HomeMy WebLinkAbout _ 9.5(c)--Report on CVPIA Settlement
CITY OF REDDING
REPORT TO THE CITY COUNCIL
Recommendation
Accept report on settlement proceeds received in the amount of $15.9 million from CVPIA
litigation; and authorize staff to pass through calculated damages to the City of Shasta Lake in
the amount of $1,468,109, and the Redding Rancheria in the amount of $33,268, using existing
mechanisms.
Fiscal Impact
Settlement proceeds, net of apportionment for the City of Shasta Lake (Shasta Lake) and the
Redding Rancheria (Rancheria), are approximately $15.9 million. Accounting for all prior legal
fees, the net benefit of the litigation is approximately $14.9 million. These proceeds will be
included as part of Redding Electric Utility’s (REU or Utility) unrestricted reserves and
incorporated into the Utility’s budget, 5-year plan, and 2023 rate proposal.
Alternative Action
The City Council could choose not to accept the report or request additional information.
Background/Analysis
The City of Redding (Redding) and other agencies buy hydroelectric power generated b y the
United States Bureau of Reclamation’s Central Valley Project (CVP) in California. Through
“assignment” contracts, Redding takes delivery of Shasta Lake and the Rancheria’s portion of
CVP power (Base Resource) and passes through all charges.
To help fund efforts to mitigate the CVP’s environmental impact, the CVPIA imposes additional
charges on CVP water and power contractors with proportionality clauses. It also caps water user
charges and ties them to the amount of water delivered each year. During drought years, the
Bureau required power customers to cover under-collections from water users in violation of
proportionality clauses.
MEETING DATE: June 6, 2023
ITEM NO. 9.5(c)
FROM:
***APPROVED BY***
nzettel@cityofredding.org
btippin@cityofredding.org
SUBJECT: 9.5(c)--Consider report regarding award of settlement proceeds from Central
Valley Project Improvement Act (CVPIA) litigation.
Nick Zettel, Director of
Redding Electric Utility
Report to Redding City Council May 31, 2023
Re: 9.5(c)--Report on CVPIA Settlement Page 2
For many years prior to filing suit, Redding and other agencies unsuccessfully advocated in an
attempt to get the Bureau to correctly interpret CVPIA and reduce the restoration fund charges
on the power contractors. Northern California Power Agency (NCPA), the City of Roseville, the
City of Santa Clara, and Redding sued the United States in 2014. Through a series of appeals, the
litigants, including Redding, ultimately prevailed. In September 2022, the United States Court of
Claims awarded $81,872,385 in damages.
Redding’s calculated damages included overpayment by Redding on behalf of Shasta Lake and
the Rancheria. NCPA received the full settlement on March 8, 2023. On May 1, 2023, NCPA
deposited $17,385,479 into Redding’s General Operating Reserve at NCPA. This amount
includes $1,468,109 and $33,268, respectively, of calculated damages for Shasta Lake and the
Rancheria.
REU bills Shasta Lake monthly for contracted services such as power and scheduling (including
CVP Base Resource and CVPIA charges). To pass through their portion of the damages, staff
proposes that REU apply a credit to these bills until exhausted.
Annually, REU calculates the value of the Rancheria’s CVP Base Resource assignment and
provides a true-up payment to the Rancheria. To pass through its portion of damages, staff
proposes that REU includes the amount in the 2023 true-up process.
Environmental Review
This is not a project defined under the California Environmental Quality Act, and no further
action is required.
Council Priority/City Manager Goals
• Budget and Financial Management – “Achieve balanced and stable 10-year Financial
Plans for all funds.”
• Communication and Transparency – “Improve the quality of communication with the
public and City employees to enhance knowledge and increase transparency to improve
public trust.”
Attachments
^CVPIA Settlement Distribution Redding
CITY OF REDDING
CVPIA SETTLEMENT Settlement Proceeds 17,385,479$
Prior Legal Costs through NCP (974,978)
Net Litigation Benefit 16,410,501$
Participants
Net
Settlement
FY 2008
Net
Settlement
FY 2009
Net
Settlement
FY 2010
Net
Settlement
FY 2011
Net
Settlement
FY 2012
Net
Settlement
FY 2013
Net
Settlement
FY 2014
Net
Settlement
FY 2015
Net
Settlement
FY 2016
Net
Settlement
FY 2017
Net
Settlement
FY 2018
Net
Settlement
FY 2019
Net
Settlement
FY 2020
Total Net
Settlement
Net Litigation Amt [1]$1,559,669 $2,174,579 ($39,231) $727,259 $678,408 $698,009 $2,415,083 $3,185,851 $2,862,681 $1,142,240 ($611,836)$1,106,369 $511,420 $16,410,501
Share of Net Litigation:
Redding [2][5]$1,413,370 $1,970,600 ($35,551) $659,041 $614,772 $632,535 $2,188,544 $2,887,730 $2,595,004 $1,035,434 ($554,626)$1,002,917 $463,599 $14,873,370
Redding Rancheria [3]$6,789 $9,466 ($171) $3,166 $2,953 $3,038 $10,513 $13,082 $11,532 $4,602 ($2,465)$4,457 $2,060 $69,022
Shasta Lake $139,510 $194,513 ($3,509)$65,052 $60,683 $62,436 $216,026 $285,039 $256,144 $102,204 ($54,745) $98,995 $45,760 $1,468,109
$1,559,669 $2,174,579 ($39,231) $727,259 $678,408 $698,009 $2,415,083 $3,185,851 $2,862,680 $1,142,240 ($611,836)$1,106,369 $511,419 $16,410,501
Base Resource Percentage [4]FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
Redding 90.6198% 90.6198% 90.6198% 90.6198% 90.6198% 90.6198% 90.6198% 90.6424% 90.6494% 90.6494% 90.6494% 90.6494% 90.6494%
Redding Rancheria 0.4353% 0.4353% 0.4353% 0.4353% 0.4353% 0.4353% 0.4353% 0.4106% 0.4029% 0.4029% 0.4029% 0.4029% 0.4029%
Shasta Lake 8.9449% 8.9449% 8.9449% 8.9449% 8.9449%8.9449% 8.9449% 8.9470% 8.9477%8.9477% 8.9477% 8.9477% 8.9477%
100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000%100.0000% 100.0000% 100.0000% 100.0000%
Notes: 1 Amount net of prior legal fees and interest income.
2 Redding paid for all prior legal costs and will recover the costs, proportionally, from the Settlement Proceeds prior to distribution.
3 The Redding Rancheria did not pay their direct share of CVPIA costs until FY15 due to an oversight by REU. FY15-20 is $33,268.
4 Base Resource Percentages in the year damages were incurred per federal fiscal year.
5 Redding's share of the Settlement is increased to $15,884,102 after the apportionment of prior legal fees and CVPIA charges paid by the City of Redding on behalf of the City of Shasta Lake and Redding Rancheria (Notes 2 and 3).
This is calculated by taking the Settlement proceeds of $17,385,479 and subtracting the Share of Net Litigation ("distributions") of $1,468,109 and $33,268 to the City of Shasta Lake and the Redding Rancheria.