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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/15/2011 - PUBLIC HEARING AND FIRST READING OF ORDINANCE NO.DATE: November 15, 2011 STAFF: Brian Janonis Patty Bigner, Bill Switzer AGENDA ITEM SUMMARY FORT COLLINS CITY COUNCIL 31 SUBJECT Public Hearing and First Reading of Ordinance No. 166, 2011, Amending Chapter 26 of the City Code to Revise Electric Rates, Fees and Charges. (Option A or Option B) EXECUTIVE SUMMARY Staff has prepared two Residential Energy Rate Options for Council consideration. This electric rate is used to bill about 55,000 residential customers. Option A is a seasonal rate form, Option B is a three-tiered seasonal rate. Both options increase the residential energy rate by an average of 6% over the current 2011 rate, however, the increase varies by season and customer usage. Both options are proposed to be effective for billings with meter reading dates on or after February 1, 2012. In three City Council work sessions, staff presented electric rate design principles, four residential rate options, a change to the residential demand rate and a pilot Time of Use rate for electric vehicles. At the September 13 Work Session, City Council also discussed a change to the General Service (GS) or commercial rate proposed by staff that will result in two rate classes, a GS (up to 25 kW) and GS 25 (25 – 50 kW). With the exception of proposed changes to the residential electric rate structure, these changes were adopted by Council on Second Reading November 1, 2011, along with proposed rate increases. At the October 11, 2011 Work Session, Council further reviewed four residential electric rate options and answers provided by staff. Based on feedback from this work session, two rate ordinances have been drafted for Council consideration and public notification has been completed. BACKGROUND / DISCUSSION Approximately 55,020 residential customers comprise this rate class. These customers include single-family dwellings, individually metered apartments and home occupations. This rate class also includes a small group (220) of multi- family customers with a single meter. Seventeen of these customers occupy four-plex or larger units. As noted above, City Council has discussed options for changes to the electric rate structure at three previous work sessions. Previous presentations and discussions have included information about national trends related to utility rate structures, comparisons of City of Fort Collins rates compared to other utilities within Colorado and nationally, customer rate impacts on various levels of use, potential for impacts on low-income customers, expected customer response (price elasticity) and impacts on the distribution system. Based on City Council discussion, staff and consultants from SAIC have prepared background information on the two options. The current electric rate (single tier) has three components: (1) a fixed charge, the monthly charge that recovers the cost of metering, billing, collecting and providing customer service, and all other customer-related costs; (2) a distribution facilities charge that recovers the cost of distribution substations, poles, wires, conductors, and transformers required to deliver power to customers, applied on a $/Kilowatt Hour (kWH or unit of electricity) basis; and (3) an energy charge that recovers the cost of fuel, purchased power, and all other variable costs associated with the production of electricity. The energy charge includes both energy and demand components of purchase power. This energy charge currently does not vary based on the season or the amount of electricity used by the customer. Through the end of 2011, the fixed charge is $3.91/bill (month); the distribution/facilities charge is $0.0220 per kWh; and the energy charge is $0.0532 per kWh. Based on the current tier structure, the 6% rate increases adopted November 1, 2011 and effective January 1, 2012, these charges would be: fixed charge, $4.48/bill; distribution/facilities charge, $0.0252/kWh; and energy charge, $0.0540/kWH. These charges are shown for comparison only and are not among the proposed options. November 15, 2011 -2- ITEM 31 Option A, Seasonal Rate Option A, the Seasonal Rate structure, changes the current single tier or flat structure to a rate structure that results in a higher rate per kWH in the summer months of June, July and August. This structure mirrors the rate structure adopted by Platte River Power Authority (PRPA), the City’s wholesale electric provider, and passes through the price charged by PRPA to residential customers. If adopted, Option A will have a fixed charge of $4.48/bill; and a distribution/facilities charge of 0.0256/kWh. During the summer season billing months of June, July and August, the energy charge will be $0.0640/ kWh. During the non- summer season billing months of January through May and September through December, the energy charge will be $0.0506/kWH. As provided in the Ordinance(Option A), the meter reading date will generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rates. Option A, the Seasonal Rate, is consistent with the current practice of directly passing through PRPA costs to customers. Seasonal rates also are a simple time of use rate. A potential advantage of seasonal rates, in addition to recovering costs, may be a reduction in overall electricity demand during the summer months due to reduced use of air conditioning (in response to higher priced electricity during that period). A simple time of use rate may also serve as a step toward a more standard or traditional time of use rate that will be available by 2014, once the City’s Advanced Metering Infrastructure (AMI) program is completed and residential customers have an advanced meter. Data from AMI meters could