HomeMy WebLinkAboutAgenda Bill 3.B 08/16/20044
'ITVOFPFTAI[.ITUA (AT_TIWnVNIAa
AGENDA BILL August 16, 2.1-1k
Ag eri M Title: Resolution Authorizing City Manager To Exec
Meeting Date: August 16, 2004
Agreement With ABAG 'Power T&Wind Up Electric Program
Meeting Time: ® 3:00 PM
❑ 1 7:00 PM
Category (check one): FTConsent Oflendar ❑ Public Hearing ❑ New Business
F1, Vnfinished Business, ❑ Pr
.Department:
Director;
Contaiz't?erson:'
Phone. Number:
Water Resources &
Michael Ban P*:t.
Mic'Lel,Baft,,
18-
Conservation
Cost of Proposal:, Not applicable.
Account Number: Not applicable
Amount Budgeted: Not.applicable
Name of Fund- Not applicable
Attachments to Agenda Packet Item,
Resolution
AgendaReport
Attachment A — Wind Up Agreement
Summary Statement:, Now that AgAGPiowet. has r eached a settlement with PG &E, it is proposing to
return funds to its members, incl'uding,Petaiuma, through a Wind Up Agreement. Petaluma's amount is
approximately $582,373.
Recommended City Council Action /Suggested Motion: City Management recommends the City
'Council, by authorize the City
y Manage'r to" execute an agreement with ABAG Power for the
'
purpose of receiving a' calculated distribution.amount of approximately $582,373, under a Wind
- settlement
Up Agreement: "
RexLkwed bv FfiiAnce Eiif&6 r
Review �e*i bv OW - &tQ ev-
A
Approved by!00
Dke�
A� Date.'
- J 2'9 2004,.
UL
TWOOs'Daie: July 19, 2004"
Revisi kand D:�te'Revised.- -
File Code:
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WHEREAS the City of Petaluma was a member of the ABAG Power Electric
Aggregation Program
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WHEREAS as a result of the
California energy crisis;, 'the ABAG Power Electric
Aggregation Pro am was °sus ended , on June 3D 2001
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WHEREAS, at the time of the Electric Aggregation Program's suspension, ABAG
Power retained certain funds from its members including the City of Petaluma, to cover
Potential operating expenses, as well as program wind up costs,;
WHEREAS, ABAG .Pow
WH er filed, a claim in, the PG &E bankruptcy case ;on behalf of
Electric Program members taTecover funds associated
with Direct Access credits that
PG &E had refused to pay. in the months leading_ up to i'ts ;bankruptcy filing;
WHEREAS, ABAG.Power has reached_a settlement with PG &E;.
WHEREAS, ABAG Power has received ;authorization- from its Board of Directors to
windup the program and: distribute remaining fund's to members, while at the same time
passing any remaining risks to members as well;
NOW BE that'
y etaluma Cit, ..Council
ITT RESOLVEID b
the P' y
1. The City' Manager is authorized to execute a Wind,"Up Agreement with ABAG
Power subject to the'review and approval of the City'Attorney.
2. This resolution shall become effective immediatel
3. All portions ,ofthis resolution are severable. Should any 'individual component of
this resolution be adjudged to be invalid and unenforceable by a body of
^ on
. P � then the remaining resolution portions shall be and
competent Jurisdiction.,
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continue in full force and effect;, except as to those resolution portions that have
been adjudge invalid: The City, Council of the, City of Petaluma, hereby declares
that it would have adopted this resolution .and each section, subsection, clause,
sentence; phrase and other.porti'on thereof, irrespective of the fact that one or
more 'section subsection, clause sentence, phrase or other, portion may be held
- invalid; or unconstitutional.
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ETALUIVIA
CITY OF P ,, CALIFORNIA
AUGUST 16 2004
AGENDA REPORT
FOR
RESOLUTION'AUTHORIZING CITY MANAGER TO E XECUTE AGREEMENT WITH ABA
POWER TO. WIND U P ELECTRIC PROGRAM
1 • E XECUTIVE SUMMARY
members including, hed a settlement with PG &E, it i
Now that ABAG Power has�reac
is proposing to return funds to its
g.Petaluma, through a Wind Up Agreement. Petaluma's amount is approximately
$582,373.
C ity Management recommends the City Council; by authorize °the City Manager to execute
an agreement with ABAG Power for�the purpose of receiving a calculated settlement distribution
amount of approximately $582,373, under a Wind Up Agreement.
2. BACKGROUND
ABAG Publicl' Owned Ener Resources ABAG Power),''
Y gY ( is a Joint Powers Agency created by the
Association of Bay Area Governments (ABAG) in l '9.98 to prov>de electric and natural gas aggregation
services to local governments in,PG &E's service territory. The City of Petaluma was a member of the
ABAG Power JPA, and was also a participant in the
- Electric Aggregation Program. As a result of the
California" energy crisis, the Electric Aggregation Program was suspended in June 2001, and all of the
City's electric accounts were returned to PG &E. At the "time 'the program was suspended, the City had
$196,030 on deposit with ABAG Power. These deposits.. were, collected at various times throughout the
program and included as part;of the:erectric utility invoices.. "To date, these funds have been held by
ABAG Power to cover potential operating expenses of the program, as well as program wind up costs.
