Customer Concerns with Implementing Demand Rates NASUCA and NARUC Conferences Austin, Texas November 2015 David Springe Consumer Counsel Kansas Citizens’ Utility Ratepayer Board

Don’t believe the Rhetoric “It is widely agreed that existing tariffs do not reflect the cost structure of providing electricity service to customers” “It is widely agreed that existing tariffs do not reflect the cost structure of providing electricity service to customers” = FALSE = FALSE “Consumer advocates refuse to discuss changes to rate design” “Consumer advocates refuse to discuss changes to rate design” = FALSE = FALSE

What is the Objective? Collect costs through fixed charges? Collect costs through fixed charges? –Raising customer charges is unpopular –Demand charges achieve same result if you can’t actually avoid them Achieve better efficiency through demand prices? Achieve better efficiency through demand prices? –Must be based on coincident peak –Must remove other price suppression measures –Must ask-”is there a better way to do this?”

Legitimate Concerns Higher bills for low use customers Higher bills for low use customers –Low use customers may be low income Limited ability to change usage Limited ability to change usage –Some things must run (AC, Refrig, Med) Difficult to understand Difficult to understand –Difference between broad concept and actual understanding of KW use

Legitimate Concerns Smart meters don’t read KW’s Smart meters don’t read KW’s Residential has more diversity than large commercial or industrial Residential has more diversity than large commercial or industrial Very difficult to calculate correct KW rate in ratemaking process Very difficult to calculate correct KW rate in ratemaking process

2014 Monthly kWh Usage vs System Peak (MW)

SUNDAY August Billing Cycle: Daily kWh usage vs Daily System Peak (MW) WEDNESDAY THURSDAY

August 7, 2014 kWh usage (15 minute increments) vs Hourly System Load (MW)

Bill impacts: Standard Rates verse Demand Rates

Predictable Result

Bill impact of Demand Rates Westar Proposed Rate Design kWhKwStandardStabilityDemand 2014Feb5826$84.53$83.46$83.33 Mar5138$76.29$79.49$83.37 Apr5338$78.68$80.64$85.10 May4838$72.71$77.76$80.77 Jun78510$108.79$109.59$ Jul113410$152.24$147.85$ Aug110010$147.92$143.51$ Sept120310$161.00$156.64$ Oct6408$91.46$89.92$94.35 Nov5538$81.07$81.79$86.83 Dec5578$81.55$82.02$ Jan7268$101.74$101.59$ Feb5048$75.21$78.97$82.59

Volumetric rates Do allocate costs rather elegantly Do allocate costs rather elegantly Customers do understand kWh’s Customers do understand kWh’s Smart meters actually read kWh’s Smart meters actually read kWh’s Can set discrete pricing times to send better price signals Can set discrete pricing times to send better price signals Can give same education as demand rates to achieve same goal Can give same education as demand rates to achieve same goal

Conversation Checklist What is the objective? What is the objective? What is the specific plan? What is the specific plan? Does the plan support the objective? Does the plan support the objective? Does the data/evidence support the plan and objective? Does the data/evidence support the plan and objective? Is there a easier/better way? Is there a easier/better way? Protections for vulnerable customers? Protections for vulnerable customers? 2 nd and 3 rd order concerns 2 nd and 3 rd order concerns

Contact Information David Springe David Springe Consumer Counsel Citizens’ Utility Ratepayer Board 1500 S.W. Arrowhead Rd Topeka, Kansas (fax)