20040426 Regular City Council Meeting - MinutesMINUTES OF THE ADJOURNED CITY COUNCIL
MEETING OF THE CITY OF VERNON HELD
APRIL,26, 2004, AT 2:30 P.M. IN THE
COUNCIL CHAMBERS OF THE CITY HALL
LOCATED AT 4305 SANTA FE AVENUE,
VERNON, CALIFORNIA
MEMBERS PRESENT;; Ybarra, Gonzales, Davis,
MEMBERS ABSENT: Malburg, McCormick
The meeting was called to order by Mayor 'Pro Tem
_ Ybarra.
It was moved by Gonzales, seconded by Davis, that the
Minutes of the Regular City Council Meeting held April 21, 2004,.
be approved and adopted as submitted. Motion carried:
The City Clerk announced that now was the time for
anyone in the audience who wished to address the City Council on
any item on the agenda other than with regard to any public
hearings that may be listed.
The Mayor Pro Tem asked if there was anyone in the
audience who wished to address the City Council at this time
There was no one in the audience who wished to address
the City Council at this time.
The City Clerk announced that it was now the time to
continue the public hearing to consider the establishment of
Vernon's Transmission Revenue Requirements (TRR) for its high
voltage transmission facilities and entitlements that were
turned over to the operational control of the California
Independent System Operator ("CAISO") when Vernon became a
participating transmission owner on January 1, 2001
It was moved by Gonzales, seconded by Davis, to
continue the public hearing to consider the establishment of
Vernon's Transmission Revenue Requirements (TRR) for its high
voltage transmission facilities and entitlements that were
turned over to the operational control of the California
Independent System Operator ("CAISO") when Vernon became a
Participating Transmission Owner ("PTO"), effective January 1,
2001, the time being 240 p.m. Motion carried.
Engineering Operations Manager Jorge Somoano addressed
the City Council and summarized this matter. Mr. Somoano
advised that on June 30, 2000, the City provided its notice of
intent to become a PTO and that Vernon was the first utility
that was not subject to FERC's jurisdiction' -under the Federal
Power Act ("FPA"), to apply to become a PTO. In order to become
a PTO, Mr. Somoano.-explained that pursuant to the,TAC tariff,
Vernon was required to turn over the operation and control of
Vernon's transmission facilities and entitlements to the CAISO:
In return, the CAISO was required to reimburse Vernon its
Transmission Revenue Requirement relating to such transmission
facilities and entitlements.
Adjourned City Council Meeting Minutes
April 26, 2004
Mr. Somoano explained the procedural history regarding
the matter. On August 29, 2000, the City Council held a public
hearing during which it considered the appropriate TRR for
Vernon. After considering the evidence, the City Council
established Vernon's TRR. Among other things', the City Council
determined that it was appropriate to use Southern California'
Edison ("SCE") as a proxy for Vernon in establishing the rate of
return and depreciation for Vernon's TRR_
On August 30, 2000, Vernon filed a petition for
declaratory order with FERC, in which it requested that FERC
accept the TRR established by the City Council. On October 27,
2000, FERC accepted Vernon's TRR, with certain adjustments, and
made it effective as of January'1, 2001. Among other things;
FERC indicated that if Vernon was, going to use SCEasa proxy,
although Vernon had not incurred debt when it purchased its
transmission facilities, SCE's capital structure should be
imputed on Vernon for purposes of FERC's review of the TRR. On
November 7, 2000, the City Council held another noticed public
hearing during which it considered FERC's rulings. After
considering the evidence submitted at that public hearing, the
City Council decided to accept the adjustments requested by
FERC. Therefore;, pursuant to Resolution No; 7659,, the City
Council approved a revised TRR.
Pursuant to Section 203 of the FPA; the CAISO then
filed for approval of the transfer of Vernon's transmission
facilities and entitlements to'the CAISO's operational control,
In that filing, the CAISO established that the transfer of
Vernon's transmission assets was in the public interest and was
beneficial to the CAISO. On January 9, 2001„ FERC approved the
CAISO's Section 203 filing. On March 28, 2001, FERC approved
Vernon's compliance filing as to Vernon's revised TRR.
Mr. Somoano explained that PG&E appealed FERC'ks
orders to the Circuit Court for the District of Columbia. On
October 15, 2002, the Court remanded to FERC the question of
whether the review conducted by FERC of the TRR for Vernon, a
non -jurisdictional entity that is part of the jurisdictional
CAISO, was sufficient to ensure that the CAISO's rates will be
just and reasonable under section 205 of the„FPA. On February
17, 2004, FERC then ordered that a hearing be held to explore
the appropriate TRR 'for'Vernon that will ensure that the CAISO's
rates after the inclusion of Vernon's TRR are just and
reasonable. FERC indicated that it would not hold a hearing
just on Vernon's rate of return and depreciation, but that it
would have a hearing to determine all aspects of Vernon's TRR,
In response to FERC's order, this hearing was scheduled to
consider evidence to review and establish Vernon's TRR.
