From an Intervener's Perspectiveby

Matt White

An intervener is a non-utility that participates in a rate case to advocate its interest

Interveners can be Consumer advocates: Government agency

that protects residential customers’ interests Large scale energy users Environmental groups Unregulated electric suppliers

Environmental Safety/Consumer Protection Number one interest

Interveners want to pay less for electricity

Convince the Public Utilities Commission that rates should be lower

Three ways to reduce electric rates Reduce the revenue requirement Shift revenues to another customer class Modify rate design within the class

Revenue Requirement is the amount of money utilities are allowed to collect from consumers through electric rates

Utilities are entitled to recover all of the costs they incur to serve customers (e.g. cost of fuel, labor)

Utilities are entitled to receive a rate of return on all of their assets they use to serve customers Add the value of all a utility’s assets (e.g. power plants,

electric lines) Utilities receive a certain percentage of the value of all

their assets annually

Argue that a utility’s reported costs are too high

Argue that a utility values its assets too high

Argue that a utility’s rate of return should be lowered

Reducing revenue requirements reduces rates for all customers

If revenue requirement is the size of the pie utilities receive from customers

Rate design and class allocation is the method of determining the piece of the pie each customer must pay

Each electric customer is assigned to a class Similar customers are assigned to the same classes Usually residential customers are in the same class,

industrial customers are in the same class, and commercial customers are in the same class

Each class is assigned a certain percentage of the revenue requirement

Each class has a different electric rate design to recover those revenues Rates are higher or lower depending on the class Different charges depending on the class (e.g. fixed

monthly charges, per kWh charges, per kW charges)

Argue that the other classes should pay more of the revenue requirement and argue that your class should pay less

This pits one intervener against the other

The pie also must be divided up amongst each customer in the class.

Rate design determines how much of the revenue requirement each customer pays

Customer’s are allocated their piece of the revenue requirement through the charges they receive on their electric bill

There are generally three types of charges Fixed monthly charge Energy Charge (per kWh) Demand Charge (per kW)

Each customer pays a different percent of the revenue requirement, depending on the type of charge

Example: If in the residential class there is a high fixed monthly charge, and a low energy charge who wins and who loses? Customers with low electric usage lose

because they must pay the high fixed monthly charge no matter what

Customers with high electric usage win because there is a low cost to excess consumption

Know your electric consumption pattern and argue for the charges that cost you the least

If you pay less because the rate design has been changed in your class, other customers in your class pay more

Generally rate cases are a zero sum game

If the utility gets less, customers get more and visa versa (revenue requirement)

If one customer class pays less revenues, another class pays more

If one customer in a class is charged less, another customer is charged more

Those who do not show up to the table (i.e. intervene in a rate case)

The other players will take your chips!!!