CHARGING UP YOUR RATE DESIGN PRESENTED BY GARY SALEBA, ANNE FALCON, - PowerPoint PPT Presentation

NORTHWEST PUBLIC POWER ASSOCIATION ANNUAL MEETING TULALIP, WASHINGTON MAY 17, 2016 CHARGING UP YOUR RATE DESIGN PRESENTED BY GARY SALEBA, ANNE FALCON, & STEVE ANDERSEN EES CONSULTING, INC. A registered professional engineering and management consulting firm with offices in Kirkland, WA and Portland, OR

CURRENT STATE OF AFFAIRS  Excellent Load Data Collected by Advanced Metering Infrastructure Hourly or more frequent demand data • Result = more accurate allocation factors in Cost of Service Analyses (COSAs) •  Better Cost Tracking for COSAs Result = more accurate cost allocation  more accurate retail rates • COSA margin of error reduced •  Changes in Energy Consumption Patterns Decreases in residential average usage due to: •  Energy efficiency  Distributed generation/net metering  Price Signals through Rate Design Incent customers to shift loads to periods when the cost of power is lower • 1

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Smart Meter Worry #1: Smart Meters are a Surveillance Device – a Search Without a Warrant 5

Smart Meter Worry #2: Health Concerns 6

CUSTOMER SEGMENTATION/CUSTOMER CLASSES  Customer Segmentation Principles Load characteristics • Physical/service characteristics • Other factors •  Statistical Methods to Differentiate Load Characteristics Hypothesis analysis to determine difference in average usage • Monte Carlo analysis for load factor estimations •  Examples Marijuana grow facilities • Data centers • High density user rates • Electric vehicle rates • LED rates • 7

WHAT IS THE RIGHT PRICE SIGNAL?  Demand Rates for Residential Customers Coincident peak vs. individual (non ‐ coincident) peak? • Ratchet? •  Large Fixed Charges  Seasonal  Block Rates  Time of Use Rates 8

CASE STUDY – RESIDENTIAL DEMAND RATES  Example: Glasgow Electric Plant Board (KY) Residential: $10/kW ‐ mo. coincident peak • demand charge Rates effective March 2016 •  Educate Consumers What is a kW? • Informational bills ($0/kW) • How do you avoid high bills? •  Consider Severe Weather  Review Projected Bill Impacts Go slow • 9

RESIDENTIAL FIXED CHARGES $50 $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 10

FIXED CHARGES UNDER ‐ COLLECTING AT MOST UTILITIES Existing Basic Charges vs. COSA Recommended Basic Charges $50 $45 $45 $42 $41 $40 $36 Existing Basic $35 $35 Charge $32 $32 $29 $30 $28 $25 COSA $25 Recommended $20 $19 $20 $18 $18 Basic Charge $16 $15 $15 $14 $15 $10 $10 $9 $8 $10 $5 $0 Utility C Utility B Utility A Utility E Utility G Utility D Utility F Utility H Utility J Utility I Utility K 11

WE’RE ALL IN THIS TOGETHER 12

THE CALIFORNIA EFFECT  Rate Design in California Cost ‐ based rates • Transition from block rates to TOU rates • Net metering • 13

PG&E INTERMEDIATE RATES 14

TIME OF USE RATES  Pass ‐ Through Price Signal from Wholesale Power Purchases 15 Source: SMUD

OTHER RATE DESIGN IDEAS  Low or Fixed Income Customers  Prepay Model Up to 10% savings •  Unbundling  Decoupling 16

GRANDA SALEBAISMS  Lead, Follow, or Get Out of the Way  If You Don’t Do It, Someone Else Will  Never Give Away Something You Can Charge For  Patience My Friend, Patience 17