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Home My WebLink About023099 ORD - 10/14/1997AN ORDINANCE APPROVING THE REQUEST OF CENTRAL POWER & LIGHT COMPANY FOR A TEMPORARY, SELECT TIME OF USE TARIFF WHICH MAY BE VOLUNTARILY REQUESTED BY CERTAIN COMMERCIAL AND INDUSTRIAL CUSTOMERS, WHICH SHALL NOT RESULT IN ADDITIONAL COSTS FOR OTHER CUSTOMERS WHEREAS, Central Power and Light Company (CPL) has requested approval of a new Select Time of Use Tariff, which is an experimental tariff of limited duration and scope; and WHEREAS, the City Council has held a public hearing on and considered such request. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CORPUS CHRISTI, TEXAS, THAT: SECTION 1. The request of CPL for a new Select Time of Use Tariff, a copy of which is attached hereto as Exhibit A and incorporated herein, is approved, subject to the conditions stated in this ordinance. SECTION 2. The experimental select -time of use tariff approved by this ordinance expires May 31, 1999. After May 31, 1999, all customers participating in the pilot program will be returned to the applicable rate schedule. In order to continue, expand and/or modify the select -time of use tariff, CPL must obtain approval from the City Council. Upon expiration of the pilot program, CPL shall provide a copy of its evaluation of the experiment including any conclusions to the City. SECTION 3. Any revenue shortfall to CPL attributed to the select time of use tariff shall not be the responsibility of other customers and shall be the sole responsibility of CPL. SECTION 4. All costs of the select time of use program, including but not limited to metering, administration, personnel and billing shall be recovered through the $10.00 per month program charge and in no event shall be the responsibility of non -participating customers. MICfUEIL1E,e PETITION OF CENTRAL POWER AND LIGHT COMPANY FOR �' n��91 APPROVAL FROM THE CITY OF CORPUS CHRISTI 1^ RECEIVE? OF A NEW SELECT TIME OF USE TARIFF I pgN'E SEAR E Pursuant to Section 2.101(a) of the Public Utility Reg tory �ct, V / TEX. CIV. STAT. ANN. art. 1446c-0 (Vernon 1997), Central Power a2 91L� Company (CPL) files this petition with the City of Corpus Christi (City), acting in its capacity as a regulatory authority, for approval of a new tariff, SELECT TIME OF USE PILOT PROGRAM, to be effective within the city limits of Corpus Christi. The proposed tariff is attached as Exhibit I. In support of this request, CPL would show the following: I. CPL is an investor-owned utility duly authorized to provide electric service within the City pursuant to a, certificate issued by the Public Utility Commission of Texas. II. CPL seeks to provide this new time of use service to select commercial and industrial customers within the City as a pilot program to gain more information about how customers react to the availability of more pricing choices offered with an easy -to -understand time of use tariff. Attached as Exhibit II is a detailed discussion of the proposed tariff. The tariff is designed to be revenue neutral for each customer, in that it produces the same total annual charges (exclusive of program charges) for a representative level of usage as would be produced under the Company's otherwise applicable tariff. Company will also assure qualifying customers that they pay no more for service under the pilot ExA,b,+ /4 program tariff than they would under the otherwise applicable tariff, regardless of their level of usage. CPL does not seek to change, alter or modify any tariffs presently in effect, but by this filing seeks only to add a new tariff as a pilot program available to select commercial and industrial customers. IV. Because the proposed tariff will be offered on a select basis as a pilot program only following agreement between the Company and customer, CPL does not believe it to be necessary to provide, nor has it provided for, any additional notice beyond that which will be provided by City in acting upon this request. V. CPL requests this tariff be made effective by July 1, 1997, or as soon thereafter as is practicable. VI. CPL's designated agent for service for documents related to this petition is: Richard Byrne Manager of Rates Central Power and Light Company 539 North Carancahua Corpus Christi, Texas 78401 (512) 881-5387 2 WHEREFORE, PREMISES CONSIDERED, CPL requests City to take those actions necessary and within its authority to approve the new rate schedule, SELECT TIME OF USE PILOT PROGRAM attached as Exhibit I, to be effective within the City of Corpus Christi on or before July 1, 1997, or as soon thereafter as practicable. Respectfully submitted, BROYLES & PRATT, P.C. A Professional Corporation Suite 250, One North Point Centre 6836 Austin Center Blvd. Austin, Texas 78731 (512) 794-2100 By W ✓t Larry W. Brewer State Bar No. 02965550 3 THE SELECT -TIME -OF -USE PROGAM PILOT PROPOSAL Submitted By: Central Power and Light Company June 4, 1997 Lf r THE SELECT—TIME-OF-USE PROGAM PILOT PROPOSAL INDEX INTRODUCTION.............................................1 II. DESCRIPTION OF THE S-TOU PROGRAM.........2 III. BENEFITS OF THE PROGRAM ..........................6 IV. IMPLEMENTATION OF THE PILOT.....................7 V. CONCLUSIONS AND RECOMMENDATIONS........8 VI. EXHIBITS. .9 ii S-TOU Pilot Proposal 5 THE SELECT -TIME -OF -USE PROGAM PILOT PROPOSAL EXHIBITS EXHIBIT 1 Proposed Select —TOU Tariff EXHIBIT 2 Derivation of Select —TOU Pricing Elements EXHIBIT 3 Select — TOU Product Options and Peak and Off -Peak Prices EXHIBIT 4 Select — TOU Sample Bill Calculations iii . S-TOU Pilot Proposal THE SELECT—TIME-OF-USE PROGAM PILOT PROPOSAL ABBREVIATIONS. ACRONYMS AND DEFINITIONS BB Base Bill, the customer usage profile priced at the standard tariff rate and fuel cost CPL Central Power and Light Company CSWS Central and South West Energy Services, Inc. CUP Customer Usage profile, a historic load shape representative of the customer's load pattern and level. kW kilowatt kWh kilowatt-hour S—TOU Select Time -of -Use Pricing Program SWEPCO Southwestern Electric Power Company WTU West Texas Utilities Company iv S-TOU Pilot Proposal r THE SELECT—TIME-OF-USE PROGAM PILOT PROPOSAL I. INTRODUCTION This paper describes the Company's proposed Select Time -of -Use (S—TOU) pilot program. The Company is seeking approval to conduct a pilot to test a new pricing program, called Select Time -of -Use (S—TOU). The Pilot will be offered to commercial and industrial customers as an altemative to the standard tariff under which they currently purchase electricity. This document provides an overview of the S—TOU pricing program and a description of how the pilot will be implemented. Additional details of this new price offering are provided in the attached proposed tariff, Exhibit 1 and in Exhibits 2, 3 and 4 which provide details on the derivation of the pricing components that make up the S—TOU offering, the prices proposed for the pilot and a sample bill, respectively. S—TOU is an integrated