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HomeMy WebLinkAbout02/17/95 BAKERSFIELD MEMORANDUM Cebruary 17, 1995 · TO: )qONORABLE MAYOR AND CITY COUNCIL FROM: ALAN TANDY, CITY MANAGER /~T[~ SUBJECT: GENERAL INFORMATION 1. We had only one applicant for the lateral transfer from among the County firefighters; this applicant later withdrew due to his concerns regarding loss of seniority. On a separate, and related, note it appears that five of the thirteen prospective new hires for the Fire Department, which includes both filling vacancies and staffing Rio Bravo, will be from minority groups. 2. On the Sports Complex/Stadium project, the new story that ran this week was badly presented with an inaccurate headline. I have not come out with a formal written financing plan, because I have been attempting to balance a variety of issues and avoid the greatest potential conflicts, such as the assessment, if that is at all possible. At this point, I do not know whether it is possible. One of the things I do need in order to pursue a finalization of a financing plan is a more formalized estimate of the project cost. I am working on doing that in connection with the others who donated money for preliminary work so that the funds would come from that source. Also on this subject, the High School Superintendent now believes that Stockdale High School will build their own on-site football facility from donations. Separately, you will find enclosed a letter from the Symphony expressing some level of interest in having an occasional event at the new facility. I also had a meeting with a promoter who might be interested in sponsoring some concerts there, if the facility is built. 3. We are trying to make up some alternatives for the median scape on Stockdale Highway in the Stockdale Estates/Quailwood areas. Please remember, however, that the piece in front of CSUB and the piece on Gosford are noncontroversial, where there was not property owner protest. Whatever happens on the Stockdale Highway piece with Stockdale Estates and Quailwood, those two portions can proceed without controversy. 4. Enclosed is the quarterly report on merit step increases from the Human Resources Division. 5. A memo from Economic Development is enclosed giving details on a possible land sale for a downtown development. HONORABLE MAYOR AND CITY COUNCIL February 17, 1995 Pa§e -2- 6. A'recent letter to Mercy Charities regarding their low income housing tax credit application is enclosed. AT.alb Enclosures cc: Department Heads Trudy Slater Carol Williams c%AyKERSFIELD MPHONY RCHESTRA JOHN FARRER, Music Director 1401 19th Street, Suite 130, Bakersfield, California 93301, 805/323-7928, E^XS05/323-7331 February 10, 1995 Mr. Alan Tandy City .Manager CITY OF BAKERSFIELD 1501 Truxtun Avenue Bakersfield, California 93301 Dear Alan: Thank you for your letter of February 2, 1995. The Bakersfield Symphony would be interested in presenting an occasional cOncert in the proposed outdoor stadium. ~ We would see these as one-of-a-kind events, probably featuring well-known popular entertainers. An outdoor stadium would not replace our ongoing need for an indoor concert-giving venue. We continue to need the Bakersfield Convention Center for this purpose. I hope you will keep us apprised as your plans develop. All best wishes. Very ,/truly your_.s~-~} / / J°hn Farrer FEB MEMORANDUM TO: JOHN W. STINSON, ASSISTANT CITY MANAGE DATE: 1/27/95 FROM: ANTHONY GONZAL'ES, HUMAN RESOURCES SUPERIOR ~/~' SUBJECT: REPORT ON MERIT STEP INCREASES QUARTER PERIOD OCTOBER- DECEMBER 1994 Per the City Council's request, attached is a listing by department of the number of employees who were. eligible and received "merit" step increases for the quarter October - December 1994. Forty-five (45) employees received "merit" increases from a total of forty-eight (48) who were eligible during the period. STEP INCREASE REPORT OCTOBER-DECEMBER 1994 27-Jan-95 EXECUTIVE 1 1 1 1 0 0 FINANCE 1 1 0 0 1 1 ATTORNEY 1 1 0 0 1 1 POLICE 17 15 3 3 14 12 FIRE 14 14 5 5 9 9 PUBLIC WORKS $ 7 4 4 4 3 WATER/SOLID WASTE 2 2 1 1 1 1 COMMUNITY SVCS 3 3 1 1 2 2 DEVELOPMENT SVCS 1 1 0 0 1 1 ED/CD 0 0 0 0 0 0 STEP INCREASE ,REPORT 1994-1995 Steps 4 and 5 27-Jan-95 ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ~i ~i~i~E~i~i~ii?~ii?~i:?:i::i~?