2012 Impact Fee Study Update April 12, 2012
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Comlink L. S.
Salem City Impact Fee Study
April 12, 2012
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SalemCity SalemCityPowerImpactFeeStudy April 12, 2012
Preparedby: Comlink L.S., LLC 860 E. 4500 S. Suite 312 Salt Lake City, UT 84107 (801) 288-4033
ProjectSeniorEngineer: R. Paul Erickson, P.E. I certify that, to the best of my knowledge and understanding, the attached impact fee analysis: 1. Includes only the costs for qualifying public facilities that are a. Allowed under the Impact Fees Act; and b. Projected to be incurred or encumbered within six years after each impact fee is paid; 2. Contains no cost for operation and maintenance of public facilities; 3. Offsets costs with grants or other alternate sources of payment; 4. Does not include costs for qualifying public facilities that will raise the level of service for the facilities, through impact fees, above the level of service that is by existing residents; and 5. Complies in each and every relevant respect with the Impact Fees Act. I make this certification with the following caveats: 1. All requirements for implementation of the impact fee are followed in their entirety by Salem City staff and elected officials. 2. If all or a portion of the impact fee analysis is modified or amended, this certification is no longer valid. 3. All information provided to Comlink L.S., LLC, its contractors and suppliers is assumed to be correct, complete and accurate. This includes information provided by Salem City and outside sources.
____________________________ R. Paul Erickson 4-12-2012 Senior Engineer
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Salem City Power Facilities Impact Fee Analysis
ExecutiveSummary Impact fees are one-time charges imposed on development, as a condition of development approval, to cover costs associated with necessary capital improvements to the electric system needed to serve new development. In April 1995, the Utah State Legislature passed Title 11, Chapter 36, Sections 101-401 (the “Impact Fee Act”). The “Impact Fee Act” put in place requirements regulating impact fees which apply to political subdivisions which own electric utilities. The “Impact Fee Act” has been changed periodically by the legislature and this study follows the requirements enacted by Chapter 47, 2011 General Session. This study has been prepared on behalf of Salem City by Comlink Land Services, LLC as part of the process in setting the City’s Impact Fee for electrical or power facilities. As documented in this report, Salem City has complied with all requirements of the Utah Impact Fees Act. Electric impact fees for the city are calculated using incremental costs which is one of several methods for calculating impact fees. This method determines what new developments should pay for improvements or a portion of the improvements needed to serve them. This is a “capacity-based” fee structure. In this way existing customers are not burdened by the new growth. The calculation of the Power Impact Fee for electrical or city power facilities is based on the city’s Impact Fee Facilities Plan and specifically shows the additions for the six years, 2012 thru 2017. The costs of the facilities yet to be constructed are estimated at today’s prices and will need to be reviewed and periodically adjusted as needed for inflation. Salem City has experienced a 6.6% annual rate of growth in its summer system peak demand over the last 10 years. The growth rate was 10.4% from 2005 thru 2007. The summer peak decreased in 2008 from the previous year’s peak. The summer peak jumped to a peak of 8,577 kW in 2009 and continued to increase to a peak of 9,068 kW in 2011. The average growth for the 2007-2011 periods was 3.2%. A city estimated growth rate of 1.91% increasing to a rate of 3.48% was used for the six years in the study period from 2012 thru 2017. A city estimated growth rate of 4.37% was used in the following years in the study. The recommended impact fee will provide the funds necessary to construct the additional capacity and main distribution lines and system related additions required to meet the new demand created by the anticipated future new development. The cost per unit (1 kilowatt) of capacity needed for new development is calculated by dividing the cost of the facilities in the Impact Fee Facilities Plan needed to serve future development divided by the capacity provided for new development from the facilities in the Impact Fee Facilities Plan. The cost of the facilities in the Impact Fee Facilities Plan needed to serve future 4
development is $2,221,337. This provides for the system capacity that is needed to meet the system Capacity Service Standard. The capacity for new development provided by each project in the Impact Fee Facilities Plan is used to divide the cost of the project eligible to be funded by Impact Fees and summed to obtain the $/kW cost for the capacity provided by the Impact Fee Facilities Plan which is $213.34. The Power Impact Fee for different types of new connections in residential, commercial and industrial categories are calculated by determining the estimated coincident peak load with the system peak for a new connection and multiplying it by the cost per capacity unit. Electric Impact Fee = Expected coincident kW demand of each new connection X $213 per kW Based upon the Power Department’s experience the expected load for each connection size was developed and was used in the new Power Impact Fee. The recommended Power Impact Fees for typical residential and commercial customers including Residential Single Phase Service Sizes of 200 Amps and 400 Amps and Commercial 3 Phase Service Size of 400 Amps are shown in the following table. For a complete listing of recommended Power Impact Fees see Table 3, on Page 20 in the study document. Power Impact Fee Residential Single Phase Service 200 Amps $1,067 400 Amps $2,133 Commercial 3 Phase (120/240V) Service 400 Amps $11,947
5
SalemCity ImpactFeeFacilitiesPlan
I.
INTRODUCTION The Salem City Power System currently provides electric service to 1,853 residential customers, 133 commercial customers, six churches, five schools and one industrial customer. The maximum demand for the system was 9,068 kilowatts for the Fiscal Year of 2012. Electric power is delivered to the system at 46,000 volts to two substations, the Arrowhead Substation with 5,000 kW of capacity (50% ownership of 10,000 kW transformer), and the new Loafer substation with 20,000 kW of capacity.
II.
SERVICE STANDARD The standard of service for all customers is based on having sufficient installed transformation capacity to meet the maximum system demand and not exceed 50% loading on substation transformers.
III.
GROWTH Salem City has experienced a 6.6% annual rate of growth in its summer system peak demand over the last 10 years. The growth rate was 10.4% from 2005 thru 2007. The summer peak decreased in 2008 from the previous year’s peak. The summer peak jumped to a peak of 8,577 kW in 2009 and continued to increase to a peak of 9,068 kW in 2011. The average growth for the 2007-2011 periods was 3.2%. A city estimated growth rate of 1.91% increasing to a rate of 3.48% was used for the six years in the study period from 2012 thru 2017. A city estimated growth rate of 4.37% was used in the following years in the study. The recommended impact fee will provide the funds necessary to construct the additional capacity and main distribution lines and system related additions required to meet the new demand created by the anticipated future new development. Figure 1, on the next page, illustrates the growth in the city’s peak demand from the year 2000 to the year 2011. During this period the peak demand doubled in size.
6
Figure 1 System Demand
KW
Salem City Historical Peak Demand 10,000 8,000 6,000 4,000 2,000 0
Peak Load
Year
V.
FUTURE CAPACITY REQUIREMENTS In 2009 system capacity was 8,750 kilowatts. Capacity needed to meet the service standard was 17,154 kW. This represents the need for an additional 8,404 kW to meet the Service Standard Capacity requirement. 20,000 kW of capacity was added to the system with the completion of the new Loafer Substation in 2010. After meeting the Service Standard capacity for the system demand this made available 8,830 kW of capacity for growth until 2022 when the installation of the 20,000 kW of capacity at the Arrowhead Substation is required. This provides sufficient capacity to meet the System Capacity requirements until 2035 with the currently estimated growth rates. Table 1 shows the surplus or additional capacity needed on the system, to meet the Service Standard Capacity requirement, on a yearly basis from 2000 through the summer of 2026. Planned capacity additions are included in Table I on the next page.
