Westar Formula Rate and your bill
10/22/2010
1
What we will be going
over
• Transferring the results from the Westar Formula Rate to
the SPP tariff.
• The SPP Tariff
–
–
–
–
Basic Cost Recovery
Cash flow through the SPP tariff
Base Plan Funding (BPF)
What goes into a Customer’s bill
• Results from the 2010 projection
• Customer bills
10/22/2010
2
Overview
Westar
ATRR
TO 2
ATRR
Each Transmission Owner in
the SPP reports its authorized
Annual Transmission Revenue
Requirement (ATRR)
10/22/2010
TO 2
ATRR
SPP
Tariff
TO 17
ATRR
SPP bills its customers based
upon these ATRRs and its
FERC approved Tariff
3
Westar Formula Rate
• Annual Transmission Revenue Requirement
Based on a fully projected 2010 Rate Year
–
–
–
–
Projection based on 13 month average rate base for 2010
Beginning balance: 2008 Form 1 adjusted for projected 2009
Ending Balance: Beginning balance plus 2010 projections
Add in any “True-up” balance (plus interest) from 2008
True-up based on actual 2008 cost vs Projected 2008 ATRR for
the period from June 1 to December 31
• Most Projections based on internal formulas
– Projected O&M is based upon the change in Net Plant
– Other factors held at 2008 levels
• New Capital based on 2010 Construction
Budget
– Based on Projects required by SPP
10/22/2010
4
The SPP Tariff - Rates
• SPP is broken up into 17 different Pricing Zones
– The Transmission Rates for each Zone are calculated by
SPP
– Annual Transmission Revenue Requirements (ATRR)
from each Transmission Owner are used
– Cost of Transmission Service for each Zone are based on
the sum of all the ATRR allocated to that Zone (ZATRR)
– Network Customers pay a Load Ratio share of the
allocated ATRR
The Load Ratio shares are calculated in January each
year based on the previous Calendar year period
(Customer 12 mo. Avg.. Peak / Zonal 12 mo Avg. Peak)
– PTP rates are shown in Attachment T of the SPP Tariff
Total Allocated ATRR / Zonal 12 mo Avg. Peak from formula =
Annual Rate.
10/22/2010
5
SPP Tariff – Cost
Recovery
• Zonal charges
Transmission Plant in existence prior to Jan. 1, 2006
Reliability Upgrades needed to meet local area criteria
Costs of new transmission projects assigned to the Zone by SPP
• Regional charges
ATRR of each project is allocated to all Zones on a load ratio
share basis
– 12 mo. Zonal Avg. Load / (Σ 12 mo. Zonal Avg. Load for all
zones)
– Based on previous calendar year load values
• Direct Assigned Costs
Costs assigned to specific transmission customers or Transmission
Project Sponsors
10/22/2010
6
SPP Tariff – Cost
Recovery
• Certain Transmission Projects can also qualify for
Base Plan Funding (BPF)
– Costs of BPF projects are recovered: 33% Regionally;
67% Zonally
– Zonal costs are primarily allocated to the zone where
the upgrade is built
Zonal Costs may be allocated to other Zones based
upon benefit
10/22/2010
7
SPP Tariff – Cost Recovery
of New Transmission
Upgrades
• Reliability Projects
– Normally BPF
– If needed to meet local area reliability criteria that are more strict
that SPP criteria, then its costs are assigned to the specific Zone
• Upgrades related to requests for Transmission Service
– Costs may qualify for Base Plan Funding
– Otherwise, costs direct assigned to Customer
