LAS Electricity Procurement Program Overview

Transcription

1 LAS Electricity Procurement Program Overview Township of Huron-Kinloss Council Presentation Graham Proudley LAS Client Relations Specialist September 3, 2014

2 WHAT IS LAS? Affiliated with AMO Focus toward competitively-priced and sustainable business services: Energy Services Procurement Programs Administrative Services Investments Our objective is to help municipalities: Save Money, Make Money & Build Capacity 2

3 LAS PROGRAM & SERVICE LISTING ENERGY SERVICES FREE Energy Consulting: EESPs The Energy Planning Tool The Energy Management Tool LED Streetlight Service Solar Photovoltaic PROCUREMENT PROGRAMS Electricity Procurement Fuel Procurement Natural Gas Procurement ADMINISTRATIVE SERVICES Home & Auto Insurance Municipal Risk Management Closed Meeting Investigator Group Benefits INVESTMENTS The One Investment Program 3

4 LAS ELECTRICITY PROGRAM PARTICIPATION Launched in 2007 with 25 municipalities 125 (28%) of Ontario municipalities participate in program 9 new members in new members in 2014 Annual hedge of approximately 365,000 MWh 119 municipalities use this option LAS offers 100% spot market billing option 6 municipalities use this option 4

5 LAS ELECTRICITY PROGRAM Background Removes Accounts from government TOU/RPP Pricing in favour of a hedged purchase or spot market pricing Facility Accounts Option #1: Place in LAS Hedge Purchase Option #2: Place at 100% Spot Market Billing Streetlight Accounts Place at 100% Spot Market Billing 5

6 ELECTRICITY MARKET Default electricity rates are often complicated if you are not already familiar with the market. Different rates apply for different types of accounts: Time-of-Use (TOU) for small volume facility accounts Regulated Price Plan (RPP) for Streetlight accounts HOEP/Spot Market for High Volume Accounts How each rate is calculated is also different from one account type to the next. 6

7 TYPICAL ELECTRICITY RATES Option RPP TOU* Spot Market (HOEP)** Applicable Accounts Streetlights, some rural facility accounts <250,000 kwh Almost all Ontario Facility Accounts <250,000 kwh Only for Facility Accounts >250,000 kwh Commodity Price Point 8.6 /kwh<750 kwh 10.1 /kwh>750 kwh 13.5 /kwh On Peak 11.2 /kwh Mid Peak 7.5 /kwh Off Peak 12-Month GA AVG. N/A N/A Total 8.6 /kwh<750 kwh 10.1 /kwh>750 kwh 9.68 /kwh 3.8 /kwh 4.86 /kwh 8.66 /kwh * May 2014 TOU Rates: Assume 22.5% on-peak, 22.5% mid-peak, 55% off-peak usage. Weighted avg. = 9.68 /kwh ** 12-month historical averages at June

8 FACILITY ACCTS <250k kwh Default to Time-of-Use (TOU) Rates On-peak 13.5 Mid-peak 11.2 Off-peak 7.5 /kwh Rates Adjusted Twice a Year May & November 4% Increase at May 2014 ~9% Year-Over-Year Increase Blended Rate Based on usage assumption: 22.5% On-peak 22.5% Mid-peak 55% Off-peak: rate Total: 9.68 /kwh 8

9 STREETLIGHT ACCOUNTS Default to Regulated Price Plan (RPP) Rates Two-tiered pricing system* 1 st All 10.1 /kwh Rates Adjusted Twice a Year May & November 4% Increase at May 2014 ~9% Year-Over-Year Increase When Consumption Price ( per kwh) Non-residential (effective May 1, 2014) All seasons How RPP Works Up to 750 kwh 8.6 More than 750 kwh 10.1 *In many cases most of usage will be at the higher rate 9

10 FACILITY ACCTS >250k kwh Default to Hourly Ontario Energy Price (HOEP) Also called the Spot Market Changes based on the market clearing price each hour (i.e. every 5 minutes), but averaged over the course of the month on bill Global Adjustment is added to the spot market rate for a total commodity cost Recent 12-month Rolling Averages to June 2014 Spot Market / HOEP: 3.8 /kwh Global Adjustment: 4.86 /kwh Total: 8.66 /kwh 10

