HomeMy WebLinkAbout1999-03-01 City CouncilCity
City of Palo Alto
Manager’s Report
TO:
ATTENTION:
FROM:
HONORABLE CITY COUNCIL
FINANCE COMMITTEE 2
CITY MANAGER DEPARTMENT: UTILITIES
DATE:
SUBJECT:
MARCH 1, 1999 CMR:148:99
PROPOSED IMPLEMENTATION PLAN FOR DIRECT
ACCESS FOR GAS UTILITY CUSTOMERS
REPORT IN BRIEF
This report recommends Council approval of a Natural Gas Direct Access Implementation
Plan. The plan will allow the City to offer gas supply choices similar to what PG&E is
offering to its customers. The plan revises the City’s current gas direct access program for
large customers and proposes to phase in direct access to additional customers over a three
year period. Phase 1, proposed to begin middle to late 1999, applies to approximately ten
large commercial customers~
The phase-in of gas direct access is intended to be flexible and responsive to changes in the
marketplace, as well as’ reflecting activity in neighboring California Public Utilities
Commission (CPUC) regulated service territory. The Palo Alto Utilities may adjust the
administration and pace of the phase-in based on customer interest, practices in neighboring
service territory, and technical and operational issues, including: implementation of the
customer information system, billing and metering issues, and the availability of gas pool
management services.
On November 4, 1998, the Utilities Advisory Commission recommended that Council
approve the proposed Natural Gas Direct Access Implementation Plan.
CMR:148:99 Page 1 of 5
RECOMMENDATION
Staff recommends that the City Council:
Approve the initiation and implementation of the City of Palo Alto Natural Gas Direct
Access Implementation Plan which updates a program Under existing Resolution No.
7522 (CMR:229:95) to allow direct access for natural gas customers.
Adopt a Resolution of the Council of the City of Palo Alto approving amendments to
Rules and Regulations 2, 6, 7, 11, 13, and adoption of a new Rule and Regulation 12 of
the Utility Rules and Regulations pertaining to implementation of direct access for natural
gas customers.
3.Authorize the City Manager or her designee to amend the Plan and associated documents
with non-substantive changes and to execute gas service provider agreements.
BACKGROUND
The City of Palo Alto Utilities (CPAU) is committed to offering competitive prices and
services to its customers. On June 19, 1995 the City Council approved Resolution No. 7522
(CMR:229:95) offering large natural gas customers (non-core customers) the opportunity to
purchase gas on the open market, thus initiating direct access for natural gas customers. The
Transportation-Only Natural Gas Rate (G-4), established at that time, allowed non-core
natural gas customers the option of purchasing gas from competing suppliers and having it
delivered to CPAU at the California border. The City. would then be responsible for
transporting gas within California. To date, no customers have elected the G-4 tariff,
primarily due to CPAU’s competitive prices.
Industry changes have put further pressure on utilities to provide greater choice to
customers. On March 1, 1998, PG&E’s intrastate transportation system became open access,
creating new opportunities to provide service choices to CPAU’s natural gas customers. On
June 22, 1998, the City Council approved (CMR:195:98) removing the intrastate
transmission charges from the transportation-only rate. The City’s continuing commitment
to customer satisfaction is driving the need to develop the Natural Gas Direct Access
Implementation Plan and to make necessary revisions to Utility Rules and Regulations.
CMR:148:99 Page 2 of 5
DISCUSSION
Natural Gas Direct Access Implementation Plan
The Natural Gas Direct Access Implementation Plan (Attachment I) is intended to revise
CPAU’s current direct access program for large customers and offer customer choice to
additional CPAU customers over a three year period beginning in 1999 and completing in
2001. The plan includes service structure, phase-in schedule and eligibility criteria. It is a
general guide for the processes to be used to allow greater participation in gas direct access.
The plan allows customers two options: 1) CPAU as the full service provider; or 2) gas direct
access with CPAU providing transportation-only service. The plan will begin with the City’s
non-core gas Customers. Other customer segments are to become eligible in subsequent
phase-in periods.
Revisions to Rules and Regulations
Adoption of the Natural Gas Direct Access Implementation Plan will require a number of
changes (shown in bold) to the Utilities Rules and Regulations (Attachment II). The
following is a summary of the significant changes.
Rule and Regulation 2- Definitions and Abbreviations: This provides a list of definitions
of utilities terms and acronyms often used in the rules.
Significant Changes: The number of terms defined has been expanded twofold.
Rule and Regulation 12- Natural Gas Direct Access: This establishes terms and conditions
under which the Gas Utility shall render distribution services under gas direct access,
including terms and conditions under which the City will provide gas balancing services to
gas commodity service providers. It sets forth requirements and responsibilities for
customers and their gas commodity service providers, and, establishes the gas balancing
responsibilities of the gas ’commodity service providers.
Significant Change: This is a new rule that establishes the necessary procedures for
providing gas direct access to customers and for reconciling the difference between a
customer’s actual gas usage and the quantity of gas that was delivered on the customer’s
behalf.
Rule and Regulation 13 - Shortage of Supply and Interruption of Delivery: This
establishes terms and conditions under which utility service may be interrupted.
CMR:148:99 Page 3 of 5
Significant Change: The title has been changed to "Shortage of Supply and Interruption of
Delivery of Energy and Gas". Language was added to establish the necessary procedures for
curtailing customers’ gas supply services. The rule establishes penalties for noncompliance
by gas commodity service providers to gas direct access customers and CPAU’s full-service
customers.
Gas Service Provider Agreement
The Gas Service Provider Agreement (Attachment III) is a required contractual agreement
between the gas commodity provider and the City. The Gas Service Provider Agreement was
modeled after the Electric Direct Access Service Provider Agreement (DASPA) and PG&E’s
Core Transport Agent agreement. The proposed Gas Service Provider Agreement was
designed for phase I of the plan, direct access for large CPAU gas customers, and a separate
agreement may be needed for the subsequent phase-in of smaller customers. In general, the
Gas Service Provider Agreement covers: (1)term and termination, (2) contract quantity, (3)
formal communications, (4) default and remedies for default, and (5) metering protocols.
RESOURCE IMPACT
The rule revisions, new rules, and Gas Service Provider Agreement are not expected to have
any significant impact of Utilities revenues.
POLICY IMPLICATIONS
The proposed Gas Service Provider Agreement and changes to the rules and regulations do
not represent a policy change for CPAU’s large customers. The Natural Gas Direct Access
Implementation Plan proposes a schedule and structure for providing direct access to all
CPAU gas utility customers if feasible.
ENVIRONMENTAL REVIEW
Approval of revisions to these Utility Rules and Regulations does not constitute a project
under the California Environmental Quality Act. Therefore, an environmental assessment
is not required.
CMR:148:99 Page 4 of 5
ATTACHMENTS
Attachment I - Gas Direct Access Implementation Plan
Attachment II - Resolution pertaining to and the Rules and Regulations
Numbers 2,6,7,11,12, and 13
Attachment III - Gas Service Provider Agreement
Attachment IV - Utilities Advisory Commission Minutes of November 4, 1998
PREPARED BY:Karla Dailey,Resource Planner, SupplyResources
Blake Heitzman, Manager, Competitive Assessment
Randy Baldsehun, Assistant Director of Utilities
Administrative Services
DEPARTMENT HEAD APPROVAL:
J.
Director of Utilities
CITY MANAGER APPROVAL:
EMILY HARRISON ~~---
Assistant City Manager
CMR:148:99 Page 5 of 5
ATTACHMENT I
City of Palo Alto Utilities
NATURAL GAS DIRECT ACCESS PLAN
Acronyms
CPAU
CGSP
CGSPA
GDA
GSPA
GSP
MMBTU
PG&E
UUT
Used
City of Palo Alto Utilities
Core Gas Service Provider
Core Gas Service Provider Agreement
Gas Direct Access
Gas Service Provider Agreement
Gas Service Provider; an entity providing supply of firm gas commodity, scheduling
and transmission services for delivery to CPA’s points of receipt
One million British thermal units
,Pacific Gas and Electric Company
Utility User Tax; City ofPalo Alto’s local tax assessed on all utility services
INTRODUCTION
This attachment provides an overview of the City of Palo Alto Utilities (CPAU) Natural Gas
Direct Access Plan. This plan is intended to revise CPAU’s current direct access program for
large customers and offer customer choice to all CPAU customers over a 3 year period. This is a
general guide to the processes used to effect participation in Gas Direct Access (GDA), including
service structure under GDA, phase-in schedule and eligibility criteria. Detailed terms and
requirements for large customer GDA will be provided in CPAU’s rules and regulations and in the
Gas Service Provider Agreement (GSPA). A Core Gas Service Provider Agreement (CGSPA)
may need to be developed for small commercial and residential customers due to metering
differences and the need for extremely high reliability.
BACKGROUND
In 1993, CPAU responded to the deregulation of interstate pipelines by developing a new rate for
transportation-only service (G4). The G4 tariff allows noncore customers to purchase gas
commodity from an alternate supplier and deliver that gas to CPAU at the California border.
Noncore customers are defined as customers who use over 250,000 therms per year and accept
lower reliability than the core. Core customers include both residential and small commercial
customers who use less than 250,000 therms per year and large customers who require the highest
reliability, To date, no customers have elected the G4 tariff primarily due to CPAU’s competitive
prices.
On March 1, 1998, a portion of PG&E’s intrastate pipeline became open access allowing
marketers to move gas within the state and offer bundled services closer to the customers’ meter.
CPAU is responding to this by revising the existing tariffs and rules to give noncore customers
maximum choice and flexibility to take advantage of this in their natural gas supply portfolios.
PG&E COMPARISON
Noncore customers on PG&E’s system (including wholesale customers such as CPAU) have been
able to directly procure gas commodity since November 1987. In fact, PG&E is planning to
phase out the gas commodity tariff‘for noncore customers in three years. In addition, PG&E has
offered aggregation as a means to allow small customers access to the gas market since 1991.
Core aggregation has had little market participation, however, PG&E has recently lowered some
of the barriers to entry and is currently aggressively marketing the program.
NATURAL GAS DIRECT ACCESS OPTIONS
Deregulation of the natural gas utility industry has opened up a competitive market, allowing
customers access to the gas commodity market. Staffproposes that all CPAU customers will
eventually have the following two options under Gas Direct Access:
1)Polo Alto Provider:
The customer may elect the City as its full service provider. In this case, the customer is not
required to take any action. CPAU will continue to be responsible for furnishing the customer
with all of its natural gas service needs
Outside Provider - Gas Direct Access:
Noncore customers may elect to purchase natural gas commodity from a Gas Service Provider
(GSP), and core customers may elect to purchase natural gas commodity from a Core Gas
Service Provider (CGSP). CPAU will then transport the gas from PG&E’s backbone system
to the customer site using CPAU’s existing contractual local transmission rights and
distribution system. CPAU will contract with a pool manager to handle gas operational and
administrative tasks. All GSPs/CGSPs will work directly with CPAU’s pool manager.
GSP/CGSP Responsibilities,
The GSP/CGSP shall be responsible for supplying natural gas and associated services to meet
the load of their customers. Their duties will include, but may not be limited to, load
forecasting, allowance for shrinkage, .monthly balancing, daily balancing during operational
emergencies, nominations on interstate and intrastate pipelines, settlement payment
obligations, and associated reporting.
GSPs/CGSPs will be responsible for billing and collecting from their customers the charges,
surcharges and taxes associated with gas services rendered, including the City’s utility users
tax (UUT). The billing details for the core aggregation program will be established at a later
date.
CPAU Responsibilities
Because CPAU serves core customers, CPAU has been allocated capacity on PG&E’s low
cost backbone transmission pipeline. CPAU will assign a pro rata share of this capacity to
GCSPs serving core customers within Palo Alto.
CPAU, through its designated pool manager, will be responsibl~ for providing local
transmission services (through CPAU’s contract with PG&E), distribution services, metering
services, balancing services, and scheduli.ng confirmation and imbalance notification. CPAU
will deliver the gas from CPAU’s pool point at the terminus of PG&E’s backbone system to
the customer’s site utilizing CPAU’s contractual rights and its distribution sysiem. CPAU,
through a contracted meter data manager, will provide customer meter data to the GSP/CGSP
and the pool manager.
CPAU is also responsible for billing customers for charges, surcharges the UUT and other
taxes associated with local transmission and distribution services rendered. Thus, a GDA
customer will receive a bill for commodity services from the GSP/CGSP and a bill for local
transmission and distribution services from CPAU.
As a pass-through ofPG&E’s ruies, CPAU will impose monthly balancing on the GDA
customers according to CPAU’s Rules and Regulations. Also in compliance with PG&E,
CPAU will impose daily balancing during an operational emergencies declared by PG&E.
This means that (C)GSPs will have to match gas nominations with actual gas usage each day
within a given tolerance band. Any resulting imbalance charges will be levied on the
GSP/CGSP. The penalties associated with imbalance services will be consistent with those of
PG&E and will be provided in the Rules and Regulations.
The following table is a summary of GSP/CGSP and CPAU’S responsibility under Gas Direct -
Access:
TABLE 1: Responsibilities of Parties Under GDA
* Deliver natural gas to CPAU pool point
* Provide for losses from point of receipt to
customer location
* Provide day ahead load forecasting
* Financial responsibility for their customers
imbalances
* Bill customer for natural gas commodity and
all (C)GSP services
*Bill customer for UUT
*Submit all required nominations
* Contract with a Pool Manager to provide
some of the services below
* Provide local transmission to city gate
* Meter customer usage
* Provide distribution services from city gate
to customer
*Bill customer for distribution and all CPAU
services
* Bill customer for UUT
* Provide balancing services through
tolerance band
* Schedule CPAU pool with PG&E
* Bill GSP/CGSP for imbalances and
noncompliance during an operational
emergency
DIRECT ACCESSREQUIREMENTS
Requirements for Noncore Natural Gas Direct Access Services
In order to take advantage of GDA~ noncore customers must apply for direct access service in
writing. GSPs will be required to sign a Gas Service provider Agreement (GSPA) and present a
security deposit. Customers will be required to sign an authorization for Direct Access service
designating the GSP as their commodity supplier.
Requirements for Core Natural Gas Direct Access Services
GDA for core customers is currently an undeveloped program. CGSP may be required to
aggregate a minimum volume of load, which will be defined in the Pules and Regulations. CGSPs
shall be required to sign a P~equest for Gas Aggregation Services with CPAU, present a security
deposit, and sign a CGSPA. Customers will indicate, by a simple form, that they wish to receive
gas commodity services from a specific CGSP.
PHASE-IN PROCESS
CPAU recognizes current technical and operational constraints that must be considered in order
to facilitate an orderly transition to full GDA for all customers. These constraints include metering
and billing, and availability of the new customer information system.
CPAU intends to ensure that all the logistics of GDA implementation will occur in a timely, cost-
effective, efficient and satisfactory manner. Therefore, GDA implementation shall be phased-in as
mitigation of constraints allows it. CPAU believes that a phase-in approach over several years will
result in a more successful implementation of GDA than a full opening before all constraints are
removed and systems are fully tested.
GDA phase-in is planned to occur in three one-year periods contingent on the items cited above.
The first open season is scheduled to commence in May, 1999 for the noncore class (customers.
who are already eligible for G4). The second and third phases will be for core customers but are
also contingent on the items cited above. Assuming CPAU moves forward with a core
aggregation program, all customers will be eligible for GDA by July 2001.
Allocation and Eligibility ,
Customers have been divided into these major eligibility segments:
1. Noncore customers: Commercial/industrial accounts with demand greater than 250,000
terms per year.
2. Commercial Core:Commercial/industrial accounts with demand less than 250,000 terms
per year.
3. Residential Core:All residential accounts.
Table 2 shows when customer segments may participate in GDA. Once an account is designated
eligible, it continues to be eligible through subsequent phase-in periods. The noncore class is
currently eligible for the G4 rate, and will have an opportunity to participate in the revised
program in the first phase. As part of the cost of service study currently underway, sta,ffis
4
investigating the possibility of allowing customers to combine’ accounts. This would increase
number of customers eligible for GDA in the first phase.
TABLE 2: Natural Gas Direct Access Phase-In Schedule
Phase Customer Open Direct Annual Number
Eligibility Season Access Volume of
Begins (MMBTU)Accounts
Phase 1 Noncore May 1999 July 1999 59,000 10
Phase 2 Commercial Core May 2000 July 2000 200,000 2,529
Phase 3 Residential May 2001 July 2001 120,000 20,588
Notifications and Open Seasons
As shown in Table 2, open seasons for eligible customers will initiate each phase-in period. The
open season will provide a reasonable window of opportunity for customers to evaluate their
options and give CPAU time to pi-epare to serve those customers who chose GDA. However,
staff is currently evaluating whether GDA applications will be valid year round.
Application Process
During an open season, interested customers shall submit an application for eligible accounts to be
entered into the GDA. Splitting of an account load between a GSP/CGSP and CPAU will not be
allowed.
Within the application, the customer shall specify CPAU’s account number, service address and
total load of each account for which the customer wishes to obtain an alternate GSP. CPAU will
verify eligibility and notify the customers as such within 5 days &the end of the open season
period.
Once all requirements have been met, including execution of all necessary agreements and any
necessary metering changes, and the initial service date of GDA has been established, then the
customer may purchase its gas requirements from a GSP/CGSP. The account shall continue to
participate in GDA for as long as the customer chooses to do so, subject to the terms of GDA
agreements and CPAU’s Rules and Regulations.
CHANGES TO GAS DIRECT ACCESS SERVICE
The customer shall provide CPAU advance written notice to: (1) voluntarily terminate GDA
service; (2) apply to materially change the gas usage requirements for GDA; (3) change
GSP/CGSPs. Acceptance of any voluntary service change may be subject to CPAU’s gas supply
availability or other operational requirements. Other terms and conditions related to suspension or
termination due to customer or GSP/CGSP default will be delineated in the GDA rule and the
GSPA.
If, after a termination, a customer wishes to participate in GDA, the customer would need to
reapply for participation in the next open season period.
ATTACHMENT II
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
APPROVING AND ADOPTING RULES AND REGULATIONS
GOVERNING UTILITY SERVICES AND FEES AND CHARGES
EFFECTIVE JULY I,1999
WHEREAS, pursuant to Chapter 12.20 of the Palo Alto
Municipal. Code the City Council may by resolution adopt rules and
regulations governing utility services and the fees and charges
therefor; and
WHEREAS, the City Council has determined to revise the
existing rules and regulations and to adopt new rules and regula-
tions, tobe effective July i, 1999;
NOW, THEREFORE, the Council of the City of Palo Alto does
hereby RESOLVE as follows:
SECTION I. Pursuant to Section 12.20.010 of the Palo Alto
Municipal Code,¯ the amended and the new rules and regulations
governing utility services, and the fees and charges therefor,
attached hereto and incorporated herein, are hereby approved and
adopted. Except as specifically amended by this resolution, all
existing utility rules and regulations shall remain in full force
and effect as of the date of their original adoption.
