HomeMy WebLinkAboutReso 1987-037 - Approving the agreement the city of redding and the resource management international, inc entitles "proposed scope of services and budget for providing consulting services related to the preparation of the common forecasting methodology 7 i
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I RESOLUTION NO. �S"f 7 ' � 7
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING
APPROVING THE AGREEA7ENT BETWEEN THE CITY OF REDDING AND
RESOURCE MANAGEMENT INTERNATIONAL, INC. ENTITLED "PROPOSED
SCOPE OF SERVICES AND BUDGET FOR PROVIDING CONSULTING
SERVICES RELATED TO THE PREPARATION OF THE COMMON
FORECASTING METHODOLOGY 7 FILING AND PARTICIPATION IN
ELECTRICITY REPORT 7 PROCEEDINGS, " AND AUTHORIZING THE CITY
MANAGER TO SIGN SAME.
BE IT RESOLVED by the City Council of the City of Redding as
follows:
� 1 . That the City Council of the City of Redding hereby
approves the attached Agreement, not to exceed the sum of
� $162, 200. 00 , between the City of Redding and Resource Management
International, Inc. (RMI) , entitled "Proposed Scope of Services
and Budget for Providing Consulting Services Related to the
Preparation of the Common Forecasting Methodology 7 Filing and
Participation in Electricity Report 7 Proceedings" ;
2. That the City Manager of the City of Redding is hereby
authorized and directed to sign all necessary documents on behalf
of the City of Redding, and the City Clerk is hereby authorized
and directed to attest the signature of the City Manager and to
impress the official seal of the City of Redding on the aforesaid
documents, when appropriate; and
3. That a true copy of the above-mentioned Agreement is
attached hereto and made a part hereof by reference.
I HEREBY CERTIFY that the foregoing Resolution was
introduced and read at a regular meeting of the City Council of �
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� the City of Redding on the 2nd day of February , 1987, and
was duly adopted at said meeting by the following vote :
AYES: COUNCIL MEMBERS: Carter, Dahl , Gard & Fulton
NOES: COUNCIL MEMBERS: Johannessen
ABSENT: COUNCIL MEMBERS: None
ABSTAIN: COUNCIL MEMBERS: None
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LEE D. FULTON, M.D. , Mayor
� City of Redding
ATTEST: �
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ETHEL A. NICHOLS, City Clerk
FO PROVED:
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RA DALL A. HAYS, C ' y Attorney
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L7ESOURGE ��vv��a��l ���1Oi��••� 1NC��
MANAGEMENT
INTERNATIONAL lo�o Hurley Way/ Sul.te S�0
'"" Sacramento, CA 95825
(916) 924-1534
CONSDLTATION AGRSBI�PP
This is an agreement for Resource Management International, Inc. (RMI) to
provide consulting services to:
Client City of Redding
Address 760 Parkview Avenue
City Redding State California Zip 96001
I
C01�1SULTIIdG SERVICES
The services to be provided are as follows: Services described in attached "Proposed
Scope of Services. and Budget for Providing Consulting Services Related to the Preparation of the
Common Forecasting Methodology 7 Filing and Participation in Electricity Report 7 Proceedings, "
for an amount not to exceed $162,200. II
PRDFSSSIO1dAI, AAlD PARAPROFESSIONAL FBSS
The fees for services, except testimony, shall be billed as follows:
Managing Executive Consultant $ 98 per hour
Principal Executive Consultant g9 per hour
Executive Consultant 8p per hour
Principal Consultant 74 per hour
Supervising Consultant 67 per hour
Senior Consultant 61 per hour
Associate Professional 55 per hour
Junior Professional 50 per hour
Research Assistant 3g per hour
Office Services 29 per hour
The fees for testimony shall be billed as $ N A per day or fraction thereof
for �7�A , and $ r�. A per day or fraction thereof for all
other personnel.
RMI fees shall be adjusted each year, commencing January 1, 1988 , to reflect
the change in fees officially established by the RMI Board of Directors.
III
SUPPORT SSRVICB CHARGES
Charges for reproduction, printing, communications, computer services, word
processing services, graphics, and other miscellaneous support services shall
be billed at rates for such services as determined from time to time and
officially established by the RMI Board of Directors plus ten percent expense
reimbursement to RMI.
