Presentation on theme: "11 Rate Design to Complement AMI Implementation in Danville, Virginia Presentation by Denise Sandlin Support Services Director Danville, VA APPA 2009 Business."— Presentation transcript:
11 Rate Design to Complement AMI Implementation in Danville, Virginia Presentation by Denise Sandlin Support Services Director Danville, VA APPA 2009 Business & Finance Conference Decision-Making on Advance Metering Infrastructure (AMI) Tuesday, September 15, 8:30 – 10:00 a.m.
2 Introducing Danville, Virginia Web Sites Size – City of Danville 44 sq. mi. Danville’s service area: 500 sq. mi. History -- Founded in 1793, incorporated in 1830, initially a tobacco & textile manufacturing center Government Structure -- Council-Manager Municipal Utilities – Publicly owned and operated Services -- Typical municipal utility services plus natural gas, electricity, and telecommunications Location -- Southside Virginia on the Virginia – North Carolina border Population -- 45,400; metro area 107,000
3 What is AMI? Advanced Metering Infrastructure (AMI) refers to systems that measure, collect and analyze energy usage, from advanced devices such as electricity meters, gas meters, and water meters through various communication media.
44 Advanced Metering Infrastructure (AMI) Benefits Two-way communication with every customer enables Remote meter reading Home area networks Remote connect/disconnect service switches More detailed data, more real time Newer, more accurate meters Financial Benefits Compliance Improvements Service Improvements Accurate outage assumptions Business development
66 Danville’s AMI Deployment Objectives 18 - month deployment Replace all electric and water meters and gas registers – 81,434 Build on our existing and planned fiber network. Support Danville’s future Smart Grid Provide benefits for Danville Utilities and its customers Rate design strategies Comply with Danville’s adopted standards covered under the Energy Act of 2005 and EISA 2007.
7 Danville’s Meter Replacements CityCountyTotal Electric24,44820,13144,579 Water19,384 Gas16, ,471
88 City of Danville’s Meter Districts
99 Adjacent County Meter Districts
10 Benefits for Danville Utilities At least 15 minute data from electric meters and hourly data from gas and water Outage and restoration notifications for customers Voltage monitoring for sags and surges prior to a customer complaint Reduced misread and hi/low bills New rate structures Improved system planning for distribution Tamper notification Reduced labor costs Remote disconnects and connects Improved safety for employees
11 Benefits for Customers Manage their own energy usage and costs New and improved customer service Help stabilize rates More accurate billing with the elimination of estimated reads and data entry errors No need to access customer property Improved outage response time and information Offer new programs and services New payment options
12 AMI System Investment Total SystemTotal CityRural Estimated AMI Investment $14,355,015$11,007,597$3,347,418 Less: One time Cash Flow Savings (4,398,724) (2,507,047) (1,891,677) Funding Requirement $ 9,956,291$ 8,500,550$1,455,741 Annual Savings$ 2,728,481$ 2,256,003$ 472,478 Simple Payback Period (years)
13 AMI System Financing ElectricWater/WWTGas Total Cost$8,027,033$4,700,441$1,627,541 Contribution from Fund $4,432,000$ 300,000$ 141,000 Debt Funding$3,595,033$4,400,441$1,486,541 Bond Term & Interest Rate 20 year 5.00%
14 Summary of Rate Design Strategies Reduce debt financing requirements based on one-time savings due to AMI Reduce customer charges based on annual savings due to AMI
15 AMI System One-Time Savings Cash Flow Advance (From a 10 to 2 day billing period) $2,968,906 Bi-Monthly to Monthly Billing Cash Flow Advance 1,429,817 Total Estimated One-Time Savings$4,398,723
16 AMI System Annual Savings Unbilled Water and Energy Losses $1,112,985 Theft 905,971 Meter Reading Labor399,220 Service Switch Field Labor310,305 Total Annual Savings$ 2,728,481
17 Customer Charge Reduction Customer charges due to AMI Savings Water Customers Total Reduction is $3.00 per meter/month Electric Customers Total Reduction is $3.20 per meter/month Phased-in implementation: $1.00/$1.20 as of July 1, 2009 $1.00 as of January 1, 2010 $1.00 as of July 1, 2010
18 Benefits of Customer Charge Reduction Visible and tangible connection Timing coincides with benefits [Good Faith effort to our customers] Solidified support for AMI project from Danville Utility Commission and City Council
19 Implications of Going Forward Budget balancing Funding and revenues will be lower Need to realize AMI savings in the form of reduced costs Data management Special rate design – e.g. time-of-use Customer communication In-home displays and Internet access 19
20 Summary Danville is making a big leap in technology and practices These improvements allow the utilities to capture significant cost-savings Cost-savings will be passed on to consumers through lower customer charges and other rates (due to lower debt service) 20
21 Comments! Questions? Denise Sandlin Support Services Director Danville Utilities 1040 Monument Street Danville, Virginia Telephone: Our program report is available upon request