HomeMy WebLinkAboutAgenda Report - March 16, 1988 (48)C O U N C I L C O M M U N I C A T I O N
TO: THE CITY COUNCIL CJLZ�CL MEETING DATE
FROM: THE CITY MANAGERS OFFICE MARCH 16, 1988
SLJ JEC : FUEL COST ADJUSTMENT
PREPARED BY: City Manager
RECOMMENDED ACTION: None required. Information only.
BACKGROUND INFORMATION: At the regular meeting of February 17, 1988,
Councilmember Pinkerton requested a report on the
fuel cost adjustment that appears on all City utility
bills. The matter was directed to Electric Utility
Director Henry Rice. Attached (Exhibit A) for the Council's information and
review is a copy o f his num to nye addressing this topic. Me Rice will be in
attendance at Wednesday night's meeting to present this item and answer any
questions Ccuncilmembers may have.
Respectfully submitted,
Thomas A. Peterson
City Manager
TAP: b r
Attachment
MEMORANDUM
TO: TOM PETERSON, CITY MANAGER
FROM: HENRY J. RICE, ELECTRIC UTILITY DIRECTOR
DATE: MARCH 9, 198E
FUEL COST AlXb'IlVIEl\Tf
- Description & Analysis -
Electric Fuel Cost Adjustment (FCA) is a rate adjustment mechanism ;hat
ensures ultimate recovery of fuel -related electric expenses such as: oil and gas
fuel for steam electric generating plants; steam costs for geothermal production;
purchased electricity; and water for power costs.
The cost of fuel i s a major item of expense for an Electric Utility;
normally representing from 20%to as rrnrh as 50%cf total utility cost.
During a period of rapidly rising, or falling, fuel costs, a utility may
have to pay more, cr less, for fuel than expected, yet be unable to adjust rates
in a timely manner to adjust for the expenses. With FCA, the difference between
actual and estimated fuel and purchased power costs is placed in a balancing
account and collected from, or refunded to, customers through periodic
adjustments. FCA ensures that the utility is not excessively harmed by rising
fuel costs and that customers do not pay more than actual energy costs.
A chart of FCA cost levels (Attachment A) showing activity beginning with
the last base rate change March 1, 1985 when the FCA was 15 mills / kwh to the most
recent experienced level - March 1988 - when the FCA was 16 mi 11 s/kwh.
Fuel adjustment clauses were first used during World War I - a period of
rapidly rising fuel costs. They were widely used in commercial and industrial
rates by 1960 and became part of many residential rate schedules as a result of
rapidly rising fuel costs in the early 1970's. PG&E first used such a mechanism,
known as the Fuel Cost Adjustment, in 1973. The current Lodi FCA became
effective in 1973.
Currently, 47 states allow some form of u.,!l adjustment clause, and 26 of
those states allow utilities to adjust fuel -related rates automatically, without
formal hearings.
The 'last formal rate adjustment for City of Lodi electric rates was in March
1985. FCA cost levels had been fluctuating monthly prior to March 1985 and were
as high as 39.93 mills/kwh in 1981; however, when the new rates were adopted in
1985, the FCA level was 15 mills per kilowatt-hour and monthly fluctutions were
abated.
These last three years (1987, 1988 and 1989) prior to commercial operation
of our new hydroelectric generation station (Calavaras) will require purchasing
increasing amounts of power and energy from third parties (please see
4.
Attachment B). Once our my hydropower source is up and running, the
requirement for purchases from third parties wi 11 subside.
Such third party purchases involve fuel costs normally higher than our
average owned participation plant fuel costs. The result i s a higher FCA.
W have attempted to levelize the cost impact and avoid erratic gyrations of
the monthly FCA by smoothing out increases and decreases. The FCA is at 16 mills
per kilowatt-hour for the third month and i s expected to remain there until the
sura mer peak' season.
Attached is a complete description of the PG&E fuel adjustment clause which
was both the cause and model for the Lodi FCA (Attachment C).
Please note that the base rate of Lodi for typical residential monthly usage
(550 kwh/month) including our FCA compared to the PG&E rate for similar service
indicates that "e are approximately 121 below PG&E (Attachment D).
