Jim Lazar
R-3677-08
for the RNCREQ
Setting the fixed charge for residential rates
October 28, 2008
Page 5 of 16
Rev Dec. 2, 2008
Comparison of Monthly Fixed Charges for US Cities used by Hydro Quebec
City
Utility
Fixed
2006 USEIA
2006 USEIA
Charge
Average
Average
Fixed
Per HQD- Residential Rate Residential Charge as
12
¢/kWh
Bill $/month
% of Bill
Boston
Chicago
Detroit
Houston
Miami
Nashville
New York
Portland
San Francisco
Seattle
Boston Edison
Commonwealth Edison
Detroit Edison
TXU Retail
Florida Power and Light
Nashville Electric Service
Con Ed
Portland General Electric
Pacific Gas and Electric
Seattle City Light
$
7.43
$ 10.27
$
7.28
$
$
5.98
$
9.70
$ 13.62
$
8.67
$
5.13
$
3.38
$
$
$
$
$
$
$
$
$
$
0.2017
0.1224
0.1021
0.1474
0.1190
0.0807
0.2090
0.0829
0.1461
0.0658
$
$
$
$
$
$
$
$
$
$
117.38
85.70
67.84
195.84
138.53
102.16
86.76
75.59
84.03
49.43
6.3%
12.0%
10.7%
0%
4.3%
9.5%
15.7%
11.5%
6.1%
6.8%
Average for US Utilities in HQ Sample
$
7.15
$
0.1277
$
100.33
8.3%
Montreal
Hydro Quebec
$ 12.19
$
0.0715
$
104.34
11.7%
Proposed
Hydro Quebec
$
$
0.0715
$
104.34
8.1%
8.40
However, I think it is also important to compare HQ to a group of more similar utilities in terms of
rate level and resource mix. I have assembled a selection of relatively low-cost utilities with
significant hydro resources. These include two in Canada and four in the United States. I do not
assert that this is a statistically accurate sample; it is simply a selection of utilities which share some
important characteristics with HQ – though their average monthly bills are significantly lower.
This group has an average monthly fixed charge of $5.16/month, which is about 7.9% of the
average monthly bill paid by residential consumers. I did not do a currency conversion for this
average. The point is simply that the current HQ fixed charge, at 11.7% of the average monthly
bill, is well above the average for this group. By contrast, the lower $.28/day fixed charge
proposed by Mr. Raphals represents 8.1% of the monthly average bill, a level very comparable to
this group of low-cost utilities.
I have also included the type of rate design for each of these utilities. All have some form of
inverted rate (the BC Hydro inverted rate takes effect November 1, 2008), and several are either
steeply inverted or three-block inverted rates.
Why is the presence of hydro significant? Only because hydro is a low-cost resource that is also a
very stable cost resource. There are some low-cost coal-dependent utilities, but they face great
uncertainty in their costs, as carbon regulation is on the way. I do not consider the coal-dependent
utilities to be appropriate comparisons for HQ.
Jim Lazar
R-3677-08
for the RNCREQ
Setting the fixed charge for residential rates
October 28, 2008
Page 17 of 16
APPENDICES
I.
WWP 1999 Customer Charge calculations
II.
BC Hydro — Summary of Classified Costs by Function and by Rate Class
III.
