B-2 Large General Service (LGS) Rate Application Large General - PDF document

BC HYDRO LGS RATE EXHIBIT B-2

Large General Service (LGS) Rate Application Large General Service (LGS) Rate Application Technical Workshop Technical Workshop November 6, 2009 November 6, 2009

Technical Workshop Objectives Technical Workshop Objectives • Orientation to the application lay-out and format • Overview of what BC Hydro is proposing • Outline the key assumptions used in the application • Overview of the MGS and LGS Account Tools 2

Agenda 1) Application Organization 2) Proposed Large General Service (LGS) Rate 3) Proposed Medium General Service (MGS) Rate 4) LGS Customer Examples 5) Overview of Account Tools 6) Conservation, Pricing Principles and Assumptions 7) Administrative, Implementation and Evaluation Details 8) BCUC Regulatory Timetable 3

Organization of the Application Table of Contents Chapter 1 – Application Chapter 2 – Direct Testimony of Lisa Coltart Chapter 3 – Direct Testimony of Sylvia von Minden Chapter 4 – Direct Testimony of Ren Orans Chapter 5 – Direct Testimony of Bob Steele 4

Organization of the Application … continued Appendices A ELGS Tariff Provisions B ELGS Class Characteristics C Comparison of TSR, RIB, LGS and MGS D Customer Consultation E Phase 1 – Customer Engagement Report F Phase 2 – Customer Engagement Report G Implementation H Survey of General Service Rates I Evaluation of Alternative Generic Rate Structures J Segmentation K Baseline Determination L LGS Bill Volatility M MGS Design Alternatives N MGS Pricing Methodology O LGS Pricing Methodology P Conservation Estimating Methodology Q MGS and LGS Modelling Assumptions R Draft Procedural Order S Draft Final Order T Draft Tariff Sheets 5

Key Phases of Customer Consultation Figure D-1 6

Existing LGS Class Average Electricity Rate* • The existing LGS (ELGS) average electricity rate (based on total monthly bill of energy, demand and basic charges) shows two clear patterns: • Customers below 150 KW see an average rate that declines • Customers above 150 KW see an average rate that is relatively flat Figure 3 – 4 Average Electricity Rate * Based on F2008 energy rates 7

Segment Existing Class into Medium and Large GS Segment Existing Class into Medium and Large GS Flat Rate Design (Phase-in) (35-150 kW) Two-Part Design (> 150 kW) (Phase-in) % represent proportion of BC Hydro’s Conservation Rates currently in place. domestic load (2009) 8

Generic Two-Part Energy Rate Structure Figure 2 - 2 9

Key Design Features of the BCH Two-Part Rate 3 2 4 1 Figure 3 - 6 10

Monthly, Formulaic, 3-Year Rolling Average Baselines Figure 3 - 5 11

Price Limit Bands • Bill impacts … same consumption; different rate structures • Bill volatility … same rate structure; different consumption Price Limit Bands: • Proposed at 80:120% of Baseline • kWh changes from Baseline outside of these bands will be charged at the appropriate Part One rate • Estimate that ~80% of LGS bills will remain within these bands 12

Anomaly Rule (Example: Calculating HBL for January 2015) Consumption 100,000 kWh Less than half the consumption of next Consumption lowest month (Jan 2012) 70,000 kWh Consumption Consumption 30,000 kWh Jan 2014 Jan 2013 Jan 2012 January 2014 (lowest use is <50% of next lowest month (January 2012), therefore is excluded from the baseline calculation As a result, January 2015 HBL = (70,000+100,000)/2 = 85,000 kWh Table 1 - 1 13

Transitional Features of the Two-Part Rate 2 1 Figure 3 - 6 14

Initial Baseline for the Two-Part Rate Figure 3 - 8 15

Phase-In to LRMC Table 3-2 Part-2 Energy Rate Fiscal Period Part-2 Energy Rate (cents/kWh) F2011 and 2012 6.88 F2013 9.42 LRMC Prices In Various Rate Structures: • TSR Tier 2 price: 7.36 cents/kWh • RIB Step 2 price: 8.27 = 7.36 cents/kWh x losses • LGS Part 2 price: 9.42 = 7.36 cents/kWh x inflation x losses 16

Two-Part Rate Example Examples of changes to a customer’s monthly energy portion of their bill under the two-part rate. Customer has baseline of 160,000 kWh for the month (average kWh for the LGS class). Situations illustrated: • Actual use = baseline • Use 5% less than baseline • Use 5% more than baseline Using F2011 tariff rates. 17

