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Home My WebLink AboutRESO 5854.... ~" . 'I • • ORIGINAL RESOLtrrION HO. 5854 RESOLUTION OF THE COUNCIL OP TSE CITY OP PALO ALTO ADOPTING CERTAIN RATE MAKING AND SERVICE STANDARDS PORSW . .NT TO THE PUBLIC UTILITY REGULATORY POLICIES ACT OF 1978 MHEREAS, the City of Palo Alto Finance and Public works Collllllit- tee conducted a public hearing on October 28, 1960, in connection with the consideration~ dete-r.m.ina;tion, and adoption of certaln rate •akin9 and electric utility service standards pursuant to the Public Utility Regulatory Policies Act of 1978 (PURPA); ~nd WHEREAS, such public hearing was properly noticed in the Ti•ea Tribune and through notices in the electric utility billings in sub- stantial conformance with the procedural rules adopted by the City Council on Septe•ber 15, 1980, for conducting the PORPA hearinqsi and MBERk:AS, at the PORPA hearing held on October 28, 1~80, the Fi- nance and Public Works Cmu1ittee received evidence and heard testi- aony fro• the City Utility staff and from utility customers and their representatives~ and WHEREAS, the Finance and Public works Colll8ittee has sub•itted to the City Council all evidence and teatiaony received during the PURPA hearinq process, toqether with its recom11endations and findings re- garding the consideration, determination, and adoption cf the rate making and electric ut!!ity service standards set forth in PURPAJ NOif, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SBCTIOW l. The Council of the City of Palo Alto deteraines that it is appropriate to iepleinent, and shall iaq>leaent, the following rate making standards to carry out the purposes of the Public Utility Requlatory Policies Act of 1978 as set forth in Section 101 of the Act: (a) Cost of service. (b) Declining block rates. (c} TiMe of day rates. {d) Seasonal rat~s. (e) Load aana9ement techniques. SBC'l'IOll 2. The Council adopts findings for each of the rate aakinq etandarda aa set forth in Exhibit •A• attached bP.reto and by this reference incorporated herein. SBCTIOll 3. The Council determines that at the present time the •interrupt:ibie rates• standard is not appropriate to impieaent in the City of Palo Alto in order to carry out the purposes of PURPA for reasons set forth in Exhibit •A•. SICTIOlf 4. The Council detenaine• that adoption of the follow- ing electric utility service standards in tti. manner set !ort.h in Sshibit •a• attached hereto and by tbia reference incorporated beret~ is appropriate to carry OQt tbe purpoaea of PDRPA as •t.*ted in Sec- tion 101 of the Act, ia otherwi•e appropriate, and i• coneietent with otherwi .. applicable •tate lava (a} lla•tel!' .. tering. (b} Information to con•mMr•. (c) Procedures for terainstion of electric service. (4) Advertiaing. • • SECTION 4. standards stated forth in Exhibit rated herein. The Council adopts the electric utility service in Section 3 above and the related findings as set •e• attached hereto and by this reference incorpo- SECTION s. The Council determines that it is not appropriate to adopt the electric service standard entitled •Automatic Adjustment Clauses• for reasons set forth in the findings of Exhibit •a•. SECTION 6. The Council finds that none of the proviaions of this ordinance will have a signif ic~nt adverse environmental impact. INTRODOCBD AND PASSED: November 24, 1980 AlES: Eyerly. Fazzino, F'!etcher, Henderson. Levy, Renzel. Witherspoon NOES; None ABSTENTIO~S: None ABSEN'l': Brenner, Sher APPROVED: • • I COST OF SERVICE Findings: 1. Cost of service rates, especially marginal cost-based rates, en- courage conservation of energy in that such rates promote con- sume~ awareness of the high cost of new or future power supplies and the need to conserve. 2. Cost-based rates bre ~quitable since th~ rates paid by each class of conaJmere reflect the actual costs that each class im- poses on the electric system. 3. Cost-based rates optim\ze the efficient use of facilities and resources by the electric utility in that such ~ates are desiqn- ed to more closely reflect the actual cost differentials assoc- iated with operating different facilities a~d power resource~. 4. The City has historically based rates on the 4Verage or imbedded cost of service. 