Resolution No. 7899. P
1 RESOLUTION NO. 7899
2
3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND ADOPTING UPDATED CITY OF
4 VERNON UTILITIES DEPARTMENT PUBLIC BENEFITS
5 PROGRAMS
6 WHEREAS, in order to satisfy the requirements of AB 1890 and
7 Section 385 of the Public Utilities Code of the State of California, on
8 March 21, 2000, the City Council of the City of Vernon adopted
9 Resolution No. 7511 adopting the City of Vernon Utilities Department.
10 Public Benefits Programs ("Public Benefits Programs") and implementing
11 two of the five projects in the area of energy efficiency contained in
12 said Programs, to wit: the Energy Audits and the Energy Education and
13 Demonstration Workshops; and
14 WHEREAS, on September 19, 2000, the City Council of the City
15 of Vernon adopted Resolution No. 7632, as amended by Resolution 7771
16 on May 23, 2001, which approved the implementation of an additional
17 two projects in the area of energy efficiency in the Public Benefits
18 Programs, to wit: the Customer Incentive and the Customer Directed
19 Program; and
20 WHEREAS, the existing Public Benefits Programs are funded by
21 the Public Benefits Charge collected directly from customers; and
22 WHEREAS, staff of the Utilities Department have updated the
23 Public Benefits Programs to provide a more concise description of the,
24 four programs that have all been implemented, to eliminate the
25 Equipment Loans as a project in the area of energy efficiency; and
26 WHEREAS, by letter dated January 16, 2002, Bruce V.
27 Malkenhorst, City Administrator/City Clerk, recommended that the
28 updated Public Benefits Programs be approved and adopted.
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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 hereby
finds and determines that the recitals contained hereinabove are true
and correct.
SECTION 2: The City Council of the City of Vernon hereby
approves and adopts the updated City of Vernon Utilities Department
Public Benefit Programs, a copy of which is attached hereto as Exhibit
"A" and made a part hereof.
SECTION 3: The City Clerk of the City of Vernon shall
certify to the passage of this resolution, and thereupon and
thereafter the same shall be in full force and effect.
APPROVED AND ADOPTED this 22"d day of January, 2002.
ATTEST:
BRUCE V. MALKENHORST, City Clerk
LEONIS C. MAL RG, Ma or
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STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANGELES )
I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution No.
7899, was duly adopted by the City Council of the City of Vernon at an
adjourned regular meeting of the City Council duly held on Tuesday,
January 22, 2002, and thereafter was.duly signed by the Mayor of the
City of Vernon.
(SEAL)
BRUCE V. MALKENHORST, City Clerkl
- 3 -
SUPPORTING
DOCUMENTS
EXHIBIT
0
City of Vernon (Updated 1/22/02)
Utilities Department
Public Benefits Programs
I. BACKGROUND
Deregulation of the electric utility industry in California dramatically changed the
regulated market system that was in place for more than eighty years. This is one
result of the passage of Assembly Bill 1890 (AB 1890). AB 1890 was passed by the
State Legislature in August 1996 and signed into law by former Governor Pete Wilson
on September 23, 1996. Fundamentally, the intent of this bill was to lower the price
of electricity for consumers by opening California's electric utility industry to
competition. Although most of AB 1890 does not apply to publicly owned utilities
such as the City of Vernon, Vernon customers are subject to certain provisions of the
law, including a mandated Public Benefits Charge.
AB 1890 provides, in part, that the City of Vernon collect a Public Benefits Charge
from all its customers. The intended purpose of this charge is to fund Public Benefits
Programs. The mandated charge is 2.85 percent of customers' total monthly electric
bill before any special fees or charges for years 1998, 1999 and 2000. Assembly Bill
995 (AB 995), which was approved by the Governor on September 30, 2000,
extended the collection of the Public Benefits Charge through January 1, 2012 at a
rate not to exceed the level that was used to collect these charges on January 1,
2000. Approximately $1.6 million was collected annually for programs until the year
2001 and approximately $2.3 million will be collected annually thereafter. To
minimize the impact of this charge on its customers, Vernon City Council approved a
customer credit to offset the state -mandated charge from its inception January 1,
1998 through March 31, 2000. In this period, City Council approved credits benefited
City of Vernon electric customers by approximately $3.6 million.
AB 1890 establishes four main categories of Public Benefits Programs that may be
funded by the Public Benefits funds. These are: 1) energy efficiency; 2) research,
development and demonstration; 3) low-income assistance; and 4) renewable
resource technologies. Based on an assessment of Vernon customers' needs and
interests, the Utilities Department is recommending programs in the area of energy
efficiency. In addition, the Utilities Department is evaluating and may recommend the
purchase of renewable energy to augment Vernon's power resource mix.
