CCOS - Class Cost of Service
Class Cost of Service
is an accounting study done to allocate the costs of electric
service to the various rate classes that make up the customers of an
electric department. VPPSA performed one
for us in mid 2002.
Click here for further information
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DPS - Department of Public Service
http://www.state.vt.us/psd/
The following is extracted from the DPS mission statement on the Web:
The Department of Public Service serves all citizens of Vermont through
public advocacy, long range planning, programs, and other actions that
meet the public's need for least cost, environmentally sound, efficient,
reliable, secure, sustainable, and safe energy, telecommunications, and
regulated utility systems in the state for the short and the long term.
The Department does this by promoting the public interest in the
provision of the state's regulated public services--electricity, natural
gas, telephone, cable TV, and to a limited degree water and wastewater.
There is more there. From our standpoint, the DPS supports various regulations that it asks the PSB to adopt and enforce. When the utilities disagree, we argue before the PSB much like a court case. DPS is almost always one party. The municipal utilities often band together as another party. Often DPS and some utilities can agree on many points and present a joint position to the PSB. It is cheaper for everyone when that occurs. Depending on the issue, the municipals may or may not have positions similar to the commercial utilities. We do not, after all, have to pay dividends. We try to keep the rates as low as possible, while still being solvent. If the DPS wants us to do things that we think are expensive and worth little, we complain before the PSB . If the requirements are not expensive, we usually just do them, because it is expensive to officially complain before the PSB. However one of the cases where we complained loudly was concerning the size of the EEC. That does not come out of our budget - but it does come out of our ratepayers’ pockets. We were not convinced that that money would be spent effectively; we protested; we lost.
When we have a rate case, the DPS
may decide to ask for an investigation
by the PSB. Since the decision by the
PSB that an HQ contract was
"imprudent", any rate case for a utility that has that particular contract
has been investigated. NED is one such -
as a consequence, our last
two rate cases have been investigated, and were finally closed in 2001 after
the completion of the HQ arbitration case.
In such an investigation,
the DPS is one party;
we are another. Various customers may make
presentations to the DPS
about points that they consider relevant.
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DSM - Demand Side Management
This represents an attempt by the DPS, enforced by the
PSB, to get
the population in general to use less electricity. Since a large
part of our current electric generation uses nonrenewable resources and
since many of us recall the 70’s and 80’s when at times an oil cartel successfully
controlled the price of these resources, we can understand why reasonable
people would try to do this. One day these efforts will be
very important.
Before 2000, DSM posed several problems for our department.
One is that the utility had to support such programs and the result was
less sales. We lost money both in supporting the program and
in lower sales. The PSB
allowed us to put the estimated cost
of DSM into our rate cases (now this item supports the EEU),
so the rate
payers pay ultimately. But decreasing sales cause problems for the
utility. Because we charge proportionally to what we sell, but three-quarters
of what we have to pay our suppliers is fixed, when we sell less than we
planned, three-quarters of the difference comes off our bottom line.
However, there are some programs that make a lot of sense. A few
decades ago there was a fad of putting electric heat in homes.
These days, this is a very expensive way to heat. It doesn’t
help the electric department to sell lots of electricity to people who
have trouble paying for it - one of the DSM programs helps people with
limited resources convert from electric heat to a less expensive form.
Other DSM programs support the sale of efficient lights and washing machines.
Starting in January ’00, these programs were all administered by the EEU
and we will be required to charge our customers a certain amount to fund
this program. We will be required to charge 2.5 to 4 times the amount
we have recently budgeted for this purpose, which was itself much more
than we could reasonably spend. This is the amount that now appears
on the bill as the EEC.
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DUP - Distributed Utility Planning
DUP is the subject of a current docket involving all electric utilities
and DPS. DPS
wants utilities to be able to do a variety of alternative
engineering studies when electric systems contemplate adding new facilities.
To do this well, the utilities must maintain information allowing for computer
modelling of their transmission and generation properties. For small
utilities such as us, it is important that we strike a reasonable balance
between the cost of maintaining this model data and the savings that might
reasonably be expected by using it.
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EEC - Energy Efficiency Charge This is a line item on our electric bill, labeled EN EFF CHG. It is a certain percentage of the rest of the month's electric bill. This money is used to support the EEU, the energy efficiency utility. The percentage is determined each year by the Public Service Board.
