HomeMy WebLinkAboutAgenda Report - May 18, 1988 (56)TO:
FROM:
SUSJECT:
COUNCIL
THE CITY COUNCIL
THE CITY iiAivAGER'S OFFICE
COMI'lUN I CAT I ON
COUNCIL MEETING DATE
MAY 18, 1988
REPAYMENT OF OVERCHARGE BY PACIFIC GkS AND ELECTRIC: COMPANY
PREPARED BY: City Manager
RECOMMENDED ACTION: See attached.
BACKGROUND INFORMATION: Attached is a Council Cnmmunication prepared by
Electric Utility Director Henry Rice concerning a
repayment to the City of Lodi by the Pacific Gas &
Electric Company. For the Council's additional
information, the recommended reduction of 4 mill per kilowatt hour in the Fuel
Cost Adjustment &arge will result in a reduction in this category for a
residence using 550/KWH per month (considered the standard or comparison
purposes) from $8.80 per rnonth to $6.60 per month, a reduction of 25%. Like
percentage reductions will also be realized by the commercial and industrial
customers.
Respectfully submi tted,
Thomas A. Peterson
City Manager
TAP: b r
Attachment
C U U N C I L
TO: THE CITY COUNCIL
FROM: THE CITY :1AINAGER' S OFFICE
SUBJECT: REPAYMENT OF OVERCHARGE BY PG&E
C 0 M M U N I C A i T 6 N
COUPICIL MEETING DATE:
MAY 18, 1988
A check in the amount of $464,711.86 acid the enclosed brief letter were received W 9,
1S88. A telephone call to the PG&E representati�'e, Mr. Harry W. Long, Jr., disclosed that
an audit by the Federal Energy Regulatory Commission (FERC) c9ncbjd9d that PGGE improperly
charged certain costs to the City of Lodi and otner v:holesale customers ire 1981.
Apparently, PG&E bought out some fuel supply contrac.s held by Chevrcn Oil and passed the
contract penalty costs through as fuel costs. FERC does not allow utilities to pass such
non -fuel cost through wholesale fuel clause applications.
PG&E interpreted its contract with wholesale customers as permitting such costs tc be
passed through, according to Mr. Long.
FERC demanded that PGGE repay its wholesale customers with interest from 1981.
The $464,71.1.86 is the accrued amount ovmd Lodi up to the time when the NCPA/PG&E
Interconnection Agreement was signed in 1983.
An additional amount for the repayment accrual owed Lodi under the Interconnection
Agreement coverage will be distributed by NCPA to the City in the next several weeks
following necessary calculation of each NCPA members share. Lodi Staff antfcipates the
addi ticnal repayment be about $340,000 or a total repayment amounting to approximately
$800,000.
RECOMMENDED ACU",T: I respectfully request that the rebate amount in total be handled as
follows:
1. An amount equal to the repayment sum be passed through to the Lodi electric customers
over a short period of time by appropriate reduction in the monthly Fuel Cost
Adjustment (FCA).
2. The total repayment amount should be deposited in the rate stabilization fund and
monthly operations cost, needed to cover the reduced fuel cost revenue, could be drawn
from that fund.
3. A reduction of 4 mil 1 s/KWH in the FCA until September 1988 would appear to be adequate
to pass the repayment amount through to the Lodi customers.
{ Q - N
Henry J. Rice
Electric Utility Director
o"sem' ..:�.:Riri„w..C"
P3--ific Gas and Electrir. Company
May 6, 1983
ct 9-1
�►
,ir. Henry Rice
Utility Director
City of Lodi
221 W. Pine Street
C a 11 Box 3006
Lodi, CA 95241-1910
Dear `fr. Rice:
!7 S. !e Sireet
S:n r" anc sc .'n 94106
51972 7000
REM' Mtill
Utility Dept.
Enclosed please find a check in the amount of $464,711.86. This
amount is a refund as a result of our. recent FERC audit. The
audit centered on the Fuel Cost Adjustment (FCA).
If you have any questions, please feel free to call me at (415)
972-3611.
Sincerely,
Harry W. Long, Jr.