9/7/2023
1 RiversideCA.gov
1 RiversideCA.gov
ELECTRIC UTILITY
FIVE-YEAR RATE PLAN PROPOSAL
City Council
September 19, 2023
Riverside Public Utilities
RiversideCA.gov
2 PROPOSED RESIDENTIAL 5 YEAR ELECTRIC RATE PLAN
WATER: $0.15 Per Day
ELECTRIC: $0.21 Per Day
REFUSE: + $0.09 Per Day
$0.45 Per Day
or
$13.50 Per Month
Average rate
increase per year
for 5 years
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2 RiversideCA.gov
3 PROPOSED RATES
$7.97 per month for the
average residential customer
In year 1, the rate increase will amount to an additional RiversideCA.gov
4 $298
$223 $201
$155 $155 $148 $136 $132 $131 $119 $118 $107 $107
$15
$5
$8
$-
$50
$100
$150
$200
$250
$300
$350
Current Known Increase - Year 1 Proposed Increase - Year 1
ELECTRIC RATE PLAN COMPARISON
Average Residential Monthly Bill at 600 kWh Per Month – Year One
RPU RATES
REMAIN
LOW
RPU
RPU =112K Service Connections
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5 OVERVIEW OF ELECTRIC
Current Rate Plan Expires
12/31/2023
112K
Service Connections
Record Peak
Demand
(9/7/2022)
648 Megawatts
Established
1895
RiversideCA.gov
6 OVERVIEW OF ELECTRIC
1 of 46
Public Power Utilities in CA
Riverside is one of 46 cities in California
that light up homes and businesses
with “public power”– electricity that
comes from a community-owned and
operated utility
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7 OVERVIEW OF ELECTRIC
Maintain
99.2 Miles
Transmission Lines
Maintain
1,351 Miles
Distribution Lines
Maintain
15 Substations
RiversideCA.gov
8 RPU team members work 24/7 to
keep the lights on
RPU: ALL DAY EVERY DAY
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5 RiversideCA.gov
9 ELECTRIC FACILITIES
Riverside Energy Resource
Center (RERC)
Springs
Clearwater
(Corona Facility)
RiversideCA.gov
10 JOINT POWER PARTICIPATION
Renewables
• Antelope Big Sky
Ranch
• Antelope DSR 1
• Columbia 2
• Kingbird B
• Summer Solar
• ARP Loyalton
Other Generation
• Palo Verde Nuclear
Generation Station
• Hoover Hydro Power
Plant
Transmission
• Mead-Adelanto
Transmission
• Mead-Phoenix
Transmission
• Southern Transmission
Systems
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6 RiversideCA.gov
11 System Average Interruption Comparison with SCE
ELECTRIC SERVICE PERFORMANCE
0 50
100
150
200
250
300
2018 2019 2020 2021 2022
Minutes SCE Minutes RPU
0 0.2
0.4 0.6
0.8 1
1.2 1.4
2018 2019 2020 2021 2022
Number SCE Number RPU
Note: SCE data unavailable for 2022
RiversideCA.gov
12 POWER SUPPLY CHALLENGES
Sustainability Challenges to Riverside Requiring Vital Solutions Regulatory encroachment/loss
of local Control:
Challenging to maintain rate
affordability in alignment with local
needs.
Carbon Neutrality:
State mandates and Local Carbon
reduction goals requiring a rapid
transition to 100% clean energy.
Increasing Loads and Peak
Demands:
Driven by Transportation electrification
and Building electrification.
Increasing Transmission
Access Charge:
New Transmission investment is
needed to integrate regional
renewable resources.
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13 The use of long-term Power Purchase Agreements
and hedging to control and reduce the impact of
power cost spiking by ~$13M
WHAT’S BEEN DONE TO KEEP RATES LOW
RiversideCA.gov
14 DateAgenda Topic
August 8, 2022Rate Trends Analysis
June 12, 2023Conceptual approval of five-year rate
plan proposal
June 26, 2023Fiscal Policy and Cash Reserve Policy
update
July 10, 2023Alternative rate scenarios
August 14, 2023Capital Improvement Plan
accomplishments
BOARD ENGAGEMENT
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15 BOARD ENGAGEMENT
FISCAL POLICY AND CASH RESERVES
(The following slides are a synopsis of a presentation to the Board of Public Utilities on June 26, 2023. Reference Attachment 5 for the complete slide deck) RiversideCA.gov
16 PURPOSE OF THE RESERVE POLICIES
Properly designed reserve policies send a positive signal to ratepayers, investors, and regulatory and credit rating agencies that the Board and City Council are committed to maintaining the long-term fiscal strength of RPU.
