Resolution No. 95621
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RESOLUTION NO. 9562
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ADOPTING A NEW TRANSMISSION REVENUE
REQUIREMENT ASSOCIATED WITH VERNON'S HIGH VOLTAGE
(OVER 200 KV) ENTITLEMENTS LOCATED OUTSIDE OF THE
CITY AND ADOPTING AN AMENDED TRANSMISSION OWNER
TARIFF FOR PURPOSES OF THE CITY'S PARTICIPATION
IN THE CALIFORNIA INDEPENDENT SYSTEM OPERATOR
WHEREAS, the City of Vernon ("City") is a chartered municipal
corporation of the State of California that owns and operates a system
for the generation, purchase, transmission, distribution and sale of
electric capacity and energy; and
WHEREAS, the City is a Participating Transmission Owner
("PTO") with the California Independent System Operator (."ISO") and the
Federal Energy Regulatory Commission ("FERC") has approved its existing
Transmission Owner Tariff ("TO Tariff"); and
WHEREAS, the ISO reimburses the City according to the City's
current Transmission Revenue Requirement ("TRR") in return for the City
turning over to the ISO the operation and control of the City's
transmission entitlements; and
WHEREAS, the City's transmission entitlements include an
ownership interest in the Mead -Phoenix Project and the Mead-Adelanto
Project (collectively, the "Mead Projects") and the California -Oregon
Transmission Project ("COTP"); and
WHEREAS, the City's interest in the Mead Projects and the
COTP is reflected in the City's current TRR and TO Tariff; and
WHEREAS, the City has entered into an agreement to sell its
interest in the Mead Projects to Startrans I.O. LLC (the "Meads
Transaction"), and has entered into a separate agreement to sell its
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interest in the COTP to the Transmission Agency of Northern California
1(the "COTP Transaction" and, collectively with the Meads Transaction,
the "Entitlement Sales"); and
WHEREAS, the City's current TRR and TO Tariff will no longer
be accurate upon the effective date of the Entitlement Sales because
the sales will materially and substantially alter the City's High
Voltage (Over 200 KV) Entitlements located outside the City
(collectively, "High Voltage Entitlements"); and
WHEREAS, it is appropriate for the City to file a new TRR and
an amended TO Tariff with the FERC and the ISO that will reflect the
City's new High Voltage Entitlements as of the effective date of each
Entitlement Sale; and
WHEREAS, neither Entitlement Sale has a fixed closing date,
the City's staff believes it possible that the Meads Transaction and
the COTP Transaction will not close on the same date, and the City's
staff does not know which Entitlement Sale will be completed first; and
WHEREAS, the City desires to efficiently transition from its
current TRR and TO Tariff to its final TRR and final amended TO Tariff
with the minimum number of administrative filings necessary; and
WHEREAS, the City's staff has determined that it is possible
to submit a single filing to the FERC and the ISO that provides for an
interim TRR and interim amended TO Tariff to take effect upon the
closing of the first Entitlement Sale, as well as a final TRR and final
amended TO Tariff to take effect upon the closing of the second
Entitlement Sale; and
WHEREAS, the Brattle Group, an experienced utilities
consulting firm, has prepared, and the City's staff has reviewed, two
possible interim TRRs and two possible interim amended TO Tariffs, so
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I as to account for the possibility of either Entitlement Sale closing
2 first; and
3 WHEREAS, the City's staff has determined that it is possible
4 to file the appropriate interim TRR and interim amended TO Tariff upon
5 the closing of the first Entitlement Sale; and
6 WHEREAS, the City's staff has determined that, regardless of
7 which interim TRR and interim TO Tariff is filed and made effective,
8 the final TRR and final amended TO Tariff can take effect upon
9 notification to the FERC and the ISO that the second Entitlement Sale
10 has closed; and
11 WHEREAS, the City's outside counsel has recommended that the
12 City retain the flexibility to submit a single filing to the FERC and
13 ISO before either of the Entitlement Sales is completed that provides
14 .for two alternative interim TRRs and interim amended TO Tariffs as well
15 as a final TRR and final amended TO Tariff, such that:
16 (1) one interim TRR and interim amended TO Tariff would
17 take effect if the Meads Transaction closes first,
18 (2) the other interim TRR and interim TO Tariff would take
19 effect if the COTP Transaction closes first,
20 (3) the appropriate interim TRR and interim amended TO
21 Tariff would take effect upon notification to the FERC and the ISO of
22 which of the Entitlement Sales has closed first, and
23 (4) the final TRR and final amended TO Tariff would take
24 effect upon the closing of the second Entitlement Sale; and
25 WHEREAS, the Brattle Group has prepared testimony with
26 included exhibits, a copy of which is attached hereto as "Exhibit 5"
27 and made a part hereof, recommending that the City Council adopt each
28 of two possible interim TRRs and a final TRR; and
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WHEREAS, the Brattle Group has prepared, and the City's staff
has reviewed, calculations for an interim TRR which would take effect
if the COTP Transaction is completed first, a copy of which is attached
hereto as "Exhibit 5-D" and made a part hereof, and which will be
implemented by the tariff sheet included as Appendix I of the interim
amended TO Tariff attached hereto as "Exhibit 2" and made a part
thereof; and
WHEREAS, the Brattle Group has prepared, and the City's staff
has reviewed, calculations for an interim TRR which would take effect
if the Meads Transaction is completed first, a copy of which is
attached hereto as "Exhibit 5-E" and made a part hereof, and which will
be implemented by the tariff sheet included as Appendix I of the
interim amended TO Tariff attached hereto as "Exhibit 3" and made a
part hereof; and
WHEREAS, the Brattle Group has prepared, and the City's staff
has reviewed, calculations for a final TRR which would take effect
after the completion of both of the Entitlement Sales, a copy of which
is attached hereto as "Exhibit 5-C" and made a part hereof, and which
will be implemented by the tariff sheet included as Appendix I of the
final amended TO Tariff attached hereto as "Exhibit 4" and made a part
hereof; and
WHEREAS, at the direction of the City's staff, outside
counsel has prepared, and the City's staff has reviewed, two interim
amended TO Tariffs and a final amended TO Tariff; and
WHEREAS, at the direction of the City's staff, outside
counsel has prepared, and the City's staff has reviewed, an interim
amended TO Tariff which would take effect if the COTP Transaction is
completed first, a copy of which is attached hereto as "Exhibit 2" and
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made a part hereof; and
WHEREAS, at the direction of the City's staff, outside
counsel has prepared, and the City's staff has reviewed, an interim
amended TO Tariff which would take effect if the Meads Transaction is
completed first, a copy of which is attached hereto as "Exhibit 3" and
made a part hereof; and
WHEREAS, at the direction of the City's staff, outside
counsel has prepared, and the City's staff has reviewed, a final
amended TO Tariff which would take effect upon completion of both of
the Entitlement Sales, a copy of which is attached hereto as "Exhibit
4" and made a part hereof; and
WHEREAS, a Notice of Public Hearing was posted on March 6,
2008, notifying all interested parties that a hearing to consider
evidence to establish the City's new TRR and amended TO Tariff was
scheduled for March 17, 2008, at approximately 10:00 a.m., subject to
the hearing being continued to a stated time and place without further
notice; and
WHEREAS, on March 17, 2008, the City Council continued the
Public Hearing to March 24, 2008; and
WHEREAS, on March 24, 2008, the City Council held a Public
Hearing in which the City Council took evidence from staff and those
other persons in attendance who wished to be heard on the establishment
of the City's interim TRRs, final TRR, interim amended TO Tariffs, and
final amended TO Tariff; and
WHEREAS, the Light & Power Department has prepared a Staff
Report, dated March 19, 2008, with exhibits, a copy of which is
attached hereto as "Exhibit 1" and made a part hereof, which finds the
TRRs recommended by the Brattle Group and the amended TO Tariffs
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prepared by outside counsel to be reasonable; and
WHEREAS, the Light & Power Department has recommended the
City adopt the interim and final TRRs recommended by the Brattle Group
and the interim and final amended TO Tariffs prepared by outside
counsel; and
WHEREAS, the City Council has heard and considered all
evidence, written and oral, presented in consideration of the adoption
of the City's interim and final TRRs and interim and final amended TO
Tariffs.
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
further finds and determines that all persons have had the opportunity
to be heard or to file written comments to the proposed adoption of the
City's interim and final TRRs and interim and final amended TO Tariffs,
and after due consideration of any and all evidence submitted at the
Public Hearing, determines there are compelling reasons to justify the
adoption of the City's interim and final TRRs and interim and final
amended TO Tariffs.
SECTION 3: The City Council of the City of Vernon hereby
declares that:
(a) any determination made pursuant to this Resolution
regarding the validity or reasonableness of any portion of any TRR or
TO Tariff shall apply only prospectively from the date of this
Resolution; and
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(b) in no way shall this Resolution affect the City
Council's adoption or determination of any previous TRR or TO Tariff.
SECTION 4: The City Council of the City of Vernon hereby
finds that the City's interim and final TRRs, as described in the Staff
Report and the testimony of the Brattle Group and attached hereto as
"Exhibit 5-C", "Exhibit 5-D", and "Exhibit 5-E", are just and
reasonable, and approves the adoption of the same, provided, however:
(a) only one of the interim TRRs will ever be effective
based upon which of the Entitlement Sales is completed first;
(b) such interim TRR shall become effective upon the
filing of that interim TRR with the FERC and the ISO, and the
notification by the City to FERC and the ISO that the Entitlement Sale
associated with such TRR has been completed;
(c) the interim TRR shall cease to be effective and the
final TRR shall become effective upon the filing of notice of
completion of the second of the Entitlement Sales with the FERC and the
ISO; and
(d) in the event that both of the Entitlement Sales are
completed on the same date, then neither of the interim TRRs will
become effective and, instead, the final TRR shall become effective
upon the filing of the final TRR with the FERC and the ISO.
SECTION 5: The City Council of the City of Vernon hereby
finds that the City's interim and final amended TO Tariffs, as
described in the Staff Report and attached hereto as "Exhibit 2",
"Exhibit 3", and "Exhibit 4", are just and reasonable and hereby
approves the adoption of the same, provided, however, that:
(a) only one of the interim amended TO Tariffs will ever
be effective based upon which of the Entitlement Sales is completed
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first;
(b) such interim amended TO Tariff shall become effective
upon the filing of that interim TO Tariff with the FERC and the ISO;
(c) the interim amended TO Tariff shall cease to be
effective and the final amended TO Tariff shall become effective upon
the filing of notice of completion of the second of the Entitlement
Sales with the FERC and ISO; and
(d) in the event that both of the Entitlement Sales are
completed on the same date, then neither of the interim amended TO
Tariffs will become effective and, instead, the final amended TO Tariff
shall become effective upon the filing of the final amended TO Tariff
with the FERC and the ISO.
SECTION 6: The City Council of the City of Vernon hereby
(directs and authorizes the City Attorney to direct outside counsel, on
behalf of the City, to:
(a) file with the FERC and the ISO the appropriate interim
TRR(s) and interim amended TO Tariff(s) and the final TRR and final
amended TO Tariff as and when it is deemed appropriate;
(b) submit to the FERC and the ISO appropriate supporting
documentation, such as this City Council Resolution approving the TRRs
and amended TO Tariffs, the Staff Report, and the testimony of the
Brattle Group in substantially the form presented in "Exhibit 5" and
with exhibits submitted according to the advice of counsel;
(c) notify FERC and the ISO promptly after the first of
the Entitlement Sales is completed which of the Entitlement Sales was
completed first and, therefore, which interim TRR and interim amended
TO Tariff is made effective; and
(d) notify FERC and the ISO promptly after the second of
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I the Entitlement Sales has been completed.
2 SECTION 7: The City Clerk of the City of Vernon shall
3 certify to the passage of this resolution, and thereupon and thereafter
4 the same shall be in full force and effect.
5 APPROVED AND ADOPTED this 24th day of March, 2008.
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8 Name: Ieonis C . Malburg
9 Title: Mayor
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11 ATTEST:
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13 ANUELA GIR ity Clerk
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby
certify that the foregoing Resolution, being Resolution No. 9562, was
duly adopted by the City Council of the City of Vernon at a special
meeting of the City Council duly held on Monday, March 24, 2008, and
thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of
Vernon.