then be used to determine an appropriate time-of-use residential rate. A disadvantage of the Seasonal Rate is that it is a more limited price signal during the non-summer months, resulting in a weak conservation signal to customers. Although it is not as complex as Option B, the Seasonal Rate is a shift from the current single tier rate structure and robust customer communication is planned for early 2012 with additional outreach prior to the summer months. Option A is planned to increase revenue from the Residential Energy Rate by 6%, which is consistent with the projected increased revenue requirement for this customer class. The average increase will be 16.8% in the three summer months and 2% in the non-summer months. Option B, Seasonal, Three-tier Rate Option B, the Seasonal Three-tier rate combines the rate recovery aspect of the Seasonal Rate with an inclining block or tiered rate structure. If adopted, Option B will have the same fixed charge of $4.48/bill; and distribution/facilities charge of 0.0256/kWh as Option A, the Seasonal Rate. The inclining blocks or tiers will differ in the summer months of June, July and August from the remaining months of the year. 1. During the summer season billing months of June, July and August, the energy charge per kWH will be tiered with the following charges: a. for the first 500 kilowatt hours per month, per kilowatt hour: $0.0531. b. for the next 500 kilowatt hours per month, per kilowatt hour: $0.0689. c. for all additional kilowatt hours per month, per kilowatt hour: $0.1005. As with the proposed Seasonal Rate, the meter reading date will generally determine the summer season billing months; however, no customer shall be billed more than three (3) full billing cycles at the summer rates. 2. During the non-summer season billing months of January through May and September through December, the energy charge per kWH will be tiered with the following charges: a. For the first 500 kilowatt hours per month, per kilowatt hour: $0.0482. b. For the next 500 kilowatt hours per month, per kilowatt hour: $0.0520. c. For all additional kilowatt hours per month, per kilowatt hour: $0.0603. Option B, the Seasonal Three-tiered rate, retains the cost recovery benefits of the Seasonal rate, passing through costs from PRPA to the customer. It also sends a strong signal to large users of electricity to incentivize conservation, and with the seasonal component, serve as a step toward further implementation of a time-of-use rate, once the City’s AMI project has been completed. The rate is more complex and significantly different from the current single tier rate structure. As a result, communication to all customers will be important throughout the year, with emphasis on the summer months. November 15, 2011 -3- ITEM 31 Option B also is planned to increase revenue from the Residential Energy Rate by 6%, similar to Option A above. The average increase will be 16.8% in the three summer months and 2% in the nine non-summer months. With this option, customer that use more than 700kWh monthly will see larger percentage increases than most customers who use less than average. Future Time-of-Use Rates With the implementation of the Advanced Meter Fort Collins project underway, the amount of information available from the new meters will improve the ability of the City’s electric customers to understand when and how much electricity is being used in significantly greater detail, opening the door for a more efficient pricing signal. Installation of the advanced water and electric meters is expected to be completed by mid-2013. Once completed and supporting time- of-day data has been gathered and analyzed, progression to time-of-day pricing (with or without tiers) can be implemented utilizing the new information. As discussed at the October 13 Work Session, staff is planning to develop and recommend a pilot time-of-use rate specifically targeted to plug-in electric vehicle owners in 2012. Conclusion As discussed in previous meetings, the City’s utility rates are designed to generate the revenue needed for operations, capital requirements, and the purchase of electricity from PRPA. As a municipal utility, rates are not designed to recover revenue above current requirements. This is sometimes referred to as a zero-sum strategy. Regardless of the structure of the rate, the utility does not design a rate to generate a profit. The proposed rate changes are designed to assist in achieving City Council goals and support customer choice in behavior related to their use of energy . These changes remain true to the City’s long-held values of fairness, equitability and financial responsibility. As mentioned above, staff anticipates the need for a robust communications to support the implementation of the new residential rate forms, beyond the annual rate increase communication. Final planning will be developed once the rate option is chosen. FINANCIAL / ECONOMIC IMPACTS Both options are designed to increase revenues from the Residential Energy Rate by 6%. When combined with the Residential Demand and commercial rate increases approved by Council on November 1, 2011 total Light and Power operating revenues are planned to increase 8.3%. Residential Energy customers will experience an average increase of 6%, however, the impact of Option B will be much higher for larger users and will be higher in the three summer months. The Utilities provides many programs to assist our customers to reduce their energy usage and thereby reduce their monthly electric bill. Proposed changes to the Residential Energy Rate are designed to be revenue neutral. Since the change to rate structure is likely to have a customer response, over or under collection of revenue will be evaluated each year and incorporated into any needed rate changes on an