11. POLICY STATEMENT
Section 385 of the Public Utilities Code of the State of California requires every
municipal electric utility to establish a non-bypassable usage -based Public Benefits
Charge to fund a minimum level of investments by the utility and other parties in any
or all of the following:
A- 1
1. cost-effective demand side management services to promote energy
efficiency and energy conservation,
2. new investment in renewable energy resources and technologies consistent
with existing statues and regulations which promote those resources and
technologies,
3. research, development, and demonstration programs to advance science or
technology which is not adequately provided by competitive and regulated
markets, and
4. services provided for low-income electricity customers, including but not
limited to, targeted energy efficiency service and rate discounts.
It is the policy of the City of Vernon to allocate revenues derived from Public Benefits
Charges, minus the cost to administer programs, in a fair and equitable manner,
consistent with Section 385 of the Public Utilities Code.
Entities conducting approved programs shall maintain appropriate records to
document project -related expenditures and project -related benefits. These records
shall be available to the Utilities Department upon request. The Director of Utilities
shall periodically report to the City Council on the Public Benefits Programs including
the status of projects and the level of funds available.
The rapid growth in demand for electric energy is in part due to wasteful,
uneconomic, and inefficient uses of power. The energy efficiency programs
recommended by the Utilities Department may provide opportunities for participating
Vernon customers to reduce energy usage and costs. As customers become more
conversant in energy management, they may discover new ways to save energy and
improve their bottom line. Low energy costs can improve the competitive position of
businesses. All Vernon electric utility customers may benefit from energy efficiency
programs, as energy efficiency may control rising energy demands, assisting the City
of Vernon to maintain its low energy rates.
III. PROGRAM DESCRIPTIONS
Utilities Department staff is recommending four programs in the area of energy
efficiency intended to benefit participating customers:
A. Energy Audits
The Department is continuing its energy audit project for interested
commercial and industrial customers. The energy audits are an excellent
starting point for customers interested in developing a broader energy
management strategy. The focus is on customized audits. Customers
receive detailed analyses of energy usage and suggestions for energy
efficiency efforts which can lead to measurable energy and -cost savings. The
audit recommendations frequently will encourage participation with other
projects of the Public Benefits Programs.
A- 2
B. Energy Education and Demonstration Workshops
A fundamental and necessary first step to promoting customer participation in
energy efficiency projects is creating a heightened awareness for energy
efficiency opportunities. Utilities Department staff can serve as a catalyst for
reducing information barriers. The Utilities Department proposes to increase
access to educational materials through channels that reach all customer
segments. The Utilities Department will provide an array of information
resources to accommodate customers' varying levels of knowledge and
experience with energy efficiency. The focus of these resources will be to
encourage the undertaking of energy efficiency measures within business
operations. Electric utility customers can then make informed business
decisions leading to measurable energy and cost savings.
The Department proposes to host several energy efficiency workshops with
presentations and discussions on various topics led by industry experts.
These workshops will provide training and demonstration efforts needed for
"market transformation" and will further complement other energy efficiency
programs.
C. Customer Incentive
Financial incentives (rebates) may be offered to customers who replace
lighting and motors with efficient equipment and technologies. Rebates for
energy efficient equipment may help shift the customers' decision -making
process by lowering the first cost concerns and bringing energy costs into
consideration. Although rebates are primarily for replacement of lighting and
motors with higher efficiency models, replacement of other technologies may
qualify for rebates as well. Participants will be required to submit detailed
specifications and proof of replacement. Department staff will monitor the
implementation of the proposed efficient equipment.
D. Customer Directed Proiects
The portfolio of energy efficiency public benefits programs established by the
Utilities Department does not exhaust all energy efficiency opportunities.
Funds are proposed to support customers with the implementation of self -
designed energy efficiency projects. These Customer Directed Projects are
intended to encourage customers to self -design energy efficiency measures
that produce a public benefit. Electric Utility customers can incorporate their
plant specific knowledge and business expertise to positively impact energy
usage patterns and processes.
Customer Directed Projects will receive matching funds for expenditures that
lead to demonstrable energy savings. Project funds may assist in the
purchase of energy efficient equipment or new construction, for example.
Demonstrated energy savings will be a requirement for project approval.
A-3
IV. TARGET MARKETS
The proposed Public Benefits Programs will be available to all interested Vernon
industrial and commercial customers. Available funds will be distributed among all
participating businesses based on specific program and evaluation criteria. In
designing program criteria, Utilities staff may consider that Vernon's industrial
customers comprise approximately 75% of Vernon's system energy and total
revenue, while representing approximately 40% of all customers in Vernon. The
City's largest 100 customers (above 500 kW peak demand) represent approximately
61 % of the peak load and 71 % of the total energy usage. Vernon has a total of
approximately 2,200 industrial and commercial customer accounts.