MANUELA GIRON
City Clerk
(SEAL)
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EXHIBIT 1
CITY OF VERNON LIGHT & POWER DEPARTMENT
STAFF REPORT REGARDING THE ESTABLSHMENT OF A NEW
TRANSMISSION REVENUE REQUIREMENT ASSOCIATED WITH
VERNON'S HIGH VOLTAGE (OVER 200 KV) ENTITLEMENTS
LOCATED OUTSIDE OF THE CITY AND ADOPTION OF AN
AMENDED TRANSMISSION OWNER TARIFF FOR PURPOSES OF
THE CITY'S PARTICIPATION IN THE CALIFORNIA INDEPENDENT
SYSTEM OPERATOR.
March 19, 2008
The City of Vernon is a Scheduling Coordinator and a Participating
Transmission Owner ("PTO") in the California Independent System Operator ("ISO")
To participate in the ISO, PTOs are required to turn over administrative control of
their transmission facilities and entitlements to the ISO. In return, the ISO collects
revenues for each PTO pursuant to calculations that reflect the expenses and capital
costs incurred by each PTO to provide transmission services. These calculations
are known as Transmission Revenue Requirements ("TRRs").
The relationship between PTOs and the ISO is governed by a Transmission
Control Agreement ("TCA"), which sets forth specific duties and obligations of all
PTOs.. The TCA requires all PTOs to file a Transmission Owner Tariff ("TO Tariff')
and TRR with the Federal Energy Regulatory Commission ("FERC"). The TCA
further requires all PTOs to file any changes in their TRRs with the FERC.
The City owns both transmission facilities and contractual transmission
entitlements, and turned over operational control of these assets to the CAISO in ,
2001. Specifically, the City owns a share of the Mead -Phoenix Project ("MPP"), a
share of the Mead-Adelanto Project ("MAP") (collectively, the "Mead Projects") and a
share of the California -Oregon Transmission Project ("COTP"). It also has
contractual entitlements to utilize transmission assets pursuant to two long-term
transmission contracts with Southern California Edison and one long-term
transmission contract with the Los Angeles Department of Water and.Power.
Staff Report
TRBAA 2008
Page 2 of 9
The City has entered into contracts to sell its ownership interests in the Mead
Projects and COTP. The Mead Projects will be sold to Startrans I.O. LLC
("Startrans"), and the COTP will be sold to the Transmission Agency of Northern
California ("TANC"). Upon the sale of these assets, the City will no longer be
entitled to collect revenues from their use under its TRR and, therefore, the City is
planning to file a revised TRR at or about the time that the sales are consummated.
This staff report supports the establishment of a new TRR and the
amendment of Vernon's TO Tariff to reflect the ultimate disposition of Vernon's High
Voltage (Over 200 KV) Entitlements located outside of the City after the Mead
Projects and the COTP are sold.
TIMING OF THE SALE OF THE MEAD PROJECTS AND THE COTP
The City's staff cannot predict exactly when the sales of the Mead Projects
and the COTP will close, and it is unlikely that both sales will close on the same day.
Thus, the City must be prepared to file an interim TRR and interim amended TO
Tariff to reflect the fact that the City has sold either the Mead Projects or the COTP
while still retaining the other. Furthermore, the City must be prepared to file a final
TRR and final amended TO Tariff when the other asset has been sold. In the event
that both sales do close on the same day, the City must be prepared to dispense
with filing an interim TRR and interim amended TO Tariff and instead file a final TRR
and final amended TO Tariff.
CALCULATION OF VERNON'S TRRs
The Brattle Group, an experienced utilities consulting firm, has prepared two
interim TRRs and a final TRR, as explained in the prepared testimony with included
exhibits, attached hereto as "Exhibit 5". The City's staff has reviewed these TRRs.
These TRRs, if approved, will be implemented by a tariff sheet included as Appendix
I of the appropriate TO Tariff.
The first interim TRR, identified herein as "Interim TRR (Without COTP)", is
calculated to reflect the sale of the COTP and the temporary retention of the Mead
Projects. The second interim TRR, identified herein as "Interim TRR (Without Mead
Staff Report
TRBAA 2008
Page 3 of 9
Projects)", is calculated to reflect the sale of the. Mead Projects and the temporary
retention of the COTP. The final TRR, identified herein as "Final TRR", is calculated
to reflect the sale of both the Mead Projects and the COTP.
In order to reduce the likelihood that either the ISO or another PTO
challenges the validity of the City's interim or final TRRs, wherever possible data
provided by the ISO itself has been used. Specifically, in November 2007 in
conjunction with litigation at FERC and the D.C. Circuit U.S. Court of Appeals related
to the City's TRR, the ISO filed recommended adjustments to the City's TRR. The
interim TRR calculations described below both incorporate data submitted by the
ISO in support of these recommended adjustments. In addition, the calculation of
the interim TRR (Without COTP) includes property tax data gathered from a filing
submitted by Startrans to FERC, which supported of Startrans' proposed TRR for
the Mead Projects after the transaction has closed.
CALCULATION OF THE INTERIM TRR (WITHOUT MEAD
PROJECTS) BY THE BRATTLE GROUP
The Interim TRR (Without Mead Projects), attached hereto as "Exhibit 5-E",
,has a total cost of service of $4,580,591. This amount is calculated as follows:
Line 1 — Adjusted Gross Plant: $35,448,988. This figure is calculated by
subtracting the ISO's gross plant value for the Mead Projects from the gross plant in
service amount calculated according to the ISO's proposed changes to the City's
August 2000 FERC filing.
Line 2 — Adjusted Accumulated Depreciation: $14,744,884. This figure takes
into account the changes in the value of Vernon's gross plant and the revised
depreciation rates proposed by the ISO. Per the ISO, the City's gross plant was
depreciated using a 2.875% rate through December 31, 2000 and a 3.14% rate
thereafter. Total depreciation was then allocated to the Mead Projects and the
COTP.
Staff Report
TRBAA 2008
Page 4 of 9
Line 3 — Net Plant in Service: $20,704,104. Net plant is calculated by
subtracting accumulated depreciation from gross plant. Under standard rate
making, an entity is allowed to earn a return on its net plant in service.
Line 4 — Cash Working Capital: $118,248. The ISO did not propose any
change to the City's calculation of Cash Working Capital, so the current calculation
remains unchanged from the City's Compliance TRR. This figure is equal to the
sum of the City's O&M Expense, A&G Expense, and Regulatory Expense multiplied
by a 1/8 (or 0.125).
Line 5 — Total Rate Base: $20,822,352. In the absence of any additional
capital contributions, Total Rate Base is the sum of Net Plant in Service and Cash
Working Capital.
Line 6 — Return Requirement: $1,851,127. This figure is calculated by
multiplying Net Plant in Service by the ISO rate of return of 8.89%.
Line 7 — Annual Depreciation Expense: $1,113,098. This figure is calculated
by multiplying the City's Gross Plant in Service by the ISO depreciation rate of
3.14%.
Line 8 — Operation & Maintenance Expense: $698,249. This figure is based
on historical expenses.
Line 9 — Transmission Service: $670,399. This figure is calculated by
annualizing the value of Existing Transmission Contracts.
Line 10 — Administration & General Expense: $4,738. This figure is
calculated from data provided by the City's staff.
Line 11 — Property Tax: $0.
Staff Report
TRBAA 2008
Page S Of 9
Line 12 — Regulatory Expense: $243,000. This figure is calculated from data
provided by regulatory counsel and reviewed by the, City's staff.
Line 13 — Total Cost of Service: $4,580,591. This figure is the sum of Line 6
through Line 12.
CALCULATION OF THE INTERIM TRR (WITHOUT COTP) BY THE
BRATTLE GROUP
The Interim TRR (Without COTP), attached hereto as "Exhibit 5-D", has a
total cost of service of $3,131,282. This amount is calculated as follows:
Line 1 — Adjusted Gross Plant: $21,432,163. This figure is calculated by
subtracting the ISO's gross plant value for the COTP from the gross plant in service
amount calculated according to the ISO's proposed changes to the City's August
2000 FERC filing.
Line 2 — Adjusted Accumulated Depreciation: $7,116,051. This figure takes
into account the changes in the value of Vernon's gross plant and the revised
depreciation rates proposed by the ISO. Per the ISO, the City's gross plant was
depreciated using a 2.875% rate through December 31, 2000 and a 3.14% rate
thereafter. Total depreciation was then allocated to the Mead Projects and the
COTP.
Line 3 — Net Plant in Service: $14,316,112. Net plant is calculated by
subtracting accumulated depreciation from gross plant. Under standard rate
making, an entity is allowed to earn a return on its net plant in service.
Line 4 — Cash Working Capital: $52,149. The ISO did not propose any
change to the City's calculation of Cash Working Capital, so the current calculation
remains unchanged from the City's Compliance TRR. This figure is equal to the
sum of the City's O&M Expense, A&G Expense, and Regulatory Expense multiplied
Staff Report
TRBAA 2008
Page 6of9
by a 1/8 (or 0.125).
Line 5 Total Rate Base: $14,368,260. In the absence of any additional
capital contributions, Total Rate Base is the sum of Net Plant in Service and Cash
Working Capital.
Line 6 — Return Requirement: $1,277,338. This figure is calculated by
multiplying Net Plant in Service by the ISO rate of return of 8.89%.
Line 7 — Annual Depreciation Expense: $672,970. This figure is calculated
by multiplying the City's Gross Plant in Service by the ISO depreciation rate of
3.14%.
Line 8 — Operation & Maintenance Expense: $169,452. This figure is
calculated to match the Operation & Maintenance Expense presented by Startrans
in its TRR filing related to the acquisition of the Mead Projects.
Line 9 — Transmission Service: $670,399. This figure is calculated by
annualizing the value of Existing Transmission Contracts.
Line 10 — Administration & General Expense: $4,738. This figure is
calculated from data provided by the City's staff.
Line 11 — Property Tax: $93,385. This figure is calculated to match the
Property Tax presented by Startrans in its TRR filing related to the acquisition of the
Mead Projects.
Line 12 — Regulatory Expense: $243,000. This figure is calculated from data
provided by regulatory counsel and reviewed by the City's staff. .
Line 13 — Total Cost of Service: $3,131,282. This figure is the sum of Line 6
Staff Report
TRBAA 2008
Page 7 of 9
through Line 12.
CALCULATION OF THE FINAL TRR BY THE BRATTLE GROUP
The Final TRR, attached hereto as "Exhibit 5-C", has a total cost of service of
$918,137. This amount is calculated as follows:
Line 1 — Adjusted Gross Plant: None.
Line.2 — Adjusted Accumulated Depreciation: None.
Line 3 — Net Plant in Service: None.
Line 4 — Cash Working Capital: None.
Line 5 — Total Rate Base: None
Line 6 — Return Requirement: None.
Line 7 — Annual Depreciation Expense: None.
Line 8 — Operation & Maintenance Expense: None.
Line 9 — Transmission Service: $670,399. This figure is calculated by
annualizing the value of Existing Transmission Contracts.
Line 10 —Administration.& General Expense: $4,738. This figure is
calculated from data provided by the City's staff.
Line 11 —Property Tax: None.
Line 12 — Regulatory Expense: $243,000. This figure is calculated from data
Staff Report
TRBAA 2008
Page 8 of 9
provided by regulatory counsel and reviewed by the City's staff.
Line 13 — Total Cost of Service: $918,137
AMENDMENT OF THE TO TARIFF
Just as it is necessary to prepare multiple interim TRRs to account for the
different possible timings of the sales of the Mead Projects and the COTP, so too is
it necessary to prepare multiple interim amended TO Tariffs and a final amended TO
Tariff.
At the direction of the City's staff, outside counsel has prepared, and the
City's staff has reviewed, an Interim Amended TO Tariff (Without Mead Projects),
attached hereto as "Exhibit 3", which will be filed with the FERC and the ISO if the
sale of the Mead Projects to Startrans is completed first. This tariff will become
effective only upon filing. The Interim Amended TO Tariff (Without Mead Projects) is
the same as the City's current TO Tariff, except that the tariff has been modified to
reflect the divestiture of the Mead Projects.
At the direction of the City's staff, outside counsel has prepared, and the
City's staff has reviewed, an Interim Amended TO Tariff (Without COTP), attached
hereto as "Exhibit 2", which will be filed with the FERC and the ISO if the sale of the
COTP to TANC is completed first. This tariff will become effective only upon filing.
The Interim Amended TO Tariff (Without COTP) is the same as the City's current TO
Tariff, except that the tariff has been modified to reflect the divestiture of the COTP.
At the direction of the City's staff, outside counsel has prepared, and the
City's staff has reviewed, a Final Amended TO Tariff, attached hereto as "Exhibit 4",
which will be filed with the FERC and the ISO when the second transactions closes.
