HomeMy WebLinkAbout1982-09-14 City Council Summary MinutesCITY
COUNCIL
M(MUTEc
ITEM
CITY
PALO
ALTO
Adjourned Meeting of
Monday, September 13, 1982
(September 14, 1982)
Item #4, Calaveras Hydroelectric Project
Adjournment in Memory of Former Mayor Clifford
Simpson
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Adjourned Meeting of
September 13, 1982
(September 14, 1982)
ADJOURNED MEETING OF SEPTEMBER 13, 1982
The City Council of the City of Pal o Al to met on Tuesday,
September 14, in the . Council Chambers at City Hal l , 250 Hamil ton
Avenue, at 7:30 p.m. in the adjourned meeting of September 13,
1982.
PRESENT: Bechtel (arrived at 7:33 p.m.) , Cobb, Eyerly,
Fletcher, Klein, Levy, Renzel , Witherspoon
ABSENT: Fazzino
ITEM #4, CALAVERAS HYDROELECTRIC PROJECT
Mayor Eyerly introduced Steve Fel te, Director of the Cal averas
County Water District.
Mayor Eyerly said that the Calaveras Project was the only item
left on the agenda. He suggested that in addressing the project,
Council first talk about the project itself. He hoped the motion
would be to approve participation in the project and the -ordinance
supporting it, and that the debate regarding at what percentage
the Council might be interested would follow. Staff recommended
participation at a 10 percent level , and he wanted to convince the
Council to use its full entitlement of 22.9 percent.
Director of Utilities Edward Aghjayan said that Mayor Eyerly was
correct that the economic decision to be made by the Council was
significant. The third phase agreement was, in essence, a binding
agreement to become involved in the project. There were some off
ramps stated, but they were not off ramps the City could easily
get on. The Council should look at the agreement as a final com-
mitment to the project. Hopefully, the Council would gain concur-
rence about whether the City should be in the project and then
address the issue of the ordinance as it related to the level of
participation. He introduced Frank Betley, Utilities Department
Principal Engineer who would review the project.
Principal Engineer Frank Betley said he would go through a general
description of the project, the need for the project, and a number
Of the project elements He said the project was initiated in
1963 when the first Federal Energy Regulatory Commission (FERC)
license was submitted for a 321 megawatt (mw) project by the
Calaveras County Water District. Numerous utilities were involved
in the project between 1963. and 1973., including the . Sacramento
Municipal Utility District > and Pacific Gas and Electric Company
(PG1E). The Initial license was not followed through and the
project was idle -: for several years.; In 1973, , the project was
revitalized by 0.11ity interests. He noted that that was the time
when the oil cri Os began and numerous projects which had not been
pursued in the past ,were beginning to be pursued again. In 1976,
the Northern California Power Agency (bCPA), and Palo Alto through
NCPA, became involved in the project. In 1977, a Meakorandum of
Understanding was signed between the Cal averas County Water
District and NCPA, and the City Council approved that agreement.
In 1978, the Calaveras County Water District filed a FERC license
for the present project which was a 200 mw project —considerably
smaller than the original 321 mw project. The power purchaser was
intended to be NCPA. In 1980, a Phase II agreement was approved
which basically furthered the agreement between Calaveras and NCPA
in terms of future development of the project. It deal t with how
a third phase agreement would be presented. In January of 1982,
the FERC license was issued. September of 1982 was the final
project schedule. Basically what would initiate project activity
was approval of the Phase III agreement. In January 1983, depen-
dent upon the status of some lawsuits filed against the license ,
ideally that would be the first sale of project bonds, which would
be sold throughout the construction period. The period between
January, 1983 and January, 1987 was envisioned to be the engi-
neering, design and construction period. In January 1987, it was
anticipated that the project operation would commence. In January
of 2013, assuming they were 30 -year general bonds let for the
project, the bonds would !Ye amortized, which would have more
significance when discussing the economic area. In the year 2032,
the initial project license would expire --the project was issued a
50 -year license.
Mr. Aghj cyan said that si nce the FERC license was issued, two
court appeals were fi 1 ed- - one by PG&E, and the other by Friends of
the River. Staff sensed that PG&E's concerns, which were monetary
concerns for facilities that they had in the area that would be
taken over, could be worked out. The concerns expressed by
Friends of the River would result in court hearings . Staff's best
esti mate about the ti me tabl e to cl ear those appeal s woul d be any-
where from four months to fourteen months. In tal king to the NCPA
General Manager, he felt they could get an expedited process by
summer of 1983, and have the clearance to proceed. It would not
make such sense to proceed wi th the proj ect unti 1 al 1 the appeal s
were dealt with. It was not an unusual situation, but it woul d
throw the time table off by approximately six months.
Mr. Betley addressed the general need for the project by saying
that Palo Alto's total load forecast, as well as the load antici-
pated to be supplied by the Western Area Power Admi ni strati on
(WAPA), and the supplemental requirements assuming a 10 percent
participation in the Calaveras Project, would yield the City 20
megawatts, and would meet the City' s requirements until the year
1992. A larger percentage of participation would obviously take
the City out further. The City was currently involved in projects
with WAPA, which was the City's primary supply, the Calaveras
County Water District (CCWD) alternative, which was being antici-
pated tonight, the Feather River Project, which was very tenuous
at thi s time, and the Water Treatment Plant Cogeneration Facil ity,
which was a substantial facility in terms of economic value, but
was a relatively small facility in terms of project contribution.
Mr. Aghj ayan added that the City had commi tted fairly extensive
sums of money to those projects to participate in the development.
In the cogeneration plant, the City was involved in feasibility
studies and had awarded a consultant contract. he said there were
NCPA Member Service Agreements for both CCWD and Feather Rivera
He stressed that other projects were being looked at, but were not
included in that list because no agreements had, been signed.
