Electric Cost-of-Service - Essential Concepts for a Changing Industry
July 12-13, 2021 | Online :: Central Time
“It was a very engaging and insightful class. Scott and David were also very knowledgeable with tons of experience to draw upon.” Utility Accountant, LADWP
“Excellent overview of the entier cost of service process for people new to topic or needing a refresher done by two excellent speakers.” Budget & Rates Analyst, Great River Energy
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.
Monday, July 12, 2021 – Central Time
8:45 – 9:00 a.m.
Log In
12:00 – 12:30 p.m.
Lunch Break
9:00 a.m. – 4:00 p.m.
Course Timing
Short breaks will be taken throughout the course
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
Overview of Cost-of-Service Process
- Process overview
- Introduction
- State regulatory process
- Local regulatory process
- Federal mandates
- The cost-of-service team
- Stakeholders
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
Morning Break
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
Lunch Break
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 Break
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
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 13, 2021 – Central Time – Central Time
8:45 – 9:00 a.m.
Log In
12:00 – 12:30 p.m.
Lunch Break
9:00 a.m. – 4:00 p.m.
Course Timing
Short breaks will be taken throughout the course
Review of Day 1
Functionalization of Costs
- Introduction
- Steps in ratemaking process
- Bundled approach
- Unbundled approach
- Steps in ratemaking process
- Business unit concept
- Products and services
- Allocations
- Direct
- Derived
- Classroom exercise No. 3: functionally unbundling costs
Morning Break
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
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
Lunch Break
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
Allocation of Costs
- Classroom exercise No. 6: allocated cost-of-service
Afternoon Break
Interpreting Cost-of-Service Results
- Introduction
- Subsidization
- Inter-class subsidization
- Intra-class subsidization
Course Wrap-Up
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.
We will be using Microsoft Teams to facilitate your participation in the upcoming event. You do not need to have an existing Teams account in order to participate in the broadcast – the course will play in your browser and you will have the option of using a microphone to speak with the room and ask questions, or type any questions in via the chat window and our on-site representative will relay your question to the instructor.
- IMPORTANT NOTE: After November 30 you will not be able to join a Teams meeting using Internet Explorer 11. Microsoft recommends downloading and installing the Teams app if possible. You may also use the Edge browser or Chrome.
- You will receive a meeting invitation will include a link to join the meeting.
- Separate meeting invitations will be sent for the morning and afternoon sessions of the course.
- You will need to join the appropriate meeting at the appropriate time.
- If you are using a microphone, please ensure that it is muted until such time as you need to ask a question.
- The remote meeting connection will be open approximately 30 minutes before the start of the course. We encourage you to connect as early as possible in case you experience any unforeseen problems.
More than 5 attendees? Call our office at 303-770-8800 for additional discounts.
Please Note: This event is being conducted entirely online. All attendees will connect and attend from their computer, one connection per purchase. For details please see our FAQ
If you are unable to attend at the scheduled date and time, we make recordings available to all registrants for three business days after the event
| Event | Standard Rate | Attendees | |
|---|---|---|---|
| Single Connection - Electric Cost-of-Service - Essential Concepts for a Changing Industry | US $ 1295.00 | ||
| Pack of 5 connections | US $ 5,180.00 | ||
| Call us at 303.770.8800 if you have any specific questions on the volume discounts | |||
| * all other discounts do not apply to license packs | |||
This event has the following related events: | |||
| Electric Utility Pricing - Trends in Cost Recovery | US $ 1295.00 | ||
| Pack of 5 connections | US $ 5,180.00 | ||
By registering I indicate I agree with EUCI's privacy policy and understand I may receive emailed reports, articles, event invitations and other information related to products and services from EUCI and any of our business partners. I understand I may unsubscribe at any time by clicking the link included in emails.
Take advantage of these discounts!
- Attend the Course and Electric Utility Pricing - Trends in Cost Recovery and pay US $ 2,295.00 per attendee (save US $ 295.00 each)
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 June 11, 2021 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
![Cpe](http://www.euci.com/wp-content/uploads/2016/07/Cpe.png")
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.