Attachments (4 )
CITY OF _aDi 3RD PARTY ENERGY PURCHASES
JANUARY 1996 THROUGH DECEMBER 1987
100
90
SO
rZz�
,W
40-
30-
20-
10
O3020 '0
0
Jon -86
May -86 S8- 6 Jan -87 Moy-87 Sep --87
MONTH -YEAR
.064 PG&E i''\ \1 OTHER
Icp
17
16
15
14
13
12
11
10
9
a
7
6
5
4
3
2
1
0
mar -85
C(TY OF LODI FUEL COST ADJUSTMENT
KARCH 1985 THROUGH MARCH 1988
SOP -83 star -•86 SOP -86 Fear -87 Sop -87 Mar --88
MONTH—YEAR
t�-c-I-►�cr{ I'�i l .� "Z'
RESOURCE
EnergX_Qost Adjustment Clause (ECAC)
able to adjust rates in a timely manner to adjust for the expenses.
See also: Annual Energy
PG&E's electric Fuel Adjustment Clause (FAC). ECAC is a rate
Rate (AER); Balancing
adjustment mechanism that ensures ultimate recovery of fuel -
Account: Electric Revenue
related electric expenses such as: oil, coal, and nuclear fuel for
Adiustment Mechanism
(ERAM); Offset Rates; Public
steam electric generating plants; steam costs for geothermal pro-
duction; purchased eIectriciry; and water for power costs.
Utility Regulatory Policies
The ECAC rate has two components:
Act of 1978 (PURPA); Rate
enc provides for recovery of 9r percent of PG &I E's electric
Structure.
Is energy costs—the remaining 9 percent of these costs are
1moi
accounted for in the Annual Energy Rate ( AER). ECAC ensu res
0
that only electric energy expenses actually incurred are charged to
low
NNW o
customers, no more and no less. The company makes no profit as
u
a result of ECAC.
During a period of rapidly rising, or falling, fuel costs, a utility
C_
may have to pay more, or less, for fuel than expected, yet be un-
able to adjust rates in a timely manner to adjust for the expenses.
With ECAC, the difference between actual and estimated fuel and
:.:
purchased power costs is placed in a balancing account and col-
Ieaed from, or refunded to, customers in future rates. ECAC '
ensures that the company is not excessively harmed by rising fuel
costs and that customers do not pay more than actual energy costs.
The ECAC rate has two components:
w
• AN OFFSET PoRTim designed to recover 91 percent of
o
PG&E's anticipated fuel expenses during the forecastperiod. ,
1moi
1 t A BALANCING ACCOUNT PORTION: designed to track the
0
differences between estimated energy costs and acru al recorded
low
NNW o
costs during the previous period. Interest is earned on this account;
u
the balance is then amortized over projected sales. If actual fuel
v o
costs are greater than estimated costs, the balancing account is said
�; �
to be undercollected. If estimated costs exceed actual costs, the
balancing account is said to be overcollected.
PG&E is allowed by the California Public Utiiities Commis-
a
Sion(cPuc) to file changes in the ECAC rate twice a year for rates
°
effective August i and February i. The February adjustment is
_
allowed only if the required adjustment would be at least plus or
minus S percent oftotal electric revenues. Additionally, as part of
r'
each August ECAC proceeding, the cruc conducts an ECAC "reason -
4J H
ableness review" ofPG & E's fuel -related purchases and operations.
c >,
Expenses for a recent one-year period are examined to determine if
they were prudent and reasonable. If the Commission determines
c.
that any costs or expenses were unwise or excessive, that amount
Z
may be deducted from the amount to be recovered under ECAC.
Any costs deducted are borne by stockholders.
o
K'
Fuel adjustment clauses were first used during World War I—
a period of rapidly rising fuel costs. They were widely used in com-
04 �
mercial and industrial rates by 1960and became part of many resi-
dential rate schedules as a result of rapidly rising fuel costs in the
w
early 1970's. PG&E first used such a mechanism, known as the
Fuel Cost Adjustment, in 1973• The current EcAc became effective
0
0
in 1976.
Currently, 47 states allow some form of fuel adjustment
clause, and 26 ofthose states allow utilities to adjust fuel -related
rates automatically, without formalhearings. The remainingzz
states, including California, require hearings and/or al',ow only a
fixed percentage of the adjustment to be passed on "automatically"
to their customers on a doliar-for-dollarbasis. The length of time
between adjustments varies fzxmstate to state as well.
