5.4. ERMUSR 12-09-2003 Elk River
Municipal Utilities
322 King Avenue phone: 763.441.2020
Elk River,MN 55330 Fax.763.441.8099
December 1, 2003
To: Elk River Municipal Utilities Commission
John Dietz
Jerry Takle
James Tralle
From: Bryan Adams
Subject: Air Conditioning Rebate
During our budgeting process, we review our rates and rebates. One issue that has again
risen, is the $6/month controlled air conditioning rebate for the 5 summer months. Is this
rebate to small,just right, or to large? This program entails allowing the electric utility to
interrupt the customers air conditioner during periods of high demand. Interruption
durations are typically 15 minutes every 30 minutes. The house will heat up generally 2
to 3 degrees. The customer receives a$30 rebate per year. The utility pays to have the
air conditioner controller installed on the air conditioner at an approximate cost of$220
plus maintenance.
Attached is Vance Zehringer's memo with his analysis. This analysis reflects, loosing
$114.28/year per uncontrolled air conditioner and $40.94/year per controlled air
conditioner. Although the assumptions are questionable in these analysis',there is no
doubt we loose less money with a controlled air conditioner. Connexus has abandoned
this program. Their financial analysis indicated the financial difference between
controlling and not controlling air conditioners is not much, but the maintenance and after
hour calls make it difficult to justify the program.
I justify this program because it does keep the electric demand lower, thus delays
building power plants (Great River Energy controlled air conditioning load is 105/MW±).
Customers now oversize their air conditioning units in their homes to compensate for the
home heating up, which negates some of the demand savings. In previous discussion
with this commission about this issue, none of the commissioners utilized this program
because during hot weather. They wanted to stay cool and not have anybody controlling
their air conditioning. The $30 rebate was irrelevant. Is this still the case?
Attached is our brochure for this program. Some staff members would like to see a
higher rebate to encourage more customer participation. I would recommend our existing
program but do a better job of promoting.
>1*,
lk River
Municipal Utilities
322 King Avenue phone: 763.441.2020
Elk River,MN 55330 Fax:763.441.8099
November 13, 2003
To: Bryan Adams
From: Vance Zehringer
Subject: Financial Analysis Cycled AC vs Uncontrolled AC
The attached analyses illustrate ERMU's net margin for residential controlled air
conditioner vs uncontrolled. These are the same demand assumptions we agreed to use
previously. Projected 2004 wholesale and retail rates have been applied. The load
control switch cost has been reduced to reflect the $50 per unit rebate GRE pays when
used on cycled ACs.
There is a noticeable difference between the two analyses. Each year,the uncontrolled
AC nets ERMU a$114 loss. The controlled AC nets a loss of$41 per year for the first 7
years, so in effect, ERMU"saves" $73 a year for every controlled AC it has on its
system. Because the Controlled AC analysis assumes a 7 year amortization schedule for
the load control switch,once the switch and installation is paid for, ERMU"saves" $97
per year in years 8 and beyond. These losses of course, assume a constant wholesale and
retail rate which we know will not be the case.
I'm wondering if we don't want to get more aggressive in signing our customers up for
the Cycled AC Program? Each controlled AC saves ERMU $1287 over its 15 year life,
once again assuming a constant wholesale and retail rate. Pretty impressive numbers
when you look at the potential. I would guess we have at least 3000 uncontrolled central
ACs and if we could sign up 1500 of them,that number becomes 1.93 million dollars
over that same 15 year period!
