Topic:"Revenue Requirement" in M04265

SPECIAL CONDITIONS (Continued) - 5. Contribution to Margin (CTM) Credit: This credit is limited to a combined total of 55 MW of load from all customers to which the CTM Credit is extended. It is applicable only to customers with a SIC Code...

AI summary The document outlines special conditions for a utility service schedule, including limits on the Contribution to Margin (CTM) Credit, rules for customers with recorded demands over 4,000 kW, revenue accounting components, seasonal definitions, and ineligibility for other discounts. The text includes references to a decision and filing by Southern California Edison and the California Public Utilities Commission.

SPECIAL CONDITIONS (Continued) - 10. Billing: A Customer's bill is first calculated according to the total rates and conditions above. The following adjustments are made depending on the option applicable to the customer. - a. Bundled Serv...

AI summary The document outlines billing conditions for different customer service options, including bundled service, direct access, and hourly PX pricing. It details how bills are calculated, adjustments made, and the inclusion of various charges such as the Competition Transition Charge (CTC). The CTC payment method can be negotiated between marketers or brokers and customers.

SECTION B. Load Retention Rates Load retention rates are generally discounted utility rates offered on a customer's existing load in response to a bonafide threat of bypass, and in exchange for the customer's agreement to continue receivin...

AI summary Load retention rates are discounted utility rates designed to prevent customers from bypassing the utility by installing cogeneration or self-generation facilities. These rates help sustain system load and retain customer revenues, benefiting ratepayers by minimizing potential revenue deficiencies. Illinois is among several states that offer these rates for both electric and gas customers.

ECONOMIC DEVELOPMENT QUESTIONNAIRE Are utilities allowed to offer other economic development related rates? Yes If yes, what types? Please mark th e appropriate response (No te: more than one item p er question can be marked if necessar fl...

AI summary The document discusses whether utilities can offer economic development-related rates, noting that flexible rates are allowed through case-by-case negotiation. It also mentions that the Commission does not require revenues from discounted load to exceed serving costs, and that benefits from such rates are shared among all ratepayers or received by stockholders. The Commission considers enhancing industry competitiveness and increasing utility plant efficiency as justifications.

General Capabilities - The CER Module allows the strategic planner to examine the financial effects on the company's consolidated operations of construction alternatives intended to meet the forecasted system demand. Complete economic eval...

AI summary The CER Module allows strategic planners to evaluate financial impacts of construction alternatives on consolidated operations, including tax effects, depreciation allowances, and investment tax credits. It supports modeling of major and blanket projects, DSM initiatives, and provides flexibility in analyzing project phase-ins, disallowances, and integration with other modules for revenue requirements calculations.

Economic Calculations The CER Module also calculates the annual present worth and the accumulated present worth of the revenue requirements associated with each project. Reports show the determination of present worth of revenue requiremen...

AI summary The CER Module calculates annual and accumulated present worth of revenue requirements for projects, using minimum revenue requirements and discounted cash flow approaches. It supports engineering economic evaluations and life-cycle comparisons of projects, and system analysis reports are available for entire plans, including data from the GAF Module or PROMOD Ill.

Output Reports The following repons are provided by t.l-ie CER Module: - Project Financial Cost Flows Bond Sizing Report - System Report Project Revenue Requirements - Oass Report System Revenue Requirements - Project Report Busbar Costs R...

AI summary The document outlines various output reports generated by the CER Module, including financial cost flows, revenue requirements, busbar costs, and diagnostics for evaluating processing results. These reports cover bond sizing, deferred taxes, AFUDC, plant closings, and other financial considerations.

Initial Calculations In producing financial results for any year, the FIR Module performs a set of initial calculations. Beginning balances are updated by additions to plant, depreciation, and changes in OVIP as transferred from the CER Mo...

AI summary The FIR Module performs initial calculations for financial results, updating balances with additions to plant, depreciation, and OVIP changes from the CER Module. Revenues and expenses are totaled, resulting in preliminary financial statements that are later adjusted through automatic financing and rate setting to meet desired cash levels and rate of return.

