RESIDENTIAL RATE DISCUSSION

2 Traditional Residential Rate  Customer Charge  Kwh Energy Charge  PCA

3 Billing Differently  Recognizing and billing a demand component(s).  Retail bill to represent similar structure as Wholesale bill.  True “unbundled” component billing is more equitable.

4 Fairness  Homes have different load factors (efficiencies). More efficient are subsidizing the less efficient.  Proper “unbundled” rate naturally addresses any DG the customer may be using.

5 Technology  TWACS/Aclara – Most coops are utilizing AMR.  Metering can retrieve demand from single phase loads (residences).  MDM systems (NISC & Others) can take data to bill upon.

6 Education  Rates are complicated. We have programmed customers to think rates are simple.  Educate customers about the true components that make up their bills.  We are sending an “incorrect” price signal with a bundled rate.  Coops could have little choice but to unbundle rates in future. De-reg Law.

7 Other Factors Social & Political side of rate setting Rate setting – “Art” & “Analytical” Big resistance – customers, employees & boards. Reduction in “base load” Generation could push unbundled pricing even more.