Transcript No Slide Title

Density/Cost Allocation Study
April 15, 2009
Michael Roger
Manager, Distribution Pricing
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OEB Direction
OEB Decision page 31
• Detailed analysis on the relationship between density and cost
allocation
• Whether the customer class demarcations offer the best reflection of
cost causation
• Consideration of alternative density weightings
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Current Density Definition
• Urban Density Zone is defined as areas containing 3,000 or more customers with a
line density of at least 60 customers per kilometre. (156,000 Residential customers)
• Medium Density Zone is defined as areas containing 100 or more customers with a
line density of at least 15 customers per kilometre. (365,000 Residential customers)
• Low Density Zone is defined as areas other than Urban or Medium Density Zone.
(358,000 Residential customers)
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Density Weighting Factors
• Used to allocate Overhead Lines and Transformer related costs
• Two Components:
– Customer Density weighting factors (allocation of fixed costs)
– Demand Density weighting factors (allocation of variable costs)
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Overhead Line Costs
• Customer density weights based on number of customer by class for
each feeder
• Demand density weights based on energy by customer class by feeder
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Example
Connectivity Data
Feeder
Km
Class 1
Class 2
Class 3
Total Class
1
10
5
20
10
35
2
20
10
10
20
40
3
30
15
5
20
40
4
40
20
5
10
35
50
40
60
150
A: Total Customers
Allocated km
Feeder
Km
Class 1 km
Class 2 km
Class 3 km
1
10
1.4
5.7
2.9
2
20
5.0
5.0
10.0
3
30
11.3
3.8
15.0
4
40
22.9
5.7
11.4
B: Total km 100
41
20
39
C=B/A
0.81
0.50
0.65
1.22*
0.76
0.98
60.8
30.3
58.9
D*
km/customer
Wts
E=DxA (Check)
Wted Cust
150
D*= Wts
0.81x150/[ 0.81 x 50 + 0.5 x 40 + 0.65 x 60]=1.22
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Density Weights Overhead Lines
Customer
For Fixed costs
UR
0.19
R1
0.66
R2
1.61
Seasonal
1.20
GSe
1.11
GSd
1.14
UGe
0.24
UGd
0.31
Dgen
1.00
ST
1.00
St Lgt
1.00
Sen Lgt
1.00
Demand
For Variable costs
0.18
0.64
1.42
1.60
1.15
1.18
0.18
0.30
1.00
1.00
1.00
1.00
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Transformer Costs
• Customer density weights based on NBV of transformation assets by
class for each feeder
• Demand density weights based on energy by customer class by feeder
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Density Weights Transformers
Customer
UR
R1
R2
Seasonal
GSe
GSd
UGe
UGd
Dgen
ST
St Lgt
Sen Lgt
For Fixed costs
0.77
0.93
1.23
0.87
1.00
1.05
1.03
0.76
1.00
1.00
1.00
1.00
Demand
For Variable costs
0.75
0.88
1.12
1.28
1.04
1.01
0.79
0.94
1.00
1.00
1.00
1.00
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Current Rate Issues
• In 2010 will still be in the middle of the 4 year Harmonization plan
• Continued Rate Pressure due to Smart Network and DG connections
• OEB Staff Paper on proposed Rate Design
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Question # 1
1.
Should “customer density” be a consideration in defining customer
classes?
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Question # 2
2.
What criteria are relevant for defining customer classes?
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Question # 3
3.
How should “density” be considered in allocating costs to the
various classes?
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