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--
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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,
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?~,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.
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