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Home My WebLink AboutAgenda Report - November 6, 1991 (63)CITY OF LORI COUNCIL COMMUNICATION AGENDA TITLE: Nw Interconnection Agreement with Pacific Gas and Electric Co. MEETING DATE: November 6, 1992 PREPARED BY: Electric Utility Director RECOMMENDED ACTION: Approve the now Interconnection Agreement between Pacific Gas and Electric Company (PG&E) , the Northern California Power Agency (NCPA), and the cities of Alameda, Biggs, Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Roseville, Ukiah and Plummas-Sierra Rural Electric Cooperative and authorize the City Manager a r i City Clerk to execute the Agreement in the form requested by NCPA. BACKGROUND INFORMATION: NCPA & PG&E have arrived at negotiated settlement of a number of ongoing disputes and have, in the process of these negotiations, agreed to a series of amendments to the Interconnection Agreement between NCPA and PG&E. Historical Summat_y : In 1983, NCPA, PG&E and the cities of Alameda, Biggs, Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Roseville, Ukiah and the Plumas-Sierra Rural Electric Cooperative executed an Interconnection Agreement (IA) that provided for, among other things, power supply from PG&E, replacement power during outages of NCPA resources, and transmission services to NCPA and its members. Since that time, NCPA and PG&E have had numerous 'disputes concerning interpretation of the IA as it relates to support for NCPA resources, transmission services and other power supply issues. In addition, NCPA and PG&E have had numerous disputes outside of the IA, mostly notably FERC Docket E-7777. The latest in the series of disputes concerned billing for transmission services under the IA and involved an attempt by PG&E to significantly increase rates for these services. Actions were subsequently filed by both parties at the Federal Energy Regulatory Commission since efforts to reach a negotiated settlement were not successful. In January 1991, the parties again attempted to negotiate a settlement and this time met with success, not only with regard to the transmission disputes, but including a number of other issues as well. A a result, the parties have agreed to settle the billing dispute, make numerous revisions to the IA, including its Rate Appendix, and settle several other proceedings involving the parties. APPROVED: AAS A. PETET City Manager CC-IA/CO.COM cc -1 Nw Interconnection AQreemei,,.� with Pacific Gas and Electric-;mpanv November 6, 1991 J v Page two The Nw Interconnection Aareement: The basic construction of the new IA is not considerably different than that of the old IA. However, significant detail has been added to certain sections of Vie IA where disputes and/or other interpretations had caused difficulties between the parties. The most notable change in the IA is to the billing provisions for transmission service. Under the old IA, NCPA and PG&E differed greatly in their interpretation of the applicable bi? ling determinants associated with the provision of transmission service. The new billing will be based upon functionalized transmission rates and provides a straight -forward mechanism for NCPA and PG&E to administer transmission costs during -Che term of the IA. As part of this Settlement Agreement, PG&E has agreed to assume the responsibility to maintain and pay for transmission facilities adequate to serve the load of NCPA member customers for all normal load growth of those member customers. Where system upgrades are required to integrate NCPA resources into PG&E' s transmission system, NCPA will assume the responsibility for the initial connection facilities. Adoption of this new IA should not, however, preclude Lodi from an equitable settlement of its long standing disagreement with PG&E re?arding purchase of surplus energy for a three-month period in 1982 (the "Healdsburgcase). This situation is one in which Western Area Power Administration (WAPA) acquired surplus Northwest energy from Bonnevilte Power Administration (BPA) and contracted to sell that surplus energy to the cities of Alameda, Healdsburg, Lodi, Lompoc, Ukiah and Santa Clara during the months of My through September 1982. PG&E claimed that WAPA could not sell surplus Northwest energy acquired from BPA to thy, cities in 