Mr. Somoano advised that, in order to address the
concerns raised by the Court and to address;FERC's order on
remand, Vernon has hired several experienced utility experts in
order to allow the -City Council to thoroughly 'explore Vernon's
TRR and 'present appropriate substantial evidence in the record
to allow the City Council to review and determine the
appropriate TRR for the transmission facilities and entitlements
that the City turned over to the CAISO's operational control on
January`1, 2001. Mr. Somoano advised that the following expert
witness testimony is being submitted to the City Council: Baker
G. Clay of Baker G. Clay and Associates; Edward H. Feinstein of
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Adjourned City Council Meeting Minutes
April 26, 2004
Brown, Williams, Moorhead & Quinn, Inc.; and Frank J. Hanley,
CRRA, of AUS Consultants -Utility Services,
Based upon the testimony and the evidence being
submitted, Mr. Somoano recommended that the City Council take
the following action:
1. Amend Resolution Nos, 7608 and 7659, in order to
amend and revise the TRR for Vernon's transmission facilities
and entitlements that were turned over to the operational
control of the CAISO on,January 1, 2001, when Vernon became a
PTO.
2. Approve the revised recommend total TRR for
Vernon's transmission facilities and entitlements of Twelve
Million Two Hundred Fifty Three Thousand Seven Hundred ninety
Seven Dollars ($12,253,797.00), that has been recommended in the
written testimony of Baker G. Clay.
3. Approve the written testimony consultants, Baker
G. Clay, Edward Feinstein and Frank Hanley, and authorize
Vernon's staff and Legal Counsel to file such t-estimony, as well
as this Resolution, with FERC for purposes of FERC's review and
determinations relating to the TRR required,to he paid to Vernon
for the transmission facilities and entitlements that have been
turned over by Vernon to the CAISO's in accordance with the City
of Vernon. J
Mr. Somoano explained that the Staff Report submitted
to the City Council contained more details.,
Communication from Bruce V. Malkenhorst, City
Administrator/ City Clerk,,dated April 15, 2004, was presented,
advising that on August 29, 2000, Resolution No. 7608 was
adopted as amended by Resolution Nos. 7659 and 7751 adopted on
November 7, 2000 and April 24, 2001, respectively, establishing
and filing Vernon's Transmission Revenue Requirement with the
Federal Energy Regulatory Commission (FERC.) The FERCfs
approval of Vernon's TRR was challenged and considered by the
D.C. Circuit Court. The D.C. Court'remanded the matter to FERC
which as now set a hearing for its consideration of Vernon's
TRR. The services of several consultants were retained to
assist in preparing and recommending" ' a TRR to be filed with the
FERC in support of Vernon's status as a Participat'ing
Transmission owner. It is hereby recommended that the CityrS
TRR be approved and established.
I I The Mayor Pro Tem asked if there were any questions
regarding this matter.
There were no questions regarding this matter.
It was moved by Gonzales, seconded by Davis, to close
the public hearing to consider the establishment of
Vernon's TRR for its high voltage transmission facilities and
entitlements that were turned over to the operational control of
the CAISO when Vernon became a PTOon January 1, 2001, the time
being 2:45 p.m. Motion carried,
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Adjourned City Council Meeting Minutes
April 26, 2004
It was moved by Davis, seconded by Gonzales, that the
aforementioned communication from the City Administrator/City
Clerk, dated April 15, 2004, and any and all supporting
documents submitted as evidence„ including the Light and Powe're
Staff Report, during the public 'hearing be received and filed
and that the City's Transmission Revenue Requirement TRR with
the Federal Energy Regulatory Commission (FERC) be approved as
revised. Motion carried.
RESOLUTION NO. 8430 - A Resolution of the City Council
of the City of Vernon Amending Resolution Nos. 7608'and 7659 in
Order'to Amend the Transmission Revenue Requirement Associated
with Vernon's High Voltage, Transmission Facilities and
Entitlements that were turned over to the Operational Control of
the California Independent System Operator when Vernon became a
Participating Transmission Owner, was presented.
It was moved by Gonzales, seconded by Davis, that
Resolution No. 843o be approved and adopted. Motion carried
The City Clerk announced that there was nothing to be
discussed in closed session.
There being no further business: to come before the
Council at this time, it was moved by Gonzales, seconded by
Davis, that the City Council Meeting be adjourned, the time
being 2:46 p.m. Motion carried.
Thomas A. Yb'arra
Mayor Pro Tem
ATTEST:
Bruce V. Malkenhors.t
City Clerk
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