Introduction to Cost-of-Service Concepts and Techniques for Electric Utilities
March 12-13, 2018
Anaheim, CA

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Overview

This two-day course will lead participants through the cost-of-service process from start to finish in detail. We will discuss and compare differences among investor-owned utilities, municipal utilities, and electric cooperatives in cost-of-service principles and techniques. Both traditional and unbundled cost-of-service analytical techniques will be discussed. Each participant will complete a sample cost-of-service analysis during the course. Training materials will be provided.

Learning Outcomes

  • Discuss FERC Uniform System of Accounts
  • Identify revenue requirements
  • Examine utility case studies
  • Discover energy allocation factors
  • Define the steps in the ratemaking process
  • List cost classifications

RECOMMENDED BACKGROUND AND REQUIREMENTS

No prior cost-of-service experience is required, although knowledge of utility system infrastructure, business environment, and operations will be helpful. To participate in model development, a laptop computer with Microsoft Excel 2003 or later is required.

Credits

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EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).  In obtaining this accreditation, EUCI has demonstrated that it  complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.

EUCI is authorized by IACET to offer 1.4 CEUs for this event.


Upon successful completion of this event, program participants interested in receiving CPE credits will receive a certificate of completion.

Course CPE Credits: 16.5
There is no prerequisite for this Course.
Program Level: Beginner/Intermediate
Delivery Methood: Group-Live
Advanced Preperation: None

EUCI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.

 

Requirements for Successful Completion of Program:

Participants must sign in/out each day and be in attendance for the entirety of the course to be eligible for continuing education credit.

Instructional Methods

PowerPoint presentations, classroom discussions, and question-and-answer sessions will be used in this conference.

Agenda

Monday, March 12, 2018

7:30 – 8:00 a.m. :: Registration and Continental Breakfast


8:00 – 8:30 a.m. :: Course Overview and Introduction

  • Course objectives
  • Course overview
    • Steps in ratemaking process
    • Steps in cost-of-service process
    • Developing cost-of-service analysis – different perspectives
    • Interpreting cost-of-service results

8:30 – 9:00 a.m. :: Overview of Cost-of-Service Process

  • Process overview
  • Introduction
  • State regulatory process
  • Local regulatory process
  • Federal mandates
  • The cost-of-service team
  • Stakeholders

9:00 – 10:15 a.m. :: Study Preparation

  • Introduction
    • Four important considerations
    • Common supporting analyses to ensure success
  • Financial planning
  • Study period selection
  • Load research study
  • System loss study
  • Resource planning studies
  • Minimum system studies
  • Accounting for direct assignment
  • Lighting study
  • Load forecasting

10:15 – 10:30 a.m. :: Morning Break


10:30 – 11:30 a.m. :: Policies, Objectives, and Strategies

  • Introduction
  • Policies
  • Objectives
  • Strategies
    • Marginal vs. embedded costs
    • Cost unbundling
    • Competitive pricing
    • Time-of-use pricing support
    • Real-time pricing support
    • Varying return on investment
    • Cost recovery through rules and regulations
    • Other strategies

11:30 a.m. – 12:30 p.m. :: Group Luncheon


12:30 – 2:15 p.m. :: Revenue Requirement

  • Introduction
    • Steps in rate design process
    • Definition
    • What is included in revenue requirement
  • Test year concept
    • Known and measurable adjustments
    • Used and useful adjustments
    • Components
  • Utility approach (IOU)
    • FERC Uniform System of Accounts
    • Rate base
      • Components
      • Definitions
    • Return on rate base
      • Weighted average cost of capital (WACC)
      • Cost of debt
      • Cost of equity
    • Utility Case Studies
  • Utility approach (regulated cooperative)
  • Cash approach (municipal)
  • Debt service coverage ratio
  • Comparison
  • Adjustments to base rates
  • Introduction to cost-of-service model
  • ATTACHMENTS: revenue requirements examples 5-1 through 5-4

2:15 – 2:30 p.m. :: Afternoon Break


2:30 – 4:00 p.m. :: Revenue Requirement (cont.)

  • Classroom exercise No. 1: revenue requirement test year adjustment – adding a new load
  • Classroom exercise No. 2: revenue requirement test year adjustment – adding a new resource

4:00 – 4:30 p.m. :: Cost Allocation Methodologies

  • Introduction
    • Steps in ratemaking process
    • Sample cost allocation methods
  • Common approaches to cost allocation
    • Embedded
    • Marginal
  • Common approaches to cost allocation
    • Bundled
    • Unbundled

Tuesday, March 13, 2018

7:30 – 8:00 a.m. :: Continental Breakfast

8:00 – 8:30 a.m. :: Review of Day 1


8:30 – 10:00 a.m. :: Functionalization of Costs

  • Introduction
    • Steps in ratemaking process
      • Bundled approach
      • Unbundled approach
  • Business unit concept
    • Products and services
    • Allocations
      • Direct
      • Derived
  • Classroom exercise No. 3: functionally unbundling costs

10:00 – 10:15 a.m. :: Morning Break


10:15 – 11:00 a.m. :: Classification of Costs

  • Introduction
    • Steps in ratemaking process
    • Basic cost categories
  • Fixed and variable costs
  • Cost classifications
    • Demand-related
    • Energy-related
    • Customer-related
    • Revenue-related
    • Direct assignments
  • Classification of functions
  • Special studies
    • Minimum systems
    • Zero intercept
  • Classroom exercise No. 4: classification of distribution plant

