The URL can be used to link to this page

Home My WebLink AboutAgenda Report - January 18, 2006 K-01 PHAGENDA ITEM 940 I CITY OF LODI COUNCIL COMMUNICATION AGENDA TITLE: Adopt resolution approving the Market Cost Adjustment (MCA) level for customers receiving Medical Rider discounts, review and provide preliminary and non-binding policy direction regarding electric rate design/structure for future adjustments to base rates by transferring rates from MCA charges to Base Rate charges, and set public hearing for February 1, 2006, to review permanent rate structure (EUD) MEETING DATE: January 18,2006 PREPARED BY: Interim Electric Utility Director RECOMMENDEDACTION: That the City Council adopt a resolution approving the Market Cost Adjustment (MCA) level for customers receiving Medical Rider discounts, review and provide preliminary and non-binding policy direction regarding electric rate design/structure for future adjustments to base rates by transferring rates from MCA charges to Base Rate charges, and set public hearing for February 1, 2006, to review permanent rate structure. BACKGROUND INFORMATION: Council began review of the attached staff report marked Exhibit A requesting non-binding policy direction on rate design on December 21, 2005. Review of the report was limited due to time constraints and staff committed to returning for additional non-binding policy direction as future agenda availability permitted. As part of the review Council undertook in December, Council reviewedthe residential discount programs and indicated a policy preferencethat the residential discount programs continue unchangedfrom current discount levels based on explanations from staff of the magnitude and cost of those programs and comparisons of similar programs at other municipal utilities. Issue: Subsequent to the December 21, 2006 meeting, staff became aware that erroneous information had been provided to Council regarding the level and cost of discounts for residential customers receiving the Medical Rider discount. When presented to council, staff was not aware the medical rider customers had been exempted from the Market Cost Adjustment, and represented to council that the magnitude of the average discount was approximately 8% and the cost of the discount was approximately $44,000. Once bills started to be received by customers, the finance department began receiving calls from customers receiving the medical rider discount, complaining about the magnitude of the increase in their bills. Upon investigation of these complaints, staff became aware that these customers had previously been exempted from the market cost adjustment, and as a result, had been receiving a discount from the standard rate of 34% for the average customer and significantly higher discounts for customers using APPROVED: Blai K g, City Manager Adopt resolution approving the Market Cost Adjustment (MCA) level for customers receiving Medical Rider discounts, review and provide preliminary and non-binding policy direction regarding electric rate designlstructure for future adjustmentsto base rates by transferring rates from MCA charges to Base Rate charges, and set public hearing for February 1, 2006, to review permanent rate structure (E U D) January 18,2006 Page 2 of 4 As can be seen in the table above, the customerswith the Medical Rider discounts are paying less than a customer on the standard residential rate for equal amounts of consumption, but are being disproportionately impacted when considered from a rate of increase on the monthly bill perspective. There are approximately 350 accounts receiving this discount. It is staffs belief that council would not have wanted to impose a rate increase on the Medical Rider customers on the order of magnitude that these customers are receiving underthe new MCA structure. It is also staffs belief that Council would not want to continue to exempt these customers from any MCA, setting up the possibility for example, that a Medical Rider customer consuming 1500 kwhrs of electricity per month would pay $167.26 while a customer using the same amount of electricity on the standard rate would pay $346.55, or 107% more than the Medical Rider customer. In an effort to provide options to council given the previous erroneous information provided, staff reviewed the discount programs of other municipal utiliies and identified three agencies at 10%, three agencies at 25% and three agencies between 30% and 39%. Alameda, Lompoc and Ukiah, are the three comparison agencies most like Lodi and their medical discount is 10%. Gridley, Santa Clara and Redding are the next group, at 25%. SMUD, Turlock and Roseville round out the comparison at 30%, 33% and 39% respectively. In the event, Council wanted to establish a medical discount similar to the closest comparison group of Alameda, Lompoc and Ukiah, staff recommends that the current MCA be left exactly as it is currently constructed with staff incorporating the additional 2% reduction, that would be required to get to a total 10% reduction, into the permanent rate structure when those rates are brought to council in February. As part of this recommendation, council may want to consider a phase in of this increase in two steps where 501/o of the increase shown above would be allowed to take affect with the December bills and the remaining increase would go into effect with the July bills. If, in the alternative, council wanted to consider a higher percentage discount, staff suggests a 25% discount from the standard rate as a compromise between the 8% reduction under the Medical Rider as originally crafted and the 34% reduction that resulted when the Medical Rider customers were exempted from the MCA back in 2001. Medical Rider Customer Billing Residential Customers Billing Comparison @ 80/6 below Standard Comparison @ Standard Residential Rate Residential Rate Consumption Monthly Bill Monthly Bill Percent I Monthly BIN Monthly Bill Percent 1Kwhrohn4oft) rallisdical kcal Change in wto Medical wlo Medical Changs in Discount Discount Bill Discount Discount Bill Applied and Applied and Applied and Applied and no MCA New MCA Old MCA New MCA 584 $54.33 74.33 37% $74.33 $81.51 10% 1,000 $98.17 $165.70 169% $152.78$184.85 21% 11500 $167.26 $327.39 96% $250.62 $346.55 38% As can be seen in the table above, the customerswith the Medical Rider discounts are paying less than a customer on the standard residential rate for equal amounts of consumption, but are being disproportionately impacted when considered from a rate of increase on the monthly bill perspective. There are approximately 350 accounts receiving this discount. It is staffs belief that council would not have wanted to impose a rate increase on the Medical Rider customers on the order of magnitude that these customers are receiving underthe new MCA structure. It is also staffs belief that Council would not want to continue to exempt these customers from any MCA, setting up the possibility for example, that a Medical Rider customer consuming 1500 kwhrs of electricity per month would pay $167.26 while a customer using the same amount of electricity on the standard rate would pay $346.55, or 107% more than the Medical Rider customer. In an effort to provide options to council given the previous erroneous information provided, staff reviewed the discount programs of other municipal utiliies and identified three agencies at 10%, three agencies at 25% and three agencies between 30% and 39%. Alameda, Lompoc and Ukiah, are the three comparison agencies most like Lodi and their medical discount is 10%. Gridley, Santa Clara and Redding are the next group, at 25%. SMUD, Turlock and Roseville round out the comparison at 30%, 33% and 39% respectively. In the event, Council wanted to establish a medical discount similar to the closest comparison group of Alameda, Lompoc and Ukiah, staff recommends that the current MCA be left exactly as it is currently constructed with staff incorporating the additional 2% reduction, that would be required to get to a total 10% reduction, into the permanent rate structure when those rates are brought to council in February. As part of this recommendation, council may want to consider a phase in of this increase in two steps where 501/o of the increase shown above would be allowed to take affect with the December bills and the remaining increase would go into effect with the July bills. If, in the alternative, council wanted to consider a higher percentage discount, staff suggests a 25% discount from the standard rate as a compromise between the 8% reduction under the Medical Rider as originally crafted and the 34% reduction that resulted when the Medical Rider customers were exempted from the MCA back in 2001. Adopt resolution approving the Market Cost Adjustment (MCA) level for customers receiving Medical Rider discounts, review and provide preliminary and non-binding policy direction regarding electric rate design/structure for future adjustments to base rates by transferring rates from MCA charges to Base Rate charges, and set public hearing for February 1, 2006, to review permanent rate structure (EUD) January 18.2006 Page 3 of 4 If a 25% discount is applied to the medical rider