annual basis. The option adopted by City Council will determine individual customer impacts. Because there is a new Seasonal component to the rate structure, financial impacts on customers will be greatest in the three summer months. If the Seasonal Three-tier rate is adopted, financial impacts will be greatest on large electricity users, especially in the summer months. In some cases, customers generally use less electricity and do not have air conditioned homes or use their air conditioner in the summer. This group of low users may experience minimal impact to their monthly bills from a changed rate structure. Customers may choose to conserve electricity by changing their use of electricity (adjusting the thermostat up or down, turning off lights, etc) or by implementing efficiency measures such as insulation, high efficiency appliances. The City offers a variety of conservation and efficiency programs to help customers reduce their electricity use and may help lower bills. Financial impacts on low income customers are also a consideration. Existing programs that assist this group of customers will be expanded in 2012, including an expanded efficiency financing program. November 15, 2011 -4- ITEM 31 ENVIRONMENTAL IMPACTS Overall reduction in electricity use, whether from conservation of energy efficiency measures result in reduced Greenhouse Gas (GHG) emissions from fossil fuel generation. As noted previously, tiered rate structures are used designed to help lower overall electricity use, especially among large users. A seasonal rate may result in less electricity use in the summer months, but does not provide a strong conservation message during the rest of the year. Customer response to the new rate structure will determine the impact of reducing electricity use and overall environmental impacts from generation. STAFF RECOMMENDATION Staff recommends adoption of Option B of the Ordinance on First Reading. BOARD / COMMISSION RECOMMENDATION The City’s Electric Board provided a letter outlining their conclusions related to electric rate options (Attachment 5). PUBLIC OUTREACH Staff has completed required public notification. Public Outreach includes a Coloradoan notice to out-of-city electric customers, published on Sunday, October 30, 2011. Postcard notification to out-of-city electric customers was mailed the week of October 30, 2011. Typically, more information about rate increases is included in the Utilities end of year letter to customers. Since the letter will be published prior to adoption of the residential energy rate ordinance, customer communication to residential customers will be delayed to the end of the year. Communication will continue throughout 2012 as needed. ATTACHMENTS 1. May 10, 2011 Work Session Summary 2. September 13, 2011 Work Session Summary 3. October 11, 2011 Work Session Summary 4. Electric Board Memo on Electric Rate Options 5. Powerpoint presentation Utilities electric · stormwater · wastewater · water 700 Wood Street PO Box 580 Fort Collins, CO 80522 970.221.6700 970.221.6619 – fax 970.224.6003 – TDD utilities@fcgov.com fcgov.com/utilities Memorandum Date: May 13, 2011 To: City Council Thru: Darin Atteberry, City Manager Brian Janonis, Utilities Executive Director From: Patty Bigner, Utilities Customer and Employee Relations Manager Re Work Session Summary – May 10, 2011 re: Rate Design Philosophy All City Council members were present except Aislinn Kottwitz. Utilities Executive Director Brian Janonis provided introductions and background on the need for financial strategy and the development of the Financial Strategy and Rate Design Philosophy. Staff answering questions included Steve Catanach and Patty Bigner. SAIC Consultant Joe Mancinelli provided a brief presentation on industry trends, emerging technology and its impact on rate design. In addition, SAIC consultant Scott Burnham previously taped a more comprehensive presentation on the details of the philosophy. City Council generally supported the approach proposed by staff and offered some suggested edits to the document. Council wanted to see how the principles and objectives would be applied to rate forms before considering adoption of the Rate Design Philosophy. Other requests for follow-up include: 1. Maps that show boundaries for the four City utilities (this item needs to be compiled - follow- up in separate memo) 2. Comparison of Fort Collins rates to the rest of the state and country to provide context (this item needs to be compiled - follow-up in separate memo) 3. Application of the rate design philosophy to current rate structures (same as number 1 & 2 – follow-up in separate memo) 4. Describe staff’s vision of what the electric utility of the future might look like (this item will be covered at the Advanced Meter Infrastructure City Council Work Session on June14, 2011.) ATTACHMENT 1 Utilities City of electric. stormwater. wastewater water 700 Wood Street Fort CoLLins 970 224 6003 TDD utilities @fcgov.com fcgov.com/utilities Memorandum Date: September 15, 2011 To: City Councilmembers Thru: Darin Atteberry, City Manager Brian Janonis, Utilities Executive Director From: Patty Bigner, Utilities Customer and Employee Relations Manager Re Work Session Summary (Partial) — September 13, 2011 Electric Rate Options All City Councilmembers were present. Utilities Executive Director Brian Janonis provided introductions and noted that the consideration of a change to the electric rate form is unprecedented in the history of the Light and Power Utility. Presentations were provided by Patty Bigner and SAIC consLiltant Joe Mancinelli. Staff answering questions included Bill Switzer, Steve Catanachm and Patty Bigner. SAIC consultant Joe Mancinelli provided a brief presentation on industry trends and response to those trends by utilities across