HomeMy WebLinkAbout2002-05-14 City Council (4)TO:
City of Palo Alto
City Manager’s Report
HONORABLE CITY COUNCIL
BUDGET
02"03
FROM:
ATTENTION:
CITY MANAGER
FINANCE COMMITTEE
DEPARTMENT: UTILITIES
DATE:
SUBJECT:
MAY 14, 2002 CMR:243:02
ADOPTION OF A RESOLUTION AMENDING ELECTRIC
SERVICE RATE SCHEDULES AND APPROVAL OF A $4
MILLION TRANSFER BETWEEN RESERVES
RECOMMENDATION
This report requests that the City Council approve:
(1) Revised electric rate schedules to update the Public Benefit. charge and the
Unmetered Electric Service rate schedule effective July 11 2002; and
(2)The transfer of $4 million from the Supply Rate Stabilization Reserve (SRSR) to the
Distribution Rate Stabilization Reserve (DRSR).
DISCUSSION
In 1997, California State AB1890 was passed, requiring electric t~tilities to collect an
electric charge to fund public benefit programs. Such programs include energy efficiency
programs, renewable programs, research and development, and low-income customer
support programs. The Public Benefits Charge is one of three components comprising a
customer’s total electric bill. The minimum level of funding required for Public Benefit
Programs is 2.85% of electric revenues. To achieve this level of Public Benefit funding,
staff recommends increasing the Public Benefit component of a customer’s bill. To avoid
increasing the overall customer electric bill, staff proposes to reduce the distribution
component a corresponding amount. Therefore, this revenue shift between components is
a revenue neutral rate change and will not impact the total charge that customers pay for
electricity.
CMR:243:02 Page 1 of 3
Unmetered Electric Services and Traffic Signals
Traffic signal rates are contained on Electric Rate Schedule E-16 "Unmetered Electric
Services". On April 25, 2000, City Council approved a transition plan to achieve full cost ¯
recovery of capital costs for Traffic Signals (CMR: 223:00). In accordance with this
plan, staff recommends that traffic signal rates increase $32,500 or 5.1 percent on July 1,
2002.
Reapportionment Between Reserves
A review of the Electric Fund Rate Stabilization ReServes (RSR) indicates that the
Distributidn RSR will fall below the minimum guideline level in FY 2002-03. To bring
the reserve balance within Council approved guidelines, staff proposes to transfer $4
million from the Supply RSR. Despite this transfer, the Supply RSR balance for FY
2002-03 is projected to be near the target guideline level.
UTILITIES ADVISORY COMMISSION REVIEW AND RECOMMENDATIONS
The Public Utilities . Advisory Commission unanimously approved staff’s
recommendations .to raise Public Benefits rates, increase unmetered service rates, and
transfer $4 million from the Supply RSR to the Distribution RSR.
RESOURCE IMPACT
While individual electric rate components will be modified to update, the Public Benefit
Charge, the net impact on total retail sales revenue will be zero. Traffic Signal revenue
will increase $32,500 in FY 2002-03. This amount is included as an allocated charge in
the Public Works 2002-03 Budget.
POLICY IMPLICATIONS
The recommendation to increase fees is consistent with the Council approved Utilities
Strategic Plan to provide superior financial performance to the City and competitive rates
to customers.
TIMELINE
The effective dates of the proposed electric rates are July 1, 2002.
CMR:243:02 Page 2 of 3
ENVIRONMENTAL REVIEW
The adoption of the resolution does not constitute a project under the California
Environmental Quality Act; therefore, no environmental assessment is required.
ATTACHMENTS:
A. Resolution
B. Electric Rate Schedules E-l, E-l-G-l, E-l-G-2, E-l-G-3, E-2, E-2-G-1, E-2-G-2, E-2-G-3,
E-4, E-4.TOU, E-4-G-1, E-4-G-2, E-4-G-3, E-7, E-7-TOU, E-7-G-1, E-7-G-2, E-7-G-3, E-8,
E-16, E-17, and E-18.
C.UAC Report dated May 1, 2002
D.D:. Minutes from the.UAC Meeting of May 1, 2002
PREPARED BY:
Lucie Hirmina, Pricing Manager
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
Director of Utilities
E~Y HARRISON
Assistant City Manager
CMR:243:02 Page 3 of 3
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO
ALTO AMENDING UTILITY RATE SCHEDULES E-l,
E-I-G1, E-I-G2, E-I-G3, E-2, E-2-GI, E-2-G2,
E-2-G3, E-4, E-4-TOU, E-4-GI, E-4-G2, E- 4-G3,
E-7, E-7-TOU, E-7-GI, E-7-G2, E-7~G3, E-8, E-16,
E-17, and E-18 OF THE CITY OF PALO ALTO
UTILITIES RATES AND CHARGES PERTAINING TO
ELECTRIC RATES
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, Schedules E-I (Residential Electric
Service), E-I-G1 (Residential Green Power Electric Service), EL
I-G2 (Residential Green Power Electric Service) , .E-I-G3
(Residential Green Power -Electric Service) , E-2 (Small
Commercial .Electric Service) , E-2-GI (Small Commercial Green
Power Electric Service) , E-2-G2 (Smal! Commercial Green Power
Electric Service), E-2-G3 (Small Commercial Green Power Electric
Service) , E-4 (Medium Commercial Electric Service) , E-4-TOU
(Medium Commercial Electric Time of Use Service), E-4-GI (Medium
Commercial Green Power Electric Service) ,E-4-G2 (Medium
Commercial Green Power Electric Service) ,E-4-G3 (Medium
Commercial Green Power Electric Service), E-7 (Large Commercial
Electric Service), E-7-TOU (Large Commercial Electric Time of
Use . Service) , E-7-GI (Large Commercial Green Power Electric
Service) ,E-7-G2 ~ (Large Commercial Green Power Electric
Service) ,E-7-G3 (Large Commercial Green Power Electric
Service) ,~E-8 (Large Commercial Electric Service) , E-16
(Unmetered Electric Service) , E-17 (Medium Commercial Electric
Service),and E-18 (Municipal Electric Service). of the Palo Alto
Utilities Rates and Charges are hereby amended to read in
accordance with Sheets E-i-l, E-I~GI-1, E-I-G2-1, E-I-G3-1, E-2-
i, E-2-GI-I, E-2-G2-1, E-2-G3-1, E-4-1, E-4-TOU-I, E-4-GI-I, E-
4~G2-I, E-4-G3~-I, E-7-1, E-7-TOU-I, E-7-GI-I, E-7-G2-1, E-7-G3-
i, E-8-1, E-8-2, E-16-2,. E-17-1, E-1712, and E-18-1,
respectively, attached hereto and incorporated herein by
reference. The foregoing Utility Rate Schedules, .as amended,
shall become effective on July i, 2002.
020508 kh 0072159
1
SECTION 2. The Council finds that the revenue derived
from the authorized adjustments of several electric service
rates shall be used only for the purposes set forth in Article
VII, Section 2, of the Charter of the City of Palo Alto.
SECTION 3. The Council finds that the adoption of this
resolution does not constitute a project under the California
Environmental Quality Act, California Public Resources Code
section 21080, subdivision (b) 8).
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:APPROVED:
City Clerk Mayor
APPROVED AS TO FORM:
City Manager
Senior Asst. City Attorney
Director of Utilities
Director of Administrative
Services
020508 Ih 0072159
RESIDENTIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-1
APPLICABILITY:
This schedule applies to separately metered single-family residential dwellings receiving retail
energy, services from the City of Palo Alto Utilities. A "single-family residential dwelling" is
designated as any house, cottage, flat, or apartment unit having a kitchen, bath, and sleeping
facilities.
Bo TERRITORY:
Within the incorporated limits of the City of Palo Alto and on land owned or leased by the City.
UNBUNDLED RATES:
Per kilowatt-hour Commodi _ty Distribution Public Benefits Total
First 300 kWh $0.03370 $0.02561 $0.00169 $0.0610
Next 300 kWh 0.04470 0.03402 0.00208 0.0808
Over 600 kWh 0.05970 0.04547 0.00273.0..1079
D.SPECIAL NOTES:
o
Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill ~amount is
broken down into three cost components as calculated under Section C: Commodity Charge,
Distribution Charge, and Public Benefits Charge.
Solar Energy Discount
Upon approval by the City, a 10 percent (10%) discount will be applied to a customer’s
electric bill if such customer has installed a qualifying solar energy system prior to April 1,
1987.
{End}
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.E-l-1 dated 7-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-l-1
RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-l-G1
A. APPLICABILITY:
Co
This schedule applies to separately metered single-family residential dwellings receiving retail
energy services from the City of Palo Alto Utilities under the green power Future 25 plan. A
"single-family residential dwelling" is designated as .any house, cottage, flat, or apartment unit
having a kitchen, bath, and sleeping facilities.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and on land owned or leased by the City.
UNBUNDLED RATES:
Per kilowatt-hour Commodi _ty Distribution Public Benefits Total
First 300 kWh $0.04170 $0.02561 $0.00169 $0.0690
Next 300 kWh 0.05270 0.03402 0.00208 0.0888
Over 600 kwh 0.06770 0.04547 0.00273 0.1159
D.SPECIAL NOTES:
Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount is
broken down into three cost components as calculated under Section C: Commodity Charge
includes a charge for the premium green power, Distribution Charge, and Public Benefits
Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-l-G1-1 dated 7-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No. E-1-GI-1
RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-l-G2
APPLICABILITY:
This schedule applies to separately metered single-family residential dwellings receiving retail
energy services from the City of Palo Alto Utilities under the green power Future 50 plan. A
"single-family residential dwelling" is designated as any house, cottage, flat, or apartment unit
having a kitchen, bath, and sleeping facilities.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and on land owned or leased by the City.
UNBUNDLED RATES:
Per kilowatt-hour Commodi _ty Distribution Public Benefits Total
First 300 kWh $0.04970 $0.02561 -$0.00169 $0.0770
Next 300 kWh 0,06070 0.03402 0,00208 0.0968
Over 600 kWh 0.07570 0.04547 0.00273 0.1239
D.SPECIAL NOTES:
Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount is
broken down into three cost components as calculated under Section C: Commodity Charge
includes a charge for the premium green power, Distribution Charge, and Public Benefits
Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-12G2-1 dated 7-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No. E-l-G2-1
RESIDENTIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E- l-G3
A.APPLICABILITY:
This schedule applies to separately metered single-family residential dwellings receiving retail
energy services t~om the City of Palo Alto Utilities under the green power Future 100 plan. A
"single-family residential dwelling" is designated as any house, cottage, flat, or apartment unit
having a kitchen, bath, and sleeping facilities.
B. TERRITORY:
Co
Within the incorporated limits of the City of Palo Alto and on land owned or leased by the City.
UNBUNDLED RATES:
Per kilowatt-hour Commodity Distribution Public Benefits ,Total
First 300 kWh $0.06370 $0.02561 $0.00169 $0.0910
Next 300 kWh 0.07470 0.03402 0.00208 0.1108
Over 600 kWh 0.08970 0.04547 0.00273 0.1379
D.SPECIAL NOTES:
Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’.s bill statement, the bill amount is
broken down into three cost components as calculated under Section C: Commodity Charge
includes a charge for the premium green power, Distribution Charge, and Public Benefits
Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-l-G3-1 dated 7-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No. E-l-G3-1
SMALL COMMERCIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-2
A. APPLICABILITY:
This schedule applies to non-demand metered electric service for small commercial customers and
master-metered multi-family facilities.
B. TERRITORY:
Co
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Unbundled Seasonal Energy Rates:
Per kilowatt-hour Commodity Distribution Public Benefits Total
Summer $0.04880 $0.03732 $0.00208 $0.0882
Winter 0.04400 0.03342 0.00208 0.0795.
D. SPECIAL NOTES:
e
Calculation of Cost Components
.The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount is
broken down into three cost components as calculated under Section C: Commodity Charge,
Distribution Charge, and Public Benefits Ch~ge.
Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective fi:om
November 1 to April 30. When the billing period is partly in the Summer Period and partly
in the Winter Period, the billing will .be computed by prorating the total kWh usage, and the
applicable rates thereto between the two seasonal periods, according to the ratio of the
number of days in each seasonal period to the total number of days in the billing period.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.E-2-1 dated 7-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No. E-2-1
SMALL COMMERCIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-2-G1
Cm
APPLICABILITY:
This schedule applies to non-demand metered electric service for small commercial customers and
master-metered multi-family facilities who receive green power under Future 25 plan.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and land Owned or leased by the City.
RATES:
Unbundled Seasonal Energy Rates:
Per kilowatt-hour Commodity Distribution Public Benefits Total
Summer $0.05680 $0.03732 $0.00208 $0.0962
Winter 0.05200 0.03342 0.00208 0.0875
D.SPECIAL NOTES:
Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount may
be broken down into three cost components as calculated under Section C: Commodity
Charge includes a charge for the premium green power, Distribution Charge, and Public
Benefits Charge.
Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective fi:om
November 1 to April 30. When the billing period is partly in the Summer Period and partly
in the Winter Period, the billing will be computed by prorating the total kWh usage, and the
applicable rates thereto between the two seasonal periods, according to the ratio of the
number of days in each seasonal period to thetotal number of days in the billing period.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-2-G1.1 dated 7-1~01 CITY OF PALO ALTO
UTILITIES
Effective 7-1=2002
Sheet No. E-2-GI-1
SMALL COMMERCIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-2-G2
APPLICABILITY:
This schedule applies to non-demand metered electric service for small commercial customers and
master-metered multi-family facilities who receive green power under Future 50 plan.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATE~;:
Unbundled Seasonal Energy Rates:
Per kilowatt-hour Commodity Distribution Public Benefits Total
Summer $0.06480 $0.03732 $0.00208 $0.1042
Wint~0.06000 0.03342 0.00208 0.0955
SPECIAL NOTES:
Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount may
bebroken down into three cost components as calculated under Section C: Commodity
Charge includes a charge for the premium green power, Distribution Charge, and Public
Benefits Charge.
Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective fi:om
November 1 to April 30. When the billing period is partly in the Summer Period and partly
in the Winter Period, the billing will be computed by prorating the total kWh usage, and the
applicable rates thereto between the two seasonal periods, according to the ratio of the
number of days in each seasonal period to the total number of days ha the billing period.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-2-G2-1 dated 7-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No. E-2-G2-1
SMALL COMMERCIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-2-G3
APPLICABILITY:
This schedule applies to non-demand metered electric service for small commercial customers and
master-metered multi-family facilities who receive green power under Future 100 plan.
TERRITORY:
Within the incorporated limits 0fthe City of Palo Alto and land owned or leased by the City.
RATE~:
Unbundled Seasonal Energy Rates:
Per kilowatt-hour Commodi _ty Distribution Public Benefits Total
Summer $0.07880 $0.03732 $0.00208 $0.1182
Winter 0.07400 0.03342 0.00208 0.1095
SPECIAL NOTES:
1.Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount may
be broken down into three cost components as calculated under Section C: Commodity
Charge includes a charge for the premium green power, Distribution Charge, and Public
Benefits Charge.
2.Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective from
November 1 to April 30. When the billing period is partly in the Summer Period and partly
in the Winter Period, the billing will be computed by prorating the total kWh usage, and the
applicable rates thereto between the two seasonal periods, according to the ratio of the
number of days in each seasonal period to the total number of days in the billing period.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-2-G3-1 dated 7-1-01 CI’[Y OF PALO AL3O
UTILITIES
Effective 7-1-2002
Sheet No. E-2-G3-1
MEDIUM COMMERCIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-4
A.APPLICABILITY:
This schedule applies to demand metered secondary electric service for commercial customers with
a maximum demand below 1,000 kilowatts who have waived electric direct access eligibility. This
schedule applies to three-phase electric service and may include service to master-metered multi-
family facilities.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Demand and Energy Rates:Per Meter
Per Month
Summer Period
Commodity Distribution Public Benefits Total
Demand Charge (kW)
Energy Charge (kWh)
Winter Period
$3.06 $10.53 $13.59
0.03500 0.01222 $0.00208 $0.0493
Demand Charge (kW)
Energy Charge (kWh)
SPECIAL NOTES:
$2.87 $6.07 $8.94
0.03150 0.01152 $0.00208 $0.0451
Calculation of Cost Components
The actual bill amount is caiculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount may
be broken down into three components as calculatedunder Section C: Commodity Charge,
Distribution Charge and Public Benefit Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.E-4’1 dated 8-1-01 CITY OF PALO ALTO
UTILITIES
’ Effective 7-1-2002
Sheet No.E-4-1
MEDIUM COMMERCIAL ELECTRIC TIME OF USE SERVICE
UTILITY RATE SCHEDULE E-4 TOU
APPLICABILITY:
This schedule applies to demand metered secondary electric service for commercial customers with
a demand between 500 and 1,000 kilowatts per month, .who have sustained this level of usage for
at least three consecutive months during the most recent 12 month period, and who have.waived
electric direct access eligibility. This schedule applies to three-phase electric service and may
include service to master-metered multi-family facilities. In addition, .this rate schedule is applicable
for customers who did not pay power factor penalties during the last 12 months.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Demand and Energy Rates:Per Meter
Per Month
Summer Period
Commodi _ty Distribution Public Benefits Total
Demand Charge (kW)
Peak $1.80 $6.20
Mid Peak 1.14 3.91
Off, Peak 0.65 2.25
Energy Charge (kWh)
Peak
Mid Peak
Off-Peak
Winter Period
$8.00
5.05
2.90
$0.06310 $0.02242 $0.00208 $0.0876
0.03230 0.01122 ¯ 0.00208 0.0456
0.02470 0.00842 0.00208 0.0352
$3.43
1.97
Demand Charge (kW)
Peak $1.62
Mid. Peak -
¯ Off-Peak 0.93
$5.05
2.90
Energy Charge (kWh)
Peak $0.0417 $0.01542
Mid Peak --
Off-Peak 0.0243 0.00882
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-4-TOU-1 dated 1-1-02 CITY OF PALO ALTO
UTILITIES
$0.00208
0.00208
$0.0592
0.0352
Effective 7-1-2002
Sheet No.E-4-TOU-1
MEDIUM COMMERCIAL GREEN POWER SERVICE
UTILITY RATE SCHEDULE E-4-G1
Co
APPLICABILITY:
This schedule applies to demand metered secondary electric Service for commercial customers with
a maximum demand below 1,000 kilowatts who receive green power under Future 25 plan and have
waived electric direct access eligibility. This schedule applies to three-phase electric service and
may include service to master-metered multi-family facilities.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Demand and Energy Rates:
Commodity
Summer Period
Demand Charge (kW)$3.06
Energy Charge (kWh)0.04300
Winter Period
Demand Charge (kW)$2.87
EnergyCharge (kWh)0.03950
SPECIAL NOTES:
Per Meter
Per Month
Distribution Public Benefits Total
1,
$10.53 $13.59
0.01222 $0.00208 $0.0573
$6.07 $8.94
0.01152 $0.00208 $0.0531
Calculation of Cost Cbmponents
The actual bill amount is calculated based on the-applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount may
be broken down into three cost components as calculated under Section C: Commodity
Charge includes a charge for the premium green power, Distribution Charge and Public
Benefits Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-4-G1-1 dated 8-1-01 CITY OF PALO ALTO
UTILITIES
Effective7-1-2002
Sheet No.E,4-GI-1
MEDIUM COMMERCIAL GREEN POWER SERVICE
UTILITY RATE SCHEDULE E-4-G2
A. APPLICABILITY:
This schedule applies to demand metered secondary electric service for commercial customers with
a maximum demand below 1,000 kilowatts who receive green power under Future 50 plan and have
waived electric direct access eligibility. This schedule applies to.three-phase electric service and
may include service to master-metered multi-family facilities.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
Co
De
RATES:
Seasonal Demand and Energy Rates:
Summer Period
Demand Charge (kW)
Energy Charge (kWh)
Winter Period
Demand Charge (kW)
Energy Charge (kWh)
SPECIAL NOTES:
Per Meter
Per Month
Commodity Distribution Public Benefits Total
$3.06 $10.53 $13.59
0.05100 0.01222 $0.00208 $0.0653
$2.87 "$6.07 $8.94
0.04750 0.01152 $0.00208 $0.0611
Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount may
be broken down into three cost components as calculated under Section C: Commodity
Charge includes a charge for the premium green power, Distribution Charge and Public
Benefits Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-4-G2-1 dated 8-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-4-G2-1
MEDIUM COMMERCIAL GREEN POWER SERVICE
UTILITY RATE SCHEDULE E-4-G3
A. APPLICABILITY:
This schedule applies to demand metered secondary electric service for commercial customers with
a maximum demand below 1,000 kilowatts who receive green power under Future 100 plan and have
waived electric direct access eligibility. This schedule applies to three-phase electric service and
may include service to master-metered multi-family facilities.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Demand and Energy Rates:
Summer Period
Demand Charge (kW)
Energy Charge (kWh)
Winter Period
Demand Charge (kW)
Energy Charge (kWh)
SPECIAL NOTES:
Per Meter
Per Month
Commodity Distribution Public Benefits Total
$3.06
0.06500
$10.53 $13.59
0.01222 $0.00208 $0.0793
$2.87 $6.07 $8.94
0.05750 0.01152 $0.00208 $0.0711
Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount may
be broken down into three cost components as calculated under Section C: Commodity
Charge includes a charge for the premium green power, Distribution Charge and Public
Benefits Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Shoet No. E-4-G3-1 dated 8-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-4-G3-1
LARGE COMMERCIAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7
A. APPLICABILITY:
This schedule applies to demand metered secondary service for large commercial customers with
a maximum demand of at least 1,000KW per month per site, who have sustained this demand level
at least 3 consecutive months during the last twelve months, and who have waived electric direct
access eligibility.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Demand and Energy Rates: .
Commodity
Summer Period
Distribution Public Benefits
Per Meter
Per Month
Total
Demand Charge (kW)
Energy Charge (kWh)
Winter Period
Demand Charge (kW)
Energy Charge (kWh)
$3.90 $8.26
0.03450 0.01202
$3.45 $3.70
0.03130 0.01162
$0.00208
$0.00208
$12.16
$0.0486
$7.15
$O.045O
SPECIAL NOTES:
1.Calculation of Charges
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the-bill amount may
be broken down into three components as calculated under Section C: Commodity Charge,
Distribution Charge and Public Benefit Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.E-7-1 dated 8-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-7-1
LARGE COMMERCIAL ELECTRIC TIME OF USE SERVICE
UT!LITY RATE SCHEDULE E27 TOU
B~
APPLICABILITY:
This schedule applies to demand metered secondary service for large commercial customers with
a maximum demand of at least 1,000KW per month per site, who have sustained this demand level
at least 3 consecutive months during the last twelve months, and who have waived electric direct
access eligibility. In addition, this rate schedule is applicable for customers who did not pay power
factor penalties during the last 12 months.
TERRITORY:
Within’the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Demand and Energy Rates:Per Meter
Per Month
Summer Period
Commodity Distribution Public Benefits Total
Demand Charge (kW)
Peak $2.57 $5.43 $8.00
Mid Peak 1.28 2.72 4.00
Off-Peak 0.64 1.36 2.00
Energy Charge (kWh)
Peak $0.04290 $0.01512 $0.00208 $0.0601
Mid Peak 0.03580 0.01252 0.00208 0.0504
Off-Peak 0.02970 0.01032 0.00208 0.0421
Winter Period
Demand Charge (kW)
Peak $1.93 $2.07 $4.00
Mid Peak -
Off-Peak 0.97 1.03 2.00
Energy Charge (kWh)
Peak $0.03520 $0.01312 $0.00208 $0.0504
Mid Peak --
Off-Peak 0.02920 0.01082 0.00208 0.0421
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No.E-7-TOU-1 dated 1-1-02 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-7-TOU-1
LARGE COMMERCIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7-GI
A. APPLICABILITY:
This schedule applies to demand metered service for large commercial customers who choose Future
25 plan. A customer may qualify for this rate schedule if the customer’s maximum demand is at
least 1,000KW per month per site, who. have sustained this demand level at least 3 consecutive
months during the last twelve months, and who have waived direct access eligibility.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Demand and Energy Rates:
Summer Period
Commodity Distribution Public Benefits
Per Meter
Per Month
Total
Demand Charge (kW)
Energy Charge (kWh)
Winter Period
$3.90 $8.26
0.04250 0.01202 $0.00208
$12.16
$O.O566.
