HomeMy WebLinkAbout0229.095~ \W:J
~UDGET I:) -9f) City of Palo Alto
City Manager's Report·
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TO;
A'ITENTION:
HONORABLE CITY CO'-lNCIL
FINANCE COMMITTEE
FROM; CITY MANAGER DEPARTMENT: UTUn1ES ..
AGENDA DA"m: MAY 25,1995 CMR:229:95
SUBJECT, Gas Fund Rate ProposaJs
TIlls report requests Council's adoption of • resolution 10 1) reduce gas rates for two
larg~ industrial custome" to achieve competiti',eness with PG&E; 2) allow the gas
CO!2IIIlOdity charge for DOn-<:<>re customers 10 be adjusted monthly 10 remain competitive
in 1lle arrrent gas =lI:e1; and J) establish a sej>WIle gas transpottatloo ODIy rate schedule
10 simplify the customer gas service options.
BtmMMENQATIONS
Staff recoonnends Council adopOon of the attacbed resolution which authorizes the
fo!1o,.ing gas rate changes, effej:tive luly I, 1995.
L Introduce Gas Rate Schedule (;,1 applic.ble to large industrial customers
Who ose at lease 250,000 therms per year and req~est service under this
schedule.
2. Revise the Noo-rore Gas Rate Schedule (;,310 aITcw the cOlIlIllOdity charge
10 be adjusted fOOuthly within • pre-.u1llorized range.
3. Establish a Transpottatioo-()rJy Natural Gas Rate Schedule G-4 applicable
10 oon-core customers, who choose 10 pc.rcl1ase their !as from • pmpedng
supplier and re'luire transportation-only service from the City', Gas Uuli,lY_
------------------------CMR;:t29"95 Pa.g.e l of S
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POLICY IMPLIC. ... TIQNS
The propoW \() revise the gas ~ommoo"'Y rate Of: RoIte Schedule o..~ on • monthly basis
rep<=IlI3 • cllmge in exisling regulato<} policy. Cu=Dl policy requires all rate cIlanj!es 10 be
approved by !he City eouncn prior 10 implementation. Soch rate proposals are fIrS! reviewed
by !he Utilities Advisor)' Cotnmissioc and !he Firulllce c"rnmlnet. Sh"lCe!he emergell« olthe
natural ,as spot martel in 1986. gas pekes fluctuate on I monthly basis. The ~ CO[ Gas
RoIte Sched-JIe 0..3 is 10 ... .ablisb. I range ol prlcos within which the City could charge >
CllStomer. The ~ ~barged by Ebe City .'ouJd "fk>al" 1l'ithin 1bc Couocil·.utborized range each
month. This cbange in reg\llatO<} policy ID allow tkltible pricing to meet marker conditions I!l2J
be ~uested in the future 10 am 10 some electric rates.
DJSCIJSSJQN , .
The propoW' in this report are largely driven by CUll cot markel corufmons in the gas industry.
Over !he past dec.de, the industr)' bas undergone fundamental regulatocy changes. Smc. 1986,
I spot market bas ex;"teC! whereby gllS is sold on • monthly basis. Reguiarocy cbanges providing
access SO ime.rst:ate and inttastate transportation systems have aTIawed gas marketers to compete
with gas utilities roc market share. Presently. competition for CUStomf"rs is increasing and is
expecteclto continue_
The Palo AIIo Gas Utility is committed 10 o.'ferlng competitive ,as prices and respond'mg in I
timery manIle'E 10 changing market coDditions-. In. today'" competitive enviroomeru. I key
oojectiv-=: for ensuring the success of a utiIity is SO offer differenJ: service <'PtiOns-Las: year.
Council approved the introdoction ol • Non-core Gas !late Scbe(!u1e 0..3 10 pro.;ide
trm<portation and sum sem .. 10 its custom." (CMR:23l1:9.j). Gas Role Schedule 0..3
serves approximately six Palo Alto businesses 11/00 use .1 least 250.000 thera-oS per year. One
of _ custO<De". the Palo Alto l.andfill Gas Project, bas elected Ie pur..base from ." aI1ernate
gas suppl;"-.
To enable the City 10 eff<ctively compete for its large gas customers and retain its marl;et share,
several revisions 10 its gas r.ilt::: sc'bedu.les as wen as I cwge in dH: Cky"'s current regulator!
policy are proposed. VH"St~ to respond 10 some large customers who have requested I ... ider
choice ol service levels at competkive prices, staff proposes 10 introduce Gas RoIte Schedule 0..7.
