Attachment

ATTACHMENT #1 Electric Rate Study Rate Design Presentation City of Dover August 26, 2003 . . Burns Brian Farber - Project Manager McDonnell SINCE 1698 Final Step of Electric Rate Study Rate Design Study Detailed Cost- of-Service Study Comprehensive Revenue Requirements Study Information and Tools

Presentation Outline ¢ Recap of Cost-of-Service Results * Review of Rate Design Considerations ¢ Overview of Rate Design Model Presentation of Proposed Rates by Rate Schedule Classification FY2004 Revenue Requirement Dollars in Millions Purchased Power Cost $35.2 63.8% Operations Expense 10.5 19.0% Depreciation Expense 3.9 7.1% Cost of Debt 1.4 2.5% Operating Transfers 4.8 8.7% Street Lighting Contribution 0.5 0.9% Net Margins 1.3 2.4% Other Revenue -2.4 4.3% Total $55.2. 100.0%

Summary - Unbundled Revenue Requirement Dollars in Millions Demand $14.3 26.0% Energy 28.0 50.8% Transmission 4.5 8.2% Distribution 4.6 8.4% Customer 3.7 6.7% Total $55.2 100.0% Cost of Service Analysis Summary Results .00 7 ‘Current Rate Revenues vs. Allocated Revenue GicentkWh current rates convkWh rev rqmt fT |

Divergent Rate Design Objectives Retail Electric Rate Design Promoye DNevenue Syeihy Factors Affecting Rate Design * Cost-of-Service Analysis Results ¢ Specific Objectives of City ¢ Competition With Other Energy Sources e Revenue Stability ¢ Price Stability * Ease of Administration

Decisions on Revenue Changes ¢ Which Rate Schedules - —are to be increased and by how much? —are to be decreased and by how much? —are not to be changed? * How is City to be Made Whole? ¢ What Specific Criteria are to be Considered? Rate Design Model Rate Schedules Monthly Billing Histo ¢ Current ¢ kWh Energy ¢ Proposed * kW Demand ¢ Competition e Revenue

Rate Design Model Considers Various Types of Charges * Cents per kWh Energy Dollars per kW Demand Demand Ratchet Customer Charge Minimum Bill Power Cost Adjustment Factor Major Rate Components * Energy Rate ¢ Sum of Variable Costs of Service ¢ Demand Rate e Sum of Power Supply Demand and Non-Customer- Related Fixed System Costs ¢ Customer Charge «© Sum of Customer Related Fixed System Costs

Proposed Rate Classifications Residential Small Commercial Medium Commercial Large Commercial Primary Metering Street Lighting ¢ Security Lighting Large Customers With Separate Rates Dover Air Force Base Kraft Proctor & Gamble Tilcon Delaware First State Power Mgmt

Comparison of Revenue Requirement and Revenue From Current Rates Revenue Current Rate Class Requirement Rates Variance Percent Residential $16,610 $16,291 $319 Small Commercial 2,343 2,646 (304) Medium Commercial : 14,340 (862) Large Commercial 1,037 14 Primary 9,941 878 Street Lighting 59 (23) Security Lighting 629 23 Other 10,207 (45) Total $55,150 $55,150 ($0) Residential Rate Rate Current Proposed Schedule Rate Rate Customer Charge $4.00 $5.00 Energy Charge $0.0880 Summer $0.0924 Winter First 1,000 kWh $0.0880 Over 1,000 kWh $0.0808

Residential Rate Comparison Average Monthly Bill per kWh Existing Proposed Mitford Newark Smyma Rate Schedule Small Commercial Rate Rate Current Proposed Schedule Rate Rate Customer Charge $5.00 $10.00 Energy Charge Summer $0.1014 $0.0880 Winter $0.0914 $0.0820

Small Commercial Rate Comparison Average Monthly Bill per kWh Existing Proposed Mitford Newark Rate Schedute Medium Commercial Rate Rate Current Schedule __ Rate Customer Charge $5.00 Without Metered Demand Energy Charge Summer $0.0521 Winter $0.0460 With Metered Demand Demand Charge Summer $10.75 Winter $7.80 Energy Charge Summer $0.0521 Winter $0.0460 Proposed Rate $10.00 $0.0880 $0.0820 $12.00 $10.00 $0.0470 $0.0380

Medium Commercial Rate Comparison Average Monthly Bill per kWh = - Existing Proposed Milford Newark Rate Schedule Large Commercial Rate Rate Current Proposed Schedule Rate Rate Customer Charge $5.00 $10.00 Demand Charge Summer $8.75 $12.00 Winter $6.80 $10.00 Energy Charge $0.0450 Summer $0.0430 Winter $0.0380

Large Commercial Rate Comparison Average Monthly Bill per kWh SSSESTESE Existing Proposed Milford Newark Rate Schedule Primary Metering Rate Rate Current Proposed Schedule Rate Rate Customer Charge $10.00 Demand Charge Summer $8.00 $12.00 Winter $5.30 $10.00 Energy Charge $0.0450 Summer $0.0400 Winter $0.0380

Il per kWh Average Monthly B jo fo] 2 = © a £ fe) O @ — © 8 a fo2] c = 2 oO = > = © £ ih o Rate Schedule G Existing ™@ Proposed Newark Conectiv z Rea KNW} \G wyvv”vy' © Average Rate Comparison Primary Metering Small Commercial Medium Commercial Large Commercial Residential Rate Schedule 13

Street Lighting Rate Rate Current Proposed Schedule Rate Rate Customer Charge $10.00 Energy Charge $0.0808 $0.0570 Comparison of Projected Revenue From Proposed Rates and Current Rates Rate Class Residential Proposed Current Rates Rates Variance $16,443 $16,291 $152 Small Commercial 2,646 (173) Medium Commercial 14,340 (372) Large Commercial 1,037 14 Primary 9,941 393 Street Lighting 59 (14) Security Lighting 629 ie) Other Total 10,207 10,207 (¢) $55,150 $55,150 $0 Percent 6.5% “2.6% 1.3% 4.0% -24.2% 0.0% 0.0% 0.0% 14

Other Proposed Rate Provisions ¢ No Changes in Separate Rate Schedules for Security Lighting and Large Customers ¢ Change Threshold between Small and Medium Commercial Rate Schedules From an Energy Basis to a Demand Basis ¢ Change Demand Ratchet on Medium and Large Commercial and Primary Metering Rate Schedules from 60% to 100% e Change Power Factor Requirement From 90% to 95% Purchased Power Cost Adjustment ¢ Additional Charge Above Rate Schedules * Provides Recovery of Contractual Increases in Power Costs * Calculated Annually * Current Methodology Provides Partial Recovery ¢ New Methodology Provides Full Recovery * Includes True-up of Past Year Cost Recovery

Project Report Covers All Phases Discussion and Questions