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Rate Stability and Power Cost

Adjustment(PCA) = 0 for all twelve


calendar months
1
Application of Cash Criteria
1. Keep the rates stable, Metric is PCA = 0
2. Increase the transfer to the City, however, it
should not be at the expense of existing Capital
Expenditure Programming
3. Reduce Industrial Ratesnumber 1 above
should take care of number 3, since no rate
increase for a long time is the same as a rate
decrease. In addition, Industrial Customers will
benefit by having a PCA = 0 for all twelve
calendar months.

2
Power Cost Adjustment
2004 - Present

3
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
January $0.02500 $0.02500 $0.00000 $0.00000 $0.00000 $0.00000 $0.00000 $0.00254 $0.00185 $0.00000
February $0.02500 $0.02250 $0.00000 $0.00410 $0.00000 $0.00000 $0.00000 $0.00076 $0.00378 $0.00000
March $0.02000 $0.02440 $0.00000 $0.00387 $0.00591 $0.00626 $0.00000 $0.00075 $0.00000
April $0.01750 $0.01950 $0.00000 $0.00160 $0.00134 $0.00000 $0.00000 $0.00295 $0.00000
May $0.02000 $0.01850 $0.00000 $0.00000 $0.00487 $0.00000 $0.00000 $0.00334 $0.00000
June $0.01500 $0.01750 $0.00000 $0.00378 $0.00029 $0.00000 $0.00000 $0.00000 $0.00000
July $0.01650 $0.03500 $0.00000 $0.00000 $0.02191 $0.00000 $0.00000 $0.00689 $0.00354
August $0.00850 $0.04500 $0.01062 $0.00000 $0.00330 $0.00000 $0.00000 $0.00000 $0.00028
September $0.00850 $0.04500 $0.00612 $0.00000 $0.00063 $0.00000 $0.00000 $0.00000 $0.00000
October $0.01000 $0.04500 $0.00000 $0.00000 $0.00000 $0.00000 $0.00000 $0.00000 $0.00000
November $0.01300 $0.03400 $0.00000 $0.00000 $0.00000 $0.00000 $0.00000 $0.00000 $0.00186
December $0.02200 $0.03750 $0.00000 $0.00000 $0.00000 $0.00000 $0.00000 $0.00339 $0.00830
4
December 2012

PCA =
$.0083/KWHR PCA=$0/KWHR
Electric Large General Service
Demand $948.00 $948.00
Energy Charge $5,579.09 $5,579.09
Power Cost Adjustment(PCA) $628.31 $0.00
Local Sales Tax $35.78 $35.78
State Sales Tax $491.93 $491.93
Total Electric Bill $7,683.11 $7,054.80
% Decrease in Bill -8.18%
Sample Customer Bill, and effects
of the Power Cost Adjustment(PCA)
For December 2012
Entire Community Benefits
5

PCA=0 all Twelve Calendar Months, Total Community
Savings, All Rate Classes

Year
2006 $517,682.47
2007 $331,060.23
2008 $1,070,826.94
2009 $131,438.19
2010 $0.00
2011 $508,840.58
2012 $449,260.04
Approximate Savings by Customer
Class
6
Electric Utility
Customer Class
Approximate
% Allocation
of PCA
Savings
Estimate of the Extension of PCA Savings by Customer Class per year
2006 2007 2008 2009 2010 2011 2012
Residential
Service 24.71% $127,919 $81,805 $264,601 $32,478 $0 $125,735 $111,012
Small General
Service 6.50% $33,649 $21,519 $69,604 $8,543 $0 $33,075 $29,202
Large General
Service 25.46% $131,802 $84,288 $272,633 $33,464 $0 $129,551 $114,382
Large
Industrial
Service 51.25% $265,312 $169,668 $548,799 $67,362 $0 $260,781 $230,246
Savings for Large Industrial Class
7
PCA=0, Large Industrial
Customer Savings--
from billing
information
PCA=0, Total
Community
Savings, All
Rate Classes
% Energy Sales
attributed to Large
Industrial Customers
PCA=0, Large
Industrial
Customer
Estimated Savings

Total Large
Industrial Sales Year
2006 $12,950,208 $517,682 51.61% $267,175.93
2007 $13,328,227 $331,060 51.75% $171,323.67
2008 $13,286,228 $1,070,827 50.96% $545,693.41
2009 $10,650,886 $131,438 47.42% $62,327.99
2010 $11,471,748 $0 48.21% $0.00
2011 $11,692,880 $241,135
2012 $10,763,758 $195,936

