Rate Impacts of Various DSM
Program Designs
Dave Lamont
EEU Budget Negotiations
April 10, 2006
Model Design
• Based on 2004 revenues and sales
• Losses attributed to Sales and DSM
impacts are adjusted to VELCO
• Base load forecast assumes no new DSM
after 2008
• Base load growth (no DSM) assumed to
be 1.5%
Model Design
• 2004 Base revenues separated into VY,
HQ, and IPP plus “everything else”
• Revenues are adjusted going forward for
impacts of contract expirations as well as
incremental market purchases and sales.
“Everything else” escalated at inflation
(2.5%)
• Model used ICF avoided cost study,
including ICAP cost projections
Model Design
• RR includes DSM budgets for ‘06 – ’08
• Revenue requirements (RR) adjusted for
T&D expenditures above base peak load
Scenarios
• Model used DSM scenarios as presented
by EVT at the 12/3/2005 workshop
• A second set was developed which
assumed 2008 savings levels continued
through 2025 with costs escalated at
inflation (2.5%)
• Savings estimates incorporated EVT
decay function
• DSM costs expensed in each year
Results
• Rates increased
• Revenue requirements (including DSM
costs) decreased
Base Case
Base Case: Currently Committed EVT Programs as proposed
Costs
2006
Current EEU
2007
$16.7
$17.6
GWh Savings
2006
2007
Current EEU
61
71
Rate and Bill Impacts
Levelized Rate 2006 - 2015
3 Year programs
$0.1305
2008
TOTAL
$18.2
$52.5
2008
TOTAL
81
213
$246.02
Programs continued at 2008
levels
Levelized Rate
$0.1320
Rate Change 2006 - 2015
23.7%
Rate Change
1.10%
NPV Rve Req 2006 - 2015
$5,720
NPV Rev Req
$5,673
Rev Req Change
-0.81%
Revenue Requirement
Change
41%
Cost/ MWh
Scenario 1: Modest increment with current strategies, as presented at 12/1 PSB Workshop
Costs
2006
Current EEU
Scenario 1 Increment
Scenario 1 Total
% Increase
GWh Savings
Current EEU
2007
2008
Cost/
MWh
TOTAL
$16.7
$17.6
$18.2
$52.5
$1.4
$3.3
$5.5
$10.1
$18.0
$20.9
$23.7
$62.6
8%
19%
30%
19%
2006
2007
2008
TOTAL
61
71
81
213
$246.02
6
12
26
44
$227.21
Scenario 1 Total
67
83
107
258
$242.77
% Increase
9%
17%
Scenario 1 Increment
Rate and Bill Impacts
Levelized Rate 2006 - 2015
3 Year programs
$0.1307
33%
21%
Programs continued at 2008 levels
Levelized Rate
$0.1325
Rate Change from Base Case
0.10%
Rate Change
1.49%
NPV Rve Req 2006 - 2015
$5,689
NPV Rev Req
$5,608
Rev Req change from Base Case
-0.53%
Rev Req Change
-1.96%
Scenario 2: Double spending in 2008, as presented at 12/1 PSB Workshop
Costs
2006
Current EEU
Scenario 2 Increment
Scenario 2 Total
% Increase
GWh Savings
2007
2008
TOTAL
Cost/ MWh
$16.7
$17.6
$18.2
$52.5
$3.4
$8.8
$17.2
$29.5
$20.1
$26.5
$35.4
$82.0
21%
50%
95%
56%
2006
2007
2008
TOTAL
Current EEU
61
71
81
213
$246.02
Scenario 2 Increment
13
34
75
122
$241.69
Scenario 2 Total
74
105
156
335
$244.44
21%
48%
% Increase
Rate and Bill Impacts
Levelized Rate 2006 - 2015
3 Year programs
$0.1307
93%
57%
Programs continued
at 2008 levels
Levelized Rate
$0.1332
Rate Change from Base Case
0.16%
Rate Change
2.01%
NPV Rve Req 2006 - 2015
$5,681
NPV Rev Req
$5,526
Rev Req change from Base Case
-0.67%
Rev Req Change
-3.38%
Scenario 4: Implement existing contract spending and strategies with current funding, PLUS as much additional cost-effective
investment over next 3 years w/o policy constraints
Costs
2006
2007
2008
TOTAL
Cost/ MWh
Current EEU
$16.7
$17.6
$18.2
$52.5
Scenario 4 Increment
$20.8
$61.3
$88.1
$170.1
Scenario 4 Total
$37.4
$78.9
$106.3
$222.6
% Increase
125%
348%
484%
324%
GWh Savings
2006
2007
2008
TOTAL
Current EEU
61
71
81
213
$246.02
Scenario 4 Increment
36
105
147
288
$591.21
Scenario 4 Total
97
176
228
501
$444.26
59%
148%
% Increase
Rate and Bill Impacts
Levelized Rate 2006 - 2015
3 Year programs
$0.1332
181%
135%
Programs continued at 2008 levels
Levelized Rate
$0.1439
Rate Change from Base Case
2.07%
Rate Change
10.24%
NPV Rve Req 2006 - 2015
$5,706
NPV Rev Req
$5,744
Rev Req change from Base Case
-0.24%
Rev Req Change
0.43%
Scenario 5: Ramp up to annual spending of $52.5 million (three times current level) in 2008; Maintain current policies for up
to 2 times spending, then unconstrained.
Costs
2006
Current EEU
Scenario 5 Increment
Scenario 5 Total
% Increase
GWh Savings
2007
2008
TOTAL
Cost/ MWh
$16.7
$17.6
$18.2
$52.5
$3.4
$13.9
$34.3
$51.6
$20.1
$31.5
$52.5
$104.1
21%
79%
188%
98%
2006
2007
2008
TOTAL
Current EEU
61
71
81
213
$246.02
Scenario 5 Increment
13
75
214
301
$171.07
Scenario 5 Total
74
146
295
515
$202.13
21%
105%
% Increase
Rate and Bill Impacts
Levelized Rate 2006 - 2015
3 Year programs
$0.1311
264%
141%
Programs continued at 2008
levels
Levelized Rate
$0.1356
Rate Change from Base Case
0.44%
Rate Change
3.88%
NPV Rve Req 2006 - 2015
$5,673
NPV Rev Req
$5,533
Rev Req change from Base
Case
-0.81%
Rev Req Change
-3.25%