Topic:"Cost Recovery" in M04265

5. Metering and Service Facilities The Company will furnish and install appropriate metering to measure energy flow. The customer shall make a nonrefundable contribution for the cost of any instrument transformers required by the Company t...

AI summary The document outlines the responsibilities of customers regarding metering and service facilities, including nonrefundable contributions for instrument transformers, installation of service entrance equipment, and reimbursement for rebuilding Company facilities to accommodate parallel generation systems.

PURPOSE. The purpose of this rate is to maintain existing electricity sales by the Company in a manner which allows economic operation by the customer and which provides a contribution to the Company's fixed cost recovery.

AI summary The purpose of the rate is to maintain existing electricity sales while allowing economic operation for customers and contributing to the Company's fixed cost recovery.

and electrical requirement.s that makes it well-suited to the installation of a cogcneration facility. In addition, Consumers says that Upjahn has the capability to move pI"od.uction to other states. Therefore, Consumers asserts, it undert...

AI summary Consumers has signed a 10-year special contract with Upjohn, which is exempt from the power supply cost recovery clause. The contract includes rate escalations based on the producer price index, with a floor and cap. Consumers argues that the agreement benefits both parties and supports economic development and system stability.

PROSCREEN II: Evolution of the Industry Leader PROSCREEN II is fully supported by the technical and consulting services of Energy Management Associates. PROSCREEN II is an evolving product. enhanced and upgraded continuously. The PROSCREEN...

AI summary PROSCREEN II is a continuously evolving utility planning tool developed since 1982. It has been instrumental in financial and resource planning for utilities, particularly in handling high interest rates, creative financing methods, and incorporating price elasticity feedback to manage demand and rate shock.

Introduction The PROVIEW (PRY) Module is a resource planning model which determines the least-cost balanced demand and supply plan for a utility system under prescribed sets of constraints and assumptions. PROVIEW incorporates a wide varie...

AI summary The PROVIEW module is a resource planning tool used to develop least-cost balanced demand and supply plans for utility systems. It works with other modules like GAF and LFA to evaluate DSM programs through screening, optimization, and detailed analysis, incorporating factors such as emissions, cost effectiveness, and reliability.

Introduction The Financial Reporting and Analysis (FIR) Module is designed to combine results from the Load Forecast Adjustment (LF A) Module, the Generation and Fuel (GAF) Module, and the Capital Expenditure and Recovery (CER) Module, wit...

AI summary The Financial Reporting and Analysis (FIR) Module integrates data from multiple modules to generate financial reports and analyze the impact of various factors on company financial operations, including construction programs, capital market conditions, tax law changes, and rate adjustments.

General Capabilities - The FIR Module considers construction expenditures, revenue requirements, generation and non-generation costs, taxes (If applicable), and financing alternatives to analyze the impact of a strategic scenario. - Specia...

AI summary The FIR Module evaluates construction costs, revenue needs, and financing options to analyze strategic scenarios. It models financial instruments, debt, and lease provisions, and allows users to input escalation rates or annual amounts for accurate financial projections.

ate of 10.00% (interest at 7% plus depreciation at 3%) was applied to the marginal capital values to obtain the annual carrying charge. The carrying charge was then converted to a per customer charge. The operating and maintenance costs po...

AI summary This text explains the method used to calculate marginal customer costs, including the application of a carrying charge derived from capital values, operating and maintenance costs, and overhead charges, all of which are then converted to a per customer charge and escalated annually.

12 Lost Revenue Recovery Mechanisms 13 14 Although lost revenue recovery mechanisms are usually associated with demand-side 15 management programs, I support establishing temporary mechanisms for innovative 16 rate designs. Most utilities...

AI summary The text discusses lost revenue recovery mechanisms for innovative rate designs, highlighting their role in reducing revenue risks for utilities and protecting customers. It contrasts temporary mechanisms with ERAM-type systems, arguing that a targeted, temporary approach balances innovation and efficiency.

ed." Pennsylvania Electric Association, Hershey, PA, September 1993. - "DSM in the 21st Century: Megawatts or Memories?" Electricity Generation for the 21st Century Conference, Denver, CO, June 1993. - "Where Are DSM Incentives Headed: A R...

