2017 Cost of Service Methodology Review

 

Cost of Service Methodology (COS) is used by our company to ensure that the rates charged to each customer group are a fair representation of the actual costs that are incurred to serve them.

A summary presentation about Cost of Service Methodology can be found here.

How do I participate?

Elenchus will provide several updates to us, the Saskatchewan Rate Review Panel and the public throughout the review process. The public is invited to participate in our COS methodology review through public meetings or through email inquiries.

Next Meeting: Preliminary Update of the COS Methodology Review

March 30, 2017 at 1:30 p.m.
Oak Room, Ramada Plaza (1818 Victoria Avenue, Regina, SK)

The public is welcome to attend and participate.

Join the live WebEx meeting.

Meeting number: 197 587 456
Password: This meeting does not require a password

Audio Connection:

Toll Free: 1(866)296-5646
Local - Canada, Saskatchewan: 1(306)781-5995
Participant Passcode: 698212

Questions should be limited to the COS Methodology Review and consultant report content.

Elenchus will respond to all questions and include all questions and responses in the final report.

Q&As

Throughout the review process, customers and stakeholders are invited to submit questions for the consultant by emailing COSreview@nullsaskpower.com. Questions should be limited to the COS methodology review and consultant draft report content. Questions and answers are posted here.

Review Process

Our COS methodology is going through an independent review. The review happens every five years to ensure our methodology is reasonable and follows industry standards whenever appropriate.

Cost of Service Methodology Review Schedule and Key Milestones

Milestone Date
Cost of service study kick off meeting. Feb 8, 2017
Elenchus provides preliminary update of review
of SaskPower’s cost of service methodology.
Mar 30, 2017
Elenchus presents draft report and its findings
and invites written submissions.
May 15, 2017
Elenchus provides a final report which includes all written
questions and a response to stakeholder submissions.
Jun 30, 2017
  • Learn more

    The Saskatchewan Rate Review Panel and Crown Investments Corporation of Saskatchewan have been invited to monitor and participate in the review. The public is also invited to participate.An independent consultant, Elenchus, has been selected to lead the COS review. Elenchus will be responsible for reviewing all aspects of our existing methodology and benchmarking our practices against other electrical utilities.

    After a review, including consideration of public input, Elenchus will provide a report outlining its recommendations. A copy of the report will be made available on this webpage. SaskPower will study all recommendations from the consultant and study the impact of each recommendation on SaskPower and its customer classes. Any material changes to our company’s COS methodology will be submitted as part of a future rate application and will be subject to a Saskatchewan Rate Review Panel review and Government of Saskatchewan Cabinet approval.

Meeting presentations

Learn more:

2012 Elenchus COS Review Report

  • 2017 Cost of Service Review Project Scope

    1. Review, in cooperation with SaskPower staff, SaskPower’s existing rate design methodology including the development of ideal cost based demand, energy, and customer rates and minimum charges for each rate code.

    2. Identify the main functionalization, classification and allocation methodologies used by utilities in Canada and the United States for cost of service modeling. Prepare for each method a written summary of the relevant advantages and disadvantages.

    3. Prepare and implement a survey of the functionalization, classification and allocation methodologies currently in use by Canadian and U.S electric utilities. The survey should include the functionalization, classification and allocation results in percentages (minimum of 7 Canadian utilities contacted).

    4. As requested by the Saskatchewan Rate Review Panel, specifically review the following items:

    4.1- The calculations associated with the Equivalent Peaker Method, which is the methodology employed by SaskPower to classify its generation rate base and expense to demand and energy related components.

    4.2- The calculation of the minimum system method to classify distribution lines and transformers.

    4.3- The implications of any class consolidation that SaskPower may consider reasonable to propose.

    4.4- Whether the Winter/Summer (2CP) allocation method continues to be reasonable for demand-related costs functionalized as generation, transmission and distribution and verification of the data inputs used to determine overall customer class demand allocation.

    4.5- The calculation of class coincident peaks and non-coincident peaks, including the appropriate number of historic years of data and number of peaks to include.

    4.6- The functionalization and classification of overhead costs.

    4.7- Documentation and explanation on how the demand response program affects participating customer class historical peak demand used as input data for cost allocation and any resulting adjustments in the cost of service study.

    5. In person in Regina, Saskatchewan, provide a preliminary update of the review to SaskPower, the Saskatchewan Rate Review Panel and interested stakeholders.

    6. Prepare and file a draft report to SaskPower, which includes an overall assessment of SaskPower’s cost of service methodology and specific recommendations, if any, on how the Corporation can improve its methodologies. The consultant’s report should include:

    6.1- A review and assessment of SaskPower's existing cost of service methodology.

    6.2- The Survey results of the functionalization, classification and allocation methodologies currently in use by Canadian and U.S electric utilities as well as the functionalization, classification and allocation results in percentages (minimum 7 Canadian utilities contacted).

    6.3- A verification of whether or not the current methodology is consistent with accepted electric power utility practices and is appropriate for SaskPower’s system characteristics.

    6.4- A proposal, if required, for the enhancement of SaskPower’s cost of service methodology including the reasons for the changes.

    7. Present the draft report and its findings to the Saskatchewan Rate Review Panel and stakeholders at a public meeting in Regina, Saskatchewan. At the meeting, the Consultant will explain the review process; describe SaskPower’s basic system and current cost of service methodology and the results from the draft report. The Consultant will respond to questions directly, as well as invite stakeholders to submit written questions.

    8. Respond to all stakeholder questions in writing. Stakeholders will be invited to prepare written submissions to the Consultant on the draft report.

    9. Following a review of all stakeholder input, the Consultant will finalize the report and provide an electronic copy of the final report to SaskPower by June 30, 2017. The Consultant will include in the final report responses to the written questions and submissions provided by stakeholders.

  • About Elenchus

    Elenchus Research Associates, Inc. was founded in 1980 by John Todd. Elenchus is a leading Canadian consulting firm respected for its expertise and experience in economic regulation, focusing on the energy sector. The firm’s clients include regulators, government agencies, electricity and natural gas utilities, and other stakeholders, including competitors and customer groups. It services include monitoring, reporting and development of regulatory strategy. Associates of the firm include experienced utility and industry individuals as well as former regulators.In addition to conducting the current review of SaskPower’s cost of service and rate design methodology, the Elenchus team for this project is engaged in or has recently completed similar work in British Columbia, Manitoba, Ontario and New Brunswick.

    John Todd
    John Todd, President of Elenchus, has specialized in government regulation for over 35 years, addressing issues related to price regulation and deregulation, market restructuring to facilitate effective competition, and regulatory methodology. John has assisted counsel in over 250 regulatory proceedings and other litigation. He provided expert evidence in about one-half of those processes. Cost of service and rate design issues have been the primary focus of his work since 1990.

    Michael Roger
    Michael has been an Associate Consultant at Elenchus since 2010. He has over 35 years of experience in the electricity industry dealing in areas of finance, cost allocation, rate design and the regulatory environment. Michael has been an expert witness at numerous Ontario Energy Board proceedings and has participated in task forces dealing with his areas of expertise.

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