Topic:"Cost To Customer" in M04265

ATTACHMENT A This attachment outlines procedures by which the requirements of Availability Clause (1 ) and Special Condition (1) are to be satisfied. - (1) The customer shall apply in writing to take service under this rate, outlining the...

AI summary This document outlines procedures for customers to apply for service under a load retention rate, including economic and technical feasibility assessments, data confidentiality, and the determination of appropriate rates and terms by NSPI and the customer, with the option for UARB adjudication in case of disagreement.

BENEFITS For existing and potential Ontario Hydro Direct customers and Large Use customers of municipal utilities faced with major decisions that involve energy cost considerations, a LREP could ensure that their electricity prices are hig...

AI summary A Load Retention and Expansion Price (LREP) can help existing and potential Ontario Hydro Direct and Large Use customers ensure competitive electricity prices, benefiting the provincial economy and utilities retaining or acquiring these customers.

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.

RESPONSE TO INFORMATION REQUEST TO: CAPE BRETON REGIONAL MUNICIPALITY FROM: NSPI Question IR-3: Compared to other jurisdictions in Canada, are Nova Scotia's electricity costs relatively high? If so, what are the reasons for this? Response...

AI summary Nova Scotia's electricity costs are somewhat higher than many parts of Canada, largely due to fuel costs. The province relies on a mix of coal, oil, natural gas, and hydro, unlike regions with significant hydroelectric production which have lower costs. NSPI highlights that electricity prices have risen only 4% since 1992, compared to a 10% rise in CPI, and no rate increases are planned for 2000.

RESPONSE TO INFORMATION REQUEST TO: CAPE BRETON REGIONAL MUNICIPALITY FROM: NSPI Question IR-17: In what ways does the proposed load retention rate serve the public interest? Is the proposal consistent with the principle of equity? If so,...

AI summary NSPI explains that the proposed load retention rate avoids rate increases by retaining load, benefits all customers, addresses equity as discussed in a prior response, and promotes efficient use of existing resources to minimize electricity costs in Nova Scotia.

2 3 First, while seasonal demand charges would improve NSPI's rate structures, they are 4 not substitutes for seasonal TOU rates. Under the seasonal demand charge approach, 5 customers are charged based on their single highest load occurri...

AI summary The text discusses the differences between seasonal demand charges and time-of-use (TOU) rates, emphasizing that TOU rates provide ongoing incentives for customers to reduce demand during peak periods, unlike seasonal demand charges which only penalize the highest load during on-peak hours.

16 Voluntary versus :Mandatory rates 17 18 In my previous testimony, I discussed the issues surrounding voluntary versus 19 mandatory TOU rates but did not take a position. Bowman and NSPI both recommend 20 voluntary TOU rates and NSPI als...

AI summary The text discusses the pros and cons of voluntary versus mandatory time-of-use (TOU) rates. While mandatory TOU rates are more efficient in promoting fair cost distribution, voluntary rates are easier to implement. The author supports voluntary TOU rates, provided revenue shortfalls are addressed by non-participating customers, leading to a gradual shift toward more efficient rate structures.

6 Balancing Multiple Objectives 7 8 The degree to which a particular rate design promotes economic efficiency depends on 9 the price component customers rely on to evaluate purchase decisions. If this price IO reflects a utility's marginal...

AI summary This section discusses the importance of balancing economic efficiency with other objectives in rate design, such as rate stability, simplicity, and assisting low-income customers. It highlights the challenges of implementing Time-of-Use (TOU) rates, including customer resistance to large fixed charges and the need to align rate changes with public expectations.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. KEHOE - customers have different outage costs, is it fair —\nequitable, if you like that they be assigned costs for generation reserve at the same level as customers with a higher outage cost? - Well, you...

AI summary Dr. Chamberlin is questioned about the fairness of assigning the same cost for generation reserve to all customers, regardless of their outage costs. He argues that pricing should reflect reliability costs and that customers should have options to choose their reliability level, similar to interruptible rates.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. KEHOE 2760 answer that right, I think you'd have to first believe that the allocation methods were appropriate to begin with in each jurisdiction. And I wouldn't agree that that's true. My concern is not...

AI summary The discussion centers on the importance of accurate price signals reflecting marginal costs in energy systems to ensure efficiency and maximize system value. The speaker questions whether reliability and outage costs should be uniformly applied to all customers, suggesting that those with lower outage cost values should contribute less. The conversation references embedded cost of service and reliability considerations.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. KEHOE the various inputs into their manufacturing process. And I guess I'm suggesting, should these same customers be able to claim confidentiality in terms of their overall costs in order to demonstrate...

AI summary The discussion revolves around the confidentiality of business cost structures, particularly in relation to electricity pricing and competitive positioning. The witness emphasizes that businesses typically treat their cost information as highly confidential, even when it comes to energy purchasing.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. CAMPBELL 2805 sufficient. - 2 Q. But there's no rate commitment for 20 years. - No, but but it's more than that. 3 Α. There is a cost consequence that results. 4 For example. suppose the rate only covered...