Mr. Betley said the City's present 1 oad was about 162 megawatts
which was hit thi s summer, and .the WAPA 175 megawatt allocation
was depicted as a 10 percent share of CCWDt, When accounting for
losses and when it was actool 1y delivered to the City, it boiled
down to about 19.2 megawatts_. An ideal power planning 'Situation,
would supply a 10 to 11 megawatt load every several years and
would ideally match the City's load requirements from a capacity
perspective. From an energy perspective, a large portion of . the
energy would be served by WAPAt. and CCWD was depicted at a 10 and
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a 22 percent level and again, there was a stair step approach to
meeting energy requirements
Mr. Betley said the_ project was located on the' North Fork of the
Stani sl aus River in Cal averas County, Cal i forni a . The anti ci pa ted
energy output of the project was 515,000 megawatt hours annually,
and it would have a capacity of approximately 200,000 kilowatts,
The general purpose of the project was to provide energy to NCPA,
and provide a means of financing a long term water supply for
Cal averas County. The major components of the proj ect were the
enlargement of Spicer Meadow Dam and Reservoir, the construction
of three diversion dams, three tunnels, two power plants, and an
after bay. There was an existing dam, owned by PG&E, with a
reservoir and with a surface area of approximately 220 acres. It
was proposed that a new dam be constructed approximately 240 feet
high, rock filled, and the new surface area of approximately 2,000
acres. Water would then be released down Highland Creek back into
the North Fork of the Stanislaus, down to McKay's Point,, and at
McKay's Point there was a 170 foot concrete arch dam proposed,
with . a small amount of capacity and approximately 40 acres. In
addition, and adjacent to McKay's Point there was the Beaver Creek
diversion dam. At Beaver Creek, was an existing PG&E facility dam
which would be removed during the implementation of the proj ect
and be replaced a little further down stream with a 15 foot high
concrete weir. It would be a relatively small storage area --
approximately five acres. The water would then be diverted from
McKay Point Dam down a 40,000 foot long tunnel which would be 17
feet in diameter to a dock roughly 10.5 feet in diameter and about
6,000 feet long. It would drop it down to the Collierville Power
Plant, which was a site 4 number of Councilmembers visited, and
was located at a p1 ace eel 1 ed Cl ark Fl at sl ightl y bel ow the con -
fl uence of the North aid ;Mi ddle Fork of the Stani si aus Ri ver, The
Collierville Power Plant would contain two, 100 megawatt turbine
generating units. The water would then be rerel eased back into
the Stani sl aus River sl i ghtly above the existing PG&E Stanislaus
Power House. Approximately one quarter mile downstream from that
1 ocation a 53 foot concrete gravity dam would be constructed,
which would be known as the Collierville After Bay Dam. Its pur-
pose was for rereg ul ati on of power pl ant affl uent fl ows and ri ver
flows. basically to smooth out the flow of water downstream to
allow white water rafting in the seasons which New Mel ones Dam
would permit.
Mr. Betley said there were three prime environmental issues. One
was the enlarged Spicer Meadow Reservoir and the implication was
the flooding of, Gavit Meadow. Approximately 140 acres of a wet-
land known as Gavit Meadow would be inundated as well as approxi-
mately 60 acres of adj acent wetland. One mitigation measure would
be to increase the water table and establishment of a repairing
vegetation along 200 acres of other meadows in the area --basically
an improvement of meadows. The second environmental issue
involved the modified stream fl ows in Highland Creek in the North
Fork of the Stanislaus River. It was a matter of perspective as
to how the alteration there affected things. Right now, the flows
in those rivers in the summertime were about 20 to 30 CFS at best
and the average annual flows were about ,300 to 400 CFS which
ideally. wool d increase the recreational opportunities as well as
the trout habitat in the river. Finally, the Colliery il 1 a Power
Plant implication was on the potential white water rafting down-
stream. The purpose of the after bay was to reregul ate fl ows to
allow rafting. When New Mel ones was full, no white water rafting
would be available. Regarding permitting, all major federal ,
state, -and local permits had been obtained. There were some
permits --local building permits --that would neells to be obtained as
the project proceeded. Looking in detail at projedt _ costs, the
total project •i_nvestment, which included total fixed costs, 10
percent engineering fee, and 15, percent in contingency, was
roughly $339 million. The total financing requrement was approxi-
mately $570 million, which assumed a 13 percent, 30 -year bond; In
analyzing the project, that was one of the scenarios analyzed.
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Numerous scenarios were analyzed as described in the staff report,
and basically a sensitivity analysis was performed. There were
four variables in the sensi tivity analysis. The bond rate was
varied --they looked at 11 percent and 13 percent bond rates, and
they looked at power lay off rates. In the early years of the
project, NCPA members and/or Palo Alto would not need the full
output of the project, and the power would be laid off to some
other entity. Realizing that they were not sure what the lay off
rate would be, they took everything from the most optimistic to a
pessimistic look at the lay-off rates. They looked at the
potential for a cost overrun, and performed one anal ysi e in which
it was assumed that the total project cost, including financing,
would override 50 percent, and looked at the impact on the City's
rate structure and what the total debt would be. The 1 ast
variable was the participation percentage. The numbers were com-
puted in such a way that all the numbers were based on a 10 per-
cent participation scenario. A number of indicators were com-
puted, i ncl uding the annual loss or gain to the City in terms of
dollars for participation in the project, a cumulative loss or
gain, the net value of the annual loss or gain in 1982 dollars as
wel 1 as the cumul ati ve net present val ue , pay bac k, rate of
return, and finally the effect on the City of Palo Alto's retail
rate.
Case 1 was a set of scenari os that analyzed the project at a 13
percent bonding rate. There were three lay-off. rates --optimistic,
pessimistic and real i s ti c-- one for each of the 13 percent bond
rates. Case 2 was done at a 11 percent bond rate, with varying
lay-off rates. Case 3 was performed at a 13 percent bond rate, a
realistic lay-off rate and a 50 percent total cost overrun.
Mr. Betley said the City would not be able to utilize the whole
output of the project in the early years, and wanted to sell it
off. For example, in the year 10 of the project, if the City was
in it for 20 megawatts, it may need 15 megawatts and would want to
sel 1 off fi ve megawatts. Those coul d be sol d at any number of
rates. They could be sold at cost ideal i sti cal 1 y so that the City
would incur no loss for the sale of the proj ect power. If the
project power cost 10 cents a kilowatt hour, the City may be able
to sel 1 it for 10 cents. More realistically, it might be sold a
little below cost which would use the PG&E thermal rate. Staff
felt comfortable with that rate because it was realistic. The
thermal rate was the average of the production costs of all
thermal plants in the PG&E system. Finally, the PG&E R-1 rate was
basscal 1y what the City of Palo Alto would buy. It would pay for
power today from PG&E if the City were a full requirements custo-
mer.
Mr. Aghjayan added that the R-1 rate represented the market rate
for whol esal e power by PG&E in the area. Since a number of enti -
ties bought from PG&E, that was the competition. . The thermal
rate, which was a 1 i ttl a higher, represented what it cost PG&E to
generate electricity from its thermal power plants some of which
were not that efficient and would not be in use unless they had to
buy the power. Theoretically, PG&E should economically buy from
the City at a 1 i ttl e bel ow that rate or at approximates y the
thermal rate because it would save them money. They did not know
what the market would be when that power become avail able, and
assumptions had to be made in drawing the economic curves. The
thermal rate was used because it was the middle rate, and that was
probably what the City could end up selling the power for.
