- Electric Cost-of-Service & Rate Design Study - Pasadena
Our team conducted an electric cost-of-service and rate design study for Pasadena Water and Power (PWP), including a revenue requirements analysis, a cost-of-service analysis and a detailed rate design analysis. The annual revenue requirement used in the subsequent phases of the study was developed based on a five-year financial forecast of PWP’s revenues and expenses. This financial forecast included projections of known changes in annual costs of large dollar items, such as power cost projections, based on information provided by PWP. Other categories of expenses were forecasted using historical trends or assumed annual rates of inflation. The forecast results have been used as the revenue requirement basis for the test year.
The cost-of-service analysis included the assignment, or unbundling, of the various costs included in the annual revenue requirement to PWP’s functional services (i.e. power supply, transmission, distribution, customer service, etc.). These unbundled cost components of the adjusted annual revenue requirement were then allocated to the various electric rate classes. The resulting allocated cost-of-service for each rate classification was then compared to the annual revenues for each class to assess the projected cost recovery provided by the existing retail rates.
The results of the financial forecast and cost-of-service analysis provided a basis for potential revisions to electric service rates for consideration by PWP. Proposed rates were developed to recover the required levels of revenues to meet revenue requirements. Particular emphasis was placed on distribution charges, customer charges and energy charges for all customer groups. Additional rate considerations include time-of use rates, demand reduction rates, electric vehicle rates, feed-in-tariff rates, and consideration of an appropriate mechanism for incorporating distributed generation on the PWP system.
The study report presented a discussion on the implications of the financial forecast and cost-of-service results on PWP’s current electric rates and described the proposed modifications to retail rates. Comparisons of sample monthly bills based on the current and proposed rates for each customer classification were also presented.
- Financial model development
- Financial planning
- Cost-of-service analysis
- Retail electric rate design
- City council presentation