E6 Tarriff wording - what does this mean?

System · June 2008

Total bundled service charges are calculated using the total rates below. On-peak, partpeak,
and off-peak usage is assigned to tiers on a pro-rated basis. For example, if
twenty percent of a customer’s usage is in the on-peak period, then twenty percent of
the total usage in each tier will be treated as on-peak usage. Bundled service
customers are billed the greater of the total minimum charge or the otherwise applicable
total charge derived from total energy rates.

I can't for the life of me figure this out.

BB. · June 2008

Re: E6 Tarriff wording - what does this mean?

Not a problem--it is very simple to explain (please note, I believe PG&S has reverted to the "2004" method of calculations. The 2005 really messed up Baseline Tiered pricing--but that has been fixed (from an email discussion with PG&E regarding E7 rate plan--E6 should be similar--but more complex because of the extra time period):

Step-by-Step Analysis:

1. The pro-rated assignment of on-peak and off-peak usage to tiers
does not make any difference in the total bill compared to tariffs
dated before November 1, 2004 in which the Energy Procurement
Surcharges were calculated separately on the total usage and added
to base energy charges for each TOU period. This is true so long
as the difference in rates from one tier to the next is the same
for each TOU period, as is the case in the current TOU tariffs and
all the ones we have seen before. An example comparison of these
calculations is shown below in Appendix I.

2. Since pro-rating has no effect on the total bill, any proposed
calculation method can be validated by making sure the result is
equal to that produced by the method used before November 1, 2004.

3. We assume that when the current E-7 tariff refers to "customer's
usage", this means the total net usage shown on the detail bill in
the TOTALS row of the USAGE (kWH) column of the TOU kWH METER
INFORMATION table of the detail bill. This is the sum of the
usages in each TOU period, which will be negative in periods when
the customer is a net generator and positive in periods when the
customer is a net consumer.

4. The tariff for E7 specifies that if twenty percent of a customer's
usage is in the on-peak period, then twenty percent of the total
usage in each tier will be treated as on-peak usage and eighty
percent of the total usage in each tier will be treated as
off-peak usage. Following this instruction is straightforward:
The percentage of the customer's usage that is in the on-peak
period is simply the ratio of on-peak usage to total net usage
times 100. This percentage will be negative when the customer is
a net generator in the on-peak period but a net consumer overall.
This percentage may also be greater than 100, but the sum of the
percentages for all periods will always be 100. (This ratio
cannot be calculated when the total net usage is zero; that
problem is addressed in a later step.)

5. Calculating a total bill that involves net generation in one TOU
period and net consumption in another TOU period using the
percentages as determined in the previous step will produce the
same total bill as the method used before November 1, 2004, just
as it does for a customer that is a net consumer in all TOU
periods. An example comparison of these calculations is shown
below in Appendix II. This validates the calculation. If some
future tariff makes the difference in rates from one tier to the
next not be the same for all TOU periods, the pro-rating to TOU
periods will still be correct.

6. The total bill calculated as described in the previous step is the
same as that produced by the calculations in the PG&E detail bills
between November 1, 2004 and October, 2005. An example comparison
of these calculations is shown below in Appendix III. Thus, one
way to mitigate the problems introduced in October 2005 by the
change in the method of calculating bills is simply to return to
the method of calculating bills as used between November 1, 2004
and October, 2005.

7. You can avoid the appearance of large baseline values and
percentages greater than 100% by reformulating the calculation.
The problem stems from the way the tariff was written. The
pro-rating is specified by a rule sentence and an example
sentence:

Rule: On-peak and off-peak usage is assigned to tiers on a
pro-rated basis.

Example: For example, if twenty percent of a customer's usage
is in the on-peak period, then twenty percent of the
total usage in each tier will be treated as on-peak usage
and eighty percent of the total usage in each tier will
be treated as off-peak usage.

The example is actually something different than the rule states.
The rule assigns usage in TOU periods to tiers, whereas the
example sentence assigns the usage in tiers to TOU periods. A
better example sentence that correctly characterizes the rule
would be:

Example: For example, if eighty percent of a customer's total net
usage is in tier 1 and the remaining twenty percent is in
tier 2, then eighty percent of the total usage in each
TOU period will be treated as tier 1 and twenty percent
of the usage in each TOU period will be treated as tier 2
usage.

The percentage of a customer's total net usage that falls within
each tier is straightforward to calculate as the ratio of the
amount in each tier to the total times 100. The result is never
greater than 100% and is always positive even if the customer is a
net generator. See Appendix IV for an example showing that a
calculation based on percentage in tiers produces the same result
as a calculation based on percentage in TOU periods.