Counc i 1 member Levy asked if thermal meant geothermal.
Mr. Aghjayan responded that it included geothermal , but really
meant fossil fired plants.
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Mr. Betley said that economic indicators were developed for the
payback period, rate of return, and net present value for the
project, for each of the seven scenarios investigated. Dependent
upon what was assumed in terms of bond rates or cost overruns,
those economic indicators did different things.
He said they looked at alternative Palo Alto participation per-
centages. What that meant in terms of total economic commitment
to the City on Case 1-A, which was a 13 percent bond rate, for 30
years, was basically a $570 million total project cost at a 10
percent level of participatio for Palo Alto, which meant an esti-
mated capital commitment of approximately $57 million. For the
various levels of Palo Alto participation, it could be seen that
the estimated capital commitment varied. They estimated the
impact of two cases on the City of Palo Alto retail rates. In
1987, the first year the project would be operational , at a 10
percent participation, the City could anticipate a retail rate
increase of 2 percent as a result of participation in the
Calaveras Project. In 1995, the City would anticipate a 1.3 per-
cent rate decrease, 1.7 percent in the year 2010, and in the year
2015, it dropped 2.9 percent. Case 3 was the 50 percent total
project cost overrun, with bonds at 13 percent. The first year,
the City's rates would increase 7.5 percent, and in 1995, they
would be up 1.6 percent, and would decrease down 2.5 percent in
the year 2015. For each of the scenarios, that information was
presented in the appendix to the staff report.
Mr. Aghjayan clarified that if Case 3 came into being, which was a
50 percent cost overrun, he stopped short of saying that was a
worst case. The City would have to raise all of its rates the
first year by 7.5 percent in order to pay for the cost of
Calaveras. It would be so expensive at that point that the City
would be unable to sell at anything but a heavy loss. He said
that amount would expand,: dependent upon the level of participa-
tion. By the same token, the benefits also stayed low at the
lower level of participation. In that case, in the year 2015, the
City's rates would be 2.5 percent lower. The City would experi-
ence heavy impact the first year, and as the years went by --
because of hydropower --that rate remained relatively steady, and
as other inflation impacted the R-1 rate from PG&E, it would get
to be less of a burden each year.
Councilmember Cobb asked if those percentages were all off today's
base frame, or were they cumulative percentages.
Mr. Betley said those were in the respective year. In the year
1995, assuming five percent. or a negative .65 percent, that was
what the 1995 rate would. be. They projected the 1995 rate without
participation and then projected what it would be with participa-
tion in the project.
Mr. Aghjayan said that in 1987, since they projected $30 million
annual revenues .compared to $20 million now, that was $2,22`,000
million at the 10 percent level.
Councilmember Witherspoon clarified that the lay-off rates ' were
factored in those figures. She asked if it had been factored in
that if the City did not do this, it would have to buy PG&E power
or some other source.
Mr. Betley said yes. The seven scenarios were done, and the way
it was determined whether the rates would go up or down was that
they compared all seven scenarios one at a time to a base _case.
The base case assumed that the City would not get involved in the
power project, and in fact, WAPA would serve part of the, City's
requirements, and all requirements would be served et the PG&E R-1
rate. Anything which was more or less than that was as a result
of lay off rates 'and different bonding rates.
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Councilmember Levy clarified that if the City made the $57 mil lion
capital commitment, for a 10 percent participation, the net result
would be that the rates to Palo Al to rate -payers would be two
percent less in the year 2010, one percent less in 1995, and two
percent more in 1987.
Mr. Betley said 'yes .
Councilmember Levy clarified that the City was going through all
that for a net savings of one or two percent in those years.
Mr. Betley said yes. In percentage it was a small number, but the
dollars were substantial .
Councilmember Renzel clarified that the progression between 1987
and 1995 would more or less be from a plus two percent to a minus
130 in increments.
Mr. Betley said that was correct. For case 1-A, the first year
was two percent greater, and gradually went down to .1, and every
year after that the rates decreased. In 2013, which was the last
year, the City's rates would only be 1.9 percent less, but $13
million in total dollars. It represented $625,000 in net value
perspecti ve. The percentages appeared small , but the numbers were
substantial in terms of dollars.
Councilmember Renzel asked i f the percentages were the overal
rates that citizens would pay or was i t the rate the City would
pay for the particular power.
Mr. Betley said it was the rate the citizens would actually pay.
He clarified that operations and maintenance costs, with their
associated escalations, were incorporated. The City of Palo
Alto's wholesale rate would not go up two percent-- the retail rate
to the rate payer would go up two percent.
Councilmember Renzel clarified that after the year 1992, the City
would lower its rates ever year.
Mr. Betley said the City would not necessarily lower its rates.
The rates would be 1.8 percent lower than they would have been i f
the City went with another al ternati ve for the base case.
Mr. Aghjayan said it was difficult to evaluate the marginal eco-
nomics of the project by looking at the small incremental savings.
They were tal king one and two percent of al i of the City' s rates,
all sources of supply, and all of the City's costs built i n .
Under those conditions, in that year, Calaveras at 20 megawatts
would just be a small portion of the City' s total needs. The
chart indicated what the impact would be on the City's total rate
structure if the investment was good, and what the impact would be
if the investment was not good in order for the Council to know
the inpac t on the customer .
Councilmember Levy asked if computing the data assumed that the
bonds would be sold on a staggered basis. He understood that if
the bonds were sold today, the figure would be somewhere between
11.5 and 1.2 percent.
Mr. Betley said, that was correct. Project costs, in terms of
cents per kilowatt hour, increased or decreased approximately ten
percent with ,every one percent fluctuation in the bond rate
Regarding relative power costs, in 1992, if Palo Alto were buying
from PG&E, the Cal averas Project would cross over and would become
1 ess expensive than the R-1 rate in 1994, and would probabl y
become less expensive than the WAPA rate around the year 2004.
The sharp drop would occur when the bonds were amortized in 2013.
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Vice Mayor Bechtel asked which scenario that was based or.
Mr. Betley said it was realistic, Case 1-A.
Councilmernber Cobb asked whose projection the PC&E R-1 rate was.
