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91-2148 O�f�"�� ouncil File # /�o?/�G � , ,+ �Z � � Green Sheet # �S� / � RESOLUTION CITY OF SAINT PAUL, MINNESOTA :�' �- resented By Referred To ( , c �� 'c�ynY,,� . Committee: Date i � - �b ,.. � l 1 WHEREAS, the City of Saint Paul has granted, in Ordinance No. 16947, as 2 amended, a franchise to use the public streets and ways to deliver hot water within 3 Saint Paul to District Heating Development Company (DHDC), doing business as 4 District Energy St. Paul, Inc., a Minnesota non-profit corporation; and 5 6 WHEREAS, on July 19, 1991, District Energy filed with the City Clerk a notice 7 of its intent to amend hot water rates which will go into effect on October 1, 1991; 8 and 9 10 WHEREAS, such rates are thereby effective pending City Council approval, 11 which approval requires a public hearing; and 12 13 WHEREAS, evidence has been presented to the City Council that: 14 15 District Energy proposes the following changes: 16 17 a) The demand rate changes from $3.85 per kilowatt of contract demand per 18 month to $4.01 kw/month, a rate increase of 4.2%; 19 20 b) The budgeted energy rate changes from $10.58 per megawatt hour to 21 $11.12/mwh, an increase of 5.1%; 22 � 23 c) The single rate changes from $0.0378 per kilowatt hour, to $0.0394 per 24 kilowatt hour, an effective increase of 4.5%. 25 26 WHEREAS, the City Council has taken into account those matters required by 27 Section 6 of Ordinance No. 16947, and by C.F. No. 85-919, and finds that District 28 Energy has met all procedural and substantive requirements for approval of a rate 29 change and based on the facts, reports and opinions presented to the City Council at 30 the public hearing; now therefore, be it 31 32 RESOLVED, that the District Energy rate schedule which sets the demand rate 33 for its customers is hereby revised to increase the demand rate from $3.85 per 34 kilowatt per month to $4.01 per kilowatt per month; and be it 35 36 FURTHER RESOLVED, that the District Energy rate schedule which sets the 37 energy rate for its customers is hereby revised to increase the energy rate from $10.58 38 per megawatt hour to $11.12 per megawatt hour; and be it 39 40 FURTHER RESOLVED, that the District Energy rate schedule which sets the 41 single rate for its customers is hereby revised to increase the single rate from $0.0378 42 per kilowatt hour to $0.0394 per kilowatt hour; and be it 43 1 �1\�� "- ': . < � ��, ��i--a/ 'J: 1 = . FURTHER RESOLVED, that all other rates, changes, and other provisions of � � the District Energy hot water franchise remain in force and are unchanged; and be it 3 4 FINALLY RESOLVED, that the attached revised Schedule A and Attachment 1 5 to the hot water franchise is approved and supersedes any previous Schedule A, and 6 is incorporated by reference into Ordinance No. 16947 as amended. 2 Yeas Navs Absent Requested by Department of: imon / z acca ee � e man � une i By; Form Approved by City Attorney Adopted by Council: Date /� -( � -�� Adoption C tif' d by Counc' S cretary By: q By� Approved by ayor for Submiseion to Approved by ayor• a e ��Z `� :J Council ��, 1 � �91 By: By� PUSUSNEO pFC ? 1'9t �� DEP.9HTMENT/OFFICE/COUNCIL DATE INITIATED �� 15 811 Finance Account GREEN SHEET CONTACT PERSON&PHONE INITIAUDATE INITIAUDATE �DEPARTMENT DIRECTOR �CITY COUNCIL ASSIGN �CITY ATTORNEY �CITY CLERK MUST BE ON CO CIL AOENDA BY(DATE) NUMBER FOR ❑BUDGET DIRECTOR �FIN.&MGT.SERVICES DIR. ROUTING ORDER �MAYOR(OR ASSISTAN� � TOTAL#OF SIGNATURE PAGES (CLIP ALL LOCATIONS FOR SIGNATURE) ACTION REQUESTED: Approval of proposed District Energy rates. RECOMMENDATIONS:Approve(A)or ReJect(R) PERSONAL SERVICE CONTRACTS MUST ANSWER THE FOLLOWING�UESTIONS: _ PLANNING COMMISSION _ CIVIL SERVICE COMMISSION 1• Has this person/firm ever worked under a contr8ct for this department? _CIB COMMITTEE _ YES NO 2. Has this person/firm ever been a city employee? _STAFF — YES NO _DISTRICT COUpT _ 3. Does this person/firm possess a ski�l not normall y possessed by any current city employee? SUPPORTS WHICH COUNCIL OBJECTIVET YES NO Explain all yes answers on separate sheet and attach to green sheet INITIATINQ PROBLEM,ISSUE,OPPORTUNITY(Who,What,When,Where,Why): Yearly the Council, in accordance with the franchise agreement, acts as a rate reviewer for proposed District Energy rate adjustments. The attached resolution recommends approval of those rates. ADVANTAQES IF APPROVED: DISADVANTAOES IF APPROVED: DISADVANTAQES IF NOTAPPROVED: RECEIVED Nov 181991 CITY CLERK TOTAL AMOUNT OF TRANSACTION S COST/REVENUE BUDGETED(CIRCLE ONE) YES NO FUNDING SOURCE ACTIVITY NUMBER FINANCIAL INFORMATION:(EXPLAIN) ��/ U , NOTE: COMPLETE DIRECTIONS ARE INCLUDED IN THE GREEN SHEET INSTRUCTIONAL MANUAL AVAILABLE IN THE PURCHASING OFFICE(PHONE NO.298-4225). ROUTING ORDER: Below are correct routings for the five most frequent types of documents: CONTRACTS(assumes authorized budget exists) COUNCIL RESOLUTION (Amend Budgets/Accept. Grants) 1. Outside Agency 1. Department Director 2. Department Director 2. Ciry Attorney 3. City Attorney 3. Budget Director 4. Mayor(for contracts over$15,000) 4. Mayor/Assistant 5. Human Rights(for contracts over$50,000) 5. Ciry Council 6. Finance and Management Services Director 6. Chief Accountant, Finance and Management Services 7. Finance Accounting ADMINISTRATIVE ORDERS(Budget Revision) COUNCIL RESOLUTION (all others, and Ordinances) 1. Activity Manager 1. Department Director 2. Department Accountant 2. Ciry Attorney 3. Department Director 3. Mayor Assistant 4. Budget Director 4. City Council 5. City Clerk 6. Chief Accountant, Finance and Management Services ADMINISTRATIVE ORDERS(all others) 1. Department Director 2. City Attorney 3. Finance and Management Services Director 4. City Clerk TOTAL NUMBER OF SIGNATURE PAGES Indicate the#of pages on which signatures are required and paperclfp or flag each of thase pa�es. ACTION REQUESTED Describe what the projecUrequest seeks to accomplish in either chronologi- cal order or order of importance,whichever is most appropriate for the issue. Do not write complete sentences. Begin each item in your list with a verb. RECOMMENDATIONS Complete if the issue in question has been presented before any body,public or private. SUPPORTS WHICH COUNCIL OBJECTIVE? Indicate which Council objective(s)your project/request supports by listing the key word(s)(HOUSING, RECREATION, NEIGHBORHOODS, ECONOMIC DEVELOPMENT, BUDGET, SEWER SEPARATION). (SEE COMPLETE LIST IN INSTRUCTIONAL MANUAL.) PERSONAL SERVICE CONTRACTS: This information will be used to determine the citys liabiliry for workers compensation claims,taxes and proper civil service hiring rules. INITIATING PROBLEM, ISSUE, OPPORTUNITY Explain the situation or conditions that created a need for your project or request ADVANTAGES IF APPROVED Indicate whether this is simply an annual budget procedure required by law/ charter or whether there are specific ways in which the Ciry of Saint Paul and its citizens wili benefit from this projecVaction. DISADVANTAGES IF APPROVED What negative effects or major changes to existing or past processes might this project/request produce if it is passed (e.g.,traffic delays, noise, tax increases or assessments)?To Whom?When? For how long? DISADVANTAGES IF NOT APPROVED What will be the negative consequences if the promised action is not approved7 Inabflity to deliver service?Continued high traffic, noise, accident rate?Loss of revenue? FINANCIAL IMPACT Although you must tailor the information you provide here to the issue you are addressing, in general you must answer two questions: How much is it going to cost?Who is going to pay? . ✓ construction on the North side of Case Avenue from Johnson Parkway to Kennard Street. All to be known as the Hazelwood/Case Area Street Paving and Lighting Project. 6. 12/17/91 FINAL ORDER: Construction of the APPROVED 4-0 Hazelwood/Case Area Storm Sewer Separation Project, bounded on the north by the Railroad, on the south by Reaney, on the west by Johnson Parkway and Clarence, on the east by Kennard and Flandrau. 7. 12/17/91 FINAL ORDER: Installation of sanitary, APPROVED 4-0 storm and water service connections, if requested by property owner, for the Hazelwood/Case Area Storm Sewer and � Street Paving and Lighting Project. 8. 12/17/91 RESOLUTION - 91-2145 - To consider APPROVED 3-0 increasing the Sewer Availability Charge (SAC) from �650.00 to $700.00 beginning January, 1992. 9. RESOLUTION - 91-2090 - Amending the 1991 APPROVED 3-0 Budget by transferring �28,000 from Contingency Reserve to the Financing & Spending Plans of PED for transportation planning services relati�ng to neighborhood portion of City's Transportation Policy Plan. 10. � RESOLUTION - 91-2148 - Approving proposed APPROVED 3-0 District Energy rates for 1992. 11. ORDINANCE - 91-2149 - An ordinance amending APPROVED 3-0 � the legislative ordinance granting to District Heating Development Company a non-exclusive franchise to use public streets and property to construct and operate a district heating system. 