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Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
TDV Economic Update
Brian Horii and Snuller PriceEnergy & Environmental Economics, Inc.
forPacific Gas & Electric Co.
Codes & Standards Program
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Agenda
Methodology Overview Conceptual Framework Detail on TDV Derivation
• Electricity• Natural Gas• Propane
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Methodology Overview of TDV
TDV Method the Same for All Energy,Sum of• Commodity Costs• Marginal T&D Costs• Rate Adjustments• Air Emissions Externalities• “1992 Adder”
Hourly Lifecycle values for each area, class, and energy type
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Commodity Costs Marginal T&D Costs Rate Adjustments Air Emissions “1992 Adder”
Formulation Based on TDV Goals
Include New Market Structure
System Efficiency Utilization
Improve Environment
Don’t Relax Standards
Cost Component TDV Goal
Total TDV Value
TDV values made with publicly available data.
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
This is What it Looks Like!
Example of Electric TDV Spreadsheet
Down for 8760 Hours
Res Com Res Com Res Com Res Com Res ComHour 30-Year NPV 15 Year NPV 30-Year NPV 15 Year NPV 30-Year NPV 15 Year NPV 30-Year NPV 15 Year NPV 30-Year NPV 15 Year NPV
1 2.20$ 1.14$ 2.03$ 1.11$ 2.09$ 1.08$ 2.28$ 1.20$ 1.94$ 0.97$ 2 2.19$ 1.13$ 2.02$ 1.10$ 2.07$ 1.07$ 2.26$ 1.19$ 1.92$ 0.96$ 3 2.17$ 1.12$ 2.00$ 1.09$ 2.05$ 1.06$ 2.25$ 1.18$ 1.90$ 0.95$ 4 2.17$ 1.12$ 2.00$ 1.09$ 2.06$ 1.07$ 2.25$ 1.19$ 1.91$ 0.95$ 5 2.22$ 1.15$ 2.05$ 1.12$ 2.10$ 1.09$ 2.29$ 1.21$ 1.95$ 0.98$ 6 2.29$ 1.20$ 2.12$ 1.16$ 2.18$ 1.14$ 2.37$ 1.26$ 2.03$ 1.02$ 7 4.77$ 2.80$ 9.93$ 6.13$ 5.55$ 3.32$ 23.03$ 14.04$ 28.26$ 17.98$ 8 3.77$ 2.15$ 10.25$ 6.34$ 5.66$ 3.38$ 7.17$ 4.23$ 18.56$ 11.70$ 9 3.02$ 1.66$ 5.42$ 3.26$ 5.69$ 3.40$ 3.10$ 1.71$ 2.24$ 1.15$
10 2.65$ 1.42$ 2.35$ 1.30$ 4.30$ 2.50$ 2.60$ 1.40$ 2.26$ 1.16$ 11 2.53$ 1.34$ 2.36$ 1.31$ 3.49$ 1.98$ 2.61$ 1.40$ 2.27$ 1.17$ 12 2.52$ 1.34$ 2.35$ 1.30$ 2.41$ 1.28$ 2.60$ 1.40$ 2.26$ 1.16$
ShastaElectric TDV Values - 10/1/2000 - $/kWh - Year 2001 Dollars - Present Value
Oakland China Lake Fresno Long Beach
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
How TDV Works in Evaluation
$/kWh
Monday Friday
With flat energy costing a kW saved is valued the same for every hour of the day
With TDV costing a kW saved during a high-cost peak hour is valued more highly than a kW saved during an off-peak hour
Flat Energy Costing
Time Dependent Energy Costing
Environment
Building up the Electric TDVs
$/kWhT&D
PX
Rate Adder
1. Start with the PX Commodity Costs2. Add the marginal T&D delivery costs3. Use flat adder to bring to rate levels4. Add environmental externality of reduced air pollution5. Add 1992 adder to bring to current standard levels
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
1992 Adder
Building up Gas and Propane TDVs
$/MMBtu
Environmental Externality1992 Adder (Nat. Gas Only)
Commodity Cost
January December
Rate Adder
1. Start with the Gas Commodity Costs2. Use flat adder to bring to rate levels3. Add environmental externality of reduced air pollution4. Add 1992 adder to bring to current standard levels
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Annualized Rate Components of Electric TDV Values
Weighted Average Electric TDV for Shasta
Shasta Commercial Electric TDV Breakdown
$0.000
$0.020
$0.040
$0.060
$0.080
