Resolution No. 6910
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RESOLUTION NO. 6910
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION
OF A 1997 EDISON-VERNON AGREEMENT BY AND BETWEEN
THE CITY OF VERNON AND THE SOUTHERN CALIFORNIA
EDISON COMPANY
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WHEREAS, on July 8, 1993, the City of Vernon and Southern
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California Edison Company ("Edison") executed the Edison-Vernon
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1993 Settlement Agreement ("1993 Settlement"); and
WHEREAS, the California Public utilities Commission
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C"CPUC") in 1995 and in 1996 conducted the Electric Restructuring
Proceeding, CPUC Docket No. R.94-04-031/I.94-04-032, resulting in
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decisions providing for the restructuring of the electric utility
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operations in California; and
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WHEREAS, the Federal Energy Regulatory Commission
C"FERC") is conducting proceedings in Docket Nos. ER96-1663-000,
EC96-19-000, and EL96-48-000, which concern the terms and
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conditions that will be applicable to such restructured electric
utility operations; and
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WHEREAS, the California State Legislature passed Assembly
Bill 1890 which was signed by the Governor on September 20, 1996,
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which provided for restructuring of electric utility operations in
California, authorized and directed the CPUC and investor-owned
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utilities to proceed to restructure, and directed that various
filings be made with the FERC in order to accomplish such
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restructuring; and
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WHEREAS, the 1993 Settlement includes various provisions
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relating to the operational arrangements between Edison and Vernon
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and dates and time limits providing for negotiation of future
changes to the operating arrangements between Edison and Vernon
including, but not limited to, integrated operations and changes
to the Partial Requirements Rate Schedule; and
WHEREAS, Edison and Vernon desire to postpone and extend
those time limits until the further development or completion of
those major CPUC and FERC matters in order to provide a more
efficient use of the their time; and
WHEREAS, Edison and Vernon disagree as to whether the
rate moratorium as between Edison and Vernon may bar Edison from
recovering charges in its partial requirements service tariff to
provide ancillary services to Vernon to the extent such costs are
not recovered under existing arrangements between Edison and
Vernon; and
WHEREAS, Edison and Vernon desire to enter into a 1997
Edison-Vernon Agreement to settle their disagreements and to
provide a time table for future negotiations.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon does
hereby find and determine that the recitals contained hereinabove
are true and correct.
SECTION 2: The City Council of the city of Vernon hereby
approves the 1997 Edison-Vernon Agreement, a copy of which has
been presented to the City Council concurrently with this
resolution, and the City Council hereby orders said Agreement to
be received and filed by the city Clerk.
SECTION 3: The City Council of the City of Vernon hereby
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authorizes the Mayor and the City Clerk to execute said Agreement
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for, and on behalf of, the City of Vernon.
SECTION 4: The City Clerk of the city of Vernon shall
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certify to the passage of this resolution and thereupon and
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thereafter the same shall be in full force and effect.
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ATTEST:
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BRUCE V.
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APPROVED AND ADOPTED this 4th day of February, 1997.
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MALKENHORST, City Clerk
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STATE OF CALIFORNIA
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COUNTY OF LOS ANGELES
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I, BRUCE V. MALKENHORST, City Clerk of the City of
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Vernon, do hereby certify that the foregoing Resolution, being
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Resolution No. 6910, was duly adopted by the City Council of the
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City of Vernon at a regular meeting of the City Council duly held
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on Tuesday, Februarv 4. 1997, and thereafter was duly signed by
the Mayor of the City of Vernon.
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BRUCE V. MALKENHORST, City Clerk
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( SEAL)
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1997 EDISON. VERNON AGREEMENT
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1997 EDISON-VERNON AGREEMENT
1. Parties
This Agreement is entered into by and between the City of V ernon, California
('~ ernon"), a municipal corporation, and Southern California Edison Company
("Edison"), a California corporation, hereinafter sometimes referred to collectively
as the "Parties," and individually as a "Party."
2. Reci tals
This Agreement is made with reference to the following facts, among others:
2.1 Edison is an investor-owned public utility doing business in the State
of California and is subject to the jurisdiction of the Federal Energy Regulatory
Commission ("FERC") with respect to the provision of electric service to Vernon.
2.2 Vernon owns a municipal electric utility that it operates within, and as
part of, the Edison control area. Vernon owns capacity resources, purchases
capacity and energy requirements from Edison under the Partial Requirements
Rate, and purchases capacity and firm and non-firm energy from third parties.
2.3 On July 8,1993, the Parties executed the Edison-Vernon 1993
Settlement Agreement (the "1993 Settlement"), FERC Rate Schedule No. 13.25.2.
2.4 The California Public Utilities Commission ("CPUC") in 1995 and in
1996 conducted the Electric Restructuring Proceeding, CPUC Docket No.
R.94-04-031/1.94-04-032, resulting in decisions providing for the restructuring of
the electric utility operations in California.
