HomeMy WebLinkAboutAgenda Report - December 20, 1989 (72)COUNCIL C0MMUNICh ION
TO: THE CITY COUNCIL COUNCIL MEETING DATE: DECEMBER 20, 1989
FROM: THE CITY MANAGER'S OFFICE
SUBJECT: REQUEST FOR PROPOSALS TO PROVIDE RATE ANALYSIS SERVICES
RECOMMENDED ACTION: That the City Council authorize the request for proposals
from qualified firms interested in reviewing and refining the existing Lodi
electric rate d:�sign and customer cost allocation methods.
BACKGROUND INFORMATION: Approximately two years ago the Electric Department
purchased and installed special recording/storage meters to survey the load
profile of our various customer classifications. Since that time, rate structures
have changed as well as rate levels; these changes were made based upon
assumptions of reasonable cost allocation factors among and between customer
classifications.
We have now collected two years of survey load data, and need to audit the
assumptions used by comparison to actual customer classification load profiles.
This audit function needs to be performed by a reputable outside agency, both to
assure objectivity, but also to obtain insight on more efficient rate principles.
The rate review project schedule requires completion by June 1, 1990 of basic
cost -of -service analysis to facilitate our 1990 rate review. Final rate design`
will be finished in August 1990.
The project will involve at least the following five components:
I. Documented translation of Department account records into Federal
Energy Regulatory Commission (FERC) approved standards.
2. Develop appropriate customer class and time -differentiated
allocation factors utilizing the two years of stored customer load
survey data.
3. Develop a computerized cost -of -service model and allocation method.
4. Develop a marginal cost -of -service study upon which load management
incentive and rate structure can be based.
5. Review Departmental rate design in general and develop
recommendations of future improvements.
Cost for this rate analysis service is anticipated to be approximately $33,000.
Funding for this project is available in the 1989/90 fiscal year budget.
Henry J. Rice
Electric Utility Director
Attach.
cc: Assist. Electric Utility Director
Manager, Rates & Resources
CITY OF LODI
ELECTRIC UTILITY DEPARTMENT
REQUEST FOR PROPOSALS
TO PROVIDE RATE ANALYSIS SERVICES
DECEMBER 21, 1989
1.
2.
INTRODUCTION
The City of Lodi is a California central valley city wit:: a
population of 50,000 serving over 23,000 electrical accounts
with a total annual (summer) peak load approaching 100 MW.
Load growth has been over 9% at times and has averaged over
4% for the last 16 years requiring increasingly larger outlays
for power purchases and system expansions. An existing
moratorium on new residential development projects is due to
expire January 10,91 with the completion of a water treatment
plant expansion, possibly triggering further sharp increases
in the need for electric power resources and system
expansions.
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The City currently meets its power requirements through its
Joint Powers Agency, the Northern California Power Agency '
(NCPA), and the Western Area Power Administration.
This request for proposals (RFP) is being issued by the City
of Lod: (City) to receive proposals from qualified firms
interested in providing rote analysis services, including
embedded and marginal cost of service ;COS) studies, for the -`
Electric: Utility Department (Department).
GENERAL DESCRIPTION OF PROJECT
The current' rate structure evolved from embedded costs along
with an awareness of the need to bp competitive with the
surrounding investor owned utility. Schedules currently in
effect are: residential, master -metered mobile home park,
three progressively larger commercial/industrial classes,
municipal, dusk to dawn lighting, standby ssrvice and energy
purchase.
The City desires a cost of service study to review the impact
of moving toward more cost -based rates Which better reflect
the true cost of doing business, insure sufficient revenue to
meet growing power supply requirements, and allocate costs to =.
all customer groups based on an equitable, urider.standable and s
defensible methodology.
An initial project memo will be developed for this engagement
which will outline the various issues highlighted by
Department staff to be reviewed, the firm's proposed approach
of addressing the various issues and a project sc.edule.
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3.
At the clusion of
Departme staff with
and recommendations of
software applications
project as well as all
the engagement, the firm will provide
a final report regarding the findings
the project, copies of any software or
developed in conjunction with the
data disks.
Two public presentations to City policy makers and management
may be required. The first presentation would be to City
policy makers and/or management to outline the final scope of
services for the project and to discuss possible study
approaches to address all outstanding issues. It is also
likely that a final presentation to City policy makers and
management at a city Council meeting would be desirable at the
conclusion of all analyses.
SCOPE OF PROJECT
The project as envisioned by Department staff will consist of
five components. These components are outlined below. Bids
should include itemized cost projections for each component
separately.
A. Accounting Information
Currently the Electric Utility's financial records are
maintained by the City's Finance Department using
municipal accounting methodology. Translation of the
Electric Utility's accounting records into FERC
equivalents is expected to be the first project step.
Documentation of the translation process is also a
requirement.
B. Load Data Analysis and Recommendations
The Electric Utility Department has approximately two
years of survey data available for residential and medium
commercial customers. Load data records are also
maintained for all large commercial customers. No load
information is maintained by the Department for small
commercial or municipal accounts. NCPA has commercial
data available by SIC codes and additional residential
data. Billing data is available for all accounts.
