Minnesota Power 2018 Projected Revenue Requirements Comparison
"Explore Minnesota Power's projected revenue requirements for 2018 and compare them with 2017 figures. Discover the key cost drivers influencing the net revenue requirements and upcoming changes in transmission rates. Stay informed about regulatory reviews and potential changes in the power industry landscape."
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Presentation Transcript
2018 Attachment O Projected Net Revenue Requirements Customer Meeting October 26, 2017
2018 Projected Customer Meeting Agenda Welcome & Introductions Meeting Purpose Disclosure 2014-2018 Rate Comparison 2017-2018 AC Detailed Revenue Requirement Comparison 2017-2018 DC Detailed Revenue Requirement Comparison Questions 2
2018 Projected Meeting Purpose Present Attachment O, GG, and ZZ revenue requirements for 2018 Compare 2017 & 2018 Attachment O, GG and ZZ formula rate calculation cost components Comply with the Formula Rate Protocols 3
2018 Disclosure Minnesota Power s 2018 projected transmission rates are subject to change pending review by MISO and other Interested Parties. Information in this presentation is based upon Minnesota Power s 2018 Projected Attachment O, filed at MISO on October 5, 2017. The dates and schedules represent Minnesota Powers best estimates for projects to be initiated and completed. Please be aware that many factors could alter those schedules, including regulatory approvals, availability of materials or construction resources, weather, and other unforeseen events. 4
Minnesota Power 2018 Projected Attachment O, GG, & ZZ Formula Rate Submitted and posted on MISO s website on October 5, 2017 MISO has completed its review of Minnesota Power s 2016 True-Up Attachment O. The 2016 true-up amount, plus any interest will be applied to the annual 2018 Attachment O revenue requirement and rates. MISO has completed its review of 2018 Attachments O, GG, and ZZ and corresponding documentation. 5
Minnesota Power Projected MISO Transmission Rates 2014-2018 Comparison of Projected Monthly Rates* 2014 through 2018 ($kW/Mo) AC $1.996 $2.370 $2.627 $3.619 $4.027 DC $2.309 $2.144 $2.038 $2.512 $2.782 2014 2015 2016 2017 2018 * The rates shown are based upon Minnesota Power Revenue Requirements. This is not the MP zonal rate. The MP zonal rate includes both Minnesota Power and Great River Energy revenue requirements and load. MISO calculates the zonal rate. 6
Comparison - 2017 to 2018 Revenue Requirement AC System Attachment O Net Revenue Requirement 2017 63,533,483 $ Cost Drivers in 2018: Increase in Return Requirement Increase in Operating Costs Increase in Revenue Credits Decrease in Annual True-Up Increase due to Attachment GG Adjustment Increase due to Attachment ZZ Adjustment Net Increase in Revenue Requirement 2017 33,942,422 $ 65,612,003 $ 5,330,411 $ 5,323,096 $ 25,385,403 $ 10,628,223 $ 63,533,484 $ 2018 40,060,078 $ 76,301,663 $ 2,141,087 $ (3,229,415) $ 25,041,300 $ 9,895,311 $ 76,054,628 $ 6,117,656 10,689,660 $ 3,189,324 $ (8,552,511) $ 344,103 $ 732,912 $ 12,521,144 $ $ Attachment O Net Revenue Requirement 2018 76,054,627 $ 7
