Hoke County to Receive Additional Water from PWC

On March 9, the Public Works Commission amended an agreement with Hoke County to add additional water service.  The existing Interlocal Agreement will be changed to increase the maximum amount of water Hoke County purchases from PWC by six (6) million gallons per month with the total monthly purchases being eighteen (18) million gallons per month.

A Facility Investment Fee of $353,096 will be paid by Hoke County for the increased water supply.

In other business, the Commission voted for the following rate increases.  The information below is from the March 9 Public Works Commission minutes.

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CONSIDER CHANGES TO THE ELECTRIC RATE SCHEDULES (PWC Strategic Goal #1)

Presented by: David W. Trego, CEO/General Manager

PWC Staff

David Trego, CEO/General Manager provided a summary of staff’s requests:

1. 0% revenue increase in electric rates as of May 1, 2016.

2. Make rate structural changes to match how we are purchasing our power from Duke Energy Progress

3. 3% revenue increase from rates effective May 1, 2017; ($6.339 million)

4. Eliminate Community Street Light charge and RECS charge on our Buy All Solar Meters. Currently if someone puts solar on their roof, we place a second meter on their house for our benefit to measure the power we are receiving from the solar panels. Our current procedure is every meter that is put in by PWC gets the street light and the RECS charge. So basically if someone puts solar on their roof, we are charging the resident twice for the particular charges (there are only a few customers). We are requesting to eliminate the community street light and RECS charges from the buy all meters.

Commissioner Shaw asked if solar customers have an agreement to sign for the second meter even though it is for PWC’s benefit. Mr. Trego replied for residential level solar there is a tariff sheet that identifies that level of service. The customer has to let us know they are putting it in. We have interconnection requirements and it has to meet our standards. When we know that it is being installed and it meets our standards we will install the second meter. But since it is below 10kW it is a tariff rate with standard terms and conditions. He stated it is typical across North Carolina.

Commissioner Shaw also confirmed that the customer cannot challenge retroactively any expenses that have been charged to them duplicated. Mr. Trego responded ‘no’. The tariff sheet states the charges apply to the meter. We will simply eliminate the charges on the tariff sheet going forward.

Mark Brown responded. He stated we have 10 customers and we will explain that we are changing our policy for their benefit. Mr. Trego stated this is a positive message to our customer that we recognize we want to make solar more affordable for our customer to put in and by taking these charges off it may assist them.

Mr. Trego stated there were a lot of factors considered in looking at the rates going forward. There is a slight reduction in our estimated wholesale power costs from Duke. That is because the price for natural gas and oil and all of their fuels are down. There is a slight decrease in what our projected wholesale costs are going forward to Duke.

We also looked at maintaining the Commission approved target of 120 days operating reserve and maintaining our debt coverage above the 2.5 to make sure we keep our bond rating.

Mr. Trego stated staff looked at matching up how we are charged from Duke Progress and how we charge our customers. As well as which factors impact rates going forward.

Significant drivers in future rates are the impact of Duke Energy Coal Ash clean up. This is driven by State and Federal Coal Ash requirements. The current Duke estimate is $2 Billion for DEP customers. PWC’s portion of Coal Ash expenses is based on our percentage of load on their system. So our exposure is roughly $70 Million based on our contract. Recovery period is likely 10+ years. They are still finalizing their plans. They have to be approved by the Coal Ash Commission.

DEP (Duke Energy Progress) is currently spending money today for Coal Ash. They expect to apply to recovery costs from their retail customers as well as wholesale customers.

Mr. Trego stated PWC will intervene at FERC to make sure what DEP files is fair and reasonable for our customers; to protect our customer interests and to reduce our exposure. Discussion ensued.

Mr. Trego stated Coal Ash costs hit the demand side of PWC’s power bill. Our bill has two pieces. It has energy, which is primarily the variable costs and the fuel costs. The fixed costs of maintaining the plants, infrastructure and everything else are related to demand side. He stated it is roughly a 50/50 split (50% for energy and 50% for demand). But this expense will hit the demand side of the equation which is important as we discuss the disparity of the rates we charge our customers for demand versus what we are currently charging them and when coal ash hits will make that difference all the greater.

The recommendations assume proactive use of the Rate Stabilization Fund to mitigate future Coal Ash impacts.

Rate structure concerns:

Primarily with Commercial/Industrial Demand Rates: The smallest residential rates do not charge demand. Currently, PWC is under recovering demand portion of customer rates. Demand costs from DEP are $17.94 per KW (without coal ash). Current PWC demand charges: $11.50 Medium Power customers & $14.00 Large Power customers. PWC is currently recovering disparity through energy usage (kWh) charges. With Coal Ash impacting demand charges PWC needs to be proactive.