$0.100
$0.120
Annualized Rate ComponentLev
eliz
ed A
nn
ual
Ele
ctri
c T
DV
$/k
Wh
Environment
T&D
PX Generation
Rate Adder
1992 Adder
34%
21%
8%
6%
31%
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Annualized Rate Components of Natural Gas TDV Values
Weighted Average Gas TDV for Shasta
Shasta Commercial Natural Gas TDV Value Breakdown
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
Annualized Rate Component
Levelized
An
nu
al G
as T
DV
$/M
MB
tu
Environment
Commodity
Rate Adder
1992 Adder
48%
38%
8%
6%
No T&D Component for natural gas or propane
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Annualized Rate Components of Propane TDV Values
Weighted Average Propane TDV for Shasta
Shasta Commercial Propane TDV Breakdown
$0.000
$2.000
$4.000
$6.000
$8.000
$10.000
$12.000
$14.000
Annualized Rate Component
Lev
eliz
ed A
nn
ual
Pro
pan
e T
DV
$/M
MB
tu
Environment
Commodity
Rate Adder
49%
45%
6%
No 1992 Adder for propane
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Electric TDV Summary
Res Com Res Com Res Com Res Com Res ComMin 0.03$ 0.02$ 0.03$ 0.02$ 0.03$ 0.02$ 0.03$ 0.02$ 0.03$ 0.02$
Average 0.75$ 0.45$ 0.74$ 0.45$ 0.75$ 0.45$ 0.74$ 0.45$ 0.75$ 0.45$ Max 3.14$ 1.91$ 3.13$ 1.90$ 3.14$ 1.91$ 3.13$ 1.90$ 3.14$ 1.91$ Min -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Average 0.21$ 0.14$ 0.37$ 0.17$ 0.32$ 0.19$ 0.13$ 0.07$ 0.47$ 0.31$ Max 95.18$ 61.56$ 129.80$ 82.72$ 150.01$ 97.02$ 73.51$ 45.50$ 637.40$ 412.26$
Rate Adder Flat 1.03$ 0.28$ 0.74$ 0.32$ 0.91$ 0.23$ 1.20$ 0.55$ 0.76$ 0.11$ 1992 Adder Flat 0.48$ 0.43$ 0.60$ 0.37$ 0.48$ 0.43$ 0.38$ 0.23$ 0.48$ 0.43$
Min 0.11$ 0.06$ 0.11$ 0.06$ 0.11$ 0.06$ 0.11$ 0.06$ 0.11$ 0.06$ Average 0.14$ 0.09$ 0.14$ 0.09$ 0.14$ 0.09$ 0.14$ 0.09$ 0.14$ 0.09$
Max 0.24$ 0.14$ 0.24$ 0.14$ 0.24$ 0.14$ 0.24$ 0.14$ 0.24$ 0.14$ Min 1.67$ 0.82$ 1.51$ 0.79$ 1.56$ 0.76$ 1.76$ 0.89$ 1.41$ 0.65$
Average 2.60$ 1.39$ 2.60$ 1.39$ 2.60$ 1.39$ 2.60$ 1.39$ 2.60$ 1.39$ Max 97.66$ 62.87$ 132.26$ 84.08$ 152.37$ 98.27$ 76.07$ 46.87$ 639.56$ 413.36$
Total TDV
TDV Lifecycle Cost Components $/kWh
Shasta
Commodity Cost
T&D Cost
Environmental Adder
Oakland China Lake Fresno Long Beach
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Natural Gas TDV Summary
TDV Values by Service AreaTDV Lifecycle Cost
Components $/MMBtuZone PG&E Socal Gas SDG&E
TDV Component Class Res Com Res Com Res Com
Min $56.02 $31.46 $53.26 $29.62 $53.01 $29.48
Avg $60.03 $33.41 $59.91 $32.91 $59.78 $32.90Commodity Cost
Max $63.44 $35.63 $67.77 $37.69 $70.31 $39.11
Rate Adder Flat $62.55 $40.79 $70.52 $25.22 $70.54 $37.03
1992 Standard Adder Flat $53.73 $5.04 $45.88 $21.12 $45.98 $9.31
Environmental Adder Flat $11.90 $7.25 $11.90 $7.25 $11.90 $7.25
Min $184.19 $84.55 $181.56 $83.20 $181.43 $83.07
Avg $188.20 $86.49 $188.20 $86.49 $188.20 $86.49Total TDV
Max $191.61 $88.71 $196.07 $91.27 $198.73 $92.69
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Propane TDV Summary
Statewide Propane ValuesTDV Lifecycle Cost
Components $/MMBtuClass Res Com
Min $115.87 $50.93
Avg $128.95 $53.97Commodity
Max $137.89 $58.51
Rate Adder Flat $117.42 $82.96
Environment Flat $14.08 $8.58
Min $247.38 $142.47
Avg $260.46 $145.51Total TDV
Max $269.39 $150.04
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Details of theElectric TDV Estimation
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Electric Costs
Time Dependent Components• Generation - Commodity• Transmission and Distribution• Emissions
Attributes- Level- Shape