Comparison - 2017 to 2018 Revenue Requirement AC System Change in Rate Base Total Rate Base - 2017 417,603,985 $ Cost Drivers in 2018: Increase in Net Plant in Service Increase in CWIP GNTL Decrease in Accumulated Deferred Taxes Decrease in Land Held for Future Use Increase in Other Working Capital Net Increase in Rate Base 2017 385,302,902 $ 90,540,683 $ (64,920,804) $ $ 6,664,427 $ 417,603,984 $ 2018 432,153,231 $ 126,977,950 $ (72,484,428) $ $ 7,351,854 $ 494,007,346 $ 46,850,329 $ 36,437,267 $ (7,563,624) $ $ 687,427 $ 76,403,362 $ 16,776 8,739 (8,037) Total Rate Base - 2018 494,007,347 $ 8
Comparison - 2017 to 2018 Revenue Requirement AC System Change in Operating Costs 2017 Operating Costs 65,612,003 $ 2017 26,708,502 $ 14,039,182 $ 6,556,555 $ 18,307,763 $ 65,612,002 $ 2018 30,883,136 $ 15,777,493 $ 7,862,945 $ 21,778,090 $ 76,301,664 $ Increase in Operating & Maintenance Increase in Depreciation Increase in Taxes Other Than Income Taxes Increase in Income Taxes Net Increase in Operating Costs 4,174,634 1,738,311 1,306,390 3,470,327 10,689,662 $ $ $ $ $ 2018 Operating Costs 76,301,663 $ 9
Comparison - 2017 to 2018 Revenue Requirement AC System Change in Revenue Credits 2017 Revenue Credits $ 5,330,411 2017 548,352 4,782,059 5,330,411 2018 715,494 1,425,593 2,141,087 Increase in Account 454 (Rent from Electric Property) Decrease in Account 456.1 (Other Electric Revenues) Net Decrease in Revenue Credits (Increases Revenue Requirement) $ $ $ $ $ $ 167,142 (3,356,466) $ (3,189,324) $ $ 2018 Revenue Credits $ 2,141,087 10
Comparison - 2017 to 2018 Revenue Requirement AC System Change in Annual True Up Adjustment 2017 True-up (2015 True Up year) $ 5,323,096 2017 2,217,375 2,958,280 147,441 5,323,096 2018 (4,149,393) $ 1,131,541 $ (211,563) $ (3,229,415) $ Decrease in Revenue Requirement Component Decrease in Divisor Component Change in Interest Component Net Decrease in True-up $ $ $ $ (6,366,768) $ (1,826,739) $ (359,004) $ (8,552,511) $ 2018 True-up (2016 True Up year) (3,229,415) $ 11
Comparison - 2017 to 2018 Revenue Requirement AC System Attachment GG 2018 Projects Included in Attachment GG - $130,949,139 total project costs In-Service 277 MTEP07 - Badoura 279 MTEP06 - Boswell / Bemidji 286-1 MTEP08 - Fargo Phase 1 286-2 MTEP08 - Fargo Phase 2 286-3 MTEP08 - Fargo Phase 3 2634 MTEP11 - Savanna Project 3373 MTEP11 - 9 Line Upgrade 12
Comparison - 2017 to 2018 Revenue Requirement AC System Attachment GG Adjustment 2017 Attachment GG Adjustment ($131,496,276 gross plant) 25,385,403 $ Revenue Requirement Components Increase in Annual Expense Charge Decrease in Annual Return Charge Decrease in Project Depreciation Expense Net Decrease in Attachment GG Adjustment 2017 7,933,100 14,164,896 $ 3,287,407 $ 25,385,403 $ 2018 7,959,571 13,808,000 $ 3,273,729 $ 25,041,300 $ $ $ $ $ $ $ 26,471 (356,896) (13,678) (344,103) 2018 Attachment GG Revenue Requirements ($130,949,139 gross plant) (applied as credit against Attachment O Rev Req) 25,041,300 $ 13
Comparison - 2017 to 2018 Revenue Requirement AC System Attachment ZZ 2018 AC Projects Included in Attachment ZZ - $52,557,690 total estimated project costs In-Service 4293 - AC NERC Facility Ratings Alert - Medium Priority 4294 - AC NERC Facility Ratings Alert - Low Priority 14
