HomeMy WebLinkAbout0348.095') City of Palo Alto
City Manager's Report
TO: HONORABLE CITY COIJNCIL
FROM:
DATE:
CITY MAlllAGER
July 13, 1995
DEPARTMENT: VTILITIES
CM.R:348:9S
SUIIJECT: Updale to CooodI .ReganIlng the ProposEd Sak 01 !he PI>wer
M.arl<edng Adminisf;ralions
REO{)FST
This report is 10 update the Courd on the latest developments regarding the C!intOD
Administtation', proposed mnsJ'e[ of the Power Mu1ce!ing Agencies.
JlEffiMMENPAIJONS
This report is fix information only.
I'QIJCY IMPLICATIONS
If the proposed _er of the !'MAs materializes, there will be coosider3ble policy implicatioos
related to acquisilion 01 the City"s electric supply needs. n.:.e policy shifts will be cflSCll5Sed in
future repons to Cooincil.
EXjtCJ;'TIYE S\JMMAll.Y
00 April 10, 1995, staff infor:med COUIlC~ (CMR: 199:95) of the Clinton Administration'. proposal
10 divest the Power Muk<ting Agencies (PMAs). TlIe largest PM. ... is the Westen> Area Power
Administration (WAPA), tile supplier 0160 10 90 peroenI 01 Palo AlIo', .""'tricity needs.
On 1une 5, 1995. staff updaIed Council (CMR:280:9S) on the House 01 Representatives (House)
and the Sen>te proposals in their budget resolutions <o=rning Ihe sale of the PMAl. Staff aIsu
outnned potentia! outcomes from the HousclSeoate budget con!creoo: committee and 5UlllIDirized
staff. action to ~ with these ootcomes.
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The House anticipated proceeds of $4.2 billioD from tlle transfer of tlle Alaska Power Mmeting
Administtatioo to Alaska. and ~""verting !be Southcasttrn, Soulhwestcfll and Western Power
Ag.""jes into private CQrpOntiOIl."
The Se""te resolution assumed net manda,OCJI sovlngs of $77 ro.illioll in 1996 and $168 mil!ioo foe
the period 1996-2002 from the SlIe of !he PMA ........ ""wever. during flooc consideration, !he
Scnitc adopted • sense of !he Senate slalln! that tllese savings should be achkved from other
unspecified manOatOCJl programs.
On Jure 26. 1m. !he cooCerees 00 !he budget proposals issued lbeir report which assumes. among
otber tiring •• $77 miIlio.n of net manda<o<y savings from energy assets (PMAs) in 1996. and 5737
million foe !he period 1996 through 2002. The come= noted IhaJ Ihe most significant cliff ere",,"
foe energy mandatory speoomg betwees !he House resot"tioo and Ihe Senale amendment was !he
sale of !he PMA as .....
While Ibe Senate lIPlen&ed its budget resolution, Slating lllat Ihe savings should be achieved ill otller
energy manda<o<y programs. !he cooCerees were unable 10 identify SOUf"""" in other energy
programs 10 achieve this level of savings. The cooCerees noted that tlle entire ulISpecifled .nergy
assets savmg. could be achieved by !he sale of !he PMA assets. Alternatively. !hey acknowledged
dJat !he savings coold be achieved through • combi,,,,tion of!he sale of !he PMAs .ocI other federal
IsseIS.
Ultirnately. !he Committee of jurisclktioo must ""!ermine how to meet !he recoociliation
insttuctions. If!he Commitu:e of jurisd'o:tion pursue< !he PMA sales IS • means of achieving !he
savings assumed in Ibe confereoce agreement. !he conferees beflcv. !he sale should be structured
10 ensure that Ibe ratepayers are pruI<CIed from nmeasoDabk rate increases.
Update 011 Staff Actirities
SIa!f is 'IIodcing wiill other members of !he Nonbcm Car.forni.o Power Ageocy (NCPA} on Ihe
following:
I. NegotiatJ:d draft of I Mcmomldum of Understanding (MOO) between NCP A and Ihe Central
Valley Project Authority (CVPA) •• joint action ageD<:y made up of CVP water customers
formed foe !he .""",sse<! interest of acquiring !he CVP "'ater system. The MOO .....
negotiated to ensure mutual cooperation between. the CVP water Uld power customers,
provided !hat !he .. '.Ie< customers are successful in lbeir anemp<s to acquire !he CVP <
2. Negotiating. draft MOO amongst Ibe CVP power customers 10 prepare foe !he j>Ol<ntial sale
of !he CVP power facilities.
•
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3. Preparing a detailed 'gr<ell1<!11 10 outflDO. in detail, !be rigbts ,nd obfigatioc 0( tl>e .arioos
CVP po .... r C\lSIOmi."ll', provided that tl>e salt: o(!be PMA would becoooe • reality.
NEXTSTEPS
Smff will ~1lUC 10 moniIcr and influence !be polltical process, ,.or!< 1Vitb other CVP custoznen
on principle< 10 fa<:ilitate !be possible transfer, and complete an 19r<ell1<nt amoog51 CVP power
CUSIO!Dm 10 set in p!occ tbe appropriate mechanisms 10 e!lS1l..... smooth transfer 0( tho CYP
~i1ities, if aecessary. SUfI",.ill upc!lIte Counc~ on Ibis impot1aDt IIlAtter on • GlOIllhIy basis until
Congress decides on tile future 0( tho PMM.
PREP ARID BY: Tom Haba.lU, AssistmI Direc1C< 0( Utilities, Rerour~ MlIIagement
CITY MANAGER APPROV.u.:
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