ABAG Power now proposes to return these funds.
members to recover funds associated with Direct Access° D ankru tcy case on behalf of
Separat c P rogram
e" from the deposit funds, ABAG Power filed a claim in the PG&E p
refused to ( A) credits that PG&E had
�g energy ratestthat o� cnrredin 2000 /2001: b ABAG. Power has subsequently A credits; were a result of the
g P p Y g
'high. en b reached a stipulated
A detailed explanation of the DA Credit: was;.provided by ABAG Power as follows:
"In the past when.ABA'G has been asked to.�explain the terms "DA Credit" a_ nd''CTC Credit" ABAG has provided the
following, general response:.
There are three ierins_that are often used interchangeably:
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settle men - t as to the amount of the claim ($17,00.0,000). The -City's proportional share of
this, claim, (in 1'ud> gEnterest) is $386,344., Jn addition to these amounts, ABAG Power expects to have
a small surplus of,funds at the'co npletion of the windup. The City's proportional share of this surplus MW
Will be calculated in accordance with the�Wind`Up Agreement and distributed by 'March 3'l, 2005.
Certain amounts.from,the ABAG'Power,;Electri cAggregat ion. Program; =remain, on deposit with the
Northern California Power Agency (NCPA) to cover Credit risks associated with energy purchased .
through the Independent Systems Operator (ISO) and. CahforniaPower Exchange (PX): These amounts
remain un ecoveredAue to court actions related to the PX bankruptcy and the Federal;Energy
Regulatory Commission (FERC) regulatory actions related to potential ISO refunds:, Should these
amounts be recovered, they will be proportionally distributed to former ABAG' power Electric Program
members.
The Wind.Up Agreement requires that certain risks be transferred frorn.ABAG,Power to its members,
including the City °of Petaluma. These ri sks are summarized as follows:
a.. Risk that PG &E or other agency (e'.g ISO):may t ,y to collect,charges from billing periods
When the City's accounts were part of the ABAG Power program.
b.
Risk that 'the CPUC may at some time a,surcharge on former Direct Access
customers.
the C TC (Compet tive TransitionC-harge) Credit. The CTC was originally intend as a'temporary`cha ge ao'be used to pay off
"stranded assets ".
2. PX Credit:, This represents the Utilities' actual cost of electricity. Because Direct Access (DA) customers ,(such as ABAG
POWER.
members)' were receiving their electricity from an entity other, than the`utility -they were�credited:back'this.amou_nt ,
Although', customers still needed to pay the utilities for " nonbypassable charges" (e.g.-
transmission,and distribution•charges, public purpose program fees, etc.).
3. DA (Direct.P,ecess) Credit. People use this term in different ways, but' - mostly it refers to the negative ,bills'that resulted
from high: CTC credits.
These, terms arei:relked as follows:
Under previous CPUC' approved regulations the amount'tha _DA customers were required to pay to the utilities could be
calculated „as follows:
DA,Customer Payment to Utili ty [ Total of all nonbypassable charges]'plus. [Competitive Transition Charge
Also by CPUC're,gulation the CTC was calculated as follows:'
CTC = [Regulated (fixed) rate] mums [Noribypassable charges] minus [PX Credit]
You tan see with thi's second' calculation that when the actual' cost ofenergy (PX Credit becomes very high, 'the CTC'
becomes negative (i.e. CTC Credit)'. You can . see ;from''the: first 'calculation that if;energy costs go eve H the - negative
CTC (CTC credit) will eventually cause the amount to be paid to the Utility to be;negafive (i.e.,DA Credit). This is what
” occurred fovseveral;inonths'mi 2000 -01.., .The iaccuinulation of these DA Credits is what ,accounted for POWER's.
claim in PG&E's bankruptcy."
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c. Risk ,that the. amounts on deposit.with NC PA are; r'sufficient`to cover future credit
requirements with ISO and/or PX.
3.• ALTARNATIVES
Alternatives available for this action item include:
a. Authorize resolution.
b. Direct City Management to take action..'
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4. FINANCIAL IMPACTS
Approva of the Wind Vp Agreement will make the Cityof Petaluma eligible to receive the following
amounts:
Return of Previous Deposits $196030
Direct Access Credit $3386,344
Total $582,373;
A review of ABAG Power invoices indicates payments for electric utility usage were generally•divided
as follows: 30 % General Fund, 59 Wastewater Enterprise Fund, -and .11% Water Enterprise Fund.
Therefore it is recommended the Deposits and DA'Credit refunds be returned in proportion to electric
utility use as follows: -"
Fund
% of Electric Usage
Allocation From Direct Access
Credit
General Fund
30%
$174,712
Wastewater'Ente; " ri§e Fund
59 %
$343,601
Water Enterprise'Fund
11 ° /a'
$64,060
Total _.
100 %
$582,313
City ^will rec_eive'one check in the amount of $582373
Thee , . Under this recommendation, atotal of
$1!4',712 will b&retumned to.ihe General.Fund; $343,601 will be'returned to the Wastewater Enterprise
Fund and $64 ill be returned to the Water Enterprise Fund.
5. CoNCLUgioN
Now that ABAG Power has reached a settlement with PG &E' i.t is appropriate for ABAG Power to
return previous ;deposits and direct access credits to its members, including the City of Petaluma.
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6. OUTCOMES OR PERFORMANCE "ME ASUREMENTS'THAT WILL IDENT- WY;SUCCESS OR
COMPLETION:
Once the resolution is. approved, 'City Management will execute the Agreement with ABAG, a check in
the amount of approximately $582,373 will°be issued to the City and distributed to the >appropriate City
funds.
7. RECOIGIMENDATION
City Management recommends the7 City Council, byxesolution, authorize the City Manager to execute,
an agreement with ABAG Power for the purpose of receiving a' alculated settlement distribution
amount of approximately $582,373, under a Wind Up Agreement.
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