Demand Charge (kW)
Energy.Charge (kWh)
. $3.45 $3.70
0.03930 0.01162 $0.00208
$7.15
$O.O53O
SPECIAL NOTES:
1.Calculation of Charges
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount may
be broken down into three components as calculated under Section C: Commodity Charge
includes a charge for the premium green power, Distribution Charge and Public Benefit
Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-7-Gl-1 dated 8-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-7-GI-1
LARGE COMMERCIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7-G2
A. APPLICABILITY:
Co
This schedule applies to demand metered service for large commercial customers who choose Future
50 plan. A customer may qualify for this rate schedule if the customer’s maximum demand is at
least 1,000KW per month per site, who have sustained this demand level at least 3 consecutive
months during the last twelve months, and who have waived electric direct access eligibility.
TERRITORY: ¯
Within the incorporated limits 0fthe City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Demand and Energy Rates:Per Meter
Per Month
Summer Period
Demand Charge (kW)
Energy Charge (kWh)
Winter Period
Demand Charge (kW)
Energy Charge (kWh)
SPECIAL NOTES:
Commodity Distribution Public Benefits Total
$3.90 $8.26 $12.16
0.05050 0.01202 $0.00208 $0.0646
$3.45 $3.70 $7.15
0.04730 0.01162 $0.00208 $0.0610
Calculation of Charges
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discotmts. On a customer’s bill statement, the bill amount may
be broken down into three components as calculated under Section C: Commodity Charge
includes a charge for the premium green power, Distribution Charge and Public Benefit
Charge. ~,
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No E-7-G2-1 dated 8-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-7-G2-1
LARGE COMMERCIAL GREEN POWER ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-7-G3
A. APPLICABILITY:
This schedule applies to demand metered service for large commercial customers who choose Future
100 plan. A customer may qualify for this rate schedule if the customer’s maximum demand is at
least 1,000KW per month per site, who have sustained this demand level at least 3 consecutive
months during the last twelve months, and who have waived electric direct access eligibility.
TERRITORY:
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Demand and Energy Rates:Per Meter
Per Month
Summer Period
Commodity Distribution Public Benefits Total
Demand Charge (kW)
Energy Charge (kWh)
Winter Period
$3.9O $8.26
0.06450 0.01202 $0.00208
$12.16
$0.0786
Demand Charge (kW)
Energy Charge (kWh)
$3.45 $3.70
0.06130 0.01162 $0.00208
$7.15
$O.O75O
SPECIAL NOTES:
1.Calculation of Charges
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount may
be broken down into three components as calculated under Section C: Commodity Charge
includes a charge for the premium green power, Distribution Charge and Public Benefit
Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-7-G3-1 dated 8-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-7-G3-1
LARGE COMMERCIAL ELECTRIC RATE
UTILITY RATE SCHEDULE E-8
Ce
APPLICABILITY:
This schedule applies to demand metered electric service for commercial customers accounts with
demand of at least 1000 kW per month, who have sustained this level of usage for at least three
Consecutive months during the most recent 12 months period, and who have retained electric direct
access eligibility.
TERRITORY:
Within’the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Rates with a Monthly Market-Based Power Supply Charge:
Summer Period
Demand Charge (kW)
Energy Charge (kWh).
Per Meter
Per Month
Commodi _ty Distribution Public Benefits Total
$3.90 . $8.26 $12.16
0.02-0.10 0.01202 $0.00208
Winter Period
Demand Charge (kW)
Energy Charge (kWh)
$3.45 $3.70
0.02-0.10 0.01162 $0.00208
$7.15
SPECIAL NOTES:
,Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount may
be broken down into three components as calculated under Section C: Commodity Charge,.
Distribution Charge and Public Benefit Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.E-8-1 dated 8-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-8-1
LARGE CObIMERCIAL ELECTRIC RATE
UTILITY RATE SCHEDULE E-8
(Continued)
o
Power Supply Charge
The Power Supply Charge will have two components: Demand (per kW) and Energy (per
kWh). The energy component is equal to the monthly average of the DJCOB daily Firm On-
Peak index as computed at the end of the month.
DJCOB daily Firm On-peak index is the weighted average price of electricity traded at the
.California-Oregon border as computed and published daily by Dow Jones & Co.
Seasonal Rate Changes
The Summer Period is effective May 1 toOctober 31 and the Winter Period is effective from
November 1 to April 30. When the billing period is partly in the summer period and partly
in the win~er period, the billing will be computed by prorating the total kWh usage, kW
demand, and the applicable rates thereto between the two seasonal periods, according to the
ratio of the number of days in each seasonal period to the total number of days in the billing
period.
Special Metering Equipment
Service under this rate schedule requires the City’s installation of automatic meter reading
equipment to enable billing on a calendar month. The City of Palo Alto Utilities normally
installs standard metering equipment to provide regular service. Service under this rate
schedule requires additional equipment that is in addition to the standard metering and billing
equipment. A customer may be required to provide dedicated telephone, service to facilitate
remote meter access.
Changing Rate Schedules
Customers may request a rate schedule change at any time during the year to any other
applicable Palo Alto full-service rate schedule. However, and election of Rate Schedule E-7,
E,7-G1, E-7-G2, or E-7=G3 will cause the customer to waive their future electric direct
access eligibility. Customers served under this rate schedule may elect electric direct access
at any time.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.E-8-2 dated 8-1-01 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-8-2
UNMETERED ELECTRIC SERVICE~
Service Description
UTILITY RATE SCHEDULE E-16
(Continued)
Customer Rate *
o Traffic Signal
(A)Controller
(B)8" Lamp
(C)12" & PVH Lamp
(D)Pedestrian Head
(E)Vehicle, System and
Bike Sensor Loop
Public Works
$344.51 ea
4.04 ea
"5.17 ea
6.89 ea
13.80 ea
Electric Service for Cathodic
Protection Station
Cable TV Power Supply(Service
Permit Fee for Electric Conduit Usage
(A) Exclusive use
(B) Non-Exclusive use
PG&E
Cable Co-op
Permittee
Permittee
9.38
29.30
1.10/ft/yr
0.55/ft/yr
9.Processing Fee for Electric Conduit Usage Permittee Actual Cost
10.Permit Fee for Utility Pole Attachments Permittee
(A)1 ft. of usable space ,.
(B)2 ft. of usable space
(C)3 ft. of usable space
(D)4 ft. of usable’space
$18.08/pole/yr
$19.98/pole/yr
$21.87/pole,/yr
$23.77/pole/yr
11.Processing Fee for Utility Pole Attachments $47.00/pole
12.Utilities Broadband Local Area Network
(A) Bandwidth Assignment
(B) Carrier Usage
City Departments
City Departments
210.80/MHZ
52.70/carrier
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No.E-16-2 dated 7-1-0"1 CITY oF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No.E-16-2
MEDIUM COMMERCIAL ELECTRICSERVICE~
UTILITYRATE SCHEDULE E-17
A. APPLICABILITY:
This schedule applies to demand metered electric service for commercial customers with demand
between 500 kW and 999 kW per month, who have sustained this level of usage for at least three
consecutive months during the most recent 12 months period, and who have retained electric direct
access eligibility~
B.TERRITORY:
Ce
Within the incorporated limits of the City of Palo Alto and land owned or leased by the City.
RATES:
Seasonal Rates with a Monthly Market-based Power Supply Charge:
Summer Period
Demand Charge (I~W)
Energy Charge (kWh)
Per Meter
Per Month
Commodity Distribution Public Benefits Total
$0.00208
$3.06 $10.53
0.02-0.10 0.01222
$13.59
Winter Period
Demand Charge (kW)
Energy Charge (k.Wh)
2.87 6.07
0.02- 0.10 0.01152 0.00208
8.94
D. SPECIAL NOTES:
1.Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and adjusted
for any applicable discounts. On a customer’s bill statement, the bill amount may be broken down
into three components as calculated under Section C: Commodity Charge, Distribution Charge and
Public Benefit Charge.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-17-1 dated 8-1-0"1 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No. E-17-1
MEDIUM COMMERCIAL ELECTRIC SERVICE.
UTILITY RATE SCHEDULE E-17
(Continued)
o
o
Power Supply Charge
The Power Supply Charge will have two components: Demand (per kW) and Energy (per kWh).
The energy component is equal to the monthly average of the DJCOB daily Firm On-Peak index
as computed at the end of the month.
DJCOB daily Firm On-peak index is the weighted average price of electricity traded at the
California-Oregon border as computed and published daily by Dow Jones & Co.
Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective t~om
November 1 to April 30. When the billing period is partly in the summer period and partly in the
winter period, the billing will be computed by prorating the total kWh usage, kW demand, and the
applicable rates thereto between the two seasonal periods, according to the ratio of the number of
days in each seasonal period to the total number of days in the billing period.
4.Special Metering Equipment
Service under this rate schedule requires the City’s installation of automatic meter’ reading
equipment to enable billing on a calendar month. The City of Palo Alto Utilities normally installs
standard metering equipment to provide regular service. Service under this rate schedule requires
additional equipment that is in addition to the standard metering and billing equipment. A customer
may be required to provide dedicated telephone service to facilitate remote meter access.
5. Changing Rate Schedules
Customers may request a rate schedule change at any time during the year to any other applicable
Palo Alto full-service rate schedule. However, an election of Rate Schedule E-7, E-7-G1, E-7-G2,
or E-7-G3 will cause the customer to waive future’electric direct access eligibility. Qualified
customers may elect Direct Access at any time.
6.Maximum Demand Meter
Whenever the monthly use of energy has exceeded 8,000 kilowatt-hours for three consecutive
months, a maximum demand meter will be installed as promptly as is practicable and thereafter
continued in service until the monthly use of energy has fallen below 6,000 kilowatt-hours for
twelve consecutive months, whereupon, at the option of the City, it may be removed.
The maximum demand in any month will be the maximum average power in kilowatts taken during
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-17-2 dated 8-1-01 CITY OF PALO ALTO
U~ILITIES
Effective 7-1-2002
Sheet No. E-17-2
MUNICIPAL ELECTRIC SERVICE
UTILITY RATE SCHEDULE E-18
APPLICABILITY:
This schedule applies to service for buildings and facilities owned and/or operated by the City of
Palo Alto.
Bm
Cg
TERRITORY:
Within the incorporated limits of[he City of Palo Alto and land owned or leased by the City.
RATES:
Unbundled Seasonal Energy Rates:
Per kilowatt-hour Commodity Distribution
Summer $0.0397 $0.03032
Winter 0.0319 0.02412
¯ Public Benefits Total
$0.00208 $0.0721
0.00208 0.0581
Do SPECIAL NOTES:
1.Calculation of Cost Components
The -actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts. On a customer’s bill statement, the bill amount is
broken down into three cost components as calculated under Section C: Commodity Charge,
Distribution Charge, and Public Benefits Charge.
2.Seasonal Rate Changes
The Summer Period is effective May 1 to October 31 and the Winter Period is effective from
November 1 to April 30. When the billing period is partly in the summer period and partly
in the winter period, the billing will be computed by prorating the total kWh usage, and the
applicable rates thereto between the two seasonal periods, according to the ratio of the
number of days in each seasona! period to the total number of days in the billing period.
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supercedes Sheet No. E-18-1 dated 3-1-02 CITY OF PALO ALTO
UTILITIES
Effective 7-1-2002
Sheet No. E-18-1
TO:
MEMORANDUM
UTILITIES ADVISORY COMMISSION
FROM:
DATE:
SUBJECT:
UTILITIES DEPARTMENT
MAY 1, 2002
PROPOSED REVISIONS TO ELECTRIC RATE SCHEDULES
AND $4 MILLION TRANSFER BETWEEN RESERVES
RECOMMENDATION
This report requests that the Utilities Advisory Commission (UAC) recommend
that the City Council approve:
(1) Revised electric rate schedules to update the Public Benefit charge and the
Unmetered Electric Service rate schedule effective July 1, 2002; and
(2) Transfer $4 million from the Supply Rate Stabilization. Reserve (RSR) to the
Distribution RSR.