8. There is an arithmetic difficulty (divide by zero) in calculating
the percentage used in each TOU period if the kWh generated in the
on-peak period equals the kWh consumed during the off-peak period
so the total usage is zero. However, if the calculation of
charges is based on percentage of usage in each tier, as described
in the previous step, then this problem can be avoided.

When calculating the percentage usage in each tier, there is still
a divide-by-zero problem if the total net usage is zero, but it is
intuitive in that case to consider all usage to be in tier 1, just
as it would be for 1 kWh net consumption or -1 kWh net generation.
So long as the baseline credit per kWh is the same for all TOU
periods, then the credit in the off-peak period and the debit in
the on-peak period cancel out. Thus, it makes no difference
whether the usage is treated as being in tier 1 or tier 2 when the
total net usage is zero.

======================================================================

Simple--huh...

Next part has some sample calculations (message too big).

-Bill

BB. · June 2008

Re: E6 Tarriff wording - what does this mean?

Part two of E7 calculations:

======================================================================
Appendix I:

Comparison of calculations before and after November 1, 2004
(before pro-rating and after). Because the difference in rates
from one tier to the next is the same for each TOU period, the
result is the same for both methods.

E-7 tariff as of March 1, 2006:

Delta from Tier2
Summer Peak Off-peak Peak Off-Peak
Tier 1 0.29372 0.08664 0 0
Tier 2 0.29372 0.08664 0 0
Tier 3 0.38171 0.17463 0.08799 0.08799
Tier 4 0.46303 0.25595 0.16931 0.16931
Tier 5 0.50565 0.29857 0.21193 0.21193

Delta from Tier2
Winter Peak Off-peak Peak Off-Peak
Tier 1 0.11472 0.08966 0 0
Tier 2 0.11472 0.08966 0 0
Tier 3 0.20271 0.17765 0.08799 0.08799
Tier 4 0.28403 0.25897 0.16931 0.16931
Tier 5 0.32665 0.30159 0.21193 0.21193

Baseline Credit 0.01559 0.01559

Sample bill calculation with net consumption in both on-peak and
off-peak periods. For simplicity, assume the baseline allocation
is 100 kWh and that 200 kWh is consumed, with 20% in the on-peak
period.

40 kWh on-peak
160 kWh off-peak

100 kWh tier 1
30 kWh tier 2
70 kWh tier 3

Calculation before November 1, 2004:

40 * 0.29372 = $11.75 On-peak charges
160 * 0.08664 = $13.86 Off-Peak charges
100 * -0.01559 = $-1.56 Baseline credit
70 * 0.08799 = $6.16 Tier 3 surcharge
$30.21 Total

Calculation after November 1, 2004:

20% * 100 * 0.29372 = $5.87 On-peak tier 1
20% * 30 * 0.29372 = $1.76 On-peak tier 2
20% * 70 * 0.38171 = $5.34 On-peak tier 3
20% * 100 * -0.01559 = $-0.31 On-peak baseline credit

80% * 100 * 0.08664 = $6.93 Off-peak tier 1
80% * 30 * 0.08664 = $2.08 Off-peak tier 2
80% * 70 * 0.17463 = $9.78 Off-peak tier 3
80% * 100 * -0.01559 = $-1.25 Off-peak baseline credit
$30.21 Total

Appendix II:

Comparison of calculations before and after November 1, 2004
(before pro-rating and after) for a bill that involves net
generation in one TOU period and net consumption in another TOU
period. Assume the customer generates -100 kWh in the on-peak
period and consumes 300 kWh in the off-peak period, so the
customer's total usage is 200 kWh, and assume the baseline
allocation is 100 kWh.