IV
CONSULTANTS
RMI may use the consultants listed below to assist in performing work here-
under. The services of such consultants will be billed at the Consultants'
rate to RMI, plus an amount which includes RMI's compensation for the
administrative, financial, and organizational costs and other expenses
incurred in connection with the consultants' work. The consultants will
function as independent contractors and will rely on RMI for all
administrative and billing functions.
Billing Rate
Consultant's Name Task to Client
Arthux M. Havenner Ph.D. Demand Forecast $g9
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PROPOSED SCOPE OF SERVICES
I AND
BUDGET
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FOR
I PROVIDING CONSULTING SERVICES
RELATED TO THE PREPARATION OF THE
� COMMON FORECASTING METHODOLOGY 7 FILING
AND PARTICIPATION IN
, ELECTRICITY REPORT 7 PROCEEDINGS
�� on behalf of
I CITY OF REDDING
ELECTRIC DEPARTMENT
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RESOURCE MANAGEMENT INTERNATIONAL, INC.
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� JANUARY 1987
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!' PROPOSED SCOPE OF SERVICES
AND BUDGET
FOR
PROVIDING CONSULTING SERVICES
I' RELATED TO THE PREPARATION OF TfiE
COI�iON FORECASTING METHODOI,OGY 7 FILING
, AND PARTICIPATION IN
i ELECTRICITY REPORT 7 PROCEEDINGS
I'
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,I ON BEHALF OF
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CITY OF REDDING
' ELECTRIC DEPARTMENT
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' RESOURCE MANAGF�NIENT INTERNATIONAL, INC.
JANUARY 1987
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I,� TABLE OF CONTENTS
� PROPOSED SCOPE OF SERVICES
I' AND BUDGET
FOR
' PROVIDING CONSULTING SERVICES
� RELATED TO THE PREPARATION OF THE
, COI�ION FORECASTING METHODOIAGY 7 FILING
' AND PARTICIPATION IN
', ELECTRICITY REPORT 7 PROCEEDINGS
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I I . INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
� II . SCOPE OF SERVICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
i III . PROJECTED RESOURCE REQUIREMENTS. . . . . . . . . . . . . . . . . . . . 1£3
I, IV. SCHEDULE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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' PROPOSED SCOPE OF SERVICES
, AND BUDGET
FOR
PROVIDING CONSULTING SERVICES
i' RELATED TO TfiE PREPARATION OF THE
COI�ION FORECASTING METHODOI�OGY 7 FILING
AND PARTICIPATION IN
FT.FCTRICITY REPORT 7 PROCEEDINGS
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_ I. INTRODUCTION
' Resource Management International , Inc. (RMI1 is pleased
to present this proposed scope of services and budget for pro-
' viding professional services related to the preparation of the
Common Forecast Methodology ( "CFM" ) 7 filing and the Electricity
, Report (ER) 7 hearings before the California Energy Commission
(CEC) .
�' We present below a proposed scope of work needed to fully
meet the City ' s statutory requirements in the ER 7 process. As
� was done in CFM 6, RMI will prepare a complete forecast of the
I,� demand for electricity within the City' s service area for the
� period 1985-2007 . This forecast will be based on the best data
�� available, and will be largely an econometric forecast with end-
� use forecasting techniques applied as appropriate. Preparation
,' of the demand forecast filing will include documentation oriented
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toward two purposes :
I, By preparing and submitting the CEC Demand Forms as
adopted by the CEC on January 21 , 1987, RMI will provide
' numerical and textual justification for the City' s fore-
' cast as required by the CEC.
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As appropriate, RMI will also provide documentation and
i' computer files and spreadsheets used in preparinq the
� City' s forecast for use by City staff.
� Because of the regulatory direction in which the CEC seems
to be moving (toward increased jurisdiction over municipal
� utilities and over power plants smaller than 50 MW) , and because
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the ER 7 process will be the City' s second CFM proceeding, the
� CEC ' s requirements may be expected to be more stringent than i.n
the ER 6 process . Accordingly, the demand forecast work includes
' activities related to data acquisition which we believe will
provide for a much improved CFM 7 filing and enhance the chances
of obtaining acceptance by the CEC. Initiating a comprehensive
i�I data collection program at this time will also provide the basis
_ for improved forecasts and CFM filings in future years. The need
Ij, for additional data was demonstrated during the ER 6 proceeding,
when the City was limited in a number of ways in its ability to
�, fully meet the CFM 6 filing requirements due to the
� unavailability of a number of important data items requested in
the demand portion of the filing. Without additional data on end
I, uses of electricity, there is an increased risk that the CEC will
reject or modify the City' s demand forecast as submitted.
