HomeMy WebLinkAboutAEA - REF PCE REFAC_12.16.14REF <-> PCE
Interactions –Incentives –Illustrations
Renewable Energy Fund Advisory Committee Meeting
Presentation overview
PCE program and characteristics of eligible communities
What happens when an RE project is introduced
Distribution of REF project savings
Questions
2
3
Residential PCE
eligible 21%
Residential
NOT eligible
9%
Community
facility PCE
eligible 7%
Community
facility NOT
eligible 2%
Other NOT
eligible 61%
Electric sales in PCE communities
188 PCE communities
$40 million annual disbursement
Percent of community kWhs that are PCE
eligible is variable by community
•Overall 28.5% of all kWhs sold are
eligible for PCE
•Communities range from 5% to 72% of
total sales being PCE eligible
•The un-weighted community average
is 40% eligible kWhs
Statewide Power Cost Equalization
4
Statewide
Residential sales
•69% PCE covered
•31% not covered
Community facility sales
•83% PCE covered
•17% not covered
Other ineligible sales
•81% commercial
•19% government
Communities with small populations have higher % of eligible kWhs
0%
10%
20%
30%
40%
50%
60%
70%
80%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Population -% kWh PCE eligible
All communities
Population % of Total kWh, PCE Eligible
Calculating PCE level and effective rates
5
Utility cost per kWh
(cost/kWh) = total
utility cost/total kWh
sold
Base rate = $0.1482
PCE level = (cost/kWh –
base rate) x 95%
Effective rate =
cost/kWh –PCE level
PCE vocabulary
Base rate: The weighted average cost per kWh in Anchorage, Fairbanks and Juneau
PCE level: The state subsidy per eligible kWh calculated for each community
Effective rate: The cost per kWh that customers will pay for a PCE eligible kWh
Example;
Total
cost
Total
kWhs
Cost /kWh Base
rate
PCE level
(cost/kWh-base rate) x 95%
Effective rate
(cost/kWh-
PCE level)
$1 M 2 M $1M/$2M
= $0.50
$0.1482 ($0.50-$0.1482) x 95% = $0.3342 $0.50-$0.3342
= $0.1658
6
PCE impacts on rates
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
PCE communities
Utility Residential Rate Effective Residential Rate Base Rate
How do RE projects impact PCE?
When a renewable energy project comes
online there will be decreases in fuel costs
and there may be increases in non-fuel costs
(e.g. O&M).
We should expect the PCE level for that
community to change because their costs
have changed.
The distribution of savings from that change
depends most on the percent of community
kWhs that are PCE eligible.
7
2%3%
60%
40%
38%
57%Community A: 40% eligible kWhs/60% ineligible kWhsDistribution of RE benefits -2 community profiles
PCE program
Ineligible kWhs
Eligible kWhs
Sharing RE savings
Assumptions:
Cost based rates means
that savings are passed
through to ineligible
PCE kWh customers
The RE project reduces
fuel costs and has zero
impact on non-fuel cost
8Community B: 60% eligible kwhs/40% ineligible kWhsCommunity benefitCommunity benefit
9
Community example: Kotzebue
Fuel
component
cost has
increased 166%
over 10 years
Effective rate is
lower despite
increased fuel
cost
Wind
generation,
appropriate
rate setting and
proper use of
the PCE
program result
in stable costs
to ratepayers.$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Wind generation kWh/yr Effective rate Fuel cost/diesel generated kWh
10
Last year:
•There were 25 generating REF funded energy
projects in PCE communities
•19 electric projects
•7 heat projects
•5 are high penetration projects that use
significant excess RE generation for heat
Five years from now:
•This estimate will be finalized end of week
•There will be one more map showing estimated
generating projects 5 years from now
11
$27.8
million
$1.7 million
$29.5 Million (2013)Annual savings from REF projectsState PCE savings
Community savings
Projects in PCE communities
•$3.3 million annual savings stays in community
(ineligible kWhs + portion of reduction to eligible kWhs)
Projects in Non-PCE communities
•$24.5 million savings to communities
12
Saving from RE Heat Projects
100% of savings from heat projects stay in the community
•REF funded heat projects saved $1.3 million last year in displaced
heating fuel in addition to creating local jobs
•This year there will be 22 operating REF heat projects
•Heat projects include biomass, heat pumps and heat recovery
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AKEnergyAuthority.org
RE project pic