the country, with specific information on electric rates, customer assistance, time of use rates, and special programs for electric vehicles. The residential energy rate options proposed for Council discussion included: • Single Tier (current rate structure) • Seasonal (Platte River Power Authority IPRPA] pass-through) • Three Tier • Five Tier Staff also proposed phasing out the Residential Demand Rate and suggested limiting the rate to residential customers who could provide documentation of total electric residence (no natural gas). One change to the rate form is proposed for the commercial rate classes. As noted in the Agenda Item Summary, the proposed change to the General Service (GS) or commercial rate class would more accurately reflect electric use of this diverse group of customers. This change would create a fourth commercial rate class to include the lower end of the mid-sized commercial customers by splitting the GS customer class into two customer classes, GS and GS 25. ATTACHMENT 2 Fort City of CoLLins Examples of customers in the proposed GS customer class include housing services for condos and apartments (lights, laundry, etc.); small retail; professional offices; non-profit agencies: and small churches. The proposed GS 25 customer class includes fast loud restaurants, medium- sized churches, restaurants, larger retail, fraternity and sorority houses, convenience stores, copy centers and banks. The remaining large commercial industrial rates will remain in the coincident peak form hut with a seasonal adjustment. Questions for City Council included: Residential Rate Options I. Of the four proposed rate options for the residential energy rate, which specific option is preferred’? 2. Does City Council support the proposed change to the residential demand rate’? Commercial Rate Options 1. Does City Council support the proposed change that would create an additional rate class from the existing General Service rate class? Questions from Councilmembers primarily focused on aspects of the residential energy rate, its merits in addressing carbon reduction and energy efficiency goals, and its impacts on customers as well as the perceived value or lack of value to the system (generation, transmission and distribution). Other questions focused on the impacts to customers related to size of households and square footage of homes, number and type of appliances, and electricity use associated with lifestyle (home office or other differences). City Council requested additional information: 1. Assumptions related to elasticity (in plain English) — what kind of impact can he expected’? What is the corresponding carbon reduction’? 2. Are the options designed to he revenue neutral? If demand and energy are reduced, the purchase power requirements will also be reduced lowering overall revenue requirements. 3. Provide more context on system impacts. How might the tiered rates affect shifts in demand which may have a negative impact on the overall load’? 4. Provide more data on the monthly variation in bill impacts, including the typical variation in monthly use. 5. Provide sample (8 to 10) scenarios of year-round use and the price impacts of the options. Examples: Large users with no air conditioning (AC), large users with AC, small users with AC, small users without AC, etc. Changes to the Residential Demand Rate and the Commercial General Service Rate were discussed and generally seemed acceptable. Councilmembers had a number of unresolved questions regarding the Residential Energy Rate and requested a follow-up Work Session, now scheduled for Oct. II, 2011. Councilmembers recognized that the schedule for implementation City of Fort Collins of the rate, if it is changed, will be delayed beyond January 1,2012. Typically, rate changes occur with the first meter reading of the new year. Staff plans to move forward with rate changes with the exception of the Residential Energy Rate. Rate ordinances for the Residential Demand, GS, GS 25, GS 50 and GS 750 rate classes will be discussed Memorandum Date: October 14, 2011 To: City Councilmembers Thru: Darin Atteberry, City Manager Brian Janonis, Utilities Executive Director From: Patty Bigner, Utilities Customer and Employee Relations Manager Re: Work Session— October 11, 2011 Electric Rate Options, Energy Efficiency and Conservation All City Councilmembers were present. Utilities Executive Director Brian Janonis provided introductions and a short presentation on the background of the Electric Residential Energy Rate Options being discussed by City Council and an overview of the responses to questions from Councilmembers at the September 13, 2011 Work Session. Energy Services Manager John Phelan provided an overview of the history, programs and results of the City’s Energy Efficiency and Conservation programs, including Water Conservation. Staff answering questions included Brian Janonis, John Phelan, Patty Bigner and SAIC consultant Joe Mancinelli. The residential energy rate options proposed for Council discussion included: • Single Tier (current rate structure) • Seasonal (Platte River Power Authority [PRPA] pass-through) • Three-Tier • Five-Tier Questions for City Council included: 1. Has sufficient information been provided to support City Council’s decision to adopt a residential energy rate ordinance with one of the four options? 