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Agenda Packet - July 26, 2004 -CC
MN�a ' H ��t ��'� �_ .rna �# _ FFt�4S++4IeF ✓FAx'cF n ani Fah . �+�+'� SF" v AZUSA 114X1 t SA I AGENDA REGULAR MEETING OF AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL AZUSA LIGHT 8.WATER MONDAY, JULY 26, 2004 729 N. AZUSA AVENUE 6:30 PM AZUSA, CA 9 t 702 AZUSA UTILITY BOARD DIANE CHAGNON CHAIRPERSON DICK STANFORD DAVE HARDISON VICE CHAIRPERSON BOARD MEMBER CRISTINA C. MADRID IOSEPH R. ROCHA BOARD MEMBER BOARD MEMBER 6:30 p.m. - Convene to Regular Meeting of the Azusa Utility Board and Azusa City Council • Call to Order • Pledge to the Flag • Roll Call I. PUBLIC PARTICIPAT143N (PersonlGroup shall be allowed to speak without interruption up to Five (5) minutes maxAnum time, subject to compliance with applicable meeting rules. Questions to the speaker or responses to the speaker's questions or comments, shall be hand/ed after the speaker has completed his/her comments. Public Participation oil/be limited to sixty(60)minutes time.) The Consent Calendar adopting the printed recommended action will be enacted with one vote. If Staff or Councilmembers wish to address any item on the Consent Calendar individually, it wifl be considered under SPECIAL CALL ITEMS. I1. CONSENT CALENDAR A. Minutes. Recommendat on: Approve minutes of regular meeting of June 28, 2004, as written. II-A. Minutes\UB Minutes 628-04.doc B. Request for Sale of Water Property at 16706 East Cvoress Street in Covina Recommendation: Approve the following res I olution: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, FINDING THAT THE PUBLIC INTEREST AND NECESSITY REQUIRE THE SALE OF SURPLUS PROPERTY, DECLARING ITS INTENT TO SELL RESIDENTIAL PROPERTY LOCATED AT 16706 EAST CYPRESS STREET (ASSESSOR PARCEL NO. 8419-022-170)AND SETTING A HEARING DATE FOR CONSIDERATION OF PROTESTS. II-B.Sale of Cypress Property.doc C. Amendment of Refuse ontract Budget for Fiscal Year 2003-2004 Recommendation: Approve additional $126,400 to the refuse expense account and revenue account to allow for final payment to Athens Services. n-C. Refuse Service Budget Amendnent.c D. Amendment of Fiscal Year 2004-2005 Utility Department Budget Recommendation: Approve amendment of Utility Department's Fiscal Year 2004-2005 budget to cover for some costs unintentionally omitted from the Operating Budget adopted by the City Council on June 21, 2004. Rim II-D. Utility Budget Arrendnent.doc E. Amendments to the Western System Power Pool Agreement with Panda Gila River, L.P. Recommendation: Authorize Mayor to execute agreement amendments to the Western System Power Pool Agreement (WSPPA) with Panda Gila River, L.P. 11-E PGR WSPP.doc F. Acceptance of Grant of Easement from Azusa Mobile Home Park LLC Recommendation: Approve the following resolution: 2 002 RESOLUTION OF THE UTILITY BOARD/CITY COUNCIL OF THE CIN OF AZUSA ACCEPTING CERTAIN GRANT EASFAAENT AND DIRECTING THE RECORDING THEREOF. II-F. Bect_Easement.doc G. Contract for Mail-In Utility Payments Processing with R 7 Lawrence Corp. Recommendation: Award three-year contract to R T Lawrence Corp. to process mail-in utility payments and authorize Director of Utilities to sign the Professional Services Agreement. PSMS II-G. Loddroz.DOC H. Acceptance of Easement from Heavenly Pet Resort for Fire Service Line- 1741 W. San Bernardino Avenue, West Covina, CA 91790. Recommendation: Accept easement granted by the owner of Heavenly Pet Resort to Water Division due to installation of a fire service line and backflow prevention device. II-H. Water Easement—SE 1. Proiect W-195, Destruction of Three Water Wells. Recommendation: Award contract to Beylik Drilling, Inc. for perforriance of Project-195, Destruction of Three Water Wells at 209 Grandview Drive Azusa; 16706 East Cypress Street, Covina; and 16106 East San Bernardino, Covina. R-I. Destniction of 3 Water Wells.doc J. Resection of Bid for Renovation of the Electric Yard at 1020 West Tenth Street. Recommendation: Reject bid of $1,518,000 from ABEAM Construction, Inc. for the renovation of the electric yard and authorize staff to re-bid project. Eli II-J.Bid Rejection—Elec Yard l K. Rejection of Bid for the Installation of Underground Electric Street Light System. Recommendation: Reject bid of $287,540 from C.T. 8- F. Inc. for Project LD 2004-1 to furnish and install underground electric street light system and authorize staff to re-bid project. II-K Reject Bid--Ughting.doc 3 003 L. Professional Services Contract for Preparation of Complete Electric Distribution System Study. Recommendation: Award Professional Services Contract to RW Beck in the amount not-to-exceed $75,873.00 for preparation of an Electric Distribution Study and authorize the City Manager to sign the agreement. H-L. Electrk MasterPlan.do 111. SCHEDULED ITEMS A. Fund Transfer from Public Benefit Charge Fund to Wholesale Power Revenue Account Recommendation: Approve fund transfer in amount of$60,000 in order to mitigate the above market cost of renewable resource procurement. In III-A. PBC Fund Transfer.doc B. San luan Replacement Power Cost Recovery Mechanism Recommendation: Approve the following resolution: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA AMENDING THE SCHEDULE OF ELECTRIC RATES AND CHARGES TO ADD A SCHEDULE FOR RECOVERY OF SAN JUAN REPLACEMENT ENERGY COST VIA FUEL COST ADJUSTMENT CLAUSE. III-8. San Juan FCA.doc C. Reclassification of Assistant Director-Power Resources to Assistant Director of Utilities Recommendation: Approve reclassification of Mr. Bob Tang from Assistant Director-Power Resources to Assistant Director of Utilities, with no change in salary. III-C. Redassifkatlon.doc IV. STAFF REPORTS/COMMU 41CATIONS A. Monthly Legislative and R gulatory Update LEij IV-A. Legislative Update.ppt 4 004 i B. Monthly Power Resources Update E IV-B. Monthly Power Resources Update.pp C. APPA Article: Industry Challenges in Changing Times 0 N-C. APPA Industry Challenges.pdf D. Annual Adjustment of Replacement Water Cost Adjustment Factor IVIMSA IV-D. Replacement ' Water Cost 09-05.do i V. DIRECTORS' COMMENTS VI. CLOSED SESSION A. CONFERENCE WITH LEGAL COUNSEL- EXISTING LITIGATION Government Code Section 54956.9 (a) Kirkwall Substation Agreements FERC Docket No. ER 04-667 B. CONFERENCE WITH LEGAL COUNSEL- EXISTING LITIGATION Government Code Section 54956.9 (a) California Energy Crisis Refund Proceedings FERC Docket No. EL 00-95 VII. ADJOURNMENT i A. Adjournment. "Incompliance with the Americans with Disabilities Act, if you need special assistance to participate in a city meeting,please contact the City Clerk at 626-811-5219. Notification three (3) working days prior to the meeting or time when special services are needed will assist staff in assuring that reasonable arrangements can be made to provide access to the meeting" 5 005 . .. ........................... 