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Virginia Energy Purchasing Governmental Association (VEPGA) Primer On Rate Design Concepts & Practices And Explanation of VEPGA Rates & Schedules (What you need to know) MAY 9, 2013 Presented by: Glenn A. Watkins Senior Economist/Executive V. President Technical Associates, Inc. 9030 Stony Point Parkway, Suite 580 Richmond, Virginia 23235 Section I: Primer On Rate Design Concepts & Practices Step 1: Set Overall Revenue Requirement Total Dominion Revenue Requirement VA State VA SCC VEPGA And Federal ≈ 78.9% ≈ 5.6% Government ≈ 7.0% N. Carolina Federal PUC (FERC) ≈ 5.0% ≈ 3.5% Step 2: Assign Revenue Responsibility to Classes and/or Rate Schedules General Considerations To Assign Revenue Responsibility General Class Definitions • Residential • Small Commercial • Medium Commercial • Large Commercial/Industrial • Interruptible • Real Time Pricing • Street & Area Lighting Conceptually • Marginal Costs • Embedded Costs (Fully Allocated Cost) • Value of Service Other Considerations • Prices Relative to Other Utilities • Percent Change from Current (Legacy Rate) • Policy and Politics • Judgment, Negotiations, Representation and Perceived “Fairness” RATE DESIGN CONCEPTS & ELECTRIC TERMS OF ART --- SYSTEM COST COMPONENTS --- TOTAL INTEGRATED UTILITY Production Primarily Generation Facilities Transmission Distribution Substations Poles & Lines (FERC) Transformers Services & Meters RATE DESIGN CONCEPTS & ELECTRIC TERMS OF ART --- BASIC RATE ELEMENTS --- Customer Charges Demand Charges Energy Charges (Fixed Per Customer) (Per kW) (Per kWh) • Cost of Service • Customer Accounting & Billing • Metering • Customer Service • • • • On-Peak Off-Peak Seasonal Reactive (kVAR) Capacity Costs • On-Peak • Off-Peak • Seasonal Variable Costs Demand & Energy Charge Rate Structures • Flat Rates (Per kW or kWh) • Inverted and Declining Blocks – Price Per Unit Increases or Decreases as Total kW or kWh Increases • Diurnal and Seasonal Time of Use • Load Factor Based (Energy Use of Demand Blocking) • Voltage Differentiation (Sub-transmission, Primary, & Secondary voltage) Section II: Explanation of VEPGA Rates & Schedules Revenue Collection Within VEPGA Rates I. BASE RATES II. RIDERS • • • • Fixed Rates Per Contract Pre-2008 Generating Units Distribution Company Overhead Automatic Recovery (Updated Annually) • Fuel • Transmission • New Generation Projects (existing generation in base rates) VEPGA Base Rate Schedules Metered Services Lighting Services SCHEDULE DESCRIPTION SCHEDULE DESCRIPTION 100 Miscellaneous Light & Power 102 Traffic Signals & Control 110 All-Electric Service & Dual Fuel Systems 150 120 Water & Sewage Pumping & Sewage Disposal Roadway, Directional & Area Lighting – High Pressure Sodium 151 Roadway, Directional & Area Lighting – Incandescent, Mercury Vapor & Urbanlites 152 Street Lighting Fixtures on Bridges & Overpasses 153 Street Lighting – Special Fixtures 154 Customer-Owned Lighting Facilities (Operating Only During Night-Time Hours) 122 Time-of-Use 130 Large Miscellaneous Light & Power 131 Thermal Storage 132 Large Misc. Light & Power – Variable Pricing Complimentary Services SCHEDULE DESCRIPTION SGCM Stand-by Generator SGCM-1 Stand-by Generator (Grandfathered) VEPGA Metered Rate Schedules (Base Rates) RATE SCHEDULES 100 W/O Demand 110 W/ Demand W/O Demand W/ Demand 120 122 130 131 132 Approx. mWh 999,100 538,700 173,100 0 2,410,700 125,200 166,000 # of Accounts 12,750 5,250 2,700 0 1,000 20 70 Average Annual kWh/Account 78,300 102,500 64,000 0 2,400,000 6,260,000 2,375,000 RATE ELEMENT Distribution Customer Charges $5.66 $5.66 $5.66 $5.66 $5.66 $8.11 $78.50 $78.50 $141.69 Demand Charges None None None None None Flat/kW Declining/kW (voltage diff.) Declining/kW (voltage diff.) Declining/kW (voltage diff.) Reactive Demand None None None None None None Flat/kVAR Flat/kVAR None Flat/kWh Flat/kWh Flat/kWh Flat/kWh Flat/kWh None None None None None None None None None Seasonal Flat/kW Inverted/kW (Seasonal TOU Ratchet) Energy Charges Electricity Supply (Production) Demand Charges 1/ Inverted/kW (Seasonal TOU Ratchet) 1/ Inverted/Kw (voltage diff.) (Annual Ratchet) Energy Charges Flat/kWh kWh per kW (Declining) Seasonal Flat/kWh kWh per kW Seasonal (Declining) 1/ Flat per kW charge less declining demand credit, which results in an inverted rate per kW. Diurnal Flat/kWh Seasonal Flat/kWh Declining/kWh Declining/kWh Critical Day Designation (TOU)/kWh VEPGA Riders Rate Schedule Rider Transmission (Rider T) 100 110 120 122 130 131 132 Energy Energy Energy Demand Demand Demand Demand Lighting Energy Generation Virginia City Hybrid (Rider S) Energy Energy Energy Demand Demand Demand Energy Energy Bear Garden (Rider R) Energy Energy Energy Demand Demand Demand Energy Energy Warren County (Rider W) Energy Energy Energy Demand Demand Demand Energy Energy Bio-Mass Facilities (Rider B) Energy Energy Energy Demand Demand Demand Energy Energy Fuel (Rider A) Energy (All Rate Schedules Same Rate)