Presented by Vicki Baldwin of Parsons Behle & Latimer at the 2016 Electric Utility Rulemaking Conference.

1. N A T I O N A L E X P E R T I S E . R E G I O N A L L A W F I R M . | P A R S O N S B E H L E . C O M
Customer Choice & Direct
Delivery: Competitive Options
for Commercial Customers –
Large Customer’s Perspective
Vicki M. Baldwin
Parsons Behle & Latimer
Electric Utility Rulemaking Conference – March 15, 2016

2. Disclaimer
 All views and opinions expressed in this
presentation are those of the presenter and
not necessarily those of Parsons Behle &
Latimer or any clients of PB&L.
2Electric Utility Rulemaking Conference – March 15, 2016

3. Client Characteristics
 Take at transmission level
 Metered service
 High load factor
 Loads not seasonal
 Sophisticated in business
 Electricity second largest expense
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4. Regulation
 Purpose
 First principle
 Regulatory leniency
– Shifts costs to rate payers
– Shifts risks to rate payers
– Culture of entitlement
– Cost of capital advantage
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5. Shifting Risks from Utility
to Ratepayers
 Future test period
 Recovery of demand side management costs
 Single-item rate case for capital investment
projects
 Annual pass-through of fuel and purchased
power costs
 Pre-approval for recovery of energy resource
costs
 For 2004 – 2012 → ROE of 10.25% to 10.7%
 Current ROE 9.8%
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6. 6Electric Utility Rulemaking Conference – March 15, 2016
8.95%
3.81%
7.62%
2.50%
2.72%
7.43
3.52%
4.65%
6.07%
3.08%
3.36%
1.47%
Date Effective
Industrial Rate Increase over Time
3/1/05 12/11/064/1/04 6/1/07 8/13/08 5/8/09 2/18/10 1/1/11 10/12/12 9/1/13 9/1/14 9/1/15

7. 7Electric Utility Rulemaking Conference – March 15, 2016
5.82
6.63 6.81
7.57
8.11
4.16
5.48
4.54
3.38
3.57
4.04
2.7
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
Dates
Henry Hub Natural Gas Spot Price
U.S. Energy Information Administration
4/1/04 12/11/063/1/05 6/1/07 8/13/08 5/8/09 2/18/10 1/1/11 10/12/12 9/1/13 9/1/14 9/1/15

8. 8Electric Utility Rulemaking Conference – March 15, 2016
5.82
6.63
6.81
7.57
8.11
4.16
5.48
4.54
3.38
3.57
4.04
2.7
8.95%
3.81%
7.62%
2.50%
2.72%
7.43 3.52%
4.65%
6.07%
3.08%
3.36%
1.47%
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
Date Effective
Industrial Rate Increase over Time
4/1/04 3/1/05 12/11/06 6/1/07 8/13/08 5/8/09 2/18/10 1/1/11 10/12/12 9/1/13 9/1/14 9/1/15

9. 9Electric Utility Rulemaking Conference – March 15, 2016
41.23
50.99
56.74
66.13
79.48
34.96
41.54
35.18
35.32
44.19
41.48
25.57
$10
$20
$30
$40
$50
$60
$70
$80
Dates
Average of Mid-C Weighted Avg./Palo Verde Weighted Avg.
U.S. Energy Information Administration
4/1/04 3/1/05 12/11/06 6/1/07 8/13/08 5/8/09 2/18/10 1/1/11 10/12/12 9/1/13 9/1/14 9/1/15

10. 10Electric Utility Rulemaking Conference – March 15, 2016
41.23
50.99
56.74
66.13
79.48
34.96
41.54
35.18 35.32
44.19
41.48
25.57
8.95%
3.81%
7.62%
2.50%
2.72%
7.43 3.52%
4.65%
6.07%
3.08%
3.36%
1.47%
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
Date Effective
Industrial Rate Increase over Time
4/1/04 3/1/05 12/11/06 6/1/07 8/13/08 5/8/09 2/18/10 1/1/11 10/12/12 9/1/13 9/1/14 9/1/15

11. Cost Allocation
 Goal – cause and effect
 Costs to serve not equal
 More accurate pricing than cost allocation
 Regulatory leniency
– Simplicity
– Gradualism
– Shifts costs to other classes
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12. 12 – CP & 75/25
 Multi-state protocol
 Utah class allocation
 Residential and commercial
– Not metered – sampled
– More temperature sensitive
– Low load factor
 Costs socialized across classes
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13. Energy Balancing Account
 Carrying Charges
 Monthly accounting but annual average
recovery
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14. Conclusion
 Distributors and end users such as industrials
should have the ability to make market-driven
choices for electricity
 Promotion of competition among electricity
suppliers will benefit all electricity consumers
and the nation by ensuring an adequate and
reliable supply of electricity at the lowest
reasonable price for everyone
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15. Thank You
Vicki M. Baldwin
vbaldwin@parsonsbehle.com
801.532.1234
www.parsonsbehle.com
201 South Main Street, Suite 1800
Salt Lake City, UT 84111
15Electric Utility Rulemaking Conference – March 15, 2016