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2.5 The FERC is conducting proceedings in Docket Nos. ER96-1663-000,
EC96-19-000, and EL96-48-000, which concern the terms and conditions that will
be applicable to such restructured electric utility operations.
2.6 The California State Legislature passed Assembly Bill 1890 which was
signed by the Governor on September 20, 1996, which provided for restructuring of
electric utility operations in California, authorized and directed the CPUC and
investor-owned utilities to proceed to restructure, and directed that various filings
be made with the FERC in order to accomplish such restructuring.
2.7 The 1993 Settlement includes various provisions relating to the
operational arrangements between Edison and Vernon in providing for negotiation
on future changes to the operating arrangements between Edison and Vernon
including, but not limited to, integrated operations and changes to the Partial
Requirements Rate Schedule.
2.8 The 1993 Settlement provided for various dates and time limits for
these negotiations to take place and for changes to be implemented. All of these
provisions in the 1993 Settlement occurred prior to the aforesaid actions of the
CPUC, the California Legislature, and the FERC and, therefore, said negotiations
and deadlines failed to anticipate the emergence of those new issues.
2.9 Edison and Vernon desire to postpone and extend those time limits
until the further development or completion of those major CPUC and FERC
matters in order to provide a more efficient use of the Parties' time and to enable
the Parties to negotiate an arrangement that would take into consideration
aforesaid changed circumstances.
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2.10 Edison has advised Vernon of its intent to file with the FERC,under
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Federal Power Act Section 205, revisions to rate schedules under which Edison
makes transmission services available to Vernon, including the Partial
Requirements Tariff, or new rate schedules, in order to recover Edison's costs to
provide ancillary services to Vernon to the extent such costs are not recovered
under existing arrangements between Edison and Vernon. As used in this
Agreement, the term "ancillary services" refers to those services that are defined in
Sections 3.1, 3.2, 3.3, 3.4, 3.5, and 3.6 of Edison's Open Access Transmission Tariff,
filed with the FERC on July 9,1996, as it may be amended or revised, or
superseded by arrangements accepted by FERC in Docket Nos. EC96-19 and ER96-
1663. Edison and Vernon disagree as to whether any rate moratorium or
settlement as between Edison and Vernon may bar Edison from recovering such
charges in its partial requirements service tariff for Vernon. The parties desire, in
this Agreement, to settle this disagreement.
2.11 Vernon is in Edison's control area, and Edison currently serves as
Vernon's scheduling and dispatching agent. In the future, Vernon may desire to
acquire ancillary services from parties other than Edison and/or to supply ancillary
services from its own resources. As the restructuring of electric utility operations in
California takes place, most of Edison's scheduling and dispatching responsibilities
are expected to be transferred to an Independent System Operator. Nevertheless,
Edison and Vernon may need to amend existing agreements in order for Vernon to
self-supply ancillary services. Accordingly, Vernon has requested that Edison agree
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to enter into good faith negotiations to amend existing agreements, if necessary, to
permit Vernon to self-supply ancillary services in the future.
3. A~eement
In consideration of the covenants and conditions herein, the Parties agree as
follows:
3.1 The following provisions in the 1993 Settlement are amended as
follows:
3.1.1 Section 5.8, line 22, the words "ten (10) years from the date of
Regulatory Approval of this Agreement" are deleted and the words "on January 1,
2006" are substituted.
3.1.2 Section 5.15, first line, "6 months" is changed to "four years and
six months",
3.1.3 Section 5.15.2, lines 1 and 2, "July 1, 1995" and "December 1,
1996" are changed to July 1, 1999" and "December 1, 2000" respectively.
3.1.4 Section 5.15.2, line 9 on page 28, "January 1, 2002" is changed
to "January 1, 2006".
3.1.5 Section 5.15.2, lines 15 and 16 on p~ge 28, "May 1, 1996" and
"June 1, 1997" are changed to "May 1, 2000" and June 1, 2001" respectively.
3.1.6 Section 5.15.4, line 2 on page 30, "January 1, 2002" is changed
to "January 1, 2006".
3.1. 7 Section 5.15.5, line 1, "June 30, 1997" is changed to "June 30,
2001".
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3.1.8 Section 5.22, line 9, "June 30, 1997" is changed to "June 30,
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3.2 Subject to the following sentence below, if Edison modifies its Partial
Requirements rate for service to Vernon, and/or any contract pursuant to which
Edison provides or will in the future provide transmission service to Vernon, in a
manner which enables Edison to charge separately for ancillary services, then, for a
one-year period following the effective date of the modified Partial Requirements
rate, Edison shall not apply to Vernon any such ancillary service charges associated
with Vernon's use of Non-Integrated Sources as defined in the Partial
Requirements rate schedule. The Parties intend by this Section 3.2 that, prior to
the expiration of such one-year period, Edison shall continue its existing practices
regarding both the performance of such ancillary services provided to Vernon and
charges to Vernon therefor.
