Finance and Rates Committee Rate Structure Overview Presented March - PowerPoint PPT Presentation

Finance and Rates Committee Rate Structure Overview Presented March 20 th , 2018

Background • Tiered rates became effective April 1, 2017 • Followed a multi-step decision making process • December average temperatures were well below normal • Resulted in high January bills for many customers that heat with electricity • Tiered rates contributed to these high bills in some cases • Wide range of potential outcomes depending on customer usage • Some customers have expressed frustration at tiered rates • In response, Staff has offered new payment options and convened this meeting 2

January Bill Breakdown (High Use) $350.00 $317.07 $42.37 $300.00 From December to (Tiered Rate Impact) January, the customer’s bill increased by $185.28. $250.00 Of this, $42.37 was due to the tiered rate structure, while $142.91 $200.00 $142.91 was related to (Higher Usage) higher usage (most likely driven by cold December weather). $131.79 $150.00 $100.00 $131.79 (Baseline) $50.00 $0.00 Dec-17 Jan-18 3 Usage: 1,731 kWh Usage: 3,451 kWh

Decision Making Timeline Series of meetings with Citizen Advisory Committee on Rates, discussing cost of service imbalances and 06/08/2011 - rate design. Tiered Rates was recommended by the committee as a preferred method to achieve energy 09/08/2011 efficiency. The Board decided to delay implementation due to other major initiatives underway. 01/19/2012 - Series of six meetings with Citizen Advisory Committee on Resource Planning, culminating in a new 07/12/2012 Integrated Resource Plan that prioritizes energy efficiency. 10/30/2014 - Two meetings with Resource Planning committee, resulting in an updated Integrated Resource Plan again 11/13/2014 emphasizing energy efficiency. Initial meeting with Citizen Advisory Committee on Finance and Rates to introduce rate structure 08/30/2016 proposals. 09/14/2016 Additional meeting with Finance and Rates Committee to discuss tiered rates. Board workshop on tiered rate structure and potential approaches. Finance and Rates Committee chair 09/27/2016 shares recommendation on tiered rate structure. 10/04/2016 Meeting with Resource Planning committee; no IRP update but confirmed EE as preferred resource. 10/11/2016 Additional discussion about tiered rates. Board approves general format. 11/22/2016 Public hearing on the specific rates applied to be applied in each tier. Board approves, effective 04/01/17. 4

Rate Options Considered in 2016 Scenario Tier 1 Tier 2 Tier 3 Option 1: Two-Tier (non-seasonal) 0 – 1,600 kWh: 1,601+ kWh: $0.0770/kWh $0.0917/kWh _ Option 2: Two-Tier (seasonal) Summer (Apr-Oct) Summer (Apr-Oct) 0-1,600 kWh: 1,601+ kWh: $0.0770/kWh $0.0992/kWh _ Winter (Nov-Mar) Winter (Nov-Mar) 0-2,400 kWh: 2,401+ kWh: $0.0770/kWh $0.0992/kWh Option 3: Three-Tier (non-seasonal) 0 – 600 kWh: 601 – 1,800 kWh: 1,801+ kWh $0.0696/kWh $0.0796/kWh $0.1089/kWh Option 4: Three-Tier (seasonal) Summer (Apr-Oct) Summer (Apr-Oct) Summer (Apr-Oct) 0 – 600 kWh: 601 – 1,600 kWh: 1,601+ kWh: $0.0728/kWh $0.0796/kWh $0.1097/kWh Winter (Nov-Mar) Winter (Nov-Mar) Winter (Nov-Mar) 0-1,000 kWh: 1,001 – 2,400 kWh: 2,401+ kWh: $0.0728/kWh $0.0796/kWh $0.1097/kWh 5