If the COTP and Mead Projects sales close on the same date, the Final Amended
TO Tariff will be filed with the FERC and the ISO on such date and no interim
amended TO Tariff will be filed. The Final Amended TO Tariff is essentially the
same as the City's current TO Tariff, except that the tariff has been modified to
reflect the divestiture of both the COTP and the Mead Projects.
Staff Report
TRBAA 2008
Page 9 of 9
RECOMMENDATIONS
1. Approve the Interim TRR (Without Mead Projects) of $4,580,591, as reflected
in the attached "Exhibit 5-E", to be filed with FERC and the ISO if the sale of
the Mead Projects to Startrans is completed first and to be effective upon the
filing of such Interim TRR with FERC and the. ISO.
2. Approve the Interim TRR (Without COTP) of $3,131,282, as reflected in the
attached "Exhibit 5-D", to be filed with FERC and the ISO if the sale of the
COTP to TANC is completed first and to be effective upon the filing of such
Interim TRR with FERC and the ISO.
3. Approve the Final TRR of $918,137, as reflected in the attached "Exhibit 5-C",
to be effective either (a) upon the notification to FERC and the ISO that the
second transaction has been completed, or (b) upon filing with FERC and the.
ISO if both transactions are completed on the same date.
4. Approve the Interim Amended TO Tariff (Without Mead Projects), attached
hereto as "Exhibit 3", to be filed with FERC and the ISO if the sale of the
Mead Projects to Startrans is completed first and to be effective upon the
filing of such Interim Amended TO Tariff with FERC and the ISO.
5. Approve the Interim Amended TO Tariff (Without COTP), attached hereto as
"Exhibit 2", to be filed with FERC and the ISO if the sale of the COTP to
TANC is completed first and to be effective upon the filing of such Interim
Amended TO Tariff with FERC and the ISO.
6. Approve the Final Amended TO Tariff, attached hereto as "Exhibit 4", to be
effective either (a) upon the notification to FERC and the ISO that the second
transaction has been completed, or (b) upon filing with FERC and the ISO if
both transactions are completed on the same date.
7. Approve the submission to the FERC and the ISO of the appropriate interim
and final TRRs and amended TO Tariffs, and supporting documentation such
as the City Council Resolution approving the TRRs and amended TO Tariffs,
this Staff Report, and the testimony of the Brattle Group in substantially the,
form presented in "Exhibit 5" and with exhibits submitted according to the
advice of counsel.
EXHIBIT 2
CITY OF VERNON, CALIFORNIA
TRANSMISSION OWNER TARIFF
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution. No. 7751 Effective: January 1, 2001
Sheet No. I
Transmission Owner Tariff (cont.)
TABLE OF CONTENTS
Page No.
1.
Preamble................................................:................................................................................................
4
2.
Effective Date.........................................................................................................................................
4
3.
TO Definitions........................................................................................................................................4
4.
Eligibility................................................................................................................................................
6
5.
Access Charges.......................................................................................................................................
6
5.1 Transmission Revenue Requirement.................:.......................................................................
7
5.2 Transmission Revenue Balancing Account Adjustment("TRBAA")....................................... 7
6.
Ancillary Services —Applicability and Charges..................................................................................... 7
7.
..................................................................................................
Billing and Payment .......................... ••••
7
8.
Expansion and Interconnection for Vernon's Interests in MPP, MAP, and Marketplace Substation.....
7
8.1 Expansion..................................................................................................................................8
8.2 Interconnection..........................................................................................................................
8
8.3 Project Managers and Operators ............•. ..................••••
9
8a.
Obligation to Interconnect or Construct Transmission Expansions and Facility Upgrades ....................
9
8a.1 Participating TO Obligation to Interconnect.............................................................................
9
8a.2 Participating TO Obligation to Construct Transmission Expansions or Facility Upgrades ....
10
8a.3 Request for FERC Deference Regarding Need Determination...............................................11
9.
Expansion Process for Vernon's Interests In MPP, MAP, and Marketplace Substation .....................11
9a.
Expansion Process...............................................................................................................................
11
9a.1 Determination of Facilities......................................................................................................
11
9a.2 Obligation to Build..................................................................................................................
12
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 2
Superceding Original Sheet No. 2
Transmission Owner Tariff (cont.)
9a.3 Provisions. Relating To Transmission Construction On the Systems Of Other TOs ............... 14
10. Interconnection Process for Vernon's Interests In MPP, MAP, and Marketplace Substation ..............15
10a. Interconnection Process........................................................................................................................
15
10a.1
Applicability.: ................................................................................ I ...........................................
15
10a.2
Applications............................................................................................................................
15
10a.3
Completed Application............................................................................................................
15
10a.4
Notice of Need for System Impact Study................................................................................16
10a.5
System Impact Study Cost Reimbursement and Agreement ...................................................
16
10a.6
System Impact Study Procedures............................................................................................
17
10a.7
Relevant Sections Apply Upon Receipt of Facilities Study Agreement .................................
18
10a.8
Partial Interim Service.............................................................................................................
18
10a.9
Expedited Procedures for New Facilities................................................................................
18
11. Uncontrollable Forces and Indemnification..........................................................................................18
11.1 Procedures to Follow if Uncontrollable Force Occurs............................................................ 18
11.2 Indemnification....................................................................................................................... 19
12. Regulatory Filings........................................................................................................................I........19
13. Miscellaneous.......................................................................................................................................19
13.1
Notices.....................................................................................................................................19
13.2
Waiver..........'...........................................................................................................................19
13.3
Confidentiality .........................................................................................................................20
13.4
Titles........................................................................................................................................20
13.5
Severability ..............................................................................................................................20
13.6
Preservation of Obligations..................................................................................................... 21
13.7
Governing Law........................................................................................................................
21
13.8
Appendices Incorporated.........................................................................................................
21
13.9
Consistency with ISO Tariff.................................................................................................... 21
13.10
Disputes...................................................................................................................................21
APPENDIXI...................................................................................................................................................... 22
APPENDIXII..................................................................................................................................................... 23
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 3
Superceding Original Sheet No. 3
Transmission Owner Tariff (cont.)
I. Preamble. Vernon's TRR for its high voltage transmission facilities and Entitlements placed under
the ISO's operational control, and certain terms and conditions relating to transmission expansion of
and interconnection with Vernon's high voltage transmission facilities and' Entitlements placed under
the ISO's operational control, are set forth in this TO Tariff.
2. Effective Date. This TO Tariff is effective on the date on which Vernon became a Participating TO,
January 1, 2001, and shall continue to be effective so long as Vernon is a party to the TCA.
3. TO Definitions. Certain capitalized terms used in this TO Tariff that are set out immediately below
shall have the meanings set out immediately below.. Capitalized terms used in this tariff and not
defined below shall have the meanings set out in the ISO Tariff as it may be amended from time to
time.
3.1 Completed Application. An application that satisfies all of the information and other
requirements of this TO Tariff, including any required deposit
3.2 Direct Assignment Facilities. Facilities or portions of facilities that are constructed by the
Participating TO for the sole use or benefit of a particular party requesting Interconnection
under this TO Tariff. Direct Assignment Facilities shall be specified in the Interconnection
Agreement that governs service to such party.
3.3 Facilities Study Agreement. An agreement between a Participating TO and either a Market
Participant, Project Sponsor, or identified principal beneficiaries pursuant to which the
Market Participants, Project Sponsor, and identified principal beneficiaries agree to reimburse
the Participating TO for the cost of a Facility Study.
3.4 Facility or Facilities Study. An engineering study conducted by a Participating TO to
determine required modifications to the Participating TO's transmission system, including the
cost and scheduled completion date for such modifications that will be required to provide
needed services.
3.5 Local Regulatory Authority. In the case of Vernon, the Vernon City Council.
3.6 MAP Joint Ownership Agreement. That certain agreement entered into by the Mead-
Adelanto owners, as the same may be revised, amended or supplemented from time to time.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 4
Superceding Original Sheet No. 4
Transmission Owner Tariff (cont.)
3.7 MAP Coordinating Committee. Governing committee of the MAP.
3.8 MAP Operation Agreement. That certain agreement entered into by the Mead-Adelanto
owners and Los Angeles, which, among other things, designates Los Angeles as operation
manager for the Mead-Adelanto Project.
3.9 Marketplace Administrative Committee. Governing committee of the Marketplace
Substation.
3.10 Marketplace Owners. Each of the Mead -Phoenix owners and each of the Mead-Adelanto
owners, their successors and assigns.
3.11 Marketplace Substation. The common terminal for the Mead -Phoenix and Mead-Adelanto
Projects and includes the Marketplace -McCullough tie line as common facilities, as more
fully described in the Marketplace Substation Participation Agreement.
3.12 Marketplace Substation Participation Agreement. That certain agreement entered into by
the Marketplace Owners, which provides, among other things, for ownership, construction,
operation, maintenance, and rights of use associated with the Marketplace Substation.
3.13 Mead-Adelanto Project or MAP. A 500 kV AC transmission line with termination
facilities at the Adelanto Switching station and Marketplace Substation, as more fully
described in the Mead-Adelanto Project Agreements as defined in the MAP Joint Ownership
Agreement.
3.14 Mead -Phoenix Project or MPP. A 500 kV AC transmission line interconnecting the
Westwing Switchyard, Mead Substation, and Marketplace Substation, as more fully described
in the Mead -Phoenix Agreements as defined in the Mead -Phoenix Project Joint Ownership
Agreement.
3.15 MPP Joint Ownership Agreement. That certain agreement entered into by the Mead -
Phoenix owners, as the same may be revised, amended or supplemented from time to time.
3.16 MPP Management Committee. Governing committee of the MPP.
3.17 MPP Operation Agreement. That certain agreement entered into by the Mead Phoenix
owners, SRP and.Western, which, among other things, designates SRP and Western as
operation managers for the Mead -Phoenix Project.
3.18 Net FTR Revenue. The sum of: 1) The revenue received by the Participating TO from the
sale, auction, or other transfer of the FTRs provided to it pursuant to Section 36.4.3 FTR, or
any substantively,identical successor provision, of the ISO 'Tariff; and 2) For each hour: a) the
Usage Charge revenue received by the Participating TO associated with its Section 36.4.3
FTRs; minus b) Usage Charges that are: i) incurred by the Scheduling Coordinator for the
Participating TO under
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
Second Revised Sheet No. 5
Superceding First Revised Sheet No. 5
Transmission Owner Tariff (cont.)
ISO Tariff Section 27.1.2.1.4, ii) associated with the Participating TO's Section36.4.3 FTRs,
and iii) incurred by the Participating TO for its energy transactions but not incurred as a result
of the use of the transmission by a third -party and minus c) the charges paid by the
Participating TO pursuant to Section 27.1.2.1.4, to the extent such charges are incurred by the
Scheduling Coordinator of the Participating TO on Congested Inter -zonal Interfaces that are
associated with the Section 36.4.3 FTRs provided to the Participating TO. The component of
Net FTR Revenue represented by item 2) immediately above shall not be less than zero for
any hour.
3.19 Participating TO. A party to the TCA whose application under Section 2.2 of the TCA has
been accepted and who has placed its transmission assets and Entitlements under the ISO's
Operational Control in accordance with the TCA. A Participating TO may be an Original
Participating TO or a New Participating TO. For purposes of this TO Tariff, the Participating
TO is Vernon.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 5a
Superceding Original Sheet No. 5a
Transmission Owner Tariff (cont.)
3.20 Project Proponent. A Market Participant or group of Market Participants that: (i) advocates
a transmission addition or upgrade; (ii) is unwilling to pay the full cost of the proposed
transmission addition and upgrade, and thus is not a Project Sponsor; and (iii) initiates
proceedings under the ISO ADR Procedures to determine the need for the proposed
transmission addition or upgrade.
3.21 System Impact Study. An engineering study conducted by a Participating TO to determine
whether a request for Interconnection to the Participating TO's transmission system would
require new transmission additions or upgrades..
3.22 System Impact Study Agreement. An agreement between a Participating TO and an entity
that has requested Interconnection to the Participating TO's transmission system pursuant to
which the entity requesting Interconnection agrees to reimburse the Participating TO for the
cost of a System Impact Study.
3.23 Transmission Revenue Balancing Account Adjustment ff RBAA" ). A mechanism
established by the Participating TO which will ensure that all Transmission Revenue Credits
and other credits specified in Sections 6 and S of Appendix F, Schedule 3 of the ISO Tariff,
flow through to ISO Tariff and TO Tariff transmission customers.
