Our work for Vancouver-based BC Hydro began with the design and implementation of an innovative multipart rate structure that included customized baselines for each of its 100 largest industrial customers. In 2008, E3 began assisting the utility with developing and implementing inclining block rate structures to encourage conservation. These ranged from a simple, two-step residential inverted block rate to more-complex baseline structures for commercial customers. Our process included surveying default rates for large general service and residential customers in other markets, analyzing usage characteristics, examining class segmentation options, and ensuring that our proposed rates adhered to BC Hydro’s cost of service principles and regulatory rate-making framework. E3 also developed materials for customer engagement, solicited feedback through moderated customer sessions, and provided expert witness testimony.

E3 has supported electric rate design in Hawai‘i since 2005. Currently, E3 is assisting Hawaiian Electric Company (HECO) on next-generation retail pricing strategy and rate designs that align with the state’s goal of meeting its 100 percent renewable portfolio standard (RPS) requirements in a way that encourages cost-effective deployment of customer-owned distributed energy resources. HECO first retained E3 to recommend a strategy for developing rates that would encourage conservation to mitigate the impact of high electricity supply costs on its customers. We recommended a three-tier inclining block structure, which is still in place, to minimize increases on small customers and provide conservation incentives to large customers. We also helped get the rate approved, preparing direct testimony and presenting to the utility’s board of directors.

E3 supported KCP&L Greater Missouri Operations Company (GMO) in its successful opposition to a $14 million disallowance proposed by the regulatory staff of the Missouri Public Service Commission (MPSC). GMO had purchased NYMEX natural gas futures to hedge against possible wholesale electricity price increases, but the spot and futures prices for natural gas plummeted, resulting in a $14 million loss to GMO. The MPSC staff contended that GMO’s hedge amounted to placing a bet in the stock market and should be disallowed. E3 founding partner C. K. Woo provided direct and surrebuttal testimony to the MPSC, explaining the role of cross-hedging in managing electricity spot-price risk and countering claims that GMO had misused natural gas futures. The MPSC denied its regulatory staff’s imprudence allegation, allowing GMO to fully recover its costs.