AESO Delivered Cost of Electricity Estimates March 3, 2020 - - PowerPoint PPT Presentation

AESO Delivered Cost of Electricity Estimates

March 3, 2020

• The AESO prepared a review of the delivered cost of

electricity and self-supply options

• Calculations were performed by the AESO’s Forecasting &

Analytics team, reflecting AESO and Distribution Facility Owner tariff costs and electricity commodity costs at 5-year intervals

– Time-series provides perspective to the changes in delivered electricity cost over the past decade – Reflects comparative costs of grid-connected self-supply

• ptions based on a range of rates of return on capital

– Demonstrates the delivery costs associated with Critical Transmission Infrastructure

Introduction

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• The delivered cost of electricity has a wide range for smaller customers, driven by

distribution tariffs in different service territories

• Delivered electricity is cheaper for high-volume consumers
• Costs have trended upward for all customer classes in the past decade

Delivered cost of electricity

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• 50.00

100.00 150.00 200.00 250.00 300.00 350.00

2009 2014 2019

Delivered Cost of Electricity, $/MWh

Average Delivered Cost of Electricity by Customer Class

Residential Small/Med Commercial Large Commercial Industrial Tx Connected

Note: graphic line are based on an average of ENMAX, EPCOR, Fortis, and ATCO customers and the whiskers represent the high/low for each customer class

• The fastest growing components of the delivered cost of electricity relate to transmission

and distribution

• Low-volume consumers face substantially higher transmission and distribution cost than

high-volume consumers

Delivered cost of electricity

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100.00 150.00 200.00 250.00 2009 2014 2019 2009 2014 2019 2009 2014 2019 2009 2014 2019 Residential Small/Med Commercial Large Commercial Industrial Tx Connected Delivered Cost of Electricity, $/MWh

Average Delivered Cost of Electricity for Various Customer Classes (2009-2019)

Transmission Distribution Administrative Charge Local Access Fee Energy

• Distribution & transmission costs increased rapidly between 2009 and 2014, as Critical

Transmission Infrastructure was commissioned

• From 2014 to 2019, the increases in distribution & transmission costs moderated slightly,

but still remained above inflationary levels

• Energy (commodity) costs have increased modestly for most customers during the past

decade

Delivered cost of electricity

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5 11% 4% 14% 5% 13% 8% 27% 9%

• 2%

1%

• 1%

1% 1% 1% 1% 2% 3% 3% 3% 3% 4% 3% 5% 4%

• 5%

0% 5% 10% 15% 20% 25% 30% 2009-2014 2014-2019 2009-2014 2014-2019 2009-2014 2014-2019 2009-2014 2014-2019 Residential Small/Med Commercial Large Commercial Industrial Tx Connected Average Annualized Growth Rate, %

Average Annualized Growth Rates of Commodity and Delivery Charges

Distribution & Transmission Energy Total Delivered Cost of Electricity

• Delivered electricity costs have increased, while self-supply costs have declined significantly over the

last decade

• Self-supply costs for residential and commercial customers were measured based on solar photovoltaic

costs, while large commercial and industrial self-supply costs options were measured based on natural gas generation

• Self-supply options were measured at levels of 0 per cent, 5 per cent, and 10 per cent return-on-capital

– Some customers may be better off to self-supply their electricity depending on return expectations

• Self-supply represents a grid-connected customer, not an islanded consumer
• From an economic perspective, the assessment doesn’t capture qualitative costs of self-supply, like

increased operational complexity

Delivered cost of electricity

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100.00 150.00 200.00 250.00 300.00 350.00

0% 5% 10% 0% 5% 10% 0% 5% 10% 0% 5% 10% Grid- Supplied Self-Supplied Grid- Supplied Self-Supplied Grid- Supplied Self-Supplied Grid- Supplied Self-Supplied Residential Small/Med Commercial Large Commercial Industrial Tx Connected

Delivered Cost of Electricity, $/MWh

2019 Average Delivered Cost of Electricity for Various Customer Classes: Grid-Supplied vs. Self-Supplied with Rates

• f Return Between 0% and 10%

Transmission Distribution Administrative Charge Local Access Fee Energy Distributed Generation Capital