Mr. Betley said the projection was a combination. R. W. Beck and
Associates, a consultant for NCPA developed a computer model in
which they actually simulated the operation of all PG&E generating
plants. Through that, they produced PG&E system costs and calcu-
lated the rates that PG&E needed to charge its customers. Those
rates were sometimes above and sometimes below, but usually pretty
close to PG&E's projections. R. W. Beck gave the City projections
of PG&E's rates in dollars per kilowatt and dollars per kilowatt
hour. Staff took that with the. City's load projections in tergr.i.
of kilowatts, kilowatt hours, and load factor and converted it to
the Palo Al to specific rate that it would have to pay for PG&E R-1
power. The FERC license for the 200 megawatt project was sub-
mitted in November, 1978 and was issued in January, 1982 for a
term of 50 years. Friends of the River and PG&E appealed the
1 icense, but the appeals were denied by the Federal Energy
Regulatory Commission on duly 9, and the 60 -day lawsuit period
ended September 10.
Mr. Aghjayan clarified that as long as the terms of the license
were under appeal , the provisions would be in final draft form.
Staff expected that the appeals would go to court hearing and
would delay further action on the project. Because staff felt
there would only be one participant, the problems with PG&E would
probably be negotiated out.
Councilmember Cobb asked about the grounds of the lawsuit by the
Friends of the River.
Aghjayan °deferred to Steve Fel te, Executive Director of the
Calaveras County Water District for response.
Mr. Felte said that the actual docuanent which was filed did not
contain any reasons. It simply appeal ed to the Court for a
rehearing of the case. Within 40 days, the material had to be.
transferred to the Court, and the Court would set up schedules for
briefings, etc. Historically, the environmental arguments were
broad primarily along the lines that alternative projects should
be considered, that there was no need for energy, no need for
water, and the general environmental issues associated with proj-
ect features.
Mr. Betley said staff believed there was a need for the project
even though some risk was associated with it. 'Under all , but the
most severe conditions, the project appeared to have a favorable
economics. At a ten (10) percent participation level , the City
would have an estimated capital commitment of $57 million, with
what staff believed to be an acceptable level of risk. Further,
the ten percent participation would fit in nicely with the staff' s
philosophy of project diversification. If Council went for the
ten (10) percent participation recommendation, there appeared to
be a market for the remaining percentages associated with the
project, and staff did not believe the project would fail due to
the Ci ty' s reduction in percentage. Staff recommended that
Council approve the project agreement and specify ten (10)percent
participation,
Mr. Aghjayan said he felt staff had demonstrated the need for the
project in terms of the City's forecast, but it made sense to look
at the project fro. an economic standpoint. There was the alter-
native of buying power from PG&E, but that was found not to work
in the long run and would end up costing the City much more money.
The need for a base of energy for the City's supply for the long
term future was subject to manydiscussions, but he felt the deciy
lion was an economic 'one and hoped the Council would view it that
way.
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Councilmember Witherspoon asked why staff only recommended a ten
percent participation.
Mr. Aghjayan said the recommendation was based on the level of
risk that any one project entailed. Staff's philosophy and
criteria for getting involved in projects was to diversify the
City's risk, look at different sources of energy, and different.
projects. He said the Cori, cif would be uneasy today if the City
had a contract to buy 50 percent of its power from Diablo Canyon,
which project had run into problems. There was a fairly extensive
financial commitment. The ten percent level of participation was
higher than the City's normal philosophy of looking at five to ten
megawatt levels. That did not mean that staff did not trust the
project or thought it was too risky. It was as good a project as
would be seen-- particularly in hydro --and it happened to be the
only licensed hydro project in California. The project was very
viable, but anything could happen in Construction and in the
operation of a project. The question was whether the City of Palo
Al to wanted to make a $57 million bet or a $130 million bet.
Councilmember Cobb asked for some speculation regarding the diver-
sification of the City's risk, and figures 1 and 2 --the stairs
indicating the additional 10 and 11 megawatt increments --as to how
the City would fill in those steps if it stayed with the ten per-
cent on the Calaveras Project and brought in other projects to
keep itself diversi fied.
Aghjayan said that Calaveras would take the first increment.
The City would have its cogeneration plant which could have the
possibility of being expanded to two or three megawatts. It was
risky to expect something from the Feather River although it was
possible. Further, the City was talking with Stanford about its
cogeneration plant, which was a 25 megawatt plant, and had sub-
mitted a proposal which had not been responded to as yet. Staff
would take a good look at geothermal and hopefully get into it,
but he offered no assurances that the City would be able to get
into it under the current conditions at NCPA. He did not think
the Council should be alarmed if the ten megawatt building blocks
did not fit right one on top of another. Looking to buy bulk
power from other utilities was a viable power purchase program,`
and, in fact, the Ci ty had a contract wi th PG&E to supply al terna-
tive needs. If a few years went by where the City purchased five
to ten percent of its power from PG&E because it did not have an
increment of power to add on, it would be of minimal impact in the
City's rate structure. Further, the City was also looking at the
possibility of a development of the field cell late in the 1990's.
That was a long way off, but they were also talking about a 50 -
year project and a 30 -year commitment.
Councilmember Witherspoon agreed that ten megawatt increments
spread the risk among a number of projects, but each time the City
got into the projects and started up with a new project, it seemed
that the capi tal costs up front were very high. She asked if it
was cost effective, although it might be less risky, to have a
series of little projects rather than having a series of 20 mega-
watt projects.
Mr. Aghjayan responded that the City was buying a share of a much
larger project in Calaveras. It was not less cost effective to
buy 10 percent rather than 22 percent and would not change the
economics- of the project. The project si ze would stay the same.
They probably would not build a single 10 megawatt project, other
than ,a small cogeneration facility, and he knew of nothing that
would be economic in than range.
Councilmember Witherspoon said that the response given to Counci l-
me+ber Cobb involved at least three other projects.
Mr. Aghjayan said that a 25 megawatt was mentioned, biit those were
Cogeneration. Staff felt that cogeneration offered a way to build
a small size project which was more economic than even the larger
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projects. The cogeneration pl ant at the Water Quality Control
Plant would be the most economic project the City was involved in
because of the factors involved even though i t would only be a
one, two or three megawatt project. Staff had stated the City' s
philosophy around the ten percent recommendation, but i t may wel
be that a higher level of participation may end up being the
smartest and brightest and most farsighted thing the Council could
do. He did not want to suggest that it was not a wise decision,
but from staff's perspective, it was wise to look at the level of
risk involved in any one project. A higher level of participation
departed from the City's tradi ti onal philosophy and the way proj-
ects were looked at, and staff was. more comfortable about recom-
mending a ten percent level than a 22 percent level of participa-
tion.
Councilmember Witherspoon said she wished the Council had not
decided to opt out of the geothermal project.