AI summary The text lists a series of presentations on demand-side management (DSM) topics, including DSM incentives, cost recovery, decoupling profits from sales, and the evaluation of demand and supply resources. These presentations were delivered at various conferences and meetings from 1991 to 1993.

DIRECT EXAMINATION BY MR. OUTHOUSE Q. Thank you, Dr. Chamberlin. Dr. Chamberlin, the only question that I would have before cross-examination; you said in your remarks that avoided cost is not synonymous with long-run marginal cost. Can th...

AI summary Dr. Chamberlin is being questioned about the distinction between avoided cost and long-run marginal cost, clarifying that they are not synonymous. This distinction is important in regulatory proceedings involving cost recovery and rate design.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. KEHOE 2754 prices which are wrong or inefficient in order to benefit a few customers. That wouldn't be what I would tend to do. With respect to the question of where would I seek to recover the revenue sh...

AI summary Dr. Chamberlin discusses the allocation of revenue shortfalls from retaining space heating customers, suggesting that all customers should share the cost if the benefit is universal. He also mentions the measurement of outage costs via customer surveys, though no specific survey results are cited.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. MACDONNELL 2773 part of the reconciliation process? A. Sure. Acknowledging that one way to do cost Q. Okay. Is there a necessity to be consistent between the cost allocation study and rate design? allocat...

AI summary The discussion centers on the importance of consistency between cost allocation studies and rate design, particularly when there is a disparity between embedded energy costs and marginal energy costs. The concern is that using a cost allocation method that assigns fixed capital costs based on energy consumption may lead to inefficiencies if rates are set based on lower marginal costs, potentially attracting more demand than revenue can support.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. MACDONNELL 2774 shortfall who would pay for it? - A. If there's a revenue shortfall that results from an incorrect price to start with, I guess stockholders pay for it until the next rate case. And then i...

AI summary The discussion centers on revenue shortfalls due to incorrect pricing and the allocation of costs based on marginal costs. The expert explains that shareholders typically bear the burden of shortfalls until the next rate case and suggests that while marginal cost-based studies may be beneficial, they are not strictly necessary.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. HARRIS 2831 to be next year. So what do you do as an alternative? You develop a revenue recovery mechanism, just a holding account, or deferral account, that you use to collect the difference between what...

AI summary The discussion revolves around the use of a revenue recovery mechanism or deferral account to adjust rates based on actual costs versus assumptions. The speaker suggests that such an account can be phased out over a few years as more accurate data becomes available, allowing for adjustments during the next rate hearing.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. HARRIS contribution to margin, or the class rate of return, or the revenue cost, that's something that happens; that's the result of the market rather than, you know, how you set the price. Q. I guess wha...

AI summary The discussion revolves around cost recovery targets and fairness in pricing, with the expert emphasizing that pricing decisions are based on market recovery rather than uniform rate of return across classes. The expert also notes that fairness, not pricing, is central to setting these targets.

B. Economic Efficiency and the Inverse Elasticity Rule Given the desirability of marginal cost pricing to meet the goal of economic efficiency, how should regulators and utilities design rate structures when prices set equal to marginal co...

AI summary This section discusses economic efficiency and the inverse elasticity rule in the context of rate design. It explores challenges in achieving marginal cost pricing and presents second-best solutions such as the equal proportions rule and the inverse elasticity rule, which aim to balance revenue requirements with allocative efficiency.

DR. CHAMBEItLIN, CROSS-EXAM. BY MR. KEHOE 2754 1 prices which are wrong or inefficient in order to 2 benefit a few customers. That wouldn't be what I 3 would tend to do. With respect to the question of 4 where would I seek to recover the r...

AI summary The witness discusses the allocation of revenue shortfalls from retaining space heating customers and mentions customer surveys used to measure outage costs, though no specific survey results are cited in the public record.

Issues NSPI entered into a 32-year coal contract with CBDC in 1978. The contract is one based on mutual dependence. It was negotia ted at a time of rapidly rising oil prices and considerable instability in energy markets. NSPI gained suppl...

AI summary NSPI and CBDC entered into a 32-year coal contract in 1978, which expired in 2010. The contract provided NSPI with supply security and price stability, while CBDC received guaranteed market support. The contract was re-negotiated in 1995, leading to an 18% price drop influenced by declining oil prices and world coal prices, which increased NSPI's coal usage.