7
Table 1 Transformation Capacity Requirements Salem 2012 Power Impact fee Study Year Loafer Peak Load Arrowhead Peak Load Coincident Peak Load
2000 4,619
2001 4,802
4,619
Service Standard Capacity Requirement
Prior to 2010 Loafer Owned Capacity Present Arrowhead Owned Capacity Total Present Substation Capacity
Surplus/Additional capacity to meet standard
4,802
2002 2,777 2,470 5,247
2003 2,623 3,104 5,727
2004 2,676 3,097 5,773
2005 3,263 3,304 6,567
2006 3,501 3,747 7,248
2007 3,756 4,244 8,000
2008 2,544 7,663 7,717
9,238
9,604
10,494
11,454
11,546
13,134
14,496
16,000
15,434
3,750
3,750
3,750
3,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
(5,488)
(5,854)
(1,744)
(2,704)
(2,796)
(4,384)
(5,746)
(7,250)
(6,684)
Salem 2012 Power Impact fee Study Study Year Year Loafer Peak Load Arrowhead Peak Load Coincident Peak Load
2009 2,655 6,119 8,577
2010 2,591 5,609 8,753
2011
8,910
9,080
9,264
9,465
9,685
9,954
10,300
Service Standard Capacity Requirement
17,154
17,506
17,819
18,160
18,528
18,930
19,370
19,908
20,601
Loafer Owned Capacity Present Arrowhead Installed Owned Capacity Total Present Substation Capacity
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
Surplus/Additional capacity to meet standard
(8,404)
(8,756)
(9,069)
(9,410)
(9,778)
(10,180)
(10,620)
(11,158)
(11,851)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
(8,404)
7,494
7,181
6,840
6,472
6,070
5,630
5,092
4,399
8,750
25,000
25,000
25,000
25,000
25,000
25,000
25,000
25,000
Rebuild Loafer Substation with 20000 kW Capacity Remove 7500 kW from Loafer
Surplus/Additional capacity to meet standard
Total Capacity after additions
1 2012
2 2013
3 2014
4 2015
5 2016
6 2017
Salem 2012 Power Impact fee Study Study Year Year Loafer Peak Load Arrowhead Peak Load Coincident Peak Load
8 2018
9 2019
10 2020
11 2021
12 2022
13 2023
14 2024
10,751
11,220
11,711
12,222
12,757
13,314
13,896
14,503
15,137
Service Standard Capacity Requirement
21,501
22,441
23,421
24,445
25,513
26,628
27,792
29,006
30,274
Loafer Owned Capacity Present Arrowhead Installed Owned Capacity Total Substation Capacity
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
Surplus/Additional capacity to meet standard
3,499
2,559
1,579
555
(1,628)
(2,792)
(4,006)
(5,274)
20,000
20,000
20,000
(1,628)
17,208
15,994
14,726
25,000
45,000
45,000
45,000
(513)
Install 20000 kW at Arrowhead Surplus/Additional capacity to meet standard
3,499
2,559
1,579
555
Total Capacity after additions
25,000
25,000
25,000
25,000
8
(513)
25,000
15 2025
16 2026
VI.
Impact Fee Facilities Plan Table 2 on the next Page lists the planned capital projects and activities included in the Impact Fee Facilities Plan that are eligible to be funded wholly or in part from Impact Fees, in present dollars. These projects and activates provide sufficient capacity to meet the Capacity Service Standard through 2035. The year 2035 results from the addition of the new Loafer Substation, the addition of the new transformer in the Arrowhead Substation and the estimated load growth rate from the city.
The Loafer Substation was completed in 2010. The actual cost incurred was $1,847,048. The 2007 estimate for the substation was $1,800,000. 3,750 kW of the 20,000 kW provided by the new Loafer Substation is replacing the capacity being retired from the old Loafer Substation (see Table 1, “Transformation Capacity Requirements). The affects of this capacity retirement is handled in the next section, Section VII which discusses why a project is needed, its cost and the percent of the Cost to be supported by impact fees and the justification. The Arrowhead Substation transformer capacity addition is anticipated in 2024 based on current city load growth projections. The new Arrowhead Substation transformer was purchased with the Loafer Substation transformer at a substantial savings. The cost of the transformer was $640,907. The installation cost of the new Arrowhead Substation transformer is estimated to be $626,973. The East Main Feeder Loop was originally estimated at $250,000. 1,100 feet of line has been built out of the Loafer Substation costing $11,227, leaving $238,773 to complete work on the East Main Feeder loop which is reflected in the Impact Fee Facilities Plan. The west Main Feeder Loop was originally estimated at $225,000. This work still remains to be completed and is reflected in the Impact Fee Facilities Plan. Eight, 3 phase gang operated air break switches each costing $10,000, are included in the Impact Fee Facilities Plan to be used as sectionalizing switches. These switches are needed as power is moved between the Loafer and the Arrowhead Substation for system requirements during outages and operation of the system. Capacitor banks in support of system growth are included in the Impact Fee Facilities Plan. Capacitor banks improve system voltage to meet industry standards and also make available additional capacity for new growth. $25,000 is estimated for this capital addition. The affects of the additional capacity made available with the capacitor bank instullations is handled in the next section, Section VII which discusses why a project is needed, its cost and the percent of the Cost to be supported by impact fees and the justification. 9
The cost of contemplated Impact Fee Studies and the supporting Electrical Master Plan study are included in support of the projects which are included in the Impact Fee Facilities Plan.
Section VI, which follows, discusses each of the items in the Impact Fee Facilities Plan. It covers why a project is needed, its cost and the percent of the Cost to be supported by Impact Fees and the justification. VI.
Impact Fee Facilities Plan Salem City has determined that the growth of the City is placing demands on various services provided by the City, including the Electric System. Growth has created a need for additional and larger Substations, and the need to increase capacity on new and existing distribution lines. The City has studied various ways of providing the funding for these facilities. The sources of revenue for electricity needs are rates, general funds or impact fees. In comparing an equitable allocation to the costs borne in the past and to be borne in the future, in comparison to the benefits already received and yet to be received, the City has determined that impact fees are the most equitable way of financing the growth related electric facilities. In determining what percent of Cost is appropriate for load growth, due to new customers, and what percent of cost is appropriate for load growth due to existing customers several approaches have been considered. Industrial & commercial customers actively pursue energy conservation in an effort to lower their energy costs. Residential customers generally realize energy conservation as they replace existing appliances with newer higher efficiency appliances and replacing existing lighting with energy efficient lighting. All these efforts are strongly supported by the city to reduce the pressure on the peak system load growth. Salem’s existing industrial and commercial loads have remained relatively flat recently. The major area that has an impact on system growth from existing customers comes from residential customers who change from evaporative swamp coolers to air conditioning. In the Salem City area it is estimated, of those that are currently using swamp coolers, 15% will convert to air conditioning each year (with an average 3 kW impact on system peak per conversion) and including the small impact of other native load growth, 20% of additional capacity needs can be attributable to native system load growth. As a result the impact fee is calculated using 80% of the cost of projects for system capacity increases unless otherwise justified.
10
1. Rebuild Loafer Substation with new 20,000 kW Transformer Why needed: Included in 2012 IF Study - Load growth related transformer capacity increase. Cost: $1,847,048 – actual price Percent of Cost Supported by Impact Fees and Justification: 50% - The 50% is determined by taking the capacity of the new substation (20,000 kW) less the capacity of the old substation being replaced (7,500 kW) and then multiplying that number by 80% which leaves the capacity made available for new connects (10,000 kW). This provides the required increase in transformer capacity identified in the 2012 Impact Fee study with the Percent adjusted for growth relating to existing customers as explained in the statement above and the adjustment for the existing transformer replacement. 2. Install New 20,000 kW transformer at Arrowhead Why needed: Included in the 2012 IF Study – Load growth related transformer capacity increase. Cost Estimate: $626,973 Percent of Cost Supported by Impact Fees and Justification: 80% - Costs incurred constructing the substation, which provides the required increase in capacity identified in the 2012 Impact Fee Study with the percent adjusted for growth relating to existing customers as explained above. 3. New 20,000 kW Transformer purchased for Arrowhead Why needed:
11
Included in the 2012 IF Study – Load growth related transformer capacity increase. Cost Estimate: $640,907 – actual price Percent of Cost Supported by Impact Fees and Justification: 80% - Costs incurred constructing the substation, which provides the required increase in capacity identified in the 2012 Impact Fee Study with the percent adjusted for growth relating to existing customers as explained above.
