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HomeMy WebLinkAboutMinutes - City Council - 1996-10-09 258 City Council, Adjourned Regular Meeting Redding Convention Center, Room 116 700 Auditorium Drive Redding, California October 9, 1996 7:00 a.m. The meeting was called to order by Mayor McGeorge with the following Council Members present: P. Anderson, R. Anderson, Kehoe, Murray and McGeorge. Also present were City Manager Warren, Assistant City Manager Perry, and Director of Administrative Services Starman, along with various members of the Electric Utility. PRESENTATION OF THE ELECTRIC UTILITY AUDIT BY ECONOMIC AND ENGINEERING SERVICES. INC. AND DISCUSSION REGARDING GOALS AND OBJECTIVES OF THE ELECTRIC UTILITY AUDIT REVIEW COMMITTEE (A-050-125) Representatives from Economic and Engineering Services, Inc. (EES) presented the Electric Utility Audit to the City Council. Council Member R. Anderson asked EES to confirm whether the projections produced by EES were a"worst case" scenario. Gary Saleba of EES viewed the projections as a"likely" scenario. Council Member R. Anderson requested EES to respond to the letter received from Wheelabrator dated October 7, 1996, incorporated herein by reference. Mr. Saleba related that EES would be happy to prepare a response to the issues raised in the letter. Council Member Murray asked how the numbers would look if the planning horizon was changed from a five-year forecast period to a 20-year forecast period. The following comments were made by individuals from the audience. (It should be noted that not all the questions posed were answered at this meeting.) John Wilson asked what the City would charge for distribution services; how much money is transferred from the Electric Utility Fund to the General Fund each year; and whether bonds were considered stranded costs. Paul Edgren suggested that the City separate the rate issue from other management issues. He also recommended that the City Council consider a"detachment fee," in lieu of a competitive transition charge(CTC). He stated that the detachment fee would be calculated as follows: total stranded cost divided by total meters prorated on the basis of kilowatt hours used. He requested that the City continue to work with EES or other financial specialists to track the marketplace. He also indicated that he thought the City could do better than Northern California Power Agency (NCPA) with respect to lobbying efforts. E. J. Simpson related that ten percent of the City's power comes from the Central Valley Project, therefore, he was perplexed by EES classifying this as a stranded cost. He indicated that the Western Area Power Administration(WAPA)would be generating projections for electric allocations for the year 2004 in the next six months and was concerned that if the City did not strongly indicate that it intended to keep the utility, this issue could impact WAPA's decision-making process. He suggested that the City Council base their projections for electricity in the future on similar forecasts for gas, coal, and oil. Mr. Simpson indicated that the City Council should error on the optimistic side with regard to the future and not assume that energy will be as cheap as EES has assumed. John Moore sought clarification as to the meaning of stranded cost. In response to Mr. Moore's question, Council Member Kehoe requested that staff produce a white paper regarding stranded cost. Assistant City Manager Perry agreed to prepare such a paper. 10/09/96 259 Stuart Oliver expressed concern over the proposed rate increase. Bill Carlson, representing Wheelabrator, elaborated on the letter previously received by the City Council. He opined that the California-Oregon border electric futures market (COB) is not a good basis upon which to generate a forecast. He used a Christmas tree analogy, whereby COB represented the leftover Christmas trees on Christmas Eve (supply is low and demand is low). He stated that the stranded costs identified by EES were overstated. He related that Wheelabrator and others are in the process of generating long-term cost estimates for PG&E rates and that he would share the general results from that study with the City, which should be available in approximately two to three weeks. Richard Johnson indicated that the City Council should closely explore the assumptions which were used to generate the stranded cost figures and, again, emphasized that the forecasted cost of oil, coal, gas, etc., would have a major impact on these figures. Dorothy Mathews suggested that the City consider bankruptcy as opposed to paying off the stranded cost. Frances Jenkins stated that she was pleased with the performance of the City's Electric Utility to date; however, she was concerned about the potential for a low-income assistance program. She preferred that the City offer more in the way of conservation assistance, such as low-interest loans. Fred Pedersen asked whether he would have an opportunity to select a different utility if the City's rates were increased 38 percent or more. Joseph Flores indicated that he was a local business person and wanted the ability to choose his own power provider if the City's rates increased. Larry Heck stated that being retired, the bottom line for him and others in his situation was the dollars and cents. He related that the City has spent millions of dollars on various projects, and he has seen no positive return for his investment. He also expressed concern over the City Council conducting a meeting at 7:00 a.m. He opined the meeting was held early to discourage members of the public from attending. He further stated that he, as well as others in the community, are still awaiting answers regarding the Redding Power Plant project. Dan Mathews complimented the City for its efforts to improve communication between the Electric Utility and its customers. With respect to the Report to City Council dated October 8, 1996, incorporated herein by reference, regarding the goals and objectives of the Electric Utility Audit Review Committee, Council Members Kehoe and Murray recommended the following minor changes: (1) Page 1 - Paragraph 3 should read: Understandably, given the breadth of this issue, the charge is quite broad. The committee can accomplish its purpose by,for example, doing the following; (2) Page 2 - Item No. 1 under the three basic functions the committee is to perform should read: Reflects the attitude and values of the community; and (3)Page 3 -Item No. 3 under the Planning Process should read: Recommend options on how we will get there. These options will represent the implementation plan or strategy. MOTION: Made by Council Member Kehoe, seconded by Council Member P. Anderson, to approve the proposed Electric Utility Audit Review Committee's Purpose and Scope of Work as outlined in the memorandum to the Members of the Electric Utility Audit Review Committee dated October 8, 1996, incorporated herein by reference, with the aforementioned modifications, and direct the City Manager to closely monitor expenses associated with said Committee. The Vote: Unanimous Ayes 10/09/96 260 ADJOURNMENT There being no further business, at the hour of 9:15 a.m., Mayor McGeorge declared the meeting adjourned. APPROVED: , 2 G // Mayor / el ATTEST: , .,.. v� .f / -,/City Clerk I I 10/09/96