Rate Change Logic After the desired financial condition is reached, the FIR Module recreates the Income Statement, Balance Sheet, and Statement of Cash Flows to account for changes in interest expense, dividends, etc. Expenses and rate bas...

AI summary The FIR Module iteratively adjusts revenues to meet desired financial targets such as rate of return on equity, total capital, or jurisdictional rate base. This process recalculates financial statements and ensures liquidity by adjusting revenues until the desired cash and rate of return levels are achieved, resulting in an initial rate change request for regulatory approval.

Output Reports Standard reports provided by the FIR are formatted differently based on utility type (REA cooperative, investor-own~ municipal) and include: - Consolidated Income Statement - Balance Sheet - Statement of Cash Flows - Rate Ba...

AI summary The document outlines various standard and diagnostic reports generated by the FIR (Financial Impact Review) module, including financial statements, rate base reports, and detailed diagnostic analyses for different utility types and classifications.

Introduction The Class Revenue Module (CRM) provides a powerful capability to analyze long range rate strategy and the implications of utility plans on customer classes. The CRM picks up where the jmisdictional logic in the FIR ends. All r...

AI summary The Class Revenue Module (CRM) is a tool used to analyze long-range rate strategies and the effects of utility plans on customer classes. It takes over from the jurisdictional logic in the FIR and calculates revenue requirements to meet the target return on rate base, allowing for flexible rate structures across different classes.

General Capabilities - Specification of multiple electric, gas, or unregulated jurisdictions - Analysis of revenues and costs at a jmisdictional and class level - Oassificatlon of expense and plant items to demand, energy, customer, or use...

AI summary The text describes the general capabilities of a system used for analyzing revenues and costs across different jurisdictions and rate classes. It includes functionalities such as classification of expenses, computation of allocation factors, rate design, and revenue forecasting. The system supports both marginal and embedded cost approaches and allows for user-defined classifications and custom logic.

Module Logic The CRM employs a two-step process to develop class rate and revenue forecasts. The first step is to calculate a cost of service at the rate class level .. The second is to develop rates for each class based on this cost of se...

AI summary The CRM uses a two-step process to develop class rate and revenue forecasts: first calculating the cost of service at the rate class level, and then developing rates for each class based on this cost of service.

Revenue Determination The structure of the CRM is designed to provide the user with maximum flexibility in modeling. By altering the number of asset classes or classification categories modeled, it is possible to produce a substantially de...

AI summary The CRM module offers flexibility in modeling cost of service analysis by allowing users to adjust allocation methods and control revenue requirements. It accounts for regulatory lag, political influences, and competitive market realities, ensuring total revenue and net income align with jurisdictional targets.

"REVISED" Response IR-30: b) NSPI interprets this question to mean "How does the benefit of selling power at load retention rates compare to the benefit of selling power in the export market?" NSPI does not believe that the current export...

AI summary NSPI argues that the export market cannot replace the loss of large customer loads, as energy sales in the export market are limited and represent less than 2% of NSPI's total energy production in 1998. The discussion pertains to the comparison of revenue from load retention rates versus export market sales.

T a bl e I rvmg- . 7B Month Destination Energy (Mwh) Revenue$ Jan Canadian Market 3,861 $92,544 Feb Canadian Market 28,104 628,104 Mar Canadian Market 43,889 1,037,148 Apr Canadian Market 34,219 855,225 May Canadian Market 24,514 593,748 J...

AI summary The table presents energy exports and revenue from the Canadian Market across months in 1999, with a total of 183,899 Mwh and $4,406,287 in revenue. NSPI's third quarter financial statements are also referenced.

For the nine months ended September 30 {unaudited) millions of dollars (except earnings per common share) 1999 1998 Revenue Electric $584.0 $550.1 Other 7.4 6.2 591.4 556.3 Cost of operations Fuel for generation and power purchased 196.7 1...

AI summary This document presents financial data for the nine months ended September 30, showing revenue, cost of operations, and earnings for the years 1999 and 1998. Key figures include revenue from electric and other sources, cost of operations, and net earnings applicable to common shares.

