Loading...
HomeMy WebLinkAbout0591.000.- [teceJiber 6, 1990 THE HONORABLE CITr COUNCIL Palo Alto, California Resolution re M)ster water Sales Contract Members of the Council: Report in Brief This staff report requests Council approval of a resolution suspendinq a provision of the Master water Sales Contract ~etween the City and County of San Franci500 ana the Suburban ~Jrchasers. Palo Alto is a party to this contract and one of the 30 suburban purchasers that make up the Bay Area Water C&ers Association (AsSociation). Suspension ot this sec-tion of the contract 'Will resolve a potential conflict between allocation of future ~ater supplies and the mandatory water rationing program enacted by the San Francisco Public utilities commission (SF~JC) on Ma} 8~ 1990. Background In ~974, Palo Alto initially file~ a lawsuit, with the rema~n~nq agencies joining 1ater, against the city and county of San Francisco to prevent an increase in vater rates to sUburhan purchasers hiqhar than San Francisco resident customers iiere to pay. DUrinq the period of 1978 through 1984, the parties to ~~is civil action enqaqed in extensive settlement negotiations in an effort to resolve outstandinq differences aaicably and provide a nelrl framework for future relationships. ThQ negotiations resulted in the ·Settlement Agreement and Kaster Water Sales Contract between the City and county of San Francisco and: Certain Suburban Purchasers in San Hateo,. santa Clara and ~ameda Counties· (AqreementJ. Palo Alto signed the Agreement on June I, 198', based on a resolution adopted by council on May 21, 1984. Discussion Onder the 1984 Aqreement, San Francisco committed to deliver water to the 30 suburban purchasers, at the prices determined by the Agreement's detailed foraulas. CIUI:5U,O 1 o Future 'Water supply is to be allocated among t.he individual suburl:lan agencies by a method described in Section 7.02 of the Aqr8.ment~ In essence, Section 7.02 provides that if the agencies do not agree among themselves as to how the additiQnal water should be allocatedjl it will be allocated based on usage 1Deasurel3 at periodic t:hree-year intervals, based on the average use during thi~ three-year period. The first triennial allocation occurred in 19Sa, ~ased on water u~e durir.g fiscal years 1584-85 throu-gh 19$6-87. The allocation fQrmula in the Agreement tends to discourage conservation, since a purchaser's permanent entitlement to additional San Francisco vater supplies is based on actual water use. Thus, there is a conflict between the program ~dopted by San Francisco to reduce consumption during this current water shortaqe and the Agreement's incentive to m~intain or increase consumption in order to increase one's entitlement to additional supply. Section 7.02 comes into play only if the suburban purchasers are unable to decide. how future water should be distributed among thell1Selves. Therefore, it is entirely within the power of the wholesale suburban purchasers to decide to suspend the operatio~ of the -vestinq-provisions of Section 7.02 for a particular time period in which water consumption patterns are unusual. Doing so, while n~t requiring any involvement by San Francisco, does require unaniaous concurrence by the 26 suburban purchasers who are involved in the allocation process. (Four purchasers are not affected due to tempor-ary status or individ.ual supply contracts that predate the 1984 Aq~eement.) 'I'Vo years aqo, the Association and Palo Alto faced a similar situation after the SFPUC adopted its water drouqht/ ccnservation prograD in April of 1988. Association meJDbers recoqnized the conflict between the Master Sales AqreemeJlt and the water conservation qoals to reduce consumption. At that time, there .as discussion about the FYs 87/88 and 88/89 being suspended. from the vesting aspect of the Master Sales Agreement. only FY 88/89 w~s finally adopted by all 26 agencies to be suspended. Several aqencies voted not to suspend FY 87/88, as their water usage did increase from the previous year. Palo Alto ~ouncil voted unaniltOUsly to exclude FY 87/88 and 88/89 from the alloca~ion calculations. (CMR:452:8, Resolution 6743} The Aqree.ent ·protects· agencies' vested ~ater ~llocations, trom decreasing, as determined by section 7.