HomeMy WebLinkAboutAEA - REF PCE REFAC_Jan 2014REF 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
Presentation purpose
•Respond to perception that the state PCE program is the primary
beneficiary of REF funded project savings
•Clarify impact of REF projects in PCE communities and
throughout the state
3
Residential PCE
eligible 21%
Community
facility PCE
eligible 7%
Residential
NOT eligible
9%
Community
facility NOT
eligible 2%
Other NOT
eligible 61%
Electric sales in PCE communities (kWh)188 PCE communities
$40 million annual disbursement
Percent of kWhs that are PCE eligible varies by
community
•Across all PCE communities (weighted
average) 28.5% of all kWhs sold are eligible.
•Eligible PCE sales range from 5% to 72% of
total sales.
•In a typical (un-weighted average) PCE
community, 40% of all kWhs sold are
eligible.
Statewide PCE
4
Statewide PCE
Residential sales
•69% PCE covered
•31% not covered
Community facility sales
•83% PCE covered
•17% not covered
Ineligible customer 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 are decreases in fuel costs and there may
be increases in non-fuel costs (e.g. O&M). These
costs are part of the PCE level calculation.
We should expect the PCE level for that
community to change because their costs have
changed.
How the impacts of those changes are
distributed 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
$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 - PCE kWhs Fuel cost/diesel generated kWh
10
Last year:
•There were 26 generating REF funded energy
projects in PCE communities
•19 electric projects
•7 heat projects
Five years from now:
•There will be 80 generating REF funded energy
projects in PCE communities
•38 electric projects
•42 heat projects
11
$27.8
million
last year
$1.7 million last year
$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 + heat)
Projects in Non-PCE communities
•$24.5 million savings to communities
REF benefits statewide from the first $75.6 million spent on the first 37 projects to start generating energy
12
REF investment in PCE vs. Non-PCE communities
The difference in population and scale between urban and rural energy systems
means that, much like consumption, savings from projects are greater.
REF funds are invested heavily in PCE communities in a larger number of small
projects.
REF investments outside PCE communities are in a fewer number of larger projects
to serve the much larger demand for energy in these communities.
Railbelt, 77%
Southeast,
13%
Kodiak, 2%Other,
8%
Statewide Consumption
On average for generating projects the REF covers:
•70% of total costs for projects in PCE communities
•31% of total costs for projects in Non-PCE communities (46% state investment
including direct appropriations)
Of the 37 currently generating REF funded projects
•26 are in PCE communities ($55.8M in REF funds)
•11 are not in PCE communities ($19.8M in REF funds + $10M direct appropriation)
•Most of these savings come from three projects, Anchorage Landfill Gas (Railbelt), Eva Creek (Railbelt)
and Pillar Mountain (Kodiak)
13
Saving from RE Heat Projects
100% of savings from heat projects stay in the community
•7 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
14
Takeaways
1.The large majority of savings associated with REF funded projects stays
in communities
2.REF projects create price stability, protecting against uncertain and
uncontrollable diesel prices
3.Savings to PCE communities are greatest in places with larger
commercial, or otherwise ineligible loads; these tend to be larger
communities
4.Smaller PCE communities with little ineligible load benefit most from
the PCE program
15
AKEnergyAuthority.org
RE project pic