12. RESOLUTION - 91-1414 - Establishing a APPROVED AS comprehensive bicycle transportation AMENDED 3-0 . policy for the City of Saint Paul . - /.�a� �°� � �r.z��:��cueu�� -�f�..�.e��,� � - i�- �s- �� - /�c�G— ��I - � �, qi-�� OO� �> ' �� CITY OF SAINT PAUL �� INTERDEPARTMENTAL MEMORANDUM To: Council President William Wilson From: Richard Gehrman, Director ��' ' Finance and Management Services Date: November 15, 1991 Re: District Energy proposed fiscal year 1992 rate change Attached is the staff report for District Energy fiscal year 1992 rate change. This is to prepare the Council for the public hearing required by ordinance on the rate case. As in past rate cases, the staff report does not contain a specific recommendation on adopting or denying the proposed rate. It does contain an analysis of issues which should be considered by the Council as the rate regulating authority. Staff concerns should be evaluated in light o.f evidence provided by District Energy. The Council's decision to approve or deny rates will ultimately be based on these two sources of information. The issues raised by the report include the following: . Staff have again raised a concern about a cross subsidy between District Energy and District Energy Services. This issue was raised on two ' previous occasions: as part of the 1991 rate case and during the Council's discussion of the Payment Assurance Agreement (PAA) , which was part of the process of approving the District Cooling financing package. The effect of these prior Council decisions was to approve the cost sharing method used by District Energy to allocate costs between the heating and cooling projects. The administration agreed with the Council that the cost sharing methodology is appropriate and does not constitute a cross subsidy. • District Energy continues to make payments into reserves for future debt payments which staff consider excessive. , • Staff believe that the incentive rate presently being proposed by District Energy to attract new customers is a preferential rate and requires Council approval. ^ District Energy proposed fiscal year 1992 rate change �/ ��/` � Page 2 The need to review our approach to rate reviews was raised as part of the District Cooling franchise approval process. The process of rate regulation continues to increase in complexity. The recent cost allocation agreement between District Cooling and District Heating is an example of this. Staff believe outside expertise is needed to make technically knowledgeable recommendations to the Council. The franchise included a requirement that the City review methods of rate review within two years. Funds were identified from franchise fees. We will be bringing a separate resolution to the Council shortly to begin this review process. RG/ts cc: Mayor James Scheibel City Council members Thomas Weyandt Bruce Hoheisel Lori Lee James Snyder Gerald Strathman ��:;;� � �� - � i �� O� CITY OF SAINT PAUL INTERDEPARTMENTAL MEMORANDUM TO: Richard Gehrman �3.nu.ce.� . • `�� FROM: Bruce Hoheisel n and mes Snyder DATE: November 4, 1991 RE: Staff Report for District Energy Proposed Fiscal Year 1992 Heating Rate Change This memorandum discusses staff's review of District Energy's proposed rate change. PROCEDURAL HISTORY District Energy filed notice with the City Clerk of its intent to change its hot water rates on 7uly 19, 1991. District Energy was informed that a City review staff consisting of Bruce Hoheisel, Lori Lee and 7ames Snyder would review the rates, with Thomas J. Weyandt assigned as legal counsel. Staff prepared an initial list of information requests, then met with District Energy staff Joyce Anderson, Rudy Brynolfson and Andrew Kasid on July 30, August 6 and 20 to ask questions and to review District Energy documents. Staff also attended the customer meetings held on August 21 and 22. When proper notice, publication, and hearing on the proposed resolution are completed, those steps along with the process to date will satisfy all procedural requirements of the franchise and the Hot Water Delivery Agreement. V�e would like to thank 7oyce Anderson, Rudy Brynolfson, and Andrew Kasid of District Energy for their cooperation during the review process. � � �/ -�/�� Staff Report for District Energy Proposed Fiscal Year 1992 Heating Rate Page 2 PROPOSED FINDINGS OF FACT 1. District Energy proposes the following changes: a) The demand rate changes from $3.85 per ldlowatt of contract demand per month to $4.01 kw/month, a rate increase of 4.2%; � b) The budgeted energy rate changes from $10.58 per megawatt hour to $11.12/mwh, an increase of 5.1%; c) The single rate changes from $0.0378 per kilowatt hour, to $0.0394 per kilowatt hour, an effective increase of 4.2%. 