2014. Presented by: Gary Saleba, President EES Consulting, Inc. A registered professional engineering and management consulting firm with offices in Kirkland, WA and Portland, OR.

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Jefferson County PUD

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  1. Jefferson County PUD Commission Briefing on Cost of Service and Rate Design Issues September 10, 2014 Presented by: Gary Saleba, President EES Consulting, Inc. A registered professional engineering and management consulting firm with offices in Kirkland, WA and Portland, OR

  2. Overview of this Presentation • Introductions and Session Objectives • Overview of Rate Setting Process • Revenue Requirements • Assumptions • Results • Cost of Service Study • Methodology • Initial Results • Rate Design • Inherited from PSE • Rates Should Follow Costs • Recommended Changes

  3. Overview of Rate Setting Process

  4. Revenue Requirements • Based on 2015 Budget • Load Forecast Based on BPA Forecast of Purchases • Cash Basis • Includes debt service and all capital improvements funded from rates • Excludes City utility taxes from revenue and expenses • Other revenues offset revenues to be collected from rates • Used for Cost of Service/Rates • Does not include funding from reserves, weather uncertainty, other factors that may impact the need for a rate change • Issues • Level and use of reserves • Funding source for capital improvements

  5. Revenue Requirements (cont’d)

  6. Cost of Service Analysis Introduction • Based on 2015 Revenue Requirement • Costs Distributed to Customer Classes based on Cost Causation • Demand-related, Energy-related and Customer-related • Requires Assumptions About Customer Usage for Each Class • Revenues Calculated Based on Current Rate Components • Expect Differences from PSE • PSE has large service area with larger customers and different density • Also underlying differences due to power supply source compared to PSE

  7. Cost of Service Analysis Results • Residential/Farm Classes • Residential paying about 90% of costs • Not much difference in costs between residential and farm use • Cost roughly 12.4 cents/kWh • General Service Classes • General service paying 120% to 160% of costs • Costs roughly 7.5 cents/kWh – not much difference among current general service rate schedules • Other Classes • Irrigation and lighting hard to measure in a COSA • Interruptible schools paying less than general service, but costs are higher • PTP paying 99% of costs

  8. Rate Design Issues • Continue with PSE Rate Form or Go to PUD-Specific Design? • Size of Customer Charge • Blocking of Energy Charge • Seasonality • Number of Schedules • Net Metering • Street Lights • Irrigation Rate Treatment • Low Income/Elderly Rate Assistance

  9. Rate Design Detail • Schedule 7 – Residential • Raise the customer charge to meet expected COSA results? • Eliminate or reduce the differential between blocks so that it only reflects difference in BPA Tier 1 and 2 • Reducing the Block 2 rate would require either an increase in Block 1 rate or customer charge • Example: $16.77 plus 8.62 cents or $23.60 plus 7.98 cents • Schedule 8 – Residential and Farm General Service • No need for a separate rate? • No reason to believe their costs are different than typical residential

  10. Rate Design Detail (cont’d) • Schedule 24 – General Service • Raise the customer charge to meet expected COSA results? • Rate differential should match BPA differential • Example: $22.90 plus 8.8 cents or $26.13 plus 8.62 cents • Schedule 25 – Medium General Service • Rate has too many components • Suggest eliminating the blocks – not consistent with cost causation • Change demand charge to reflect all peak demand (not just over 50 kW) • Make sure demand and energy components match COSA to get right price signals for load factor • Not sure three GS rates are needed – combine with Rate 26

  11. Rate Design Detail (cont’d) • Schedule 29 – Seasonal Irrigation & Drainage Pumping Service • Rate has too many components • Suggest eliminating the blocks – not consistent with cost causation • Change demand charge to reflect all peak demand (not just over 50 kW) • Make sure demand and energy components match COSA to get right price signals for load factor

  12. Rate Design Detail (cont’d) • Schedule 26 – Large General Service • Combine with Rate 25 • Schedule 31 – Primary General Service • Combine with Rate 25/26 with primary meter discount?

  13. Rate Design Detail (cont’d) • Schedule 43 – Interruptible Total Electric Schools • Eliminate rate? • No benefit for interruptible customers with BPA as provider • Street Lights • Rate for light • Rate for pole • What about specialty street lights?

  14. Rate Design Detail • Timing • Change when new billing system is put in place • Audit accounts and do customer bill analysis in mean time • Work towards making sure customers are on the right rate and have the proper meter

  15. Summary/Conclusion • Need to Finalize Budget and How to Pay for Capital/Reserve Fund Policy • Basic COSA is Sufficient for Now • Simplify Rates Along with New Billing System, Minor Adjustments Between Classes

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