�� A second element in the CFM 7 process will be the filing
i of a complete supply plan as specified by the CEC in the supply
;� forms and instructions when these are adopted by the CEC. While
I the CEC has yet to release a draft of these forms, our proposal
j� is based on the assumption that they will not differ signifi-
� cantly in scope from those used in CFM 6. When the CEC releases
I� draft supply forms, RMI will also assist City staff as requested
� in presenting the City' s case for modifications ( if needed) to
i' the draft forms . This type of constructive intervention proved
useful in the demand form process, and is further discussed below
I under "CEC Liaison" . As for the demand forecast, all computer
�� s readsheet tem lates and data used in develo
� p p ping the supply plan
, filing will be provided to City staff for use in future filings
� and other planning purposes.
' In informal workshops, CEC staff have referred to a third
' set of forms that may be requested for the first time in the CFt�I
7 proceeding. These forms are expected to serve as a "bridge"
I, between the supply and demand filings and should provide an
j opportunity to address the factors distinguishing the City' s
� filing from the large investor-owned utilities ' submittals . We
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� have provided a suggested scope of work for completion of these
� additional forms , based on an assumption that the scope of these
j new forms will be somewhat less than for the demand and supply
I' forms .
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' Finally, we include a proposal for efforts in support of
irthe City ' s filing after the supply plan and demand forecast have
' been submitted . In previous ER cycles, submission of the
� utilities ' filings triggered an extensive series of hearings,
workshops, and data requests from CEC staff in support of the
�� filing.
IIn addition to the forms actually filed with the CEC, the
, data will be provided to City staff in the form of computer.
� spreadsheets in a format compatible with the City ' s computer
'' hardware and software. These spreadsheets will provide compiled
data for the demand forecast, supply plan, and financial data
� used in preparing the CFM 7 forms.
I� Section II presents the proposed scope of services for
,i� performing the tasks described above.
ISection III contains a breakdown, by task, of the
estimated resource requirements needed to complete the work as
!� proposed. Section IV contains a schedule showing the estimated
time needed to complete each task and proposed milestones for
Iraccomplishment of this work .
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, II. PROPOSED SCOPE OF SERVICES
I� The professional services that RMI proposes to provide to
' the City consist of the following six primary tasks :
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l . Preparation and filing of Demand Form E-9. 2A and
�� E-9. 2B by February 17, 1987, and filing of a request
for exemption from specific demand forms by
� � February 20, 1987, as required by the CEC;
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� 2 . Preparation of a demand forecast for the service area
� served by the City of Redding for the years 1985-2007 .
Included within this task will be increased efforts in
� collecting or estimating certain end-use data
� regarding the City' s electrical customers •
� 3 . Preparation of a supply plan in t?�e approved CEC
� format which is consistent with the City ' s planning
� objectives and with the demand forecast ;
��� 4. Preparation of an as yet unspecified third set of
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CFM 7 forms. It is expected that these forms will
i' provide an opportunity to describe those factors which
differentiate the City 's demand forecast and supply
I� plan from the large investor-owned utilities, and to
present the City ' s .views regarding the relative
' advantages and disadvantages of econometric fore-
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casting techniques as compared to end-use methods;
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5 . Liaison with the CEC staff in hearings, worksho s, and
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data request arenas, as well as informal contacts to
� maintain close coordination with CEC staff needs and
requirements; and
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�� 6 . Provision of all data in computer spreadsheet format
to allow use of such data by City staff.
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�� Task 1.0 - Immediate CEC Filin Re uirements
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�� Forms E-9. 2A and B will be completed and filed as required
� by the CEC on February 17, 1987 . Appropriate requests for
' exemptions from specific demand forms will be filed as required
�, by February 20, 1987 . As needed, requests for exemption from
other forms as appropriate will be filed by the required filing
,� dates when specified by the CEC.