set of time -differentiated pricing options. Like conventional time -of -use rates, the energy prices in S—TOU vary between designated peak and off-peak periods. Unlike conventional TOU rates, S—TOU offers customers several TOU structures to choose from. In addition, under S—TOU there are no demand charges. S—TOU is a unique rate design that incorporates customer requests for more choices and user-friendly rates, yet utilizes responsible design and marginal cost -based pricing principles. The basic S—TOU service structure involves daily peak hours for the weekdays during the months of June through September. All other hours are designated as off-peak. The S—TOU program will offer customers a choice from among three different peak time periods during which a peak price is applicable, each of which can be matched to one of three choices among combinations of peak and off-peak usage prices. In all, there are nine different time -of -use product options from which to choose. Exhibit 3 provides the pricing and peak definitions for all nine S—TOU product options. The S—TOU pilot will be made generally available to all retail non- residential, non -lighting customers. It is not available in conjunction with any riders, or with supplemental or back-up services. The program is expected to be most attractive to small to medium sized commercial customers and to small to mid-sized industrial establishments — customers with loads between 50 kW and 500 kW. This customer group includes commercial establishments like fast food restaurants and convenience, grocery and department stores. It also includes a wide range of office buildings, municipal service providers, and other institutional customers. A wide range of light manufacturing, fabrication and assembly operations are expected to find S—TOU an attractive altemative to conventional services. S—TOU is designed to provide benefits both to subscribers and to all other customers. S—TOU provides customers much greater choice in electricity service than is currently available through the standard tariffs. Customers that have the ability to shift load from the peak periods to off-peak periods, or to reduce load during the peak period, will find that S—TOU provides strong incentives for such 1 S—TOU Pilot Proposal 3 behavioral changes. In addition, under S—TOU the customer has the opportunity to expand his operations and consume additional amounts of electricity at attractive prices off-peak. The nine S—TOU product options are designed to meet the needs of a diverse customer population, needs that can not be adequately met through a uniform rate structure. Almost any eligible customer could conceivably benefit from the program, if not by taking actions to change operations in the short -run, then by making changes to operations and undertaking behavioral changes over the longer run. But, how much any individual customer or class of customers will benefit depends on behaviors that have not been fully documented or catalogued. The goal of the Pilot is to discover exactly how much flexibility customers have, and to design services that unlock the inherent Toad management potential. I1. DESCRIPTION OF THE SELECT TIME -OF -USE PROGRAM The S—TOU program offers customers a choice among three time periods during which peak prices are applicable to energy consumption, and a choice among three combinations of peak and off-peak prices. The peak period choices are 3 p.m. to 7 p.m. (a four hour peak window), 2 p.m. to 8 p.m. (a six hour peak window), or 1 p.m. to 9 p.m. (an eight hour peak window). Each of these peak windows applies only to the weekdays, excluding holidays, during the months of June, July, August and September. Exhibit 3 displays the S—TOU product options, combinations of the peak window choices, and corresponding peak/off-peak price combinations. In the Exhibit, the S—TOU product options are designated by letters (A,B,...,l), a convention followed in the discussion below. Under S—TOU, customers choose from among three choices of peak and off-peak prices that apply to energy usage during the selected time periods. The customer can choose from two extreme price options, either a low peak and high off-peak price or a high peak and lower off-peak price, or select the middle option which lies between the extremes. He also can choose between wide or narrow peak windows, or take a window between the two extremes. The resulting nine product options are combinations of peak windows and peak and off-peak prices for consumption. The nine S—TOU products reflect trade-offs between the number of hours of peak price exposure, and how high the peak price is during that period of exposure. Comparing the cells -of the S—TOU 'price matrix' in Exhibit 3 provides insight into the underlying pricing and peak exposure pattems. For any choice of peak window size, the peak price increases as the customer moves across the price columns from low to high. For example, in the 3 p.m. to 7 p.m. peak window (the first row of the price matrix) the peak price increases from a low price of 8.2 cents per kWh for product option A to a high of 11.8 cents per kWh for product option C. Moving down a column illustrates the effect of changing window sizes. Keeping the peak price constant, for example at 8.2 cents, and moving down the columns decreases the off-peak price from 3.35 cents at its highest for product option A to 3.15 cents at its lowest for product option G. Comparing product option prices in this manner points out the diversity S—TOU offers, and it demonstrates how these prices are integrated to reflect the changes in the underlying costs of providing service under the different product options. 2: S—TOU Pilot Proposal 61 1 0 T Who Benefits? Customers will be offered the opportunity to select from the nine S-TOU product options and to choose the one that best fits their individual circumstances—their individual consumption profile and load management capabilities. For example, the customer could select product option A which offers 8.2 cents per kWh during the peak hours of 3 p.m. to 7 p.m. (during the months of June through September) and 3.35 cents per kWh during all other hours. Product option A offers the lowest peak price and has the fewest hours designated as on - peak. The Company expects that this option will appeal to customers who anticipate opportunities to expand loads and therefore select the lowest relative prices. The benefits to customers who might expand their operations in response to prices are obvious. Customers who are able to manage their loads also stand to gain from S-TOU subscription. These could choose product option I which offers the highest load management benefits in the form of the highest peak price, 11.8 cents per kWh, and the longest designated on -peak period, 8 hours. In addition, under product option I, the load management -oriented customer pays only 2.80 cents per kWh for all consumption of electricity during the off-peak period. The