SECTION. 2. This Council finds that the adoption of this
resolution will not have a significant impact on the environment.
SECTION 3.
July I, 1999.
The foregoing changes shall become effective
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:APPROVED:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
Senior Asst. City Attogney City Manager
bif~ctor of Administrative-
Services
Director of Utilities
981110 syn 0071555
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
ABBRE .VIATIONS:
ADQ -
AMK -
Btu -
ccf -
CPAU -
CPUC
DA’ -
DASPA -
EFO -
ERU
ESP
FERC
GDA
GSP
GSPA
kVar
kVarh
kW
kWh
MDQ -
MMBTU -
OFO -
PAMC -
PG&E -
PT -
RWQCP -
UUT -
Average Daily Quantity
Automated Meter Reading
British Thermal Unit
hundred cubic feet
City of Palo Alto Utilities
California Public Utilities Commission.
Direct Access
Direct Access Service Provider Agreement
Emergency Flow Order
Equivalent Residential Unit
Energy Service Provider
Federal Energy Regulatory Commission
Gas Direct Access
Gas Service Provider
Gas Service Provider Agreement
Kilovar
Kilovar-hours
Kilowatt
Kilowatt-hour
Maximum Daily Quantity
Megawatt
One million Btus.
Operational Flow Order
Palo Alto Municipal Code
Pacific Gas and Electric Company
Pacific Standard Time
Regional Water Quality Control Plant
Utilities Users Tax
CITY OF PALO ALTO UTILITIES
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CITY OF PALO ALTO
UTILITIES
Sheet No. - 1
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
B. GENERAL DEFINITIONS:
Account
The identification number in CPAU’s billing system for utility services.
Administrative Services Director
The individual designated as the director of administrative services under Section 2.08.150
of Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is
designated the representative of the director of administrative services.
Agency ---
Any local, county, state or federal governmental body or quasi-governmental body,
including, without limitation, the CPUC, the FERC and any joint powers agency, but
excluding the City and any board, commission or council of the City.
Aggregated Load
The combined Load of all Eligible Customers, measured in MMBtu per Day, served by a
Gas Service Provider within the City.
Average Daily Quantity
Also "ADQ". The monthly contracted for quantity of natural gas with the City divided by
the number of Customer’s operating days in that month.
Applicant
An individual, corporation, partnership, agency, or other legal entity or authorized agent of same,
requesting CPAU to supply any or all of the following:
2.
3.
4.
5,
6,
7.
Electric Service
Water Service
Gas Service
Sewage Collection
Refuse and Recycling Collection
Storm Drain Service
Fiber Optic Service
Backbone Transmission System
That portion of PG&E’s system used to transport gas from PG&E’s interconnection with
interstate pipelines, other local distribution companies, and the California gas fields to
CITY OF PALO ALTO UTILITIES
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CITY OF PALO ALTO
UTILITIES
Sheet No. - 2
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
PG&E’s local transmission and distribution system as defined by Rule I of PG&E’s gas
tariff or applicable sections.
Balancing Agent
CPAU’s Gas Balancing Agent as designated by PG&E form 79-869, "Customer
Authorization for Agent to Act for Customer with Respect to Gas Balancing and Rule 14
Services and Obligations" or replacement form.
Balancing Service
CPAU’s service to accommodate imbalances between actual Customer Gas usage and
Customer-owned gas delivered to CPAU.
Billing Period
Also "service period" or "billing cycle". The normal billing cycle for CPAU Customers is
monthly. The number of days in the billing cycle or billing period is determined by the number of
days between meter reads. A Customer’s meters are read approximately every 27-33 days. On an
average basis, a billing period is 30 days. The Billing Period for Gas Direct Access Customers
will coincide with PG&E’s billing cycle for gas transportation.
Billing Therms
The number of billing units for natural gas that is based on the metered consumption (in ccf)
multiplied by the product of an altitude pressure adjustment and a Btu factor (heating content of
natural gas which varies monthly). One (1) therm equals 100,000 Btu.
British Thermal Unit
Also :’Btu". The standard unit for measuring a quantity of thermal energy.
Business Day
Any Day, except a Saturday, Sunday, or any Day observed as a legal holiday by the City.
Capacity
The total quantity of natural gas that can be transported over the applicable portions of
PG&E’s pipeline system or the Distribution System for a specified period of time or at
point(s) of interconnection.
Charge
Any assessment, cost, fee or levy for natural gas, gas transportation or related services,
energy, or energy-related services other than a Tax, including any Transition Cost
CITY OF PALO ALTO UTILITIES
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CITY OF PALO ALTO
UTILITIES
Sheet No.-3
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
Recovery Charge, Public Benefits Charge, and other such mandated or required public
surcharges.
Charter
The Charter of the City of Palo Alto.
City Attorney
The individual designated as the city attorney of the City under Section 2.08.120 of
Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated
the representative of the City Attorney.
City Clerk
The individual designated as the city clerk of the City under Section 2.08.110 of Chapter
2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the
representative of the City Clerk.
City Manager
The individual designated as the city manager of the City under Section 2.08.140 of
Chapter 2.08 of Title 2 of the Palo Alto Municipal Code, and any Person who is designated
the representative of the City Manager.
City of Palo Alto
Also "City". The government of the City of Palo Alto, a chartered city and a municipal
corporation duly organized and validly existing under the Laws of the State of California, with a
principal place of business located at 250 Hamilton Avenue, Palo Alto, County of Santa Clara.
City of Palo Alto Utilities
The term CPAU shall mean all utilities operated by the City of Palo Alto. Such utilities shall
include, but not be limited to, water, gas, electric, sewage collection, refuse collection, storm
drain, and fiber optics. The City of Palo Alto is the legal entity which owns and is responsible for
the City of Palo Alto Utilities.
City’s Pool(s)
The identification number(s) assigned to CPAU by PG&E in CPAU’s Natural Gas Service
Agreement which may be used to nominate gas for delivery to CPAU.
CITY OF PALO ALTO UTILITIES
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Effective 7-1-99
CITY OF PAL(] ALTO
UTI,LITIES
Sheet No. - 4
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
Code
The words "the Code" or this Code" shall mean the Palo Alto Municipal Code.
Core Customer
All residential Customers, commercial and industrial Customers physically connected to
the Distribution System whose natural gas use is less than 250,000 Therms per year, and all
commercial and industrial Customers physically connected to the Distribution System
whose gas use is 250,000 Therms per year or greater and who are not served under a
Noncore Rate Schedule.
Core Market Customer ~
A customer who purchases full gas service from CPAU under one rate schedule that includes gas
supply, distribution services from CPAU, and pipeline transportation services.
Commercial Service
Commercial utility service is provided to businesses, non-profit organizations, and industrial
customers. In addition, applies to utilities services through a master meter serving multi-family
residential dwellings.
Cubic Foot of Gas
Also "cf". The quantity of gas that, at a temperature of sixty (60) degrees Fahrenheit and a
pressure of 14.73 pounds per square inch absolute, occupies one cubic foot.
Curtailment
The act of reducing or interrupting the delivery of natural gas.
Customer
The person, corporation, agency, or entity in whose name service is rendered for a particular
account as evidenced by the signature on the application, contract, or agreement for service. In
the absence of a signed instrument, a customer shall be identified by the receipt of any payment
of bills regularly issued in the name of the person, corporation, or agency regardless of the
identity of the actual user of the service.
Customer Fiber
Customer single mode and/or multi-mode fiber optic cables that can be installed to interconnect to
locations within City of Palo Alto limits, but outside of CPAU established single mode network
path.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 5
DEFINITIONS AND ABBREVIATIONS
RI J-LE AND REGULATION 2
Customer-Owned Generation
An electric generator owned by the Customer, interconnected with and operating in parallel with
CPAU facilities.
Dark Fiber
A strand of optic transmission material within a fiber optic cable that is provided by CPAU
without any of the light transmitters, receivers, or electronics required for telecommunications
over the fiber.
Day
Any calendar day, unless a Business Day is specified, commencing at 12:00:00 a.m. PST on
a calendar day and ending at 12:00:00 a.m. PST on the following calendar day.
Decatherm
A unit of energy equal to ten Therms or one million Btu (MMBtu).
Default Rate Schedule
The rate schedule to which a Customer is assigned automatically by CPAU for a period of twelve
months, in the event a Customer does not elect a specific rate schedule determined by CPAU to
be available at that time.
Demand
The highest rate of delivery of electric energy, measured in kilowatts (kW) or kilovolt amperes
(kVA) occurring instantaneously or registered over a fixed time period (normally fifteen minutes
unless otherwise specified within a monthly billing cycle).
Demand Charge
An electrical charge or rate that is applied to a metered demand reading expressed in kilowatts to
compute a demand charge component of a Customer’s electric bill.
Direct Access
Also "DA". The election by a Customer to procure its electricity, and related energy services,
from an Energy Service Provider, other than CPAU. In this situation, a Customer deals directly
with an ESP for commodity supply, while distribution and applicable transmission services would
continue to be provided by CPAU.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 6
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
Direct Access Metering
Also "DA Metering". An electromechanical device capable of recording or transmitting energy
use to effect Direct Access, including any communication system or services needed to allow the
access to meter read information. Such metering shall conform to the standards and specifications
currently adopted by CPAU.
Direct Access Plan
Also "DA Plan." The document detailing the processes and procedures adopted by CPAU to
effect and allocate participation in Direct Access within CPAU’s Service Territory, including
phase-in schedule, eligibility criteria and selection processes.
Direct Access Service Request
Also "DASR". The form required to initiate Direct Access Service.
Direct Access Service Provider Agreement
Also "DASPA". Also referred to as Direct Access Service Provider Contract (DASPC). The
contract between CPAU and the DA Customer’s Energy Service Provider that delineates the
terms and conditions under which Energy Services may be scheduled or nominated to the City’s
Schedule Coordinator and transmitted to the DA Customer.
Distribution Services
Includes, but is not limited to, utility service provided by the Distribution System and other
services such as billing, meter reading, administration, marketing, and customer services.
Distribution System
The infrastructure owned and operated by CPAU which is capable of transmitting
electrical power or transporting water, wastewater, or gas within the City of Palo Alto.
The electric distribution system transmits power from the City’s interconnection with Pacific Gas
and Electric Company to CPAU’S meter located on the Customer’s premises.
The gas distribution system transports gas from Pacific Gas and Electric Company receiving
stations to CPAU’s meter located on the Customer premises. The water distribution system
transports water from the San Francisco Water Department receiving stations and CPAU wells to
the meter located on the Customer premises. The Wastewater Collection System transports
sewage from the Customer’s premises to the Water Quality
Control Plant.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No.-7
DEFINITIONS AND ABBREVIATIONS
RI ILE AND REGULATION 2
Distribution and Transmission Services
Services provided by CPAU to effect the physical delivery of Energy Services provided by the
Energy Services Provider from the Point of Receipt to the Direct Access Customer’s Service
Address.
Diversion
See PG&E Rule 14 or replacement Rule.
Effluent
Partially or completely treated sewage flowing out of any sewage treatment facility.
Eligible Customer
Any Person who is authorized by the City to receive gas from a GSP or energy from an
ESP, or both.
Emergency Flow Order
Also, "EFO". See PG&E’s Rule 14 or replacement Rule.
Emergency Service
Electric Service supplied to, or made available to, load devices which are operated only in
emergency situations or in testing for same.
Energy Services
Energy commodity and any applicable ancillary services used to generate and transport such
commodity from its origin to the City’s Point of Receipt. May also mean the sale of value added
services associated or related to the provision and/or usage of energy commodity.
Energy Service Provider
Also "ESP." The agent employed by the DA Customer obligated to procure, schedule,
nominate, and transport Energy Services. ESP shall also include any and all agents or
contractors employed or utilized by ESP in performance of its obligations, including scheduling
coordinator(s).
Equivalent Residential Unit
Also "ERU". This is the basic unit for computing storm drainage fees. All single-family and
duplex units are billed 1 ERU and are considered to have an impervious area of 2,500 square feet.
All other non-residential properties have ERU’s computed to the nearest 1/110 ERU using this
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 8
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
formula: No Of ERU=Impervious Area (sq.ft.) /2,500 sq.ft.
, Full Service
Provision by CPAU of both Distribution and Transmission Sei’vices, and Energy or Gas
Commodity Services to its Customer, Also known as "Fully Bundled Service",
Gas
Any combustible gas or vapor, or combustible mixture of gaseous constituents used to
produce heat by burning. It shall include, but not be limited to, natural gas, gas
manufactured from coal or oil, gas obtained from biomass or from land fill, or a mixture of~
any or all of the above.
Gas Day
Any calendar day, commencing at 7:00:00 a.m. Pacific Standard Time on a calendar day
and ending at 7:00:00 a.m. Pacific Standard Time on the following calendar day.
Gas Direct Access
Also "GDA." The election by a Customer to procure its natural gas, and related natural
gas services, from a Gas Service Provider, other than CPAU. In this situation, a Customer
obtains natural gas commodity directly from a GSP, but local transmission of the natural
gas commodity is effectuated by CPAU in accordance with the terms of CPAU’s Natural
Gas Service Agreement with PG&E..Also, distribution services would continue to be
provided by CPAU.
Gas Direct Access Service Request
Also "GDASR". The form required to initiate Gas Direct Access Service.
Gas Service Provider
Also "GSP". The Person who procures, schedules, nominates and arranges transport of
natural gas to Gas Direct Access Customers, including its successors and assigns.
Gas Service Provider Agreement
Also "GSPA". The contract between CPAU and the Gas Direct Access Customer’s Gas
Service Provider that establishes the terms and conditions under which Gas services may
be provided to the Gas Direct Access Customer.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No.-9
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
Imbalance Charge
A fee that is imposed by CPAU as a result of actions taken by the GSP when the confirmed
gas nominations which are accepted and scheduled by PG&E do not match the Gas Direct
Access Customer’s Load.
Inspector
The authorized inspector, agent, or representative of CPAU.
Interstate Transportation (or Transmission)
Transportation of natural gas on a pipeline system under the regulation of the FERC.
Intrastate Transportation (or Transmission)
Transportation of natural gas on the PG&E system under the regulation of the CPUC.
Kilovar (kVar)
A unit of reactive power equal to 1,000 reactive volt-amperes.
Kilovar-hours (kVarh)
The amount of reactive flow in one hour, at a constant rate ofkilovar.
Kilowatt (kW)
A unit of power equal to 1,000 watts.
Kilowatt-hour (kWh)
The amount of energy delivered in one hour, when delivery is at a constant rate of one kilowatt; a
standard unit of billing for electrical energy.
Law
Any administrative or judicial act, decision, bill, certificate, charter, code, constitution,
opinion, order, ordinance, policy, procedure, rate, regulation, resolution, rule, schedule,
specification, statute, tariff, or other requirement of any district, local, municipal, county,
joint powers, state, or federal agency, or any other Agency having joint or several
jurisdiction over the Parties to this Contract, in effect either at the Commencement Date or
during the Term hereof, including, without limitation, any regulation or order of an official
or quasi-official entity or body governing the applicable service provided by the City to
which a Customer may be subject or bound.
CITY OF PALO ALTO UTILITIES -
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 10
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
Load(s)
The electric power demand (KW) of the Customer at its Service Address within a measured
period of time, normally 15 minutes or the quantity of gas required by a Customer at its
Service Address, measured in MMBtu per Day,
Load Profiling
A methodology which may be employed by CPAU, in lieu of DA Meeting, to compute the bill for
all DA Customers who have accounts that do not require, or are exempt from, Direct Access
Metering. The methodology may include application of a class-average hour-by-hour load profile
to determine a monthly average usage profile appropriate for that class of customer.
Local Transmission System
PG&E’s pipelines used to accept gas from the Backbone Transmission System, and
transport it to the Distribution System.
Main Sewer Line
Any sewer line not including a building connection (service) sewer.
Master-metering
Where CPAU installs one service and meter to supply more than one residence, apartment
dwelling unit, mobile home space, store, or office.
Maximum Daily Quantity
Also "MDQ". The maximum quantity of Gas that can be nominated daily, as specified in
Exhibit A of the Gas Service Provider Agreement.
Meter
The instrument owned and maintained by CPAU that is used for measuring either the electricity,
gas or water delivered to the Customer.
Meter Read
The recording of usage data from metering equipment
Minimum Charge
The least amount for which service will be rendered in accordance with the rate schedule.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 11
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
Noncore Customer
A commercial or industrial customer whose gas use is 250,000 Therms per year or greater
and who is served under a non-core Rate Schedule.
Occupied,Domestic Dwelling
Any house, cottage, flat, or apartment unit having a kitchen, bath, and sleeping facilities, which is
occupied by a person or persons.
Open Season
CPAU’s process used to advertise and take applications from Eligible Customers for
obtaining Direct Access or Gas Direct Access services.
Operational Flow Order
Also "OFO". See PG&E’s Rule 14 or replacement Rule.
Person
Any individual, for profit corporation, nonprofit corporation, limited liability company,
partnership, limited liability partnership, joint venture, business trust, sole proprietorship,
or other form of business association.
PG&E City Gate "
The point at which PG&E’s Backbone Transmission System connects to PG&E’s local
transmission and distribution system.
Point of Delivery (POD)
Unless otherwise specified, .that location on the Customer’s’Premises where the CPAU circuit and
Customei’s electrical wiring are interconnected or the point(s) on the Distribution System
where the City delivers natural gas that it has transported to the Customer.
Point of Receipt
The designated location at which CPAU receives energy supplied by an ESP and/or Scheduling
Coordinator on behalf of a DA Customer or the designated location at which CPAU receives
gas supplied by a GSP on behalf of a GDA Customer. The Points of Receipt for energy will
be designated in the DASPA as one of the NCPA Points of Receipt, the Palo Alto City Gate
meter or other specified point(s). The Point of Receipt for gas will be the City’s Pool or other
specified point(s).
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 12
DEFINITIONS AND ABBREVIATIONS
RI ILE AND REGULATION 2
Pole Line
Overhead wires and overhead structures, including poles, towers, support wires, conductors,
guys, studs, platforms, cross arms braces, transformers, insulators, cutouts, switches,
communication circuits, appliances attachments, and appurtenances, located above ground and
used or useful in supplying electric, communication, or similar or associated service.
Pool
A nomination tool provided by PG&E that allows the aggregation of natural gas supply
from several sources.
Pool Manager
The Person designated by the City to perform a variety of tasks related to management of
the City’s Pool, which may include nominations through the City’s Pool, imbalance
tracking, accounting, and billing.