ECONOMIC ANALYSIS UNCONTROLLED AC
2004 Res Rate
DESCRIPTION BILLING UNITS RATE
REVENUE
Fixed chg AMouNT COMMA
Demand chg summer 12 mo $7.00 per mo $0.00 Not Applicable
Demand 0 kw
chg winter 0 $0.00 per kw $0.00
Energy chg summer 1,227 kwh $0.00 per kw Not Applicable kw
ngy chg winter 0 kwh $0.0865 $ Not Applicable
Energy
Subtotal $0.0713 per kwh $106.14.14 Res Sum mer Rate
Other PCA 1,227 kwh 0.00
$106.14 Res Winter Rate
TOTAL REVENUE $0000 per kwh
0.00 No June,July or Aug
EXPENSE $106.14
Pwr Billspring/fall
Spring/fall coin dmd
Dist Dmd loss(6%) 4.3 kw $7.23 per kw
Subtotal 0.258 kw $31.09
Energy $7.23 per kw AC Not Controlled
125 kwh 146
Dist Energy loss(6%) $0.027650 per kwh $3.96
Subtotal 7.5 kwh $0.027650 per kwh $3.46
Pwr Bill-summer
0.21
Summer coin dmd $3.66
Dist Dmd loss(6%) 8.3 kw $17.22 per ,
Subtotal 0.498 kw $142.93
$17.22 per kw AC Not Controlled
Energy 8.58
Dist Energy loss(6%) 61102 1%11 $0.027650 per kwh $151.50
Pwr Bill-winter
$0.027650 per kwh $30.47
winter
Winter coin dmd $32.30
0 k
Dist Dmd loss(6°,6) w $10.56 per ,
Subtotal 0 $10.56 per kw $0.00 AC Off
Energy
Dist Energy loss(6°/,) 0 kwh $0.027650 per kwh $0.00
Subtotal 0 kwh $0.027650 per $0.00
Substation charge
Other $0.00 per yr S0.00
Subtotal Power Cost $0.00
0.00
Distribution Costs $220.42
Substation
Pri distribution sys $0.00 per yr
Service transformer $0.00 per yr $0.00
Service drop
$0.00 $0.00
per yr $0.00
Meter
$0.00 per yr
Meter reading/billing yr$0.00 total $0.00
Remote control unit installed $0.00 per $000
Program admin $0.00 total $000
Subtotal Dist Cost $0.00 per yr
$0.00 No Control Sw
O.Oo
Customer Incentive Credit @ $0.00
$0.00 per mo X 5 $0.00
Marketing Not Controlled
Total Expense
$0.00 per yr
0.00
GROSS MARGIN(LOSS)BEFORE GRE CREDIT $220.42
GRECREDIT @ $0.00 PER AC PER MONTH X 3
NET MARGIN(LOSS)BEFORE CIP CREDIT APPLIED
($114.28)
CIP CREDIT(EXPENSES OFFSET REQUIRED 0.00 Not Controlled
NET MARGIN(LOSS)INCLUDING CIP CREDIT SPENDING) ($11418)
1020
($114.28)
No Control Sw
2004 Res Rate
ECONOMIC ANALYSIS CONTROLLED AC
AMOUNT COMAS
DESCRIPTION BILUN RpyTE Not Applicable
$7.00 per mo $0.00 Not Applicable
REVENUE 12 mo �� per low $0.00 Not Applicable
Deed chg 0 kw $0.00 kw Demand chg summer 0 kw $0.00 per kwh §106 14 Nos Summer Rate
Demand chg summer 1227 kwh $0.0865 per S014 ResSumm Summer Rate Energy chg summer 0 kwh $0.0713 per kwh $106.14
Energy chg Subtotal No June,July or Aug
Subtotal 1,227 kwh MO
$0.000 per kwh
Other PCA $106.14
TOTAL REVENUE
EXPENSE $10.85 AC Controlled
• Pwr Bill-$Pring�ll 1.5 kw $7.23 per kw S0 05
Dist Dmd coin dmd $7.23 per kw $11.50 Dist Dmd loss Subtotal 0'� $3.46
Subtotal $0.027650 per IoHlt
125 kwh 027650 per kwh 21
Energy loss(6%) 7.5 kwh �' $3.66
Dist Energy
Subtotal $82.66 AC Controlled
Pwr Bill-summer 4.8 $17.22 per kw
Demmer coin dmd $17.22 per kw $87.62
Dist Dmd loss Subtotal 0.288 kw $30.47
Subtotal 1102 kwh $0.027650 per kwh S1
Energy loss(6%) 66.12 kwh $0.027650 per kwh $32.30
Pwr Dist Energy Subtotal
�� AC Off
Winter coin d Bill-winter 0 kw $10.56 per kw
Winter coin loss( 0 kw $10.56 per kw $0.00
Dist Dmd loS ub6%)
Subtotal 0 kwh $0.027650 per kwh �00
Energy 0 kwh $0.027650 per kwh $0.00
Dist Energy loss(6%) $000
Subtotal $0.00 pef yr
Other charge $135.07
Other
Subtotal Power Cost
$0.00 per yr $0.00
Substation Costs $0.00
Substation $0.00 per yr $0.00
Sei viseitransf r 00 yr $0 00 required
Service drop transformer $0.00 per yr Only one meter req
$0.00 total $ .E Only one meter
Service drop $0.00 r 7 years&
Meter $0.00 per yr $23.57 Amortized over Ye
Remote control unit $165.00 total $p00 Amortized er7 sw rebate
Remote control unit installed $0.00 per yr $23.67
Subtotal admin
Subtotal Dist Cost Annual customer credit
56.00 per mo X 5 $30.00
Incentive Credit
II Marketing $0.00 per yr 0.0
$1118.64
Total Expense ($82.51)
BEFORE GRE CREDIT 121.1_i_10 1 Control credit
GROSS MARGIN (LOSS) (g6a 51)
• GRECREDIT t/ID $6.00 PER AC PER MONTH X 3 No Control Sw
2$ 3.51
NET MARGIN(LOSS)BEFORE CIP REQUIRED D SLID ($a0 9a)
CIP CREDIT(EXPENSES NET MARGIN(LOSS)INCLUDING C POCREDI SPENDING)