11 THE GLOBAL ADJUSTMENT What is the Global Adjustment (GA)? The Global Adjustment is a Government charge applicable to: All high volume municipal accounts (i.e. (>250,000 kwh) Any account on contract with a retailer (such as LAS) Why do you have to pay the GA? Almost all power generators in the Ontario market have fixed, guaranteed or subsidized prices to ensure they never lose money The GA is an additional hourly charge collected from consumers by the government to pay those fixed prices, guarantees and subsidies if the HOEP is too low. 11

12 RELATION OF HOEP TO GA Note the inverse relationship between the Global Adjustment (yellow) and the HOEP/Spot Market Price (light blue). 12

13 HOEP/SPOT MARKET NOTES Average 2013 HOEP price = 2.7 /kwh Higher in 2014 YTD ~4.75 /kwh HOEP / Spot Market Customers also pay Global Adjustment charge 2013 average = 5.9 /kwh Lower in 2014 YTD ~3.83 /kwh 2013 average spot market total cost was 8.6 /kwh 2014 YTD = 8.58 /kwh 13

14 LAS HEDGED PURCHASE Purchase with 120+ Other Municipal Members Allows LAS access to better pricing based on volume Typical member hedges (fixed-price) at 65% of consumption Remaining 35% settles at HOEP / Spot Market prices LAS fixed cost approach was competitive with the spot market in 2013 and has been lower than spot market YTD Create Budget Stability for Your Municipality The 2014 Hedge Price is 2.83 /kwh The LAS rate is locked in for each calendar year. 14

15 FLEXIBLE HEDGING Flexible Hedging Hedging allows members to fix a portion of their electricity commodity cost Members can hedge as high as 75% or as low as 0% (spot market rate) Typical member hedges at 65% Comparison of Hedge Levels Higher Hedge Stable and predictable, less exposure to spot market (similar to a fixed-rate mortgage) Lower Hedge Increased volatility, but also greater potential for spot market savings (similar to a variable-rate mortgage) 15

16 ELECTRICITY RATES COMPARISON: LAS VS. DEFAULT Option RPP TOU* Spot Market (HOEP)** LAS Program*** Applicable Accounts Streetlights, some rural facility accounts <250,000 kwh Almost all Ontario Facility Accounts <250,000 kwh Commodity Price Point 8.6 /kwh<750 kwh 10.1 /kwh>750 kwh 13.5 /kwh On Peak 11.2 /kwh Mid Peak 7.5 /kwh Off Peak 12-Month GA AVG. N/A N/A Total 8.6 /kwh<750 kwh 10.1 /kwh>750 kwh 9.68 /kwh All Facility Accounts 3.8 /kwh 4.86 /kwh 8.66 /kwh LAS facility accounts <250,000 kwh 3.17 /kwh 4.86 /kwh 8.03 /kwh * May 2014 TOU Rates: Assume 22.5% on-peak, 22.5% mid-peak, 55% off-peak usage. Weighted avg. = 9.68 /kwh ** 12 month historical averages at June 2014 *** 2014 Hedge Cost (65%) & 12-month rolling averages for Spot Market** (35%) & Global Adjustment at June

17 CALCULATING THE LAS RATE Block Unit Price LAS Commodity Price LAS 2014 Hedge Price (including LAS program fee) 2.83 /kwh 65% of Load 1.84 /kwh Average 12 Month Spot Market Price 3.80 /kwh 35% of Load 1.33 /kwh Total Expected LAS Cost 3.17 /kwh Average 12 Month Global Adjustment Cost 4.86 /kwh Total Expected Commodity Cost 8.03 /kwh 12 Month Blended RPP Rate Exepcted Savings on LAS Program 9.68 /kwh 1.65 /kwh 17

18 NEXT STEPS Pass council resolution or by-law related to program enrollment and sign agreement with LAS LAS (as retailer) will enroll your accounts on spot market while we wait for the critical mass to develop next program hedge purchase Expected for Fall 2014 Spot market billing fee is $15 per account/month Prior to Hedge purchase all electricity accounts will be enrolled at spot market rates 18

19 TO LEARN MORE Graham Proudley LAS Client Relations Specialist ext. 369 Or visit our website at: 19