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The Rate Making Process Presented to RUCO Workshop May 2013 Chuck Miessner Pricing Manager APS

The Rate Making Process Presented to RUCO Workshop May 2013 Chuck Miessner Pricing Manager APS. Rate Making Process - General. Utility electric rates are designed to recover the costs to serve customers.

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The Rate Making Process Presented to RUCO Workshop May 2013 Chuck Miessner Pricing Manager APS

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  1. The Rate Making ProcessPresented to RUCO Workshop May 2013Chuck MiessnerPricing Manager APS

  2. Rate Making Process - General Utility electric rates are designed to recover the costs to serve customers. Costs include fuel and operating costs as well as investments in capital infrastructure for power plants, transmission and distribution lines and other equipment. Costs include an authorized return on the invested capital, which provides an opportunity not a guarantee. Fuel and operating costs are recovered as a pass through. Costs Rates

  3. Rate Making Process – Rate Increase As costs increase over time, APS must request an increase in rates with the Arizona Corporation Commission. The new proposed rates are based on historic costs – usually two years prior to when the new rates go into effect. APS may not recover, and rates are not designed on, long-range projected future costs. Rates are typically revised in a formal rate case. Some costs can be adjusted annually through an alternate process (e.g. fuel). These processes are legal proceedings where the ACC staff, customer groups, and other parties represent their interests. Costs Rates

  4. Utility ServicesAverage Residential $/kWh Costs are assessed for the services provided to customers. Rates are developed for each service.

  5. Customer Rate Classes Examples Residential Time-of-use Time-of-use, demand Inclining block Business Extra-small Small Medium Large Extra Large Costs are assessed and rates are developed for each customer rate group

  6. Rate Design - Charge Types Basic Service Charge (BSC) $ per month, regardless of usage or maximum draw Used to recover metering and billing costs and distribution infrastructure costs Energy $ per kWh Total usage in a month Used to recover operating costs such as fuel and O&M Demand $ per kW Maximum draw in any hour during the month Used to recover infrastructure costs for power plants and transmission and distribution lines

  7. Utility Costs vs. Charge TypesResidential Inclining block, TOU-Energy Rates

  8. APS Customers (2012)

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