20040224Hirsh Direct.pdf

William M. Eddie (ISB# 5800)
ADVOCATES FOR THE WEST
O. Box 1612
Boise, ill 83701
[phone]
fax: [phone]
billeddie(fYnnci .net
Idaho Pui:'!~ Utmties Commission
Office of me SecretaryRECEIVED
FEB 2 U 2004
Boise, Idaho
Express Mail:
1320 W. Franklin St.
Boise, ID 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS INTERIM
AND BASE RATES AND CHARGES FOR
ELECTRIC SERVICE
CASE NO.IPC-03-
DIRECT TESTIMONY OF NANCY HIRSH
ON BEHALF OF NW ENERGY COALITION
DIRECT TESTIMONY OF NANCY HIRSH
I Qualifications and Background
PLEASE STATE YOUR NAME, BUSINESS ADDRESS AND POSITION
WITH THE NW ENERGY COALITION.
RESPONSIBILITIES.
My name is Nancy Hirsh. My business address is 219 First Ave. South, Suite
100, Seattle, W A 98104. I am the policy director for the NW Energy
Coalition (NWEC).
PLEASE DESCRIBE YOUR EDUCATION, BUSINESS EXPERIENCE AND
I have a Bachelor of Science degree from the School of Natural Resources at the
University of Michigan. I spent twelve years in Washington, D.C. working for
the National Wildlife Federation and Environmental Action Foundation on federal
energy policy and electric utility issues, including providing assistance to state
environmental and consumer organizations working on utility resource planning.
I made numerous presentations to national and state audiences on the importance
of least cost resource planning and the role of energy efficiency and renewable
energy resource development in keeping utility customer bills affordable. Since
1996, I have been the policy director for the NW Energy Coalition, coordinating
the work of the policy team in advocating for investments in clean and affordable
energy services. I serve as Chair of the Board of the Renewable Northwest
Project. I also am a member of Idaho Power s Energy Efficiency Advisory
Group.
Q. PLEASE DESCRIBE THE NW ENERGY COALITION.
Hirsh, Nancy - Di
NW Energy Coalition
A. The NW Energy Coalition is an alliance of more than 100 environmental, civic
and human service organizations, progressive utilities and businesses from Oregon
Washington, Idaho, Montana, Alaska and British Columbia. We promote energy
conservation and renewable energy resources, consumer and low-income protection
and fish and wildlife restoration in the Columbia River Basin. The Coalition has 11
member organizations in Idaho, including groups such as Advocates for the West
League of Women Voters, Idaho Rural Council, and South Central Community
Action Agency.
Q. HAVE YOU PREVIOUSLY TESTIFIED IN REGULATORY PROCEEDINGS?
A. Yes. I have testified before the District of Columbia and Georgia Public Service
Commissions, the Public Utility Commission of Oregon and the Washington Utilities
and Transportation Commission. My previous testimony concerned integrated
resource planning, rate design issues, utility sale of assets and the public benefit
concerns from utility mergers.
II Overview of Testimony
Q. CAN YOU SUMMARIZE YOUR TESTIMONY?
A. Yes. Idaho Power is seeking to shift common variable costs into a fixed service
charge. This move goes against standard rate design allocations for customer
charges, reduces customers ' ability and willingness to implement energy saving and
bill reduction measures, and unduly impacts low and fixed income households. I will
only address the increase in the customer charge for residential customers, as they are
a core constituency for the Coalition.
Hirsh, Nancy - Di
NW Energy Coalition
III Residential Customer Charge
Q. HOW IS IDAHO POWER PROPOSING TO CHANGE ITS FIXED CUSTOMER
CHARGE?
A. Currently, residential customers pay a monthly customer charge of $2.51. In this
case, the Company is proposing a service charge of $1 0.00 for residential customers
in Schedule 1. This is a 300 percent increase in the fixed monthly charge residential
customers see on their bill.
Q. WHY IS THE COMPANY PROPOSING SUCH A DRAMATIC INCREASE IN
THE CUSTOMER CHARGE?
A. On page 11 of his direct testimony, Mr. Gale states that the Company advocates
movement toward cost-of-service results which assign costs to those customers that
cause the company to incur the costs." This proposed move to collect more revenues
from fixed charges , rather than volumetric sales, will reduce revenue risk. Increasing
the fixed portion of a customer s bill reduces revenue fluctuations by providing
modest guaranteed minimum revenue regardless of weather, energy efficiency
improvements and economic conditions.
Q. IS THIS THE BEST APPROACH FOR REDUCING REVENUE
FLUCTUATIONS?