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� Task 2.0 - Demand Forecast Preparation
� The preparation of the load forecast and the completion of
� many of the demand-related forms requires the analysis of data
� for the purpose of establishing parameter relationships between
' electric demand and causal factors affecting demand. For. the
� residential class we propose to forecast future energy demand
� using both historical time series data and cross section data on
� end-use patterns to the extent such data is available.
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This task will consist of the estimation of demand re]_a-
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� tionships necessary for the preparation of the load forecast by
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� customer class . Though the effects of conservation and load
management will be estimated as part of the time series and end-
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, use model specifications, we have designated this work element as
i� a separate subtask because of the relative emphasis which it has
' been given by the CEC.
� An important part of this task will be preparation of the
� forms adopted by the CEC on January 21 , 1987 . This will include
� a discussion of the forecasting methods used and the rationale
i for use of econometric forecasting techniques by the City.
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�� Subtask 2.1 - Data Acquisition
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The Commission staff has consistently criticized forecasts
,� of the California utilities regarding the quality of end-use
data . The investor-owned utilities have been filing forecasts
i' with the CEC for 12 years, and this forecast will be the seventh
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� biennial filing. The CEC has generally required increased data
1, quality in each successive filing. It is reasonable to assume
_; that the CEC staff will stress similar improvements for the City,
;� particularly in light of the questions and comments received on
the City ' s CFM 6 filing. The data acquisition described here is
� not an absolute requirement for prepari_ng the demand for.ecast .
I Fiowever, without such data, peak demand by customer class must be
I estimated using class-specific load factor data for PGandE with
�� adjustments to suit the City ' s customer distribution. Data
I specific to the City ' s service area would strengthen the City ' s
� case before the CEC. Without such data, the risk is increased
� that the CEC will reject or modify the City ' s forecast. More
I� directly applicable data will enhance the City' s ability to
i defend its forecast .
�� The following are areas in which the acquisition of addi-
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tional data would significantly improve the quality of the City ' s
� load forecast to meet the anticipated increased data requirements
I', of the CEC.
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�� 1 . More extensive collection and record keeping of data
� relating to conservation and load management.
� 2 . Collection of end-use data.
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� The activities to obtain this data are described below.
I Subtask 2.1.1 - Work with City Utility Staff to Collect Data
� Related to the City's Conservation and Load Management (CLM)
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I Programs
'� Although the City presently has a number of CLM programs
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i� in effect , some of the data needed for the City ' s first CFP�I
filing which relate to various aspects af such programs were not
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iavailable when the City ' s CFM 6 filing was prepared . As a
I� result, the accounting of peak and energy reductions attributable
to CLM effects was based on data contained in PGandE ' s CFM 6
�� filing and some basic simplifying assumptions . Further , data
were not available w:�ich would permit the calculation of CLM
'� program costs per unit of energy or peak demand served . This
� information is needed in order to conduct the program cost
� effectiveness tests required to complete CFM Forms E-9. 1A an�
E-9.1B. In the absence of such data, these forms could not be
�I completed .
��! While , in general, much of the information nee3ed to
I fulfill the filing requirements related to the City ' s ongoing
I� conservation and load management programs is currently available,
such data are not readily retrievable from one central
i�� location. With the cooperation of City staff, we will collect
I such data from various existing accounting records and establi.sh
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� an historical data base on such programs. Some of this data ( for
example the costs of the various programs) can be used directly
!� to fulfill the filing requirements . Other filing requirements
will , however, require the use of such data in conjunction with a
�� number of reasonable estimates to provide the needed information
for filing . For example, the estimation of the amount of load
reduction accomplished by the home energy audits will require the
� development of assumptions about the average amount of energy
savings resulting from an energy audit and the collection of data
;, on the number of such audits performed for each year of the
� program' s existence .
'� Subtask 2.1.2 - Assist the City in the Collection of Customer
End-Use Data
�� The CFM requirements specify that certain end-use informa-
tion is to be reported by customer class (Form E-3 .2) . For_ the
i' residential class , this information is to include for each of
several appliances, the numbers of such appliances , saturation
� rates ( i .e . , percentages of sampled customers who own such major
appliances) , total usage of the appliance class, annual unit
i� energy consumption, and the coincident peak demand of each such
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;, appliance . Such breakdowns must also be made for other service
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' classifications, although the number of end uses for which such
� information must be reported are fewer than for the residential
� class .