-100 kWh on-peak
300 kWh off-peak
200 kWh net usage

100 kWh tier 1
30 kWh tier 2
70 kWh tier 3

Calculation before November 1, 2004:

-100 * 0.29372 = $-29.37 On-peak charges
300 * 0.08664 = $25.99 Off-Peak charges
100 * -0.01559 = $-1.56 Baseline credit
70 * 0.08799 = $6.16 Tier 3 surcharge
$1.22 Total

Calculation after November 1, 2004:

The percentage of the customer's usage in the on-peak
and off-peak periods is:

-100 / 200 = -50% On-peak
300 / 200 = 150% Off-peak
100% Total

-50% * 100 * 0.29372 = $-14.69 On-peak tier 1
-50% * 30 * 0.29372 = $-4.41 On-peak tier 2
-50% * 70 * 0.38171 = $-13.36 On-peak tier 3
-50% * 100 * -0.01559 = $0.78 On-peak baseline debit

150% * 100 * 0.08664 = $13.00 Off-peak tier 1
150% * 30 * 0.08664 = $3.90 Off-peak tier 2
150% * 70 * 0.17463 = $18.34 Off-peak tier 3
150% * 100 * -0.01559 = $-2.34 Off-peak baseline credit
$1.22 Total

Appendix III:

Comparison of baseline energy charges calculation from the detail
bill for account PVV 18 31805 for June 15, 2005 to July 15, 2005
with a calculation based on percentage of usage in each TOU period
as in Appendix II. This account is on rate schedule E-9, with a
baseline allowance of 366 kWh.

Reduced representation of BASELINE ENERGY CHARGES table:

Desc. TOU Usage Base qty Tiered qty Rate Charge
Tier 1 Peak -62 -810.429 -62 0.28368 $-17.59
Tier 1 Part -101 -1320.214 -101 0.10395 $-10.50
Tier 1 Off 191 2496.643 191 0.04965 $9.48
TOTALS 28 $-18.61

Calculation based on percentage of usage in each TOU period:

-62/28 = -221.4% On-peak
-101/28 = -360.7% Partial-peak
191/28 = 682.1% Off-peak

-221.4% * 28 * 0.28368 = $-17.59 On-peak tier 1
-360.7% * 28 * 0.10395 = $-10.50 Partial-peak tier 1
682.1% * 28 * 0.04965 = $9.48 Off-peak tier 1
$-18.61 Total

Appendix IV:

Example showing that a calculation based on percentage in tiers
produces the same result as a calculation based on percentage in
TOU periods. As in Appendix II, assume the customer generates
-100 kWh in the on-peak period and consumes 300 kWh in the
off-peak period, so the customer's total usage is 200 kWh, and
assume the baseline allocation is 100 kWh.

-100 kWh on-peak
300 kWh off-peak
200 kWh net usage

100 kWh tier 1
30 kWh tier 2
70 kWh tier 3
200 kWh total usage

Calculation based on percentage of usage in each TOU period:

-100 / 200 = -50% On-peak
300 / 200 = 150% Off-peak
100% Total

-50% * 100 * 0.29372 = $-14.69 On-peak tier 1
-50% * 30 * 0.29372 = $-4.41 On-peak tier 2
-50% * 70 * 0.38171 = $-13.36 On-peak tier 3
-50% * 100 * -0.01559 = $0.78 On-peak baseline debit

150% * 100 * 0.08664 = $13.00 Off-peak tier 1
150% * 30 * 0.08664 = $3.90 Off-peak tier 2
150% * 70 * 0.17463 = $18.34 Off-peak tier 3
150% * 100 * -0.01559 = $-2.34 Off-peak baseline credit
$1.22 Total

Calculation based on percentage of usage in each tier:

100 / 200 = 50% Tier 1
30 / 200 = 15% Tier 2
70 / 200 = 35% Tier 3
100% Total

50% * -100 * 0.29372 = $-14.69 On-peak tier 1
15% * -100 * 0.29372 = $-4.41 On-peak tier 2
35% * -100 * 0.38171 = $-13.36 On-peak tier 3
50% * -100 * -0.01559 = $0.78 On-peak baseline debit

50% * 300 * 0.08664 = $13.00 Off-peak tier 1
15% * 300 * 0.08664 = $3.90 Off-peak tier 2
35% * 300 * 0.17463 = $18.34 Off-peak tier 3
50% * 300 * -0.01559 = $-2.34 Off-peak baseline credit
$1.22 Total

The calculations above are equivalent as shown by simple algebra.
Given:

U = total net usage
P = on-peak usage
T = tier 1 usage
R = on-peak tier 1 rate

Then for the on-peak tier 1 charge calculation (the first line in
each of the two calculations), we have:

On-peak tier 1 = P/U * T * R (% in peak)
= T/U * P * R (% in tier 1)

======================================================================

I left off the names--I don't know the folks but I do want to acknowledge the good fight they had with PG&E back in 2005 to fix up their TOU rate plans.

-Bill

For extra credit, program into an Excel spreadsheet using variables for tiers, rates, and kWhr readings.

-BB

E6 Tarriff wording - what does this mean?

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