HomeMy WebLinkAboutA001 - Council Action form dated April 14, 2009 t
ITEM# 42
DATE: Ap0114, 2009
COUNCIL ACTION FORM
SUBJECT: ELECTRIC UTILITY RATE CHANGES
BACKGROUND:
As discussed during the FY 2009/10 budget process, the City of Ames Electric Services
budget included a 5.0% metered electric rate increase to take effect with the bills issued on
or after July 1 , 2009. An increase of the commercial and industrial power factor adjustment
from 85% to 90% is also included in this ordinance change. The revenue resulting from
this rate increase is needed to fund plant maintenance, improvements, and operating costs
while maintaining an adequate fund balance for the utility.
The power factor adjustment increase is intended to induce customers with poor power
factors to take corrective steps and make improvements leading to more efficient use of
electricity. This will lead to a reduction in overall capacity requirements. The proposed
increase in the power factor adjustment was determined to be necessary since the existing
adjustment is too small to act as a motivator for most customers to improve power factor
performance. Poor power factor conditions for our larger customers lead to added capacity
requirements for the entire system. The attached spreadsheets illustrate sample bill
impacts of this rate increase on various classes of customers, a comparison of the current
and proposed rate structure, and power factor adjustment change on several large power
customers. These increases take effect if customers make no modifications to their
systems to improve their power factors. The Utility's Demand Side Management
Program provides for assistance to customers wishing to improve their power
factors.
The proposed rate change is an across-the-board increase with no change to our current
rate structure for all customer classes. Following this rate increase, the Utility will conduct
an extensive cost-of-service study and prepare alternative rate structures, and analyze the
impacts of alternate rate structures on the various classes of customers.
This rate increase is the third in a series of planned rate increases. The first was a 3.5%
increase for 2006/07, and the second was an 8.0% increase during 2008/09. The timing
and amount of any future rate increases will be dependent on the capital costs which the
Utility will need to incur to meet demand, capital and environmental requirements.
Attached is the edited ordinance section reflecting the increased rates and the increase in
power factor adjustment.
1
ALTERNATIVES:
1. Approve the proposed changes to the Electric Utility rate ordinance to increase
overall rates for all classes of customers of the Electric Utility by 5.0%for bills issued
on or after July 1, 2009, and also increase the power factor adjustment from 85% to
90% as included in the 2009/10 budget.
2. Approve either the rate increase or the increase in the power factor adjustment, but
not both at this time.
3. Refer the Electric Utility rate ordinance back to staff with direction to develop an
alternative rate structure. Depending on the complexity of the desired rate structure,
this alternative would likely delay implementation of a rate increase, and could result
in a larger rate increase or not achieving the Electric Utility fund balance target
unless other changes are made to reduce budget expenditures.
4. Do not approve a rate increase at this time. This alternative will require extensive
changes to the Electric Utility budget since a 5.0% revenue increase was included in
the adopted budget.
MANAGER'S RECOMMENDED ACTION:
The Electric Utility is embarking on major maintenance projects and the completion of a
vital transmission project in the next year to 18 months that will help secure the future
power supply of our customers for the next 20 years. The current rate structure will not
supply the revenue necessary to complete these large projects. In addition, a number of
large power customers have poor power factors that result in the Utility needing to supply
capacity beyond what would be necessary if those power factors were improved. It is time
for those customers with poor power factors to take advantage of the Utility's Demand Side
Management Program and make upgrades to their equipment for the benefit of all
customers by avoiding unnecessary additional capacity.
Therefore, it is the recommendation of the City Manager that the City Council adopt
Alternative #1 and approve a 5% rate increase for all customer classes effective with the
bills issued on or after July 1, 2009, and also increase the power factor adjustment point for
large customers from 85% to 90%.
2
2009 Electric Rate 5% Increase
Revised: 2009 April 10
Section Description / Months Bills Mailed Current Proposed
28.103. Residential Service charge $5.00 $5.25
July- October
Flat Rate $0.0825 $0.0866
November-June
first 400 kWh $0.0760 $0.0798
next 600 kWh $0.0637 $0.0669
all over 1,000 kWh $0.0604 $0.0634
Minimum bill $5.00 $5.25
28.104. General Power Service charge $6.00 $6.30
July- October
first 2,000 kWh $0.0917 $0.0963
next 5,000 kWh $0.0783 $0.0822
all over 7,000 kWh $0.0760 $0.0798
November-June
first 2,000 kWh $0.0715 $0.0751
next 5,000 kWh $0.0593 $0.0623
all over 7,000 kWh $0.0570 $0.0599
Minimum bill $6.00 $6.30
Fluctuating load $0.311 $0.327
28.105. Large Power Service Charge $45.00 $48.00
July - October
first 50 kW demand $4.751 $5.000
next 100 kW demand $4.304 $4.520
all over 150 kW demand $3.857 $4.050
kWh for first 200 hours of demand $0.0615 $0.0646
kWh for next 200 hours of demand $0.0425 $0.0446
all kWh over 400 hours of demand $0.0391 $0.0411
November-June
first 50 kW demand $3.410 $3.581
next 100 kW demand $2.962 $3.110
all over 150 kW demand $2.515 $2.641
kWh for first 200 hours of demand $0.0525 $0.0551
kWh for next 200 hours of demand $0.0414 $0.0435
all kWh over 400 hours of demand $0.0369 $0.0387
Power Factor Adjustment 85% 90%
Section Description / Months Bills Mailed Current Proposed
28.106. Industrial Service charge $112.00 $118.00
July - October
demand charge for all kW $3.857 $4.050
kWh for first 200 hours of demand $0.0548 $0.0575
kWh for next 200 hours of demand $0.0369 $0.0387
all kWh over 400 hours of demand $0.0347 $0.0364
November-June
demand charge for all kW $2.515 $2.641
kWh for first 200 hours of demand $0.0470 $0.0494
kWh for next 200 hours of demand $0.0357 $0.0375
all kWh over 400 hours of demand $0.0324 $0.0340
Power Factor Adjustment 85% 90%
28.107 Street &Security Lighting 1,000 Watt - Mercury Vapor $23.25 $24.45
700 Watt - Mercury Vapor $16.95 $17.80
400 Watt - Mercury Vapor $10.60 $11.15
400 Watt - Mercury Vapor-Orn $12.85 $13.50
250 Watt - Mercury Vapor $7.60 $8.00
250 Watt - Mercury Vapor-Orn $11.30 $11.90
175 Watt - Mercury Vapor $6.25 $6.60
175 Watt- Mercury Vapor-Orn $8.45 $8.90
400 Watt- H.P. Sodium $11.45 $12.05
400 Watt - H.P. Sodium-Orn $12.85 $13.50
360 Watt - H.P. Sodium $10.85 $11.40
360 Watt - H.P. Sodium-Orn $12.25 $12.90
250 Watt - H.P. Sodium $8.30 $8.75
250 Watt - H.P. Sodium-Orn $11.75 $12.35
200 Watt - H.P. Sodium $8.05 $8.45
200 Watt- H.P. Sodium-Orn $11.75 $12.35
150 Watt- H.P. Sodium $6.95 $7.30
150 Watt- H.P. Sodium-Orn $9.15 $9.65
100 Watt - H.P. Sodium $5.60 $5.90
100 Watt - H.P. Sodium-Orn $7.60 $8.00
70 Watt- H.P. Sodium $4.90 $5.15
70 Watt - H.P. Sodium-Orn $7.00 $7.35
Flood lights, per lamp adder $0.60
$0.65
Energy only charge $0.075 $0.080
Section Description / Months Bills Mailed Current Proposed
Power Factor Adjustment 85% 90%