Power Factor
The percent of total power delivery (kVA) which does useful work. For billing purposes, average
power factor is calculated from a trigonometric function of the ratio of reactive kilovolt-ampere-
hours to the kilowatt-hours consumed during the billing month.
Premises
All structures, apparatus, or portion thereof occupied or operated by an individual(s), a family, or
a business enterprise, and situated on an integral parcel of land undivided by a public street,
highway, or railway.
Primary Service
CPAU electric distribution Service provided to a Customer’ s premises at a voltage level equal to
or greater than 1000 volts.
Provision
Any agreement, circumstance, clause, condition, covenant, fact, objective, qualification,
restriction, recital, reservation, representation, term, warranty, or other stipulation in a
contract or in Law that defines or otherwise controls, establishes, or limits the performance
required or permitted by any party.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY QF PALQ ALTO
UTILITIES
Sheet No. - 13
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
Prudent Utility Practices
The methods, protocols, and procedures that are currently used or employed by utilities to
design, engineer, select, construct, operate and maintain facilities in a dependable, reliable,
safe, efficient and economic manner.
Public Benefits Charge
Mandated charge on electric bills to fund qualifying energy and low-income customer programs
and services that benefit the public good in accordance with AB 1890.
Public Works Department
City of Palo Alto department responsible for providing storm drain, wastewater treatment, and
refuse and recycling services.
Rate Schedule
One or more tariff sheets setting forth the charges and conditions for a particular class or type of
utility service. A rate schedule includes wording such as Schedule number, title, class of service,
applicability, territory, rates, conditions, and references to rules.
Recyclable
The material is recyclable if it is easily collected and processed and there is a demand for it. The
most common recyclable materials are paper, glass, metal, and some plastics. Recyclable materials
are processed, manufactured, and reused in order to regain material for human use.
Residential Service
Utility service provided to separately metered single family or multi-family, domestic dwelling.
Scheduling Coordinator
An entity providing the coordination of power schedules and nominations to effect transportation
and distribution of electric power and energy.
Secondary Service
CPAU electric distribution service provided to a Customer’s premises at a voltage level less than
1000 volts.
Service Address
The official physical address of the building or facility assigned by CPAU’s Planning Department,
at which Customer receives utility services.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 14
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
Service Charge
A fixed monthly charge applicable on certain rate schedules that does not vary with consumption.
The charge is intended to recover a portion of certain fixed costs. ’
Services or Service Lines
Facilities of CPAU, excluding transformers and meters, between CPAU’s transmission or
distribution system and the Point of Delivery to the Customer.
Service Territory
The geographic boundaries within the City of Palo Alto limits served by the physical distribution
system of the CPAU.
Shrinkage
The volume of natural gas expressed as a percentage that is not delivered to a Customer
due to the physical operation of the Interstate Transmission System or the Distribution
System, or both.
Sole Discretion
An individul will base a decisionupon factors as is deemed appropriate by that individual,
and that individual will not be required to state any reason for the decision.
Standby Service
Back-up energy services provided by CPAU to a DA customer who returns to CPAU for
commodity supply service on short notice either due to ESP not providing commodity supply
service or by choice of the Customer.
Tax
Any assessment, charge, imposition, license, or levy (including any utility users tax) and
imposed by any Agency, including the City.
Temporary Service
Service requested for limited period of time or of indeterminate duration such as, but not limited
to, service to provide power for construction, seasonal sales lot~ (xmas trees), carnivals, rock
crushers or paving plants. Temporary service does not include emergency, breakdown or
standby service.
Therm
A unit used to measure a quantity of heat for natural gas that is equal to 100,000 British Thermal
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 15
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
Units (Btu).
Tolerance Band
The percentage of gas usage, on a Monthly basis, as set by PG&E in its Schedule G-BAL
or replacement tariff at which PG&E and CPAU will’provide Balancing Service at no
additional Charge.
Transition Cost Recovery
Also "TCR." Mandated charge on all electric bills to fund the CPAU repayment of costs of fixed
and variable costs of above-market generation which may be characterized as "stranded costs".
Trap
Any approved equipment or appliance for sealing an outlet from a house-connection sewer to
prevent the escape of sewer gas from a main line through a building connection (service) sewer.
Uncontrollable Force
Any cause beyond the control of the party affected, including but not restrcted to, failure of
or threat of failure of facilities, .flood, earthquake, storm, drought, fire, lightening,
epidemic, war, riot, civil disturbance, or disobedience, labor dispute, labor or material
shortage, sabotage, restraint by court order or action by public authority, which by
exercise of due diligence such party could not reasonable have been expected to avoid and
which by exercise of due diligence it shall be unable to overcome.
Underground Utility District
An area in the City within which poles, overhead wires, and associated overhead structures are
prohibited or as otherwise defined in Section 12.04.050 of the PAMC.
Utilities Department
City of Palo Alto department responsible for providing water, gas, electric, wastewater collection,
and fiber optic services.
Utilities Director
The individual designated as the director of utilities under Section 2.08.200 of Chapter 2.08
of Title 2 of the Palo Alto Municipal Code, and any Person who is designated the
representative of the director of utilities.
Utility Rules and Regulations
The compendium of utility rules and regulations prepared by the Department of Utilities
and adopted by ordinance or resolution of the Council pursuant to Chapter 12.20 of the
Palo Alto Municipal Code, as amended from time to time.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALtO
UTILITIES
Sheet No.-16
DEFINITIONS AND ABBREVIATIONS
RULE AND REGULATION 2
Utilities User Tax
Also "UUT". City of Palo Alto tax imposed on utility charges to a water, gas, and/or electric
service user. Charges include charges made for metered energy and water and charges for service
including customer charges, service charges, standby charges, charges for temporary services,
demand charges, and annual and monthly charges. In 1987, Palo Alto voters approved a 5
percent tax on utility charges for water, gas, and electricity to raise revenue for general
governmental purposes of the City of Palo Alto. A reduced tax of 3 percent was approved for
qualifying high volume users. The tax does not apply to Refuse, Storm Drain, or Wastewater
Collection charges.
(END)
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No.-17
ESTABLISHMENT AND
REESTABLISHMENT OF CREDIT
RULE AND REGULATION 6
A.ESTABLISHMENT OF CREDIT FOR RESIDENTIAL SERVICE:
The Applicant’s credit will be established:
If the Applicant is the owner of the residence to which CPAU is requested to
supply service; or
If the Appli£ant makes a sufficient cash deposit with CPAU to secure payment of
any bills for service to be supplied by CPAU; or
If the Applicant has previously been a Customer of CPAU within the past two
years and during the last twelve consecutive months of that prior service has not
received more than (2) five-day past due notices, and provided that the credit of
the Applicant is unimpaired in the opinion of CPAU; or
If the Applicant’s credit is otherwise established to the satisfaction of the Utilities
Supervisor, Customer Service Center.
B.ESTABLISHMENT OF CREDIT FOR COMMERCIAL SERVICE:
The Applicant’s credit will be established:
If the Applicant makes a sufficient cash deposit with CPAU to secure payment of
any bills for service to be supplied by CPAU; or
If the Applicant provides, in lieu of a cash deposit, a certificate of deposit drawn
on a local bank or savings and loan association, or a surety bond sufficient to
secure the payment of any bill for service to be supplied by CPAU; or
3.If the Applicant’s credit is otherwise established to the satisfaction of CPAU..
C.REESTABLISHMENT OF CREDIT:
An Applicant who has been a utility Customer of CPAU and whose service has
been discontinued for any reason, including failure to pay utility bills, may be
required to reestablish credit before service is resumed, by making a cash deposit
and by paying all past due bills outstanding. However, an Applicant for residential
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
~...::.. ’:: :- ~,
CITY OF PALO ALTO
UTILITIES
Sheet No.-1
ESTABLISHMENT AND
REESTABLISHMENT OF CREDIT
RULE AND REGULATION 6
service will not be denied service for failure to pay past due bills outstanding for
other classes of service. The requirement to pay past due bills under this section is
not applicable to Customers who have filed for bankruptcy.
A Customer who fails to pay utility bills before they become past due, and who
further fails to pay such bills within the time required by a second notice of
nonpayment, may be required to reestablish credit by making a cash deposit with
CPAU and by paying all past due bills outstanding regardless of whether or not
service has been discontinued for nonpayment.
A Customer may be required to reestablish credit in accordance with this section if
the conditions of service or basis on which credit was originally established have,
in the opinion of CPAU, materially changed.
4.RE-ESTABLISHMENT OF CREDIT FOR GAS SERVICE PROVIDERS
An applicant who is a Gas Service Provider and.who fails to pay billing
statements on or before the due dates as prescribed in the Gas Service
Provider Agreement and the Utility Rules and Regulations or has been
referred to a collection agency for collection shall be required to re-establish
its credit with CPAU as a condition precident to the resumption of service.
The Gas Service Provider may re-establish credit by:
(A)Paying all past Charges, plus interest, due and payable to CPAU, and
(B)Posting of a security deposit in the amount and form satisfactory to
the City Attorney.
D.CUSTOMER CREDIT RATING SYSTEM:
A credit rating system has been established by CPAU for all accounts and is shown
on a Customer’s utilities bill statement.
The following ratings are based on a Customer’s rolling 12-month payment
history in terms of the Customer’s record in paying bills before they became due.
"A" is the highest rating and means the Customer paid before the due date in at
least 11 of the 12 previous months. "B" means the Customer usually paid before
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No.-2
ESTABLISHMENT AND
REESTABLISHMENT OF CREDIT
RULE AND REGULATION 6
the due date but in two or three months paid after the due date. "C" means the
Customer customarily pays after the due date and did so between 4 to 7 times over
the previous 12 months. "D" means the Customer is habitually delinquent and paid
after the due date at least 7 times over the previous 12 months. In addition,
Customers who have had their service terminated for non-payment automatically
receive a "C" or "D" rating based on the number of notices, regardless of how
frequent or infrequent they paid previous bills before they were due.
(END)
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 3
DEPOSITS
RULE AND REGULATION 7
AMOUNT OF DEPOSIT:
1.The amount of a deposit shall be set forth in Customer Deposits Rate Schedule C-
2,
If a Customer has been delinquent on more than once in the past twelve months
the deposit may be set higher than is set forth under the applicable rates in Rate
Schedule C-2. This amount shall not exceed a sum equal to twice the estimated
monthly utilities bill.
Where a deposit is made for commercial service, CPAU may from time to time
require an additional deposit to offset increases in utility rates or increased utility
usage.
If a Customer files for bankruptcy protection under Chapter 7, Chapter 11, or
Chapter 13, the Customer shall be required to establish credit under Rule 6.b. 1
and/or 6.B.2.
The requirement for a deposit may be waived by the Supervisor, Utilities Customer
Service Center if:
(A)
(13)-
He/she is satisfied of the creditworthiness of the Customer based upon a
prior history with CPAU and/or;
An audited financial report is provided of recent operations which
indicates to the satisfaction of the Supervisor, Utilities Customer Service
Center that the business is financially healthy and/or;
Deposits can be in the form of a certificate of deposit at a local bank or savings
and loan, indemnity or surety bond, or cash.
A security deposit may be required from an Energy Service Provider (ESP)
providing Direct Access Service to Palo Alto Customers. The terms relating
to the amount, collection, return or use of the security deposit will be
included in the Direct Access Service Provider Agreement (DASPA) signed
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 1
DEPOSITS
RULE AND REGULATION 7
between the ESP and CPAU.
RETURN OF DEPOSIT:
Upon discontinuance of service, CPAU will refund the Customer’s deposit or
the balance thereof which is in excess of unpaid bills for service furnished by
CPAU. If the deposit is unclaimed for a period of one year after discontinuance of
service, the deposit will become the property of CPAU.
CPAU may refund a Customer’s deposit by draft or by applying the deposit to the
Customer account and the Customer will be advised.
If the Customer establishes service at a new location, CPAU may retain the deposit
for such new account in partial or total fulfillment of the deposit obligation for the
new account.
Residential deposits will be refunded at the end of one year of service provided all
bills for service have been paid before they become past due.
Deposits held for commercial service shall be refunded when service is
discontinued by the Customer, or after three years if all bills for service during the
recent 12 month period have been paid before they become past due.
6.CPAU will not pay interest on customer deposits.
SECURITY DEPOSITS FOR GAS SERVICE PROVIDERS
The Gas Service Provider shall be responsible for paying to CPAU any pool
administration Charges, Imbalance Charges, Taxes,. and any other City Charges
that may arise from the provision of Gas services to Eligible Customers. The Gas
Service Provider shall place a security deposit with CPAU to secure the payment of
the Charges referred to herein before the Gas Service Provider may provide Gas
commodity services to any Eligible Customer.
A security deposit in the amount of $90 per MMBtu of MDQ (rounded up to
the nearest MMBtu) shall be due and payable on the date that the CPAU
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
UTILITIES
Sheet No. - 2.
DEPOSITS
RULE AND REGULATION 7
t
autho?izes the Gas Service Provider to commence the delivery of Gas. The
deposit shall secure the payment of all Charges payable by the Gas Service
Provider to CPAU, including, without limitation, the pool administration
Charges, Imbalance Charges, Taxes, gas commodity replacement Charges,
and any other applicable City Charges.
The form of the security deposit shall be:
(A)Cash, which shall earn no interest during the term of the deposit with
CPAU; or
(B)Irrevocable and renewable Standby Letter of Credit issued by a major
U.S. financial institution reasonably acceptable to the City, acting by
and through the Administrative Services Director; or
(c)Renewable surety bond issued by a major insurance company or
admitted surety acceptable to the City and in a form acceptable to the
City Attorney, or
A certificate of deposit, the term of which is renewable for successive
terms of not less than one (1) year each, that is assigned to the City; or
(E) Other form of security deposit acceptable to the City.
Security deposits shall be held as long asthe Gas Service Provider provides
Gas services in CPAU’S service territory.
(END)
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
% ,:.".:. ~
CITY OF PALO ALTO
UTILITIES
Sheet No. - 3
BILLING, ADJUSTMENTS,AND PAYMENT OF BILLS
RULE AND REGULATION 11
At PREPARATION AND PRORATION OF BILLS:
Bills for utility services will be prepared on a monthly basis in accordance with the
rate schedule or CPAU contract applicable to the premises served, as determined
by CPAU.
The monthly minimum or service charge for metered water (and related
wastewater), gas, or electric service, as well as the consumption "blocks" if
applicable for opening, closing, or regular bills, will be prorated on the basis of the
number of days in the service period to the number of days in an average month.
The number of days in an average month will be taken as 30.4. The effect of such
proration will be to produce a uniform average unit cost for the commodity
regardless of the number of days in the service period.
In the event that water, gas, electric, refuse, wastewater and/or storm drain rates
change during the service period, charges will be prorated on the basis of the
number of days covered by the previous rate schedule to the number of days
covered by the new rate schedule.
The monthly (or bimonthly) flat-rate charge for refuse, storm drain and wastewater
or other nonmetered services will be billed 12 times per year, or equivalent thereof
on regular bills. Such charges will only be prorated on opening or closing bills and
when rates change.
BILLING UNITS:
1.All metered’ billing units used for billing purposes shall be determined to the
nearest whole unit. Such units may include, kW, kWh, kVa, kVar, hp, therms, and
or ccf.
C.PAYMENT OF BILLS:
CPAU issues’ bills to its customers on a monthly basis. Bills shall be deemed received
upon personal delivery to Customer or three days following the deposit of the bill in the
United States Mail to the Customer’s last known address. Bills for CPAU services are
due and payable 20 days following issuance of the bill statement. Bills unpaid after the 20
CITY OF PALO ALTO UTILITIES
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BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
day period are considered delinquent. If a Customer’s payment is not received by CPAU
before the next bill statement is issued, the outstanding balance in excess of $100 will be
assessed a late payment charge in accordance with this rule. For the convenience of
CPAU Customers there are a number of ways to pay CPAU bills:
By enclosing the bill stub and check and mailing to: CPAU, P.O. Box 10097, Palo
Alto, CA 94303-0897.
By paying in person at the Civic Center, Revenue Collections, 1st Floor, 250
Hamilton Avenue, Palo Alto between the hours of 8:00 a.m and 4:30 p.m.. Visa
and Master card payments can be processed at Revenue Collections.
By dropping the payment in the Night Depository Box either in the from of the
Civic Center Plaza or at the drive-up Night Depository Box in the Civic Center
Garage, A level.
By banking at a financial institution or subscribing to a service company that
provides automatic payments by telephone transfer between the Customer and the
bank. This involves the Customer notifying (by touch tone telephone) the bank or
service company each month of the utilities bill amount, the amount is deducted
from their bank account, and the bank issues a check to CPAU.
LATE PAYMENT CHARGES:
Any unpaid balance above $100 from a prior billing period is delinquent and
assessed a late payment charge. Utilities charges incurred in the current billing
period are due and payable by the "Due Date" indicated on the front of the bill
statement. Bills’unpaid by the due date are considered delinquent and a late
payment charge is added to the outstanding balance if payment is not received
before the next bill is rendered.
Based on the particular merits of a given situation, late payment charges may be
waived by CPAU. Examples of situations where a waiver is granted are generally
those under which the Customer is faced with circumstances beyond his or her
control. Two examples are:
(A) The posting of payments received by CPAU is delayed or in error.
CITY OF PALOALTO UTILITIES
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BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
(B)The Customer is withholding payment or partial payment pending
resolution of an inquiry,
In the event the Customer makes a payment of less than the total amount of bill
rendered, which amount includes any previous balance owing, CPAU shall apply
said payment first to the previous billing charges and the remainder, if any, to the
current billing charges unless otherwise agreed to by CPAU.
In the event that a Customer participating in the ProjectPLEDGE Program has a
delinquent bill, late charges will not be applied. However, the Customer’s
participation in ProjectPLEDGE will be discontinued after three consecutive
months in which the Customer has not included their pledge amount in the bill.
The late payment charge will be computed on the balance forward using the
following schedule:
If Balance is:
$ 00.00 to 99.99
100.00 to 199.99
200.00 to 299.99
300.00 to 399.99
400.00 to 499.99
500. 00 and up
Late Payment Charge
Per,Month is:
None
1.1 percent
1.2 percent
1.3 percent
1.4 percent
1.5 percent
Subparagraphs D(1) and D(2) to the contrary notwithstanding, Customers whose
CPAU bills include payments of principal and/or interest on loans from CPAU
which are secured by deeds of trust on real property shall be charged a late
payment charge when any current CPAU bill includes an unpaid installment on
such loan from a prior bill, provided that twenty (20) days have elapsed since the
day of the last billing. For closing bills, the elapsed time will be thirty (30) days.
The late charge on such loan payment shall be six percent (6%) of the installment
due or fine dollars ($5), whichever is greater. No charge will be imposed more
than one for a late payment for the same installment; provided, however, that the
imposition of the late charge on any late payment will not eliminate or supersede
late charges imposed on prior late payments.
