# Presentation: 702624

## Public Information ForumLoveland Area ProjectsProposed 2004 Firm PowerRate AdjustmentRon Steinbach

- July 2003

## Topics

- Fryingpan-Arkansas Power Repayment Study
- LAP Rate Proposal
- Implementation Schedule

## Fry-ArkFY 2002 Expenditures

- O&M					$  3.8 million
- Purchased Power and 			Transmission			$  5.5 million
- Interest on Investment		$  4.2 million
- Interest on 2001 Deficit		$  8.4 thousand
- Payoff of 2001 Deficit		$99.5 thousand
- Investment Repayment		$ 315 thousand

## Fry-ArkFinal FY 2002 PRS Results

- Existing revenue requirement meets all requirements for annual expenses and capital repayment.
- Original investment repaid one year ahead of schedule.
- No rate adjustment is necessary.

## Changes made to the FY 02 PRS for the Preliminary FY 03 PRS

- FY 2005 Work Plans (one additional year) increased previous study solution by 3%
- O&M trend year increased $183k
- Replacements increased $1,441k over the FY 2004 work plan
- Changes to the purchase power and surplus energy sales projections decreased previous study solution by 7%
- Transmission expense projections increased previous study solution by 3%

## Fry-ArkPreliminary FY 2003 PRS(Rate Setting PRS)

- Existing revenue requirement is just short of meeting requirements for annual expenses and capital repayment.
- The lowest possible revenue requirement is $12,857k, which is $2,000 more than the current revenue requirement.
- The original investment is repaid in the year required, 2034.

## Future O&M Expenditures

- 			_Western_	   _Bureau_
- 2003		$789,119	$3,036,241
- 2004		$631,776	$3,147,203
- 2005		$678,902	$3,185,596
- 2006		$697,700	$3,423,773
- 2007		$717,082	$3,927,259
- 2008		$737,067	$3,437,040

## Difference Between FY 03 and FY92 Rate Setting PRS

| 50 years | 1993-2042
(in millions) |
| --- | --- |
| Revenues | $10.7 |
| O&M | $23.9 |
| Purchase Power & WH | $31.7 |
| Interest on Investment | ($50.9) |
| Interest on Deficits | ($30.4) |

- Due to the historical effects of the Final Cost Allocation, interest adjustments were taken in FY 94 and again in FY 96.  These adjustments allowed the deficits to be repaid in FY 96 vs. 2011 as projected in the FY 92 rate setting PRS.

## Slide 9

## Slide 10

## PRESENT REVENUE REQUIREMENT:			$12,855,560

PROPOSED INCREASE (JANUARY 2004):		$                0 Revenue Requirement				$12,855,560

- _PROPOSED INCREASE (JANUARY 2004)_:		_$                0_ Revenue Requirement				$12,855,560

- Fry-Ark

## PRESENT REVENUE REQUIREMENT:
15.80 mills/kWh x 1,988,000,000 kWh			$31,410,400

PROPOSED INCREASE (JANUARY 2004):
2.17 mills/kWh x 1,988,000,000 kWh			$  4,313,960 
	Revenue Requirement				$35,724,360
(17.97 mills/kWh x 1,988,000,000 kWh)

- 15.80 mills/kWh x 1,988,000,000 kWh			$31,410,400
- _PROPOSED INCREASE (JANUARY 2004)_:
- 2.17 mills/kWh x 1,988,000,000 kWh			_$  4,313,960_
- 	Revenue Requirement				$35,724,360
- (17.97 mills/kWh x 1,988,000,000 kWh)

- Pick-Sloan WD

## P-SMBP-WD Revenue Requirement			$35,724,360
Fry-Ark Revenue Requirement				$12,855,560

Total LAP Revenue Requirement			$48,579,920

- Fry-Ark Revenue Requirement				_$12,855,560_
- Total LAP Revenue Requirement			$48,579,920

- Loveland Area Projects

## Capacity:  Recovers 50% of revenue requirement

  ($48,579,920 X 50%) = $24,289,960 	=	$3.14/kWmo
(687.6 MW + 602.2 MW)    (6)   (1,000)

Energy:  Recovers 50% of revenue requirement

  ($48,579,920 X 50%) = $24,289,960	=	11.91 mills/kWh
                2,040 GWh   (1,000)

- _  __($48,579,920 X 50%) = $24,289,960 __	_=	$3.14/kWmo
- (687.6 MW + 602.2 MW)    (6)   (1,000)
- Energy:  Recovers 50% of revenue requirement
- _  __($48,579,920 X 50%) = $24,289,960__	_=	11.91 mills/kWh
-                 2,040 GWh   (1,000)

- Loveland Area ProjectsRate Design

## LAPFirm Power Rate Proposal

- Propose One Step Rate
- Request Comments on Two Step Rate

| 
Proposal | Composite Rate (mills/kWh) | Percent Change | Effective Date | Western Division Rev. Req. (millions) | Fry-Ark Rev. Req. (millions) | Capacity Charge ($/kWmo) | Energy Rate (mills/kWh) |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Current Rates | 21.70 |  | Oct. 1994 | $31.4 | $12.9 | $2.85 | 10.85 |
| One Step | 23.81 | +9.7% | Jan. 2004 | $35.7 | $12.9 | $3.14 | 11.91 |
| Two Step | 23.39
23.84 | +7.8%
+1.9%
+9.7% | Jan. 2004
Oct. 2004 | $34.8
$35.8 | $12.9
$12.9 | $3.08
$3.14 | 11.69
11.92 |

## Public Process Schedule 

- Informal Meetings were held in April
- Public Process
- FRN – Published June 13
- Public Information Forums - July 14-15
- Public Comment Forum - August 6
- 90 Day comment period closes Sept 11
- Record of Decision - November
- Rate Announcement - Nov/Dec
- Implementation of New Rates January 1, 2004

## Methods of Commenting

- Email:  LapFirmAdj@wapa.gov
- Send Hard Copy To:
- 				Mr. Joel K. Bladow
- 				Regional Manager
- 				Rocky Mountain Region
- 				Western Area Power Administration
- 				P.O. Box 3700
- 				Loveland, CO 80539-3003

## Other Information

- Materials for formal process will be posted on Website:
- _[http://www.wapa.gov/rm/rm.htm](http://www.wapa.gov/rm/rm.htm)_
- Contact Dan Payton by Email:
- dpayton@wapa.gov

## Loveland Area Projects

- Question and Answer Session