PCA=0, Large Industrial
Customer Savings


Total Large Industrial
Sales

Year Less PCA Savings % Decrease on Energy Bill
2006 $12,950,208.00 $267,175.93 $12,683,032.07 -2.06%
2007 $13,328,227.00 $171,323.67 $13,156,903.33 -1.29%
2008 $13,286,228.00 $545,693.41 $12,740,534.59 -4.11%
2009 $10,650,886.00 $62,327.99 $10,588,558.01 -0.59%
2010 $11,471,748.00 $0.00 $11,471,748.00 0.00%
2011 $11,692,880.00 $241,134.82 $11,451,745.18 -2.06%
2012 $10,763,758.00 $195,936.28 $10,567,821.72 -1.82%
Average = -1.70%
Rate Study Performed in 2012
Consulting firm SAIC performed rate study in
2012 for both electric and natural gas utilities.
Consultants were made of aware of various
strategies we are using and intend on
implementing in the electric utility.
Consultants only looked as far as year end
2016, result was they did not recommend
raising rates.
8





Power Supply Planning Presentation
9
Operating Expensesnumbers from
2011 Audit
$18,858,445.00
$6,053,688.00
$883,761.00
2011--Operating Expenses
Power Supply Expenses
Other Expenses
PILOT
Approximately 70% of all electric utility expenditures are power supply expenses.
Other expenses will increase due primarily large increases in Transmission Expense.
Focus on reducing power supply expenses.



10
Power Supply Planning
The following items are included in this study, some have already been implemented, while others will
likely be implemented in the future.

1. Rate stabilization fund is usedthis was implemented in 2006.
2. Statistical Model being used by system control to dispatch generating unitsimplemented in
2012.
3. Base load supply was reduced from 30 MW to 25 MWthis was implemented on January 1,
2013. This supply comes from Missouri River Energy Services.
4. Unit 8 has a scheduled run in January, June, July and Augustthis has been implemented, and
functions as a hedge against the market.
5. Installation of new Wartsila 9.5 MW generating unitUnit will go on-line in February 2013. Unit
will be used as a hedge against the real-time market.
6. Change air permit for units 3 and 4. Each of these units are 4 MW dual fuel units. Late spring
2013 we will identify what needs to be done (if anything), to gain added operating hours for both
units. Anticipate this will be complete in 2014. Units will be used as a hedge against the real-time
market.
7. Purchase and install a 2
nd
Wartsila 9.5 MW generating unitwe would like to see this unit go on-
line in 2015/2016 time frame. This unit will be used as a hedge against the real-time market.

11
Power Supply agreement with Missouri River Energy
Services
Missouri River Energy Services(MRES) is a Joint Action Agency. HUC has a
membership agreement with MRES. HUCs electrical bill from MRES is based on a
rate. All members of MRES have the same rate structure.
MRES rate structure is seasonal, following is a breakdown of that rate structure:
Dec-Feb.$53.1/MWHR
March-May--$44.1/MWHR
June-Aug.$58.3/MWHR
Sep.-Nov--$44.2/MWHR
Approximately 70 % of Hutchinsons electrical energy supply comes from MRES.
The other 30 % comes from market purchases or is generated using HUCs power
plants.
Much emphasis has been placed on mitigating market risk as it relates to the 30 %
that HUC provides Hutchinson. Market years 2006, 2007, 2008, 2009, 2010, 2011
and 2012 have all been treated as test years to determine the proper amount of
generation that need to be installed at plant 1 to mitigate market risk.
The following slides are a representation of the level of effectiveness of HUCs
strategies for the additional 30 % using a combination of market purchases and
HUCs electrical generation.

12
Example of July 20, 201125 MW Base Load,
Unit 3, 4, 8 New Unit 5
0
10
20
30
40
50
60
70
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Load
Base Load + Unit 8 + Other Gen.
July 20, 2011
Unit 8 scheduled start
Units 3, 4, 5 start
Market > Gen Cost
Purchase off market
Market < Gen Cost
Unit 8 scheduled stop
Units 3, 4, 5 stop
Market < Gen Cost
Not enough generation
at Plant 1 to cover load

Time24 Hours/day
Blue Line is HUC Electric Load

Red Line is Electric Supply
MRES Base Load Supply

13
MWHRs
Example of July 20, 201125 MW Base Load,
Unit 3, 4, 8, New Units 5 & 6
0
10
20
30
40
50
60
70
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Load
Base Load + Unit 8 + Other Gen.
July 20, 2011
MRES Base Load Supply