No late charge will be imposed on any installment which is paid or tendered in full
CITY OF PALO ALTO UTILITIES
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BII,LING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
on or before its due date, or within the ten (10} days after notice is given that the
late charge will be imposed even though an earlier installment or installments, or
any late charges thereon, may have been paid in full when due. For purposes of
determining whether late charges may be imposed, any payment tendered by the
Customer shall be applied by CPAU to the most recent installment due. Nothing
in this Rule and Regulation shall be construed to alter in any way the duty of the
Customer to pay any installment on a loan from CPAU when due or to alter the
fights of CPAU to enforce the payment of such installments. Nothing in this
subparagraph shall alter the payment or collection of late Charges assessed in
accordance with subparagraphs (1) and (2) of this Rule and Regulation for CPAU
bills or portions thereof which do not include payments on loans secured by real
property.
In the event a Customer’s payment of principal and interest is past due on an
unsecured loan from CPAU, the applicable late payment charge may be established
in the contract with the customer,
RETURNED CHECK CHARGE:
A service charge will be made and collected by the City of Palo Alto for each
. check returned by a bank to CPAU for the reason of insufficient funds in
accordance with Rate Schedule C- 1.
DISPUTED BILLS:
1.CORRECTNESS OF BILL
If the correctness of a bill is questioned or disputed by the Customer, an
explanation should be requested from a Utilities Customer Service Representative
within five (5) days of receiving the utility bill.. If the bill is determined to be
incorrect, a corrected bill will be issued to the Customer.
2.BILL REVIEW PROCEDURE
(A)A Customer who has initiated a complaint or requested an investigation
within five (5) days of receiving the utility bill shall be given an opportunity
to review the complaint with the Supervisor, Customer Service Center.
CITY OF PALO ALTO UTILITIES
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UTILITIES
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BILLING, ADffUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
(c)
The review shall include consideration of whether the Customer should be
permitted to amortize the unpaid balance of their account over a reasonable
period of time.
After reviewing the disputed bill, the Supervisor, Customer Service Center
will:
(1) Authorize any necessary adjustments; or
(2) Advise the Customer that the bill is correct as presented; and
(3) Determine if an amortization period is warranted.
If an amortization period is warranted and agreed to by the Customer,
service will not be discontinued for nonpayment provided the Customer
complies with the amortization agreement, and provided the current bill is
paid within 20 days of the date issued.
If the Customer fails to comply with the amortization agreement, service
shall be subject to discontinuance for nonpayment of bills as provided in
Rule 14.
(E)Failure of the Customer to notify CPAU of a billing error or to request an
explanation of charges within 20 days of the date of the bill will constitute
acceptance by the Customer of the bill as rendered.
PAYMENT OF BILLS IN DISPUTE
If a Customer disputes a specific utility charge on a utilities bill covering multiple utilities,
the bill amount for utility services which are not in dispute shall be due
and payable by the date due on the bill statement. The Customer is not obligated
to pay the utility charge in dispute while CPAU is investigating the disputed charges.
Upon completion of the investigation, CPAU will notify the Customer if and when a
payment is required.
BILLING ADJUSTMENTS:
Under certain circumstances, CPAU will adjust a Customer’s bill to correct for billing
error or for reasons of equity and fairness. Such adjustments are generally of a one-time
nature. Billing error is the incorrect billing of an account due to an error by CPAU or the
CITY OF PALO ALTO UTILITIES
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CITY OF PALO ALTO
UTILITIES
Sheet No. - 5
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION ,11
Customer which results in incorrect charges to the Customer. Some billing errors also
arise if the Customer provides incorrect information to CPAU.
Billing adjustments applied to Customer charges for reasons of equity and fairness
include water or gas leak credits, smoothing, and in cases where excessive consumption
of water, gas, and/or electricity occurred and where Customers rented debris boxes as a
result of the Customer’s reasonable efforts to mitigate or remedy property damage or
loss caused by an event of force majeure.
Billing errors include, butare not limited to, incorrect meter reads or meter read estimates,
clerical errors, wrong therm factors, wrong meter multiplier, incorrect voltage discount,
meter installation, crossed meters, undercharges due to meter tampering, an inapplicable
rate, an oversight in the process of entering the appropriate meter information into the
computer system for billing, or field errors such as installing the meter or regulator
incorrectly.
1.SMOOTHING ADJUSTMENT
A smoothing adjustment averages the usage of a customer over two billing
periods. The Supervisor, Customer Service Center or a designated
representative shall determine if a smoothing adjustment is indicated,
A smoothing adjustment may be appropriate if consumption between two
billing cycles changes to an extraordinary high level and is caused by the
following.
(1) An estimated meter reading by CPAU; or
(2) A longer or irregular billing cycle.
2.METER ERRORS AND OTHER BILLING ADJUSTMENTS
(A)When, as a result of a test, a meter is found to be more than two percent
(2%) fast, CPAU will refund the Customer the overcharge based upon the
corrected meter readings for the period the meter was in use.
When, as a result of a test, a meter in residential use is found not to
register, or to register more than ten percent (10%) slow, CPAU may bill
CITY OF PALO ALTO UTILITIES
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CITY OF PALO ALTO
UTILITIES
Sheet No. - 6
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND P~GULATION 11
(c)
the Customer for the undercharge base on an average bill. The bill will be
computed upon an estimate of consumption based upon the Customer’s
prior use.
When, as a result of a test, a meter in other than residential use is found not
to register, or to register more than two percent (2%) slow, CPAU may bill
the Customer for the undercharge base on an average bill. The bill will be
computed upon an estimate of consumption based upon the Customer’s
prior use during the same season of the year.
APPLICABLE ADJUSTMENT PERIOD FOR METER ERRORS,
RETROACTIVE BILLING, AND REFUNDS
When it is found that a meter is recording in error or an error in billing has
occurred, the date and cause of which can be reliably established, the
retroactive billing adjustment will apply as follows:
(A)Where the Customer has been undercharged, the period to be
backbilled shall not exceed 6 months;
Where the Customer has been overcharged the period to be
refunded shall not exceed 12 months;
Where there is evidence that theft of energy or water has occurred, CPAU
shall retroactively bill and collect any underpayment or nonpayment of
charges. The applicable period to assess charges shall be from the date it
can be reasonably established the theft began to the date in which the
underpayment was discovered and initially established. The applicable
period shall not exceed 4 years.
4.WATER OR GAS LEAK CREDITS:
Billing adjustments may be made for water or gas lost as a result of leakage in a
line on the Customer premises beyond the CPAU meter. Leaking faucets, toilets,
hoses, or sprinklers do not qualify for a billing credit unless a determination has
been made by CPAU that the Customer had no control of such device(s) leaking.
CITY OF PALO ALTO UTILITIES
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CITY OF PALO ALTO
UTILITIES
Sheet No. - 7
BILLING,ADffUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
Under no circumstances will a billing credit be provided a Customer when the facts
indicate that a Customer had knowledge of a water or gas leak, but failed to take
corrective measures in a timely manner. It is the Customer’s responsibility to
maintain their lines and equipment in a reasonable condition such that leaks do not
occur.
Generally, a leakage credit will be granted for a one month billing cycle.
However, depending on the circumstances, a two month billing cycle may
be granted by the Supervisor, Customer Service Center. Such
circumstances include, but are not limited to, a leak occurring while a
Customer is out of town for an extended period of time. Leak credits will
not be provided beyond a two month billing cycle.
(B)All Customer classes are eligible for the leak credit. To qualify for the
water leak credit, evidence of having repaired the leak is required. Such
evidence may consist of a plumber’s repair bill material receipt or field
verification by CPAU. Customers who are negligent or slow to react in
repairing a leak do not qualify for a leak credit.
(0 To arrive at the corrected bill amount which reflects the leak credit, CPAU
will estimate what would have been the normal consumption and calculate
a normal bil! based on that consumption. Then, actual consumption in
excess of the normal figure will be billed at CPAU’s current wholesale
commodity cost plus ten percent. The sum of these two calculations
represents a revised billing amount. The leak credit is the difference
between the revised billing amount and the original bill.
BILLING ADJUSTMENTS IN CONNECTION WITH FORCE MAJEURE
EVENTS
For purposes of this Rule and Regulation, the term "force majeure" means
the occurrence of an event that is beyond the reasonable control of the
utility Customer and, which by reasonable efforts, the Customer could not
prevent. Such events include, but are not limited to, an Act of God, an
irresistible, superhuman cause, fire, flood, earthquake, or any other similar
cause.
CITY OF PALO ALTO UTILITIES
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Effective 9-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No.-8
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
KULE AND REGULATION 11
03)Water, Gas, and/or Electric
A water, gas, and/or electric billing adjustment in connection with
a force majeure event shall be limited to charges for water, gas,
and/or electricity consumption in excess of the historical average
for the customer The billing adjustment will be applied as a credit
on the customer’s bill. The credit is for the amount of excess
usage and represents the difference between the amount charged
for the applicable period and an amount calculated based on the
customer’s average consumption for a similar period. This credit
shall include a refund of any applicable utilities users tax that was
based on the amount of excess usage.
(2)The Director of Utilities shall determine the historical average
consumption. Depending on the availability of data and other
reasonable considerations, the basis for calculating such averages
may be the same month(s) in a previous year, a recent 12 month
average, a 6 month seasonal average for winter or summer, or other
appropriate period(s) as determined by the Director of Utilities.
(c)Debris Boxes
(1)A billing adjustment or refund in connection with debris boxes
shall be limited to Palo Alto Sanitation Company charges incurred
or to be incurred out-of-pocket by the resident, owner, or business
for removal of flood-damaged materials only. Refunds will not be
applied to charges paid through insurance policies. The Palo Alto
Sanitation Company will keep a record of those residences and
businesses that request debris boxes during the applicable refund.
period.
(D)To qualify for an adjustment under this section, the customer may be
required to provide documentation to verify damage to the residence or
building, or contents thereof. In circumstances in which the City has
previously verified such damage such as by a field visit or has made a
determination from other information resources, documentation from the
customer may not be required. However, to qualify for a refund for debris .
CITY OF PALO ALTO UTILITIES
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Sheet No. - 9
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND. REGULATION 11
box rentals, a signed statement by the customer is required that attests that
the debris box was used for flood-damaged materials only and that the
Customer has not and will not be reimbursed by homeowners insurance or
any other agency.
H.BUDGET BILLING PAYMENT PLAN:
A Budget Billing Payment Plan establishes equalized monthly payments and is available to
all residential Customers who qualify as set forth below.
Customers may join the Budget Billing Payment Plan at any time prior to July 1,
the beginning of the annual budget payment cycle, providing however, the
Customer account balance is zero, and the Customer has not been removed from
the budget plan for non-payment within the previous six months.
A Customer electing to Utilize the plan shall agree to make monthly payments
based on CPAU’s estimate of the Customer charges for the twelve-month period
July 1 through the next June 30, reflecting anticipated rate changes.
CPAU does not guarantee that the total actual charges will not exceed or be less
than its estimate. CPAU will review the account on a periodic basis and may
revise its estimate in response to changing rates or variations in the amount of
service used. CPAU may require that Customers pay a revised monthly amount as
a condition to continuing participation in the plan.
4.DISCONTINUANCE OF BUDGET BILLING:
The budget payment plan shall remain in effect from year to year, subject to
review of the monthly payment amount, and shall terminate when:
(A)
(B)
(C)
(O)
(E)
The customer notifies CPAU to terminate participation in the plan;
CPAU notifies the customer of the termination of its budget payment plan:
The Customer no longer takes service at the premises; or
The Customer owes an amount of two or more monthly payments.
However, if the customer eliminates the delinquency, removal from the
plan will not occur.
The Customer participates in Direct Access and buys from another Energy
CITY OF PALO ALTO UTILITIES
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Effective 9-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No.-10
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
Service Provider.
Upon termination of either CPAU service or participation in the budget payment
¯ plan, any amount owned by the Customer for actual charges shall immediately
become due and any amount due the Customer shall be refunded as soon as
possible.
RESALE PROHIBITED:
Services shall be used by Customer only for the purposes specified in
the service agreement and applicable rate schedule(s). CPAU service shall
not be resold except as provided in this rule.
Premises which are receiving service in conflict with this Rule as of the
effective date of this Rule may continue to receive service under such
conditions if so authorized in writing by CPAU.
Sub-metering shall be considered .sufficient evidence that utilities are being
resold, with the exception of provision I-4 below.
Property owners may bill the cost of providing utilities’ to individual tenants
separately from rent only with consent of the Assistant Director of Utilities,
Administrative Services. Charges for utilities may be allocated based upon
metering, square footage, or another methodology determined to be
reasonable by CPAU. Under no circumstances can the total costs of
CPAU services allocated to tenants exceed the costs of CPAU services
billed to the property owner by CPAU. A property owner using a billing
procedure coming within the scope of this Rule must disclose all
information used to determine a tenant’s utilities bill to the tenant or
CPAU, or both, upon request. Property owners are responsible for
resolving utility bill disputes with their tenants. Tenants may request and
receive from CPAU a copy of previous bills for a period not to exceed 12
months, charged to the property owner who sub-meters.
J.ACCOUNTING, BILLING, AND PAYMENT FOR GAS SERVICE PROVIDERS
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 9-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 11
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
P~ULE AND REGULATION 11
1.INFORMATION CHARGES
CPAU shall charge, and the Gas Service Provider shall pay, for any non-
confidential or non-proprietary information requested by the Gas Service
Provider pertaining to the Eligible Customer which is in addition to
information normally provided in accordance with CPAU’s procedures.
BILLING
All billings between the Gas Service Provider and CPAU for services under a
Gas Service Provider Agreement shall be performed by CPAU or the Pool
Manager on a calendar month basis.
(A)All billing statements shall reflect the period from 7:00:00 a.m. PST
on the first Day of each calendar month until 7:00:00 a.m. PST hours
on the first Day of the following calendar month; provided, however,
the billing statements for any partial first month and partial last
month of service shall be prorated by the number of Gas Days of
service during such month.
Bills sent to the Gas Service Provider shall be sent to the appropriate
billing address specified in the Gas Service Provider Agreement.
(c)Payments for amounts billed to the Gas Service Provider shall be due
on the last Day of the month in which the billing statement is issued or
the fifteenth (15th) Day after receipt of the billing statement,
whichever is later. Payments for amounts owed by CPAU to ~the Gas
Service Provider shall be applied as a credit to the Gas Service
Provider’s bill within the time in which the Gas Service Provider is
required to pay CPAU’s bills. If, as a result of the credit, the Gas
Service Provider is owed money, CPAU shall make payment in
accordance with this Rule. Payment shall be made at the offices
designated in The Gas Service Provider Agreement, or by electronic
funds transfer to accounts specified in The Gas Service Provider
Agreement.
(D) Amounts not paid on or before the due date shall be payable with
CITY OF PALO ALTO UTILITIES
Issued by the City Council
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CITY OF PALO ALTO
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Sheet No. - 12
BILLING,ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
o
(E)
interest accrued at the rate of one percent (1%) per month, or the
maximum interest rate permitted by Law, whichever is less, prorated
by Days from the due date to the date of payment. When payments
are mailed to CPAU, the billing statements shall be deemed paid on
the dates of receipt by CPAU.
If the Gas Service Provider disputes the accuracy of. any portion of the
billing statement, then the Gas Service Provider shall pay the
undisputed portion within the time required herein. Upon a
determination that any disputed amount should be paid bythe Gas
Service Provider, the Gas Service Provider shall pay such amount,
plus accrued interest, at the rate established in this Rule.
(F)CPAU shall adjust a billing statement as deemed reasonably necessary
by the Utilities Director for any billing statement error that is
established. All adjustments or billing statement errors shall be
resolved promptly as practicable, and, upon resolution, shall be
included in the billing statement for the next regular Billing Period.
RECORDS
CPAU and the Gas Service Provider Shall keep accounting records and books
for two (2) years in accordance with generally accepted accounting principles
and practices in the industry. CPAU and the Gas Service Provider shall have
the right to examine those books and the accounting records of the other
during that two-year (2-year) period.
Any examination will be at the examining Party’s expense, must be
conducted at a reasonable time, and must be confined to the extent necessary
to verify the accuracy of any statement, charge, or computation or any
demand made under or as a result of transporting Customer-owned Gas. "
(END)
CITY OF PALO ALTO UTILITIES
Issued by the City Council "~ ....--," ....
Effective 9-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No. - 13
NATURAL GAS DIRECT ACCESS
RULE AND REGULATION 12
A.APPLICAB~ITY
This Rule applies to Gas Direct Access Customers and Gas Service Providers
providing Gas service to Gas Direct Access Customers in accordance with the
provisions of Schedule G,4 and the Gas Service Provider Agreement.
GENERAL
1. NATURE OF SERVICE
The Gas Service Provider will deliver or have delivered to PG&E quantities of
Gas in accordance with PG&E Gas Rule 21, and PG&E will deliver equivalent
quantities of Gas adjusted for in-kind Shrinkage allowance, on a Btu-for-Btu
basis, into the City’s Pool. From the City’s Pool, CPAU will use the Local
Transmission System and Distribution System to deliver or have delivered the
equivalent quantities of Gas to the Customer’s Point of Delivery. The Gas
delivered to the Customer will not necessarily be the Gas that the Gas Service
Provider delivered to PG&E or CPAU.
2.GAS SPECIFICATIONS
Do
Unless otherwise agreed to by both parties, the gas delivered to CPAU must meet
the quality specifications detailed in PG&E’s Rule 21 or replacement rule. The
minimum and maximum heating value and the pressure of the gas must be such
that the gas can be integrated into CPAU’s system of the Point(s) of Receipt.
DELIVERY INTO PG&E SYSTEM
The Gas Service Provider must deliver the quality of Gas, allowance for in-kind
shrinkage, and minimum volumes to PG&E under the nominations procedures
spelled out by PG&E in its Gas Rule 21. All nominations must be communicated to
the Pool Manager thirty (30) minutes prior to PG&E’s deadlines.
DELIVERY INTO THE CITY’S POOL
CITY OF PALO ALTO UTILITIES
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Effective 9-1-99
CITY OF PALO AL~O
UTILITIES
Sheet No. - 1
NATURAL GAS DIRECT ACCESS
RULE AND REGULATION 12
o
IN-KIND SHRINKAGE ALLOWANCE - LOCAL DISTRIBUTION
The in-kind shrinkage quantity represents the unaccounted-for gas
attributable to the volume of gas received by CPAU for Gas Direct Access
service. Gas Service Providers shall deliver each Gas Day at the Point of
Receipt an additional in-kind quantity of Gas equal to two and one half
percent (2.5%) of the total volume of Gas to be delivered.