A. No. As NW Energy Coalition witness, Ralph Cavanagh, articulates in his
testimony, the Company can take a more comprehensive approach to address the need
for more certainty in revenue collection without dramatically increasing the customer
charge. Many jurisdictions have used fonns of "decoupling (i.e. the separation of
revenues from volumetric sales) to address this issue.Under decoupling, true-ups are
Hirsh, Nancy - Di
NW Energy Coalition
used to provide the Company with its approved revenue requirement, even when
consumption shifts due to weather, energy efficiency improvements and economic
conditions. Decoupling protects both the utility and its customers from under- or
over-collection of approved revenues, and thus reduces the utility s risk. This
solution is a win-win for both customers and shareholders.
Q. WHAT APPROACH IS THE COMPANY USING TO CLASSIFY ITS COSTS
AMONG CUSTOMER CLASSES?
A. In her testimony, Ms. Brilz cites the National Association of Regulatory Utility
Commissioners Electric Utility Cost Allocation Manual as the primary guide to the
classification of customer costs.
Q. HAS THIS MANUAL BEEN FOLLOWED IN OTHER JURISDICTIONS WITH
RESPECT TO THE DEVELOPMENT OF FIXED CUSTOMER CHARGES?
A. NARUC is clearly a credible source of guidance for state regulators and those
they regulate. However, the 1992 Electric Utility Cost Allocation Manual includes
some methodologies not widely supported by Commissions around the country. In
1992 , the Washington Utilities and Transportation Commission sent a letter explicitly
rejecting the "minimum distribution" and "minimum-intercept" methods because they
include costs beyond basic customer service. The WUTC letter states "the only costs
which should be considered customer-related are the costs of meters, services, meter
Hirsh, Nancy - Di
NW Energy Coalition
reading and billing. Our staff believes that is the most common approach taken by
Commissions around the country" (emphasis in original).! (see Exhibit 605)
Q. DO YOU SHARE THE VIEW OF THE WUTC STAFF WITH RESPECT TO
DESIGNATING CUSTOMER-RELATED CHARGES?
A. Yes. Meters, line drops, meter reading and billing are the only costs that are
customer-specific costs that do not vary directly with the number of customers served
or with energy usage or demand. When developing the cost allocation methodology
used in customer class rate spread analysis, some of the costs of poles, wires and
transfonners may be applied to the customer charge. However, when establishing
rate design, it is inappropriate to allocate common, non-assignable costs to the fixed
customer charge. For example, ifmy house burns down, the cost savings to the
Company would be limited to not having to provide the meter, meter services and
billing. The poles and wires remain in place to serve the neighbors on either side of
me. Similarly, if! subdivide my house, the additional cost to the Company would
include a new meter, meter reading services and a new billing account, but no
additional poles or wires. Costs related to distribution and other infrastructure may
be appropriate costs to serve the residential class, but they do not belong in the fixed
customer charge as they are not associated with specific customers.
Q. WHY SHOULD DISTRIBUTION FACILITY COSTS GENERALLY BE
EXCLUDED FROM THE FIXED CUSTOMER CHARGE?
I Letter from Paul Curl, Secretary of Washington Utilities and Transportation Commission, to Julian Ajello
of the Califol11ia Public Utility Commission, regarding review of the NARUC Electric Utility Cost
Allocation Manual, June 11 , 1992.
Hirsh, Nancy - Di
NW Energy Coalition
A. These costs are joint costs that cannot be specifically allocated to the customer
paying the bill. The costs are real for the residential class but they are costs more
associated with demand, number of customers, distance and density -- not an
individual customer. Distribution system costs, such as trans fanners and substations
are driven by throughput and vary over the long-run depending on energy use. For
example, trans fanner upgrades are usually driven by power supply costs and the need
to reduce losses. These types of costs reflect area-wide conditions and cannot be
attributed to an individual customer. Poles, wires and trans fanner costs may be fixed
in the short-tenn but ultimately they are sized for long-tenn demand.
A leading author in utility rate design is critical of the inclusion of a portion of
annual maintenance and capital costs of the distribution system in customer cost
calculations. In his book Principles of Public Utility Rates, James Bonbright states
the inclusion ofthe costs of a minimum-sized distribution system among the
customer-related costs seems to me clearly indefensible.. .
Q. WHAT COSTS DO THE OREGON AND WASHINGTON COMMISSIONS
INCLUDE IN THE CUSTOMER CHARGE?
A. The Washington and Oregon Commissions have general policies to allow only the
inclusion of meters, line drops, billing and meter reading as part of the calculation of
the customer charge. According to Bob Jenks, executive director of the Citizens
Utility Board of Oregon, the policy of Oregon has been consistent for the past decade.
As part of the Oregon Commission s overall rate design philosophy to send customers
2 Bonbright, James c.Principles of Public Utility Rates, New York, Columbia University Press, 1961
347.
Hirsh, Nancy - Di
NW Energy Coalition
the appropriate price signal, only directly assignable costs are included in the
customer charge.
ARE YOU PROPOSING A HARD RULE THAT THE TOTAL COSTS OF
METERS, LINE DROPS , METER READING AND BILLING SHOULD REPRESENT
THE FIXED CHARGE?
