Options for RTF Funding Allocation

Mike WeedallTheresa Drake

Jim WestSeptember 30, 2011

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Agenda

Objectives of funding allocationOptionsDiscussion

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Objectives of Funding Allocation (Preliminary)

The Policy Advisory Committee (PAC) is seeking a funding allocation that results in:• Stable funding: Achieves stable funding for the RTF• Choice of projects: Connects funding levels to stakeholder value• Workplan engagement: Involves funders in development of RTF

high-level workplan• Low resource requirement: Does not require significant RTF staff

resources to maintain

Some additional objectives for consideration:• Develops accountability of the RTF to funders• Maintains some equity among stakeholders• Minimizes free ridership

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Option Development

We recognize that some of the objectives may be at odds• Therefore, we believe a balance is necessary

There are many dimensions that could be considered in funding allocation

We have chosen to two options that have tradeoffs: • Stable Funding • Choice of Projects

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Choice of Projects

Stable Funding

The bookends of these dimensions:• A: Subscription/Menu: Allocation - based on funder choice of

projects. Choice – very high. Stable funding – extremely low. • D: Funder size: Allocation – based on funder size characteristics

(sales/customers). Choice – low. Stable funding– very high. We recommend the PAC consider middle options for

more balance.

Allocation Dimensions

A DB C

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The middle ground…. B: Base funding plus subscriptions. Each funder would contribute its

size-based share (e.g., sales) toward a base funding amount. Base funding would go to non-elective projects. Remainder of funding would be contributed on a subscription/menu basis for funder-chosen projects. • Allocation – part characteristics, part subscription• Choice of projects – medium• Stable funding – medium/low• Workplan engagement – high

C: Full funding, vote with your dollars. Each funder would contribute its size-based share to the RTF. PAC would decide on portion of total funding dedicated to Base/non-elective projects. Remainder of projects would be “voted” on by funders using TBD process. • Allocation – full characteristics• Choice of projects– medium• Stable funding– high• Workplan engagement – high

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Background for Examples: Illustrative RTF Workplan

RTF Workplan Type BudgetProject 1 Non-elective 200,000$ Project 2 Non-elective 100,000$ Project 3 Non-elective 300,000$ Project 4 Elective 100,000$ Project 5 Elective 200,000$ Project 6 Elective 100,000$ Project 7 Elective 50,000$ Project 8 Elective 150,000$ Total Non-elective 600,000$ Total Elective 600,000$

Total

Full funding: RTF-recommended (Pjts 1-6) or PAC-decided level 1,000,000$ Non-elective as % of Full Level 60%

Number/$ of elective projects

exceeds full funding level to

encourage choiceAll stakeholders may add

elective projects to the “list”,

based on TBD criteria (e.g.,

must be within RTF scope,

must have regional benefit,

etc)

Project(s)

Choice

Total to RTF: $

for Chosen

PjtsSize

share

Total to RTF - (size

* full funding)

Base funding:

(size * non-elective)

Chosen projects (excludes any non-elective)

Elective Funding:

$ for Chosen

Pjts

Total to RTF:

Base + Elective

Total to RTF - (size

* full funding)

Points for choosing projects¹

Chosen projects

Funder 1 2, 5 $300,000 50% $500,000 $300,000 5 200,000$ 500,000$ $500,000 200,000 5Funder 2 1, 8 $350,000 20% $200,000 $120,000 8 150,000$ 270,000$ $200,000 80,000 part of 8Funder 3 NA 30% $300,000 $180,000 NA 180,000$ $300,000 120,000 7, part of 8Total $650,000 $1,000,000 $600,000 $350,000 950,000$ $1,000,000 400,000

1: Points based on dollars for elective projects (Total funding minus Non-elective funding)

Base funding plus subscriptions (Option B)

Subscription/ Menu (Option A)

Funder Size (Option D)

Full funding, vote with your dollars (Option C)

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Option Examples

Project(s)

Choice

Total to RTF: $

for Chosen

PjtsSize

share

Total to RTF - (size

* full funding)

Base funding:

(size * non-elective)

Chosen projects (excludes any non-elective)

Elective Funding:

$ for Chosen

Pjts

Total to RTF:

Base + Elective

Total to RTF - (size

* full funding)

Points for choosing projects¹

Chosen projects

Funder 1 2, 5 $300,000 50% $500,000 $300,000 5 200,000$ 500,000$ $500,000 200,000 5Funder 2 1, 8 $350,000 20% $200,000 $120,000 8 150,000$ 270,000$ $200,000 80,000 part of 8Funder 3 NA 30% $300,000 $180,000 NA 180,000$ $300,000 120,000 7, part of 8Total $650,000 $1,000,000 $600,000 $350,000 950,000$ $1,000,000 400,000

1: Points based on dollars for elective projects (Total funding minus Non-elective funding)

Base funding plus subscriptions (Option B)

Subscription/ Menu (Option A)

Funder Size (Option D)

Full funding, vote with your dollars (Option C)

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Option Examples, with some thoughts

Funding level must be decided

somewhat exogenously

Additional process to “vote”

Funders may

choose projects

differently than RTF

Funding might be plus or minus

rec. level, but likely that some

funders choose no projects

Need to decide on

what is “base” level of

funding

Options B, C and D require

decision on size share

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Additional Discussion Topics What is the “size share”? (Options B, C, D)

• 1) Sales based (probably EIA 861 data)− Relatively simple. Timing of updates must be decided. Publics need to agree

on approach to sales to BPA. • 2) Combination of sales and customers

− Current NEEA model - 87.5% sales; 12.5% customers. NEEA model is included in current contracts, but does not include all utilities.

May be a risk if NEEA’s funding allocation changes in the future. Should we be considering a multi-year approach?

• This may be better for many parties, PAC should consider how to make the chosen allocation option multi-year

Are we missing any funders?• Yes, PAC is missing the Mid-C utilities (Grant, Chelan, Douglas) and

Rocky Mountain Power. PAC should solicit their funding (RTF staff has tried in the past). Are there other utilities or other stakeholders?

Are there any governance issues due to funding options? • We don't think so.

Would other parties be able to add funding for additional projects?• Options A, B and C provide this functionality; criteria would need to be

defined.