~?:?:?:i :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::: EXECUTIVE 1 0 1 1 0 0 0 0 FINANCE 1 1 1 1 0 0 0 0 ATTORNEY 0 0 1 1 0 0 0 0 POLICE 6 6 17 15 0 0 0 0 FIRE 5 5 14 14 0 0 0 0 PUBLIC WORKS 8 7 $ 7 0 0 0 0 WATER/SOLID WASTE 2 2 2 2 0 0 0 0 COMMUNITY SVCS 4 4 3 3 0 0 0 0 DEVELOPMENT SVCS 2 1 1 1 0 0 0 0 ED/CD 1 0 0 0 0 0 0 0 .................... :: :::iiiii!ii!i !!i!iiiiii~ii!! :.:.:.:.:.:.:.:-:-:-:.:..: .............. BAKERSFIELD Economic and Community Development Department MEMORANDUM February 15, 1995 TO: Alan Tandy, City Manager ~ ~ FROM: Jake Wager, Economic Develop~nent Director SUBJECT: OWNERSHIP PARTICIPATION AGREEMENT:CARLSON DEVELOPMENT CITY PROPERTY - 21ST & M STREETS Gayle W. Carlson, d.b.a. Carlson Development, submitted an offer in November to purchase the city owned block at 21st & M streets. He is proposing to construct a 13,011 sf facility and a 2,270 administration office, which will be leased to' the National Association for People with Disabilities (NAPD). The facilities would be used by approximately 25 staff members and 150 clients (individuals will have a range of various physical and mental disabilities). Vice Mayor DeMond met with Gayle Carlson and myself to review the project. She is favorably inclined towards the facility and sale of property. It has been negotiated that all closing costs and broker commission will be paid by Carlson, so that their original offer would be a "net" to the city of $4.00 per square foot. The city should receive approximately $278,784 on the saie. Don Anderson has developed the purchase contract. An additional agreement is being developed by staff and Janice Scanlan, to provide CDDA assistance in the form of funding a specific portion of the off-site improvements (i.e. trees or curb & gutter). The agreement will include a provision for the CDDA to issue a Certificate of Completion which will then trigger a one-time payment by the CDDA to the developer. The exact amount of assistance provided by the CDDA has not been finalized, but it should be in the $12,000-15,000 range. Carlson's project timing is contingent upon passage of the proposed CBD zoning and the need to begin construction as soon as possible. We anticipate the purchase contract and notice of findings will go before the Council on March 22nd. The purchase contract will have contingencies covering the passage of downtown zoning and approval of the CDDA agreement. The CDDA will review the agreement for signature at their April 10th meeting. After approval of the agreement escrow will open and close only after the downtown zoning goes into affect, which is anticipated to be mid-May. Carlson hopes to begin construction immediately thereafter with completion estimated by May 1996. If you have further questions please call. cc: Janice Scanlan Don Anderson ew/jw BAKERSFIELD February 9, 1995 Charmaine Curtis Mercy Charities Housing California 1028A Howard Street San Francisco, CA 94103 Dear Ms. Curtis, Attached for your review and comment is a draft of the letter I am prepared to execute for inclusion. in your low income housing tax credit application. Please return any suggested revisions at your earliest convenience. In the meantime please be assured that the City of Bakersfield remains committed to providing its on-going support and cooperation. This was evidenced again by the action taken by the City Council in Wednesday, February 8, 1995 in unanimously approving the initial annexation proceedings and the ensuing supportive comments made by Councilmembers. With respect to the analysis currently underway, we have received a tentative commitment by the consultant that their work may be completed as early as February 17, 1995. Upon receipt of the analysis and following a brief period of internal review and discussion we will adVise you of staffs position relative to the additional funds (above $300,000) being sought by Mercy Charities Housing Califomia~ At that time, I may be in a position to provide you with a letter which may fully address all City assistance being sought by your organization. That letter may then be substituted for the C d~d to you today, ~re~h .... draft version provi e current status. Until then I remain ordially yours, ~ ~ ~. _ John F. Wager, Jr. Economic Development Director enclosure / cc: ~/Alan Tandy, City Manager Mike DePetro dlt:jw? merc¥.llt City of Bakersfield · Economic and Community Development Department 515 Truxtun Avenue · BaKersfield · California 93301 (805) 326-3765 · Fax (805) 328-1548 · TDD (805) 324-3631 - draft- February 6, 1995 Dear , The purpose of this letter is to advise of the status of an application for HOME funds submitted to the City of Bakersfield by Mercy Charities Housing California. The HOME funds would be utilized to construct 56 units of rental housing in southeast Bakersfield. On October 5, 1994 a letter of understanding was forwarded to Mercy Charities Housing California outlining in broad form the content of an agreement to be developed by Mercy Charities Housing of Bakersfield (see C alifo rnia and the City %~~~~~ On October 12, 1994, the Bakersfield City Council adopted by unanimous vote a resolution in support of the development of affordable housing in southeast Bakersfield by Mercy Charities Housing California (see attached). On December 22, 1994, Mercy Charities Housing California submitted a HOME application requesting $550,000 in assistance. While there is a general understanding that a minimum of $300,000 of HOME funds will be made available and have been set aside for this project (subject to City Council approval of the development agreement, no later than April 5, 1995), a financial analysis is presently under way on the balance of the funds requested ($250,000). Although we recognize the importance of timing, the analysis may not have been completed soon enough prior to the March 10, 1995 deadline for the submittal of low income housing tax credits for us to indicate how the additional amount of $250,000 requested will be treated. In spite of this unresolved matters it is important to note that the City of Bakersfield is on record in support of this very worthwhile and important project. The project enjoys community-wide support and is viewed as a catalyst for future development opportunities in southeast Bakersfield. We t cur prior to the anticipated April believe that the final resolution of any ou standing, . allocation meeting. ~0~}~~' At the time of final City Council action we will be forwarding to your office a full description of the City's financial commitment. If you have any questions please call me at (805) 327-3765. Sincerely, John F. Wager, Jr. Economic Development Director SENATOR KEN MADDY 'i FF'RI3 tOQ SENATE REPUBLICAN LEADER ] FOR IMMEDIATE RELEASE: CONTACT: Jan Dana February 10, 1995 (805)324-6188 MADDYANNOUNCES OPENING OF NEW DISTRICT OFFICE Stat~ Senator Ken Maddy has announced the opening of his new Bakersfield district office. The office is located at: 841 Mohawk Street, Suite 190 Bakersfleld 93309 The phone number for the new office is (805)324-6188 and the FAX number is (805)324-6199. Jan Dana, a Kern County native, is the Field Representative in the new office. Jan has previously worked for KGET-TV, the Bakersfield Fire Department and Governor Pete Wilson. Pam Silvius will be providing secretarial support in the Bakersfield office. The new boundaries of the 14th'State Senatorial District became effective when Senator Maddy was re-elected to office on November 8, 1994. Maddy now represents a majority of the Bakersfield area, the Kern Valley, Porterville, Lindsay, Exeter, Visalia and Tulare, as well as a portion of Fresno County. Maddy served in the State Assembly from 1970 to 1978 and was first elected to the State Senate in 1979. In 1987, Senator Maddy was elected Republican Leader of the State Senate. As such, he has distinguished himself as a leader on major California issues. Most notable are his roles in formulating a strong code of ethics for state legislators and his support for the Transportation Improvement Initiative to update our state's transportation system. Maddy's leadership and commitment in resolving. California's annual budget crisis has earned him respect from Republicans and Democrats alike, as well as noted columnists and editorial writers. He also has been recognized on the national level, receiving the 1992 Lee Atwater Memorial Minority Leader of the Year Award from the National Republican Legislators'Association. --More-- -2- Currently, Maddy serves as vice-chair of the Governmental Organization Committee and is a member of the Health and Human Services, Legislative Ethics, Revenue and Taxation, and'Constitutional Amendments Committees. · Maddy has long been in the forefront of legislative battles concerning water, land use, farm labor and other agricultural issues. He is a particularly strong advocate of private property rights and continues to fight to reform the Endangered Species Act and other governmental regulation of agriculture, business and industry. A native Californian, Maddy attended Los Angeles and Inglewood schools and graduated from California State University, Fresno with a Bachelor's Degree of Science in Agriculture. After serving in the U.S. Air Force as'an Air FOrce Polide Officer~ Maddy earned a law degree from the School of Law at the University of California, Los Angeles. mare. ,League of California Cities .. i~~k.