A. No. In my opinion, the sum of these costs represents the absolute maximum
amount of a fixed charge. However, other factors, including the need to create
appropriate incentives to guide energy usage, instruct that fixed customer charges
should be less than the sum of those listed costs. When considering the question of
whether customer charges should be increased and usage charges decreased
Frederick Weston, with the Regulatory Assistance Project, concluded: "for the most
part, the answer is no, and even suggests that it may be appropriate in certain cases to
reduce customer charges.3 (See Exhibit 606). I further explain the policy reasons for
this opinion later in my testimony.
Q. WHAT COSTS DOES THE COMPANY INCLUDE IN ITS COST OF SERVICE
FOR RESIDENTIAL CUSTOMERS?
A. In Ms. Brilz s Exhibit 42 - Cost of Service Unit Costs, the costs for Schedule
customers is outlined. This list includes substations, numerous line charges, services
meters and meter reading, customer accounts, uncollectibles, and customer assistance.
3 Weston, Frederick Charging For Distribution Utility Services: Issues in Rate Design, RegulatOlY
Assistance Project December 2000, p. 46.
Hirsh, Nancy - Di
NW Energy Coalition
Q. WHAT PERCENTAGE OF THE COMPANY'S STATED TOTAL COST OF
SERVICE FOR RESIDENTIAL CUSTOMERS WOULD BE COLLECTED
THROUGH THE PROPOSED FIXED CHARGE?
A. Exhibit 42 shows that the total cost of service for residential customers is $24.
per customer per month. A $10.00 service charge is about 41 percent of$24.61.
Q. HOW DOES THE COMPANY ARRIVE AT $10.00?
A. On pages 4&5 of her direct testimony, Ms. Brilz describes customer related costs
as the "investment in meters, a portion of the investment associated with distribution
facilities, the costs associated with meter reading and billing, and the costs associated
with maintaining the availability of service regardless of whether service is actually
taken.From reviewing the Company s testimony it is not clear how the $10 was
derived. The costs of meters, meter reading, billing and line drops are specifically
delineated in Exhibit 42; however it is not apparent how the company detennined the
portion of the investment associated with distribution facilities" and "costs
associated with maintaining the availability of service regardless of whether service is
actually taken" that were included in the proposed fixed charge. The Company
appears to have summed all costs of service for Schedule 1 customers (less certain
revenues), and then reduced that total amount ($24.61) by 40% to reach the figure of
$10. The Company has not articulated a basis for this 40% multiplier factor, and I
have not been able to independently detennine its basis.
Hirsh, Nancy - Di
NW Energy Coalition
Q. WHAT ELEMENTS OF THE LISTED COSTS OF SERVICE FOR SCHEDULE
CUSTOMERS IN THE BRILZ EXHIBIT 42 COULD PROPERLY BE INCLUDED
IN A FIXED CUSTOMER CHARGE?
A. The table below identifies costs in Brilz Exhibit 42, page 1 (Residential Service -
Schedule 1) that appear to correlate with categories of costs I discussed above, which
collectively fonn an absolute cap on any fixed charge.
Line Function Service $/Cust/Month
276 Meters 362850
278 Install on Cust. Premises 2076l
281 Meter Reading 1.51315
282 Customer Accounts 68819
Total 7718
Q. IS IT YOUR RECOMMENDATION THAT THE FIXED CUSTOMER CHARGE
FOR SCHEDULE 1 CUSTOMERS SHOULD BE $6.77?
A. No. The figure of $6.77 is the maximum that could be justified based on the
infonnation submitted by the Company. For the policy reasons discussed further
below, it is my opinion that the fixed charge should be considerably lower than this
amount.
Hirsh, Nancy - Di
NW Energy Coalition
Q. ARE YOU FAMILIAR WITH THE CUSTOMER CHARGES OF SOME OF THE
OTHER INVESTOR-OWNED UTILITIES OPERATING IN THE PACIFIC
NORTHWEST?
A. Yes (See Exhibit 607):
Puget Sound Energy: $5.
Avista (Washington): $5.
Avista (Idaho): $4.
Pacific Power (Washington): $4.
Pacific Power (Oregon): $7.
Portland General Electric: $10.
IV Adverse Impacts from Increasing the Fixed Customer Charge
Q. DOES MOVING A GREATER PROPORTION OF COST RECOVERY INTO A
FIXED CUSTOMER CHARGE HAVE ADVERSE IMP ACTS?