3.2.1 Vernon waives any right it may have to contend in a proceeding
before FERC or any other regulatory or judicial body that any applicable rate
moratorium or settlement in effect as between Edison and Vernon will prohibit
Edison from applying such charges to Vernon in accordance with the Partial
Requirements Tariff after the end of the one-year period referenced in Section 3.2.
3.2.2 Vernon understands and intends that the waiver described in
Section 3.2.1 extends to claims which Vernon does not know or suspect to exist in
its favor at the time of executing this Agreement, which, if known by Vernon, would
have materially affected Vernon's settlement with Edison. In this regard, Vernon
hereby waives application of California Civil Code Section 1542.
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3.2.3 Vernon has read and understands the following provisions of
California Civil Code Section 1542:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
may have materially affected his settlement with the
debtor."
Vernon understands and acknowledges that the significance and
consequence of this waiver of California Civil Code Section 1542 is that even if it
should eventually suffer additional damages arising out of the facts referred to in
this Agreement, Vernon will not be able to make any claim for those damages.
Furthermore, Vernon acknowledges that it intends these consequences even as to
claims for damages that may exist as of the date of this Agreement but which it
does not know exist, and which, if known, would materially affect its decision to
execute this Agreement, regardless of whether its lack of knowledge is the result of
ignorance, oversight, error, negligence, or any other cause.
3.3 Within 3 months following the FERC's issuance of its decision on
Phase II in FERC Docket No. EC96-19-00, Edison and Vernon shall enter into good
faith negotiations to amend existing agreements between Edison and Vernon, if
necessary, to permit Vernon, after the end of the one-year period referenced in
Section 3.2, to acquire ancillary services from others and/or to supply such services
from Vernon's own resources. If the FERC has not issued a definitive decision on
Phase II matters by September 1, 1997, the Parties shall enter such negotiations
beginning in November 1997. The Parties shall endeavor to have any necessary
Amendments effective by January 1, 1999.
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4. Nonnrecedent and Reservation of Rie-hts
The Parties intend that none of the principles underlying or embodied
in this Agreement shall be deemed by FERC, the CPUC, any court or other
administrative agency (state or federal), any Party hereto, or any third party as
precedent in any proceeding or litigation except to the extent specifically stated
herein. In particular but without limitation of the foregoing, the Parties intend
that the fact of the amendment set forth in Section 3 herein, Edison's agreement to
that amendment, and the substance of that amendment, shall neither be offered in
evidence, used as any form of precedent, nor in any other way used to make or
defend against any claim of any type by either Edison or Vernon, except for the
purpose of enforcing the provisions of that amendment. The Parties have assented
to the terms of this Agreement in order to arrive at a settlement. Each Party
expressly reserves the right to advocate in current and future proceedings (except
where participation in such proceedings may be prohibited elsewhere in this
Agreement) principles, positions, and methodologies which may be different from
those underlying this Agreement, and the Parties expressly declare that this
Agreement should not be construed as a precedent for or against either of them in
such advocacy.
5. Previous Communications
This Agreement contains the entire agreement and understanding
between the Parties as to the subject matter of this Agreement, and supersedes all
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prior agreements, commitments, representations, and discussions between the
Parties relative to the subject matter of this Agreement.
6. Nonseverabilitv
The Parties understand and agree that this Agreement is subject to
each and every condition set forth herein, and that each term of this Agreement is
in consideration and support of every other term.
7. Governine- Law and Rerulations
This Agreement shall be interpreted, governed and construed
under the laws of the State of California, as if executed in and to be
performed wholly within the State of California, and in accordance with the
Federal Power Act, 16 D.S.C. ~~ 824, et~.
8. Entire Amendment
This Agreement contains the entire amendment to the 1993
Settlement agreed to by the Parties herein and all other provisions of the 1993
Settlement which are not otherwise provided for herein shall remain enforceable by
and between the Parties. Nothing in Section 3.2.1 or any other provision of this
Agreement shall be understood as diminishing in any manner the rights of the
Parties provided for in Section 5.23 of the 1993 Settlement.
9. Sirnature Clause
The signatories hereto represent that they have been appropriately
authorized to enter into this Agreement on behalf of the Party for which they sign.
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IN WITNESS WHEREOF, the Parties execute this Agreement as of the
28th day of February, 1997.
SOUTHERN CALIFORNIA EDISON
COMPANY
CITY OF VERNON
By:
\J,~ ~BY:__~/
Vikram BUdhraja
Date: d-/Y- 97
Senior Vice President
Name:
Title:
Date:
2-28-97
ATTEST:
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By:
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Bruce V. Malkenhorst
City Clerk
APPROVED
BRYANT C. DANNER
Senior Vice President
and General Counsel
Bya;~J~
? Attorney
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APPROVED AS TO FORM:
By: ~B~~~~'
City Attorney
LW963440.097
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