3.24 Transmission Revenue Credit. Collectively, 1) the sum of: a) all revenues received by the
Participating TO from the ISO for Wheeling service, plus b) Usage Charge revenues received
by the Participating TO pursuant to Section 27.1.2.1.6 (ii) of the ISO Tariff, plus c) NET FTR
Revenue received by the Participating TO; minus 2) any charges attributable to the
Participating TO (but not attributable to the FTR Holder) pursuant to ISO Tariff 27.1.2.1.7.
3.25 Transmission Revenue Requirement. The TRR is the total annual authorized revenue
requirements associated with transmission facilities and Entitlements turned over to the
Operational Control of the ISO by the Participating TO. The costs of any transmission facility
turned over to the Operational Control of the ISO shall be fully included in the Participating
TO's TRR. The TRR includes the costs of transmission facilities and Entitlements and
deducts Transmission Revenue Credits and credits for Standby Transmission Revenue and the
transmission revenue expected to be actually received by the Participating TO for Existing
Rights and Converted Rights. The TRR is shown in Appendix I.
4. Eligibility. Transmission service over Vernon's high voltage transmission facilities and Entitlements
placed under the ISO's Operational Control shall be provided only to Eligible Customers as defined
by the ISO Tariff. Any dispute as to whether a customer is eligible for wholesale transmission service
shall be resolved by FERC and any dispute as to whether a Vernon End -Use Customer is eligible for
service under this TO Tariff shall be resolved by the Local Regulatory Authority. At the present time,
there are no Vernon End -Use Customers eligible for service under this tariff.
5. Access Charges. The applicable Access Charges are provided in the ISO Tariff.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
Second Revised Sheet No. 6
Superceding First Revised Sheet No. 6
Transmission Owner Tariff (cont.)
5.1 Transmission Revenue Requirement. As set forth in the ISO Tariff, the Transmission
Revenue Requirement for each Participating TO shall be used to develop the Access Charges
set forth in the ISO Tariff. Vernon's Transmission Revenue Requirement is set forth in
Appendix I.
5.2 Transmission Revenue Balancing Account Adjustment ("TRBAA"). The Participating
TO shall maintain a Transmission Revenue Balancing Account ("TRBA") that will ensure
that all Transmission Revenue Credits and the refunds, specified in Sections 6 and 8 of
Appendix F, Schedule 3 of the ISO Tariff, flow through to transmission customers. The
TRBAA shall be equal to: TRBAA = TRCF + TRCT + I .
TRCT = The balance representing the prior period difference between the projected
Transmission Revenue Credits and the actual credits.
TRCF = The forecast of Transmission Revenue Credits for the following calendar year.
I = The interest balance for the TRBA, which shall be calculated using the interest rate
pursuant to Section 35.19(a) of FERC's regulations under the Federal Power Act
(18 C.F.R. § 35.19(a)). Interest shall be calculated based on the average TRBA
principal balance each month, compounded quarterly.
The Vernon TRBAA, calculated in accordance with the ISO Tariff and approved by the City
Council, is stated in Appendix I.
6. Ancillary Services —Applicability and Charges. If any Ancillary Services are required, Vernon will
not provide such services, but transmission customer will be required to meet any such requirement in
accordance with the ISO Tariff.
7. Billing and Payment.
7.1 [intentionally left blank]
7.2 The ISO, in accordance with the ISO Tariff, shall pay the Participating TO, among other
things, Wheeling, Usage, Access Charge revenues, and FTR auction proceeds (excluding
Usage Charge revenues payable to FTR Holders) in accordance with the ISO Tariff.
7.3 Users of Vernon's high voltage transmission facilities and Entitlements placed under the
ISO's Operational Control shall pay to the ISO all applicable charges in accordance with the
ISO Tariff.
8. Expansion and Interconnection for Vernon's Interests in MPP, MAP, and Marketplace
Substation. Expansion of and/or interconnection to the high voltage transmission facilities presently
placed under the ISO's Operational Control by Vernon, which consist of Vernon's minority interests
in MPP, MAP, and the Marketplace
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 7
Superceding Original Sheet No. 7
Transmission Owner Tariff (cont.)
Substation, require -approval of the owners and/or the management committees of those facilities.
Therefore Vernon does not have the legal authority to compel expansion and interconnection. Vernon
will submit, or assist in the submission of, expansion and/or interconnection requests from third
parties to the appropriate bodies of a project pursuant to the individual agreements. It is Vernon's
intent to facilitate the submission of such requests to the full extent allowed by the agreements
governing or otherwise applying to those projects and the applicable laws and regulations. The project
agreements have the provisions, described immediately below, that address expansion and
interconnection requests. At this time, the projects do not have explicit procedures for expansions and
interconnection requests. In some cases, such procedures may be under development. Third parties
making such requests will be responsible for reimbursing all of Vernon's reasonable expenses
incurred by Vernon in facilitating submission of such requests to such governing bodies. Sections 8a,
9a, and 10a, and their subparts, of this Vernon TO Tariff shall apply as described in Section 8a.
8.1 Expansion
8.1.1 Mead-Adelanto Project. Pursuant to Section 11.4 of the MAP Operation Agreement,
the Project Coordinating Committee may consider increasing the available
transmission capability of the transmission line.
8.1.2 Mead -Phoenix Project. Pursuant to Section 11.4 of the MPP Operation Agreement,
the Project Management Committee may consider increasing the available
transmission capability of the transmission line.
8.1.3 Marketplace Substation. Pursuant to Section 10.6 of the Marketplace Substation
Participation Agreement, the Administrative Committee may consider increasing the
capability of the Substation.
8.2 Interconnection
8.2.1 Mead-Adelanto Project. Pursuant to Section 6.2.10 of the MAP Ownership
Agreement, the Project Coordinating Committee has the power to approve and
designate contracts.
8.2.2 Mead -Phoenix Project. Pursuant to Section 6.2.10 of the MPP Ownership
Agreement the Project Management Committee has the power to approve and
designate contracts.
8.2.3 Marketplace Substation. Pursuant to Section 13 of the Marketplace Substation
Participation Agreement, any entity may interconnect transmission lines at the
Marketplace Substation subject to approval by
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 8
Superceding Original Sheet No. 8
Transmission Owner Tariff (cont.)
each Marketplace Owner and execution of an interconnection agreement between the
Marketplace Owners and the requesting entity.
8.3 Project Managers and Operators. Each transmission project in which Vernon has
Entitlements has a project manager and an operating agent. They are as follows and can be
contacted in connection with any request for expansion or interconnection.
Project Manager Operating Agent
Mead -Phoenix Project SRP, WAPA (DSW)
Mead-Adelanto Project LADWP LADWP
Marketplace Substation LADWP LADWP
8a. Obligation to Interconnect or Construct Transmission Expansions and Facility Upgrades.
8a.1 Participating TO Obligation to Interconnect. Sections 8a, 9a, and 10a, and their subparts,
are provided for consistency with other PTOs' TO Tariffs and for potential future application
should Vernon acquire any transmission facilities or acquire additional 10a legal authority in
its existing facilities which would provide Vernon sufficient legal authority to implement
these Sections. These Sections 8a, 9a, and 10a have no current application to the transmission
facilities turned over to ISO operational control by Vernon, which facilities are Vernon's
minority interests in, MAP, MPP, and the Marketplace Substation, which are covered solely
by Sections 8, 9, and 10 as to expansions and interconnections. Neither are they presently
applicable to any other Vernon facilities. If the situation changes so that Vernon has legal
authority over transmission facilities so that Vernon is able to implement the provisions of
Sections 8a, 9a, and 1 Oa so that those provisions become effective, to the extent consistent
with Sections 9a.2.1 and 9a.3.3 of this TO Tariff, the Participating TO shall, at the request of a
third party pursuant to Section 210, interconnect its system to the generation of such third
party, or modify an existing Interconnection. Interconnections under this TO Tariff shall be
available to entities eligible to request interconnection consistent, with the provisions of
Section 210(a) of the FPA.
8a.1.1 Upgrade to Transmission System. Interconnection must be consistent with
Good Utility Practice, in conformance with all Applicable
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008
Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 9
Superceding Original Sheet No. 9
Transmission Owner Tariff (cont.)
Reliability Criteria, all applicable statutes, and regulations. The Participating
TO will not upgrade its existing or planned transmission system to
accommodate the Interconnection if doing so would impair system reliability, or
would otherwise impair or degrade pre-existing firm transmission service.
8a.1.2 Costs Associated with Interconnection. The cost of any Direct Assignment
Facilities constructed pursuant to this section shall be borne by the party
requesting the Interconnection. Any additional costs associated with
accommodating the Interconnection shall be allocated in accordance with the
cost responsibility methodology set forth in the ISO Tariff for transmission
expansions or upgrades. Any disputes regarding such cost allocation shall be
resolved in accordance with the ISO ADR Procedures. If a Market Participant
fails to raise through the ISO ADR Procedures a dispute as to whether a
proposed transmission addition or upgrade is needed, or as to the identity, if
any, of the beneficiary, then the Market Participant shall be deemed to have
waived its right to raise such dispute at a later date. The determination under the
ISO ADR Procedures as to whether the transmission addition or upgrade is
needed and the identity, if any, of the beneficiaries, including any determination
by FERC or on appeal of a FERC determination in accordance with that
process, shall be final.
8a.1.3 Execute Interconnection Agreement. Prior to the construction of any
Interconnection facilities pursuant to this TO Tariff, the party requesting an
Interconnection shall execute an appropriate Interconnection Agreement that
will be filed with FERC, or the Local Regulatory Authority, in the case of a
Local Publicly Owned Electric Utility, and that will include, without limitation,
cost, responsibilities for engineering, equipment, and construction costs. All
costs shall be paid in advance by the requesting party.
8a.1.4 Coordination with ISO on Interconnection Requests. The Participating TO
shall coordinate with the ISO, pursuant to the provisions of the TCA, in
developing Interconnection standards and guidelines for processing
Interconnection requests under this TO Tariff.
8a.2 Participating TO Obligation to Construct Transmission Expansions or Facility.
Upgrades. The Participating TO shall be obligated to: (1) perform System Impact or Facility
Studies where the Project Sponsor or the ISO agrees to pay the study cost and specifies the
project objectives to be achieved, and (2) build transmission additions and facility upgrades
where the Participating TO is obligated to construct or expand facilities in accordance with
and subject to the limitations of the ISO Tariff and this TO Tariff.
8a.2.1 Obligation to Construct. A Participating TO shall not be obligated to
construct or expand Interconnection facilities or system upgrades unless
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 10
Transmission Owner Tariff (cont.)
and until the conditions stated in Section 9a.2.1 hereof have been satisfied.
8a.2.2 Local Furnishing Participating TO Obligation to Construct. A Local
Furnishing Participating TO shall not be obligated to construct or expand
Interconnection facilities or system upgrades unless and until the conditions
stated in Section 9a.3.3 hereof have been satisfied.
8a.3 Request for FERC Deference Regarding Need Determination. It is intended that FERC
grant substantial deference to the factual determinations of the ISO, (including the ISO's
ADR Procedures), the Vernon City Council, W SCC, or RTG coordinated planning processes
as to the need for or construction of a facility, the need for full cost recovery, and the
allocation of costs.
9. Expansion Process for Vernon's Interests In MPP, MAP, and Marketplace Substation. The
Expansion process for Vernon's Interests in MPP, MAP, and Marketplace Substation, -which it has
turned over to ISO operational control, is as stated in Section 8 above, Section 9a and its subparts do
not currently apply to those interests or any other Vernon facilities.
9a. Expansion Process.
9a.1 Determination of Facilities. A Participating TO shall perform a Facilities Study in
accordance with this Section where (1) the Participating TO is obligated to construct or
expand facilities in accordance with the ISO Tariff and this TO Tariff; (2) a Market
Participant agrees to pay the costs of the Facilities Study and specifies the project objectives
to be achieved in terms of increased capacity or reduced congestion; or (3) the Participating
TO is required to perform a Facilities Study pursuant to the ISO Tariff.
9a.1.1 Payment of Facilities Study's Cost.
9a.1.1.1 Market Participant to Pay for Facilities Study. Where a Market
Participant requests a Facilities Study and the need for the
transmission addition or upgrade has not yet been established in
accordance with the procedures established herein and the ISO
Tariff, the Market Participant shall pay the cost of the Facilities
Study.
9a.1.1.2 Project Sponsor or Project Proponent to Pay for Faculties
Study. Where the facilities to be added or upgraded have been
determined to be needed in accordance with the procedures
established herein and the ISO Tariff, the Project Sponsor, Project
Proponent, or the ISO requesting the study shall pay the reasonable
cost of the Facilities Study. When the Participating TO is the
Project Sponsor in accordance with the ISO Tariff, the costs of the
Facilities Study shall be recovered through the Access Charges and
transmission rates.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. I 1
Superceding Original Sheet No. I I
Transmission Owner Tariff (cunt.)