Fixed Components• Rate Adder• 1992 Adder
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
The Commodity Component:Generation Market Price - Level
Price based on the “all-in” cost of a combined cycle gas turbine
Gas price forecast is the major driver
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
Year
All-
in M
ark
et
Pri
ce (
$/M
Wh
)
Fuel Cost ($/MWh) Variable O&M ($/MWh) Levelized Capital & Fixed O&M
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
The Commodity Component: Generation Market Price - Shapes
Price[m,h] = All-in Cost * Monthly Price Ratio[m] * Typical Shape[m,h]
-
0.50
1.00
1.50
2.00
2.50
3.00
1 11 21 31 41 51 61 71 81 91 101 111 121 131 141 151 161
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Oct
Nov
Dec
Monthly Typical Shapes (normalized to average 1.0)Monthly Typical Shapes (normalized to average 1.0)
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
The Commodity Component: Combining Level and Shape Yield the Hourly Prices
Shapes mapped to 1997 chronology
-
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
1
349
697
1045
1393
1741
2089
2437
2785
3133
3481
3829
4177
4525
4873
5221
5569
5917
6265
6613
6961
7309
7657
8005
8353
8701
Hour of the year
Gen
erat
ion
Pri
ce (
$/M
Wh
)
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
The T&D Component: T&D Marginal Cost - Levels
Marginal costs will always be in flux. Use the most recent values available.• SCE PTRD Proposal• PG&E 1999 GRC Phase II
Use full “ratemaking” marginal costs• DSM marginal costs can be lower
– Timeframe of impacts– Pervasiveness of impacts
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CASE Initiative Project
The T&D Component: T&D Cost - Shape
Concept• T&D systems are built for peak loads• Peak load is driven largely by weather• Peak Capacity Allocation Factors (PCAFs) are
used to allocate the marginal costs to the high load hours
– Used by PG&E and SCE
• Want price signals highest when load is highest in an area. PCAFs reflect this.
– Allocate cost to hours in the peak period. The higher the relative load, the higher the allocated cost.
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CASE Initiative Project
The T&D Component: PCAFs and Temperature
Temperature Loads PCAFsDrives Drives
Load Information Missing or Difficult to Obtain in Many Areas
Temperature PCAFs
We used temperature as a proxy for load, and as the basis for allocating
costs to hours of the year.
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CASE Initiative Project
The T&D Component: PCAF / Load Relationship
PCAFs focus on the highest load hours
-
50
100
150
200
250
300
6/1/99 6/21/99 7/11/99 7/31/99 8/20/99
Date
Lo
ad (
MW
)
0%
2%
4%
6%
8%
10%
12%
PC
AF
Wei
gh
t
Load (MW)
PCAF
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CASE Initiative Project
The T&D Component: Temperatures Drive the Peaks
Milpitas illustrates the strong correlation of weekday temp with peak loads.
-
50
100
150
200
250
300
6/1/99 6/21/99 7/11/99 7/31/99 8/20/99
Date
Lo
ad (
MW
)
0
20
40
60
80
100
120
Tem
per
atu
re
Load (MW)
Temp
Sunday
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CASE Initiative Project
The T&D Component: Results of Load & Temperature Correlation
Peak period is all weekday hours with temperatures within 15 degrees of the highest observed temperature in the area (weekday only).
This 15 degree span defines the hours that could drive peak demand, and thus drive the need for capacity expansion.