4. East Main Feeder Loop Between Arrowhead and Loafer Substations Why needed: Load growth induced capital improvement to maintain established service levels of reliability, system operability and capacity requirements. Enables load transfers between substations as required. Cost Estimate: $238,773 Percent of Cost Supported by Impact Fees and Justification: 40% - Construction costs of existing 600 amp feeder lines and 200 amp feeder lines were compared and it was determined that the additional cost to construct a 600 amp main system distribution feeder used between substations over the construction of a 200 amp local feeder was 40% of the construction cost of a 600 amp feeder.
5. West Main Feeder Loop Between Arrowhead and Loafer Substations Why needed: Load growth induced capital improvement to maintain established service levels of reliability, system operability and capacity requirements. Enables load transfers between substations as required. Cost Estimate: 12
$225,000 Percent of Cost Supported by Impact Fees and Justification: 40% - Construction costs of existing 600 amp feeder lines and 200 amp feeder lines were compared and it was determined that the additional cost to construct a 600 amp main system distribution feeder used between substations over the construction of a 200 amp local feeder was 40% of the construction cost of a 600 amp feeder. 6. Sectionalizing Switches Why needed: Load growth induced capital improvement to maintain established service levels of reliability, system operability and capacity requirements. Enables load transfers between substations as required. Cost Estimate: $50,000 Percent of Cost Supported by Impact Fees and Justification: 40% - Sectionalizing Switches are an element used in main system distribution feeders and will be used between Loafer and Arrowhead substations. The justification of the 40% of cost supported by Impact Fees is the same as the East and West Main Feeder Loops between Arrowhead and Loafer substations because they will be used in those main system feeder loops.
7. Capacitor Banks in Support of System Growth Why needed: Load growth induced capital improvements which provide voltage support bringing system voltages to system standards which also provides increased capacity on distribution lines for load growth. Cost Estimate: $25,000 Percent of Cost Supported by Impact Fees and Justification: 13
80% - The 80% percent adjustment for growth, relating to existing customers, is the same as explained above.
8. Impact Fee Study Why needed: Used as the basis for determining equitable Impact Fees for new customer load growth. Cost Estimate: $10,000 Percent of Cost Supported by Impact Fees and Justification: 100% - As allowed by the Impact Fee Act.
9. Electrical Master Plan (20 years) Why needed: Used as the basis for determining equitable Impact Fees for new customer load growth.
Cost Estimate: $60,000 Percent of Cost Supported by Impact Fees and Justification: 80% - The 80% percent adjustment for growth, relating to existing customers, is the same as explained above.
In Table 2, listed for each item in the Impact Fee Facilities Plan, are each item’s E stimated Cost or Actual Cost, the percent of each item’s cost eligible to be funded by Impact Fees as outlined above, the resulting cost eligible to be funded by Impact Fees, the capacity provided by the item directly in support of new connects and the contribution from each item to the total Impact Fee expressed in dollars per kilowatt (Impact Fee eligible cost divided by capacity provided by the item directly in support of new connects). 14
The contribution from each item to the total Impact Fee is $213.34 as seen on the Total row at the bottom of Table 2 and in the column titled ‘Impact Fee Contribution by Capital Addition’. See Table 2 on the following page.
15
60,000 1,235,746
$
$
$
$ Total $
Sectionalizing Switches
Capacitor Banks in support of system growth
Impact Fee Study
Electical Master Plan (20 year)
10,000
25,000
50,000
$
80% $
100% $
80% $
40% $
40% $
$
West Main Feeder Loop
225,000
40% $
$
East Main Feeder Loop
238,773
80% $
New 20000 kW transformer purchase for Arrowhead
80% $
626,973
Install new 20000 kW transformer at Arrowhead
$
50% $
Year
Rebuild Loafer with new 20000 KW transformer
Captial Additions
2,221,337
48,000
10,000
20,000
20,000
90,000
95,509
512,726
501,578
923,524
% of Total Estimated Cost Eligibale Total to be Funded Cost Eligible to Cost to complete By Impact be Funded By the Project Fees Impact Fees
16
$
26,000 $
26,000 $
426 $
26,000 $
26,000 $
26,000 $
16,000 $
16,000 $
213.34 $
2.31
0.38
46.99
0.77
3.46
3.67
32.05 $
31.35
92.35 $
$
2,487,955 $
640,907
1,847,048
Impact Fee Total Actual Cost Contribution by Expended for Capital Addition Completed ($/kW) Project
10,000 $
Capacity Provided by Project for New Connections (kW)
Table 2 Impact Fee Facilities Plan
$
5,000 $
5,000
2012 1
$
$
4,000 $
4,000
2013 2
$
56,000 $
48,000
8,000
2014 3
$
5,000 $
5,000
2015 4
$
$
$
$
25,000 $
25,000
2016 5
71,000
12,000
4,000
25,000
30,000
2017 6
SalemCity ImpactFeeAnalysis
VII.
FUNDING The existing system was built through operating revenues from power sales. Undeveloped property has not used power and has not contributed to the funding of the existing system. New development creates impacts on the existing system and benefits from the capital improvements. With new development, additional system capacity is needed to maintain the Service Standard. Only impact fees and operating revenues will be available to fund system improvements required by development impacts. Impact fees become an important element to achieve an equitable allocation of costs borne in the past and to be borne in the future in comparison to the benefits already received and yet to be received.
VIII.
ELECTRIC IMPACT FEES Impact fees are one-time charges imposed on development, as a condition of development approval, to cover costs associated with necessary capital improvements to the electric system needed to serve new development. In April 1995, the Utah State Legislature passed Title 11, Chapter 36, Sections 101-401 (the “Impact Fee Act”). The “Impact Fee Act” put in place requirements regulating impact fees which apply to political subdivisions which own electric utilities. The “Impact Fee Act” has been changed periodically by the legislature and this study follows the requirements enacted by Chapter 47, 2011 General Session. This study has been prepared on behalf of Salem City by Comlink Land Services, LLC as part of the process in setting the City’s Impact Fee for electrical or power facilities. To implement impact fees as defined by the Impact Fee Act, “local political subdivisions” must conduct an analysis with the following elements: x x x
1
Identification of the impact on system improvements required by the development activity; Demonstration of how those impacts on system improvements are reasonably related to the development activity; Estimation of the proportionate share of the costs of impacts on system improvements that are reasonably related to the new development activity1; and
See the Proportionate Share Analysis included on page 21 of this document. 17
x
Explanation of how the impact fee was calculated.
Electric impact fees in Salem City are calculated using incremental costs which is one of several methods for calculating impact fees. This method determines what new developments pay for improvements or a portion of the improvements needed to serve them. This is a “capacity-based” fee structure. In this way existing customers are not burdened by the new growth.
IX.
Calculating Impact Fees
There are two steps in the process of calculating impact fees. 1. Determine the cost of improvements attributable to new development. 2. Allocate the identified costs to various types of development (customers).