2. Which of the four options proposed for consideration does City Council prefer for implementation? Councilmembers requested that two residential energy rate ordinances be prepared for consideration at the November 15, 2011, one for the seasonal electric rate option and a second for the seasonal 3-tier electric rate. If adopted by Council, the new residential energy rate will be effective February 1, 2012. No further questions were asked of staff. ATTACHMENT 3 Next Steps At the September 13, 2011, staff also proposed phasing out the Residential Demand Rate and suggested limiting the rate toresidential customers who could provide documentation of total electric residence (no naturalgas). An additional commercial rate class is recommended. This change to the General Service (GS) or small commercial rate class wouldmore accurately reflect electric use of this diverse group of small business customers. This change would create afourth commercial rate class to include the lower end of the mid-sized commercial customers bysplitting the GS customer class into two customer classes, GS (energy only) and GS 25 (energy-demand). A seasonal rate structure is recommended for all rate classes. Electric rates would increase 8.3% on average. These changes (exclusive of the Residential Energy rate options) will be considered by City Council at the October 18, 2011 regular meeting. 1. Staff plans to move forward with the above rate changes with the exception of the Residential Energy Rate. Rate ordinances for the Residential Demand, GS, GS 25, GS 50 and GS 750 rate classes and proposed changes to water and wastewater rates will be discussed at the City Council Finance Committee on October 17, 2011. 2. Public notification for the rate ordinances above began October 1, 2011 per Public Utility (PUC) requirements. 3. These ordinances will be considered by City Council at first reading October 18, 2011. Second reading is scheduled for November 1, 2011. (without changes to the Residential Energy Rate) 4. Public notification for consideration of the Residential Energy Rate options begins November 1, 2011 per PUC requirements. 5. City Council considers two options for Residential Energy Rate on November 15 and December 6, 2011. 6. 2012 rates become effective January 1, 2012 for all rates other than the Residential Energy Rate. 7. Residential Energy Rate will be effective February 1, 2012. Utilities —Electric Board City of 700 Wood St. Fort CoLLins P0 Fort Box Collins, 580 CO 80522 974i6208 fax MEMORANDUM DATE: August 8, 2011 TO: Mayor Weitkunat and Councilmembers FROM: Steve Wolley, Chairperson on behalf of the Fort Collins Electric Board SUBJECT: Proposed Electric Utility Rate Structures EC: Darin Atteberry, City Manager Brian Janonis, Utilities Executive Director Patty Bigner, Customer and Employee Relations Manager Steve Catanach, Light and Power Operations Manager Electric Board At the August 3 Electric Board meeting, Utilities staff and representatives from their consulting team, SAIC (an R.W. Beck company) met with the Electric Board for more than three hours to review findings related to proposed electric service rate structures for commercial and residential customers. Board members engaged Utilities staff in a deep and broad-ranging discussion, testing whether the analyses and conclusions presented to the Board: 1) Met the original intent of the study; 2) Covered all known risks and impacts; and 3) Would result in a rate structure that favorably drives the City’s Energy Policy and financial requirements. In the end, the Electric Board found the findings to be complete and the Utilities leadership has prepared well for the challenges it will face over the course of the next several years, starting in 2012 and continuing past the rollout of Automated Metering Infrastructure (AMI) in mid-to-late 2013. The Electric Board commends the Utilities leadership and SAIC teams on the thoroughness and the quality of the study. The Electric Board makes the following additional observations and recommendations: 1. The data and analyses are complex. Decision-makers should set aside ample time to review the rate structure analysis. Utilities leadership and their consultants have a very thorough understanding of several rate structures and their impacts on both the Utility’s economic viability and impact to the broad spectrum of their customers. Rate structure data was presented in several tables and graphs. ATTACHMENT 4 Ft0oLLins It may take multiple hours for decision-makers to review and comprehend the analysis. 2. Decision makers should evaluate the impact of rate structure options on related City goals. The Electric Board also viewed information regarding how each rate type will perform against stated City values and goals. The Electric Board recommends that decision-makers use this information when discussing rate structLlres. 3. The new AMI infrastructure will be a valuable tool for shaping second or third- generation rate changes, especially rate structures that employ a Time-of-Use (TOU) model. AMI will provide extensive insight into Fort Collins’ customer usage patterns and demand elasticity, enabling an entire new level of understanding of grid and customer behavior. When the data becomes available, thoughtful analysis of this new data set will provide invaluable insight into the effectiveness of second or third-generation rate structures. The Electric Board believes that future TOU rate strLlctures should be shaped by analysis of this data when it becomes available. 4. Exercise considerable caution when finalizing the planned rollout of the phased rate changes. Utilities staff and SAIC understand the potential unfavorable impact of implementing sequential i-ate changes over a period of years. To manage this risk and impact, Utilities plans call for applying the concept of “gradualism”. The Electric Board fully supports the use of gradualism. It is worth noting that board members are united in their concern that successive and complex i-ate changes may still generate elevated and counterproductive levels of concern in the community. Evidence from the industry provides examples of rate structure changes that have met their goals and others that have been received badly by customers. Fort Collins Light and Power is well positioned to move ahead. Should you have any questions regarding this topic, please feel free to contact us for further clarification. 