Staff Report Item 6
Staff Report Item 6:
Recommendation
To: Ava Community Energy Authority
From: Kelly Brezovec, Sr. Director, Account Services
Subject:
Seeking feedback from the Finance, Administration and Procurement Subcommittee on fiscal year 2023-2024 surplus revenue customer bill credits.
Date: November 13, 2024
__________________________________________________________________ Summary/Recommendation
Staff seeks feedback on proposed Fiscal Year 2023-2024 surplus revenue bill credit options based on the January 2024 Fiscal Year Budget Surplus Allocation resolution.
To review, the plan allocation is as follows:
1. $50 million to be retained for working capital needs
2. $100 million to be contributed to reserve funds
3. The remaining balance to be split 60/40 between:
a. One-time on-bill credits to customers, with some portion applied specifically to CARE/FERA customers
b. Incentives for an Ava Solar and Storage Program
Table 1 identifies the credits available for the on-bill credits and the Ava Solar and Storage Program, following the allocation approved in January 2024. A discussion of the budget and performance compared to forecast is available in the Budget to Actuals, Waterfall, and Reserves presentation at the November 13, 2024, Finance, Administration, and Procurement Subcommittee.
Allocation Budget Actuals % Change
Net Revenues $179,484,000 $187,404,824 4.4%
Contributions
Working Capital $50,000,000 $129,484,000 $137,404,824 6.1% Staff Report Item 6
Reserve Funds $100,000,000 $29,484,000 $37,407,824 26.9% Remaining
On-Bill Credits 60% $17,690,400 $22,444,694 26.9%
Ava Solar + Storage
Program 40% $11,793,600 $14,963,130 26.9%
Table 1: FY 2023-2024 Net Revenues and Fund Allocations Staff recommends allocating the one-time on-bill credits to customers as follows:
$75 for CARE/FERA customers,
$11.68 for non-CARE/FERA residential customers, and
$0.0026 per kilowatt-hour used during fiscal year 2023-2024.
This credit allocation provides each customer class with a larger credit than they received from the FY2022-2023 surplus revenue credits. Later in this memo this series of credits is identified as “Option 3.”
Financial Impact
Allocation of surplus funds from the previous fiscal year has already been approved by the Ava Board and does not have an impact on ongoing operations. The financial impact on customer bills is discussed below in the Analysis section.
Analysis and Context (with deadlines as applicable)
History
In the January 2024 resolution, Fiscal Year Budget Surplus Allocation, The Board agreed to move forward with the Finance, Administrative, and Procurement subcommittee’s recommendation where 60% of the unallocated budget surplus is to be dedicated to on-bill credits with some portion specifically applied to CARE and FERA customers.
Since the assignment of the unallocated budget surplus credit is by customer class, and exactly what portion is to be applied to CARE and FERA customers, the Board is expected to provide guidance at the November Board meeting in advance of customers seeing these credits in December - February.
Credits have been applied to customer bills in 2022 and 2023; staff recommend reviewing the proposed credits for 2023-2024 through the lens of previous customer experiences and potential expectations.
Fiscal Year 2022-2023:
The 2022-2023 budget included a $50 credit for CARE customers, specifically to be applied in Q1/Q2. In August/September 2022, CARE/FERA customers received a $50 “EBCE CARE Customer 2022” credit.
The 2022-2023 budget also allowed for a Budget Surplus Waterfall Allocation as follows:
1. Working Capital Needs: $50MM
Staff Report Item 6
2. Reserve Account Funding: $75MM
3. 50/50% split of any excess to:
a. Incremental Long-term Renewable Energy/Clean Energy Storage Investments b. One-time On-Bill Credits to customers
Based on the 2022-2023 surplus, $10,504,837 was allocated to “revenue share” customer credits. The credits were split pro-rata based on total load between the residential and non-residential segments. Approximately 40% of total usage was attributed to Residential customers. Every active residential customer received the same credit amount, $7.27. Non-residential customers received a credit based on a volumetric calculation of $0.002 per kWh of FY 2022-2023 usage. Table 1 identifies credits provided by customer class.
The non-residential credits were provided based on annual consumption; Table 1 provides average credits for common commercial rates.
Non-residential
Customer Size
Average Annual Usage
(kWh) Average Credit
Small (B1) 16,632 $33
Medium (B10) 205,176 $410
Large (B19) 2,676,288 $5,353
Table 1: FY 2022-2023 Average Non-residential Surplus Revenue Credits On the bill, these credits were identified as “Ava Customer Dividend.” Residential credits were applied to the bill in December and non-residential in January/February.