~2. It, during a triennial allocation, an agency's averaqe usage is less than the previous vesting allocation, that agency's allocation will remain at the hiqher value4 This ensures that s.aller and/or-slower growth agencies 1 allocation of water would not be jeopardized by larger and/or growth aqencies ot the Association. CIIIII 511,0 2 \ .' -, staff recommends that council approve the attached resolution .uapending use of water consumption in fiscal years 89/90 and 90/91 troa the v •• tinq procedures ot the San Francisco Water Department xa.ter A9reement, conditiona1 upon ai.llar action by all remaining suburban purcha8er~ affected by the allocation process. Respectfully submitted, ~(& &:t DOIIGLAS M. SHORT Senior Power Enqineer Attachment: Resolution CMR:462:8 cxa.5tl.D ) USOLOTIOK WOo IIBSOLt!1'IOK 01' ~ COtJIIClL or TIIB Cln 01' PALO AL'I'O SUSPEHDIBG OP~RA~IOK 01' SICTIOR 1.02(b) 01' '&'I"I'UJaIrl AGItl!l!XEft Mro 08""'11 OTEa anl!S COII'rRACT nn !'lIB Cln AJII) COUliTY OJ' lAW PItAllCIBCO rOll PISCAL YEARS 1"9-90 AND 1990-'1 The CouncIl of the city or Palo Alto does RESOLVE as follows: \ Whereas, the city of Palo Alto obtains water from the San Francisco Department «·snm") pursuant to the terms of IS Settlement Agreement and Master Water Seales Contra.ct with the City and County of San Francisco {·Contract-) and e. Water Pv.rchase contract with the San Francisco Public utilities Commission, each of which was entered into in 19B4; and, WHEREAS I the San Francisco Public Utilities Cvmmission, on May S, 1990, declared ~ vater shortage ~ergency and adopted a 1andatory Water conservation Program, including water rationing and excess use charges. The goal of the mandatory Water conservation Progra. is to reduce significantly the consumption o£ water supplied by the SFWD within its service area. In response~ water us~ during April, Kay and ~une, 1990, by wholesale customers has been considerably below use during tha corresponding months of 1987; and~ WHEREAS, th-e :mandatory water Conservation Proqra: is expected to remain in effect until at least May, 1991; thus, water ratloning will be imposed by the BFWO on its whole5~le customers for the majority of FY 1990-9l; and, WHEREAS, the Contract provides a lDethocloloqy by which individual wholesale customerls entitlements to the overall Supply Assurance made by San Francisco are determined~ Unless the wholesale customers otherwise agree, this determination is based on ~ater usage by individual wholesale customerst and, WHEREAS, the provisions of the Contract that determine permanent entitlements to a portion of the overall Supply Assurance based on water used are. not com.patible with efforts by a!l the wholesale customers to reduce consumption of SFWD vater~ Tbey should, therefore, be suspended in response to the enactment ot the mandatory Water Conservation Proqram by the San Francisco Public utilities Commission and the actions by this agency and the other wholesale custoaers to encourage vater conservation. NOW, THEREFORE, the city of Palo Alto does hereby RESOLVE as follows: I'CTIOI +1 Subject to the provisions of Section 3 of this Resolution, the proviSions of section 7.02(b) of the Contract dealing with the allocation at that portion of the Supply Assurance designated as ·suburban allocable water-shall be suspended as to water used by vholesale customers during TY19B9-90 (i.e., July 1, 1989 -June 30, 1990) and curing FY1990-91 (i~e., JUly 1, 1990 -June 30, 1991). water usaqe Quring these two fiscal years 1 /' ./ • will not b~ used tor any purpose in determininq perma~ent entitlements of the ~holesale customers to suburban allocable water~ '.0t.10. 2. In all other respects,. section 7402 (b) of the contract shall remain in fnll force .. nd effect and _hall operate without modification as to water used durinq all year. other than ~Y1geg-90 and FY1990-91, co~encinq with FY1991-91. 'PDt.iOA 3a This Resolution shall beCODlE effective. upon adoption of resolution!! of like. tenor by each of the 25 other wholesale customers affected by Section 7~02(b) on or before December 31, 1990. It each and all of the other 25 wholesale customer-s have not adopted a resolution of like tenor by December 31, 1990, then this resolution shall be of no further force or effect and the provisions of section 7.02(b) of the Contract shall apply to water used during FY1989-90 and FY1990-91 in accordance with their terms. ,.o\ioo 61 If each ar~ all of the 2S other wholesale customers adopt resolutions suspendinq the operation of Section 7.<J2{b) as to water used durinq FY1990-91, but all 25 do not adopt resolutions suspending cpe~aticn of section 7.02(b) as to water used during FY19B9-90 as well, this resolution shall be effective to suspend operation ~f Section 7.02(b) as to water used during FY1990-91 only. INTROOO<:ED AND PASSED: AYES: tlOES: ABSTENTIONS: ABSENT: ATTEST. APPROVED: city Clerk Mayor APPROVED AS TO FORK: City Manager Senior Assistant City Attorney Director of Utilities Dire~tor of Finance 2 / . . , . '.