Sccoodly. gas ~ bave been volallle litis fC<.Ca1 ~ear; and the use of • year-round fixed
commoolly cllru:ge for !he 0.3 customers ru,,; not been market re'l"'osive. Staff propo>es •
cbange in regulatory policy whielt ">'ould .now the comm<Xf1lY gas price under Gas RoIte
Schedule 0-3 10 be revised eacll month... Fin2.TIy ~ in a "bouselceeping matter", staff proposes
10 introduce Rolle Schedule 0-4 applicable 10 large customers .. ·ho request transportatioo-only
ser .. ict and choose I: competing ~pprLer. This change will simplify service options under Gas
Rare Schedule G-3 by moving gas transportation-onIy service w a De\Jl rate schedule.
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I. In!rOdnqign of Gj.< Ratt Scl!eduk 0-7
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I. I ,...,1lI «>mparisOll of Palo Alto and PG&E gas rates, with oae •• cqMion Palo Alto charged
lower overall rab:S. The e.ception is lhat Palo Alto has !Wo large industrial customers, who pay
approrimately 20 perceot higher ,as bills than they would if served by PG.l E. This proposal
es:abrtshes Gas Rate Schedule 0-1.t tr.e curreot PG&E market rate. ScbWJ!e G·' would apply
10 large gas users who use at least 250,000 lherms per year and request • service level between
flllll (net subject 10 inI<onuption) se","'" (G-2) a.'lC! curtanable (SIlbject iO interruption) service
(0-3). Umer Gas Rate Scbeduk 0-7, tI1e two large indo.strial customers will experience bill
reductioDS of 19.1 pen:ent. Their .. rvic< will be SUbjecllO curtailmont afiercUSlvmers served
"" Ihe 0-3 rare ate curtoned, The re"nne reduction associated with offering tl>l. rate schedule
is appro.Enately 5200,000, .,hlch .,ilI be talen out of tI1e Rate Str.t-nization Reserve (RSR).
l. Floating Gas Commodity OW" . Gas Rate Scl!edule G·)
Some of Palo AIto's non-core customers bave beeD approacbed by competing gas suppLiers ",bo
have offered to lower !heir :.is bills 'II!th competitive ra~es. Becaug gas commodity prices are
volalile, oor present method of charging cu.<lO<IleT> • fixed year·round commooil:y rate has not
proveD responsive 10 gas prices ... hicl1lend to ch.inge monttJy. 'Whereas !he utility may .Q\ler
cu!lect when ~ commodity nle is hlgber than the mar1cet. ill!lllY UD(\er",,1Ie<:1 its pnn:hased g'"
costs when the 0-3 commo<fIty rate is belaw the marl<et price. Coo.<equently. during mon!lls
in wticlt our rates are high relativ.: 10 she rr.a.rk~ il customer perception can arise that ibe Palo
Alto Gas Utiliry is uncompetitive.
Under Gas Rare Schedule 0-3, our customers bave direct access 10 the gas martel. and can
choose odJer suppliers. Staff, proposo1 is 10 float !he gas commooL'Y portion 0( 0-3 between
• ConDcQ authorized range of 10 cents 10 35 cents per therm. This nmge is based upon acrual
gas prices c!uring the past 2 years whicI! ranged between 14 cents and 29 cents per thermo By
adjusting the commodity rate mODthly 10 re!Je,;t the City', receot gas purchase C<l5t, the
cu..stomers lack an iIx:entive SO consider other gas suppliers. Customers who subscribe to thI.s
service wllI pay an aM.'tional " tenths of ore cent per th..-rrn brol<erage fee to cover the City's
expenses 10 provide this service.
3. Introduction of Transporfl!tion-Only Seryig: • Rate Sclledule G-4
c~ Rale Schedule G4 will be appflcable to those cu$!omef'S 'II/ba meet me criteria for oon<Of>!
