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Home My WebLink AboutMinutes 1997-01-15Mayor Joseph A. Fernekes Council: James L. Datzman Eugene R. Mullin John R. Penna Robert Yee MINUTES City Council City Hall Council Conference Room January 15, 1997 AGENDA ADJOURNED REGULAR MEETING CALL TO ORDER: (Cassette No. 1) ROLL CALL: 1. Interview of Planning Commission applicants. '~ouncilman Penna Arrived at 5:35 p.m.) RECESS: RECALL TO ORDER: 2. Discussion of the deregulation of the electric industry. ACTION TAKEN ADJOURNED REGULAR MEETING 5:30 p.m. Mayor Pro Tem Mullin presiding. Council Present: Datzman, Yee and Mullin. Council Absent: Penna and Fernekes. City Clerk Battaya stated Mayor Fernekes was de- layed and would not arrive until 8:30 p.m. Mayor Mullin stated each applicant will have an opportunity to give an opening statement, be inter- viewed and may give a short summary. The following individuals were interviewed: Marc Teglia, Judith Honan, John Lucchesi, Richard Ochsenhirt, Robert Stevens, Eugene Sim and Haresh Gidwani. Council recessed the meeting for dinner at 6:55 p.m. Mayor Pro Tem Mullin recalled the meeting to order at 7:30 p.m., all Council was present. Mr. Maurice A. Kruth, Senior Vice President of Re- source Management International, Inc. related: electricity is a major business making approximately $23 billion a year; 30 percent is publicly owned; 705 IOUs; the rates are over priced by 50% in California; AB1890 mandates deregulation by law that became effective in late 1996; lower cost power is available; AB1890 was provided for recovery of stranded costs by PG&E, SCE and SDG&E; AB1890 opened markets to competition beginning in 1998; it created an independent system operator (ISO) and power exchange (PX); PG&E revenues data in 1995 - 21,879 customers, 474,061,955 kilo- watt hours, $49,423,688 gross revenue and 10.4 cents per kWh (average rate); alternatives for elec- tric system ownership - status quo, load aggregation 1/15/97 Page 1 ~ENDA ~TION TAKEN Discussion of the deregulation of the electric industry - Continued. 185 by others, load aggregation by S.S.F., partial mu- nicipal system, municipal system with leased facili- ties and municipal system with ownership; suggested goals for S.S.F. consideration - reduce retail rates (1 cent kWh, or 10% below wherever PG&E is at), encourage economic growth, potential savings for city functions, maximize benefits by partnering, gain improved reliability of service; should the City be considering electricity? - 1 cent/kWh would save citizens and businesses more than $4 million a year, load aggregation will be happening and partners are available; how might this work? - PG&E could continue to provide distribution services, PG&E may lease distribution to the City: PG&E (via contract) would continue to provide distribution of electricity based on negotiated costs, S.S.F. and partners would provide generation, transmission, and pay CTCs, distribution facilities could be acquired, with part- ners operating and providing services; possible partners - ABAG, Bonneville Power Adm., Enova, NCPA, PacifiCorp., PGE/Enron or PG&E; and possible cost comparisons for residential - in 1998 12.5 cents vs. 11.5 cents and in 2003 9 cents vs. 8 cents; next steps are discussions with S.S.F. indus- tries and residents, PG&E and prospective partners, RFP/RFQ leading to contractual arrangements with partners, and detailed studies and implementation. Discussion followed are there hidden costs if in the future the city switches carriers; Palo Alto buys the power and bills customers 5 cents a kilowatt, but the major transmission lines belong to PG&E which is a monopoly; can an individual use PG&E if the city goes elsewhere; a city should come up with a pack- age that is so attractive everyone wants it for the better rate, say 10% lower than PG&E and partner would take care of problems. Mr. Steve Oliver, Bonneville Power Admin., stated there is a lot of surplus power out there and if the city aggregates they will come out. Columbia River Power Plant is where Bonneville's power comes from and they are one of the largest power systems and report to the Secretary of Energy. They are obligated to market all of their power at cost and provide one half of the power in the pacific north- west. Mr. Larid Dyer, Enron, related: Enron is the larg- est non-regulated power and natural gas marketer in North America; in process of merging with Portland 1/15/97 Page 2 A~ENDA ACTION TAKEN 186, Discussion of the deregulation of the electric industry - Continued. Mayor Fernekes Arrived at the Meeting at 8:30 p.m. General Electric (PGE); alliance partner with the Northern California Power Agency (NCPA); Enron's competencies in risk management, energy trading and finance are augmented by PGE's exper- tise in power distribution/development systems and NCPA's competencies in California's generation and transmission facilities, municipal systems, customer focus and regulatory advocacy; and reiterated the benefits of AB1890; more work has to be done on AB 1890 and there will be a lot of opportunity to provide services and a fight for market access to save money; natural gas can also be considered as a savings; manage risk management to energy cost. Mr. Don Dame, Northern California Power Agency (NCPA), stated there are retail power opportunities for public agencies, but PG&E would still be re- sponsible for the wires. Mr. Walter Pollock, Portland General Holdings, stated their average cost for customers is 5.2 cents per kilowatt. Mr. Juan Nagore, Portland General Electric, stated his firm has been in business for 30 years and has smaller stranded investment costs and operate at efficient system costs and he felt his Company and Enron are a very good team and have a hydroelec- tric plant. Mr. Eric Jensen, PG&E, stated there will no longer be a status quo, there will be choices and rates will go down. After the CTC goes down rates will drop 30% and on I/1/98 residential rates go down 10% and his firm wants to help the city make the best energy choices. Councilman Yee asked, didn't the City of S.F. turn this down. City Manager Wilson stated it was the economics of going in and buying an old system, for there is no way to afford that under current law. He stated 800 kilowatts have to be deregulated and that could be a greater number. He feels this team is greater than ABAG and the City should go to the Chamber and then into the community telling people we are trying to provide a choice, go with an RFP and put togeth- er a team in some format.; Councilman Yee felt the Council should move forward with the Chamber and the community, but no more study sessions on the 1/15/97 Page 3 AQENDA AC!!QN TAKEN Discussion of the deregulation of the electric industry - Continued. 4. Closed Session, pursuant to GC 54957, for an evalu- ation of the City Manager. RECALL TO ORDER: ADJOURNMENT: RESPECTFULLY SUBMITTED, W~rbara A. Battaya, City Clerk ity of South San Francisco 187 subject and suggested the Mayor and Vice Mayor serve on a subcommittee; City Manager stated with- in the next 30 days this will be evaluated. Council went into a Closed Session at 9:30 p.m. to discuss the item noticed. Mayor Fernekes recalled the meeting to order at 10:42 p.m., all Council was present, direction was given. M/S Yee/Mullin - To adjourn the meeting. Carried by unanimous voice vote. Time of adjournment was 10:43 p.m. APPROVED. The entries of this Council meeting show the action taken by the City Council to dispose of an item. Oral communica- tions, arguments and comments are recorded on tape. The tape and documents related to the items are on file in the Office of the City Clerk and are available for inspection, review and copying. 1/15/97 Page 4