Setting Competitive Electric Rates. Ronald D. Elks General Manager/CEO Presented to: Joint Municipal Power Agency Relief Committee January 10, 2012

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1 Setting Competitive Electric Rates Ronald D. Elks General Manager/CEO Presented to: Joint Municipal Power Agency Relief Committee January 10, 2012

2 2 Overview About GUC Our Customers Rate Setting Methodology/Strategy Competitiveness Catalyst for Economic Growth Summary

3 3 Mission Statement Greenville Utilities is dedicated to enhancing the quality of life for those we serve by providing safe, reliable utility services at the lowest reasonable cost, with exceptional customer service.

4 4 Local Control GUC is governed by an eight-member Board of Commissioners made up of local citizens representing the interests of all customers

5 5 Our Board Is the regulatory body for GUC Makes decisions that support local needs and values Is responsible for approving rates and development plans, setting operating and extension policies, and recommending GUC s annual budget for approval by City Council

6 6 Customer Connections 64,000 Electric 22,000 Gas Edgecombe/Martin EMC Edgecombe/Martin EMC 34,250 Water 28,000 Sewer Pitt/Greene EMC GUC Electric Winterville Progress Energy Combined total: ~148,250 Ayden Progress Energy

7 7 Energy Sales by Customer Type kwh Billed 21% 7% 29% 43% Residential Small Commercial Commercial Industrial

8 8 Four Enterprise Funds: Separate and Self-Sustaining Electric/water/sewer/natural gas enterprise funds are operated as separate and selfsustaining business units. Each enterprise fund stands alone and each is supported by cost-of-service rates and fees.

9 9 Cost-of-Service Principles The rates for all GUC services are developed on a cost-of-service basis. Based on comprehensive rate studies, the actual rate structure is set to recover the costs to serve all customers. GUC s policy is to maintain rates at or below the median or midpoint when compared to other regional electric providers.

10 Electric: Winter Bill Typical Residential Customer using 1,000 kwh with LM Credits EMCs Municipals Median GUC IOUs $0.00 $20.00 $40.00 $60.00 $80.00 $ $ $ Updated January 2012 Total Bill

11 11 Competitive Rates GUC has been successful in consistently maintaining residential and industrial rates at or below the median of other neighboring and regional providers.

12 12 Electric: Where Does Our Dollar Go? 83 Purchased Power Costs (including NCEMPA debt) 17 Operations/Maintenance, System Infrastructure, Turnover, Salaries

13 13 Formal Transfer Agreement with City Computation of City Transfer is specified in Chapter 861 of Senate Bill 1069, An Act to Amend and Restate the Charter of the Greenville Utilities Commission of the City of Greenville. General fund transfers are computed based on 6% of the Electric and Gas Funds fixed assets, net of related debt plus 50% of the annual retail cost of service for the City's public lighting. Transfers are made to the City only after payment of all debt service.

Rate Strategy: Lowest Reasonable Cost 14 Focus on ensuring that our customers pay the lowest reasonable rates, consistent with safe and reliable service.

14 Rate Strategy: Lowest Reasonable Cost 14 Focus on ensuring that our customers pay the lowest reasonable rates, consistent with safe and reliable service. GUC has offset past wholesale electric increases through system growth and costsaving measures such as load management, industrial generation, and other efficiencies.

15 15 Absorbing Increases Since 2002, GUC has absorbed: Nearly $10.5 million in wholesale electric cost increases Nearly $4.7 million in increased costs for poles, transformers, wire, vehicles, fuel, insurance, labor, etc. Last electric base rate adjustment in 1991 All increases since that time have been directly attributable to the cost of acquiring power for customers

16 Record of Reliability GUC continually reinvests in its systems, ensuring consistent, reliable service for all customers. For FY2011, overall electric system reliability was % GUC compares favorably with national averages for outage duration and frequency. We rank in the top 10 percent based on industry benchmarking results.

17 17 Catalyst for Economic Growth Commercial, Industrial & Institutional Customers Mutual Benefits Profitability & Sustainability Key Relationships Provide Support & Assistance

18 18 Industrial Requirements Reliability (infrastructure in place) Power quality 5% growth since 1990 Flexibility to meet specific needs

19 Total Customers Growth in Electric Customers 70,000 65,000 60,000 55,000 50,000 45,000 40,000 35,000 30,

20 MWh Growth in Electric Sales (MWh) 1,750 1,700 1,650 1,600 1,550 1,500 1,450 1,400 1,350 1,300 1,

21 21 Managing the Debt Since the early 1980s, GUC s portion of the NCEMPA debt has been incorporated into our electric rates. For over 30 years, through load management, industrial generation, growth and other costcontainment measures, GUC has successfully managed and paid its portion of the debt while maintaining competitive rates, high levels of service and supporting the economic growth of Greenville-Pitt County.

22 22 Summary Competitive rates Safe, reliable service Sound financial management A catalyst for economic growth/ industrial recruitment

23 Setting Competitive Electric Rates Ronald D. Elks General Manager/CEO Presented to: Joint Municipal Power Agency Relief Committee January 10, 2012

A Letter to Our Customers

ANNUAL REPORT 2003 A Letter to Our Customers From the General Manager MG&E experienced a year of progress in spite of the contentious world climate in 2003. This climate contributed to volatile energy