0. NO •Eye': y,... W V1. �y F „d `•. y, �L,�m . rata 2' AZUSA r.YR 8 N1 ztrC CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26, 2004 SUBJECT: AMENDMENT OF FY 2004-05 UTILITY DEPARTMENT BUDGET RECOMMENDATION It is recommended that the Utility Board/City Council: 1. Approve of an amendment to the Utility Department's FY 2005 budget to increase Water division budget by $260,600 , Electric division budget by $293,344, and Customer Service division budget by $11,000, all to cover omitted projected overtime/standby time costs; 2. Approve of an increase in the Customer Services division budget by $100,000 to cover omitted estimated regular time costs/benefits; and 3. Add Customer Service Representative I (1 fulltime or FT) position and two part-time Customer Service Representative I (1 fulltime equivalent or FTE) positions together with an increase of $84,342 to the Customer Service division budget to cover the cost of these positions. BACKGROUND After the adoption of the Operating Budget on June 21, 2004, staff noted that there were some costs unintentionally left off the adopted version. After some review, Utility and Finance Department staff determined that the following were omitted from the Utility budget which was approved by the City Council on June 21, 2004: • Overtime/standby costs of $564,944 for various Utility divisions • Salary and benefits for Fields Services (Meter Readers) was under-budgeted by $100,000 • One fulltime Customer Service position in amount of $54,338 and two part- time positions in amount of $30,004. These costs do not necessarily represent increases from prior year budget. Of the total overtime/standby time costs, 98% or $553,994 is for the Water and Electric divis'ons, most of OT & Standby Budget Amendment: FY 2003-04-Actuals FY 2004-05 thru May 31 '04 Budget CONSUMER SERVICES 31-40-711- Field Services Salaries and Benefits 902 6033 Overtime Pay/Pre $2,219.32 $ 9,000 Customer Records & Collections Salaries and Benefits 903 6033 Overtime Pay/Pre $10,336.52 $ 2,000 Total Consumer Services $12,555.84 $11,000.00 023 OT & Standby Budget Amendment (cont) FY 2003-04-Actuals FY 2004-05 thru May 31 '04 Budget ELECTRIC DISTRIBUTION -O&M 33-40-735- FERC SUPERVISION&ENGINEERING 580 800 SALARIES & BENEFITS 6033 Overtime Pay/Pre $3,459.92 $13,825.00 OVERHEAD LINE EXPENSE 583 830 SALARIES & BENEFITS 6030 Overtime Pay/Reg $4,042.79 $5,000.00 6033 Overtime Pay/Pre $29,518.03 $100,000.00 6039 Standby Pay/Prem $14,995.97 $25,000.00 UNDERGROUND LINE 584 840 SALARIES & BENEFITS 6030 Overtime Pay/Reg $4,042.79 $5,000.00 6033 Overtime Pay/Pre $29,518.50 $100,000.00 6039 Standby Pay/Prem $14,995.97 $25,000.00 METER EXPENSES 586 860 SALARIES & BENEFITS 6030 Overtime Pay/Reg $1,091.34 6033 Overtime Pay/Pre $4,917.52 $12,276.00 MISC DISTRIB. 588 880 6033 Overtime Pay/Pre $0.00 $2,713.00 ENGINEERING 33-40-745- FERC SUPERVISION & ENGINEERING 580 800 SALARIES & BENEFITS 6030 Overtime Pay/Reg $747.68 $4,530.00 Total Electric $107,330.51 $293,344.00 Total: $307,316.76 $564,944.00 025 ,‘„ AZ LSA cxr s w+.rec AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITI _ y P DATE: JULY 26 2004 SUBJECT: APPROVAL OF FUND TRANSFER FROM PUBLIC BENEFIT CHARGE (PBC) FUND TO WHOLESALE POWER REVENUE ACCOUNT RECOMMENDATION It is recommended that the Utility Board/City Council approve the fund transfer in the amount $60,000 from PBC Fund to wholesale power revenue account to mitigate the above market cost of renewable resource procurement. It is further recommended that the Utility Board/City Council approve an appropriation increase of $60,000 in capacity and energy account of the Light Fund to pay for the above market cost of renewable resource procurement. BACKGROUND In May 2003, the Utility Board adopted a Renewable Portfolio Standard (RPS) for the electric utility to comply with renewable resource legislation SB 1078. It was understood that the procurement of renewable resources may cause the electric utility to pay more for power that would otherwise be available in the wholesale market. The adopted RPS limited the impact to retail rates of such additional costs to no more than 5% and authorized a partial funding from PBC Fund in the amount of $60,000 to mitigate the above market costs of renewable resource procurement if necessary. In September 2003, the City entered into a 20-year contract to procure windpower from Highwinds Project at a price of $53.5/MWh. The power delivery under this contract commenced on September 1, 2003. At the end of FY 03-04, staff determined that the above market cost incurred under the contract is $134,171 as outlined in Attachment 1 and thus the cost mitigation from the PBC Fund is warranted. 49/°'(1 ( i/24/ Afr' l/ 47/ /16( Air 054 Attachment 1 Renewable Energy Subsidy MONTH ABOVE/(BELOW) MKT Sep-03 $13,631.20 Oct-03 $16,818.56 Nov-03 $22,470.88 Dec-03 $13,911.52 Jan-04 $11,733.44 Feb-04 $13,241.92 Mar-04 $17,335.20 Apr-04 $12,104.64 May-04 $4,894.88 Jun-04 $8,028.80 TOTAL $134,171.04 056 AZUSA ... LIGHT&WATU r_i_ AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES <-1( DATE: JULY 26 2004 SUBJECT: APPROVAL OF THE SAN JUAN REPLACEMENT POWER COST RECOVERY MECHANISM RECOMMENDATION It is recommended that the Utility Board/City Council approve the San Juan replacement power cost recovery mechanism described below, and the resolution for the applicable rate schedule to Light and Water Rules and Regulations incorporating such a mechanism. It is further recommended that the Utility Board/City Council direct the staff to implement the San Juan power cost recovery mechanism commencing October 1, 2004. BACKGROUND The City's San Juan Unit 3 resource is its single largest resource providing up to 75% of City's annual energy requirement. Due to the sunk cost nature of San Juan resource, the cost incurred in procuring replacement power when the unit is derated, or unavailable due to scheduled or forced outages is an addition to the power resource cost. Normally, the electric utility budgets additional funds in the budget process to account for the forecast replacement power cost in the ensuing fiscal year, but the precise forecast is becoming increasingly challenging due to (1) more frequent forced outage episodes of San Juan, and (2) increasingly volatile and upward trended spot market prices when the purchases of replacement power take place. Thus, staff hereby proposes a rate adjustment mechanism by utilizing Fuel Cost Adjustment (FCA) provision in the existing electric schedule that would ensure more timely and prudent recovery of all power procurement costs taking into account the variable nature of San Juan cost structure. The following describes the proposed rate adjustment mechanism via FCA. aaou d 2/ // oiii4: /1' 057 RATE ADJUSTMENT MECHANISM: Step 1: Establishment of Base San Juan Replacement Power Cost Budget It is recognized that San Juan unit 3 is a unit contingent resource, thus it is reasonable to assume that the unit will from time to time have scheduled and forced outage episodes and the City would incur certain amount of replacement power costs during such times. In establishing the base San Juan replacement power cost budget, we will assume a unit availability factor of 85% on a monthly basis and an average replacement power cost of $40/MWh. The choice of 85% availability and $40/MWh is predicated upon the economic consideration when the City first purchased the unit output, at that time it was assumed that unit would have 85% annual availability factor and the market price for power would be close to $40/MWh. The existing electric rate structure is to large extent set based on these assumptions. Step 2: Calculation of Actual San Juan Replacement Power Cost As the San Juan unit operates and the replacement power cost is incurred, the actual cost incurred in replacing San Juan resource will be tracked and totaled each month. Step 3: Comparison of the Cost Difference Once the base replacement power cost and the actual replacement power cost are calculated, a comparison will be done on a monthly basis for cost recovery considerations. Also, any San Juan outage insurance premium will be recovered on an equal 12-month installment basis, and any San Juan insurance coverage payout will be appropriately credited. Step 4: Quarterly Cost Recovery Mechanism On a quarterly basis, the accumulated cost difference taking into account San Juan insurance coverage adjustments will be computed for potential recovery or crediting. To avoid de minimums or excessive adjustments, it is suggested that a bandwidth be used in establishing the adjustments. Initially, it is proposed the following criteria be used in establishing the bandwidth: a. If the quarterly accumulated cost difference (either a credit or a charge) is less than $100,000, then such accumulated cost difference will be carried over to the immediately succeeding quarter for crediting or recovery. No adjustment will be made in the immediately succeeding quarter. b. If the quarterly accumulated cost difference (either a credit or a charge) is more than $750,000, then only $750,000 in either credit or charge will be assessed to the immediately succeeding quarter in the form of "fuel cost adjustment" as computed by the following formula: Fuel Cost Adjustment = $750,000/Forecast Retail Sales in MWhs in the immediate succeeding quarter. 