19 TOU Rate Structures and Revenue Reconciliation 20 21 For price signals to be efficient, they must present a reasonably accurate picture of 22 the utility's marginal costs. The challenge for TOU rate design involves providing 23 efficien...

AI summary The document discusses the challenges of designing Time-of-Use (TOU) rate structures that provide accurate price signals while recovering embedded revenue. NSPI found that reconciling marginal costs with revenue requirements using an equi-proportional method results in rates that deviate significantly from marginal costs. Bowman evaluated several reconciliation methods, concluding that the customer charge approach aligns best with marginal costs, though it may lead to higher customer charges.

ns. \Vhen utilities have excess capacity, changes in EUE brought about by a 7 change in load are very small. Under these circumstances the VOS produces a 8 relatively low marginal cost of capacity. 9 1 O System Planning methods attempt to...

AI summary The text discusses the relationship between excess capacity, Expected Unserved Energy (EUE), and Value-of-Service (VOS) in system planning. It explains the Differential Revenue Requirements method for calculating marginal capacity costs and emphasizes the importance of using marginal costs rather than a blend of avoided and marginal costs for rate design.

11 Elasticity Estimates 12 13 Estimates of price elasticity are useful for predicting how customers will respond to 14 rate changes. Most utilities include some type of price coefficient in their load 15 forecasting models. These coefficie...

AI summary Price elasticity estimates help predict customer responses to rate changes. While industry studies show measurable responses to TOU rates, results vary and cannot be generalized. Dr. Globerman notes that precise guidance is limited, but the evidence suggests TOU rates generally lead to significant response, justifying additional metering costs. Lost revenue recovery mechanisms are recommended for innovative rates due to uncertainty in customer participation and shifting behavior.

DR. CHAMBERLIN, DIRECT EXAM. BY MR. OUTHOUSE 2749 - be calculated in a similar manner? - 2 They can be calculated in a similar manner, in which Α. case avoided costs are calculated if they're 3 calculated the same way as long-run marginal...

AI summary The discussion revolves around the calculation of avoided costs and long-run marginal costs, with the expert noting that they can produce similar results if calculated on the same planning assumptions. The expert also clarifies that avoided costs are often used differently in PURPA contexts and may involve distinct approaches compared to long-run marginal costs.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. KEHOE 2758 - that where you're coming from? - 2 A. I'm not sure that I'm saying I don't think I'm 3 saying that you have to agree with the reliability 4 standard. What I'm saying is that the price should...

AI summary The discussion revolves around the reliability standard and how the price should reflect the system's cost to maintain it. The witness is questioned about the historical revenue-to-cost ratio for domestic customers and whether outage costs influence this ratio across jurisdictions.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. MACDONNELL 2772 think marginal - Q. If you'd like to substitute a word, that's fine. - A. I think reflecting marginal costs in the rates is a very important thing to do. I think, the more efficiency is an...

AI summary The discussion focuses on the importance of reflecting marginal costs in rates and the reconciliation process involving revenue requirements. It highlights the differences between marginal cost-based and embedded cost-based revenue requirements, particularly in examples like California.

DR. CHAMBERLIN, CROSS-EXAM. BY MR. HARRIS 2839 - Part of that is unbundling of services and unbundling of costs and prices. - Mr. Kehoe, or someone, mentioned revenue cost ratio 3 0. 4 targets that this Board had used, and I quess you've 5...

AI summary The discussion centers on the use of revenue cost ratio targets by regulators to ensure fairness in customer rates, with the witness confirming that this approach is widely used in the U.S. but not in jurisdictions transitioning to competitive markets, where cost of service is adjusted based on the PVR index.

RESPONSE TO INFORMATION REQUEST TO: SEMPRA ATLANTIC GAS INC. FROM: NSPI Response IR-5: (1) No. The 20% referred to in Mr. Whalen's evidence refers to percentage of customer load, and not to the number of customers. It has been used for ill...

