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City of Palo Alto
City Manager's Report
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT: UTILITIES
April 18. 1995 CMR:199:'1S
Adoption 01'. Raoh.1ioD 0pp00IDg FedenI ProposaIs 10 Tnmsf ... ~
FedBaI Power MarkeIioc Ac!miWstrations
Staff rtqlIeSIS that Council adopI • r"solution outlining Pzk, A1w's positioo willi. respect 10 the
CfuIIon Admin1s!ration', proposal 10 divest the federal Power M.amting Agencies (PMAs).
BF.CQMMENI)ATIQNS
Staff ~ that Council ;dopt the alIacbod Resolutioo. opposing tile privatization of the
PMAs and favoring the =ttucturiDg of the rehlionship betwees the PMAs and their CllSlOII>eIS
IG teduce IIle federal pmonnoI overbead n:qulred 10 operate the PMAs.
PQf.JCV IMPLICATIONS
. Adopting !his resolution will have 00 cforect internal policy implications to< Polo Alto.
EXJlCUTIVE SIJMMARY
Palo AlIo reccr.-cs 60 10 90 pen::enl of its electrici!y needs throogb an agreement wilh the
westen. Mea Puwer Administmlon (W ~ A). <me of slx fedeIal .gooc;"s =i'OOSible to<
martding federal hydroelectric power. The propo<ed 1996 federal budget, issued on February
6, 1m. includes • propoW to divest the federal government of four of the six PMM. The
proposal stipulates that the Clinton Mministtation will make the traDsfer ensuring no significant
imp8cI on Ihe ;:urrent PMA cuSl""""'.
FoOowing stroog opposition from the American Public Puwer Association, (APP A) representing
rmmk:iparlties and rural cooperatives woo are <urretI1 customer> of the PMAs, officials of tbe
l'a&' Ion
2
CIizlioi> AdmlnislratiOn lilIlOIlIlCed Illal the current CU5lorncrs ",ill bave the pr<feren<e '" ~ire
Ihe IIydro project assets at CO<!.
Whik die Clinton Adm;ni ..... tioo·. modifJed positioo will .resuh in Ies. r..ooomi<: hardship I<>
Palo AIIo <:USIOmCrS, !hen: is DO glla,anrec lhat this position will 00< wor.en c!uriog bOOget
cle!ibermoos in Coogres!. Staff bas establisbe<l • lOp prioriIy OIl efforts '" ""I)' !he ootcome
in favor cl Palo Ait<>. Activities coorinue OIl • daily basis wid> • Non!Jem California Power
AgelY:y (NCPA) West=! Task Force chair«! by Palo AIIo, cliscus5ions with ."J'PA ... 'XI
weetinas aDd ~ with 0epanmt:Dt of ~gy "meW., legislators and tblOi< staff
members in WasbingroD, D.C.
Staff believes dlat an .n~ effo.-t must lnclcde supp.>rt IJld input from !lJc CiIJ's electric
C\lSIOIDm. "(be ResolutiOn prescllle<l 10 the CIt)' Counc~ is !be fJCSt step in informing a.es.
custOlllOB. Staff bas developecI !bE attached ",a,teting plan '" inform our CllSIorIlerS clll1is
issue, die impfICation cl its ootcome on ekc!ricity cost .,., availability and to solicit !beir
SUJlIl<l<\ aM input.
0.,... .... IMPAC'[
lbere eTisIs • broa<I range 0( fiscal impacts SIemIIliDg from the various courses 0( action ope!<
\0 tbc feden] governme:n!. Three P<-.... ibillties are outlined below.
I) A privatization 0( die PMk via an opea competitive ouction cooId raise Palo Aho', """,er
~ by lip '" $IS !I1ilIion per year c!epending on tbc privatizatiOn pri.:e and k!nIlS, T>'beIber
tbc City', ol<isti!lg comracts would be booon:cI by !be ""'" owner .,., wbether die DCW OWDCr
would be able \0 implcmeDl anti~titiye lImnS .,., proceclurc& '" gaiD more cootroI 0(
Palo Aha', service Ierrito<y.