AI summary Dr. Chamberlin discusses the importance of aligning prices with long-run marginal costs when making capacity commitments, arguing that short-run marginal cost pricing can lead to inefficiencies. He also references a paper co-authored by him on competition and flexible rates, attached to an information request.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. HARRIS 2816 then if that means customers decrease their usage, because they don't like the high price, so be it." Well, when the "so be it" happens, there'll be an even different cost. And finally, in the...

AI summary Dr. Chamberlin discusses the challenges of achieving equilibrium pricing in energy markets, emphasizing the long lead times required to build new plants and the impact of varying contract durations on market dynamics. He suggests that as markets become more competitive, the gap between short-run and long-run pricing will diminish due to diversified contract terms.

tionale for inverted rates has been applied too broadly. Residential cus- The efficiency criticism of declining block rates has been incorrectly applied, and has therefore led to poor policy choices. tomers in each service area face invert...

AI summary The text argues that the efficiency criticism of declining block rates has been misapplied, leading to poor policy decisions. It highlights that residential customers in various service areas face inverted block tariffs in both summer and winter. Load data show significant seasonal peak demand differences, suggesting that new combustion turbines may not be needed for off-peak seasons, affecting cost allocation and tariff design.

ed, representing relistic price markups over marinal costs when prices at marinal costs fail to provide the evenue requirement. Each solid ne shows the combinations of elative marginal costs and rela- tive elasticities, given the value of...

AI summary This text discusses variations in class marginal costs and how they influence the efficiency of different rate structures. It explains that flat rates are efficient when price responsiveness and marginal costs are equal, and that inverted or declining block tariffs may be more efficient under different elasticity conditions.

II. Marginal Costs, Rate Design, and Conservation Our primary conclusion from this analysis is this: Economic effi- -)ncy cannot be promoted by the de- · sign of rate structures which deviate significantly from cost. If larger users are le...

AI summary The text argues that economic efficiency cannot be promoted by rate structures that deviate significantly from cost. Inverted block rate structures worsen efficiency by overcharging large users and undercharging small ones. Declining block rates in winter may promote conservation, efficiency, and equity, particularly for residential customers with electric heat.

Lessons from Experience - ) QA/QC Standards: Inadequate knowledge and experience with the high QA/QC standards required by the oil and gas industry ranks as one of the leading weaknesses among prospective bidders for fabrication and constr...

AI summary The text highlights challenges in the oil and gas industry related to QA/QC standards, HS&E practices, bid responsiveness, cost competitiveness, and award criteria. Local bidders face difficulties in meeting international standards and are often less competitive in pricing compared to overseas suppliers.

Table V-2 Relative Fuel Prices for Electrical Generation in Nova Scotia Price mmbtu/unit Efficiency Cost/mmbtu CBDC Coal (tonne) 65.00 26.50 0.33 7.43 Natural Gas (mmbtu) 2.50 1.00 0.33 7.58 Heavy Oil (#6) 15.90 6.29 0.33 7.66 Imported Coa...

AI summary Table V-2 compares the relative fuel prices for electrical generation in Nova Scotia, including coal, natural gas, and heavy oil. The table includes prices, energy content, efficiency, and cost per unit of energy. Note that CBDC coal prices are based on a long-term agreement with NSPI and may differ from international prices.

Table A-4 Nova Scotia Power Inc. Unit Costs of Energy Production, Coal vs. Oil, 1993-1997 1997 1996 1995 1294 1993 Energy (GWh ) Coal 8,247 7,850 7,053 7,160 6,346 Oil 781 609 1,239 1,206 2,117 Cost of Fuel ($ 000,000s) Coal 189.2 198.9 18...

AI summary Table A-4 from the 1998 Nova Scotia Power Inc. Annual Report compares the unit costs of energy production using coal and oil from 1993 to 1997, providing data on energy output in gigawatt-hours and fuel costs in millions of dollars.

What this means for the CBRM CBDC's production difficulties and relatively high costs serve to weaken the company's competitive position as a supplier to NSPI. The long term contract provides some protection from market forces, provided CB...

AI summary CBDC's production challenges and high costs hinder its competitiveness as a supplier to NSPI. While the long-term contract offers some short-term protection, long-term viability requires reduced costs and more stable production levels. CBDC is developing a strategy to address these issues in its next 5-year plan.

Q. How significant are energy prices in Stora Enso's cost structure? A. The cost of electricity typically represents the largest single cost of producing paper more than the cost of wood, capital, or labour - and this is true of Stora Enso...

AI summary Energy prices, particularly electricity, are the largest single cost in Stora Enso's production of paper, impacting its competitiveness in global markets. This is especially true for Stora Enso Port Hawkesbury Limited.

19 Q IN A PREVIOUS RESPONSE YOU USED THE TERM "SUCCESSFULLY" WITH 20 RESPECT TO A CAR. WHAT DID YOU MEAN BY THAT? 21 A By successful I mean a rate that benefits all stakeholders. The customer taking 22 service on the CAR achieves its goal...

AI summary The witness explains that a CAR (Customer Assistance Rate) is considered successful when it benefits all stakeholders, including customers who reduce energy costs, the utility that retains customers and profits, and other customers who benefit from lower unit costs and a better economic climate.

