Energy Utilities
by Ownership Type
Roman Draba
VP – Regulatory Affairs
We Energies
October 24, 2011
1
3 Categories of Energy Utilities

Municipal Electric / Gas utilities (Munis)

Cooperative Electric utilities (Co-ops)

Private -- Investor Owned Utilities (IOUs)
2
Municipally-Owned Electric/Gas System
(Munis)





Owned & operated by local government.
May include Water/Sewer/Telecom.
Serves 15% of nation’s electric load – fairly dense
population areas.
Often regulated by state PUCs (PSCs).
Size of Muni’s varies :
{Class AB - Rev $4M+; C >$200K-$4M; D < $200K}.


May offer generation to distribution.
May purchase all or portion of power from others.
3
Cooperative Energy Utilities (Coops) *






Member-owned utilities.
Generally not-for-profit / no fed taxes / sometimes
not even state regulated (e.g. PSCW).
1935 FDR’s Rural Electrification – now Rural Utilities
Service.
Primarily rural customers over a wide area.
841 Distribution and 65 Gen. & Trans. Coops in US
Economies of Scale – as buyer or seller of power.
* Also referred to as “Rural Electric Cooperatives”.
4
Investor Owned Utilities (IOUs)

Owned by shareholders – operated for profit.
IOUs serve 72% of nation’s electric needs.
Retail services regulated by state PUC’s (PSCs).
Partially vertically integrated OR structurally separated,
by state.
Wholesale services regulated at federal level (FERC).

Other federal regulation by:




1.
2.
3.

Nuclear Regulatory Commission (nuclear plants),
FCC (joint use of poles w/ cable companies and telecoms), &
Securities & Exchange Commission (financial).
Industry trends:
de-regulation and market-based pricing
VS. re-regulation (e.g. California)
Smart meters – advantages v. cost to install
5
IOU/Utility concerns in WI & nation






Service reliability / customer satisfaction.
Managing fuel costs and sources.
Transmission constraints.
Environmental compliance.
Maintaining distribution infrastructure.
Other (Always something new).
6
Wisconsin Service Territories
M unicipals in Corporate Lim its
M uni’s outside Corporate Lim its
Cooperatives
Large I OUs




(1M + M W h annual sales).
Alliant Energy (WP&L) Madison
Madison Gas & Electric Madison
Wisconsin Public Service Green Bay
We Energies (WEPCO/WEGO/WG)
Milwaukee

Xcel Energy (NSP – WI)
Eau Claire,
(parent: Minneapolis, MN)
7
National Statistics (by ownership type)
IOUs are
much Larger
Electric Utility Comparisons *
Municipals
Cooperatives
Investor-Owned
Total
50
37
277
364
2,000
930
220
3,150
21
18
104
143
Size (median number of customers)
2,000
12,500
400,000
Customers, % of total
15%
12%
73%
Total Revenue (billions of dollars)
Number of Organizations
Number of Total Customers
Revenues, % of total
kWh sales, % of total
Sales (billions kilowatt hours)
Coops are
more
weighted to
residential
& Farm
Residential
100%
14%
10%
76%
100%
15%
11%
74%
100%
Municipals
Cooperatives
Investor-Owned
Total
205
223
952
1,380
Commercial
211
82
1056
1,336
Industrial
155
89
692
1,009
Other
Total
Percentage of total distribution line owned
Coops
have
longer
lines per
customer.
4
0
4
8
575
393
2704
3733
Municipals
Cooperatives
Investor-Owned
Total
7
43
50
100
47
7
35
34
Revenue per mile of line
$86,302
$10,565
$62,665
$60,827
Distribution plant per Customer
$2,309
$2,845
$2,229
$2,362
Assets ( billions )
$200
$100
$700
$1,000
Equity ( billions )
$55
$31
$220
$306
Customers per mile of line (density)
Note: "Investor-Owned" includes data for IOU affiliates engaged in competitive retail markets where appropriate
Source: 2010 EIA-861 and RUS Form 7 data
*NRECA Strategic Analysis - Last Updated: February 2010
8
IOUs relationship to the MISO
Midwest Independent System Operator

We Energies (Generation & Distribution utility)




All Generation is sold to the MISO at the marginal marketclearing price.
All load to serve retail customers is purchased from the MISO at
Locational Market Prices or LMPs. *
LMPs = System-wide Generation price + local transmission
losses + local transmission congestion costs
Generation-only IOUs buy all load from
the MISO.

* Wholesale customers of the utility are also served at MISO-based pricing.
9
Similar ISOs serve other areas of U.S.
& Canada
10
Questions ?
11