Rate Options Considered in 2016 Scenario Tier 1 Tier 2 Tier 3 Option 1: Two-Tier (non-seasonal) 0 – 1,600 kWh: 1,601+ kWh: $0.0770/kWh $0.0917/kWh _ Option 2: Two-Tier (seasonal) Summer (Apr-Oct) Summer (Apr-Oct) 0-1,600 kWh: 1,601+ kWh: $0.0770/kWh $0.0992/kWh _ Winter (Nov-Mar) Winter (Nov-Mar) 0-2,400 kWh: 2,401+ kWh: $0.0770/kWh $0.0992/kWh Option 3: Three-Tier (non-seasonal) 0 – 600 kWh: 601 – 1,800 kWh: 1,801+ kWh $0.0696/kWh $0.0796/kWh $0.1089/kWh Option 4: Three-Tier (seasonal) Summer (Apr-Oct) Summer (Apr-Oct) Summer (Apr-Oct) 0 – 600 kWh: 601 – 1,600 kWh: 1,601+ kWh: $0.0728/kWh $0.0796/kWh $0.1097/kWh Winter (Nov-Mar) Winter (Nov-Mar) Winter (Nov-Mar) 0-1,000 kWh: 1,001 – 2,400 kWh: 2,401+ kWh: $0.0728/kWh $0.0796/kWh $0.1097/kWh 6

Purpose of Tiered Rates • Emerald is experiencing unprecedented load growth • More than 10% over the past two years • Emerald must acquire new long-term power resources • Physical power plants or contracts can be highly risky and costly • Emerald’s resource of choice is energy efficiency • Confirmed by our Resource Planning citizen advisory committee • Lowest cost, incremental, and provides direct customer benefits • Helps address peak demand and capacity issues • Tiered rates is one tool to incentivize energy efficiency • Tonight’s meeting: did we go too far too fast? 7

Residential Energy Rates Prior Rates Usage Energy Charge Notes All kWh $0.0796 Flat rate for all usage Tiered Rates (effective 04/ 01/ 17) Usage Energy Charge Notes 0 – 600 kWh $0.0696 $0.01 lower than prior rate 601 – 1,800 kWh $0.0796 Equal to prior rate 1,800+ kWh $0.1089 Pacific Power’s average rate (approximate) Note: The tiered rate structure was designed to be revenue neutral as compared to the prior flat rate. 8

Tiered Rates – Monthly Bill Impacts kWh Used Prior Charge New Charge Change 100 $7.96 $6.96 -$1.00 200 $15.92 $13.92 -$2.00 300 $23.88 $20.88 -$3.00 400 $31.84 $27.84 -$4.00 500 $39.80 $34.80 -$5.00 600 $47.76 $41.76 -$6.00 700 $55.72 $49.72 -$6.00 800 $63.68 $57.68 -$6.00 900 $71.64 $65.64 -$6.00 1,000 $79.60 $73.60 -$6.00 Median Average Customer = 1,136 kWh/month 1,100 $87.56 $81.56 -$6.00 1,200 $95.52 $89.52 -$6.00 Mean Average Customer = 1,294 kWh/month 1,300 $103.48 $97.48 -$6.00 1,400 $111.44 $105.44 -$6.00 1,500 $119.40 $113.40 -$6.00 1,600 $127.36 $121.36 -$6.00 1,700 $135.32 $129.32 -$6.00 1,800 $143.28 $137.28 -$6.00 1,900 $151.24 $148.17 -$3.07 2,000 $159.20 $159.06 -$0.14 2,100 $167.16 $169.95 $2.79 2,200 $175.12 $180.84 $5.72 2,300 $183.08 $191.73 $8.65 2,400 $191.04 $202.62 $11.58 2,500 $199.00 $213.51 $14.51 9

Tiered Rates – High Use Monthly Bill Impacts kWh Used Prior Charge New Charge Change 2,500 $199.00 $213.51 $14.51 2,600 $206.96 $224.40 $17.44 2,700 $214.92 $235.29 $20.37 2,800 $222.88 $246.18 $23.30 2,900 $230.84 $257.07 $26.23 3,000 $238.80 $267.96 $29.16 3,500 $278.60 $322.41 $43.81 4,000 $318.40 $376.86 $58.46 4,500 $358.20 $431.31 $73.11 5,000 $398.00 $485.76 $87.76 5,500 $437.80 $540.21 $102.41 6,000 $477.60 $594.66 $117.06 6,500 $517.40 $649.11 $131.71 7,000 $557.20 $703.56 $146.36 7,500 $597.00 $758.01 $161.01 10