A. Yes. There are a number of significant impacts on customers.
First, the marginal cost of the next increment of peak demand and baseload
energy is clearly more than the average system cost. Putting common costs into the
energy charge gives a price signal to customers that reflects this reality. The
Company s proposal reduces that price signal to customers, thereby reducing the
incentive to increase energy efficiency and conserve energy. A high fixed portion of
the bill gives the customer less control over his or her bill. Customers become less
4 In Commission order UE 155, pages 21-, August, 2001, the Commission agreed to the $10 customer
charge in order to prevent a rate decrease for small use customers when all other customers were facing a
rate increase. PGE originally proposed a $7.00 customer charge for line drop, meters, meter reading and
billing. The customer charge was increased to $10.00 to compensate for a tiered rate structure adopted by
the Commission which reduced the overall rate increase originally sought by PGE.
Hirsh, Nancy - Di
NW Energy Coalition
motivated to reduce consumption and improve efficiency, therefore efficiency
investments become more expensive as opportunities for increasing efficiency are
lost. A high customer charge conflicts with the Company s demand-side
management programs that invest in energy efficiency measures in customer homes
and businesses. Over the past two years, the Company has changed its corporate
focus to include a commitment to acquire energy savings as a resource for meeting
customer supply needs and reducing peak load. With funds from the demand-side
management tariff rider, the Company has initiated a more public energy efficiency
campaign than at anytime in the last decade. The Energy Efficiency Advisory Group
is working closely with the Company to help design the most effective program
offerings for customers. The Company is marketing and financing programs to
encourage customers to participate in the rejuvenated Idaho Power energy efficiency
programs. Yet, the increase in the fixed charge makes the job of the energy
efficiency staff that much harder, as customers see less reward for participating in the
Company s programs.
Second, the Company s 2002 Integrated Resource Plan identified peak demand as
a critical problem for the Company. Clearly, the introduction of seasonal rates is a
direct attempt by the Company to address this problem. However, as mentioned
above, increasing the fixed customer charge tells the customer that there is less cost
associated with increased usage at the same time that the seasonal rates are trying to
send the opposite signal. Perhaps a better approach would be to maintain the
customer charge and the rate for the first 500 - 1000 kwh/month at current levels, and
apply an increase only to the end-block of power during the peak season. An inverted
Hirsh, Nancy - Di
NW Energy Coalition
rate structure focuses customer attention on discretionary usage during the peak
period. PacifiCorp in Oregon, Pacific Gas and Electric and Southern California
Edison all use this approach. Inverted rates must be accompanied by aggressive
energy efficiency programs to assist customers in responding to the price signal.
Third, the increase from $2.51 to $10.00 is a 300 percent increase. That is quite a
dramatic increase in a service territory known for some of the lowest rates in the
country. The overall rate shock associated with the requested rate increase will be
further exacerbated by the fact that customers can t do anything to reduce the service
charge portion of their bill. If these costs are incorporated into the energy charge
then customers have the ability to reduce consumption through improved efficiency
and reduce their overall bill.
Fourth, low- and fixed-income households pay more for their energy costs as a
percent of their income than non low- and fixed-income customers. An increase in
the fixed charges would disproportionately impact low- and fixed-income customers.
As discussed earlier, a high fixed charge that inappropriately includes costs that are
really driven by usage - either energy or demand - will shift costs from high usage
customers to this fixed charge. Small use customers in trailer courts, multi-family
buildings and in densely populated areas do not drive up demand and increase
pressure on the distribution system in the same way that new sub-divisions with large
housing stock cause upgrades. Small use customers, which may be fixed income
seniors living in apartments or trailer courts, will see a greater increase in rates. By
moving non-energy costs into the fixed service charge, the Company is rewarding
high use customers with a lower percent increase in rates. This situation exacerbates
Hirsh, Nancy - Di
NW Energy Coalition
the high percent of income payment problems faced by low- and fixed- income
households.
Q. DOES THIS CONCLUDE YOUR TESTIMONY?
A. Yes.
Hirsh, Nancy - Di
NW Energy Coalition
02/18/04 ~ ~
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June 11, 1992
REF':6-1134
Mr~ !ulian Ajello
California PU C.'-r 505
Van NesS Avenue
San Francisco', California 94102
Dear Mr~ Ajello:
PIease a""'Pt tbis belated response to your request ror review of the
Febcu:uy. 1991 . driIft of the new N
AR. U C Electric Utility
QJ s ,LAl!g.Manu'!.!. Our st2:ff re co gnjz os ,
that the fimI has now been
printed. However, the incO11Si'to"t treatment
of customer
re!ated ""Sts in the man"; is of cone""" In thr~ areas, three different approache, arepresomod. The first is an energy weighted approach, ,the second the S~ed "minimum.system or I!zero~int~rc~pt" method, and tbe
last is the "basic CUstomer" method.At page 39 of the d,~ distribution plant is identified as being CUStomer, demand, andenergy-rOlate!!. That
is consistent with the "'eatInent of gas
distnoution plant by thisCommission, where it b", ordered that 50% of distribution mains be treated '"
commodity-related. Our Co!!lmi.ssiQ!! b",not =de specific-findings OIl eJemicdistribution plant, exc~pt as set forth below.