~ "4400 K STREET · SACRAMENTO CA 95814 ~, (916),658-8200 California Cities ---'- Work Together .... . ,.t . FEB I 3 February 1, 1995 TO: Mayors and City Managers -RE: Public-Utilities Conlmission ~Electricity-Rate Deregulation. Overview of Issue and League Policy Guidelines. Information. Many cities are beginning to hear about the Public Utilities Commission's (PUC) proposal to deregulate electricity. In addition, many cities have asked the League for background information and whether the League has a position on the topic. This complex and often.controversial issue was the subject of a lengthy discussion at the January meetings of the League's Environmental Quality Policy Committee and the Board of Directors. Attached is a stfmmary of the wari_ous key issu_es __on the subject and the League policy_ gUifieii~es adopted by the Board of Directors.' The League will continue to monitor and evaluate-the PUC process and proposals, as well as provide information to cities as appropriate. We will keep cities informed as additional information is available. If you have questions, please contact the League's Sacramento office for more information. puccitiesmcmo THE PUBLIC UTILITIES coMMISSION ' ' PROPOSAL TO DEREGULATE ELECTRICITY ' "' ' ' '~ Background ~nd League Pollcy' February 1995 BAcKGRoUND ,' In April 1994, the California Public Utilities Commission (PUC) announced that it · intends to "deregulate'-:~Califor~nia's electricity services market.. The-primary reason for this proposal is the view that such deregulation would significantly reduce the cost of. electricity in California, an important goal since California's electric rates are significantly higher.than Other states. ACcording to Daniel Wm. Fessler, President of the PUC, "existing data suggests that rates for electricity in CalifOrnia are at abOut 140 to~.. 150% of the national average." Fessler observes that, "Worse from our perspective is the fact that we are surrounded by. western states which have rates that are below that. average." ClearlY, this rate disparity has ecOnomic impacts for buSinesses, and citizens in California. 'ThuS, the PUC is exPloring the option of deregulating electricity as a meahs of lowering the rates. In April, following a series of hearings, the PUC issued for public debat6 and discussion its notice ~of Rulemaking and Investigation. Known as the "BluebOok'', the PUC staff proposal has stimulated' cOnsiderable debate and several alte~:native prOp0sals] It should be noted that sOme.observers argue that the program, should not' be called rate "deregulati6n", but rate "reregulation," since the PUC will still remain in the regulatory arena. The following summarizes the various key proposals, the issues raised by various groups, 'the key areas likely to effect cities, how different cities will be imPacted, and how the Proposals impact existing League policy. 'The summary does not cover the · transmission/distribution liiae ~portion of'the proposals, since with the 'exception of wheeling,' it is not integr'al to a position .adopted by the League. (Wheeling is the process of sending electricity generated at one location, such as a city cogeneration plant at a. community 'center, over .utility or other power lines, across town to city hall -- that is from one location to another.) THE'TWo MAIN PROPOSALS: DIRECT ACCESS AND pOOLCO ~The two most prominent restrudturing proposals that. have'been discussed over the last few month's are the "direct access" model and the "PoolCo" model.. In the direct access model, customers Would enter intO bilateral contracts directly with sellers (or generators) of' electricity. Generators could be a traditional utility' or an independent power producer. , Electricity would be "wheeled" ovei: existing transmission and distribution lines between the seller and buyer, The PUC 'Bluebook envisioned the direct access' model. · and it is ~favored by Pacific Gas.and Electric Company. " ~ .:'. "..