Title
Draft Resolution - Approval to Amend Tariff and Business Rules - Base Power Charge, Sustainable Power Credit, Service Availability Charge & Delivery Charge, Single & Three-Phase Rates, Lamp Charges - W Symank/R Kruger
Other Info
Submitted By: Randy Kruger
Department: Chief Financial Officer
Financial Impact and Cost/Benefit Considerations:
Base Power Charge
The Base Power Charge is a pass-through of costs incurred in connection with the development and management of Pedernales Electric Cooperative, Inc.’s (the Cooperative) power supply, which serves the membership’s electric energy requirements. Given the Cooperative’s forecasted expense for power, an increase is necessary to ensure adequate cost recovery. The increase of revenue from the recommended adjustment to the Base Power Charge is forecast to be approximately $17.5M in 2025; expenditures of staff time is not anticipated to be impacted.
Sustainable Power Credit
Expenditure of Cooperative funds is not anticipated to be impacted; expenditure of staff time is not anticipated to be impacted.
Service Availability Charge & Delivery Charge
Recommended changes to the Residential Delivery and Service Availability Charges (SAC) are calibrated to recover the Cooperative’s forecasted expenses and are adjusted to align this revenue more closely with the fixed costs incurred. Given the projected revenue requirements, an increase in revenue is necessary, and these adjustments in aggregate are forecast to produce approximately $12M in additional revenue during 2025; expenditure of staff time is not anticipated to be impacted.
Single & Three-Phase Rates
Recommended changes to the Small Power Delivery and Service Availability Charges are calibrated to recover the Cooperative’s forecasted expenses and are adjusted to align this revenue more closely with the attributed costs by each type of service. The decrease in revenue from these adjustments in aggregate is forecast to be approximately $4M in 2025; expenditures of staff time is not anticipated to be impacted.
Lamp Charge
Recommended recission of addition of lighting types. The decrease in revenue from these adjustments in aggregate is forecast to be approximately $3,000 in 2025; expenditures of staff time is not anticipated to be impacted.
Discussion
Base Power Charge
The Tariff and Business Rules of the Cooperative (the Tariff) currently include a Base Power Charge which recovers the purchased power and other costs incurred in connection with the development and management of the Cooperative’s power supply to serve the membership’s electric energy requirements.
The Base Power Charge attributable to purchased power cost is largely driven by the energy and ancillary service costs in the ERCOT market as well as the ERCOT market performance of the generation fleet and portfolio of the Cooperative’s primary power supplier the Lower Colorado River Authority. Given the ERCOT market outlook, an increase of $0.003400/kWh to the amount of the Base Power Charge is recommended to ensure adequate cost recovery. This increase will be added to the Flat Base Power Charge and the Time-Of-Use Base Power Charge beginning on March 1, 2025.
|
Charges: |
Current Amount: |
Proposed Amount: |
|
Flat Base Power Charge |
$ 0.058500 |
$ 0.061900 |
|
Season |
Time of Use Period |
Current Charge per kWh |
Proposed Charge per kWh |
|
Non-Summer (Jan. - May and Oct. - Dec.) |
Super Economy |
2:01 am - 4:00 am |
$ 0.040910 |
$0.044895 |
|
|
Economy |
11:01 pm - 2:00 am 4:01 am - 5:00 am |
$ 0.050270 |
$0.046671 |
|
|
Normal |
8:01 am - 4:00 pm 7:01 pm - 11:00 pm |
$ 0.055120 |
$0.052527 |
|
|
Peak |
5:01 am - 8:00 am 4:01 pm - 7:00 pm |
$ 0.061710 |
$0.061350 |
|
Summer (Jun. - Sep.) |
Super Economy |
3:01 am - 5:00 am |
$ 0.039440 |
$0.038387 |
|
|
Economy |
11:01 pm - 3:00 am 5:01 am - 7:00 am |
$ 0.041440 |
$0.039905 |
|
|
Normal |
7:01 am - 12:00 pm 8:01pm - 11:00 pm |
$ 0.045910 |
$0.047026 |
|
|
Peak |
12:01 pm - 2:00 pm 6:01 pm - 8:00 pm |
$ 0.059100 |
$0.091961 |
|
|
Super Peak |
2:01 pm - 6:00 pm |
$ 0.119310 |
$0.096305 |
The net impact to most members will be an increase of approximately $4.25 per month for an average member that uses 1,250 kWhs per month. This will be a 2.7% net increase to the average member’s monthly bill.
Tariff amendment and effective date is shown below:
• Base Power Charge, Section 500.1.7 - Effective for all bills March 1, 2025.
Sustainable Power Credit
The Cooperative’s Rate Policy requires a Cost-of-Service Study to be conducted at regular intervals to guide rate design and as an input to the Rate Plan. The Rate Plan defines how the Cooperative anticipates recovering its costs from members for services provided during the upcoming year. The proposed 2025 Rate Plan references review of the Sustainable Power Credit - Interconnect Rate.