At pageS 91-100 of ili. drat', the miriliuWIl-SY5'.m and zero interc.pt methods arepresented. These methods do not confoim to
the =trix: on page 39, wbich incorporate,an energy Component of &scribndon plant
. Unfor1Unafcly, these two methods ate
tbe
oroX methods presented. These are
the two methods 'our CmIimission bas explicitlyrejected.
Fincl!y, "" page 148, in the section on marginal cost determination; the '
~asic 'customer
method, counting as cuStomer relzted costs only meters,
services, !!!eter rea,Hng, 1Uid
billing, is identified and ~ci'ended.
( i
Previoi!s&afu inc!uded !dditiooa! mothod,
wbicb..o missing ftom the fiIWl versiao.For o"""'PIC; the 10/31/88 dlilfi disrossed at tI,e i\ill mooting m
S." Francisco containeda section explicitlY settiDg forth the basic customer method in
the embedded COSt scction.
Iii l'oveIIlbor of 1988, a 'Croon
dis=ing the eoergy-lVeigltted method was dh~bu"'d to. the Ccmn:"ttee.
. .
EXHIBIT
, /
~O~
02/18/04 15: 49 FAX [phone] N Hirsh (NCAC)l4i 005
~.
J~ Nelia
June 11,'1992
Page 2
, ('
Our Co~m;~sion h3s be~n extremely dear about Olle thing in this '~a:' that the'minimum-distribution" and '!ninimwn~intercept" metho$ are not acceptable, and that
- ,
the .ID1b!costs' which shpuId ~~ considered customer-related are the costS of meters
, ,
serviceS. meter reading ::;nd billing. Our staff believes that is the most common approacb Ween by Commi~oDS aroWld the country. For exapJ.ple, in Iowa,: the arfmirdstrativerules of the Commi~slQn set this forth explicitly, while in Arizona and Illinois, the'm'mi~oris ha,:e explicitly rejected tbe minimum-syste~ or mipimum-intercept me~ods
..
'I in favor:af the basic ~tomer appro?-Ch.
, '
ill gaS cOst or service, o Comm.ission has explicitly found that diStribution plant(including service connections) is partially demand-related and partially commodity ,re1at~d, consistent with the matrix on page 39. The' CoITesPOD.dIng plant oIl the electiic 'side - poles, ~nductorS and tr3Ilsformers ...;. has not beeri positively resolved in ariy casesto date. A r~GeDtIy'~ed electrlc '~ost of service case will provide an opportunity for
' ,
advocates of the demand:-only alJ6cation. approach and thos~ favoring .an en~rgy weighingapproach to make their cases before the CanlI11issioD.
' hope ,that it is possible to either couect futur~
editions, of the Manual to refleCt the. vanety of approaches to determlnlng
customer-related costs; or to even issue a correctionto this edition.
Please feel free to contact Bruce
Folsom at [phone] with, any questions you maynave.
Sincerely,
, ,
v-~
, Paul Curl
Se....'TetaIy
' ", '. ,' "
02/18/04 15: 47 FAX [phone] N Hirsh (NCAC)
CHARGING Fa DISTRIBUTION UTILITY
SERVICES:
ISSUES IN RATE DESIGN
December 2000
Frederick Weston
with assistance from:
Cheryl Harrington
David Moskovitz
Wayne Shirley
Richard Cowart
The Regulatory Assistance Project
16 State Street, M:ontpelier, VT 05602
Phone: [phone]
Fax: [phone]
rapvennont(q)ao 1. com
i4J 002
. EXHIBIT
GOb
02/18/04 15: 47 FAX [phone] N Hirsh (NCAC)141003
CHARGING FOR DrsTRIBUTION UTIUTY SERVlCES 'PAGE 46
through their effects (reduced public health, acid deposition, etc.67 Put iLTlother way, the
marginal environmental costs of generation, which are largely associated with fuel consumption
and therefore are directly coITelated to kilowatt-hour production, are not reflected in CUITent
prices for electricity.
Because generation markets do not intemaJize all the costs of production, it falls to regulators
and policyrnakers to correct the failure, Volumetric pricing for distribution services, appropriate
for the reasons already stated, is also justified on the ground that there are incremental kilowatt-
hour costs that commodity prices fail to capture; in this way, the mark-up on usage-baseddistribution charges needed to cover the embedded revenue requirement serves as a proxy ror
some portion of the environmental damage costs of production, Whether the mark-up is
sufficient to "cover" those damage costs and whether additional mitigation efforts are warranted
remain of course, questions policymakers must grapple with.
4. Practical Considerations
Usage-based rates are well-understood by consumers, They are for the most part, uncomplicatedand can be easily ad:r:ninistered. Fixed prices share these attributes.