customers, the bill comparison would be approximately as shown in the table below: As can be seen in the table above, the absolute dollar value increases for both the Medical Rider customers and the Standard Residential customers using equal amounts of electricity are very close, but the Medical Rider customers still experience a larger percentage increase because the absolute dollar value of the increase is as compared to a lower initial billing level. In order to effectuate bills for Medical Rider customers that achieve as close as practicable, the comparison shown above, MCA rates as shown in the table below would need to be adopted by City Council as follows. Medical Rider Custom Billing Residential Customers Billing Kwhras implarr rated EA Comparls, i@ 25%belo Standard Comparison@ Standard Residential Rate 0-50 Monthly Bill !sidential Rat Monthly Bill pomem 2 51-300 2.9 Consumption Monthly Bill Monthly Bill Percent Kwhrshnonth wNedical wlMedical Change in w!o Medical wlo Medical Change in 601-781 Discount Discount Bill Discount Discount Bill 6 Applied and Applied and 901-1,171 Applied and Applied and 782-900 13.2 no MCA New MCA 8 Old MCA New MCA 9 structured 19.0 to achieve 25% discount 584 $54.33 $61.13 L 13% $74.33 $81.51 10% 1,000 $98.17 $138.64 41% $152.78 $184.85 21% 1,500 $167.26 _$259.91 55% $250.62 $346.55 38% As can be seen in the table above, the absolute dollar value increases for both the Medical Rider customers and the Standard Residential customers using equal amounts of electricity are very close, but the Medical Rider customers still experience a larger percentage increase because the absolute dollar value of the increase is as compared to a lower initial billing level. In order to effectuate bills for Medical Rider customers that achieve as close as practicable, the comparison shown above, MCA rates as shown in the table below would need to be adopted by City Council as follows. A similar issue arose with the SHARE, or low income discount. and the combined SHARE/Medical Rider discount, but the affects have not been as severe as was experienced under the Medical Rider because the MCA's for these classes of customer were discounted, achieving the reduction from the standard rate that staff previously disclosed to Council. As in the case of the Medical Rider customers, the SHARE and SHARE/ Medical Rider discounts, were also exempted from the Market Cost Adjustment, however, in the design of the new Market Cost Adjustment, the MCA for a SHARE customer was set at 70% of the MCA MCA Table for Medical Rider Customers Tier Kwhras implarr rated EA Cents per Kwhr as big ft nted Kwhras propowd Cents per Kwhr as 1 0-50 2.6 0-400 0.85 2 51-300 2.9 401-508 1.0 3 301-400 4.1 509-600 2.5 4 401-508 4.9 601-781 5.5 5 509-600 4.9 782-900 9.0 6 601-781 6.5 901-1,171 10.0 7 782-900 13.2 >11,171 10.0 8 901-1,171 17.6 9 X1,171 19.0 A similar issue arose with the SHARE, or low income discount. and the combined SHARE/Medical Rider discount, but the affects have not been as severe as was experienced under the Medical Rider because the MCA's for these classes of customer were discounted, achieving the reduction from the standard rate that staff previously disclosed to Council. As in the case of the Medical Rider customers, the SHARE and SHARE/ Medical Rider discounts, were also exempted from the Market Cost Adjustment, however, in the design of the new Market Cost Adjustment, the MCA for a SHARE customer was set at 70% of the MCA Adopt resolution approving the Market Cost Adjustment (MCA) level for customers receiving Medical Rider discounts, review and provide preliminary and non-binding policy direction regarding electric rate design/structure for future adjustmentsto base rates by transferring rates from MCA charges to Base Rate charges, and set public hearing for February 1, 2006, to review permanent rate structure (EUD) January 18,2006 Page 4 of 4 for a standard residential customer (reflecting a 301/6 discount from the standard rates) and the MCA for the combined SHARE/Medical Rider was set at 65% of the MCA for a standard residential customer (reflecting a 35% discount from the standard rates) and as a result, the rate reflects the non-binding policy preference expressed by council in December and has mitigated the rate of increase issue experienced by the Medical Rider customers. Staff therefore recommends no further adjustments to these rates need to be considered. Recwnmlrer n: That City Council: a) affirm the Medical Rider discount at 10%, leaving the current MCA unchanged and direct staff to incorporate the balance of the discount into the permanent rate design to be brought to council in February, and advise staff as to whether the rate increase should be phased in through two or more steps, or b) adopt the Market Cost Adjustments as proposed in the staff report which would effectuate a 25% discount from the standard residential rate, and c) Authorize the finance director to adjust any bills issued to customers receiving the Medical Rider discount to reflect the decisions adopted by council as part of this staff report. FISCAL IMPACT: The impact of changing from the currently implemented MCA to the proposed MCA would be a change in the cost of the discount from approximately $44,000 per year to approximately $110,000 per year, or an increase of $66,000. FUNDING: X",4^ -R. &'& Ruby iste, Interim Finance Director kCz&6i David Dockham Interim Electric Utility Director DD1sh Attachments CC: City Anon -ray Deputy City Manager AGENDA k.ix ITEM YN— (V DATE:MEETI NG December 21, 2005 P,FtE0*AED.SY-. lhterlmtloctric Utility Direct] RECOMMENDED ,CTI .- That the City Council provide preliminary policy direction to Electric Utility Department staff, which will serve as the basisfor rate dein, and the rate structure that will be brought to the City Council for approval at a future date. BACKGROUND INFORMATION: The City Council approved a set of market cost adjustments ({SCA° ).on November 16,2005. The MCA's approved by council became: off.ective on December 2, 2005 and will be reflected in bills received by customers in December. As part of the MCA discussions, Council was told that Electric Department staff would return to the City Council for policy direction and guidance as part of a rate `Prue up" effort. This agenda item initiate that process and provides the opportunity for a fuller discussion of rete issues than could be accommodated during the MCA process given the urgency of the financial situation facing the City in November where the city was basing money on each unit of energy sold. Issue„ The Market Cost Adjustment implemented on December 2, 2005 allowed the Electric Utility to begin collegting for the significant increases in costs for bulk power. This Market Cost Adjustment addressed an increase in bulk power costs of over 38% since the last time a Market Cost Adjustment was made. One of the trey features of the Market Cost Adjustment is that it is supposed to be temporary in nature, requiring that the Electric Utility report on a quarte, ly basis the continued need for the Market Cost Adjustment and to recommend increases or dec'eases to the MCA as necessary. While the most recent MCA is entirely consistent with the intended purpose cf the MCA, a permanent adjustmentto electric rates, or "rate true up" is needed to reflect the fact that projected long term costs for bulk power will remain at or near levels secured through the current MCA and absent a structural adjustment to the base rate structure reflecting the more permanent increase in bulk power costs, the MCA would itself become a permanent featu re cf the rate structure, which is not what the MCA was intended for. The "rate true up" is intended to allow for a movement away from the current (temporary type) rate structure that relies heavily on the Market Cost Adjustment as an augmentation to base rates as the mechanismfor meeting the overall revenue requirement for the utility, and instead providing for a movement to a permanent rate structure that relies on base rates as the mechanism for meeting the overall revenue requirement for the utility (e.. "base rates" should be set to cover the expected average level of power and other costs). APPROVED: Blair -K , City Manager Receive • nary Policy Direction.. from City Council in order to 'i base rates by transferring rates from Ma .. rket 66,st Aatjt;jmentChargesA6 Base RMe Charges- Truing up the Electric RatesEUC D. a:, 211 200S - In conjunction with the in.corporation of the higher costs of bulk power into the base rate structure, this "true p" provides ars opportunity to address elements of rate design that the Council or staff has previously identified as problematic,and/or which could not be addressed as part of the MCA discussions due to. e short period of time under which t he MCA process was undertaken. In that regard, staff has identified the fallowing issues as benefiting from Council discussion and preliminary policy guidance prior to significant effort being. expended on rate design under this "true up" effort. Issuos to be addressed Staff has identified the following four rate design issues as farming the basis for additional discussion and preliminary'polioy