Comparison - 2017 to 2018 Revenue Requirement AC System Attachment ZZ Adjustment 2017 AC Attachment ZZ Adjustment ($54,127,985 gross plant) 10,628,223 $ Revenue Requirement Components Decrease in Annual Expense Charge Decrease in Annual Return Charge Decrease in Project Depreciation Expense Net Decrease in Attachment ZZ Adjustment 2017 3,265,513 5,977,243 1,385,468 10,628,224 $ 2018 3,194,650 5,748,341 952,320 9,895,311 $ $ $ $ $ $ $ $ $ $ $ (70,863) (228,902) (433,148) (732,913) 2018 AC Attachment ZZ Adjustment ($52,557,690 gross plant) (applied as credit against Attachment O Rev Req) $ 9,895,311 15
Comparison - 2017 to 2018 RevenueRequirement DC System Attachment O Net Revenue Requirement 2017 16,581,888 $ Cost Drivers in 2018: Increase in Return Requirement Increase in Operating Costs Increase in Annual True-Up Decrease due to Attachment ZZ Adjustment Net Increase in Revenue Requirement 2017 5,584,097 11,230,270 $ 1,123,903 $ 1,356,382 $ 16,581,888 $ 2018 5,733,823 11,983,043 $ 2,004,530 $ 1,362,143 $ 18,359,253 $ $ $ $ $ $ $ $ 149,726 752,773 880,627 (5,761) 1,777,365 Attachment O Net Revenue Requirement 2018 18,359,253 $ 16
Comparison - 2017 to 2018 Revenue Requirement DC System Change in Rate Base Total Rate Base - 2017 68,702,846 $ Cost Drivers in 2018: Increase in Net Plant in Service Increase in Accumulated Deferred Taxes Increase in Other Working Capital Net Increase in Rate Base 2017 77,094,630 $ (9,662,406) $ 1,270,622 $ 68,702,846 $ 2018 78,879,929 $ (9,462,415) $ 1,290,051 $ 70,707,565 $ $ $ $ $ 1,785,299 199,991 19,429 2,004,719 Total Rate Base - 2018 70,707,565 $ 17
Comparison - 2017 to 2018 Revenue Requirement DC System Change in Operating Costs 2017 Operating Costs 11,230,270 $ 2017 2,991,969 3,976,793 1,220,334 3,041,174 11,230,270 $ 2018 3,374,367 4,149,174 1,315,791 3,143,711 11,983,043 $ Increase in Operating & Maintenance Increase in Depreciation Increase in Taxes Other Than Income Taxes Increase in Income Taxes Net Increase in Operating Costs $ $ $ $ $ $ $ $ $ $ $ $ $ 382,398 172,381 95,457 102,537 752,773 2018 Operating Costs 11,983,043 $ 18
Comparison - 2017 to 2018 Revenue Requirement DC System Change in Annual True Up Adjustment 2017 True-up (2015 True Up year) $ 1,123,903 2017 1,092,773 31,130 1,123,903 2018 1,934,113 70,417 2,004,530 Increase in Revenue Requirement Component Change in Interest Component Net Increase in True-up $ $ $ $ $ $ $ $ $ 841,340 39,287 880,627 2018 True-up (2016 True Up year) $ 2,004,530 19
Comparison - 2017 to 2018 Revenue Requirement DC System Attachment ZZ 2018 DC Projects Included in Attachment ZZ - $8,221,371 total estimated project costs In-Service 4293 - DC NERC Facility Ratings Alert - Medium Priority 20
Comparison - 2017 to 2018 Revenue Requirement DC System Attachment ZZ Adjustment 2017 DC Attachment ZZ Adjustment ($8,098,605 gross plant) $ 1,356,382 Revenue Requirement Components Increase in Annual Expense Charge Increase in Annual Return Charge Decrease in Project Depreciation Expense Net Increase in Attachment ZZ Adjustment 2017 276,868 872,456 207,058 1,356,382 2018 303,571 878,607 179,965 1,362,143 $ $ $ $ $ $ $ $ $ $ $ $ 26,703 6,151 (27,093) 5,761 2018 DC Attachment ZZ Adjustment ($8,221,371 gross plant) (applied as credit against Attachment O Rev Req) $ 1,362,143 21
2018 Transmission Customer Meeting Questions? 22
2018 Transmission Customer Meeting Contacts: Jeanne Kallberg jkallberg@mnpower.com (218) 355-2648 Kara Henderson khenderson@mnpower.com (218) 355-2869 23
