LCEC: City data request would cost millions
Responding to a data request from the Public Service Commission this week, LCEC estimates that it could cost between $2.2 and $3.4 million to provide the geographic cost of service approach being requested by the City of Cape Coral.
“Utilities don’t keep records by geography,” said LCEC spokesperson Karen Ryan. “We would have to recreate all that we do with a whole new accounting process. It’s pretty extensive to do something like that. If the data the city wants existed we could just hand it over, but it doesn’t exist.”
LCEC reports that performing a geographic separation study and designing rates accordingly would require a series of steps, including using mapping data and manual customer counts to draw boundaries within its service territory.
“This would be a very time-consuming process and is estimated to cost between $300,000 and $500,000,” LCEC attorney D. Bruce May wrote in the response to the Public Service Commission.
Once the geographic regions are defined, a detailed inventory of LCEC assets needs to be performed. Inventory would have to be grouped according to joint use to serve all regions, jointly used to serve multiple regions, and those used exclusively for an individual region. It is estimated the process of taking plant inventory and separating it by region would cost between $1.2 and $1.8 million, based on a previous study performed in 2006 that was done to identify cable TV and communication attachments on its poles.
May said geographic regions can never be considered static and customer concentrations and service characteristics change over time due to growth or decline.
The third step involves modifying the accounting system to track plant additions, depreciation, track operating and maintenance expenses and other factors. LCEC estimates the cost of reprogramming the accounting and cost of training employees in its function adds another $300,000 to $400,000 to the study cost.
Fourthly, conducting a cost of service study geographically is more complicated than a traditional cost of service study. LCEC’s rate consultant estimates the cost between $50,000 and $70,000.
The last step to redesign the rate schedules and reprogram the billing system by region would double the number of rate schedules. LCEC’s information systems contractor and rate consultant estimate this step would cost between $430,000 and $650,000.
“This response was simply to answer the PSC’s questions,” said Ryan, “and reiterate that we don’t believe the (city) complaint has any merit.”
The city has requested the information to confirm its premise that in-city ratepayers “subsidize” ratepayers in less populous areas served the electric co-op. The city also is seeking information to determine the value of LCEC’s assets in the city to determine is ratepayers in Cape Coral could be better served by a city-owned electric utility.