Mr. Aghjayan said they were still talking to NCPA, but there was
no way the City could get into the project render the current con -
di ti ons . The City was offered a contract to buy steam from a
power plant, and the field upon which that plant was to be located
had prior commitments to another plant. In short, the City would
have no rights to NCPA plant #2. If the steam ran out in project
#3, NCPA could draw on it from project #2, but the City would be
participants of project #3, with no rights to project #2.
Councilmember Cobb thought hydro power would probably be the
cheapest, cleanest and most acceptable form of power the City
could get its hands on for meeting the kinds of requirements being
discussed. Absent a clear set of possibilities for the future, he
saw some strong arguments for taking a bigger bite of the
Cal averas project.
Mr. Aghjayan said there were people that would agree completely
with Councilmember Cobb and suggest that it was a great project.
It had a license and there was not a lot on the horizon in
California, but staff would hang with its ten percent recommenda-
tion because of the risk level and because they were ta1 king about
50 -year planning.
Counc ii member Cobb said other al ternati ves included energy fusion
which was very far away and very capital intensive, and solar
electric which was also very expensive in terms of the capital
investment. In terms of cost and environmental acceptabil i,ty, he
was l ooki ng for alternatives to make him comfortabl a with taking a
smaller bite of the project .
Vice Mayor Bechtel felt that the energy demand projected by staff
was based upon increased usage of electricity . The other alterna-
tive, which was not mentioned, was conservation. She asked for an
idea about how that would fit in .
Mr. Aghjayan said that conservation was factored into the fore-
cast, but it was not a dramatic conservation effort, which was
what they were working at. Even that would not result in any
where near raeeti ng the City's needs, and he deferred to Bob Nagel
about how conservation was looked at in the forecast.
Energy Planner Bob Nagel said that conservation was included in
the long range forecast. The forecast for this year included a
best estimate about what could be achieved by conservation between
now and the year 2000. The forecast had an eight; percent further
reduction in load from where it would be going without conserva-
,ti`on by the year , 1990, and, the- impact in the year 2000 showed a
13.8 percent reduction beyond the present conservation The
City's lead this year was approximately 19 percent less than it
would have been without the forces which caused the conservation
a-fforts over the past 8.5 years. He said that the conservation
experienced so far was easy, and they now projected that there had
already been a 19 percent conservation effort and that .the further
2 4 9 8
9/14/82
eight percent conservation woul d occur between now and the year
1990, which would increase to 13.8 percent in the year 2000. They
hoped for greater conservation, but the foregoing was today s best
estimate.
Vice Mayor Bechtel clarified that the conservation factor was put
into the energy need charts.
Mr. Nagel said staff's forecast between now and the year 2000, on
an average, was somewhere around 1.5 percent per year, which was a
modest growth. As was discussed in the energy planning sessions,
staff took the Comprehensive Plan and tried to use it as a guide
to where the City' s employment and energy woul d go and came up
with the load forecast from it. Staff was reassured because the
forecast was fairly close to PG&E's forecast. The City's average
was 1.51 percent between now and the year 2000, and PG&E's area
average was 1.7 percent between now and the year 2000.
Councilmember Levy asked if the possibility of dramatic increases
in electric usage, i .e ., electric automobiles, radiology or cable
television, was considered.
Mr. Nagel said staff considered those things and did not include
major surprises in the forecast, but made a list of things that
could happen that would upset the forecast. They had a forecast
which incl uded the energy factors from the Comprehensi ve Plan as
the energy future for Palo Alto; however, if electric cars became
very practical, then the forecast would have to go up. Another
significant possibility woul d be if rapid transit came through
Palo Alto and put in a source of energy Staff thought about the
fact that significant changes could occur, and the approach would
be to look at the forecast each year and adjust it if something
was changing.
Councilmember Levy asked what the percentage increase would be in
demand if electric automobiles had a major impact.
Mr. Nagel said it was hoped that the electric automobiles would be
charged during the night. He coul d not recall the exact number,
but thought i t was somewhere on the order 1f a ten percent
increase.
Councilmember Renzel said the earlier chart showed a peak demand
going up about three ki 1 owatts per year. It appeared to be a
straight line of three kilowatts per year rather than anything
related speci fi cal 1 to land use changes or increased usage for
specific projects, and she asked how those were arrived at.
Mr. Nagel said that the Comprehensive Plan's forecast for 1990 was
not a smooth transition, and staff had to work with spot points
which was why it appeared that the curve was a smooth progression
over a period of years. Further, conservation could Upset the
appearance considerably, and staff hoped that a strong conserva-
tion effort would occur within the next five to ten years, at
which tiBe, the City would achieve the major things to be accom-
pl .shed with conservation. After 1990, it appeared that the
growth rate increased which was due to the fact that the returns
of conservation would be diminished.
Councilmember Renzel asked what kind of changes would be required
to the land use map to make any significant reduction in the
i ncreased demand.
Mr. Nagel said staffworked with land use in a previous forecast.
It was very time consuming and difficult, and this forecast used employment. Employment and land use language were somewhat inter-
related end one could be obtained from the other. Industri al l y
zoned l and had significantly greater energy requirements than
office space and commercially zoned land. He, said it was true,
that unless people fell in love with air conditioning and used
tremendous amounts, the energy intensiveness in the industrial
2 4 9 9
9/14/82
area was greater per square foot per acre than it was in office
space, and residential was way down from either commercial or
industrial.
Councilmember Cobb said he presumed that conservation would be
harder down the road. He cl arified that the curve could start to
build again once the limit of voluntary conservation was reached.
In order to significantly pull the demand curve down, would
mandatory conservation be required.
Mr. Nagel was fairly certain that would be the case, and commented
that considerable amounts of mandatory conservation already
existed through building standards and State building standards.
Mr. Aghjayan said that if they went to involuntary conservation,
the demand could be pretty much cut out all together, dependent
upon how far they were willing to go. He said it had always been
the City's philosophy in designing the programs to create programs
which were attractive to residents and ones they would go after.
In some cases they were easy measures and in other cases capital
investments were necessary, and the City had helped make the
capital investment by loaning some money. He clarified that by a
"dramatic conservation, program" he meant a well designed, well
thought out, creative, innovative program that would be well
received by the community. The City's philosophy had always been
not to force something down the throats of its rate payers because
they were not wei 1 received, the concept of conservation would not
sell, and would not be carried through. If the City had to get to
the involuntary aspect, he suspected the Council would face long
deliberations as a policy matter.
Councilmember Fletcher said the previous comments indicated that
the residential community was a small percentage of the total
usage, and that primarily the industrial area used so much
electricity, which was where any mandate would have the most
effect. She felt that some mandation could occur in terms of
office buildings shutting off equipment nights and weekends. More
could be done and she felt they should start at City Hall.