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� For the CFM 6 filing, Redding-specific end-use data were
either unavailable or of insufficient quality for meeting the CFM
requirements . Because the City has not as yet conducted any
,' consumer appliance surveys, the only available end-use data
� i specific to the City consisted of Census data for 1980 on
, selected residential housing and demographic characteristics , as
well as on some appliances . For this reason, some of the CFM
� forms which address CLM programs and which were dependent upon
end-use information (Forms E-9.2 and E-9.3) were completed on the
basis of information reported by PGandE. Other forms which were
'� de endent u on such data F-
p p (Forms E-3 . 1 and Form E-3 . 2R, 3 . 2C,
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�' E-3 . 2I , and E-3 . 2A) could not be completed. We propose, there-
; fore, to assist the City in the conduct of an end-use survey to
� obtain the needed data.
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'��� This task involves the use of a mail-out survey question-
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�� naire to be sent to the City ' s electric customers for the purpo�e
I of eliciting from such customers information related to the man-
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' ner in which electricity is used. Although it may ultimately be
�� desirable to conduct such surveys for both the residential and
commercial classes, we are recommending that to start the process
�� and obtain useful information which can be included in the next
� CFM filing only the residential class by surveyed at this time .
;,� The information to be elicited through the survey will
I include data related to the size and age of the residence, the
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' t e of structure ( frame, , or other; sin le famil , du lex,
; triplex, or apartment) , the types and numbers of electric-using
�, appliances, numbers of persons in the household, family income,
Iattitudes about conservation, and other factors .
� It is proposed that we would assist the City in structur-
, ing the end-use survey plan and that City staff would be involved
iin the implementation of the plan. (Alternative arrangements can
I� be made, but this reduces the City' s cost of the program as long
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� as staff are available) . Specific work elements which we would
� undertake on behalf of the City would be the following:
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' l . Design the sample of customers to be selected from the
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� responses (this involves, among other things, the
i determination of the appropriate sample size,
i� procedures for selection of customers to be included
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i in the sample , and appropriate stratification factors ,
� if needed) .
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2 . Assist the City in designing the survey instrument
� ( i .e. , determining the information to be elicited and
' the manner in which such information may he most
i� effectively obtained) .
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I,� 3 . Assist the City in the synthesis and analysis of the
I data.
i�, a . We propose that after the data are coded and are
� in a machine readable format, we would conduct an
�� analysis to provide descriptive data (such as
appliance saturations) which can be directly use�9
�� in preparing the forms.
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i� b. The data will be broken down to provide appliance
' saturations , i .e. , the percentage of residential
j units which have central air conditioning equip-
i� ment, and to provide conditional saturation infar-
imation, such as the percentage of new housing
�� (houses constructed during the past five years)
I which have heat pumps .
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It is anticipated that all other work associated with this
� task , such as printing and mailing, monitoring the responses, the
iconduct of follow-ups in cases of non-response, and coding the
� data and data entry will all be performed by City staff, or by
' part-time staff to be hired by the City. RMI is available to
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'� provide these services, but to minimize costs to the City, these
tasks are not reflected in the budget in Section III .
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�� Subtask 2.2 - Time Series Demand Model Specification
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' The purpose of this subtask will be to Use statistical
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I techniques to estimate the historical relationship between
electric energy consumption by customer class and several causal
i� factors which affect electric energy use. Those causal factors
. ' include class price of electricity, the price of natural gas (as
;� a substitute heating fuel) , disposable personal income per
capita, the number of customers, and local employment. Heating
� and cooling degree days will be included in the equation to
I account for fluctuations in the historical consumption series due
� to weather variation. Additionally, binary variables will be
tested to account for seasonal effects (such as the number of
� hours of daylight) not accounted for by heating and cooling
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degree days . Finally, it is necessary to account for the lagged
; consumption effects of changes in each of the primary causal
�� variables . This is due to the fact that changes in income and
, prices do not always have an immediate impact on consumption, but
�� instead often have effects which extend well into the future .
� For example , customers generally do not immediately switch heat-
f ing fuels in response to changes in relative heating fuel
j` prices . In order to account for such lagged effects, alternative
lag functions will be tested, to include a Koyck specification
'� (wherein electric consumption lagged one period is included in
! the equation to account for .the cumulative past influences of the
� primary causal variables) .