AI summary NSPI responds to an information request regarding customer load retention, clarifying that the 20% and 10% figures mentioned are illustrative and not based on specific scenarios. No firm proposals for alternate supply options have been presented, and load retention rates would be determined on a case-by-case basis.

"REVISED" Response IR-30: b) NSPI interprets this question to mean "How does the benefit of selling power at load retention rates compare to the benefit of selling power in the export market?" NSPI does not believe that the current export...

AI summary NSPI argues that selling power at load retention rates is more beneficial than exporting power, as the export market opportunities are limited and represent less than 2% of NSPI's total energy production in 1998. The discussion is framed within an application for approval of a load retention rate under the Public Utilities Act.

Table Irving-7B Month Destination Energy (Mwh) Revenue $ Jan Canadian Market 3,861 $92,544 Feb Canadian Market 28,104 628,104 Mar Canadian Market 43,889 1,037,148 Apr Canadian Market 34,219 855,225 May Canadian Market 24,514 593,748 Jun Ca...

AI summary The table provides energy sales and revenue data for the Canadian Market from January to November 1999, with total energy sold at 183,899 MWh and total revenue of $4,406,287. The third quarter financial statements of NSPT are also referenced.

ASSUMPTIONS USED IN DEVELOPING MODEL Rate Base Lateral cost -$35 million, distribution system - $20 million Distributor will build out basic system as quickly as possible to have service ready for customer connections to gain early revenue...

AI summary The assumptions used in developing the model include capital expenditures for lateral and distribution systems, depreciation rates, equity and debt ratios, operating and maintenance costs, and revenue requirements. The model assumes a 35% equity ratio with a 12% return on equity, and capital is capitalized at different rates over the project timeline. Operating costs are estimated, with normalized ratios emerging in later years as the system becomes operational.

NOVA SCOTIA POWER, INC. Revenue From Off-System Sales NSURB NSP1 - P- <l1 I EXHIBIT# p _ I~

AI summary The document references Nova Scotia Power, Inc. and mentions revenue from off-system sales, indicating a focus on financial aspects related to energy sales outside the company's primary service area.

7 Q PLEASE STATE YOUR EDUCATIONAL BACKGROUND AND EXPERIENCE. I was awarded a Bachelor of Science Degree from the City College of New York in 9 1964 and a Doctorate of Philosophy in Mathematics from Brown University in 1969. 10 Subsequently...

AI summary The individual provides a detailed account of their educational background and professional experience, including roles in academia, industry, and consulting, with a focus on energy economics and regulatory matters, and highlights their extensive testimony before various regulatory bodies and commissions.

- 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.

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.

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.

00 KW or greater. It noted that the rate would recover all of the incremental costs of producing the additional electricity and make a contribution to help pay for existing excess generating capacity. In its decision in Re Gulf States Util...

AI summary The text discusses a legal basis for a load retention rate, referencing a 1987 Texas Public Utility Commission decision that approved a tariff rider offering rate discounts to large-volume electric customers who can cogenerate. The decision outlined conditions for reasonable discrimination in rate structures, emphasizing benefits to the utility system and the importance of maintaining industrial load.

RATEPAYER RISK AND REVENUE LOSS In his pre-filed testimony Mr. Whalen gave a hypothetical, numerical example of the effect on NSPI if it should lose a significant part of its industrial load to self-generation. If 20% of its industrial loa...

AI summary The text discusses the financial impact on Nova Scotia Power Incorporated (NSPI) if a significant portion of its industrial load leaves the system due to self-generation. It highlights the argument that a load retention rate should be viewed as a benefit to other customers rather than a discount, and raises the question of whether the revenue loss should be borne entirely by other customers or shared with shareholders.

ORDER This Application having been heard by the Board on January 12, 13, 14, 2000, after due public notice, and the Board having issued its decision on May 24, 2000; IT IS HEREBY ORDERED that the Load Retention Rate as set out in the attac...

AI summary The Board has approved the Load Retention Rate as outlined in Schedule 'A' and mandated Nova Scotia Power Incorporated to report annually on revenue and energy sales related to this rate. The order was issued on May 29, 2000, following a hearing in January 2000.

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.

