Transcript OPPD Unbilled Energy and Revenue Estimation

Estimating Unbilled Revenues
• Joni Davis, OPPD
• Mindy Willis, OUC
Learning Outcomes
• Understand reasons for accruing unbilled
revenues
• Understand two methodologies
Unbilled Revenues - Definition
• Revenues applicable to electric energy
consumed but not yet billed to the customer
Accounting Basis
• Revenue Recognition
• Matching Principle
• Asset Recognition
• Materiality
Advantages
• Fair presentation of assets, revenues and cents
per kWh
• Facilitates identification of billing issues and/or
metering issues
OPPD Unbilled Energy and
Revenue Estimation
Theory and Methodology
Disadvantages
• Difficult to estimate and validate as accurate
• Budgeting issues
Unbilled Energy - Definition
• Unbilled energy is an estimate of the portion of
net system requirements (NSR) consumed by
retail customers in the calendar month, but not
yet billed.
• Unbilled calculations reconcile billed data (on
meter read schedules) to net system
requirements (on a calendar schedule).
Meter Read Schedules
• Each month OPPD reads its meters in one of 20
cycles.
• Each cycle has roughly the same number of
meters.
• One cycle is read each workday.
• Energy is billed on the meter read date.
Meter Read Cycles
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Cycle 1: 12/31/2003 – 1/29/2004
Cycle 2: 1/02/2004 – 1/30/2004
Cycle 3: 1/05/2004 – 2/02/2004
Cycle 4: 1/06/2004 – 2/03/2004
Cycle 5: 1/07/2004 – 2/04/2004
Cycle 6: 1/08/2004 – 2/05/2004
Cycle 7: 1/09/2004 – 2/06/2004
Cycle 8: 1/12/2004 – 2/09/2004
Cycle 9: 1/13/2004 – 2/10/2004
Cycle 10: 1/14/2004 – 2/11/2004
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Cycle 11: 1/15/2004 – 2/12/2004
Cycle 12: 1/16/2004 – 2/13/2004
Cycle 13: 1/19/2004 – 2/17/2004
Cycle 14: 1/20/2004 – 2/18/2004
Cycle 15: 1/21/2004 – 2/19/2004
Cycle 16: 1/22/2004 – 2/20/2004
Cycle 17: 1/23/2004 – 2/23/2004
Cycle 18: 1/26/2004 – 2/24/2004
Cycle 19: 1/27/2004 – 2/25/2004
Cycle 20: 1/28/2004 – 2/26/2004
Note how each cycle contains days in January.
Note how cycles one and two contain no days in February
Note how no cycles contain the dates 2/27 – 2/29 (which are in February’s
NSR.
FEBRUARY UNBILLED EXAMPLE
20
Cycle
15
February Billed
10
5
January Unbilled
February Unbilled
12/31/2003
1/31/2004
Date
2/29/2004
Weather Patterns
Example: February - four-days of below zero temperatures
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Cycle 1: 12/31/2003 – 1/29/2004
Cycle 2: 1/02/2004 – 1/30/2004
Cycle 3: 1/05/2004 – 2/02/2004
Cycle 4: 1/06/2004 – 2/03/2004
Cycle 5: 1/07/2004 – 2/04/2004
Cycle 6: 1/08/2004 – 2/05/2004
Cycle 7: 1/09/2004 – 2/06/2004
Cycle 8: 1/12/2004 – 2/09/2004
Cycle 9: 1/13/2004 – 2/10/2004
Cycle 10: 1/14/2004 – 2/11/2004
Streak 1: 2/2 – 2/5:
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Cycle 11: 1/15/2004 – 2/12/2004
Cycle 12: 1/16/2004 – 2/13/2004
Cycle 13: 1/19/2004 – 2/17/2004
Cycle 14: 1/20/2004 – 2/18/2004
Cycle 15: 1/21/2004 – 2/19/2004
Cycle 16: 1/22/2004 – 2/20/2004
Cycle 17: 1/23/2004 – 2/23/2004
Cycle 18: 1/26/2004 – 2/24/2004
Cycle 19: 1/27/2004 – 2/25/2004
Cycle 20: 1/28/2004 – 2/26/2004
Most billed in February, very little unbilled
Streak 2: 2/11 – 2/14: About half in February’s billed and half in unbilled
Streak 3: 2/25 – 2/28: Virtually none billed in February, almost all unbilled
Unbilled Energy Calculation Step 1
• Group Monthly billed kWh by
– Rate Class (Residential, Commercial,
Industrial, Lighting)
– Meter Read Cycle
– There are 80 groups (4 classes x 20 cycles)
Unbilled Energy Calculation Step 2
• For Each Group (class and cycle)
– Determine system load or NSR for each day in
the cycle
20
Cycle
15
Cycle 10 – get NSR for
each day in the cycle
10
5
12/31/2003
1/31/2004
Date
2/29/2004
Unbilled Energy Calculation Step 3
• For Each Group (class and cycle)
– Estimate the percentage of NSR before and
after the first of the month
20
Cycle
15
10
5
60%
40%
12/31/2003
1/31/2004
Date
2/29/2004
Unbilled Energy Calculation Step 4
• For Each Group (class and cycle)
– Apply the percentages to the billed energy
Example: Cycle 10 for one customer class:
Total Billed Energy = 1,000 MWH
Estimated Billed Energy before beginning of month = 600 MWH (1,000
MWH * 60%)
Estimated Billed Energy after the start of the month = 400 MWH (1,000
MWH * 40%)
Unbilled Energy Calculation Step 5
• Sum all groups’ billed energy allocated before
the first of the month. This is the estimated billed
energy consumed in the previous month.