NOMINATIONS AND NOMINATION CHANGES
e
The GSP will conform to both CPAU nomination standards and PG&E
nomination standards when coordinating gas nominations with the Pool
Manager.
(A)All nominations shall be communicated to the Pool Manager in
accordance with PG&E Rules except for a thirty (30) minute
nomination deadline adjustment by facsimile transmission to the
number set forth in the Gas Service Provider Agreement.
Nominations that are accepted and scheduled by PG&E will be
confirmed by the Pool Manager to the Gas Service Provider.
(c)If the Gas Service Provider fails to provide the proper nomination
information, then the Gas Services Provider will be required to pay
any Imbalance Charges imposed by PG&E on CPAU due to that
failure.
EMERGENCIES
The Gas Service Provider shall respond to Curtailments, Operational Flow
Orders, and Emergency Flow Orders in accordance with Rule 13.
DAILY USAGE MEASUREMENT
For purposes of determining daily usage, Noncore Customers are required to have
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 9-1-99
CiTY OF PALO ALTO
UTILITIES
Sheet No. - 2
TRANSPORTATION OF NATURAL GAS
RULE... AND REGULATION 12
Fo
Meters that can record daily usage. Telemetering will be installed on Noncore
Customers’ meters, where CPAU determines that it is cost effective.
SECURITY DEPOSITS AND REESTABLISHMENT OF CREDIT
Security deposits will be made by the Gas Service Provider in accordance with Rule
6. Credit may be reestablished in accordance with Rule 7.
ADDITIONAL FACILITIES
Transportation of Gas does not obligate CPAU to construct any additional facilities
or to modify any existing facilities to provide receipt of Gas into CPAU’s system.
POSSESSION OF GAS
The Gas Service Provider shall be deemed to be in control and possession of the Gas
until the Gas is delivered to CPAU at the Point of Receipt. The Gas Service
Provider shall be deemed to regain control and possession of the Gas upon delivery
from CPAU to or on behalf of the Customer.
I~NDEMNIFICATION
The Gas Service Provider shall indemnify, protect, defend and hold harmless the
City, its council members, directors, officers, employees, partners, principals,
contractors, agents and representatives, from and against any and all administrative
and judicial proceedings and orders, charges, claims, costs, damages, demands,
expenses, fines, judgments, liabilities, losses, penalties, including reasonable
attorney’s fees and the costs of defense arising, directly or indirectly, in whole or in
part, out of the City’s activities or the City’s property and not arising out of the sole
negligence or willful misconduct of the City.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 9-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No.-3
TRANSPORTATION OF NATURAL GAS
RULE AND REGULATION 12
K.GAS BALANCING FOR GAS DIRECT ACCESS CUSTOMERS
Imbalances will be maintained at the City’s Pool. For deliveries made to Direct
Access Customers, the Customer’s Gas Service Provider will be responsible for
imbalances. All Gas Service Providers must endeavor to ensure that daily Gas
deliveries match daily Gas usage.
The Customer’s Gas Service Provider will assume responsibility for managing and
clearing imbalances for the Aggregated Load served by that Gas Service Provider.
The Gas Service Provider shall be responsible, including financially responsible,
from the date the Gas Service Provider Agreement goes into effect, for all applicable
balancing, capacity allocation and constraint obligations, charges, penalties, and
credits related to Gas service. Any existing imbalances and/or adjustments to past
imbalances will also become the responsibility of the Gas Service Provider upon the
effective date of the Gas Service Provider Agreement.
The Gas Service Provider will nominate transportation deliveries to the City’s Pool
on behalf of the customer in accordance with this Rule.
1.USAGE MEASUREMENT
For purposes of determining daily usage, Noncore Customers are required to
have Meters that can record daily usage. Telemetering will be installed on
Noncore Customers’ meters, where the City determines that it is cost
effective. .
o TOLERANCE BAND
The Tolerance Band is equal to the percentage of usage in the month the
imbalance occurred set by PG&E in PG&E’s Schedule G-BAL or other
replacement tariff. ’
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 9-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No.-4
TRANSPORTATION OF NATURAL GAs
RULE AND .REGULATION 12
CUMULATIVE IMBALANCE
A Gas Service Provider’s cumulative imbalance shall be the difference, for
each calendar month, between the metered usage of its Customers and actual
monthly Gas deliveries plus any adjustments carried forward from prior
months. A cumulative imbalance quantity will be stated each month on the
cumulative imbalance statement.
o
Any remaining cumulative imbalance, within the Tolerance Band, will be
considered the first transaction during the calendar month following the just-
completed imbalance period. Any remaining cumulative imbalance in excess
of the Tolerance Band will be automatically cashed out. Cashouts will
includea commodity cashout only. Commodity cashout prices will be in
accordance with PG&E’s Schedule G-BAL or replacement tariff.
ACCOUNTING ADJUSTMENTS
If accounting adjustments result in a change to a previous cumulative
imbalance, then:
1. If any portion of the adjusted quantity was previously subject to an
imbalance cashout, the adjusted portion of the cashout will be reversed.
2. Any remaining adjustment quantity will be considered the first
transaction ’during the calendar month following the date of notification of
the adjustment, unless otherwise agreed to by CPAU.
CURTAILMENT OF SERVICE
Imbalance Services by CPAU may be curtailed. Details are provided in Rule
13.
6.TERMINATION
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 9-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No.
TRANSPORTATION OF NATURAL GAS
RULE AND REGULATION 12
Upon termination of the Gas Service Provider agreement, any remaining
imbalance will be cashed out at the applicable commodity cashout prices.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 9-1-99
CITY OF PALO ALTO
UTILITIES
Sheet No.-6
SHORTAGE OF SUPPLY AND INTERRUPTION OF DELIVERY
OF ENERGY AND GAS
RULE AND REGULATION 13
A. GENERAL:
CPAU will make reasonable efforts to deliver continuous and sufficient utility service to
its Customers, but CPAU does not guarantee the continuity or sufficiency of supply.
CPAU will not be liable for service interruption, shortage or insufficiency of utility supply,
or any loss or damage occasioned thereby.
INTERRUPTION OF DELIVERY:
Co
When interruptions occur, CPAU will endeavor to reestablish service with the
shortest possible delay consistent with the safety of its Customers and the general
public.
CPAU will have the right to suspend service temporarily for the purpose of maldng
repairs of improvements to the system. When CPAU finds it necessary to schedule
an interruption to its service, it will, where feasible, notify all Customers to be
affected of the approximate time and the anticipated duration of the interruption.
CPAU will endeavor to schedule interruptions at hours that will be least
inconvenient to the Customers and consistent with economical utility operations.
SHORTAGE OF SUPPLY:
During times of threatened or actual shortage of supply, CPAU will apportion the
available supply among its Customers in accordance with the Emergency Load Shedding
Plans, incorporated herein by reference, on file with CPAU. With due regard for public
health and safety, these plans will provide for shortages caused by insufficient supply or
natural or manmade events which reduce the capacity of CPAU’s suppliers and CPAU is
requested to limit the level of delivery to its Customers for some specified period of time
of"until further notice." The Director of Utilities is authorized to adjust the Emergency
Load Shedding plans to reflect changes in personnel, distribution systems, utility services,
or other factors, when, in the opinion of the Director of Utilities such adjustments will lead
to better protection of the public health and general welfare.
CITY OF PALO ALTO UTUtJTIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES Sheet No. -1
SHORTAGE OF SUPPLY AND INTERRUPTION OF DELIVERY
OF ENERGY AND GAS
RULE AND REGULATION 13
Do OVERSUPPLY OR POWER SURGES ON THE DISTRIBUTION SYSTEM
Power surges may occur due to conditions beyond the control of CPAU or its
Customers. CPAU will make reasonable efforts to minimize power surges occurring on
the CPAU distribution system, but CPAU does not guarantee that power surges will not
occur. CPAU recommends that Customers protect their connected loads and equipment
from power surges. CPAU shall not be liable for any loss or damage occasioned by power
surges.
CAPACITY ALLOCATION; CONSTRAINT OR CURTAILMENT OF NATURAL
GAS SERVICE
CPAU may reduce, interrupt, or allocate natural Gas supply services for operational
reasons in the event of projected or actual supply or capacity shortages.
A Point of Receipt service restriction is a reduction of the nominations at the Point
of Receipt to match the capacity available in the Distribution system. Gas Direct
Access Customers and their Gas Service Providers are solely responsible for
providing the necessary services upstream of the Point of Receipt. A Point of
Delivery service restriction is a reduction of the daily quantity delivered to the
Customer or temporary interruption of the Customer’s service.
CPAU will exercise good faith efforts to furnish and deliver continuous service and a
sufficient quantity of Gas to Customers, but CPAU does not guarantee continuity of
service or SUfficiency of quantity. CPAU shall not be liable for any interruption,
shortage, or insufficient supply, or any loss or damage of any kind or character
caused by such, if caused by an Uncontrollable Force or any other cause that is
beyond CPAU’s reasonable control except that arising from its failure to exercise
reasonable diligence. CPAU shall be the sole judge of whether it is operationally
able to receive and/or deliver Gas on its Distribution System. CPAU shall not be
liable to the Customer for damages, or otherwise, as the result of any interruption,
reduction, or allocation of Gas transportation capacity or delivery service.
CPAU may, in the exercise of reasonable judgment, reduce receipts or deliveries of
natural Gas in order to test, alter, modify, enlarge, or repair any part of the
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
U T I L I T I E S Sheet No. -2
SHORTAGE OF SUPPLY AND INTERRUPTION OF DELIVERY
OF ENERGY AND GAS
RULE AND REGULATION 13
Distribution System or any facility or property related to the operation of the
Distribution System. In all such cases, CPAU shall give the Customers reasonable
notice as circumstances will permit, and CPAU shall complete such repairs or
improvements as soon as practicable and with minimal inconvenience to Customers.
CPAU shall not be responsible for any Curtailment, confiscation, or inability to
deliver natural Gas into the PG&E, or any other upstream pipeline, system. CPAU
shall not be responsible for any Curtailment or confiscation by PG&E causing an
inability to deliver natural Gas into CPAU’s Pool. Any shortfall in deliveries into
the City’s Pool must be made up by obtaining third-party Gas supplies, reducing
customer usage, or receiving supplies subject to the balancing provisions described
in Utility Rule and Regulation 12, if available.
1. RECEIPT POINT CAPACITY ALLOCATION
(A)
(B)
(C)
CITY OF PALO
Issued by the City
Effective 7-1-99
Allocation Because of Non-conformance of Gas to CPAU’s Specifications
CPAU has the right and responsibility to maintain the quality standards
of the gas in its system. CPAU may refuse to accept gas or to accept
limited amounts of gas if the gas is not of the quality required for service
to CPAU Customers. CPAU shall be the sole judge of the ability of its
system to accept any such gas not conforming to its specifications. (See
Utility Rule and Regulation 12.)
Allocation Due to Local Constraints
CPAU may reduce the amount of gas CPAU receives on the Customer’s
behalf due to operating conditions or regulatory requirements affecting
all or a portion of CPAU’s system. CPAU will take whatever steps it
determines are operationally appropriate in the event a constraint on
CPAU’s Distribution System threatens service to Customers.
In the event CPAU reduces the receipt of Customer-owned gas for any
reason cited above, the Customer must obtain third party gas, stop
receiving service, or receive supplies subject to the imbalance provisions
ALTO UT]I~ITIES
Council
CITY OF PALO ALTO
UTILITIES Sheet No. -3
SHORTAGE OF SUPPLY AND INTERRUPTION OF DELIVERY
OF ENERGY AND GAS
RULE AND REGULATION 13
in Utility Rule and Regulation 12 if this service is available.
2. POINT OF DELIVERY SERVICE RESTRICTIONS
(A)Reasons for service restrictions
O)
(2)
Operating Constraints
CPAU may interrupt or reduce delivery of natural Gas in the
event of projected or actual capacity constraints or projected or
actual supply shortages on the Distribution System, subject to the
priorities set forth in Section 3.
Local Constraints
In the event of lo~:alized constraints, Customers in unconstrained
areas may continue to receive service; provided, however that
CPAU may take whatever steps it determines are operationally
necessary in the event a constraint on the Distribution System
threatens service to Customers. This may include Curtailment of
Noncore Customers.
3.CURTAILMENT PRIORITIES
In the event of a projected or actual supply Curtailment, Customers will be
curtailed in the following order of precedence:
1.Noncore Accounts
2.Core Commercial Accounts
3.Residential Accounts
Should the amounts to be curtailed be less than an entire category, CPAU will
curtail accounts on a pro rata or rotating block basis.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
U T I L I T I E S Sheet No. -4
SHORTAGE OF SUPPLY AND INTERRUPTION OF DELIVERY
OF ENERGY AND GAS
RULE AND REGULATION 13
4.OPERATIONAL FLOW ORDERS, EMERGENCY FLOW ORDERS, AND
DIVERSIONS
If at any time PG&E imposes an OFO, EFO, or diversion requirements upon
CPAU, the Pool Manager, or the Balancing Agent, the Gas Service Provider and all
Customers will comply with those restrictions in accordance with PG&E’s Rule 14.
If the Gas Service Provider does not comply with the requirements established by
PG&E during an OFO, EFO or Diversion, the Gas Service Provider or Customer
will pay a noncompliance Charge. The noncompliance charge will be calculated in
accordance with PG&E’s Rule 14 or replacement Rule.- This applies to Gas Direct
Access Customers and Noncore Full-Service Customers.
(END)
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-99
CITY OF PALO ALTO
UTILITIES Sheet No. -5
ATTACHMENT III
GAS SERVICE PROVIDER CONTRACT
THIS GAS SERVICE PROVIDER CONTRACT ("Contract"), dated as
of , 19__, is entered into, by and between the CITY OF
PALO ALTO, a municipal corporation of the State of California
(~CITY") and ("GSP") (collectively, "Parties", and,
individually, ~Party"), in reference to the following facts:
A. In the exercise of the powers granted under Article
XI, Section 9 of the California Constitution, the Charter, the Palo
Alto Municipal Code and other Laws, the Palo Alto City Council has
authorized the CITY’s gas utility customers to negotiate with other
suppliers of natural gas and other related natural gas services.
B. The CITY’s designated Pool Manager will serve as the
CITY’s exclusive .agent in connection with the CITY’s exercise of
rights and the performance of obligations under this Contract.
C. In reliance on the GSP’s due authorization and
qualification to provide natural gas commodity services to retail
customers in the State of California, the CITY wishes to authorize
the GSP to negotiate, directly, with the CITY’s natural gas utility
customers in accordance with applicable Laws and the Provisions.
The GSP wishes to provide natural gas commodity and related natural
gas services to the CITY’s Eligible natural gas utility customers
in accordance with applicable Laws and the Provisions.
follows:
IN CONSIDERATION OF the Provisions, the Parties agree, as
ARTICLE 1 .SPECIAL TERMS : INTERPRETATION
i.i General. The special terms that are denoted by
initial or full capitalized letters in this Contract and its
exhibits shall have the meanings set forth in the Palo Alto
Municipal Code, the Utilities Rates and Regulations and this
Contract, unless the context clearly indicates otherwise.
1.2 Applicable Utilities Rates and Requlation~. The GSP
agrees to fully comply with the Utilities Rates and Regulations,
including, without limitation, Rule and Regulation numbers 2, 6, 7,
iI~ 12 and 13, as may be amended from time to time, and Rate
Schedule G-4, as may be amended from time to time, all of which
pertain to the provision of natural gas service, and the Provisions
of this Contract and its exhibits.
1.3 Consequences of Changes. If the CITY adopts,
modifies or repeals any portion of the Utilities Rules and
981218 syn 0071556
1
Regulations that would result in the material and adverse
alteration of the rights or obligations of the GSP under this-
Contract, then, upon the written request of the GSP, the Parties
shall, in good faith, confer and attempt to renegotiate any
Provision of this Contract that is directly affected by such
adoption, modification or repeal. If the Parties are unable to
renegotiate the applicable Provisions of this Contract to their
mutual satisfaction within a reasonable time, then any Party may
exercise its rights under this Contract or by Law to terminate this
Contract.
ARTICLE 2.TERM AND TERMINATION
2.1 ~.This Contract will become effective as of
(~Service Initiation Date") and will remain in effect,
unless and until it is terminated by the GSP or the CITY in
accordance with the Palo Alto Municipal Code, the Utilities Rules
and Regulations and this Contract.
2.2 Termination by. CITY. The CITY, acting by and
through the City Manager in the exercise of his or her Sole
Discretion, may terminate for convenience this Contract, and
termination hereof shall become effective forty five (45) Days
after the date on which written notice of termination is received
by the GSP. The GSP may not compel a contrary or different
decision on any such matter, and notwithstanding any other
Provision of this Contract, the individual exercising such Sole
Discretion on behalf of the CITY shall not be liable to the other
Party.
2.3 Termination... by GSP. The GSP may terminate for
convenience this Contract, and termination hereof shall become
effective ninety (90) Days after the date on which written notice
of termination is received by the CITY; provided, however, if the
CITY adopts, modifies or repeals a special term or condition that
has the effect of. materially and adversely altering the GSP’s
rights or obligations under this Contract, the GSP may terminate
for convenience this Contract forty-five (45) Days after the date
on which written notice of termination is received by the Utilities
Director, acting on behalf of the CITY. The GSP shall bear the
burden of proving to the CITY that the CITY’s adoption,
modification or repeal of .a special term or condition will
materially and adversely alter the GSP’s rights or obligations
under this Contract.
2.4 Termination . for ....Cause. This Contract may be
terminated for cause by a Party in accordance with the Provisions
of this Contract or by Law.
981218 syn 0071556
2
2.5 Conflicting T~rmination Notices. Nothing in this
Contract shall be deemed or construed to prohibit the exercise of
a Party’s right to terminate for cause at any time after a right to
terminate for convenience has been exercised, but such termination
for convenience has not yet become effective. In the event that
both a notice of termination for cause and a notice of termination
for convenience-have been delivered, this Contract shall terminate
on the earlier of the effective termination date of such notice.
ARTICLE 3.GAS DIRECT ACCESS SERVICES
3.1 Commliance...with Laws. The Parties, and each of
them, shall comply with the applicable Laws in the exercise of
their rights and obligations under this Contract.
3.2 Grant of. Authority. In consideration of the mutual
covenants, the CITY hereby authorizes the GSP to provide natural
gas commodity services and other related natural gas services to
one or more Eligible Customers, and the GSP hereby agrees to
provide natural gas commodity services and other related natural
gas services to the Eligible Customers in accordance with the
applicable Laws and the Provisions of this Contract.