~.' ~.~: The' PoolCo model proposes creation-of a po01 into which all generators deliver' :' ~: electricity and from which users purchase electricity. Electricity prices would-be based upon frequent (hourly) auctions based upon the prices generators would bid to sell to the pool and the demand for the electricity by users. All users would .pay the same price for buying electricity frOm the pool. The PoolCo model envisions.the opportunity for direct access between generators and users, as an option to buying and .selling within the pool. This model is favored by Southern California Edison Company and San Diego Gas and Electric Company. ............... OUESTIONS~AND-IssUES'TO<RESOLVE ......... ~ ..... ? ' .... *~ .... i ..... -:.4-:~- Obviou~sly, the concept of electricity rate deregulation has raised a variety of questions that must be resolved before any 'plan can be implemented. The following summarizes the key issues. Cost Reduction and Benefits: While most involved in the debate agree that rate deregulatiOn will resUlt in reduced electricity costs, some have questioned this aSsumption. .More importantly, many have questioned.whether the b~nefits-Will,bt equitably shared, or .will accrue primarily'to large industrial users of electricity.' :BecauSe the PUC ~Bluebo0k Proposal envisions a phased in approa~ch"to direct, aC6ess,.with:larg~ indUstrial Users ~participating first and residential users participating last, there is some concern that small users of electricity, Which-include residential and small, c0mmercial~, customers, might not benefit to the same eXtent as larger users. 'ManY cities are' ~ considered small commercial customers. · Alternative Energy. Standard Offers and the Cliff:' As a reSult of the energy crisis in the 1970s, state and national interest in expanding development of alternative energy sOurces grew. The federal government passed the Public Utility Regulatory Policies Act of 1978 _(P~_U_RP~),_w_hich~as ~_ntg_n__de~d_. t_o_d~c_[~.gs_e._U._S..~co_ns_g~mpt_io' n 0[pe~tr_oleumeprgducts. by allowing comPanies .that can generate electricity through diff6rent means' (i2e., cogeneration, methane, etc.) to sell that power to the utilities. Under PURPA, a utility is required to pay to an alternative/independent power producer a price that is equal to the utility's "avoided cost." In California, the PUC established several tools to aSsiSt independent energy producers reach agreement with the utilities. One of the most commonly used is known as Standard Offer Number'4, which was a quasi-long-term contract between the producer and utility. It established a'firm price which the producer woUld 'receive .from the utility..Many of the Standard Offer Number 4 contracts were'_for .~en'years. In year eleven, known aS. "the -cliff"; it was expected that the price independent Power' prOducei~S,could.then receive for the electricity would be 'significantlY leSs than that'they recei~,ed under, the standard offer..: Many independent power produc6rs :~' inCOrpOrated'this difference in their financial projections and will be: able t0'c°ntinUein 2 year.eleven and beYond. · Others did not consider this change in price and are in ' '-': potential financial trouble because of the..reduced revenue to be received in year eleven and beyond.~ Unfortunately, for many independent power producers, the cliff (or year' .eleven) is:coinciding with ~the 'new. world of-rate deregulation; thus producing a double ' negative .impact/ . · ' Wheeling: Central to. any proposal is the recognition of broad based retail wheeling." That is, for any deregulation program to work, it will be .necessary for users and sellers to easily send the electricity over lines frOm one location to another. For.' cities that generate electricity at a city location, such as a methane or cogeneration facility at the municipal landfill, this easy wheeling is an attractive option. Currently, most cities use' the power generated at the site (i.e., to operate 'the landfill) and sell any excess to the Utility, even. though'th-ey mightrpr~-f~-~-tO-wh~el~ the-excess po,ocr to '~ity'hall~for its"- ..... operations. TraditionallY, utilities have.been reluctant to facilitate such wheeling. ' These barriers would.be