Bryan Texas Utilities FY15 Rate and Budget...

Bryan Texas Utilities

FY15 Rate and Budget Presentation August 12, 2014

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Gary Miller General Manager Bryan Texas Utilities

Cost of Service Rate Design

Municipal Electric Rates Fair - Equitable - Predictable * prevent cross subsidization * minimize large swings in price Local Control Not for Profit Cost of Service studies identify the costs to serve each type of customer and is then used to set rates accordingly Regular COS studies identify valuable information for the financial proforma needed for both short and long range strategic business planning

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NewGen Strategies, LLC

Municipal and Governmental Clients in Texas Include: • Austin (Texas) • Austin Energy (Texas) • Bryan Texas Utilities (Texas) • Garland Power & Light (Texas) • Garland (Texas) • Greenville Electric Utility System (Texas) • Lubbock (Texas) • Lubbock Power & Light (Texas)

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Cost of Service

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O&M Expense

Debt Service

GFT

Capital

Other

Prod. Demand Energy

Trans. Demand

Dist. Demand

Customer

Cust. Svc. Cust.

1 2 3. Classify 4. Allocate

COST OF SERVICE BY RATE CLASS

Cost of Service Results - City

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-3% -8% -6%

2% 0%

11%

0%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

-$0.150

-$0.100

-$0.050

$0.000

$0.050

$0.100

$0.150

Residen. SmallComm

GeneralService

LargeIndustrial

Trans.Service

RuralElectricDivision

Total

$/KW

H

City Cost of Service Rate vs. Current Rate ($/kWh and Percentage Change)

Current Rate COS Rate Change

Cost of Service Results - Rural

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11% 0% -5%

4% 12% 7%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100 %

-$0.150

-$0.100

-$0.050

$0.000

$0.050

$0.100

$0.150

Residen. Residen. CS SmallComm

GeneralService

Irrigation Total

$/KW

H

Rural Cost of Service Rate vs. Current Rate ($/kWh and Percentage Change)

Current Rate COS Rate Change

Residential Comparison – City/Rural

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$0.1019 $0.0985

$0.0934

$0.1033

CURRENT RATE COS

City and Rural Residential Rate Comparison ($/kWh)

City Rural

Phased in Approach

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Retail rates designed to reach cost of service for all classes in three phases Rate increases initially offset by decrease to

Power Supply Adjustment Power Supply Adjustment offset duration

dependent on future fuel costs Maintain Regulatory Charge pass through in

Rate Structure

City Residential Rate Comparison

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$100 $109 $105

$110 $116 $116

$128

BTU - City BTU - CollegeStation

Austin EnergyCity Rate

GarlandPower and

Light

BluebonnetElectric Coop

NavasotaValley Electric

Coop

CollegeStationUtilities

Average Monthly Residential Bill at 1,000kWh ($/Month)

Rural Residential Rate Comparison

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$159 $160 $162 $172 $172 $188

Proposed BTU -Rural

Garland Powerand Light

BluebonnetElectric Coop

Austin EnergyOutside City

Rate

Navasota ValleyElectric Coop

College StationUtilities

Average Monthly Residential Bill at 1,500kWh ($/Month)

Small Commercial Comparison

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$107 $104

$121 $130 $133

$150

BTU - City BTU - Rural Austin EnergyCity Rate

BluebonnetElectric Coop

Garland Powerand Light

College StationUtilities

Secondary Service Small - Average Monthly Bill at 1,000 kWh

City Commercial Demand Rate

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$2,156 $2,108

$2,553 $2,777 $2,859 $2,991

BTU - City BTU - Rural BluebonnetElectric Coop

Austin EnergyCity Rate

CollegeStationUtilities

GarlandPower and

Light

Secondary Service Demand Average Monthly Bill 25,000kWh Energy Usage/85kW Demand

(40% Load Factor)

Conclusions

• BTU can temporarily offset base rate increases by returning current fuel charge over-recovery balance

• Total City rate increase with fuel offset: 0 percent

• Total City rate increase without fuel offset: 2.4 percent

• Total Rural rate increase with fuel offset: 7 percent

• Total Rural rate increase without fuel offset: 9.9 percent

• At end of phase in period and end of fuel offset, BTU still maintains competitive rates.

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BTU Board Recommendation

• Modify rates to collect correct cost of service • Phase in rates over a three year period to

minimize cost impacts on customers • Adopt Electric Rate Ordinances as proposed

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FY15 Budget Highlights

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Capital Spending

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$-

$5

$10

$15

$20

$25

$30

FY8 FY9 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

Transmission Distribution Production Billing/AMI All Other

Transmission Projects • FY15 Atkins to Briarcrest $ 5.0 mm

Wellborn to Millican $ 2.1 mm Kurten Sub $ 1.5 mm Triangle Park Sub $ 1.3 mm

• FY16 Rayburn to Nall $ 1.5 mm

• FY17-19 Triangle Park Sub #2 $ 6.0 mm Underground Cable Replace $ 5.0 mm Annex Sub $ 4.5 mm Tabor to Rayburn $ 4.5 mm Graham Sub $ 3.5 mm

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-

$1

$2

$3

$4

$5

$6

$7

$8

$9

FY8 FY9 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

Distribution Substation Other Distribution

Distribution CIP Trends - City (in millions of $)

FY15 Distribution Projects - City

• Pole Replacement Program $2.3 mm

• Atkins to Briarcrest Upgrade $385k • Atkins Cable Tray

$250k • Underground Cable Replacement $160k • GIS Mapping

$160k

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Distribution CIP Trends - Rural (in millions of $)

$-

$1

$2

$3

$4

$5

$6

$7

$8

FY8 FY9 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

Distribution Subtation Distribution Other AMI

FY15 Rural Distribution Projects

• New Customer Construction $2.9 mm • New Feeder Construction $0.9 mm • Distribution Substations $0.4 mm

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Financial Measures

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BTU Credit Ratings

S&P

• A+ • Stable

Outlook

Fitch

• A+ • Stable

Outlook

Moody’s

• A2 • Stable

Outlook

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‘AA’—Very strong capacity to meet financial commitments. ‘A’—Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.

Days Operating Cash – City System

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-

20

40

60

80

100

120

140

160

180

200

2012 2013 2014 2015 2016 2017 2018

Minimum

Debt Service Coverage – City System

Target

Minimum

25

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2012 2013 2014 2015 2016 2017 2018

Days Operating Cash – Rural System

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-

20

40

60

80

100

120

2012 2013 2014 2015 2016 2017 2018

Minimum

Debt Service Coverage – Rural System

Target

Minimum

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0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2012 2013 2014 2015 2016 2017 2018

Budget Summary

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FY15 Expenditure Assumptions

Overall Expenditures up $20.1 mm

• Energy cost up $12.6 mm due to customer growth, greater off-system sales, and expected higher fuel costs

• TMPA capacity cost up $6.3 mm • Higher General Fund Transfer - $1.4 mm • Departmental O&M up $ 100k (less than 1%) for:

– 3.5% Merit – 4 staff additions – Offset by lower production maintenance costs

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FY15 Budget Proposal – City System (in thousands of $)

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FY15 Budget Proposal – City System (in thousands of $)

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FY15 Budget Proposal – Rural System (in thousands of $)

FY15 Budget Proposal – Rural System (in thousands of $)

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BTU – General Fund Transfer (in millions of $)

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0

2

4

6

8

10

12

14

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Next Steps

• Council Feedback

• Rate and Budget Resolutions from BTU

• Incorporate BTU Budget into total City Budget

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