resulting price differential (9.0 cents/kWh) is the highest available among the nine product options, and offers a strong inducement to customers to shift load. S-TOU is not just beneficial to customers with opportunities for either expansion or load management. The other S-TOU product options support mixed strategies for customers who may want to expand, but at other times want incentives to shift loads. It also accommodates customers with more rigid processes and usage patterns, who are not able to shift loads over long hours, but who can still exercise some discretion and control over their usage and want an opportunity to earn savings. Many customers with the ability and willingness to undertake load changes are denied that opportunity under conventional, one - structure -fits -all rate designs. S-TOU product options open up opportunities for bill savings for a significant number of the Company's customer population. It encourages customers to join up and try out their load shifting ideas at little risk, but with substantial opportunity for benefit Billing For many customers, S.: TOU offers easier to understand billing. Once the customer selects one of these S-TOU product options, calculating the bill is simpler than under most standard rates. The S-TOU bill is comprised of three components: • - the delivery charge, • - the energy charge, and • - the program charge. The delivery charge is a fixed monthly assessment that the customer pays regardless of his current level of usage. It is set individually for each customer. The delivery charges are discussed in greater detail below. The energy charge is the summation of the peak and off-peak energy charges. The off-peak energy charge is calculated by multiplying the customer's metered kWh consumption in the off-peak period by the product option's off-peak price. The peak energy charge is calculated by multiplying the customer's 3 S-TOU Pilot Proposal I ii metered kWh consumption in the peak period by the product option's peak price. The applicable peak period hours and the peak and off-peak pnces correspond to those of the S—TOU product option the customer selects. The program charge recovers the added cost of serving the customer on the program, including metering, billing and administration. This charge will be added to the monthly bill. Isolating incremental product service costs and recovering them directly from subscribers through the program charge protects non -participants from any cost increases resulting from the introduction of S—TOU. A sample S—TOU bill calculation is shown on Exhibit 4. How a customer's bill changes under S—TOU depends upon how he responds to the incentives built into the product option he chooses. S—TOU is configured at subscription so that the customer's S—TOU bill (minus the program charge) will be identical to what it would be under the otherwise applicable standard tariff rate if the customer's consumption patterns and levels do not change from his historic usage profile. As a result, if the customer's level of usage of electricity during the peak and off-peak periods is exactly the same as what he consumed in the historical reference period, his total S—TOU bill (minus the program charge) will not be different than what it would have been on the standard tariff. The Company proposes to establish a customer usage profile (CUP) for each subscriber based on recent consumption levels and patterns. By design, if the customer's usage deviates from his CUP, his bill will vary from the amount that he would have paid for the same usage under the standard tariff. Using more or less energy during the peak and off-peak periods will cause the S—TOU bill to change, but only by the amount of those applicable charges. A key feature of the S—TOU product design is the absence of demand charges. If the customer expands usage, he will not pay an incremental demand charge. Instead, he pays only for the added kWh at the peak or off-peak price, whichever is applicable. Conversely, bads shifted or shed do not result in demand charge credits, just savings in proportion to the marginal cost -based peak or off-peak energy price. S—TOU offers customers straight -forward energy prices for consumption, and these prices incorporate the underlying costs of providing services, including peak premiums that encourage load shifting and shedding. The off-peak and peak energy prices are set using --recent studies of the Company's hourly marginal costs, adjusted to reflect the relative risks borne by the Company. Details on the methodology and procedures used to set each of the energy prices are provided in Exhibit 2. More on the Delivery Charge The delivery charge is the amount of revenue that must be collected to assure that, if loads do not change from the CUP level and profile, the S—TOU bill is equivalent to the Base Bill, absent the program charge. The S—TOU customer - specific delivery charge is established at the beginning of subscription and assessed as a fixed fee on the each month's bill. The delivery charge is calculated as a residual, the difference between an established Base Bill and the energy cost of the CUP. Under S—TOU, the Base Bill is the customer's CUP billed at the standard tariff rate and fuel costs. The 4 S-TOU Pilot Proposal delivery charge is the customer's Base Bill minus the total of the customer's CUP - based energy charge calculated using the S—TOU off-peak and peak prices of the product option chosen by the customer. This calculation will be performed for all the bill cycles in the subscription period and S—TOU bills contain one -twelfth of that amount. Pilot Treatment of the Delivery Charge Company proposes to waive the delivery charge lower limit for the pilot and instead require only that the delivery charge be non -negative. This less stringent provision ensures that customers have access to as many product options as possible, including those product options that promote Toad management. The Pilot will allow the Company time to more accurately measure the cost of serving transmission and distribution services in an unbundled manner, and to reformulate the S—TOU product design to maximize the choices available to all customers. Because the delivery charge is calculated using each customer's CUP and the product option he selects, the delivery charge will be unique to each customer. If the customer chooses the wide, eight-hour peak period, with a high peak price of 11.8 cents, which is product option I, the delivery charge amount will likely be less than if he chose an altemative product option with lower peak prices applied to narrower peak periods, like product option A. The residual revenue to be collected through the delivery charge will be greater for product option A because less of the Base Bill revenue will be allocated to the peak energy charge, due to product option A's lower peak price and shorter peak window. Is S—TOU Cost Based? The S-TOU design, while employing new concepts and ideas, is still