058 Any amount above $750,000 that remains to be credited or recovered will be carried over to the succeeding quarter for crediting or recovery. The $750,000 threshold is chosen to approximately equate to a 10% adjustment of the current base retail rate, i.e., the adjustment to the base retail rate is to remain within 10% to avoid excessive rate adjustment. c. If the quarterly accumulated cost difference (either a credit or a charge) is between $100,000 and $750,000, then the entire accumulated cost difference in either credit or charge will be assessed to the immediately succeeding quarter in the form of "fuel cost adjustment" as computed by the following formula: Fuel Cost Adjustment = Accumulated cost difference/Forecast Retail Sales in MWhs in the immediate succeeding quarter. Further the Utility Board may establish from time to time, at the recommendation of the Director of Utilities, a minimum threshold of carried over credits to minimize the prospective fluctuations in the fuel cost adjustment. The application of the above adjustment mechanism is illustrated in the attachment 1. The applicable resolution for rate schedule to Light and Water Rules and Regulations incorporating such a mechanism is in attachment 2. FISCAL IMPACT The actual fiscal impact the proposed adjustment mechanism will depend on the actual San Juan availability throughout the fiscal year and the spot market price for power to replace San Juan power. Had the adjustment mechanism been in place during FY 03-04, the electric utility would have assessed approximately $680,000 in FCA charges to retail customers or about 2.6% increase in retail revenues. Prepared by: Bob Tang, Assistant Director of Resource Management Attachments: _.s Attachment 1.pdf Attachment Attachment 2-Rule RPC Pres.ppt 2--Resolution.doc Change.doc 059 } ATTACHMENT 1 The application of the proposed adjustment mechanism is illustrated by the following examples: Example 1: The actual San Juan output in MWhs and the actual incurred San Juan replacement power cost were used for FY 03-04. a. At the end of the first quarter of FY 03-04, the accumulated cost difference taking into account San Juan insurance coverage adjustment is a charge of$18,983,thus no adjustment is made. b.At the end of the second quarter of FY 03-04,the accumulated cost difference taking into account San Juan insurance coverage adjustment is a charge of$406,988 and combined with the previous quarter's charge of$18,983 yields a charge$425,971 to be recovered. The quarterly adjustment is computed as: $425,971/Forecast retail sales in MWhs in the immediate succeeding quarter=$425,971/ (19,905+18,856+21,338)=$7.10/MWh or 0.71 cents/kWh in fuel cost adjustment charge. c. At the end of the third quarter of FY 03-04, the accumulated cost difference taking into account San Juan insurance coverage adjustment is a credit of$50,679. Thus no adjustment is made. d. At the end of the fourth quarter of FY 03-04,the accumulated cost difference taking into account San Juan insurance coverage adjustment is a charge of$533,037 and combined with the previous quarter's credit of$50,679 yields 0.62 cents/kWh in fuel cost adjustment charge. The above recovery and crediting mechanism will yield a recovery of$908,329 above the base San Juan replacement power cost of$1,572,336, of which$230,000 is for the recovery of San Juan insurance premium. Example 2: It is assumed that San Juan has very high availability factor of 95%and market price of $50/MWh for replacement power. The adjustment mechanism will yield credits of 0.27/kWh, 0.29/kWh,0.26/kWh, and 0.22/kWh in the applicable quarters for a total credit of$687,196 for the twelve month period. 060 Example 3: It is assumed that San Juan has very low availability factor of 75%and high market price of$65/MWh for replacement power. The adjustment mechanism will yield charges of 1.15/kWh, 0.98/kWh, 0.24/kWh,and 0.20/kWh in the applicable quarters for a total charge of$1,623,084 for the twelve month period, with$1,292,990 of insurance payout offsetting the overall total charge. 061 Example 1 San Juan Replacement Energy Cost Recovery Spreadsheet Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total Actual SJ Output 17.840 20,572 19,898 15,415 17,533 14,008 18,829 20,862 18.798 1,796 21,413 21,302 208,266 Actual SJ Replac Energy Cost $266,702 $43.943 339,494 $268,677 $137,151 $341,100 3146.432 $765 $137,744 5809.033 543,572 $16,052 52.250,685 Maximum Output 22.320 21,576 20.880 22,320 21,600 22,320 22,320 20,880 22.320 21.600 22,320 21,600 262,056 Unavailable SJ Output 4,480 1,004 982 6,905 4,067 6,312 3,491 18 3.522 19.804 907 298 53,790 %Outage Rate 20.07% 4.65% 4.70% 30.94% 18.83% 37.24% 15.64% 0.09% 15.78% 91.69% 4.06% 1.38% 20.53% Base SJ Output©85% 18,972 18,340 17,748 18,972 18.360 18,972 18,972 11.748 18,972 18,380 18.972 18,360 222.748 Unavailable SJ Output 3.348 3.236 3,132 3,348 3.240 3,348 3.348 3,132 3.348 3,240 3.348 3,240 39,308 %Outage Rate 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% Base SJ Replac Energy Cast @$40/MWh $133,920 5129.456 5125,280 $133,920 $129,600 $133.920 5133.920 5125.280 5137.920 5129,600 5133.920 $129,600 $1,572,336 Actual-Base SJ Replac Energy Cost $132,782 -$85.513 -385,786 $134,757 $7,551 $207,180 $12,512 -$124,515 $3,824 $679,433 -$90,348 -$113,548 $678.329 San Juan Insurance Premium Recovery $19,167 $19,167 319,167 $19,167 $19,167 $19,167 519.167 519,167 $19,167 519,167 $19.167 519.167 3230.000 San Juan Insurance Payout $0 SO SO SO SO $0 SO $0 $0 30 50 $0 $0 Cumulative Quarterly Difference(COD) 518.983 $406,988 -$50,679 3533.037 5908.329 If I(CQD)14100,000,then adjustment•0 If I(CQD)1>$750,000,then adjustment=+-$750,000 0 $425,971 $0 5482.358 5908.329 or else adjustment=COD Retail Sales(MWh) 26,151 26,700 24,358 23.374 19.400 20.200 19.905 18,856 21.338 20,500 22,485 22,407 26,151 26,700 24,356 Adjustment(cents/kWh) 0.71 0.71 0.71 0.00 0.00 0.00 UR 0.62 0.62 Q 6V Example 2 San Juan Replacement Energy Cost Recovery Spreadsheet Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total Actual SJ Output 21,204 20.497 19,836 21,204 20.520 21.204 21.204 19,836 21,204 20,520 21,204 20.520 248,953 Actual SJ Reptile Energy Cost 355.800 353.940 $52,200 $55,800 554.000 $55,800 555.800 $52,200 555,800 554,000 555,800 554,000 $855,140 Maximum Output 22,320 21.576 20,880 22.320 21,600 22.320 22.320 20.880 22.320 21,600 22,320 21,600 262.056 Unavailable SJ Output 1,116 1,079 1,044 1,116 1.080 1.116 1.116 1.044 1,116 1,080 1,116 1,080 13.103 %Outage Rate 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% Base SJ Output e2 85% 18,972 18,340 17,748 18,972 18.360 18,972 18.972 17.748 18,972 18,360 18.972 18.360 222,748 Unavailable SJ Output 3.348 3,236 3,132 3,348 3.240 3,346 3.348 3,132 3,348 3,240 3.348 3.240 39,308 %Outage Rate 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% Base SJ Replac Energy Cost 0540/MWh $133,920 $129,456 $125,280 5133.920 $129,600 $133,920 $133,920 $125,280 $133,920 $129,800 $133,920 5129,600 51.572.336 Actual-Base SJ Replac Energy Coat -$78,120 -$75,516 -$73,080 -$78,120 -575.600 -$78,120 -$78,120 -$73,080 -$78,120 -$75,600 -$78,120 -$75,600 -$917.196 San Juan Insurance Premium Recovery 319,167 $19,167 $19,167 319,167 519,167 519,167 $19,167 $19,167 $19,167 $19,167 $19,167 $19.167 $230,000 San Juan Insurance Payout SO $0 $0 $0 S0 50 30 SO SO $0 $0 $0 $0 Cumulative Quarterly Difference(COD) -$169,216 -$174,340 -$171,820 -$171,820 -$687,196 It RCQD)14100,000,then adJustment=0 If l(CQD)1>$750,000.then adjustment=+-$750,000 -5169,216 -5174,340 -$171,820 -$171,820 -5687,196 or else adjustment=COD Retail Sales(MWh) 26,151 26,700 24,356 23,374 19,400 20.200 19,905 15,858 21,338 20,500 22,485 22,40'7 26,151 26,700 24,356 