Moratorium Update:

Rate Classification Discussion

Sept. 21, 2015

Intent of Presentation

• Communicate progress toward establishing a new rate class

• Share theory of key rate class elements under consideration

• Seeking Board feedback prior to progressing toward detailed impact analysis

No Formal Board Action Required Today

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Conclusion of Staff findings from July 6

• New high EUI loads warrant a rate classification that ensures financial stability

• The new high EUI loads warrant operating policy adjustments

• In order to minimize impacts to existing customers and preserve the status quo, it is in the best interest of the District to extend the existing moratorium on applications for loads of 1aMW or more and establish an EUI threshold on applications of new or expanding loads of 250kWh/Ft2/Year for the purposes of the moratorium

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* Energy Use Intensity (EUI)

Actions recommended from July 6

• Extend the current moratorium;

• Modify the moratorium to no longer accept any new or expanded high EUI load applications;

• Define high EUI applicant, for the purpose of the moratorium, as 250kWh/Ft2/Year or greater;

• Establish and implement new rate classification(s) and associated rate structure; and

• Implement operating policy changes.

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Current Board Rate Setting Guidelines

– Fair, Equitable, Non-Discriminatory

– Revenue Stability and Sufficiency

– Cost Based

– Continuity in Philosophy

– Ability to Pay

– Conservation & Efficient Usage

– Simplicity in Administration and Understanding

– Major Shifts Adjusted Over Time

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Rate Class Addition

• Propose adding a rate class for High Density Load customers

• Address risks that threaten District’s mission

• Protect existing customers from increasing costs associated with this class

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Examples used:

• Public Service Company of Colorado

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Examples used:

• Consolidated Edison Company of New York

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9

3.2

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

aMW

New Data Processing Electrical Usage Since May 2014

Review of Progress during Moratorium • Action: Moratorium on all applications > 1aMW • Learned: Characteristics of new applicants, including high EUI, and impacts on

District business • Action: Extend moratorium and modify to include all applications > 250 EUI • Learned: High EUI alone may include some customers without the identified

impacts on District business; identified impacts on District are impacts of high density data processing loads

Rate Class Definition: Main Considerations

1. Identified Impacts and Risks. Tailor class closely to impacts and risks identified in previous presentations to the Commission and comments from Commissioners. Maximize capture of intended load and minimize capture of unintended load.

2. Data Processing. Recognize that the majority of new applicants are high density data processors and the industry has the identified risks (e.g., rapid growth, use of maximum available capacity, large potential for further growth, ability to leave suddenly). In the future, other industries may need to be addressed.

3. EUI. Recognize that high load density indicates a focus on energy use and the risks that use entails for the District.

4. Fairness and Predictability. Make the class easy for Customers to understand. Minimize burden for Customers’ new service applications.

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Draft Rate Class Summary

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Key Element Primary Reasons

Applies only to data processors and other high density technology industries similar to data processing.

Recognizes that not all high-EUI industries pose the same risks (e.g., rapid growth, use of maximum available capacity, large potential for further growth, ability to leave suddenly) as data processors.

Does not apply to any load with an EUI below a set threshold. In order to be excluded based on low EUI, the customer must demonstrate a low EUI to the satisfaction of the District.

Recognizes computer usage is common but low EUI facilities are less impactful individually and in the aggregate. Relieves customers and District from need to calculate EUI in majority of applications without compromising District’s ability to enforce threshold.

EUI Threshold Considerations

• Include high density data processors and similar high density technology industries with highest impact in the rate schedule

• Exclude customers that do not have the same impacts

• Minimize the ability to circumvent the rate schedule

• Use a tested threshold if possible – The EUI threshold of 250 kWh/Ft2/Year has successfully identified data processing applications posing the highest risk

Draft EUI Threshold: 250 kWh/Ft2/Year

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Draft Rate Class Definition High Density Load This schedule applies to data processing and similar technology industries. A Customer otherwise subject to this rate schedule will be excluded from this schedule if the Customer demonstrates to the District’s reasonable satisfaction that the EUI of its facility is less than 250kWh/Ft2/Year. “Energy Use Intensity” or “EUI” means the annual kilowatt-hours of electric energy used divided by the operating space square footage used by the energy consuming activity as determined by the District. The methodology for calculating EUI will be determined by the District. In developing and applying the methodology, the District may make reasonable assumptions and projections as necessary to estimate electrical usage and square footage based on the Customer’s application, data regarding the industry of the Customer, and other sources.

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Next Steps

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• Classification impacts

• Establish rate meeting dates Oct

• Informational meetings (tentative) Oct - Nov

• Rate proceeding (tentative) Nov - Dec

• Moratorium hearing and ratification of rate proceeding action, if any Dec 7

Questions/Comments

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