Fiscal Year 2023-2024
The 2023-2024 budget again included a special $50 CARE or FERA credit. On the bill, these credits were the “Ava Customer Credit.” These were applied in November 2023.
To review, in January 2024, the Board approved a surplus allocation plan:
1. $50 million to be retained for working capital needs
2. $100 million to be contributed to reserve funds
3. The remaining balance to be split 60/40 between:
a. One-time on-bill credits to customers, with some portion applied specifically to CARE/FERA customers
b. Incentives for an Ava Solar and Storage Program
Note: The 2024-2025 budget did NOT include a special Q1/Q2 CARE allocation. The 2023- 2024 surplus will be the “fall” credit that CARE customers may be accustomed to receiving from Ava.
2023-2024 Surplus and Credit Options
Following the direction of the Board’s resolution from January 2024, for the credit assignments described in table 3, staff first assigned a value to credits for CARE/FERA customers. Then, using the same methodology applied to the FY 2022-2023 surplus, staff divided the remaining funds proportionally between residential and non-residential, based on 2022-2023 actual load Staff Report Item 6
(annual usage). Also, based on the operational success of applying the FY 2022-2023 surplus, residential credits are divided equally among all customers. Non-residential, or commercial, credits are applied based on actual usage in the previous fiscal year. In options 1, 2, and 3, CARE/FERA customers receive only the CARE credit, so their load is not included in the proportional division. In options 4 and 5, CARE/FERA customers receive both their unique credit and the residential credit, so their load is included in the total residential load.
Staff used the following assumptions in developing Options 1, 2 and 3, shown in Table 4.
CARE/FERA Customer Count 108,415
Residential Customer Count, total 512,850
Non-residential load, 2023-2024 3,747,420,727 kWh
Residential load, total, 2023-2024 2,189,688,525 kWh
CARE/FERA load, 2023-2024 368,023,164 kWh
Total Surplus Available $22,444,694
Table 2: Assumptions for analysis
Option 1: $125 for CARE/FERA Credit
Customer Class
%
Funds Total Bill Credit Note
Residential 13% $2,934,630 $7.26 Similar to 2023 credit CARE/FERA 60% $13,551,875 $125.00 Does not receive Residential Credit Non-residential 27% $5,958,189 $0.0016 Same to 2023 credit
Option 2: $100 for CARE/FERA Credit
Customer Class
%
Funds Total Bill Credit Note
Residential 17% $3,829,054 $9.47 Nearly double 2023 credit CARE/FERA 48% $10,841,500 $100.00 Does not receive Residential Credit Non-residential 35% $7,774,140 $0.0021 Similar to 2023 credit
Option 3: $75 for CARE/FERA Credit
Customer Class
%
Funds Total Bill Credit Note
Residential 21% $4,723,478 $11.68 Nearly double 2023 credit CARE/FERA 36% $8,131,125 $75.00 Does not receive Residential Credit Non-residential 43% $9,590,091 $0.0026 1.5x 2023 credit
Option 4: $50 for CARE/FERA Credit
Customer Class
%
Funds Total Bill Credit Note
Residential 28% $6,298,859 $12.28 Nearly double 2023 credit Staff Report Item 6
CARE/FERA 24% $5,420,750 $50.00 Also receives Residential Credit Non-residential 48% $10,725,085 $0.0029 1.5x 2023 credit
Option 5: $40 for CARE/FERA Credit
Customer Class
%
Funds Total Bill Credit Note
Residential 30% $6,699,995 $13.06 Nearly double 2023 credit CARE/FERA 19% $4,336,600 $40.00 Also receives Residential Credit Non-residential 51% $11,408,099 $0.0030 1.5x 2023 credit
Option 6: No special credit to CARE/FERA
Customer Class
%
Funds Total Bill Credit Note
Residential 37% $8,304,537 $16.19 More than double 2023 credit Non-residential 63% $14,140,157 $0.0038 Almost double 2023 credit Table(s) 3: Staff identified options for 2023-2024 bill credits Staff recommends the middle option, Option 3. Table 4 provides an overview of all options provided with a comparison to the previous credits shared with customers.