cost - based. Usage prices for S—TOU product options are based on the marginal costs incurred by the Company to produce or acquire and deliver electricity. Program and delivery charges directly assess each subscriber his fair share of embedded and incremental service costs. The energy charges are based on the marginal costs of serving customers on the Company's system, and are described in Exhibit 2.The cost of fuel used to serve energy to the S—TOU customers will be treated in a manner consistent with the substantive rules of the Public Utility Commission of Texas. Fuel Cost Treatment The energy charges under S—TOU incorporate a fuel cost that recovers fuel at the rates prescribed by the Public Utility Commission of Texas. Changes in those prescribed fuel costs will result in corresponding changes in the S—TOU energy charges. By design, each S—TOU product option is revenue neutral with respect to the customer's CUP priced out at prevailing tariff rates. By construction, the S—TOU rate is designed on the same cost basis as the standard tariff, and therefore it is itself cost -based and consistent with accepted rate -making principles. III. BENEFITS OF THE PROGRAM TO CUSTOMERS AND COMPANY Both participating and non -participating customers will benefit from the 5 S—TOU Pilot Proposal 1 S—TOU program. For participating customers, S—TOU blends the best aspects of RTP and time -of -use product structures. It provides customers with access to marginal cost -based, demand -free, off-peak prices during most hours of the year (between 93% and 96% of the hours are off-peak depending on the altemative chosen by the customer). Moreover, S—TOU limits higher peak prices to known levels which occur at established times, i.e. the S—TOU peak period chosen by the customer. Therefore, S—TOU eliminates price risk resulting from prices that are formula based, that can reach levels of $1.00 per kilowatt-hour (or higher) for several hours, and that are known and delivered only one day in advance. S—TOU is designed to appeal to customers currently served under standard rates with demand charges. It offers them the chance to convert the demand charge into their chosen combination of a delivery charge and peak/off-peak prices, and they are given a wide choice among product options. These price signals will give the customers with growth potential the opportunity to expand their utilization of electricity in the most efficient manner. Customers looking for assured opportunities to shift and lower their bill will find predictable peak prices. Customers who pursue a mixed strategy, or need to accommodate special usage circumstances will also find a product option that offers greater value than their existing service. The S—TOU product line offers many opportunities for participating customers to try out Toad management strategies at little risk. S—TOU expands the choices available to customers. It provides a fixed/variable pricing structure, it eliminates the demand charges, and it provides stable energy prices. This important design compromise will allow far more customers to take service under marginal cost -based rates that lead to greater efficiency of system utilization. Customers that do not participate in this pilot stand to benefit and they will certainly not be harmed. The S—TOU pilot program, by introducing a wide range of choices, sets the stage for future opportunities for all customers, even if they choose not to participate in the pilot. Revenue neutrality, the program charge, and the treatment of fuel expense protect customers from adverse impacts from the Company's implementation of the S—TOU Pilot. The Company also benefits from S—TOU by providing customers with meaningful choices priced at marginal cost. The Company proposes this new Pricing program in response to the expressed needs of its commercial and industrial customers for alternatives to the existing prescribed standard rates. The development, marketing, and implementation of innovative programs like S—TOU allows the Company to respond to customer requests for choices and provides the Company valuable experience in offering customers new electricity products and prices. Also, the S—TOU program is consistent with the Company's strategy to design prices that better reflect marginal costs. Marginal cost -based pricing encourages efficient consumption decisions on the part of the customers and provides incentives to the Company to maintain its high standards in managing costs. IV. IMPLEMENTATION OF THE PILOT The Company will implement the pilot as soon as it receives approval. Interested customers will be briefed on the product options to help them decide whether they want to participate, and if so which product option best fits their 6 S—TOU Pilot Proposal !3 needs. Where needed, sample bills will be prepared to help customers compare behaviors under S-TOU with the standard rates. If the customer wants to participate in the pilot, the Company will ask for a commitment of one year of participation. In return for this commitment, the Company will assure all customers participating in the pilot, absent the program charge, that their total annual bills under S-TOU will not be any higher than they would have been under their standard rate. The guarantee is as follows: The Company will credit to the S-TOU subscriber's account any positive amount determined by: 1) the total dollar amount of all bills issued to the subscriber for service under S-TOU during the contract year, less the program charges, minus 2) the total dollar amount derived by rendering bills on the same metered usage, using the other applicable tariff and billing provisions of the tariff under which the customer was taking service immediately prior to initiating service under S-TOU. Additional conditions and provisions include: 1. Customer must complete one full contract year of service under S-TOU; 2. The determination of the amount of any such credit shall be made by the Company, and any applicable credit shall be made to the account of the customer, within 30 days of the expiration of the customer's annual service contract; 3. The guarantee is not applicable to any customer who does not complete the full obligations of the annual S-TOU contract executed by the customer as a condition for taking service under S-TOU; 4. The guarantee is applicable only to single customer accounts served through one meter. The Company proposes to limit participation in the pilot to 100 customer accounts. This is to ensure that the Company is able to provide adequate support to customers who want to evaluate the benefits of subscription, and to install the meters for all participants in a timely manner. The Company proposes to allow customers to initiate a full year of service under S-TOU up until May 31, 1998, provided that the 100 subscriber limit has not been exceeded. All customers subscribing during that period will be provided with a full year of service at the prices and under the provisions