Ele lectric Rate Act ction Proposal February 2017 Hu Huntsville - PowerPoint PPT Presentation

Ele lectric Rate Act ction Proposal February 2017

Hu Huntsville Util tilities Rate His History ry (2 (2000 – present) • October 2002 • 5.5% to all rate classes impacting availability and demand/energy charges • Residential availability increased $1.33 (from $3.67 to $5.00) • Prior to this increase, last HU increase was in 1987 (15 years) • October 2011 • 3.5% to all rate classes impacting availability and demand/energy charges • Residential availability increased $3.11 (from $5.77* to $8.88) • May/October 2016 proposal • $4.90 residential availability increase ($13.78) • $3.99 small commercial availability increase ($15.38) • City Council requested alternatives

Cou Council Recommendations • Any rate increase should be spread across all rate classes • Increases should be in both availability and usage charges • Consideration given to impacts on fixed and low income ratepayers • Retain multiple usage tiers to support conservation

February Rate Acti ction Proposal Across the board adjustment of 2.75% • Availability, demand and energy increases for residential, general service commercial/industrial and outdoor lighting customers Residential Customer impacts • Availability increases $0.29 per customer per month from $8.88 to $9.17 • Energy rates increase $0.00246/kWh for 0-1,400 kWh and $0.00268/kWh for any additional kWh used Revenue generated relies more on usage and minimizes availability impact

Esti timated Monthly Residential Elec lectric Bill Bill Im Impact Monthly Usage Current Proposed Increase 500 kWh $ 54.31 $ 55.83 $ 1.52 • Calculations include seasonal rates for Winter, Summer and Transition periods 750 kWh $ 77.02 $ 79.16 $ 2.14 1,000 kWh $ 99.74 $102.49 $ 2.75 • Includes Availability Increase of $0.29 1,250 kWh $122.45 $125.82 $ 3.37 • Includes Tier 1 (0-1,400 kWh) Increase of 1,400 kWh $136.08 $139.81 $ 3.73 $0.00246/kWh 1,496 kWh $145.58 $149.57 $ 3.99 1,750 kWh $170.73 $175.40 $ 4.67 • Includes Tier 2 (additional kWh) Increase 2,000 kWh $195.48 $200.82 $ 5.34 of $0.00268/kWh 2,250 kWh $220.23 $226.24 $ 6.01 • All numbers calculated using October 2,500 kWh $244.98 $251.66 $ 6.68 2016 fuel costs of $0.02293 2,750 kWh $269.73 $277.08 $ 7.35 3,000 kWh $294.48 $302.50 $ 8.02

Why Is Is A Rate In Increase Needed? • Electric system maintenance and improvements are required to ensure reliable service and meet the needs of our growing community ◊ HU was awarded a Diamond ranking (highest available) in the RP3 program from the American Public Power Association in 2016. RP3 recognizes utilities that demonstrate high proficiency in reliability, safety, work force development and system improvement. • Funding for all expenses comes from sales revenue • Current sales revenue is dependent on weather and customer behavior • Supply and material costs have increased steadily over time

Ris ising Cos Costs Here are examples of items we purchase to keep the system operating and how the costs have changed from 2010 through 2016. We have limited control over these costs. 2010 2016 $ Increase % Change 75’ Concrete Pole $3,090 $3,315 $225 7.3% 2,000’ Reel of Cable $4,060 $4,620 $560 13.8% Bucket Truck $167,500 $200,000 $32,500 19.4% Substation Transformer $320,000 $414,000 $94,000 29.4%

Managing Cos Costs Despite the rising supply and material costs, Huntsville Utilities compares favorably with other TVA utilities in regards to operating costs per customer and per 1,000 kWh sold. Huntsville Similar Neighboring All TVA All TVA All TVA Utilities Utilities Utilities Utilities Municipalities Cooperatives O&M per Average Customer $255 $387 $286 $362 $359 $367 O&M per 1,000 kWh Sold $9 $14 $13 $14 $12 $17 Source: TVA Distributor Financial Report for the Fiscal Year Ended June 2016 (preliminary)

Unexpected Cos Costs Gurley Area Damage from November/December Storms

Only 15% of of Ele lectric Revenue Pays for Op Cos Costs Electric Sales Revenue Water Sales Revenue Gas Sales Revenue HU 15% Gas Suppliers HU 38% 62% TVA HU 85% 100%

Part rtial Lis List of of It Items Funded by th the Rate In Increase • Substation Improvements • Moontown • Madison Hospital • SE Water Plant • Northwest • Redstone Gateway • Sunlake • County Line • Tree Trimming • Distribution transformers • Pole inspection and replacement • General Development and Service Extensions

Esti timated Ele lectric Bil Bill Co Comparison (1 (1,0 ,000 kWh) $140.00 $123.83 $118.93 $118.16 $114.17 $112.28 $110.63 $108.44 $107.92 $120.00 $102.49 $99.74 $96.96 $100.00 $80.00 $60.00 $40.00 $20.00 $- Note: Calculations based on rate information available on individual local power company websites. October fuel costs used.

Proje ojected Tim Timeli line • Request Electric Board approval to present the rate August 30, 2016 adjustment to City Council • Present rate adjustment to TVA for approval September 2016 • Individual meetings with each Council member September 2016 • Public notice December • Formal Public Hearing January 9, 2017 • Council meeting January 12, 2017 • City Council work session January 19, 2017 • City Council vote January 26, 2017 • Rate Implementation (Based upon Council approval) February 1, 2017

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