# Presentation: 772068

## Parker-Davis Project

- Informal Rate Meeting
- June 13, 2007

## Meeting Agenda

- Overview of Parker-Davis Project Rate Methodology and Calculation Assumptions
- Proposed FY 2008 Service Rates
- Comparison to Current Service Rates
- Rate Determinants
- Next Steps and Questions

## Rate Methodology

- Current rate methodology in effect since November 1997 (Rate Order WAPA-75)
- Service rates calculated annually to ensure adequate to recover annual project expenses and capital requirements
- Project costs and other revenues allocated between generation and transmission
- Excess revenues from prior year applied to expenses in current evaluation period

## Calculation Assumptions

- Actual budget data used for O&M expenses in 2008 and 2009.  Budgets increased at 3% for remaining years of rate calculation.
- Most recent 10 Year Plan data from Western and Reclamation used to project capital requirements
- Minimal increase in previous projections of other revenues due to water conditions

## Calculation Assumptions

- Purchase Power requirements will be met by using energy banks so not rate impacting
- Revenue Carryover used to stabilize project rates will be depleted in 5 year window (by FY 2012)

## Proposed FY 2008 Service Rates

|  | Proposed Rate |
| --- | --- |
| Firm Transmission | $1.08/kW-month |
| Energy | 3.32 mills/kWh |
| Capacity | $1.45/kW-month |
| Firm Power Composite w/o Transmission | 6.64 mills/kWh |

## Comparison to Current Service Rates

|  | Current (FY07) | Proposed (FY08) | Change |
| --- | --- | --- | --- |
| Firm Transmission (kW-Month) | $1.08 | $1.08 | - |
| Energy (mills/kWh) | 3.32 | 3.32 | - |
| Capacity (kW-Month) | $1.45 | $1.45 | - |
| Firm Power Composite w/o Transmission (mills/kWh) | 6.64 | 6.64 | - |

## Rate DeterminantsAverage Transmission Expenses During 5-Year Evaluation Period (in millions)

- Total:  $42.6

## Rate DeterminantsComparison of Average Transmission Expenses (in millions)

|  | FY07-11 | FY08–12 | Change |
| --- | --- | --- | --- |
| Western O&M | $17.3 | $17.5 | $0.2 |
| Western General | $4.5 | $4.5 | - |
| CME & Multi-Project | $1.4 | $1.5 | $0.1 |
| P&I | $17.6 | $19.1 | $1.5 |
| Total | $40.8 | $42.6 | $1.8 |

## Rate DeterminantsAverage Generation Expenses During 5-Year Evaluation Period (in millions)

- Rate DeterminantsAverage Generation Expenses During 5-Year Evaluation Period (in millions)

- Total:  $10.8

## Rate DeterminantsComparison of Average Generation Expenses (in millions)

|  | FY07-11 | FY08–12 | Change |
| --- | --- | --- | --- |
| Western O&M | $1.6 | $1.7 | $0.1 |
| BOR O&M | $6.6 | $7.1 | $0.5 |
| Purchase Power | - | $0.1 | $0.1 |
| CME & Western General | $0.5 | $0.5 | - |
| BOR Replacements | $1.5 | $1.1 | ($0.4) |
| P&I | $0.3 | $0.3 | - |
| Total | $10.5 | $10.8 | $0.3 |

## Rate DeterminantsAverage Other Revenue During 5-Year Evaluation Period (in 1,000s)

- Rate DeterminantsAverage Other Revenue During 5-Year Evaluation Period (in 1,000s)

- Total:  $3,994.8

## Rate DeterminantsAverage Other Revenue During 5-Year Evaluation Period (in 1,000s)

|  | FY07-11 | FY08–12 | Change |
| --- | --- | --- | --- |
| Nonfirm Transmission | $977.4 | $980.1 | $2.7 |
| Nonfirm Energy | - | $140.0 | $140.0 |
| Ancillary Services | $64.7 | $38.6 | ($26.1) |
| Miscellaneous | $1,206.6 | $1,056.3 | ($150.3) |
| Multi-Project | $1,650.2 | $1,779.8 | $129.6 |
| Total | $3,898.9 | $3,994.8 | $95.9 |

## Next Steps for P-DP Rates

- Detailed information posted on website:
- 	http://www.wapa.gov/dsw/pwrmkt/RateAdjust/Main.htm
- Proposed rates finalized and effective by 10/1/2007
- Current rate methodology expires 10/1/2008 so full formal rate process will be initiated in FY 2008

## Questions/Comments

- Western Contacts:
- 				Jack Murray
- 				602-605-2442
- 				jmurray@wapa.gov
- 				Scott Lund
- 				602-605-2441
- 				slund@wapa.gov