Step 1 In 2011 the summer peak demand for the system was 9,068 kilowatts. With the addition of the new Loafer Substation, the 8,756 kW deficit in meeting the Service Standard Capacity Requirement was covered. The cost of the Arrowhead capacity increase, main distribution feeders, sectionalizing switches, capacitor banks and other capital improvements listed in the Impact Fee Facilities Plan are attributable to the new development identified in the Load Forecast and based on historical growth patterns projected in to the future and are needed to meet the Service Standard. Step 2 The cost per capacity unit (1 kilowatt) for each item in the Impact Fee Facilities Plan is calculated by dividing the projected facility cost for each item needed to serve new customer connections divided by the new capacity provided by each item to serve new customer connections. The total capital costs attributed to projected new customers in the Impact Fee Facilities Plan is $2,221,337. This will provide for sufficient system capacity through 2035 to meet the system capacity Service Standard. New development capacity provided in support of new customer connects are identified by item in the Impact Fee Facilities plan. The contribution from each item to the total Impact Fee expressed in dollars per kilowatt is calculated by taking the Impact Fee eligible cost and dividing it by the capacity provided by the item directly in support of new connects. The individual item’s contribution to the total Impact Fee in $/kW are summed to the overall $/kW Impact Fee which is $213.34 per kW. The Electric Impact Fee for different types of new load in residential, commercial and industrial categories are calculated by determining the estimated coincident peak demand 18
(kW) of each type of load and multiplying it by the cost per capacity unit. Electric Impact Fee = Expected coincident peak kW demand of each new load X $213.34 per kW. The expected coincident peak kW demand was estimated using a combination of methodologies which included: a. Prorated estimates of total building/facility load based on actual loads and/or connected transformers for similar building/facility loads along the Wasatch Front b. Detailed residential load estimates based on previous load measurements and detailed engineering studies of residential loads for newly constructed dwellings along the Wasatch Front with natural gas and electric combined HVAC systems and c. Based upon the Power Department’s experience2.
The expected coincident peak kW demand for each connection size was used in developing the new Power Impact Fee Schedule. See Table 3, Power Impact Fee, on the following page.
2
See Salem City Power Department expected load based on service size, included as page 22 of this document. 19
Table 3 Salem City Proposed Impact Fee Schedule
Residential Single Phase Service Sizes
AMPS
PEAK DEMAND (kW)
KVA
100 125 150 200 225 400
Impact Fee
24 30 36 48 54 96
2 3 4 5 7 10
$ $ $ $ $ $
427 640 853 1,067 1,493 2,133
$ $ $ $ $
853 1,280 1,707 2,560 3,627
$ $ $ $ $ $ $ $ $ $ $
2,987 4,480 5,760 11,947 17,920 24,107 30,080 36,267 48,214 60,374 75,521
$ $ $ $ $ $ $ $ $ $ $
2,987 4,480 5,760 11,947 17,920 24,107 30,080 36,267 48,214 60,374 75,521
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $
6,613 9,813 13,867 27,734 42,027 55,681 69,761 83,627 111,788 139,735 174,722 209,495 244,056 261,549 279,043
Commercial Single Phase Service Sizes
AMPS
PEAK DEMAND (kW)
KVA
100 125 150 200 400
24 30 36 48 96
4 6 8 12 17
Commercial 3 Phase (120/240V) Service Sizes
AMPS 125 150 200 400 600 800 1000 1200 1600 2000 2500
KVA
PEAK DEMAND (kW)
52 62 83 166 249 332 415 498 664 830 1038
14 21 27 56 84 113 141 170 226 283 354
Commercial 3 Phase (120/208V) Service Sizes
AMPS 125 150 200 400 600 800 1000 1200 1600 2000 2500
KVA
PEAK DEMAND (kW)
45 54 72 144 216 288 360 432 576 720 900
14 21 27 56 84 113 141 170 226 283 354
Commercial 3 Phase (277/480V) Service Sizes
AMPS 125 150 200 400 600 800 1000 1200 1600 2000 2500 3000 3500 3750 4000
KVA
PEAK DEMAND (kW)
104 125 166 332 498 664 830 996 1329 1661 2076 2494 2905 3113 3320
31 46 65 130 197 261 327 392 524 655 819 982 1144 1226 1308
20
Cost per Capacity Unit $ 213
SalemCity ProportionateShareAnalysis The Salem City Electrical Power Impact Fee is proportionate and reasonable in order to provide proper electrical service for new loads developing within the City. This written analysis establishes an equitable allocation of the costs and includes the factors as outlined in the Utah Impact Fees Act (11-36201(5)(b)(i-vii)) and as amended to the present. It is noted that Salem City has included the costs for voltage transformation and main distribution lines as the system improvements which will be necessary in order to deliver energy to its customers in the Power Impact Fee. A brief discussion of these seven factors is set forth below: i.
ii.
iii.
iv.
v.
vi.
vii.
The cost of existing public facilities; This item is not applicable because the Electrical Impact Fees are based on the recommendations of the capital facilities plan for the Salem City electrical system. There is no excess existing capacity available to serve new development. The Power Impact Fee is based on the costs required to provide the same established level of service to new customers as provided historically to the current electrical system customers. The manner of financing existing public facilities, such as user charges, special assessments, bonded indebtedness, general taxes, or federal grants; This item is not applicable because the Electrical Impact Fee is not based on existing facilities and general tax revenues are not anticipated to be used to fund the capital facilities plan. The relative extent to which the newly developed properties and the other properties in the city have already contributed to the cost of existing public facilities, by such means as user charges, special assessments, or payment from the proceeds of general taxes; The system improvements that are included in the impact fee have not been contributed to previously by newly developed properties through other funding means. No general revenue funds or other taxing revenues have been used to build any of these facilities. The relative extent to which the newly developed properties and the other properties in the district will contribute to the cost of existing public facilities in the future; It is anticipated that the additional electrical facilities will be paid for from Power Impact Fee funding. Future contributions from other sources are not anticipated at this time. The extent to which the newly developed properties are entitled to a credit because the city is requiring their developers or owners, by contractual arrangement or otherwise, to provide common facilities, inside or outside the proposed development, that have been provided by the city and financed through general taxation or other means, apart from user charges, in other parts of the city; The system improvements included in the Power Impact Fee have not received funding from general taxation or other means and will be built by the City as outlined in the capital facilities Plan. Extraordinary costs, if any, in servicing the newly developed properties; No extraordinary costs are anticipated in servicing new development. Salem City consists of a single service area and provides the same level of service city wide to each of its customers. The facilities constructed through the Power Impact Fees collected will be used to serve new Salem City electrical customers. The time-price differential inherent in fair comparisons of amounts paid at different times; only present day pricing for the facilities included in the impact fee have been used. Required cost adjustments should be included as part of the periodic Power Impact Fee review and updating process. 21
SalemCity ExpectedCoincidentkWDemandBasedonServiceSize In developing the Power Impact Fee, the Power Department provides input as to the impact for each improvement listed in the Impact Fee Facilities Plan attributable to new developments within the city. This is quantified based on the projected load demand of a new development. The estimated peak load (in kW) necessary to serve new development is set forth below. It is to be used in calculating the Power Impact Fee and is based on service connection size. The coincident peak electrical load was estimated using a combination of methodologies which included: 2. Prorated estimates of total building/facility load based on actual loads and/or connected transformers for similar building/facility loads along the Wasatch Front 3. Detailed residential load estimates based on previous load measurements and detailed engineering studies of residential loads for newly constructed dwellings along the Wasatch Front with natural gas and electric combined HVAC systems and 4. Based upon the Power Department’s experience.
Residential Single Phase Service Sizes
Commercial 3 Phase (120/208V) Service Sizes
AMPS
AMPS
100 125 150 200 225 400
PEAK DEMAND (kW) 2 3 4 5 7 10
125 150 200 400 600 800 1000 1200 1600 2000 2500
Commercial Single Phase Service Sizes AMPS 100 125 150 200 400
PEAK DEMAND (kW) 4 6 8 12 17
125 150 200 400 600 800 1000 1200 1600 2000 2500
14 21 27 56 84 113 141 170 226 283 354
Commercial 3 Phase (277/480V) Service Sizes AMPS 125 150 200 400 600 800 1000 1200 1600 2000 2500 3000 3500 3750 4000
Commercial 3 Phase (120/240V) Service Sizes AMPS
PEAK DEMAND (kW)
PEAK DEMAND (kW) 14 21 27 56 84 113 141 170 226 283 354
22
PEAK DEMAND (kW) 31 46 65 130 197 261 327 392 524 655 819 982 1144 1226 1308
Comlink L. S.