1 1 RESIDENTIAL ELECTRIC RATE OPTIONS CITY COUNCIL MEETING November 15, 2011 2 Development of Electric Rate Options • Staff drafted Financial Strategy and Rate Design Principles to serve as foundation for future rate design – May 10, 2011 Work Session • Electric Rate Alternatives discussed with Electric Board and City Council Finance Committee • September 13th Work Session on four electric rate options; change to residential electric demand rate; change to current commercial (General Service) rate • October 11th Work Session to provide additional background and answer questions on residential electric rate options; presentation on conservation and efficiency ATTACHMENT 5 2 3 Development of Electric Rate Options • Outcome of October 11, 2011 Work Session: Prepare two ordinances for City Council consideration – Option A – Seasonal Rate – Option B – Seasonal Three–Tiered rate 4 Rationale for changes to Existing Rate Structure • Align Rates with Policy • Energy Policy • Climate Action Plan • Reduce Consumption • Energy Efficiency and Conservation • Avoid Future Capital Costs • Pass through Platte River Power Authority Seasonal Rate in 2012 • Meet increased revenue requirements • Allocate costs equitably • Options are revenue neutral – not designed to generate excess revenue 3 5 Proposed Electric Rate Alternatives • Two Options – Option A, Seasonal Rate (PRPA Pass Through) – Option B, Seasonal Three-Tier Rate • Rate structure options incorporate rate increases adopted November 1, 2011 • New Residential Rate Option effective February 1, 2012 6 Option A, Seasonal Rate • Charge per Kilowatt Hour (kWh) higher in summer months of June, July, August • Passes through seasonal charge from Platte River Power Authority • Generates needed revenue to meet Utilities costs • Simple time of use rate • Weaker conservation message during the winter months 4 7 Option A, Seasonal Rate 23,877 46,131 67,267 76,559 74,925 68,003 58,309 47,721 37,865 29,993 42,169 26,392 9,253 7,293 10,533 6,936 6,301 3,549 2,454 3,469 ‐ 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 ‐10% 0% 10% 20% 30% 40% 50% 60% 70% 80% Annual Number of Bills Percentage Change from Current Bill Monthly Energy Per Bill (kWh) Number of Bills Current Rate Summer % Change Non Summer % Change Annual % Change 8 Option B, Seasonal Three-Tier Rate • Energy Charge per kilowatt hour (kWh) increases in three blocks of energy use – 0 – 500 kWh – 501 – 1000 kWh – Above 1000 kWh • Charge per kWh higher in summer months of June, July, August • Average use in non-summer months is 656 kWh • Average use in summer months is 710 kWh 5 9 Option B, Three-Tier Rate 23,877 46,131 67,267 76,559 74,925 68,003 58,309 47,721 37,865 29,993 42,169 26,392 9,253 7,293 10,533 6,936 6,301 3,549 2,454 3,469 ‐ 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 ‐10% 0% 10% 20% 30% 40% 50% 60% 70% 80% Annual Number of Bills Percentage Change from Current Bill Monthly Energy Per Bill (kWh) Number of Bills Current Rate Summer % Change Non Summer % Change Annual % Change 10 Option B, Seasonal Three-Tier Rate • Passes through seasonal charge from Platte River Power Authority • Generates needed revenue to meet Utilities costs • Incorporates a simple time-of-use rate (seasonal) • Provides a strong conservation message to large users of electricity, increased in the summer months 6 11 Comparison of the Two Rate Options Option A Option B Seasonal Three-Tier Rate Rate Fixed Charge ($/Bill) $4.48 $4.48 Distribution Facilities Charge ($/kWh) $0.0256 $0.0256 Total Energy Charge (energy and demand) Summer* ($/kWh) – June, July & Aug Tier 1 [1-500 kWh] $0.0640 $0.0531 Tier 2 [501-1000 kWh] $0.0689 Tier 3 [1001kWh and higher] $0.1005 Non-Summer ($/kWh) Tier 1 [1-500 kWh] $0.0506 $0.0482 Tier 2 [501-1000 kWh] $0.0520 Tier 3 [1001kWh and higher] $0.0603 12 Comparison of the Two Rate Options – Selected Customers Selected House Square Feet # of Occupants A/C Annual Average (kWh) Highest Winter Usage (kWh) Highest Summer Usage (kWh) A 4,242 2 Yes 633 851 726 B 3,306 4 Yes 1,692 3,026 1,762 C 3,000 3 Yes 928 1,075 1,485 D 2,980 7 No 641 915 594 E 2,850 2 Yes 567 876 650 F 2,700 4 Yes 654 566 1,112 G 2,621 2 Yes 482 615 644 H 2,600 2 Yes 803 1,057 1,137 I 2,500 4 Yes 362 508 406 J 2,275 2 No 507 524 625 K 2,000 2 No 606 1,391 474 7 13 Comparison of the Two Rate Options – Selected Customers 2011 Option A - Seasonal Option B - 3-Tier Selected House Average Monthly Bill % Difference Monthly Increase % Difference Monthly Increase A $ 51.17 5.88% $ 3.01 1.92% $ 0.98 B $ 126.41 5.29% $ 6.69 11.98% $ 15.14 C $ 85.00 5.51% $ 4.68 6.79% $ 5.77 D $ 50.67 5.09% $ 2.58 1.05% $ 0.53 E $ 45.58 6.13% $ 2.79 1.51% $ 0.69 F $ 51.67 7.83% $ 4.05 4.86% $ 2.51 G $ 44.25 5.63% $ 2.49 0.97% $ 0.43 H $ 70.58 5.72% $ 4.04 4.46% $ 3.15 I $ 30.83 6.22% $ 1.92 0.79% $ 0.24 J $ 42.25 6.22% $ 2.63 1.01% $ 0.43 K $ 47.83 4.78% $ 2.29 1.28% $ 0.61 14 Thank you. OPTION A SEASONAL RATE ORDINANCE NO. 166, 2011 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING CHAPTER 26 OF THE CODE OF THE CITY OF FORT COLLINS TO REVISE ELECTRIC RATES, FEES AND CHARGES WHEREAS, the City Council is empowered and directed by Article XII, Section 6, of the City Charter to fix, establish, maintain and provide for the collection of such rates, fees or charges for utility services furnished by the City as will produce revenues sufficient to pay the costs, expenses and other obligations of the electric utility, as set forth therein; and WHEREAS, Platte River Power Authority costs are increasing due to reduced surplus sales, increased operating costs for aging plants and environmental mitigation, increased natural gas expenses for peaking