Rate Policy Discussion

Presentation to Review PanelNovember 1, 2013

Rate Policy: Role of Review PanelORD 123256, Section 4:c) Assess the adequacy of City Light’s financial policiesd) Review changes to City Light's rates e) Assess City Light's rate design to ensure that rates send

the appropriate signals to customers to use electricity efficiently

f) Assess City Light's implementation of marginal cost allocation among customer classes

2

Rate Policy Review: Goals Predictability: rates/bills should be

predictable. Simplicity/transparency: Rates are

understandable and changes are implemented in an orderly way.

3

Predictability

Financial Stability

Price Signal

Equity

Transparency

Price signals: rates should provide meaningful price signals that ratepayers can observe and act on, to encourage consumption awareness and conservation.

Equity: Everyone should pay their true cost of service. Financial Stability: Rates should collect the full

revenue requirement with a reasonable level of certainty.

Rate Class

Current Structure

Proposed New Structure Predictability

Transparency

Price

Signal for

Efficienc

y

Equity

Financial Stability

Residential2 blocks with seasonal first block (300 kWh summer, 480 kWh/mo winter)

2 blocks with year-round 300 kWh/mo first block

BSC at 50% Customer MC ($4.71/month)

BSC at 75% Customer MC ($7.07/month) and retain price signal of second block.

Low Income 60% Subsidy50% subsidy, and expand the program to reach more qualified residents.

Medium Network

Flat kWh and kW rates TOU kWh and kW rates

Policy Issues Matrix 1

4

Rationale For Change

Rate Class

Current Structure

Proposed New Structure Predictability

Transparen

cy

Price Signal for

Efficiency

Equity

Financial Stability

Small, Medium, Large, HD

Minimum charge at 100% Customer MC

Base Service Charge recovers 100% Customer MC.

Small GSDistribution MC collected 100% via energy charge

Flat Infrastructure Charge recovers 50% of Distribution MC($42/mo)

Medium, Large, HD

Demand charge recovers ~16% Distribution MC

Demand charge per kW recovers 50% of Distribution MC

All No decoupling Decoupling

Policy Issues Matrix 2

5

Rationale For Change

Fixed and Variable Components of Costs and Revenues

Fixed

EnergyDemand

$0

$100

$200

$300

$400

Distributionand Other

Fixed Costs46%

Energy Costs54%

Energy

BSC & Infrastructure

79%

8%

Revenue Proposal

Revenue Current

BSC 3%

93%

Demand 4%

Energy

Demand 13%

Fixed costs still recovered by energy charges

Costs

54%Energy

46%

Distribution & Other

6

$500

$600

$700

$800