2.0 METHODOLOGY The SRMC test involves the following steps: Determine the average marginal cost (over 8784 hours in 2024) at the transmission delivery level. In calculating this marginal cost, the effects of exports and load served under the Extra Large Industrial Active Demand Control (ELIADC) Tariff , the successor to the LRT, are removed from the net system load. The 2024 marginal cost of 8.122 cents per kilowatt hour is calculated based on the fuel, incremental heat rate, and variable operating and maintenance (O&M) costs of the unit serving the next megawatt (MW) for each hour.1F 2 (i) Account for distribution line losses by increasing the marginal cost at the transmission level by the average distribution energy losses for those classes which are served at the distribution level. This is done to establish the average annual marginal cost by class at the point of consumption. (ii) Determine the average annual unit revenue for each class by dividing the appropriately modified actual annual revenues by the actual annual kilowatt hours (kWh) of energy sold. (iii) Compare the unit revenues from step (iii) to the average marginal costs from step (ii). If the class unit revenue is lower than its average marginal cost, the class fails the SRMC test. (iv) For classes which fail the test, calculate estimates of inefficient usage by applying price elasticities to the actual annual gigawatt hours (GWh) sales reported for each class.2F 3
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2.0 METHODOLOGY The SRMC test involves the following steps: Determine the average marginal cost (over 8784 hours in 2024) at the transmission delivery level. In calculating this marginal cost, the effects of exports and load served under t...
AI summary The SRMC test calculates average marginal costs and compares them to unit revenues to assess efficiency. It accounts for distribution losses, uses price elasticity estimates, and applies different values for various rate classes. The test uses data from the 2024 Load Forecast Report and a California Energy Commission report.