plants, increased financing costs, and continuing capital investment; and WHEREAS, Platte River Power Authority will increase the City’s wholesale cost of power approximately 6.4% in 2012; and WHEREAS, the revenues in the Light and Power Fund have not been sufficient to fund capital projects and system replacements and reserves have been utilized to make up for the shortfall; and WHEREAS, the reduction in reserves was accelerated due to reductions in interest revenue and development fee revenue; and WHEREAS, without additional rate increases, reserves are projected to fall below minimum policy levels as early as 2013; and WHEREAS, a 6% rate increase to the residential energy service rate will adequately fund additional purchase power and the necessary capital improvements and system replacements and stem the decline in reserves; and WHEREAS, City Council desires to enact rate structures to encourage additional energy conservation measures in order to meet Energy Policy and Climate Action Plan goals; and WHEREAS, the proposed rate structure will change the current flat rate structure into a seasonal rate structure that results in a higher rate per kilowatt hour in the summer months; and WHEREAS, the proposed increases are to be effective on all billings issued with meter readings on or after February 1, 2012; and WHEREAS, based on the foregoing, it is the desire of the City Council to amend Chapter 26 of the City Code to revise the residential energy rate. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That Sections 26-464(c), (j) and (o) of the Code of the City of Fort Collins are hereby amended to read as follows: Sec. 26-464. Residential energy service, schedule R. . . . (c) Monthly rate. The monthly rates for this schedule are as follows: (1) Ffixed charge, per account: Three dollars and ninety-one four dollars and forty-eight cents ($3.914.48). (2) Demand charge, per kilowatt-hour: Two and eighty-four one- hundredths cents ($0.0284). (32)Ddistribution facilities charge, per kilowatt-hour: Two two and twenty one-fifty-six hundredths cents ($0.02200.0256). (43)Eenergy and demand charge, per kilowatt-hour: during the summer season billing months of June, July and August, with the summer season billing month determined by the month the meter is read, and provided that no customer shall be billed more than three (3) full billing cycles as summer season billing. The energy and demand charge shall be: Two and forty-eight one-hundredths cents ($0.0248). six and forty one-hundreds cents ($0.0640) per kilowatt hour. (4) energy and demand charge, during the non-summer season billing months of January through May and September through December: five and six one-hundredths cents ($0.0506) per kilowatt hour. (5) Iin lieu of taxes and franchise: a charge at the rate of six and zero-tenths (6.0) percent of all monthly service charges billed pursuant to this Section. . . . (j) Parallel generation. Operation or connection of any electric generator in parallel with the utility system is not permitted under this schedule unless authorized by the General Manager. See appropriate alternate schedules for this service. The credit for the energy delivered to the electric utility under this provision shall be provided at applicable Platte River Power Authority avoided cost rates. If a customer is receiving -2- net metering service, such customer's service shall also be governed by the net metering service terms and conditions described in Subsection (o) below. . . . (o) Net metering. . . . (5) The customer-generator's consumption of energy from the utility shall be measured on a monthly basis and, in the event that the qualifying facility has produced more electricity than the customer-generator has consumed, the customer-generator shall receive a monthly credit for such production. During the second calendar quarter of each year, the customer-generator shall receive payment for the net excess generation accrued for the preceding twelve (12) months. The credit per kilowatt hour for the energy delivered to the electric utility under this provision shall be provided at the summer season energy charge as specified in Subsection (c). Section 2. That the amendments to Chapter 26 of the City Code contained herein shall go into effect for all bills issued based on meter readings on or after February 1, 2012. Introduced, considered favorably on first reading, and ordered published this 15th day of November, A.D. 2011, and to be presented for final passage on the 6th day of December, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk Passed and adopted on final reading on the 6th day of December, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk -3- OPTION B TIERED RATE ORDINANCE NO. 166, 2011 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING CHAPTER 26 OF THE CODE OF THE CITY OF FORT COLLINS TO REVISE ELECTRIC RATES, FEES AND CHARGES WHEREAS, the City Council is empowered and directed by Article XII, Section 6, of the City Charter to fix, establish, maintain and provide for the collection of such rates, fees or charges for utility services furnished by the City as will produce revenues sufficient to pay the costs, expenses and other obligations of the electric utility, as set forth therein; and WHEREAS, Platte River Power Authority costs are increasing due to reduced surplus sales, increased operating costs for aging plants and environmental mitigation, increased natural gas expenses for peaking plants, increased financing costs, and continuing capital investment; and WHEREAS, Platte River Power Authority will increase the City’s wholesale cost of power approximately 6.4% in 2012; and WHEREAS, the revenues in the Light and Power Fund have not been sufficient to fund capital projects and system replacements and reserves have been utilized to make