october 30, 2014
DESCRIPTION
2015 Attachment O Customer Meeting for Missouri River Energy Services and Marshall Municipal Utilities. October 30, 2014. Terry Wolf, Manager of Transmission Services. Agenda. Meeting Purpose MRES Profile Attachment O Calculation Question/Answer MMU Profile - PowerPoint PPT PresentationTRANSCRIPT
October 30, 2014
2015 Attachment OCustomer Meeting for
Missouri River Energy Services and Marshall Municipal Utilities
Terry Wolf, Manager of Transmission Services
AgendaMeeting Purpose MRES
Profile Attachment O Calculation Question/Answer
MMUProfileAttachment O CalculationQuestion/Answer
Regulatory Background and Outstanding Issues
Meeting PurposeTo provide an informational forum regarding
the MRES forecasted Attachment O for 2015.
The forecasted Attachment O for 2015 is calculated using the Midwest ISO’s EIA Form 412 Attachment O-MRES template with a projected net revenue requirement and projected load.
Rates become effective on January 1, 2015 for joint pricing zone comprised of Otter Tail Power Company, Great River Energy, and MRES.
Attachment GG, MM effective January 1, 2015.
Missouri River Energy Services
Odin Wind Project
WorthingtonWind Project
Marshall Wind Project
LaramieRiver Station
Exira Station
WatertownPower Plant
Missouri River
Misso
uri R
iver
Misso
uri R
iverYellowstone River
Big Horn RiverCanyon Ferry Dam
Fort Peck Dam
Yellowtail Dam
Garrison Dam
Oahe Dam
Big Bend Dam
Fort Randall Dam
Gavin’s PointDam
Rugby Wind
Project
Point Beach Nuclear Plant
Red Rock Hydroelectric
Plant
MBPP
Irv Simmons
CapX Fargo
CapX Brookings
ITA
MRES Member
MRES Generation Resource
Planned MRES Generation Resource
Federal Hydroelectric Dam Transmission Projects (MBPP, Irv Simmons, ITA, CapX (Fargo, Brookings)
- 61 Members served - Transmission: ~239 miles- Generation: ~744
MW- Renewable: ~86
MW
MRES FERC ActivitiesTransmission facilities are owned by Western
Minnesota Municipal Power Agency (WMMPA)FERC Declaratory Order (EL08-22, 12/08)
combines financial statements for ATRRAttachment O effective 6/1/11Incentive filing (EL11-45, 6/11)
CapX; Fargo P2 & P3, and Brookings CWIP, Abandon Plant, Hypothetical cap structure
205 filing (ER12-351, 11/11)FERC Approved ER12-351, and EL 11-45 on
January 20, 2012
Forward Looking Attachment OForward Rate Requirements Rate Base Operating Expenses Revenue Requirement and Rate Network Rate Summary
Forward Rate RequirementBy June 1 of each year, MRES will post on OASIS
all information regarding any Attachment O True-up Adjustments for the prior year.2015 Forward Looking Attachment O will be true-up
info will be posted June 2014 from 2013 financials.MRES will post on OASIS its projected Net
Revenue Requirement including the True-Up Adjustment and load for the following year, and associated work papers in September.
MRES will hold a customer meeting to explain its formula rate input projections and cost detail.
Total Rate BaseRate Base Item
2014Projected (Monthly Average)
2015Projected (Monthly Average)
$ Change
% Chang
e Explanation
Gross Plant in Service $ 107,061,023 $ 163,462,421 $ 56,401,398 52.7%
The increase is due mainly to the projected energization of CapX Fargo Phase 3 and a portion of CapX Brookings.
Accumulated Depreciation $ 37,444,201 $ 40,020,878 $ 2,576,677 6.9%
Net Plant in Service $ 69,616,822 $ 123,441,543 $ 53,824,721 77.3%
CWIP $ 45,433,754 $ 12,378,619 $(33,055,135) -72.8%
Working Capital, M&S and
Prepayments $ 1,545,076 $ 1,709,614 $ 164,538 10.6%
Total Rate Base $ 116,595,652 $ 137,529,777 $ 20,934,125 18.0% Net Plant + CWIP + Working Capital
Note: The above numbers are transmission only and general and intangible plant allocated to transmission.
Rate Base Earning Hypothetical Capital Structure Return
Rate Base Item 2014
Projected (Monthly Average)
2015 Projected (Monthly Average)
$ Change
% Change Explanation
Gross Plant in Service $ 35,271,170 $ 87,233,135 $ 51,961,965 147.3%
The increase is due mainly to the projected energization of CapX Fargo Phase 3 and a portion of CapX Brookings.
Accumulated Depreciation $ 493,553 $ 1,925,723 $ 1,432,170 290.2%
Net Plant in Service $ 34,777,617 $ 85,307,412 $ 50,529,795 145.3%
CWIP Projects included in Rate
Base $ 45,433,754 $ 12,378,619 $ (33,055,135) -72.8%
Working Capital $ - $ - $ - - %
Rate Base- Hypothetical
Capital Structure $ 80,211,371 $ 97,686,032 $ 17,474,661 21.8% Net Plant + CWIP + Working Capital
Note: The above numbers are transmission.