Unit 8 scheduled start
Units 3, 4, 5, 6 start
Market price > Gen Cost
Plant 1 now has enough
Generation to take care of HUC
load. HUC will realize a small op. income
from electric supply sold into market. The
Op. Income received is subtracted from
Wholesale rates charged to HUC retail customers.
Time24 Hours/Day
Blue Line is HUC
Electric Load
14
Red Line is Electric Supply
MWHRs


Example July 2011
July 2011
$/MWHR MWHR Total Cost
Base Load $ 58.02 18,600 $ 1,079,172.00
Market Purchases $ 29.11 7,824 $ 227,755.95

Cost of Unit 8 Scheduled Gen. $ 36.60 2,400 $ 87,840.00

Hedged Gen.--units 3, 4, 5, 6 $ 47.49 3,109 $ 147,649.33

Additional Market Purch. After gen. $ 140.21 17 $ 2,383.62

Total HUC Load and Cost w/o bundling $ 34.88 13,350 $ 465,628.90

Bundled Gen.Revenue $ 67.54 1,751 $ 118,260.86
Bundled Gen Expense $ 47.24 1,751 $ 82,725.00
Bundled Gen Op Income $ 35,535.86

Total HUC Cost less bundling op. income $ 32.22 13,350 $ 430,093.04

Blended Cost for July $ 47.24 31,950 $ 1,509,265.04
MWHR's % Provided
Provided from MRES Base Load Supply 18600 58.22% $ 58.02
Combination of Market & Generation Supply 13350 41.78% $ 32.22
Total HUC retail supply 31950
15
Monthly Supply from MRES and
Market/Generation for 2011
Monthly 2011
% MRES Supply
Agreement % from Market/Generation
January 72% 28%
February 72% 28%
March 74% 26%
April 77% 23%
May 74% 26%
June 67% 33%
July 58% 42%
August 62% 38%
September 74% 26%
October 80% 20%
November 83% 17%
December 81% 19%
2011 Annual Supply % Supplied
% MRES Supply Agreement 72%
% from Market/Generation 28%
Note: This reflects the 25 MW base load power supply agreement with MRES.
Please note that anywhere from 60% to 80% of HUC average monthly energy
purchases are provided via MRES base load supply agreement.
16
HUC 2011Market
$/MWHR
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
Market
Statistical Model+Unit 6
Average Market Price
Average + Unit 6
Market Mitigation 2011
Average price using a combination
of market purchases and HUC
generation at plant 1

Average price if all extra
needs purchased off market

17
2011 Blended
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
2011 Actual
Statistical Model+Unit 6
2011 Average
Avg + Unit 6
2011
Base Load Contract
reduction,

Unit 8 scheduled run,

Statistical Model being used,

Installation of New Unit 5

Unit 3 and 4 added Op. hours

Installation of New Unit 6

Note:
Does not include
transmission expense.
18
Annual % Supply From MRES and
Market/Generation
% Annual Supply
Year
% MRES
Supply
Agreement
% from Market
and/or
Generation
Total HUC
Load
(MWHR's)
2006 69% 31% 319069
2007 67% 33% 328647
2008 69% 31% 318496
2009 76% 24% 288620
2010 72% 28% 305777
2011 72% 28% 302775
2012 75% 25% 291957
Note: The MRES base load power supply agreement accounts for approximately
70% of HUC annual energy needs.
19
$/MWHR savings by project and
Benchmarking Study
2006 2007 2008 2009 2010 2011 2012
Actual Average $54.06 $53.77 $57.47 $54.10 $52.78 $53.51 $52.35
25 MW Base Load and Market Purch. $50.68 $53.22 $52.47 $45.38 $45.59 $45.87 $46.01
+ Unit 8 $49.71 $52.54 $51.52 $45.64 $45.33 $45.66 $45.94
Statistical Model + Unit 5 $47.78 $49.85 $49.96 $45.01 $44.59 $44.71 $44.76
Statistical Model + Units 3, 4 $46.16 $47.59 $48.64 $44.49 $43.97 $43.90 $43.77
Statistical Model+Unit 6 $44.23 $44.91 $47.08 $43.86 $43.23 $42.94 $42.59
APPA Benchmark--10% to 50 %
Generation(median) $46.00 $58.00 $47.00
APPA Benchmark--North
Central/Plains(median) $49.00 $59.00 $60.00
APPA Benchmark--50% to 100%
Generation(median) $34.00 $46.00 $43.00
20
Per Unit and Extended Savings
Per Unit($/MWHR) Savings by project 2006 2007 2008 2009 2010 2011 2012
25 MW Base Load and Market $3.38 $0.55 $5.00 $8.72 $7.19 $7.64 $6.35
+ Unit 8 $0.97 $0.68 $0.95 ($0.26) $0.26 $0.21 $0.07
Statistical Model + Unit 5 $1.93 $2.68 $1.56 $0.63 $0.74 $0.96 $1.18
Statistical Model + Units 3, 4 $1.62 $2.26 $1.31 $0.53 $0.62 $0.81 $0.99
Statistical Model + Unit 6 $1.93 $2.68 $1.56 $0.63 $0.74 $0.96 $1.18
Electric Sales (MWHR's) 319,069 328,647 318,496 288,620 305,777 302,775 291,957
Extended Savings 2006 2007 2008 2009 2010 2011 2012
25 MW Base Load and Market $1,078,771 $180,675 $1,592,879 $2,516,080 $2,198,758 $2,312,946 $1,852,610
+ Unit 8 $309,172 $224,629 $304,073 ($74,937) $80,785 $62,353 $20,350
Statistical Model + Unit 5 $615,954 $882,118 $496,845 $180,551 $225,721 $289,806 $344,275
Statistical Model + Units 3, 4 $518,163 $742,836 $418,396 $152,043 $190,081 $244,047 $289,916
Statistical Model + Unit 6 $615,319 $882,118 $496,845 $180,551 $225,721 $289,806 $344,275
Total Savings $3,137,378 $2,912,375 $3,309,037 $2,954,288 $2,921,065 $3,198,957 $2,851,426
Note: Red = Market Hedge and Bundling
21
Bundling and Market Prices


