Marginal Cost of Electricity Services

February 15-16, 2023 | Online :: Central Time

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“This course was relevant and thought provoking. Time very well spent!” – Manager, Rates and Finance, BC Hydro

“Great speakers, thorough coverage of topics, knowledgeable presenters.” – Staff Rate Analyst, PSE&G

The increase of low-cost renewables has increased uncertainty for utilities when calculating avoided or marginal costs.  Avoided cost analysis must now capture future states in ways that cannot be accommodated with traditional approaches. A proper marginal cost study provides pertinent information on a utility’s avoided cost of energy and capacity due to reduced demand in different time periods and locations. Marginal cost estimates can be used to evaluate and design energy efficiency and demand response programs, as well as renewable resources. Marginal generation capacity costs have been set according to the least-cost means by which capacity can be provided. An avoided-cost analysis provides the utility manager with a broader spectrum of possibilities as avoided costs can be used to compare demand options to demand options, supply options to supply options, and demand options to supply options.

Register now to explore the changing landscape for determining marginal/avoided costs, get conceptual and institutional background information, review technical underpinnings and receive recommendations that your company can contemplate.

Learning Outcomes

• Discuss the concepts and definitions of marginal cost
• Review the various electricity services including generation, transmission, distribution, and customer as well as output metrics
• Explore the estimation methods including contemporary estimation issues
• Review the elements of generation services including short and long run marginal costs
• Review the elements of transmission services including locational marginal pricing
• Review the elements of distribution services including load- and customer-related incremental costs
• Discuss the elements customer service as they pertain to the incremental costs of providing services, by service type
• Examine examples of marginal costs in support of electric vehicle tariffs, avoided costs of conservation and DSM programs, and incremental value of power supply contracts with solar facilities

Wednesday, February 15, 2023 : Central Time

 

9:00 – 9:15 a.m. :: Welcome and Introductions

Short breaks will be taken in the morning and afternoon.

Cost Concepts and Definitions

• Financial, accounting and economic costs
• Average and marginal costs
  • Incremental costs
  • Avoided costs
• Short- and long-run marginal costs
• Internal marginal costs and opportunity costs
• Costs differentiated by time and location (LMP)

Electricity Services, Output and Cost Metrics

• Generation services
  • Energy supply
  • Operating reserves
  • Capacity
• Transmission services
  • Transport and interconnection services
• Distribution services
  • Delivery services
• Customer services
  • Specialized and tailored services

Estimation Methods

• Specific to timeframe and service
• Historically observed costs
• Forward simulation of demand and supply
  • Accounting for uncertainty
  • Dimensions of uncertainty
• Contemporary estimation issues:
  • Incorporation of renewables and storage in supply portfolio
  • Electric vehicle market penetration

Generation Services

• Technology choices
  • Old-world choice set
  • Modern technologies and choices
    • Renewables, storage
• Energy services
• Environmental costs including CO2 and other emissions
• Short-run marginal costs
  • Energy costs
  • Internal production costs; market-based opportunity costs
  • Reliability costs as scarcity rent proxies
    • Operating reserve demand curves
  • Opportunity costs
    • Optimization of energy and reserve costs
  • Start-up and no-load costs
    • Commitment problems
• Long-run marginal costs
  • Energy costs
  • Capacity costs

Transmission Services

• Marginal costs differentiated by location (Locational Marginal Prices)
  • Short-run marginal costs
    • Energy line losses
• Technical methodology
  • Congestion rents
  • Reliability costs
• Long-run marginal costs
  • Capacity costs
  • Problem of capital indivisibility

Thursday, February 16, 2023 : Central Time

Distribution Services

• Marginal costs by type of service and area
  • Load- and customer-related incremental costs
  • Short-run marginal costs
    • Load-related costs
• Long-run marginal costs
  • Load-related capacity costs
  • Customer-related delivery costs

Customer Services

• Incremental costs of providing services

Example Applications

• Marginal costs in support of electric vehicle tariffs
• Avoided costs of conservation and DSM programs
• Incremental value of power supply contracts with solar facilities

Robert Camfield, Senior Regulatory Consultant, Christensen Associates

Robert Camfield is Senior Regulatory Consultant at Christensen Associates.  He has extensive experience in the energy industry and the economics of regulation, including resource decisions, regulatory governance and incentive plans, market restructuring, cost allocation, energy contracts, cost of capital, and performance benchmarking. Mr. Camfield has managed numerous projects involving wholesale and retail markets, including market restructuring in Central Europe.  He served as the program director for EEI’s Transmission and Wholesale Markets summer program from 1999 – 2008 and is credited with innovations related to web-based energy services, cost analysis, and two-part tariffs for transmission. Prior to joining Christensen Associates, he served as system economist for Southern Company and chief economist for New Hampshire Public Utilities Commission.