2) A cost-based lnnSfer '" existing prefercna: custom<rs coold increase Palo Alto', power oosIS
by up \0 $5 !I1ilIioo annnaIly, c!epending 00 bow muc1. 0( die City', curreDl sbarc 0( die
(Mual Valley Project is forfeited 00 customers "';th little oc 00 elment allocation.
3) A restructuring .,., cIeIJ( payoff ",oo.ld have little direct annual impact 011 Palo Alto power
costs.
ENYmQNMEN1AL ASSE!SSMENT
Adoptloo 0( I!>is resolufun c!oes not constitule I project under !be California Environmental
QuaiiIy Act. However, 1he federal government', final decision on !be fate cl die PMAs could
ba-", significaDI esvironmenlal impact. ranging from !be cancenation 0( WAPA', oogoing
conservatiOn .,., renewable energy programs '" !be re-operatiOn 0( multi-plIfIlO6C publlcly
f.DllDCed hydro facDme., for sih.'<1 term profit potenti.al at some disadvantage 10 flood colltrol
tc<rC3lion and enviroomel!tallDttrests.
Tom Kabat, Senior R<:S<lWXe P1annet
Tom Habashi, kslsW;t DirocIor of Utilities
Depa/1men! Head Approval: /tf!il-EDWAJlOl.
Direc!ir of Utilities
.... lol3
RESOlUTION NO._
RESOlUTION Of THE COUNCil Of THE Cf1Y Of PALO ALTO
IN OPPOSITION TO THE PRIVATIZATION PROf'OSAL FOR
THE FEDERAL POWER MARKETING ADMINJSTRATIONS
WHEREAS, i1e Cily or Palo AIle manages ijs elec!ric utility ope<a!iOOs with
!he goal cK proifoding an adequale, reliable, and safe supply cK elEoClric pow9( 10 meet
rustomers· needs .., an economiCal, eff;c$1l. and environmentally sound mamer. and
WHEREAS, h Govemna<i or tie lJnite<:I Slates proposes 10 ... ~ several or
t>e Power Ma!T<e!ing Admir.istrafioos, lncIuding h Western Ivea Power Mminislralion;
and
WHEREAS, !he commitment ~ .., 1964 by the City or Palo AIIo 10 h
Western /vea I'o.r;er At:tnif1iSlralion haS resu!ted in S<wort 10 tie expansion and opera!iOn
or federall>ydroefOOric generaf""'~ and
WHEREAS. 1M City or Palo AIIo has baS<ld ~s eleclric reSOlX<Oe planning
sIraIegjes on h conIinued relaIionsl1ip with f1e Western Area Power Administra'"<lOI\ tom
which it receives up 10 ninety percenl or is eleclric suppf.es; and
WHEREAS, ..... residenls and busine$$es or Palo AlIa COLo\d e~
signif"""" increases in eIecIric fiiles I ..... Westem Area p<NfB( Administration were
pIi,afize<l; and
WHEREAS, f1e IIfbiIra')' saTe d tie Powor Ma!T<eling Administrations could
S<lfV& 10 concenIra1e "lecIriciIy generation n an anll<"mpeUfive mamer;
NOW, THE~FORE. !he ~ or f1e City or Palo AlIa does hefeby
RESOl'IE as 1oIIows:
seCTION 1. The City Council hereby ClflIY..ses tie pivafizalion d!he Federal
Powe< Ma11<e<"J<19 Admlnistraf1OOS, and f1e Oty Manage< is hereby aulhoIize<l 10
. (:Q!f.nJUrliCale !he Citys senfl/llenl 10 the Secretary or ,..., Oeparunenl or Energy, 1he
Presi<lert or b UniIed Stales, and appropriate members or the Congre>M; or Ihe Unile<I
Stales and hif s!affl;.
