Rate Design to Complement AMI
Implementation in Danville, Virginia
Presentation by
Denise Sandlin
Support Services Director
Danville, VA
APPA 2009 Business & Finance Conference
Decision-Making on Advance Metering Infrastructure (AMI)
Tuesday, September 15, 8:30 – 10:00 a.m.
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Introducing Danville, Virginia
Location -- Southside Virginia on the Virginia – North Carolina border
Population -- 45,400; metro area 107,000
Size – City of Danville 44 sq. mi.
Danville’s service area: 500 sq. mi.
History -- Founded in 1793, incorporated in 1830,
initially a tobacco & textile manufacturing center
Government Structure -- Council-Manager
Municipal Utilities – Publicly owned and operated
Services -- Typical municipal utility services plus
natural gas, electricity, and telecommunications
Web Sites
http://www.danvilleutilities.com
http://ndanville.net
http://www.danville-va.gov
http://www.discoverdanville.com
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What is AMI?
Advanced Metering Infrastructure (AMI)
refers to systems that measure, collect and
analyze energy usage, from advanced
devices such as electricity meters, gas
meters, and water meters through various
communication media.
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Advanced Metering Infrastructure (AMI)
Benefits
 Two-way communication with every customer enables
• Remote meter reading
• Home area networks
 Remote connect/disconnect service switches
 More detailed data, more real time
 Newer, more accurate meters
 Financial Benefits
 Compliance Improvements
 Service Improvements
 Accurate outage assumptions
 Business development
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Danville’s AMI
Deployment Objectives
 18 - month deployment
 Replace all electric and water meters and gas
registers – 81,434
 Build on our existing and planned fiber network.
 Support Danville’s future Smart Grid
 Provide benefits for Danville Utilities and its
customers
 Rate design strategies
 Comply with Danville’s adopted standards covered
under the Energy Act of 2005 and EISA 2007.
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Danville’s Meter
Replacements
City
County
Total
Electric
24,448
20,131
44,579
Water
19,384
Gas
16,607
19,384
864
17,471
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City of Danville’s
Meter Districts
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Adjacent County
Meter Districts
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Benefits for
Danville Utilities
 At least 15 minute data from electric meters and
hourly data from gas and water
 Outage and restoration notifications for customers
 Voltage monitoring for sags and surges prior to a
customer complaint
 Reduced misread and hi/low bills
 New rate structures
 Improved system planning for distribution
 Tamper notification
 Reduced labor costs
 Remote disconnects and connects
 Improved safety for employees
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Benefits for
Customers








Manage their own energy usage and costs
New and improved customer service
Help stabilize rates
More accurate billing with the elimination of
estimated reads and data entry errors
No need to access customer property
Improved outage response time and information
Offer new programs and services
New payment options
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AMI System
Investment
Total System
Total City
Rural
$14,355,015
$11,007,597
$3,347,418
(4,398,724)
(2,507,047)
(1,891,677)
Funding
Requirement
$ 9,956,291
$ 8,500,550
$1,455,741
Annual Savings
$ 2,728,481
$ 2,256,003
$ 472,478
Simple Payback
Period (years)
3.6
3.8
Estimated AMI
Investment
Less: One time
Cash Flow Savings
3.1
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AMI System
Financing
Electric
Water/WWT
Gas
Total Cost
$8,027,033
$4,700,441
$1,627,541
Contribution
from Fund
$4,432,000
$ 300,000
$ 141,000
Debt Funding
$3,595,033
$4,400,441
$1,486,541
Bond Term &
Interest Rate
20 year
5.00%
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Summary of
Rate Design Strategies
 Reduce debt financing requirements based on
one-time savings due to AMI
 Reduce customer charges based on annual
savings due to AMI
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AMI System
One-Time Savings
Cash Flow Advance
$2,968,906
(From a 10 to 2 day billing period)
Bi-Monthly to Monthly Billing Cash
Flow Advance
1,429,817
Total Estimated One-Time Savings
$4,398,723
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AMI System
Annual Savings
Unbilled Water and Energy Losses
$1,112,985
Theft
905,971
Meter Reading Labor
399,220
Service Switch Field Labor
310,305
Total Annual Savings
$ 2,728,481
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Customer Charge
Reduction
 Customer charges due to AMI Savings
 Water Customers Total Reduction is $3.00
per meter/month
 Electric Customers Total Reduction is $3.20
per meter/month
 Phased-in implementation:
 $1.00/$1.20 as of July 1, 2009
 $1.00 as of January 1, 2010
 $1.00 as of July 1, 2010
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Benefits of Customer
Charge Reduction
 Visible and tangible connection
 Timing coincides with benefits
 [Good Faith effort to our customers]
 Solidified support for AMI project from
Danville Utility Commission and City Council
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Implications of
Going Forward
 Budget balancing
• Funding and revenues will be lower
• Need to realize AMI savings in the form
of reduced costs
 Data management
 Special rate design – e.g. time-of-use
 Customer communication
• In-home displays and Internet access
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Summary
 Danville is making a big leap in technology and
practices
 These improvements allow the utilities to capture
significant cost-savings
 Cost-savings will be passed on to consumers through
lower customer charges and other rates (due to
lower debt service)
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Comments!
Questions?
Denise Sandlin
Support Services Director
Danville Utilities
1040 Monument Street
Danville, Virginia 24541
Telephone: 434-799-6581
e-mail: sandldl@ci.danville.va.us
Our program
report is available
upon request
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