3.2.1 Subject to the GSP’s compliance with the
conditions precedent governing the initiation of natural gas
commodity services to an Eligible Customer, natural gas may be
delivered on or after the first Day of the Billing Period
immediately following the Service Initiation Date. Natural gas
commodity services shall not be provided to an Eligible Customer
before the Service Initiation Date that is established for that
Eligible Customer. The CITY will not accept any natural gas
nomination from the GSP prior to an Eligible Customer’s Service
Initiation Date. ~
3.3 Exercise of Authority. The GSP shall comply with
the following preliminary and procedural requirements as a
condition precedent to the provision of natural gas commodity
services to an Eligible Customer.
3.3.1 The GSP shall obtain an Eligible Customer’s
written authorization in the form set forth in EXHIBIT "A" to
provide natural gas commodity services. Such authorization shall
constitute the Customer’s request to receive Gas Direct Access
service from the CITY under Rate Schedule G-4, and shall
constitutes the Eligible Customer’s authorization to the GSP to act
on the Eligible Customer’s behalf in providing natural gas
commodity services to the Customer.
981218 ~yn 0071~56
3
3.3.2 An Eligible Customer who wishes to terminate
authorization and commence receiving natural gas commodity services
from .the CITY must provide written notice to the CITY to terminate
the authorization. The termination may apply to all or some of the
Customer’s accounts, as specified in EXHIBIT ~A". A termination of
such authorization, in the form as set forth in EXHIBIT ~B", must
be submitted to the CITY, and a copy of EXHIBIT "B" must be given
to the GSP.
3.3.3 A summary (Exhibit "D") must be completed by the
GSP and must be submitted to the CITY, if the GSP provides natural
gas commodity service to more than one’ Customer under the Contract.
3.3.4 The GSP shall execute on or before the
Commencement Date the CITY’s Standard of Conduct for Affiliates, in
the form as set forth in EXHIBIT "F".
3.3.5 The GSP shall post a security deposit in an
amount, as set forth in Utilities Rule and Regulation number 7,
before it may commence providing natural gas commodity services to
an Eligible Customer under this Contract.
ARTICLE,,,4.CONTRACT QUANTITIES
4.1 ~____Q. The Maximum Daily Quantity of natural gas, as
specified in EXHIBIT ~A", will be the maximum amount of natural gas
that the GSP may deliver into the City’s Pool for delivery to an
Eligible Customer on any Gas’Day. The MDQ for the GSP shall be
equal to the sum of the MDQs of all Eligible Customers served by
the GSP.
ARTICLE 5.BILLING
5.1 Charoes. The GSP agrees to pay the CITY for all
charges associated .with services that the CITY provides to the GSP.
These charges shall include, without limitation, imbalance charges,
as set forth in Utilities Rule and Regulation number 12, as may be
amended from time to time, Operational Flow Order, Emergency Flow
Order, and Involuntary Diversion penalties, as set forth in
Utilities Rule and Regulation number 13, as may be amended from
time to time, and the Pool Administration Charge and the Metering
Charge, as set forth in EXHIBIT ~G".
5.2 Payment DUe. The CITY will bill the GSP for any and
all services rendered to the GSP under this Contract. The charges
shall be due and payable in accordance with Utilities Rule and
Regulation number ii as may be amended from time to time.
981218 syn 0071556
ARTICLE 6.METERING AND DEVIATIONS
6.1 Meter standards. The metering standards set forth in
the Utilities Rules and Regulations shall govern GSP-Eligible
Customer transactions authorized under this Contract. The CITY
shall be responsible for collecting, maintaining and storing the
Eligible Customer’s historical natural gas meter data, which shall
be made available to the GSP, provided that the Eligible Customer
authorizes, in writing, such disclosure by the CITY.
6.2 Determination of Load. The CITY or its designated
Meter Data Management Agent shall interrogate by means of remote
facilities the Eligible Customer’s interval meter data, including,
without limitation, the performance of data validations and
associated data corrections as may be deemed necessary by the CITY
in order for the CITY to prepare settlement-quality data. The
detailed information shall be provided to the GSP on a daily basis.
ARTICLE 7.GENERAL OBLIGATIONS
7.1 General Obligations. In addition to the other
obligations of the GSP specified in this Contract, the GSP shall:
7.1.1 Pay for all Charges due and payable to the CITY;
7.1.2 Comply with all associated reporting requirements;
7.1.3 Endeavor to ensure that daily natural gas commodity
deliveries match the daily Eligible Customer’s natural gas usage;
7.1.4 Accept responsibility for imbalances in accordance
with Utilities Rule and Regulation number 12;
7.1~.5 Communicate with the CITY’s agent, as necessary,
or as deemed appropriate by the CITY, on matters directly affecting
the rights and obligations of the Parties under this Contract;
7.1.6 Bill and collect the Charges for natural gas
commodity services and related Charges, including, without
limitation, Taxes, and file all tax forms, including the Utility
Users Tax Remittance Form, as set forth in EXHIBIT ~E";
7.1.7 Notify the CITY of the names, addresses, telephone
numbers and other relevant information of any Person representing
the GSP in.connection with this Contract;
7.1.8 Adhere to Prudent Utility Practices in providing
natural gas commodity services to Eligible Customers under this
Contract;
981218 syn 0071556
5
7.1.9 Assure that its Affiliates meet the standards of
conduct in dealing with Eligible Customers, as are set forth in
EXHIBIT "F";
7.2 Eligible C~stQmer Service DisconneGtion. If the
CITY r~quires th% discontinuance of natural gas commodity services
to an Eligible Customer, the CITY shall notify the GSP only if the
CITY’s service to the Eligible Customer’s Accounts is closed
permanently in accordance with applicable CITY procedures. In such
event, the CITY will give not less than five (5) Days’ prior
written notice¯ The CITY shall not be liable for damages for its
failure to provide such notice¯
7~3 Planned,,,,,Curtailment. During a period of planned
curtailment, which will affect, substantially, service provided by
the GSP to an Eligible Customer, the CITY will attempt to notify
the GSP of the curtailment, so that the GSP may make any desired
modifications to its Gas nominations that ar4 supplied to the Pool
Manager. The CITY will not be liable for damages for its failure to
provide such notice.
7.4 Emergency_ Curtailment. Natural gas commodity
services provided by the GSP shall be subject to emergency
curtailments in accordance with Utilities Rule and Regulation
number 13, as may be amended from time to time.
ARTICLE 8.REPRESENTATIONS AND WARRANTIES
8.1
warrants :
GSP REPRESENTATION.The GSP represents and
8.1.1 It is a corporation duly organized and validly
existing and in good standing under the Laws of the State of
¯It has all requisite corporate power and authority to
own its property, real and personal, and operate its business as
and where it is now being conducted.
8.1.2 It has the power and authority to enter into this
Contract and perform its obligations hereunder. The execution,
delivery and performance hereof have been duly authorized by all
necessary corporate actions and proceedings. This Contract is (and
any other instrument, document or writing to be executed and
delivered by the GSP pursuant hereto will be) legal, valid and
binding obligations of the GSP, and enforceable against the GSP in
accordance with the Provisions of this Contract except as may be
limited by applicable Laws.
9~121~ syn 0071556
6
8.1.3 The execution and delivery hereof and any other
instrument, document or writing contemplated hereby by the GSP will
not conflict with or violate or constitute a breach or default
under the Articles of Incorporation or Bylaws of the GSP or the
provision of any mortgage, trust, indenture, bond, lien, pledge,
release,contract, guaranty or instrument to which the GSP is
subject.
8.1.4 All information, financial statements, records,
reports, resolutions, certifications and other documents or
writings which will be submitted by the GSP pursuant to the
Provisions of this Contract will be true and correct at the time
such information, financial statements, records, reports,
resolutions, certifications and other documents or writings are
submitted or made available to the CITY.
8.1.5 There are no unresolved claims or disputes between
the GSP and the CITY. There are no actions, suits or proceedings
pending or, to the knowledge of the GSP, threatened against the GSP
that, if adversely determined to the GSP, would materially and
adversely affect the ability of the GSP to perform its obligations
under this Contract.
8.2 CITy RE~RESENTATIQN. The CITY represents and
warrants:
8.2.1 It is a municipal corporation duly organized and
validly existing and in good standing under the Laws of the State
of California. It has all requisite corporate power and authority
to own its property, real and personal, and operate its business as
and where it is now being conducted.
8.2.2 It has the power and authority to enter into this
Contract and perform its obligations hereunder. The execution,
delivery and-performance hereof have been duly authorized by all
necessary actions and proceedings. This Contract is (and any other
instrument, document or writing to be executed and delivered by the
GSP pursuant hereto will be) legal, valid and binding obligations
of the CITY, and enforceable against the CITY in accordance with
the Provisions hereof except as may be limited by applicable Laws.
8.2.3 The execution and delivery hereof and any other~
instruments, documents or writings contemplated hereby by the~CITY
will not conflict with or violate any provision of the Charter or
the Municipal Code.
981218 ~yn 0071556
7
ARTICLE 9.ASSIGNMENT
9.1 General. Except as provided by Law, this Contract
shall not be assigned, in whole or in part, by a Party without the
written consent of the other Party, and any assignment, transfer,
license, conveyance, sale, hypothecation or encumbrance hereof by
shall be void.
ARTICLE i0.WAIVER AND ,, RELEASE
I0.I waiver. The consent by a Party to any act by the
other Party shall not be deemed to imply consent or to constitute
the waiver of a breach of any Provision hereof or continuing~waiver
of any subsequent breach of the same or any other Provision, nor
shall any custom or practice which may arise between the Parties in
the administration of any part of the Provisions hereof be
construed to waive or lessen the right of a Party to insist upon
the performance by the other Party in strict accordance with the
Provisions hereof.
10.2 Release. The CITY will not be liable for
interruption, shortage or insufficiency of supply or delivery of
Gas, or any loss or damage of any kind or character arising from or
related thereto, excepting only such damage arising directly from
the CITY’s gross negligence or willful misconduct.
ARTICLE Ii.DEFAULT AND REMEDIES FOR DEFAULT
I0.i GSP Default. This Contract may be terminated by
the CITY upon the occurrence of a default by the GSP under this
Contract, and the GSP fails to cure the same within thirty (30)
Days or within such longer period of time, as is provided below,
after the receipt of notice from the CITY, or, when the cure
reasonably requires more than thirty (30) Days, the failure of the
GSP to commence to cure within such thirty (30) Days and thereafter
diligently and continuously prosecute such cure to completion,
including, without limitation, any of the following:
i0.I.i Failure to pay any C~arge, when due, unless the
GSP in good faith disputes all or any portion of such Charge, in
which case the GSP shall pay only the undisputed portion, if any,
until such dispute is resolved;
10.1.2 Failure to pay any Tax, when due, or the failure
to perform any other obligation requiring the payment of money
under the Provisions hereof, and the failure continues for a period
of forty-five (45) Days, unless the GSP in good faith disputes all
or any portion of such Tax, in which case the GSP shall pay only
the undisputed portion, if any, until such dispute is resolved;
981218 syn 0071556
10.1.3 Failure to observe, perform or comply with any
material Provision of this Contract required to be observed,
performed or complied with by the GSP;
10.1.5 Assignment or transfer of its interest in this
Contract, whether voluntarily or by operation of Law, in violation
of the Provisions of this Contract;
10.1.6 General assignment of its assets for the benefit
of its creditors;
10.1.7 Filing by or against the GSP a petition to have
the GSP adjudicated a bankrupt, or a petition for a reorganization
or arrangement under any Law relating to bankruptcy or insolvency,
unless the same is dismissed within one hundred eighty (180) Days
after the same is instituted;
10.1.8 A Person other than the CITY obtains an order or
decree in any court of competent jurisdiction enjoining or
prohibiting the GSP from performing under this Contract, and such
order or decree is not vacated within one hundred eighty (180) Days
after the granting thereof, unless the GSP upon the written demand
of the CITY indemnifies the CITY against loss or damage suffered by
the CITY as a result of the GSP’s nonperformance pursuant to such
order or decree; and
10.1.9 Any representation, warranty, or statement made
by the GSP in this Contract that shall prove to have been incorrect
in any material respect when made.
In the event of a default by the GSP, the CITY shall give notice of
default to the GSP at least thirty (30) Days before any notice of
termination shall become effective.
lOf2 CITY Default. This Contract may be terminated by
the GSP upon the occurrence of any of the following defaults by the
CITY:
10.2.1 Failure to observe,’ perform or comply with any
material Provision hereof required to be observed, performed or
complied with by the CITY, and the CITY fails to cure the same
within thirty (30) Days, or, when the cure reasonably requires more
than thirty (50) Days, the failure of the CITY to commence to cure
within such thirty (30) Days and thereafter diligently and
continuously prosecute such cure to completion;
10.2.2 General assignment of its assets for the benefit
of its creditors, or the filing by or against the CITY a petition
to have the CITY adjudicated a bankrupt, or a petition for a
reorganization or arrangement under any Law relating to bankruptcy
981218 syn 0071556
9
or insolvency, unless the same is dismissed within one hundred
eighty (180) Days after the same is instituted, unless the CITY
upon the written demand of the GSP indemnifies the GSP against loss
or damage suffered by the GSP as a result of the CITY’s non-
performance pursuant to such order or. decree; and
10.2.3 A Person other than the GSP obtains an order or
decree in any court of competent jurisdiction enjoining or
prohibiting the CITY from performing under this Contract, and such
order or decree is not vacated within one hundred eighty (180) Days
after the granting thereof, unless the CITY upon the written demand
of the GSP indemnifies the GSP against loss or damage suffered by
the GSP as a result of the CITY’s non-performance~pursuant to such
order or decree.
In the event of a default by the CITY, the GSP shall give notice of
default to the CITY at least thirty (30) Days before any notice of
termination shall become effective.. _
10.3 Remedies. for D~f~ult. In .addition to all other
rights and remedies provided by Law or otherwise provided in this
Contract, to which the non-breaching Party may resort cumulatively,
or in the alternative, the non-breaching Party may:
10.3.1 Except as otherwise provided herein, keep this
Contract in effect and enforce all of its rights and remedies
hereunder, including the right to payment of Charges as they may
become due, by appropriate legal action;
10.3.2 Seek the specific performance hereof by the
breaching Party or other rights or remedies at law or in equity;
and
10.3.3 Terminate for cause this Contract by giving
notice of termination.
10.4 Suspension., If the GSP fails to procure and
schedule gas for more than five (5) consecutive Days, or defaults
in making payments to the CITY, or otherwise fails to perform its
obligations pursuant to this Contract or the Utilities Rules and
Regulations, this Contract may be immediately suspended. The CITY
shall immediately notify the Eligible Customer of the suspension,
which shall remain in effect for thirty (30) Days, after which time
the GSP may resume performance of its obligations if the CITY is
satisfied with the performance of the GSP.
10.4.1 During the term of the suspension, the Eligible
Customer shall be provided service under Rate Schedule number G-3.
981218 8yn 0071556
10
During the term of suspension, the CITY will assume imbalance, EF0,
and 0FO responsibilities for the Customer’s Load.
10.4.2 If the failure of performance by the GSP occurs
twice in the period of any one year, this Contract may be
immediately terminated by the CITY, and the Eligible Customer shall
be returned to the CITY’s gas procurement service.
10.5 Uncontrollable....Force. A Party to this Contract
shall not be deemed in default under this Contract when such
Party’s failure of performance is attributable to an Uncontrollable
Force.
10.6 Limitations. NOTWITHSTANDING ANY OTHER PROVISION
OF THIS CONTRACT, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
ANY CONSEQUENTIAL, EXEMPLARY, INCIDENTAL, INDIRECT, LIQUIDATED,
PUNITIVE OR SPECIAL DAMAGES OR LOST REVENUE OR LOST PROFITS TO ANY
PERSON ARISING OUT OF THIS’ CONTRACT OR THE PERFORMANCE OR
NONPERFORMANCE OF ANY PROVISION OF THIS CONTRACT, EVEN IF SUCH
PARTY HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES. THE
CITY’S TOTAL LIABILITY FOR ANY CLAIM OR DEMAND OF THE GAS SERVICE
PROVIDER ARISING OUT OF THIS CONTRACT SHALL NOT EXCEED THE AMOUNT
OF THE CHARGES PAID BY THE GAS SERVICE PROVIDER TO THE CITY PRIOR
TO THE DATE OF CLAIM OR DEMAND. [DOES THIS APPLY?]
ARTICLE II.NOTICE
All notices which shall or may be given pursuant to this
Contract shall be, in writing, and delivered by the United States
Postal Service, by means of private express delivery systems, or by
facsimile transmission, provided a copy of the same is followed by
delivery by the United States Postal Service or by private express
delivery systems, to the addresses of the parties identified in
Exhibit ~C", as stated below. Notices hereunder shall be effective
upon receipt to the addressee.
ARTICLE 12.MISCELLANEOUS PRO~ISIONS
12.1 Integration. This Contract contains the entire
understanding between the Parties with respect to the subject~
matter herein. There are no representations, warranties, agreements
or understandings (whether oral or written) between the Parties
relating to the subject matter hereof which are not fully expressed
herein.
12.2 .Amendments. This Contract may not be amended except
pursuant to a written instrument signed by the Parties. All
exhibits, which may be amended from time to time, and any addenda
and schedules which, from time to time, may be referred to in any
981218 syn 0071556
Ii
duly executed amendment to this Contract are by such reference
incorporated in this Contract and shall be deemed a part hereof.
12.3 Bin~lina Effect. This Contract shall be binding upon
and inure to the benefit of the successors and permitted assignees
of the Parties~
12.4 Headings. The Article headings hereof are inserted
for convenience of reference only, are not a part hereof and shall
have no effect on the construction or interpretation hereof.
12.5 CounterpartS. This Contract may be executed in any
number of counterparts, each of which shall be an original, but all
of which together shall constitute one and the same instrument.
12.6 Applicable Law. This Contract shall be governed by
and construed in accordance with the Laws of the State of
California without regard to its conflicts of laws, rules, or
principles.
12.7 _~_~W~. In the event that suit is brought by a Party,
the Parties agree that trial of such action shall be vested
exclusively in the state courts of California, County of Santa
Clara, or in the United States District Court, Northern District of
California, in the County of Santa Clara.
12.8 Severability. If any Provision is held by court of
competent jurisdiction in a final judicial action to be void,
voidable, or unenforceable, such Provision shall be deemed
severable from the remaining Provisions and shall in no way affect
the validity of the remaining portions hereof.
12.9 Conflicting Provisions. To the extent any Provision
of this Contract is in conflict with the Palo Alto Municipal Code
or the Utilities Rules and Regulations, the applicable provision
that imposes the higher duty on the Parties, and each of them,
shall govern.
12.10 Rules of Inter~_retation. Each Party and its counsel
have. reviewed this Contract. Accordingly, the normal rule of
construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the
construction and interpretation hereof.
