estimating unbilled revenues
DESCRIPTION
Estimating Unbilled Revenues. Joni Davis, OPPD Mindy Willis, OUC. Learning Outcomes. Understand reasons for accruing unbilled revenues Understand two methodologies. Unbilled Revenues - Definition. Revenues applicable to electric energy consumed but not yet billed to the customer. - PowerPoint PPT PresentationTRANSCRIPT
Estimating Unbilled Revenues
• Joni Davis, OPPD
• Mindy Willis, OUC
Learning Outcomes
• Understand reasons for accruing unbilled revenues
• Understand two methodologies
Unbilled Revenues - Definition
• Revenues applicable to electric energy consumed but not yet billed to the customer
Accounting Basis
• Revenue Recognition
• Matching Principle
• Asset Recognition
• Materiality
Advantages
• Fair presentation of assets, revenues and cents per kWh
• Facilitates identification of billing issues and/or metering issues
OPPD Unbilled Energy and Revenue Estimation
Theory and Methodology
Disadvantages
• Difficult to estimate and validate as accurate
• Budgeting issues
Unbilled Energy - Definition
• Unbilled energy is an estimate of the portion of net system requirements (NSR) consumed by retail customers in the calendar month, but not yet billed.
• Unbilled calculations reconcile billed data (on meter read schedules) to net system requirements (on a calendar schedule).
Meter Read Schedules
• Each month OPPD reads its meters in one of 20 cycles.
• Each cycle has roughly the same number of meters.
• One cycle is read each workday.• Energy is billed on the meter read date.
Meter Read Cycles • Cycle 1: 12/31/2003 – 1/29/2004
• Cycle 2: 1/02/2004 – 1/30/2004
• Cycle 3: 1/05/2004 – 2/02/2004
• Cycle 4: 1/06/2004 – 2/03/2004
• Cycle 5: 1/07/2004 – 2/04/2004
• Cycle 6: 1/08/2004 – 2/05/2004
• Cycle 7: 1/09/2004 – 2/06/2004
• Cycle 8: 1/12/2004 – 2/09/2004
• Cycle 9: 1/13/2004 – 2/10/2004
• Cycle 10: 1/14/2004 – 2/11/2004
• Cycle 11: 1/15/2004 – 2/12/2004
• Cycle 12: 1/16/2004 – 2/13/2004
• Cycle 13: 1/19/2004 – 2/17/2004
• Cycle 14: 1/20/2004 – 2/18/2004
• Cycle 15: 1/21/2004 – 2/19/2004
• Cycle 16: 1/22/2004 – 2/20/2004
• Cycle 17: 1/23/2004 – 2/23/2004
• Cycle 18: 1/26/2004 – 2/24/2004
• Cycle 19: 1/27/2004 – 2/25/2004
• Cycle 20: 1/28/2004 – 2/26/2004
Note how each cycle contains days in January.
Note how cycles one and two contain no days in February
Note how no cycles contain the dates 2/27 – 2/29 (which are in February’s NSR.
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12/31/2003 1/31/2004 2/29/2004
Date
Cy
cle
January Unbilled February Unbilled
February Billed
FEBRUARY UNBILLED EXAMPLE
Weather PatternsExample: February - four-days of below zero temperatures
• Cycle 1: 12/31/2003 – 1/29/2004
• Cycle 2: 1/02/2004 – 1/30/2004
• Cycle 3: 1/05/2004 – 2/02/2004
• Cycle 4: 1/06/2004 – 2/03/2004
• Cycle 5: 1/07/2004 – 2/04/2004
• Cycle 6: 1/08/2004 – 2/05/2004
• Cycle 7: 1/09/2004 – 2/06/2004
• Cycle 8: 1/12/2004 – 2/09/2004
• Cycle 9: 1/13/2004 – 2/10/2004
• Cycle 10: 1/14/2004 – 2/11/2004
• Cycle 11: 1/15/2004 – 2/12/2004
• Cycle 12: 1/16/2004 – 2/13/2004
• Cycle 13: 1/19/2004 – 2/17/2004
• Cycle 14: 1/20/2004 – 2/18/2004
• Cycle 15: 1/21/2004 – 2/19/2004
• Cycle 16: 1/22/2004 – 2/20/2004
• Cycle 17: 1/23/2004 – 2/23/2004
• Cycle 18: 1/26/2004 – 2/24/2004
• Cycle 19: 1/27/2004 – 2/25/2004
• Cycle 20: 1/28/2004 – 2/26/2004
Streak 1: 2/2 – 2/5:
Streak 2: 2/11 – 2/14:
Streak 3: 2/25 – 2/28:
Most billed in February, very little unbilled
About half in February’s billed and half in unbilled
Virtually none billed in February, almost all unbilled
Unbilled Energy Calculation Step 1
• Group Monthly billed kWh by
– Rate Class (Residential, Commercial, Industrial, Lighting)
– Meter Read Cycle
– There are 80 groups (4 classes x 20 cycles)
Unbilled Energy Calculation Step 2• For Each Group (class and cycle)
