HomeMy WebLinkAboutResolutions - No. 2022-206RESOLUTION NO. 2022-206
A RESOLUTION OF THE LODI CITY COUNCIL RATIFYING
EXPENDITURE OF $1.5 MILLION FROM GENERAL OPERATING
RESERVES HELD AT NORTHERN CALIFORNIA POWER AGENCY FOR
AUGUST 2022 POWER SUPPLY COSTS
WHEREAS, on August 1, 2022, Lodi Electric Utility (LEU) staff met with the City's Risk
Oversight Committee (ROC) to discuss the City's power supply costs and corresponding Energy
Cost Adjustment (ECA) for the month of August; and
WHEREAS, the ECA, approved by the City Council in 2007, is a monthly charge or
credit applied to customer utility bills based on corresponding increases or decreases in power
supply costs which mitigates the need for Council to consider more frequent changes to base
electric rates; and without the ECA, electric rates would need to be adjusted on a more frequent
basis to ensure sufficient reserves are available to address unforeseen cost increases; and
WHEREAS, due to a number of factors impacting utilities across the State, including
excessive temperatures, prolonged drought conditions, supply chain constraints, limited power
supply resources, and increasing transmission costs to support California's ambitious climate
goals, LEU continues to see an upward trend as it relates to power supply costs; and
WHEREAS, while historically the ECA has averaged at or around 2 cents per kilowatt-
hour (kWh) each year, over the past year or two, LEU has seen the summer months trend
higher as market prices continue to escalate when demand is at its highest and resources are
limited; and as a result, last year the City Council took action to use $2 million in reserves from
its General Operating Reserve (GOR) to reduce both the August and September 2021 ECA for
customers; and
WHEREAS, once again, the utility is faced with a record high ECA for August 2022; and
WHEREAS, recognizing the impact of these higher than average ECA amounts on
customers and their utility bills over the summer months when usage is at its highest, the City's
Risk Oversight Committee took action to approve the use of $1.5 million in reserves from its
General Operating Reserve (GOR) to cover a portion of the August 2022 power supply charges
to reduce the August 2022 ECA by approximately 35 percent - down to 5.74 cents/kWh as
compared to almost 9 cents/kWh; and
WHEREAS, action was needed quickly to ensure the timely posting and release of utility
bills; and
WHEREAS, LEU's GOR provides funding for, among other things, business related
areas of risk such as market power volatility and the cost of replacement power during dry year
conditions for which costs cannot reasonably be forecasted and budgeted; and
WHEREAS, this action, in addition to the financial assistance and discount programs
offered by LEU, will provide some relief to utility customers this summer who may be
experiencing other financial challenges in this current inflationary environment; and
WHEREAS, as of June 30, 2022, LEU had an available balance of approximately $11
million in its GOR held at Northern California Power Agency (NCPA).
NOW, THEREFORE, BE IT RESOLVED that- the Lodi City Council does hereby ratify
the expenditure of $1.5 million from the GOR held at NCPA for August 2022 power supply
costs.
Dated: August 17, 2022
I hereby certify that Resolution No. 2022-206 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held August 17, 2022 by the following votes:
AYES: COUNCIL MEMBERS — Hothi, Kuehne, Nakanishi, and Mayor Chandler
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — Khan
ABSTAIN: COUNCIL MEMBERS — None
OLIVIA NASHED
City Clerk
2022-206