CIassUICaOOo. and cbocse 10 purcha!;e !heir gas from or:her 5l:lppfters. This service is presently
,,,,,noble linde, NGn-Core Gas Rate Scbedule 0-3. Hewever, iocluamg tnmsportation-only
service 'lr'itli the non-core gas commodity service. ""hicb includes. both transportatioo. and supply
from the City .. can cause: some confusion. The purpose for introducing Rate Schedule G-4 :is
to s1mpfIfy lhese service options and will no(. imp<K..'1 the Gas Fund revenue.
lmPid oq ~ Dj!!s
A ~-ison 0( PG8<E C\!:otomcr bills will! Palo Aho C1l5tomer bills. is ilhIstrated by !he
.!IY..!Jed Jl"apbs. This comparisoo is Nsed on PGdI:E', cumllt r.tes snd Palo Alto', propor.ed
ra!<S. The figurcs indi.oa~ that the CiIy', .... idential gas rates. on a year-round basis. are
approldma!ely 2S perce"" below PG8<E', l'eSideoo.l ratts. Palo Alto'. non-residential ps rates
ore appro,imarety 16 re=1lt below PG&E's ,.te, in !he ",inter but 10 percent above PG8<E',
rates in !he SUIDIDeI depell<fmg on the sas consumption. Compared 00 a year-round basis
however, Palo Alto's non-residential ,.t .. are approximately 7 pon:<Dllower !had PGdI:E', ,.te,.
C<>mparlng Palo Alto', non-cor: customer bills will> PG&E', oon-core bms ;, difficult bc.Oause
o(!he momhly commodity rate adjustment The following table shows !he rfpical moothly t.iJ1s
for ilIe various ~ classes. although !be rate p<oposals in this report w()\lld not cbange
ICSideDliai and m..'>5t noo-re<idential bills in Palo A.'to: ..
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TheM! fj:ooo>td Ml!l Peroenl Below
CUstomer Usage Bill ~ Change PG&:E
ReslWmter 100 546M SO.OO 0.0 (28.7)
ResJTA""mter 150 85.34 0.00 0.0 (11.8)
~ 26 1J,84 0.00 0.0 (l6.6}
RtsISwruner 45 2UO 0.00 0.0 ( 8.6)
c"mmert:W SOO m.oo 0.00 0.0 (10.S)
Industrial 3200 1,888.00 0.00 0.0 ( 7.3)
JOiIustria! 30,000 14,220.00 (3,480.00) (19.7) 0.0
FISCAL IMPACT
In F1' 1995-96. !be propo5al iO establish Gas Rate Scbe<1ule G-7 represents I revenue reductloo
0( approximately 5200,000. oc 1 percem, based on I combined .. ,,,mal usage fOl" .. 'Ie N'O
custc>m<rs 0( 1.1 millio!l thenn<. The two other proposals are not expoc!ed 10 impa<.-t revenues.
These clJ.anges "ill ha ye DO impact on re.idential rateS.
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iNYJRDNMIlNTAL AS.'il§5MENT
1bc adoption of !he res<JluOOn does 001 constitute. project undtr the CalifO!llia Eovtromnelll3/
QuaIiI7 Ad. ""''''fore. no envlronmentallWeSSroOnI is requ'rred.
ADACHMENIS
Resolution, Rate Scb«!ul .. 0-3, G-4, and 0-1
PREPARED BY, Lucie Hirolina, Manager, Utilities Ra ....
REYIEWED BY; Ral>!y Ba!<&hl1l1. Assistant Directcc of Utilities,
, "'drninistraUvt Services
DEPARTMENT READ REVIEW;~~
EDW J.
{}ire<: of Utili' s
I"qe S ors
RESIDFt1IAL GAS BILL COM~RJSON
160.00
140.00
120.00
100.00
80.00
so·.oo
40.00
2O.!tD
• Mo,thly Bills
Winter
C.OO -"-___ ~_--j.--_=-:...:=-L-=;::::=.L...-=:;:::=:.../
TberrnB
Summer
$ Monthly Sills
F;gu1'e 1.b. Ttlerms
NON-RES~NTIAL GAS BIll C~PARISON
Winter
2.500
2,000
1,500
1,000
500
$ M onthl)' 8i11a
o~~~~~~~~~L~~~~~
300
Ftgure 2.a. Therms
Summer
$ Monthly Bills
2,000
1,500
1,000
500
300 500 700 1000 3200
Ffgw"e 2.0 Tnerms
RF.soLUTION NO.
RBSOLtlTION OF THE COUNCIL OF TKS CITY OF p;u.o ALTO
AMENOING UTILITY PATE SCHEIXILE G-3 AND
BSTAB~ISHING UTILITY RATE SCHEDULES G-~ AND G-7
OF THE CITr OF PALO ALTO UTILITIES RATES AND
CHARGES PERTAINING TO NON-CORE, TAANSPC>IITATION-
ONLY AND LARGE <XMIBRCIAL NATURAL GAS SnVICB
The Council -of the City of Palo Alto does hereby J;.E:S()LVE as
follows!