FY22/23
FY23/24
Budget
To be applied Dec-24 to Feb-25
Option 1 Option 2 Option 3 Option 4 Option 5 Option 6
Residential Credit $7.27 (Dec-23) $7.26 $9.47 $11.68 $12.28 $13.06 $16.19 CARE Credit
(Total)
$50 (Aug-22)
$7.27 (Dec-23) $50 (Nov-23) $125 $100 $75 $62.28 $53.06 $16.19 Non-Residential
(per kWh)
$0.002/kWh (Jan-24) $0.0016 $0.0021 $0.0026 $0.0029 $0.003 $0.0038 Table 4: Summary of Options
Customer Bill Impact
The non-residential credits by option vary widely based on annual usage; table 6 provides context. Staff recommends option 3. For a small or medium commercial customer, this is an extra $10 and $120 credit, respectively, compared to 2023 Non-residential
Customer Size
Average
Annual
Usage (kWh) Option 1 Option 2 Option 3 Option 4 Option 5 Option 6 Small (B1) 16,632 $27 $35 $43 $48 $50 $63
Medium (B10) 205,176 $328 $431 $533 $595 $616 $780
Large (B19) 2,676,288 $4,282 $5,620 $6,958 $7,761 $8,029 $10,170 Table 5: Example credits for average commercial customers Staff Report Item 6
With significantly less usage variability, residential bills are more meaningful to compare year-to-year and for an “average” household. Tables 6 and 7 provide a snapshot of average annual electricity bills for residential CARE/FERA customers and residential customers respectively; annual bills are inclusive of generation and delivery charges. Staff used the default rate, which was E-1, a flat generation rate with tiered delivery charges, until 2021 when the new default was a time-of-use rate, TOU-C.
Default CARE/FERA Rate
Rate Year
Average
Monthly Usage
(kWh)
PG&E Average
Annual Bill ($)
Ava Average
Annual Bill ($)
Ava Average
Annual with
Credits ($)
E-1 2019 338 $659 $651
E-1 2020 338 $693 $689
E-1 2021 429 $925 $919
E-TOUC 2022 339 $889 $871 $821
E-TOUC 2023 343 $934 $904 $846
E-TOUC 2024 341 $1,080 $1,050 $975
Table 6: Average annual CARE/FERA residential bills, 2019-2024 In 2022, compared to 2021, CARE customers experienced lower annual bills due to a decrease in average monthly usage, annual electricity bills were lowered further through the Ava $50 bill credit. In 2023, customers would have seen average monthly bills increase from $871 to $904, however the $57 in bill credits from Ava effectively offset this increase. Should Ava apply a $75 credit to customer bills in 2024, customers would again be shielded from the bulk of the nearly $100 annual increase.
Standard residential customer bills, shown below in Table 7 do not experience this same benefit, as the credit has not been nearly as significant.
Default Residential Rate
Rate Year
Average
Monthly Usage
(kWh)
PG&E Average
Total Annual
Bill ($)
Ava Average
Total Annual
Bill ($)
Ava Average
Total Annual
Bill with
Credits ($)
E-1 2019 359 $1,070 $1,063
E-1 2020 359 $1,165 $1,160
E-1 2021 402 $1,358 $1,353
E-TOUC 2022 373 $1,525 $1,505
E-TOUC 2023 365 $1,549 $1,516 $1,502
E-TOUC 2024 360 $1,776 $1,744 $1,732
Table 7: Average annual residential bills, 2019-2024
Staff Report Item 6
Another way to look at this information is shown in Figures 1 and 2, with the same information provided graphically.
Figure 1: Average annual CARE/FERA residential bills, 2019-2024 Figure 2: Average annual residential bills, 2019-2024
Review of Option 3
Staff recommends Option 3, as this provides a larger credit than all three customer groups received last year. These bill credits would be applied to customer bills one to three months after Board approval.
Customer Group
Proposed Credit from
FY23-24 Surplus
Residential $11.68
CARE/FERA $75
Non-Residential $0.0026 per kWh
Small (B1) $43
Medium (B10) $533
Large (B19) $6,958
Table 8: Option 3, review
Attachments (if applicable)
A. PowerPoint
Fiscal Year 2023-2024 Customer Bill
Credits
Finance, Administration, and Procurement
Subcommittee
November 13, 2024
Attachment Staff Report Item 6A
Summary
2 The January 2024 Budget Surplus Allocation resolution identified the following allocation:
1. $50 million to be retained for working capital needs
2. $100 million to be contributed to reserve funds
3. The remaining balance to be split 60/40 between:
o One-time on-bill credits to customers, with some portion applied specifically to CARE/FERA customers
o Incentives for an Ava Solar and Storage Program
Staff seeks feedback on proposed FY2023-2024 bill credit options. Based on the 23-24 financial audit ~ $22M is available for on-bill credits.