2. A comparison of rates is as follows: (See Exhibit #1) Actual Actual Actual Forecast Budget FY 1988 FY 1989 FY 1990 FY 1991 FY 1992 Rates: Demand (kw/mo) 3.14 3.29 3.48 3.85 4.01 Energy (mwh) 10,38 10.17 10.09 10.58 11.12 Single (kw) .0325 .0334 .0347 .0378 .0394 Expenses: Demand 5,063,943 5,558,077 5,723,158 6,531,377 6,833,040 Energy 2,332,643 2,457,172 2,339,444 2,397,000 2,772,318 3. Coverage rates are higher than the target rates as specified in the Payment and Priority Agreement. Therefore, franchise fees estimated by District Energy at $713,300 should be defened. An explanation of coverage and target rates is shown in Exhibit 2. A calculation of coverage and target rates for the proposed 1992 rates is contained in Exhibit 3. 4. The average interest rate projected for payments on Series A bonds is 5.5% plus .625% for the Letter of Credit fee for this budget year. Similar methods and sources were used in estimating the interest rate last year. It is the opinion of review staff, as well as Gary Norstrem, City Treasurer that the projected rate is reasonable. � �l� - �/ �� Staff Report for District Energy Proposed Fiscal Year 1992 Heating Rate Page 3 DISCUSSION Past rate cases have involved a review of the request by City staff which included several meetings with District Energy personnel to review documents and discuss specific issues. Based on this review, the staff made a recommendation to the City Council. Due to the increased complexity of the issues involved in these cases brought on by the development of the district cooling project, and the basic policy decisions that must be made by the City Council as the regulator of this utility, the staff does not intend to make final recommendations in this report. This staff report identifies issues for the Council as background to consider in making a decision to approve or deny the rate request. District Energy's Continued Subsidy of District Energy Services One concern is the continued subsidy from District Energy to District Energy Services for the cooling project. District Energy Services is a separate corporation which was founded to provide services other than heating; such as district cooling, the Department of Energy vacuum steam project and the operation of the heating plant at Metropolitan State University. Beginning in 1990 a significant amount of support was given to the cooling project from District Energy. The 1990 budget included $10,000 for research and development of the cooling project. A total of $98,000 in expenses were incuned during FY 1990. This included an estimated staff time allocation of$30,000 plus direct costs of$68,000. These expenses have been treated as heating expenses. The 1991 Budget did not include any allocation for R&D on the cooling project. District Energy assumed the financing for the cooling project would be in place to cover these costs. Expenses in 1991 are projected to be $441,000 representing direct engineering, financing and other costs in the development of district cooling and $75,600 in estimated staff costs. The direct costs of $441,000 have been set up as a receivable from District Energy Services. It is anticipated two-thirds of this receivable will be collected through the bonds to finance district cooling. At the rime of the closing of the final bond issue, District Energy Services will reimburse District Energy $144,000 in bond issuance costs and $150,000 in construction costs. The remaining $147,000 will be defened as established in the Cost Allocation. Agreement and Payment Assurance agreement. The additional $75,600 in staff costs will be charged as heating expenses. District Energy contends the staff level would have been the same without the cooling project. District Energy has indicated there is no intention of reimbursing these costs of $173,600 from cooling to heating. In the 1991 rate case staff raised the issue of improper cross-subsidy from one company to the next. District Energy's response was that these R&D expenses would be repaid to the heating customers through an agreement that the joint Board of Directors of DE and DFS would formulate at a later date. The rate review staff