Mayor Eyerly reminded the Council that they were well prepared for
a decision on the project. Three good and informative work
sessions had take place on the electric utility, and Council -
members were provided ,with the opportunity for an overflight of
the project area with the cooperation of Steve Felte from the
Calaveras County Water District. The decision was large, but the
Council was well prepared to make it. If the ordinance was
approved for first reading tonight, in order for the City to
become a part of the project, it would have to be approved for
second reading on September 27, and submitted to NCPA not later
than September 28. He thanked Bob` Nagel and Frank 3etl ey for the
work they did on the staff report. He pointed out that the hydro
project had a long life, the license had to be cleared from the
litigation °:'or 50 years, and the City had a good contract with the
Calaveras County Water District for use of the power in the second
50 years if the license could be held. The environmental impacts
were always a concern to the Palo Alto City Council, and the
overflight, pictures and study of the EIR showed. a negligible
impact on the project.
MOTION: Mayer Eyerly alcoved, seconded by Cobb, approval of the
ordinance for first reading, subject'to the deletion of paragraph
2 on page 2, and without ally percentages,
ORDINANCE .FOR FIRST READING entitled "ORDINANCE OF THE
Luc►ai :kc. yr tat c1 i t up MO ALTO APPROVING ° THE TERNS
AND CONDITIONS OF A MEMBER AGREEMENT SEMEN NORTHERN
CALIFORNIA PONE* AGENCY AND CERTAIN PARTICIPATING
MEMBERS, AND AUTHORIZING THE EXECUTION AND DELIVERY OF
WO AGREEMENT BY OFFICERS OF THE CITY OF PALO ALTO"
MOTION CONTINUED
AGREEMENT FOR CONSTRUCTION, OPERATION AND FINANCING
OF THE NORTH FORK STANISLAUS RIVER
HYDROELECTRIC DEVELOPMENT PROJECT
1
1
1
Mayor Eyerly said that Section 2 of the ordinance basically said.
that the City Council would give authorization for the City to
increase the percentage at some later time if parts of the project
did not have total participation. He felt that the Council should
address the amount of participation tonight and tie it down.
Councilmember Klein said he had trouble with the ordinance not
specifying a percentage. He thought it was a nullity not to have
a number.
AMENDMENT s Council member ill ei n moved, seconded by Cobb , to
insert 22.92 percent as the figure to be used in paragraph one of
the ordinance.
Councilmember Levy said that regarding Palo Alto liabilities, he
understood that Palo Al to was only pledging the revenues of its
electric utility and was obligated in no other wa.y.
Mr. Aghjayan said that was correct, but the Council must recognize
that the City was pledging to rase revenues of the electric
utility if needed.
Councilmember Levy said the language indicated that the City
could not issue bonds in the future that were on a parity or
superior to the bonds for the project.
Senior Assistant City Attorney Anthony Bennetti said the City
could issue bonds that were on a parity provided the City had
either 125 percent of the revenues or the certification of a
nationally recognized engineer stating that in their professional
opinion the further encumbrance of those revenues would not
jeopardiie the financial stability of the project. He said other
members of NCPA had si mil ar cl auses in the RFL Agreement and that
was what they were doing in order to enter the Cal averas Project.
It was the standard way bond counsels dealt with the problem that
Palo Alto and other entities would continue to be interested in
projects, but al so had an obligation to protect the financial
commitments to the prior bond holders.
Councilmember Levy asked if the City could be reasonably assured
that participation in this project would not be detrimental to the
City's issuing bonds for future projects.
Mr. Aghjayan said it was an obligation whether the City floated
the bonds or whether they signed an agreement, and it would have
some impact. Of all the NCPA cities, Palo Al to probably had the
best credit rating. The other cities were pledging their electric
revenues and appeared to . be getting into project after project.
He was not a bond counsel and could not give an appropriate
response.
Councilmember Levy asked if Mr. Aghjayan could envision a scenario
where there would be an excess of power to which Palo Alto was
obligated and which it was unable to sell.
Mr. Aghjayan said no. If anything was priced low enough, a buyer
could - be found. There may be a lot of excess energy available
coming from other parts of the country so that the market price
for _spot power dipped. low.. He could see a bad scenario where the
City .would get less than the R-`1 rate, but not one where the City
got nothing. PG&E had dozens of power plant facilities and there
was a marginal cost involved with operating each of those facili-
ties. As they could buy power more economically, they shut down
the «ost uneconomical facilities.
2 5 0 1
9/14/82
Mr. Aghjayan continued that PG&E would get to some point where
they might have a particular facility where the marginal cost of
producing power for it may be 60 mils and they would be willing to
buy from the City for 57 mils.
Counc i l member Levy clarified that the risks were summari zed on
Table 5 on page 17 where it was indicated how much the City would
have to raise rates in order to handle the most probable case and
the worst case. In the 22.92 percent participation, in 1987, if
the City made a lot of mi stakes or the bui 1 ders of the project
made a lot of mistakes, the cost to the rate payers would be 17
percent. On the other hand, in the most probable case, the
maximum cost to the City's rate payers would be 4.5 percent. He
asked if that was the right measure of the risks the City was
taking on behalf of its rate payers.
Mr. Aghjayan said that since the City was pledging its electric
revenue, it was pledging in the contract that it would raise its
rates to pay the costs of the project no matter what. He said
there was a section in the contract which made it clear as to the
City's obligation to pay no matter what happened. That would be
the impact if the project did not work out.
Council member Klein clarified that the amendment should say 22.92
percent in order to be totally precise and for the staff to
understand that the Council meant the total allotment to which the
City was entitled.
Council member Witherspoon said that when Mayor Eyerly introduced
the motion, he mentioned that he wanted to strike a paragraph
which referred to the ability to negotiate for other allotments
that were not fully utilized. She asked for an explanation of the
rationale.
Mayor Eyerly clarified that the paragraph was contained on page 2
of the ordinance. Palo Alto would give NCPA 22.92 percent for
seed moneys, which was the moneys paid for a project i f there was
agreement from the Council to participate. When it came down to
signing the final power purchase contract, which was what they
were doing now, they might not want their full entitlement which
would leave a certain percentage. Some cities, on previous
projects, were desperate for more power if it was felt that the
project were very viable. It gave Palo Alto the opportunity to
purchase more power than what it said initially. He felt that the
City should take the 22.92 percent, which was what the City was
geared for during the long haul on the project. He did not think
he would support any 1 arger allotments and did not want that
paragraph in the ordinance.