Salem City Impact Fee Study
April 12, 2012
1
TableofContents
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SalemCity SalemCityPowerImpactFeeStudy April 12, 2012
Preparedby: Comlink L.S., LLC 860 E. 4500 S. Suite 312 Salt Lake City, UT 84107 (801) 288-4033
ProjectSeniorEngineer: R. Paul Erickson, P.E. I certify that, to the best of my knowledge and understanding, the attached impact fee analysis: 1. Includes only the costs for qualifying public facilities that are a. Allowed under the Impact Fees Act; and b. Projected to be incurred or encumbered within six years after each impact fee is paid; 2. Contains no cost for operation and maintenance of public facilities; 3. Offsets costs with grants or other alternate sources of payment; 4. Does not include costs for qualifying public facilities that will raise the level of service for the facilities, through impact fees, above the level of service that is by existing residents; and 5. Complies in each and every relevant respect with the Impact Fees Act. I make this certification with the following caveats: 1. All requirements for implementation of the impact fee are followed in their entirety by Salem City staff and elected officials. 2. If all or a portion of the impact fee analysis is modified or amended, this certification is no longer valid. 3. All information provided to Comlink L.S., LLC, its contractors and suppliers is assumed to be correct, complete and accurate. This includes information provided by Salem City and outside sources.
____________________________ R. Paul Erickson 4-12-2012 Senior Engineer
3
Salem City Power Facilities Impact Fee Analysis
ExecutiveSummary Impact fees are one-time charges imposed on development, as a condition of development approval, to cover costs associated with necessary capital improvements to the electric system needed to serve new development. In April 1995, the Utah State Legislature passed Title 11, Chapter 36, Sections 101-401 (the “Impact Fee Act”). The “Impact Fee Act” put in place requirements regulating impact fees which apply to political subdivisions which own electric utilities. The “Impact Fee Act” has been changed periodically by the legislature and this study follows the requirements enacted by Chapter 47, 2011 General Session. This study has been prepared on behalf of Salem City by Comlink Land Services, LLC as part of the process in setting the City’s Impact Fee for electrical or power facilities. As documented in this report, Salem City has complied with all requirements of the Utah Impact Fees Act. Electric impact fees for the city are calculated using incremental costs which is one of several methods for calculating impact fees. This method determines what new developments should pay for improvements or a portion of the improvements needed to serve them. This is a “capacity-based” fee structure. In this way existing customers are not burdened by the new growth. The calculation of the Power Impact Fee for electrical or city power facilities is based on the city’s Impact Fee Facilities Plan and specifically shows the additions for the six years, 2012 thru 2017. The costs of the facilities yet to be constructed are estimated at today’s prices and will need to be reviewed and periodically adjusted as needed for inflation. Salem City has experienced a 6.6% annual rate of growth in its summer system peak demand over the last 10 years. The growth rate was 10.4% from 2005 thru 2007. The summer peak decreased in 2008 from the previous year’s peak. The summer peak jumped to a peak of 8,577 kW in 2009 and continued to increase to a peak of 9,068 kW in 2011. The average growth for the 2007-2011 periods was 3.2%. A city estimated growth rate of 1.91% increasing to a rate of 3.48% was used for the six years in the study period from 2012 thru 2017. A city estimated growth rate of 4.37% was used in the following years in the study. The recommended impact fee will provide the funds necessary to construct the additional capacity and main distribution lines and system related additions required to meet the new demand created by the anticipated future new development. The cost per unit (1 kilowatt) of capacity needed for new development is calculated by dividing the cost of the facilities in the Impact Fee Facilities Plan needed to serve future development divided by the capacity provided for new development from the facilities in the Impact Fee Facilities Plan. The cost of the facilities in the Impact Fee Facilities Plan needed to serve future 4
development is $2,221,337. This provides for the system capacity that is needed to meet the system Capacity Service Standard. The capacity for new development provided by each project in the Impact Fee Facilities Plan is used to divide the cost of the project eligible to be funded by Impact Fees and summed to obtain the $/kW cost for the capacity provided by the Impact Fee Facilities Plan which is $213.34. The Power Impact Fee for different types of new connections in residential, commercial and industrial categories are calculated by determining the estimated coincident peak load with the system peak for a new connection and multiplying it by the cost per capacity unit. Electric Impact Fee = Expected coincident kW demand of each new connection X $213 per kW Based upon the Power Department’s experience the expected load for each connection size was developed and was used in the new Power Impact Fee. The recommended Power Impact Fees for typical residential and commercial customers including Residential Single Phase Service Sizes of 200 Amps and 400 Amps and Commercial 3 Phase Service Size of 400 Amps are shown in the following table. For a complete listing of recommended Power Impact Fees see Table 3, on Page 20 in the study document. Power Impact Fee Residential Single Phase Service 200 Amps $1,067 400 Amps $2,133 Commercial 3 Phase (120/240V) Service 400 Amps $11,947
5
SalemCity ImpactFeeFacilitiesPlan
I.
INTRODUCTION The Salem City Power System currently provides electric service to 1,853 residential customers, 133 commercial customers, six churches, five schools and one industrial customer. The maximum demand for the system was 9,068 kilowatts for the Fiscal Year of 2012. Electric power is delivered to the system at 46,000 volts to two substations, the Arrowhead Substation with 5,000 kW of capacity (50% ownership of 10,000 kW transformer), and the new Loafer substation with 20,000 kW of capacity.
II.
SERVICE STANDARD The standard of service for all customers is based on having sufficient installed transformation capacity to meet the maximum system demand and not exceed 50% loading on substation transformers.
III.
GROWTH Salem City has experienced a 6.6% annual rate of growth in its summer system peak demand over the last 10 years. The growth rate was 10.4% from 2005 thru 2007. The summer peak decreased in 2008 from the previous year’s peak. The summer peak jumped to a peak of 8,577 kW in 2009 and continued to increase to a peak of 9,068 kW in 2011. The average growth for the 2007-2011 periods was 3.2%. A city estimated growth rate of 1.91% increasing to a rate of 3.48% was used for the six years in the study period from 2012 thru 2017. A city estimated growth rate of 4.37% was used in the following years in the study. The recommended impact fee will provide the funds necessary to construct the additional capacity and main distribution lines and system related additions required to meet the new demand created by the anticipated future new development. Figure 1, on the next page, illustrates the growth in the city’s peak demand from the year 2000 to the year 2011. During this period the peak demand doubled in size.
6
Figure 1 System Demand
KW
Salem City Historical Peak Demand 10,000 8,000 6,000 4,000 2,000 0
Peak Load
Year
V.
FUTURE CAPACITY REQUIREMENTS In 2009 system capacity was 8,750 kilowatts. Capacity needed to meet the service standard was 17,154 kW. This represents the need for an additional 8,404 kW to meet the Service Standard Capacity requirement. 20,000 kW of capacity was added to the system with the completion of the new Loafer Substation in 2010. After meeting the Service Standard capacity for the system demand this made available 8,830 kW of capacity for growth until 2022 when the installation of the 20,000 kW of capacity at the Arrowhead Substation is required. This provides sufficient capacity to meet the System Capacity requirements until 2035 with the currently estimated growth rates. Table 1 shows the surplus or additional capacity needed on the system, to meet the Service Standard Capacity requirement, on a yearly basis from 2000 through the summer of 2026. Planned capacity additions are included in Table I on the next page.