– Determine system load or NSR for each day in the cycle
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12/31/2003 1/31/2004 2/29/2004
Date
Cycle
Cycle 10 – get NSR for each day in the cycle
Unbilled Energy Calculation Step 3• For Each Group (class and cycle)
– Estimate the percentage of NSR before and after the first of the month
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12/31/2003 1/31/2004 2/29/2004
Date
Cycle
40%60%
Unbilled Energy Calculation Step 4• For Each Group (class and cycle)
– Apply the percentages to the billed energy
Example: Cycle 10 for one customer class:
Total Billed Energy = 1,000 MWH
Estimated Billed Energy before beginning of month = 600 MWH (1,000 MWH * 60%)
Estimated Billed Energy after the start of the month = 400 MWH (1,000 MWH * 40%)
Unbilled Energy Calculation Step 5• Sum all groups’ billed energy allocated before
the first of the month. This is the estimated billed energy consumed in the previous month.
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Date
Cycle
February’s Billed Energy allocated to January’s NSR
Unbilled Energy Calculation Step 6• Sum all groups’ billed energy allocated after the
first of the month. This is the estimated billed energy consumed in the current month.
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Date
Cycle
February’s Billed Energy allocated to February’s NSR
Unbilled Energy Calculation Step 7• Sum the daily system loads after the first of the
month. This is the current month’s NSR.
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12/31/2003 1/31/2004 2/29/2004
Date
Cycle
February’s Net System
Requirements
Unbilled Energy Calculation Step 8• Reduce the NSR by an estimated percentage
for system losses.
Unbilled Energy Calculation Step 9• Subtract the billed energy consumed in the
current month from the NSR less load losses. This is unbilled energy.
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12/31/2003 1/31/2004 2/29/2004
Date
Cycle
February’s Unbilled Energy = February’s NSR less February’s billed energy allocated to February’s NSR
Unbilled Energy Example (GWH)
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12/31/2003 1/31/2004 2/29/2004
Date
Cycle
February Billed = 730
Allocated to Jan = 443Allocated to Feb = 287
Feb NSR (less loss) = 707
February Unbilled = 420
Unbilled Revenue Calculation Step 1
• Allocate total unbilled energy to each rate class.– Determine contribution by class based on the
ratio of billed energy consumed in the previous month.
– Apply this ratio to the current month’s total unbilled energy.
Unbilled Revenue Calculation Step 2
• For each rate class– Calculate the $/MWH for all billed energy in
the current month.
• Adjust the $/MWH if needed for any rate changes – including seasonal rate changes (fractionalization).
Unbilled Revenue Calculation Step 3
• Apply the actual billed $/MWH to the allocated unbilled energy by class.
Unbilled Revenue Calculation Step 4
• The sum of the revenue for all classes is the asset “unbilled revenue.”
• The change in asset from the previous month is the impact on earnings.
Summary CalculationUnbilled Summary
Billed 1,000,000System Load 1,200,000Load Loss % 7.0%
Loss 84,000System Load w/Loss 1,116,000
Billed System Load MWHCurrent Previous 600,000Current Current 400,000
Next Current 716,000 <==Unbilled
Unbilled RevenueClass Energy Ratio Rev-Meter Rev-UM Rev-Total $/MWH Allocated MWH Allocated RevenueResidential 200,000 40.0% $30,000,000 $30,000 $30,030,000 $74.00 286,400 $21,193,600Commercial 200,000 30.0% $20,000,000 $200,000 $20,200,000 $59.90 214,800 $12,866,520Industrial 199,000 29.8% $10,000,000 $0 $10,000,000 $35.50 213,368 $7,574,564Lighting 1,000 0.2% $0 $1,000,000 $1,000,000 $150.00 1,432 $214,800Retail Revenues 600,000 716,000 $41,849,484
Questions