1. Welcome to Cloverland Electric Cooperative’s Special Board Meeting
October 24, 2016
The program will begin at 7 p.m.

2. Chairperson Virgil Monroe

3. President and CEO Dan Dasho

4. 2016 Cost of Service Study Ratemaking Process Cost of Service Study
Revenue Requirement
Rate Design

5. 2016 Cost of Service Study Test Year
Test Year – 12 Months Ended December 2015
Test year operating results were adjusted for “known and measurable” changes (“Pro Forma Adjustments”)
Standard approach in industry, for both regulated and non-regulated utilities

6. 2016 Cost of Service Study
Allocates the cooperative’s costs to members as fairly as possible based on their power usage patterns.

7. 2016 Cost of Service Study Purpose of a Cost of Service Study
Determines if the revenue generated by a member class is covering its cost of providing service
Determines subsidies between rate classes
Determines cost based rate components

8. 2016 Cost of Service Study Types of Costs in a Cost of Service Study
Fixed Cost
Many are joint costs that must be allocated to each class of service
Variable Cost

9. 2016 Cost of Service Study Rate Design Principles
Rates should be fair and equitable for all members
Members should pay the costs that they impose on the system
Recover fixed costs through fixed charges

10. 2016 Cost of Service Study Rate Design Principles
Recover variable costs through variable charges
Reduce or eliminate subsidies between classes
Simplify rate classes from 15 to 6

11. Times Interest Earned Ratio (TIER)
2016 Cost of Service Study
Times Interest Earned Ratio (TIER)
A calculation used to measure a company’s ability to meet its debt obligation.

12. Board Considered Three Options:
2016 Cost of Service Study
Board Considered Three Options:
2.0 TIER = $5.68 Million
1.8 TIER = $3.98 Million
1.6 TIER = $2.27 Million
Target TIER is
1.8
Normal range 1.6 to 2.2

13. 1.6 TIER = $2.27 million or 2.9% increase
2016 Cost of Service Study
1.6 TIER = $2.27 million or 2.9% increase

14. Current FC (Facility Charge) Proposed FC
2016 Cost of Service Study
Proposed Residential Changes
Current FC (Facility Charge) Proposed FC
$ $23.75
Current EC (Energy Charge) Proposed EC
ESE $ $
CEC $ $

15. 2016 Cost of Service Study Proposed Change Impacts on a
1,000 kWh Residential Electric Bill:
ESE = + $10.75
CEC = - $11.03

16. 2016 Cost of Service Study Proposed Small Commercial Changes
Proposed FC
Single Phase $25.60
Three Phase $40.60
Proposed EC $

17. Proposed Demand Charge
2016 Cost of Service Study
Proposed Large Power Changes
Proposed FC
$110
Proposed EC $
Proposed Demand Charge
$8.80

18. Proposed Demand Charge
2016 Cost of Service Study
Proposed Large Power Mining Changes
Proposed FC
$265.00
Proposed EC $
Proposed Demand Charge
$15.00

19. 2016 Cost of Service Study Proposed OPL Yard Lights Existing Equipment
175 mv $12.12
400 mv $23.75
250 sv $15.69
100 sv $10.42
LED $9.97

20. 2016 Cost of Service Study Proposed OPL Yard Lights New Equipment
175 mv $14.19
400 mv $25.27
250 sv $16.92
100 sv $11.48
LED $11.17

21. Cooperative
Facility Charge
Great Lakes Energy
$32.21
Alger Delta
$25.00
Cloverland - Proposed
$23.75
Midwest Energy
$18.00
Presque Isle
HomeWorks
$17.50
Cherryland
$15.00
Ontonagon REA
Thumb Electric
$12.00

22. Cooperative
Energy Charge
Ontonagon REA
$0.1810
Alger Delta
$0.1490
HomeWorks
$0.1228
Thumb Electric
$0.1209
Midwest Energy
$0.1104
Cherryland
$0.1098
Cloverland - Proposed
$0.0914
Great Lakes Energy
$0.0864
Presque Isle
$0.0860
* Standard Residential Rate

24. Proposed New Supplemental Service Charges
Any special service at member’s request-outside working hours $200
Any special service at member’s request-during working hours $75
Meter test charge (includes meter reading)-field test required $75
Connections-outside working hours $200
Reconnect charge-outside working hours $200
Reconnect charge-during working hours $75
Did not pay field trip $75
Disconnect at pole-outside working hours $250

25. Proposed New Supplemental Service Charges
Disconnect at pole-during working hours $100
Nonsufficient funds charge $30
Deposit interest %
Unauthorized use of electricity penalty (New) $1,000
Membership fee $5
Late payment penalty %
Transfer service-no service interruption $20

26. Proposed 2017 PSCR Factors
2017 Maximum Authorized Factor Contingent Factor
$ $