5. Other Issues
a. Customer Charg-es
One kind affixed charge has long been a fixture of uiility pricing: the monthly (or daily)
customer charge. 11 mostjili-isdictions, recurring periodic rates designed to cover at least t~e
costs of metering and billing serve to generate a stream of revenues that does not yary with usage
and thereby provides some meaSUIe of fina.rlC:ial risk mitigation for the utility. For residential
customers, these charges range from as little as a dollar to ten dol1ars or more per month. Forcommercial and industrial customers, they ca.n be considerably greater,
The current debate about pricing for distribution services really comes down to a simple
question: should customer charges be increased and usage charges decreased (or even eliminated)
and, if so, by how much? Our inquiry concludes that, for the most part, t~e fuiswer is no, and
even suggests that it may be appropriate in c~rtain cases to reduce customer charges. Of course
decisions taken by regulatory commissions will be based on the particular facts of each case; our
67. Competitive commodity markets for electricity do not capture these costs in prices; nor are they typically
reflected in IT1lITginal cost studies i..., those states where the industry remai..,s vertically integrated.
68. One variation orthe customer charge is the "minimum biU" approach, such as that used by Central MainePower (see Section ILc.3.), which requi:"es payment of a monthly charge, but with it also comes a specified number
of "fTee" blo"att-hours of de1ivery service. DeEvery in excess of t!-,e allowance is biUed on a per-unit (leV/h) basis.
02/18/04 15: 48 FAX [phone] N Hirsh (NCAC)(4J 004
CHARGING FOR DISTRIBUTION UTILITY SERVICES PAGE47
intention here is to examine the various policy considerations and potential consequences of
different actions,
We do not foresee an outright elimination of customer charges, although, as competition in the
industry grows and alternatives to grid-provided power become more cost-effective, we belieyethat they will become less and less tenable. The rate-making principles that counsel against the
imposition of fixed charges also discourage radical and inunediate changes in rate design.
. Nominal customer charges have been around a long time. They are well-understood by
consumers, and they provide some revenue stability for utilities. Any change in rate design ,
should be deliberate, to minimize potentially deleterious impacts on customers and companies.
In evaluating proposals for redesign or distribution rates, commissions may be asked to consider
structures that call ror some blend of customer and usage charges, weighted so as to increase therevenue share of the fixed rate elements (in relation to historical allocations). Although much of
the discussion in this paper has been cast in "either-or" terms (usage-based vs. fixed rates), itsgeneral prescriptions apply no less to any intennediate, proposal: the magnitude of a shift from
usage-based to fixed rate elements will have predictable effects on consumer demiL.'1d, utilityrevenues, and long-term dynamic efficiency. As one moves along the continuum of rate designs
from usage-based to fixed, the benefits of the former give way more and more to the difficulties
of the latter. This is the kind of trade-off that commissions are often faced with balancing: our
analysis concludes that the balance strongly ravors a rate structure that allows consumers to avoid
charges, when there cost-effective alternatives that they value more highly. Usage-based rates fitthis bilI; so do "hook-up fees" (see the following section).
b. Customer Costs a..TJd Hook-Up Fees
In recognition of the dedicated nature of customer-related facilities (meters and service drops),
regulators might consider an alternative rate structure ror recovering their costs. As discussed
earlier, marginal customer investment costs can be distinguished from other utility marginal costs
of service, insofar as they are only ayoidable atthe time that the facility is installed or replaced.
In a competitive market, a customer would pay the prevailing price of purchasing the hook-up at
the time of installation, which would approximate marginal cost. Tills is the way in which
consumers purchase many durable goods which are affixed to t.heir premises and have no other
uses apfu."L ITom the premises (curtains, ceiling insulation, etc,). Consequently, it may be moreeconomically efficient to recover the costs or access equipment in the form of a customer "hook-
" fee,
The revenUe impacts oft:.~is charge should be carefuIIy considered. Ifhook-up fees m:e to beimplemented, it is critical that double-counting of costs be avoided. Regulators must be careful
to assure that these costs, if recovered in a hook-up fee, are not also included in other distribution
charges.
02/20/04 13: 51 FAX [phone] NWEC l4J 002
WN U-
Twenty-Third Revised Sheet No, 7
Canceling Twenty-Second Revised
Sheet No, 7
PUGET SOUND ENERGY
Electric Tariff G
SCHEDULE 7
RESIDENTIAL SERVICE
(Single phase or three phase where available)
AVAILABILITY:
1. This schedule is limited to residential service, which means service that is delivered through
one meter to a single-family unit and is used principally for domestic purposes, even though
such service may incidentally be used for non domestic purposes, Electric service for
nondomestic use may be separately metered and served under the provisions of the
applicable general service schedule, provided that such service does not include single-family
units,
2, If this schedule is applied to transient occupancy in separately metered living units, billing
shall be in the name of the owner on a continuous basis,
3. Single-phase motors rated greater than 7-1/2 HP shall not be served under this schedule
except by the express written approval of the Company,
4, Space conditioning and water heating capacities shall be energized in increments of 6 KWor
less by a thermostat, jow voiiage relay, or $uitabie time delay equipment.