5. Marginal costs can only estimate future costs and to that extent are not as reliable as imbedded or current costs. Basing r~tes on ~arginal costs alone would likely result in revenues far in excess of the City's cost of service, since the City1 s present power supply source, the Central Valley Project, consists pri- lllarily of low cost hyrdoelectric power and energy. 6. A blending of the marginal cost and imbedded cost methodologies, within their attendant advantages1 in future rate deterainations will &ore effectively serve each of the PURPA goals of conserva- tion, efficiency, and equity. Findings: II DECLINING BLOC~ RATES 1. None of the City's retail electric rates reflect a rate for the energy component that decreases as kilowatt-hour consumption in- creases. (NOTB: Although the Cit~•s present rate schedule E-2 has a declining block structure, the energy colllpOnent i~self in- corporated in this rat~ design doe3 not decline with consuap- tion). 2. Declining energy rates with increased consWl!ption do not encour- age conservation in that such rates do not send a proper price signal to the consumer reflecting the higher cost of additional power supplies. 3. Declining energy rates are not equitable rates to electric con- SWRers in that such rates do not ref!ect the coat of service since the City is charged a flat energy rate under its current wholesale power agreement with the Western Area Power Adminis- tration, the City's present source of power ~nd energy. • • 4. Declining energy rates do not optimize the efficient use of utility facilities and resources in that such rates do not re- flect the true coat of service. 5. Since 1976, the City has progressively flattened its rate struc- tures and will continue to do so as cost of service studies in- dicate. Ill TIME OF DAY RATES Findings~ 1. Time of day rates encourage the conaervation of power provided that such rates tend to shift load shapes so that the City's peak demand is reduced as a result of the shift ir. load and thereby results in deferral of new planned capacity. 2. If time of day rates can be developed that will result in an overall reduction in load growth, such rates would tend to op- timi ze the efficiency of use of pres~nt facilities and re- sources. 3. Time of day rates, which tend to reflect the higher costs of power needed to meet peak demand, result in more equitable rates to electric consumers since customers are charged for the higher costs of supplemental power in proportion to their contribution to the system's peak demand. 4. The electric utility has committed to evaluate a range of load mw11a9ement techniques, including time of day rates. 5. Based upon the results of further studies and depending upon how power is marketed by the Western Area Power Administration dur- ing the 1980's, time of day rates may prove to be cost effective in Palo Alto. IV SEASONAL RATES Findingst 1. Seasonal rates tend to encourage the conservation ~f energy in that such rates are designed to reflect the actual cost of pro- viding powe according to season and thereby result in more ac- curate price signals to electric conswoers. 2. To the extent that seasonal rates lower peak demand during Palo Alto's temperature sensitive peakinq periods, such rates will encourage the most efficient use of the City's power resources and facii~ti~~ by reducing reliance upon less efficient and more expensive peaking sources. 3. Season rates, which follow the cost of service rate making prin- ciple in that such rates are designed to reflect the actual costs that vary by season, tends to encourage more equitable rates to electric consWl!ers. • • 4. Hot weather during the aumaer and early fall season in Palo Alto has a direct effect on the energy use pattern of the consumer. 5. The cost to the City of providing service varies seasonally as purchased power costs historically rise due to lower load fac- tors experienced during warm weather months. v INTERRUPTIBLE RATES Findings: 1. Interruptible rates tend tc encourage conservation of energy in that the utility is able to curtail a portion of its load during periods of peak demand resulting in customers foregoing that energy consW!lption. 2. Interruptible rates t.end to encourage the optimization of the efficient use of facilities and resources by the utility in that the utility•s ability to drop interr1ptible custo111ers during periods of peak demand results in a higher and more efficient load factor and minimi~es the need for inefficient peaking sources. 