9a.1.1.3 Principal Beneficiaries to Pay for Facilities Study. Where the
facilities to be added or upgraded have been determined to be
needed and the principal beneficiaries have been identified by the
ISO or ISO ADR Procedures in accordance with the ISO Tariff, the
Project Sponsor and the identified principal beneficiaries shall pay
the reasonable cost of the Facilities Study, in such proportions as
may be agreed, or, failing agreement, as determined in accordance
with the ISO ADR Procedures.
9a.1.2 Payment Procedure. Where a Facilities Study is being conducted pursuant to
this TO Tariff, the Participating TO shall, as soon as practicable, tender to the
Market Participant, Project Sponsor, Project Proponent, ISO, or identified
principal beneficiaries, as the case may be, a Facilities Study Agreement that
defines the scope, content, assumptions, and terms of reference for such study,
the estimated time required to complete it, and such other provisions as the
parties may reasonably require and pursuant to which such Market Participant,
Project Sponsor, Project Proponent, the ISO, or identified principal beneficiaries
agree to reimburse the Participating TO the reasonable cost of performing the
required Facilities Study. I£ the Market Participant, Project Sponsor, Project
Proponent, the ISO, or identified principal beneficiaries, as the case may be,
agree to the terms of the Facilities Study Agreement, they shall execute the
Facilities Study Agreement and return it to the Participating TO within ten
Business Days. If such Market Participant, Project Sponsor, Project Proponent,
the ISO, or identified principal beneficiary elects not to execute a Facilities
Study Agreement, the Participating TO shall have no obligation to complete a
Facilities Study.
9a.1.3 Facilities Study Procedures. Upon receipt of an executed Facilities Study
Agreement, a copy of which has been provided to the ISO by the party
requesting the Facilities Study, the Participating TO will use due diligence to
complete the required Facilities Study in accordance with the terms of the
Facilities Study Agreement.
9a.2 Obligation to Build.
9a.2.1 Due Diligence to Construct. Subject to Section 9a.3.3 of this TO Tariff, the
Participating TO shall use due diligence to construct, within a reasonable time,
additions or upgrades to its transmission system that it is obligated to construct
pursuant to the ISO Tariff and this TO Tariff. The Participating TO's obligation
to build will be subject to: 1) its ability, after making a good faith effort, to
obtain the necessary'approvals and property rights under applicable federal,
state, and local laws; 2) the presence of a cost recovery mechanism with cost
responsibility assigned in accordance with the ISO Tariff; and 3) a signed
Participation
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 12
Transmission Owner Tariff (cont.)
Agreement. The Participating TO will not construct or expand its existing or
planned transmission system, if doing so would impair system reliability as
determined through systems analysis based on the Applicable Reliability
Criteria.
9a.2.2 Delay in Construction or Expansion. If any event occurs that will materially
affect the time for completion of new facilities, or the ability to complete them,
the Participating TO shall promptly notify: (1) the Project Sponsor with regard
to facilities determined to be needed; (2) the Parties to the Participation
Agreement with regard to facilities determined to be needed pursuant to the ISO
Tariff where principal beneficiaries were identified; and (3) the ISO. In such
circumstances, the Participating TO shall, within thirty days of noticing such
Project Sponsor, Parties to the Participation Agreement, and the ISO of such
delays, convene a technical meeting with such Project Sponsor, Parties to the
Participation Agreement, and the ISO to discuss the circumstances which have
arisen and evaluate any options available. The Participating TO also shall make
available to such Project Sponsor, Parties to the Participation Agreement, and
the ISO, as the case may be, studies and work papers related to the cause and
extent of the delay and the Participating TO's ability to complete the new
facilities, including all information that is in the possession of the Participating
TO that is reasonably needed to evaluate the alternatives.
9a.2.2.1 Alternatives to the Original Facility Additions. If the review
process of Section 9a.2.2 determines that one or more alternatives
exist to the originally planned construction project, the Participating
TO shall present such alternatives for consideration to the Project
Sponsor, Parties to the Participation Agreement, and the ISO, as the
case may be. If upon review of any alternatives, such Project
Sponsor, the ISO, or Parties to the Participation Agreement wish to
evaluate or to proceed with one of the alternative additions or
upgrades, such Project Sponsor, the ISO, or Parties to the
Participation Agreement may request that the Participating TO
prepare a revised Facility Study pursuant to Sections 9a.1.1, 9a.1.2,
and 9a.1.3 of this TO Tariff. In the event the Participating TO
concludes that no reasonable alternative exists to the originally
planned addition or upgrade and the Project Sponsor or Parties to
the Participation Agreement or the ISO disagree, the dispute shall
be resolved pursuant to the ISO ADR Procedure.
9a.2.2.2 Refund Obligation for Unfinished Facility Additions. If the
Participating TO and the Project Sponsor, the ISO, or Parties to the
Participation Agreement, as the case may be, mutually agree that no
other reasonable alternatives exist, the obligation to construct the
requested additions or upgrades shall terminate and any deposit not
yet applied toward the expended project
Authorized by City of Vernon
Ordinance No. 940
Issued on: April N, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No! 13
Transmission Owner Tariff (cont)
costs shall be returned with interest pursuant to FERC Regulation
35.19(a)(2)(iii). However, the Project Sponsor and any identified
principal beneficiaries, as the case may be, shall be responsible for
all costs prudently incurred by the Participating TO through the
time the construction was suspended.
9a.3 Provisions Relating To Transmission Construction On the Systems Of Other TOs.
9a.3.1 Responsibility for Third Party Additions. A Participating TO shall not be
responsible for making arrangements for any engineering, permitting, and
construction of any necessary facilities additions on the system(s) of any other
entity or for obtaining any regulatory approval for such facilities. The
Participating TO will undertake reasonable efforts through the coordinated
planning process to assist in making such arrangements, including, without
limitation, providing any information or data required by such other electric
system pursuant to Good Utility Practice.
9a.3.2 Coordination of Third -Party System Additions. Where transmission
additions or upgrades being built pursuant to the ISO Tariff require additions or
upgrades on other systems, to the extent consistent with Section 9a.3.3 of this
TO Tariff the Participating TO shall coordinate construction on its own system
with the construction required by others. The Participating TO, after
consultation with the ISO, the Project Sponsor, and Parties to the Participation
Agreement, as the case may be, may defer construction if the new transmission
facilities on another system cannot be completed in a timely manner. The
Participating TO shall notify such Project Sponsor, Parties to the Participation
Agreement, and the ISO, in writing of the basis for any decision to defer
construction and the specific problems which must be resolved before it will
initiate or resume construction of the new facilities. Within forty Business Days
of receiving written notification by the Participating TO of its intent to defer
construction pursuant to this section, such Project Sponsor, Parties to the
Participation Agreement, or the ISO may challenge the decision in accordance
with the ISO ADR Procedure.
9a.3.3 Expansion by "Local burnishing Participating TOs." Notwithstanding any
other provision of this TO Tariff, prior to requesting that a Local Furnishing
Participating TO construct or expand facilities, the ISO or Project Sponsor shall
tender (or cause to be tendered) an application under Section 211 of the FPA
requesting FERC to issue an order directing the Local Furnishing Participating
TO to construct or expand facilities as necessary to provide transmission service
as determined pursuant to the ISO Tariff. Such Local Furnishing Participating
TO shall thereafter, within ten Business Days of receiving a copy of the Section
211 application, waive its right to a request for
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 14
Transmission Owner Tariff (cont.)
service under Section 213(a) of the FPA and to the issuance of a proposed order
under Section 212(c) of the FPA. Upon receipt of a final order from FERC
under Section 211 of the FPA that is no longer subject to rehearing or appeal,
such Local Furnishing Participating TO shall construct or expand facilities to
comply with that FERC order and shall transfer to the ISO Operational Control
over the Local Furnishing Participating TO's expanded transmission facilities in
accordance with the ISO Tariff.
10. Interconnection Process for Vernon's Interests in MPP, MAP, and Marketplace Substation. The
interconnection process for Vernon's Interests in MPP, MAP, and Marketplace Substation, which it
has turned over to ISO operational control, is as stated in Section 8 above. Section 10a, and its
subparts, do not currently apply to those interests or any other Vernon facilities.
10a. Interconnection Process.
10a.1 Applicability. All requests for Interconnection directly to the ISO Controlled Grid from
parties eligible to request such Interconnection consistent with Section 210(a) of the FPA
shall be processed pursuant to the provisions of this Section 10 which is subject to the
applicable interconnection, integration, exchange, operating, joint ownership and joint
participation agreements, and the rights and obligations of owners of jointly -owned facilities.
10a.2 Applications. Parties requesting Interconnections shall submit written applications to the
Participating TO and shall send a copy of the application to the ISO. The Participating TO
shall time -stamp the application to establish study priority.
10a.3 Completed Application. A Completed Application shall provide all of the information listed
in 18 C.F.R. § 2.20, including, but not limited to, the following:
(i) The identity, address, telephone number, and facsimile number of the entity
requesting service;
(ii) The Interconnection point(s) and the location of the transmission addition
contemplated by the applicant;
(nI) The resultant (or new) maximum amount of Interconnection capacity requested at
each point which may experience such an increase; and the increased transmission
capacity of the transmission addition requested;
(iv) The proposed date for initiating an Interconnection. In addition to the information
specified above, when required to properly evaluate system conditions, the
Participating TO also may ask the applicant to provide the following:
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 15
Superceding Original Sheet No. 15
Transmission Owner Tariff (cont.)
(v) The electrical location of the source of the power (if known) to be transmitted
pursuant to the applicant's request for Interconnection. If the source of the power is
not known, a system purchase will be assumed;
(vi) The electrical location of the ultimate load (if known). If the location of the load is
not known, a system sale will be assumed; and
(vii) Such other information as the Participating TO reasonably requires to process the
application.
The Participating TO will treat the information in (v) and (vi) as confidential at the request of
the applicant except to the extent that disclosure of this information is required by this TO
Tariff, by regulatory or judicial order, for reliability purposes pursuant to Good Utility
Practice, or pursuant to RTG or ISO transmission information sharing agreements. The
Participating TO shall treat this information consistent with the standards of conduct
contained in Part 37 of FERC's regulations.
10a.4 Notice of Need for System Impact Study. After receiving a Completed Application for
Interconnection, the Participating TO shall determine on a nondiscriminatory basis whether a
System Impact Study is needed. If the Participating TO determines that a System Impact
Study is necessary to accommodate the requested Interconnection, it shall so inform the
applicant (and shall send a courtesy copy to the ISO), as soon as practicable. In such cases,
the Participating TO shall within twenty Business Days of receipt of a Completed
Application, tender a System Impact Study Agreement that defines the scope, content,
assumptions and terms of reference for such study, the estimated time required to complete it,
and such other provisions as the parties may reasonably require, and pursuant to which the
applicant shall agree to reimburse the Participating TO for the reasonable costs of performing
the required System Impact Study. For an Interconnection request to remain a Completed
Application, the applicant shall execute the System Impact Study Agreement and return it to
the Participating TO within ten Business Days. If the applicant elects not to execute a System
Impact Study Agreement, its application shall be deemed withdrawn, and the applicant shall
reimburse to the Participating TO and the ISO all costs reasonably incurred in processing the
application.
10a.5 System Impact Study Cost Reimbursement and Agreement.
10a.5.1 Cost Reimbursement. The System Impact Study Agreement shall clearly
specify the maximum charge, based on the Participating To's estimate of the
cost and time for completion of the System Impact Study. The charge shall not
exceed the reasonable cost of the study. In performing the System Impact Study,
the Participating TO shall rely, to the extent reasonably practicable, on existing
transmission planning studies. The applicant will not be assessed a charge for
such existing studies; however, the applicant will be responsible for the
reasonable charges associated with any modifications to existing
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 16
Transmission Owner Tariff (cont)
planning studies that are reasonably necessary to evaluate the impact of the
applicant's request.
10a.5.2 Multiple Parties. If multiple parties request Interconnection at the same
location, the Participating TO may conduct a single System Impact Study. The
costs of that study shall be pro -rated among the parties requesting
Interconnection.
