HomeMy WebLinkAboutStaff Report 7 04/20/1998APR
CITY OF PETALUMA, CA AGENDA SUMMARY
Agenda Subject Meeting Date:
Status report on ABAG Power & Community Aggregation 4/20/98 3:00 PM
Department Contact Person Phone Number
Public Works �.t�,� Steve Simmons 778 -4560
Cost of Proposal N/A Amount Budgeted N/A
Account Number
Attachments to Agenda Packet Item
1. Administrative report on Community Aggregation from San Mateo
2. ABAG Report on Community Aggregation and Special Programs
3. Graphs illustrating unbundled power charges and the Capital Transition Cost payoff schedule
4. Press Democrat newspaper article on the California Power Exchange opening
5. ABAG Power Newsletter
Summary Statement
The City Council approved joining the ABAG Power JPA in September of 1997 to aggregate
power and gas purchases for City facilities with the goal of saving 4% to 5% of annual utility
costs. The Council also at that time expressed an interest in community -wide aggregation. As of
April 1, 1998, ABAG Power began purchasing power for members from the power exchange. A
status report on what is happening around the state regarding community aggregation will be
given by Patricia Spangler, ABAG Power Program Manager.
Recommended City Council action
N/A
Submitted to Finance Director: Submitted to City Manager:
N/A
Today's Date File Code
4/7/98
Memorandum April 10, 1998
TO: Fred Stouder, City Manager
FROM: Steve Simmons, Public Works Superintendent
SUBJECT: Regarding ABAG Power Update
Background
The California Public Utilities Commission (CPUC) and State Legislature are
implementing a restructuring and deregulation of the electric utilities in the State (Gas
deregulation was done several years ago). Assembly Bill 1890 provided the basis for this
restructuring effort. The bill required a 10% reduction for small commercial and residential
customers 1/1/98, another 10% reduction 1/1/02, and a final 10% reduction 1/1/08. Large
business and Agricultural Customers will get a 30% reduction 1/1/02. The savings are a result
of AB 1890's schedule given to PG &E to divest itself of its high cost energy production facilities
and recover costs from bad investments it made. This 30% cost phase out is called the Capital
Transition Cost (CTC). Another result of AB 1890 is that it forced PG &E to unbundle its
electrical charge, or break it apart, and subjected these parts to competition. About half of the
remaining cost supports PG &E's distribution system maintenance meter reading, billing and
rebate programs. The other half is the actual cost of the electrical energy. This electrical energy
is sold on the open market by the Power Exchange (PX) to energy service providers such as
PG &E or ABAG Power.
The City of Petaluma along with 67 other agencies joined an ABAG sponsored Joint
Powers Authority last fall to aggregate power and allow purchase of electricity directly from the
power exchange (PX). Currently this JPA aggregation is for City facilities only. The City's
projected power savings will come as a result of ABAG Power purchasing electricity power from
the PX more cheaply than what PG &E currently charging its customers. Buying power from the
PX has been compared to playing the stock market. ABAG Power anticipates the City's
estimated saving should be 4% to 5% ($45,000) of our current total electrical bill of +$900,000.
I have attached several graphs, a current newspaper article from the Press Democrat and a
copy of ABAG Powers newsletter. Together they do a good job presenting the overall picture
regarding the state of California's electrical industry deregulation.
Current Status of Program
The latest word from the Association of Bay Area Governments (ABAG) is that their
power purchaser, Northern California Power Association (NCPA) began buying electricity from
the PX for ABAG Power on April 1, 1998. Buying was originally scheduled to begin January 1,
1998 but the Independent System Operator (ISO) and Power Exchange (PX) did not have all the
bugs worked out of their software (See attached article). I have received and distributed to the
City Finance Department a list from Arizona Public Service (ABAG Powers Billing Agent) of all
of the city's electrical accounts that are in the program. I also provided Finance with a password
and account number so our accounts can be accessed and grouped over the Internet.
Additionally, April 7, 1998, I receive from ABAG, for the City's review, an electric remote
access interval meter installation contract. As part of this program, or any direct access program,
accounts over 50 kw need to have remote access meter installed. It looks like we will need 6 of
these meters at + $800 each. I hope to have the meters installed within a month or two.
Accounts will be transferred from PG &E to Arizona Public Service (APS) on their read date in
April.
Community Aggregation
On the topic of community aggregation, I attended the ABAG community aggregation
committee meeting 3/20/98. In summary ABAG feels it is premature to embark on a City -wide
residential aggregation program, as the City aggregation program hasn't even gotten off the
ground yet. ABAG's feeling is that residential users have just received a 10% reduction and will
receive another reduction in 2002. The 4% to 5% that could be saved by buying power off the
power market would be eaten up by administering the program. ABAG recommends we wait
and see, how the market shakes out (see attached memo from ABAG Power dated 4/8/98).
ABAG noted that private aggregators haven't made a move on the residential market and that is a
good indication that the benefits aren't significant. ABAG suggests that if member cities were
interested in providing a program for economic development purposes that small to mid -size
business accounts could be targeted as a market. ABAG's feeling is that the larger companies
have the staff and expertise and probably have made their decisions already, but the smaller
businesses probably haven't. ABAG offered, at a cost of + $50,000 to the interested cities, to
come up with a marketing plan, sample contract and some training to the Cities community
development department. ABAG say they wouldn't be involved beyond that. The resulting
contract would be between the business and an energy service provider located in the private
sector. If the City is interested in participating in this program a letter of intent to participate in
funding a portion of the +/- $50,000 Cost needs to be sent to ABAG Power. If it is the Councils'
desire to pursue community aggregation at this time I would recommend hiring a consultant to
develop an RFP and contract with a energy service provider to implement the program for the
City. I have attached a copy of an Administrative Report from the City of San Mateo as an
example of options and costs associated with this type of program
cc: Gene Beatty
David Spillman