DISCUSSION
Revised Public Benefit Charge
In !997, California State AB1890 was passed requiring electric utilities to collect
an electric charge to fund public benefit programs. Such programs include energy
efficiency programs, renewable programs, research and development, and low-..
income customer support programs. The Public Benefits Charge is one of three
components comprising a customer’s total electric bill.
The minimum level of funding required for Public .Benefit Programs is 2.85% of
electric revenues. Applying this formula to current revenues, the Public Benefit
charge collected should be approximately $2,077,000 in FY02-03. However,
based on the current Public Benefit rate of $0.0016 per kWh, approximately
$],600,000 is projected. Therefore, staff proposes to increase the Public Benefit
charge and make a corresponding decrease in the distribution charge. This revenue
shift between components is a revenue neutral rate change and will not impact the
total charge that customers pay for electricity. To allocate 2.85 percent of FY 02-
03 electric sales revenues, a Public Benefit rate of $0.00208 per kWh is
recommended.
Unmetered Electric Services and Traffic Signals
Traffic signal rates are contained on Electric Rate Schedule E-16 "Unmetered
Electric Services". On April 25, 2000, City Council approved a transition plan to
achieve full cost recovery of capital costs for Traffic Signals (CMR: 223:00). In
accordance with this plan, Traffic Signals rates are proposed to increase’ $32,500
on an annual basis for four years. Accordingly, staffrecommends that traffic
signal rates increase $32,500 or 5.1 percent on July 1, 2002.
Reapportionment between Reserves
A review of the Electric Fund Rate Stabilization Reserves. indicates that the
Distribution RSR will fall below the minimum guideline level in FY02-03. To
bring the reserve balance within Council approved guidelines, staff proposes to
transfer $4 million from.the Supply RSR. Despite this transfer, the SRSR balance
for 1~Y02-03 is projected to be near the target guideline level.
ALTERNATIVES."
An alternative to increasing the Unmetered Service rates would be to forgo the
increase or delay the increase until FY 03-04. The difference between the cost and
the revenue associated with these services would be taken out of the DRSR.
RESOURCE IMPACT
While individual electric rate components will be modified to update the Public
Benefit Charge, the net impact on total retail sales revenue will be zero. Traffic
Signal revenue will increase $32,500 in FY02-03. The Unmetered Service rate
increase .will recover the cost, therefor, the impact on the revenue will be
insignificant. The transfer of $4 million from the Supply RSR to the Distribution
RSR will keep both reserves within Council approved guidelines.
POLICY IMPLICATIONS
The recommendation to increase fees is consistent with the Council approved
Utilities Strategic Plan to provide superior financial performance to the City and
competitive rates to customers. These recommendations do not represent a change
in current City policies.
TIMELINE
The effective dates of the proposed electric rates are July 1, 2002.
ENVIRONMENTAL REVIEW
The adoption of the resolution does not constitute a project under the California
Environmental Quality Act; therefore, no environmental assessment is required.
ATTACHMENTS:
A.Electric Rate Schedules E-l, E-l-G-l, E-l-G-2, E-l-G-3, E-2, E-2-G:I, E-2-G-2,
E-2-G-3, E-4, E-4-TOU, E-4-G-1, E-4-G,2, E-4-G-3, E-7, E-7-TOU, E-7,G-1,
E-7-G-2, E-7-G-3, E-8, F_~16, E-17, andE-18
PREPARED BY:
Lu~ie Hirmi~a, Pricing Manager
REVIEWED BY:
DEPARTMENT HEAD:
Randy i~aldschun, Assistant Director Utilities
Adm. Services
:li!tiles
EXCERPT OF UAC MEETING 5/1/02
FY 2002/03 OPERATING/CIP BUDGET AND RATE PROPOSALS
Bechtel: And we’ll just move on to the next item with is item #2, the-FY 2002-2003
operating and CIP budget and the rate proposals.
Ulrich: This would be item #2.
Bechtel: Item #2 on the agenda.
Ulrich: Do you want to do them, we’ve got them listed as A through E or do you want to
do them }hat way or what would your preference be?
Bechtel: I have notes from looking it over. It looks like for example there is a summary
report on the enterprise funds that lists all ofihe funds including some of those that are not
under our review..That’s the summary and it’s page 1. Then there are discussions of the
reserves for each of the funds and then we move to individuals so I’m open to comments
from the Commissioners as to how you would like to proceed with next year’s operating
budget and then at the same time we can lo0k at the CIP. Comments on how you would
like to handle this? Mr. Ferguson.
Ferguson: Just a question at the top here. As I read item 2, what we have here is 4-5
requests for the UAC to approve proposed rate increases and there is no staff request here
for the UAC to approve or discuss the budget items. So do we want to proceed directly to
the rate discussions or should we have some global discussions about the implications of
the budget?
Ulrich: IfI can just make one point. The reason for putting ittogether this way is we
brought the major changes and major items in the budget to you before and we’ve had
good discussion on that and our agreement was we would hit the major changes because as
you recall, this is an interim year budget. This is not starting all over. You asked
questions .and we went through that last time. My commitment to you at that time was I
would give you the latest draft of the budget. That way you will not be surprised when it
moves on to the Finance Committee and it all gets approved. But it’s not intended that we
would go through each of the items unless you had questions and wanted to getinto more
detail. Because we had attempted to do those kind of items early on.
Fer,~uson: Good, I just wanted to clarify that, because my preference is to proceed ahead
directly to the discussion of the various rate proposals.
Bechtel: Mr. Rosenbaum.
Rosenbaum: I did have one question on the text associated with the Electric Fund. This is
page 3, next to the last paragraph, it starts off in 2001-02, a 43% increase in rates was
adopted and then it goes on to say at present there is uncertainty regarding a potentially
UAC Minutes 5-1-02 DRAFT Page 19 of 40
significant impact related to supply contract settlement provisions and other outstanding
supply issues. What is that issue? Which one is that?
B aldschun: This relates to the cancellation of our Enron contract.
Rosenbaum: You’re suggesting there is some uncertainty? We’ve heard.otherwise we
don’t think.
Baldschun: Oh no. Our position is 0fcourse that there’s not going to be any,. you can’t
assume any liability here; but you never know so the prudent thing to do is don’t react too
quickly. So we’re not going to be assuming anything. We’re just going to keep the
reserves where they are and not propose to reduce rates. There’s some other factors too
that are.. . [interrupted]
Rosenbaum: All fight, but you are suggesting .the concern about the eventual outcome of
the Enron contract had some effect on your decision with regards to rates? We haven’t
heard that before.
Ulrich: You mention concern?
Rosenbaum: Yes.
Ulrich: I think it says uncertainty-and there is a level, of uncertainty. I w0uldn;t raise it. I
think we did exactly the right thing and we’ve had significant discussion here and
communication about why we did what we did. And I feel very confident that what we. did
was appropriate, but I think it is important that there’s always a level of uncertainty and
with this significant amount of it in that contract, I think it’s important to list it here. I
would not say in the sense of concern that we think we.did something inappropriate and
we’re waiting for something to happen.
Rosenbaum: I Wouldn’t suggest that, but it seems to me at the meeting, either last meeting
or 2 meetings ago, I did ask the question and I think the answer was we had not put aside
anything and we were not Contemplating putting aside anything..
Baldschun: That is correct. We have not specifically set ~side any funds for that.
Rosenbaum~: But this should be an argument for maintaining a healthy reserve.
Baldschun: Like any other cost uncertainty, absolutely. We have, Bern mentioned, halfa
dozen that potentially that could impact us so I think it is the prudent thing to do, and the
reserves are not exactly that-healthy. If you 10ok at the electric fund rate stabilization
reserve in the budget and given the fact we’ll be pulling out substantial amount of money
in this proposed fiscal year, this whole discussion is in the context of explaining why we
are not going to reduce the electric rates. I think there have been some perceptions that we
were automatically going to reduce our electric rates 43% in this year, which would not be
a wise thing to do.
Rosenbaum: All right, but ifI look forward to next year and some of these issues go away,
we’ll have another discussion about electric rates then. One other issue where I know there
was some concerns. I guess Dexter and I both went to the NCPA strategic plann!ng
UAC Minutes 5-1-02 DRAFT Page 20 of 40
session and in conversations with some of the other NCPA members, we got the idea that
some of them were unhappy with what we had charged them during the height of the
energy crisis and were .attempting to recovering some of those funds. Is this the $6 million
that we talk about as the NCPA settlements or is this still an outstanding issue?
Ulrich: I think what you’re referring to is what happens in a pool. A pool has a certain set
of agreements and it occasionally, and sometimes quite frequently goes through discussion
about whether the pool agreementslaJ-e being followed and what .are the changes to be
made and that is a healthy thing that is done all the time, so that may be’the area you’re
referring to. Yes, a signific.ant amount of discussions have beendone on that and some of
those expectations on what we think the settlements will be are reflected in the budget and
in this document so that there is no shock or surprise if or when that odcurs. And with the
significant price increases last year, these numbers are much higher than they would be in a
calm year, but we go through the same process and the same settlement. That’s an
experience that the pool does a!l the time.
Rosenbaum: We’re still on good terms with everybody.
Ulrich:Youbet.
Rosenbaum: Good.
Bechtel: All right then. Mr. Ferguson.
Fer~uson: I was just going to propose a motion on 2A if you’re ready to.
Bedhtel: First ~f all, for the interest of any viewers or for the minutes, let me just talk
about 2A. Item 2A is before us and it says staff requests the UAC recommend that the
City Council approve amended Utility Connection Fee Rate Schedules and they are listed
here to be effective July 1. And just a little bit of background, it says current fee schedules
were last revised in 1998 andso it’s appropriate to raise the rates at this time. So that’sthe
background on the first rate schedule we’re looking at 2A. So Mr. Ferguson?
¯ Fer~uson:. I’dlike td move approTal that the staff recommendation on item 2a.
Bechtel: Mr. Ferguson recommends2a that UAC recommend to the Council that the fee
schedules be listed.to be affected. Do I hear a second?
Rosenbaum: Second.
Bechtel: Second by Mr. Rosenbaum. Any discussion on the proposed increase to the
Utility Service call and connection fees?
Dawes: This looked pretty straightforward to me. Basically cost of service, updated hours
and pay rates has my support.
Bechtel: Any other questions of staff on their justification? If not, I’ll callfor a vote. All
in favor of the UAC recommending that.the City Council approve these rate schedules
please say "aye".
UAC Minutes 5-1-02 DRAFT Page 21 of 40
All Commissioners: Aye.
Bechtel: All opposed.. None opposed. Motion is approved unanimously. Moving next to
item 2B. 2B, there are 2 items here and this report requests that the UAC recommend tl~at
the City Council approve a 1) revised electric rate schedule to update the public benefit
charge and the unmetered electric service rate schedule, which would be effective July.l,
2002 and 2) to transfer $4 million from the supply rate stabilization reserve to the
distribution rates stabilization reserve. So there are 2 issues here on this recommendation
from staff. Questions on this before a motion? Mr. Dawes.
Dawes: I was a little confused as to how the arithmetic worked on the 2.85%. I had
assumed that that’s what we were charging as an over-ride all the time,but the last " "
paragraph on that page starting 2B seemrd to imply that we weren’t. Or maybe it’s just
simply an issue of kilowatt-hours versus percentage of dollars billed, but if you, could
elucidate me Randy, I’d appreciate it.
Baldsehun: As yo~ recall, AB 1890 was passed to require utilities to automatically charge
¯ a public benefit fee and implement programs. The problem was you couldn’t implement
effective programs in a very short period of time. It took us, I think, a year to roll out the,
the Advantage P~ogram.. So for the first year or two, we had a surplus in the public benefit
reserve because we weren’t spending as much as we were collecting. So it didn’t make
sense for us to raise the public benefit charge percentage to 2.85 when we had the 43% rate
increase. Well after the energy crisis, we pretty much almost depleted the public benefits
r.eserve and so now there’s a good use and need for that money, so we’re going to be
collecting that.
Dawes:. So there was a gap where we were collecting less than 2.85%?
Baldschun; That’s correct.
