We conducted a comprehensive electric cost-of-service and rate design study for the Naperville Department of Public Utilities in 2011. We analyzed historical costs of providing electric service to Naperville’s customers and developed projections of future costs for five years of annual system revenue requirements. In addition, a number of rate classifications were added to allow the electric utility to begin offering time-of-use (TOU), plug-in hybrid and electric vehicle (PHEV) and renewable net metering services associated with the ongoing smart grid build-out in the city.
A five-year financial forecast of the utility's operations was developed. The financial forecast included projections of annual operating revenues, operating expenses, net non-operating income, and the resulting net income, as well as projections of plant investment, debt service and other cash flows. These estimates were used to forecast Naperville’s need for additional funds through retail rate adjustments, transfers from reserves and/or external capital financing. The projections were summarized in pro forma statements of projected net income and cash flows.
A cost-of-service analysis was developed based on assumptions reviewed and approved by Naperville staff. For the cost-of-service analysis, the annual revenue requirement was allocated and assigned among appropriate functional services, as well allocated to the city's rate classifications. The results of the cost-of-service analysis and the allocation of the annual revenue requirement were broken down into energy-related costs, demand-related costs and customer-related costs.
The cost of service was established for each rate classification and standard retail rates were analyzed to ensure the rates recovered the appropriate revenue for the utility. Input from Naperville was used in the development of the proposed standard rates and structures. We also developed TOU rates for the Residential, General Service, General Service Demand, Primary Service and Transmission Service customer classes. The TOU rates provide customers with rate options that enable reductions in costs of electricity and improve the efficiency of Naperville electric system operations through monetary incentives to shift load from on-peak and critical peak hours to off-peak hours.
Naperville has relied on our consultants for rate-related assignments in 1994, 1995, 1998, 2000, 2002, 2006 and 2011.
- Load forecast
- Financial forecast
- Revenue requirement
- Cost of service
- Rate design