EEU - Efficiency Vermont - Energy Efficiency Utility
http://www.efficiencyvermont.com/
Welcome to Vermont's newest resource - Efficiency Vermont! Our mission
is to help you save money and preserve Vermont's environment by using energy
efficiently. We're dedicated to serving all Vermonters with services and
products that reduce electric bills and pollution associated with energy
use.
Our Goals
· Reduce your electric bills with cost-effective energy efficiency
measures
· Reduce the cost of energy efficiency services with consistent,
integrated service to individuals and companies throughout Vermont
· Preserve Vermont's natural environment and sense of community
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Introduction to FERC
http://www.ferc.gov/about/about.asp
The Federal Energy Regulatory Commission is an independent regulatory
agency within the Department of Energy that
· Regulates the transmission and sale of natural gas for resale
in interstate commerce;
· Regulates the transmission of oil by pipeline in interstate
commerce;
· Regulates the transmission and wholesale sales of electricity
in interstate commerce;
· Licenses and inspects private, municipal and state hydroelectric
projects;
· Oversees environmental matters related to natural gas, oil,
electricity and hydroelectric projects;
· Administers accounting and financial reporting regulations
and conduct of jurisdictional companies, and;
· Approves site choices as well as abandonment of interstate
pipeline facilities.
The Commission recovers all of its costs from regulated industries
through fees and annual charges.
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GMP - Green Mountain Power
http://www.greenmountainpower.biz/
GMP
is a commercial power company whose area borders us on the north.
CVPS is another commercial company whose area borders us on the south.
WEC, Washington Electric Cooperative, is an electric cooperative whose
area borders us on the east. However, our power actually comes to
us through transmission facilities from
GMP.
Our lines are maintained
by contract with GMP.
For most of the ‘90s, our power was dispatched
by GMP.
This was a mutually satisfactory arrangement for most
of this time. When the PSB put financial pressure on
GMP by disallowing
a significant part of their rate increase, one of
GMP's reactions was to
dismantle their power department. Consequently, our power contracts
are now administered by VPPSA.
GMP still maintains our lines.
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HQ - Hydro-Quebec
http://www.hydroquebec.com/en/index.html
Hydro-Quebec is a Canadian power company that wishes to sell excess
power in the US, and does so through a variety of contracts. The
particular contracts in dispute were done some time ago when it was expected
that oil-produced power would be very expensive. At that time, the
state government and the regulatory agencies were supporting these contracts
as a way for Vermont to ensure its future power needs without burning scarce
fuel and without polluting the atmosphere as much. For some oil
prices did not climb as much as feared and this contract - and others -
became very expensive. During this particular contract was under
severe political attack in Vermont, although it is not clear that it is
significantly different than any of a variety of other contracts, such
as the IPPs, below. However, because of this attack there has
been severe regulatory pressure on all utilities, and severe financial
pressure on GMP. Because of the 1998 ice storm the Vermont
Joint Owners (VJO) of this contract sought relief by arbitration for the
losses suffered during this storm. This arbitration was settled in
mid 2001, with the VJO receiving some damages, but not as much as it had
asked for. Since then, all of rate cases pending on this decision
have been settled. Subsequently, power costs rose, and the Hydro-Quebec contracts
have been less expensive than power available on the market.
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IPP - Independent Power Producer
Again, back in the '80s there were programs to create incentives to
develop alternative sources of electric power. This, like the
HQ contract, was considered prudent at the time.
Like the HQ
contract, these contracts have long lives and are now a significant part
of our over-market (or "stranded") power costs. Because these contracts
were entered into by Vermont and mandated to the individual utilities,
they are not now under attack, nor can they be. In many cases, they
are being used as cash cows by large companies who are not developing economical
alternative power sources. We have tried, unsuccessfully, to negotiate
these contracts with the IPPs. In the fall of ‘99, we, with several
other utilities, intervened in a proposed sale, in an attempt to get some
particular monies returned to the rate payer. This has resulted in
a particularly contentious docket initially devoted completely to legal
technicalities and not to the issues important to the Vermont ratepayer.
A breakthrough occurred in January, 2002, and a proposed settlement has
been submitted to the Public Service Board.