SECTION 2 As an a~emalive 10 such privalil.alion efforts, !he Council
recommends f1e ;estnJ<,ltrng cK !he e,"srlng :elalionstllp between !he federal Power
Mmefong AdminislraflOt'lS and ""it customers 10 improve efficiency by reducing !he
.runber or federal petSCli. lei and ovemead cosIs required 10 operate"" Power Marl<eting
Admi.";SlrartOns.
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'. -..... .,.: . ..:: ..
, DRAFT
·Prtvatlzatlon of the Power Marketing Administrations"
Communication Strategy "".parec! by City Q( I'llTe AIIol
Bacllground
The Cfinlon administration's fiscal 1996 budget propose$ 10 seM, or "privatize", fOur
Power Mar1<e6ng Administrations (PMA's) by 1996 i .... c:I .... ding !he Western Area Power
Jldminislralion fWestern"). We;,1em is !he source ~ sIxty to nrMty percenl ~ h
e1ec:lricily pllChased b;' !he City of PaTo Mo Ulilffi8$ (City) for dislribuliorllo its
residenlia!. commerciaf and O'lduruial e;ecIric custOl11llfS.
ot.eUSl1on:
. The City deper1ds upon exisling oost-OOsed federal hydroelectnc generators 8I"Id faders!
lraroSmission lines 10 f1e NMhwest 10 receive up 10 IIinely percenI ~ ~s C\Jrr6nI power
needs. Should lhasa major assets be sold 'hough e competitive bld<f1l19 process, !he
City would be ,'IJIr1erable 10 competitors "bidding up' the oost ot os reSOUfC$$. We
would have 10 either ouIbid him aT seek other resources on !he open mar1<et. This
would have a signifocenllorog-lerm cos! impad on !he City. e!edric ruslom ..... and
could drive up' our 'ilIflo/esale power oosts by fifty percenI aT more.
Communications Summary Regarding PMA Sale
ObJective:
To irlcrease pubUc and bUSiness awarer.ess ot Ihe Feder .. ; Power Ma!l<etiog
Administrafioo 1ssue irlthe City cI Palo AlIo and generale active support by lie
busir1ess oommunily for 1he Citys posftion regardIng !he proposed privaftzalion.
Key Ile8sage:
The C~y cI Palo AlIo opposes !he privatization cllhe Federal Pcwer Mar1<eting
Adrninistr&ilorls.
As an a~smatTve to such privatization ef'.orts, !he City recommands lie
restnJcIurVlg ~ hi exisfll19 relatJonship ber-en !he Federal Power Mar1<eUng
Ad,,,inlstralioos and !heir custom&rs 10 imprOve effICienCy by reducing !he
number ot federal perSOl'Ylel and "".mead costs required to operate !he Poweo
Mar!<e!ing AdmL'listralions.
Aucf\em:e:
Citizens ot P akJ Mo
Businesses located irI Palo Ana
Stale and Federalleglslators ancI!helr staffs
,. "
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Communlcalon:
Ci!y Manager; UlJlities [)i."ec!or and Stall, Mayor of Palo Ano; Palo AJI::> City
Cooocil; UtiliUes MJiscry Commission (UAC~
.. &thOdoJogles:
Utilities-bi~ inSeo1s; Meelings with elvie, businEiss, and govemmenlal Ieade<s;
news releases.
Targeted StnIt&gIIlS:
Citiz_ of Palo AltO
AcIion ftem.:
a) Prepare and dislOOule utility biU ilserts and "",stionlanswer fact sheets
e;cplaining cmen! PMA flfl<lt'lCiog, pelst benefrt, 10 Palo Ano t-om hi
PMA's, and neg<l!ive inpacI$ of hi privafizalion proposal for !he P","""
Mar1celing AdminlslfaflOOS (PtM'5) on pubTJC power.
