Attachment

ATTACHMENT #1 Electric Rate Study Status Report The Electric Rate Study Implementation Committee found that if we implemented the recommendations of the consultants including: proposed energy rates, demand rates, 95% power factor, the 100% Demand Ratcheting, and 25KV criteria for distinguishing between small and medium commercial customers total revenue would increase 11.93% or $6,317,544 more than projected by the consultant. Keep in mind new rates were to be revenue neutral as a whole. When analyzing why this occurred we determined that 1) Consultant appeared to not have factored in the impact of 100% ratcheting or the power factor when making the recommendations on energy and demand rates. 2) Also the consultant did not factor in the shifting of commercial customers from small to medium classes when applying the 25KV criteria. Based on our analysis to date the committee recommends the following: 1. Accepting the consultant’s recommendations for residential rate structure. The committee recommends increasing the rate from $.0880 to .0890. Our calculations indicated that without this slight adjustment, the rate would not cover cost of service and provide needed revenue. 2. Accepting the proposed energy rates and customer service charges proposed by consultant for all rates except primary (see #6 below). 3. Not accepting the consultant’s recommendation for 25K V peak demand as the criteria for determining whether a customer is a small or medium commercial customer, this caused too much rate shifting resulting in higher cost to customers that were not anticipated by the consultant. The committee proposes keeping the current criteria of 3,500 kwh for two consecutive months. 4. Accepting the consultant’s recommendation for 95% power factor and 100% ratcheting for demand customers (medium commercial, large commercial, primary, transmission and special rates) as good practices to put into place, but we recommend reducing the proposed demand rates to equalize for the increase in cost caused by the power factor and ratcheting increases. 5. Accepting the consultant’s recommendation for billing demand based on a standard maximum 15-minute demand during the month. Currently, primary and special rates demands are based on a maximum 60-minute demand during the month. 6. Accepting recommendation of moving the Church rate, Agricultural Commercial Rate, and Municipal Rate customers into appropriate commercial classes, this actually caused an overall decrease in cost for these customers

Areas needing additional review: l. We are continuing to analyze the impact on Primary Customers. When we applied the 95% power factor and the 100% Demand Ratcheting with modified demand rates we were able to bring the overall classes revenue up to the 4% recommended by the consultant. The problem we are having is that we found wide variations within the customers. Some customers saw increases of .604% while others were increased by 24.8%. We are currently examining ways to smooth the impact on this rate class. The study also recommended reincorporating three special rate customers back into this rate class. The large increases these customer’s are experiencing because of that is being analyzed and reviewed by the committee. Until we can examine this further the committee is uncomfortable making a recommendation. Impact on the Medium Commercial class was erratic with 96 out of 1,084 customers experiencing 50 % or larger percentage increases from current bills. We are examining why these large increases are occurring. Until this issue is resolved we are uncomfortable approving a demand charge for this class of customer.