-"- / /" ~=-,;';"-'-".'---------"~---" ~, " .-> "','" ,:,/. September 22, 1988 THE HONORABLE CITY COUNCIL Palo Alto, California Kaster Water Sales Contract-Water _~~_t_ionin9 Conflict Members; of the Council: 11 This staff report requests Council's approval of a resolution suspending a provision ot the Master Water Sales contract between the City and county of San Francisco and the Suburban Purchasers. Palo Alto is a party to this contract and one of the 30 suburban purchasers~ Suspension ot this section of the contract will resolve a potential conflict between alloca~ion of future water supplies and the mandatory water rationing program recently enacted by the San Francisco PUblic utilities Commission on April 28, 1988~ Background In 1974, Palo Alto filed a lawsuit aqainst the City and County of San Francisco to prevent an increase in water rates to suburban purchasers ~hich was higher than San Francisco resident customers were to pay. DGrinq the period of 1978 through 1984 p the parties to this civil action engaged in extensive settlement negotiations in an effort to resolVe their outstanding differences amicably and provide a new framework for their futu~e relationships. The negotiations resulted in the ·Settlement Agreement end Master Water Sales Contract Between the city and County of San Francisco and certain Suburban Purchasers i~ San Mateo, santa Clara and Alameda Counties.-Palo Alto signed this agreement on June 8, 1984, based on a resolution adopted by Council on May 21, 1984. Discussion Under the 1984 Agreement p San Francisco committed to deliver water to the 30 suburban purchasers, at the prices determined by the Agreement's detailed formulas~ 0!R:462:8 , " • / G Futu~e water supply is to be allocated amonq the individual suburban agencies by a method described in Section 7.02 of the Aqreement. In essence p Section 1.02 provides that if the agencies do not agree amonq themselves as to how the additional water should be allocated, it will be allocated ba~ed on usage measured at periodic three-year intervals. The first three year period covered fiscal years 1984-85 through 1986-87; and each suburban purchaser's guaranteed a~ount was increased early this year, h3sed on the average usage of these three years. The allocation formula in the Agreement tends to discouraqe conservation since & purchaser's permanent entitlement to additional San Francisco water supplies is based on actual water use. Thus. there is a conflict bet~een the program adopted by San Francisco to reduce consumption during this current water shortage and the Agreement's incentive to maintain or increase consumption in order to increase one's entitlement to additional supply. section 7.02 comes into play only if the suburban purchasers are unable to decide how future water should be distributed a~ong themselves. Therefore, it is entirely within the power of the wholesale suburban purchasers to decide to suspend the operation of the ·vesting-provisions of Section 7.02 for a particular time period in which water consumption patterns are unusual. Doing so, ~hile not requiring any involvement by San Francisco, does require unanimous concurrence by the 26 suburban purc~asers who are involved in the allocation process. ,Four purchasers ar~ not affected due to temporary status or individual supply contracts which predate the 1994 Agreement.) Th~re has ~een discussion by representatives of the 26 suburban purchasers that two fiscal years be suspended frem the allocation procedures. This is due to the water conservation efforts during calendar years 1987 and 1998. San Francisco asked for voluntary vater conservation in 1987 from the suburban purcl".asers,. and in 1988 the monthly rationing allocations are in effect. It ia the general consensus of the suburban purchasers that fiscal years 1987-88 and .1988-89 be suspended tro:a. the vesting aspects of the Master Agreement to resolve the conflict between allocation of future water supplies and the 'Wat,er conservation/ vater rationinq that has taken place since 1987. CI!lI:462:8 -2 - • o ~~lusio~ Staff recommends th~t council approve th~ ~ttacbed resolution suspendin9 llse of vateX" consumption in fiscal y'ears 1937-8&' arvd 1~38-89 t~om the vestinq procedures of th~ San Francisco Water De~rtaQnt M~ster Agr~a~ent6 conditional upon similar ~etion by All Qther suburban pu~ch~sers. Depending on such action, it is poss1bl~ that only ~ater U&e in ~iscal year 19a5-S9 vill be exelud.