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HomeMy WebLinkAboutAgenda Report - September 20, 2006 I-02 PHAGENDA IT= 1-2 CITY of Logi COUNCIL COMMILJNICATION TM AGENDA TITLE: Adopt msolution to amend the Electric Utility Department Rules and Regulations No. 15 to assess a Transmission & Substation System Charge on new developmeets outside existing City limits as of August 1, 2006 (EUD) MEETING DATE: September 20, 2006 PREPA ED BY: Electric Utility Director ACTION: That the City Council adopt a resolution amending the Electric Utility Department Rules and Regulations No. 15 to establish a new Transmission and Substation System Charge and assess this fee on new developments outside City boundaries as they exist on August 1, 2006. BACKGROUND INFORMATION: Presently, the cost of constructing new transmission lines and substation facilities for the distribution system is provided by the Electric Utility Department (EUD) without any cost contributions by new developers. Presently, EUD's existing four (4) distribution substations have sufficient capacity for existing and in -fill development within the city. In the short run, new developments outside existing city boundaries can also be served from existing substations. In the longer run, however, new substations may be required in the west/southwest andfor south/southwest areas of the community to reliably accommodate expanded growth beyond current city boundaries. Based on typical EUD substation and transmission facilities design, the estimated cost of constructing a new substation and its associated transmission system is $7,864,500 (in 2006 dollars). The corresponding cost per kVA (kilovolt -amperes) is $163.84, which is calculated using the 48MVA (megavolt -amperes) effective capacity of the EUD's standard substation. Staff' recommends the establishment of a Substation and Transmission System Charge to be assessed as a development impact fee upon future EUD electric load outside City boundaries as they exist on August 1, 2006. The initial mount of such charge would be $163.84 per kVA of computed new electrical load. This charge would be adjusted annually beginning January 1, 2008 based on changes in the Producer Price Index for Electric Paver Distribution. ['For a typical 200 amp residence (5kVA), the one-time charge would be $818.20.] A separate account shall be established under the EUD's Capital Improvement Project (CIP) Fund for the collected fees. This separate fund shall be expended only for the construction of new substation and transmission lines and shall not be commingled with other capital accounts. The proposed amendment to EUD's Rules and Regulations No. 15 (Extension of Facilities) is shown in Attachment A_ FISCAL IMPACT: This action will provide funds for future capital expenditures associated with new substation/transmission facilities. FUNDING AVAILABLE: Not applicable. aiste, Finances Serv&n Manager APPROVED: Blair Kitig, City Manager A - I p Is m , m d the foc*k LOW Depw6ad ftdn mWMa Is to as�aas a Trommbdoo & I amchol" on nOw dwdopomb o 777 AMft @MMMV CNV as 1. ZON JEUD sepbun 20, 20©8 Pap 2 of 2 F. Momm EWCW Utlity Director PREPARE BY: Dwy Bucamg, Jr., P E. GFMA)BAd AftgMm cc: M ;tw Attachment A CITY OF LORI ELECTRIC UTILITY DEPARTMENT AMFMQMENT TO RULE AND R99I&ATION NO. 15 (EXTENSION OF FA IG LITIES) Exietiog Section D.3 of Rule and Regulation No, 15 is amended by the addition of a new Subsection "c" to read as follows: D. Line Extensions 3. City's Rresponsibility: c. Furnish and construct transmission line (60k1) and distribution substation facilities to accommodate new development within the service area. The projected costs of such facilities shall be shared proportionately based on the electrical capacity requirements of new electric load, as determined by EUD. These projected costs shall include labor, materials, equipment and infrastructure to construct necessary transmission line and distribution substation facilities. A "Transmission & Substation System Charge" shall be assessed to new developments and/or electric load outside City boundaries as such boundaries exist on August 1, 2006. The amount of this charge ($163.84 per kVA of computed new electrical load) shall be documented in the Schedule of Charges attached to EUD's Rules and Regulations. The amount of the Transmission & Substation System Charge shall be revised annually beginning January 1, 2008 based on the change in the U.S. Department of Labor's Bureau of Labor Statistics' Producer Price Index (PPI) for Electric Power Distribution between the PPI for the month of June of the prior two calendar years. If there is a change in this charge between the time of application for electric service and the actual payment of charges, the charge in effect at the time of payment shall apply. RESOLUTION NO. 2006- A RESOLUTION OF THE LODI CITY COUNCIL AMENDING THE ELECTRIC 0*e4�� UTILITY DEPARTMENT RULES AND REGULATIONS NO. 15, ESTABLISHING A NEW TRANSMISSION & SUBSTATION SYSTEM CHARGE ON NEW DEVELOPMENTS OUTSIDE EXISTING CITY LIMITS AS OF AUGUST 1, 2006 WHEREAS, presenfiy the cost of constructing new transmission lines and substation facilities for the distribution system is provided by the Electric Utility Department (EUD) without any cost contributions by new developers; and WHEREAS, presently, the Electric Utility Department's