RESOLUTION ______
[Board of Supervisors/City Council/Commission/Board]
of
[County/City/Special District]
WHEREAS, ______(Public Agency) is currently purchasing electricity and natural gas and related transportation and distribution services from Pacific Gas and Electric Company (Utility) under the jurisdiction of the California Public Utilities Commission (CPUC); and
WHEREAS, deregulation of the natural gas industry in 1986 and CPUC Decisions Nos. 91-02-040, 94-04-027 and 95-07-048, and regulation promulgated thereunder, now permit Utility customers, including local governments, to purchase natural gas and specified related support services from third parties through a "core transport agent;" and
Whereas, on May 6, 1997, the California Public Utilities Commission (CPUC) issued Decision 97-05-040 authorizing customers of the Utility to acquire electric supply and related services from sources other than PG&E on January 1, 1998; and
WHEREAS, the Public Agency is a member or cooperating member of the Association of Bay Area Governments (ABAG); and
WHEREAS, ABAG formed a Power Purchasing Pool Program to aggregate natural gas needs of interested ABAG members and cooperating members in 1996 and currently acts as a core transport agent on behalf of such members to deliver or cause to be delivered natural gas and related services (including invoicing and gas management) to such members and has formed a Power Purchasing Pool Committee comprised of representatives from each participating member or cooperating member and grant it the power to oversee the Program; and
WHEREAS, ABAG proposes the formation of a pooled purchasing program for the acquisition of electric supply and related services (Electric Program) and that the Electric Program be implemented througha "Joint Exercise of Powers Agreement Creating the ABAG Publicly OWned Energy Resources" (ABAG POWER) (attached as Exhibit A) formed by ABAG and other public entities in the PG&E service territory in which such public entities commit to participating in ABAG POWER for at least one (1) year; and
WHEREAS, a participant in the Electric Program will acquire electric supply and related services under an agreement between the participant and ABAG (Direct Access Electric Aggregation Agreement) (attached as Exhibit B) which will be assigned from ABAG to ABAG POWER upon the formation of ABAG POWER; and
WHEREAS, each participant in the Electric Program will be represented on the Board of Directors of ABAG POWER by a director, or in his/her absence by an alternate, appointed by the participant; and
WHEREAS, the Public Agency finds that it is in its best interest and the public interest to join ABAG POWER and participate in both ABAG's Electric and Natural Gas Programs.
NOW, THEREFORE, BE IT RESOLVED, that the [Board of Supervisors/City Council/Board of Directors] of the [County/City/Special District] hereby authorizes the [Title of Official] to execute (1) the Natural Gas Sales and Aggregation Agreement with ABAG, in substantially the form set forth in [the attached Exhibit C] appointing ABAG as the core transport agent for the Public Agency in procuring the purchase and transportation of natural gas and related services and (2) the Utility's Customer Authorization for Core Gas Transportation Services [the attached Exhibit D].
BE IT FURTHERRESOLVED, that the {Title of Official} is appointed the Public Agency's representative on ABAG's Power Purchasing Pool Committee and to the ABAG POWER Board to oversee the operation of Power Purchasing Pool Program.
AND FINALLY, BE IT FURTHERRESOLVED that the [Board of Supervisors/City Council/Board of Directors] of the [County/City/Special District] hereby: (1) authorizes the [Title of Official] to execute and deliver the "Joint Powers Agreement creating the ABAG Publicly OWned Energy Resources", (2) authorizes the [if different from above, the County Administrator/City Manager/General Manager], or his/her designee to execute and deliver the Direct Access Electric Aggregation Agreement in substantially the form, or in conformance with the principles, set forth in Exhibit B, and (3) designates [name(s) and/or title(s)] as the County/City/District's representative [and alternates, respectively] to the Board of Directors of ABAG POWER.
PASSED AND ADOPTED this ____ day of ______, 199__.
Sample Report to Council or Board
Date:June 18, 1997
To:Council or Board Members
From:City Manager, County Administrator, or General Manager
Subject:ABAG’s Power Purchasing Pool for Electricity and Natural Gas
Background
In 1991, the California Public Utilities Commission (CPUC) deregulated the commodity portion of the natural gas market and allowed utility customers to procure their gas supply from suppliers other than the utility. In 1996 and 1997, the CPUC and the State Legislature acted to deregulate the electric utility industry in the State of California. Starting January 1, 1998, all customers of the current monopoly utility are eligible to contract directly with the power supplier of their choice to obtain power supply.
In order to facilitate the participation of local governments in the new deregulated energy market, the Association of Bay Area Governments (ABAG) created a Power Purchasing Pool for local government agencies in 1995. To pilot its efforts in this area, ABAG created a Natural Gas Purchase Program, which currently purchases natural gas for 32 public agencies. In the first year of its operation, ABAG’s Natural Gas Program achieved a seven percent savings (as percent of the utility’s cost) for participants. In November 1996, ABAG issued an RFP for Power Supply and Services on behalf of 130 local government agencies participating in ABAG’s RFP. On behalf of the RFP participants, ABAG evaluated proposals from qualified suppliers, power marketers, and utilities and negotiated agreements with a team of suppliers and service providers to create a comprehensive electricity purchasing program for local governments. At this time, ABAG is offering to enroll local governments and other public agencies in both its natural gas and electric programs. The deadline for enrollment is September 30, 1997.
Natural Gas Program Description
ABAG purchases natural gas on the agency’s behalf and arranges for it to be deliver to the PG&E system for distribution by PG&E to the burner tip. Participation in ABAG’s Program assures no change in participant’s current priority of service with Pacific Gas and Electric Company (PG&E), quality of natural gas, overall reliability of service and performance of maintenance. PG&E will continue to provide meter reading, “on the ground” repair and maintenance, and emergency response to all participants.