direction from council; Relationship. Oiscount Levels Eco orrit A couple of subsidiary issues fall out of tine above major issues. These relate to the following: All electric rates. Mobile Horne rites Relationship of Rates I� h Classes. Mow rate levels differ by Mass each f hat suff icient revenues can be recovered to support overall utility operations is one the thorniest issues that rate designers face and is the primary decision that underpins all other rate design issues. Differences between classes are based on a number of factors: Cost of Service Competitiveness Economic value, Other local Con iderations unci Preferences In short, rate designers Willa). evaluate and iter ne the costs imposed on the utility by each class cf customer, b)assess the: relative competitiveness of the rates in each class to other utilities in the area and region, c) assess the relative econornic value. and need of certain classes in order to assess the need: for credits W discounts and d) Neill as ether local community attitudes, values and beliefs as they may impact on rate design considerations. To address the first factor described above, a Cost of Services Analysis (COSA) was performed for projected 2006 and 2007 sts. Th purpose of the COSA was to identify the costs of serving each class of customer in order to determine how much revenue should be collected from each class based on the cost to serve a particular class, It staffs opinion that a band should be placed around these COSA values, meaning that the varies that result from the study effort can be 15% higher or lower and still accurately reflect the east of serving a particular class of customer. The result of the 2006 COSA is displayed below with a 15% banding around the current Lodi rates in place effective December 2, 2005. COSA studies typically serve as the foundation for rate design. Once the total amount of revenue that needs to be collected from each class is identified, rate designers can take that revenue number and divide it by the amount of energy and capacity consumed by each rate class to come up with a rate structure that allows the appropriate level of revenue to be collected from each class. The 2006 and 2007 COSA studies referenced above, validated and reinforced the abbreviated COSA study that was used as the basis for the recently approved Market Cost Adjustments (MCA's). As a result, the rates for all t.edl Current Average Law High Average ander COSA COSA COSA wl Rate h MCA 20.06. 200.6 2006 Trcie U ENA debtial $0.178 $0.150 $0.127 $0:.173 $0..150 Eli 0.W. Inebme . $0.096 $05149 $0.1 $0:171. 0,093 $0.149 12 0,171M MONO Home $0.19 1 mall ornmercial $0.166 $0J43 $0121 1 .1 `; $0.166 $Q. l $0:135 $0.116 $0.157 $0.150 Small Industrial 0.144 $0.135 $0,115 $016 ; $0.144 G* M diurh Industrial $0.123 $0.133 $1.11 $4:15 $0.123 5 Industrial sari % $0.114 0.1; 4 $0.114 $0.'155. $0.114 1-1lndustrial $0.059 $0.137 $0.117 $0J50 $0.114" Contract Lir $U85 $0.131 $().ill 1.151 $0 03 r ontr ct M is r $4.123 ' $0:13 $0."117 $0.159 $0.123 The Mobile Homes, 11 and Large Contract ra.tes;on the other hand were given MCAs whose effective rotes were . a level of at least 0% below Gast of Service. Mobile homes will be discussed below. The industrial rate setting reflected the. short amount of time provided to these customers to review and understi nd the basis for the increase so as to mitigate the rate shock that would occur in moving from the did rate to a COSAbased rate. It also reflected an implied economic value for these customers. The i dusttial customer class has expressed to EUD staff that implementation cf a rate that reflectsthe city's cost .of. service for the industrial rate class would result in a rate level that would be a retreat from the city's historical policy of incentive or economic development based rates that formed the basis for many of these customers choosing to do business in Loch. Several industrial customers have indicated that rues at the cast of service level could cause therm to have to move elsewhere or shutdown as they would force costs too high for these plants to compete. As can be seen in the table above, the current Lodi rates are ext emely competitive with PGCE at the current level, would be competitivewith PG&E at the low end of the COSA banding level, but are not necessarily competitive with rate levels elsewhere in tha region or out at the state. As a result, these customers have also expressed an interest in understanding what Lodl's long -terra rate design policy will be in order that they achieve a level of stability and predictability In their rate structure, but also to make long-term business decisions about where they will conduct business. To assist in assessing the economic value of the industrial customer class, the third element cf rate design considerations, the industrial customers have agreed to fund an economic study that will report on the value of Industry to the community. The report is expected to be completed on or around December 12, 2005, but was not available far staff review at the time this staff report was prepared. This report should be reviewed and considered in the context of this element of rate design. Lastly, local considerations and preferences must be an element of rate design. As Lodi policy makers consider the future makeup of the community and assess where subsidies, discounts or credits will be i ril�ry:andio►t-lr�#ingPolicy Direction from City Car€i gra arils #« adjust base rates transferring rat fqtt�', rk t�q st Adjustment Charges to Base Hate Charges - `Truin , up the Electric Ratan" (EUDI qg t 're( tt to str 60 oil th d� 10 id ration should be. a ven to the type of business or industry that fits best with Lodi 's long Egon f its fdtur . If for exarnp le, Lodi wants to continue to attract industrial types of uses that will a subsidy or credit from dost of Service in orderforthose types of businessesto be competitive, Iff r uest that council express its policy preference as retaining the relationship between as found In the table above. f, on the other hand, council wants to eliminate subsidies or credits glass<or provide subsidies or credits to a different class of customers in support of different C goals, staff requests tha t council express its policy preference to either eliminate subsidies and over time in order to achieve rates within the cost of service band or to grandfather existing erst s. orae level below cost of service with new customers being subject to a rate falling within t of service band. As rt of the MCA process., Council made a commitment to the industrial customers that the average rates effectuated through the MCA and the rate re.lationshi ps between the industrial class and the rernai'ing classes that resulted from the MCA would not be changed for the balance of the fiscal year. Any changes that occurred after that point, were to be considered in the context of the report being .....'Commissioned by the industrial customers, further discuss ons of the CCSA studies, and further deliberations over the strategic interests of the city. Because staff and council have not seen the report onthe economic value of industry to the community, it is pre mature to make any recommendations on new rate design for this class of customer, however, staff requests that council express a non-binding preference through a straw Grote on this issue of consensus rate differentials to either: at' Maintain the current. rate relationships as approved through the MCA through the balance d7 this fiscal year contingent on further discussions of the city's strategic preferences and further discussions of the results of the economic stu dy report commissioned by the industrial customers; b) Maintain the current rate relationships as approved through the MCA through the balance of this fiscal year and begin working with the city cou ncil and industrial customers on a plan to transition to a cost of service based rate. to r9im ifxity As part of the MCA process, council expressed. a concern that the tiered structure of the MCA was too corn l x. A part of the MCA process staff had proposed a nine tiered MCA that was intended to mimic P ®s rate structuromore closely than the base two tier structure otherwise allowed, but acknowledges that this structure is tie complex. In order to address the complexity issue, staff is requesting council guidance in the following four areas: Residential firing. All Electric Rates Industrial Structure Mobile Homes Residential Ti rirr Dodibase`rate structure for residential customers includes two tiers. In contrast, PG&E's residential rate structure includes five li rs. luring the last Market Cast Adjustment, staff proposed implementation of nine tiers for the residential MCA: in an effort to try and g et the combined two-tier base rate structure and nine l r MICA to align more closely with P 's five -tier rate structure. Council appropriately expressed concern in general with the complexity of this large number of tiers, but did not indicate how many tiers would be too many A more simplified two-tier rate structure would facilitate ease of understanding by the customer. However, the rates underthis stricture would not compare easily to