By - Jon Brown

Electric Cost-of-Service – Essential Concepts for a Changing Industry
July 15-16, 2019 | Chicago, IL

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Overview

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Electric Utility Pricing – Trends in Cost Recovery, July 17-18, 2019 in Chicago, IL

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 1.3 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: 15.0
There is no prerequisite for this Course.
Program Level: Beginner/Intermediate
Delivery Methood: Group-Live
Advanced Preperation: None

CpeEUCI 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, July 15, 2019

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

lunch11:30 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

Afternoon Break2:15 – 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, July 16, 2019

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

Break10:00 – 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

lunch11:45 p.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

Break3:15 – 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

 

Embassy Suites Chicago Magnificent Mile

511 North Columbus Drive

Chicago, IL 60611

Reserve your room:

please call 1-312-423-6309

Click here to book online

Room Block Reserved For:

Nights of July 14 – 19, 2019

Room rate through EUCI:

$229.00 single or double plus applicable taxes
Make your reservations prior to June 14, 2019.

 

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