During the course of this phase of the analysis several
'� diagnostic tests will be undertaken to ensur.e that the model is
; properly specified and that the parameter estimates satisfy
I desired statistical properties. This subtask will be undertaken
�i' using the TSP regression software package . Load factor data will
be used to convert class energy forecasts into class demand fo.re-
, casts, using the City' s system load factor and estimates of
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iresidential load factors of Pacific Gas and Electric Company
;� (PGandE) and other neighboring utilities . The City' s commercial
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�� class load factor will be estimated on the basis of the residen-
� tial class load factor estimate, assumptions about diver. sity
I among the residential and commercial. classes and the City ' s
'� s stem load factor . Becau e iden ial
y s res t class load patterns tend
j' to be relatively uniform from one service territory to another
� but commercial class consumption often is not, this approach is
; likely to yield reasonable approximations to class demands .
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The parameter estimates together with the projections of
; the causal variables will provide the basis of the forecast.
� Causal variable projections will be based upon a review of
consensus forecasts from a variety of published alter.native
� sources. ,
� An important part of the modeling of the City' s historical
I�I growth as well as accounting for future growth consists of cor-
rectly evaluating the effects of annexations . Although his-
�� torical effects were adequately addressed during the preparation
�
I of the CFM 6 filing, improved documentation will be needed in the
�� CFM 7 process for forecasting the effects of future annexa-
� tions . We propose to base annexation projections on discussions
�� with City planners ; reasonable assumptions about annexations will
be incorporated into the forecast without specifying those tracts
wh r i
e e n such growth is likely to occur.
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Subtask 2.3 - Estimation of Conservation and Load Management
'� Effects
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Because of the importance given to conservation and load
� management in the CFM form requirements, this subtask will be
, undertaken to ensure that the required phases of conservation and
I� load management reporting are adequately addressed . It is anti-
cipated that this section of the CFM 7 filing can be materially
� improved over the previous filing, provided increased emphasis is
I, placed on the collection of data related to the City' s program-
� matic efforts in this area. With the data to be received fr.om
� the residential end-use survey described under Subtask 2 , 1,
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substantial data can be gained on the conservation potential of
i�' the existing housing stock (data related to age and size of
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I�� residential unit, type of structure, thickness of walls, the
; nature and amount of conservation retrofitting that has been
I� installed and other factors) .
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I� Subtask 2.4 - Load Duration Curve Projection
; Updated projections will be provided for the City ' s load
� duration curves for peak day, average weekday, and average
weekend day of each month, based on historical consumption data,
I� normalized to weather.
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�� Subtask 2.5 - Report Preparation
�� This subtask includes preparation of the demand forecast
in the format specified by the CEC in the Demand Forecast Forms
,� and Instructions adopted by the CEC on January 21, 1987 . This
I-- will include administrative requirements such as duplication of
I� the filing and transmittal to the General Service List as
� required by CEC regulations.
���
We will also provide the compiled data to City staff in
! computer spreadsheet format on diskette in a format compatible
(r with the City ' s computer hardware.
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� Task 3.0 - Analysis of Supply-Related Data
The purpose of this task is to _conduct the analysis neces-
� � sary to complete the CFM 7 supply forms. The completion of this
i task requires an analysis of power supply plans, the estimation
I,� of the revenue requirements of the preferred supply plan, and the
conver ence of the dem d
, g an forecast and supply plan.
I� Subtask 3.1 - Analysis of surrly Plans
�
� This part of the analysis will consist of the identifica-
tion of a preferred resource plan, and the completion of the
required supply forms for that plan. As a part of this task , we
, propose to review the feasibility of modifications to the timing
�, of new resources in consultation with City staff if adjustments
� are dictated by the forecast for proper balance. At this point,
the exact scope of this task remains somewhat uncertain i.n that
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1� the CEC staff has not yet published the supply forms that must be
completed . Consequently, the amount of supply-related informa-
'�� tion that must be filed is not known with certainty.
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I Subtask 3.2 - Revenue Requirements Analysis
I� Followin the com letion of the r u
� 9 p eso rce plan analysis,
� the revenue requirements associated with the preferred plan must
i� be determined. This will involve a review of the capital cost ,
operating characteristics, operating cost, financing require-
I� ments, and the development schedule for every owned, committed
; and planned resource of the City over the twenty-year planning
� horizon. The purpose of this analysis will be to provide needed
Idata for the phase of the analysis which converges the revenue
I� stream generated by the load forecast and the revenue require-
i ments of the supply plan.