7
Table 1 Transformation Capacity Requirements Salem 2012 Power Impact fee Study Year Loafer Peak Load Arrowhead Peak Load Coincident Peak Load
2000 4,619
2001 4,802
4,619
Service Standard Capacity Requirement
Prior to 2010 Loafer Owned Capacity Present Arrowhead Owned Capacity Total Present Substation Capacity
Surplus/Additional capacity to meet standard
4,802
2002 2,777 2,470 5,247
2003 2,623 3,104 5,727
2004 2,676 3,097 5,773
2005 3,263 3,304 6,567
2006 3,501 3,747 7,248
2007 3,756 4,244 8,000
2008 2,544 7,663 7,717
9,238
9,604
10,494
11,454
11,546
13,134
14,496
16,000
15,434
3,750
3,750
3,750
3,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
(5,488)
(5,854)
(1,744)
(2,704)
(2,796)
(4,384)
(5,746)
(7,250)
(6,684)
Salem 2012 Power Impact fee Study Study Year Year Loafer Peak Load Arrowhead Peak Load Coincident Peak Load
2009 2,655 6,119 8,577
2010 2,591 5,609 8,753
2011
8,910
9,080
9,264
9,465
9,685
9,954
10,300
Service Standard Capacity Requirement
17,154
17,506
17,819
18,160
18,528
18,930
19,370
19,908
20,601
Loafer Owned Capacity Present Arrowhead Installed Owned Capacity Total Present Substation Capacity
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
3,750 5,000 8,750
Surplus/Additional capacity to meet standard
(8,404)
(8,756)
(9,069)
(9,410)
(9,778)
(10,180)
(10,620)
(11,158)
(11,851)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
20,000 (3,750)
(8,404)
7,494
7,181
6,840
6,472
6,070
5,630
5,092
4,399
8,750
25,000
25,000
25,000
25,000
25,000
25,000
25,000
25,000
Rebuild Loafer Substation with 20000 kW Capacity Remove 7500 kW from Loafer
Surplus/Additional capacity to meet standard
Total Capacity after additions
1 2012
2 2013
3 2014
4 2015
5 2016
6 2017
Salem 2012 Power Impact fee Study Study Year Year Loafer Peak Load Arrowhead Peak Load Coincident Peak Load
8 2018
9 2019
10 2020
11 2021
12 2022
13 2023
14 2024
10,751
11,220
11,711
12,222
12,757
13,314
13,896
14,503
15,137
Service Standard Capacity Requirement
21,501
22,441
23,421
24,445
25,513
26,628
27,792
29,006
30,274
Loafer Owned Capacity Present Arrowhead Installed Owned Capacity Total Substation Capacity
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
20,000 5,000 25,000
Surplus/Additional capacity to meet standard
3,499
2,559
1,579
555
(1,628)
(2,792)
(4,006)
(5,274)
20,000
20,000
20,000
(1,628)
17,208
15,994
14,726
25,000
45,000
45,000
45,000
(513)
Install 20000 kW at Arrowhead Surplus/Additional capacity to meet standard
3,499
2,559
1,579
555
Total Capacity after additions
25,000
25,000
25,000
25,000
8
(513)
25,000
15 2025
16 2026
VI.
Impact Fee Facilities Plan Table 2 on the next Page lists the planned capital projects and activities included in the Impact Fee Facilities Plan that are eligible to be funded wholly or in part from Impact Fees, in present dollars. These projects and activates provide sufficient capacity to meet the Capacity Service Standard through 2035. The year 2035 results from the addition of the new Loafer Substation, the addition of the new transformer in the Arrowhead Substation and the estimated load growth rate from the city.
The Loafer Substation was completed in 2010. The actual cost incurred was $1,847,048. The 2007 estimate for the substation was $1,800,000. 3,750 kW of the 20,000 kW provided by the new Loafer Substation is replacing the capacity being retired from the old Loafer Substation (see Table 1, “Transformation Capacity Requirements). The affects of this capacity retirement is handled in the next section, Section VII which discusses why a project is needed, its cost and the percent of the Cost to be supported by impact fees and the justification. The Arrowhead Substation transformer capacity addition is anticipated in 2024 based on current city load growth projections. The new Arrowhead Substation transformer was purchased with the Loafer Substation transformer at a substantial savings. The cost of the transformer was $640,907. The installation cost of the new Arrowhead Substation transformer is estimated to be $626,973. The East Main Feeder Loop was originally estimated at $250,000. 1,100 feet of line has been built out of the Loafer Substation costing $11,227, leaving $238,773 to complete work on the East Main Feeder loop which is reflected in the Impact Fee Facilities Plan. The west Main Feeder Loop was originally estimated at $225,000. This work still remains to be completed and is reflected in the Impact Fee Facilities Plan. Eight, 3 phase gang operated air break switches each costing $10,000, are included in the Impact Fee Facilities Plan to be used as sectionalizing switches. These switches are needed as power is moved between the Loafer and the Arrowhead Substation for system requirements during outages and operation of the system. Capacitor banks in support of system growth are included in the Impact Fee Facilities Plan. Capacitor banks improve system voltage to meet industry standards and also make available additional capacity for new growth. $25,000 is estimated for this capital addition. The affects of the additional capacity made available with the capacitor bank instullations is handled in the next section, Section VII which discusses why a project is needed, its cost and the percent of the Cost to be supported by impact fees and the justification. 9
The cost of contemplated Impact Fee Studies and the supporting Electrical Master Plan study are included in support of the projects which are included in the Impact Fee Facilities Plan.
Section VI, which follows, discusses each of the items in the Impact Fee Facilities Plan. It covers why a project is needed, its cost and the percent of the Cost to be supported by Impact Fees and the justification. VI.
Impact Fee Facilities Plan Salem City has determined that the growth of the City is placing demands on various services provided by the City, including the Electric System. Growth has created a need for additional and larger Substations, and the need to increase capacity on new and existing distribution lines. The City has studied various ways of providing the funding for these facilities. The sources of revenue for electricity needs are rates, general funds or impact fees. In comparing an equitable allocation to the costs borne in the past and to be borne in the future, in comparison to the benefits already received and yet to be received, the City has determined that impact fees are the most equitable way of financing the growth related electric facilities. In determining what percent of Cost is appropriate for load growth, due to new customers, and what percent of cost is appropriate for load growth due to existing customers several approaches have been considered. Industrial & commercial customers actively pursue energy conservation in an effort to lower their energy costs. Residential customers generally realize energy conservation as they replace existing appliances with newer higher efficiency appliances and replacing existing lighting with energy efficient lighting. All these efforts are strongly supported by the city to reduce the pressure on the peak system load growth. Salem’s existing industrial and commercial loads have remained relatively flat recently. The major area that has an impact on system growth from existing customers comes from residential customers who change from evaporative swamp coolers to air conditioning. In the Salem City area it is estimated, of those that are currently using swamp coolers, 15% will convert to air conditioning each year (with an average 3 kW impact on system peak per conversion) and including the small impact of other native load growth, 20% of additional capacity needs can be attributable to native system load growth. As a result the impact fee is calculated using 80% of the cost of projects for system capacity increases unless otherwise justified.
10
1. Rebuild Loafer Substation with new 20,000 kW Transformer Why needed: Included in 2012 IF Study - Load growth related transformer capacity increase. Cost: $1,847,048 – actual price Percent of Cost Supported by Impact Fees and Justification: 50% - The 50% is determined by taking the capacity of the new substation (20,000 kW) less the capacity of the old substation being replaced (7,500 kW) and then multiplying that number by 80% which leaves the capacity made available for new connects (10,000 kW). This provides the required increase in transformer capacity identified in the 2012 Impact Fee study with the Percent adjusted for growth relating to existing customers as explained in the statement above and the adjustment for the existing transformer replacement. 2. Install New 20,000 kW transformer at Arrowhead Why needed: Included in the 2012 IF Study – Load growth related transformer capacity increase. Cost Estimate: $626,973 Percent of Cost Supported by Impact Fees and Justification: 80% - Costs incurred constructing the substation, which provides the required increase in capacity identified in the 2012 Impact Fee Study with the percent adjusted for growth relating to existing customers as explained above. 3. New 20,000 kW Transformer purchased for Arrowhead Why needed:
11
Included in the 2012 IF Study – Load growth related transformer capacity increase. Cost Estimate: $640,907 – actual price Percent of Cost Supported by Impact Fees and Justification: 80% - Costs incurred constructing the substation, which provides the required increase in capacity identified in the 2012 Impact Fee Study with the percent adjusted for growth relating to existing customers as explained above.