PG&E and some customers would invariably have rates higher than PG&E and some less in order to achieve the mathematical average Receive Preliminary and Non -Binding Policy Direction from City Council in order to adjust base rates bytransferring rates from Market Cost Adjustment Charges to Base Rate Charges - "Truing up the Electric Rates" ( Li) . . December 21, 2045 Page 5 of being less than PGE. If the PG&E comparison is not critical, then staff would recommend that the assigned revenue requirementfor residential be recovered through base rates with a winter/summer differential and only two tiers. The MCA would be set to zero. Any future MCA's would be implemented with the same two tiers. if, on the other hand, close comparisons to PG&E are desirable, staff recommends the adoption cf a structure that replicates the PG&E structure with five base tiers and any future MCA's implementedwith the same five tiers. Staff requests that council express a non-binding preference through a straw vote for either: Moving toward the long term objective of a rate structure similar to PG&E -- fide tier residential rate design; or Waving as the objective average customer bills that are less than PG&E with a less complicated —two tier residential rate design Alf Electric Homes Lodi currently has approximately 500 customers on the All Electric borne late. These customers receive a higher allotment of energy in the first tier (5 85 kwhrs in the all electric vs. 440 kwhrs dUrin tf e s Mer and 1,000 kwhrs vs. 400 kwhrs in the winter) which translates into an approximate 10P/o discount for 585 kwhrs of consumption during the summer and an approximate 20% discount for 1,000 kwhrs of consumption during the winter. While these discounts made some economic sense in the past, they make no sense today. In the far distant past, energy costs declined as the level of production increased. That cost relationship no longer exists. The electric utility now faces increasing costs as production increases or as new generation is utiiized. Because of this new relationship, providing the all -electric home customers with a larger base level of consumption at the first tier rate requires a subsidy from the standard residential customer to the all -electric residential customer. In staffs opinion, this subsidy should be eliminated and all residential customers should be treated equally. A table showing NCPA cities with and without the all -electric rate is attached as exhibit 1. Staff requeststhat council express a non-binding preference through a straw vote for either: a) retaining the all electric home rate schedule along with its higher allocation of first tier consumption; and b) eliminating the distinction between the standard residential rate class and the all electric rate class. Industrial. Structure With respect to industrial rate design and the level of complexity that currently exists, the industrial class design has three tiers or costing periods: on -peek, off-peak and partial peak. Generally, Lodi's power costs are incurred in only two periods referred to as Meavy Load and Light Load. Therefore, a reduction to two rate periods would be justified. This would also help to facilitate revenue stability by aligning revenues more closely with cost causation. A second element of the industrial rate design that needs to be addressed is the provisionfor customers that use over 1 mw of electricity to self seleot into either of two rate classes, the 11 rate class or the G5 rate class along with the provision of an economic stimulus credit that is extended to all customers eligible to self select into either rate class where the credit is extended without regard to performance criteria, obligations or time limits. Staffs recommendation is to eliminate the ability for any customer to self select into a rate class along with any evergreen rate credits, replacing these credits with specific agreements, if warranted, that specify the term of the agreement, provisions for modifying the agreement and performance requirements and obligations on the part of the customer that are expected in return for the credit. This is discussed in more detail later, under economic development. DISCOUMS aurIN Council's deliberations on ?hemarket cost adjustment, council members commented that discounts were :both too much'And not enough. ln..an effort to gain further insight into the differing policy objectives of different 'rhanr°it momb rs; staff has assembled a list of al' discounts that Are currently in place in the city in an attempt to ...enhadae the discussion on disdo unts and to discern whether the treatment of discounts should be differentiated in any way based on the type of discount. Below is a list of the discounts currently in effect, the total cost of those discounts and the cost per account of those discounts. DISCOl nt. Analysis Avg any :RoMdential Discountsoiscount Mit ; Accounts ASI Fixed Income $4 606 t 90 AMR `: Medical $44257. $126 350 SHARE Itavy €n�eatra� :EDMW HARE Medical $39470 X 56 154 EEMR.:: Alr- l tdc.Med€ca! $3 Cs :. $00 4 EF All-Sleetric SHARE flow incfte $9232 $176 53 FMA All -Electric SHAREMedicat $777 $:173 5 Receive Preliminary and Non -Binding Policy Direction from City Council in orderto adjust base rates,bylransferrin rates from Market Cost Adjustment Charges to Base Rate Charges —"Truing up the Electric Rates" (UO) December 21, 2005 Page 7 of 9 Fixed Income For those customers on fixed incomes below $45,500 annually and who are over 62 YOWP`Q.18`an.d..1d6 Ot qualify for any other discount, a discount of 5% on their electric bill is available. There are. cufrently. 90:.. accounts receiving this discount with a total annual cost of $4,606. Medical Rider Residential Customers on the standard residential rate (EA), the SHARE program rate (Eopr"the Mobile Home rate (EM) are entitled to an additional 500 kwhrs of electricity at a lower first tier rate under the Medical Rider Discount. To qualifyfor the Medical Rider, customers mustclemonstrate thatthey are... either: a) dependent on life supportclevices used in the home, b) a paraplegic, quadriplegicor':.hern iple . g . 1c. person having special air-conditioning needs, c) a multiple sclerosis patient having special heating or cooling needs or d) have another medical condition requiring special heating or cooling needs thatwould. be reviewed on a case by case basis. Customers are also allowed to combine discounts:if eligible for both the SHARE discount and the Medical Rider, but for the purposes of this paragraph, ,only the Medical discount will be discussed. There are currently 354 accounts receiving this discount witha,tot 6l.annual cost of $134,032. The discount results in an approximate 8% reduction from the standard'applicable rate. SHARE The SHARE discount is available to any customer in single family or multi family dwellings separately metered by the City of Lodi (including mobile home tenants) where the customer meets the. special income requirements of the rate schedule: N6iWb—er of _P��s_ons -in H o_use_h_o1_dm_, A—nnu-a--1H-o—usehoId Income 1-2 3 $?2QOO $25,900 4 $31 500 Each additiona!_p S !�rs2n $5,200 There are currently 1,671 accounts receiving this discount with a total annual cost of $397,168. The discount results in an approximate 30% reduction from the standard applicable rate. Combined SHAREIMedical Rider Customers eligible for either the SHARE discount or Medical Rider discount are eligible to combine the discounts. There are currently 159 accounts receiving the combined discount at a total annual cost of $50,448. The discount results in an approximate 36% reduction from the standard applicable rate. Residential Discount Policy Direction For comparison purposes, staff has assembled comparisons from other NCPA cities that show the discounts and levels of:discounts that are provided for each of the categories of residential discounts as Exhibit 2. Siaff requests ihat council express a non-binding preference on residential discount programs through a straw vote to either: a) retain the existing discount programs with approximately the same level of discount applied to each program b) retain the existing discount programs with a reduced level of discount applied to each program c) retain the existing discount programs with an increased level of discount applied to each program d) eliminate the existing discount programs Iv rel Minaty Arad Nord- i a inn Policy Direction from City Council in order to adjust fuse rates by transferring r tes- ROM 8*6j Cost Adjustimont Charges to Base Rate Charges — "Truing up the Electric Rates" (ELID) ertaer.1, X405 f Undo r the. arket Cost Adj stment.and rate lock commitment provided to the industrial customers through the end of this fiscal year, the Economic Stimulus Credit has been effectively subsumed into the over ll industrial rate reduction from cost of service. Future designs will need to determine whether this feature is explicitly retained or eliminated. For example, if industrial rates were set at a specific level below east of service, the resulting rate differential could serve as a permanent, transparent method of valuing the economic benefit of these customers. Alternatively, the industrial rate