101 Prepare and dislribute ,.,.,..,.; rel98685 explaining curren! PMA issue,
past booefits 10 Palo Ane !rom !he PMA'S, negative impacIs of \he
privafizatiOn proposal on pubfiC power, and requasUog tr.at local pm! and
ra<fro media pOO6ciZe !he story.
c) Prepare and dislm>ule "Leftars 10 !he Edltot" of focall'18lO'Spapefs and
tade journals deSCfibing !he PMA issue and slaf"'ll a case in support of
!he Cit/s position Attamp! 10 ii!sert sim~ar stalemen!s In OpinjoniEditorial
pages.
f!t!';')"'M 19cated kl palo Alto.
AcIion ftems:
a) Prepor.re and dislri!lu!e utility bill mert5 explaining !he curren! PMA
'SSU8, pels! benefits 10 Palo Ano from !he PMA'S, negative iIr.pacls of !he
pnvaflZ&Eoon proposal on pubTlC power, and request Iha! businesses
consider support"Jng fie Ci!y's position hough !heir JegisTa!ors Of
GoverMlen!aI Affairs Departmenls in Sac<amento and Was11ington D.C.
b) Prepare and clislri!lu!e fad and QUe$fionfanswe.-sheels 10 local
businesses explaining It ... cmen! PMA issue, psst benefits 10 Palo Ano
from !he PMA'S, negative impacts of \he PflYafizaflOO propo5al 00 public
power, and requesUng Iha! member businesses support Ihe City's position
hough conlacI with \he Palo AnD C-I'.amber of Commerce.
e) Prepare "sample Tellers 'lOr concerned businesses and hi<
employees 10 use as a guide for supporting !he City's posi!ion.
d) Prepare and clis!tibl~e fad sheets 10 hi Palo Ane Chamber 01
;
i
. ,
Commerce explaining I/1e ClMTent PMA issue, past benefils 10 Palo Mo
t'om I/1e PMA'S, IC-egafive impaCts of !he privafizalioo proposal on puIllic
po\Io'8t', and request flat hl CI\arnber seek a ResoMion from l/1eir
na!iona! organiza!ion S".ating suppott lor !he Cilys position.
ej Make peNOnaI presenlaf>ons by Ihe City's senior aiail' 10 govemmenlal
relations IIl<eCWveS of major eledtic aJStomers 10 expla;n Ihe currer<
PMA issue, pas! banefits 10 Palo Mo from IloJ PMA'S. negative i'npac(S of
Ihe privalization proposal on publ"JC poer, and impac!s on aJStomer
opeming costs. Request !l<Jsiness support lor !he CiIy'S pos~ion hough
lloJir GoYemmenIai Affairs olf..::es at t-e Stsle and Federal levels.
StltlII!!! Fr&rrpII aglslat.,.. and !Ilejr .Iat'fs
Acfoon IIams:
_) Make personal presen!aUOns by h City. senior staff 10 QOV6(TIlT>9n!al
represeroIatives and !heir staffs at !he Sla!e and F ede<al1e'l91s 10 ~e
\hal the oonc:erns of PaJo Mo are known prior 10 a decision regarding
tansfer of !he POIlIe< Matl<eting ".dministraflOnS.
SUMMARY OF MARKETING .... CTMTIES
City Council Resolution
Fact sIMets (ulinli .. • ~ and all custome.s)
Question and Anllwer SlIeets (all customenl)
UtlII1I ... Binsturr .... (all customers)
~ rei ..... for !he Print and Radio media.
·LeU ..... to the Editor" for Print media (news and fra<!e journal .. )
PubIk: Meeting wiIh. Governmental Affal'" Oepar~ 0( major electric
CUflomers (City Government and UtIlities Staff ~-l
, ~-;,
SchedulIng of Mayor, City CouncA members IIIId UAC IIembers 10 DtIend
IIeJor Cus'_ Meetings
Meeting wIIto Palo Alto Chamber of Commerce (City Go'I1Imment IIIId
. UtIlItIes Nff repreeentativea)
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