10a.6 System Impact Study Procedures. Upon receipt of an executed System hapact Study
Agreement, the Participating TO will use due diligence to complete the required System
Impact Study within a sixty day period. The System Impact Study shall identify any system
constraints which cannot be reasonably accommodated -through ISO Congestion
Management, such that transmission expansions or upgrades would be required to provide the
requested Interconnection. In the event that the Participating TO is unable to complete the
required System Impact Study within such time period, it shall so notify the applicant and
provide an estimated completion date along with an explanation of the reasons why additional
time is required to complete the required studies. A copy of the completed System Impact
Study and related work papers shall be made available to the applicant and the ISO. The
Participating TO will use the same due diligence in completing the System Impact Study for
others as it uses when completing studies for its affiliated UDC. The Participating TO shall
notify the applicant and the ISO immediately upon completion of the System Impact Study.
10a.6.1 Failure to Execute an Interconnection Agreement. If the Participating TO
finds that the transmission system will be adequate to accommodate all of a
request for Interconnection and that no costs are likely to be incurred for new
transmission additions or upgrades, the applicant must execute an
Interconnection Agreement within ten Business Days of completion of the
System Impact Study or the application shall be deemed terminated and
withdrawn.
10a.6.2 Facilities Study Procedures. If a System Impact Study indicates that additions
or upgrades to the transmission system are needed to meet an applicant's
request, the Participating TO shall, within fifteen Business Days of the date of
the System Impact Study, tender to the applicant a Facilities Study Agreement
that defines the scope, content, assumptions and terms of reference for such
study, the estimated time required to complete it, and such other provisions as
the parties may reasonably require, and pursuant to which the applicant agrees
to reimburse the Participating TO for performing the required Facilities Study.
For a service request to remain a Completed Application, the applicant shall
execute the Facilities Study Agreement and return it to the Participating TO
within ten Business Days. If the applicant elects not to execute a Facilities
Study Agreement, its application shall be deemed withdrawn and the applicant
shall reimburse to the
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 1 Effective: January 1, 2001
Sheet No. 17
Transmission Owner Tariff (cont.)
Participating TO all costs reasonably incurred in processing the application not
covered by the System Impact Study Agreement.
10a.7 Relevant Sections Apply Upon Receipt of Facilities Study Agreement. Upon receipt of an
executed Facilities Study Agreement by the Participating TO, the relevant portions of
Sections 9a.1.3 through 9a.3.3 of this TO Tariff shall apply.
10a.8 Partial Interim Service. If the Participating TO determines that there will not be adequate
transmission capability to satisfy the full amount of a Completed Application for an increase
in the maximum rate of delivery or receipt associated with a new request for Interconnection,
the Participating TO nonetheless shall be obligated to offer and provide the portion of the
requested Interconnection that can be accommodated without any additions or upgrades.
However, the Participating TO shall not be obligated to provide the incremental amount of
requested Interconnection that requires the addition of facilities or upgrades to the
transmission system until such facilities or upgrades have been placed in service.
10a.9 Expedited Procedures for New Facilities. In lieu of the procedures set forth above, the
applicant shall have the option to expedite the process by requesting the Participating TO to
tender at one time, together with the results of required studies, an "Expedited Service
Agreement" pursuant to which the applicant would agree to compensate the Participating TO
for all costs reasonably incurred pursuant to the terms of this TO Tariff. In order to exercise
this option, the applicant shall request in writing an Expedited Service Agreement covering
all of the above -specified items within twenty Business Days of receiving the results of the
System Impact Study identifying needed facility additions or upgrades or costs incurred in
providing the requested Interconnection. The Participating TO shall tender an Expedited
Service Agreement within ten Business Days of the applicant's request. While the
Participating TO agrees to provide the applicant with its best estimate of the new facility costs
and other charges that may be incurred, unless otherwise agreed by the parties, such estimate
shall not be binding and the applicant must agree in writing to compensate the Participating
TO for all costs reasonably incurred pursuant to the provisions of this TO Tariff. The
applicant shall execute and return such Expedited Service Agreement within ten Business
Days of its receipt or the applicant's request for Interconnection will cease to be a Completed
Application and will be deemed terminated and withdrawn. In that event, the applicant shall
reimburse to the Participating TO all costs reasonably incurred in processing the application
not covered by the terms of the System Impact Study Agreement.
11. Uncontrollable Forces and Indemnification.
11.1 Procedures to Follow if Uncontrollable Force Occurs. In the event of the occurrence of an
Uncontrollable Force which prevents a Party from performing any of its obligations under
this TO Tariff, such Party shall (i) immediately notify the other Parties in writing of the
occurrence of such Uncontrollable Force, (ii) not be entitled to suspend performance in any
greater scope or longer duration
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 18
Transmission Owner Tariff (cont.)
than is required by the Uncontrollable Force, (iii) use its best efforts to mitigate the effects of
such Uncontrollable Force, remedy its inability to perform, and resume full performance
hereunder, (iv) keep the other Parties apprised of such efforts on a continual basis and (v)
provide written notice of the resumption of performance hereunder. Notwithstanding any of
the foregoing, the settlement of any strike, lockout or labor dispute constituting an
Uncontrollable Force shall be within the sole discretion of the Party to this TO Tariff
involved in such strike, lockout, or labor dispute and the requirement that a Party must use its
best efforts to remedy the cause of the Uncontrollable Force and mitigate its effects and
resume full performance hereunder shall not apply to strikes, lockouts, or labor disputes. No
Party will be considered in default as to any obligation under this TO Tariff if prevented from
fulfilling the obligation due to the occurrence of an Uncontrollable Force
11.2 Indemnification. A Market Participant shall at all times indemnify, defend, and save the
Participating TO harmless from any and all damages, losses, claims, (including claims and
actions relating to injury or to death of any person or damage to property), demands, suits,
recoveries, costs and expenses, court costs, attorney fees, and all other obligations by or to
third parties, arising out of or resulting from the Participating TO's performance of its
obligations under this TO Tariff on behalf of a Market Participant, except in cases of
negligence or intentional wrongdoing by the Participating TO.
12. Regulatory Filings. Nothing contained herein shall be construed as affecting, in any way, the right of
Vernon to unilaterally make application to FERC as it deems necessary and appropriate to recover its
Transmission Revenue Requirements, or for a change in its terms and conditions, including changes in
rate methodology, or for a change in designation of transmission facilities and Entitlements to be
placed under the ISO's control, pursuant to the applicable FERC rules, regulations, policies, and
governing statutes.
13. Miscellaneous.
13.1 Notices. Any notices, demand, or request in accordance with this TO Tariff, unless otherwise
provided in this TO Tariff, shall be in writing and shall be deemed properly served, given, or
made: (i) upon delivery if delivered in person, (ii) five days after deposit in the mail if sent by
first class United States mail, postage prepaid, (iii) upon receipt of confirmation by return
electronic facsimile if sent by facsimile, or (iv) upon delivery if delivered by prepaid
commercial courier service, in each case addressed to a Party at the address set forth in
Appendix II. Any Party may at any time, by notice to the other Parties, change the
designation or address of the person specified in Appendix II to receive notice on its behalf.
Any notice of a routine character in connection with service under this TO Tariff shall be
given in such a manner as the Parties may determine from time to time, unless otherwise
provided in this TO Tariff.
13.2 Waiver. Any waiver at any time by any Party of its rights with respect to any default under
this TO Tariff, or with respect to any other matter arising in connection with this TO Tariff,
shall not constitute or be deemed a waiver with
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 19
Transmission Owner Tariff (cont.)
respect to any subsequent default or other matter arising in connection with this TO Tariff.
Any delay short of the statutory period of limitations in asserting or enforcing any right shall
not constitute or be deemed a waiver.
13.3 Confidentiality.
13.3.1 Maintaining Confidentiality if Not for Public Disclosure. The Participating TO
shall maintain the confidentiality of all of the documents, data, and information
provided to it by any other Party that such Party may designate as confidential,
provided, however, that the information will not be held confidential by the
receiving Party if (1) the designating Party is required to provide such information
for public disclosure pursuant to this TO Tariff or applicable regulatory
requirements, or (2) the information becomes available to the Public on a non -
confidential basis (other than from the receiving Party).
13.3.2 Disclosure of Confidential Information. Notwithstanding anything in this
Section 11.3.2 to the contrary, if any Party is required by applicable laws or
regulations, or in the course of administrative or judicial proceedings, to disclose
information that is otherwise required to be maintained in confidence pursuant to
this Section 11.3.2, the Party may disclose such information; provided, however,
that as soon as such Party learns of the disclosure requirement and prior to making
such disclosure, such Party shall notify the affected Party or Parties of the
requirement and the terms thereof. The affected Party or Parties may, at their sole
discretion and own costs, direct any challenge to or defense against the disclosure
requirement and the disclosing Party shall cooperate with such affected Party or
Parties to the maximum extent practicable to minimize the disclosure of the
information consistent with applicable law. The disclosing Party shall cooperate
with the affected Parties to obtain proprietary or confidential treatment of
confidential information by the person to whom such information is disclosed prior
to any such disclosure.
13.4 Titles. The captions and headings in this TO Tariff are inserted solely to facilitate reference
and shall have no bearing upon the interpretation of any of the rates, terms, and conditions of
this TO Tariff.
13.5 Severability. If any term, covenant, or condition of this TO Tariff or the application or effect
of any such term, covenant, or condition is held invalid as to any person, entity, or
circumstance, or is determined to be unjust, unreasonable, unlawful, imprudent, or otherwise
not in the public interest, by any court or government agency of competent jurisdiction, then
such term, covenant, or condition shall remain in force and effect to the maximum extent
permitted bylaw, and all other terms, covenants, and conditions of this TO Tariff and their
application shall not be affected thereby but shall remain in force and effect. The Parties shall
be relieved of their obligations only to the extent necessary to eliminate such regulatory or
other determination, unless a court or
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 20
Superceding Original Sheet No. 20
Transmission Owner Tariff (cont.)
governmental agency of competent jurisdiction holds that such provisions are not severable
from all other provisions of this TO Tariff.
13.6 Preservation of Obligations. Upon termination of this TO Tariff, all unsatisfied obligations
of each Party shall be preserved until satisfied.
13.7 Governing Law. This TO Tariff shall be interpreted, governed by, and construed under the
laws of the State of California, without regard to the principles of conflict of laws thereof, or
the laws of the United States, as applicable, as if executed and to be performed wholly within
the State of California.
13.8 Appendices Incorporated. The appendices to this TO Tariff are attached to this TO Tariff
and are incorporated by reference as if fully set forth herein.
13.9 Consistency with ISO Tariff. This TO Tariff is intended to be consistent with the ISO
Tariff, and, if necessary, shall be amended to conform with any changes authorized or
required in any final order in FERC Docket No. ER00-2019.
13.10 Disputes. Except as limited by law, the ISO ADR Procedures shall apply to all disputes
between parties which arise under this TO Tariff or under or in respect of the proposed terms
and conditions of a Facilities Study Agreement, System Impact Study Agreement or
Expedited Service Agreement. The ISO ADR Procedures set forth in Section 13 of the ISO
Tariff shall not apply to disputes as to whether rates and charges set forth in this TO Tariff
(other than charges for studies) are just and reasonable under the FPA.
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 21
Transmission Owner Tariff (cont.)
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $3,131,282.
The TRBAA is a negative $1,664,556 for calendar year 2008.
All of Vernon's transmission facilities and Entitlements placed under the ISO's Operational Control are High
Voltage Facilities as defined by the ISO Tariff.
The TRBAA will be recalculated annually consistent with the ISO Tariff approved by the Vernon City
Council, and provided to the ISO.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective. Upon Acceptance by the Commission
Eight Revised Sheet No. 22
Superceding Seventh Revised Sheet No. 22
APPENDIX II
NOTICES
Designated Representative:
Mr. Eric T. Fresch
City Administrator
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90041
Tel. No. (323) 5 83-88 11
Fax No. (323) 581-7924
Authorized by City of Vernon
Ordinance No. 940
Transmission Owner Tariff (cont.)
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 23
Superceding Original Sheet No. 23
EXHIBIT 3
CITY OF VERNON, CALIFORNIA
TRANSMISSION OWNER TARIFF
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 1
TABLE OF CONTENTS
Transmission Owner Tariff (cont.)
Page No.
1. Preamble................................................................................................................................................. 4
2. Effective Date..........................................................................................:.............................................. 4
3. TO Definitions....................................................................................................................................... 4
4. Eligibility................................................................................................................................................ 6
5. Access Charges....................................................................................................................................... 6
5.1 Transmission Revenue Requirement .... ..
.............................................................................