Adjustment(cents/kWh) -$0.27 -50.27 -$027 ,Zg -0.29 -0.29 _22¢ -0.26 -0.26 -0.22 -0.22 -0.22 Cr) C-') Example 3 San Juan Replacement Energy Cost Recovery Spreadsheet Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total Actual SJ Output 16,740 16,182 15,660 16.740 16,200 16,740 16.740 15,660 16,740 16.200 16,740 16,200 196,542 Actual SJ Replac Energy Cost $362,700 $350,610 $339,300 5362.700 5351,000 1362.700 $362.700 $339,300 $362,700 $351.000 5362.700 $351,000 $4,258,410 Maximum Output 22.320 21.576 20,880 22,320 21,600 22,320 22,320 20,880 22,320 21.600 22.320 21.600 262.056 Unavailable SJ Output 5.580 5.394 5.220 5.580 5,400 5,580 5,580 5,220 5,580 5.400 5.580 5,400 65,514 %Outage Rate 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25 00% 25.00% 25.00% 25.00% Base SJ Output 4 85% 18.972 18,340 17,748 18,972 18,360 18.972 18,972 17,748 18.972 18,360 18,972 18.360 222,748 Unavalable SJ Output 3,348 3,238 3,132 3,348 3,240 3,348 3,348 3,132 3,348 3,240 3,348 3.240 39,308 %Outage Rate 15.00% 15.00% 15.00% 15.00% 15.00% 15 00% 15.00% 15.00% 15.00% 15.00% 15 00% 15.00% 15.00°/ Base SJ Replac Energy Cost 9$40/MWh SI 33.920 3129.456 $125,280 $133,920 $129,600 $133,920 $133,920 $125.280 3133.920 5129.600 $133,920 $129,600 $1.572,336 Actual-Base SJ Replac Energy Cost 5228,780 5221.154 $214,020 $228,780 $221,400 $228,780 $228,780 $214,020 5228,780 $221,400 5228,780 1221,400 $2.686.074 San Juan Insurance Premium Recovery 519,167 119.167 519.167 $19,167 519.167 $19,167 $19,167 $19,167 $19,167 $19.167 $19,167 $19,167 5230.000 San Juan Insurance Payout $0 SO SO SO $0 -$146,390 -5195,300 -$182,700 -$196,300 -$189.000 -$195.300 -$189,000 41.292.990 Cumulative Quarterly Difference(CQD) 3721,454 5590,070 $155,780 $155,780 $1,623,084 If K(C00)14100.000.then adjusiment=0 It I(CQD)1>5750.000.then adjustment•+•$750,000 5721 454 $590,070 $155,780 $155.780 or else adjustment=CQD Retail Sales(MWh) 26,151 26,700 24,356 23,374 19.400 20,200 19.905 18,856 21,338 20,500 22,485 22,407 26,151 26,700 24,358 Adjustment(cents/kWh) III 1.15 1.15 0.98 0.98 0.98 Qli 0.24 0.24 020 0.20 0.20 cz '1) F RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA AMENDING THE SCHEDULE OF ELECTRIC RATES AND CHARGES TO ADD A SCHEDULE FOR RECOVERY OF SAN JUAN REPLACEMENT ENERGY COST VIA FUEL COST ADJUSTMENT CLAUSE. WHEREAS, pursuant to Section 78-36 and Section 78-37 of the Azusa Municipal Code, the rates and charges of the City of Azusa electric utility are set by a Resolution passed by the Council; and WHEREAS, the City incurs additional replacement power cost during the periods when City's San Juan resource is unavailable; and WHEREAS, the precise forecast of such additional costs has been increasingly difficult to ascertain due to increased level of San Juan unavailability and increasingly volatile market price for power when replacement power purchases take place; and WHEREAS, the City Council desires recover prudently incurred San Juan replacement power cost in a timely and efficient way. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The City's schedule of rates and charges for its Electric Utility are hereby amended to include the schedule shown in Exhibit A which is attached to this Resolution and made a part of it; and Section 2. The amended rates and charges of the City of Azusa Electric Utility shall take effect for all bills rendered on or after October 1, 2004; and Section 3. The City Clerk shall certify the adoption of this Resolution. PASSED, APPROVED AND ADOPTED THIS 26th DAY OF JULY, 2004. MAYOR 065 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof, held on the 26th day of July, 2004 by the following vote of the Council: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: City Clerk 066 EXHIBIT "A" FUEL COST ADJUSTMENT - SAN JUAN RESOURCE JULY 26, 2004 067 EXHIBIT A SCHEDULE FCA-SJ FUEL COST ADJUSTMENT—SAN JUAN RESOURCE Background: The City's San Juan Unit 3 resource is its single largest resource providing up to 75% of City's annual energy requirement. Due to the sunk cost nature of San Juan resource, the cost incurred in procuring replacement power when the unit is derated, or unavailable due to scheduled or forced outages is an addition to the power resource cost that must be recovered. This rate schedule would ensure timely and prudent recovery of the replacement power costs for San Juan Unit 3 resource. Applicability: Applicable to all electric services. Territory: Within the electric service territory of the City of Azusa. Rate: Energy Charge As determined by the methodology below Rate Determination: The Azusa Light and Water shall determine the fuel cost adjustment component associated with its San Juan unit 3 resource pursuant to the following methodology each quarter. The Director of Utilities shall notify the City Council of the new fuel cost component associated with its San Juan unit 3 each quarter. It shall be applied to all electric bills beginning the first billing cycle of each quarter. 1. Determine the base San Juan replacement power cost for the quarter through the following calculation: (A) =Base San Juan Replacement Power Cost in $ = 30 x (N#of days during the quarter) x 24 x 0.15 x 40 2. Determine the actual San Juan replacement power cost in $ incurred during the quarter(B) 068 3. Determine other San Juan associated costs (+) or credits (-), e.g. outage insurance premium payment (+), outage insurance payout(-) incurred during the quarter(C) 4. Derive the amount of Replacement Power Cost (RPC) eligible to be recovered through the following calculation: RPC= (A)—(B) + (C) 5. Adjust the RPC in accordance with the following to derive Adjusted Replacement Power Cost (ARPC): (i) If RPC< -$750,000, then ARPC=-$750,000 (ii) If-$750,000<RPC<-$100,000, then ARPC=RPC (iii) If-$100,000<RPC<+$100,000, then ARPC=$0 (iv) If$100,000<RPC<+$750,000, then ARPC=RPC (v) If RPC>+$750,000, then ARPC= +$750,000 6. Derive Replacement Power Cost Balancing Account (RPCBA)by subtracting ARPC from RPC, i.e.,RPCBA=RPC-ARPC 7. Forecast the retail sales for the immediately succeeding quarter(R) 8. Derive the fuel cost adjustment associated with the San Juan unit 3 resource by dividing ARPC by(R) 9. Any balance remaining in RPCBA shall be added to the RPC of the immediately succeeding quarter for recovery or credit. Subject to City Council's approval, the Director of Utilities may establish a minimum RPCBA threshold to be retained for the purposes of reducing the fluctuations in fuel cost adjustment. This rate schedule is applicable to San Juan energy resource only. To the extent a need arises to apply FCA provision to energy resources other than San Juan, the Director of Utilities may implement it with the approval of the Utility Board. 069 SAN JUAN REPLACEMENT POWER COST RECOVERY VIA FUEL COST ADJUSTMENT JULY 26, 2004 (�70 ISSUE: o TO ENSURE TIMELY AND PRUDENT RECOVERY OF SAN JUAN REPLACEMENT POWER COST 071 2 Historical San Juan Forced Outage Rate CY 2001 CY 2002 Month %Available CY 2001 AVG Month %Available CY 2002 AVG Jan-01 92.36% Jan-02 99.29% Feb-01 60.01% Feb-02 100.00% Mar-01 99.57% Mar-02 96.39% Apr-01 98.35% Apr-02 87.43% May-01 88.19% May-02 83.72% Jun-01 90.77% Jun-02 97.35% Jul-01 99.27% Jul-02 94.03% Aug-01 14.47% Major Forced Outage Aug-02 88.36% Sep-01 37.69% Major Forced Outage Sep-02 78.06% Oct-01 96.22% Oct-02 98.97% Nov-01 41.07% Nov-02 61.69% Dec-01 96.12% 76.41% Dec-02 86.95% 89.36% Total Replacement Cost $11,293,000 Total Replacement Cost $735,000 Average Replacement Coat $182/MWh Average Replacement Cost $26.30/MWh CY 2003 CY 2004 Month %Available CY 2003 AVG Month %Available CY 2004 AVG Jan-04 - 82.01% Jan-04 84.36% Feb-04 85.96% Feb-04 99.91% Mar-04 65.34% Mar-04 84.22% Apr-04 83.28% Apr-04 8.31% Scheduled Outage May-04 99.91% May-04 95.94% Jun-04 83.77% Jul-04 79.93% Aug-04 95.35% Sep-04 95.30% Oct-04 69.06% Nov-04 81.17% Dec-04 62.76% 81.99% Total Replacement Coat $2,082.000 Total Replacement Cost $1.138.000 Average Replacement Cost $43.99/MWh Average Replacement