up for the shortfall; and WHEREAS, the reduction in reserves was accelerated due to reductions in interest revenue and development fee revenue; and WHEREAS, without additional rate increases, reserves are projected to fall below minimum policy levels as early as 2013; and WHEREAS, a 6% rate increase to the residential energy service rate will adequately fund additional purchase power and the necessary capital improvements and system replacements and stem the decline in reserves; and WHEREAS, City Council desires to enact rate structures to encourage additional energy conservation measures in order to meet Energy Policy and Climate Action Plan goals; and WHEREAS, the proposed rate structure will change the current flat rate structure into a seasonal, three-tier rate structure that results in a higher rate per kilowatt hour in the summer months combined with a tiered rate structure; and WHEREAS, the proposed increases are to be effective on all billings issued with meter readings on or after February 1, 2012; and WHEREAS, based on the foregoing, it is the desire of the City Council to amend Chapter 26 of the City Code to revise the residential energy rate. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That Sections 26-464(c), (j) and (o) of the Code of the City of Fort Collins are hereby amended to read as follows: Sec. 26-464. Residential energy service, schedule R. . . . (c) Monthly rate. The monthly rates for this schedule are as follows: (1) Ffixed charge, per account: Three dollars and ninety-one four dollars and forty-eight cents ($3.914.48). (2) Demand charge, per kilowatt-hour: Two and eighty-four one- hundredths cents ($0.0284). (32)Ddistribution facilities charge, per kilowatt-hour: Two two and twenty one-fifty-six hundredths cents ($0.02200.0256). (43)Eenergy and demand charge, per kilowatt-hour: during the summer season billing months of June, July and August, with the summer season billing month determined by the month the meter is read, and provided that no customer shall be billed more than three (3) full billing cycles at the summer rate. The energy and demand charge shall be billed as follows:Two and forty-eight one-hundredths cents ($0.0248). a. for the first 500 kilowatt hours per month, per kilowatt hour: five and thirty-one one-hundredths cents ($0.0531). b. for the next 500 kilowatt hours per month, per kilowatt hour: six and eighty-nine one-hundredths cents ($0.0689). c. for all additional kilowatt hours per month, per kilowatt hour: ten and five one-hundredths cents ($0.1005). (4) energy and demand charge, during the non-summer season billing months of January through May and September through December: a. for the first 500 kilowatt hours per month, per kilowatt hour: four and eighty-two one-hundredths cents ($0.0482). -2- b. for the next 500 kilowatt hours per month, per kilowatt hour: five and twenty one-hundredths cents ($0.0520). c. for all additional kilowatt hours per month, per kilowatt hour: six and three one-hundredths cents ($0.0603). (5) Iin lieu of taxes and franchise: a charge at the rate of six and zero- tenths (6.0) percent of all monthly service charges billed pursuant to this Section. . . . (j) Parallel generation. Operation or connection of any electric generator in parallel with the utility system is not permitted under this schedule unless authorized by the General Manager. See appropriate alternate schedules for this service. The credit for the energy delivered to the electric utility under this provision shall be provided at applicable Platte River Power Authority avoided cost rates. If a customer is receiving net metering service, such customer's service shall also be governed by the net metering service terms and conditions described in Subsection (o) below. . . . (o) Net metering. . . . (5) The customer-generator's consumption of energy from the utility shall be measured on a monthly basis and, in the event that the qualifying facility has produced more electricity than the customer- generator has consumed, the customer-generator shall receive a monthly credit for such production. During the second calendar quarter of each year, the customer-generator shall receive payment for the net excess generation accrued for the preceding twelve (12) months. The credit per kilowatt hour for the energy delivered to the electric utility under this provision shall be provided at the summer season energy charge charge as specified in Subsection (c). Section 2. That the amendments to Chapter 26 of the City Code contained herein shall go into effect for all bills issued based on meter readings on or after February 1, 2012. -3- Introduced, considered favorably on first reading, and ordered published this 15th day of November, A.D. 2011, and to be presented for final passage on the 6th day of December, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk Passed and adopted on final reading on the 6th day of December, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk -4- at the City Council Finance Committee on Sept. 26, 2011. Public notification will begin October 2 and Electric Rate Ordinances will be considered by City Council at first reading Oct. 18, 2011. Second reading is Nov. 1, 2011. Next Steps September 26 - Council Finance Committee related to all utilities rates and fees October 11 - Work session on Residential Energy Rate October 18 - I ‘ reading of Electric Rates (without changes to Residential Energy Rate); also I ‘ reading of ordinances for water and wastewater rates and PIFs/development fees October 25 - Work session on Energy Conservation Programs November 1 - 2’ reading of Rates and Fees Jan. 1, 2012 - all rates effective except for Residential Energy Rate Late 2011 or early 2012 - I SI reading of ordinance changing Residential Energy Rate to be effective shortly thereafter.