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Nick Crowley, Senior Economist, Christensen Associates

Nicholas A. Crowley is a Senior Economist with Christensen Associates Energy Consulting. Mr. Crowley has testified performance-based regulation issues on behalf of EPCOR Utilities in Alberta, as well as National Grid (gas) and Eversource (electric) in Massachusetts. Mr. Crowley also recently co-authored (with Dr. Meitzen) an analysis of the impact of performance-based regulation on Canadian utilities in Utilities Policy. He has calculated total factor productivity measures for the electricity and gas sectors and developed indexes for use in performance-based ratemaking. Mr. Crowley has participated in the development of cost benchmarks for power systems and marginal cost estimation, and the development of avoided cost models. He assists electric utilities in measuring cost of capital and preparing COS studies for rate cases. He has also measured price responses by customers participating in leading demand response programs. Prior to joining CA Energy Consulting, Mr. Crowley served as an economist at the Federal Energy Regulatory Commission, where he assisted with energy industry benchmarking, the incentive regulation of oil pipelines using the Kahn methodology, and the review and evaluation of natural gas pipeline rate cases.

We will be using Microsoft Teams to facilitate your participation in the upcoming event. You do not need to have an existing Teams account in order to participate in the broadcast – the course will play in your browser and you will have the option of using a microphone to speak with the room and ask questions, or type any questions in via the chat window and our on-site representative will relay your question to the instructor.

• IMPORTANT NOTE: After November 30 you will not be able to join a Teams meeting using Internet Explorer 11. Microsoft recommends downloading and installing the Teams app if possible. You may also use the Edge browser or Chrome.
• You will receive a meeting invitation will include a link to join the meeting.
• Separate meeting invitations will be sent for the morning and afternoon sessions of the course.
  • You will need to join the appropriate meeting at the appropriate time.
• If you are using a microphone, please ensure that it is muted until such time as you need to ask a question.
• The remote meeting connection will be open approximately 30 minutes before the start of the course. We encourage you to connect as early as possible in case you experience any unforeseen problems.

Please Note: This event is being conducted entirely online. All attendees will connect and attend from their computer, one connection per purchase. For details please see our FAQ

If you are unable to attend at the scheduled date and time, we make recordings available to all attendees for 7 days after the event

REGISTER NOW FOR THIS EVENT:

Marginal Cost of Electricity Services

February 15-16, 2023 | Online

Your registration may be transferred to a member of your organization up to 24 hours in advance of the event. Cancellations must be received on or before January 13, 2023 in order to be refunded and will be subject to a US $195.00 processing fee per registrant. No refunds will be made after this date. Cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other EUCI event. This credit will be good for six months from the cancellation date. In the event of non-attendance, all registration fees will be forfeited. In case of conference cancellation, EUCIs liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at 303-770-8800

Credits

EUCI is accredited by the International Accreditors for Continuing Education and Training (IACET) and offers IACET CEUs for its learning events that comply with the ANSI/IACET Continuing Education and Training Standard. IACET is recognized internationally as a standard development organization and accrediting body that promotes quality of continuing education and training.

EUCI is authorized by IACET to offer 1.0 CEUs for this event.

Requirements for Successful Completion of Program

Participants must be logged in and in attendance for the entirety of the course to be eligible for continuing education credit.

Instructional Methods

Case Studies and PowerPoint presentations

 

Upon successful completion of this event, program participants interested in receiving CPE credits will receive a certificate of completion.

Course CPE Credits: 11.0
There is no prerequisite for this Course.
Program field of study: Specialized Knowledge
Program Level: Basic
Delivery Method: Group Internet Based
Advanced Preperation: None

EUCI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org

 

Who Should Attend

This conference was developed for:

• Utility executives
• Corporate communication professionals
• Contact center management professionals
• Commissioners
• Commission staff
• Attorneys
• Regulatory affairs managers
• Pricing and load research managers
• Customer representatives and organizations
• Cost of service analysts
• Financial analysts
• Rate design, product development and customer strategy professionals