• Economic Balanced Portfolio Upgrades
– Regional
• Sponsored Upgrades
– Costs direct assigned to Sponsor
• Generation Interconnection Service
– Upgrades assigned to Generator, with credits from Attachment Z
10/22/2010
8
Revenue Requirements from
Transmission Owners to SPP
Pricing Zones
Westar’s Total ATRR
Westar Zonal ATRR
SPP Tariff
Westar
Zone
Regional Charge
BPF ATRR
BPF
Projects
OGE’s Total ATRR
BPF ATRR
33% of Total
BPF Zonal
Charges 67%
OGE
Zone
OGE Zonal ATRR
All Other SPP TO’s Total ATRR
BPF ATRR
Zonal ATRR
10/22/2010
All
Other
SPP
Price
Zones
9
Example of BPF Cost Allocation
BPF
Projects
$16
BPF ATRR=$12
Project 1
Regional Rate
Rev. Req. Allocated
By Load Ratio Share
$4
$4.80 (30%)
33% Regional
67% Zonal
Allocation
$8
BPF ATRR=$36
$12
Project 2
Zonal Rate
Rev. Req. Allocated
By Zonal Benefit
(This is Done
by Project)
$24
Zonal Rate
Rev. Req. Allocated
By Zonal Benefit
(This is Done
by Project)
Total BPF ATRR for all Projects = $48.00
10/22/2010
$4.80 (20%)
SPP Pricing
Zone 2
LRS=30%
$8.00 (50%)
33% Regional
67% Zonal
Allocation
Total BPF
Allocated Costs
$3.20
$3.20 (20%)
$8.00
Westar Pricing
$8.00 (100%)
$1.20
Zone
LRS=20%
------$1.20
$12.40
(5%)
$18.00 (75%)
SPP Pricing
Zone 3
LRS=50%
$4.80
$4.80
------$9.60
$8.00
$18.00
------$26.00
Sum of Allocated BPF ATRR = $48.00
10
Customer Bill Make up
Ancillaries Supplied by SPP
SPP pays suppliers
for Ancillaries 2 &
4
SPP keeps Admin
fees to support
the RTO (Anc. 1A)
SPP Admin Charge (Schedule 1A)
Ancillary 2 - RV
SPP
Ancillary 4 - EIS
Customer 1
Ancillaries 3, 5 & 6
Supplied on behalf
of SPP by Westar
as necessary
Westar’s Share
of BPF
Westar
Generation
Ancillary
Services
Ancillary 1 - SC
Schedule 11
BPF
ATRR
Allocated
To Westar
Zone
10/22/2010
Total
Westar
Zonal
ATRR
Westar
Retail = Acct. 566.0011
Other Whsle. bus. =
Acct. 565.
Schedule 9
Westar
Transmission
Cost
Recovery
Other
Transmission
Owners in SPP
Other TO’s Share
of BPF
11
Looking at 2010 . . .
10/22/2010
12
Comparison between
2010 and 2009
Comparison of Transmission Formula Rate Results
10/22/2010
2009(Proj)
2010(Proj)
516,089,141 $ 640,910,500
Change from
2009 to 2010
24.19%
Rate Base
$
O&M
Dep. Expense
Taxes Other than Inc.
Income Taxes
Return
Incentive Return
Gross Rev. Req.
$
$
$
$
$
$
$
35,776,626
25,511,853
13,463,304
18,574,132
42,355,852
488,817
136,170,584
Rev. Credits
True-up Adj(3)
Net Rev. Req.
$
$
$
15,227,764 $ 17,939,732
(3,034,975) $
(1,120,609)
117,907,845 $ 131,957,167
17.81%
-63.08%
11.92%
BPF Rev. Req.
BPF True up
Zonal Rev. Req.
$
$
$
10,932,138 $ 19,256,992
(122,136) $
(2,803,356)
107,097,843 $ 115,503,531
76.15%
2195.27%
7.85%
$ 36,577,947
$ 25,969,421
$ 12,959,043
$ 22,551,336
$ 52,428,290
$
531,471
$ 151,017,508
2.24%
1.79%
-3.75%
21.41%
23.78%
8.73%
10.90%
Notes:
(1) Current collected ATRR from TFR posted Feb. 17, 2009
(2) 2010 ATRR posted October 15, 2009.
(3) Total True up value is :
Adjustment
Interest
Zonal
$
1,594,109 $
88,638
BPF
$
(2,550,745) $
(252,611)
Total
$
(956,636) $
(163,973)
Total True up value is only for the months of June 2008 through December 2008.
Total True-up
$ 1,682,747
$ (2,803,356)
$ (1,120,609)
13
BPF Transmission
Projects
• Westar
– 41 BPF Projects totaling over $19.3 million (Rev. Req.) $126 million
E&C.
