April 9, 2014

Purpose of the Study

Analytical assessment of the rates, terms and
conditions for standby service
Focus on combined heat and power (CHP)
applications
Identify opportunities for improvement in selected
utility standby tariffs
Estimate the economic impact of the suggested tariff
improvements on a selected set of proxy CHP
customers
2 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Standby Service Defined
Set of electric utility products for customers with on-
site, non-emergency generation
Provides a utility backstop for on-site generation
facilities
Important factor in determining the economics of
CHP applications relative to utility full requirements
service or purchasing power from a competitive
supplier
3 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Illustration of a Self-Generators
Purchase Requirements
D
e
m
a
n
d
Supplementary Power
Standby Power
Plant Requirement
Generation
Time
Forced
Outage:
Backup
Power
Planned
Outage:
Maintenance
Power
Planned
Outage
(Coinciding
with Plant
Shutdown)
4
Typical Standby Rate Structure
Capacity reservation charge
As-used capacity and energy charges
Maintenance capacity charge
Facility charges
5 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Standby Rates
Best Practices
Allocation of Utility Costs
Generation, transmission, and distribution charges
should be unbundled
Generation reservation demand charges should be
based on the utilitys cost and the forced outage rate of
customers generators on the utilitys system
Higher-voltage delivery charges should recognize load
diversity
6 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Standby Rates
Best Practices
Appropriate Incentives
Pro-rated daily demand charges
Daily maintenance demand charges -- discounted
Customer Options
Interruptible standby service option
Customers should be able to procure standby service
from the open market
7 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Analytical Process
Selected Jurisdictions and Tariffs
State Utility Tariff(s)
Arkansas Entergy Arkansas, Inc. Standby Service Rider
Colorado Public Service Company of Colorado Schedule PST
Schedule TST
New Jersey Jersey Central Power & Light Company Rider STB
Ohio AEP-Ohio Power Company Schedule SBS
Schedule OAD-SBS
Utah Rocky Mountain Power Schedule 31
8 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Analytical Process
Description of Analytical Methods
Economic analysis performed for each utility
standby tariff analyzed
Selection of customer usage characteristics
Discussions with state regulatory commission
staff
State customer databases
Small, medium and large non-residential
customers
9 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Analytical Process
Modeling Methods
Customized Microsoft Excel spreadsheet
Key model inputs
Load factor
Peak demand
Generating unit net capability and outage hours
Utility rates for standby and supplemental service and
applicable tariff riders
Costs modeled under existing and modified standby
rates
10 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Analytical Process
Development of Tariff Modifications
Reviewed the standby tariff
components
Evaluated against best practices in
standby rate design
Identified tariff adjustments
11 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Common Tariff Recommendations
Generation, reservation and daily demand charges
Seasonal and on/off-peak charges
Scheduled maintenance daily demand charge
Dedicated distribution investment charge
Load diversity for transmission and shared
distribution
Interruptible option
Open market standby if available
12 The Regulatory Assistance Project and Brubaker & Associates, Inc.
State Specific Recommendations
Arkansas EAIs SSR Tariff
More rate transparency
Better price signals
Increased flexibility
Better clarity
13 The Regulatory Assistance Project and Brubaker & Associates, Inc.
State Specific Recommendations
Colorado PSCos Schedules PST and TST
The Grace Energy Hours provision should
be eliminated and replaced with a
generation reservation fee and a daily
demand charge
Charges developed based on common tariff
recommendations
14 The Regulatory Assistance Project and Brubaker & Associates, Inc.
State Specific Recommendations
New Jersey JCP&Ls Rider STB
Scheduled maintenance hours should be allowed for
all standby customers, irrespective of when the
customer commenced service
Standby service should be available to all customer-
generators regardless of the availability factor of their
generating unit
Standby tariffs should be concise and easily
understandable
15 The Regulatory Assistance Project and Brubaker & Associates, Inc.
State Specific Recommendations
Ohio Ohio Powers Schedules SBS and OAD-SBS
Two separate rate zones
Separate standby rates for bundled and
choice customers
Eliminate menu of forced outage rates for
bundled customers
16 The Regulatory Assistance Project and Brubaker & Associates, Inc.
State Specific Recommendations
Utah RMPs Schedule 31
Currently no reservation generation
charge
Daily on-peak backup charges
Excess power charge > $40 per kW
Single customer limit 10 MW
17 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Conclusion
Standby rates can benefit from a reassessment to
enhance their effectiveness for CHP applications
Existing rates, terms and conditions can be modified
Better match utility costs
Provide clearer price signals
Provide improved incentives for the operation of self-
generation units
Enhance flexibility for customers
18 The Regulatory Assistance Project and Brubaker & Associates, Inc.
Questions ?
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We would like to thank the Oak Ridge
National Laboratory and the United States
Department of Energys Office of Energy
Efficiency and Renewable Energy for their
support and involvement in this project.
The Regulatory Assistance Project and Brubaker & Associates, Inc.