Valley Clean Energy Board Meeting – September 8, 2022
via video/teleconference
Item 15 – Mid-Year 2022 Customer Rates Review 1
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Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 3 Item 15 – Mid-Year 2022 Customer Rates Review
Overview
Since March 2020, the overall economy and energy sector has been highly unpredictable due to COVID-19, regulatory decisions, and weather conditions driving volatility by increased load demand, resource adequacy costs, and energy costs.
As part of its 2022 Customer Rates action, the Board directed staff to monitor 2022 financial performance and recommend, if warranted, mid-year 2022 adjustments to customer rates/credits and/or allocation of additional financial resources for programs and renewable energy credits.
This informational presentation will provide:
• Update on 2022 Financials & Load
• Discussion
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 4 Item 15 – Mid-Year 2022 Customer Rates Review
2022 Budget Proforma Update (6 Months Actuals – unaudited)
APPROVED
2022 BUDGET
2022 Proforma
(7 Month Actuals +
Description 5 Month Budget) Variance
Revenue $ 89,750 $ 87,650 $ (2,100)
Power Cost $ 66,990 $ 69,057 $ (2,067)
Other Expenses $ 5,292 $ 5,292 $ 0
Net Income $ 17,468 $ 13,301 $ (4,167)
Note: The table does not account for updated forward power market price fluctuation and resource adequacy costs.
Key Factors
• Revenues: lower than forecasted but in general alignment with budget. Overall approx. -2% v. budget. • Power Costs: Higher than budgeted due to recent power cost increases during June & July driven by gas prices and weather conditions during peak season. Overall approx. -3% v. budget. • Load: 2022 drought conditions continued from 2021 impacting agricultural sector pumping loads that have been partially offset by reduced loads for Residential and Commercial. Overall within 5% v. forecast.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 5 Item 15 – Mid-Year 2022 Customer Rates Review (Load Forecast vs Actual) -
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
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90,000,000
100,000,000
1 2 3 4 5 6 7 8 9 10 11 12
kWh
Month
Load Forecast
Sum of Lighting
Sum of Ag
Sum of Industrial
Sum of LgComm
Sum of MedComm
Sum of SmallComm
Sum of Res
-
10,000,000
20,000,000
30,000,000
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50,000,000
60,000,000
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1 2 3 4 5 6 7 8 9 10 11 12
kWh
Month
Actual Load
Sum of Lighting
Sum of Ag
Sum of Industrial
Sum of LgComm
Sum of MedComm
Sum of SmallComm
Sum of Res
Month Res
Sm
Com
m
Med
Com
m
Lg
Com
m Ind Ag Light Total
1 89% 85% 94% 102% 114% 105% 89% 93%
2 89% 87% 96% 110% 119% 179% 94% 101%
3 85% 90% 95% 102% 108% 140% 100% 98%
4 89% 91% 101% 100% 106% 127% 107% 101%
5 104% 97% 96% 106% 103% 109% 117% 104%
Load
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 6 Item 15 – Mid-Year 2022 Customer Rates Review
Summary & Next Steps
Year-to-date financial performance is generally in-line with projections. Staff believes it is prudent to maintain Board adopted 2022 customer rates, budget allocations for programs, and renewable energy credits.
• Continue to monitor financial results to incorporate into 2023 Rate setting • Continue to monitor PG&E Rate and PCIA for 2023 bundled rates. (Current forecasts favorable)
• 2023 Rates and Budget Adoption with additional customer options Discussion
Valley Clean Energy Board Meeting – September 8, 2022
via video/teleconference
Item 16 – Rate Adjustment System – Introduction 7
yvonnehunterphotography.com yvonnehunterphotography.com Public Comments
8 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
Join the Public Comment Queue by
➢ “Raising Hand” on Zoom Meeting
OR
➢ Press *9 if joining by phone
Emailed comments received before the item has concluded will be read into the record.
Emailed comments received after the item has concluded but before the end of the meeting will not be read but will be included in the meeting record.
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 9 Item 16 – Rate Adjustment System – Introduction
Overview
VCE and all other Load Serving Entities (i.e. CCA’s, Publicly Owned Utilities, and Investor Owned Utilities), face volatility in key external cost factors that are largely outside their control. A Rate Adjustment System “RAS” could automatically adjust customer rates within a Board defined range to more timely and accurately reflect changes in key external cost factors outside VCE’s control.
This informational presentation will provide:
• Introduction of Rate Adjustment System Concept
• Summary and proposed next steps
• Discussion & Feedback
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 10 Item 16 – Rate Adjustment System – Introduction
What is a Rate Adjustment System (RAS)?
A tool utilized to make automatic adjustments within
predetermined guidelines triggered by movement in
recovery of specific costs.
Rate Adjustment System Key Attributes
• Allow +/- adjustments
• Timely response to power cost and load uncertainties
• Power Market Volatility - Commodity Prices
• Weather – Heat Waves and Droughts
• Regulatory Proceedings – PCIA and RA
• Board Authorized Range such as “+- XX%”
Rate Adjustment System Benefits
• Design to insulate customers from rate shocks
• Inclusive of CARE/FERA
• Positive view by rating agencies
• Avoid multiple annual rate reviews
• Moderate pressure on cash reserves & debt covenants
• Formal Review (EROC) and Reporting (BOARD)
Budget Policy
Reserve Policy
Strategic Plan
Rates Policy
Item X – Short Title and Slide Description [Calibri (Body) 29 font (not bold)] 11 Item 16 – Rate Adjustment System – Introduction
Summary & Proposed Next Steps
Staff is seeking general Board feedback and direction to proceed on developing a Rate Adjustment System to return later this Fall for further Board consideration. • September – Review and receive CAC input on Concept
• Develop Draft Schedule and Examples
• Examples based on three product categories (Base, Standard, and Ultra Green) • Address potential CARE/FERA protections
• October 2022 – Review draft Rate Adjustment System with CAC • Receive additional feedback for Draft Customer Rate Adjustment System • November 2022 – Return to Board and CAC for proposed Rate Adjustment System • Present Draft Customer Rate Adjustment System to Board • Present Draft Proposed Customer Rate Adjustment System to CAC for recommendation • December 2022 – Rate Adjustment System for 2023
• Present Draft Proposed Customer Rate Adjustment System for possible board adoption (2023 Implementation) • Consolidate with 2023 Budget & Rates Adoption
Discussion & Feedback