Setting Competitive Electric Rates

Ronald D. Elks

General Manager/CEO

Presented to:

Joint Municipal Power Agency Relief Committee

January 10, 2012

• About GUC

• Our Customers

• Rate Setting Methodology/Strategy

• Competitiveness

• Catalyst for Economic Growth

• Summary

Overview

2

Mission Statement

Greenville Utilities is dedicated to

enhancing the quality of life for those we

serve by providing safe, reliable utility

services at the lowest reasonable cost,

with exceptional customer service.

3

Local Control

• GUC is governed by an eight-member Board of

Commissioners made up of local citizens representing

the interests of all customers

4

Our Board …

• Is the regulatory body for GUC

• Makes decisions that support local needs and

values

• Is responsible for approving rates and

development plans, setting operating and

extension policies, and recommending GUC’s

annual budget for approval by City Council

5

Customer Connections

64,000 – Electric

22,000 – Gas

34,250 – Water

28,000 – Sewer

Combined total:

~148,250

Progress

Energy

Edgecombe/Martin

EMC

Pitt/Greene

EMC

Progress

Energy

Edgecombe/Martin

EMC

GUC

Electric

Winterville

Ayden

6

Energy Sales by Customer Type

43%

7%

21%

29%

kWh Billed

Residential

Small Commercial

Commercial

Industrial

7

Four Enterprise Funds: Separate and Self-Sustaining

• Electric/water/sewer/natural gas enterprise

funds are operated as separate and self-

sustaining business units.

• Each enterprise fund stands alone and each

is supported by cost-of-service rates and

fees.

8

Cost-of-Service Principles

• The rates for all GUC services are developed on a

cost-of-service basis.

• Based on comprehensive rate studies, the actual

rate structure is set to recover the costs to serve all

customers.

• GUC’s policy is to maintain rates at or below the

median or midpoint when compared to other

regional electric providers.

9

Updated January 2012

Electric: Winter Bill Typical Residential Customer using 1,000 kWh with LM Credits

Total Bill

IOUs

GUC

Median

Municipals

EMCs

$0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00

Competitive Rates

• GUC has been successful in consistently

maintaining residential and industrial rates

at or below the median of other neighboring

and regional providers.

11

12

83¢ Purchased Power Costs

(including NCEMPA debt)

Electric:

Where Does Our Dollar Go?

17¢ Operations/Maintenance,

System Infrastructure,

Turnover, Salaries

Computation of City Transfer is specified in Chapter 861 of Senate Bill 1069, An Act to Amend and Restate the Charter of the Greenville Utilities Commission of the City of Greenville.

General fund transfers are computed based on 6% of the Electric and Gas Funds’ fixed assets, net of related debt plus 50% of the annual retail cost of service for the City's public lighting.

Transfers are made to the City only after payment of all debt service.

Formal Transfer Agreement with City

13

Rate Strategy: Lowest Reasonable Cost

• Focus on ensuring that our customers pay

the lowest reasonable rates, consistent with

safe and reliable service.

• GUC has offset past wholesale electric

increases through system growth and cost-

saving measures such as load management,

industrial generation, and other efficiencies.

14

Absorbing Increases

• Since 2002, GUC has absorbed:

– Nearly $10.5 million in wholesale electric cost

increases

– Nearly $4.7 million in increased costs for poles,

transformers, wire, vehicles, fuel, insurance, labor, etc.

• Last electric base rate adjustment in 1991

– All increases since that time have been directly

attributable to the cost of acquiring power for

customers

15

Record of Reliability

• GUC continually reinvests in its systems, ensuring consistent, reliable service for all customers.

• For FY2011, overall electric system reliability was 99.996%

• GUC compares favorably with national averages for outage duration and frequency. We rank in the top 10 percent based on industry benchmarking results.

Catalyst for Economic Growth

• Commercial, Industrial &

Institutional Customers

• Mutual Benefits –

Profitability & Sustainability

• Key Relationships

• Provide Support &

Assistance

17

Industrial Requirements

5%

growth

since

1990

• Reliability (infrastructure in place)

• Power quality

• Flexibility to meet specific needs

18

Growth in Electric Customers

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Tota

l Cu

sto

me

rs

Growth in Electric Sales (MWh)

1,250

1,300

1,350

1,400

1,450

1,500

1,550

1,600

1,650

1,700

1,750

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

M

Wh

• Since the early 1980s, GUC’s portion of the

NCEMPA debt has been incorporated into our

electric rates.

• For over 30 years, through load management,

industrial generation, growth and other cost-

containment measures, GUC has successfully

managed and paid its portion of the debt while

maintaining competitive rates, high levels of

service and supporting the economic growth of

Greenville-Pitt County.

Managing the Debt

21

Summary

• Competitive rates

• Safe, reliable service

• Sound financial management

• A catalyst for economic growth/

industrial recruitment

22

Setting Competitive Electric Rates

Ronald D. Elks

General Manager/CEO

Presented to:

Joint Municipal Power Agency Relief Committee

January 10, 2012