SECTION l~ Pursuant to Section 12.20.010 of the Palo Alto
Municipal Code, SChedule G-3 (Non-Core Natural Gas Service] of the
Palo ~tQ ~ili~ies Rates and Charges is he~eby amended to read in
aCQOrdance with Sheets G-3-1 and G·3-2~ and Schedule G-t
ITransportation-Only Natural GaB Service) and Schedule G-7 (Large
Camwercial_Natural Gas Service) are hereby added to the Palo Alto
UCilities Rates and Charges to read in accordance ~th Sheets G-4-1
and G-7-1 .. respectively. attached hereto and incorpOrated herein t-.y
ref~rence. T".oe foregoing Utility Rate SChedules, as a.'Tteooed and as
adopCed~ eball become effective oc July 1~ 1995.
SRCfION 2. The Council finds that the revenue derived frem
the authorized adj~stment and addition of the several natural gas
service rates_ shall be used only for, the purposes set fort.h in
Article VLI. section 2~ of ~he Charter of the City of Palo AJto.
SECTIOIi :J.. The Coun-cil finds that the adoption of th.is
resolution does not constitute a project under the california
Environmental Quality Act~ California PUbli~ Resources Code seccion
210S0. subdh-ision (b) (SI _
DiTJt()[.o!]C8D AND PASSED:
ArES:
NOBS:
ASSENT:
ABSTENTIONS:
ATTEST: APPROVED:
City Clerk Mayor
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APPl!OVED AS TO FORM:
senior Asst. City Attorney
&irector.of Finance
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City Manager
Oirector of ~tilities
A. APPLICABlUTY:
NON-CQRE NATURAL GAS SERVICE
WililY SATE SCHEOlIlE G-3
Tnis sdledule appfres 10 no,,·core lransp<Jrtation and commo<foty service for oon-residenUal
customers ~-too use at least 250,000 !herms per year per sile. In addiiior, !his rale schedule
applies 10 customers formesfy receiving service "n<Ief !he Gas Rate ScI1eduIe G-5O rate
(lated July 1. 1992.
S. TERRITORY,
Wi!hin the Service·atea 01 \he City 01 Palo AIIo and on land cwned or leaoed by !he City.
C. RATES:
p", Meter
PerMonlh
1. Commodity Charge Per Therm ........................... 10.0¢ -SS.O¢
2. Sio1<erageFeepe~Therm ••.•.••....••.......•.••...••••..•••.. O.4¢
3. Transportation Charge PI!( Therm ........ _ . _ • . . • . .. . • . . . . • . . • . .. 17.0¢
D. SPECIAL CONDITIONS:
1. Service under this scile6loTe is subject 10 d"osconfinuance in wllo1e or in part in case 01
aclual or anficlpaled shortage 01 natural gas resulting from art insufficienl supply,
inadequate \"al'.SlTlission or <!eHvety capacity 01 facl1ilies. or sho<tage requiremer.l1;.
Howevef, \he City Wll a!!emptlo minjmize disruption :'y providing a<!equate no!ice prior
10 curt.ai1mefll . TM City will no! be Kable for damages occasiOned by interruption or
discontinuance of service supplied under !his schedlJ!e.
2. Specific terms and cor<fifions shan be covered b,. separate agreement between !he Cily
and customers served un(!ef Ihls rate schedule.
3. TJ-.e commo<flly charge is equal 10 !he City's average cost 01 \he natural g .. s paid at \he
Caflfornja border for \he monlh immediately preoeding !he month in whicO \he customer
is b<l1ed. The COITroOOity c!1arge .... iI fa! within !he minimumfmaximOOl range set for1h
in C.1.
4. A customer who eleds 10 be served under lhls rate will pay a brokefag.e fee equallc
!he allocable adminjSlralive cosls incurred by \he City in provi<ftng !he r>OfK:Ore gas
seMce.
CITY OF PALO ALTO UTILITIES
Issued by !he City Couoc~
SUpe.osede.s Original Sheet NO. G-3-f dat5d 1·f...§4
Effective 7-1-95
Sheet No. G-3-1
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i • NON-CORE NATURAl. GAS SERVICE
!JIUJY SATE SCHEOlli G-3
-(Corllinued)
5. The ~ charge is equal 10 the COS! of lransportJog n.!uraI gas from !he
California bo«Ier 10 the customers gas meter.
