Item 17
1 VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 17
To: Board of Directors
From: Mitch Sears, Interim General Manager
Rebecca Boyles, Director of Customer Care and Marketing Sierra Huffman, Program and Community Engagement Analyst Subject: Bill Protection in the Time-of-Use (TOU) Transition Date: March 10, 2022
______________________________________________________________________________
RECOMMENDATION
Approve and adopt Bill Protection Option 3, in which customers can call and request bill protection if they choose to remain on the Time of Use rate for a full 12 months.
BACKGROUND and ANALYSIS
Since April of 2021, VCE’s residential customers have been transitioning from flat, tiered rates to time-of-use (TOU) rates. TOU rates are designed to better reflect the wholesale energy market and grid conditions, and encourage customers to use electricity midday/overnight, when renewable/low-carbon energy is more abundant. VCE’s residential TOU transition began with NEM customers in March 2021, and the remainder of eligible customers (about 12,500 accounts) will be transitioned in April 2022.
Since nearly 20% of VCE’s residential customers will be moved to ETOU-C, VCE staff has analyzed the fiscal and customer impacts of providing bill protection for newly transitioning TOU customers. PG&E is required to provide automatic bill protection for customers that stay on the TOU rate for 12 months. CCAs are not required to participate in the TOU transition, nor provide bill protection, but most CCAs are participating and providing some type of bill protection.
Most residential customers will be minimally affected by the change to TOU- about 51% would pay slightly more, with most bill impacts in the $1-2/month range. Although the estimated customer impacts are limited, to enable a successful transition and ease any potential customer impacts, staff is recommending that VCE provide a measured bill protection program. Note:
Low-income CARE/FERA customers in hot climate zones (including Yolo County) will not be automatically transitioned.
Item 17
2 Bill Protection Options
Costs vary depending on the approach to bill protection. Working with SMUD, staff has estimated the cost for 4 different options:
Bill Protection Option Estimated Cost Notes
1. Standardized $25
credit
Total: $300,000-$312,500 One-time $25 bill credit for all residential TOU customers that
stay on the rate for 12 months
2. Upon request by
customer – Bill
Calculation
• $15,000 for billing engine tool
• $85 per account calculation
• $12,000-$15,000 for bill
protection credit
• Total: $78,000-81,0001
Manual calculation in which
customers call in and are eligible
for a “backwards looking” bill
protection credit after 12 months
on the rate.
3. Upon request by
customer –
Standardized $25
credit
• $15,000 - $40,0002 One-time $25 bill credit for
residential TOU customers that opt
for bill protection and stay on the
rate for 12 months.
4. Automatic for all
eligible customers
• $22,500+ for billing engine tool
• $120,000-$150,000 for bill
protection credit
• Total: $142,500-$172,5003
Tool estimate of $22,500 could
increase.
Staff recommends that VCE provide bill protection option 3, a standardized credit upon customer request. Recognizing that this approach trades a certain amount of precision in calculating bill impacts for simplicity, staff believes it provides an appropriate balance resulting in a measured approach to potential customer impacts while avoiding inefficient and burdensome program administration costs. This is the least-cost option that is also easiest to implement, and the call-in approach is similar to East Bay Community Energy’s approach in its residential TOU bill protection program. As part of TOU outreach efforts, VCE will include customer bill protection information on the website and social media if this item is approved.
This item was evaluated by the Community Advisory Committee (CAC) on February 24th, 2022, and the CAC also recommended adopting bill protection option 3.
Financial Impact
Estimate varies depending on option, from $0-$312,500. Should the Board recommend option 3, the estimated fiscal impact is a one-time $15k to $40k in CY 2023. TOU bill protection would end after the 12-month transition period – no associated costs going forward.
CONCLUSION
Staff is seeking approval on a bill protection approach from the Board of Directors. 1 Assuming that of 6,000 eligible customers, 10% request bill protection. The average credit would be $20-25. The high end of the range in total cost is unlikely as only 2-3% of customers are likely to call and request bill protection. 2 Assuming 10-20% of eligible customers call to request bill protection 3 Assuming $20-$25 credit for 6,000 eligible customers