City of East Point Determination of PCA and ECCR Chau Nguyen, ECG

Page 2 |PCA From Ordinance:  Power Cost Adjustment: Power cost adjustment shall mean that increase or decrease in rates charged to customers of the city’s electric utility sufficient for the city to recover total electric utility costs, including but not limited to wholesale power cost, investment in future energy resources, costs of distribution system operation and maintenance, administrative costs attributable to utility operations, and transfers and allocations paid to the city. Rates charged to electric utility customers may be increased or decreased in an amount per kilowatt hour (kWh) through a power cost adjustment rider. In keeping with sound financial management practices, the policy of the city will be to ensure that its utilities are operated in a fiscally sound manner and as such to make power cost adjustments to pass on increased operating, maintenance and capital costs to utility customers as needed.  Power Cost Adjustment Rider (PCA): The monthly power cost adjustment in cents per kWh shall represent the difference between total electric department costs (including wholesale power, distribution system operation & maintenance, administrative charges, transfers and allocations paid to the general fund of the City of East Point) and total electric department revenues (including sales of electricity and other operating receipts) divided by the total kilowatt hour sold to customers served under tariffs subject to such Power Cost Adjustment (PCA). Application of this rider is at the sole discretion of the City of East Point. Applicable tariffs include Residential, General Service, Small Power, Medium Power, and Large Power. In short:

Page 3 |ECCR From Ordinance:  Environmental Compliance Cost: The environmental compliance cost shall mean that increase or decrease in rates charged to customers of the city’s electric utility sufficient for the city to recover capital costs and operating and maintenance costs associated with government mandated environmental costs. These Rates charged to electric utility customers may be increased or decreased in an amount per kilowatt hour (kWh) through an environmental compliance cost recovery rider. In keeping with sound financial management practices, the policy of the city will be to ensure that its utilities are operated in a fiscally sound manner and as such to make environmental compliance cost recovery adjustment to pass on compliance costs for federal mandates to utility customers as needed.  Environmental Compliance Cost Recovery Rider (ECCR): The monthly environmental compliance cost recovery adjustments in cents per kWh shall represent the difference between annually reported environmental compliance costs from MEAG divided by the total kilowatt hour sold to customers served under tariffs subject to such Environmental Compliance Cost Recovery rider. Application of this rider is at the sole discretion of the City of East Point. Applicable tariffs include Residential, General Service, Small Power, Medium Power, and Large Power. ECCR costs have always been included in MEAG budget and bills.  Prior to February 2013, ECCR was paid for in PCA.  After February 2013, ECCR was separated from PCA. In other words PCA was offset by ECCR

Page 4 | How we arrive at current PCA & ECCR In January 2013, City faced $3,285,885 budget shortfall.

Page 5 | How we arrive at current PCA & ECCR ECG presented to Council 2 proposals Note that PCA at that time was $0.002/kWh City is NOT double-dipping on ECCR PROPOSAL 1 Raise rates Set PCA to $0.0164/kWh (increase of $0.0144/kWh) PROPOSAL 2 Raise rates Set PCA to $0.0102/kWh (increase of $0.0082/kWh) Set ECCR to $0.0062/kWh

Page 6 | Why PCA & ECCR have not gone down? Wholesale power costs has NOT reduced  FY13: $29.84M vs. FY16: $36.70M  EPA rules continue to exert pressure on costs East Point has made progress on reducing excess power by winning quite a few Customer Choice load.  Helps maintain PCA & ECCR instead of increasing them Build up operation reserve for 45 days