Cost $41/MWh 3 072 Replacement Power Cost Recovery Mechanism: Step 1: Establish Base San Juan Replacement Cost Budget o Assumptions: (a)San Juan has an availability of 85%throughout the FY (b)Cost of replacement power=$40/MWh Step 2: Document the Actual San Juan Replacement Power Cost o Track the actual cost of replacement power for San Juan on a monthly basis Sten 3: Compare the Cost Difference o Compare the budgeted San Juan replacement power cost vs.the actual San Juan replacement power cost on a monthly basis Step 4: Recover on a Ouarterlv Basis the Cost Difference Accumulate the monthly cost differences in a quarter for recovery or credit i�. Set bandwidth to avoid de minimums(<1.5%)or excessive recovery or credits (>10%). Avoid rate shocks Hi. Calculate the amount of fuel cost adjustment dividing the amount to be recovered or credited by the forecast quarterly retail sales 4 073 Example 1 : San Juan Replacement Energy Cost Recovery Using Actual FY 03-04 Data Die 1 San Replacement Energy Cost RecoverySt>rea Jul Od Nov Dec Jan Feb Mar Jul Taal • :SJ a 17540 20,5721 19,898' 15,4151 17.5331 14,0061 18,829: 20 . i 18,798' 1,796 21,413 21,302 ` 208,288 al BJ Replx Ener Coat 5266702/ 543,943' $39,4941 6168,677 5137,151 5341 10'1.:$146,432, $7651 5137,744 $809,0333 $43572r.$t61 52,250,665 0utpU ..� ._. f 22,320 215761 208801 22,320 21,60822,320; 22,320; 20,880 22,320 21,600 22,320 215001 262056 Unevaieble SJ Onlut 4,480 1,0041 982: 6,905-4,067 8,312. 3,4911 18. 3 , 19,804 907 298 53,790 %Outs a Rate 20.07%1 4.65%1 470%; 30.94% 18.83% 3724% 15.64% 0.09%. 15.78%, 91.69% 4.06% 1.3896 20.53% Base SJ a 18,3 0 85% 18,972 18,340; 17,748 18,972 60118,9721 18,9721 17,748 18,9721 18 18,382 222,748. Unavailable S.1 Output 3,348 ,a ...._. _. ..':, '3 3348: 3 .1 3,132: 348 3 3 3 ; 32 r. 39 u %Outage Rate 15.00% 15.00% 15.00%, 15.00% 15.00% 15.00%1 15.00% 15.00%: 15.00% 15.00% 15.00% 15.00% 1 15.00% Base SJ Replac Energy Cost O54VMWII 5133920 5129.456 5125,2801 5133,920 $129,600 $133920.$133,920 S125,2B0:51339204..$129,600 $133920_.5129600.. ..._1..$1,572,336 Actual Base Sl RepNc Energy Cast ............ 5132,782 585,5133 585 7861 5134 757 57,551 6107180- 512,512`5124,515 $3,8241 5679433 480,348 5113,548 0578,379 San Juan Insurance Premium Recovery 519,1671 519167a$19167. $19,167 $199,167$191671 519,1671$19,167, 519167 $19167 $19167 $19,167 5230,099. San Len Insurance Payout 50! 5 0 50; 50 $01 M 50; $0f so so• $0 $0 ' SO Cumae8ve Oue DBlerence(CODS...,_..... .. J 518,983_.._....._,..,.._.__-, s ' ._1 i $50 6*791 .,µ.,....._..__.._._....__ !871 $908,329 #.... 1.1COD L.dt00,OD0,then adraretrnenl4 _..._...... • ..,..._. ! - b ._......_.1.�...__ ^•.-'.-.,._.a �. ._.,�,...�. 8ICODX>$75o 000 ten acpSOnsrdm--$750 000 0. I$425,971 $0 $482,3581 5908 329 s or -- elusmient=COD I - .. .._.�- _..__........___ RAM Sales(MWh1, 26,151 26,7001 24,356 23,374 19,4003 20208_L 020_' 1rt 9905, 18,8561 21,3381 20,50 22,485 22,407 26,151 Aduslmera(eeraslkWb) 9_ q.n, 0.71" 0.71-Tggj; 0.00. o.00- ffg 5 074 Example 2: Assumes high San Juan availability (95%) and $50/MWh for replacement power k, 2 San ,, Replacement Energy Coat Recovery Spreadsheet Jul Oct Nov Dec Jan Feb Mar Jul Total .:.,.:SI ONp t. _ 21,2041.,20,4971 19,836 21,204E 20,520 21204 21204 19,836. 21,209 20520!21,204 20,5231 248,953 SI Rep ac En .Cost� $55,800. 553,940, 552200 $55,800,1 254,000T-x,800 $5,8001 $52,20D $55,3001 $54,000 555,800; $54,3001 5655,140. 3- 21,576' 20,880: ?2,320 21,800 22,320 22,320. 20,880' - '-1. 21,600 22220: 21,600 262,056 limn ilable SJ Output 1,116; 1,0 1,044: 1,1161 1,080 1,116. 1,1161 1,044 1,116; 1,080 1116; 1003 13,103 efiefe„µ = 5.00%1 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%. 5.00% 5.00% 5.00% 500%; 5.00% 5.00% Base SJa,r @85% , 18,9 18 4 17,748: 18,972; 18 >I 18,972 18'721 17748 18,9721 18260 18,912 18,3601 i 222,748 UnavaiaUeS1alto 1 , 3 - 3236 3,132 8; 3, 3,348 3,240 3,348; 3241321 3,348; 3240; 3348; 32401 1 3908 %Outage Rate 1 15.00%,1 15.00% 15.00%; 15.00%. 15.00% 15.00%: 15.00% 15.00% 15.00%: 15.00% 1500%: 15.00%) 15.00% er! Base SJ Replac En ..,Coal @$40�MWh $133,920 5129,456 5125,280 5133,9201$129 $133320 5133,9201$125280 $133,920:$129,630 5133,9201 mew! $1,572,334 AcWsl-BaseSJR la EEnergyCost _ -71.$78,1203 •$75,516 473,080 578,120 575,600 $78,124$78,124 •$73,080 $78,120; 475,6001 478,124 _475,600 14317,196 San Juan Insurance Rankin Recovery.___..'_,.419,167519,167 419,167; $19,1671 $19,167 $19,167` $19,167; $19_1671 $19,167: $19,1671 $19,167: 619,167( __1_$230,000 'San Juan klsxarlce Payaid _ SOj lir,� $0; D° TO SJ1 $ 80 T to m m $0' $0 507 1 m j1 . Cumlafae Quarterly Dilerence(COD)• ; __ $169216: 1$174,344 1 $171,820; $171,,'11 I $687,198 11(P0144100,010!barn ad�r71em0 -1 . -1 1 1 la d ,, ad 5750,000 1 14 E9218 j -5174240 ! 4171,620 $1ii J 4687,198 ..gyp..... a �. RetetSales(MWh) I 26,151'26,700 24,356 23,374} 19,4001 20,200r 19,905; 18256j 21,338 20,500 22485 22,407E 26,151 k14097118111(cei9s411).___,____..V ) 1 : $09: $0271 43271--i2.71-702911 029: M. -0261 -0161 _..1-- -022 6 075 1 • • Example 3: Assumes low San Juan availability (75%) and $65/MWh for replacement power .11„ ,:3 San ,: Replacement Energy Cost Recovery Spreadsheet Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jur Total ., SJOupu I 16,7401 16,182 15060 16,740. 16200 16,740 16,7401 15,660 16,740 16,200 16,7401 16,2001 190542 SI COSI Ni$362,700.5350,610 5339,300 5362.7001 5351,000 $352,700 5362,700 5339,300 $362,700 $351,000 5362,700 5351,0001 $4,258,410 QApu ' 71,320 21,576 20,80 22,320. 21,600 22,320. 72,320 20,883 22,320 21,600 22,320. 21,6001 262,056 Unavailable Sl Output i 5,580 5,394 5,220 5,5801 5,400 5,560 5,593 5,220 5,580 5,400 5,580 5,400, 65,514 %Outage Rate 25.00% 260094 25.00%, 25.00%1 15.00% 25.00% 25.00% 25.00`% 25.00%, 2500% 2.00% 2500% 2500% Base SJ Ouiput 085% 18,972 18,340 17,748 18,972 18,360 18,972 18,972 17,748 18,972 18,360 18,9721 18,360 271,748 UnastatieSJOutput 3,348 3236 3,132 3,3481 3,240 3,348 3,348, 3,132 3,348, 3,240 3,3484 3,240 39,338 %Outage Rate 15.00% 15.00% 15.00% 1530%; 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% Base SI Replac Energy Cost 05101410h $133.920 $129,456$12280$133,970;$129,600 $133,920 $133,930 $12280 $133,930 $12,600 $133.921 $129,600 5157.4336 Actual-EaseSIReplacEneWCost $228,780 5221,154,5214020 $128,7801$221,403 5228,780 52 8,780 6214,020 $228,780 5221,400, $228,780 5221,400 $2,686,074 San Juan Insurance PieniuuRecovery $19,167 $19,167 $19,167 $19,167; $19,167 $19,167 $19,167 $19,167 $19,167 $19,167 $19,161 $19,167 5230000 San Juan Insurance Payout $7 50. $0 501 50 4146390 5195300 5182,700 4195,300 4189000 4196,300$189000) 41,22990 1 QmulaAve OuarOsAy Difference(COD) ,5721,454 I 1 5690,070 $155,780. $156,780 $1,623,084 iKCI]D)IQi00000 thenerfjusYrrenl=0 II l(4bD)1ap50,00Q Men edusenenk+4750,000 $721,454' i 5593,070 $155,760, $155,7:1' or else alustment.COD • Retai Sales(MWh) ; 2,151 26,700, 24,356 23374; 19,400 21,200 19,905 18,856 21,339 215003; 22,485 22,407 26,151 Warned(cerrtslkWb) ]a ` 1.15 1.15' 0.98 0.96 0.98 3,2_4' 024, 024, 020 7 076 L.. 77k;;:il ..-.,: •,;ur ., ., •r 9..,`,y .�.?2.