Two-Part Example – Actual Use = Baseline F11 Prices Energy Charge kWh cents / kWh Energy $ First 14,800 kWh 14,800 8.18 $ 1,211 Current All additional kWh 145,200 3.94 $ 5,721 LGS Rate 160,000 Total Energy Bill ($) $ 6,932 Structure F11 Prices Part 1: Baseline Energy Charge kWh cents / kWh Energy $ First 14,800 kWh 14,800 8.17 $ 1,209 All additional Baseline kWh 145,200 3.93 $ 5,706 Proposed 160,000 Part 1 Energy Bill $ 6,916 Two-Part Rate Part 2 : Energy (Credit) or Charge Energy difference from Baseline (+ 20%) 0 6.68 $ - Energy (below) 80% or above 120% of Baseline 0 3.93 - No Part 2 Charge 0 Part 2 Energy Bill $ - or Credit Total Energy Bill $ 6,916 Unit Cost (¢/kWh) 4.3 Variance due to Proposed Two-Part Rate Structure minus Existing LGS Rate Structure ($) $ (16) revenue neutral rates 18

Two-Part Example – Actual Use 5% Below Baseline F11 Prices Energy Charge kWh cents / kWh Energy $ First 14,800 kWh 14,800 8.18 $ 1,211 Current All additional kWh 137,200 3.94 $ 5,406 LGS Rate 152,000 Total Energy Bill ($) $ 6,616 Structure F11 Prices Part 1: Baseline Energy Charge kWh cents / kWh Energy $ First 14,800 kWh 14,800 8.17 $ 1,209 All additional Baseline kWh 145,200 3.93 $ 5,706 Proposed 160,000 Part 1 Energy Bill $ 6,916 Two-Part Rate Part 2 : Energy (Credit) or Charge Energy difference from Baseline (+ 20%) (8,000) 6.68 $ (534) Energy (below) 80% or above 120% of Baseline 3.93 Part 2 Energy Bill $ (534) Part 2 Credit Total Energy Bill $ 6,381 Unit Cost (¢/kWh) 4.2 Proposed Two-Part Rate Structure minus Existing LGS Rate Structure ($) $ (235) 19

Two-Part Example – Actual Use 5% Above Baseline F11 Prices Energy Charge kWh cents / kWh Energy $ First 14,800 kWh 14,800 8.18 $ 1,211 Current All additional kWh 153,200 3.94 $ 6,036 LGS Rate 168,000 Total Energy Bill ($) $ 7,247 Structure F11 Prices Part 1: Baseline Energy Charge kWh cents / kWh Energy $ First 14,800 kWh 14,800 8.17 $ 1,209 All additional Baseline kWh 145,200 3.93 $ 5,706 Proposed 160,000 Part 1 Energy Bill $ 6,916 Two-Part Rate Part 2 : Energy (Credit) or Charge Energy difference from Baseline (+ 20%) 8,000 6.68 $ 534 Energy (below) 80% or above 120% of Baseline 3.93 Part 2 Energy Bill $ 534 Part 2 Charge Total Energy Bill $ 7,450 Unit Cost (¢/kWh) 4.4 Proposed Two-Part Rate Structure minus Existing LGS Rate Structure ($) $ 203 20

Rate – MGS Flat Rate – F2016 Average Electricity Rate per kWh F2016 Average Electricity Rate per kWh MGS Flat • Figure 2 – 3 below shows the average electricity rate per kWh for customers in the MGS class with different levels of demand ~70% of accounts ~30% of accounts 21

For the new MGS class a Flat Energy Rate is Proposed For the new MGS class a Flat Energy Rate is Proposed Phase-in to a flat rate from current declining block Table N-12 provides the estimated prices as the rate structure flattens MGS Tier 1 MGS Tier 2 Maximum Rate Restructuring Impact Fiscal Year (cents/kWh) (cents/kWh) (See Table 2-1) 7.69 3.70 N/A F2010 (current) CARC + 2% 8.12 4.05 F2011 8.39 4.52 CARC + 4% F2012 CARC + 6% 8.80 5.32 F2013 CARC + 8% 9.13 6.40 F2014 9.23 7.71 CARC + 10% F2015 CARC + up to10% 9.25 9.25 F2016 CARC = Assumed Class Average Rate Changes can arise from any or all of the following: revenue requirement changes, changes in rate rider, and cost of service rate re-balancing 22

MGS Bill Impacts Due to the Restructuring Alone These bill impacts assume no changes in consumption. 30% of accounts “pay more” than under current structure • All remain under bill impact thresholds • Average annual bill increase is ~ $2,800 on a bill of $32,000 or around 8.75%; if we remove the effect of CARC, the effect of restructuring alone is an average annual increase of 2%. 70% of accounts “pay less” • Average annual bill decrease due to restructuring is 2.5% 23

Overview of Account Tools MGS Account Tool LGS Account Tool 24

Description • Each “Account Tool” is set up with the rate structures proposed in the Application as well as the modelling assumptions used in the Application • Each is “populated” with a range of customer scenarios, in each new class • Model provides for the selection of a consumption profile and for the LGS Account Tool selection of an annual percent decline (conservation) or percent increase in energy consumption • Also can manually input consumption 25

MGS 26

LGS 1. User selects a historical consumption scenario - Scenarios 1 to 9 are preset on varying consumption levels - Manual entry for historical consumption (by month) also available 2. User selects a consumption rate of change (e.g. 0% growth per year) 27