TULLAHOMA UTILITIES
AUTHORITY
RETAIL
RATE REVIEW
Our approach to residential
and commercial rate
realignment
Historical Rate Thinking
• The original Electric Light Board
– Street lighting
– Flat fee
• Power and Light companies
– Metered usage
– Customer charge & kWh
More History
• What about big loads?
• What if the big loads don’t use
much kWh?
– Capacity charges and Demand
Charges
– Load factor charges
– Facilities Charges
Along those lines…
• What if large loads use power
seasonally or infrequently?
– Demand ratchets
– Minimum bill calculations
– Rate floors/rate penalties
– Seasonal load factor charges
And there’s more…
• What if the type of load was
heavily motor load and required
energizing current (aka bigger
wire, transformers, etc).
– Reactive meters
– Power Factor adjustments
Limited Metering
capabilities
• Westinghouse brought us the kWh
meter in 1894
• Relatively unchanged for 100
years except for introduction of:
– Demand metering ($$)
– Reactive kWh metering ($$$)
– Limited recording on tape ($$$$)
TVA End use rates
• For residential, prescribed kwh
metering and a customer charge
• For commercial/industrial, outlined
a three tier rate, GSA-1, GSA-2,
GSA-3
• Why have a three part rate?
– Cost of metering
– Difficultly allocating fixed generation
GSA rate review
• GSA-1 under 50kW, 15,000kW
– No demand meter (saves costs)
– Low customer charge, high kWh
• GSA-2 over 50kW or 15,000kw
– Higher customer charge
– Demand component
• GSA-3 over 1000kW
– High customer charge, low kWh cost
What’s wrong with this rate?
• Doesn’t really correlate fixed asset
costs to those who require it
– Transmission
– Distribution
• Doesn’t really correlate cost of
energy generation with usage.
– Wholesale costs of purchased power
on peak vs excess capacity
TVAs response: TOU
• Time of use rates allow TVA to
better align energy costs with
energy usage.
• But what about fixed asset
recovery?
• TVA is still attempting to recover
fixed costs with a volumetric
component.
TUA Response: Change.
• TVA wholesale rate from end-use to
Time-of-use energy, and we speculated
future structure adjustments
• TUA typically peaks concurrently with
TVA, so our variable costs align with
same time periods
• Technology has developed that allowed
us to capture interval data for every
customer.
First response: TOU
• TUA was the first to implement
mandatory TOU across all
customer segments
• We implemented an AMI system
that would automatically pool
usage into on-peak, off-peak, and
transition.
• This required major programming
Retail TOU
Implementation Plan
• Public meetings
– AMI rollout and TOU discussion were
combined
• RFP for AMI infrastructure
– Several venders responded
– Required 15 minute interval data
– Future ability for load control (2-way)
– Need for water readings
Implementation
Challenges
– Few customer complaints
– Cycle billing vs calendar month with
respect to seasons
– Residential – 5 cent summer
differential, 3 cent winter differential
– TVA rate spread may be insufficient
to influence customer behavior.
– Declining block in GSA-2
Is that enough?
• We anticipated TVA rates
changing again
• We had customers that had large
transformers that had shut down
• We had a concern that we could
no longer rely on guideline
increases (partly because we are on-peak)
Revenue less power
cost vs expense
Decoupling the phone bill
• Remember long distance deregulation?
• TUA wanted a way to evaluate its real
distribution costs and couple that to a
rate that is fair and recovers our cost
equitably.
• TVA rates (whatever form they were in)
could then be added to bottom.
GSA-2 Rate
Realignment
– Continuing effort to move to a more
appropriate correlation between
wholesale and retail.
– Split demand into two charges:
• A facility charge with a 12 month ratchet
• A coincident peak demand (TUB peak)
– Added a customer realignment
charge that phases out to avoid rate
shock to low load factor customers.
GSA-2 MIGRATION
Typical GSA-2 bill
comparison
• Old Bill:
Consumed
Demand
12month highest demand
Coincindent Peak
180000 kWh
350.4 kW
420 kW
218.4 kW
OCT 2014 RATE
Customer Charge
Demand Charge:
1st 50kW
over 50kW
Energy Charge w/FCA:
First 15,000 kwh
Transition Period
Total Bill
$
80.00
50
300.4 $
10.96
$
$0.00
3,292.38
15,000 $
165,000 $
0.0898
0.0505
$
$
1,346.25
8,339.10
$ 13,057.73
Typical GSA-2 bill
comparison
APR 2016 RATE:
Customer Charge:
Facility Charge:
$
80.00
$
147.00
294 $
0.50
Demand Charge:
1st 50kW
over 50kW
50 $
300.4 $
0.50
7.13
$
$25.00
2,141.85
Coincident Peak Charge
218.4 $
1.54
$
336.34
70% of hightest 12 mo
Energy Charge:
Transition Period
180,000
$
0.0392
$
7,047.00
15,000
165,000
180,000
$
$
$
0.0308
0.0041
0.0169
$
$
$
461.25
676.50
3,045.60
Customer Alignment Charge
1st 15000 kWh
over 15000
FCA
Total Bill
$ 13,960.54
One Rate Key
Components
• Distribution costs:
– Fixed Customer charge
• Everyone pays the same
– Scalable Facilities charge
• Everyone pays for what capacity they need (70%
ratchet over the year)
– Distribution Losses (only local adder in kWh)
• Wholesale costs
– kWh (TOU)
– Coincident Peak (kW)
TUA Rate Re-alignment Timeline
GSA-3
>1000 kW
GSA-2
GSA
50-999 kW
>15,000 kWh
What about GSA-1?
GSA-1
500-15000 kWh
GSA-1
Apr 2020
Apr 2019
Apr 2018
Apr 2017
Oct 2016
Apr 2016
<500 kWh
Oct 2015
Jun 2015
<50 kW
<15,000 kWh
B. Coate 06.02.15
GSA-1 Rate
Realignment Review
• GSA-1 customers will split into
two groups:
– Single phase customers with 200A or
smaller service
– Three phase customers or single
phase with larger than 200A service
Rate Re-alignment Timeline
GSA Large
- CC
GSA-3
>1000 kW
-
- kW
- TOU kWh
- CP
50-999 kW
>15,000 kWh
200A Single Phase
GSA-1
Apr 2019
Apr 2018
Apr 2017
Oct 2016
Apr 2016
Oct 2015
<50 kW
<15,000 kWh
GSA Small
- CC
- TOU kWh
Apr 2020
GSA-2
Jun 2015
Facility
Charge
B. Coate 06.02.15