expressed strong concern that such an agreement should have been entered prior to the approval of the 1991 rates. Staff Report for District Energy Proposed Fiscal Year 1992 Heating Rate �/_ �� Page 4 , District Energy originally projected cooling service agreements representing 3400 tons of demand. To date they now have signed contracts totaling 3004 tons of demand. In order to resolve this difference the Board of Directors of District Energy have agreed to delay potential sharing of fixed cost between heating and cooling customers as outlined in the Payment Assurance Agreement. As established by this agreement fixed costs include direct operating costs, city regulatory costs, net debt service, financing costs and change in the working capital cost portion of the DES Demand charge rate. Estimated annual cost would be approximately $90,046. It is the opinion of the rate team that this deferral violates the principles of true cost allocation since it subsidizes the customers of one utility at the expense of the customers of another utility. Although the rate team is concerned about the cross subsidy between DE and DES, it is also clear to the rate team that through adoption of the Payment Assurance Agreement, Council File #91-1879 on October 8, 1991, the Council has already considered and acted on this matter. Continued Larg,e Payments Into Reserves for Future Debt Another concern is rates which appear to be higher than necessary to establish reserves for future debt payments. The 1992 Budget includes reserve increases of$1,084,376. This includes an additional $427,119 in bond principal and interest accounts, $488,767 for the City Loan account, and $171,428 for the Supplemental Debt Service Reserve. In past years the balance maintained in this supplemental debt service reserve was 1.5% of the Series A bonds. With this budget allocation, the supplemental debt service percentage will increase to 2.1% and in 1993 is projected to be 3% and the balance in the City Loan account will be $1,200,000. District Energy's demand rate includes substantial payments into a reserve for future debt payments. It is unclear that cunent customers are only being charged for things that are used and useful to provide them with the commodity they are purchasing (heat). The rate team questions the prudence of establishing large reserves by collecting funds prior to debt maturity. Perhaps these dollars should remain with the customers until maturity of debt. It is also not clear how much rates would increase if these reserves were not established. District Energy has indicated that the increase in reserves is being done in part to prevent a dramatic increase in rates in fiscal year 1994 when the first repayments are due on the outstanding loans. They claim that by "smoothing" the heating rates up to the needed level they will prevent "rate shock" to the customers on that year. Staff Re ort for District Energ Proposed Fiscal Year 1992 Heating Rate �j _�/�� P Y Page 5 Rate shock is a term used in utility regulation. However, it is most often applied in instances where a utility seeks to include a large amount of capital investment in one year, such as when a new electric generating plant comes into service. The concept of rate shock is used by regulators as a basis for attempdng to balance the interests of a utility's customers and shareholders, and is accomplished by limiting the amount of the investment in the new plant that is allowed into the rate base of the utility. When applying the concept of rate shock most often a regulator will not allow the full value of the increased plant capacity into the rate base, or will not allow a dramatic increase in a customers rates because of a change in some rate design. In this instance District Energy is proposing to pre-collect future debt payments from customers. The fairness of making cunent customers pay the debt not due until the future and which debt the monies are being escrowed to pay should be considered. For example, the City Loan account has been established to reserve funds for the UDAG loan. The UDAG loan is not the most expensive debt held by the utility. Explanation of the Incentive Rate District Energy is proposing to continue to offer incentive rates for an additional4 years in an attempt to attract additional customers. District Energy first obtained authority to create this additional customer class in 1987 on a four year basis. The Council must examine whether the proposal creates unequal