2007 2008 2009 2010 2011
Annual LMP(Market)
Prices $51.26 $48.08 $24.61 $29.01 $27.76
$-
$500,000.00
$1,000,000.00
$1,500,000.00
$2,000,000.00
$2,500,000.00
$3,000,000.00
$3,500,000.00
2006 2007 2008 2009 2010 2011 2012
Bundled Revenue
Bundled Income
Bundled Expense
Effects on bundling as it relates to LMP or Market Prices--HUC generates
more MWHRs during higher market year prices. In addition, Operating Revenue
and Operating Income both increase substantially. The graph only reflects plant 1
generation.
22
Bundling and Market Prices
2007 2008 2009 2010 2011
Annual LMP (Market) Prices $51.26 $48.08 $24.61 $29.01 $27.76
0
5000
10000
15000
20000
25000
30000
2006 2007 2008 2009 2010 2011 2012
Bundled Generation
Bundled Generation
MWHRS

HUC generates more MWHRs during higher
market year prices. The graph only reflects plant
1 generation.
23
Market Purchases, Hedged Generation
and LMP (Market) Prices
2007 2008 2009 2010 2011
Annual LMP (Market) Prices $51.26 $48.08 $24.61 $29.01 $27.76
0
20000
40000
60000
80000
100000
120000
2006 2007 2008 2009 2010 2011 2012
Hedge
Market Purchases
Market Purchases and Hedged Generation--HUC generates
more MWHRs during higher market year prices. The graph
only reflects plant 1 generation.

MWHR
24
Savings due to changing Base Load and
Market PurchasesJanuary 2013
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
2006 2007 2008 2009 2010 2011 2012
25 MW Base Load
25
Savings due to Unit 8 Scheduled Hedge
and BundlingJanuary 2013
($500,000)
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
2006 2007 2008 2009 2010 2011 2012
+ Unit 8
25 MW Base Load
Note: Red = Market Hedge and Bundling

26
Savings due to adding Unit 5 Hedge
and BundlingFebruary 2013
($500,000)
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
2006 2007 2008 2009 2010 2011 2012
Statistical Model + Unit 5
+ Unit 8
25 MW Base Load
Note: Red = Market Hedge and Bundling. Years 2006, 2007 and 2008 are higher market
years, please note effectiveness of HUC generation during those years.

27
Savings due to Additional Operating
Hours Units 3 and 4 Hedge and
Bundling--2014
($500,000)
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
2006 2007 2008 2009 2010 2011 2012
Statistical Model + Units 3, 4
Statistical Model + Unit 5
+ Unit 8
25 MW Base Load
Note: Red = Market Hedge and Bundling. Years 2006, 2007 and 2008 are higher market
years, please note effectiveness of HUC generation during those years.
28
Savings due to adding Unit 6 Hedge and Bundling
2015/16
($500,000)
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
2006 2007 2008 2009 2010 2011 2012
Statistical Model+Unit 6
Statistical Model + Units 3, 4
Statistical Model + Unit 5
+ Unit 8
25 MW Base Load
Savings by Market Year with Respect to Integrated Resources Plan and Other Strategies

Note: Red = Market Hedge and Bundling. Years 2006, 2007 and 2008 are higher market
years, please note effectiveness of HUC generation during those years.


