Line item to fund Energy Assistance Program
— from Suzanne Olson for OPALCO —
Beginning in January, our electric bills will go up 5% and there will be a couple of new line items. The board-approved rate increase for 2016 will be spread equally across the facilities and energy charges (see below). As a result of the 2015 Low Income Needs Assessment, members will see a line item on our bills to fund a new program to assist qualified members in need. The line item will assess $0.0005 per kilowatt, which comes out to an average forty-five cents per month for residential members.
The other new line item is a place holder for a future demand charge. The demand line item will show $0.00 to prepare members for the demand charge that will eventually be charged to all members, to reflect the actual charges OPALCO is charged on the power bill from Bonneville Power Administration. No date has been set for the start of demand charges.
Residential members make up the majority of OPALCO members. Here’s how the changes will look beginning in January for the average residential member:
Facility Rate increases from $38.90 to $40.54
Energy Rates (< 3,000 kWh - winter): $0.0855 $ to 0.0892
Energy Assistance Program line item: $0.0005 per kilowatt hour (average of $0.45)
Demand Charge line item: $0.00 (placeholder for future charge)
To review the budget and rate discussions in detail, all board materials and budget reports are available online in our Resource Library (Home / Resource Library ...). A recent article on rates is also available online: https://www.opalco.com/?p=8943.
As a co-op, OPALCO’s budget is built to meet the cost of service, which is higher than most other utilities given our remote island communities connected to the mainland by submarine cables. During the past two years of revenue shortfalls, we’ve tightened the belt along the way and delayed projects and hiring to meet the need. In 2016, we project a stable revenue year as the adjustments we’ve made for changing energy usage and weather patterns are built in to budget assumptions.
We are not alone. It’s been a bit of a bumpy ride for all utilities in the region. OPALCO projects smoother sailing ahead as we adjust to the new weather norms, get through the final two years of our submarine cable replacement project, major upgrades to our communications infrastructure, Rock Island’s start-up operations begin to level out and we begin to add new electrical load through fuel switching initiatives.
Thank you for your patience and cooperation during the bumps!
For the latest information about OPALCO, go to: www.opalco.com; sign up for our email newsletter (https://www.opalco.com/about/email-signup/); and follow us on Facebook (Orcas Power & Light Cooperative) and Twitter (@orcaspower). OPALCO is our member-owned cooperative, powering more than 11,000 members on 20 islands in San Juan County since 1937.
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Could you explain the last item about increased load through fuel switching,please. Also, when demand charges begin will there be an opportunity to mitigate the charge with time of day metering.
I thought I saw mention of an item for 2.4 million dollars for electric system communication enhancement. Will this support in any way the Rockisland business? If so; how will the electric customers be compensated for this investment?
Bill – good questions.
1) On fuel switching: our co-op energy load will increase incrementally as members switch their propane (heating) and gasoline (cars) energy consumption to electricity. These fuel switching gains (albeit small) represent new energy loads on our system. With the load comes additional energy sales (revenue) to help offset the trends of lower energy sales due primarily to warmer weather. Beyond the cleaner footprint of our mostly hydro electricity, it also just makes sense to invest our energy consumption dollars into a cooperative utility that we all own.
2) On the future demand charge: Any residential member can switch into a Time of Use (TOU) tariff today and, IF they shape their usage to the tariff, see significant savings over the residential rate. In addition to developing energy usage habits that will serve members well as costs go up, there are no kilowatt hour tiers or seasonal blocks in the TOU rate. The bottom line is, IF members can adjust to using power outside of the peak periods, the savings will pay off. This savings could help to mitigate future demand charges, as you wonder, but not directly. The future demand charge will be a pass through from the BPA bill for system-wide demand until such time as residential meters are upgraded with a device to measure individual demand.
Tom, Theresa Haynie here for OPALCO: Perhaps you are referring to the budget line item “Grid Control Communications Infrastructure” that is budgeted at $2.4M for 2016. Grid control communications refers to the infrastructure for our fiber optic plant and the monitoring devices we use in our energy grid to manage the system. From the Supervisory Control and Data Acquisition (SCADA) electronic boards in the OPALCO offices, including the software, to the devices in the field that communicate back to the offices, SCADA and the fiber optic lines that transmit data support the field work of OPALCO crews around the clock, this system is an essential part of tracking and reporting everything from breaks in the line to voltage irregularities that occur in the energy grid.
How is the 2.4 mil spent. Is it all payroll? Is this 2.4 mil every year forever? What is 2.4 mil broken down in terms of KW cost.
Bill,
You need to be a little careful about OPALCOs fuel switching ideas. There can be an economic advantage to the Customer if oïl prices are high and they can be. It is also a good deal for OPALCO as they get more revenue and that helps all us electric customers.
The idea that OPALCO has a mostly hydro carbon foot print is very misleading. OPACLO is part of a vast interconnected power grid. That grid is roughly 25 percent hydro, 25 percent coal, natural gas, nuclear and renewables. This makes up OPALCOs carbon footprint for existing loads. It is not anywhere near mostly hydro.
There is a different story for new loads. This grid system operates on the concept of economic dispatch. This means that the lowest incremental cost plant runs first and to its maximum capability. The next lowets cost plant runs next. Finbally the highest cost plant runs last. This plant will meet OPALCOs new load from fuel switching. The most expensive plant are coal plants. So, the new load is going to run on coal, not hydro.
OPALCO seems feel that since their power supply contract is from BPA, and BPAs fuel mix is mostly hydro, that OPALCO is running on hydro. This approach defies the laws of physics. OPALCOs GM and one board member are very aware of these facts.
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I support fuel switching as a way for OPALCO to gain more revenue. They buy power for 3.5 cents and sell it to us at 8.5 cents.
I just dont think the carbon footprint issue should be used as an incentive. It is really a disencentive.
Theresa,
Thanks for the information on the 2.4 million dollar budget item. Very informative.
However, your reponse did not address the main part of the question. So, lets try again.
Will this 2.4 million and the fiber and communications Equipment, in any way whatso ever, be used or benefit rockisland?
If it does benefit rockisland, is OPALCOs lender aware of the use of electric utility funds to benefit rockisland?
Suzanne,
Two questions:
If you are going to begin charging the BPA demand charges in the new demand line item, will you be reducing your fixed charge? Isnt the BPA demand charge currently in the OPACLO fixed charge? Isnt this the charge you propose in the new demand line?
You site the cost of subsea cables to bring power to the islands. Who owns the cable from the Mainland to Decatur and to Lopez? As I recall, they are owned by BPA. The subsea cables within the county are certainly a cost issue.
Tom: The line item for demand beginning in January is a placeholder only – will show $0.00. There is not yet a timeline for when actual demand charges will begin to appear and not yet a breakdown of how that pass through will work in terms of its relationship to the facilities charge. Stay tuned. As soon as we know, we’ll get the info out to the membership.
The submarine transmission cables from the mainland to Decatur and from Decatur to Lopez are indeed owned by BPA. There are 26 other submarine cables (distribution and transmission)in our system that are NOT owned by BPA.
Note that $2.4 million is roughy 10 percent of OPALCO’s annual budget. Is this a capital expense that will be amortized over many years? Or will it be expensed in 2016? That’s an important difference to ratepayers.
Theresa Haynie here for OPALCO. Michael, without going into budget basics, the $2.4MM is a line item in the Capital Projects Budget that will be capitalized (added to our assets) and depreciated (where it will show up as an expense) over many years. Also, looking ahead, the capital expenditure on our fiber communications backbone in 2017 is forecasted at $730K, and tapers off for this phase of our grid expansion.”