Participants will receive a single monthly bill for natural gas service from ABAG, even though the gas and the transportation services will be provided by different companies. In addition, the ABAG bill will consolidate all accounts into one summary bill.
CPUC and PG&E regulations require all customers wishing to aggregate their gas requirements with others in order to purchase gas from a third party to sign an agreement with a Core Transport Agent. The Core Natural Gas Sales and Aggregation Agreement authorizes ABAG to serve as the Core Transport Agent for the Public Agency. This agreement also provides information on ABAG’s fees for this service. ABAG will collect one cent ($0.01) per therm consumed by the City as an operating fee to pay for the services described above. In addition, ABAG will collect one-third of one cent ($0.009) per therm consumed to offset its own administrative.
By signingPG&E Customer Authorization for Core Gas Transportation Service, the public agency authorizes PG&E to recognize ABAG as the Public Agency’s Core Transport Agent and agrees that it will continue to be responsible for payment to PG&E of its transportation bills, even the Public Agency authorizes PG&E to send the bill to the Core Transport Agent for payment. PG&E will continue to provide to the City all existing services except procurement of natural gas. These include meter reading, routine service calls, and emergency as it currently does. In addition, to the bill sent by ABAG, PG&E will provide the City with an “information-only” invoice, displaying the City’s actual meter reads for the purpose of confirming ABAG’s bill.
Electric Program Description
Under the terms of the program, ABAG will purchase power for each participant in the program and arrange for its delivery (transmission) to the PG&E system. PG&E will be responsible for ensuring delivery of the power to the end users as well as for routine maintenance and emergency response services. ABAG, via its billing agent, will invoice participants for power charges, transmission charges, and PG&E distribution charges, which will also include a competitive transition charge and a public benefits charge. Payments from participants will go to an escrow account, from which ABAG will authorize the payment of all suppliers and service providers.
Based on its current arrangements with two suppliers to provide low cost power, ABAG estimates that the rate of savings for the program will be approximately 4 percent less than PG&E’s bundled rate service in the first year of the new deregulated market. ABAG rates will be established in the Fall 1997 after ABAG has completed its purchase of needed power. Rates will be structured to reflect the relative cost of peak and off-peak power. ABAG anticipates it will have a specific rate for streetlighting. ABAG recommends that participants bring all of their electric accounts into the program in order to maximize the load aggregation potential of the pool. Power suppliers and services providers were selected using a competitive process.
Power suppliers for the program were selected on the basis of the price of commodity compared to other firms offering the same product. Power suppliers currently under MOU with ABAG include Seattle City Light with CNG Energy Services and PG&E Energy Services. Service providers were selected on the basis of competence to perform the desired service and the extremely competitive price offered. Billing services will be provided by Arizona Public Service Company. The Northern California Power Agency will provide schedule coordination, dispatch, and commodity management services.
Participants in the program will be required by state regulation to install time-of-use meters on all accounts with greater than 20 kW maximum demand. ABAG will facilitate the purchase and installation of these meters for all participants in the Pool. Although, the cost of each meter is unknown at this time, ABAG anticipates that it will be able to amortize the cost of the meters over a multi-year time period. Installation of meters for these accounts is not an ABAG requirement but a state-mandated prerequisite to participating in the new deregulated market.
Participation in the program is governed by two agreements: 1) a Joint Powers Agreement and 2) an Direct Access Electric Aggregation Agreement. ABAG is forming a joint powers agency to house this program and the existing natural gas purchasing program. The joint power agency is required to insulate ABAG’s other planning and service programs from the cashflow and legal requirements of the Power Pool. The joint powers agreement must be executed by each public agency participating in the program. The Direct Access Electric Aggregation Agreement stipulates the commercial terms of the program, including the participant’s commitment to purchase power from ABAG and to pay for other charges incurred by the Pool on behalf of all participants. The initial term of the Agreement is one year and it includes an evergreen clause that will re-enroll the participant for an additional year unless it notifies ABAG of its intent to exit the program at the end of the first year.
ABAG will charge participants a per-kWh administrative fee to cover the cost of administering the program, including the cost of obtaining consulting expertise to design rates and purchase additional power supplies and to pay for the monthly services of the Schedule Coordinator. ABAG’s Administrative Fee will be approved by the Power Purchasing Pool Committee in the Fall 1997 after the final supply arrangements have been made and the rate structure has been announced.
As a participant in the program, the City, County or Special District will have a representative on the governing body for the Joint Powers Agency and will have access to the expertise of ABAG’s consultants and service providers.
Fiscal Impact
ABAG estimates that total natural gas savings for 1997-98 will be approximately five to eight percent. For this public agency, this would result in about $______.
For the electric program, ABAG estimates that total savings in the first year of the electric program will be approximately four percent less than what the City, County, or Special District would otherwise pay PG&E for the same service. In 1996, ABAG estimated that the natural gas program would achieve only a two to three percent savings; however, at the end of the first year, the program posted a seven- percent savings due to pipeline rebrokering and other commodity management activities. Based on ABAG’s experience with natural gas, ABAG anticipates that commodity management and rebrokering of excess power may result in actual savings in the electric program exceeding this conservative projection. For example, four percent savings on our current electric bill would result in a savings of about $______.
Recommendation
Approve the attached resolution authorizing participation in ABAG’s natural gas and electric programs and authorizing the City Manager, County Administrator, or General Manager to sign the necessary agreements for each program.
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