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HomeMy WebLinkAbout2009-06-08 RMLD Power Contracts Rate Setting Green Power Committee MinutesReading Municipal Light Department (RMLD) Board of CommissioCLERK Power Contracts, Rate Setting, Green Power Committee Regular SessiRI Il ~t3tf~s June 8, 2009 1I~Q I JUL I I P E2: 4 b Start Time: 7:35 p.m. End Time: 9:35 p.m. Att endees: Committee Members: Mr. Hahn, Ms. O'Neill, and Mr. Soli RMLD Board: Ms. Kearns CAB Member: Mr. Vale RMLD Staff: Mr. Cameron, Ms. Parenteau, and Mr. Seldon Mr. Hahn called the meeting to order at 7:35 p.m. Mr. Cameron explained that the RMLD was providing an update of the Deferred Fuel Cash Reserve (DFCR) analysis, which demonstrates the recommended level of funding, required to back up the fuel charge. Deferred Fuel Cash Reserve - Updated Analysis of Balance Ms. Parenteau said that the RMLD had performed an analysis to determine the appropriate DFCR level given the RMLD present fuel costs, related energy expenses and the historic fluctuation in the natural gas market. Ms. Parenteau explained that the RMLD has entitlements in power plants and have medium term power supply agreement that have fixed prices or locked into the natural gas prices. Therefore, the RMLD's exposure to price fluctuations have been minimized over the years. However, the RMLD still has over 20% of its power supply in the day-ahead market and is subject to price fluctuations. Ms. Parenteau explained that the DCFR stabilizes the fuel charge on an ongoing basis. Further, Ms. Parenteau has had discussions with the Customer Specialists and the Key Account Managers and both have said that the customers desire to have stable rates with no large price spikes. Ms. Parenteau reported that Mr. Cameron had performed statistical analysis of the natural gas wellhead prices from 2000 to present and found that the average price during that period was $5.42 with the standard deviation of $1.90, resulting in one standard deviation price movement of 36%. Based on these statistics the RMLD looked at a "worst case" price movement around the mean of the August gas price. Mr. Soli pointed out that the unit fuel price trend in Table 1 and the fuel cost and revenues shown in Table 2 do not seem to reflect the same pattern. Discussion ensued. Ms. Parenteau said that she would review the data to see if there is an inconsistency in the data. Mr. Soli pointed out in Table 1 that the fuel charge shown was higher than what was actually charged to the customer. Mr. Cameron asked if Mr. Soli was referring to the PASNY Credit issue. Mr. Soli replied, "yes." Mr. Cameron explained that all customers are charged the same fuel charge amount, however, the residential customers also received the PASNY credit monthly, which is received in the form of the our (not clear here) credit. Discussion ensued. Ms. O'Neill made a motion seconded by Mr. Hahn that the Power Contracts, Rate Setting, Green Power Committee recommend to the RMLD Board to increase DFCR level to between $2.5 to $2.9 million. Motion passed: 2:0:1. Mr. Soli voted against the motion.