fourth ctc reset compliance filing fall 2009 customer meetings
TRANSCRIPT
Fourth CTC Reset Compliance Filing
Fall 2009 Customer Meetings
Background
NMPC already submitted three separate filings to comply with the Merger Rate Plan: First filing on 8/1/2003 with new rates effective 1/1/2004
and 1/1/2005.
Second filing on 7/29/2005 with new rates effective 1/1/2006 and 1/1/2007.
Third filing on 8/1/2007 with new rates effective 1/1/2008 and 1/1/2009.
Fourth compliance filing was made on 8/3/2009 and, if approved, new rates will become effective 1/1/2010 and continue through 12/31/2011.
Disclaimer – This presentation is a summary of the Fourth CTC Reset Filing. Final rates will likely be different than those filed
and are scheduled to become effective January 1, 2010.
Why We Do the CTC Reset
To Reset CTC Rates for updated commodity price forecast Commodity costs are passed on to customers without any
mark-up.
Market commodity costs are recognized in Supply Services on the bill, but forecasted over-market variable costs (OMVC) are included in the CTC rate, based on a forecast of commodity costs.
Every two years, CTC rates are reset so that forecasted OMVC revenues match forecasted OMVC expense.
This reset process is revenue neutral to NMPC but ensures that stranded costs are collected from customers in the manner envisioned by Power Choice.
Why We Do the CTC Reset (continued)
To Adjust Deferral Account Recoveries
The 10 year rate plan allows us to collect or refund money in the deferral account, which tracks expenses that were difficult to forecast, such as storm expenses, pension costs and site investigation & remediation costs.
Rates Are Forecast to Increase in 2010
Commodity prices
Commodity prices are forecast to increase from 2009 to 2010
For CTC rates, the 2010 forecast of commodity prices in this fourth reset is lower than the 2009 forecast of commodity prices in the third reset, creating an increase in over-market costs from 2009 to 2010.
Below-market purchase power agreement with Nine Mile 1 expires in 2009.
Below-market purchase power agreement with Nine Mile 2 is declining in value in 2010.
Cost of the legacy purchase power contracts (non-settling IPP’s) is increasing.
Rates Are Forecast to Increase in 2010 (continued)
The forecast of non-residential billed kW in the fourth reset (2010-2011) is 9% lower than the third reset (2008-2009).
Deferral Account recoveries are forecast to increase $32 million from 2009 to 2010.
Market Price Forecast – NYISO Central Zone Prices
NYISO Central ZoneAll Hours Average Day Ahead LBMP
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
Ja
n-0
4
Ap
r-0
4
Ju
l-0
4
Oct-
04
Ja
n-0
5
Ap
r-0
5
Ju
l-0
5
Oct-
05
Ja
n-0
6
Ap
r-0
6
Ju
l-0
6
Oct-
06
Ja
n-0
7
Ap
r-0
7
Ju
l-0
7
Oct-
07
Ja
n-0
8
Ap
r-0
8
Ju
l-0
8
Oct-
08
Ja
n-0
9
Ap
r-0
9
Ju
l-0
9
Oct-
09
Ja
n-1
0
Ap
r-1
0
Ju
l-1
0
Oct-
10
Ja
n-1
1
Ap
r-1
1
Ju
l-1
1
Oct-
11
$/MWh
4th CTC Reset3rd CTC Reset2nd CTC Reset1st CTC ResetMerger Rate PlanActual
KWh Sales Forecast Summary
Residential Use
9,000
9,500
10,000
10,500
11,000
11,500
12,000
Year
GW
H
Forecast W/N Historic Use
Non-Residential Use Excluding NYPA R&E
17,000
17,500
18,000
18,500
19,000
19,500
20,000
20,500
Year
GW
H
Forecast W/N Historic Use
Residential kWh growth averaged 2.0% annually during the 2000-2005 housing boom.
Since 2005, residential kWh have declined 0.3% per year.
Growth is expected to average just 0.1% per year from 2008 to 2011
This will keep residential kWh below the highs reached in 2005.
General Service kWh ytd decline continues through 2009 but shows solid recovery in 2010 and 2011, averaging growth of 1.1% per year.
Although General Service kWh have growth, total non-residential kWh sales have declined over the long term and remain well below 1990 levels.
Deferral Account Impacts
The Third CTC Reset (2008 & 2009) included $124 million per year of deferral account recoveries.
The Fourth CTC Reset (2010 & 2011) proposes to include $156 million per year of deferral recoveries.
This is an increase of $32 million from 2009 to 2010. Over the two reset years (2010 and 2011), the increase is $64 million in total.
The increase is primarily due to recovery of storm expenses from 2008. The December 2008 Albany storm accounts for $47 million of the two year increase.
Typical Bill Impacts
Refer to filing documents
The following slides are typical bill impacts for the central region:
SC2 Demand
SC3 Primary VDL
SC3A Transmission VDL
SC-2D Typical Bill 2009-2010
SC-3 Primary Typical Bill 2009-2010
SC-3A Transmission Typical Bill
2009-2010
SC-2D Typical Bill 2010-2011
SC-3 Primary Typical Bill 2010-2011
SC-3A Transmission Typical Bill 2010-2011
Filing Schedule
August 3 – Filing Submitted
August 20 – Technical Conference
October – Supplemental Filings (Updates)
December – PSC Order & Compliance
Jan 1, 2010 and Jan 1, 2011 – New Rates