This definition is independent of climate zone. This definition is spot-on with PCAFs in the
summer
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CASE Initiative Project
CONCORD DPA in DIABLO Division. Weather Station: Concord
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20 40 60 80 100 120
Temp
Cum
ulat
ive
PC
AF
Actual PCAFs Estimated Shape
The T&D Component: Sample Summer PCAF Results
Similarly good correlation was obtained for all summer peaking areas:• San Jose• Bakersfield
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CASE Initiative Project
The T&D Component: Same Principles Apply to the Winter - w/ Refinements
Same 15 degree bandwidth Only consider 7am to 9pm
MONTEREY 21 KV DPA in CENTRAL COAST Division. Weather Station: Monterey
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20 40 60 80 100 120
Temp
Cum
ulat
ive
PC
AF
Actual PCAFs Estimated Shape
K-X DPA in EAST BAY Division. Weather Station: Oakland
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20 40 60 80 100 120
Temp
Cum
ulat
ive
PCA
F
Actual PCAFs Estimated Shape
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CASE Initiative Project
The T&D Component: Winter PCAF Timing
Winter Areas• Current areas peak in the evening. Do we need
to worry about a morning peak?
-0.1
0
0.1
0.2
0.3
0.4
0.5
0.6
10 15 20
Hour of the Day
PC
AF
To
tals
by
Ho
ur
of
the
Da
y
NORTH PEN WEST 12 KV
MONTEREY 21 KV
SEASIDE MARINA 12 KV
K-X (Oakland)
RADIAL (SF)
-0.1
0
0.1
0.2
0.3
0.4
0.5
0.6
10 15 20
Hour of the Day
PC
AF
To
tals
by
Ho
ur
of
the
Da
y
NORTH PEN WEST 12 KV
MONTEREY 21 KV
SEASIDE MARINA 12 KV
K-X (Oakland)
RADIAL (SF)
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
The T&D Component: Hourly Costs
Hourly Cost is the T&D capacity cost (from the utilities) times the temperature weight.
Temp weight is the total PCAF for each degree F, divided by the number of hours that are at that degree F.
Temph = temperature category for that hour. (nearest whole degree) TotalPCAF[Temph] = total % of capacity cost allocated to that temp category NumberofHours = # of hours that fall into that temp category in the year CapacityCost = T&D marginal capacity cost in $/kW-yr a = Area, h = hour
)(
)(& ,
h
haha TempursNumberofho
TempTotalPCAFstCapacityCoDCostT
)(
)(& ,
h
haha TempursNumberofho
TempTotalPCAFstCapacityCoDCostT
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
The T&D Component: Winter PCAF Problems
Assigning costs to the winter (in summer peaking areas) doubles the T&D costs for the area• Favors measures that save in summer and
winter --- bit issue? Spreading actual costs over summer and
winter would undervalue summer reductions
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Environmental Adder: Emissions
A realistic valuation of NOx emissions is on the order of $3000-12,300/ton, centered on $7500-8000/ton..
A reasonable, albeit very tentative and highly uncertain, range of values for CO2 emissions is about $5-13/ton-CO2. Thus, the $9/ton-CO2 value used in both the 1994 and 1998 CEC valuations appears to be reasonable.
E3 concludes that a realistic valuation of environmental externalities should be closer to the CEC ER94 valuations, but perhaps at the lower end of this range.
For common electric generation plants in California, this level of externality valuation corresponds to a total emission cost, or energy adder, of about $10/MWh.
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Environmental Adder: Emission Cost Estimates
0
10
20
30
40
50
60
701 3 5 7 9 11 13 15 17 19 21 23
Hour of the Day
Mar
ke
t P
rice
or
Emis
sio
n C
os
t ($
/MW
h)
2005 Market Price
ER94
CEC 1998
Other States Min
Other States Max
E3 Recommendation
Table 1: Emission Cost Scenarios
Cost $/ton NOx SO2 VOC PM-10 CO2
ER94 9120 4490 4240 4610 9CEC internal 1998estimate
1800 1780 530 910 9
Other States Min 850 150 1010 330 1Other States Max 7500 1700 5900 4600 24E3 Recommendation 3000 9
“Other States” refers to values used in Massachusetts, Minnesota, Nevada, New York, and Oregon.