eliminated under rate deregulation, although clearly some reasonable price,for wheeling would be'levied. : The Bi0mass Issue: One of the most talked about issues in the solid waste arena has been the. impact of rate deregulation on the biomass industry. This sector of the alternative energyindustry generally uses wood waste, municipal green, yard waste and forest waste~ which it burns to produce electricity, The biomass industry,' and indirectly -lo~a! governments, may..be impa~ted several ways.. Like other alternative energy. ~ producers, the biomass industry may be effected by the !'cliff' and if they have not: ,. factored the potential lower prices in year eleVen into their financial .calculations, face.. serious economic impactsby the dual impacts of deregulation and the cliff. In anticipation of rate deregulation, some major utilities have closed or curtailed activity in' their biomass plants, thus decreasing the demand for biomass already now. Once deregulation is implemented, it could have the impact of further reducing the effeCtive demand for biomass, since the price paid for biomass could be lower than the biomass producers can afford. If the demand for. hiomass declines due to ,deregulation, and the compost markets are not yet vig6rous enough to absbrb the material that had been used to generate electricity, this waste material will.go to landfills. Although biomass accounts for only a small portion of the electricity generated in California, the impacts of deregulation on the industry, solid waste management and local government in California may be profound, While the PUC may be exploring deregulation as a means of reducing energy prices and increasing economic competition, such activity; some say, would be in conflict with existing California policy to reduce waste sent to landfills. In addition, local governments that have' anticipated receiving some credit for biomass towards their AB 939 goals may have to reConsider their diversion programs and develop new ones to t'ake th~..p!ace.'of proposed biomass,programs. (It should, be. noted, that jurisdictions will -not be penalized in calculating.their,progress .towards the 25% and 50% diTeersion goals because new biOmass is disposed of at.landfills. The impact will be in deciding upon different,PrOgrams :to' rePlace 'the biomass program act. .~.: ' :.. ~ ' :'..~;,.'. Stranded Inve'stment: ' ~Many participants in 'the..process have expressedconeernabout.., the ,isslie. of "stranded investment.'' Currently, most'electricity prices inelude.'capital costs for long term infrastructure investments, whether they be nuclear, wind, geOthermal or.~ small hydro generating sources. If the basis of charging for electricity changes, there is concern that these investments wOuld be "stranded" and the costs not recovered.' Specifically, if retail electricity prices decline to a more competitive level, then they may not compensate utility and generation owners for some of the past investment costs. That is, Some of the. investment will be stranded. How stranded assets are' treated:is a central feature of 'this debate. .' ........... s/~m~ ~6bie-/~e~ri'i~d tha=(~r~fii-~e~t?iCY~"~6sii ~are tiigh-bec-aiise-°¥~p~i ifi~;eitin~ti 'decisions'by utilities and that the Stranded investments should be covered by '. sharehOlders,' not ratepayers. However, other observers point out that such a policy Would break the unwritten contract between the public, utilities and investors, who made decisions based upon regulatory policy at the time. Still others point out that the' stranded investment issue applies also to alternative energy generators such as wind, small hydro, geothermal, and biomass. They argue that any plan to deal with stranded investment of' large central generating systemsl such as nuclear power, should-also,'apply. to';generato'rs'Of alternative ' energy' soUrces. ' . .~. · ~-,. '~ "'" ,' .7: MUhi~iP~l~.Utiliti~s'..., It itpPears :that 'an}/; Pi~opo~al .finally adopted,bY: the 'PUC.will riot:,' apply:directlY to electricity generated' an'd/Or' distributed by municipa! utilities.' .