could be set at cost of service, and only selected and qualified customers could be offered the economic development credit, in which case, an explicit rate value would need to be made available. individual Contracts in the past, in order to attract customers and/or to allow customers under expiring below market contracts to transition to the published rate over a longer period of time, special agreements were put in place. The original intent was for these contracts to act as an attraction or retention tool with the expectatron that they would expire on a specific date after which the customer would transition to the published rate. These contracts are largely operating as intended, with the exception that the transition rate should have been slightly higher than has turned out to be the case, and that a more detailed cost benefit analysis of Receivo Preliminary and Rion -Binding Policy Olrecifon from City Council in ~ to adjust ,bad rates ftm Market dost Adjushnent Charges to .Base late Chang - "Truing up t1w Boctric (R Decwnber 21, 2005 Page 9 of 9 the contracts could have been undertaken. Contracts can be effective tools for economk* used in a manner that clearly supports the strategic objectives of the city, I n order to beg in sorting out the myriad of economic development options ava ilable to. #16 61 a) a yes or no vote on whether the economic stimulus credit should be retained or no vote economic credit should b,. limited in 11:'. i years or less) c) a yes or no vote on whether the economic stimulus credit should be tied to measurable and./or quantifiable retums to the community d) a yes or no vote on whether the economic stimulus credit should be tied to a mak.imum,discount o t of Service e) if the answer to d is yes, a yes or no vote . r discount from��C`000.servioe... should be greater or less than 25% Next Steps Based on the preliminary and non-binding policy preferences expressed by city council, st� can. .:prepare. an updated rate design incorporating those preliminary policy preferences. The updated. to then be brought back to c" council for further council and public input and deliberation:.: FISCAL IMPACT. 1 David o interim Electric Utility Director DDAst Attachments Exhibit I - Comparison of All Electric and Mobile aHome Rates (Residential -Master Meter Residential -individual .. commer'daWaster No �I . l -Individual MeterRe.sidential-Master . Residenfiaf-jndivldual M an first SM kWh per month and 15"1A afire 5M kWh kWh reduction on.first 5W Mb 1211412005 RESOLUTION NO. 2006-18 A RESOLUTION OF THE LODI CITY COUNCIL IMPLEMENTINGAND ADJUSTING THE MARKET COST ADJUSTMENT LEVEL FOR ELECTRIC RATES FOR CUSTOMERS RECEIVING MEDICAL RIDER DISCOUNTS WHEREAS, the Council of the City of Lodi finds as follows: 1, The City of Lodi provides electricity to its citizens through the Lodi Electric Utility Department; 2, The City charges customers of this utility a charge to fund the on-going operation and maintenance of the electric supply; and 3. The Lodi Municipal Code authorizes the City Council to impose by resolution a Market Cost Adjustment to address cost spikes in the wholesale electric market (Lodi Municipal Code Section 13.20.175). NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lodi as follows: Section 1. Recitals. The foregoing recitals are true and correct. Section 2. Lew of Charaes. Pursuant to Section 13.20.175 of the Lodi Municipal Code, the Market Cost Adjustment Level for electric rates for customers receiving Medical Rider Discounts are hereby implemented in the amounts shown as follows: Section 3. The City Council hereby: a) Adopts the Market Cost Adjustment level, which would effectuate a 25% discount from the standard residential rate; and b) Authorizes the Finance Director to adjust any bills for December 2005 and January 2006 issued to customers receiving the Medical Rider discount to reflect the decisions adopted by Council. Section 4. Effective Date. This resolution shall take effect immediately. MCA Table for Medical Rider Customers Tier Kwhr as implemented (EA) Cents per Kwhr as implemented Kwhr as proposed Cents per Kwhr as proposed 1 0-50 2.6 0400 0.85 2 51-300 2.9 401-508 1.0 3 301-400 4.1 509-600 2.5 4 401-508 4.9 601-781 5.5 5 509-600 4.9 782-900 9.0 6 601-781 6.5 901-1,171 10.0 7 782-900 13.2 >1,171 10.0 8 901-1,171 17.6 9 >1,171 19.0 Section 3. The City Council hereby: a) Adopts the Market Cost Adjustment level, which would effectuate a 25% discount from the standard residential rate; and b) Authorizes the Finance Director to adjust any bills for December 2005 and January 2006 issued to customers receiving the Medical Rider discount to reflect the decisions adopted by Council. Section 4. Effective Date. This resolution shall take effect immediately. Dated: January 18,2006 hereby certify that Resolution No. 2006-18 was passed and adopted by the City Council of the City of Lodi in a regular meeting held January 18, 2006, by the following vote: AYES: COUNCIL MEMBERS—Beckman, Hansen, Johnson, Mounce, and Mayor Hitchcock NOES: COUNCIL MEMBERS—None ABSENT: COUNCIL MEMBERS — None ABSTAIN: COUNCIL MEMBERS— None 5USAN J. BLACKS N City Clerk 2006-18 Detailed Examples of Bill Comparisons including the affect of the recently adopted MCA for Customers under the Standard Residential EA Rate versus Customers under the Standard Residential Rate with the Medical Rider Discount Applied for Consumption Levels of 584 kwhrs per month (the average customer), 1000 kwhrs/month and 1500 kwhrs per month 584 kWh Winter Old Rate EAMR-MEDICAL EA -RESIDENTIAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 144 0.13818 $ 19.90 Medical Rider 144 0.09987 $ 14.38 400 0.09987 $ 59.85 2nd Tier Total $ 54.33 300 0.0175 $ 5.25 $ 19.90 Medical Rider 284 0.0325 $ 9.23 $ 59.85 0.026 $ 14.48 $ 54.33 $ 1.30 Total $ 74.33 Old Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ applying MCA EAMR-MEDICAL 0.09987 $ EA -RESIDENTIAL 2nd Tier 0 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 144 0.13818 $ 19.90 Medical Rider 144 0.09987 $ 14.38 $ 59.85 0.026 $ 1.30 $ 54.33 $ 1.30 250 MCA 300 0.0175 250 5.25 300 0.0175 $ 5.25 0.041 284 0.0325 100 9.23 284 0.0325 $ 9.23 0.049 $ 5.29 $ 14.48 $ 5.29 $ 14.48 0.049 $ Total $ 68.81 $ Total $ 74.33 New Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 144 0.13818 $ 19.90 Medical Rider 144 0.09987 $ 14.38 $ 59.85 $ 54.33 MCA 50 0.026 $ 1.30 50 0.026 $ 1.30 250 0.029 $ 7.25 250 0.029 $ 7.25 100 0.041 $ 4.10 100 0.041 $ 4.10 108 0.049 $ 5.29 108 0.049 $ 5.29 76 0.049 $ 3.72 76 0.049 $ 3.72 $ 21.67 $ 21.67 Total $ 76.00 Total $ 81.51 1,000 kWh Winter Old Rate EAMR-MEDICAL EAMR-MEDICAL EA -RESIDENTIAL EA -RESIDENTIAL 1 st Tier 0.09987 400 0.09987 $ 39.95 EA -RESIDENTIAL 400 0.09987 $ 39.95 2nd Tier 0.09987 0 0.13818 $ - $ 560 0.13818 $ 77.38 Medical Rider $ 500 0.09987 $ 49.94 77.38 Medical Rider 500 $ 117.33 $ 49.94 60 0.13818 $ 8.29 300 0.0175 $ 5.25 8.29 Total $ 98.17 0.026 300 0.0325 $ 9.75 0.026 $ 1.30 MCA 300 0.0175 300 0.049 $ 14.70 0.0175 $ 5.25 100 300 0.0325 4.10 100 0.0575 $ 5.75 $ 9.75 108 300 0.049 5.29 14.7 300 0.049 $ 35.45 14.70 92 100 0.0575 4.51 5.75 100 0.0575 Total $ 152.78 Old Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ applying MCA EAMR-MEDICAL 0.09987 EA -RESIDENTIAL 39.95 2nd Tier 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 560 0.13818 $ 77.38 Medical Rider 500 0.09987 $ 49.94 $ 117.33 60 0.13818 $ 8.29 MCA 50 0.026 $ $ 98.17 0.026 $ 1.30 MCA 300 0.0175 7.25 5.25 300 0.0175 $ 5.25 100 300 0.0325 4.10 9.75 300 0.0325 $ 9.75 108 300 0.049 5.29 14.7 300 0.049 $ 14.70 92 100 0.0575 4.51 5.75 100 0.0575 $ 5.75 181 0.065 $ 11.77 35.45 0.065 $ $ 35.45 119 0.132 Total $ 133.62 119 Total $ 152.78 New Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 560 0.13818 $ 77.38 Medical Rider 500 0.09987 $ 49.94 $ 117.33 60 0.13818 $ 8.29 $ 98.17 MCA 50 0.026 $ 1.30 50 0.026 $ 1.30 250 0.029 $ 7.25 250 0.029 $ 7.25 100 0.041 $ 4.10 100 0.041 $ 4.10 108 0.049 $ 5.29 108 0.049 $ 5.29 92 0.049 $ 4.51 92 0.049 $ 4.51 181 0.065 $ 11.77 181 0.065 $ 11.77 119 0.132 $ 15.71 119 0.132 $ 15.71 100 0.176 $ 17.60 100 0.176 $ 17.60 $ 67.52 $ 67.52 Total $ 165.70 Total $ 184.85 1,500 kWh Winter Old Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 1060 0.13818 $ 146.47 Medical Rider 500 0.09987 $ 49.94 $ 39.95 2nd Tier $ 186.42 0.13818 560 0.13818 $ 77.38 300 0.0175 $ 5.25 500 0.09987 Total $ 167.26 300 0.0325 $ 9.75 MCA 560 0.13818 $ 300 0.049 $ 14.70 250 0.029 $ 7.25 600 0.0575 $ 34.50 MCA 300 0.0175 $ 5.25 $ 64.20 0.0175 $ 5.25 0.049 300 0.0325 Total $ 250.62 Old Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ 39.95 400 applying MCA EAMR-MEDICAL 2nd Tier 0 EA -RESIDENTIAL $ - 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 1060 0.13818 $ 146.47 Medical Rider 500 0.09987 $ 49.94 $ 186.42 MCA 560 0.13818 $ 77.38 0.026 $ 1.30 250 0.029 $ 7.25 $ 167.26 0.029 $ 7.25 MCA 300 0.0175 $ 5.25 300 0.0175 $ 5.25 0.049 300 0.0325 $ 9.75 300 0.0325 $ 9.75 $ 4.51 300 0.049 $ 14.70 300 0.049 $ 14.70 181 600 0.0575 $ 34.50 600 0.0575 $ 34.50 0.132 $ 15.71 $ 64.20 $ 47.70 271 $ 64.20 $ 47.70 Total $ 231.46 $ 62.51 Total $ 250.62 New Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 1060 0.13818 $ 146.47 Medical Rider 500 