rates that discriminate improperly between the two customer classes - the full paying customers and the discount customers. An analysis of the results of the first four years of incentive rates should include: • How many customers were attracted • What part did the existence of the incentive rate play in attracting those customers • Did the discount impact their decision to go with District Energy or were other factors more persuasive such as the�ability to avoid initial capital costs and maintenance expenses • What is the price differential to potential customers between District Energy and alternate sources • Is the discount offered significant enough to truly be considered as part of the decision to go with DE • What is the potential market for incentive rate customers Staff Report for District Energy Proposed Fiscal Year 1992 Heating Rate Page 6 These issues need to be examined to be assured that the incentive rate discount is simply not a windfall to new customers at the expense of existing customers. Staff was struck by the two different positions taken by the District Energy Board of Directors when the issue of incentive rates was compared to the issue of the Payment Assurance Agreement between District Heating and District Cooling. The incentive rate plan seems to be based on the premise that the heating product needs to be priced lower to attract new customers. The payment assurance agreement acknowledges that current customers risk the loss of potential sharing of fixed costs with district cooling, which could reduce heating rates. The rates are appazently too high to attract new customers, but low enough so that existing customers can be asked to pay the start-up costs of the new utility. CONCLUSION The rate team has verified the cost and reserve numbers used in the current rate filing to be materially accurate. The rate team suggests the City Council members consider the concerns expressed together with the evidence presented and either approve or deny the rate request. District Energy staff will be present at the committee and council meetings to present evidence to support the rate requested. � ' .� j � � . ,� � / . � j .� / � j ! / / � j .� / � j .. � / j .. / � • � � • � � • • • � • � • . • � � , EXHIBIT �`-�j�� Coverage Rates shall mean the rates and charges, which if collected by the Corporation, would in the aggregate equal the amount necessary to satisfv all of the Corporation's financial obligations, including, but not limited to, debt service with respect to the Series A Bonds, debt service with respect to the obligations of the Corporation to the City and Bank under the City Loan Agreement and Reimbursement Agreement, and Operating Expenses, funding of various repair and replacement and reserve accounts, and other amounts necessary to properly and efficiently operate the System, assuming that Franchise Fees are paid to the Citv (after accumulation of the Franchise Fee Requirement as provided in the Loan Agreement and City Loan Agreement) on a current basis but not including the deferred Bank Fees, Reimbursements and deferred obligations of the Corporation to the City, payment of which is provided for in Section 3 . 03 hereof. Target Rates shall mean, subject to the terms and conditions of the Service Agreements, the rates and charges permitted to be charged by the Corporation under the Service Agreement equal to a predetermined percentage (which will vary over time) of actual firm natural gas prices; "predetermined percentage'� (for any ` given year) shall be that percentage that results from dividing the Corporation's projected hot water rate for the Corporation's next fiscal year (expressed in $/MMBtu as contained in Gilbert/Commonwealth December 2, 1982 computer analysis reported to the Corporation) by such fiscal year's projected firm .natural gas/MMBtu end use rate (as contained in Table 9 of the Gilbert/Commonwealth Report to the Corporation dated September 30, 1982) ; provided, however, that the resulting percentage shall never be lower than 72%; the "actual firm natural gas prices" shall mean a weighted average of the prices actually charged by Northern States Power Company for its various classes of non- interruptible City of Saint Paul gas service customers, to be determined by assigning the demand for each DHDC customer to that customer's comparable Northern States Power Company class of non- interruptible customers. Note: Taken from the Payment and Priority Agreement (as amended) relating