I� Subtask 3.3 - Convergence of Demand Forecast and Supply Plan
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This phase of the analysis is necessary as a result of the
� interdependence of power requirements and power su 1
I pp y, and is
�� required by the CFM 7 Demand Forms and Instructions . Future
power requirements, as determined by the load forecast segment of
ithe analysis, are dependent upon the projected price of
� electricity, which in turn depends upon the revenue requirements
I associated with the supply plan. The supply plan depends ,
i� however , upon future power requirements. In order to ensure that
! this interdependence is modeled correctly, it will he necessary
� to use an iterative procedure which ensures internal consistency
between demand and supply elements. It is extremely important
that this part of the analysis be modeled correctly. This part
� of the analysis will be accomplished using an iterative software
package which converges the revenue requirements associated with
� power supply and the actual revenues associated with the load
� forecast .
I� The revenue requirements associated with the supply plan
I will be compared with the revenues that would be generated by the
� load forecast. If these two revenue streams are not equal , a new
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�� rate projection based on the supply plan revenue requirements
, will be introduced into the forecast model and a new load fore-
�� cast will be developed .. At this point, we would review the pro-
posed timing or other changes to the supply plan assumptions in
� consultation with City staff. The procedure will be repeate3
'� until the two revenue requirements streams converge . A schematic
� which illustrates the manner in which the convergence software
I� package functions is presented on the following page .
i� Subtask 3.4 - Report Preparation
�
� This subtask includes presentation of the final supply
�� plan in the format prescribed by the CEC. It is anticipated the
Supply Forms and Instructions will be adopted in March 1987 , but
I�� no schedule for adoption has yet been published by the CEC.
Estimating the effort needed to comply with the forms is there-
� fore difficult ; we have based our estimate on the assumption that
the forms will not change significantly in scope .
I,� As for the demand forecast , all data provided to the CEC
i will also be provided to City staff in a computer spreadsheet
format compatible with the City ' s computer faci.lities . This will
,� include the financial data referred to in Subtask 3 .3 .
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RESOURCE MANAGEMENT INTERNATIONAL, INC.
�� CFM T PREPARATION
El�ctrlc D�mandiSupply Convergsnce Model
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i�� ECONOMETRIC PARAMETER ESTIMATION
� •MCE 0[EIFCiRit�i�
I PROJECTION pF CAUSAL FACTORS co.[
AFFECTING DEMAND
�MC[f Cf�ITF���t�rE wf�tiNG�UFlS
� . F�ILOr�[MT
[MG-UfEf�Ci0a5
�O�Ul�1i0x
I� DEVELOPMENT pF LOAD FORECAST
� REVISED RATE PROJECTION
I
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�� DEVELOPMENT OF
VROJECTED REVENUE REOUiREMENTS
AND RATES ASSOCIATED WITH SUPPL�PLAN
�
CONVEROENCE OF
� EOUIRED REVENUESICER SUPVLY PLAN NO
AND
CTUAL REVENUES(PER DEMAND FORECAST)
�� rES
� PREPARATION Of flNAL REGOAT
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I� Task 4.0 - Completion of A�dditional CFM 7 Forms Required by CEC
In workshops conducted on the CFM 7 Demand Forms and
i� Instructions, CEC staff have alluded to a third set of forms
(beyond the demand and supply forms) that may be required for
I filing in CFM 7 . No draft of these forms is yet available , nor
�
'� has CEC staff clearl s ecified the
� Y p purpose or nature of the
forms .
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'� It is anticipated that the forms will serve as a "bridge"
, between the supply plan and demand forecast filings . As such,
'� the forms should provide scope for discussion of the City ' s
` approach to demand forecasting based on locally specific growth
� rates, development patterns, and utility actions . The form may
I� also provide an opportunity for a strong defense of the City ' s
' use of econometric forecasting techniques, which are in many
�� respects better suited to the needs of municipal utilities than
ithe end-use methods favored by the CEC.
� RMI will support the City in preparing these forms, though
I estimation of the effort involved is obviousl difficult .
Y
Assuming the scope of the new forms is somewhat less than for the
� existing forms, this task will be erformed under a corres ond-
� P P
I� ingly lower budget .