29
Summary of Savings
2006 2007 2008 2009 2010 2011 2012
25 MW Base Load and Market Purchases $1,078,771 $180,675 $1,592,879 $2,516,080 $2,198,758 $2,312,946 $1,852,610
Savings due to gen. hedge & bundling $2,058,608 $2,731,700 $1,716,158 $438,208 $722,307 $886,011 $998,815
$3,137,378 $2,912,375 $3,309,037 $2,954,288 $2,921,065 $3,198,957 $2,851,426
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
2006 2007 2008 2009 2010 2011 2012
Savings due to gen. hedge & bundling
25 MW Base Load and Market Purchases
Summary--note effectiveness of plant 1
generation hedge and bundling
during higher electric market years
(years 2006, 2007, and 2008).
30
Question on Power Supply
Planning?
31
Supporting Documents
32
HUC 2006Market
$/MWHR
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
Market
Statistical Model+Unit 6
Market Average
Average + Unit 6
Market Risk Mitigation 2006
Average price using a combination
of market purchases and HUC
generation at plant 1
Average price if all extra
needs purchased off market
33
2006 Blended
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
2006 Actual
Statistical Model+Unit 6
2006 Actual Average
Avg + Unit 6
2006
Base Load Contract
reduction,

Unit 8 scheduled run,

Statistical Model being used,

Installation of New Unit 5

Unit 3 and 4 added Op. hours

Installation of New Unit 6

Note:
Prices do not include
Transmission expense.
34
HUC 2007Market
$/MWHR
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
Market
Statistical Model+Unit 6
Average Market Price
Average + Unit 6
Market Risk Mitigation 2007
Average price if all extra
needs purchased off market
Average price using a combination
of market purchases and HUC
generation at plant 1

35
2007 Blended
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
2007 Actual
Statistical Model+Unit 6
2007 Average
Avg + Unit 6
2007
Base Load Contract
reduction,

Unit 8 scheduled run,

Statistical Model being used,

Installation of New Unit 5

Unit 3 and 4 added Op. hours

Installation of New Unit 6
Note:
Prices do not include
transmission expense
36
HUC 2008Market
$/MWHR
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
Market
Statistical Model+Unit 6
Average Market Price
Average + Unit 6
Market Mitigation 2008
Average price if all extra
needs purchased off market

Average price using a combination
of market purchases and HUC
generation at plant 1

37
2008 Blended
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
2008 Actual
Statistical Model+Unit 6
2008 Average
Avg + Unit 6
2008
Base Load Contract
reduction,

Unit 8 scheduled run,

Statistical Model being used,

Installation of New Unit 5

Unit 3 and 4 added Op. hours

Installation of New Unit 6

Note:
Prices do not include
38
HUC 2009Market
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
Market
Statistical Model+Unit 6
Average Market Price
Average + Unit 6
Market Mitigation 2009

39
2009 Blended
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
2009 Actual
Statistical Model+Unit 6
2009 Average
Avg + Unit 6
2009
Base Load Contract
reduction,

Unit 8 scheduled run,

Statistical Model being used,

Installation of New Unit 5

Unit 3 and 4 added Op. hours

Installation of New Unit 6

Note:
Prices do not include
transmission expense.
40
HUC 2010Market
$/MWHR
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
Market
Statistical Model+Unit 6
Average Market Price
Average + Unit 6
Market Risk Mitigation 2010
Average price if all extra
needs purchased off market
Average price using a combination
of market purchases and HUC
generation at plant 1

41
2010 Blended
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
2010 Actual
Statistical Model+Unit 6
2010 Average
Avg + Unit 6
2010
Base Load Contract
reduction,

Unit 8 scheduled run,

Statistical Model being used,

Installation of New Unit 5

Unit 3 and 4 added Op. hours

Installation of New Unit 6
Note:
Prices do not
Include transmission
42
HUC 2012Market
$/MWHR
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$50.00
Market
Statistical Model+Unit 6
Average Market Price
Average + Unit 6
Market Mitigation 2012

Average price if all extra
needs purchased off
market
Average price using a combination
of market purchases and HUC
generation at plant 1

43
2012 Blended
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
2012 Actual
Statistical Model+Unit 6
2012 Average
Avg + Unit 6
2012
Base Load Contract
reduction,

Unit 8 scheduled run,

Statistical Model being used,

Installation of New Unit 5

Unit 3 and 4 added Op. hours

Installation of New Unit 6
Note:
Prices do not include
transmission expense
44