11:00 – 11:45 a.m. :: Rate Class Determination

  • Overview of issues
    • Rate classes
    • Number of classes
    • Type of classes
    • Classes within classes
    • Rate class trends: community solar
    • Cost-of-service support

11:45 a.m. – 12:45 p.m. :: Group Luncheon


12:45 – 2:15 p.m. :: Development of Allocation Factors

  • Introduction
    • Steps in ratemaking process
  • Demand allocation factors
    • Coincident peak
    • Non-coincident peak
    • Sum of max demands
    • Average and excess
    • Other
    • Utility Case Studies
  • Energy allocation factors
  • Customer allocation factors
  • Revenue allocation factors
  • Direct assignment
  • Classroom exercise No. 5: development of demand allocation factors

2:15 – 3:15 p.m. :: Allocation of Costs

  • Classroom exercise No. 6: allocated cost-of-service

3:15 – 3:30 p.m. :: Afternoon Break


3:30 – 4:00 p.m. :: Interpreting Cost-of-Service Results

  • Introduction
  • Subsidization
    • Inter-class subsidization
    • Intra-class subsidization

4:00 – 4:15 p.m. :: Course Wrap-Up

Instructors

Scott H. Burnham, Executive Consultant, NewGen Strategies & Solutions LLC

Mr. Burnham has over 18 years of experience in consulting, management, cost-of service, feasibility analyses and valuation services. His responsibilities include development of revenue requirements, costs-of-service allocation methodologies, rate design and revenue adequacy studies, utility valuation analyses and other engineering economic analysis. His project feasibility, financing and system acquisition projects have provided clients with a sound financial basis upon which to make decisions on purchasing, selling or modifying facilities. His rate related projects have included those that required the development and review of retail and wholesale electric rates, and rate structures, and analysis of rate riders for interruptible industrial rates, environmental cost adjustment rates, energy / fuel cost recovery and others. He has also assisted industrial customers in rates negotiation and evaluation.

Mr. Burnham has also been involved in feasibility and implementation studies, independent engineering reviews, operation and maintenance reviews, planning studies and valuation studies for generation assets. He has led multiple projects that have focused on determining the value of distributed solar resources to specific utilities. His clients have included municipal utilities, investor-owned utilities, electric cooperatives, and private sector clients.


David A. Berg, P.E., Principal, Dave Berg Consulting, LLC

Mr. Berg is a Principal with Dave Berg Consulting, LLC, and has more than 32 years of experience. He specializes in consulting services requiring a combination of technical and financial expertise. His electric industry restructuring and pricing work has assisted utilities in stabilizing their customer base and revenues in an increasingly complicated environment as well as in educating them on the particular industry changes that could affect their operations most significantly. His project feasibility, financing and system acquisition projects have provided clients with a sound technical and financial basis upon which to make decisions on purchasing, selling or modifying facilities. He understands the special issues confronting small and medium size municipal utilities, as well as the joint action agencies serving these utilities. He has also assisted industrial customers in analyzing particular industry issues that impact their operations.

Mr. Berg has also been involved in financial and technical evaluation of power generation projects that utilize alternative fuels. These have included landfill gas, biomass and wind generation projects.

Mr. Berg is a popular speaker both at utility training sessions and state and national conferences, due to his ability to focus on the essential points of complicated issues and to recommend actions appropriate to the audience.

Location

Hyatt Regency Orange County
11999 Harbor Blvd
Garden Grove, CA 92840

To reserve your room, please call 1-714-750-1234
Please indicate that you are with the EUCI group to receive the group rate.

Room Rate:

The room rate is $169.00 single or double plus applicable taxes.

Room Block Dates:

A room block has been reserved for the nights of March 11 – 14, 2018.

Rate Available Until:

Make your reservations prior to February 11, 2018. There are a limited number of rooms available at the conference rate. Please make your reservations early.

Register

Please Note: Confirmed speakers do not need to register and are encouraged to participate in all sessions of the event. If you are a speaker and have any questions please contact our offices at 1.303.770.8800

EventEarly Bird Before
Friday, February 23, 2018
Standard RateAttendees
Introduction to Cost-of-Service Concepts and Techniques for Electric UtilitiesUS $ 1295.00 US $ 1495.00

This event has the following related events:

Introduction to Rate Design for Electric UtilitiesUS $ 1295.00 US $ 1495.00

Take advantage of these discounts!

  • Attend the Course and Introduction to Rate Design for Electric Utilities and pay $2,295.00 per attendee (save $ 295.00 each)

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Any organization wishing to send multiple attendees to these conferences may send 1 FREE for every 3 delegates registered. Please note that all registrations must be made at the same time to qualify.

Cancellation Policy

Your registration may be transferred to a member of your organization up to 24 hours in advance of the event. Cancellations must be received on or before February 09, 2018 in order to be refunded and will be subject to a US $195.00 processing fee per registrant. No refunds will be made after this date. Cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other EUCI event. This credit will be good for six months from the cancellation date. In the event of non-attendance, all registration fees will be forfeited. In case of conference cancellation, EUCIs liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at 303-770-8800