1. RESISTANCE TO CONVERSION Development of a new natural gas distribution system into areas previously unserved by natural gas often requires some measure of incentive program to encourage conversion to the newly available energy source. T...

AI summary The text discusses the barriers to converting to natural gas, including safety concerns, cost savings, and high conversion costs. It outlines strategies to overcome these barriers, such as cost reduction measures, gas price stabilization, and public awareness campaigns, referencing successful and unsuccessful implementations in other jurisdictions.

Aids to Construct Mainline Facilities In situations where the population base is low and the distances between population centers is great, the rate base (cost of facilities) is disproportionately skewed toward the high relative cost of ma...

AI summary In low-density, sparsely populated areas like Cape Breton Regional Municipality, the high cost of mainline transmission facilities disproportionately affects distribution rates. Government subsidies or cost-sharing for mainline laterals, as seen in Alberta and Quebec, have successfully reduced these costs. Similar approaches, such as expanding M&NE's Laterals Policy, could help Nova Scotia achieve cost-effective gas distribution.

Toll Reduction Techniques Distribution tolls for each consumer class are normally set by the provincial utility board with jurisdiction. In Nova Scotia, this function will be administered by the Nova Scotia Utilities and Review Board under...

AI summary The text discusses toll reduction techniques used by regulatory boards to lower transportation tolls from new distribution systems. It outlines methods such as adjusting depreciation terms, forward levelizing rates, reducing return on equity, government debt guarantees, and cost savings incentives. It also notes that cross-subsidization is no longer used in modern unbundled service environments.

Service Connection Cost Assistance The cost to bring gas service from the street main into a dwelling often ranges from $600 to $2,000 per installation. Several approaches have been used successfully in other jurisdictions. - Partial subsi...

AI summary The document outlines various methods to assist with the cost of connecting gas service to homes, including partial subsidization by utilities or government, capped subsidies, and loan assistance programs. These approaches aim to reduce the financial burden on consumers while managing cost exposure for ratepayers and ensuring affordability.

POTENTIAL LOAD LOSSES? - A. No, I do not. Mr. Whalen's statement seems to be based on a general regulatory principle the a utility's customers have to pay for all of the utility's cost of service. Although such assertion is generally corre...

AI summary The response argues that revenue losses from rate discounts may be offset by cost reductions and that utilities are not guaranteed to recover all lost revenues. It also mentions the possibility of selling excess power at a profit. The respondent references a Pennsylvania Public Utility Commission decision to support the assertion that revenue recovery is not guaranteed.

Q. IS IT REASONABLE TO RECOVER AT LEAST A PART OF FIXED COSTS? - A. Yes. If there is no contribution to the fixed costs, there is no economic reason to retain or serve a load. On page 9 of his Direct Testimony, Stora Enso's witness Dr. Ala...

AI summary The response affirms that it is reasonable to recover at least a part of fixed costs, citing Dr. Alan Rosenberg's testimony and referencing the Central Illinois Public Service Company's tariff. The response also refutes the idea that the LR rate should be lower than the cost of self-generation, arguing that self-generation involves higher capital costs and reliability issues.

Lack of Cost Miti2ation Efforts - Q. BESIDES ITS PROPOSED EFFORT TO RETAIN LOADS AT LR RA TES, DID NSPI PROPOSE ANY EFFORTS TO MITIGATE COSTS CAUSED TO OTHER RATE PAYERS BY ITS REVENUE LOSSES? - A. No, it did not. Although NSPI did not pro...

AI summary NSPI did not propose any cost mitigation efforts to recover revenue losses from its LR rate proposal, assuming losses would be recovered from other customers. Suggestions include implementing a tariff provision to reduce sales to large customers during high off-system power purchase periods and selling power in U.S. markets with higher prices, such as NEPOOL and PJM.

CONCLUSIONS AND RECOMMENDATIONS - Q. MR. KUMAR, PLEASE SUMMARIZE YOUR CONCLUSIONS? - A. In my opinion, NSPI's proposed LR rate provision is a proper response to a competitive market. However, NSPI's proposal lacks certain customer protecti...

