Parker-Davis Project · PDP FY18 Rates Presentation 12 . FY18 Transmission Charge Determinates...

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Parker-Davis Project Fiscal Year 2018 Rates & Charges

June 14, 2017

Florence Brooks

Public Utilities Specialist

Agenda

• FY 2017 Rate Calculation Summary

• FY 2018 Standard Calculation Parameters

• FY 2018 Charge Determinates • Generation:

• Purchase Power

• Transmission: • WAPA O&M • Other Revenue • Reservations

• Preliminary FY 2018 Charges

• Optional Restructuring of Principal (Transmission)

• Next Steps and Contact Information

2 PDP FY18 Rates Presentation

FY 2017 Rate Calculation Summary

Generation Charges

Purchase Power and Wheeling projection increased from $1m to $2m, resulting in an 8% increase to the composite generation charge

Transmission Charges

Transmission costs increased 5%, while Other Revenue decreased 15%.

We reduced a 12% transmission charge increase to 7% by deferring 50% of the FY17 principal payment to future years


Standard Calculation Parameters

• Actual work plans are used for O&M expenses when available. Work plans are escalated for inflation in remaining years of cost evaluation period (rate window)

• Ten-Year Plan information from WAPA and Reclamation is used to project capital costs

• Costs not readily identified as generation or transmission are allocated via the Cost Apportionment Study

• Transmission and generation sales projections are based on contractual values


FY18 Generation Charge Determinates

(Purchase Power)

• Purchase power is difficult to project given the volatility of hydrology and energy pricing

• We take a minimal approach with projections to prevent adverse rate impacts

• While we will continue with the minimal approach, we are increasing our projections to more closely align them with recent actual expenses


• Beginning in FY17, we agreed to increase purchase power projections by $340k per year until $3m is reached in FY 2022:

• Actual purchase power costs that exceed projections impact the carryover available in future fiscal years


2017 2018 2019 2020 2021 2022

Annual PPW $1.3m $1.7m $2.0m $2.4m $2.7m $3.0m

5-Yr Avg in Rate $2.0m $2.4m $2.6m $2.8m $3.0m $3.0m


(Purchase Power)


(Purchase Power)


Year Expenses

2012 $1.0m

2013 $3.8m

2014 $3.3m

2015 $5.2m

2016 $3.6m

2017 (Rate) $1.3m

Prelim 2018 $1.7m


Average Annual Expenses (in millions)


FY17-21 FY18-22 Change

WAPA O&M $2.1 $2.3 $0.2

CME & Western General $0.4 $0.2 $(0.2)

BOR O&M $10.3 $10.7 $0.4

Purchase Power $2.0 $2.3 $0.3

BOR Replacements $2.6 $1.5 $(1.1)

P&I $0.1 $0.1 -

Total $17.5 $17.1 $(0.4)




CME/Western

General$0.2

PurchasePower$2.3

WAPA

O&M$2.3

P&I$0.1

BOR O&M$10.7

BOR Replacements$1.5


Average Annual Other Revenue, Carryover, Revenue Requirement and Reservations ($ in millions)



Other Revenue $0.3 $0.3 $(0.0)

Carryover $1.5 $0.7 $(0.8)

Total $1.8 $1.0 $(0.8)

Revenue Requirement $15.7 $16.1 $0.4

Reservations (GWh) 1,425 1,425 -

FY18 Transmission Charge Determinates

(WAPA’s O&M)



WAPA O&M $28.7 $33.1 $4.4

Western General $4.5 $1.5 $(3.0)

CME & Multi-Project $(1.2) $(1.2) -

Total $32.0 $33.4 $1.4


• Vegetation Management is estimated to be $3.9m in FY18 & FY19 with $1m in the out years

• Direct charging of Overhead


(Other Revenue) • Other Revenues are composed of all transmission

related sales except for NITS and firm point-to-point

• Downward trend primarily due to decreases in short-term and non-firm sales

• Although we need to adjust our projections, we need a balanced approach similar to purchase power

• Reduce Other Revenue by approximately $0.7m a year to $7.6m and will reassess the projection each year

• Projections are higher than recent actuals:



(Other Revenue)


Year Other Rev

2012 $12.5m

2013 $9.0m

2014 $8.0m

2015 $7.4m

2016 $5.3m

2017 (Rate) $8.3m

Prelim 2018 $7.6m


(Reservations)


Average FY17-21 FY18-22 Change

Reservations (MW) 2804 2612 (192)

• South Point reduction of 285 MW

• BCP Post 2017 net reduction

• Assumes reservation increase & recovery in FY2021





WAPA O&M $28.7 $33.1 $4.4

Western General $4.5 $1.5 $(3.0)

CME & Multi-Project $(1.2) $(1.2) -

Purchase Power/Wheeling $1.9 $1.9 -

P&I $27.4 $28.4 $1.0

Total $61.3 $63.7 $2.4




WAPA O&M

$33.1 P&I

$28.4

Western General

$1.5 Purchase

Power$1.9


Average Annual Other Revenue, Carryover, and Reservations ($ in millions)



Other Revenue $8.6 $7.6 $(1.0)

Carryover $4.6 $2.3 $(2.3)

Total $13.2 $9.9 $(3.3)

Revenue Requirement $48.1 $53.8 $5.7

Reservations (MW) 2,804 2,612 (192)

Preliminary FY 2018 Charges


FY17 (current)

FY18 (proposed) Change

Energy (mills/kWh) 5.52 5.65 0.13 2.4%

Capacity (kW-Month) $2.42 $2.47 $0.05 2.1%

Composite w/o Tran (mills/kWh)

11.03 11.30 0.27 2.4%

Firm Tran (kW-Month) $1.43 $1.61 $0.18 12.6%

NITS Revenue Requirement

$46.2m $45.5m $(0.7) 1.5%

Optional Restructuring of Principal

• Last year, we deferred 50% of the planned FY17 principal payment to mitigate a transmission charge increase from 12% to 7%

• Although a short-term strategy, we can again defer the upcoming principal payment and spread that principal across future periods

• A 100% deferral of principal would cost approximately $5.5m over the 40-50 year repayment period but mitigate the increase to the FY18 charge:


FY18 Charge (proposed)

Change from FY17 Charge

(kW-Month)

100% Principal Payment $1.61 $0.18 12.6%

0% Principal Payment $1.46 $0.03 2.1%

Questions/Thoughts


Next Steps

• Information regarding the P-DP rates and charges to be posted on WAPA’s website:

https://www.wapa.gov/regions/DSW/Rates/Pages/Parker-Davis-New-format.aspx

• Generation costs finalized at Advancement of Funds Annual Funding Board - 7/20/2017

• Proposed charges will be finalized in July/August and become effective for the October 2017 service month











WAPA Contacts

Florence Brooks

602-605-2479

[email protected]

Scott Lund

602-605-2442

[email protected]


mailto:[email protected]

mailto:[email protected]

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