20
Cycle
15
10
5
February’s Billed
Energy allocated
to January’s NSR
12/31/2003
1/31/2004
Date
2/29/2004
Unbilled Energy Calculation Step 6
• Sum all groups’ billed energy allocated after the
first of the month. This is the estimated billed
energy consumed in the current month.
20
Cycle
15
10
5
February’s Billed
Energy allocated
to February’s NSR
12/31/2003
1/31/2004
Date
2/29/2004
Unbilled Energy Calculation Step 7
• Sum the daily system loads after the first of the
month. This is the current month’s NSR.
20
Cycle
15
February’s Net
System
Requirements
10
5
12/31/2003
1/31/2004
Date
2/29/2004
Unbilled Energy Calculation Step 8
• Reduce the NSR by an estimated percentage
for system losses.
Unbilled Energy Calculation Step 9
• Subtract the billed energy consumed in the
current month from the NSR less load losses.
This is unbilled energy.
20
Cycle
15
10
5
February’s Unbilled Energy =
February’s NSR less
February’s billed energy
allocated to February’s NSR
12/31/2003
1/31/2004
Date
2/29/2004
Unbilled Energy Example (GWH)
20
February Billed = 730
Cycle
15
10
Allocated to Jan = 443
Allocated to Feb = 287
Feb NSR (less loss) = 707
February Unbilled = 420
5
12/31/2003
1/31/2004
Date
2/29/2004
Unbilled Revenue Calculation Step 1
• Allocate total unbilled energy to each rate
class.
– Determine contribution by class based on the
ratio of billed energy consumed in the
previous month.
– Apply this ratio to the current month’s total
unbilled energy.
Unbilled Revenue Calculation Step 2
• For each rate class
– Calculate the $/MWH for all billed energy in
the current month.
• Adjust the $/MWH if needed for any rate
changes – including seasonal rate
changes (fractionalization).
Unbilled Revenue Calculation Step 3
• Apply the actual billed $/MWH to the allocated
unbilled energy by class.
Unbilled Revenue Calculation Step 4
• The sum of the revenue for all classes is the
asset “unbilled revenue.”
• The change in asset from the previous month is
the impact on earnings.
Summary Calculation
Unbilled Summary
Billed
System Load
Load Loss %
Loss
System Load w/Loss
Billed
Current
Current
Next
Unbilled Revenue
Class
Residential
Commercial
Industrial
Lighting
Retail Revenues
1,000,000
1,200,000
7.0%
84,000
1,116,000
System Load
Previous
Current
Current
Energy
200,000
200,000
199,000
1,000
600,000
MWH
600,000
400,000
716,000
Ratio
40.0%
30.0%
29.8%
0.2%
<==Unbilled
Rev-Meter
$30,000,000
$20,000,000
$10,000,000
$0
Rev-UM
$30,000
$200,000
$0
$1,000,000
Rev-Total
$30,030,000
$20,200,000
$10,000,000
$1,000,000
$/MWH
$74.00
$59.90
$35.50
$150.00
Allocated MWH
286,400
214,800
213,368
1,432
716,000
Allocated Revenue
$21,193,600
$12,866,520
$7,574,564
$214,800
$41,849,484
Questions