1982. The United States District Court recently held that WAPA could sell such surplus Northwest energy to the cities. PG&E also claimed that the cities of Alameda, todi and Ukiah wcre contractually precluded from contracting with WAPA to purchase Northwest energy without PG&E's express consent (Lodi and the other two cities had not completed negotiation with PG&E to amend their respective power contracts as had the other cities). W feel that PG&E unnecessarily withheld consent for Lodi to obtain its contracted for portion of the WAPA Northwest surplus power. Therefore, v& will have to pay a larger amount to PG&E at their undiscounted rate, while PG&E gets the benefit of the cheaper power that v& had to give up. Summary: The Settlement Agreement and amendments to the IA represent a restructuring of the relationship between NCPA and PG&E in a manner that will lower cost, increase flexibility, reinove uncertainty and minimize disputes. In order to become efi.ective, the amendments must be approved by the members' governing boards and such approval is hereby recommended with the caveat that Lodi should have assurance by both NCPA and PG&E that an equitable conclusion will be made i n the 1982 surplus power purchase case. FUNDING: Niue Required Henry J. Rite Electric Utility Director cc: Manager, Rates & Resources CC-IA/TXTU.OID RESOLUTION NO. 91-198 ---------------------- A RESOLUTION OF THE LODI CITY COUNCIL RELATING TO AN INTERCONNECTION AGREEMENT WITH PACIFIC GAS AND ELECTRIC COMPANY BE IT HEREBY RESOLVED as follows: The Interconnection Agreement between Pacific Gas and Electric Company and the Northern California Power Agency, and the Cities of Alameda, Biggs, Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Roseville, Ukiah and Plumas-Sierra Rural Electric Cooperative is hereby approved and the Lodi City Manager and City Clerk are hereby authorized and directed to execute suci) agreement on behalf of this entity. Dated: November 6, 1991 I hereby certify that Resolution No. 91-198 was passed and adopted by the Lodi City Council in a regular meeting held November 6, 1991 by the following vote: Ayes: Council Members - Pinkerton, Sieglock, Snider and Hinchman (Mayor) Noes: Council Members - None Absent: Council Members - None Abstain: Council Members - Pennino Alice M. Reimche City Clerk 91-198 RES91198/TXTA.02J 3 3 a [attest] [attest] F 5 [attest] �c i] is i� [attest] 14 1! 16 CITY OF ALAMEDA By Authorized Representative CITY OF BIGGS By Authorized Representative CITY OF GRIDLEY By Authorized Representative CITY OF HEALDSBURG By Authorized Representative CITY OF LODI Authorized Representative /1 Thomas A. Peterson, 31 C it y Manager CITY OF LOMPOC By s Authorized Representative CXTY OF PALO ALTO By Authorized Representative CXTY OF ROSEVILLE By Authorized Representative 127 1 [ . attes-$ '17 I is r lice Ni_ R is �ity Clerk 2C [attest] 21 22 23 fattest] 24 25 26 27 [attest] 28�I CITY OF ALAMEDA By Authorized Representative CITY OF BIGGS By Authorized Representative CITY OF GRIDLEY By Authorized Representative CITY OF HEALDSBURG By Authorized Representative CITY OF LODI Authorized Representative /1 Thomas A. Peterson, 31 C it y Manager CITY OF LOMPOC By s Authorized Representative CXTY OF PALO ALTO By Authorized Representative CXTY OF ROSEVILLE By Authorized Representative 127 CITY COUNCIL DAVID M. HINCHMAN. Mayor JAMES W. PINKERTON. Jr. ,Mayor Pro Tempore PHILLIP A. PENNINO JACK A. SIECLOCK JOHN R. (Randy) SNIDER Uft 2 CITY OF LODI CITY HALL, 221 WEST PINE STREET P.000X 3006 LODt CALIFORNIA 95241-1910 (209) 334-5634 FAX (209) 333-6795 November 14, 1991 Northern California Power Agency Attention: Gail Sipple Executive Assistant 180 Cirby Way Roseville, CA 95678 Dear Gail: THOMAS A. PETER30N City Manager ALICE M REIMCHE City Clerk BOB McNATT City Attorney Enclosed herewith please find three executed signature pages and attached certified copies of Resolution No. 91-198 entitled, "A Resolution of the Lodi City Council Relating to an Interconnection Agreement with Pacific Gas and Electric Company" which was adopted by the Lodi City Council at its regular meeting of November 6, 1991. Should you have any questions regarding this matter, please do not hesitate to call this office. Very truly yours, Jell Alice M, Reimche City Clerk AMR/amp Enclosure