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Rate Adder
Example for Fresno Commercial Building
$-
$0.01
$0.02
$0.03
$0.04
$0.05
$0.06
$0.07
$0.08
$0.09
$0.10
2001
2004
2007
2010
2013
2016
2019
2022
2025
2028
Fo
reca
st in
200
1 $/
kWh
Total Marginal Cost
Current RetailForecast
Flat adder to adjust marginal cost up to retail rate levels.
Shape still represents underlying social marginal costs.
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
1992 Adder: Comparison of Electric Rate Forecasts
Current rate forecast is much lower than existing.
Adder up to existing levels removes any IOU rate differentials
Electricity Comparison of Existing Standard Basis and Current Forecast
$-
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
$0.14
$0.16
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
20
15
20
17
20
19
An
nu
al
Av
era
ge
Pri
ce
$2
00
1 $
/kW
h
Existing Standard Basis Current CEC Forecast
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Electric TDV Summary
Res Com Res Com Res Com Res Com Res ComMin 0.03$ 0.02$ 0.03$ 0.02$ 0.03$ 0.02$ 0.03$ 0.02$ 0.03$ 0.02$
Average 0.75$ 0.45$ 0.74$ 0.45$ 0.75$ 0.45$ 0.74$ 0.45$ 0.75$ 0.45$ Max 3.14$ 1.91$ 3.13$ 1.90$ 3.14$ 1.91$ 3.13$ 1.90$ 3.14$ 1.91$ Min -$ -$ -$ -$ -$ -$ -$ -$ -$ -$
Average 0.21$ 0.14$ 0.37$ 0.17$ 0.32$ 0.19$ 0.13$ 0.07$ 0.47$ 0.31$ Max 95.18$ 61.56$ 129.80$ 82.72$ 150.01$ 97.02$ 73.51$ 45.50$ 637.40$ 412.26$
Rate Adder Flat 1.03$ 0.28$ 0.74$ 0.32$ 0.91$ 0.23$ 1.20$ 0.55$ 0.76$ 0.11$ 1992 Adder Flat 0.48$ 0.43$ 0.60$ 0.37$ 0.48$ 0.43$ 0.38$ 0.23$ 0.48$ 0.43$
Min 0.11$ 0.06$ 0.11$ 0.06$ 0.11$ 0.06$ 0.11$ 0.06$ 0.11$ 0.06$ Average 0.14$ 0.09$ 0.14$ 0.09$ 0.14$ 0.09$ 0.14$ 0.09$ 0.14$ 0.09$
Max 0.24$ 0.14$ 0.24$ 0.14$ 0.24$ 0.14$ 0.24$ 0.14$ 0.24$ 0.14$ Min 1.67$ 0.82$ 1.51$ 0.79$ 1.56$ 0.76$ 1.76$ 0.89$ 1.41$ 0.65$
Average 2.60$ 1.39$ 2.60$ 1.39$ 2.60$ 1.39$ 2.60$ 1.39$ 2.60$ 1.39$ Max 97.66$ 62.87$ 132.26$ 84.08$ 152.37$ 98.27$ 76.07$ 46.87$ 639.56$ 413.36$
Total TDV
TDV Lifecycle Cost Components $/kWh
Shasta
Commodity Cost
T&D Cost
Environmental Adder
Oakland China Lake Fresno Long Beach
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Details of the Natural Gas Estimation
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
The Commodity Component: Monthly Natural Gas Shape
Monthly, not hourly variation for natural gas.
Seasonal Allocation Factors for Natural Gas
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Jan
ua
ry
Fe
bru
ary
Ma
rch
Ap
ril
Ma
y
Jun
e
July
Au
gu
st
Se
pte
mb
er
Oct
ob
er
No
vem
be
r
De
cem
be
r
Allo
ca
tio
n F
ac
tors
PG&E Socal Gas SDG&E
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
The Commodity Component: Long Run Forecast
Residential Core Natural Gas Forecast
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
Re
tail
Co
st
$200
1/M
MB
tu
PG&E Socal Gas SDG&E
Long run residential natural gas rate forecast
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Environmental Adder:Externality for Natural Gas
Natural Gas Externalities• 0.058 ton-CO2/MMBtu• 0.045 lb NOx/MMBtu.