Dawes: Where we increase the ratio?Okay.That answers my question.
Baldschun: Actually this fiscal year, we’re collecting less than 2.85 %.
Bechtel: Other questions of staff at this time on 2B? Let me just take a sense of the
Commission on separating these 2 issues, 1 and 2, separating the rate schedules from the
transfer. I’m assuming unless there’s some other discussion that we’ll handle both of those
items together in the same motion. Do I hear a motion?
Ferguson: Move approval.
Bechtel: We have a motion from Mr. Ferguson that we recommend to the City. Council.
that they approve a revision to the Electric Rate Schedule and that they approve a $4
million transfer between reserves. Do I hear a second?
Rosenbaum: Second.
Bechtel: Second by Mr. Rosenbaum.Any other questions? Discussion? Mr. Dawes.
UAC Minutes 5-1-02 DRAFT Page 22 of 40
Dawes: Traffic lights. When we converted, we-paid a lot of money to convert over to
LADs which were going to reduce the. amount of electricity that they used and here we’re
hitting up the City for a $32 thousand a year increase. I don’t get it.
Baldschun: I think some of you on the UAC reviewed ou~ enterprise transfer
methodology. Well part of that transfer methodology recommendation was for the Utilities
to charge the City for traffic signals capital cost. Up until that study was done, the policy
was not to ch~ge the City for capital cost in the traffic signal system. They recommended
and Council approved that we do collect capital cost. Council approved I think a three
year transition to what was presumed to be full cost capital recovery and itwas, I think,
$32,500 a year. And so we’re just following (hat, but to get to the point, I believe you’re .
not the first person who has brought this up because our energy usage in these traffic..
signals, we just saw an email, it’s gone down 2/3. Our cost of service, as it currently
stands, we’renot recovering our full cost and we can’t...[interrupted]
Dawes: "That’s including the CIP, which installed them. ’
Baldschun: Right. i "
Dawes; We don’t pay; we don’t get all the cost of the electrical sel~iee back.
Baldschun: The energy costs are really insignificant in.terms of the overall traffic signal
operation. It’s really the capital cost that is the issue so .we’re going to follOw what
Council approved and in another year or two, we will look at the full cost of service and ¯
we will make a recommendation if we feel we need to continue to increase those rates. But
it’s a policy decision that the Council is really the only one who can make and so we’re
just following what they’ve approved two or three years ago..
Dawes: Thank you.
Bechtel: Other questions on proposal 2B? Then I’ll call for a vote for the proposed
revision to the electric rate schedules and the $4 million transfer between reserves. All in
favor, please indicate "aye". "
All Commissioners: Aye.
Bechtel: Any opposed? Passes unanimously. Moving on to 2C. That’s the proposed gas
rate decrease..This report requests that the UAC recommend to the City Council that they
approve a $12 million retail gas revenue decrease effective July 1, 2002. The proposed
revenue decrease represents approximately 26.7% decrease system-wide. That’s the issue
before us. Discussion from Commission? Mr. Ferguson.
Fer~uson: Thank you Mr. Chairman. I’m a great believer in our reserve approach and
:using the reserve as shock absorbers in the over-all pattern of rate increases and decreases.
We had a couple of opportunities in the last year to talk about increasing the size of the
reserve maximums and minimums across programs and ithink in the case of the electric
fund, wedid accommodate the wild swings in electric energy prices and I recall Girish had
a nice little table Showing the new factors that justified changing the over-all range in the
reserves. This year in the gas fund, what we have is a gas fund at least on the supply side
that’s going, to be $3 million above the max. Did I read that correctly? So we’re" on the
UAC Minutes 5-1-02 DRAFT Page 23 of 40
usual,.reasonable assumption that we want to keep rates stable over a multi-year period. It
might have.made sense to leave $3 million above the maximum in the till. But my guess is
gas prices are going to be much more stable in the Coming year or two, especially if we do
laddering, then the experience we had along with everything else with wild swings, where
they tookus by surprise, So I’m inclined to stick with the reserve guidelines that we
adopted and had kept in place for several years and rather than hold $3 million back above
the maximum guideline, let’s just roll that into the over-all decrease and adopt a reduction
of revenue of $15 million instead of $12 million. And if I’m just reading those numbers
wrong, !’m happy to be corrected, but it looks like we’re keeping an extra $3 millionin the
supply reserve above the maximum guideline.
Baldschun: On which document are you looking at? Is it in the budget orin the rate
proposal?
Ferguson: In the gas fund, page 4 or in the text at the bottom of page 2 6n the gas fund.
¯Baldschun: Let me direct your attention to page 2 of the Enterprise Fund Reserves in the
budget. If you look at the projected reserve balance for the supply rate stabilization
reserve, there were a number of changes that.occurred and have been occurring in_the
rec~nf weeks and that’s why I’m delaying my response because as I indicated to some of
you earlier today, I’ve got some revised reserve balances and one of them is the supply rate
stabilization reserve. But on page 2 of the enterprise fund reserves, you see.an ending "
balance of $4,989,000.
.Fer~uson: Yes.
apologies.
I’m reading the extra $3 million in the distribution reserves so my
Baldschun: So that one’s within the range. Yet the statement you pointed out says it’s
above the maximum guideline and that’s because there were some changes that have been.
occurring. If your point is are we going to change the guidelines or Should we keep them,
we changed the guideline formula, for el(ctric and for gas last year, The impact was that it
didn’t change the actua! guideline amounts in the gas while it did in the electric. So where
we are now is we’ve got.new guidelines as of last year, but it’s not resulting in any
significant difference at all than the oldguideline. If you’d like, I’ll talk about that
particular reserve because in the accounting in the budget process, there was a double entry
in the bond proceeds related to our soft engineering costs.
Fer,~uson: Let me jusi correct myself first. There is an extra. $3 million in the distribution
reserve, not the supply reserve, so there really is $3 million there above the guideline and
that’s what I’d prefer to send back to the ratepayers, bu~.maybe there’s more to the story.
Amy Javelosa-Rio: Good eve .ning. I’m Amy. I’m with the budget accounting and I’m the
oneresponding for preparing the budget documents. First of all, I would like.to point to
your attentirn that there is a change in the reserve balance. We originally gave you a draft
document on the fund reserves..Thi~ has been amended, so. for. your discussion purposes, I
would refer you to the .amended, which is a part of the document I think this ev. ening.
Bechtel: You’re referring to page 2 of the summary sheet enterprise fund reserves?
Javelosa-Rio: That is correct sir.
UAC Minutes 5-1-02 DRAFT Page 24 of 40
Bechtel.’. And that has electric fund at the top, gas fund in the middle,
wastewater... [interrupted]
Javelosa-Rio: That is correct. We have an amended.statement.
Baldschun: While she’s putting that up, I;ll talk in terms of what the.impact of what the
changes are. Essentially, a change in the balance in the Gas distribution RSR resulted in a
drop from $7.8 million down to $5.2 million. That’s about a $2.6 million decrease in the
gas distribution RSR and it relates to an accounting oversight with certain C~ bond costs
going into that reserve which is incorrect. The other change is in the water fund that is a
change in the budget draftl It shows an RSR ending balance of $14.586 million and there
were two changes that brought that down to a level of $10.2 million. So that’s a total of a
$4.3 million drop in that projected reserve balance. Now what .that essentially does is
bring that reserve below the maximum guideline in the water fund. ! apologize
for... [interrupted]
Bechtel So let me understand. Let me summarize what I have heard and that is that on
the gas fund that the distribution RSR for the.projected ending balance ’02-’ 03, you’re
saying is $5.2 million as opposed to almost $7.8 million. Is that correct? So $5.2 million
is about $1 million or maybe it’s $900,000 above the reserve guideline 0f$4.3827 That’s
what we interrupt. We’re still a million dollars above the maximum.
Baldschun: Correct.
Bechtel: Okay. Under the water fund, which we’ll talk about, that is the rejected ending
balance, I.assume that the first column which is ’01-’02 is 10.2 down $4 million so that
brings for next year, that brings that down to below 11.4 million.
Baldschun: Correct.
Bechtel: Okay. And so let me come back to Mr. Ferguson’s question was, where he was
leading to is, that onthe gas fund, why wouldn’t we want to give back a million? He was
going to give back 4 million. Why not 1 million? I think that’s where the discussion was
around when we got. onto this.
Baldschun, The way we sized the rate proposal was we Wanted to be prudent in terms of
any cost contingencies and there’s one outstanding uncertainty that we wanted to plan for
just in case and that’s approximately $7 million above our target level. What we did was
we took that target level and we added $7 million. Lucie, you can correct me if I’m wrong
here. That was what we want to end fiscal year ’02-’03 with.
Hirmina: The plan.was to leave $7 million above the target level on the supply side. The
distribution is only $785 thousand over the maximum at this point. We’re waiting to see
where all the expenses are going to be with those issues. We’re waiting for them to settle.
If they settle as we think they would, then next year we would have another decrease.
Baldschun: I hate to do this because we have so many financial statements with different
goals in terms of presentations. I mean the budget is based on certain assumptions. Then
we have the 10-year financial forecast. The 10-year financial forecast is a document we
UAC Minutes 5-1-02 DRAFT Page 25 of 40
use to develop the rate proposal. As I mentioned earlier today, the difference between our
10-year financial forecast reserve balances and the reserve balances you see here, are
significant in that the budget proposal was developed over a period of months, finally
getting to the point where we put it in draft form. In the meantime, we have been updating
on an ongoing basis, including the most recent being the quarterly report, what we project
to be reserve balances. Maybe it might help if we turn to the supply rate stabilization
reserve ending balance, let’s see what that looks like. The example in the quarterly report,
the supply rate stabilization reserve for fiscal year ’01-’02 is.rising .from an adopted budget
figure of $t.9 million to $6.8 million. A lot of that increase is based on the staff’s internal
assumptions about events that some of which are reflected in the draft budget and some of
which are not. In terms of the rate proposal we base it on the most.updated information. I
.think it would be imprudent not ..to use the most recent information we have.. This budget
document, the way the City process goes, is you have a mid-year report in which
adjustments are made and becomes the adjusted budget. When that happens, the process
takes in November, December and then finally the Council approves it and it’s not until
probably February or March where it’s released. Well lot of things happen between then,
so we don’t just use the adjusted budget. We keep on updating that adjusted budget in -
terms of our projections for our rate requirements and that’s what we use the 10-year for. I
apologize for dragging this out, but the 10-year financial forecast indicates from our best
information that we can end fiscal year ’02-’03 with this 27% rated decrease where the
supply reserve will end up at a balance somewhere around $7 million over target which
was the defining factor. Next year, we’ll have a lot better information on what’s going to
happen with regards to that cost contingency and we’ll also have more information, on the
cost for ’03-’04 which we’ve talked earlier about. We purchased up to have of that fiscal
year. at this point. So next year, .there’s a very good possibility we’llhave a subsequent
rate decrease if the cost contingency is not required and purchase gas costs continue to-fall
below our current level of gas costs,
Bechtel: Mr. Ferguson, follow up tothat since you’ve kicked this one off.
Fer~uson: Yes, I’m trying to do the right thing here and I shouldn’t have¯ kidded myself
that there would be $3 million lying on the table at the last minute before our budget
approval. But let’s go back and focus on what’s really goirig on here. We do have reserve
guidelines. The reserve guidelines are there because there are generally, external factors
that bounce around supply prices or bounce around the d~stribution cost experience and we ¯
want to accommodate those things without having annual rate. increases or decreases.
Makes plenty of sense. I’ve always assumed that those brackets were created based on
experience and mostly because of external factors; things beyond our control; things we
can’t plan and manage for on an annual basis. Sounds like here, we’re talking about a
couple million-dollar swing that’s entirely inside our accounting system. And I’m just
wondering if maybe we ought to rethink Our reasons for having max’s and min’s here if
part of the max and rain calculus is that it’s just mechanically impossible to close the
bool~s or get a good number here at budget time to the nearest 1 million or 3 million. Well
so be it. Then let’s build that into our reserve guidelines, as well as our provision for
external factors. Am I reading that co.rrectly or is this a one-time event?
Baldschun: I understand it’s a one-time event.
Bechtel: Mr. Dawes.