5. Customers requiring three-phase service under this schedule will be required to contribute the
incremental cost of three-phase facilities to provide such service,
MONTHLY RATE:
Basic Charge: $5.50 single phase or $13.60 three phase
Energy Charge:
Base Rate
2727rt
9144~
Low Income Proqram0126~
0126i
Effective Rate
2653rt per kVVh for the first 600 kWh
9270rt per kVVh for all over 600 kWh
(R)(R)
(R)(R)
Issued: July 1 , 2003
.Advice No.: 2003-
Effective: October 1 , 2003
Issued By Puget Sound Energy
p,/,
:1
-----
Kail R. KaiZmar T1t!e: Director, Regulatory Relations
EXHIBIT
:is bul'
AViSTA CORPORATiON
dba Avista Utilities
First Revision Sheet 1 I
Canceiing
Original Sheet 1I.P.C, No. 28
SCHEDULE
RESIDENT!A.L SERVICE - IDfI,
(Single phase & available voltage)
AVAILABLE:
To Customers in the State of Idaho where Company has electric service available.
APPLICABLE:
To service for domestic purposes in each individual residence , apartment, mobilehome, or other living unit when all such service used on the premises is supplied through a
single meter.
Where a portion of a dwelling is used regularly for; either (a) the conduct of
business, (b) where a portion of the electricity supplied is used for other than domestic
purposes , or (c) when two or more living units are served through a single meter, theappropriate general service schedule is applicable, However, if the wiring is so arrangedthat the service for all domestic purposes can be metered separately, this schedule will be
applied to such service.
MONTHLY RATE:
$4.00 Basic Charge, plus
First
All over
600 kWh
600 kWh
555iper kWh
303iper kWh
Monthly Minimum Charge: $4.
OPTIONP.L SEASONAL MONTHLY CHARGE:
A $4.00 monthly charge shall apply to Customers who close their account on a
seasonal or intermittent basis, provided no energy usage occurs during an entire monthly
biiiing cycle while the account is closed. Customers choosing this option are required to
notify the Company in writing or by phorie in advance and the account will be closed at the
start of the next billing cycle following notification, If energy is used during a monthly billing
cycle, the above listed energy charges and basic charge of $4.00 shall apply.
SPECIAL TERMS AND CONDITIONS:
Service under this schedule is subject to the Rules and Regulations contained in
this tariff.
The above Monthly Rate is subject to increases as set forth in Tax Adjustment
Schedule 58 , Temporary Rate Adjustment Schedule 65 , Temporary Power Cost
Adjustment Schedule 66 , and Energy Efficiency Rider Adjustment Schedule 91.
Issued July 7 2000 Effective August 1 2000
Issued by Avista Utilities
Thomas D. Dukich , Manager, Rates & Tariff P,dministration
02120/04 13: 51 FAX [phone] NWEC l4J 003
WN U-
Third Revision Sheet 1
Canceling
Second Revision Sheet 1
AVISTA CORPORATION
dba Avista Utilities
SCHEDULE 1
RESIDENTIAL SERVICE - WASHINGTON
(Single phase & available voltage)
AVAILABLE:
To Customers in the State of Washington where Company has electric
service available.
APPLICABLE:
To service for domestic purposes in each individual residence , apartment
mobile home, or other living unit when all such service used on the premises is
supplied through a single meter.
Where a portion of a dwelling is used regularly for; either (a) the conduct of
business, (b) where a portion of the electricity supplied is used for other than
domestic purposes, or (c) when two or more living units are served through a
single meter, the appropriate general service schedule is applicable. However, ~f
the wir~ng is so arranged that the service for all domestic purposes can be metered
separately, this schedule will be applied to such service.
MONTHLY RATE:
$5.00 Basic Charge, plus
First 600 Kwh 4.522~ per KwhNext 700 Kwh 5.261 ~ per Kwh
. All over 1300 Kwh 6.167~ per Kwh
Minimum Charge: $5.
SPECIAL TERMS AND CONDITIONS:
Service under this schedule is subject to the Rules and Regulations
contained in this tariff.
The above Monthly Rate is subject to the provisions of Tax Adjustment
Schedule 58, Energy Efficiency Rider Adjustment Schedule 91, Residential and
Farm Energy Rate Adjustment Schedule 59, and Temporary Power Cost
I Surcharge Schedule 93,
Issue June 21, 2002 Effective July 1 , 2002
Per WUTC 5'h Supp. Order in Docket UE.O11595
Issued by Avista Corporation
Kelly Norwood Vice President. Rates & Regulation
02/20/04 1.3:52 FAX [phone] NWEC l4J 004
WN U-74,Ninth Revision of Sheet No. 16
Canceling Eighth Revision of Sheet No. 16
PACIFIC POWER & LIGHT COMPANY
paR COMMISSION' S RECE!P~
STANP
SCHEDULE 16
RESIDENTIAL SBRVI
AVAILABLE
In all territory served by Company in the State of Washington,
APPLICABLE:
To single-f&mily residential Cuetomers only
electric requirements when all service is supplied at
For three-phase residential service see Schedule 18.
for all single-phaseone point of del i very.