Scenario $/MMBtu 15 Year NPV 30 Year NPVER94 $ 0.73 $8.94 $14.68CEC Internal 1998 Estimate $ 0.56 $6.92 $11.36Other States Min $ 0.08 $0.95 $1.56Other States Max $ 1.56 $19.19 $31.51E3 Recommendation $ 0.59 $7.25 $11.90
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Rate Adder
Example for Commercial Fresno Customer
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
20
00
20
03
20
06
20
09
20
12
20
15
20
18
20
21
20
24
20
27
20
30
Fo
rec
as
t $
20
01
$/M
MB
tu
Marginal Cost
Retail Rate
Flat adder to adjust marginal cost up to retail rate levels.
No T&D component in marginal cost, assumption is flat allocation across hours.
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
1992 Adder:Comparison of Gas Forecasts
Natural GasComparison of Existing Standard Basis with Current Forecast
0
2
4
6
8
10
12
14
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
$2
00
1 D
olla
rs p
er
MM
Btu
Existing Current Forecast
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Natural Gas TDV Summary
TDV Values by Service AreaTDV Lifecycle Cost
Components $/MMBtuZone PG&E Socal Gas SDG&E
TDV Component Class Res Com Res Com Res Com
Min $56.02 $31.46 $53.26 $29.62 $53.01 $29.48
Avg $60.03 $33.41 $59.91 $32.91 $59.78 $32.90Commodity Cost
Max $63.44 $35.63 $67.77 $37.69 $70.31 $39.11
Rate Adder Flat $62.55 $40.79 $70.52 $25.22 $70.54 $37.03
1992 Standard Adder Flat $53.73 $5.04 $45.88 $21.12 $45.98 $9.31
Environmental Adder Flat $11.90 $7.25 $11.90 $7.25 $11.90 $7.25
Min $184.19 $84.55 $181.56 $83.20 $181.43 $83.07
Avg $188.20 $86.49 $188.20 $86.49 $188.20 $86.49Total TDV
Max $191.61 $88.71 $196.07 $91.27 $198.73 $92.69
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Details of the Propane Estimation
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
The Commodity Component:Long Run Trend for Propane
EIA Crude Oil Forecast Used Going Forward
Propane Prices Follow Crude O ilPropane Prices Follow Crude O il
15
35
55
75
95
115
135
Jan-
86
Jan-
87
Jan-
88
Jan-
89
Jan-
90
Jan-
91
Jan-
92
Jan-
93
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
98
Jan-
99
Jan-
00
Cen
ts p
er G
allo
n
WTI Crude Propane (M. Belvieu)
No. 2 (USGC) SHOPP Propane
PMM Propane
Source: DRI Platt's Spot Prices
Retail/Spot PricesRetail/Spot Prices
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
The Commodity Component:Monthly Shape of Propane
Based on EIA Historical California Propane Prices
Propane Seasonal Shape(Based on Historical California Prices)
0%
20%
40%
60%
80%
100%
120%
140%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Sea
son
al A
dju
stm
ent
Fac
tors
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Environmental Adder:Propane Externalities
Propane Externalities• 0.07 ton-CO2/MMBtu• 0.045 lb NOx/MMBtu
Scenario Annual $/MMBtu 15 Year NPV 30 Year NPVER94 $ 0.84 $10.27 $16.86CEC Internal 1998 Estimate $ 0.67 $8.24 $13.54Other States Min $ 0.09 $1.10 $1.80Other States Max $ 1.85 $22.73 $37.32E3 Recommendation $ 0.70 $8.58 $14.08
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Rate Adder
Example for Commercial Customer
$-
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
20
00
20
03
20
06
20
09
20
12
20
15
20
18
20
21
20
24
20
27
20
30
Fo
rec
as
t $
20
01
$/M
MB
tu
Marginal Cost
Retail Price
Flat adder to adjust marginal cost up to retail rate levels.
No T&D component in marginal cost, assumption is flat allocation across hours.
Copyrighted © 2000 PG&E All Rights Reserved
CASE Initiative Project
Propane TDV Summary
Statewide Propane ValuesTDV Lifecycle Cost
Components $/MMBtuClass Res Com
Min $115.87 $50.93
Avg $128.95 $53.97Commodity
Max $137.89 $58.51
Rate Adder Flat $117.42 $82.96
Environment Flat $14.08 $8.58
Min $247.38 $142.47
Avg $260.46 $145.51Total TDV
Max $269.39 $150.04