6. The Iolal monlh/y charge " t1erms used during the moo!h X {COIT1l1'1OOrty charge +
broI<erage fees + Transportation cliargeJ-
1. AcusltJmer may request seMce IJI'ldar Ihis scIle.XJIe for more !han one accounl or
meIef l!he accounts are located on one sne. A s~e sliaR be defined as one or mon!
utirrty accoooIS se.-'Iing coo!iguoos parcels of land with no ... Ie:vening puNIC rTg/ll-of
ways (e.g. streets) and have a common bllling address.
CITY Of PALO ALTO UTIUTIES
Issved by !he City Council
Effec~ve 7-1-95
Origirlal SIleet No. G-3-2
NATURAL GAS TRANSPORTATION-ONLY SERVICE
UTILITY PATE SCHEDUlE G-4
,This schedule approes 10 lranspor'.a!ion-only service for """-<:ore service for customers who
use at leas! 250,000 IhemI$ pet year at one sfte.
B. TERRITORY:
WiIhi~ the servICe area 01 the City 01 Palo Mo arid on land owned Of leased by !he City.
C. RATES:' ••
ParMeter
El1!: MootI1
1. TranspO<tatioo Charge p", Therm .....•.••.••..•.•••...•••... 11.0¢
2. Brokerage fee per Therm •••.••••••••••..•••.•.••.•••••..••. 0.41
D. SPECIAL CONDITIONS:
1. Ss>ecific !erms and oonailions shaU be cover<od by separate agreement between the
City a'nd customers set1Ie<1 under Ihis tale schedule,
2. A customer who erects 10 be charged underlhis rale Schedule will pay a brokerage
fee equal to the ailocable administraliv<! cosls ilcurred by the city in provid"mg
lral1SjlOrtafion.«lJy service,
3. The lrar.sportalXln charge is equal 10 the cost of transpo<1irog na1ura! gas vom !he
Carlfomla border 10 the C\J5!omer's gas meter.
•. ToIa! mon!hIy charge = \herms used X (lraosportatioo charge ~ brokerage fee).
5. A CUSIolT\e( may reques! service unO", Ihis schedufe for mor" lhan one ac<lOOn! or
one meter if the accounts are located on one s~e. A sfte sl'IaD be defined as
cooti~ parcels 01 Jand with no intervening righl-<>f·ways (e,g. _Is) and have
a common bming address,
CITY OF PALO At TO UTILITIES
Issued by the City Council
Effective 1·'·95
O!lglna! Sheet No. G-t-l
•
A. APPLICABlLIrf:
LARGE COMMERCIAL NATURAL GAS 5eRVlC£
UTILITY RATE SCHEDUlE G-7
This scl!8du1e applies 10 non-residenfia! cos1Omers who use at least 250,000 !he""s per
year at one site. Cu$tomers served unde<> V",is Rate Schedule accept a highe<> risk of
CUI1aJlrnen! Illan wsfomers served on Commercial NaMal Gas Rate scI1edule G-2.
8, T£RRlTORY:
Wi1hin !he service area of !he Cily of Paio Mo and on land owned 0< leased by !he City,
C. RATES:
AI Year-round Delivered Cornmocfrty
Per Meter
Per Month
Per Therm .. _ . _ ..•......•.•..••.•.•.••......•....•.•••• 47.4¢
O. SPEC1AL CONDITION:
1. Service under Illis scl1eduTe is subjecllo (f1SCOl\!k1uance in whole or in part in case
of ackJai or an!iclpated shol1age of nalural 925 reSuJ!ing from an insuf!icienl supply,
nadequale transmission or derrvef)' cap!ICiIy of facilities, or shortage requirements.
Customers served under \his schedule will be CUfla1Ted only I the City experier.ces
supply or Iransrnission shortages in e.cess of its non-<:ere service under Rate
Schedules G-3 and G-I as specified in !he 11OIl-cO<e service agreements.
The City wiD a!teITIpt 10 minimize the disruption by providing adequate no6ce p<io<
10 CUflanmant The Cily Wll no( be fiable for damages occasioned by inlerr1Jll\ion
or disconUnuance of service supptied under lhis scf>edule.
2. A <:IJstorner may quarofy lOr service undef lhis schedule for more Ihan one account
if !he accoonts are Ioc.ated on one s~e. A s ft. shan be defined as contiguous
parcels of land with no intervening righI-oI'·way (e.g. streets) and have a common
bnfLng address.
CITY OF PALO ALTO UTILITIES
Issued by the Cdy Council
Effective 7·1·95
Original Sheet No. G·7-1