REU Proposed Rate Structure Change

REU Proposed Rate Structure Change
RESIDENTIAL CUSTOMERS
REU is Committed to Redding
Redding Electric Utility (REU) is an economic engine and major employer that contributes to the vitality of Redding’s economy by investing its resources locally.
REU recently completed a comprehensive cost-of-service study (with the aid of hired consultant Leidos Engineering) to determine what it actually costs to provide
electric services to all REU customer classes. The results of this study were integrated into the development of REU’s proposed new rate (or pricing) structure.
The objectives of REU’s rate structure redesign include fair and equitable electric service pricing for all customer classes (residences and businesses), enhanced
customer choices, and closer alignment between REU’s fixed costs/fixed revenue sources and the Utility’s variable costs/variable revenue sources. REU will
propose its new rate structure to the City Council on June 16, 2015 (set Public Hearing) and will come back to the City Council for final approval on August 18,
2015. Pending approval, REU’s new rate structure will become effective October 1, 2015.
Why is REU changing its Rates Structure?
Proposed Residential Rates1
REU’s Strategic Plan identified financial and business model as one of its
top priorities:
Rate
Class
• Rate structure to reflect utility cost structure
• Utility requires significant fixed cost investments for generation, transmission,
and distribution systems
Residential
(E1)
• Rates need to incentivise efficient energy usage
Financial Plan for the Future
REU Revenue Sources
REU Proposed Rates
Variable
Costs
Existing
Rate
Proposed
Rate
Network Access
Charge/Fixed
$13/mo
$42/mo
Energy Charge
$0.1528/kWh
$0.1231/kWh
Residential Bill Comparison2
Fixed vs. Variable (Costs and Revenue Sources)
REU Cost Structure
Bill
Component
Fixed
Charge
Revenues
REU’s proposed new rate structure1 increases the Network Access
Charge (Fixed Charge), reduces the energy (kWh) charge and includes
no change to the Federal, State and solar surcharges.
18%
32%
Fixed Costs
68%
• = Fixed
• = Variable
Fixed
Charge
Revenues
34%
Variable Charge
Revenues
66%
Variable Charge
Revenues
82%
1
2
kWh
kWh
kWh
Monthly kWh
Current residential bill
Proposed residential bill
850
1,100
1,500
$148.18
$151.94
$187.94
$184.27
$251.56
$236.01
Difference
$3.76
$(3.67)
$(15.55)
Pending City Council approval 8/18/15
Includes all surcharges, fixed and energy (kWh) charges
RESIDENTIAL
Lifeline/Lifeline Plus (Low Income Discount)
Rate Transition Program – Climate $ Credit
REU is concerned about its low/fixed-income customers and proposes to
expand the criteria for assistance.
REU is concerned about the proposed rate impacts to its low energy users
and is proposing to use a portion of its sale of carbon allowances (AB 32) to
ease this transition.
200 kWh
Existing LL/LP Benefit
Proposed LL/LP
Benefit
Fixed Charge Discount
$3.25
$20
Energy Discount
$7.64
$0
Total Discount
$10.89
$20
Lifeline Plus will expand to 50% of median income; REU is proposing a flat
$20 monthly credit for LL / LP customers
Lifeline Bill Comparison
Current bill at 200 kWh
$33.92
Proposed bill at 200 kWh
$27.87*
Difference
($6.05)
*Year 1 – Includes proposed climate credit
Competitive Rates Compared to PG&E
Credit/Month
Year 1
Year 2
Year 3
$20
$10
$0
Usage up to
600 kWh / month
Total $7.5M proposed to be returned to low energy users
New Rate Structure – New Challenges and
New Opportunities
Whenever pricing structures change, new challenges and opportunities
arise. REU’s proposed new rate structure is no exception. REU is committed
to all of its customers – low-income, single family, multi-family, and small
and large business customers. REU is committed to meeting the needs of
its customers by offering highly reliable power and a variety of customer
programs and services at competitive rates that are generally lower than
those charged by PG&E. By June 1, REU will have additional information
including video segments, frequently asked questions and answers, and a
rate comparison tool available on our website at www.reupower.com. If you
have any questions, please email or call REU at reurates@reupower.com or
(530) 339-7300.
REU is proposing to maintain its competitive rates relative to its neighboring utility, Pacific Gas and Electric (PG&E).
Proposed Rate Comparison to PG&E1
Customer Class
Billed Energy (kWh)
Billed Demand (kW)
Total Bill ($)
Less than PG&E (%)
Residential
850
N/A
$150.32
18%
Small Commercial
1,792
N/A
$324.46
15%
Medium Commercial
17,923
50 kW
$2,903.64
9%
Large Commercial
71,693
200 kW
$10,907.72
8%
Fiscal year 2014 REU combined customer class saved approximately $30M versus PG&E.
1
Residential /Commercial Low
Energy Users