Mayor Eyerly said he thought the City should go for the 22.92
percent participation because the City depended now on WAPA and
was starting to reach its maximum allocation. The City definitely
needed supplemental power between now and when the WAPA contract
ran out, which was 2004. To fill in those squares, the staff
recommended certain levels and bass cal l y addressed the need for
supplemental power. He was not sure that the WAPA power was as
viable as the City residents and Councilmembers often thought
because in the last six or seven years there had been certain
impacts on the WAPA power. He recalled the Santa Clara case where
Santa Cl ara received a fi ma allocation of WAPA power . The
PG&E/NCPA cities received a small allocation of WAPA power. Onl y
about half of WAPA power came fromhydro-- the balance was picked
up from other areas as viably as WAPA_ could obtain it. Each new
allocation of the WAPA power diluted its viability." SMUD has
filed a lawsuit against WAPA alleging that its contract
en ti tl event was for, hydro power only from . the project and none of
the higher priced power that WAPA picked up elsewhere. If SMUD.
was successful, it could have a major impact on Palo Alto . and the
rates. He said SMUD's contract ran out in 1993, and if they were
100 percent successful, it would impact Palo Alto's contract to
2 5 0 2
9/14/82
the tune of about $135 million in extra power costs --about $13
million yearly and that would not be the last request for alloca-
tion from WAPA. The Council should look at its WAPA contract
which expi red in 2004, realizing that new allocations had been
made, endeavors were being made to gain advantage on their con-
trac is , rates were raised due to the government' s feeling that the
projects needed to operate in the black, and that there was a
chance that the di 1 uti on would make it not as viable as it had
been in the past. He was concerned that the City was not being
realistic as to how viable the power was at this time. Further,
when 2004 arrived, if the City did not have some type of a backup
plan, it might not have any WAPA power. If WAPA power was still
viable in 2004, the City had no assurance that it would be able to
sign a new contract. At the same time, if the City was able to
sign a contract, it did not know how much power would be available
or the price. The Council needed to seriously consider the City's
full entitlement on the Calaveras project. Calaveras looked like
a good proj ec t-- there was al ways the chance that constructi on
costs would go up --but there had been considerable efforts put
into engineering studies on the cost of the project. Just
recently Bob Nagel found a way to drill a tunnel which would be a
big cost saver. He did not feel that the worst case presented by
staff was too big a risk to accept. When considering the risks,
what might happen to WAPA, and the gains of the Calaveras Project
over the long haul, i t seemed intel l i gent to go ahead. He felt
the City had become accustomed to lower power costs than those of
PG&E, and that the Council needed to be realistic and try to con-
tinue on that trend. If the Council did not take aggressive steps
to do that, the City's ability to offer lower rates would
gradual 1 y fade away.
Vice Mayor Bechtel said the Mayor had made some good points, but
she was concerned about the risks. The chart estimated a 50 per-
cent cost overrun case with a 13 percent bond rate. If the City
took a 22.92 percent commitment, the dollar commitment in that 50
percent cost overrun was $197 million. She thought a 50 percent
cost overrun sounded horrendous, but everyone was familiar with
projects where there; was a 100 percent cost overrun. She was con-
cerned about the level of risk and how it would affect rates. If
the $197 million was compared with a more probable case of $57
million, with a ten percent participation, it was still a substan--
ti al ri sk. Page 4 of the staff report sai d that the additional 20
megawatts would bring the City to approximately 1992, or an addi-
tional ten years to find additional projects and to work on more
strenuous and difficult conservation efforts.
AMENDMENT TO AMENDMENT: Tice Mayor Bechtel moved that the level
of participation be 15 percent.
Vice Mayor Bechtel said that would get the City approximately 30
megawatts, and according to the staff chart would get the City
through to . 1996. The capital commitment would be somewhere
between $85 million and $114 million, which was a more acceptable
risk in her opinion.
AMENDMENT TO AMENDMENT DIED FOR LACK OF A SECOND.
Counci1member Levy said there were four elements to take into con-
sideration when making the decision: (1) environmental questions;
(2) alternative sources; (3) costs; and (4) the demands in Palo
Alto. Regarding the environment, any projects that appeared to be
practical at this point had environmental draw . backs . The
Calaveras project had fewer environmental drawbacks than any other
the City was currently looking at with the exception of taking
over the Feather River project. If, they :looked at the alterna-
tives in ..ten years, it was very likely that what would be avail-
able then would be environmentally less desirable. There would be
more developments in solar power, wind power and fuel cells, but
as far as the projects that were now economically viable, it
1 ooked as though there would be no decent hydro si tes and the
2 5 0 3
9/14/82
and the City would have to go to coal , oil or nucl ear- -al 1 of
which had unpleasant environmental effects . Regarding alternative
sources the City would have, he thought they would all be environ-
mentally difficult. The real question was what kind of costs
risks the City could afford. The very worst case --the 50 percent
overrun, with a 22.92 percent involvement --meant an increase in
rates of 17 percent the first year, down to a four percent
increase by 1995, and by the end of the century would result' in
savings. That level of increase to the City's rate payers, as the
worst case situation, was tolerable. The outlook was more favor-
able now than it was when the numbers were prepared because the
rate of interest was lower so that the worst case rather than
being 17 percent in 1987 might be 12 or 13 percent in 1987. He
thought there was a reasonable 1 i kel i hood that demand would ri se
substantially, and that woul f be good environmentally. For
example, mass transit would very likely be electrically powered,
and the improvement of; medical care would come about by advances
which were electrically powered. ..The population would be older in
Palo Al to and there might be a demand for more lighting for
streets and parks. He thought that the Council should be aware
that those were possibilities and that overall they would improve
the quality of life and the environment. He would support the
22.92 percent.
Councilmember Renzel agreed with staff that the City should be
more conservative in its participation and spread the risks over
more projects . She would oppose the amendment.
Councilmember Cobb said Councilmember Fazzino asked him to comment.
for him in his absence. He agreed with the idea of the City
taking its full entitlement and shared in the reasons that hydro-
electric power was probably the best way to generate electric
power in terms of cleanliness, cost, and acceptability. Other
potential sources of electric power were either less likely, less
desi rabl e, and probably more expensive. Comments had been made
about risk, and Councilmember Levy expressed his feelings well.
There was another risk that other power opportunities that were
acceptable in terms of price, environmental impact, and politi-
cally acceptable may not occur, and the City could be taking a
bigger risk by waiting for something to come over the horizon. A
long time ago Palo Alto went into the utility business and was
considered visionary for doing so. If the City took its full
entitlement now, some day the Council would be considered
Visionary for taking that step.
Councilmember Klein said he agreed completely with Councilmembers
Cobb and Levy. He thought the cost overrun case was overstated.