BC Hydro — Revenues
Docket UE-991606
Exhibit ___(JL-RD-1)
Page 1
Cost-Based Customer Charge - Electric
Residential
Amount
Plant Costs
Plant In Service
1
Meters
2
Less Accumulated Depreciation - Meters
3
Services
4
Less Accumulated Depreciation - Services
5 Total Customer Plant In Service
8
9
10
11
12
13
14
General Plant Assignment to Customer Plant
Total Customer Plant in Service
Total PTDC Plant in Service
% of General Plant Customer-Related
Total General Plant in Service
Total General Plant Accumulated Depreciation
Net General Plant in Service
Customer-related General Plant:
15 Total Customer Plant and Associated General Plant:
16
17
18
19
20
Rate of Return
Allowable Rate of Return
Tax benefit of debt
Net of Tax Return
Return Requirement, Net of Tax:
Net to Gross Ratio
21 Return Revenue Requirement
Source/Formula
$12,241,205
-$3,843,113
$37,421,953
-$12,139,533
$33,680,512
Tab 50, P. 21
Tab 50, P. 26
Tab 50, P. 21
Tab 50, P. 26
Sum, Lines 1-4
$49,663,158
$488,231,906
10.1720%
Line 5
Tab 50, P. 23
(8) / (9)
$38,087,939
-$16,422,695
$21,665,244
$2,203,798
Tab 50, P. 23
Tab 50, P. 28
Sum, Lines 11 - 12
Line 10 x Line 13
$35,884,310
Line 14 + Line 5
8.82%
-1.53%
7.29%
$2,616,202
62.09%
Hill
Hill
Line 16 + Line 17
Line 18 x Line 15
Tab 28, P. 3
$4,213,435
Line 19 / Line 20
Cost-Based Customer Charge - Electric
Operating Costs
Depreciation Expense for Meters / Services
22
Meters
23
Services
24
Customer Installations
25
General Plant Depreciation Expense
26
Customer-Related General Plant Depreciation Expense
27
Subtotal Depreciation Expense
28
29
30
31
Operation and Maintenance Expenses
Customer Accounts
Meter Reading
Supervision
Subtotal Meter Reading and Billing
32
Customer-related portion @ 55%:
33
34
35
Customer Installations
Meter Maintenance
Meter Operation
36 Subtotal Customer-Related O&M Expenses
$357,925
$887,515
$0
$3,141,338
$319,538
$1,564,978
Tab 50, P. 13
Tab 50, P. 13
Tab 50, P. 13
Tab 50, P. 15
Line 10 x Line 25
Lines 22+23+24+26
$2,834,578
$1,020,618
$165,396
$4,020,592
Tab 50, P. 6
Tab 50, P. 6
Tab 50, P. 6
Lines 28 + 29 + 30
$2,211,326
Line 31 * 55% Bimonthly
$297,000
$51,815
$384,232
$2,944,373
Tab 50, P. 6
Tab 50, P. 6
Tab 50, P. 6
Lines 32 - 35
Administrative and General Assignment
37
38
39
40
Total PTDC O&M
Total A&G
A&G Loading Factor
Customer-Related A&G Expense
38 Total Customer-Related O&M Expense
39
Net to Gross Ratio for Expenses
$90,479,754
$21,710,236
23.99%
$706,490
Tab 50, P. 8
Tab 50, P. 9
Line 38 / Line 37
Lines 37 - 39
$5,215,841
Line 40 + Line 36
95.53%
Tab 25, P. 2
40 Revenue Requirement for O&M Expenses
$5,460,121
Line 38 / Line 39
41 Total Customer-Related Revenue Requirement
$9,673,556
Line 40 + Line 21
42 Total Residential Customers
43 Annual Revenue Requirement / Residential Customer
44 Monthly Residential Customer Revenue Requirement
175,466
$55.13
$4.59
Tab 50, P. 7
Line 41 / Line 43
Line 43 / 12 Months
Summary of Classified Costs by Function by Rate Class
Total BC Hydro - F08
Summary of Costs by Classification
Energy
Generation Transmission Distribution Total Demand Customer
Demand Related Costs Related Costs
Demand
Related Costs Demand
Cost Classes
Related Costs Related Costs Related Costs
Residential
Assigned
Costs
Total
405.14
124.39
160.43
259.25
544.07
236.21
0.00
GS<35
96.79
32.65
42.11
50.93
125.69
29.73
0.00
252.20
GS>35
345.19
108.99
140.56
130.54
380.09
10.02
0.00
735.31
Irrigation
2.29
0.58
0.75
2.56
3.88
0.47
0.00
6.64
StreetLight
4.93
0.65
0.83
2.99
4.46
8.03
5.56
22.98
400.52
100.76
129.94
0.00
230.70
2.43
0.00
633.64
1,254.86
368.02
474.62
446.26
1,288.89
286.89
5.56
2,836.20
Transmission
Total Classes
1,185.43
Schedule 4.1
Appendix A
1 OF 1
10/22/2008
BC Hydro
F2008 RDA
Schedule 5.2
Page 1
Revenue - Apr 2008 Rates
Rate
Code
Residential
1101
1105
1107
1111
1121
1127
1131
1132
1133
1148
1180
Sub Total
Customer
67,190,985
227,306
1,669,553
503
460
3,523
69,092,331
Energy
Block 1
1,025,493,804
5,236,570
3,260,344
17,836,066
8,968
8,072
47,592
1,051,891,416
Energy
Block 2
476,562
9,367
485,929
Energy
Block 3
Demand
Block 1
-
Demand
Block 2
-
Demand
Block 3
-
Total
-
1,092,684,789
5,236,570
3,964,213
19,505,619
18,838
8,532
51,115
1,121,469,676