3. Interruptible rates tend to encourage equitable rates to elec- tric consUnters in that such rates offer a customer a lower rate reflecting a lower level of service to these customers. 4. Up to the present time, no utility customer has expressed an interest in an int~rruptible rate. 5. The Electric Utility would not likely curtail service to a po- tential interruptible customer until 1984-85. 6. Interruptible rates should not be implemented until the utility•s peak de•and approache3 its contractual limit of 175 11.egawatts. VI LOAD MANAGEMENT Findings: 1. Load management techniques may encourage the conservation of energy to the extent that such techniques can effectively modify power usage and cause a decrease in the peak demand of the elec- tric utility. 2. Load mana9e•ent techniques will encourage the opti•ization of the efficient u•e of facilities and resources by the electric utility to the extent that such techniques are a cost effective •etbod of reducing the utility's peak deaand. 3. Load mana9ement techniques will er.courage equitable rates to electric consumer& to the extent that such techniques result in the loweri~9 of the coetg of providin9 such service to ~n aumers. 4. The electric utility has co .. itted to evaluate a range of energy and ~apacity load •an~geaent techniques and to implement those technique• ¥hich prove to be cost effective. • • EXHIBIT •s• I MASTER METERING 1. Master metering makes it difficult for individual occupants to monitor their electric energy use in th~ units they occupy. 2. Separate metering allows those customet·s who conserve to benefit -directly from lower utility costs while those not conserving bear the costs appropriate to their level of usage. 3. Kaster metering may not be cost effective or feasible for all new construction and in all circumstances. 4. Adoption of this standard is likely to further the three pur- poses of PURPA: conservation, efficiency, and equitable rates. II INFORMATION TO CONSUMERS Findings: 1. Well informed consumers is a desirable goal in the face of the longrun rise in energy costs. Availability of information about rat~s, conservation. and service practice policies is conaide~ed effective in promoting conservation, the efficient uae of facil- ities and resources, and equity a111on9 consumers. 2. The utility's current plans and practices re9ardin9 con&Wller in- for111ation are consistent with this standard except that inforaa- tion on proposed rate schedules is made available to the public ir. staff reports rather than thro119h a utility bill Mailing. 3. The administrative costs to supply additional information on propos~d rate schedules would be burdensome and unwarranted in view of the fact that electric utility rates are set by the City Council by .:esolution in properly-noticed public aeetin9s. III PROCEDURES POR TERMINATION Of SERVICE Findings: 14 This standa~d insures that consumers receive reasonable notice and equitable consideration before service is te~minat~d. 2. The City's current procedures are in compliance with this stan- dard end with exi•ting California state law. . . . • • IV ADVERTISING Findings: 1. Promotional advertising is not practiced by the City and is con- trary to conservation objectives. 2. The City does not engage in political advertising. 3. The City is currently in compliance with this standard and adop- tion of this standard may assist in furthtring the three PURPA goals of conservation, efficiency, and equity. v AUTOMATIC ADJUSTMENT CLAUSES Findings: 1. The objective of this PURPA standard is to establish some basic criteria by which regulatory authorities should evaluate automa- tic adjustment clauses when used. 2. rhe City electric utility is presently not subject to frequent wholesale power rate increases due to increases in the cost of fuel. 3. Because the City does not utilize an automatic fuel adjustment clause in its electric tariffs, this standard is not appropriate tn adopt in Palo Alto. • \ • Offfee of -. C1t;J ClM"t {411) 3!9-871 tsintt It t of .... fl'I tM Urbn Dlwel........_ SM ,.._, ... Ar.a Offfce -.......... c.ur. S.1t• 1100 SM h'acitc.o; Ca11fornta M111 Ill." Stf': st ...... 1y. • .. j • ' l l l I l l l I I -I I