Operating Expenses
Expense Item
2014Projected
2015Projected
$ Change
% Change Explanation
O&M $ 5,592,612 $ 5,978,422 $ 385,810 6.9%
Depreciation Expense $ 1,895,223 $ 3,029,955 $ 1,134,732 59.9% Increase in Depreciation Expense is due
to projected plant additions.
Taxes Other than Income $ 496,027 $ 911,077 $ 415,050 83.7%
Increase in other taxes is due to projected property taxes on additional transmission plant in service.
Operating Expense $ 7,983,862 $ 9,919,454 $ 1,935,592 24.2% O&M + Depreciation + Taxes
Note: The above numbers are transmission only andA&G expenses, general plant depreciation and taxes allocated to transmission.
Return on Rate Base (Actual Capital Structure)2014
Projected 2015
Projected $
Change % Change Explanation
Long Term Debt 75% 78% $- 4.00%
Proprietary Capital 25% 22% $- -12.0%
Total 100.00% 100.00% $- - %
Cost of Debt 5.43% 4.88% N/A -10.1% Lower cost of 2014 debt issue
MISO Equity Return 12.38% 12.38% N/A 0.0% Equity return approved for MISO Transmission Owners.
Rate of Return 7.18% 6.53% N/A -9.1% (LTD*Cost of Debt) + (Proprietary Capital * MISO Equity Return)
Total Rate Base $ 116,595,652 $137,529,777 $ 32,957,152 18.0% From Rate Base Calculation
Allowed Return –Actual Capital Structure $ 8,373,575 $ 8,979,168 $ 2,228,674 7.2%
Increase largely due to additional transmission investment. See Rate Base slide for additional detail.
Return on Rate Base (Hypothetical Capital Structure)2014
Projected 2015
Projected Comments
Long Term Debt 55% 55% Capital Structure approved in docket EL 11-45-000. Proprietary Capital 45% 45%
Total 100.00% 100.00%
Weighted Cost of Debt 5.43% 4.88% See previous slide.
MISO Equity Return 12.38% 12.38%Rate of Return –
Hypothetical Capital Structure 8.56% 8.26% 55% * Cost of Debt plus 45% * 12.38%
Rate of Return - Actual Capital Structure 7.18% 6.53% See previous slide.
Difference between Hypothetical and Actual Capital Structure 1.375% 1.727%
Rate Base - Hypothetical Capital Structure $ 80,211,371 $ 97,686,032
Additional Return – Hypothetical Capital Structure $ 1,102,658 $ 1,687,476
Hypothetical and actual capital structure difference * Hypothetical Capital Structure Rate Base
Revenue Requirements, Excluding Prior Year True-Up
2014 Projected
2015Projected
$ Change
% Change Explanation
Return - Actual Capital Structure $ 8,373,575 $ 8,979,168 $ 605,593 7.2%
Increase due to additional investment in CapX transmission plant.
Additional Return –Hypothetical Capital Structure $ 1,102,658 $ 1,687,476 $ 584,818 53.0%
Increase due to additional investment in CapX transmission plant.
Operating Expense $ 7,983,862 $ 9,919,454 $ 1,935,592 24.2% See Operating Expense slide for
details.Total Revenue Requirement Before Prior Year True-Up $ 17,460,096 $ 20,586,098 $ 3,126,002 17.9%
Attachment GG Adjustments $ (8,086,829) ($ 9,742,309) $ (1,655,480) -20.5% Projected credit for the CapX Fargo Project.
Attachment MM Adjustments $ (3,129,634) ($ 4,445,882) $ (1,316,248) -42.1% Projected credit for the CapX Brookings Project.
Attachment O Revenue Requirement Before credits $ 6,243,633 $ 6,397,908 $ 154,275 2.5%
Revenue Credits $ 135,153 $ 135,153 $ - 0.0%Revenue credits assumed to remain unchanged from 2014 to 2015.