UAC Minutes 5-1-02 DRAFT Page 26 of 40
Dawes: I have the same line 0fthinking as Rick. Obviously these new figures are new
data, but sort of going backwards a year and half or so, I was certainly very strong on
inserting an extra rate increase in our series of either 4 o~ 5 increases in one fiscal year
when the gas was just running away from us in our reserves headed toward and actually
got to zero at that time. My message here is I think .we have to do the same thing but only.
on the down side of the curve. As I read the quarterly reports on the gas reserves, it looks
as though we’re considerably ahead of where we thought we would have been on the
enterprise fund reserve schedules and Randy you’ve confirmed that. We’re doing better
than we had the opportunity to put in the enterprise fund. budget cycle. So rather than
trying to suggest that we do something, different than the rate adjustment that’s on the
table, I would like to re-emphasize th~ appropriateness of revisiting this in 6 months. It’s
great to have things stable for a year, but ifit goes the way I sense it is going, andthe fact
that you also said you’ve got our purchase prices locked up for this coming year, this
should be a fairly calculable thing. Other thanthe issue, the same issue inthe gas fund as
we have in the electric side vis-it-vis contract termination issues, which to me says we
should brave a little robust fund there, but again over time we’ll know more about that so
let’s look at it again in 6 months.
Baldschun: I absolutely agree. I think we should look at it on a quarterly basis. The end
of this fiscal year is going to be real critical and real important for us as everyend of fiscal
year is because that’s,where you find that there might be CIP projects deferred or there
may be other costs or that’s when our sales revenues Come in. That’s when our actuals are
known and you really have a foundation of going forward to propose any rate changes..
Now we can propose rate changes anytime. We don’t have to do it in. July.. If we get good
contracts in ’03-’04 and we endthis fiscal year as we’re hoping we are, then-there’s
nothing preventing us from coming back with a rate change if the fmancials indicate that.
Dawes: Yes, one item I did forget to mention is that’the rate 0f change of those reserves is
very high. I mean, we got about to zero and we’ve restored them in.virtuallyin one year to
where we are today and so it would seem to me and gas isn’t varied that much on the cost
side so we should be adding very rapitlly to that.and again goes the same, we should look
at it quickly.
Bechtel: Other discussion, more discussion on the gas rate decrease? Mr. Rosenbaum.
Rosenbaum: Rick, I just wanted to co’amend you for looking so carefully at this. It would
seem that if we are using the new number, the 5.2 million, .and you add that to the supply
rate stabilization number, the sum of those two is about equal to the maximum for the sum
so we’re about in the ballpark using that number. So perhaps we should wait and we’ll
remember staff indicated that it is indeed possible to have rate changes iri the middle of the
year.
Bechtel: Other discussion? Lucie, while you’re here, could you update the last line of the
enterprise fund reserves with the numbers that you have on the table here? I’m looking at
page 3 and what I’m noting is if you. take a look at all of the enterprise funds,-all added of
course together, our reserves are dropping $24 million according to the numbers We have
in front of us and dropping to $154 million. Do you have what that number would be?
Really what do you think our projecting currently what or how our reserves are going to
drop or increase?
UAC Minutes 5-1-02 DRAFT Page 27 of 40
Ulrich: Just say, Amy will .give you an answer to.that..
¯ Javelosa-Rio: . The $154 million that you saw here includes enterprise funds other than the
utilities department and with the new numbers I have given, this Will definitely be updated.
So the $154 million will decrease approximately by the difference of the numbers that I
gave you previously and the new numbers and it’s approXimately I believe $6 million..
Bechtel: So $154 will drop to $6?
Javelosa-Rio: That is correct.
Bechtel: Okay, so there’s been no. At least from that point of view, the City is not
deteriorating too.rapidly even with decreasing the rates at this point. Any other
discussion? I’ll entertain a motion on the proposed gas rate decrease.
R0senbaum: I move approval of the proposed gas rate decrease.
Dawes." Second.
Bechtel: Moved by Mr. Rosenbaum. Seconded byMr. Dawes that werecommerid to the
Ci.ty Council to.approve a rate decrease effective July 1, 2002. All in favor please indicate
"aye".
All Commissioners: Aye.
Bechtel: Oppgsed? None. Then motion passes unanimously. Moving on to item 2D
proposed water rate increase. What the City taketh giveth, the City taketh away I guess.
We are being asked to recommend to the City Council that they apprgve a 20% water rate
increase effective July 1, 2002 and there’s a basically part of the.reason for this is the
revenue bonds and other issues associated with our long-term water cost. Discussions or
questions.of staff on this item? Mr. Rosenbaum.
Rosenbaum: The water rate increase was in part predicated on the increase in the
wholesale rate from.San Francisco. We’re told. that the increase from San Francisco is not
going to occur. Are you going to propose reducing the rate increase request?
Baldschun: No we won’t. Again, timing is everything.. We got theproposed rates from
San Francisco indicating a wholesale rate increase and went through the budget process as
the staff does. We prepared the language that we’re expecting this and also indicate that
as the reason for the rate increase because it’s a $400 thousand hit and. that adds to the rate
increase. With Schedule B changes, we will revise this downward to reflect no increase in
wholesale costs. But if youlook at the rate issue here, it’s certainly not SFPUC. Even in
’03-’04 when there is a planned SFPUC increase. It’s the CIP. The. C~ is going up so
much in one year that we need to transition to that through a combination of the bond
proceeds, using the reserves and .two rate increases. Now I think what this means in terms
of the impact onthe customer from San Francisco not increasing their wholesale ra~eis it
should reduce the size of our retail rate increase if we have to have a rate increase next
year. Our projections are thai we’re going to have another rate increase in ’03-’04 of 25%,
but I don’t think that’s going to materialize given the fact that SFPUC is not going to have
a wholesale rate increase this year, which tells me that we’re going to have at least $400
UAC Minutes 5-1-02 DRAFT Page 28 of 40
thousand, perhaps $800 thousand more in the reserves as a result ofthat action. So that
should have some favorable impact on our rate proposal for next year. Even taking out the
San Francisco issue, you still are left with this veiy large CIP and we need to do the CIP.
Rosenbaum: I recognize that the CIP impact is there, but it seems to me and I guess I
made the same comment last year, if wewere the California PUC and you gentlemen were
PG&E and you came to us and said we’ve got this rate increase based on certain estimated
increases and costs and, oh by the way, one of these increases ain’t going to occur, but
what the hell, we won’t take that into account. Themembers of the CPUC would kind of ’
look askance at that and suggest that you adjust the rate increase to reflect your¯true
increasein costs.
Baldschun: Well the rate prop.osal is not based¯ onthe requirements for this fiscalyear..
That’s obvious. If you look at the budget document for ’02-’03, you don’t even see the
CIP going up much compared, but if you look at. ’03-’04, that’s where¯you see it. ~So I "
don’t know how PG&E plans or how the PUC wants them to plan to have levelized rate
adjustments, but that’s what this is all about. We’re trying to levelize the impact of this ¯
uge project that s commgoup; not in this fiscal year, not m the proposed budget, but in the
¯ followingyear and Council’s approved the CIP, We’ve issued bonds for it. Everybodyis
on board to do it and this.is¯ simply the plan to fund it without having more of an adverse
impact on the ratepayers.
Rosenbaum: Sure, but it would, seem that your C[P would be in exactly the same shape if.
-the. rate increase were reduced by $400 thousand. I don’t want.to belabor it. At some
. point, I’ll offer an amendment to reduce the rate increase by that amount. " :~ "
Baldschun: Okay.
Ulrich: Your analogy, Mr. Rosenbaum, with CPUC and PG&E, the one difference is in
maybe the CPUC would not approve the rate increase because they know that additional
amount of money on rate of return would then go to the shareholders of PG&E in the form
of additional dividends or higher profits, whereas, the kind of money we’re talking about
here .whether it is a lower rate orit goes into reserves or we spend it on CIP is all the
money of the Customers in Palo Alto. It goes nowhere else. So I think your point about
whether there should be $400 thousand more in the reserve is a good point, but it is one
thatis not going to go somewhere else and it won’t be diluted by dividends to somebody in
Kalamazoo, Michigan.
Bechtel: Other? Mr. Ferguson.
Ferguson: I’d like to Connect this up to the legislative effort. I don’t have the answer right
now, but let me just..pose the question. How does our, what’s the message that we convey
vis-a-vis the other suburbs in the San Francisco in the way we increase our rates this year
or next year or levelize them? Is there a wiser way, a more judicious way of incurring this
increase inside Palo Alto for purposes of making our case stronger in the legislature? Is it
better for us to take a big painful hit next year all at once? Do we look like we’ve had a
kind of cushy time of it if we levelize it over two years where the other suburbs are
incurring a painful increase forced by San Francisco next year? I’m just wondering how
the message works outside the city.
UAC Minutes 5-1-02 DRAFT Page 29 of 413
Beecham: I’d say there may be some small political benefit if we say that we have or we
are now in the process of recommending a rate increase to fund our own CIP .that does take
into account reliability for our own distribution system. Whether we say we have the rates
this year or that we have approved the C~ for ’03-’04 is probably a small difference
aqtually. .. ~.
Ulrich." As you also recall when we had this discussion about the 10-year financial
forecast, it showed in here, coI-zect me if I’m wrong Randy or Lucie, but itshowed 20% ’
this year, 25% rtext year and then several years of zero and then an actual reduction and
one of the ideas is to be able to smooth out these rates so thatlthe increases.are not jumping
all over the place. So I think this would fit in with the smoothing part rather than have the
25% next year, it may be less than that, So this is our judgment area on what the
appropriate way to handle this lack.of an increase from the City of San Francisco. ....... . :
Bechtel: Thank you John. I think you raised a good issue...If you look at long-term, and
actually;’ we’re looking at another increase next year. Mr. Dawes.
Dawes: Yes, I wanted, to raise similar questions on water as we did.for an earlier fund. I
noticed in the quarterly update that the water-ftmd, water RSR is projected at 10.5 at the
end of this year and then ifI fast forward to the water fund in the draft budget, it shows a
14.586 balance at the end of this year and wondered if looks like there’s been substantial
. slippage in that area. Same as we have so that this would be another reason for adhering to
the rate inc.rease, which absorbs.the San Francisco adjustment .... . ..... c~ .
Baldschun: Well, let me just say to Clarify, the 14 million is now right around 10 million
based on Amy’s comments which is consistent with the 10-year financial forecast and
that’s below the maximum guideline of 11 or some millionl I don’t wantto focu.s too "
much on this SFPUC. We talk a lot about this huge project and the based on the
projections we’ve gotten from San Francisco, they have proposed rate increases from now
through the next 15 years, but they,re really not significant until 2008-2013 according to
their schedule. So I think if we can just get the SFP.UC wholesale rate increase out of our
Consciousness for a while and focus on what’s really driving this and that’s our capital
program.
Dawes." I only mentioped it because Commissioner Rosenbaum indicated he was going to
try to get it back a little bit later. One last question about the bond proceeds and again on
the water fund summary, it shows that at the end of next fiscal year, whichis at the time
we will be starting to spend at our peak CIP rate for the big hole in the park and all that
stuff. We only have $584 thousand left of our bond proceeds. Basically we’ve spent $13 "
million. I realized that soft cost got reimbursed out of it right at the outset, but to blow
through $13 million in two years when before any of the big bucks start hitting seemed a
bit of a problem.
Baldschun: Well the timing and use 0fthose funds is not so much trying to use thosein
the very specific year in which th.at project’s going to hit. You really have to look at it in
terms of where did we start from and where are we going to end up at? We started with no
waters’ate increase. This was last year. With a CIP e.scalating over a 3-year period up to
$22 million, and we’ve got bond proceeds of $11 million.. Now we can use those in the
last year and all. that’s going to do is make our reserve balances quite a bit lower in these
early years. I mean at the end the 3-year period, we’re going to be exactly where we would
UAC Minutes 5-1-02 " DRAFT Page 30 of 40
be whether we used the money early on, over a 3-year period or we use it at the end. The
reason we’re using it early on is because we want to keep the reserves healthy. We also
from our financial advisor’s standpoint, we-want to have healthy reserves for our ratings,
so there’s no reason for us to hold back on using those funds. If we did, we’d probably
have to have a larger rate increase. I mean, essentially, those bonds are buffering the size
of these rate increases that we’re proposing.