0.09987 $ 49.94 $ 186.42 560 0.13818 $ 77.38 $ 167.26 MCA 50 0.026 $ 1.30 50 0.026 $ 1.30 250 0.029 $ 7.25 250 0.029 $ 7.25 100 0.041 $ 4.10 100 0.041 $ 4.10 108 0.049 $ 5.29 108 0.049 $ 5.29 92 0.049 $ 4.51 92 0.049 $ 4.51 181 0.065 $ 11.77 181 0.065 $ 11.77 119 0.132 $ 15.71 119 0.132 $ 15.71 271 0.176 $ 47.70 271 0.176 $ 47.70 329 0.19 $ 62.51 329 0.19 $ 62.51 $ 160.13 $ 160.13 Total $ 327.39 Total $ 346.55 584 kWh Summer Old Rate EAMR-MEDICAL EA -RESIDENTIAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 144 0.13818 $ 19.90 Medical Rider 144 0.09987 $ 14.38 440 0.09987 $ 63.84 2nd Tier Total $ 58.32 300 0.0175 $ 5.25 $ 19.90 Medical Rider 284 0.0325 $ 9.23 $ 63.84 0.026 $ 14.48 $ 58.32 $ 1.30 Total $ 78.32 Old Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ applying MCA EAMR-MEDICAL 0.09987 $ EA -RESIDENTIAL 2nd Tier 0 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 144 0.13818 $ 19.90 Medical Rider 144 0.09987 $ 14.38 $ 63.84 0.026 $ 1.30 $ 58.32 $ 1.30 250 MCA 300 0.0175 250 5.25 300 0.0175 $ 5.25 0.041 284 0.0325 100 9.23 284 0.0325 $ 9.23 0.049 $ 5.29 $ 14.48 $ 5.29 $ 14.48 0.049 $ Total $ 72.80 $ Total $ 78.32 New Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 144 0.13818 $ 19.90 Medical Rider 144 0.09987 $ 14.38 $ 63.84 $ 58.32 MCA 50 0.026 $ 1.30 50 0.026 $ 1.30 250 0.029 $ 7.25 250 0.029 $ 7.25 100 0.041 $ 4.10 100 0.041 $ 4.10 108 0.049 $ 5.29 108 0.049 $ 5.29 76 0.049 $ 3.72 76 0.049 $ 3.72 $ 21.67 $ 21.67 Total $ 79.99 Total $ 85.51 1,000 kWh Summer Old Rate EAMR-MEDICAL EAMR-MEDICAL EA -RESIDENTIAL EA -RESIDENTIAL 1 st Tier 440 440 0.09987 $ 43.94 EAMR-MEDICAL 440 0.09987 $ 43.94 2nd Tier 1 st Tier 0 0.13818 $ - 43.94 560 0.13818 $ 77.38 Medical Rider 2nd Tier 500 0.09987 $ 49.94 - 560 0.13818 $ 121.32 77.38 Medical Rider 60 0.13818 $ 8.29 49.94 300 0.0175 $ 5.25 60 Total $ 102.17 8.29 300 0.0325 $ 9.75 50 0.026 $ 1.30 $ 102.17 0.026 300 0.049 $ 14.70 MCA 300 0.0175 7.25 5.25 300 100 0.0575 $ 5.75 100 300 0.0325 4.10 9.75 300 0.0325 $ $ 35.45 108 300 0.049 5.29 14.7 300 0.049 Total $ 156.77 Old Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ applying MCA EAMR-MEDICAL 0.09987 EA -RESIDENTIAL 43.94 2nd Tier 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 560 0.13818 $ 77.38 Medical Rider 500 0.09987 $ 49.94 $ 121.32 60 0.13818 $ 8.29 MCA 50 0.026 $ 1.30 $ 102.17 0.026 $ 1.30 MCA 300 0.0175 7.25 5.25 300 0.0175 $ 5.25 100 300 0.0325 4.10 9.75 300 0.0325 $ 9.75 108 300 0.049 5.29 14.7 300 0.049 $ 14.70 92 100 0.0575 4.51 5.75 100 0.0575 $ 5.75 181 0.065 $ 11.77 35.45 0.065 $ $ 35.45 119 0.132 Total $ 137.62 119 Total $ 156.77 New Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 560 0.13818 $ 77.38 Medical Rider 500 0.09987 $ 49.94 $ 121.32 60 0.13818 $ 8.29 $ 102.17 MCA 50 0.026 $ 1.30 50 0.026 $ 1.30 250 0.029 $ 7.25 250 0.029 $ 7.25 100 0.041 $ 4.10 100 0.041 $ 4.10 108 0.049 $ 5.29 108 0.049 $ 5.29 92 0.049 $ 4.51 92 0.049 $ 4.51 181 0.065 $ 11.77 181 0.065 $ 11.77 119 0.132 $ 15.71 119 0.132 $ 15.71 100 0.176 $ 17.60 100 0.176 $ 17.60 $ 67.52 $ 67.52 Total $ 169.69 Total $ 188.85 1,500 kWh Summer Old Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 1060 0.13818 $ 146.47 Medical Rider 500 0.09987 $ 49.94 2nd Tier 0 $ 190.41 $ 560 0.13818 $ 77.38 300 0.0175 $ 5.25 0.09987 $ Total $ 171.26 300 0.0325 $ 9.75 560 0.13818 $ 77.38 300 0.049 $ 14.70 250 0.029 $ 171.26 600 0.0575 $ 34.50 MCA 300 0.0175 $ 5.25 300 $ 64.20 $ 5.25 108 300 0.0325 $ Total $ 254.61 Old Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ 43.94 440 applying MCA EAMR-MEDICAL 2nd Tier EA -RESIDENTIAL 0.13818 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 1060 0.13818 $ 146.47 Medical Rider 500 0.09987 $ 49.94 $ 171.26 $ 190.41 560 0.13818 $ 77.38 50 0.026 $ 1.30 250 0.029 $ 171.26 250 0.029 $ 7.25 MCA 300 0.0175 $ 5.25 300 0.0175 $ 5.25 108 300 0.0325 $ 9.75 300 0.0325 $ 9.75 0.049 300 0.049 $ 14.70 300 0.049 $ 14.70 $ 11.77 600 0.0575 $ 34.50 600 0.0575 $ 34.50 119 0.132 $ 15.71 $ 64.20 0.176 $ 47.70 $ 64.20 0.176 $ 47.70 Total $ 235.46 0.19 Total $ 254.61 New Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 1060 0.13818 $ 146.47 Medical Rider 500 0.09987 $ 49.94 $ 190.41 560 0.13818 $ 77.38 $ 171.26 MCA 50 0.026 $ 1.30 50 0.026 $ 1.30 250 0.029 $ 7.25 250 0.029 $ 7.25 100 0.041 $ 4.10 100 0.041 $ 4.10 108 0.049 $ 5.29 108 0.049 $ 5.29 92 0.049 $ 4.51 92 0.049 $ 4.51 181 0.065 $ 11.77 181 0.065 $ 11.77 119 0.132 $ 15.71 119 0.132 $ 15.71 271 0.176 $ 47.70 271 0.176 $ 47.70 329 0.19 $ 62.51 329 0.19 $ 62.51 $ 160.13 $ 160.13 Total $ 331.39 Total $ 350.54 Detailed Examples of Bill Comparisons of Customers under the Standard Residential EA Rate versus Customers under the Standard Residential Rate with the Medical Rider Discount at 25% of the Standard Bill Applied for Consumption Levels of 584 kwhrs per month (the average customer), 1000 kwhrs/month and 1500 kwhrs per month 584 kwh Winter Current Current Old Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 184 0.13818 $ 25.43 Medical Rider 184 0.09987 $ 18.38 $ 65.37 Total 1 $ 58.32 300 0.0175 $ 5.25 Ave $ 0.0999 284 0.0325 $ 9.23 $ 14.48 Total $ 79.85 Ave $ 0.1367 Old Rate applying MCA EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 184 0.13818 $ 25.43 Medical Rider 184 0.09987 $ 18.38 $ 65.37 $ 58.32 MCA 300 0.0175 5.25 300 0.0175 $ 5.25 284 0.0325 9.23 284 0.0325 $ 9.23 $ 14.48 $ 14.48 Total $ 72.80 ITotal 1 $ 79.85 Ave 1 $ 0.1247 1 Ave 1 $ 0.1367 New Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 184 0.13818 $ 25.43 Medical Rider 184 0.09987 $ 18.38 $ 65.37 $ 58.32 MCA 50 0.026 $ 1.30 50 0.026 $ 1.30 250 0.029 $ 7.25 250 0.029 $ 7.25 100 0.041 $ 4.10 100 0.041 $ 4.10 108 0.049 $ 5.29 108 0.049 $ 5.29 76 0.049 $ 3.72 76 0.049 $ 3.72 $ 21.67 $ 21.67 Total $ 79.99 Total $ 87.04 Ave 1 $ 0.1370 Ave $ 0.1490 Proposed Change 1 st Tier 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - Medical Rider 184 0.09987 $ 18.38 $ 58.32 MCA 50 0.0085 $ 0.43 250 0.0085 $ 2.13 100 0.0085 $ 0.85 108 0.01 $ 1.08 76 0.025 $ 1.90 $ 6.38 Total $ 64.70 Ave $ 0.1108 1,000 kWh Old Rate EAMR-MEDICAL 1stTier 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - Medical Rider 500 0.09987 $ 49.94 100 0.13818 $ 13.82 Total $ 103.70 applying MCA 1 st Tier 2nd Tier Medical Rider 1 st Tier 2nd Tier Medical Rider 1 st Tier 2nd Tier Medical Rider EAMR-MEDICAL 400 0.09987 $ 39.95 0 0.13818 $ - 500 0.09987 $ 49.94 100 0.13818 $ 13.82 $ 103.70 300 0.0175 5.2! 300 0.0325 9.7! 300 0.049 14. 100 0.0575 5.7! 35.4! Total $ 139.15 400 0.09987 $ 39.95 0 0.13818 $ 500 0.09987 $ 49.94 100 0.13818 $ 13.82 $ 103.70 50 0.026 $ 1.30 250 0.029 $ 7.25 100 0.041 $ 4.10 108 0.049 $ 5.29 92 0.049 $ 4.51 181 0.065 $ 11.77 119 0.132 $ 15.71 100 0.176 $ 17.60 $ 67.52 Total $ 171.22 400 0.09987 $ 39.95 0 0.13818 $ - 500 0.09987 $ 49.94 100 0.13818 $ 13.82 $ 103.70 50 0.0085 $ 0.43 250 0.0085 $ 2.13 100 0.0085 $ 0.85 108 0.01 $ 1.08 92 0.025 $ 2.30 181 0.055 $ 9.96 119 0.09 $ 10.71 100 0.1 $ 10.00 $ 37.45 Total $ 141.15 EA -RESIDENTIAL 400 0.09987 $ 39.95 600 0.13818 $ 82.91 $ 122.86 300 0.0175 $ 5.25 300 0.0325 $ 9.75 300 0.049 $ 14.70 100 0.0575 $ 5.75 $ 35.45 Total $ 158.31 EA -RESIDENTIAL 400 0.09987 $ 39.95 600 0.13818 $ 82.91 $ 122.86 300 0.0175 $ 5.25 300 0.0325 $ 9.75 300 0.049 $ 14.70 100 0.0575 $ 5.75 0.049 $ 5.29 $ 35.45 0.049 Total $ 158.31 400 0.09987 $ 39.951 600 0.13818 $ 82.91 $ 122.86 50 0.026 $ 1.30 250 0.029 $ 7.25 100 0.041 $ 4.10 108 0.049 $ 5.29 92 0.049 $ 4.51 181 0.065 $ 11.77 119 0.132 $ 15.71 100 0.176 $ 17.60 $ 67.52 Total $ 190.38 1,500 kWh Old Rate EAMR-MEDICAL EA -RESIDENTIAL 400 1st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 1100 0.13818 $ 152.00 Medical Rider 500 0.09987 $ 49.94 1100 0.13818 $ 191.95 Medical Rider 600 0.13818 $ 82.91 300 0.0175 $ 5.25 $ 600 Total $ 172.79 300 0.0325 $ 9.75 MCA 50 0.026 $ 172.79 300 0.049 $ 14.70 MCA 300 0.0175 $ 5.25 600 0.0575 $ 34.50 300 0.0325 $ 9.75 300 0.0325 $ 64.20 87.45 300 0.049 $ 14.70 300 Total $ 256.15 Old Rate EAMR-MEDICAL EA -RESIDENTIAL 400 1st Tier 400 0.09987 $ applying MCA EAMR-MEDICAL 0.09987 EA -RESIDENTIAL 39.95 1st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 1100 0.13818 $ 152.00 Medical Rider 500 0.09987 $ 49.94 2.13 $ 191.95 $ 600 0.13818 $ 82.91 $ 1.08 92 MCA 50 0.026 $ 172.79 50 0.026 $ 1.30 MCA 300 0.0175 $ 5.25 300 0.0175 $ 5.25 300 0.0325 $ 9.75 300 0.0325 $ 9.75 87.45 300 0.049 $ 14.70 300 0.049 $ 14.70 600 0.0575 $ 34.50 600 0.0575 $ 34.50 181 0.065 $ 64.20 181 0.065 $ 64.20 119 Total $ 236.99 119 Total $ 256.15 Current Rate EAMR-MEDICAL EA -RESIDENTIAL 400 1st Tier 400 0.09987 $ 39.95 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - 1100 0.13818 $ 152.00 Medical Rider 500 0.09987 $ 49.94 MCA 50 $ 191.95 0.43 600 0.13818 $ 82.91 2.13 100 0.0085 $ 0.85 $ 172.79 $ 1.08 92 MCA 50 0.026 $ 1.30 50 0.026 $ 1.30 119 250 0.029 $ 7.25 250 0.029 $ 7.25 100 0.041 $ 4.10 100 0.041 $ 4.10 87.45 108 0.049 $ 5.29 108 0.049 $ 5.29 92 0.049 $ 4.51 92 0.049 $ 4.51 181 0.065 $ 11.77 181 0.065 $ 11.77 119 0.132 $ 15.71 119 0.132 $ 15.71 271 0.176 $ 47.70 271 0.176 $ 47.70 329 0.19 $ 62.51 329 0.19 $ 62.51 $ 160.13 $ 160.13 Total $ 332.92 Total $ 352.08 Proposed Rate EAMR-MEDICAL 1st Tier 400 0.09987 $ 39.95 2nd Tier 0 0.13818 $ - Medical