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ISO - Independent System Operator
http://www.iso-ne.com/
The following was extracted from this site:
ISO New England Inc. was established as a not-for-profit, private corporation
on July 1, 1997 following its approval by the Federal Energy Regulatory
Commission (FERC). The organization immediately assumed responsibility
for managing the New England region's electric bulk power generation and
transmission systems and administering the region's open access transmission
tariff. Located in Holyoke, Massachusetts, ISO New England was formed by
transferring staff and equipment from the New England Power Pool.
Since May 1, 1999, ISO New England has also administered the wholesale
electricity marketplace for the region. Six electricity products
are bought and sold sold by market participants on an Internet-based
markets system.
The following was extracted from the NEPOOL site:
What is an "Independent System Operator?"
The Independent System Operator concept was developed by the Federal
Energy Regulatory Commission (FERC) as part of the framework to support
the deregulation of the $200 billion electric industry in the United States.
The FERC envisioned the establishment of several regional ISO’s across
the country which would be approved and regulated by FERC. The FERC stated
their principles for ISO operation and governance in Order 888. Key principles
include: providing independent, open and fair access to the region’s transmission
system; establishing a non-discriminatory governance structure; facilitating
market based wholesale electric rates; and ensuring for the efficient management
and reliable operation of the bulk power system.
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NED - Northfield Electric Department
http://www.vppsa.com/communities/northfield.html
NED is a municipal electric utility, but we do very little of the maintenance
with our own staff. We own the electric power lines, but contract
with GMP to maintain them. Our only electric employees do billing.
Until Oct, 1999, we bought most of our power through
GMP, although we have
independent contracts with several sources, such as Hydro Quebec and the
McNeil wood-burning plant. Because of legal details having to do
with public financing, in 1998 administration of the McNeil contract had
to be taken away from GMP
and was then administered, or dispatched, by VPPSA.
Per agreement, as of Oct 1, 1999, all of Northfield’s power is dispatched by VPPSA.
The electric utility industry is heavily regulated. We cannot change our rates without a rate case. In 1998 we had several “one-time” expenses; these caused our expenses to exceed our revenue. In 2000 we expected power costs to increase. That, and the fact that we already were running a deficit Line of Credit (LOC), caused us to file for a rate increase, effective Jan. 2000. Since then we have reduced our LOC to zero. In 2002 power costs may increase less than we had feared. In the middle of the decade we must start replacing some of our less expensive power contracts. Depending on conditions then, we may need another rate case at that time.
Despite the two recent rate increases and the fact that we have no owned generation nor our own power crew, we still provide electricity to residential customers at lower cost than any of our closest neighbors.
In November, 2002, we filed a Class Cost of Service (CCOS). Subsequently we filed
a rate reduction that took effect in January 2003.
Click here for further information
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NEPOOL - New England Power Pool
http://www.iso-ne.com/ISO_Customer_Services/NEPOOL_Participant_Registration.html/
The following was extracted from this site:
Formed
in 1971, the New England Power Pool is a voluntary association of entities
that are engaged in the electric power business in New England. The NEPOOL
members, referred to as Participants, include investor-owned utility systems,
municipal and consumer-owned systems, joint marketing agencies, power marketers,
load aggregators, generation owners and end users. None of NEPOOL's members
has an ownership interest in the association. The relationship among the
NEPOOL members is governed principally by an operating agreement called
the Restated NEPOOL Agreement. That Agreement includes provisions for the
governance of the organization. It also establishes the key understandings
concerning the operation of wholesale power markets in New England, including
the operation of a market-priced, bid-based power exchange pursuant to
which Participants can buy and sell electricity services. The Restated
NEPOOL Agreement also includes as an attachment the NEPOOL Open Access
Transmission Tariff, the "NEPOOL Tariff", pursuant to which all entities
are eligible to receive transmission service over Pool Transmission Facilities
("PTF"), which are transmission facilities in New England rated 69 kV and
above that are used to move power throughout the region. NEPOOL is a tight
power pool that established a single regional network which, historically,
has coordinated, monitored and directed the operations of virtually all
of the major generation and transmission bulk power supply facilities in
New England. NEPOOL built a state-of-the-art Control Center to centrally
dispatch the bulk power system using the most economic generating and transmission
equipment available at any given time to match the electric load of the
region. This approach has netted many millions of dollars in savings for
NEPOOL members and their customers, while increasing the overall reliability
of the bulk power system.