Strong and transparent financial policies, including maintaining prudent reserves for emergencies, rate stability, working capital, capital improvements and debt service, are consistent with best practices in the utility industry.
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17 RESERVE CATEGORIES
1. Restricted Reserves are established and utilized for narrowly defined purposes as specified by legal restrictions, bond covenants, and other regulations or ordinances.
2. Designated Reserves are that portion of unrestricted reserves that meet specific purposes set aside by the Board and City Council. Designated reserve funds ensure stable service delivery, meet future needs, and protect against financial instability. Designated reserves may be held for specific capital and operating purposes.
3. Undesignated Reserves are the remaining unrestricted reserves that may be used for any lawful purpose and have not been designated for specific capital and operating purposes; however, maintaining a proper level of undesignated reserves is critical to ensure the utility can meet its fluctuating cashflow demands and mitigate financial volatility.
RiversideCA.gov
18 RESERVES – EXAMPLES AND DEFINITIONS
DefinitionRestricted Reserve
Funds set aside for regulatory requirements for greenhouse gas allowances and low carbon fuel standard proceeded as legally restricted for specific purposes.
Regulatory Requirements
Reserve (Cap and Trade
auction proceeds)
Assembly Bill 1890, adopted in 1996, monthly surcharge of 2.85% of the total electric charge to be used for low-income customer assistance, energy efficiency and conservation programs, renewable resources and energy research and development.
Electric Public Benefits Fund
DefinitionUndesignated Reserve
Mitigates rate shock due to temporary and transitional regulatory changes, loss of a major resource, sharp demand reduction or market volatility.
Rate Stabilization
Ensures ability to make debt service payments in an extreme event that may impact RPU’s ability to provide services, thus impacting revenues at a time critical infrastructure repairs are needed to restore systems. The Debt Service Reserve is intended to prevent an event where RPU would be unable to pay its debt service obligations during such emergencies, or extreme market disruptions.
Debt Service
DefinitionDesignated Reserve
Established in December 2007 to fund the debt service and capital expenditures for construction of internal electric generation and purchase of state transmission grid capacity, annual repair and improvements to internal generation facilities, and fund internal RPU sub-transmission system upgrades for RTRP improvements. The funds are received from retail customers through the Reliability Charge on each monthly bill.
Electric Reliability
Established March 2016 to accumulate amounts for repairs and replacement of facilities, vehicles, and technology outside of the Capital Improvement Program.
Capital
Repair/Replacement
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19 WITH PROPOSED RATE INCREASES - ELECTRIC
$0
$100
$200
$300
$400
$500
$600
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
ALL Electric Reserves WITH Proposed 5-Year Rate Plan
Undesignated Cash Balance Line of Credit Designated Cash Balance Restricted Cash Balance Min Target
Source: Refer to Board presentation on Cash Reserve Policy (Attachment 5)
RiversideCA.gov
20 BOARD ENGAGEMENT
ALTERNATIVE RATE SCENARIOS
(The following slides are a synopsis of a presentation to the Board of Public Utilities on July 10, 2023. Reference Attachment 6 for the complete slide deck) 19 20
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21 ELECTRIC 5-YEAR RATE PLAN
SCENARIO 5% SYSTEM AVERAGE
$0
$50
$100
$150
$200
$250
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITH 5% Annual Rate Increases
Undesignated Cash Balance Line of Credit Min Target
RiversideCA.gov
22 ELECTRIC 5-YEAR RATE PLAN
SCENARIO 6.25% SYSTEM AVERAGE
$0
$50
$100
$150
$200
$250
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITH 6.25% Rate Increases
Undesignated Cash Balance Line of Credit Min Target
Source: Refer to Board presentation on Alternative Rate Scenarios (Attachment 6)
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23 ELECTRIC 5-YEAR RATE PLAN
SCENARIO USING A PHASED APPROACH
$0
$50
$100
$150
$200
$250
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves USING A PHASED APPROACH
(2%,2%,7%,7%,7%) for the Annual Rate Increases
Undesignated Cash Balance Line of Credit Min Target
Using the same assumptions of costs in the COSA, this graph is an analysis of the impact of reversing the rate increases, ie. Residential as 2.4%, 2.3%, 7%, 7.1%, and 7.1% RiversideCA.gov
24 BOARD ENGAGEMENT
CAPITAL IMPROVEMENT PROJECTS
(The following slides are a synopsis of a presentation to the Board of Public Utilities on August 14, 2023. Reference Attachment 7 for the complete slide deck) 23 24
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25 ELECTRIC CIP
The Electric Plan rate increases support investment in the electric system. The following is a summary of the 2018 investment plan, the 2018-2023 expenses, and the projects to be funded by the currently proposed for the Electric Utility Five-Year Rate Plan.