The City was going to need the amount of energy being tal ked about
in the Cal averas project whether it took 22.92 percent in
Cal averas or 10 percent in Cal averas and some other megawattage
from some other projects. If the City took ten percent in
Calaveras and some other projects as well , the other projects were
also going to have a cost overrun risk. It was not appropriate,
in his opinion, to say the City was taking a $197 million risk
here whereas it would not be somewhere el se. Any project the City
invested in at any time would have a cost overrun risk. It was
true that by putting the City's money in a variety of things, that
the risk was reduced somewhat because it was not likely that all
the projects would have a 100 percent overrun even though it some-
times seemed that- way. It may be that . the Calaveras project was
the best engineered one the City would ever see and had less like -
1 i hood of having a cost overrun. Staff being appropriately
cautious and conservative- painted the worst possible case, but as
the decision -makers, the Council must be cautious as well and
caution migh , well He on the side o_ f going forward .with a -prof act
that was: ' here- now, and none as good as this was envisioned for ` the
next several years.
AKEliDREMT PASSED by a vote of 6-2, Renzel and Bechtel voting
"no,. Fazzieo absent
Councilmember Renzel said she would oppose the main motion. She
continued to feel that the City was recklessly developing its land
and increasing its energy use. It was very expensive to pay the
piper when the WAPA power allocations were exceeded and in a proj-
ect such as Calaveras, the City was exporting its environmental
costs without regard to what they were doing. The mitigation
measure for the meadow to be flooded as part of the project was to
create new meadows el sewhere. She thought the Council should
address the fundamental question of whether the City should...
increase the number of kilowatt hour peak demand by three kilowatt
hours every year.
MAIN NOTION AS AMENDED PASSED by a vote of 7-1, Renzel voting
"no," Fazzi no absent.
Mr. Aghjayan said staff would assume that it had direction from
the Council to proceed with developing a stronger program in the
area of selling lay off power, and that one al ternative might well
be to work out an exchange of energy capacity with other enti-
ties. He said that the Sacramento Municipal Utility District
(SMUD) was interested in the project and it might be possible to
arrange a contract wherein the City could sell them energy at the
initial stages of the project and buy the capacity back later on
when the City needed it more. He advised the Council that staff
would jump right into the question of how to sell the lay off
power when it was not needed, and might well return with a supple-
mental agreement to address that particular issue.
Mayor Eyerly asked if staff was going to consider selling the lay
off power to WAPA.
Mr. Aghjayan said it was a possibility except that WAPA had not
expressed any interest in the past. He had a conversation today
with SMUD wherein they indicated some possible interest in buying
a long term equity share in the project. SMUD may be willing to
buy more at the initial stages of the project to get some commit-
ment at the ending stages of the project. Similar types of
arrangements might be more economical than j ust the straight sal e
of lay off power. He did not think staff needed direction from
the Council, unless it was felt that staff should not work in that
area.
Councilmember Witherspoon commented that there was an opportunity
to tour the Hetch Hetchy system on September 30 and October 1. If
anyone was interested, they should get in touch with either Ray
Remmel or Ann Tanner immediately.
ADJOURNMENT IN MEMORY OF FORMER MAYOR CLIFFORD SIMPSON
0
NOTION: Vice Mayor Bechtel moved, seconded by Fletcher, that
Council adjourn in memory of Clifford Simpson.
Vice Mayor Bechtel said that Clifford Simpson died recently, and
had been the mayor of Palo Alto from 1954-1955, and served on the
Council until 1957. He was the owner of an .automobile dealership
agency in Palo Alta for 37 years.
MOTION PASSED unanimously, Fazzino absent.
Council adjourned the adjourned meeting of September 13, 1982 at
9:20 p.m. ;in memory of Clifford Simpson.
ATTEST: APPROVED
2 5 0.5
9/14/82
Councilmember Renzel said she would oppose the main motion. She
continued to feel that the City was recklessly developing its land
and increasing its energy use. It was very expensive to pay the
piper when the WAPA power allocations were exceeded and in a
project such as Calaveras, the City was exporting its environ-
mental costs without regard to what they were doing. The :mitiga-
tion. measure for the meadow to be flooded, to create new meadows,
elsewhere was questionable. She thought the Council should
address the fundamental question of whether the City should.
increase the number of kilowatt hour peak demand by three kilowatt
hours every year. -
MAIN NOTION AS AMENDED PASSED by a vote of _ 7-1, Renzel voting
"no,' Fazzino absent.
Mr. Aghjayan said staff would assume that it had direction from
the Council to proceed with developing a stronger program in the
area of selling lay off power, and that one alternative might well
be to work out an exchange of energy capacity with other enti-
ties. He said that the Sacramento Municipal Utility District
(SMUD) was interested in the project and it might be possible to
arrange, a contract wherein the City could sell them energy at the
initial stages of the project and buy the capacity back later on
when the City needed it more. He advised the Council that staff
would jump right into the question of how to sell the lay off
power when' it was not needed, and might well return with a supple-
mental agreement to address that particular issue.
Mayor Eyerly asked if staff was going to consider selling the lay
off power to WAPA.
1
1
Mr. Aghjayan said it was a possibility except that WAPA had not
expressed any interest in the past. He had a conversation today
with SMUD wherein they indicated some -possible interest in buying
a long term equity share in the project. SMUD may be willing to
buy more at the initial stages of the project to get some commit-
ment at the ending stages of the project. Similar types of
arrangements might be more economical than just the straight sal e
of lay off power. He did not think staff needed -direction from
the Council, unless it was felt that staffs shout d not work . in that
area.
Councilmember Witherspoon commented that there was an opportunity
to tour the Hetch Hetchy system on September 30 and October 1. If
anyone was interested, they should get in touch with either Ray
Remne►l or Ann Tanner immediately.
ADJOURNMENT IN MEMORY OF FORMER MAYOR CLIFFORD SIMPSON
NOTION 'ice Mayor. Bechtel moved, seconded by Fletcher, tkat
Council adjourn in memory of Clifford Simpson.
Vice Mayor Bechtel said that Clifford Simpson died recently, and
had been the mayor of Palo Alto from 1954-1955, and served on the
Council until 1957. He was the owner of an automobile dealership
agency in Palo Alto for 37 years,
NOTION PASSED daaniooasly, Fazzine absent.
Council adjourned the adjourned meeting of September 13, 1982 at
9:20 p.m. in memory of Clifford Simpson.
kTTEST:
APPROVED
C► r Clerk NTayor
2 5 0 5.
9/14/82 -
As Corrected
12/6/82