Tuesday, August 04, 2015

Heber Light Proposed Rate Increase

Update: The rate increase WAS approved at a postponed  August meeting on 2 Sept.  As a result of some data supplied it appears some commercial users may get increases of up to 400%, while others may get a reduction.  All residential users will get a 6% increase.   The rate increase will occur in  the next billing cycle.

A word to the wise, it may be very appropriate to carefully check your bills.  One user recently found his residential account had been billed in error for several YEARS
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Heber Power Board Members and Heber City Council

As this epistle is too detailed for presentation at the Public Hearing, I'm sending it to the decision makers (Board) in the hope that you will take it under consideration in your decision on the rate increase.
My two major concerns are raising residential rates and the possible reduction in larger commercial, that may not be offset by necessary Peak Power purchases. A minor concern is also the lack of time based rates and its affect on peak power.
At last year's Rate Increase hearing, Mr Pender talked about the concept of “Cost of Causation.” means that those who cause the utility to incur its costs should be responsible for payment of such costs.” pg 4, COS Study
The imposition, or continuation, of a service charge further hurts those least able to pay bills – the low residential user. But that IS being addressed somewhat, relatively, with the new proposed rates.Removing it or reducing it, with a per kwhr adjustment, might be a better alternative to an increase.
The Board decision to increase impact fees from 40% to 60% was a step in the right direction, in my opinion. I believe last year 75% was recommended.
That does mean, however, that 40% (rather than 60%) of the 'caused' cost burden must be still be borne by the remaining current ratepayers. While this was a good decision, it appears that this proposed rate increase may further the inequitable burden on the residential ratepayer, rather than those who have benefited from the past lower impact fees.
Last year's rate increase presentation used 'examples' showing a standard 4.5% for all users. A closer look showed that not to be true. Smaller commercial faced a larger relative burden that larger commercial. That appears to have been corrected in this year's proposal. All small commercial seems to be getting a rate REDUCTION. This is probably a positive step, for the existing 1185 small businesses, who may have been beneficiaries of the lower impact fees of the past.
It appears that an original 4.5% residential increase has been increased to 6% for all nearly 10,000 users. This does seem strange to me as one of the avowed reasons for municipal (user owned) utilities is lower rates for the 'owners' (municipalities and their residents and taxpayers). The supposed advantage of lower impact fees was encouragement for
businesses who create employment. Business creation may be a community positive but lower fees accompanied by lower user costs seems to an opposing direction for the municipal concept and the concept of 'Cost of Causation.'
Last year's proposal clearly favored big users, of whom there were 10, or so. This year there are shown 21 large and 123 medium commercial entities potentially involved in the demand charge system. Although the rate charts indicate a 7% increase for large commercial at an assumed 46% load factor, no figures are available to determine the rate at 90%.
The Demand rate system would supposedly help correct the Peak Power problem. Is this rate for “coincident peak demand, non-coincident peak demand and billing demand.”
However no figures are provided to demonstrate that the proposed rate structure will actually do so. If a more complete analysis of the commercial rates (rather than using an average factor), who can it be determined what the resultant revenue AND cost will be??? At a minimum, a few selected actual examples would be helpful. e.g. Company X, under the proposed new rates, will pay $50,000/yr using 100K Kwhr with a load factor of 80%; if the load factor is reduced to 40%, then their payment will decrease to $40,000/yr, and HL&P will save $20,000 in peak power purchases, thereby achieving a net benefit to ratepayers of $10,000. “The utility has been collecting data on commercial demands and analyzing the impact on these customers of implementing a demand charge.” (pg 1 of study)
This type of specific information should be available. However, when some who should know and understand are asked how this demand rate structure would work, I get an answer of 'I understand it, but can't explain it.' or from an HLP employee who was kind enough to respond to some of my questions, in writing:
ME: Both small and medium commercial have 'assumed' load factors, how does that compare with the actual current load factors?
HLP: The load factor was calculated from actual data provided by the company as well as industry averages.
ME: The large Commercial rates use an "Assumed Load Factor: 46.1%" - are there any comparison of rates of the 10 or so entities for their current rates vs. the proposal with the SAME usage?
HLP: In regards to the proposed rate increase, no such comparisons are presently available outside of the data tables provided in Exhibit D of the cost of service study I emailed to you yesterday. If customers are curious as to their individual impact, we have been encouraging them to come in and we will walk through their individual impact(s) directly with them.

ME: Under last year's proposal there were potential great reduction for this group. If the same this year, are the figures available as to whether any potential reductions will accrue to large commercial with their same usage?
HLP: As with the prior question, the previously referenced Exhibit D demonstrates the impacts of this rate adjustment.

ME: As the suggested goal of the rate change was to decrease peak power demand factor, will this proposed rate structure do that? How?
HLP: The proposed rate design creates economic incentives for the commercial customer to reduce their demand on the system.
Last year, it was suggested that time based usage costs would be implemented, apparently that is still being studied. After a million dollars worth of installed “smart” meters, it would seem it could or should have already been instituted.
ME: Whatever happened to the time based rates discussed last year using the 'smart-meters,' or is there still not the capability to implement it?
HLP: The Company is developing a Meter Database Management System to accurately capture the data necessary to analyze and potentially implement time of day rates.

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