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7 Rate and Finance Challenges <br />~3 ~~~~ ~~ ~ sl ~ - <br />The Municipal Utility is concerned about the rate impact of <br />potential environmental legislation. Implementation of re- <br />newable portfolio standards (RPS) and potential legislation <br />or regulation to limit carbon dioxide emissions are of partic- <br />ular concern.The Municipal Utility has added wind resources <br />to its generation portfolio and currently provides 4 <br />percent of its energy sales from wind. However, it also rec- <br />ognizes that there has been a net cost to add these <br />resources. The utility is concerned that if RPS mandates 20 <br />percent to 30 percent of energy requirements from renew- <br />ables, there may be a significant cost impact. This cost <br />impact could be driven by numerous factors including higher <br />capital costs due to increased demand, increased transmis- <br />sion requirements, and expanded operating challenges. <br />Potential carbon dioxide legislation is a source of rate impact <br />anxiety for the Municipal Utility. Any proposal to limit carbon <br />dioxide emissions will likely increase costs to the Municipal <br />Utility and its customers. This cost increase could be sub- <br />stantial. The challenge for the Municipal Utility is how to <br />prepare when the outcome is largely unknown. <br />The Municipal Utility has already implemented steps to manage its <br />power supply program to minimize negative cost impact from pend- <br />ing environmental regulations. Relative to the rate side of the <br />business, it has decided to increase its customer awareness programs <br />~to prepare customers for change, whatever that change may be. The <br />utility has decided to implement an "environmental adjustment" to its <br />ate schedules. This adder will be similar to a fuel or purchased power <br />adjustment. The environmental adjustment will begin appearing on <br />bills immediately, but the initial amount of the adjustment will be <br />zero. The new bills will include information about the rationale for the <br />adjustment (it will reflect increased costs to meet new environmental <br />regulations). The adjustment will be a straight pass-through on a per- <br />kWh basis, applied equally to all customer classes. As costs are <br />incurred, the adjustment will begin to impact bill amounts, and the <br />bills will include specific information about the justification and calcu- <br />lation of the adjustment. The Municipal Utility will also add <br />information to its normal communicafion outlets such as its Web site, <br />e-mail, media outlets and community organization presentations. In <br />addition, it has begun to investigate more contemporary communica- <br />tions such as a blog, a Facebook page and Twitter. <br />Finley Engineering has been a leader in <br />design, engineering and construction of <br />electrical power systems for over fifty <br />• ~ • • ~ years. Our planning and design for electric <br />power systems includes all phases of <br />distribution, transmission and substations, <br />from initial stages and site selection to <br />• • construction management and startup. <br />For more information visit <br />www.fecinc.com or contact us at: <br />Finley Engineering Company <br />104 East 11th Street P.O. Box 148 <br />Lamar, MO 64759 <br />471-682-5531 <br />Phil Carroll P.E. <br />Vice President <br />p.carroll®fecinc.com <br />~in~ <br />ENGINEERING <br />INNOVATION TO THE NE%T POWER <br />www.fecinc.com <br />7$ SEPTEMBER LOOJ PUBLIC POWER <br />