of the product option they select upon subscription. The energy prices in the tariff shown in Exhibit 1 will be offered to all subscribers for one year of S-TOU service under the Pilot Provided that the pilot verifies the benefits anticipated from S-TOU, the Company plans to file for approval of a permanent and expanded S-TOU program offering. During the pilot, the Company and the participating customers will work together to test this new pricing concept and to identify improvements that need to be made prior to expanding program offerings. Based on the progress made during the pilot phase, the Company may file a request for expanded S-TOU availability under a revised tariff before the Pilot is over. V. CONCLUSIONS AND RECOMMENDATIONS The Company is assembling a list of commercial and industrial customers that would likely be interested in the program. Many of these customers were contacted and invited to attend product briefings held in late April and early May. During these briefings the S-TOU program was described. The meetings went S-TOU Pilot Proposal well with most customers expressing an interest in participating in the program. The Company is encouraged that customers value S—TOU features and easily recognize how they can benefit from subscription. The Company seeks permission to conduct the S—TOU pilot beginning when the tariff is approved for service and ending no later than May 31, 1999. I5 8 S-TOU Pilot Proposal VI. Exhibits S—TOU Pilot Proposal 143. EXHIBIT 1 S-TOU Tariff 17 10 S-TOU Pilot Proposal i CENTRAL POWER AND LIGHT COMPANY TARIFF FOR ELECTRIC SERVICE Applicable: Cities of Corpus Christi, Harlingen, McAllen, and Victoria Section: B Sheet: 32 Page 1 of 5 Section Title: Rate Schedules Revision: New Effective Date: SELECT TIME OF USE (S-TOU) PILOT PROGRAM Exhibit 1 AVAILABILITY This Select Time of Use (S-TOU) Pilot Program rate schedule is available as a pilot program to a maximum of 100 retail non-residential, non -lighting customers for one year of electric service at the sole discretion of the Company. This schedule will be available to customers who execute a rate change endorsement initiating service within 12 months of the effective date of this rate schedule. This schedule will be available to the customer for a period of twelve months. This schedule will not be offered to new customers after 12 months from the effective date of this schedule. Upon termination of the customer's participation in the Pilot Program, the customer will be returned to the applicable standard rate schedule, such that usage under the S-TOU rate schedule will not affect the customer's billing determinants upon return to standard rate schedules. This schedule is not available for resale, stand-by, maintenance, auxiliary, temporary, or supplemental service. Once this service is selected, service will continue to be supplied under this schedule for twelve consecutive months. TYPE OF SERVICE Service will be supplied at one delivery point and shall be at one standard voltage. A written contract may be required at the Company's option. TERMS AND CONDITIONS Service will be furnished under the Company's Service Rules and Regulations, Section D, except as modified herein. CUSTOMER USAGE PROFILE (CUP) The Customer Usage Profile (CUP) is twelve months of hourly energy usage and billing demands, typically derived from historic billing files that represent the electricity consumption pattern and level typical of the Customer's operation under the standard nate schedule, including any applicable riders. The CUP must be agreed to by both the Customer and the Company as representing the Customer's usage pattern under the standard rate schedule and applicable Riders. Agreement to the CUP is a condition for participation in the S-TOU pilot program. A standard rate schedule must be designated for calculation of the monthly base bilL DEFINITION OF SEASONS AND PERIODS 0 CENTRAL POWER AND LIGHT COMPANY Exhibit 1 TARIFF FOR ELECTRIC SERVICE Applicable: Cities of Corpus Christi, Harlingen, McAllen, and Victoria Section: B Sheet: 32 Page 2 of 5 Section Title: Rate Schedules Revision: New Effective Date: SELECT TIME OF USE (S-TOU) PILOT PROGRAM Seasons The On -Peak Season is defined as the calendar months of June, July, August, and September. The Off -Peak Season is defined as the calendar months of October through May. Periods All hours in the Off -Peak season are Off -Peak hours. The On -Peak season contains a Peak and an Off -Peak period. The customer will select one of the available Peak periods. The Peak Periods are: Narrow Window: 3:00 p.m. through 7:00 p.m. weekdays (four hours); Standard Window: 2:00 p.m. through 8:00 p.m. weekdays (six hours); Wide Window: 1:00 p.m. through 9:00 p.m. weekdays (eight hours). The Off -Peak period includes all hours not listed above as Peak. Independence Day (July 4) and Labor Day (as observed), are excluded from the Peak period. MONTHLY PRICES The customer shall select one Window - Pricing combination from the following matrix: S-TOU Peak and Off -Peak Enerav Price Matrix Peak Period Peak and Off -Peak Prices Narrow Window 3 p.m. - 7:00 p.m. PP = 8.20 0/kWh Po = 3.35 0/kWh Pp = 9.70 0/kWh Po = 3.30 0/kWh Pp = 11.80 0/kWh Po = 3.20 1/kWh Standard Window 2 p.m. - 8:00 p.m. PP = 8.20 ¢/kWh Po = 3.25 ¢/kWh Pp = 9.70 0/kWh Po = 3.15 0/kWh Pp = 11.80 0/kWh Po = 3.00 it/kWh Wide Window 1 p.m. - 9:00 p.m. PP = 8.20 0/kWh Po = 3.15 0/kWh Pp = 9.70 0/kWh Po as 3.00 0/kWh Pp = 11.80 0/kWh Po = 2.80 ¢/kWh Pp is the pnce during the peak hours; Po is the price during the off-peak hours. Each Window - Pricing combination is a distinct pricing structure and the corresponding quoted energy price is applicable to energy consumption during the applicable peak or off-peak period during the entire term of the customer's participation in the Pilot Program. The above prices in- clude the applicable fuel component contained in Tariff Sheet No. 24, Section B: Rate Schedule, as of the effective date for this tariff and that component of the above prices is subject to change, 19 CENTRAL POWER AND LIGHT COMPANY TARIFF FOR ELECTRIC SERVICE Applicable: Cities of Corpus Christi, Harlingen, McAllen, and Victoria Section: B Sheet: 32 Page 3 of 5 Section Title: Rate Schedules Revision: New Effective Date: SELECT TIME OF USE (S-TOU) PILOT PROGRAM Exhibit 1 refund and surcharge according to the provisions of Tariff Sheet No. 24, Section B: Rate Sched- ule, other schedules that may become applicable to the recovery of fuel costs, and pursuant to the fuel rule of the Public Utility Commission of Texas. MONTHLY BILL For each monthly billing period, the customer will be charged according to the following formula: Monthly Bill = EC + DC + Pgm Where: EC = Energy Charge; DC = Delivery Charge; Pgm = Program Charge. Enema' Charge (EC) The Energy Charge is a charge for energy usage during the billing period based on the Window - Pricing combination selected by the customer. The Energy Charge is calculated using