Attachment Staff Report Item 6A
History
3 • Previous budgets have provided for on-bill customer credits as follows:
FY 22/23 FY23/24
Residential Credit $7.27, Dec 2023 TBD
CARE Customer Credit $50, Aug 2022
$7.27 Dec 2023
$50, Nov 2023
Commercial Credit $0.002/kWh, Jan 2024 TBD
• The CARE customer credits provided in 2022 and 2023 were authorized by the board at $50 each
• Credits that were funded by surplus revenue were calculated by staff, splitting the total amount available into residential and commercial based on percentage of total load.
o Commercial customers were provided a custom credit based on actual usage
o Residential customers all received the same amount
Attachment Staff Report Item 6A
Summary of Options: FY23-24 Surplus Revenue On-bill Credits 4 One-time Bill Credit
Customer Class Option 1 Option 2 Option 3 Option 4 Option 5 Option 6 Residential $7.26 $9.47 $11.68 $12.28 $13.06 $16.19
CARE/FERA $125.00 $100.00 $75.00 $62.28 $53.06 $16.19
Non-Residential Credit
(per kWh) $0.0016 $0.0021 $0.0026 $0.0029 $0.0030 $0.0038 Small (B1) $27 $35 $43 $48 $50 $63
Medium (B10) $328 $431 $533 $95 $616 $780
Large (B19) $4,282 $5,620 $6,958 $7,761 $8,029 $10,170
Attachment Staff Report Item 6A
Recommendation (Option 3)
5 Customer Group
Proposed Credit from FY23-24
Surplus
Residential $11.68
CARE/FERA $75
Non-Residential $0.0026 per kWh
Small (B1) $43
Medium (B10) $533
Large (B19) $6,958
Attachment Staff Report Item 6A
Effect on Customer Bills:
CARE/FERA Customers with
Option 3
6 Rate Year
Average
Monthly
Usage (kWh)
PG&E
Average
Annual Bill
($)
Ava Average
Annual Bill
($)
Ava Average
Annual with
Credits ($)
E-TOUC 2022 339 $889 $871 $821
E-TOUC 2023 343 $934 $904 $846
E-TOUC 2024 341 $1,080 $1,050 $975
500
600
700
800
900
1,000
1,100
1,200
2019 2020 2021 2022 2023 2024
Average Annual Bills
CARE/FERA
PG&E Ava Ava with Credits
Attachment Staff Report Item 6A
Next Step
7 • Staff will bring the recommendation and feedback
from the Finance, Administration, and
Procurement Subcommittee to the Board of
Directors on Wednesday, November 20.
Attachment Staff Report Item 6A
Thank you!
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8 Attachment Staff Report Item 6A
Attachment Staff Report Item 6A
Appendix: Options
10 Option 1: $125 for CARE/FERA Credit
Customer
Class % Funds Total Bill Credit Note
Residential 13% $2,934,630 $7.26 Similar to 2023 credit CARE/FERA 60%
$13,551,875
$125.00
Does not receive Residential
Credit
Non-residential 27% $5,958,189 $0.0016 Same to 2023 credit Option 2: $100 for CARE/FERA Credit
Customer
Class % Funds Total Bill Credit Note
Residential 17% $3,829,054 $9.47 Nearly double 2023 credit CARE/FERA 48%
$10,841,500
$100.00
Does not receive Residential
Credit
Non-residential 35% $7,774,140 $0.0021 Similar to 2023 credit Option 3: $75 for CARE/FERA Credit
Customer
Class % Funds Total Bill Credit Note
Residential 21% $4,723,478 $11.68 Nearly double 2023 credit CARE/FERA 36% $8,131,125 $75.00
Does not receive Residential
Credit
Non-residential 43% $9,590,091 $0.0026 1.5x 2023 credit Option 4: $50 for CARE/FERA Credit
Customer
Class % Funds Total Bill Credit Note
Residential 28% $6,298,859 $12.28 Nearly double 2023 credit CARE/FERA 24% $5,420,750 $50.00 Also receives Residential Credit Non-residential 48% $10,725,085 $0.0029 1.5x 2023 credit Option 5: $40 for CARE/FERA Credit
Customer
Class % Funds Total Bill Credit Note
Residential 30% $6,699,995 $13.06 Nearly double 2023 credit CARE/FERA 19% $4,336,600 $40.00 Also receives Residential Credit Non-residential 51% $11,408,099 $0.0030 1.5x 2023 credit Option 6: No special credit to CARE/FERA
Customer
Class % Funds Total Bill Credit Note
Residential 37% $8,304,537 $16.19 More than double 2023 credit Non-residential 63% $14,140,157 $0.0038 Almost double 2023 credit Attachment Staff Report Item 6A