Rider 500 0.09987 $ 49.94 600 0.13818 $ 82.91 $ 172.79 MCA 50 0.0085 $ 0.43 250 0.0085 $ 2.13 100 0.0085 $ 0.85 108 0.01 $ 1.08 92 0.025 $ 2.30 181 0.055 $ 9.96 119 0.09 $ 10.71 271 0.1 $ 27.10 329 0.1 $ 32.90 $ 87.45 Total $ 260.24 584 kwh Summer Current Current Old Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 144 0.13818 $ 19.90 Medical Rider 144 0.09987 $ 14.38 $ 63.84 Total 1 $ 58.32 300 0.0175 $ 5.25 Ave I $ 0.0999 284 0.0325 $ 9.23 $ 14.48 Total $ 78.32 Ave $ 0.1341 Old Rate applying MCA EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 144 0.13818 $ 19.90 Medical Rider 144 0.09987 $ 14.38 $ 63.84 $ 58.32 MCA 300 0.0175 5.25 300 0.0175 $ 5.25 284 0.0325 9.23 284 0.0325 $ 9.23 $ 14.48 $ 14.48 Total 1 $ 72.80 Total $ 78.32 Ave 1 $ 0.1247 1 Ave 1 $ 0.1341 New Rate EAMR-MEDICAL EA -RESIDENTIAL 1 st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 144 0.13818 $ 19.90 Medical Rider 144 0.09987 $ 14.38 $ 63.84 $ 58.32 MCA 50 0.026 $ 1.30 50 0.026 $ 1.30 250 0.029 $ 7.25 250 0.029 $ 7.25 100 0.041 $ 4.10 100 0.041 $ 4.10 108 0.049 $ 5.29 108 0.049 $ 5.29 76 0.049 $ 3.72 76 0.049 $ 3.72 $ 21.67 $ 21.67 Total $ 79.99 Total $ 85.51 Ave 1 $ 0.1370 Ave $ 0.1464 Proposed Change 1 st Tier 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - Medical Rider 144 0.09987 $ 14.38 $ 58.32 MCA 50 0.0085 $ 0.43 250 0.0085 $ 2.13 100 0.0085 $ 0.85 108 0.01 $ 1.08 76 0.025 $ 1.90 $ 6.38 Total $ 64.70 Ave 1 $ 0.1108 1,000 kWh 1 st Tier 440 0.09987 $ 43.94 0.049 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ 0.049 - 560 0.13818 $ 77.38 Medical Rider 500 0.09987 $ 49.94 $ 17.60 $ 121.32 60 0.13818 $ 8.29 300 0.0175 $ 5.25 Total $ 102.17 300 0.0325 $ 9.75 300 0.049 $ 14.70 100 0.0575 $ 5.75 $ 35.45 Total $ 156.77 Old Rate applying MCA 1 st Tier 2nd Tier Medical Rider New Rate 1 st Tier 2nd Tier Medical Rider New Rate 1 st Tier 2nd Tier Medical Rider EAMR-MEDICAL 440 0.09987 $ 43.94 0 0.13818 $ - 500 0.09987 $ 49.94 60 0.13818 $ 8.29 $ 102.17 300 0.0175 5.25 300 0.0325 9.75 300 0.049 14.7 100 0.0575 5.75 35.45 Total $ 137.62 EAMR-MEDICAL 440 0.09987 $ 43.94 0 0.13818 $ - 500 0.09987 $ 49.94 60 0.13818 $ 8.29 $ 102.17 50 0.026 $ 1.30 250 0.029 $ 7.25 100 0.041 $ 4.10 108 0.049 $ 5.29 92 0.049 $ 4.51 181 0.065 $ 11.77 119 0.132 $ 15.71 100 0.176 $ 17.60 $ 67.52 Total $ 169.69 EAMR-MEDICAL 440 0.09987 $ 43.94 0 0.13818 $ - 500 0.09987 $ 49.94 60 0.13818 $ 8.29 $ 102.17 50 0.0085 $ 0.43 250 0.0085 $ 2.13 100 0.0085 $ 0.85 108 0.01 $ 1.08 92 0.025 $ 2.30 181 0.055 $ 9.96 119 0.09 $ 10.71 100 0.1 $ 10.00 $ 37.45 Total $ 139.61 EA -RESIDENTIAL 440 0.09987 $ 43.94 560 0.13818 $ 77.38 $ 121.32 300 0.0175 $ 5.25 300 0.0325 $ 9.75 300 0.049 $ 14.70 100 0.0575 $ 5.75 0.049 $ 5.29 $ 35.45 0.049 Total $ 156.77 EA -RESIDENTIAL 440 0.09987 $ 43.94 560 0.13818 $ 77.38 $ 121.32 50 0.026 $ 1.30 250 0.029 $ 7.25 100 0.041 $ 4.10 108 0.049 $ 5.29 92 0.049 $ 4.51 181 0.065 $ 11.77 119 0.132 $ 15.71 100 0.176 $ 17.60 $ 67.52 Total $ 188.85 53% 12% 11% 66% 20% $ 1.37 $ 0.74 1,500 kWh Old Rate EAMR-MEDICAL 0.09987 EA -RESIDENTIAL 2nd Tier 1st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 1060 0.13818 $ 146.47 Medical Rider 500 0.09987 $ 49.94 $ 146.47 Medical Rider $ 190.41 $ 560 0.13818 $ 77.38 300 0.0175 $ 5.25 77.38 0.055 Total $ 171.26 300 0.0325 $ 9.75 MCA 50 0.026 MCA 300 300 0.049 $ 14.70 0.0175 $ 5.25 0.029 300 0.0325 600 0.0575 $ 34.50 $ 9.75 100 300 0.049 $ 14.70 300 $ 64.20 600 0.0575 $ 34.50 600 Total $ 254.61 Old Rate EAMR-MEDICAL 0.09987 EA -RESIDENTIAL 2nd Tier 1st Tier 440 0.09987 applying MCA EAMR-MEDICAL 440 EA -RESIDENTIAL $ 1st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 1060 0.13818 $ 146.47 Medical Rider 500 0.09987 $ 49.94 0.13818 $ $ 190.41 92 560 0.13818 $ 77.38 0.055 $ 9.96 $ 171.26 0.09 $ 10.71 $ 171.26 MCA 50 0.026 MCA 300 0.0175 $ 5.25 300 0.0175 $ 5.25 0.029 300 0.0325 $ 9.75 300 0.0325 $ 9.75 100 300 0.049 $ 14.70 300 0.049 $ 14.70 600 0.0575 $ 34.50 600 0.0575 $ 34.50 5.29 92 $ 64.20 4.51 92 $ 64.20 $ 4.51 Total $ 235.46 $ Total $ 254.61 Current Rate EAMR-MEDICAL 0.09987 EA -RESIDENTIAL 2nd Tier 1st Tier 440 0.09987 $ 43.94 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - 1060 0.13818 $ 146.47 Medical Rider 500 0.09987 $ 49.94 100 $ 190.41 560 0.13818 $ 77.38 92 0.025 $ 2.30 181 0.055 $ 9.96 $ 171.26 0.09 $ 10.71 271 MCA 50 0.026 $ 1.30 50 0.026 $ 1.30 $ 87.45 250 0.029 $ 7.25 250 0.029 $ 7.25 100 0.041 $ 4.10 100 0.041 $ 4.10 108 0.049 $ 5.29 108 0.049 $ 5.29 92 0.049 $ 4.51 92 0.049 $ 4.51 181 0.065 $ 11.77 181 0.065 $ 11.77 119 0.132 $ 15.71 119 0.132 $ 15.71 271 0.176 $ 47.70 271 0.176 $ 47.70 329 0.19 $ 62.51 329 0.19 $ 62.51 $ 160.13 $ 160.13 Total $ 331.39 Total $ 350.54 1st Tier 440 0.09987 $ 43.94 2nd Tier 0 0.13818 $ - Medical Rider 500 0.09987 $ 49.94 560 0.13818 $ 77.38 $ 171.26 MCA 50 0.0085 $ 0.43 250 0.0085 $ 2.13 100 0.0085 $ 0.85 108 0.01 $ 1.08 92 0.025 $ 2.30 181 0.055 $ 9.96 119 0.09 $ 10.71 271 0.1 $ 27.10 329 0.1 $ 32.90 $ 87.45 Total $ 258.70 49% 8% 6% 94% Provide Preliminary and Non -Binding Policy Direction Regarding Rate Design and Rate Structure - Continued V2 TM City Council Meeting January 18, 2006 Overview • Action Tonight — Council is requested to receive staff's report and provide preliminary and non-binding direction on remaining elements of the report as time permits Rate True Up Issue • Market Cost Adjustment mechanism is temporary • Electric Department cost increases are permanent • Need to replace the temporary MCA with a permanent Base Rate Structure MCA to Base Rate Transformation 011 0 70 60 N 50 L O m 40 30 m 20 W] 0 Base Rates o MCA -Expenses Goals • Simplify the Rate Structure • Establish Stability and Predictability • Eliminate Uncertainty • Eliminate Volatility • Keep average rates under the permanent rate design equal to average rates under the recently adopted MCA Issues to Address in Rate Design • Relationships between Classes of Customers • Rate Structure Complexity • Discount Levels • Economic Development Over the next few weeks staff will work with Council on each of these issues Relationship of Rates Between Classes • Goal is to collect sufficient revenues from each class to support overall utility operations • Factors to consider - Cost of Service — foundation of rate design - Competitiveness - Economic Value - Other Considerations and Preferences Cost of Service and Competitiveness Lodi Average under MCA COSA 2006 Low COSA 2006 High COSA 2006 PG&E Current Average w/ True Up Rate ($/kwh) EA Residential $0.173 $0.150 $0.127 $0.173 ED Low Income EM Mobile Home $0.149 $0.149 $0.126 $0.127 $0.171 $0.171 $0.093 G1 Small Commercial $0.166 $0.143 $0.121 $0.164 $0.166 G2 $0.150 $0.136 $0.116 $0.157 $0.150 G3 Small Industrial $0.144 $0.135 $0.115 $0.156 $0.144 G4 Medium Industrial $0.123 $0.133 $0.113 $0.153 $0.123 G5 Industrial$0.114 $0.134 $0.114 $0.155 $0.114 1-1 Industrial Contract Large $0.137 $0.131 $0.117 $0.111 $0.158 $0.151 Contract Medium $0.123 $0.138 $0.117 $0.159 $0.123 Economic Value and Local Preference Factors • Economic study underway through Industrial Customer working group • Strategic choices and value judgments - Are subsidies essential to retain and attract - Do subsidized businesses fit desired profiles - Does the community value social programs Detail Rate Design Features • complexity of the current MCA tiered structure - PG&E uses a five tier structure - Lodi has two base tiers and up to nine MCA tiers • A two tier structure is easier to understand, but makes comparisons to PG&E harder Tier Example Monthly Consumption (kwhrs) Straw Vote • Staff requests that council express a non- binding preference to either: - Move toward a long term objective of a rate structure similar to PG&E - a five tier residential rate design - Have as the long term objective that average rates are less than PG&E, with a less complicated - two tier residential rate design All Electric Homes • 600 customers on All Electric Home Rate • Customers receive a higher baseline allowance - 585 kwhrs vs 440 kwhrs summer = 10% discount - 1,000 kwhrs vs 400 kwhrs winter = 20% discount • Discounts no longer rational given utility cost structures - No longer decreasing costs of production • Most agencies have eliminated distinctions All Electric and Mobile Home Comparisons Exhibit 1 - Comparison of All Electric and Mobile Home Rates NCPA Members All -Electric Rate Mobile Home Rate Alameda Yes No Residential -Master Meter Biggs No No Gridley No No Healdsburg Yes No Residential -Individual Lompoc Yes No Residential -5 Master and 2 Individual Palo Alto No No Residential -Individual Plumas-Sierra No No Commercial -Master Meter Roseville No No Residential -Individual Meter Ukiah Yes No Residential -Master Meter Lassen Municipal No No Residential -Individual Redding No Yes Residential -Master Meter Santa Clara No No Residential -Individual Truckee Donner No No Residential -Individual Turlock No No Residential -Individual Rates as of 12/5/05 Straw Vote • Staff requests that council express a non- binding preference to either: - Retain the all electric home rate schedule along with its higher allocation of first tier consumption, or - Eliminate the distinction between the standard residential class and the all electric rate class