the following formula: Where: EC = (kWh,x P,) + (kWhp x Pp) kWh, = A customer's current actual off-peak kWh usage in the month; kWhp = A customer's current actual on -peak kWh usage in the month; P. ` = The applicable off-peak S-TOU price for the month; Pp = -The applicable on -peak S-TOU price for the month. Note that P. and Pp contain a fuel cost component that is subject to change, refund, and surcharge as specified in the MONTHLY PRICES section of this rate schedule. Delivery Charge (DC) CENTRAL POWER AND LIGHT COMPANY Exhibit 1 TARIFF FOR FT.FCTRIC SERVICE Applicable: Cities of Corpus Christi, Harlingen, McAllen, and Victoria Section: B Sheet: 32 Page 4 of 5 Section Title: Rate Schedules Revision: New Effective Date: SELECT TIME OF USE (S-TOU) PILOT PROGRAM The monthly Delivery Charge is designed to achieve revenue neutrality with the customer's standard rate schedule and CUP. The Delivery Charge is calculated using the following formula: DC = (Base Bill - [(kWh, x P,) + (kWh, x P,)]} + 12 months; subject to: DC Z $0. Where: DC = Monthly Delivery Charge; Base Bill = Annual CUP billed under the standard rate schedule and riders; kWh., = A customer's CUP off-peak kWh usage for the 12 month period; kWh, = A customer's CUP on -peak kWh usage for the 12 month period; P, = The applicable off-peak S-TOU price for the 12 month period; P, = The applicable on -peak S-TOU price for the 12 month period; Program Charge (Pgm) A monthly program charge will be assessed to cover the additional metering, administration, and billing costs associated with participation in the S-TOU pilot program. The Program Charge is $10.00 per month. S-TOU PILOT PROGRAM GUARANTEE The Company will credit to the S-TOU subscriber's account any positive amount defined by the difference between: 1) the total dollar amount of all bills issued to the subscriber for service under S-TOU during the contract year less Program Charges; minus 2) the total dollar amount defined by rendering bills on metered usage during the contract year using all other applicable tariff and billing provisions of the rate schedule and riders designated by the customer in his S-TOU rate change endorsement. Additional conditions for the guarantee to be effective include: 1. Customer must complete one full contract year of service under S-TOU; 2. The determination of the amount of any such credit shall be made by the Company, and any applicable credit shall be made to the account of the customers, within 30 days of the expiration of the customer's annual service contract; 3. The guarantee is not applicable to any customer who does not complete the full obligations of the annual S-TOU contract executed by the customer as a condition for taking service under S-TOU; The guarantee is applicable only to single customer accounts served through one meter. al CENTRAL POWER AND LIGHT COMPANY Exhibit 1 TARIFF FOR F.I.FCTRIC SERVICE Applicable: Cities of Corpus Christi, Harlingen, McAllen, and Victoria Section: B Sheet: 32 Page 5 of 5 Section Title: Rate Schedules Revision: New Effective Date: SELECT TIME OF USE (S-TOU) PILOT PROGRAM ADJUSTMENTS TO BILLING Base Rate Fuel Costs and Gross Receipts Fee Adjustment The above rate is subject to the provisions of Sheet Nos. 24 and 25, Section 13: Rate Schedule, of the Company's tariff manual. Voltage Adjustment Customers subscribing to S-TOU shall receive service at the same voltage class that service was provided under the standard rate schedule, and the customer will continue to be responsible for installing, owning and operating, or leasing from the Company, all facilities necessary for taking service at the stated voltage. When service is metered at a voltage level other than that standard rate schedule service voltage, both the metered kW and kWh will be adjusted for all billing purposes as follows: 1) When service is provided at the line side voltage, but is metered on the load side of the transformation facilities, 2% will be added to both readings to compensate for transformation losses. 2) When service is provided at the load side of the voltage, but is n}etered on the line side of the transformation facilities, 2% will be subtracted from both readings to compensate for transformation losses. MINIMUM MONTHLY BILL The mininnrm monthly bill will be the -Delivery Charge and Program Charge plus applicable fees and taxes. Exhibit 2 DERIVATION OF THE S—TOU PRICING ELEMENTS 1 S-TOU Pilot Proposal OZ DERIVATION OF THE S-TOU PRICING ELEMENTS The Select-TOU (S-TOU) pricing program replaces the standard tariff billing determinants with three major pricing elements: a Delivery Charge (DC), an Energy Charge (EC) and a Program Charge (PC). The DC is a fixed monthly amount that the customer will be billed regardless of the amount of electricity consumed. The EC is the summation of the peak energy charge (metered peak kWh priced at peak prices) and the off-peak energy charge (metered off-peak kWh priced at off-peak prices). PC is a fixed monthly amount billed to the customer to recover the incremental costs of operating the program. The derivation of each of these pricing elements is described in this exhibit. Customer Usage Profile The S-TOU product line is designed to be revenue neutral at a customer's pre -specified usage profile priced at the otherwise applicable tariff. The load basis for establishing the S-TOU pricing elements for each customer is the Customer Usage Profile (CUP). The CUP includes hourly energy usage levels in sufficient detail and monthly billing demands to represent the electricity consumption pattern and level typical of the customer's operation under the standard rate schedule, and to determine peak and off-peak charges under the altemative peak window options under S-TOU. The CUP is developed based upon the customer's hourly energy and demand consumption for the most recent twelve month period under the standard tariff. In many cases, historic hourly data are available to establish the hourly energy of the CUP. However, for most customers to whom S-TOU is intended to apply no metered hourly Toad profile will be available prior to their subscription to S-TOU. The Company is developing Toad shape matching procedures and a load shape library that will facilitate matching the prospective subscriber's business and usage characteristics with those of others with similar characteristics. The Company will consider the customer's actual end-use energy consumption based upon billing history, electric equipment used, hours of operation, shift patterns, and load factor. In addition, the Company may use the hourly load shapes of similar customers as a guide to developing an appropriate CUP. Once a good profile match has been made, the customer's billing data will be reconciled with those of the synthesized load shape to provide the CUP needed to evaluate the benefits of S-TOU, and to subscribe the customer to the S-TOU pilot. Whether native load data are available or a load shape must be synthesized, the