5 Year Plan
(2024-2028)
Expenditures
2018-2023
Budgeted
(2018-2023)
10 Year Plan
(2018-2028)
Project Category
$48,947,000$10,895,370$30,428,289$89,208,0001. Overhead Projects $75,125,000$18,973,956$29,966,569$139,326,0002. Underground Projects $69,683,000*$38,021,033$30,448,024$88,100,0003. Substation Projects $83,162,000$26,110,384$45,189,662$96,574,0004. System Automation $38,582,000$72,273,033$94,902,173$115,037,0005. Recurring Projects $315,499,000$166,273,776$230,934,717$528,245,000Total:
5%3%Rate Increase:
*+/- $40 million Hunter Substation will be funded with carryover s and/or using a portion of $69,683,000 Substation Project funding in the 2023 5-Year Rate Plan. No additional CIP in the proposed five-year Electric Rate Plan.
RiversideCA.gov
26 COMPLETED AND PLANNED – OVERHEAD PROJECTS
Overhead Projects: $89,208,000 10-Year Investment (FY 2018-2028) • 3,080 poles and related equipment replacements
• 600 overhead switches replacements
• 1,270 street light retrofits
• Convert 29 4kV circuits to 12kV in 6 years
Completed:
811 streetlights replaced
900 poles and related equipment replaced
200 overhead switches replaced
10 circuits converted to 12kV
Planned:
376 street light retrofits
1,540 poles and related equipment
400 overhead switch replacements
15 voltage conversions (4kV to 12kV)
Source: Refer to Board presentation on CIP (Attachment 7) 25 26
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27 RATES
RATES 2009 - PRESENT
RiversideCA.gov
28 HISTORY OF ELECTRIC RATES
Rate
IncreaseElectric
3.60%1/1/2009
5.80%1/1/2010
0%1/1/2011
0%1/1/2012
0%1/1/2013
0%1/1/2014
0%1/1/2015
0%1/1/2016
0%1/1/2017
0%1/1/2018
No Rate Increases
from 2011 - 2018
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29 HISTORY OF ELECTRIC RATES
Rate IncreaseElectric
2.95%1/1/2019
3.00%1/1/2020
3.00%1/1/2021
3.00%1/1/2022
3.00%1/1/2023
Due to COVID
impacts on the
community,
the 1/1/2021
rate increase
was delayed
to 7/1/2021
Current Rate Plan Expires
12/31/2023
RiversideCA.gov
30 THE WHY
0 5
10 15
20 25
30 35
40 45
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 RPU Electric Rate Increases vs CPI
Cumulative Increase in CPI Cumulative Rate Increase
29 30
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31 Increased construction/equipment costs
Costs for natural gas have doubled over the last two
years, due to increased liquid natural gas exports and
restricted capacity on western interstate gas pipelines.
Costs for CAISO Market energy have gone up 60%-80%,
due to increasing natural gas costs and supply-chain
challenges delaying the development of new renewable
resources.