12.11 Time is o.f Essence. For the purposes hereof, the
time in which an act is to be performed ’shall be computed by
excluding the first Day and including the last. If the time in
which an act is to be performed falls on a Saturday, Sunday, or any
981218 syn 0071556
12
Day observed as a official holiday by the CITY, the time for
performance shall be extended to the following Business Day.
IN WITNESS WHEREOF, this Contract is duly executed by the
Parties on the date first above stated in Palo Alto, County of
Santa Clara, California. ~
ATTEST:CITY OF PALO ALTO
City Clerk
APPROVED AS TO FORM:
Senior Asst. City Attorney
APPROVED:
Assistant City Manager
Director of Administrative
Services
Director of Utilities
Risk Manager
Mayor
GSP
By:
Name:
Title:
By:
Name:
Title:
Taxpayer Identification No.
(Compliance with Corp. Code § 313 is
required if the entity on whose
behalf this contract is signed is a
corporation. In the alternative, a
certified corporate resolution
attesting to the signatory authority
of the individuals signing in their
respective capacities is acceptable)
981218 sya 0071556
13
CERTIFICATE OF ACKNOWLEDGMENT
(Civil Code § 1189)
STATE OF
COUNTY OF
)
)
)
On , before me, the undersigned, a
notary public in and for said County, personally appeared
(check one) [ ] personally known to me ([ ] or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument, and acknowledged to me
that he/she/they executed the same in his/ her/their authorized
capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the ~entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
CERTIFICATE OF ACKNOWLEDGMENT
(Civil Code § 1189)
STATE OF
COUNTY OF
)
)
)
On
notary public in and for
, before me, the undersigned, a
said County, personally appeared
!
(check one) [ ] personally known to me ([ ] or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument, and acknowledged to me
that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
981218 syn 0071556
14
For City Use
Contract No
Date Received
Service Initiation Date
Termination Date
Revision
EXHIBIT ~A"
CUSTOMER AUTHORIZATION FOR GAS DIRECT ACCESS SERVICE
By this Authorization for Gas commodity service (Authorization), I
request Gas Direct Access Service from the City of Palo Alto
(CITY), a municipal corporation, and authorize the Gas Service
Provider listed below to provide Gas commodity services on my
behalf in accordance with the Utility Rules and Regulations.
Gas Service Provider (legal name):
My Gas Service Provider is authorized to do any and all things both
proper and necessary in establishing and administering such service
for and on my behalf, including (by way of illustration and not
limitation) the purchase, nomination and delivery of Gas supplies,
treatment, clearing and mailing payments for Gas imbalances, and
all procurement-related transactions for my Palo Alto Utility Gas
Accounts set forth in this Authorization.
The Service Initiation Date is designated in the Gas Service
Provider Agreement. The initial term of this Authorization will be
nine (9) consecutive Months from the Service Initiation Date and
thereafter will continue month-to-month unless the Customer closes
its business, or either the Customer or the Gas Service Provider
executes and submits to the CITY Exhibit B, Notice of Termination
of Gas Direct Access Service (Notice of Termination). Unless
otherwise specified, Notice of Termination received by the CITY
prior to the first .Day of the Month will become effective foreach
account on the normal meter reading date in the following month.
The effected Accounts will transfer to Schedule G-3 service until
an~Open Season is declared by the CITY, at which time I may take
Gas service under any Optional Rate Schedule.
I authorize the CITY to release~ to my Gas Service Provider by
written or electronic transfer the current and historical Gas usage
information for accounts set forth in this Authorization. I
release, hold harmless, and indemnify the CITY from any liability,
claims, demands, causes of action, damages, or expenses resulting
from unauthorized use of this information.
The CITY will provide its services to me in accordance with the
terms and conditions of Schedule G-4, Utility Rules and Regulations
2,6,7,11,12 and 13 and any other Utility Rules and Regulations and
981218 Byn 0071557
any modifications thereto authorized from time to time by the Palo
Alto City Council.
I will continue to be responsible for payment of the CITY’S
transportation Charges including PG&E Local Transmission System
Charges and CPAU’s Distribution System Charges. I understand that
the City Council does not regulate my Gas Service Provider, and
that the resolution of, or any losses or damages resulting from any
disputes I have with my Gas Service Provider will be my sole
responsibility. Billing disputes between me and the CITY will be
resolved as specified in the CITY’s Utility Rule and Regulation ii.
Accounts
My Gas Service Provider will serve the following City accounts
be completed by the City):
To
Gas Service Address Account
Number
Meter
Number
Average
Daily
Quantity
Maximum Daily. Quantity
I accept the Maximum Daily Quantity of MMBTUs. The MDQ
will be the maximum amount of Gas .that the Gas Service Provider
will be allowed to nominate into the~City’s Pool on any Day. The
MDQ is based on the historical maximum single Day use at the
facilities served under the Gas Service Provider Agreement. The
MDQ may be adjusted if I can document to the satisfaction of the
City that changes in my operations warrant a modified MDQ.
Communications
The CITY will use the following Customer address to which to send
formal notices.These addresses will not be used for billing on
CITY accounts.
9~121~, syn 0071557
2
To Customer
(Customer Name)
Mailing Address
Attention:
To the CITY
City of Palo Alto Utilities
Mailing Address:
250 Hamilton Avenue~
P.O. Box 10250
Palo Alto, CA 94301
Attention:
Telephone Number:
( )
Telecopier Number
(
(Please Type or Print Clearly)
Telephone Number
(650)329-
Telecopier Number
(650)326-1507
Signed by:
(Signature of Customer or duly-
authorized representative)
For
(Customer Name)
(Print Name)
(Title
(Date)
Accepted by:
For
(Customer Name)
(Print Name)
(Title)
(Date)
981218 ~’n 0071557
EXHIBIT
For City Use
Contract No
Date Received
Service Initiation Date
Termination Date
Revision
NOTICE OF TERMINATION OF GAS DIRECT ACCESS SERVICE
The Customer hereby directs the City to terminate Gas Direct Access
Service to Customer account(s) set forth in the attached
Authorization and to commence City natural gas commodity
procurement service for accounts in accordance with Schedule G-3.
Termination received by the first Day of the Month will become
effective for each account on the first day of the following. Month.
Termination is for accounts set forth below.
Gas Service Address Account Number Average Daily
Quantity (MMBTU)
The City must receive one completed and signed Notice of
Termination. Facscimiles or photocopies must be accompanied by an
original. Termination should be mailed to:
City of Palo Alto Utilities
Manager Supply Resources
P.O. Box 10250
Palo Alto, CA 94301
Telecopy Number (650) 326-1507
The Customer terminates the Authorization with the City for Gas
Direct Access Service for the accounts specified. The Party
executing Termination, whether a Customer or a Gas Service
Provider, is responsible for sending a copy of the Notice of
Termination to the other Party. The Customer and the Gas Service
provider are responsible for resolving any outstanding contractual
981218 ~yn 0071557
disputes regarding Termination or which survive termination. Once
Termination becomes effective, the Customer must remain on Schedule
G-3 until the next Open Season or negotiate a special contract with
the CITY.
This Termination is executed by an authorized representative of []
Customer or [] Gas Service Provider
(Company) Name:
Signature:
Printed Name:
Title:
Date:
Telephone:
Telecopy:
981218 syn 0071557
EXHIBIT ~C"
For City Use
Contract No
Date Received
Service Initiation Date
Termination Date
Revision
FORMAL COMMUNICATIONS BETWEEN PARTIES
This Exhibit C designates the formal contact names, mailing addresses, and
telephone and telecopier numbers for the Parties to the attached Gas Service
Provider Agreement. The information provided under this Exhibit C may be
changed from time to time by that party submitting a revised Exhibit C to the
other Party.
Formal Notices and
Program Administration
Business Name:
Mailing Address:
Attention:
Telephone Number;
Telecopy Number:
Gas Nomination
Business Name:
Mailing Address:
Attention:
Telephone Number;
Telecopy Number:
Imbalances
Business Name:
Mailing Address:
Attention:
Telephone Number;
Telecopy Number:
Invoices
Mailing Address:
Attention:
Telephone Number;
Telecopy Number:
Payments
Mailing Address:
Accounts:
Attention:
Telephone Number;
Telecopy Number:
To the City or Pool
Manager
To the Gas Service Provider
981218 ayn 0071557
6
EXHIBIT D
For City Use
Contract No
Date Received
Service Initiation Date
Termination Date
Revision
GAS SERVICE PROVIDER GROUP SUMMARY
Gas Service provider Name:
PrePared By:
Date Prepared:
An. updated Exhibit D must Accompany the Gas Service Provider’s
submittal of additional Customer Authorizations. The Gas Service
Provider must complete an entry for every Customer added to the
Gas Service Provider’s group. The contract number will be
assigned by the City.
Contract Number
(CITY USE ONLY)
Customer Name
Per Exhibit A
Number of Accounts
per Exhibit A
981218 syn 0071557
For City Use
Contract No
Date Received
Service Initiation Date
Termination Date
Revision
EXHIBIT ~E"
City of Palo Alto
Gas and Electric Utility Users
Remittance Form
Gas Service Provider Name:
For the period :
Tax
Utility Customer
Name
Utility Customer
.Address
City Charges
Plus Gas
Service
Provider
Charges for the
Period Above
(This
information
will be kept
confidential)
X 5% =
Utility
Users Tax
Owed’to
the City
of Palo
Alto
I hereby certify that the above represents the total amount owed to
the City of Palo Alto for the time period above, pursuant to the Palo
Alto Municipal Code (PAMC) Chapter 2.35 *.
By Date
Phone
9~121[~ syn 0071557
* Pursuant to Chapter 2.35 of the Municipal Code, a tax in the amount of
five percent (5%) on utility usage in Palo Alto shall be collected by utility
service suppliers and shall be remitted to the City of Palo Alto. The 5%
rate shall be imposed on the following services: metered electricity and Gas
plus any customer charges, charges for temporary services, service charges,
demand charges, and any other annual and/or monthly charges. For large
volume users determined by the City of Palo Alto, the rate may be reduced to
4% and 3% in accordance with Section 2.35.100 of the Municipal Code. Payment
shall be due to the City of Palo Alto by the 25th of the month for the
preceding billing month.
Remit to:
Supervisor of Revenue Collections
City of Palo Alto, ist Floor
250 Hamilton Avenue, Palo Alto, CA 94301 (650) 329-2317
981218 syn 0071557
9
For City Use
Contract No
Date Received
Service Initiation Date
Termination Date
Revision
EXHIBIT ~F"
STANDARD ,OF CONDUCT ,,, FOR AFFILIATES
Neither the Gas Service Provider nor its Affiliate shall represent
itself as an employee, agent or representative of the CITY or claim
association-or affiliation with the CITY in any capacity other than
as set forth in the Contract. The Gas Service Provider and its
Affiliates, jointly and severally, expressly covenant not to
intentionally deceive or mislead any Eligible Customer.
"Affiliate" means (I) any Person or entity that, directly or
indirectly, owns, controls or holds with the power to vote ten
percent (10%) or more of the outstanding voting rights of the GAS
SERVICE PROVIDER, (ii) any .Person or entity ten percent (10%) or more
of the outstanding voting securities of which is, directly or
indirectly, owned, controlled or held with power to vote by the GAS
SERVICE PROVIDER, (iii) any Person or entity who is a director or
executive officer of a Person or entity which is an affiliate thereof
under (I) or (ii), (iv) any Person or entity that, directly or
indirectly, through one or more intermediaries, is under common
control with the GAS SERVICE PROVIDER, or (v) any general partner or
limited partner of a Person or entity that, directly or indirectly,
owns, controls or holds with power to vote eighty percent (80%) or
more of the outstanding voting rights of the CUSTOMER. For the
purposes of (iv) above, a Person or entity shall be deemed under
common control with the GAS SERVICE PROVIDER only if the Person or
entity that exercises such common control owns, controls or holds
twenty-five (25%) or more of the outstanding voting rights of both
the GAS SERVICE PROVIDER and any such other Person or entity.
Effective date:
981218 syn 0071557
10
For City Use
Contract No
Date Received
Service Initiation Date
Termination Date
Revision
EXHIBIT ~G"
GAS SERVICE PROVIDER FEE SCHEDULE
B
C
Gas Service Provider $per month
Monthly Billing Charge
and Pool Administration
Fee
Imbalance Charges
EFO, OFO, Involuntary
Diversion Penalties
Metering and Us~’~e Data
Charge
As per Rule 12
As per Rule 13
$Per month
Notes:
A)
B)
C)
This charge covers the cost of monitoring daily and monthly
imbalances, resolving any questions regarding imbalances and
preparing the Gas Service Provider’s monthly bill for
Imbalance Charges and other services. There is only one
billing/pool administration Charge per Gas Service Provider
per month.
Imbalance Charges are described in Utility Rule and
Regulation 12, and are billed on a monthly, basis.
The penalties for OFO, EFO, or Involuntary Diversion
noncompliance are described in Utility Rule and Regulation
13.
D)This Charge covers the administrative cost of collecting and
communicating metering data to the Gas Service Provider.
There is only one billing/pool administration Charge per Gas
ServiCe Provider per month.
Effective date:
98121g syn 0071557
11
ATTACHMENT IV
customers in Palo Alto. T~mo~ should be spent on these general
kinds of programs, and to thei~x~? that that you want to spend some
money here, I do not persoj1~lly o~ect to that. Thank you for thisreport which I had aske~r. I appreciate the work you have done.
7.New Business
a. Natural Gas Direct Access Plan
Mr. Balachandran: You have a description of the plan in your report.
Karla Dailey will give a presentation on the mechanics of how this
program works in terms of operations and contracts and the different
entities involved. We will then take questions on both the presentation
and the report.
Ms Dailey: Just as an overview, as you have read in the report, this
is Phase 1 of direct access for the gas utility. This is only for the
largest customers on the system. These are the same customers who today
are eligible for the G-4 Transportation Only rate. So this is not an
expansion. It is more accurately a revision and improvement of what is
currently approved and on the books. The plan includes our future view
of how we can bring this to smaller customers -- the small commercial
customers and the residential customers. I am going to focus mostly
tonight on Phase I, which is for the large customers.
We talked about this several months ago in several of the quarterly
reports. We are on a track to bring this program to the customers
sooner. We were thinki~ng that with electric DA, there were going to be
some customers who were really interested in electric DA who might say
that they want to buy all of their energy from someone else. We wanted
to be ready for them on the gas side, if that happened. As you know, it
did not happen on the electric side, so we pulled back on the reins a
bit and took some time to do some more work and some more improvements
on this program. It is now scheduled to be rolled out in July of 1999,
which will coincide with the next phase of electric DA.
I have four slides, and would like to take you through some of the
concepts. Hopefully, some of these graphs will help clear up any
confusion that you may have developed in reading the report or just some
of the jargon that we have been using in the quarterly reports. This
diagram is the physical flow of gas. Right now, the city’s gas
provider, currently a company called Coral, delivers our gas in two
places. They deliver part of it at the California border, and that gas
moves through PG&E’s backbone system, which is the redwood line for us.
They deliver the rest of it at the PG&E city gate. "City gate" is a
confusing term, because it is not our city gate. It is not really
anyone’s city gate, but PG&E calls it the city gate, so we have to stay
with the terminology.
Between PG&E’s city gate and what I am calling our city meter, there is
another piece of pipeline which is PG&E’s local transmission system.
These are the medium size pipes. The gas accord opened up the backbone
portion of the PG&E system. It did several things, and that is one of
them. So that part of the system is now open access. Anyone, a
marketer, an end user, a producer, whoever, can buy capacity on the
MINUTES UAC:981104:MIN
Final Page 32
backbone system. The local transmission system is not unbundled, and it
is not open access. The only entities that can hold capacity on that
part of the system are the end-use customers. In PG&E’s eyes, Palo Alto
is an end-use customer, so we hold that capacity. Our customers do not
have the ability to go out and buy that on their own. The marketers do
not have the ability to go out and buy that and serve them at the Palo
Alto city meter. -The closest that anybody can get to our customers is
the PG&E city gate. So the arrow going from the gas service providers
who will be the parties who would potentially be serving our gas DA
customers, the closest they can get to our customers is the PG&E city
gate.
We move the gas from the city gate to the city meter, and then of
course, our local distribution system gets the gas to all of our
customers, whether they be our full service customers or gas DA
customers, the G-4 customers.
This slide shows a summary of Party Responsibilities. The three parties
that I have highlighted are the gas service provider, the city, and a
to-be determined pool manager. The gas service provider has to get gas
to the city’s pool point, which is basically the PG&E city gate for the
customers. They have all been nominating, they have to be sure they
deliver enough gas to Cover losses in our distribution system, and they
have to bill the customer for that commodity and for any other services
they might be contracted for. They also have the financial
responsibility for imbalances, which means that if they have not
delivered enough gas or have delivered too much gas relative to what
that customer actually used, they will fall subject to our rules and
regulations about imbalancing. They will have to pay those penalties as
laid out in that rule.
Palo Alto will provide the local transmission, the local distribution,
the metering, and we will bill the customer for those services. We also
provide a balancing service to the gas service provider, which means
that we will set up the rules for them. We will get them tolerance band
and a system to work within. It is impossible for everyone to be
exactly on balance, as you cannot know exactly what the customer is
going to use on a given day and deliver exactly that much gas, so
through our rules and regulations, we are setting up ways for the gas
service provider to meet our requirements and still be able to
effectively serve our customers.
The pool manager is an entity that we have not found yet. We are
actually in the process of developing a Scope of Work for an RFP for
this. This will be an impartial third party who will manage the Palo
Alto pool with. all of these potentially different gas service providers
nominating gas on behalf of Palo Alto customers. So it will be that
entity’s job to keep track of what the gas service providers are
nominating, to keep track of what the end users, the G-4 customers, are
using, calculate those imbalances, and we will probably have them do the
unbalance billing if there are any penalties or anything like that,
associated with imbalances, and they will also keep track of day-to-day
operational conditions, particularly on the PG&E system that the gas
services providers will have to be aware of. So what we are looking for
in this company is someone who is impartial, someone who is not in the
MINUTES UAC:981104:MINFinalPage 33
business of buying and selling commodities, because they will have to
know a lot of information about what the gas service providers are
nominating for those customers. You do not really w~nt one marketer who
is in charge of that and other marketers, who are having to divulge
information to that company. So we are probably going to have a fairly
short list of qualified bidders or proposers for that.
This.is probably easier to look at than talk about, but I will try and
start at the top of this slide and work around clockwise. I have the
City of Palo Alto in the middle, and have tried to represent all of the
agreements that will exist between ourselves and all of these other
parties. The pool manager is at the top, and we will need a pool
manager agreement. As I said, we are in the scoping of the RFP phase
right now, so obviously that agreement does not yet exist. The second
agreement is the gas service provider agreement. That~is akin to what
we have been calling on the electric side the gas bus. We are calling
it the gas bus on the gas side. That is one of the documents that will
be going to the council in January.