150
:n
CITY OF LODI
ELECTRIC UTILITY
AVERAGE USE COMPARISON
CITY OF LODI
ArTvA ME-t4T
RATE SCHEDULE
- EA -
DOMESTIC SERVICE
EFFECTI`+E DATE: MARCH
1, 1985
-------------------------------------------------------------------
RATE ($)
AMOUNT (s)
BASE RATE
---------
----------
FIRST
440 KWH
PER KWH
0.04864
21.40
EXCESS
Illi KWH
PER KWH
0.07677
3.44
----------
------
TOTAL EASE
550 KWH
29.84
FCA
ALL
KWH PER KWH
0.01600
8.80
CEC TAX RATE
ALL
KWH PER K, -,H
0.00020
0.11
TOTAL BILL FOR 550 KWH
AVERAGE USE
$38.75
PACIFIC GAS AND ELECTRIC COMPANY
RATE SCHEDULE E-1SB - RESIDENTIAL SERVICE - BASIC - WINTER
EFFECTIVE DATE: JANUARY 1, 1938
-------------------------------------------------------------------
RATE (S) AMOUNT ($)
BASE HATE ----------
FIRST 355.7 KWH PER KWH (1) 0.05767 20.51
EXCESS 194.3 KWH PER KWH 0.06953 13.51
TOTAL BASE 550 KWH 34.02
ADJUSTMENT RATES (2)
FIRST 355.7 KWH PER KWH 0.00933 3.32
EXCESS 194.3 KWH PER KWH 0.04801 9.33
TOTAL ADJ 550 KWH 12.65
CEC TAX KATE ALL KWH PER KWH 0.00020 0.11
TOTAL BILL FOR 550 KWH AVERAGE USE $46.78
FOOTNOTES
(1) BASIC WINTER QUANITY: 11.7 KWH PER DAY TIMES 30.4 DAYS = 355.7 KWH
City of Lodi
Lodi, Caiifornia
SCHEDULE EA
DOitESTIC SERVICE
APPLICABILITY:
Canceling Ordinance No. 1321
Domestic service is applicable to domestic lighting, heating, cooking and single-
phase c'_omestic power service in single-family dwellings and in flats and apartments
separately metered by the City and to single-phase service used in common fur residen-
t i a l purposes by tenants i n multi- family dwellings.
RELIABILITY:
The City will endeavor at all times to provide a regular and uninterrupted supply
of service, but in case the supply of service shall be interrupted or irregular or
defective ox fail from causes beyond its control or through ordinary negligence of
employees, servants or agents, the City will not be liable.
RATES:
Per Meter
Per Month
Minimum Charge: . . . . . . . . . . . . . . . . . . . . . . . . $1.65
Energy Charge:
First 440 kwhr, per kwhr . . . . . . . . . . . . . . . . . .04864
Over 440 kwhr, per kwhr . . . . . . . . . . . . . . . . . ,07677
Fuel Cost Adjustment:
A fuel cost adjustment will be included in each bill for service. The
adjustment amount shall be the product of the total kilowatt hours for which
the bill is rendered times the adjustment amount per kilowatt hour, The
adjustment amount per kilowatt hour w i 11 be calculated to recover Fuel cost
amounts charged tae City by the Pacific Gas and Electric Co., Northern California
Power Agency and other suppliers of bulk power.
SPECIAL CONDITIONS :
(a) When a business or commercial establishment is conducted in conjunction
with a residence and both are measured through one meter, this rate does not apply.
(b) Service on this schedule will be supplied at the single-phase secondary
voltage available - either 120/240 or 120/208 volts.
11-Y61
Pactf% Gas and Electric Company canceihpp q
Scut Frcmcaco. Cahlbr7 ra
CIA 3
Revised Cal. P, U.C. Sheet ,Vo. 10322-E
Revised Cul. P.U.C. Sheet X0. 10060-E
SCHEMILE E-1-•RESIOENTIAL SERVICE
APPLICABILITY: This schedule is applicable to single-phase residential service in single-family
awe I I Ings and in flats and apartments separately metered by the Utility; to single-phase service
in common areas in a multifamily complex; and to all Single-phase farm service on the premises
operated by the person whose residence is supplied through the same meter.