Company will attempt in good faith to reach an agreement on an appropriate CUP with every customer interested in subscribing to S-TOU. a4 S-TOU Pilot Proposal Base Bill The Base Bill (BB) is developed for each billing period in the customer's S—TOU service contract. Typically, there are 12 billing cycles in an annual contract. The BB is determined by applying the usage rates and other terms and conditions of the tariff, under which the customer would otherwise be taking service, to the corresponding CUP billing determinants. In calculating the BB, the tariff rates and provisions applicable at the time the customer initiates S—TOU subscription are used in each billing month of the contract year. Fuel costs for the Base Bills are calculated using the most recently approved methods and rates for fuel cost accounting. The Base Bill is used only to establish the delivery charge that is assessed to in billing period. Energy Prices The S—TOU product line offers customers altemative combinations of peak periods and altemative peak and off-peak prices, resulting in nine different product options. The basis used for deriving the peak and off-peak prices is the Company's estimated marginal costs. Marginal energy and capacity costs are estimated for each hour of the year using a production -costing method. For the pilot, the Company proposes to use marginal cost estimates made for 1998, since the pilot begins the summer of 1997 and runs through May, 1999. Marginal costs are estimated through the summation of the components shown below. MCh = [MECh + MOCh + NFVOM] *LAF. where: MCh = marginal cost in hour h, MEC = marginal energy costs in hour h, MOC = marginal outage cost in hour h, NFVOM = non -fuel variable O&M, and LAF = loss adjustment factor. Using these marginal costs as a basis, combinations of peak and off-peak prices were established for each of the S—TOU product options. The nine proposed S—TOU product option prices are provided in Exhibit 3. Derivation of Peak Prices The peak price for each of the peak windows (4, 6 and 8) was calculated as the average of the marginal costs (MCh ) for the hours falling in the window. For example, the peak price for the four hour window, the 336 hours between 3 p.m. to 7 p.m. in the months of June through September 1998 is calculated as the simple average of the forecast hourly marginal costs during those hours. Using the Company's forecast of 1998 marginal cost, the low peak price is $.082/kWh. Peak prices for the six hour window ($.097/kWh), the 506 hours between 2 p.m. to 8 p.m., and for the eight hour window ($.118/kWh), the 676 hours between 1 p.m. to 9 p.m., were derived in the same manner. 3 S—TOU Pilot Proposal • Derivation of Off-peak Prices The off-peak price is defined as the price for electricity used (kWh) during all hours of the off-peak period. The base for determining the off-peak price for each product option is the average hourly marginal cost for those hours that are defined as being off-peak. Base off-peak prices were adjusted first to account for risks, and then to equate product revenues among product options. A detailed explanation follows. The price for each product option is determined following a fixed formulation. For example, Product Option C is the 4 -hour peak window with the peak price set at P8 = 11.8 cents/kWh, the average marginal cost during the hours of the eight-hour peak window. The equivalent off-peak price using the same methodology would be 1.76 cents, the average marginal cost over all the 8428 non -peak hours in Product C. This is the base price. It was then adjusted to cover risks by raising it by a factor of 1.8, resulting in the final product option C off-peak price of 3.20 cents/kWh (see Exhibit 3 for all the product prices). Off-peak prices for product options E and G, the other products on the reverse diagonal of the product matrix (Exhibit 4), were set using the same methodology. The average off-peak marginal costs for product options E and G were both 1.73 cents/kWh (after rounding), which results in a final price of 3.15/kWh cents after it is multiplied by the 1.8 risk adjustment factor. For the three products along the reverse diagonal, products C,E and G, the peak prices are the average hourly marginal costs for the hours in the peak. The off peak - prices for all three products are the risk adjusted average marginal costs of the off- peak hours. All of the remaining off-peak prices, for Products A,B,C,E,H, and I, reflect not only the marginal costs adjusted for risks, but also include an adjustment so that products in the same row collecting exactly the same revenue from a 100% load factor load of any size. Since the peak prices change as one moves across a row of products, so does the peak revenue. If the products in a row are to be balanced so that the prices will produce an equal amount of revenue from adding a single kilowatt to every hour of the year, then the off-peak charges must be adjusted to realize that revenue equality condition. In the first row, moving left from product option C to product option 6, the peak price falls from 11.8 to 9.7 cents per kWh. The peak price decrease results in a reduction in peak revenue from product option B relative to product C for a load of 1 kWh in every hour of the year (a 100% load factor load). To bring the total product revenue of B back equal to that of product option C for a 100% load factor, the off-peak price was increased from the 3.20 cents/kWh product option C to 3.30 cents/kWh in product option B. Now, these two products produce equal revenues for any 100% load factor load. In product option A, the peak price decreases to 8.2 cents/kWh, requiring that the off-peak price of A to be increased another 0.05¢ to 3.35 cents/kWh to meet the 100% load factor revenue equality condition. As a result, Product Option A produces the same revenues as product options B and C for a 100% load factor load. Off-peak prices for the second and third row products were developed following the same formulation. As a result of this formulation, all product options produce identical revenues for 100% load factor loads. All product options are equally attractive to adding or reducing a uniform load. But, the prices offer 4 S—TOU Pilot Proposal different incentives for shifting load and adding loads, which yield meaningful product choices that will appeal to a wide variety of customer circumstances. The total energy charge that will be billed to the customer is: EC= (Ppx kWhp)+(P,xkWh)) Where: EC = total energy charge P, = peak price P, = off-peak price kWh, = metered peak kWh kWh, = metered off-peak kWh Delivery Charge and Delivery Charge Lower Limit The delivery charge is the residual revenue that is recovered from the customer after subtracting the baseline energy charge, i.e. the baseline energy price out at the chosen energy price subtracted from the Base Bill, or DC = BB -ECa,p where: DC = customer's delivery charge. The delivery charge lower limit in the S—TOU