Fee Studies
If capital construction costs and other expenses were constant over time, rates charged to electric, gas, water and wastewater customers would likely recover the full cost of extending distribution facilities to serve new customers. Generally, however, new construction costs are higher than historical costs incurred to provide service to existing customers. Therefore, it is typically understood that the cost of integrating new customers to the existing system will be higher than that reflected by the embedded costs of the utility. Electric, gas, water and wastewater utilities periodically conduct fee studies to assess existing cost structures, rationale behind prevailing fees and to potentially modify fees to best meet the financial goals and objectives of the utility.
Most utilities use some form of line extension or connection fee, although the methodology for determining the fee varies. EES Consulting assists our clients with the assessment of fees to ensure a fair and equitable sharing of capital construction costs and other fees associated with operating a utility. EES Consulting provides a review of current policy and fees, provides a discussion of policy options, calculates fees based on cost causation and assists in developing updated policies for our clients.
FortisBC
EES Consulting assisted Fortis BC in reviewing and critiquing BC Hydro’s proposed line extension policy at the BCUC. Based on EES’ testimony and analysis provided to the BCUC, BC Hydro’s proposal was rejected.
Big Bend Electric Cooperative
Big Bend Electric Cooperative requested that EES Consulting survey line extension policies from regional Northwest utilities and provide a primer on industry practices related to setting line extension charges. For this project, EES surveyed 11 Northwest utilities regarding their line extension policies, application fee structure, allowances, line extension fee, and any unique conditions for developers. Big Bend used this information and a line extension fee calculated by EES Consulting to develop a new line extension policy and fee structure.