`y _+cam �c$ WiW�x -�� i.,�. AZ LISA -GMT 6 'M'RTEE AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26, 2004 SUBJECT: RECLASSIFICATION OF ASSISTANT DIRECTOR- POWER RESOURCES TO ASSISTANT DIRECTOR OF UTILITIES RECOMMENDATION It is recommended that the Azusa Utility Board/City Council approve in principle the reclassification of Mr. Bob Tang from Assistant Director- Power Resources to Assistant Director of Utilities, with no change in salary. BACKGROUND Azusa Light &Water has come a long way to have its current management structure and staff of capable managers. It is one of my recent goals to establish not just a capable management team but also an executive transition plan that will better serve the interest of the City and Azusa Light &Water. This plan involves promotion of a viable candidate who can stay in constant touch with all issues that this organization is involved in, and be ready to step up to the helm on a temporary or interim basis when the need arises to serve as its Director. I have been working with Mr. Tang for almost ten years. He has been a very dedicated employee and a tremendous resource to my management team. Ever since the period of electric deregulation in California, Mr. Tang has shown a real passion and commitment to his job with the City and Azusa Light &Water. Mr. Tang 's integrity was demonstrated throughout the energy crisis, and his intellect for grasping fast shifting industrial dynamics has enhanced the overall strength of Azusa Light &Water. a/pi 0 d_ 7/9*// //1// OVA11/64/( 077 13E-- legislative Update Prepared by Bob Tang July 26, 2004 -Azsi ,t La: 16C i/(4°a/ a/ 71r 1 079 AB 426 (Cox) — Exit Fees 1. The bill would exempt "Greenfield" muni load in annexed areas from paying exit fees 2. Passed out of the Senate Energy, Utilities and Communication Committee 6-0 and now moves to the Senate Floor. 3. The bill will be held on the Senate Floor until August to see if the CPUC takes any action as it relates to "greenfields" and exit fees 4. Significant victory to the muni community so far 3 081 BE. a Power Resources Division Monthly Report • Status of Projects • Power Consumption Comparison • Wholesale Market Trend • Power Resource Budget Update • Preliminary FY03-04 Light Fund Operating Result 47)4 ----71 , fi 04°I 6 L 1 i /14 083 � � D�� u Power Resource Cost Accounting FY '03-'04 .-..,. ... ... ...LONGTERM i SHORT iERM.._.....TRANSMSSICN ANCILLARY SCHEDULING .. ..TOTAL..... ......WHOLESALE NET _. �. MONTHHAS ..........CONTRACTS PURCHASES ... COSTS......_.<..SERVICE COSTS DISPATCHING COSTS ......_....COSTS ......._...-REVENUES COSTS._....., JUL 031N 1 823,681.74! 1,789,296.72 261,849.96 .......21,102:72...................................._.33,886.40 2,929,817.54 (1,553,548.90) 1,376,268.641 AUG 0391...5......._.._..........1461981..__._.................2686777..................... ...... ......._{._-..........991,354.111 1.461,981.39 268,677.72 16,523.39w36297.36 2,774,833.97 (1,407,707.86) 1,367,126.11 € SEP 03 1 981,62129 i 764,815.44 267,207.62 11,806.86 33213.05 2,058,68428 (851,92725) 1,206,737.03 1 CCT 03(9) 973,408.96: 1265543.37 263,015.15 13,917.15 31,527.64 2547,41227 (1337,709.83) 1,509,702.441 NOV03(6) 1,927,894.96 s 676,688.91 218,560.42 10,686.60 24,481.64 2,858,312.53 (633,945.77) 2,224,366.76 3 DEC 0314 969,95996. 1,034,790.77 1 219,85827 13,371.81 25,117.50 2,263,098.31 (817239.17) 1,445,859.14 JAN 04 972,018.96 82022235 219,035.12 10,474.67 27,387.98 2,049,139.08 (823,45131) 1,225,687.17 FEB0410 967,916.96 i 566,645.16 522,30641 10,452.02 26,407.67 2,093,72822• (679089.82) 1,414,838.40 .._MAR 04..........971230.96:_.___.........855,371.50 ...._.207,98026.......__ 12,855.38. ._..____......__29,931.71 _.. .2,077,369.83 .._(826,103.11)...__.1251266.72 APR 04 986,864.96 811,598.19 204,076.12 11,128.88 30,011.61 2,043,679.76 (16931554 1,874,364228 ._.MAY04 .... ......971,15526... -.. 665,585.63 ....208,94520. ...._....20,00000 ...... .... 24,892.78,... 1,89057957 ...(79774900 1092830.57) 1----JUN „._JUN04 971,20233 1,661,857.42, 208,94520 20,000.00i 24,892.78 ��- 2,886,897.7r (1,687,620.50)1 1,99277.223 i TOTAL $12,508,311.15 $12,374,396.85` '$3,070,457.47 $172,319.50 $348,048.12 1 $28,473,533.09 ($11,285,408.66) $17,188,124.431 i _ -- --: _ ._._ . _ _ { (/y )For the month of Ju1y2003 San Juan Unit#3m Replacement Cost due to unit outage amounts to$26-67-70-27-80:1- 266 702 30� • (B)._....,.. month For the month of October 2003,San Juan Unit#3 Replacement Cost due to unit outage amounts to$268,507.18 (C) Forthe monof Noeember2003,SCPPA San Juan annual true-up costs is$960,315. 1-----•-(D,� Far the month of December an ue to 2003,SJuan Unit#3 Replacement Cost dunit outage amounts to$341,099.81 i (E) One-rime refund to the CPlSO market for the osercoltected transmission rersnue requirement(fRR)during January through October2003 per TRR settlement agreement (tlri Vie amoun(ot 532,e9:1 t. d .._ __ _.... i !(1) (INCLUDES SCPPA.LONG TERM CEJ CTS .�- _ (2) INCLUDES ALL SHORT TERM PURCHASES FOR HEDGING AND LOAD BALANCING PURPOSES _ INCLUDES T.TEA_.._.N.D...__...t,__, N C »_m__ __ _” (3) INCLUDES ALL SHORT TERM AND LONG TRANSMSSIC7tJ r.... CT COSTS (4) COSTS CHARGED BY CALIFORNIA INDEPENDENT SYSTEM OPERATOR FOR SYSTEM RELJPBIUTY FUNCTIONS ..._...... _._._. ..__ _ __ (5) INCLUDES COSTS FOR SCHEDULING AND DISPATCHING CF ELECTRICITY — . ��_.........SUMOF(1)THROUGH(5) .,�,.,,... ...,_.,..,...... ....,,,._ • (7) WHOLESALE REVENUES DERIVED FROM SALES CF MESS POWER+PTO BENEH is 1. g8 ........DIFFERENCE OF i6)AND(7). ..._. ... ....__....._.._..L. • 087 *FT.° ID arks F AZUSA LIGHT d WATER INFORMATION ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES < V DATE: July 26, 2004 SUBJECT: ANNUAL ADJUSTMENT OF REPLACEMENT WATER COST ADJUSTMENT FACTOR The existing water rates for the Azusa Water Utility include an annual adjustment factor called the "Replacement Water Cost Adjustment Factor (RWCAF)." This adjustment factor was implemented following the severe drought that occurred around 1990. The drought forced the Watermaster to set the Operating Safe Yield in the San Gabriel Basin very low, which in turn increased our replacement water costs far above those normally anticipated in a so- called normal water year. In 1992, the City Council adopted a rate methodology which included a RWCAF, which was incorporated into the City's regular water tariff. This resulted from a water rate review in which the replacement water cost component was analyzed separately. The adjustment factor that the City Council adopted, and which was recommended by staff, is similar to the Fuel Cost Adjustment Factor for electricity that was first introduced in the 1970's during the oil embargo when energy costs fluctuated regularly due to the unpredictable oil supply and costs. The RWCAF, by tariff adopted in 1992, requires annual review, and if necessary, is adjusted. Whenever an adjustment is required, the Director of Utilities is required to inform the Utility Board/City Council. This memorandum provides notice of that adjustment. The RWCAF will be adjusted for fiscal year 2004-2005 to an amount of $0.13 per ccf (hundred cubic feet), effective for all bills rendered after July 31, 2004. So far this year, the water supply from the San Gabriel River has been very low due to a record low winter rainfall. Consequently, the Main San Gabriel Basin remains at low levels, and therefore the Operating Safe Yield has been kept at the same level as last year in response to the lower levels. The current conditions have required, and will continue to require, the purchase of a higher than normal amount of replacement water; the adjusted RWCAF must therefore be continued. In addition, the carryover water right available to offset pumping for this fiscal year is low due to last year's lowered Operating Safe Yield. This year's RWCAF of �H $0.13 is an increase from last year's RWCAF of $0.09. The Operating Safe Yield as established by the Main San Gabriel Basin Watermaster for es fiscal year is 170,000 acre-feet, the same as last year. ,+ / pot Prepared by: Chet Anderson, Assistant Director- Water Operations A ; 1/0/k) i: 094 rii • 19))) 11jj1L)/IL. Industry Challenges in Changing Times: You Can Count on APPA Remarks of Alan H. Richardson, President& CEO,American Public Power Association Presented to the 2004 APPA National Conference, Seattle, Washington on June 21, 2004 Members of the APPA Board of Florida authorizing the creation of a captured by the concept of electric Directors, ladies and gentlemen, good public power system; and release of utility deregulation. Indeed, there morning,welcome to Seattle and to the yet more evidence revealing the crude was a global infatuation with the 2004 APPA annual conference. I want to language and crass behavior of Enron presumed ability of the market to offer a special welcome to