Recommend revenue neutral structural changes in May 2016. We would increase demand/fixed costs and lower energy (kWh) costs.

Recommend that May 2017 increase focus on demand/fixed charges rather than energy (kWh) charges.

Mr. Trego delineated the recommendations below. Staff also responded to Commissioners’ questions.

Recommendations

Residential

Current May 2016 May 2017

Facilities Charge $13.50 $13.50 $15.00

Energy Charge $0.0990 $0.0990 $0.1004

Small Power & Church Service (closed)

Current May 2016 May 2017

Facilities Charge $18.00 $21.00 $23.00

Energy Charge $0.1013 $0.0990 $0.0990

Medium Power Service

Current May 2016 May 2017

Facilities Charge $24.00 $27.00 $30.00

Demand Charge $11.50 $12.50 $13.50

Energy Charge $0.0555 $0.0520 $0.0520

Large Power Service

Current May 2016 May 2017

Facilities Charge $265.00 $275.00 $290.00

Demand Charge $14.00 $15.25 $17.00

Energy Charge $0.0542 $0.0515 $0.0515

Non –Residential Time of Use (closed)

Current May 2016 May 2017

Facilities Charge $265.00 $275.00 $290.00

Demand –On Peak $14.00 $16.70 $17.50

Demand –Off Peak $ 2.50 $ 2.50 $ 2.50

Energy –On Peak $0.0580 $0.0580 $0.0670

Energy –Off Peak $0.0425 $0.0355 $0.0355

Large Industrial Time of Use

Current May 2016 May 2017

Facilities Charge $650.00 $675.00 $700.00

Demand –On Peak $15.00 $16.70 $17.50

Demand –Off Peak $ 2.00 $ 2.00 $ 2.00

Trans. Discount $ 2.00 $ 1.00 $ 0.50

Energy –On Peak $0.0388 $0.0350 $0.0350

Energy –Off Peak $0.0347 $0.0300 $0.0300

Typical Customer Impacts

Residential Using 1,000 kWh

Current May 2016 May 2017

$112.50 $112.50 $115.40

Residential Using 2,500 kWh

Current May 2016 May 2017

$261.00 $261.00 $266.00

Non Residential –Small Power Using 1,250 kWh

Current May 2016 May 2017

$144.50 $145.00 $147.00

Commercial -Medium Power Using 28,800 kWh & 160 KW Demand

Low Load Factor 25%

Current May 2016 May 2017

$3,462 $3,525 $3,688

Commercial –Medium Power Using 28,800 kWh & 80 KW Demand

Medium Load Factor 50%

Current May 2016 May 2017

$2,542 $2,525 $2,608

Large Power Using 3,500,000 kWh & 9,700 KW Demand

Medium Load Factor 50%

Current May 2016 May 2017

$325,700 $328,400 $345,400

Large Power Using 3,500,000 kWh & 6,500 KW Demand

High Load Factor 75%

Current May 2016 May 2017

$281,000 $279,600 $291,000

PWC COMPARISON WITH OTHER UTILITIES Residential 1,000 kWh Rocky Mount 141.54 $ Lexington 141.41 $ South River EMC 128.45 $ Greenville 123.86 $ Lumbee River EMC 119.65 $ PWC eff 5/1/16 112.50 $ Duke Energy Progress 108.87 $ Duke Energy Carolinas 106.57 $ Commercial – 30KW Demand 8,000 kWh Rocky Mount 1,048.43 $ Lexington 988.65 $ Greenville 895.47 $ South River EMC 820.15 $ PWC eff 5/1/16 $

Staff Recommendations:

(1) Residential rates will not change, effective May 1, 2016

(2) Adjust non-residential rate classes, revenue neutral, effective May 1, 2016

(3) Increase revenues by $6.339 million effective May 1, 2017

Commissioner Shaw motioned to accept staff’s recommendations as presented during the discussion and by hardcopy. Motion seconded by Commissioner Fowler and unanimously approved.

Commissioner Lallier requested for staff to provide a timeline on the intervention process at FERC relevant to Coal Ash.

Chairman Rogers thanked staff for their efforts in compiling and presenting the Electric Rate Schedules.

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A follow up Fayetteville Observer news article regarding the rate change can be found ↓

http://www.fayobserver.com/news/local/fayetteville-pwc-approves-rate-increase-to-start-in-may/article_3adea32b-637b-55c9-8a82-78f14177a35e.html

 

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