Net Attachment O Revenue Requirement Before Prior Year
True-Up $ 6,108,480 $ 6,262,755 $ 154,275 2.5% Revenue Requirement before
credits less Revenue Credits
Revenue Requirements, Including Prior Year (2013 Actual) True-Up
2014 Projected
2015Projected
$ Change
% Change
Attachment O Before True-Up $ 6,108,480 $ 6,262,755 $ 154,275 2.5%
Attachment O True-up, Including Interest $ (1,489,607) $ 339,555 $ 1,829,162 -122.8
Attachment O Revenue Requirement Including True-Up $ 4,618,873 $ 6,602,310 $ 1,983,437 42.9%
Attachment GG Before True-Up $ 8,086,829 $ 9,742,309 $ 1,655,480 20.5%
Attachment GG True-up, Including Interest $ (1,368,055) $ 56,044 $ 1,424,099 -104.1%Attachment GG Revenue Requirement Including True-Up $ 6,718,774 $ 9,798,353 $ 3,079.579 45.8%
Attachment MM Before True-Up $ 3,129,634 $ 4,445,882 $ 1,316,248 42.1%
Attachment MM True-up, Including Interest $ (273,057) $ 302,570 $ 575,627 -210.8
Attachment MM Revenue Requirement Including True-Up $ 2,856,577 $ 4,748,452 $ 1,891,875 66.2%
15
MRES Total ATRRAttachment O, GG, MM
$21,149,115
Attachment O $6,602,310
31%
Non-MISOIS PRICING ZONE
$3,338,09151% of Att O
MISOOTP PRICING ZONE
$ 3,264,219 49% of Att O
MISO Attachment GG CapX Fargo$ 9,798,353
46%
MISO Attachment MM CapX Brookings
$ 4,748,45223%
2015 MRES Annual Transmission Revenue Requirement Distribution
Marshall Municipal Utilities
- Located in SW MN- Load ~ 85 MW- Transmission
- ~ 15 miles- 6 HV substations
- Generation: - CT and Wind
Interconnected
MMU FERC ActivitiesTransmission facilities are owned by
Marshall Municipal Utilities Commission (MMU)
MMU is a member of MRESMRES has an agency agreement with
MMU (6th agency agreement in MISO)MRES will be signatory to JPZ in NSP
zoneMISO made FLTY filing on October 21,
2014, asking for effective date of 1/1/15, ER15-142
Forward Looking Attachment OForward Rate Requirements Rate Base Operating Expenses Revenue Requirement and Rate Network Rate Summary
Forward Rate RequirementBy June 1 of each year, MRES will post on
MRES OASIS all information regarding any Attachment O True-up Adjustments for MMU for the prior year.
MRES will post on MRES OASIS projected Net Revenue Requirement including the True-Up Adjustment and load for the following year, and associated work papers in October.
MRES will hold a customer meeting for MMU to explain its formula rate input projections and cost detail.
Total Rate BaseRate Base Item
2014Projected (Monthly Average)
2015Projected (Monthly Average)
$ Change
% Change Explanation
Gross Plant in Service $ 17,071,419
Accumulated Depreciation $ 8,774,764
Net Plant in Service $ 8,296,655
Working Capital, M&S and
Prepayments $ 102,143
Total Rate Base $ 8,398,798
Note: The above numbers are transmission only and general and intangible plant allocated to transmission.
Operating Expenses
Expense Item
2014Projected
2015Projected
$ Change
% Change Explanation
O&M $ 558,847
Depreciation Expense $ 557,718
Taxes Other than Income $ 291,577
Operating Expense $ 1,408,143 Sum of prior 3 items
Note: The above numbers are transmission only andA&G expenses, general plant depreciation and taxes allocated to transmission.
Return on Rate Base2014
Projected 2015
Projected $
Change %
Change Explanation
Long Term Debt 33%
Proprietary Capital 67%
Total 100.00%
Cost of Debt 4.09%
MISO Equity Return 12.38% Equity return approved for MISO Transmission Owners.
Rate of Return 9.6% (LTD*Cost of Debt) + (Proprietary Capital * MISO Equity Return)
Total Rate Base $ 8,398,798 From Rate Base Calculation
Return $ 806,637
Revenue Requirements, Excluding Prior Year True-Up
2014 Projected
2015Projected
$ Change
% Change Explanation
Return $ 806,637
Operating Expense $ 1,408,143
Total Revenue Requirement Before Prior Year True-Up $ 2,214,780
Attachment GG Adjustments NA
Attachment MM Adjustments NA
Attachment O Revenue Requirement Before credits $ 2,214,780
Revenue Credits $ 0Assumed zero because no basis to estimate.
Net Attachment O Revenue Requirement Before Prior Year
True-Up$ 2,214,780
Regulatory / FERC IssuesComplaint against MISO TOs
regarding ROE and certain TOs regarding capital structure (ER14-12)Unknown timing and impactsResolved in 2015??
Complaint against MISO TOs regarding Protocols (Docket EL12-35)Required changes in timing and info shared
MMU FERC Filing ER15-142
Regulatory / FERC Issues, Procedures and Timing
By June 1st Post actual calculations and true-ups based on prior year’s Rate
InformationBy September 1st
Meet with Interested Parties to discuss the actual prior year’s Rate information
December 1st Deadline for information requests
By January 10th Must respond to information requests
January 31st Deadline for informal challenges
March 15th Annual Informational filing
March 31st Deadline for formal challenges
QuestionsIf you have any additional questions after the meeting, please submit via e-mail to Terry Wolf: [email protected]
All questions and answers will be distributed by e-mail to all attendees. Additionally, the questions and answers will be posted on the MRES OASIS website (http://oasis.midwestiso.org/OASIS/MRET) within two weeks from the date of inquiry.