AI summary Mr. Kumar concludes that NSPI's LR rate proposal is appropriate for a competitive market but requires customer protection measures. He recommends conditions for implementation, including non-discrimination, availability timelines, loss mitigation strategies, and revenue sharing incentives.

SHAREHOLDERvsRATEPAYERCOST Several parties including Mr. Kumar suggested that NSPI should not be assured it will be able to recover all losses associated with offering the rate. Board questions during the hearing raise the possibility that...

AI summary The document discusses the debate over whether NSPI should be allowed to recover all losses from offering a rate. NSPI argues that the rate is necessary to mitigate risks to remaining customers if a large customer switches to an alternate supply, and that the risk is borne by customers, not shareholders.

Recommendations: - Generally, we find Mr. Kumar's testimony persuaSIve and support his recommendations. - The Board should direct NSPI to file evidence detailing scenanos where customers able to successfully build co-gen plants do so and N...

AI summary The recommendations emphasize the need for NSPI to provide detailed evidence on co-gen plant scenarios, ensure revenue losses are not passed to other customers, publish discounted sales details, and scrutinize load retention rate applications thoroughly for fairness and credibility.

I think that's important because if the prices don't reflect marginal costs, they're inefficient and the whole system produces less value than it can. I think that's the issue that I'm concerned with. ... I think you could say that a numbe...

AI summary The text discusses the importance of setting a price floor that reflects marginal costs to ensure system efficiency. NSPI argues that its proposed LR Rate clearly defines a price floor, but there is concern about whether costs are adequately recovered. Experts agree that marginal costs must be recovered to avoid providing service below cost, which would not be in the public interest.

D. Timing for the Implementation of a LRR Various parties explored the proposition as to whether the LRR should only be made available at the time a customer is in a position to install its own generation. A decision by a customer to leave...

AI summary The discussion focuses on the timing of implementing a Load Retention Rate (LRR), considering whether it should be available when a customer is ready to install self-generation. It emphasizes the importance of financial and engineering considerations, and the use of net present value to evaluate the economic benefits of LRR over time. All parties agree that there should be no condition requiring LRR to be available only after a customer can install self-generation.

E. Competitiveness Section 5 ofthe Sempra Submission (pp. 13 - 18) is presented underthe heading "The LR Rate should be Pro-Competitive and not Anti-Competitive". From this general proposition, Sempra draws the conclusion that the NSPI sha...

AI summary The document critiques Sempra's argument that NSPI should bear the risk of load retention (LR) discounts, stating that NSPI's goal is to reduce customer risk, not shareholder risk. It refutes the 'normal business' analogy, noting that NSPI operates under a regulatory framework and cannot assume unregulated risks. The analysis also disputes the claim that LR contracts impose costs, arguing that they provide benefits and that NSPI, not ratepayers, bears the revenue impact.

Discrimination, § 39 — Rates — Customer classes — Cost allocation. [OR.] In determining fair and reasonable rates for utility service the commissioner has broad discretion in allocating costs among customer classes; however, the classifica...

AI summary The text outlines legal standards for determining fair and reasonable utility rates, emphasizing that cost allocation among customer classes must avoid unjust discrimination. It specifies that discounts must be based on reasonable criteria and benefit other customers by maximizing fixed cost contributions, while permissible customer classification factors include volume of use and end use.

om the CPEX plant to the benefit of other customers, the Commissioner has allowed transportation of natural gas by Northwest Natural to CPEX at discounted rates. In other situations, the price of en- ergy may not dominate production costs...

AI summary The Commissioner has allowed discounted rates for natural gas transportation to CPEX and electric service to Nippon Kokan K. K. as part of incentive packages to maintain or attract load. These discounts may benefit other customers by reducing fixed costs and are considered permissible criteria for distinguishing among customers based on economic circumstances.

INTRODUCTION The New Brunswick Power Corporation (NB Power) applied on Feb. 4, 1993 for a change in its rates to provide an incentive rate for large industrial customers. More particularly, this incentive rate was to promote in-province ec...

