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2012 Cost of Service Study

2012 Cost of Service Study

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Columbia, Missouri cost of service study that cost Columbia city government, tax, and ratepayers $40,000.
Columbia, Missouri cost of service study that cost Columbia city government, tax, and ratepayers $40,000.

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Categories:Types, Presentations
Published by: The Columbia Heart Beat on Aug 26, 2014
Copyright:Traditional Copyright: All rights reserved

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10/02/2014

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C
ITY OF
C
OLUMBIA
W
ATER
L
IGHT
D
EPARTMENT
C
OST OF
S
ERVICE
/ E
LECTRIC
U
NBUNDLING
S
TUDY
- 2012
M
ARCH
1, 2012
Utility Financial Solutions, LLC
185 Sun Meadow Court Holland, MI USA 49424 (616) 393-9722 Fax (616) 393-9721 Email: mbeauchamp@ufsweb.com
Submitted Respectfully by:
 
Mark Beauchamp, CPA, CMA, MBA President, Utility Financial Solutions
 
 
6/13/2013 1
C
ITY OF
C
OLUMBIA
W
ATER
L
IGHT
D
EPARTMENT
 
T
ABLE OF
C
ONTENTS
 S
ECTION
 P
AGE
N
O
. I
NTRODUCTION
 2 P
ROJECTED
R
EVENUES
, E
XPENSES
N
ET
I
NCOME
 4 P
ROJECTED
C
ASH
F
LOWS
 5 C
OST OF
S
ERVICE
S
UMMARY
 6 D
EVELOPMENT OF
R
ECOMMENDED
R
ATE
T
RACK
 7 R
ECOMMENDED
R
ATE
T
RACK
 9 C
OST OF
S
ERVICE
R
ESULTS
 10 U
NBUNDLING
P
ROCESS
 11 S
IGNIFICANT
A
SSUMPTIONS
 20 R
ECOMMENDATIONS
 22 A
CCOUNTANTS
C
OMPILATION
R
EPORT
 24
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6/13/2013 2
C
ITY OF
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OLUMBIA
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ATER
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IGHT
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EPARTMENT
 
COST OF SERVICE ELECTRIC UNBUNDLING STUDY EXECUTIVE SUMMARY - INTRODUCTION
I
NTRODUCTION
 
This report was prepared to provide the City of Columbia electric utility with a long-term financial plan and an electric cost of service and unbundling rate study. The specific purposes of the financial plan and rate study are identified below:
1)
 
Determine Electric Department’s revenue requirements for calendar year 2012
. The Electric Department’s revenue requirements were projected for the period from 2012 – 2016 and included adjustments for the following: a.
 
Changes in fuel cost and purchased power costs. b.
 
Capital improvements currently underway and scheduled over the next five years. The City of Columbia electric utility provided capital improvement information for 2011 – 2016.
2)
 
Identify cross subsidies that may exist between rate classes.
 Cross-subsidies exist when certain customer classes subsidize the electric costs of other customers. The rate study determined if cross-subsidies exist and practical ways to reduce the subsidies.
3)
Recommend rate adjustments needed to meet targeted revenue requirements.
The primary purpose of a rate study is to identify appropriate revenue requirements and the rate adjustments needed to meet targeted revenue requirements. The report includes a long-term rate track for the City of Columbia electric utility to help ensure the financial stability of the utility in future years.
 
4)
 
Unbundled electric rates.
The cost of providing electricity to customers consists of a number of components, including power generation, distribution, customer services, transmission, and payment in lieu of tax. Electric unbundling identifies the cost of each component to assist the utility in preparing for electric restructuring, understanding its cost structure and developing special rate forms for customers such as net metering rates, standby rates, and time of use rates.
5)
 
Identify the appropriate monthly customer charge for each customer class.
 
The monthly customer charge consists of fixed costs to serve customers that do not vary based on the amount of electricity used. The City of Columbia electric utility retained Utility Financial Solutions to review the above items and make recommendations on the appropriate course of action. This report includes results of the long-term financial plan, electric cost of service and unbundling study.

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