4. East Main Feeder Loop Between Arrowhead and Loafer Substations Why needed: Load growth induced capital improvement to maintain established service levels of reliability, system operability and capacity requirements. Enables load transfers between substations as required. Cost Estimate: $238,773 Percent of Cost Supported by Impact Fees and Justification: 40% - Construction costs of existing 600 amp feeder lines and 200 amp feeder lines were compared and it was determined that the additional cost to construct a 600 amp main system distribution feeder used between substations over the construction of a 200 amp local feeder was 40% of the construction cost of a 600 amp feeder.
5. West Main Feeder Loop Between Arrowhead and Loafer Substations Why needed: Load growth induced capital improvement to maintain established service levels of reliability, system operability and capacity requirements. Enables load transfers between substations as required. Cost Estimate: 12
$225,000 Percent of Cost Supported by Impact Fees and Justification: 40% - Construction costs of existing 600 amp feeder lines and 200 amp feeder lines were compared and it was determined that the additional cost to construct a 600 amp main system distribution feeder used between substations over the construction of a 200 amp local feeder was 40% of the construction cost of a 600 amp feeder. 6. Sectionalizing Switches Why needed: Load growth induced capital improvement to maintain established service levels of reliability, system operability and capacity requirements. Enables load transfers between substations as required. Cost Estimate: $50,000 Percent of Cost Supported by Impact Fees and Justification: 40% - Sectionalizing Switches are an element used in main system distribution feeders and will be used between Loafer and Arrowhead substations. The justification of the 40% of cost supported by Impact Fees is the same as the East and West Main Feeder Loops between Arrowhead and Loafer substations because they will be used in those main system feeder loops.
7. Capacitor Banks in Support of System Growth Why needed: Load growth induced capital improvements which provide voltage support bringing system voltages to system standards which also provides increased capacity on distribution lines for load growth. Cost Estimate: $25,000 Percent of Cost Supported by Impact Fees and Justification: 13
80% - The 80% percent adjustment for growth, relating to existing customers, is the same as explained above.
8. Impact Fee Study Why needed: Used as the basis for determining equitable Impact Fees for new customer load growth. Cost Estimate: $10,000 Percent of Cost Supported by Impact Fees and Justification: 100% - As allowed by the Impact Fee Act.
9. Electrical Master Plan (20 years) Why needed: Used as the basis for determining equitable Impact Fees for new customer load growth.
Cost Estimate: $60,000 Percent of Cost Supported by Impact Fees and Justification: 80% - The 80% percent adjustment for growth, relating to existing customers, is the same as explained above.
In Table 2, listed for each item in the Impact Fee Facilities Plan, are each item’s E stimated Cost or Actual Cost, the percent of each item’s cost eligible to be funded by Impact Fees as outlined above, the resulting cost eligible to be funded by Impact Fees, the capacity provided by the item directly in support of new connects and the contribution from each item to the total Impact Fee expressed in dollars per kilowatt (Impact Fee eligible cost divided by capacity provided by the item directly in support of new connects). 14
The contribution from each item to the total Impact Fee is $213.34 as seen on the Total row at the bottom of Table 2 and in the column titled ‘Impact Fee Contribution by Capital Addition’. See Table 2 on the following page.
15
60,000 1,235,746
$
$
$
$ Total $
Sectionalizing Switches
Capacitor Banks in support of system growth
Impact Fee Study
Electical Master Plan (20 year)
10,000
25,000
50,000
$
80% $
100% $
80% $
40% $
40% $
$
West Main Feeder Loop
225,000
40% $
$
East Main Feeder Loop
238,773
80% $
New 20000 kW transformer purchase for Arrowhead
80% $
626,973
Install new 20000 kW transformer at Arrowhead
$
50% $
Year
Rebuild Loafer with new 20000 KW transformer
Captial Additions
2,221,337
48,000
10,000
20,000
20,000
90,000
95,509
512,726
501,578
923,524
% of Total Estimated Cost Eligibale Total to be Funded Cost Eligible to Cost to complete By Impact be Funded By the Project Fees Impact Fees
16
$
26,000 $
26,000 $
426 $
26,000 $
26,000 $
26,000 $
16,000 $
16,000 $
213.34 $
2.31
0.38
46.99
0.77
3.46
3.67
32.05 $
31.35
92.35 $
$
2,487,955 $
640,907
1,847,048
Impact Fee Total Actual Cost Contribution by Expended for Capital Addition Completed ($/kW) Project
10,000 $
Capacity Provided by Project for New Connections (kW)
Table 2 Impact Fee Facilities Plan
$
5,000 $
5,000
2012 1
$
$
4,000 $
4,000
2013 2
$
56,000 $
48,000
8,000
2014 3
$
5,000 $
5,000
2015 4
$
$
$
$
25,000 $
25,000
2016 5
71,000
12,000
4,000
25,000
30,000
2017 6
SalemCity ImpactFeeAnalysis
VII.
FUNDING The existing system was built through operating revenues from power sales. Undeveloped property has not used power and has not contributed to the funding of the existing system. New development creates impacts on the existing system and benefits from the capital improvements. With new development, additional system capacity is needed to maintain the Service Standard. Only impact fees and operating revenues will be available to fund system improvements required by development impacts. Impact fees become an important element to achieve an equitable allocation of costs borne in the past and to be borne in the future in comparison to the benefits already received and yet to be received.
VIII.
ELECTRIC IMPACT FEES Impact fees are one-time charges imposed on development, as a condition of development approval, to cover costs associated with necessary capital improvements to the electric system needed to serve new development. In April 1995, the Utah State Legislature passed Title 11, Chapter 36, Sections 101-401 (the “Impact Fee Act”). The “Impact Fee Act” put in place requirements regulating impact fees which apply to political subdivisions which own electric utilities. The “Impact Fee Act” has been changed periodically by the legislature and this study follows the requirements enacted by Chapter 47, 2011 General Session. This study has been prepared on behalf of Salem City by Comlink Land Services, LLC as part of the process in setting the City’s Impact Fee for electrical or power facilities. To implement impact fees as defined by the Impact Fee Act, “local political subdivisions” must conduct an analysis with the following elements: x x x
1
Identification of the impact on system improvements required by the development activity; Demonstration of how those impacts on system improvements are reasonably related to the development activity; Estimation of the proportionate share of the costs of impacts on system improvements that are reasonably related to the new development activity1; and
See the Proportionate Share Analysis included on page 21 of this document. 17
x
Explanation of how the impact fee was calculated.
Electric impact fees in Salem City are calculated using incremental costs which is one of several methods for calculating impact fees. This method determines what new developments pay for improvements or a portion of the improvements needed to serve them. This is a “capacity-based” fee structure. In this way existing customers are not burdened by the new growth.
IX.
Calculating Impact Fees
There are two steps in the process of calculating impact fees. 1. Determine the cost of improvements attributable to new development. 2. Allocate the identified costs to various types of development (customers).
