HomeMy WebLinkAboutRESO 9206Resolution No. 9206
Resolution of the Council of the City of Palo Alto Approving
Renaming the Calaveras Reserve to the Electric Special
Project Reserve and Adoption of Electric Special Project
Reserve Guidelines
WHEREAS, the Calaveras Reserve was first established in 1983 to help defray cost
associated with the Calaveras Hydroelectric Project;
WHEREAS, in 1996 anticipation of deregulation of the California electricity market,
Council changed the purpose of the Calaveras Reserve to cover potential stranded costs
associated with the Calaveras Hydroelectric Project, Seattle City Light Exchange contract,
California Oregon Transmission Project and Washington Water Power contract;
WHEREAS, in 1997 Council authorized the collection of a competitive transition
surcharge from the City of Palo Alto's Utilities Department (CPAU) electric customers to cover
stranded costs in the event CP AU customers elected to receive electric supply services from
other providers;
WHEREAS, in 1999 Council stopped the collection of the competitive transition
surcharge as the Calaveras Reserve was fully funded at $71 million and established the Calaveras
Reserve Target and Guidelines with a schedule to drawdown funds;
WHEREAS, in 2009 Council approved new Calaveras Reserve guidelines which
required the annual calculation of short-term stranded cost to determine minimum transfer to the
operating budget based; the annual calculation of long-term stranded cost; and the identification
of funds available for special projects to the benefit of electric ratepayers;
WHEREAS, at its July 20, 2011 Utilities Advisory Commission (UAC) staff
presented a proposal to clarify how much Calaveras Reserve would be available to transfer to the
operating budget cover short-term operating cots versus funding for future electric special
projects and the UAC unanimously voted (with Commissioner James Cook absent) to transfer all
of the Calaveras Reserve to a new Electric Special Project Reserve to fund projects to the benefit
of electric ratepayers;
WHEREAS, consistent with the UAC's direction, staff presented at the September
20,2011 Finance Committee meeting a proposal to rename the Calaveras Reserve to the Electric
Special Project Reserve and proposed new guidelines to manage the reserve and the Finance
Committee voted 4 to ° in support staffs recommendation with modifications; and
NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE
as follows:
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SECTION 1. The Council hereby adopts the Resolution as follows:
1. Change the purpose of the Calaveras Reserve from partially funding above market
electric costs and partially funding projects that benefit electric ratepayers to
entirely funding projects that benefit electric ratepayers;
2. Rename the Calaveras Reserve as the Electric Special Project (ESP) Reserve; and
3. Adopt the following ESP Reserve guidelines:
a. The purpose of the ESP Reserve is fund projects that benefit electric
ratepayers;
b. The ESP Reserve funds must be used for projects of significant impact;
c. Projects proposed for funding must demonstrate a need and value to
electric ratepayers. The projects must have verifiable value and must not
be speculative, or he high-risk in nature;
d. Projects proposed for funding must be substantial in size, requiring
funding of at least $1 million;
·e. Identify the preferred projects to be funded by the ESP Reserve by end of
FY 2015;
f. Any uncommitted funds remaining at the end of FY 2020 will be
transferred to the Electric Supply Rate Stabilization Reserve and the ESP
Reserve will be closed; and
g. Funds may be used for analysis and pilot projects which would be the
basis for planned large projects.
4. Staff will identify a process and criteria (e.g., economic) for identifying eligible
projects.
SECTION 2. The Council finds that any revenue derived from the authorized
adoption enumerated herein shall be used only for the purpose set forth in Article VII, Section 2,
of the Charter of the City of Palo Alto.
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