RPU Rates Memo

Here is a memo I prepared for the RPU discussion on rates today. My goal is to reduce the customer charges residents pay by about $100 per year. I am in Charlotte but still wanted to get some comments on the record on behalf of the community I represent.

RPU rate memo


Greetings RPU Board & Staff;

I would like to see RPU set a goal of reducing customer charges for residential electric customers of at least $100 per year starting in 2019. We have been told by our customer base that they overwhelmingly want us to lead on clean energy, so let’s do it. I look forward to discussing this at an upcoming meeting.

I am headed to Charlotte for the National League of Cities but wanted to share my thoughts on the setting of rates in 2018 and beyond. I am also interested in spurring on discussion related to smart grid infrastructure in 2018. I would also like to express my desire to help RPU grow the business in 2018 and beyond by using targeted incentives to promote the electrification of vehicle fleets and building HVAC systems.

Reconsidering Residential Rate Structures:

The RPU policies of fiscal sustainability and treating all user groups fairly are critical to who we are and should remain unchanged. However, by a preponderance of evidence, there are many industry accepted practices that can result in different balances between customer and energy charges. A list industry acceptable rate analysis tools include would also include “basic customer” and ”peak and average” models. These would result in lower customer charges than the method we have chosen.

We happen to be using a philosophy that results in more items being included in the customer charge. As such in 2018 we will have a customer charge that is substantially higher than that of Xcel Energy. We understand that higher customer charges are a financial disincentive to conservation and the creation of local generation. We also understand that the total amount paid for by residential customers is not likely to change, but the net contributions from energy and customer charges would.

I believe that the proposed rates for 2018 should go forward. I believe that it is too late to switch strategies now. I would request that we revisit policies related to these rates in 2018 for 2019 and beyond. I have set a personal goal of reducing customer charges for RPU residential electric customers of $100 per year in 2019.

While the idea of residential demand charges is both innovative and could achieve an unprecedented level of fairness, we don’t have anywhere near the technology in place to pursue this yet. I would also suggest that minimum energy bills could be a compromise method of addressing the infrastructure needs of very low use customers such as “snowbirds” or local generators such as myself.

Advancing Smart Grid:

Smart Grid can mean many different policies and technologies but when I use the term I speak to having the policies and technologies in place to accomplish 3 goals.

  1. Enable reliable real-time bidirectional communications between energy supply and load.
  2. Enable the dissemination of energy availability, cost, and percent renewable.
  3. Remotely control loads, especially HVAC and vehicle charging.

RPU’s smart grid business case is complicated by the SMMPA contract which really does allow us or our consumers to financially benefit by using energy when it is plentiful and cheap. This may continue to be the case until 2030. That said I do believe we need to begin the process of building out smart infrastructure in anticipation of 2030 or opportunities to collaborate with SMMPA in the intervening years.

Growing RPU Electric Customers:

Despite the current availability of relatively inexpensive fossil fuel resource, there is a strong desire in the community to reduce our carbon emissions. Prospects for efficient combined heat & power plants in the future are exciting.  In the short run I believe we should create incentive programs and rate structures to encourage the installation of heat pumps in homes and small businesses as well as the electrification of vehicle fleets. In 2017, the city of Rochester purchased 11 diesel buses. It is my goal that these are the last non-electric transit vehicles we ever purchase.

By aggressively promoting efficient electric heating and vehicles we and secure new energy revenue into the future. This is particularly exciting because these same customers also offer us the potential to significantly adjust our load to maximize the use of abundant, cheap clean energy.

Locally we produce no coal, oil, natural gas, or uranium. We to have tremendous access to wind, solar, biomass, and hydro power in our region. As rely on electricity to fuel an increasingly flexible load demand we also boost the fortunes of RPU and the region.

Thank you to RPU Board and Staff for your service,

Michael Wojcik,

Rochester City Council, RPU Board of Directors, Rochester Energy Commission


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