HomeMy WebLinkAboutD-1 Staff Report - Electric Fund Budget AmendmentSCHEDULED ITEM/PUBLIC HEARING D-1
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: TIKAN SINGH, GENERAL MANAGER
DATE: JANUARY 23, 2023
SUBJECT: PUBLIC HEARING - ADOPT RESOLUTION NO. 2023-C06 FOR THE APPROVAL
OF ELECTRIC FUND BUDGET AMENDMENT, APPROVAL OF CLIMATE
FUND BUDGET AMENDMENT AND APPROVAL OF BLANKET PURCHASE
ORDER INCREASE
BACKGROUND:
The Power Resources division within Light and Water administers and ensures that power supplies are
prudently procured, delivered, scheduled, and optimized for Azusa electric customers. Multiple
circumstances have impacted the power resource budget since the beginning of the current fiscal year. In
addition, wholesale power market prices have increased substantially, primarily due to gas supply
constraints. As a result, staff is seeking approval for a budget amendment for the Power Resources division
to ensure all supply requirements are met through the end of fiscal year 22/23.
RECOMMENDATION:
Staff recommends that the City Council take the following actions:
1)Conduct the Public Hearing and receive testimony; and
2)Adopt the attached Resolution No. 2023-C06; and
3)Amend the Electric Fund Expense Budget for Fiscal Year 2022/23 for $10,550,000 for the purchase
of wholesale power; and amend the GHG Fund Program Expense Budget for Fiscal Year 2022/23 in
the amount of $950,000 for a total budget amendment of $11,500,000; and
4)Amend the GHG Fund Program Revenue Budget for FY 2022/23 in the amount of $950,000; and
5)Approve an increase in blanket purchase order #037096: California Independent System Operator by
$10,550,000.
APPROVED
CITY COUNCIL
1/23/2023
Electric Fund Amendment
January 23, 2023
Page 2 of 2
ANALYSIS:
Staff develops the power resources budget with the best available data, such as forward market pricing,
planned maintenance outages, new resource commercial operating dates, and forecasted City power
demand. The entire state witnessed a significant heat storm that spiked electric prices at the end of the
summer season, and the resources budget had previously incurred a slight impact from heat storm price
spikes.
Further, in December 2022, the natural gas market experienced a sudden and turbulent phase stemming
from multiple factors. Globally, the European crisis intensified global fuel markets, mainly natural gas.
Regionally, the U.S.'s western segment was particularly impacted by an unexpected series of atmospheric
river winter storms. Limited natural gas flows into California, lower than normal gas storage inventories,
and high heating demand has rattled California gas prices, impacting electricity prices with it.
After reviewing the current fiscal year 2022/23 budget and anticipated budget needs for the remainder of
the year, Staff has determined that a budget amendment is necessary to pay for power purchases.
Improved hydrology, healthier snowpack, and normal spring weather conditions are expected to counter
the gas-stressed market conditions, reducing the actual expenditures.
FISCAL IMPACT:
A budget amendment of $10,550,000 will be added to expense account no. 33-40-775-550-6590, Capacity
and Energy, budget amendment of $950,000 will be added to expense account no. 23-40-770-556-6625,
GHG Program Expense, budget amendment of $950,000 will be added to revenue account no. 23-40-770-
555-4450, GHG Program Revenue. Electric Fund cash reserves and an existing Power Cost Adjustment
will fund this amendment.
Prepared by: Reviewed and Approved:
Richard Torres Tikan Singh
Assistant General Manager General Manager
Power Resources
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachments:
1) Resolution No. 2023-C06
RESOLUTION NO. 2023-C06
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF AZUSA, CALIFORNIA, AMENDING THE
FISCAL YEAR 2022-2023 ELECTRIC UTILITY
OPERATING BUDGET FOR THE PURCHASE OF
WHOLESALE POWER.
WHEREAS, the western natural gas markets have experienced a sharp increase from
limited storage levels, increased heating demand, constrained flows into California; and
WHEREAS, the cost of wholesale power has followed the sharp natural gas market increases;
and
WHEREAS, the cost of power purchases impacts the current utility operating budget; and
WHEREAS, on the 20th day of June, 2022, City Council of the City of Azusa adopted the
Fiscal Year 2022-2023 Operating Budget for Azusa Light & Water, which did not provide for
payment of the unprecedented volatile market impacted wholesale power purchases; and
WHEREAS, Azusa Municipal Code Section 2-450 requires that during the fiscal year after
adoption of the budget, amendments exceeding $1,000,000.00 may be approved by the city council
following a public hearing held by the city council on the proposed and shall be formalized by the
adoption of a resolution; and
WHEREAS, a public hearing for this matter was conducted at a joint meeting of the Azusa
City Council/Utility Board on the 23rd day of January, 2023; and
WHEREAS, an amendment in the amount of $11,500,000 to the Electric Utility Operating
expense budget will be adequate to make payment for wholesale power; and
NOW, THEREFORE, BE IT RESOLVED that the city council/utility board of the city of
Azusa, does hereby resolve as follows:
SECTION 1. That the Electric Utility Fiscal Year 2022-2023 Operating Budget is hereby
amended in the amount of $10,550,000 in the expense account number 33-
40-775-550-6590 and the GHG Program Expense Operating Budget is
hereby amended in the amount of $950,000 in expense account number 23-
40-770-556-6625 for a total budget amendment of $11,500,000.
Attachment 1
SECTION 2. That the GHG Program Revenue Fiscal Year 2022-2023 Operating Budget
is hereby amended in the amount of $950,000 in revenue account number
23-40-770-555-4450
SECTION 3. That blanket purchase order #037096 (California Independent System
Operator is hereby increased by $10,550,000
SECTION 4. The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED AND ADOPTED this 23rd day of January, 2023.
_____________________________
Robert Gonzales
Mayor
ATTEST:
______________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2023-C06 was duly adopted by
the City Council of the City of Azusa at a Special Meeting of the City Council the 23rd day of
January, 2023, by the following vote of Council:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
_______________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
APPROVED AS TO FORM:
_______________________________
Best Best & Krieger, LLP
City Attorney