HomeMy WebLinkAboutAgenda Report - June 3, 2003 B-01 SMCITY OF LODI
AGENDA TITLE: Resolution in Support of Senate Bill 888, entitled, "Repeal of Electricity Deregulation Act of
2003" (EUD)
MEETING DATE: June 3, 2003
PREPARED BY: Electric Utility Director
RECOMMENDED ACTION: That the City Council adopt a resolution in support of Senate Rill 888 (SB
888), entitled, "Repeal of Electricity Deregulation Act of 2003".
BACKGROUND INFORMATION: With the passage of Assembly Bill 3890 in 3996 the traditional obligation of
investor owned utilities (IOU) to plan and build sufficient electrical generation
to serve the needs of consumers was abandoned. Additionally, the IOUs
traditional obligation to serve customers was replaced by an obligation to pass through spot market costs to
consumers. This resulted in the consumers of IOUs and many municipally owned utilities suffering severe economic
hardship as a result of failures in the electricity market.
SB 888, as now written, would restore that obligation to serve and authorize utility investment in new transmission and
generation. SB 888 also ends direct access, beneficial to very few at the expense of many, and recognizes electricity
as a necessity, not a commodity.
In 3996, Lodi Electric Utility was unconvinced of the promised benefits of deregulation and its proposed business
model. Along with other California municipals, we stayed the course and maintained our obligation to serve our
customers. Today, municipal utilities consumers' rates are generally stable, municipal utilities are creditworthy and
they are among the very few in California looking to build new generation to meet future electricity needs.
It is staff's belief that healthy electric utilities with a primary purpose of serving the electric needs of their customers is
beneficial to all of California and would have secondary benefits for Lodi, such as a more stable wholesale electric
market, as well as investment in new transmission and generation. Such investment leads to a higher level of
underlying system reliability.
For these reasons, it is respectfully requested that the City Council adopt the attached resolution in support of SB 888,
as currently constituted.
Fl.lA1DIhEG: None ��& //
Alan N. Vallow
Electric Utility Director
PREPARED BY: Sondra Huff, Manager, Governmental Affairs
ANVISHtIst
C: City Attorney
Finance Director
APPROVED.
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WHEREAS, the California Legislature, with the passage of AB 1890 in 1996, abandoned
the traditional obligation of investor-owned utilities to plan and build sufficient electrical generation
to serve the needs of consumers; and
WHEREAS, the traditional investor-owned utility obligation to serve customers was
replaced by an obligation to pass through spot market costs to consumers; and
WHEREAS, the consumers of investor-owned and municipally -owned utilities suffered
severe economic hardship as a result of failures in the electricity market; and
WHEREAS, the result of a flawed market design resulted in statewide rolling blackouts; and
WHEREAS, the City of Lodi was asked to share in rolling blackouts in spite of having
adequate generation resources, and
WHEREAS, SB 888 has been introduced in the California State Senate to return investor-
owned utilities to the obligation to serve their customers including the obligation to plan and
construct sufficient power plants; and
WHEREAS, reliability of the state's electric system is of paramount importance; and
WHEREAS, the citizens of California have demonstrated a preference for a reliable
electrical system; and
WHEREAS, SB 888 provides the framework for greater accountability of the California
Independent System Operator.
NOW, THEREFORE, BE IT RESOLVED that the City of Lodi supports the intent of SB 888
as currently constituted and urges California's legislature to ensure that its provisions are
implemented in a timely manner.
Dated: June 3, 2003
I hereby certify that Resolution No. 2003-96 was passed and adopted by the Lodi City
Council in a special meeting held June 3, 2003, by the following vote:
AYES: COUNCIL MEMBERS — Beckman, Howard, Land, and May -or Hitchcock
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — Hansen
ABSTAIN: COUNCIL MEMBERS — None
SUSAN J. BLACKSTON
CITY CLERK