MO~~HLY BILLING
The Monthly Billing shall be the sum of the
All Monthly Billings shall be adjusted in
91,97, 98, 99 and 191.
Basic and Energy Charges.
accordance with Schedules
Basic Charge:$4.
Energy Charge
Baae
Rate
4,.285(:
025';:
per kWh for the first 6PO kWh
per kWh for all additional kWh
MINIMUM CHARGE:
The monthly Minimum Charge shall =-e the Basic Charge. A higher
minimum may be required under contract to cover special conditions.
CONTINUING SERVICEExcept as specifically provided otherwise, the rates of this Tariff
are based on continuing service at each service location. Disconnect and
reconnect transactions shall no~ operate to relieve a Customer from monthly
minimum charges.
RULES AND REGULATIONS
Service under , this Sched~le is subj ect to the General Rules and
Regulations contained in the tariff of which this Schedule is a part and to
those prescribed by re~Jlatory authorities.
Issued November 25, 2002 Effective Ja!luary 1, 2003
Issued by PACIFIC POWER ~ LIGHT COMP~7
D. Douglas Larson 1'i tIe Vice President, Regulation
T1"2 10.Advice No.02 -000
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02/20/04 13; 53 FAX [phone] NWEC
Portland General Electric Company Third Revision of Sheet No. 7-
C. Oregon No. E-17 Cancelinq Second Revision of Sheet No. 7-
SCHEDULE 7
RESiDENTiAL SERVICE
AVAILABLE
In all territory served by the Company.
APPLICABLE
To Residential Consumers.
CHARACTER OF SERVICE
60-hertz alternating current of such phase and voltage as the Company may have
available.
MONTHLY RATE
The sum of the following charges per Point of Delivery:
sic Charqe
Single Phase Service
Three Phase Service
Transmission and Related Services Charae
Distribution CharQe
Energy Charge
Standard Cost of Service Offer
First 250 kWh
Over 250 kWh
Time-of-Use (TaU) Offer
(enrollment is necessary) .
On-Peak Period
Mid-Peak Period
Off-Peak Period
First 250 kWh block credit
.. See Schedule 100 for applicable adjustments
$10.
$16,
324 ~ per kWh
272 rt per kWh
. 4.327 ~ per kWh
807 ~ per kWh
7. 990 ~ per kVv"
807 ~ per kWh
926 ~ per kWh
(0.480)~ per kWh
Advice No. 03-
issued No'!9~ber 17 , 2003
Pamela Grace Lesh , Vice President
Effective fer service
on and after January 1 2004
141005
11\
(I)
~i)
(I)
(R)
OZ/ZO/O4 NWEC13; 53 FAX [phone]
Portland General Electric Company
C. Ore on No. E-
Second Revision of Sheet No. 7-
Cancelin~ First Revision of Sheet No. 7-
SCHEDULE 7 (Continued)
MONTHLY RATE (continued)
Renewable Portfolio Options
(available upon enrollment in either Energy Charge option)
Renewable Usage O,800~ per kWh in addition to Energy ChargeFixed Renewable $3.50 per month per blockHabitat $2.50 per month and
800~ per kWh in addition to Energy Charge
Nonstandard Meterinq Charoe
Single Phase meter
Three Phase meter
$1.
$4.
**
Applicable to TaU
RENEWABLE ENERGYRESOURCE PORTFOLIO OPTIONS
The Consumer shall be charged for the Renewable Portfolio Option in addition to all
other charges under this schedule for the term of enrollment in the Renewable Portfolio
Option.
Habitat Option
The organization, For the Sake of Salmon. will receive $2.50 per month from each
Consumer enroiled in the Habitat Option. The O.800~ per kWh shall purchase
Tradable Renewable Credits (TRCs) and/or renewable energy consisting of at
teast twenty percent of new renewable resources and the remainder from other
qualifying resources.
Fixed Renewable Option
The Company shall purchase 200 kWns of Tradable Renewal Credits (TRCs)
and/or renewable energy per block enrolled in the Fixed Renewable Option. All
TRCs purchased under this option shaH come from new renewab!e resources.
Advice No. 03.
issued Septemb~r 12, 2003
Pamela Grace Lesh, Vice President
""""'--"':..- "-- --_.:_-
~H'="\oL!""" ,"'! "";;" v"-,,,
on and after January 1 , 2004
!4j 006
(R)(M)
(N)
(R)
(C)
(C)
(9)
;'-'