the 128 first- energy traders who manipulated the meet all of society's electric needs time national conference attendees. western energy markets three years ago. without government interference. I hope you find the conference both With respect to these recent revelations Ken Lay of Enron once observed that professionallyrewardingandpersonally about Enron, we are indebted to the "an imperfect market is better than a enjoyable. efforts of the Snohomish County perfect regulator." In a similar vein, Public Utility District. Without their FERC Chairman Pat Wood told an Glenn,thankyoufortheintroduction. persistence and perserverance, the APPA audience a couple of years ago But more than that thanks for your `secret" tapes, protected from public that markets on an average day will do great service to APPA over the past year view by FERC and DOR, might never better than regulators on their best. as Chair of the Board. You have been have been released. Well, not exactly. a great spokesperson for public power, and an outstanding advocate It was assumed that markets for issues that you embrace would work, new players would and that should be embraced displace electric utihty monopolies, by public power leaders across Many believed that deregulation and only the largest, private, for- the country—environmental would be the demise ofpublic profit companies would survive. leadership, a commitment toMany believed that deregulation research, and a commitment to would be the demise of public public power's most valuable power. It was argued that we power. It was argued that we asset, its employees. weren't big enough or smart weren't big enough, fast enough or smart enough to prosper in the I also want to thank our brave new world of a competitive host utility, Seattle City Light, enough to prosper in the brave environment. the members of the local arrangements committee, new world of a competitive Things didn't turn out as these and in particular City Light , pundits predicted—public power Superintendent Jorge Carrasco environment. Things didn't turn is prospering while private power and Deputy Superintendent Jim has faltered. In 2003, Standard Ritch for the time spent preparing out as these pundits predicted & Poor's credit rating agency for the invasion of nearly 2,000IS prospering downgraded 139 private power — public power partisans. You andpublic power p p g while companies, while upgrading all those who have contributed has faltered. only II. In contrast, five public to the success of this event have private powerpower systems were upgraded, done an incredible job. and only five were downgraded. This wasn't a one-year anomaly. Finally, I want to thank all In 2002, there were 10 public of the companies and firms who are There is so much to talk about power upgrades and 12 downgrades, sponsors of this conference, and who and so little time. With both of these while private power companies are exhibiting at the Public Power facts in mind, this morning I'll focus earned 15 upgrades compared to 182 Expo. on three general areas: first, an downgrades. These IOU downgrades assessment of the state and direction of are the result of failed investments This has been yet another the industry; second, an evaluation of and failed business strategies pursued remarkable year for our industry. how public power is doing; and third, with the expectation that deregulation Over the last 12 months, we've some challenges we face and how APPA would succeed. It hasn't. witnessed: a huge blackout in the activities and services are designed to upper Midwest and Northeast; so-far address them. Public power credit ratings remain unsuccessful congressional efforts to exceptionally strong. And fortunately enact a comprehensive energy bill; Industry Restructuring for our economy and our country, skyrocketing natural gas prices; a host private utilities are coming out of their of FERC decisions and proposals; an Not long ago, federal and state economic nosedive. However, their overwhelming vote in Winter Park, policymakers and regulators were painful and still only partial return to 1 089 theoretical benefits of deregulation, sector in the past year resulted from will search for other ways to grow their looking for ways to measure success that the continued commitment by public business. They will almost certainly have little to do with the real world. power utilities to conservative business turn to mergers and acquisitions, and strategies, and prudent responses to will likely do so with a vengeance if I'm more skeptical, and more volatile commodity prices for both the Public Utility Holding Company pragmatic. I tend to measure success by fuel and power, including improved Act of 1935 is repealed. Financially results as seen, felt and enjoyed by the hedging activity that helps mitigate the strong public power systems are likely intendedbeneficiariesofderegulation— impact of price swings. Public power acquisition targets. consumers. Deregulation promised utilities nationwide continue to adapt lower rates and better service,but hasn't both operationally and financiallyto yet delivered. It promised greater new challenges, which bodes well for efficiency than could be achieved credit quality." As private power through regulation but delivered bills to consumers of staggering proportions Public power remains the low-cost companies abandon their due to such things as stranded-cost electricity provider. Based on 2002 recovery charges and higher prices data, the latest available,private power diversification strategies due to market manipulation. And company rates were 13 percent higher for consumers, the worst may be yet than rates paid by consumers of publicly pursued in hopes of to come. Almost every state that owned utilities. deregulated electric service imposed higher profits, they will limited-time price caps or reductions. We respond to the requests of our Time is running out and consumers communities. Communities want search for other ways to soon will be exposed to higher prices. green power programs and we have Deregulation didn't necessarily responded. Earlier this year, the grow their business• promise greater reliability, but it National Renewable Energy Laboratory certainly wasn't supposed to be a released "top ten" lists measuring Financially strong public threat to reliability. But reliability has utility performance in four areas of been threatened. It was threatened by involvement in green power programs. power systems are likely market manipulation, with California Public power systems accounted for a as the prime but by no means the only disproportionate share of top spots in acquisition targets. example. While deregulation was not each of these lists. the immediate cause of the cascading blackout last August 14, it clearly There are other indices of success as created an environment in which the well, including the tremendous interest The wholesale market has changed focus on reliability was displaced by a in public power that we see today in dramatically and, in some cases, focus on the bottom line. communities throughout the country. irreversibly. Public power systems The logical question is why have we that depended on wholesale power Public Power Prospers done so well? purchases to meet all or some of their power supply needs are finding fewer In the mist of this turmoil, public In the go-go days of the late '90s, options and higher prices. For many power has prospered, as is evident we didn't lose focus on our primary public power systems, the perennial from the credit rating numbers I cited mission. We were not distracted by the problem of transmission access has earlier. Here is what credit analyst Peter siren song of higher profits through not been resolved. In some areas, Murphy of Standard&Poor's had to say diversification. We recognized, transmission access is still denied while regarding the financial health of public accepted and indeed welcomed our in others access may be