CURRENT AND PROPOSED RATES Dover, Delaware Electric Department Customer Charge Per Billing Period Demand Charge Per Kilowatt of Maximum Monthly Demand Energy Charge Per Kilowatt-Hour of Energy Used per Month Committee Committee Committee Rate Schedule Current Proposed Proposed Current Proposed Proposed Current Proposed Proposed Residential $4.00 $5.00 $5.00 $0.0880 $0.0890 Summer $0.0924 Winter - First 1,000 kWh $0.0880 Winter - Over 1,000 kwh $0.0808 Small Commercial $5.00 $10.00 $10.00 Summer $0.1014 $0.0880 $0.0860 Winter $0.0914 $0.0820 $0.0810 Medium Commercial $5.00 $10.00 $10.00 Without Metered Demand Summer $0.0521 $0.0880 $0.0880 Winter $0.0460 $0.0820 $0.0820 With Metered Demand Summer $10.75 $12.00 $10.50 $0.0521 $0.0470 $0.0470 Winter $7.80 $10.00 $8.50 $0.0460 $0.0380 $0.0380 Large Commercial $5.00 $10.00 $10.00 Summer $8.75 $12.00 $10.50 $0.0450 $0.0430 $0.0430 Winter $6.80 $10.00 $8.50 $0.0450 $0.0380 $0.0380 Primary $10.00 $10.00 $0.0450 Summer $8.00 $12.00 $9.12 $0.0400 $0.0400 Winter $5.30 $10.00 $7.12 $0.0380 $0.0380 Street Lighting $10.00 $10.00 $0.0808 $0.0570 $0.0570 Security Lighting (per lamp) 70 watt HPS Roadway Style Lamp $2.34 $2.34 $2.34 100 watt HPS Roadway Style Lamp $3.20 $3.20 $3.20 150 watt HPS Roadway Style Lamp $4.69 $4.69 $4.69 250 watt HPS Roadway Style Lamp $8.16 $8.16 $8.16 400 watt HPS Roadway Style Lamp $12.60 $12.60 $12.60 175 watt Mercury Vapor $5.98 $5.98 $5.98 250 watt Mercury Vapor $8.16 $8.16 $8.16 400 watt Mercury Vapor $12.69 $12.69 $12.69

EXISTING RATES NO Naor PROJECTED PROJECTED ADJUSTMENTS % REVENUE BILLED FISCAL RATE CLASS 2003 CHANGE CHANGE Residential 17,303,129 0.90% 155,728 Small Commercial 2,588,354 6.50% -168,243 Medium Commercial 14,172,306 -2.60% -368,480 Large Commercial 764,631 1.30% 9,940 Commericial Total 17,525,291 3.01% -526,783 Primary 6,218,402 NIA NIA Tilcon 410,498 NIA NIA Sheraton 184,094 N/A NIA Playtex 2,316,671 NIA N/A Primary Subtotal 9,129,665 4.00% 365,187 OAFB 4,006,460 0.00% 0 P&G 2,403,878 0.00% Q Kraft 2,562,714 0.00% 0 TOTAL REVENUE * 0.01% ° -6,868 MODIFIED RATES KWH SUMMER KWH WINTER KW SUMMER Residential 0.0890 0.0890 Small Commercial 0.0860 0.0810 Medium Commercial Large Commercial Primary Tilton Sheraton Playtex DAFB P&G Kraft 10.5000 10.5000 9.1200 9.1200 9.1200 9.1200 5.6000 6.3000 5.7500 SUMMARY COMMPARSION OF RATE CHANGE PROPOSAL MODEL #1 PROPOSED RATES NO SHIFTING RATCHET 100% POWER FACTOR 95% DIFFERENCE 17,283,507 19,622 2,467,621 120,733 15,094,606 922,300 813,137 48,506 18,375,364 850,073 6,999,274 780,872 526,488 115,990 235,762 51,668 3,062,258 745,587 10,823,782 1,694,117 4,191,217 184,757 2,430,436 26,558 2,682,494 119,780 55,786,800 2,855,663 KW WINTER 8.5000 * 8.5000 7.1200 * 7.4200 * 7.1200 * 7.1200 * 4.0500 4.7500 4.2000 CITY OF DOVER MODEL #1 MODIFIED PROPOSED RATES RATCHET 100% POWER FACTOR DIFF % 95% DIFFERENCE 0.11% 47,468,010 164,881 4.66% 2,430,116 ~158,238 6.51% 14,158,037 14,269 6.34% 774,075 9,444 4.85% 17,362,228 -163,063 12.56% 6,226,352 7,950 28.26% 435,866 25,368 28.07% 186,650 2,556 32.18% 2,652,517 335,846 18.56% 9,501,385 371,720 4.61% 4,009,392 2,932 1.10% 2,404,218 340 4.67% 2,562,824 110 5.40% 53,308,056, 376,919 DIFF % 0.95% 6.11% 0.10% * 1.24% 0.93% * 0.13% * 6.18% * 1.39% * 14.50% * 4.07% * 0.07% 0.01% 0.00% 0.71% *