As a component of the Interconnect Rate, the Sustainable Power Credit is designed to pay solar members for their excess power at the market value of power plus any system benefit. The Sustainable Power Credit is updated annually to ensure that this credit compensates eligible Members for received energy, and closely aligns with the benefit to the Cooperative. After review, the recommendation is to adjust the Tariff and Business Rules (the “Tariff”) as to “Sustainable Power Credit” Section 500.1.12 by increasing the Sustainable Power Credit from: - $0.069554 to - $0.082666 per kWh.
Tariff amendment and effective date is shown below:
• Sustainable Power Credit, Section 500.1.12 - Effective for all bills March 1, 2025.
Service Availability Charge & Delivery Charge
The Tariff of the Cooperative currently includes the SAC and the Delivery Charge, which are fixed and variable recovery mechanisms respectively, that together recover the Cooperative’s costs associated with providing distribution services to the membership including, but not limited to, billing, metering, collections, customer service, maintenance and operations of distribution infrastructure, and other related costs.
The fixed cost of distribution infrastructure is recovered using a combination of fixed and variable charges. The SAC is a fixed monthly charge, and the Delivery Charge is variable based on kWh delivered. To ensure proper matching of expenses to cost recoveries fixed costs should be recovered through fixed charges like the SAC and variable costs should be recovered through volumetric based charges like the Delivery Charge, thereby reducing variable revenue and increasing fixed revenue. The recommendation is an increase in the SAC and a decrease in the Delivery Charge.
|
Charges: |
Current Amount: |
Proposed Amount: |
|
Service Availability Charge |
$ 22.50 |
$ 32.50 |
|
Delivery Charge |
$ 0.028405 |
$ 0.022546 |
Given the level of forecasted costs, a net increase in revenue is recommended to ensure adequate cost recovery. The net impact to most members will be an increase of approximately $2.68 per month for an average member that uses 1,250 kWhs per month. This proposal does not affect eBilling or eDraft credits of $1.00 and $1.50 per month, respectively.
Tariff amendment and effective date is shown below:
• Service Availability Charge, Section 500.2 - Effective for all bills March 1, 2025.
• Delivery Charge, Section 500.2 - Effective for all bills March 1, 2025.
Single & Three-Phase Rates
The Tariff of the Cooperative currently includes the SAC and the Delivery Charges for the Small Power rate class, which are fixed and variable recovery mechanisms that together recover the Cooperative’s costs associated with providing services to the membership including, but not limited to, billing, metering, collections, customer service, maintenance and operations of distribution infrastructure, and other related costs.
Among the existing Small Power rate class, approximately 24,000 members receive single-phase service and approximately 9,000 receive three-phase service. Significant differences exist in the usage patterns between single-phase and three-phase service, causing a divergence in the revenue requirement between these two member groups.
|
Current Small Power Charges: |
Amount: |
|
Service Availability Charge |
$ 37.50 |
|
Delivery Charge |
$ 0.021977 |
The proposed adjustments would address potential over/under recovery between these member groups and is expected to bring the Small Power rate class in line with its aggregate revenue requirement. In doing so, we expect an overall revenue impact in 2025 of approximately -0.4% of total revenues for the Cooperative.
|
Proposed Small Power Single-Phase Charges: |
Amount: |
|
Service Availability Charge |
$ 37.50 |
|
Delivery Charge |
$ 0.007849 |
|
Proposed Small Power Three-Phase Charges: |
Amount: |
|
Service Availability Charge |
$ 57.50 |
|
Delivery Charge |
$ 0.026506 |
The net impact to Small Power single-phase members will be a decrease of approximately $13.41 per month for an average member that uses 1,250 kWh per month.
The net impact to Small Power three-phase members will be an increase of approximately $39.82 per month for an average member that uses 2,500 kWh per month.
Tariff amendment and effective date is shown below:
• Service Availability Charge, Section 500.3 - Effective for all bills March 1, 2025.
• Delivery Charge, Section 500.3 - Effective for all bills March 1, 2025.
Lamp Charges
The Cooperative previously approved an amendment to the Tariff and Business Rules in March 2024 (2024-068) to add two (2) new lighting types, LED 1-S and LED 2-S to Section 500.1.16. The effective date scheduled for this change was originally June 1, 2024. In May 2024, the Cooperative by resolution (2024-153) extended the effective date for such changes until January 2025. The Cooperative wishes to consider rescinding implementation of such changes.
Body
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE that it approves the amendments to the Cooperative’s Tariff and Business Rules as attached hereto with such changes, if any, as were approved by the Board, to become effective upon Board approval, unless otherwise specified in the Tariff and Business Rules; and
BE IT FURTHER RESOLVED that the Cooperative approves the recission of the prior resolutions referenced herein with respect to the additions of lighting types to the Cooperative’s Tariff and Business Rules and that all actions taken prior to the date herein by the officers and duly authorized agents of the Cooperative in connection with such resolution, be ratified, confirmed, and approved; and
BE IT FURTHER RESOLVED that the Chief Executive Officer, or designee, is authorized to take all such actions as needed to implement this resolution.