Satisfactory completion of this component will result in:
1) an on-going methodology to develop class and
time -differentiated allocation factors: 2) development
of recorimendations for future refinements and
improvements to be implemented as resources become
available.
C. Embedded Cost of Service
The consultant will work with Department staff to develop
a computerized time-differentiated embedded cost of
service model and allocation factors, and to recommend
assumptions to be used with the model. Satisfactory
completion of this component will result in: 1) {
development of an ongoing system which will enable the
Department to update COS information on a current and
forecast basis; and 2) development of recommendations Cor {
future refinements and improvements to be implemented as
resources become available.
D. Marginal Cost of Service I"
The consultant will work with Department staff to develop
a marginal cost of service study for use in developing
incentive and load management rates, and in determining
the City's avoided costs.
E. Rate Design
The Department is also requesting assistance in
devel oping new types of rate design. These would include
residential and commercial time-of-use rates, and rates
for City enterprise funds.
4. PROJECT SCHEDULE
January 19, 1990 - Deadline for submittal of prcposals
February 15, 1990 - Award date (projected)
June 1, 1990 - Completion of Embedded Cost of Service Study
(includes Accounting information, current Load Data
Analysis, and Embedded Cost of Service components)
August 1, 1990 - Completion of Rate Design, Marginal Cost of
Service, and Load Data Recommendations components.
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5.
6.
FELECTION PROCESS
The selection of the irm will be made .b, the Electric Utility
Department based on the firm's ability to provide the services
required and on the response tc the information requested.
This selection will be based solely on the Department's
judgement of the most qualified respondent. Furthermore, the
Department reserves the right to reject any or all proposals,
to waive irregularities or informalities in any or all
proposals and to accept any proposal which is deemed to be in
the best:, interest of the City.
SUBMITTAL OF PROPOSALS
A. Due Date
Proposals will be received until 5:00 p.m., Pacific
Standard Time, January 19, 1990. Proposals postmarked
or hand delivered after January 19, 1990 will not be
accepted.
B. Number of Copies/Method of Delivery
Prospective firms shall submit five (5) copies of their
proposals to:
John L. Stone
Manager, Rates and Resources
City of Lodi Electric Utility Department
1331 South Ham Lane
Lodi, California 95242-3904
C. Procedurai and Information Questions
Any questions regarding this proposal or additional !
infor-mation required by the respondents should be
directed to:
John L. Stone, Manager, Rates and Resources,
James Doyle, Senior Electric Utility Rate Analyst, or
Nancy Bougher, Electric Utility Rate Analyst
1331 South Ham Lane
Lodi, California 95242-3904
(209) 333-6748
Copies of the RFP may be picked up at 1331 South Ham
Lane, Lodi, ^.aliforn:.a or requested to be mailed by
calling (209) 333-67t8.
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E.
F.
Proposal Costs
The City is not liable for any cost incurred by a
proposer responding to this RFP.
Insurance/Indemnification
The consultant shall defend, indemnify and save harmless
the City, its officers and employees from and against any
and all claims, demands, losses, defenses, costs or
liability of any kind or nature which the City, its
officers and/or employees may sustain cr incur, or which
may be imposed upon them for injury to or death of
persons, or damage to 'property, arising out of the
consultant's activity or passively' negligent performance
or attempted negligent performance of this agreement,
excepting only liability arising out of the wiliful
misconduct or negligence of the City, its officers or
employees.
Acceptance of Proposal Contents
After the consulting firm is selected by the Department,
the contents of the submitted proposal will become a
contractual obligation. Failure of the consultant to
agree to include the proposal as part of the contractual
agreement may result in cancellation of the award. The
Department reserves the right to reject those parts that
do not meet with the approval of the Department.
7. CONTENTS OF PROPOSAL
Each proposal should contain tine following information:
A. Title Page
Show the RFP subject, name of the firm, mailing address,
telephone number, name and title of contact person and
date of submission.
B. Project Memo
A project memo outlining the various issues to be
reviewed, the firm's proposed approach of addressing the
various issues and a detailed schedule for completil;g the
project. The schedule should reference the guidelines
listed above and include measurable milestones.
Alternative scenarios with differing levels of Department
and/or City staff involvement and alternative schedules
may be submitted.
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C. Fee Schedule
Each proposal shall contain an itemized listing for each
component of services to be provided, key personnel
expected to be assigned to the respective components,
expected level of Department and/or City staff
involvement, and projected consultan" : hours and expenses.
f r.
A complete schedule of fees for each lavel of staff work,
alone with per diem, travel, general administrative and
other fees, shall be included.
D. General Background Information
For general background information, the following is
required:
1. The organization and size of tie proposer, whether
it is local, regional, or national in operations
and the location of the main office.
2. The location of the office from which the work is
to be done and the number of professional staff by
staff level employed at that office.
3. The names, titles, and educational and professional
resumes for each of the key people on the proposal
team.
4. A minimum of t w o references for each of the proj ect
personnel listed above. Each reference should
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include a contact person and phone number.
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