existing four (4) distribution substations have sufficient capacity for existing and in -fill development within the city; and WHEREAS, in the short-term, new developments outside existing city boundaries can also be served from existing substations, and in the long-term, new substations may be required in the west/southwest and/or south/southwest areas of the community to reliably accommodate expanded growth beyond current city boundaries; and WHEREAS, based on typical EUD substation and transmission facilities design, the estimated cost of constructing a new substation and its associated transmission system is $7,864,500 (in 2006 dollars). The corresponding cost per kVA (kilovolt -amperes) is $163.84, which is calculated using the 48MVA (megavolt -amperes) effective capacity of the EUD's standard substation; and WHEREAS, staff recommends the establishment of a Substation and Transmission System Charge to be to be assessed as a development impact fee upon future EUD electric load outside City boundaries as they exist on August 1, 2006. The initial amount of such charge would be $163.84 per kVA of computed new electrical load. This charge would be adjusted annually beginning January 1, 2008 based on changes in the Producer Price Index for Electric Power Distribution; and WHEREAS, a separate account shall be established under the EUD's CIP Fund for the collected fees. Fund shall be expended only for the construction of new substation and transmission lines and shall not be commingled with other capital facilities account. The proposed amendment to EUD's Rules and Regulations No. 15 (Extension of Facilities) is shown in Attachment A. NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council hereby amends the Electric Utility Department's Rules and Regulations No. 15, establishing a new Transmission and Substation System Charge and approves assessment of this fee on new developments outside City boundaries as they exist on August 1, 2006; and BE IT FURTHER RESOLVED, that this Resolution shall take effect on December 1, 2006. Dated: September 20, 2006 I hereby certify that Resolution No. 2006- was passed and adopted by the City Council of the City of Lodi in a regular meeting held September 20, 2006, by the following vote: AYES: COUNCIL MEMBERS - NOES: COUNCIL MEMBERS - ABSENT: COUNCIL MEMBERS - ABSTAIN: COUNCIL MEMBERS - JENNIFER M. PERRIN Interim City Clerk 2006- Please immediately confirm receipt o, f'this fax by calling 333-6702 CITY OF LODI P. O. BOX 3006 LODI, CALIFORNIA 95241-1910 ADVERTISING INSTRUCTIONS SUBJECT: implementation of a new Substation & Transmission System Charge to be assessed as a development impact fee upon future electric utility customers outside existing City boundaries and making corresponding amendments to the applicable Electric Utility Department Rules and Regulations (EUD) PUBLISH DATE: Saturday September 9, 20016 TEAR SHEETS WANTED: Three (3) please SEND AFFIDAVIT AND BILL TO: JENNIFER M. PERRIN, INTERIM CITY CLERK City of Lodi P.O. Box 3006 Lodi, CA 95241-1910 DATED: Thursday September 7, 2006 ORDERED BY: JENNIFER M. PERRIN, CMC INTERIM CITY CLERK DANA R. CHAPMAN''t ADMINISTRATIVE CLERK JENNIFER M. PERRIN INTERIM CITY CLERK JACQUELINE L. TAYLOR, CMC DEPUTY CITY CLERK Faxq to the Sentinel at 369-11084 at (time) on (date) (page$) LN5 121AAt Phoned to confirm receipt of alfpa'ges at (lima) JLT ^_DRC—_ --JM (initials) formAadvins.doc: 0 DECLARATION OF POSTING Imomnentation of a now Substation & Transmission System Charge to be assessed as a development impact fee upon future electric utility customers outside existing City boundaries and making corresponding amendments to the applicable Electric Utility Department Rules and Regulations (EUD) On Friday, September 8, 2006, in the City of Lodi, San Joaquin County, California,an implementation of a new Substation & Transmission System Charge to be assessed as a development impact fee upon future electric utility customers outside existing City boundaries and making corresponding amendments to the applicable Electric Utility Department Rules and Regulations (EUD), was posted at the following locations: Lodi Public Library Lodi City Clerk's Office Lodi City Hall Lobby Lodi Carnegie Forum I declare under penalty of perjury that the foregoing is true and correct. Executed on September 8, 2006, at Lodi, California. JENNIFER M. PERRIN, CMC INTERIM CITY CLERK GANA R. CHAPMAN V ADMINISTRATIVE CLERK N:1Administration\CLERK\Forms\DECPOSTF,UD. DOC ORDERED BY: JENNWER M. PERRIN INTERIM CITY CLERK JACQUELINE L. TAYLOR, CMC DEPUTY CITY CLERK CITY OF LODI Carnegie Forum 305 West Pine Street, Lodi NOTICE OF PUBLIC HEARING Date: September 20, 2006 Time: 7:00 p.m. For information regarding this notice please contact: Jennifer M. Perrin Interim City Clerk Telephone: (209) 333-6702 NOTICE OF PUBLIC HEARING NOTICE IS HEREBY GIVEN that on Wednesday, September 20, 2006 at the hour of 7:04 p.m., or as soon thereafter as the matter may be heard, the City Council will conduct a public hearing at the Carnegie Forum, 305 West Pine Street, Lodi, to consider the following matter: a) implementation of a new Substation & Transmission System Charge to be assessed as a development impact fee upon future electric utility customers outside existing City boundaries and making corresponding amendments to the applicable