(Theri~iS some' ~ontroYers~/'about this. -Ultimately it Will be re~olved'in the courts and/or"" legislature.) ' If we assume that the' PUC prOposal will not'directlY impact ' municipal Utilities, it is clear:that it will have indirect impacts on.municipal utilities, For example, if a large industrial user is free to contract directly with another generator outside the .municipal utility's jurisdiction for cheaper electricity, how will this impact the muni's rate base and income stream? Some say this will serve as a stimulus for municipal utilities to lower rates in order to be able to compete? Others say it will severely impact the ..... ~a_b. i!ity of. m_unieipal utilities, as_large _users_drop_ off !heir system, i ._ _:. _-': _.'. i . i, Social and Environmentol Impacts: In the past, California energy policy has included' support of social programs, such as free energy audits and low income weatherization programs,' and support of programs beneficial' the environment. The latter include" development of alternative energy sources that are more environmentally benign, such as 'having less air quality impacts than large central generating facilities. It is unclear' whether' the' }ate deregUlationprop0sals would be able to continue supp°rting 'such programs, some have-stated that by relying'simply on the,market to dictate price and service, such programs would only be supported if there is a market demand for them. Others h~i¥e observed;that sUCh' Programs provide an important'"public ~ood" that~:shoUid ie~t '~nlY not b~: -tO market fortes'to determine. :~:: -' . ,:5 .... :5 .... . .... : :5.: ' 4 'Potential impactg on Cities: ' Rate deregulation has .the potential .to ~save cities, money...' Because cities are'electricitY cOnsumers, they will benefit from reduced rates. 'Depending upon the?size and' energy efficiency of ci~ operations, these savings could be '" .:considerable2' A' }urvey cOnducted by the League in the mid-1980s .found that next.to salaries and'benefitS, energy waS~th~ second highest budget Cost in cities. '(The effects of new energy management programs in cities may have changed' this figure.). However, as .... electricitY rates· decline, there will alSo. be Some reduction in revenUe tO citie~ frOm UtilitY i~sefs taxes. ' .... ' In addition to the basic cost savings, how rate deregulation effects cities will depend upon individual cities. For example, cities that buy power from an investor owned utilitY will be effected differently that ~cities ·have municipal electric utilities, Large dtie.s_ will b~e- impacted differ~fitl~-ffom ~s~n~tll ciii~§2 -Cities' thai'have a ~/fi~tliafi~ plant 05- geothermal plant in one citY facilitY and wish to wheel the power across town to 'CitY hall will be impacted differently than cities that have no citY-owned alternative energy generation projects. Finally, it is likely that small, rural cities will be impacted differently than other cities. The role of the citY as a broker or negotiator for other electricitY users is also another mumc~pahzatlon, this concept views the citY as potential..impact on cities. Called." .... " serving as the 'bulk'purchaser Or broker of electricity for many smaller users in the citY. For examPle, the citY' c°uld assist small businesses and residential CUstomers tO band together and, with the'~cityi pul:Chase the electricity in a larger block, thus' extending the :benefits otherWise provided to large users to smaller Users as Well; This.is because it is. · likely the.city Could ·negotiate a'better deal with an individual generatOr or the pool.' ..' This is ,an important possible neW role for cities and has significant economic deyelopment 'implications. This opportunitY would exist under both the direct 'access and PoolCo models. Finally, it appears that restructuring will not have a negative impact on the authority, of cities to issue franchises or on franchise revenue. However, this is a potential area that · 'ShOuld.be Clarified · IMPLEMENTATION TIMELINE Initially, the·PUC PropOsed that large 'customers; 'including resale cities, would be brought into the "direct access" system in 1996, industrial customers by ·1998, commercial customers by 1999, and all customers (including residential) by 2002. Thus, the plan was for large"Customers to enter the·system first,' with smaller users last. Th~. PoolCo proposal targets 1998 as the date all customers would be Participating in. the system.. !Origi. nally, the PUC anticipated a relatively shOrt time frame, for developing this program. HoweYer, based Upon the issues raised·by'various interests, it. is. clear that a longer implementation time frame will be used. At a PUC hearing in early December, 5 ?