Tiered Rates – Results to Date (May-17 to Jan-18) • Total revenue collection was $96,817 more than under a flat rate • 80% of customers were favorably impacted (compared to a flat rate) 8,000 • 80.1% of customers saw lower charges under tiered rates 7,062 7,000 • 10.2% of customers saw higher charges (5% or less) • 4.9% of customers saw higher charges (between 5% and 10%) 6,000 5,401 • 2.6% of customers saw higher charges (between 10% and 15%) • 2.1% of customers saw higher charges (15% or greater) 5,000 Frequency 3,959 4,000 3,000 2,099 2,000 1,011 1,000 542 219 123 65 27 1 0 -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% Variance in Energy Charges (Tiered vs. Flat) 11

Usage Histogram (January 2018 Bills) 4,500 4,000 3,500 3,087 3,073 2,927 3,000 2,455 Frequency 2,500 2,000 1,704 1,420 1,500 1,143 1,000 717 700 446 446 500 304 75 41 12 5 0 0 Usage Bins 25 th percentile 75 th percentile 95 th percentile 99 th percentile Median 12 931 kWh 1,675 kWh 2,552 kWh 4,430 kWh 6,879 kWh

Usage Histogram (June 2017 Bills) 8,000 6,885 7,000 6,000 5,000 4,301 Frequency 4,000 3,306 3,000 1,733 2,000 997 1,000 633 264 105 90 69 38 28 16 25 4 2 2 - Usage Bins 25 th percentile 75 th percentile 95 th percentile 99 th percentile Median 13 527 kWh 857 kWh 1,262 kWh 2,231 kWh 4,305 kWh

Usage Histogram (Average 12-mo. Bills) 8000 7000 6000 5595 5276 5000 Frequency 4000 3373 3000 2595 1696 2000 973 719 1000 377 185 116 93 52 28 28 9 0 1 0 Usage Bins 25 th percentile 75 th percentile 95 th percentile 99 th percentile Median 14 676 kWh 1,136 kWh 1,673 kWh 2,859 kWh 4,677 kWh

“Average” (Median) Customer Experience +$12.02 Annual Energy Charge (Flat Rate) = $1,146.24 Annual Energy Charge (Tiered Rates) = $1,094.75 Annual Energy Charge Difference = ($51.49) -$3.51 -$6.00 -$6.00 -$6.00 -$6.00 -$6.00 -$6.00 -$6.00 -$6.00 -$6.00 -$6.00 12-mo. Average Usage (kWh) 2,415 1,885 1,308 1,206 1,099 934 724 849 887 882 857 1,354 1,200

Low Use (25 th Percentile) Customer -$6.00 -$6.00 Annual Energy Charge (Flat Rate) = $670.47 Annual Energy Charge (Tiered Rates) = $606.48 Annual Energy Charge Difference = ($63.99) -$6.00 -$6.00 -$6.00 -$6.00 -$5.38 -$5.12 -$4.97 -$4.31 -$4.20 -$4.01 12-mo. Average Usage (kWh) 1,286 1,232 925 755 699 431 497 401 420 512 538 727 702

High Use (75 th Percentile) Customer +$31.01 Annual Energy Charge (Flat Rate) = $1,623.52 Annual Energy Charge (Tiered Rates) = $1,611.59 +$11.08 Annual Energy Charge Difference = ($11.93) -$0.37 -$5.65 -$6.00 -$6.00 -$6.00 -$6.00 -$6.00 -$6.00 -$6.00 -$6.00 12-mo. Average Usage (kWh) 3,063 1,992 1,368 1,288 1,287 1,293 1,738 1,812 1,773 1,472 927 2,383 1,700