IDIA 614 Sequential Visualization and Analysis
Data Representation - BGE Research Artifact
David Pepper
From: Dasher, Don M
Sent: Wednesday, April 18, 2007 11:10 AM
To: 'david.pepper at verizon.net'
Cc: Howe, Tawanda
Subject: Answers to your questions
David - below are the responses to the questions that you asked. If there are any further questions, please email to my attention.
Cheers!
Don
Stabilization Deferral Phase 1
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1. no opt out
correct. All BGE residential electric customers are required to participate by law
2. in effect 6/1/06-5/31/07 - Between these dates a portion of the bill was deferred through a deferral credit.
3. repayment to be "phased in" over 10 years
Phased in isn't quite right. Repayment will be over a 10 year period. Will include deferred power costs, carrying/interest charges and other costs related to the issuance and support of the bonds to be issued
4. pot of accumulated debt bears interest
The repayment of the deferred costs will include the borrowing costs BGE will incur
Repayment
5. "averaged by number of customers"
The recovery charge, like the credits are based on a rate that will be applied on monthly usage therefore the amount you see on your bill will change each month. Because usage varies each month it is not likely the recovery charge and credits will match. Customers will not pay more or less than the total recovery cost (plus carrying/interest costs and other costs related to the issuance and support of the bonds to be issued)
6. shouldered by all people in pot
All BGE residential electric customers participate in the 2006 Rate Stabilization plan as required by law
7. weighted by use (i.e. weighted average, see http://en.wikipedia.org/wiki/Weighted_mean)
The recovery charge, like the credits are based on a rate that will be applied on monthly electric usage therefore the amount you see on your bill will change each month. Because usage varies each month it is not likely the recovery charge and credits will match. Customers will not pay more or less than the total recovery cost (plus carrying/interest costs and other costs related to the issuance and support of the bonds to be issued)
8. defaults subtract from, immigrants add to population (i.e. no repayment if leave BGE/state)
There are no exit fees, so if someone leaves BGE's service territory, they also leave the 2006 Rate Stabilization Program; if a customer enters BGE’s territory during deferral period, they will get credits; if a customer enters during recovery period, they will pay the recovery charge
Proposed Stabilization Deferral Phase 2
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9. no opt out
The law states this will be a voluntary program
10. to take effect 6/1/07-12/31/07
The law states that all residential electric customers will be paying market rates January 1, 2008 unless they choose to participate in a voluntary 2007 Deferral Plan
11. repayment "phased in" over 2 years
Phased in isn’t quite right. Repayment will be over 2 years
12. pot of accumulated debt bears interest
The repayment of the deferred costs will include the borrowing costs BGE will incur
Repayment
Same as above, but will apply only to those customers who voluntarily participate in the deferral program
13. "averaged by number of customers"
See above
14. shouldered by all people in pot
See above
15. weighted by use (i.e. weighted average, see http://en.wikipedia.org/wiki/Weighted_mean)
See above
16. defaults subtract from, immigrants add to population (i.e. no repayment if leave BGE/state)
The 2007 plan, as proposed will have an exit fee . Customers opening BGE accounts after the enrollment period will pay market rates
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Specific Questions
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17. My understanding is that the stabilization deferral only applies to the electricity portion of the bill. Does this cover the entire projected increase in the bill? I.e. Was a rise in gas commodity and/or delivery prices part of the projected 72%/65% increase?
72% was the annualized increase to the total residential electric bill
18. In #3 above (phase 1), what is the amortization schedule for the phase in period? (see http://en.wikipedia.org/wiki/Amortization)
There is no amortized schedule. The average annualized increase was approximately 15%. Customers received a credit. This credit has been calculated to be 4.577 cents per kWh from July to September, 2006 and 5.052 cents per kWh from October, 2006 through May, 2007.
19. In #11 above (phase 2), what is the amortization schedule for the phase in period? (see http://en.wikipedia.org/wiki/Amortization)
Under BGE’s proposal, customers who opt in will pay half of the increase to market rates starting on June 1, 200 and will make the full move to market rates starting on January 1, 2008
20. How is the weighted average described in 7. (phase 1) calculated? I.e. what is the relationship between use of electricity and the fee?
The recovery charge, like the credits are based on a rate that will be applied on monthly usage therefore the amount you see on your bill will change each month. Because usage varies each month so it is not likely the recovery charge and credits will match. Customers will not pay more or less than the total recovery cost (plus carrying/interest costs).
21. How is the weighted average described in 15. (phase 2) calculated? I.e. what is the relationship between use of electricity and the fee?
The recovery charge, like the credits are based on a rate that will be applied on monthly usage therefore the amount you see on your bill will change each month. Because usage varies each month so it is not likely the recovery charge and credits will match. Customers will not pay more or less than the total recovery cost (plus carrying/interest costs).
22. In #4 above (phase 1), what method of calculating interest is used? What rate? Is it variable? Is it compounding? If so on what schedule?
The repayment of deferred costs include the borrowing costs BGE will incur
23. In #12 above (phase 2), what method of calculating interest is used? What rate? Is it variable? Is it compounding? If so on what schedule?
The repayment of deferred costs include the borrowing costs BGE will incur
24. The wording in "Connections Special Edition July 06" says "The [phase 1] recovery fee will be modest and vary with usage." What are the components of the fee and how is a customer's use (relative to other customers) used to generate the fee?
The recovery charge, like the credits are based on a rate that will be applied on monthly usage therefore the amount you see on your bill will change each month. Because usage varies each month so it is not likely the recovery charge and credits will match. Customers will not pay more or less than the total recovery cost.
The recovery costs cover the borrowing costs BGE will incur as well as other costs associated with the issuance and support of the bonds to be issued.
25. Is the 65% percent revised rate increase mentioned in the February and March Connections calculated by subtracting the 15% increase which was not covered by the stabilization deferral from the projected 72% increase? If not, how is it calculated? I.e. What period of time is it an increase from/to?
The 65% reflects an increase over current bills. This world be in addition to the 15%
26. How can BGE customers access the Phase 1 bill/law?
A summary of the 2006 plan can be found on bge.com Can also get it from the General Assembly web site: http://mlis.state.md.us/
27. How can BGE customers access the phase 2 proposal and/or the resulting bill?
The proposal has been filed with the Maryland Public Service Commission. Once approved, BGE will notify all residential electric customers. Can also get a copy of order once issued from PSC web site (Its’s Case No. 9099): http://www.psc.state.md.us/psc/index.htm
28. When would the rate increase have kicked in without phase 1? 6/1/07?
Absent Senate Bill 1, , residential customers would have begun to began paying market rates for electricity supply starting July 1, 2006