Island Energy Advisory Committee Board FY 2010-2011 Rate Case Presented to Island Energy Advisory Committee Board DRAFT

FY 2009-2010 Accomplishments Completed the first phase of the substation H upgrade. Began the second phase of the upgrade. Promoted various energy efficiency programs to encourage energy savings and to reduce customer’s energy bills. Implemented retail level solar incentive program providing rebates for the installation of solar energy systems. Implemented the Medical Support Baseline and Low Income Assistance programs to help people in need.

FY 2009-2010 Accomplishments Increased public outreach activities within the Mare Island and Vallejo communities. Island Energy was awarded “Business of the Year” by Vallejo Chamber of Commence. Continued updating of website to reflect the most accurate information to be used by commercial and residential customers including downloadable forms, applications, and newsletters. Distributed Quarterly Newsletters to keep customer informed on Island Energy’s latest activities and programs. Sponsored eight events/programs for a total of $ 8,500 through Outreach (non-rate payer) funds.

Island Energy Historical Electric Load

Island Energy Historical Gas Load

Proposed FY 2010-2011 Electric Operation Expenses Percentage Electricity Purchase Cost $1,436,331 43.51% Electric Labor Services $424,400 12.86% Shops and Materials $22,000 0.67% Maintenance & Repairs $65,000 1.97% Contractual & Professional $28,000 0.85% Meeting & Training $4,500 0.14% Depreciation $310,000 9.39% Capital Outlay $25,000 0.76% A&G Transfer $986,173 29.87%

Proposed FY 2010-2011 Gas Operation Expenses Percentage Gas Purchase Cost $347,560 34.23% Gas Labor Services $295,000 29.05% Shops & Material $16,500 1.62% Maintenance & Repairs $70,000 6.89% Contractual & Professional $20,000 1.97% Meeting & Training $3,000 0.30% Depreciation $15,000 1.48% A&G Transfer $248,395 24.46%

FY 2010-2011 Operating Expense Summary Electric Operation Current Rate Case Proposed Rate Case $ Change % Change  Year FY 2009/2010 FY 2010-2011   Electricity Purchase Cost $ 1,534,505 $ 1,436,331 $ (98,174) -6.40% Operating Expense $ 1,818,099 $ 1,865,073 $ 46,974 2.58% Total Electric Operating Expense $ 3,352,604 $ 3,301,404 $ (51,200) -1.53% Gas Operation Gas Purchase Cost $ 295,350 $ 347,560 $ 52,210 17.68% $ 661,283 $ 667,895 $ 6,612 1.00% Total Gas Operating Expense $ 956,633 $ 1,015,455 $ 58,822 6.15% Total Operating Expense $ 4,309,237 $ 4,316,859 $ 7,622 0.18%

Proposed FY 2010-2011 Electric Revenues Customer Class Rate Case FY 09/10 FY 10/11 $ Change % Change Residential $219,709 $233,747 $ 14,038 6.38% Non-Residential $2,797,004 $2,813,646 $ 16,642 0.60% Street Lighting $27,289 $ 0.00 0% Total $3,044,001 $3,074,682 $30,681 1.01%

Proposed FY 2010-2011 Gas Revenues Customer Class Rate Case FY 09/10 FY 10-11 $ Change % Change Commodity Charge $295,350 $347,560 $52,210 17.68% Delivery Charge $580,524 $537,440 (43,084) -7.42% Meter Service Charge $24,729 0.00 0.00% Total $900,603 $909,729 9,126 1.01%

Proposed FY 2010-2011 Operating Income Cumulative Cash Flow of Operation Electric Gas Total Revenues $3,074,682 $909,729 $3,984,411 Expenses $3,301,404 $1,015,455 $4,316,859 Surplus/(Deficit) ($226,722) ($105,726) ($332,448) Depreciation $310,000 $15,000 325,000 Cumulative Cash Flow of FY 2010-2011 ($7,448)