Dawes: Thank you.
Bechtel: Any other questions of staff on this? Mr. Carlson.
Carlson: I think this applies to all these reserve issues. It must b~ in the budget here
somewhere, but our reserves are so large, the interest we’re earning on them has to be
pretty significant item. -
Baldschtm: We do get interest income from all of our utility reserves. The yield varies. I
think the yield these days, the weighted average let’s say of the portfoliO for the City, what
is it Amy?
Javelosa-Rio: The interest income is actually reflected ili. the summary. We are showing
an interest income here andhow it’s computed is based.actually on the average balance on
the cash and not on the reserves. So while we may be showing a reserve balance here, the
accounting is using the daily cash balance or the monthly cash balance to compute the
interest income.
Bechtel: Out of curiosity, what is the difference between our daily balance and our
reserves? Are we talking about $50 million or $10 million?
Ja~elosa-Rio: I think, sir, the difference is when we have the cash balance, when we -
compute on the balance sheet, there might be, this is not a question of the cash basis and
accrual basis of accounting. So for example the rate stabilizationreserve is computed on a
full accrual basis, which has some accounts payable, while we compute the interest base on
the cash balances of a certain month. There may be some accounts payable sitting there so
if we compare the cash and the reserve on two different reporting basis, they don’t match.
And I think that is the difference.
Bechtel: I understand. Any other discussion on this? .If not, I entertain a motion to
increase our water rates on an average of 20% effective July 1. Do I hear a motion?
Dawes: So moved.
Bechtel: Moved by Mr. Dawes. Do I hear a second?
Carlson: I’ll second.
Bechtel: Seconded by Mr. Carlson. Any other discussion? Mr. Rosenbaum.
Rosenbaum: I would propose an amendment to reduce the rate increase by-the size of the
reduction of the proposed increase of the San Francisco wholesale rate.
UAC Minutes 5-1-02 DRAFT Page 31 of 40
Bechtel: I have a motion, an amendment to reduce by approximately $400 thousand; I
believe it was approximately that to be applied in some way across that. Do I hear a
second?
Carlson: What percent is that?
Bechtel: There is 3.1 million is the rate increaseaccording to the report.
Baldschun: It’s 2.6%.
Bechtel: 2.6?
Baldschun: $400 thousand and you’re taking it from 20 down to 17.4.
Bechtel: Not hearing a second on the motion to amend, we’lt move on to call to question.
All in favor of the proposed water, thatwe recommend to the City Council to approve the
rate schedule, all in favor please say ."aye".
Carlson, Ferguson, Bechtel, Dawes: Aye. .
Bechtel: Opposed?.
Rosenbaum: Nay.
Bechtel:. One, we have passes on a count of 4 to 1. Mr. Rosenbaum voting in the negative.
I guess that completes the agenda. No I’m sorry. One more. We have wastewater
collection 2E. This is a request fdr us to recommend to the City Council that we approve a
25% wastewater collection rate increase to be effective July 1, 2002. Questions of staff on
thisone? I entertain a motion to approve that we recommend to the City Council approve
the 25% rate increase.
Rosenbaum: So moved ’
Bechtel: Mr. Rosenbaum moved. Second by?
Dawes: Dawes.
Bechtel: Mr. Dawes. All in favor please say "aye".
All Commissioners: Aye.
Bechtel: Any opposed? Being none, motion passes unanimously. And I’ve reached the
end of my report, end of my agenda, so that completes our new business item for tonight.
’ Next regularly scheduled meeting is June 5th and which we will talk about the electric
long-term resource plan. Randy, you have a question?
Baldschun: I believe you need to take action on the operating budget and the CIP. You’ve
approved the rate proposals, but unless I missed something, I don’t think you’ve taken any
action on the operating budget and the CIP.
UAC Minutes 5-1-02 DRAFT Page. 32 of 40
Bechtel: I guess you’re right. I guess we need to.
Ferguson?: Where’s the agendized item?
Ulrich: It’s listed under 2. It says Fiscal Yea~ 2002-2003 Operating/CIP Budget alnd Rate
Proposals and it’s shown as an action item.
Bechtel: okay. I guess.
Ferguson: That was my question at the.top of the discussion whetherl I’m happy to take
action. I just want to make sure we’re not going through a useless motion here.
Bechtel: So basically we’re looking at the draft budget.
Ulrich: As you recall... [interrupted]
Becht_el: Beginning with item #, yes, it’s listed as agenda item #2 and all the way through
up to we reach the point of the rate increases.
Ulrich: As .you recall, this has been an ongoing process. This is not an attempt to. show
you this at the last minute of course. In years past, we’ve had very limited discussion
because the way the city budget moves by the time you get around to discussing these
items, it’s being printed and put into the manual. So we started a number of months ago,
as. you-recall, talking the individual CIP areas and focusing on the ones that ire a change
from previous years. If you have any questions on it or issues, we are glad to answer them.
Bechtel: Mr. Ferguson.
Ferguson: Mr. Chairman, I really don’t want to belabor the details of the budget or the
project list so I. appreciate that, but I did ask the question at the beginning of our agenda
because I did have a couple of questions and they aye things we visited a Couple of times
before and maybe there’s a new wrinkle in the story. But it crops up, i think, in most of
the fund budgets, so let me ask the question generically. There’s a one-time facility rent
charge that crops up, I think, for all the funds, for example on ~e electric fund on page 6,
the.ongoing facility rent is $255. There’s a one-time charge of $561k. Why is the.one’
time charge so much larger than the ongoing charge and is this part of the process where "
the City charges us market rate, top dollar rates for the use .of the City office buildings?
What does that number mean?
Ulrich: I believe it’s what you just described. It’s the rent, that we pay to the City for the
use of City’s facilities. Utility in most cases does not own facilities. We pay rent to the
owner, which is the City and there is a market evaluation done. There was also an attempt
to mitigatethose costs because of the economic situation in the market and the fact that
rents didn’~ change much. So we did not have the same amount of rate increase in the ¯
rents in past years. It’s now catching up and it will be an increase in the budget in July that
will ):effect that change up to. market. " -.
Ferguson: Can you explain why there’s an ongoing charge and then there is a one-time
charge that’s so much bigger?
UAC Minutes 5-1-02 DRAFT Page 33 of 40
Ulrich-: As you recall, this is a two-year budget so they deferred last year and we’re now
going to pay it this year.
Ferguson: Okay. My second question that again applies to almost all the funds is the
allocated charges. There’s a note 11 indicating that there is something perhaps related to
sotb,vare and computer systemsthat’s allocated, I assume, at some City central staff
. computer charge. And there my question is, is that being applied "rateably"? .Is it applied
across City Departments based on their base budgets or how is it allocated?
Ulrich: That’s con-ect. It is allocated, actually, in the case of the new program that we’re
working on that will have a significant cost to the City is the ERP which is the replacement
for the current accounting .system and it will als0 include a job management system. So
we’re paying in Utilities, we are paying a fair share, of that based on the expected’.use of the
system. So in the case of like the job management system, we would be paying a fairly
percentage proportion of that because of the amount of CIP.work we do and how itwill be
used.
Baldschun: Let me just elaborate on this because it’s a very important application. Iknow
Bern is well aware of it. I don’t know that this has come to the attention of the UAC, but
the City’s financial accounting system is called IFAS. That was installed a number of
years ago and it’s going to be replaced. They went out to bid. There are still two vendors
that they’re lookingat to replace it, or what they call ERP, or Enterprise Resource Plan, I
think.it is. But as John said; it’s the general ledger, it’s all the financials, it’s the p.ayroll,
it’s fixed assets, inventory, purchasing and it’s a huge application and it’s expensive, but
it’s one that will benefit the Utilities immensely as well as other City departments sO that’s
what you’re seeing’with these increased allocated charges:
Bechtel: Question in general on the budget preparation process. Have you taken a look at
-this with.regard? You.certainly, the Utilities have .their own revenue, but with respect to .
overall, just looking at this from the top down or bottom’.s up view, that we’re doing the
best we can in managing the expenses and overhead and that these are tough times for most
companies. The City, of course, benefits. The Utilities benefits from what we see having
gone through the revenues, but I.can see a lot of other things where the City canbenefit
from just reduced expenditures h~re mad there. What sort of guidelines did you. u.se for-
yourself in looking at all the discretionary spending?
Ulrich: Well we attempt to follow the same guidelines as the general fund in looking at
ways of deferring some work. Most 0f the. savings you’ll see in there are.from not filling
positions. We are by far the largest organization or the largest number of vacant positions
so we’re looking at each one. Our goal this year, was not to add positions unless we were
able to find a way to either pay entirely for that additional position or additional re~,enue to
offset those costs. As you can see, it went very well in that area. At the same time, we’re
increasing the amount of work we’re actually accomplishing. So we’re loo.king at
everything.. We’~e a!so candidly looking at ways we can help the.general fund and the rest
of the City get work done. We’reall part of the City and we are finding the synergies
around how to do things for the general fund that will also help our utility customers.
Bechtel: On a procedural issue, should We, we have before us an operating budget for next ¯
year. We also have a long-range CIP. As part of our process, our recommendation tonight
UAC Minutes 5-1-02 DRAFT Page.34 of 40
to the City Council, do we include the long-range CIP as a recommendation or are we just
looking at next year’s operating budget?
.Ulrich: Well the budget appro, val is just for this year, but in order to give you an idea of
why we’re spending the money, you have to look at the Capital Improvement Program for
much longer periods. For example, the water, you have a good understanding of how
much it’s costing for the water CIP and it’s not just a commitment to fund it for next year.
Next year fits in with the entire plan, but technically you’re only approving the actual
expenditures for the forthcoming year.
Bechtel: I’ll entertain a motion then that UAC recommends to the City Council they
approve the Utilities Operating and CIP Budget for fiscal year ’02-’03. Do I hear a
motion?
Ferguson: So moved.
Bechtel: Mr. Ferguson moved that we recommend to the City Council. Do I hear a
secor~d?
Rosenbaum: I’ll second and make a comment.
Bechtel: Second by Mr. Rosenbaum. Further comments?
Rosenbaum: I-guess UAC has been looking at this information and making
recommendations to the Council since the UAC started. This is perhaps a cursory a look
as we’ve given. George, are you going to .the Finance Committee to represent the UAC?
Bechtel: Yes.
Rosenbaum: Yes, the Finance Committee doesn’t know that we looked at that as cursory
as did and I don’t know that you want to tell them. I’m not quite sure how to proceed. Is it
any different this year than it has been in past years? Clearly it was hard to get a second,
because I suspect none of us are terribly comfortable with making that recommendation.
Ulrich: Let me make a comment. I guess .I would say I’m very disappointed in that
perspective is that I thought exactly what we did is we actually spent more time on it,
because we went back and started much earlier in the process and brought forward all the
workwe did last year and that this is the second part of it so this long-term plan you did
see last year and portions of it the year before and on specific major areas, for example, the
water area, we went through a lot of study sessions and discussions on it. So I thought we
had spent time on this and we devoted the last meeting as I recall, no the meeting before
that, tO the highlights to the changes. The other reason I think we spent time on it was we
put a lot of rimeand effort into the Strategic Plan, which called for ’in this matrix, the
things that were important to do and we tried to relate all the work that we’re doing to
those Strategic Plan initiatives so that we’re not off trying to sell you, doing something that
doesn’t fit in with reducing, keeping rates low or improving serv’ice reliability. So if we’re
not doing a good job in communicating either on specific projects or where we’re spending
the money, then we ought to get back together and discuss how to do a better job of that.
Because we do not want you to go into the Finance Committee if you’re not comfortable
with what we’re doing,
UAC Minutes5-1-02 DRAFT Page 35 of 40
Rosenbaum: .I think you ¯make a good point, John, and.indeed two months ago, we .
discussed significant changes I guess from year to year in the budget and I think that was
helpful. I think what you’re saying from a macro level, we’ve looked at the budget and.
compared it to the Strategic Plan. and surely didn’t fmd anything out of place so I would
think George when you speak to the Finance Committee, that y6u emphasize that from the
macro level, we’ve looked at it and it seems fine without suggesting that we’ve gone
through the details of the line items in the budget.
