Objectives
Approach
PROSPECTS LOOKING FORWARD
- gas costs; ISO costs; expiration of contracts
- Cost reductions; service quality; transmission congestion management
REDUCTION IN DELIVERY PRICES
* Relative to prices that would otherwise become effective September 1, 2001 under Power Choice
TEN YEAR "FREEZE" IN REDUCED ELECTRIC DELIVERY CHARGES
- e.g. tax, law, regulatory and accounting changes; high inflation; transmission revenue adjustments
* Includes a one percent increase in T, D + CTC in years four and five of Power Choice and a return on
the MRA regulatory asset post Power Choice
ANTICIPATED AVERAGE PRICE IMPACTS DIFFER BY CUSTOMER GROUP - RESIDENTIAL
- Rate plan moderates projected total increases from 12.4 percent to 6.1 percent*
* Prices include all surcharges. Prices without the merger include a one percent increase for T, D and CTC.
PROJECTED RESIDENTIAL PRICE IMPACTS
(SC-1 on Standard Offer Service - cents/kWh)
2002 without
Today's Rates merger 2002 with merger
------------- ------------ ----------------
Commodity 3.5 5.5 5.3
Delivery 8.6 8.1 7.5
Total 12.1 13.6 12.8
All prices are forecast and presented in cents per kWh. Commodity costs in 2002 include all ancillary services charges.
ANTICIPATED AVERAGE PRICE IMPACTS - SMALL COMMERCIAL
- Rate plan moderates projected total increases from 11.0 percent to 7.9 percent*
* Prices include all surcharges. Prices without the merger include a one percent increase for T, D and CTC.
PROJECTED SMALL COMMERCIAL PRICE IMPACTS
(SC-2D on Standard Offer Service - cents/kWh)
2002 without
Today's Rates merger 2002 with merger
------------- ------------ ----------------
Commodity 3.4 5.3 5.3
Delivery 7.9 7.2 7.0
Total 11.3 12.6 12.2
All prices are forecast and presented in cents per kWh. Commodity costs in 2002 include all ancillary services.
ANTICIPATED AVERAGE PRICE IMPACTS FOR LARGE COMMERCIAL AND SMALL INDUSTRIAL CUSTOMERS
- Rate plan moderates projected total increases from 9.9 percent to 5.7 percent*
* Prices include all surcharges. Prices without the merger include a one percent increase for T, D and CTC.
PROJECTED LARGE COMMERCIAL AND SMALL INDUSTRIAL PRICE IMPACTS
(SC-3 on Standard Offer Service)
2002 without
Today's Rates merger 2002 with merger
------------- ------------- ----------------
Commodity 3.3 5.0 4.9
Delivery 7.3 6.6 6.2
Total 10.5 11.6 11.1
All prices are forecast and presented in cents per kWh. Commodity costs in 2002 include all ancillary services.
ANTICIPATED AVERAGE PRICE IMPACTS FOR LARGE COMMERCIAL AND INDUSTRIAL CUSTOMERS
- Rate plan provides even larger projected bill reductions (14.5 percent versus 9.9 percent reductions
without the merger)*
- Contract customers given option to move back to tariff pricing for delivery charges
* Prices include all surcharges. Prices without the merger include a one percent increase for T, D and CTC.
PROJECTED LARGE COMMERCIAL AND INDUSTRIAL PRICE IMPACTS
(SC-3A on Market-Priced Service)
2002 without
Today's Rates merger 2002 with merger
------------- ------------ ----------------
Commodity 5.1 4.7 4.7
Delivery 3.4 2.9 2.5
Total 8.4 7.6 7.2
All prices are forecast and presented in cents per kWh. Commodity costs include all ancillary services costs.
ELECTRIC COMMODITY ISSUES
- Initially, a majority of energy supplies needed for Standard Offer Service are hedged
- Propose to levelize costs over first four years
- Costs in all years adjusted through a commodity adjustment clause
- One time offer to small customers to move back to Standard Offer Service
- Largest customers will be moved to spot market pricing as existing hedged contracts expire
Below is a tabular representation of the omitted graph:
cents/kWh
Year Standard Offer Market Price
2001 4.3 4.4
2002 4.3 4.4
2003 4.3 4.1
2004 4.3 4.1
DELIVERY RATE PATH PROPOSAL
- certain exogenous factor adjustments during the rate plan
- T&D rates after the rate plan period
- synergy savings achieved during the rate plan period
- provides a reasonable opportunity to recover merger costs only if savings are really achieved
Omitted Graph
The omitted chart depicts without data, the concept of the delivery rate path proposal in the Joint Proposal settlement offer. The charts top line, illustrates a flat delivery rate path (inclusive of T&D plus CTC) for eight years. A line below that lineillustrates a flat delivery rate path (inclusive of T&D plus CTC) for ten years. The ten-year line depicts the reprofiled CTC for an additional two years. Underneath the ten-year delivery rate path is a depiction of the T&D guideline rates (a subset of the T&D plus CTC) which escalate linearly through the ten-year period. Along side the tenth-year of the T&D guideline rate is the note “Earned Savings - 50% reflected in the rate of return over the next ten years.”
OTHER MAJOR PROVISIONS
- $22 million potential incentive/penalty per year
- Share of savings generated for customers
EXTENSION OF CURRENT GAS SETTLEMENT AGREEMENT
- Delivery rate freeze
- Safety incentives
- Programs to facilitate competitive market
SCHEDULE AND ISSUES