Proposed FY 2010-2011 Electric Rates Residential Electric Rates Year FY 2009-2010 (as of July 2009) Residential Electric Rate ($/Kwh) FY 2009-2010 (as of March 2010) FY 2010-2011 Residential Electric Rate ($/Kwh)   Island Energy PG&E Difference As of March 2010 Tier 1: $ 0.11531 0% $ 0.11877 -3.00% $ 0.11877 $ 0.11877 Tier 2: $ 0.13109 $ 0.13502 $ 0.13502 $ 0.13502 Tier 3: $ 0.25974 $ 0.28562 -9.96% $ 0.28562 $ 0.28562 Tier 4: $ 0.37866 $ 0.42482 -12.19% $ 0.42482 $ 0.42482 Tier 5: $ 0.44098 $ 0.49778 -12.88% $ 0.49778 $ 0.49778 Non-Residential Electric Rates Year FY 09-10 (as of July 2009) Non-Residential Electric Rate ($/Kwh) FY 09-10 (as of March 2010) Non-Residential Electric Rate ($/Kwh) FY 10-11 Non-Residential Electric Rate ($/Kwh) Customer Class Island Energy PG&E Difference As of March 2010 Small Commercial User $ 0.17886 0% $ 0.18603 -4.0% $ 0.18603 $ 0.18603 Large Commercial User $ 0.15816 $ 0.16508 -4.4% $ 0.16508 $ 0.16508 12

Proposed FY 2010-2011 Electric Rates As an averaged residential customer who consumes 500 kWh a month, you save $1.97 a month under Island Energy’s Current Rate Schedule.   Total Customer Usage: 500 Island Energy PG&E (Rates as of 04/22/2010) Number of Billing Days: 30 Baseline = 12.6 kWh/Day kWh Used Rate Cost Tier 1: Baseline Usage 378 $ 0.1153 $ 43.59 $ 0.11877 $ 44.90 Tier 2: 101-130% Baseline 113.4 $ 0.1311 $ 14.87 $ 0.13502 $ 15.31 Tier 3: 131-200% Baseline 8.6 $ 0.2597 $ 2.23 $ 0.28562 $ 2.46 Tier 4: 201-300% Baseline $ 0.3787 $ - $ 0.42482 Tier 5: Over 300% Baseline $ 0.4410 $ 0.49778 Total Cost $ 60.69 $ 62.66

Proposed FY 2010-2011 Electric Rates As an averaged commercial customer who consumes 2,500 kWh a month, you save $ 17.93 a month under Island Energy’s Current Rate Schedule (FY 2009-2010). FY 2009-2010 Island Energy PG&E A-1 Rate $ 0.17886 /KWh $ 0.18603/KWh Utility Bill $ 447.15 $ 465.08 Savings $ 17.93   As a large commercial customer who consumes 86,400 kWh a month, you save $ 597.89 a month under Island Energy’s current rate Schedule (FY 2009-2010) FY 2009-2010 Island Energy PG&E A-10 Rate $ 0.15816 $ 0.16508 Utility Bill $ 13,665.02 $ 14,262.91 Savings $ 597.89  

Gas operation has not been self-sufficient even with sales increase in FY 2009-2010. Commodity rate remains a pass-through at an average of $0.793/Therm 10% reduction in delivery charge, from $1.3617/Therm to $1.2258/Therm. Proposed FY 2010-2011 Gas Rates

Pittsburg Power Company Financial Assistance to Support Island Energy Operation Island Energy Establishment Loan $ 300,000 Facility Relocation Loan $ 200,000 Loan for Gas/Electric Meters $ 650,000 Loan for Operational Support $ 100,000 Investment on System Upgrade $ 3,000,000 Total Financial Assistance to Island Energy $ 4,250,000

Taxes Paid to the City of Vallejo for Island Energy Operation Year FY 99/01 FY 01/02 FY 02/03 FY 03/04 FY 04/05 FY 05/06 FY 06/07 FY 07/08 FY 08/09 FY 09/10 Actual Projection COV Sales Tax $153,444 $107,556 $126,064 $130,816 $132,785 $160,864 $176,264 $207,411 $213,517 $219,000 Electric Franchise Fee $11,476 $43,398 $53,578 $59,019 $58,981 $60,880 Gas Franchise Fee $13,711 $ 18,012 Annual Tax Payment to COV $144,261 $204,262 $229,842 $266,430 $286,209 $297,892 Total Taxes Paid to the City of Vallejo: $1,946,776 Gas Operation Franchise Fee started on January 1st, 2009