to HRA District Heating Revenue Bonds. , EXHIBIT 3 TARGET4.WK1• 02-Aug-91 09:39 AM CALCULATION OF "TARGET RATE" FOR FY 1992 PER PAYMENT AND PRIORITY AGREEMENT --------------CUSTOMER CLASS--------------- � COMMERCIAL/ LG GENL LG GENL RESIDENTIAL INDUSTRIAL (SMALL) (LARGE) OVERALL ----------- ---------- -------- ------- ------- USAGE DATA 1 CCF/DAY - LOW 500 2,000 2 CCF/DAY -HIGH 1,999 3 AVERAGE CCF/DAY 1,475 2,949 4 AVERAGE CCF/YEAR 788 89,531 294,904 589,808 FIRM GAS RATES (JANUARY 1991) ----------------------------- 5 CUSTOMER CHG ($/MO) $4.00 $14.00 $225.00 $225.00 6 DEMAND ($/CCF/DAY/MO) 0.99013 0.99013 7 COMMODITY ($/CCF) 0.45121 0.40684 0.26151 0.26618 OVERALL COSTS 8 TOTAL $/YEAR $404 $36,593 $97,340 $194,734 9 AVERAGE $/CCF 0.51212 0.40872 0.33007 0.33017 9A AVERAGE $/MCF $5.12 $4.09 $3.30 $3.30 10 END USE $/MMBTU @65$ $7.88 $6.29 $5.08 $5.08 TARGET RATE CALCULATIONS ------------------------ 11 D.E. DEMAND � BY CLASS 1.9$ 94.0$ 0.0$ 4.2$ 12 WEIGHTED AVG $/MMBTU $6.27 13 X TARGET PERCENTAGE FROM 1982 FEASIBILITY STUDY 13A PROJECTED D.H. RATE $16.60 DIVIDED BY 72.0� 13B PROJECTED GAS RATE $23.05 (MINIMUM 72�) 14 = "TARGET RATE" PER PAYMENT AND PRIORITY AGREEMENT ($/MMBTU) $4.51 15 TARGET RATE PER KWH $0.0154 COVERAGE RATE CALCULATION ------------------------- 16 DEMAND RELATED COSTS, EXCLUDING FRANCHISE FEES $6,833,040 17 FRANCHISE FEES 713,300 18 DEMAND RELATED COSTS + FRANCHISE FEES $7,546,340 19 COVERAGE DEMAND RATE @ 142,000 KW DEMAND $4.43 20 OVERALL COVERAGE RATE PER KWH $0.0424 _ � . ; . . , . _ . . , ��r�� : , . ; ,. : _ . ; , _ . _ _ w _ : ..� October 8� 1991 ; : � � Councilr�b�r Roger Goswttz C�airp�reon, Public-Hlorks, Utflities and Transpcas�Gation Ct�. _ Room 70I, City Ball ° : : Dea�. Cauncilu�mber Gosyitz: � � : At Che Octc�bor 1r 1991 City CounCil meeting� the attbcl'�ed letter of , District .Hsating was rQferred to tbe Public Works Crom��ttee foc discussion ar�d ��endat�on. � . Sincerely� ; ��f Qit�� , : ,t , t�bl O'� � . City Clerk , _ . NlO:th - A��achmertt . - _ . i • _ _ y . . . . f : . ,_ , , . , ;, . , . , _ _ . . � . . .,. .- -^,� � � _, .�s .;, .;: • ..-.a: � - . 4 1 , , .� .� ....... . ;... . : . .,,. � ,. .� ...� �� . � , -,. ..� �.. „ e'r_ . �. - , v` � .. , y i ,. , . � , . , • . . . - . . ;. , - . , . . . � . .�� . ..... . . .� ..: ', _ : , . ��- � �- " , < .. . ,„. ,: . ,� . ._.,. . . , � , -� -- � � � .. . �. �� +� .. . � . . �� ' . � . . � . � .. . ., . . .... � �.� . . . ..., . .. . .. � � � �� . . .. . . --... ,�� ! -�, . �.. ',. .,��. . . . . '. .: .. . . . . � .. . ;.�.��• -� . �... .. . . � . � _.: . � . . .. . -�,. ,.', ..� . � '. ._ �... . -• .. : . �., � . _. \.. .. � _ _ _ .. . . . � . . . . . . . . . . .. '. �: .. . 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I _-. . .e� . . ., ... � ... ... . .,.. . , � .. ,.i i , n ... � , . 9j -a i��f�,:� . f � ; k,� ��w.��^"'��. �,� �.�7 C?l ' J�' �� istrict Energy ST. PAUL, mic. ;�b� � 76 West Kellogg Boulevard St. Paul, MN 55102-1611 (612) 297-8955 FAX(612) 221-0353 september 20, 1991 RECEIVED S E P 2 0 1991 CITY CLERK Molly O'Rourke City Clerk City of St. Paul Third Floor, City Hall St. Paul, MN 55102 Re: District Heating Rates Dear Ms. O'Rourke: Pursuant to the hot water district heating franchise and previous notice filed July 19, 1991, District Energy St. Paul Inc. , hereby files its amended Schedule A. The rates therein will be used on all bills for hot water service beginning with the billing month of October 1991 and will remain in effect until superseded. This is a routine annual rate adjustment as envisioned by the franchise and the Hot Water Delivery Agreement. Please contact me at 297-8955 if there are any questions regarding this matter. Sincerely, Rudy B olf n Vice President C: James Snyder, Lori Lee, Bruce Hoheisel Rich Gehrman, Tom Weyandt, William Mahlum Attachments: Schedule A Affidavit of Compliance with Council Resolution 85-919 � , � � �/ - � ��8 DISTRICT ENERGY ST. PAUL, INC. AFFIDAVIT OF COMPLIANCE WITH COUNCIL RESOLUTION 85-919 Pursuant to Section 2 of City Council Resolution 85-919, District Energy St. Paul Inc. , states the following facts regarding its compliance with Section 1 of that Resolution: 1. District Energy gave notice of its intent to file a new or amended Schedule A in a letter dated July 19, 1991, filed with the City Clerk on that date. 2 . District Energy sent or delivered a notice of its rate filing and the related customer meeting to all signed hot water customers between July 18 and July 26, 1991. The notice included the new rates sought by District Energy; the time, date, and place of the customer meeting; and the Notice of Customer Rights constituting Exhibit 1 of the Resolution. A copy of the notice was provided to the Executive Director of the St. Paul Building Owners and Managers Association (BOMA) . The same information was sent to all Mount Airy residents with notice of a special meeting as described below. 