assured but at power. "The stability of the public power responsibility as load-serving entities an uncertain and unpredictable price. while others in the industry were abandoning their customers in pursuit Self-help is one answer. Public of what they thought would be more power systems finding they can't rely Today, public power is profitable strategies. on the wholesale market are once again looking at meeting their own power- healthy and strong. Our Today, public power is healthy and supply needs. Some are doing so on strong. Our focus is the same as it their own, like Springfield, Missouri, focus is the same as it has been over our 120 year history— which is in the process of developing resource adequacy for both the short a new 250 n-CW coal-fired power has been over our 120 and long term; reliability, and most plant. Others are working collectively important, responsibility to our through their joint action agencies to year history— resource communities. While we are doing build new units on their own, such as well today, there are many challenges AMP-Ohio, or by taking a partnership adequacy for both the ahead. position with private power companies or other partners, as is happening in short and long term, Challenges Indiana and Illinois. The creation of a new, super joint action agency is reliability, and most The apparent back-to-the-basics being discussed in the upper Midwest, trend in our industry doesn't signal where there are more than 400 public important, responsibility a return to the good old days, which, power systems in Iowa, Minnesota and looked at objectively, were not always Nebraska. to our communities. so good. As private power companies abandon their diversification strategies Coal is once again an attractive fuel pursued in hopes of higher profits,they source. New technologies hold great 3 091 Public power has a very strong 30 percent increase in participation In each of these areas, and many commitment to a clean and and now has more than 225 members. more, APPA keeps members of the healthy environment. Dealing This spring, the Sacramento Municipal public power community informed with environmental issues is a huge Utility District employees developed throughourdailyandweeklynewsletters challenge for public power and for the Tree Benefits Estimator, designed and our bi-monthly magazine and our APPA. APPA is helping members to enable utilities to quantify and track web site. The Internet has dramatically understand complicated environmental the environmental and energy savings enhanced our ability to communicate rules and regulations proposed by the of tree planting programs. This tool is with you. In addition to our electronic Environmental Protection Agency. available on the APPA web site. forums, we have created a network of And we have created an electronic public power government relations communications network to help Security of our industry's professionals.Thenearly250individuals environmental experts at public power infrastructure has come to the forefront connected to this network, called the systems ask questions of each other and of industry priorities following the Government Relations Working Group, exchange information. (This is, by the attack on America on September or GRWG, receive almost daily e-mail way, just one of almost 20 electronic 11, 2001. Today, the newt created messages on legislative and regulatory exchanges managed by APPA. You Department of Homeland Security is developments. Since the beginning of can find more information on these up and running,and soon its proposals the 108th Congress last year, nearly 500 exchanges by visiting our Web site at will directly or indirectly touch every ' e-mails have been sent to group. www.appanet.org.) APPA member. Some examples of how this might occur include the reporting Let me address one final challenge of critical infrastructure information, facing public power—the public power mandated vulnerability assessments, workforce. Your employees are your We have been working and the development of cyber security most valuable asset, many of them are standards. APPA staff have been approaching retirement,and you will be with Congress and industry working with DHS,DOE,FERC,NERC challenged as you plan for succession and formally and informally with other and of necessity reach into the labor stakeholders to establish industry working groups on all of these market to replace retirees. You can issues. meet those challenges only if you a new environment in are providing attractive employment Reliability is now a critical issue for opportunities, including attractive which reliability standards the industry and APPA. Unfortunately, compensation packages.Unfortunately, deregulation has shifted the focus of the compensation of public power are mandatory and private utility management to bottom- professionals hasn't kept pace with line considerations. An industry that the compensation packages offered by enforceable and those used to share information and work other employers. So a major focus of cooperatively to keep the lights on APPA over the last couple of years, and who violate them will be has become an industry in which a major focus over the next several,will generation and transmission facilities be to help public power policymakers punished. are pushed to the limits, maintenance understand the workforce challenges is deferred,and information is withheld we face, and encourage them to pursue on the grounds that it is competitively courses of action to address them. sensitive. We have been working with In Washington, APPA is working Congress and industry stakeholders to Conclusion with the Environmental Protection establish a new environment in which Agency and members of Congress reliability standards are mandatory and Over the last few minutes,I hope I've to help them understand the real- enforceable and those who violate them been able to give you an overview of world consequences of regulatory will be punished. where our industry has been and where and legislative proposals. We want to it is heading, how public power has help EPA find solutions that address One of the many lessons learned fared, the challenges we face and how real environmental problems in ways over the last few years is how much APPA can help you address them. APPA that are the least disruptive for public our customers value reliability. Price has much to offer. Take advantage of power systems and the communities is important, but reliability is equally it. We wouldn't exist without you. We and citizens that depend on them for important and for some customers exist only to serve you. Have a great reliable, low cost service. even more important than price. At conference. the local level, public power has a well Another environmental challenge deserved reputation for reliability and =l Y3 F I„ facing public power is global warming. rapid response for service restoration. °:w pti #_ Pursuing the adage think globally, We need to be sure our customers ,r- act locally," APPA created the TREE recognize this fact. To assist you in POWER program in 1991. Trees this effort, APPA is looking at creating beautify the community. Participation a new program—Reliable Public Power Aj1lericanPublic Pim*Association in TREE POWER is a high-visibility, Provider, or RP3. At the heart of this t ' high-reward proposition. Beyond that program is formal recognition by APPA -' benefit, however, trees sequester CO2, of members that meet certain criteria .230, M St,N W thus helping to address global warming. in areas such as safety, reliability and Washmgton,..DC 20037 1484 `4 Properly placed,they can help conserve employee training. You can learn 202/467.2900 . energy used for home cooling. more about this exciting initiative at fax)202467x291:0 Today, TREE POWER is a nationally the concurrent session on reliability recognized program. Over the last 18 tomorrow morning. WWwAPPAnet org' months, it has experienced an almost s 5 093