Bechteli Dick, I agree with you. I certainly can give you the floor. The processby Which
we .went through this is perhaps Rick and I.were talking earlier in the meeting about having
gone through this in the previous years line item by line item and that is certainly a process
by which I’d be prepared to do so: That’s why I encouraged .everyone to do their
homework prior to this meeting and I felt that everyone had done their homework and had
looked at this thing. There seemed to be Very little motivation for going-through the detailS
at this time, so perhaps some of it is a cursory, look. I certainly did not spend a small
amount of time at looking at this prior to the meeting. Mr. Dawes.
Daweg: I’d like to put in a plug for the process. In years past, when we have gone through
a book much thicker than. this it seemed, CIP by CIP, frankly the input that the
Commissioners can make on that kind of a thing is I think minimal. I think to characterize
our process as cursory is wrong. I rely not only on what we have seentonight, but what we
have seen and been through in previous meetings. Frankly, I think, and I’ve said this
before, and I’ll say it again, the.10-year forecast, which Randy had at hand, and which the
staff has done an incredibly good job in putting together, I think it’s the most valuable
piece we have and we started with this 6 months ago. I’ll note that the rate increases,
which are. really one. of the bottom, bottom lines of what we do ~s fly-specking those, are
tota.lly consistent with the 10-year forecast that we went through. I think it’s been an
excellent way of going through policy issues, which face the Utility and have gotten
deliberately away from the detail, so I would commend this process myself.
Bechtel: Mr. Carlson.
Carlson: ~ missed the last meeting because of a funeral, so I don’t know if you went over
this.. I’m very uncomfortable with approving this kind of budget with this level of
discussion because there’s some resource management operations gQes up by 150% in 2
years. I mean that’s a pretty big item. I don’t remember ever discussing anything like that
and there’s some similar increases in the operations side and then there’s the rent item,
which Rick properly called out, which rents are not going up, they’re going down. They’re
collapsing right now. This is obviously a general fund bail out. Maybe that’s not a bad
thing, but that’s where it is. I just feel very nervous. In my understanding of the agenda
was that we were just starting to look at the budget and what was being approved, the way ¯
I read the agenda, was the rate increases, which is why we jumped to that and boy I sure
would like to discuss this a little.bit more, but here we are at 9:35 so I don’t knowwhat to
do.
Bechtel: Mr. Ferguson.
Ferguson: The process unfolded pretty much as I expected it would unfold. I thinkthere
were a couple of procedural missed cues here. I don’t think tonight’s missed cue was fatal
UAC Minutes 5-1-02 DRAFT Page 36 of 40
although it’s a little bit of a stretch to say the budget was an action item proposed tonight.
I guess we can float a Supreme Court opinion on that somewhere, but I thinkMr. Carlson
did miss the Strategic Planning discussion where we did talk about some significant
changes and items in the categories you indicated. It wasn’t in the context of the budget
dollar layout in this chart of accounts, but we hit the high points in those earlier
discussions. So I agree the pi:ocess is an improved process. The.other missed cue here is
¯ that it wasn’t clear when any of the Commissioners who wanted to talk about a couple of
specific projects, it wasn’t clear when the invitation was extended. I would have come up
with the afew more comments and I think Mr. Rosenbaum wanted to make a few more
comments and so maybe there’s a better way to lay out theagenda given the major
improved changes that we made in the process. Maybe there’s a bettei: way to define these
things in locked steps so that there are no missed cues the next time around. I’m happy
with where we are, all things considered.
Bechtel: Thank you Mr. Ferguson. Other comments? Well I think that in proceeding with
this, we.could have tried a systematic going through page-by-page, which I think might
have been instructed. We did have in front of us, in proper order anyway, the details of the
budget and then the back up being the rate proposals that we’ re too basically fund next
year’s budget. I think every year; we seem.to learn a little. At least, Fve learned from my
mistakes having gone through. 3 of these sessions. This year, perhaps, I think looking at
the long-term plan as we did several months ago and then strategic plan certainly gave me
plenty of background. Certainly the material as presented here, there was plentyof detail
and so we have our email system. I encourage all of us to use that system to bring up
points you didn’t understand so I guess I’m perhaps a little unhappy that some of the
Commissioners felt that there needed to be more discussion on specific items. You’re
certainly welcome to come forth with those. At this point, I sense at least some level of
comfort withthe budget the staffhas put together. There may be some specific questions
on some of those items. We certainly have time to talk about them. Then certainly next
year, we can come back and address them again. Any other comments before we vote on
this recommendation for next year’s operating budget?
Carlso_n: Can I just ask the one question?
Bechtel: Yes.
Ca_rlson_: Why does resource management operations go up by 150% in 2 years?
Ulrich: Some of thai maybe Girish wants to answer that, but I think you’ll notice that the
legal fees are some of the significant...[interrupted]
Carlson: So that’s legal fees? I mean I just want to know what’s going on. It goes fi:om
$2 million back in 2000-2001 to $5 million.
Ulrich: I can go through thedetails, but that as you recall we’ve had discussions about the
additional legal charges.
Carlson: So that’s where it is?
Balachandran: That’s one major part.. The other is NCPA cost. NCPA cost has also gone
up significantly and the previous budget, that was not as high.
UACMinutes 5-1-02 DRAFT Page 37 of 40
Carlson: Our payments for membership as opposed to power purchases?
Balachandran: Oh yes, power purchases are just pass through. It’s the services like power
pooling and legal expenses and everything else. So those were, froma resource
management perspective, legal expenses are a large chunk 0fnew cost and NCPA cost if
you look at just the NCPA staff cost that gets passed on to us, not the power cost. That has
taken a pretty large increase too.
Carlson: Well, after we get through this craziness, I would assume that item ought to go
back down?
Balachandran: Yes, I was just reviewing. I’m not sure when that craziness is going to get
over like Commissioner Bechtel talked about a little while ago. Nothing’s beenfixed.
Ulrich: .Maybe I’ll wait until after you have your vote, then I would like to comment a
little more discussion on this budget area.
Bechtel: Okay. Any other specific items or questions..9 Then all in favo? of
recommending tothe CitY Council they approve the utilities Operating CIP budget for next
year, please say "aye".
All Commissioners: aye.
Bechtel: Opposed? No? Motionpasses unanimously. I guess we’re close to wrap up,
John? ¯ -
Ulrich: Sure, just a couple things on the budget. One, my sense is and tthink I articulated
it a few minutes ago is that we followed the budget process and in fact made significant .
improvements over prior years. Even though this is an interim budget year where we’re
not basically zero-based budgeting. It’s an attempt to have a 2-year budget cycle in the
City, so there should not be any major surprises. Last meeting; we did not discuss the
budget. That was the strategic plan meeting. It was¯ the meeting before that where we ¯
brought all ofthe items that weresignificant changes including the legal and others and
that’s where we had, I thought, a pretty detailed discussion. I guess what I’d like to have
some discussion or future meeting is the process for next year. The last thing I wan~ to do
and I am, I guess, conveying some disappointment in not meeting the needs that I thought
you all wanted to have .and the confidence that you have in the budget process that we.
followed. So if we can have some more discussion on that, because we have protracted
this out over a much longer period of time rather than hitting it all at one meeting and
going.through it item by item. We took the high level and. moved it through that way. So I
appreciate your support on that, but on how we did it, but I’d also want to meet the needs
in the sense that some of you were disappointed in something that we didn"t do in this
process.
Bechtel: Well I think we can certainly do some homework and let you know perhaps what
wecan do for next year’s process to do this sort of thing. I think that’s my guess is that "
this is a process that can change as we can change rates in midstream, we can certainly
change the process. Randy?
UAC Minutes 5-1-02 DRAFT Page 38 of 40
Baldschun: Having gone through this a number Of times, every year, it is.a crunch.. And
the truth is is that you have this Palo Alto process where we go to the.UAC, Finance and
the Council. So you really have to back up from the Council date and that’s June 17 this
year. Then you’ve gotthe Finande meeting. Finance needs to have enough time to have a
meeting between them and the Council so the Council can digest the minutes. And-every
year, we end up with this problem withthe UAC meeting and perhaps more so this year.
What is different this year I think is that, and by the way, I think it’s better this year, is
don’t have the detail. You don’t have the functional detail and we don’t have the
functional detail. Some printer has it right now and he’s printing up hundreds of copies.
Finance will have it next week. It will have the same information you have plus some
functional detail. What you have is the big picture and in my opinion, I think that’s
appropriate for you. Now the detail usually you don’t really get into that much frankly.
But what we’ve tried to do from the very beginning here and we’ve really bent over
backwards, particularly John pushing us, is to get you the information early. We had to do
our rate proposals back in March, all 5 of them. We’re normally doing them in April and
so the idea was to give you an early heads-up on what’s coming. You had a chance to
digest the rate proposals. YOU had a chance to look at the 10-year. You had a chance to
look at the operating budget; which was reflected in the 10-year for ’02-’03. I don’t know
how we could have done it otherwise given the fact that you’ve got a May 1 st meeting,
they’ve got a Finance meeting and you,ve got a schedule that’s got.to flow all the way to.
the Council.
Bechtel: Mr~ Dawes..-
Dawes: Onearea that would be exceedingly helpful and this. has come up in the past is
much more standardization in the format of the financial reports. One of the things that we
have sPun wheels on both email and here in session is not being able tbbridge from one
report to the other and drawing misconclusions about it. If there was one format, it would
be vastly easier for the staff to deal with too becauseif you’re dealing with one format for
quarterly reports, for budgeting, for all purposes, it would be you’re operating off the same
database. You make one forecast based on actuals, year to date, forecast of balanced year
and that serves for every purpose. I think that confusing for instance sales revenues are
different in. one report versus the other and so I wouldput in a very big plug for
standardization of financial formatting both as a way to save staff time, but to increase
depth of understanding on the part of Commissioners, Finance Committee and Council.
Bechtel: Mr. Rosenbaum..
Rosenbaum: Let me try to amplify a little on my concern. I actually agree with Dexter. I
think these 10-year reports or 10-ye.ar forecasts are byfar the most interesting thing we go.
through and we ask a lot of questions. I personally had difficulty understanding certain
aspects of it when I’m going to be trying to meet with staff to better my understanding. I
found that all.helpful and that’s high level. But the Council Members and the Finance
Committee, they’re going to have this printed budget and that’s a hell of a lot of work to go
through and it’s very tempting for a Finance Committee member to say well the UAC has
already.gone through this and that in a senserelieves me of some of the burden just as the.
full Council might well feel that way after the Finance Committee has reviewed it. There’s
only a certain amount of timein a day and my discomfort is that we clearly haven’t done
that. The things We’ve done are perhaps more important than attempting to go through
line-by-line so my point is that if you can somehow convey to the Finhnce Committee that
UAC Minutes 5-1-02 DRAFT Page 39 of 40
we’ve done very useful things but we have not done a line-by-line review and whether we
should or shouldn’tis hard to determine, but I don’t want to suggest that staff hasn’t been
very helpful in presenting us with the important issues and we’ve had a chance todebate
those.
Ulrich: Would you like me to just mention next meeting for the record?
Bechtel: For the record]
Ulrich: The next meeting for June is Wednesday, June 5 at 7 o’clock in this roomand the
item that’s on the agenda now, subject to additions that you’d like to make is the electric
long-term resource plan. And this would be the tlext stage of the discussion that we had 3
" months ago on various alternatives for the 10ng-term resource plan so we’re getting closer
to our recommendation and it’s time to have that discussion with you all.
Bechtel:,, All right. Any suggestion? Any other items for next June’s meeting?
Ulrich: I guess just probably a reminder, Mr. Bechtel, that the Finance Committee meeting
for the Enterprise Funds, which will include us will be May 14 here at City Hall.
ADJOURNMENT
Bechtel: Yes, I think you alerted me sometime ago. No other items. I entertain a motion
to adjourn.
Rosenbaum: So moved..
Bechtel: Moved by Mr. Rosenbaum. Second by Mr. Carlson. All in favor please say.
"aye’.’.
All Commissioners: Aye.
Bechtel: Opposed? None.
UAC Minutes 5-1-02 DRAFT Page 40 of 40