3 . District Energy held the required customer meeting on August 21, 1991, at 2: 00 p.m. in District Energy's conference room, 76 West Kellogg Boulevard, St. Paul. Approximately seven persons representing District Energy customers attended, along with two members of the City's rate review staff. A second meeting was held with interested residents of the Mount Airy homes on August 22, 1991, at 7:00 p.m. at the Mount Airy Neighborhood Center. Approximately 14 residents attended, along with a member of the City's rate review staff. Copies of District Energy's notice filing with the City, the proposed new Schedule A, and the hot water franchise (Ordinance No. 16947 as amended) were made available to meeting attendees. At each meeting, the new rates were explained, customers were advised that the City Council must approve the new rates before they become finally effective, and customers were allowed a reasonable opportunity to comment on the proposed rates both formally and informally. Rudy Bryn 1 son Vice Presi ent � 1�..u1�1 ( Date � 9 -�� SCHEDULE A (AMENDED) to HOT WATER FRANCHISE granted to District Heating Development Co. d.b.a. DISTRICT ENERGY ST. PAUL, INC. by the CITY OF ST. PAUL (Ordinance No. 16947, adopted July 20, 1982, as amended) RATES: The following rates shall be effective beginning with the billing month of October 1991 and shall remain in effect until superseded: Single rate: $0.0394 per kilowatt-hour Two part rate: Demand: $ 4.01 per kilowatt per month Energy: $ 11. 12 per megawatt-hour PROMPT PAYMENT PROVISION: A charge of 5 (five) percent will be added to the net bill computed at the rate shown above, which charge shall constitute a discount from the gross bill for payment within the discount period, all as more specifically provided in the Hot Water Delivery Agreement. FUEL ADJUSTMENT: In the event that the energy refund (assessment) per megawatt-hour accrued pursuant to the Hot Water Delivery Agreement as of March 31 of any year is greater than five percent of the energy rate then in effect, District Energy shall refund (may assess) an amount, equal to that portion of the difference which exceeds one percent of the energy rate, not later than May 31 of the same year. The amount refunded (assessed) shall be deducted when the overall refund (assessment) for the year is computed. SURCHARGE: A City fee surcharge of 8.7 percent will be included in the gross and net monthly bills computed under this rate schedule except as otherwise provided by law. SERVICE CHARGES: Service charges shall remain in effect as previously filed (see attachment) . � � 9/ -�i�� Schedule A Attachment 1 DISTRICT ENERGY ST. PAUL, INC. Service Charges Effective October 1, 1988 Pursuant to Section 8.5 of the Hot Water Delivery Agreement as amended, the following rates are established for performance of specific services more properly charged to an individual Customer than to all Customers as a whole. Service charges are payable within 30 days of billing and are in addition to Demand Charges and Energy Charges. 1. Restoration of service after shutoff by District Energy: Customer demand under 100 kW: $15. 00 Customer demand 100 kW or over: $50.00 2 . Damage to District Energy system equipment: Actual cost of repair or replacement as determined by District Energy plus service charge of $30. 00. 3 . Unauthorized drainaqe of District Energy system water: The sum of the following: (a) Estimated quantity of water lost times combined water and sewage rate paid by District Energy during period of drainage; (b) Estimated heat value of water lost times applicable Energy Rate; and (c) Service charge of $30. 00. Note: Drainage of system water creates an unsafe condition and is cause for suspension of service until corrected. 4. Service calls made at Customer's request by District Enerqy personnel for problems found to be in Customer's and not District Energy's equipment• Between 8:00 a.m. and 3: 30 p.m. on Monday through Friday (excluding holidays observed by District Energy) : $30.00 All other times: $50.00