V. MEASUREMENT AND VERIFICATION
The Public Benefits Programs will be evaluated periodically.
A- 4
CITY COUNCIL
LEONIS C. MALBURG
Mayor
THOMAS A. YBARRA
Mayor Pro-Tem
WM. 'BILL" DAVIS
Councilman
H. "LARRY" GONZALES
Councilman
W. MICHAEL MCCORMICK
Councilman
BRUCE V. MALKENHORST
City Administrator / City Clerk
FAX (323) 826-1438
City Council
City of Vernon
Honorable Members:
EDUARDO OLIVO
City Attorney
FAX: (562) 927-8722
KEVIN WILSON
Director of Community Services & Water
FAX: (323) 826-1435
KENNETH J. DeDARIO
Director of Municipal Utilities
FAX: (323) 826-1425
STEVEN E. PARKER
Fire Chief
FAX: (323) 826-1407
CITY HALL BRUCE W. OLSON
4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief
TELEPHONE (323) 583-8811 FAX: (323)826-1481
January 16, 2002
®� A0
C
The Utilities Department is requesting that an update to the Public
Benefits Program (PBP). This update will provide a more concise
description of the four programs that are available through the City
in the area of energy efficiency:
• Energy Audits
• Energy Education and Demonstration workshops
• Customer Incentive and Customer Directed Projects, and
• Elimination of Equipment Loans
The existing PBP is funded by Public Benefits Charges (PBC), revenue
collected directly from the customers. It is hereby recommended that
the updated PBP be approved and adopted.
Very truly yours,
Bruce V. Malkenhorst
City Administrator/City Clerk
BVM/ng
January 16, 20
TO: Bruce V. Malkenhorst, City Administrator
FROM: Kenneth J. DeDario, Director of Utilities
SUBJECT: Public Benefits Program
I recommend approval of the attached updated City of Vernon Utilities Department Public
Benefits Programs (PBP). The updated PBP replaces the existing PBP which was approved by
Resolution No. 7511. The updated PBP provides a more concise description of four programs
that are all in the area of energy efficiency: Energy Audits, Energy Education & Demonstration
Workshops, Customer Incentive and Customer Directed Projects, and eliminates Equipment
Loans. The PBP is funded by the Public Benefits Charge (PBC) which is collected directly from
the customers. The updated PBP also reflects a revised background section mainly because of
the increased revenues being collected by the PBC.
If you have any questions or comments, please contact me. Thank you for your consideration.
KJD:ah
Attachment
r�
r
City of Vernon
Utilities Department
Public Benefits Programs
BACKGROUND
Deregulation of the electric utility industry in California dramatically changed the
regulated market system that was in place for more than eighty years. This is one
result of the passage of Assembly Bill 1890 (AB 1890). AB 1890 was passed by the
State Legislature in August 1996 and signed into law by former Governor Pete Wilson
on September 23, 1996. Fundamentally, the intent of this bill was to lower the price
of electricity for consumers by opening California's electric utility industry to
competition. Although most of AB 1890 does not apply to publicly owned utilities
such as the City of Vernon, Vernon customers are subject to certain provisions of the
law, including a mandated Public Benefits Charge.
AB 1890 provides, in part, that the City of Vernon collect a Public Benefits Charge
from all its customers. The intended purpose of this charge is to fund Public Benefits
Programs. The mandated charge is 2.85 percent of customers' total monthly electric
bill before any special fees or charges for years 1998, 1999 and 2000. Assembly Bill
995 (AB 995), which was approved by the Governor on September 30, 2000,
extended the collection of the Public Benefits Charge through January 1, 2012 at a
rate not to exceed the level that was used to collect these charges on January 1,
2000. Approximately $1.6 million was collected annually for programs until the year
2001 and approximately $2.3 million will be collected annually thereafter. To
minimize the impact of this charge on its customers, Vernon City Council approved a
customer credit to offset the state -mandated charge from its inception January 1,
1998 through March 31, 2000. In this period, City Council approved credits benefited
City of Vernon electric customers by approximately $3.6 million.
AB 1890 establishes four main categories of Public Benefits Programs that may be
funded by the Public Benefits funds. These are: 1) energy efficiency; 2) research,
development and demonstration; 3) low-income assistance; and 4) renewable
resource technologies. Based on an assessment of Vernon customers' needs and
interests, the Utilities Department is recommending programs in the area of energy
efficiency. In addition, the Utilities Department is evaluating and may recommend the
purchase of renewable energy to augment Vernon's power resource mix.