– Second phase of Wichita-Reno-Summit 345 kV line $101.4 million
• AEP
– 17 BPF Projects, Total=$12.6 million
– Westar’s direct Zonal share, $0
• OGE
– 10 BPF Projects, Total = $3.3 million
– Westar’s direct Zonal Share, $296,630
• SPS, NPPD
– 6 BPF Projects, Total = $2.0 million
– Westar’s direct Zonal Share, $0
10/22/2010
14
Estimated Westar Zonal
Costs for 2010
Zonal Total
BPF Total
Westar
All Others
Total Regional
$115,503,530
$19,256,992
2009 Zonal ATRR
Regional
Westar Zonal
33% * Total
LRS %
$6,354,807
12%
5,875,701
12%
Westar Zone
Allocation
$762,577
$705,084
$1,467,661
$115,050,240
2010 Zonal ATRR
$128,879,788
Westar
All Others
10/22/2010
Zonal BPF Cost
67% * Total
$12,902,185
Allocated
to WR
Estimated 12%
Increase
$11,611,967
$296,630
$11,908,597
15
Wholesale Customer
Estimate of Transmission Service Costs based on SPP OATT
Line
1
2
3
4
5
Description
City Peak Load
Average Peak Load (est)
Annual Energy (MWH)
(Note 6)
(12 mo loss comp. avg with trans pk)
(Note 5)
Average Network Transmission Peak Demand (MW)
Load Ratio Share
(line 2 / line 4 )
6
7
7A
8
Transmission charges - SPP OATT
Schedule 9
Schedule 11-Zonal
Schedule 11 - Regional
Total Rev. Req.
Calculation
SPP OATT-Attachment H
SPP OATT-Schedule 11
SPP OATT-Schedule 11
9
10
11
12
13
14
15
16
17
18
19
Estimated Annual Transmission Charges
Transmission Charge (Sched. 9 & 11)
Schedule 1 - Westar Scheduling [Note 1]
Schedule 1A - SPP Scheduling
Schedule 2 - Reactive (SPP Billing-est only)
Schedule 3 - Regulation [Note 1]
Schedule 4 - Imbalance (Based on Market)
Schedule 5 - Spinning Reserves [Note 1]
Schedule 6 - Supplemental Reserves [Note 5]
Schedule 10 - Distribution Facilities Charge
Schedule 12 - FERC Fees
Total of all Annual Charges
Calculation
(line 8 * line 5)
(line 2 * rate/yr)
(line 2 * 730 hrs * rate/MW*12 mos)
(Note 2)
(line 2 * rate * 1.35%)
(varies)(Note 3)
(line 2 * rate * 1.67%)
(line 2 * rate * 1.65%)
(Note 4) (rate per month)
(line 3 * rate/MWH)
(sum lines 9 to 18)
Note 1:
Note 2:
Note 3:
Note 4:
Note 5:
Note 6:
Peak Load
(MW)
13.333
10.000
66288
Calculation
3751.667
0.002665482
Revenue
Requirements
$ 115,503,530
$ 11,908,597
$
1,467,661
$ 128,879,788
Rates
Percentage Annual Costs
See Rev Reqm
100.00% $ 343,526.76
$
752.09
100.00% $
7,520.90
$
0.195
100.00% $
17,082.00
$
122.63
100.00% $
1,226.30
$
53,358.74
1.35% $
7,203.43
$
53,358.74
$
39,134.61
$
1,000.00
$ 0.054908392
1.67%
1.65%
100.00%
100.00%
Pricing comes from the Westar Open Access Transmission Tariff (OATT)
Price fluctuates. Cost was estimated by taking about 10% of Westar's OATT price.
Charge varies depending on the market and if the supplier takes on the charge from SPP.
Distribution facilities charge is based upon the pro-rated costs of any distribution facitlies used by the city to obtain power.
Source WEN Form 1 Page 311 Column G (this is only energy sold by WRGS to City, doesn't include any other resources)
Peak Load based at Westar Transmission Peak. Loss Compensated based on SPP Transmission Service.
$
8,910.91
$
6,457.21
$
12,000.00
$
3,639.77
$ 407,567.28
10/22/2010
17