ERMUSR HANDOUT #3 10-13-2009 - Laserfiche WebLink

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The Municipal Utility's current rate structures have been in place for many years. The rates include customer charges and single block energy charges for residential and small commercial cus- tomers. Large commercial customers have a demand and energy rate, and the industrial customers have a demand rate with on- and off-peak energy rates. The utility realizes that more special- ized rates are needed to influence customers' use of electricity. There has been a recent emphasis on conservation programs to reduce overall electricity usage and demand response efforts to reduce peak consumption.The Municipal Utility is also beginning to consider advanced metering infrastructure (AMI) devices to support smart grid programs. JLUTIC The Municipal Utility has implemented a broad array of rebates for energy efficiency efforts, such as efficient appliances, compact fluo- rescent lighting and insulation programs. It also works directly with larger customers to reduce consumption through more efficient motors, lighting and other uses. Recognizing that successful conser- vation programs reduce sales, which reduce revenues, has resulted in a renewed effort to monitor revenues and costs through the util- ity's financial plan. The conservation programs also have a cost associated with the rebates and other program costs. As consump- tion goes down, the utility may need to raise rates or implement some form of decoupled rates (revenues not tied to consumption). As future rate increases are required, it is considering a move to in- verted energy rates, where higher levels of usage get more expensive. This would further discourage higher levels of energy use, but the higher usage rates help offset the lower revenue due to reduced sales. For rate-related demand response efforts, it is con- sidering both carrot and stick approaches. The carrot approach includes giving customers a credit on a $/kW basis for reducing peak load consumption when requested by the utility. The stick ap- proach includes more time-of--use rates for more customer classes and even higher rates for on-peak usage. The utility is also contem- plating critical peak pricing with significantly higher rates during a small number of peak hours during the year. Critical peak pricing will require some kind of two-way communication with customers to alert them that a critical peak period has been declared. Ulti- mately, the Municipal Utility will be moving into automated metering infrastructure (AMI) systems and will need to consider all the costs associated with the programs along with the savings real- ized to determine how overall rate levels will be impacted. AMI systems also allow for more innovative rates to further influence customer usage. The state legislature and public utility commission have imple mented requirements for utilities to begin implementing net metering and backup power tariffs. The net metering tariffs are intended for smaller renewable generation installations at resi- dential and commercial locations. Under this tariff, the customer is required to receive full retail rate credit for any surplus energy injected into the Municipal Utility system. The backup power tar- iffs are required for larger customers who self generate all or a portion of their own requirements and who need backup power from the Municipal Utility when their own generation is not avail- able or is insufficient to meet their requirements. ' SOLUTION 2 ` The state has issued net metering rules that will dictate much of the utility's new net metering tariff: The utility has also collected tariffs from other area utilities that are designed to comply with the same rules. The utility will require metering upgrades at customer loca- tionswhere net metering service is requested. The new meters will measure flow of energy both into and out of the customer facility. The state rules allow for collection. of additional meter expenses. The Municipal Utility will implement a higher monthly customer charge for net metering customers based on the difference iri capi- tal cost, including installation cost for the new meter amortized over the expected life of the meter. For the backup power tariff; the Mu- nicipal Utility needs to consider the requirements of the backup customer in an unbundled way. For the generation and transmis- sion portions of the backup tariff, it has opted to rely on the market. The unknown nature of timing and amounts of backup generation required make it difficult for the Municipal Utility to include provi- sion of backup generation in its generation asset plans. The Municipal Utility is a participant in the regional independent sys- tem operator, which will provide real-time market power delivered to the Municipal Utility for any backup generation and transmission requirements. The utility will do a straight pass-through, with an adder for local system losses, to any backup customer requiring en- ergy. For local disMbution services (substations, feeders, service transformers and drops, meters, etc.) the Municipal Utility will rely on its unbundled cost of service analysis to set fixed monthly rates on a $/kW basis for the maximum backup amount requested by the customers. It has adopted a philosophy that it must plan and build its local system to be able to serve the backup customers at any time, just like any other customer. www.APPAnet.org SEPTEMBER 2OOJ 'I7