AI summary NB Power applied for a rate change in 1993 to offer a 50% discount on demand charges for large industrial customers, aiming to stimulate economic growth. The incentive would be available until 1998 and was intended to help utilize excess generating capacity. NB Power argued that the rate would benefit all customers by recovering incremental costs and reducing the need for revenue from other sources.

POTENTIAL BENEFITS The incentive rate will only apply to additional loads of 2000 KW or greater. It provides for a reduction to the normal demand charge but the energy charge is unchanged. There is no additional cost to NB Power for additi...

AI summary The incentive rate applies to additional loads of 2000 KW or greater, reducing demand charges without affecting energy charges. NB Power notes that fixed generation costs remain unchanged, and potential revenue may be lower due to 'free-riders' who would have increased demand anyway. However, the Board acknowledges the potential for increased industrial demand with the incentive rate.

Re Iowa Public Service Company Docket No. RPU-88-3 (TF-88-24) Iowa Utilities Board May 17, 1988 OPINION and order authorizing electric tariff containing discounted rates for customer engaged in farm equipment manufacturing upon agreement t...

AI summary The Iowa Utilities Board authorized a discounted electric rate for a farm equipment manufacturing customer who agreed not to install cogeneration or self-generation facilities. The decision was based on the belief that the discount would encourage continued use of the utility's services, preserving system load and helping recover fixed costs.

iderations involved in this decision are the protection of those customers who do not have an alternative source of supply and, in addition, the furtherance of a positive business climate in the area. The pr1Sposed rate does not grant an u...

AI summary The discussion focuses on the proposed rate for Deere, ensuring it does not unfairly advantage Deere or disadvantage other IPS customers. The rate is aligned with Deere's self-generation costs, and any potential disadvantage to other customers is deemed reasonable as lost revenue would be recouped from them.

Re Northern Indiana Public Service Company __ l I Cause No. 38365 Indiana Utility Regulatory Commission January 20, 1988 ORDER permitting an electric utility to offer rate discounts to industrial customer, who agree to defer construction o...

AI summary The Indiana Utility Regulatory Commission permitted an electric utility to offer rate discounts to industrial customers who agree to defer construction of cogeneration facilities for five years and purchase all their power from the utility during that period. The decision found the arrangement not unreasonably discriminatory and consistent with PURPA and state law.

B. Donnelley Contract. Petitioner also requests approval of the proposed electric service contract to be entered into between Petitioner and Donnelley (Exhibit B to Petitioner's 1-A). Petitioner states that this is the standard form of con...

AI summary The Petitioner seeks approval for a new electric service contract with Donnelley, which includes billing credits in exchange for deferred installation of electrical generating equipment and an initial payment. The contract includes specific terms for billing credits, payment conditions, and options for renegotiating energy delivery after the five-year period.

ties from earning more or less profit from different classes of customers. See I.C. 8-1-2-24, 25 and 46. Thus, the fact that NIPSCO's cost recovery under Rider GA would be less than under other indus- trial rate schedules does not make Rid...

AI summary The text discusses whether Rider GA is discriminatory based on cost recovery differences among customer classes. It notes that while Rider GA recovers less cost than other industrial rate schedules, this does not inherently make it discriminatory. Intervenor Bethlehem's witness raises concerns about potential discrimination, citing exclusion of certain customers and cogeneration plants from eligibility.

reviewed the testimony of the experts and studied in forma1ion supplied by Mid-America. Mr. Strode iestified that the Staff was convinced that co-generation is a viable alte rnative for Mid -America. The Commission is also persuaded that M...

AI summary The Commission reviewed testimony and evidence regarding Mid-America's cogeneration alternative and its impact on AP&L's fixed costs. The Commission concluded that the negotiated rates between AP&L and Mid-America are not unduly discriminatory and provide sufficient incentives for Mid-America to avoid pursuing its cogeneration option for at least four years.

code, the applicant utility had to demonstrate that the proposed rate did not grant an unreasonable preference or subject anyone to an unreasonable prejudice or disadvantage. Iowa code stated in part: No public utility subject to rate regu...

AI summary The Board approved a proposed rate for Deere, stating it does not grant an unreasonable preference or advantage. The rate matches Deere's self-generation costs, and while it may disadvantage other IPS customers, the Board determined this is not unreasonable as the lost revenue would be recouped from other customers.