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PSB - Public Service Board
http://www.state.vt.us/psb/
This board administers Vermont regulatory practices. For electric
utilities, it reviews rate case proposals. The PSB is also involved
in other regulatory action. Current dockets that the municipal
utilities are participating in include what will be done about
DUP.
We also are participating in a docket that concerns the sale of a hydro-power
utility. We are not directly participating in the docket on the sale
of Vermont Yankee. Neither our 1998 nor 2000 rate case will
be formally decided until the Vermont utilities arbitration case with HQ
is settled. In the meantime we have a memorandum of understanding
concerning our rate cases that allows us to keep collecting. If there
is a favorable settlement to the HQ issues, it will save our customers
money, but won’t help us because the PSB will take account of it in the
final rate settlement. Other actions of the PSB have affected
Northfield indirectly, including its current GMP rate case.
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SCADA - Supervisory Control and Data Acquisition
This is a generic term for the control
systems used to monitor and control the operations of electric, water and
sewer utilities, as well as other operations.
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SQRP - Sevice Quality and Reliability Plan
This plan sets up a series of quality measurements and standards to which
NED will hold itself. Setting up such a plan was a
consequence of settling our outstanding rate cases of 1998 and 2000. The categories
include response time for performing customer tasks, billing accuracy and power
outages.
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VELCO - Vermont Electric Power Company
http://www.velco.com/
- the following was extracted from this web site:
The United States Congress enacted the National Energy Act (EPACT)
Title VII, in April of 1992, requiring open access to transmission to encourage
competition in the electric utility industry. The Vermont Electric Power
Company (VELCO), as the first ever transmission only company in the United
States, has been providing nondiscriminatory access to generators and shippers
on comparable terms and conditions for over 40 years.
VELCO was organized in 1956 to develop an integrated transmission system to interconnect the numerous Vermont electric utilities and to provide them with access to economic power from the St. Lawrence River project. The initial 224-mile 115 kV VELCO system was placed in service in September 1958. Since that time, VELCO has expanded its facilities and services as required by the needs of its participants and the evolution of the industry. Currently, its transmission system consists of 534 miles of transmission lines, 25 substations and a 200 MW back-to-back HVDC Converter. To monitor and control this system VELCO uses an extensive fiber optic communication network.
Through VELCO, all Vermont utilities are represented as a single entity in the New England Power Pool. (End of VELCO web extract)
VELCO currently is trying to raise some money for some construction
projects. They plan to do this by selling stock. Also, taking
advantage of new FERC rules, they plan to raise their rates for piping
electricity to various utilities, including NED. They concurrently
plan to increase the rate of return on their issued stock, some of which
we have. Largely through the efforts of Bill Gallagher, General Manager
of VPPSA, the larger utilities have agreed to have the stock issued so
that it will be distributed roughly according to power usage. If
we participate, this will increase our percentage of ownership.
NED,
with the approval of the Board of Trustees, agreed to so participate as
one of the conditions for settling the last rate case. All this happened
some time ago, but because of regulatory procedures, the final sale has
not yet occurred as of early ’02.
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VPPSA - Vermont Public Power Supply Authority
http://www.vppsa.com/about/
This is a state-wide joint action agency that supplies many services
to participating municipal electric departments. Joint action allows
all of the municipals to utilize a shared set of resources as opposed to
each of us hiring staff for those job functions. One very important job
is power dispatch. VPPSA also supports computer operations and regulatory
requirements, such as rate cases. Because our budget for the fiscal
year beginning in July, 1999 predicted a deficit of $250K with then-current
rates and power cost projections, we asked VPPSA to prepare a new rate
case for us. This rate change took effect in January, 2000.
They did not prepare our previous (1998) rate case - we re-joined them
only in Nov, 1998 - but they were very helpful in the final negotiations
with the PSB on that case.
We have had difficulties with several previous rate cases.
We looked to VPPSA to help us prepare a rate case that will enable us to
operate without losing money.
Most VPPSA participants are managed by experienced power engineers;
many of them generate power, which Northfield does not. From November,
1998 through August, 2000 we had limited management for the electric department.
VPPSA’s assistance was especially valuable to us during that time, but
still benefits us greatly by providing specialized experience that NED
can not afford to duplicate.
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