- As stated in the previous section, ECANS' has identified a number of - provisoes that in our opinion need to be addressed. Some can be addressed - directly by the Board in its decision on this rate application. Others are much - broader...

AI summary ECANS argues that load retention rates should be based on accurate calculations of the cost of lost load, emphasizing that they should equal or exceed NSPI's long-run marginal cost. ECANS also highlights concerns with the methodology used in calculating savings and advocates for the use of long-run marginal cost as a floor for all load retention rates.

C tid 4.-" ]" ..... on I enIJaIlIY: The cover of confidentiality sought by NSPI in this application is very broad and very unacceptable. NSPI seeks to compete with alternate energy sources where those sources can successfully compete with...

AI summary NSPI's confidentiality request is criticized for being overly broad. NSPI seeks to compete with alternate energy sources but does not support open competition. The utility's regulated business supports its competitive operations, with fixed costs including return on equity being discounted to successful load retention candidates. Other customers argue that transparency about negotiated rates and volumes is necessary for fair future rate hearings.

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.

s which those customers would experience if they chose to construct a cogeneration facility, thereby lessening the incentive for those customers to drop off of GSU's system and engage in cogeneration. According to staff wit.ness George Men...

AI summary GSU is concerned about potential industrial load loss due to cogeneration and is considering implementing a discounted SUS rate to retain customers. Witness George Mentrup supports this concern, citing past load loss and future rate increases. James Thornton argues that adopting Schedule SUS would reduce annual revenues by $3 million but prevent a potential $13.9 million loss from cogeneration.

V. Recommendation Based upon the evidence of record, the examiner finds that there is an immediate danger that GSU will experience load loss to cogeneration in the near future unless GSU takes concrete steps to prevent that loss from occur...

AI summary The examiner recommends that the Commission approve Schedule SUS and the associated service agreement amendment, as filed, effective immediately upon the entry of a final order. The examiner also recommends that no revenue losses associated with Schedule SUS may be recovered from GSU ratepayers in future rate proceedings, as GSU's shareholders will bear the burden of such losses.

rom IPS's other customers. If the proposed rate does create a disadvantage to IPS's other customers, it is not an unreasonable disadvantage since they will not have to pay this additional revenue. The Board will approve the proposed rate....

AI summary The Board approves IPS's proposed rate but imposes conditions, including offering discounted rates to certain customers and adjusting revenue calculations to absorb discount costs. Fifty percent of any revenue increase will be used to reduce rates for all customers, while the remaining fifty percent may be retained by IPS.

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.

inally at any time after the initial two years of the contract either party has the option of initiating negotiations for delivery of energy to the customer after the five year period of the contract. 4. Circumstances Prompting the Proposa...

AI summary NIPSCO's witness testified that Rider GA was developed in response to industrial customers considering on-site generation, which could reduce NIPSCO's revenue and impact system operations. NIPSCO argues that such installations would be redundant and could lead to unnecessary purchases of electricity from qualified facilities.

on's expertise in making this determination of the reasonableness of rate discrimination. Capital l mprov. Board v. Indiana Pub. Strvict Cummission, - Ind.App. - , 375 N.E.2d 6 16, 633 ( 1978). Inten ·enor Bethlehem's witness Rudden consid...

AI summary The text discusses the reasonableness of rate discrimination in the context of a regulatory proceeding, focusing on the testimony of witnesses regarding the impact of rate structures on customer classes and the potential loss of industrial customers due to on-site generation. The Commission acknowledges the variability in customer classes and the potential adverse effects of losing high-load factor customers.

DISCUSSION [I, 2) AP&L and Mid-America support approval of the Agreement. As a result of the August 19, 1988, amendment to the Agreement, the Staff now recommends approval of the Agreement. Also as a result of the amendment, AEEC, the othe...

AI summary AP&L and Mid-America support the approval of an agreement, which would allow Mid-America to reduce its electricity purchases from AP&L through co-generation. The Commission must determine if the agreement is just and reasonable. Experts testified that co-generation is a viable alternative for Mid-America, which currently does not generate its own electricity.