THE WHY
INCREASED POWER SUPPLY COSTS
RiversideCA.gov
32 INCREASED POWER SUPPLY COSTS
THE WHY
0.06 0.065
0.07 0.075
0.08 0.085
0.09 0.095
0.1 15/16 16/17 17/18 18/19 19/20 20/21 21/22
$ per kWh
Fiscal Year
Cost per kWh
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17 RiversideCA.gov
33 THE WHY
($100)
($50)
$0
$50
$100
$150
$200
$250
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITHOUT Rate Increases
Undesignated Cash Balance Line of Credit General Fund Subsidy Min Target RiversideCA.gov
34 ELECTRIC CUSTOMER STATISTICS
Note: As of June 30, 2022, Combined Ag Pumping, Street Lighting, Traffic and Outdoor Lighting with Commercial/Industrial
39.7%
60.3%
ELECTRIC YTD ACTUAL REVENUES
Residential - $134,403
Commercial/ Industrial-
$203,473
(In Thousands)
Total Electric Revenues - $337,876
88.8%
11.2%
ELECTRIC CUSTOMER COUNTS
Residential - 99,731
Commercial/ Industrial -
12,597
Total Customer Count - 112,328
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35 PROPOSED RESIDENTIAL ELECTRIC RATE PLAN
$0.21
Avg Cost
per day over
5 years
$7.97
Average Monthly
increase year 1
Year 5
% Increase
Year 4
% Increase
Year 3
% Increase
Year 2
% Increase
Year 1
% Increase
CustomersCustomer
Class
2.4%2.3%7.0%7.1%7.1%99,718
Residential
(3 Tiers)
Dollar values calculated based average monthly usage of 600 kWh RiversideCA.gov
36 PROPOSED COMMERCIAL ELECTRIC RATE PLAN
Year 5
%
Increase
Year 4
%
Increase
Year 3
%
Increase
Year 2
%
Increase
Year 1
%
IncreaseCustomersCustomer Class
2.9%3.0%3.0%2.8%2.5%11,015
Commercial Flat
(2 Tiers)
0.0%0.0%0.0%0.0%0.0%988
Commercial Demand
(2 Tiers)
4.3%4.3%6.3%6.6%5.9%622
Industrial TOU
(3 periods)
35 36
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19 RiversideCA.gov
37 PROPOSED COMMERCIAL ELECTRIC RATE PLAN
$0.43
Average Cost Per
Day over 5 years
Years 2-5
% Increase
Year 1
% Increase
Avg kWh
Usage (Tier 1)Customer Class
3.8%2.7%1,750Commercial
Flat Example
$9.12
Average monthly
increase year 1
RiversideCA.gov
38 WITHOUT RATE INCREASES
($100)
($50)
$0
$50
$100
$150
$200
$250
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITHOUT Rate Increases
Undesignated Cash Balance Line of Credit General Fund Subsidy Min Target 37 38
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20 RiversideCA.gov
39 WITH PROPOSED RATE INCREASE
$0
$50
$100
$150
$200
$250
FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2023 FYE 2024 FYE 2025 FYE 2026 FYE 2027 FYE 2028 Millions
Undesignated Reserves WITH Proposed 5-Year Rate Plan
Undesignated Cash Balance Line of Credit Min Target
RiversideCA.gov
40 $298
$223 $201
$155 $155 $148 $136 $132 $131 $119 $118 $107 $107
$15
$5
$8
$-
$50
$100
$150
$200
$250
$300
$350
Current Known Increase - Year 1 Proposed Increase - Year 1
ELECTRIC RATE PLAN COMPARISON
Average Residential Monthly Bill at 600 kWh Per Month – Year One
RPU RATES
REMAIN
LOW
RPU
RPU =112K Service Connections
39 40
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21 RiversideCA.gov
41 LOW INCOME PROGRAMS - ELECTRIC
$16.00
Current Monthly Electric
SHARE Credit
$20.00 Year 1
$30 by Year 5
Projected future Monthly
Electric SHARE Credit
4,880
Residential Electric Customers
Assisted
Established
1989
Sharing Households Assist Riverside’s Energy (SHARE) Program RiversideCA.gov
42 ASSISTANCE PROGRAMS
ESAP
Energy Savings Assistance Program (ESAP) is designed to help lower monthly bills, while making homes more energy efficient through professional home improvements at no
cost to customer
Utilicare
Medical support program offered to Riverside Public
Utilities customers with a full-time resident who regularly use certain medical devices that provides electricity at an adjusted rate structure
41 42
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43 ENERGY EFFICIENCY PROGRAMS
Energy Rebates
RPU offers a wide range of energy
efficiency programs to help
customers lower their utility bills
– Air Conditioning Incentives
– Energy Star Rebates on Qualifying
Appliances
– Pool & Spa Pump
– Tree Power
– Weatherization
RiversideCA.gov
44 NEW REPLACEMENT PROJECT
Hunter Substation
Replacement Project
Commissioned in
the early 1960’s
Average
substation life
expectancy is
~50 years
Serves
approximately
4,700
customers
Improve system reliability with
a new Utility Scale distribution
substation supporting future
development in the area and
maintaining power reliability.
Approximate
cost $40M
NEW SUBSTATION
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23 RiversideCA.gov
45 RECOMMENDATIONS
That the City Council:
1. Conduct a public hearing to receive input related to the electric utility five-year rate plan proposal;
2. Adopt a Resolution approving and establishing FY
2023/24 – 2027/28 electric rates, to be effective
January 1, 2024; and
3. Approve an increase to the Sharing Households Assist Riverside Energy Program from $16 per month to $20
per month for qualifying customers.
45