Our contract between ourselves and our customers will just be the
tariffs and the utility rules and regulations. As part of the gas bus,
there will be an exhibit that is an authorization. Basically, the
customer will just say, "I, Company XYZ, authorize Marketer ABC to be my
gas service provider," and all of these rules and regulations will apply.
It will be a very simple, one-page form that they will have to sign
authorizing that marketer to be their supplier. Between the customer
and the gas service provider, they will have their own gas sales
agreement, and the city will not be a party to those.
We will also have a meter data manager. That company will provide a lot
of services for us on the electric side. We are hoping that they can
collect the individual customer data and distribute that to the pool
manager and whoever else needs to see it. That will be more efficient
than our staff trying to do it, since they are going to be accessing all
those remote meters and setting up the software to do that. So the
meter data management agreement is not just for gas. There will be a
section in the agreement that applies to what they are going to do for
our gas meters.
Our own supplier, which is our gas service agreement currently with
Coral (if it is not with Coral, it will be with someone else), but we
will continue to have the same sort of commodity agreement with someone
to serve our full-service customers. Last but not least, the city has
an agreement with PG&E that is the natural gas service agreement. That
covers the local transmission services that we get from them that are
unbundled at this point, as well as the Redwood capacity that we
accepted, the allocation, the 6,000 MPGs per day. We have that
agreement with them, as well. That is all of the agreements.
This next slide is a summary of what is in the gas bus. We tried to put
as much of the meat as possible into the utility rules and regulations.
The contract is not nearly as thick as the gas bus, I would say. A lot
more of the details are in the utility rules and regulations, but just
as an overview, we did model a lot of this agreement after the electric
program, as well as PG&E’s core transport agreement. That is the
MINUTES UAC:981104:MIN
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agreement under which, if you want your core customers on PG&E’s system
as the marketer, you have to sign. On the PG&E system, if you are
serving non-core customers, there is no agreement. The responsibility
is placed on the customer, not on the gas service provider. But unlike
PG&E’s non-core program, we are placing the financial responsibility on
the GSP, not on the customer. That is why we need this agreement.
The major components are pretty typical ofcontracts, e.g., the term and
termination date, the maximum daily quantity, which is important because
Palo Alto has a maximum daily quantity that we can move across the local
transmission system. So we need to have some control over what a
marketer can nominate for a DA customer on our system on a daily basis.
So we are going to prorate our maximum daily quantity to those DA
customers and put a cap on how much gas they can move through the system
on any given day. Otherwise, our own core customers might be put at
risk of not being able to get all of their supply if we do not limit
that.
Also included in the contract is communication -- who needs to call
whom, how that needs to be done, default and remedies for it, metering
responsibility and protocols, plus liability, default, waiver and
release, assignment, warranties and representation, those types of legal
items are in there. It also includes the exhibits, which include the
customer authorization form I mentioned, and a sister form to that which
would allow the customer to terminate their agreement with the GSP for
whatever reason.
That is a quick summary of it. This particular agreement and the
utility ~ules and regulations are scheduled to go before the counc~l in
January, and now, I will be happy to take your questions.
Vice Chair Johnston: Without those charts, this would have been a lot
more difficult to understand the roles of all of the parties. This has
been a major help, along with the report.
Commissioner Eyerly: In listening to Karla and scanning this report, if
we get into this direct access, it seems to me we are going to have a
lot of contracts to worry about, and I doubt if they are all going to
come down in a regular format that we sign with the larger companies
that might be interested. Have you thought about the legal work
involved with these contracts?
Mr. Balachandran: These contracts that are being developed are up-front
contracts to establish the structure that will enable our customers to
enter into agreements with suppliers. Let’s say that in Phase I, we
have ten customers, and suppose that all of them leave. They are going
to be signing agreements with someone else. We do not get involved in
that. They will have had to sign the gas bus, which is a standard
contract being finalized right now, which the council will approve,
hopefully, in January.
Ms. Dailey~ I don’t think there will be room for much, if any,
negotiation on the gas bus. It is going to be a pretty standard
contract that they will have to sign. We are not going to have ten
different versions for ten different gas service providers. If they
want to serve a customer in the City of Palo Alto, that is what they
MINUTES UAC:981104:MINFinalPage 35
will have to sign. Most of the details are in th~ rules and
regulations, anyway, and we will not be changing rules and regulations
to fit individual gas service providers’ needs.
Commissioner Eyerly: I accept what you have to say, but suppose you do
get into some problems and there are some negotiations, are you going to
depend upon .our city attorney’s department to handle the legal end of it
if you. get into some of that? Or are you going to have a outside
specialist? Have you thought about that?
Ms. Dailey: I guess I do not see what there is to negotiate. We have
this program, and if they want to serve our customers, here is the
agreement that they have to sign. I am not anticipating any
negotiations. Granted there will be problems with the program, and in
the next phase, we will probably have to revise some rules and
regulations as one never does things perfectly the first time. But I
just do not see contract negotiations other than the contract between
ourselves and our pool manager. That is certainly one that will be
negotiated, and the contract between ourselves and our next gas
supplier. But those are just two agreements. There will not be lots of
those.
Mr. Mrizek: It is ~very similar to what we are doing in the electric
utility. If a customer wants to buy from another marketer, they have to
agree to our terms.
Commissioner Eyerly: I hope it is all that simple.
Commissioner Sahagian: I agree with Paul that the graph was very
helpful. I have a lot of questions for you. I appreciate that we have
very competitive gas and that we have not lost any customers, but maybe
I am the worrywart of the group. As I understand it today, the gas
service providers cannot get into our system because basically, we are.
not letting them use our distribution system. That is really the
lockout. They can go to PG&E and get access all the way to our meters,
and that is far as they can go. Is that correct?
Ms. Dailey: No. Let me try to .answer that in a couple of different
ways. They cannot get any closer to our meters than the PG&E city gate.
That is true. Right now, we do have a program on the books that would
allow them to buy their own gas and deliver it to the California border.
Actually, in July of 1998, that rate was revised so that the backbone
portion of the G-4 rate was removed. Theoretically, there is no problem
except that we have not had an open season in our rate. Our rules say
we have to have an open season before they can choose to go on that
rate. That is really the block right now. We need to declare an open
season to let the customers choose this option.
In the past, we held all of the transportation from the California
border all the way to the city meter. Those were PG&E’s rules. None of
that pipeline was open access, so the closest anybody could get to any
customer was the California border. We bought all of our gas at the
California border. Now, one more piece of the puzzle has opened up as
an open access pipeline, and that is the backbone. So now, anybody can
get one step closer. Now we are able to buy some of our gas at the PG&E
MINUTES UAC:981104:MIN
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city gate.
Conunissioner Sahagian: The capacity in that backbone system and the
capacity in that local transmission system between the city gate and our
meters, is that a fixed charge that we pay every month, or is it
prorated based on voluble?
Ms.. Dailey: The capacity that we own on the backbone is mostly a fixed
charge, with a very small volumetric portion. The contract that we have
with PG&E for the local transmission is almost all volumetric. But we
have a maximum daily quantity that we can move over that system. We
have a cap on how much we can bring in on a daily basis over that part
of the system.
Commissioner Sahagian: If a user elects to go with Brand E (not naming
anyone in particular), and they purchase gas from Brand E, is any
portion of our transmission cost going to become stranded costs by
virtue of their buying from that new service provider, and that service
provider having some independent.arrangement with PG&E to move the gas
through PG&E-affiliate-owned lines?
Ms. Dailey: No, because we do not really own any backbone on behalf of
those large customers. Relative to our entire load, we do not have that
much bac~bone, so we are not at risk of having a bunch of backbone
capacity that is unused. Regarding local transmission, nobody else can
hold it but us anyway. That is all volumetric. So all of the gas that
gets to the city has to go through that way, one way or the other. It
is really a wash, because we will get charged for it, but we will also
get paid for it by the ~ustomer, because we will be charging them for
that. So there is no potential stranded cost there now.
Commissioner Sahagian: Hypothetically,.if three years from today, 50%
of our gas users in the city were buying from another gas service
provider, the remaining 50% would not be looking at any significant
increase in their billing as a result of the denominator being squeezed.
When you think in those terms, is it still an insignificant
consideration?
Ms. Dailey: Yes, I think that is so. Girish just said to me that we
have 6,000 a day on the Redwood line, and say our load went all the way
down to 3,000 a day in summertime, I guess that is a potential stranded
capacity issue. The historical data suggests that the market value for
that capacity is way higher than what we pay for it. Certainly, there
are no guarantees that that will be the case in the future, but it is
about half of what the tariff rate is. We get it at an all-dimension
rate for a number of other reasons. So that capacity has been very,
very cheap and has been very, very valuable, and the chances of the
market value of it being lower than the price we pay for it is pretty
slim.
Commissioner Sahagian: Would it ~be reasonable, as part of our tariff
structure or whatever this agreement is, to require that the gas service
provider buy transmission services through us at published tariff rates
so that if people do go off the system, our piece of it is being covered
off and we make money on it?
MINUTES UAC:981104:MINFinalPage 37
Ms. Dailey: I don’t think we want to sell it to them at published
tariff rates, because the market valu~e has been double that.
Commissioner Sahagiant I have another question. I have been on the
short end of imbalances along the way with one of the power plants that
I manage. In situations where we were using more gas than we had
forecast, we got killed. We would get dragged over the coals because
of the imbalances. That is a service which, if the city is going to
provide and there is an interruption on the part of the gas service
provider, I think the city is well within its rights to almost go right
up to the edge of usury penalties, almost, for those imbalances,
providing imbalanced services. I wanted to understand if that is
something we are in sync with and if we are tracking the market for that
sort of thing. .
Ms. Dailey: Yes, we do a lot of referring to PG&E’s rules and
regulations and our transportation of gas rules and regulations, like
the new one that is coming out to cover this whole program. I guess our
view on it has been that we want to protect ourselves from the penalties
that could be imposed upon Palo Alto. PG&E sees us as Palo Alto. They
do not care if we have-customers that are buying their own gas. They
are blind to that. They see us as Palo Alto, and if Palo Alto is out of
balance, they come to us to collect that money. So what we have tried
to do is to design a rule to pass that through, basically, if the gas
service provider could cause us that problem. PG&E is going to charge
us, and we are going to be able to turn around and collect that money
from the gas service provider. So that is how we are doing it. I don’t
think their throwing our System out of balance is really that much of a
concern, because PG&E is going to catch it up higher, before it gets to
our distribution system. So it is just a matter of our covering
ourselves against PG&E’s rules.
Commissioner Sahagi.an: This is my last question. I remember that one
of the questions that I jotted down in the margin was, whatmigration
have we seen so far, and earlier, it was said in answering the question
that there has been no migration. We are batting a thousand, so far.
What migration do you anticipate when we open access? if you were to
look into your crystal ball and realize that gas is probably a little
easier to market commodity than electric energy at the moment, because
it does not have a lot of CTC and other things encumbering it. The
reliability thing does not hang quite so high in people’s heads.
Realistically, what exposure are we looking at, and what happens if we
do face significant migration?
Mr. Balachandran: Just looking at the experience of the PG&E system for
the large customers, and Phase 1 is opening up for the ten largest
customers, the non-core customers, it just depends upon how heavily
marketers discount to our customers and how interested they are in
getting this load. After that, the remaining part of our load, which is
about 85%, is small customers. PG&E has had a core aggregation program
for ~about five years now, and they just have not gotten much response.
Now through the gas accords, they have started to promote that program
very heavily. They still have not gotten much response on that. So
based on that history and just the history of customers wanting to stay
with an existing provider unless there are significant savings to be
MINUTES UAC:981104:MINFinalPage 38
achieved and the margins are pretty thin, I don’t see much of a risk for
the core customers, commercial and residential. There really is not
much in it for them.
Ms. Dailey: I actually think a lot will be told by the next phase in
electric DA, too. A customer is much more likely to think about doing
this for gas if they have already decided to do it for electric. They
will not just wake up some morning and say they want to buy their gas
from somebody else. I just think it is going to be more likely that
somebody like Company E who says, I can serve both your gas and electric
needs, and the customer says, okay, maybe I will look at it as a
package, but I do not think there is going to be a whole lot of response
to the standalone thing.
Commissioner Gruen: How many customers are eligible for this, and what
portion of the total load in Palo Alto do they represent? I have the
same question for the top two or three customers. What percentage of
our total load are they?
Ms. Dailey: In Table #2 in the report on Page 5, it splits that out
between Phase I, which is the large customers, about ten accounts. You
can refer to the annual volume, etc. Does that answer your question?
(Yes)
Commissioner Johnston: From what I am hearing, going forward with
natural gas direct access creates no stranded costs and no equivalent
CTC, and from everything you have basically said, it really does not
matter very much how many customers opt into this or not, presumably
because the charge is all really coming through the distribution. Is
that a fair characterization?
Mr. Balachandran: I would not be as categorical as you have, saying no
CTC, no stranded costs I would say the risk of incurring stranded
costs is really minimal. There are two things. One is that on the
transportation side, the capacity that we have, we are buying under the
market value at half themarket value right now. Secondly, the sequence
of events that would, lead to our having some of the capacity unused is
also a very unlikely scenario where small, commercial customers suddenly
start leaving us in droves. In just looking at the experience of PG&E’s
service territory, that is not happening. In looking at both of these
scenarios, I would say the probability of stranded costs is very low.
Vice Chair Johnston: Does that force us to always maintain very short-
term contracts? The risks you are characterizing are based somewhat on
today’s market position. If, down the road, we signed a longer-term
contract, presuming we would only sign it if it was a good contract,~ and
then prices went in a detrimental way to the City of Palo Alto, and the
result of that was that customers wanted to leave, how do we avoid that
scenario? Do we avoid that by saying we are never going to buy longer-
term contracts? DO we avoid that by saying, if we are engaged in
longer-term contracts, we have the right to impose a stranded cost at
such time as people leave? How do we avoid it?
Mr. Balachandran: Just to return to a question that Commissioner
Sahagian had on risk management, which was, what are we do on the
MINUTES UAC:981104:MINFinalPage 39
revenue side, we will try and match up our risk on the revenue side so
that if we enter into a long-term contract on the gas side, it would
probably be in response to perhaps some commitments on the sales side
where, perhaps, we had 30% of our customers on three-year rate
schedules. I think that is when we go in for a long-term contract.
Otherwise, another way to deal with this is when we purchase a gas or
supply contract, even if it is for 2, 3, 5 years, have minimum and
maximum bands, and the way in which we purchase it would not necessarily
be at a fixed price. It would be at an index price with an option to
fix at different levels. That is pretty much the way we have it right
now where the supplier serves our load. So they are taking on the
volumetric risk over there. It is probably imbedded in the price
someplace, so that is the way we hedge something like that.
Vice Chair Johnston: The counter to that is that if we stay short term,
and somebody else signs a long-term contract and ends up being a winner,
they can undercut the price and effectively, overnight we could lose all
of our customers. Maybe that has no risk to us if it turns out that we
are collecting on the distribution side.
Mr. Balachandran: That can always happen. It happened on the electric
side, too, not just from someone else signing a long-term contract and
the market moving favorably. It could be someone with very deep pockets
who has a strategic interest in buying market shares. Then we would
have to make a strategic decision on how we want to respond to that. Do
we want to let go of the supply business? Or do we want to stay in the
supply business for the long term and respond to that aggressively?
That would be part of our business plan.
Vice Chair Johnston:
we open our doors?
Is it true that nobody right now is mandating that
Mr. Balachandran: That~is correct.
Vice Chair Johnston: So this decision is just consistent with the
city’s decision early’on, I believe, in the electric process, which was
that we want to offer our customers a choice.
Ms.. Dailey: Yes, in fact, it is consistent with an earlier decision
which was the creation of the G-4 rate to begin with, in 1993 or 1994.
So we made the decision to let large customers buy their own gas a long
time ago. This is just a revision of that program.
~Mr. Balachandran: And that was done in response to one of our large
customers requesting choice. We developed a program, but they did not
exercise that choice.
Vice....Chair Johnston: We need to make a recommendation on this item.
MOTION: Commissioner...Sahagian: I so move.
SECOND: By Chairman Eyerly.
MOTION PASSES:Vice Chair Johnston:That motion passes unanimously on
MINUTES UAC:981104:MINFinalPage 40
a vote of 4-0.
8.City Council~Referrals - None
9.Reports of Officials/Liaisons
a. BAWUA .. Report
Ms... Ratchye: The repor~ that you found at your places tonight basically
states that Standard and Poor has lowered its rating on San Francisco’s
sewer bonds, but not on\their water bonds yet. But for both the sewer
and the water enterprises, the outlook/has changed from stable to
negative. They largely p~int to Proposition H, the initiative that theSan Francisco voters approved in June/that did not allow for any rate
increase for eight years.\ They are ~eclaring that "The practical loss
of rate setting and the pro~ected e~sion in financial margins if action
is not take is inconsistent with prudent management practices and
flexibility associated with ~trongiutility credits." It looks like they
will be closely watching San\Francisco and seeing what they do over the
period of the 8-year rate fre@z~ and potentially increasing operational
costs. They also state in\/the attachment to your report that "The
commission will be forced t~\explore non-rate sources of revenue that
permit them to sell water and~ewer services to nonresidential customers
and exploit revenues frQ~ ~ts large real estate holdings through
concession agreements, l~ases\and outright land sales." So they are
suggesting that the com~ission~needs to look at some way to get enough
money to run their operations.\This~is for your information. I am not
sure what this means /~r us.~ ~is is fairly new information.
Vice Chair Johnston:/My underst~ding was that we, meaning BAWUA, paid
a fixed percentag9/ of the operational costs. Can this upset that?
Isn’t this a contr~gtual agreement?
Ms. Ratchye: Ye it cannot do t~at. Proposition H has nothing to do
with raising rases in the suburbs~ It does not stop that at all. But
you are right,~hey have to use the~same rate-making methodology that is
in our contract now, which speaks almost solely to that question of rate
setting and c~st allocation. It is not a fixed percentage in that it is
the same percentage every year, but the method is fixed. So they can
raise our rates, but they will have to find other revenues besides rate
revenues to cover increasing cost. Under Proposition H, they can raise
their rates 18% just to cover the cost of the bonds that the voters have
already .approved, and they can also increase rates again if they have
anothe~/~voter-approved bond. Those are for specific capital projects,
but they are not allowed to increase rates for any operational expense
for eight years (general operations, salaries, etc) which no doubt will
increase in eight years.
Vice Chair Johnston: Thank you very much.
9.b. NCPA Report
Councilman Rosenbaum: There are a number of letters and con~nunications
relative to our Western marketing plan and our efforts to secure renewal
of those contracts. We put in a major effort to get a letter signed by
MINUTES UAC:981104:MIN
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