Mobile Homes • Lodi has six mobile home parks containing a total of 490 mobile home pads • Parks are master metered • Park owner bills residents • Residents entitled to residential discounts, but no direct city billing relationship with customer • Current rates significantly below COSA • Need to fix over long term, but not now Industrial Structure • Industrial Rate Class has three tiers - On Peak - Off Peak - Partial Peak • Costs are incurred in two periods - Heavy Load Hours - Light Load Hours • Therefore a reduction to two rate periods would be justified Industrial Structure (cont) • Customers can self select into either of two rate classes (11, G5) • Economic stimulus credit is extended to all customers in both rate classes - Credit is evergreen - Credit has no performance criteria • Staff recommends delaying any decisions on Industrial modifications until further review of the economic report can take place Discounts • Council expressed concerns regarding discounts - Too High - Too Low - Discussion was brief — didn't address all discounts • To further discussions staff has assembled a list of all discount programs - Identified costs of program - Qualification criteria - Comparisons to other agencies Residential Discounts • Fixed Income - Income below $45k/yr and over 65 yrs old - 5% discount - 90 accounts receiving the discount - Total annual cost of $4,606 Residential Discounts (cont • Medical Rider - Eligible to customers on Standard or Discounted Residential Rate - Provides additional 500 kwhrs at lowest rate - Requires dependence on life support devices, paraplegic, quadriplegic or hemiplegic, Multiple Sclerosis or other special, approved needs - 354 accounts currently receiving the discount - Discount is approximately 8% (34%) - Total annual cost of $44,257 [$110k under new proposal] Residential Discounts (cont) • SHARE (Single Household Alternative Rate for Energy) - Available to any residential customer meeting specific income requirements • 1-2 persons • 3 persons • 4 persons $22,000 household income $25,900 household income $31,500 household income - 1,671 accounts receiving discount - Discount approximately 30% from standard rate - Total annual cost of $293,036 Residential Discounts (cont) • Combined SHARE/Medical Rider - Currently 159 accounts receiving the discount - Discount approximately 36% from standard rate - Total cost of discounts $50,448 Residential Discounts Discount Avg by Acct # Accounts EAR Fixed Income $4,606 $51 90 EAMR Medical $44,257 $126 350 ED SHARE (low income) $293,036 $181 1,618 EDMR SHARE Medical $39,470 $256 154 EEMR All -Electric Medical $360 $90 4 EF All -Electric SHARE (low income) $9,232 $176 53 EFMR All -Electric SHARE Medical $777 $173 5 Residential Discount Total $391,738 2,274 Residential Program Comparisons Exhibit 2 - Comparison of Low Income and Medical Discount Programs 600 kWh Average NCPA Members Low Income Discount Medical Discount Medical Low Income Discount Alameda Yes 25% Yes 10% Yes 15% Biggs No 0% No 0% No 0% Gridley No 0% Yes 25% No 0% Healdsburg Yes Yes Lompoc No 0% Yes 10% No 0% Palo Alto Yes 20% No 0% No 0% Plumas-Sierra No 0% No 0% No 0% Roseville Yes 15% Yes 39% No 0% 50% on fir: Ukiah Yes $25 Yes 10% No 0% 500 kWh Lassen Municipal No 0% No 0% No 0% Redding No 0% Yes 25% No 0% Santa Clara Yes 25% Yes 25% No 0% Truckee Donner No 0% No 0% No 0% Turlock Yes 15% Yes 33% No 0% 50% reduc Rates as of 12/5/05 SMUD Yes 30% Yes 30% Yes 50% Straw Vote - Residential • Staff requests non-binding policy direction to either: 1. Retain the existing programs with approximately same level of discount applied to each 2. Retain the existing programs with a reduced level of discount applied to each 3. Retain the existing programs with an increased level of discount applied to each 4. Eliminate the existing discount programs Commercial Discount Programs • G1 and G2 Community Benefits Incentive Discount - Eligible to Non -Profit entities (501(c)(3)) who are currently receiving Federal Community Block Grant Funds or have received such funds not more than two years prior of the current billing cycle - Eligible for a 30% discount from standard rate - Total of seven G2 and five G2 customers receiving the discount - Total Cost of $25,272 Commercial Discount Programs (cont) Commercial Discount Avg by Acct # Accounts G1B G1 Community Benefits Incentive $6,795 $1,045 7 G2CB G2 Community Benefits Incentive $25,272 $5,616 5 Commercial Discount Total $32,067 12 Commercial Discount Programs (cont) Community Benefit Incentive Customers Lodi Adopt A Child Lodi Boys and Girls Club Loel Foundation Lodi House Lodi Salvation Army Hill House Museum Straw Vote - Commercial • Staff Requests anon-binding policy direction to either: 1. Retain existing programs with approximately the same level of discount applied 2. Retain existing programs with a reduced level of discount applied 3. Eliminate the existing programs Industrial Discount Programs • Economic Stimulus Credit - Provided to all customers in the G5 and 11 rate classes - Credit is permanent part of rate - Credit amounts to a 5% to 10% discount from standard rate - Eleven accounts currently receive the discount - Total cost of the discounts is $801,334 Industrial Discount Programs (cont) • Individual Contracts - Eligibility offered on a case by case basis - Seven accounts currently under contracts - Total costs of contracts $805,840 • Staff recommends addressing further details of Individual Contracts and Economic Stimulus Rates as part of future discussions 11/2/2005 Policy Preference 90.0% 80.0% 70.0% 60.0% 0 d 50.0% 0 H v 40.0% 0 30.0% 20.0% 10.0% 0.0% Residential 9% min Proposal rate change at % of customers 10-20 >25 rate change % 11/2/2005 Policy Preference $0.210 $0.200 $0.190 $0.180 $0.170 $0.160 $0.150 $0.140 $0.130 $0.120 $0.110 Winter Residential Comparison of Rate Scenarios $/kw h vs Monthly kw h 0 200 400 600 800 1,000 1,200 — C urre nt —No Decrease 9% min Proposal Please immediately confirm receipt -Of'thisfax by calling 333-6702 CITY OF LODI P. O.BOX 3006 LODI, CALIFORNIA 95241-1910 ADVERTISING INSTRUCTIONS SUBJECT SPECIAL NOTICE OF PUBLIC HEARING FOR February 15,2006 for the Establishment of an Electric Base Rate Structure (i.e. a permanent adjustment to electric rates by transferring rates from Market Cost Adjustment charges to Base Rate charges) PUBLISH DATE: January 28,2006 TEAR SHEETS WANTED: Three (3) please SEND AFFIDAVIT AND BILL TO: SUSAN BLACKSTON, CITY CLERK City J^ Lodi P.O. Box 3006 Lodi, CA 95241-1910 DATED: Tuesday January 24,2006 ORDERED BY: JENNIFER M. PERRIN, CMC DEPUTY CITY CLERK DAMA R_ CHAPMAN ADMINISTRATIVE CLERK SUSAN J. BLACKSTON CITY CLERK JACQUELINE L. TAYLOR, CMC DEPUTY CITY CLERK hixed to the. Senttinelinel at 4M1tS 369-1084 at •, (time)Ql t i ! . :,.--(date) e' (pages) t confiirmreceipt of pages at ° JLT DRC�JMP (initials),, ' formsladvins.doc CITY OF LODI Carnegie Forum 305 West Pine Street, Lodi NOTICE OF PUBLIC HEARING Date: February 15,2006 Time: 7:00 p.m. NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN that on Wednesday, February 15,2006 at the hour of 7:00 p.m., or as soon thereafter as the matter may be heard, the City Council will conduct a public hearing at the Carnegie Forum, 305 West Pine Street, Lodi, to consider the following matter: a) Establishmentof an Electric Base Rate Structure (i.e. a permanent adjustment to electric rates by transferring rates from Market Cost Adjustment charges to Base Rate charges) Information regarding this item may be obtained at the Electric Utility Department, 1331 S. Ham Lane, Lodi, (209) 333-6762. All interested persons are invited to presenttheir views and comments on this matter. Written statements may be filed with the City Clerk, 221 W. Pine Street, Lodi, California, 95240 — at any time prior to the hearing scheduled herein, and oral statements may be made at said hearing. If you challenge the subject matter in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice or in written correspondence delivered to the City Clerk at or priorto the close of the public hearing. By Order of the Lodi City Council: Susan J, Blackston City Clerk Dated: January 18,2006 Approved as to form: D. Stephen Schwabauer City Attorney JNCITYCLWFORMSIPH NOTICE publication MASTER for LNSdoc 1120/06 DECLARATION OF POSTING PUBLIC HEARING FOR FEBRUARY 15,2006 for the Establishment of an Electric Base Rate Structure (i.e. a permanent adjustment to electric rates by transferring rates from Market Cost Adjustment charges to Base Rate charges) On FridayJanuary 27, 2006, in the City of Lodi, San Joaquin County, California, a Notice of Public Hearing for the Establishment of an Electric Base Rate Structure (i.e. a permanent adjustment to electric rates by transferring rates from Market Cost Adjustment charges to Base Rate charges) Lodi Public Library Lodi City Clerks Office Lodi City Hall Lobby Lodi Carnegie Forum I declare under penalty of perjury that the foregoing is true and correct. Executed on January 27, 2006, at Lodi, California. JENNIFER M. PERRIN, CMC DEPUTY CITY CLERK E DANA R. CHAPMAN ADMINISTRATIVE CLERK N:1Administration\CLERK\Forms\DECPOST.DOC ORDERED BY: SUSAN J. BLACKSTON CITY CLERK JACQUELINE L. TAYLOR, CMC DEPUTY CITY CLERK