Electric Utility Department Rules and Regulations (EUD) Information regarding this item may be obtained in the Electric Utility Department, 1331 S. Ham Lane, Lodi, (209) 333-6762. All interested persons are invited to present their views and comments on this matter. Written statements may be filed with the City Clerk, City Hall, 221 W. Pine Street, 2^d Floor, Lodi, 95240 at any time prior to the hearing scheduled herein, and oral statements may be made at said hearing. If you challenge the subject matter in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice or in written correspondence delivered to the City Clerk, 221 West Pine Street, at or prior to the close of the public hearing. By Order of the Lodi City Council: ifer M. P n terim City Clerk Dated: September 6, 2406 Approved as to form: D. Stephen Schwabauer City Attorney CLERKIPUBHEARWOTIC MOIeW.doc OR/% Electric Utility Department Public Hearing Transmission & Substation System Charge September 20, 2006 • Many electric utilities have moved to full cost recovery models for new load • A major cost element of electric system expansion relates to new substations and associated transmission • Presently, EUD's four existing substations have sufficient capacity for existing and in -fill growth • In short run, new development/load outside present City limits can be served • In the longer run (5 to 15 years), new substations in southwest and/or south/southeast may be necessary • A 1 At tM .. :.AL ip TFF Alit, '.1N[• - 4W Ali Electric Systems grid • EUD recommends adoption of a "Substation & Transmission System Charge" • Would apply to new electric development/load outside City boundaries as they exist on 8/1/06 • These fees would be set aside in a separate account only for stated purposes • Initial rate of $163.84 per kilovolt ampere (kVA) of connected load • Charge to be updated annually based on Producer Price Index (Electric Distribution Facilities) • Proposed December 1, 2006 effective date Customer Impact • Fee payment amount varies based on connected electric load • Typical new home is 5 kVA, resulting in a one- time charge of about 820 • At the upper end, a 1000 kVA manufacturing plant would be charged about $164,000 A new substation (with transmission) would cost -$7.8 million. Calculation 1.60kV to 12kV Distribution Substation: Effective Capacity = 48.00 MVA No. of Distribution Feeders = 8 Circuits No. of Power Transformers = 2 Units Substation Lot Size = 40,000 sq ft Distribution Substation Cost = 11.60kV Transmission Line: Typical Line Length to the Substation = $ 7,444,500 5.00 miles 60kV Transmission Cost = III. Typical Distribution Substation Facility Cost: Total (Substation + Transmission) Cost = $ 420,000 $ 7,864,500 Cost per kVA = $ 163.84 2006$ n �P Electric Utility Department Public Hearing Net Metering Co -energy Metering September 20, 2006 Background • All CA electric utilities required to purchase solar/wind energy from customers Assembly Bill 58 & SB 1 • Purchases are made through "net metering" except • For public entities, purchases from solar/wind units over 10 kilowatts in size may be made by "co -energy metering" Net Metering • In purest sense, involves one meter to "net" power delivered to customer from EUD and power purchased from customer by EUD • As a result, customers receive a price equal to the full retail cost of electricity for solar/wind energy Electricity from EUD "Net" Meter Electricity from Solar/wind Electricity from EUD Net Metering Electricity priced at full retail rate, Electricity from Solar/wind Electricity priced at full retail rate Example for G2 Customer (Summer): Sales (@ full retail rate) 15.7¢ Purchases (@ full retail rate) 15.7¢ Wholesale Energy Price 7 to 8 0 Per KWH Electricity from EUD Net Metering Electricity priced at full retail rate, Electricity from Solar/wind Electricity priced at full retail rate Example for Residential Customer (Summert: Sales (@ full retail rate) 14 to 33 ¢ Purchases (@ full retail rate) 14 to 33 ¢ Wholesale Energy Price 7 to 8 ¢ Per KWH Co -Energy Metering • Involves two meters One to measure power delivered to customer from EUD A second to measure power delivered by customer to EUD • As a result, customers receive a price equal to the wholesale cost of electricity for solar/wind energy • Proxy for wholesale cost is % of net energy charges under applicable rate tariff Electricity from EUD loplop Electricity from Solar/wind "Co -energy" Metering ComEnergy Meter'ing n �P Electricity from EUD Electricity priced at full retail rate Electricity from Solar/wind Electricity priced at '/2 of net energy charges under applicable retail rate Example for G2 Customer (Summer): Full retail rate 15.70 '/2 of net energy charges 7.390 Wholesale Energy Price 7 to 8 0 Per KWH Other Provisions • Public Benefits and Customer Charges are non -bypassable • No payments for customer generation in excess of purchases over annualized period • Requirement for co -metered entities to pay bills on a monthly basis • Requirement to net meter limited to 2.5% of peak load (about 3500 kilowatts today) Solar Customers • Five residential customers at 2 Kilowatts each • Three commercial units in service (two customers) — 5.9 KW, 35 KW and 38 KW • One additional commercial 30 KW unit is pending — Lodi Grape Festival Worst case "lost" revenue: ~ $750K/year n �P .41