TERRITORY: The entire territory served.
RATES:
Per Meter
ENERGY CHARGE: Per Month
2.4SEL 1 `IE (TIER 1) QUANTITIES, per kwh...................................Zjt( )
TIERIl QUANTITIES, per krrh.............................................
MINIMLIM CWCE: $5.00 per month.
SPECIAL CONDITIONS:
1. ON TRACT: For customers who use service for only part of the year, this
schedule is applicable only on an annual contract.
2. 8ASELIHE RATES: Baseline rates are applicable only to separately -me terod residential
use. The Utility may require the customer to complete and ffle with it a Declaration of
Eligibility for Baseline Quantities for Residential Rates.
3. &ASELINE (TIER y: The following quantities of electricity are to be billed at the
rates for baseline use:
BASELINE OUANTITIES (krni PER DAY)
Code B - Basic Quantities Code h - All -Electric uant ties
Baselice ummer Winter unser Wfn er
Territory* Tier Tier 1 Tier 1 Tier 1
P 13.1 11.7 19.9 37.2
0 7.6 11.3 17.0 32.9
R 14.7 1-t-7 21.2 33.2
S _ 13.1 ( 1.7_, 79.9 33.9
7.6 - 3.7 17.0 26.6
V 8.9 10.0 20.3 32.2
W 16.4 11.0 24.2 30.5
X 10.5 11.3 13.4 32.9
Y 9.8 11-7 17.0 37.2
Z 6.9 11.3 20.6 40.2
*The applicable baseline territory is described in Part A of the Preliminary Statement.
§. ALL -ELECTRIC WANT ITIES (Code H): All -electric quantftfes are applicable to service
to customers with permanently -installed electric heating as the primary heat source.
All -electric quantities are also applicable to ssrvfce to customers of record as of
November 15, 1?84, to whom the former Code W (Basic plus Water Heating) lifeline allowance was
applicable on May 15, 1984, and who thereafter maintain continuous service at the same location
under this schedule.
5 SEASONAL CHANCES: The summer season is May 1 through October 31 and the winter season
is November 1 through April 30. Bills that include May i and November 1 seasonal changeover
dates will be calculated by multiplying the applicable daily baseline quantity for each season
by the number of days in each season for the billing period.
6. STANDARD MEDICAL QUANTITIES (Code M - Basic Plus Medical Ouantftfes, Code 5
Ail -Electric Plus Medical Ouantftfes): Additional medical quantities are avaflable as provided
in Rule 19.
'--
!
ATE SCHEDULE
Effective
9650
LML
Energy
Rate
ECAC
Fee
v CIESIDENTIAL
a �
a
ti
E-1
Tier
00012
.06700(1)
.06953(1)
.04789
Tier 11
.11754(1)
(.01423)(8)
.17235
.00012
.15824(R)
.06964(1)
.00796
w o
E-7
(Pd. A)
.05556
.00012
c, ^�
.05802(1)
,02073
Peak
a
.01186(I)
.03868
,00000
Off -Peak
m
n
(Pd. 8)
Peak
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3
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Off -Peak
m
9a5elln0
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3
q
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Bars
uase
Energy
Rates AER CFA** OCAC
.04907 (1) .00229(1) .00017 .00614(1)
.06093 (1) .00229(1) .00017 .00614(1)
(.02247)(R) .00193(1) .00017 .00614(1)
.06140 (1) .00193(1) ,00017 .00614(1)
.05654 1) .00193(1) ,00017 .00614(1)
.04978 (1) .00193(1) .00017 .00614(1)
.01186 (1) .00000 .00000 .00000
Total
Adjustmnnt
Effective
9650
LML
Energy
Rate
ECAC
Fee
Chorgo
a �
a
t
.05767(1)
.00921
00012
.06700(1)
.06953(1)
.04789
.00012
.11754(1)
(.01423)(8)
.17235
.00012
.15824(R)
.06964(1)
.00796
,00012
.07772(1)
.06478(1)
.05556
.00012
.12046(1)
.05802(1)
,02073
,00012
.07887(I)
.01186(I)
.03868
,00000
,05054(I)
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