Transcript Electric Rate cases

From an Intervener's Perspective
by
Matt White
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An intervener is a non-utility that participates
in a rate case to advocate its interest
Interveners can be
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Consumer advocates: Government agency that
protects residential customers’ interests
Large scale energy users
Environmental groups
Unregulated electric suppliers
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Environmental
Safety/Consumer Protection
Number one interest
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Interveners want to pay less for electricity
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Convince the Public Utilities Commission that
rates should be lower
Three ways to reduce electric rates
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Reduce the revenue requirement
Shift revenues to another customer class
Modify rate design within the class
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Revenue Requirement is the amount of money
utilities are allowed to collect from consumers
through electric rates
Utilities are entitled to recover all of the costs they
incur to serve customers (e.g. cost of fuel, labor)
Utilities are entitled to receive a rate of return on
all of their assets they use to serve customers
Add the value of all a utility’s assets (e.g. power plants,
electric lines)
 Utilities receive a certain percentage of the value of all
their assets annually
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Argue that a utility’s reported costs are too
high
Argue that a utility values its assets too high
Argue that a utility’s rate of return should be
lowered
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Reducing revenue requirements reduces rates
for all customers
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If revenue requirement is the size of the pie
utilities receive from customers
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Rate design and class allocation is the method
of determining the piece of the pie each
customer must pay
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Each electric customer is assigned to a class
Similar customers are assigned to the same classes
 Usually residential customers are in the same class,
industrial customers are in the same class, and
commercial customers are in the same class
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Each class is assigned a certain percentage of the
revenue requirement
Each class has a different electric rate design to
recover those revenues
Rates are higher or lower depending on the class
 Different charges depending on the class (e.g. fixed
monthly charges, per kWh charges, per kW charges)
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Argue that the other classes should pay more
of the revenue requirement and argue that
your class should pay less
This pits one intervener against the other
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The pie also must be divided up amongst each
customer in the class.
Rate design determines how much of the
revenue requirement each customer pays
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Customer’s are allocated their piece of the
revenue requirement through the charges they
receive on their electric bill
There are generally three types of charges
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Fixed monthly charge
Energy Charge (per kWh)
Demand Charge (per kW)
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Each customer pays a different percent of the
revenue requirement, depending on the type of
charge
Example: If in the residential class there is a
high fixed monthly charge, and a low energy
charge who wins and who loses?
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Customers with low electric usage lose because they
must pay the high fixed monthly charge no matter
what
Customers with high electric usage win because
there is a low cost to excess consumption
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Know your electric consumption pattern and
argue for the charges that cost you the least
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If you pay less because the rate design has been
changed in your class, other customers in your
class pay more
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Generally rate cases are a zero sum game
If the utility gets less, customers get more and
visa versa (revenue requirement)
If one customer class pays less revenues,
another class pays more
If one customer in a class is charged less,
another customer is charged more
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Those who do not show up to the table (i.e.
intervene in a rate case)
The other players will take your chips!!!