~d,. Respectfully suoaitt.d. ;t;-~ ~f D<Xl<:IAS M. saOR'!' senior Power Engineer /: .., -j .' __ r" f~·;~· .. ::.tt -,":./,.., lUClIlIRD L. YOONG Director of Utilities ~\,\;\\)...~ \l,')"Q,\A, ~rLEMING C"" Aseistant City Kanaqe~ C!!R:U2:8 . "-.. " -l - l - r"\ V RESOLUTION NO. ___ _ RESOLUTION OF THE COUNCIL OF THE CIT1 OF PALO ALTO SUSPENDING OPERATION OF SECTION 7.01(bl OF SETTLE~.ENT AGREEMENT A..~O MASTER 't-:ATER SALES CONTRACT WITt! TliE CIT~ AND CCfu'NT:i OF SAN FRANCISCO FOR FISCAL YE~PS 1997-1988 AND 1988-1989 WH"EREAS" the City of Palo Alto obtains water from the San Francisco Water Department (·SFI .. D") pursuant to the termS of a Settlement Agreement and Master Water Sales Contc3ct ~ith the City and County of Se.n Francisco (·Con~ract·) and Water Purchase Con­ tract ~ith the San Francisco Public Utilities Commission, each of ~b~ch_ ~as entered into in 1984; an~ WHEREAS, the San Francisc:o Public Utilities Commissior:, on April 28 .. 1988, declared a water shortage emergel"lcy and adopted a mandatory Water Conservation Program, including water ration ing and excess use charges~ The goal of th~ ma~datory Water Conserva­ tion Program is to reduce sl;:"11 ficently the consumption of water supplied by the SFWO within its service area. In response, 'Water use during April, May and June 198a by vholesale customers of the SFi'."[) has been considerably beloW' use during the correspondin~ months of 19B7; and WHEREAS, the ~andatory Water Conservation Program is expected to remain in effect until at least April 1989; thus, ~ater ration­ ing will be imposed by the SFWO on its ~holesale customers for the majority of Fiscal Year 1988-1989; and YHEREAS, the Contract provides a methodology by which indivi­ dual wholesale customers' entitlements to the overall Supply Assurance made by San Francisco are determined. Unless the whcle­ sale customers otherwise agree, this determination is based on water usage by individual wholesale customers, and t."'HEREAS, the provisions of the Con.tract lIIhich determine per­ manent ~ntitlements to a portion of the o~erall Supply Assurance based on 'Iol'ater used al"'e not compatible ..,ith efforts by all the wholesale customers to reduce consumpticn of SFWD 'ori'ater. They sh-c·uld, therefore, be suspended in respor,se to the enactment of the mandatory Water Conservation. Program by the San Francisco Public Utilities Commission and the actions by this agency and the other wholesale custoners to encourage water conservation. NOW TI::iEREFORE I the Council of the City of Palo Alto does hereby RESOLVE as foll~ws~ SECTION 1. Subject to the provls~ons of Section 3, th~ pro­ visions of Section 1.02(b} of the Contract dealing with the allo­ cation of that portion of the Supply Assurance designated as ·suburban allocable vater· shall be suspended as to water used by wholesale customers during lY 1987-1988 (i.~., July I, 1981 -Jyne 10, 1988J and during FY 1988-lS89 (i.e. July 1, 1988 -June 30, 1989). Water usage during these two fiscal years will not be used for any purpose in determining permanent entitlements of the whole~ale customers to suburban allocable ~ater. 1. ,"' SECTION 2. In all other respe::ts, Section 1.02(0) of the Contr~ct shall remain in full force and effect and sh311 operate without modification as to Yater used during all years oth~r than FX 1987-1998 and FY 1988-1989, c0mmencing vith FY i9S;-199Q. SECTIOtJ 3. This Resolution shall become effective upon adop­ tion of resolutions of liit.e tenor by each of the 25 other 'Whole­ sale customers affected by Section 7.02{b), on or before December 31, 19188. If each lind e:l1 of the other 2S vholesa.le Cu$tomers have not adopted a resolution of like tenor by December 31, 1988, then this resolution shall be of no further force or effe;:;t and the provisions of Section 7.02(b) of the Contract shall apply to water· used during Fl 1987-1988 and FY 1968-1989 in accordance ~ith the ir terms. SECTION 4. If each and all of the 25 other W'holesale custo­ mers adopt resolutions suspending the operation of Section 7.02(b) as to water used during FY 1988-1989~ but all 25 do not adopt res­ olwtions suspending th~ operation of Section 7.02tb) CiS to water used during FY 1987-1988 as ~ell, this resolution shall be effac­ tive to suspend operation of Section 7.02(hl as to .... ater used during FY 1988-1989 only. INTRODUCED AND PASSED: AYES, NOES: ABSTENTIO!lS: ABSENT: APPROVED, .a.TT£ST: Mayor City Clerk Clty Manager APRPOVEO AS TO FORM; Dlrector of UtIlities Senior Assistant City Attor~ey Dlrector of Flnance acb 2.