II. POLICY STATEMENT
Section 385 of the Public Utilities Code of the State of California requires every
municipal electric utility to establish a non-bypassable usage -based Public Benefits
Charge to fund a minimum level of investments by the utility and other parties in any
or all of the following:
1. cost-effective demand side management services to promote energy
efficiency and energy conservation,
2. new investment in renewable energy resources and technologies consistent
with existing statues and regulations which promote those resources and
technologies,
3. research, development, and demonstration programs to advance science or
technology which is not adequately provided by competitive and regulated
markets, and
4. services provided for low-income electricity customers, including but not
limited to, targeted energy efficiency service and rate discounts.
It is the policy of the City of Vernon to allocate revenues derived from Public Benefits
Charges, minus the cost to administer programs, in a fair and equitable manner,
consistent with Section 385 of the Public Utilities Code.
Entities conducting approved programs shall maintain appropriate records to
document project -related expenditures and project -related benefits. These records
shall be available to the Utilities Department upon request. The Director of Utilities
shall periodically report to the City Council on the Public Benefits Programs including
the status of projects and the level of funds available.
The rapid growth in demand for electric energy is in part due to wasteful,
uneconomic, and inefficient uses of power. The energy efficiency programs
recommended by the Utilities Department may provide opportunities for participating
Vernon customers to reduce energy usage and costs. As customers become more
conversant in energy management, they may discover new ways to save energy and
improve their bottom line. Low energy costs can improve the competitive position of
businesses. All Vernon electric utility customers may benefit from energy efficiency
programs, as energy efficiency may control rising energy demands, assisting the City
of Vernon to maintain its low energy rates.
III. PROGRAM DESCRIPTIONS
Utilities Department staff is recommending four programs in the area of energy
efficiency intended to benefit participating customers:
A. Energy Audits
The Department is continuing its energy audit project for interested
commercial and industrial customers. The energy audits are an excellent
starting point for customers interested in developing a broader energy
management strategy. The focus is on customized audits. Customers
receive detailed analyses of energy usage and suggestions for energy
efficiency efforts which can lead to measurable energy and cost savings. The
audit recommendations frequently will encourage participation with other
projects of the Public Benefits Programs.
B. Energy Education and Demonstration Workshops
A fundamental and necessary first step to promoting customer participation in
energy efficiency projects is creating a heightened awareness for energy
efficiency opportunities. Utilities Department staff can serve as a catalyst for
reducing information barriers. The Utilities Department proposes to increase
access to educational materials through channels that reach all customer
segments. The Utilities Department will provide an array of information
resources to accommodate customers' varying levels of knowledge and
experience with energy efficiency. The focus of these resources will be to
encourage the undertaking of energy efficiency measures within business
operations. Electric utility customers can then make informed business
decisions leading to measurable energy and cost savings.
The Department proposes to host several energy efficiency workshops with
presentations and discussions on various topics led by industry experts.
These workshops will provide training and demonstration efforts needed for
"market transformation" and will further complement other energy efficiency
programs.
C. Customer Incentive
Financial incentives (rebates) may be offered to customers who replace
lighting and motors with efficient equipment and technologies. Rebates for
energy efficient equipment may help shift the customers' decision -making
process by lowering the first cost concerns and bringing energy costs into
consideration. Although rebates are primarily for replacement of lighting and
motors with higher efficiency models, replacement of other technologies may
qualify for rebates as well. Participants will be required to submit detailed
specifications and proof of replacement. Department staff will monitor the
implementation of the proposed efficient equipment.
D. Customer Directed Projects
The portfolio of energy efficiency public benefits programs established by the
Utilities Department does not exhaust all energy efficiency opportunities.
Funds are proposed to support customers with the implementation of self -
designed energy efficiency projects. These Customer Directed Projects are
intended to encourage customers to self -design energy efficiency measures
that produce a public benefit. Electric Utility customers can incorporate their
plant specific knowledge and business expertise to positively impact energy
usage patterns and processes.
Customer Directed Projects will receive matching funds for expenditures that
lead to demonstrable energy savings. Project funds may assist in the
purchase of energy efficient equipment or new construction, for example.
Demonstrated energy savings will be a requirement for project approval.
3
�t
e
IV. TARGET MARKETS
The proposed Public Benefits Programs will be available to all interested Vernon
industrial and commercial customers. Available funds will be distributed among all
participating businesses based on specific program and evaluation criteria. In
designing program criteria, Utilities staff may consider that Vernon's industrial
customers comprise approximately 75% of Vernon's system energy and total
revenue, while representing approximately 40% of all customers in Vernon. The
City's largest 100 customers (above 500 kW peak demand) represent approximately
61% of the peak load and 71% of the total energy usage. Vernon has a total of
approximately 2,200 industrial and commercial customer accounts.
V. MEASUREMENT AND VERIFICATION
The Public Benefits Programs will be evaluated periodically.
:I