18 Q HOW IS IT POSSIBLE FOR THE REGULAR TARIFF TO EXCEED THE ACTUAL FULLY ALLOCATED OR EMBEDDED COST OF PROVIDING SERVICE? - 20 A There are several ways this could occur. - 21 22 23 24 25 26 1. Tariff rates are generally designed to recove...

AI summary The regular tariff may exceed the actual fully allocated or embedded cost of providing service because tariff rates are designed to recover costs from a broad group of customers, leading to individual customers paying more or less than the actual cost of serving them. This discrepancy can be addressed by refining customer classes or conducting direct assignments.

- Q. ARE THERE OTHER PROBLEMS WITH NSPI'S ILLUSTRATION OF ITS REVENUE LOSSES? - A. Yes. In response to UARB IR-14, NSPI acknowledged that the customers who install their own generation would need to acquire from NSPI some ancillary service...

AI summary The discussion addresses NSPI's revenue losses due to customer self-generation and highlights that some losses are offset by revenues from ancillary services. It also mentions a comparison of large customers' revenues with NSPI's marginal cost, with an attachment providing relevant data.

Attachment 2 to my Direct Evidence presents NSPI's purchased power and fuel costs. The average purchased power cost in 1998 was 6.697 cent/KWH as compared to NSPI's average fuel cost of 2.45 cents/KWH. NSPI's responses to UARB IR-33 shows...

AI summary The text discusses NSPI's purchased power and fuel costs in 1998, highlighting that the average purchased power cost was significantly higher than the average revenue from large customers. It also notes that NSPI's marginal energy costs during winter peak hours exceeded the revenue from large industrial customers, potentially leading to losses if rates are not adjusted.

st ofelectricity to the customerfrom that option is expected to be lower than the cost to the customer of continuing to purchase electricity from NSP/. NSPI would determine the impact on its other customers of losing the customer load in q...

AI summary NSPI seeks approval for general principles and a process to establish load retention rates for customers leaving the system. The process involves forecasting models, scenario comparisons, and negotiated rates submitted to the Board for approval, with some data not required to be publicly disclosed.

ATTACHMENT "A" This attachment outlines procedures by which the requirements of Availability Clause (1) and Special Condition (1) are to be satisfied. - (1) The customer shall apply in writing to take service under this rate, outlining the...

AI summary This attachment outlines procedures for customers to apply for service under a load retention rate, including initial screening, determination of load retention price, and adjudication by the UARB if needed. It also details economic and technical feasibility criteria and the impact on NSPI's other customers.

ATTACHMENT "A" This attachment outlines procedures by which the requirements of Availability Clause (1) and Special Condition (l) are to be satisfied. - (1) The customer shall apply in writing to take service under this rate, outlining the...

AI summary This attachment outlines procedures for customers to apply for service under a load retention rate, including initial screening, establishing load retention prices, and determining economic and technical feasibility of alternate supply options. It also covers confidentiality, cost considerations, and the impact on other customers.

st ofelectricity to the customerfrom that option is expected to be lower than the cost to the customer of continuing to purchase electricity from NSP/. NSPI would determine the impact on its other customers of losing the customer load in q...

AI summary NSPI seeks approval for general principles and a process to establish load retention rates for customers leaving the system. The process involves scenario analysis, negotiation of rates, and submission to the Board for approval, with some data not required to be publicly disclosed.

e first twelve months following approval of the rate. 17. A qualifying customer must execute an amendment to ilS existing service agreement with CSU as a precondition to subscription to Schedule SUS. - 18. The service agreement amendment r...

AI summary The document outlines the conditions and rate structure for Schedule SUS, including service agreement amendments, rate calculations based on cogeneration facilities, and the use of sizing factors to determine optimal facility sizes for customers.

NIPSCO construction and that consequently deferral of construction and coordination of the addition of cogeneration facilities would produce greater benefits than current construction of cogeneration. Mr. Jeffrey R. Bailey, Assistant Chief...

AI summary The Commission discusses the impact of deferring cogeneration facility construction on NIPSCO's operations and ratepayers. It notes that while cogeneration may offer long-term benefits, current capacity is sufficient, and losing existing customers could lead to increased costs for remaining ratepayers. The Commission suggests considering methods to retain existing load.

. We find Pejtioner's insistence upon an up-front payment and repayment without interest as a demonstration of the customer's good faith of going forward absent an agreement to have been appropriate. I If Petitioner were to lose Donnelley...

AI summary The document discusses the Donnelley Contract, emphasizing its benefits to Petitioner, its ratepayers, and Donnelley. It highlights that even with a 2¢ per kwh discount, Donnelley would still contribute significantly to Petitioner's fixed costs. The contract is deemed reasonable and just, in the public interest, and should be approved.

f utility. A review of these cases seems to establish that incentive rates, such as the proposed Load Retention Rate, will not be unreasonable or unjustly discriminatory if three tests are satisfied. - 1. Any difference in rates between va...

AI summary The document outlines three tests to determine if a Load Retention Rate is reasonable and non-discriminatory: differences in customer load volume and alternate supply justify different classes, the rate benefits other customers, and the rate must be at least equal to incremental generation costs.