Step 1 In 2011 the summer peak demand for the system was 9,068 kilowatts. With the addition of the new Loafer Substation, the 8,756 kW deficit in meeting the Service Standard Capacity Requirement was covered. The cost of the Arrowhead capacity increase, main distribution feeders, sectionalizing switches, capacitor banks and other capital improvements listed in the Impact Fee Facilities Plan are attributable to the new development identified in the Load Forecast and based on historical growth patterns projected in to the future and are needed to meet the Service Standard. Step 2 The cost per capacity unit (1 kilowatt) for each item in the Impact Fee Facilities Plan is calculated by dividing the projected facility cost for each item needed to serve new customer connections divided by the new capacity provided by each item to serve new customer connections. The total capital costs attributed to projected new customers in the Impact Fee Facilities Plan is $2,221,337. This will provide for sufficient system capacity through 2035 to meet the system capacity Service Standard. New development capacity provided in support of new customer connects are identified by item in the Impact Fee Facilities plan. The contribution from each item to the total Impact Fee expressed in dollars per kilowatt is calculated by taking the Impact Fee eligible cost and dividing it by the capacity provided by the item directly in support of new connects. The individual item’s contribution to the total Impact Fee in $/kW are summed to the overall $/kW Impact Fee which is $213.34 per kW. The Electric Impact Fee for different types of new load in residential, commercial and industrial categories are calculated by determining the estimated coincident peak demand 18
(kW) of each type of load and multiplying it by the cost per capacity unit. Electric Impact Fee = Expected coincident peak kW demand of each new load X $213.34 per kW. The expected coincident peak kW demand was estimated using a combination of methodologies which included: a. Prorated estimates of total building/facility load based on actual loads and/or connected transformers for similar building/facility loads along the Wasatch Front b. Detailed residential load estimates based on previous load measurements and detailed engineering studies of residential loads for newly constructed dwellings along the Wasatch Front with natural gas and electric combined HVAC systems and c. Based upon the Power Department’s experience2.
The expected coincident peak kW demand for each connection size was used in developing the new Power Impact Fee Schedule. See Table 3, Power Impact Fee, on the following page.
2
See Salem City Power Department expected load based on service size, included as page 22 of this document. 19
Table 3 Salem City Proposed Impact Fee Schedule
Residential Single Phase Service Sizes
AMPS
PEAK DEMAND (kW)
KVA
100 125 150 200 225 400
Impact Fee
24 30 36 48 54 96
2 3 4 5 7 10
$ $ $ $ $ $
427 640 853 1,067 1,493 2,133
$ $ $ $ $
853 1,280 1,707 2,560 3,627
$ $ $ $ $ $ $ $ $ $ $
2,987 4,480 5,760 11,947 17,920 24,107 30,080 36,267 48,214 60,374 75,521
$ $ $ $ $ $ $ $ $ $ $
2,987 4,480 5,760 11,947 17,920 24,107 30,080 36,267 48,214 60,374 75,521
$ $ $ $ $ $ $ $ $ $ $ $ $ $ $
6,613 9,813 13,867 27,734 42,027 55,681 69,761 83,627 111,788 139,735 174,722 209,495 244,056 261,549 279,043
Commercial Single Phase Service Sizes
AMPS
PEAK DEMAND (kW)
KVA
100 125 150 200 400
24 30 36 48 96
4 6 8 12 17
Commercial 3 Phase (120/240V) Service Sizes
AMPS 125 150 200 400 600 800 1000 1200 1600 2000 2500
KVA
PEAK DEMAND (kW)
52 62 83 166 249 332 415 498 664 830 1038
14 21 27 56 84 113 141 170 226 283 354
Commercial 3 Phase (120/208V) Service Sizes
AMPS 125 150 200 400 600 800 1000 1200 1600 2000 2500
KVA
PEAK DEMAND (kW)
45 54 72 144 216 288 360 432 576 720 900
14 21 27 56 84 113 141 170 226 283 354
Commercial 3 Phase (277/480V) Service Sizes
AMPS 125 150 200 400 600 800 1000 1200 1600 2000 2500 3000 3500 3750 4000
KVA
PEAK DEMAND (kW)
104 125 166 332 498 664 830 996 1329 1661 2076 2494 2905 3113 3320
31 46 65 130 197 261 327 392 524 655 819 982 1144 1226 1308
20
Cost per Capacity Unit $ 213
SalemCity ProportionateShareAnalysis The Salem City Electrical Power Impact Fee is proportionate and reasonable in order to provide proper electrical service for new loads developing within the City. This written analysis establishes an equitable allocation of the costs and includes the factors as outlined in the Utah Impact Fees Act (11-36201(5)(b)(i-vii)) and as amended to the present. It is noted that Salem City has included the costs for voltage transformation and main distribution lines as the system improvements which will be necessary in order to deliver energy to its customers in the Power Impact Fee. A brief discussion of these seven factors is set forth below: i.
ii.
iii.
iv.
v.
vi.
vii.
The cost of existing public facilities; This item is not applicable because the Electrical Impact Fees are based on the recommendations of the capital facilities plan for the Salem City electrical system. There is no excess existing capacity available to serve new development. The Power Impact Fee is based on the costs required to provide the same established level of service to new customers as provided historically to the current electrical system customers. The manner of financing existing public facilities, such as user charges, special assessments, bonded indebtedness, general taxes, or federal grants; This item is not applicable because the Electrical Impact Fee is not based on existing facilities and general tax revenues are not anticipated to be used to fund the capital facilities plan. The relative extent to which the newly developed properties and the other properties in the city have already contributed to the cost of existing public facilities, by such means as user charges, special assessments, or payment from the proceeds of general taxes; The system improvements that are included in the impact fee have not been contributed to previously by newly developed properties through other funding means. No general revenue funds or other taxing revenues have been used to build any of these facilities. The relative extent to which the newly developed properties and the other properties in the district will contribute to the cost of existing public facilities in the future; It is anticipated that the additional electrical facilities will be paid for from Power Impact Fee funding. Future contributions from other sources are not anticipated at this time. The extent to which the newly developed properties are entitled to a credit because the city is requiring their developers or owners, by contractual arrangement or otherwise, to provide common facilities, inside or outside the proposed development, that have been provided by the city and financed through general taxation or other means, apart from user charges, in other parts of the city; The system improvements included in the Power Impact Fee have not received funding from general taxation or other means and will be built by the City as outlined in the capital facilities Plan. Extraordinary costs, if any, in servicing the newly developed properties; No extraordinary costs are anticipated in servicing new development. Salem City consists of a single service area and provides the same level of service city wide to each of its customers. The facilities constructed through the Power Impact Fees collected will be used to serve new Salem City electrical customers. The time-price differential inherent in fair comparisons of amounts paid at different times; only present day pricing for the facilities included in the impact fee have been used. Required cost adjustments should be included as part of the periodic Power Impact Fee review and updating process. 21
SalemCity ExpectedCoincidentkWDemandBasedonServiceSize In developing the Power Impact Fee, the Power Department provides input as to the impact for each improvement listed in the Impact Fee Facilities Plan attributable to new developments within the city. This is quantified based on the projected load demand of a new development. The estimated peak load (in kW) necessary to serve new development is set forth below. It is to be used in calculating the Power Impact Fee and is based on service connection size. The coincident peak electrical load was estimated using a combination of methodologies which included: 2. Prorated estimates of total building/facility load based on actual loads and/or connected transformers for similar building/facility loads along the Wasatch Front 3. Detailed residential load estimates based on previous load measurements and detailed engineering studies of residential loads for newly constructed dwellings along the Wasatch Front with natural gas and electric combined HVAC systems and 4. Based upon the Power Department’s experience.
Residential Single Phase Service Sizes
Commercial 3 Phase (120/208V) Service Sizes
AMPS
AMPS
100 125 150 200 225 400
PEAK DEMAND (kW) 2 3 4 5 7 10
125 150 200 400 600 800 1000 1200 1600 2000 2500
Commercial Single Phase Service Sizes AMPS 100 125 150 200 400
PEAK DEMAND (kW) 4 6 8 12 17
125 150 200 400 600 800 1000 1200 1600 2000 2500
14 21 27 56 84 113 141 170 226 283 354
Commercial 3 Phase (277/480V) Service Sizes AMPS 125 150 200 400 600 800 1000 1200 1600 2000 2500 3000 3500 3750 4000
Commercial 3 Phase (120/240V) Service Sizes AMPS
PEAK DEMAND (kW)
PEAK DEMAND (kW) 14 21 27 56 84 113 141 170 226 283 354
22
PEAK DEMAND (kW) 31 46 65 130 197 261 327 392 524 655 819 982 1144 1226 1308