, At this time it is not certain that these additional forms
� will be �required by the CEC. However, the information to be
� provided will be needed to support the City ' s choice of ,
� forecasting method . If the forms are not required, RMI will
I� provide a report in lieu of the additional forms which will
provide equivalent information in support of the City ' s fi.ling.
j� Support will also be provided to City staff in working
with the CEC staff in developing these forms as was done for the
�� demand forms and instructions . This support is included under
I Task 5 , CEC Liaison.
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I� Task 5.0 - Pre aration For and Presentations Before the CEC
i� Subsequent to filing of a demand forecast, supply plan,
�
� and other forms with the CEC, it is expected that several
� hearings, workshops, and data request proceedings will be needed
�� to follow on with the City ' s submittal . During the ER 6 process,
,� this phase involved extensive discussions with the CEC staff
regarding the role of the municipal utilities in the ER
� proceeding, as well as several sessions with CEC staff explaining
��� and justifying the City ' s demand forecast and supply plan.
After the City' s CFM 7 filing is submitted, there will be
ra continuing need to present the demand forecast and supply plan,
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respond to CEC staff data requests, and to support the City in
I providing comments on draft CEC documents such as ER 7 and the
� Integrated Supply and Demand Report.
�'
� In addition, prior to filing of the demand forecast and
supply plan there may be opportunities to influence preparation
� of the forms. This has already proven to be the case for the
i Demand Forms and Instructions , which were modified in several
� areas to meet the concerns af the municipal utilities . If the
� CEC schedule allows , it can be anticipated tY�at similar
�� opportunities will arise in the development of the supply forms
and instructions as well as the "third form" which has not �een
I�� clearly described . RMI will support City staff in hearings and
workshops and will provide written materials as directed by City
istaff.
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� III. RESOURCE REQUIREMENTS
This section contains an estimate of the resource requi 're-
I,� ments needed to complete each task assignment. Tasks 1 through 4
are proposed to be performed for a price of $134,600 based on the
� assumption that the work to be performed will not differ signifi-
cantly, other than the end-use data collection, from the work
performed for ER 6. It should be noted that the requirements for
� - Task 5 ( liaison with the CEC) depend upon a numher of factors
' which cannot be known in advance. For this reason, Task 5 will
� be performed through April 1988 on a time and expense basis, with
a not-to-exceed cap of $27 ,600 ( $24,000 plus secretar�.al ,
� postage, copying, and other expenses) , which is expected to be
� sufficient provided issue or issues raised in the ER 7 process do
i�( not become protracted. Should the hearing/workshop process
� extend beyond April 30, 1988, additional funding may be requested
� to cover the remainder of the proceeding. Under no circumstances
will the total authorized budget amount be exceeded without
authorization by the City.
I�
� In addition to the costs associated with professional
services, we anticipate that costs for secretarial assistance,
� . travel , telephone, and postage will amount to about 15 percent of
� the total budget.
�' Estimates of resource requirements by task are as follows :
Estimated Estimated
�� Task Person-Hours Cost
1 .0 Immediate CEC Filing
Requirements 120 $ 7 ,800
�� 2 .0 Demand Forecast* 580 37 , 700
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� 2 . 1. 1 Conservation and Load
Management Data Collection 85 5,650
2 . 1 .2 Collection of Residential
End-Use Data 250 16 , 200
�� 3 .0 Supply Plan* 480 31 , 750
4.0 Third Form* 270 17, 500
�, 5 .0 CEC Liaison 370 24,000
Secretarial , Postage, Copying, etc . 21 ,600
TOTAL $162 , 200
� *Approximately $11, 500 to be used in post-CFM 7 filing follow-up.
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�� The proposed budget will provide for the preparation of a
icomplete filing for CFM 7 �and participation in the ensuing ER 7
' proceedings . Costs for work to be performed by the CFM 7 filing
I deadline of June l, 1987, will total approximately $123 , 100 .
� This includes work related to the residential end-use data col-
lection task, which we believe to be a cost-effective investment
� Uy the City, both for the CFM 7 filing and for improved informa-
�� tion for ratemaking, load management , and conservation analyses
� for the City' s use.
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�� IV. SCHEDULE
A schedule showing the beginning and completion dates for
��� each task as well as project milestones is provided on the
following page .
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