Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School...
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![Page 1: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/1.jpg)
Intervenor Review of Electricity Distributor
Rate Applications
July 9, 2012Jay Shepherd
for School Energy Coalition
![Page 2: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/2.jpg)
School Energy Coalition
• Who We Are• Coalition of seven school board/management
organizations• 5000 schools with 2 million students• Spend $550 million per year on energy
• Intervention Principles• Always look for the win-win solution• “Walk softly but carry a big stick”• Think long term
![Page 3: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/3.jpg)
Role of Intervenors
• Voice of the customers• Assist the Board• Attitude of the client
organizations
![Page 4: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/4.jpg)
But Who Are They?
• Organizations:– Five active ratepayer groups in LDC
applications– Other ratepayer, environmental and
industry groups in other matters
• People:– Experienced consultants specializing
in energy
![Page 5: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/5.jpg)
Steps in the Review• Revenue Requirement
– OM&A issues (pattern, FTEs, affiliates)– Rate Base issues (opening, capex, dep’n)– Cost of Capital issues (debt rate, taxes)
• Revenue Forecast (load, customers)
• Deficiency/Sufficiency• Who Pays
– Cost Allocation (RTC, anomalies)– Rate design (fixed charges)
![Page 6: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/6.jpg)
Sources of Information
• Financial Statements• Rating agency reports• Website, Newspaper stories, etc.• Yearbook data• Asset Condition Assessment and AMP• Strategic/Business Plan• Tax returns or tax calculations• Previous applications, results, rates
![Page 7: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/7.jpg)
Comparative Data• Valuable diagnostic tools
– Identify potential problem areas– Test against evidence for consistency
• Comparative Rates the most important– Captures all aspects of costs, but rough
• Rate Base and Capital Spending– PP&E per customer (level and trend)– Capex/depreciation ratio each year– Average depreciation rate
![Page 8: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/8.jpg)
Comparative Data• OM&A Metrics
– OM&A per customer– FTE per customer– Spending ratios (e.g. maint. vs. G&A)– Individual line item trends
• Other Metrics– Components of revenue (e.g. by class)– Debt/equity ratio (leveraging)– Actual returns
![Page 9: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/9.jpg)
Examples
(see handouts)
![Page 10: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/10.jpg)
Interrogatories• What are we looking for?
– Documents referred to (or omitted)– Explanations
• Missing data, steps, or confusion• Comparative data
• Clear answers simplify the TC (call)• Challenges facing this LDC
– Show investigation and analysis– Thoughtful plan to deal with them
![Page 11: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/11.jpg)
Technical Conference
• Usually first contact with intervenors• Not cross-examination, but tougher
than IRs • Model TC is a dialogue• Point is to save the Board panel from
wasting their time
![Page 12: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/12.jpg)
ADR –The Process
• What is actually going on?– Negotiation between utility and ratepayers– Most COS applications can be settled– Opportunity vs. challenge
• Steps– Exchange of information/dialogue– Intervenor caucus– Offers back and forth– Reaching agreement– Documenting the agreement
![Page 13: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/13.jpg)
ADR – Negotiations
• Offers– Issue by issue – revenue requirement usually first– Deficiency based packages (looking for savings)
• Settlement of other issues– Cost allocation and rate design– Deferral and variance accounts– Severability
• Intervenor point of view– Result by agreement vs. result by decision– ADR positions vs. Hearing/Argument positions– Comparative data increasingly influential
![Page 14: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/14.jpg)
Oral Hearings• General comments
– Short time frame– Board members busy but very experienced– Creates an impression but also a record
• Cross-examination– Bias in favour of the cross-examiner– Utility counsel has limited freedom to protect you– Good questioners are well prepared– Don’t “play the game” - use your natural advantage– Credibility not easily lost, but also not easily regained– Pay close attention to questions from Board members
![Page 15: Intervenor Review of Electricity Distributor Rate Applications July 9, 2012 Jay Shepherd for School Energy Coalition.](https://reader030.fdocuments.us/reader030/viewer/2022032800/56649d225503460f949f827d/html5/thumbnails/15.jpg)
Intervenor Review of Electricity Distributor
Rate Applications
July 9, 2012Jay Shepherd
for School Energy Coalition