...... 7
5.2 Transmission Revenue Balancing Account Adjustment("TRBAA")....................:.................. 7
6. Ancillary Services —Applicability and Charges..................................................................................... 7
7. Billing and Payment................................................................................................................................ 7
8. Expansion and Interconnection for Vernon's Interests in COTP........................................................... 7
8.1 Expansion..................................................................................................................................8
8.2 Interconnection.......................................................................................................................... 8
8.3 Project Managers and Operators............................................................................................... 9
8a. Obligation to Interconnect or Construct Transmission Expansions and Facility Upgrades .................... 9
8a.1 Participating TO Obligation to Interconnect............................................................................. 9
8a.2 Participating TO Obligation to Construct Transmission Expansions or Facility Upgrades .... 10
8a.3 Request for FERC Deference Regarding Need Determination ............................................... 11
9. Expansion Process for Vernon's Interests In COTP.............................................................................11
9a. Expansion Process................................................................................................................................ 11
9a.1 Determination of Facilities...................................................................................................... 11
9a.2 Obligation to Build.................................................................................................................. 12
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 2
Superceding Original Sheet No. 2
Transmission Owner Tariff (cont.)
9a.3 Provisions Relating To Transmission Construction On the Systems Of Other TOs ............... 14
10. Interconnection Process for Vernon's Interests In COTP.....................................................................15
10a. Interconnection Process........................................................................................................................ 15
10a.1 Applicability ............................................................................................................................15
10a.2 Applications............................................................................................................................ 15
10a.3 Completed Application............................................................................................................ 15
10a.4 Notice of Need for System Impact Study................................................................................ 16
10a.5 System Impact Study Cost Reimbursement and Agreement ................................................... 16
10a.6 System Impact Study Procedures............................................................................................ 17
10a.7 Relevant Sections Apply Upon Receipt of Facilities Study Agreement ................................. 18
10a.8 Partial Interim Service............................................................................................................. 18
10a.9 Expedited Procedures for New Facilities................................................................................ 18
11. Uncontrollable Forces and Indemnification..........................................................................................18
11.1 Procedures to Follow if Uncontrollable Force Occurs............................................................ 18
11.2 Indemnification....................................................................................................................... 19
12. Regulatory Filings.................................................................................................................................19
13. Miscellaneous......................................................................................................................................19
13.1
Notices.....................................................................................................................................19
13.2
Waiver.....................................................................................................................................19
13.3
Confidentiality.........................................................................................................................20
13.4
Titles........................................................................................................................................20
13.5
Severability..............................................................................................................................20
13.6
Preservation of Obligations.....................................................................................................
21
13.7
Governing Law........................................................................................................................
21
13.8
Appendices Incorporated.........................................................................................................
21
13.9
Consistency with ISO Tariff....................................................................................................
21
13.10
Disputes...................................................................................................................................21
APPENDIXI...................................................................................................................................................... 22
APPENDIXII..................................................................................................................................................... 23
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 3
Superceding Original Sheet No. 3
Transmission Owner Tariff (cont.)
1. Preamble. Vernon's TRR for its high voltage transmission facilities and Entitlements placed under
the ISO's operational control, and certain terms and conditions relating to transmission expansion of
and interconnection with Vernon's high voltage transmission facilities and Entitlements placed under
the ISO's operational control, are set forth in this TO Tariff.
2. Effective Date. This TO Tariff is effective on the date on which Vernon became a Participating TO,
January 1, 2001, and shall continue to be effective so long as Vernon is a party to the TCA.
3. TO Definitions. Certain capitalized terms used in this TO Tariff that are set out immediately below
shall have the meanings set out immediately below. Capitalized terms used in this tariff and not
defined below shall have the meanings set out in the ISO Tariff as it may be amended from time to
time.
3.1 Completed Application. An application that satisfies all of the information and other
requirements of this TO Tariff, including any required deposit .
3.2 COTP. The California -Oregon Transmission Project as defined in the COTP Interim
Participation Agreement.
3.3 COTP Interim Participation Agreement. That certain agreement entered into by the
various parties on or about September 30, 1991 for the purpose to complete construction of,
and to own and operate the COTP.
3.4 Direct Assignment Facilities. Facilities or portions of facilities that are constructed by. the
Participating TO for the sole use or benefit of a particular party requesting Interconnection
under this TO Tariff. Direct Assignment Facilities shall be specified in the Interconnection
Agreement that governs service to such party.
3.5 Facilities Study Agreement.. An agreement between a Participating TO and either a Market
Participant, Project Sponsor, or identified principal beneficiaries pursuant to which the
Market Participants, Project Sponsor, and identified principal beneficiaries agree to reimburse
the Participating TO for the cost of a Facility Study.
3.6 Facility or Facilities Study. An engineering study conducted by a Participating TO to
determine required modifications to the Participating TO's transmission system, including the
cost and scheduled completion date for such modifications that will be required to provide
needed services.
3.7 Local Regulatory Authority. In the case of Vernon, the Vernon City Council.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 4
Superceding Original Sheet No. 4
Transmission Owner Tariff (cont.)
3.8 Net FTR Revenue. The sum of.• 1) The revenue received by the Participating TO from the
sale, auction, or other transfer of the FTRs provided to it pursuant to Section 36.4.3 FTR, or
any substantively identical successor provision, of the ISO Tariff; and 2) For each hour: a) the
Usage Charge revenue received by the Participating TO associated with its Section 36.4.3
FTRs; minus b) Usage Charges that are: i) incurred by the Scheduling Coordinator for the
Participating TO under
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
Second Revised Sheet No. 5
Supereeding First Revised Sheet No. 5
Transmission Owner Tariff (cont.)
ISO Tariff Section 27.1.2.1.4, ii) associated with the Participating TO's Section 36.4.3 FTRs,
and iii) incurred by the Participating TO for its energy transactions but not incurred as a result
of the use of the transmission by a third -party and minus c) the charges paid by the
Participating TO pursuant to Section 27.1.2.1.4, to the extent such charges are incurred by the
Scheduling Coordinator of the Participating TO on Congested Inter -zonal Interfaces that are
associated with the Section 36.4.3 FTRs provided to the Participating TO. The component of
Net FTR Revenue represented by item 2) immediately above shall not be less than zero for
any hour.
3.9 Participating TO. A party to the TCA whose application under Section 2.2 of the TCA has
been accepted and who has placed its transmission assets and Entitlements under the ISO's
Operational Control in accordance with the TCA. A Participating TO may be an Original
Participating TO or a New Participating TO. For purposes of this TO Tariff, the Participating
TO is Vernon.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 5a
Superceding Original Sheet No. 5a
Transmission Owner Tariff (cont.)
3.10 Project Proponent. A Market Participant or group of Market Participants that: (i) advocates
a transmission addition or upgrade; (ii) is unwilling to pay the full cost of the proposed
transmission addition and upgrade, and thus is not a Project Sponsor; and (iii) initiates
proceedings under the ISO ADR Procedures to determine the need for the proposed
transmission addition or upgrade.
3.11 System Impact Study. An engineering study conducted by a Participating TO to determine
whether a request for Interconnection to the Participating TO's transmission system would
require new transmission additions or upgrades.
3.12 System Impact Study Agreement. An agreement between a Participating TO and an entity
that has requested Interconnection to the Participating TO's transmission system pursuant to
which the entity requesting Interconnection agrees to reimburse the Participating TO for the
cost of a System Impact Study.
3.13 Transmission Revenue Balancing Account Adjustment ffRBAX ). A mechanism
established by the Participating TO which will ensure that all Transmission Revenue Credits
and other credits specified in Sections 6 and S of Appendix F, Schedule 3 of the ISO Tariff,
flow through to ISO Tariff and TO Tariff transmission customers.
3.14 Transmission Revenue Credit. Collectively, 1) the sum of a) all revenues received by the
Participating TO from the ISO for Wheeling service, plus b) Usage Charge revenues received
by the Participating TO pursuant to Section 27.1.2.1.6 (ii) of the ISO Tariff, plus c) NET FTR
Revenue received by the Participating TO; minus 2) any charges attributable to the
Participating TO (but not attributable to the FTR Holder) pursuant to ISO Tariff 27.1.2.1.7.
3.15 Transmission Revenue Requirement. The TRR is the total annual authorized revenue
requirements associated with transmission facilities and Entitlements turned over to the
Operational Control of the ISO by the Participating TO. The costs of any transmission facility
turned over to the Operational Control of the ISO shall be fully included in the Participating
TO's TRR. The TRR includes the costs of transmission facilities and Entitlements and
deducts Transmission Revenue Credits and credits for Standby Transmission Revenue and the
transmission revenue expected to be actually received by the Participating TO for Existing
Rights and Converted Rights. The TRR is shown in Appendix I.
4. Eligibility. Transmission service over Vernon's high voltage transmission facilities and Entitlements
placed under the ISO's Operational Control shall be provided only to Eligible Customers as defined
by the ISO Tariff. Any dispute as to whether a customer is eligible for wholesale transmission service
shall be resolved by FERC and any dispute as to whether a Vernon End -Use Customer is eligible for
service under this TO Tariff shall be resolved by the Local Regulatory Authority. At the present time,
there are no Vernon End -Use Customers eligible for service under this tariff.
5. Access Charges. The applicable Access Charges are provided in the ISO Tariff.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
Second Revised Sheet No. 6
Superceding First Revised Sheet No. 6
Transmission Owner Tariff (cont.)
5.1 Transmission Revenue Requirement. As set forth in the ISO Tariff, the Transmission
Revenue Requirement for each Participating TO shall be used to develop the Access Charges
set forth in the ISO Tariff. Vernon's Transmission Revenue Requirement is set forth in
Appendix 1.
5.2 Transmission Revenue Balancing Account Adjustment ("TRBAA"). The Participating
TO shall maintain a Transmission Revenue Balancing Account ("TRBA") that will ensure
that all Transmission Revenue Credits and the refunds, specified in Sections 6 and 8 of
Appendix F, Schedule 3 of the ISO Tariff, flow through to transmission customers. The
TRBAA shall be equal to: TRBAA = TRCF + TRCT + I .
TRCT = The balance representing the prior period difference between the projected
Transmission Revenue Credits and the actual credits.
TRCF = The forecast of Transmission Revenue Credits for the following calendar year.
I = The interest balance for the TRBA, which shall be calculated using the interest rate
pursuant to Section 35.19(a) of FERC's regulations under the Federal Power Act
(18 C.F.R. § 35.19(a)). Interest shall be calculated based on the average TRBA
principal balance each month, compounded quarterly.
The Vernon TRBAA, calculated in accordance with the ISO Tariff and approved by the City
Council, is stated in Appendix I.
6. Ancillary Services —Applicability and Charges. If any Ancillary Services are required, Vernon will
not provide such services, but transmission customer will be required to meet any such requirement in
accordance with the ISO Tariff.
7. Billing and Payment.
7.1 (intentionally left blank]
7.2 The ISO, in accordance with the ISO Tariff, shall pay the Participating TO, among other
things, Wheeling, Usage, Access Charge revenues, and FTR auction proceeds (excluding
Usage Charge revenues payable to FTR Holders) in accordance with the ISO Tariff.
7.3 Users of Vernon's high voltage transmission facilities and Entitlements placed under the
ISO's Operational Control shall pay to the ISO all applicable charges in accordance with the
ISO Tariff.
8. Expansion and Interconnection for Vernon's Interests in COTP. Expansion of and/or
interconnection to the high voltage transmission facilities presently placed under the ISO's
Operational Control by Vernon, which consist of Vernon's minority interests in COTP,
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 7
Superceding Original Sheet No. 7
Transmission Owner Tariff (cont.)
require approval of the owners and/or the management committees of those facilities.
Therefore Vernon does not have the legal authority to compel expansion and interconnection.
Vernon will submit, or assist in the submission of, expansion and/or interconnection requests
from third parties to the appropriate bodies of a project pursuant to the individual agreements.
It is Vernon's intent to facilitate the submission of such requests to the full extent allowed by
the agreements governing or otherwise applying to those projects and the applicable laws and
regulations. The project agreements have the provisions, described immediately below, that
address expansion and interconnection requests. At this time, the projects do not have explicit
procedures for expansions and interconnection requests. In some cases, such procedures may
be under development. Third parties making such requests will be responsible for reimbursing
all of Vernon's reasonable expenses incurred by Vernon in facilitating submission of such
requests to such governing bodies. Sections 8a, 9a, and 10a, and their subparts, of this Vernon
TO Tariff shall apply as described in Section 8a.
8.1 Expansion. Pursuant to Section 5.1 of the COTP Interim Participation Agreement, the
Management Committee was established as a means of securing effective managerial and
policy direction.