design is set for each customer as the estimated embedded costs for providing customer, transmission and distribution services. This is estimated using the class customer costs and unitized T&D costs from the most recent Commission approved embedded cost of service study. The formula for calculating the delivery charge lower limit is as follows: DC (LL) = C + { W ,,w •(Q ,kw x U kw) } + where: DC(LL) = C = Ukw = Ukwh = Q kw = Qkwh = W kw = Wkwh = { W kWh •(Q kwh x U kWh) } the customer's delivery charge lower limit the class customer -related cost, the class -level unitized demand -related cost of T&D , the class -level unitized usage related cost of T&D, and the class level customer's baseline level of demand (in kW), the customer's baseline level of usage (in kWh), the class level demand revenue weight, and the class level energy revenue weight. The demand related cost calculation is weighted by the percent of the customer's Base Bill that is collected through demand charges ( W,N„). Likewise, the usage related cost calculation is weighted by the percent of the customer's Base Bill that is collected though volumetric charges (Wk„,, ). This adjustment keeps fixed and variable proportions of the T&D charge consistent with how the standard bill is calculated. For the proposed pilot, the Company proposes to waive the delivery charge lower limit. S—TOU Pilot Proposal a7. Program Charge The program charge will be established to recover the incremental cost of providing metering and billing services and administering the S-TOU to the subscribing customers. Calculation of the Total Bill The total bill for each pricing product is then the sum of the individual components, i.e., delivery charge and energy charge and program charge as follows: S-TOU Bill = DC + { (Po x kWhp) + (P, x kWh,) } + PC 6 S-TOU Pilot Proposal Exhibit 3 S—TOU PRODUCT MATRIX AND PEAK AND OFF-PEAK ENERGY PRICES S-TOU Product Options Are Designated by Capital Letters fh, r�,e r.;�p, np'(,• ', "esu;'' )Peak Window." Spm =;7pm apd+:+ S-TOU Peak Pncc_r r„ a, ' (cents/kWh) c i" t° • '� ., ow Medium .,:..; High ;... 114:i'..::::',' •} P:=28.20 P,= 9.7d P' =11.81 A B C lr.j2pm = 8pm` = 3.350 Pc = 3.30d Po = 3.20¢ D E F Po = 3.25c Pc = 3.150 Po = 3.00d G Po = 3.15¢ 11 Po = 3.00¢ Po = 2.80¢ 7 S-TOU Pilot Proposal S-TOU SAMPLE BILL CALCULATION III ON \ \ 0 \cs cos Bill Component Delivery Charge /\% z o Derivation of the Delivery Charge \ \ ji to 0 0 \ ®SS 2 0 inpe enoo en 41 a 22 CM _ Bill Component \ Delivery Charge szl Final Balancing Charge Delivery Charge ! m at ▪ 3 \In • k § ). [ • k 41 # k k 0V -00 00 00 2f sO on CI VI Bill Component a £ 3D SELECT TIME OF USE TEMPORARY PRICE CHANGE ENDORSEMENT CUSTOMER ACCOUNT NO.: Effective 19_, Customer and Central Power and Light Company (Company) agree that electric service shall be temporarily changed from Rate and Rider Schedule(s) and billed on the Select Time of Use Pilot Program Rate Schedule under the tams and conditions reflected in that Rate Schedule. The Customer and Company agree the monthly delivery charge to be paid by the Customer will be $ and that the Customer has selected a peak period and peak/off-peak prices of f../kWh and 0/kWh, respectively. The Company and Customer also agree that service will be metered at voltage and the fuel charges which have been incorporated into the Select Time of Use Rate Schedule energy charges, and which are subject to change as noted therein, are shown on Sheet B-24 which has an effective date of February 28, 1997. For purposes of applying the Gross Receipts Fee Adjustment, the Customer will be treated as though k were being saved on the Rate Schedules it has been temporarily removed from. Following termination of service under the Select Time of Use Not Program Rate Schedule, Customer will resume service under the other above -listed rate schedule(s) unless otherwise agreed to by Company and Customer. Customer usage while on the Select Time of Use Pilot Program Rate Schedule will not be taken into consideration by Company in establishing billing demands or minimums when the Customer resumes service on the other previous rate schedule(s); however, if the rate schedules under which service is resumed establish billing demands or minimums based on all or part of the prior twelve-month period, Customer and Company agree that such language will refer to the twelve months immediately preceding the initiation of service under the Select Time of Use Rate Schedule. APPROVED: APPROVED: By. Customer Title: By. Title: Company Date: Date: 31 SELECT TIME OF USE NEW CUSTOMER PRICE ENDORSEMENT CUSTOMER: ACCOUNT NO.: Effective 19 , Customer and Central Power and Light Company (Company) agree that electric service shall be billed on the Select Time of Use Pilot Program Rate Schedule under the terms and conditions reflected in that Rate Schedule The Customer and Company agree the monthly delivery charge to be paid by the Customer will be $ , and that the Customer has selected a peak period and peak/off-peak prices of ¢/kWh and ¢/kWh, respectively. The Company and Customer also agree that service will be metered at voltage and the fuel charges which have been incorporated into the Select Time of Use Rate Schedule energy charges, and which are subject to change as noted therein, are shown on Sheet B-24 which has an effective date of February 28, 1997. Customer and Company agree that if the Customer were not being saved under the Select Time of Use Pilot Program Rate Schedules, service would be provided under Rate and Rider Schninle(s) For purposes of applying the Gross Receipts Fee Adjustment, the Customs is considered to be served on this rate srhednle. Following termination of service under the Select Time of Use Pilot Program Rate Schedule, Customer will commence service under the other above -listed rate schedule(s) unless otherwise agreed to by Company and Customer. Customer usage while on the Select Time of Use Pilot Program Rate Scherinle will not be taken into consideration by Company in establishing billing demands or minimums when the Customers commences service on the other rate srhebde(s) APPROVED: APPROVED: By By Customer Company Title: Title: Date: Date: 3 -)-- That the foregoing ordinance was read for the first time and passed to its second reading on this the -I—kay of ,iLIIYLb&/v , 19 9 / , by the following vote: Loyd Neal Jaime Capelo Melody Cooper Alex L. Garcia, Jr. Arnold Gonzales Betty Jean Longoria John Longoria Edward A. Martin Dr. David McNichols ,I That foregoing ordinance was read for the second time and passed finally on this the 1 `f day of L atiatn , 19 cin, by the following vote: Loyd Neal Jaime Capelo Melody Cooper Alex L. Garcia, Jr. Arnold Gonzales Betty Jean Longoria John Longoria Edward A. Martin Dr. David McNichols PASSED AND APPROVED, this the 14t day of 00-Lrt , 1997. ATTEST: Armando Chapa, City secretary AYOR THE CITY OF CORPUS CHRISTI APPROVED THIS 2 5 DAY OF 5 not. , 1997: JAMES R. BRAY, JR., CITY ATTORNEY• 7JRBXXXX.xxx