~,the~ Co~ssionad0Pted'new.tatget'dates. for isSuingits deregulation.order. :~By January reqiiirerhents 0f:ACR'143i;:BY March 22;~ 1995; .the PUC will ;adopt an "Interim Policy ~ S~xty: days ~ after,~,the'~, Inten Decision" proposing.: an eleCt~ic industry 'restrU'c~uring poliCY. ' ' J,"" . 'm PoliCY Decision, the PUC will issue ~a final decision adopting an electric industry , .,restructuring poliCY. The PUC will eStablish a "Public Working Group!' .to. develop "implementation options." The Public Working Group will be asked to prepare a written report by February 22' 1995 and will be asked to reconvene after issuance of the Interim Policy DeCision. Presumably, the' Working Group would then work on issues regarding .proposed policy inclUded in the Interim Policy Decision. Most observers of the PUC process'note that the question of' rate deregulation is not.one ....... of-if,-but~when-and ~how?- That is;'rate- deregulation will-happen; ~it,is-jusr a-matter'of When and in 'what form. ' .'LEAGUE POLICY GUIDELINES ' ~ 'ON ELECTRICITY DEREGULATION Support 'th'e~ ConcePI: The-League of California Cities supports:the concept' of,electricity rate deregui~ifi°n if:it resultSin lower electricity ~rates that: Conti~ue permanently~ int0~the :'ta't~i~:~':Th~'Leagu~':d0~S~fi0t.'stipPi~ti'''0r-.'~Spp0se?fifiy sPeCific ::form Of rate deregulation (ili6'.:~"di'~i~ac~esg' V'~'~ilg?o61Cb), but believes.the program'Ultimately implemented' must sa{{s:f~tc~0rilY'/idd~S, th6:f°l!o~ingc/iteria. -AnY progfamdecided upon'~by the PUC ~h6uld'be b~sed 0n'a thorbugh economic an'alYsis of.'the" full costs and' potential benefits of the alt~n~tiv~ ti~fid~r"c0nsideration." Equitable Benefits: Any restructuring program should result in all rate payers directly sharing the benefits equitably. Mtlnicipal Utilities: Any restructuring program should consider the viability of municipal · Franchise Authority: Cities should continue to have the authority to issue franchises and any program should be at least revenue neutral relative to revenue currently received from franchises. Municipi~lization: Cities should be authorized to serve as brokers/facilitators in negotiating, buying, transmitting, and distributing electricity for their businesses and residents. The League will continue to evaluate appropriate conditions and criteria relative to municipalization, with the goal of developing .a more specific poliCY. :~ Strande0 Investments:. The problem ,of stranded investment should be resolved..in a way that keeps investors, ratepayers, and generators financially whole. Any. policy, to_deal, with'~tranded investment for large energy producers (i.e., nuclear'power) should, be~ .. '- ~.applicable.'to all: other producers (i.e., independent power producers). , . .~ .. Wheeling: Any program should facilitate the wheeling of electricity between generators and users. Alternative Sources: Consistent with existing League policy that supports the development of alternative energy sources, any restructuring program should incorporate support of alternative energy in order to enhance the mix of energy sources available in California, both for environmental and strategic energy security reasons.~ Biomass: The unique problems of the bi0mass industry, as they relate to California's solid waste infrastructure, should be fairly resolved in any deregulation program. Social and Environmental Impacts: Consistent with existing League policy, California should not abandon its energy programs that provide social and environmental benefits. In addition to these policy guidelines, the' League will continue to monitor the rate .deregulation process and initiate additional policy review and action, as appropriate. This. includes review, by other policy committees .and further analysis or.the municipalization issue, ,as well as other issues. 'The League'will also evaluate~ potential .:. final support for. any formal pr9posal based on-how well it adda:esSes the above criteria. The -League will also provide information, workshops,, and other educational tools'. tO ' cities to assist them in adapting to the new electricity, world resulting from deregulation and ensure that small and/or rural cities are not atan information/technical disadvantage. Finally, the League also adopted a separate resolution on the effects of the deregulation proposal on the biomass industry. 7