8.2 Interconnection. Pursuant to Section 5.1 of the COT? Interim Participation Agreement, the
Management Committee was established as a means of securing effective managerial and
policy direction.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 8
Superceding Original Sheet No. 8
8.3
Transmission Owner Tariff (cont.)
Project Managers and Operators. Each transmission project in which Vernon has
Entitlements has a project manager and an operating agent. They are as follows and can be
contacted in connection with any request for expansion or interconnection.
Proiect Manager Oyerating Agent
California -Oregon TANC WAPA (SNR)
Transmission Project
8a. Obligation to Interconnect or Construct Transmission Expansions and Facility Upgrades.
8a.1 Participating TO Obligation to Interconnect. Sections 8a, 9a, and 10a, and their subparts,
are provided for consistency with other PTOs' TO Tariffs and for potential future application
should Vernon acquire any transmission facilities or acquire additional 10a legal authority in
its existing facilities which would provide Vernon sufficient legal authority to implement
these Sections. These Sections 8a, 9a, and I Oa have no current application to the transmission
facilities turned over to ISO operational control by Vernon, which facilities are Vernon's
minority interests in COTP which are covered solely by Sections 8, 9, and 10 as to
expansions and interconnections. Neither are they presently applicable to any other Vernon
facilities. If the situation changes so that Vernon has legal authority over transmission
facilities so that Vernon is able to implement the provisions of Sections 8a, 9a, and 10a so
that those provisions become effective, to the extent consistent with Sections 9a.2.1 and 9a.3.3
of this TO Tariff, the Participating TO shall, at the request of a third party pursuant to Section
210, interconnect its system to the generation of such third party, or modify an existing
Interconnection. Interconnections under this TO Tariff shall be available to entities eligible to
request interconnection consistent with the provisions of Section 210(a) of the FPA.
8a.1.1 Upgrade to Transmission System. Interconnection must be consistent with
Good Utility Practice, in conformance with all Applicable
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008
Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 9
Superceding Original Sheet No. 9
Transmission Owner Tariff (cont.)
Reliability Criteria, all applicable statutes, and regulations. The Participating
TO will not upgrade its existing or planned transmission system to
accommodate the Interconnection if doing so would impair system reliability, or
would otherwise impair or degrade pre-existing firm transmission service.
8a.1.2 Costs Associated with Interconnection. The cost of any Direct Assignment
Facilities constructed pursuant to this section shall be borne by the party
requesting the Interconnection. Any additional costs associated with
accommodating the Interconnection shall be allocated in accordance with the
cost responsibility methodology set forth in the ISO Tariff for transmission
expansions or upgrades. Any disputes regarding such cost allocation shall be
resolved in accordance with the ISO ADR Procedures. If a Market Participant
fails to raise through the ISO ADR Procedures a dispute as to whether a
proposed transmission addition or upgrade is needed, or as to the identity, if
any, of the beneficiary, then the Market Participant shall be deemed to have
waived its right to raise such dispute at a later date. The determination under the
ISO ADR Procedures as to whether the transmission addition or upgrade is
needed and the identity, if any, of the beneficiaries, including any determination
by FERC or on appeal of a FERC determination in accordance with that
process, shall be final.
8a.1.3 Execute Interconnection Agreement. Prior to the construction of any
Interconnection facilities pursuant to this TO Tariff, the party requesting an
Interconnection shall execute an appropriate, Interconnection Agreement that
will be filed with FERC, or the Local Regulatory Authority, in the case of a
Local Publicly Owned Electric Utility, and that will include, without limitation,
cost, responsibilities for engineering, equipment, and construction costs. All
costs shall be paid in advance by the requesting party.
8a.1.4 Coordination with ISO on Interconnection Requests. The Participating TO
shall coordinate with the ISO, pursuant to the provisions of the TCA, in
developing Interconnection standards and guidelines for processing
Interconnection requests under this TO Tariff.
8a.2 Participating TO Obligation to Construct Transmission Expansions or Facility
Upgrades. The Participating TO shall be obligated to: (1) perform System Impact or Facility
Studies where the Project Sponsor or the ISO agrees to pay the study cost and specifies the
project objectives to be achieved, and (2) build transmission additions and facility upgrades
where the Participating TO is obligated to construct or expand facilities in accordance with
and subject to the limitations of the ISO Tariff and this TO Tariff.
8a.2.1 Obligation to Construct. A Participating TO shall not be obligated to
construct or expand Interconnection facilities or system upgrades unless
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 10
Transmission Owner Tariff (cont.)
and until the conditions stated in Section 9a.2.1 hereof have been satisfied.
8a.2.2 Local Furnishing Participating TO Obligation to Construct. A Local
Furnishing Participating TO shall not be obligated to construct or expand
Interconnection facilities or system upgrades unless and until the conditions
stated in Section 9a.3.3 hereof have been satisfied.
8a.3 Request for FERC Deference Regarding Need Determination. It is intended that FERC
grant substantial deference to the factual determinations of the ISO, (including the ISO's
ADR Procedures), the Vernon City Council, WSCC, or RTG coordinated planning processes
as to the need for or construction of a facility, the need for full cost recovery, and the
allocation of costs.
9. Expansion Process for Vernon's Interests In COTP. The Expansion process for Vernon's Interests
in COTP, which it has turned over to ISO operational control, is as stated in Section 8 above, Section
9a and its subparts do not currently apply to those interests or any other Vernon facilities.
9a. Expansion Process.
9a.1 Determination of Facilities. A Participating TO shall perform a Facilities Study in
accordance with this Section where (1) the Participating TO is obligated to construct or
expand facilities in accordance with the ISO Tariff and this TO Tariff; (2) a Market
Participant agrees to pay the costs of the Facilities Study and specifies the project objectives
to be achieved in terms of increased capacity or reduced congestion; or (3) the Participating
TO is required to perform a Facilities Study pursuant to the ISO Tariff.
9a.1.1 Payment of Facilities Study's Cost.
9a.1.1.1 MarketTarticipant to Pay for Facilities Study. Where a Market
Participant requests a Facilities Study and the need for the
transmission addition or upgrade has not yet been established in
accordance with the procedures established herein and the ISO
Tariff, the Market Participant shall pay the cost of the Facilities
Study..
9a.1.1.2 Project Sponsor or Project Proponent to Pay for Faculties
Study. Where the facilities to be added or upgraded have been
determined to be needed in accordance with the procedures
established herein and the ISO Tariff, the Project Sponsor, Project
Proponent, or the ISO requesting the study shall pay the reasonable
cost of the Facilities Study. When the Participating TO is the
Project Sponsor in accordance with the ISO Tariff, the costs of the
Facilities Study shall be recovered through the Access Charges and
transmission rates.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 11
Superceding Original Sheet No. 11
Transmission Owner Tariff (cont.)
9a.1.1.3 Principal Beneficiaries to Pay for Facilities Study. Where the
facilities to be added or upgraded have been determined to be
needed and the principal beneficiaries have been identified by the
ISO or ISO ADR Procedures in accordance with the ISO Tariff, the
Project Sponsor and the identified principal beneficiaries shall pay
the reasonable cost of the Facilities Study, in such proportions as
may be agreed, or, failing agreement, as determined in accordance
with the ISO ADR Procedures.
9a.1.2 Payment Procedure. Where a Facilities Study is being conducted pursuant to
this TO Tariff, the Participating TO shall, as soon as practicable, tender to the
Market Participant, Project Sponsor, Project Proponent, ISO, or identified
principal beneficiaries, as the case may be, a Facilities Study Agreement that
defines the scope, content, assumptions, and terms of reference for such study,
the estimated time required to complete it, and such other provisions as the
parties may reasonably require and pursuant to which such Market Participant,
Project Sponsor, Project.Proponent, the ISO, or identified principal beneficiaries
agree to reimburse the Participating TO the reasonable cost of performing the
required Facilities Study. If the Market Participant, Project Sponsor, Project
Proponent, the ISO, or identified principal beneficiaries, as the case maybe,
agree to the terms of the Facilities Study Agreement, they shall execute the
Facilities Study Agreement and return it to the Participating TO within ten
Business Days. If such Market Participant, Project Sponsor, Project Proponent,
the ISO, or identified principal beneficiary elects not to execute a Facilities
Study Agreement, the Participating TO shall have no obligation to complete a
Facilities Study,
9a.1.3 Facilities Study Procedures. Upon receipt of an executed Facilities Study
Agreement, a copy of which has been provided to the ISO by the party
requesting the Facilities Study, the Participating TO will use due diligence to
complete the required Facilities Study in accordance with the terms of the
Facilities Study Agreement.
9a.2 Obligation to Build.
9a.2.1 Due Diligence to Construct. Subject to Section 9a.3.3 of this TO Tariff, the
Participating TO shall use due diligence to construct, within a reasonable time,
additions or upgrades to its transmission system that it is obligated to construct
pursuant to the ISO Tariff and this TO Tariff. The Participating TO's obligation
to build will be subject to: 1) its ability, after making a good faith effort, to
obtain the necessary approvals and property rights under applicable federal,
state, and local laws; 2) the presence of a cost recovery mechanism with cost
responsibility assigned in accordance with the ISO Tariff; and 3) a signed
Participation
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective. January 1, 2001
Sheet No. 12
Transmission Owner Tariff (cont.)
Agreement. The Participating TO will not construct or expand its existing or
planned transmission system, if doing so would impair system reliability as
determined through systems analysis based on the Applicable Reliability
Criteria.
9a.2.2 Delay in Construction or Expansion. If any event occurs that will materially
affect the time for completion of new facilities, or the ability to complete them,
the Participating TO shall promptly notify: (1) the Project Sponsor with regard
to facilities determined to be needed; (2) the Parties to the Participation
Agreement with regard to facilities determined to be needed pursuant to the ISO
Tariff where principal beneficiaries were identified; and (3) the ISO. In such
circumstances, the Participating TO shall, within thirty days of noticing such
Project Sponsor, Parties to the Participation Agreement, and the ISO of such
delays, convene a technical meeting with such Project Sponsor, Parties to the
Participation Agreement, and the ISO to discuss the circumstances which have
arisen and evaluate any options available. The Participating TO also shall make
available to such Project Sponsor, Parries to the Participation Agreement, and
the ISO, as the case may be, studies and work papers related to the cause and
extent of the delay and the Participating TO's ability to complete the new
facilities, including all information that is in the possession of the Participating
TO that is reasonably needed to evaluate the alternatives.
9a.2.2.1 Alternatives to the Original Facility Additions. If the review
process of Section 9a.2.2 determines that one or more alternatives
exist to the originally planned construction project, the Participating
TO shall present such alternatives for consideration to the Project
Sponsor, Parties to the Participation Agreement, and the ISO, as the
case may be. If upon review of any alternatives, such Project
Sponsor, the ISO, or,Parties to the Participation Agreement wish to
evaluate or to proceed with one of the alternative additions or
upgrades, such Project Sponsor, the ISO, or Parties to the
Participation Agreement may request that the Participating TO
prepare a revised Facility Study pursuant to Sections 9a.1.1, 9a.1.2,
and 9a.1.3 of this TO Tariff. In the event the Participating TO
concludes that no reasonable alternative exists to the originally
planned addition or upgrade and the Project Sponsor or Parties to
the Participation Agreement or the ISO disagree, the dispute shall
be resolved pursuant to the ISO ADR Procedure.
9a.2.2.2 Refund Obligation for Unfinished Facility Additions. If the
Participating TO and the Project Sponsor, the ISO, or Parties to the
Participation Agreement, as the case may be, mutually agree that no
other reasonable alternatives exist, the obligation to construct the
requested additions or upgrades shall terminate and any deposit not
yet applied toward the expended project
Authorized by City of Vernon.
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 13
Transmission Owner Tariff (cont.)
costs shall be returned with interest pursuant to FERC Regulation
35.19(a)(2)(iii). However, the Project Sponsor and any identified
principal beneficiaries, as the case may be, shall be responsible for
all costs prudently incurred by the Participating TO through the
time the construction was suspended.
9a.3 Provisions Relating To Transmission Construction On the Systems Of Other TOs.
9a.3.1 Responsibility for Third Party Additions. A Participating TO shall riot be
responsible for making arrangements for any engineering, permitting, and
construction of any necessary facilities additions on the system(s) of any other
entity or for obtaining any regulatory approval for such facilities. The
Participating TO will undertake reasonable efforts through the coordinated
planning process to assist in making such arrangements, including, without
limitation, providing any information or data required by such other electric
system pursuant to Good Utility Practice.
9a.3.2 Coordination of Third -Party System Additions. Where transmission
additions or upgrades being built pursuant to the ISO Tariff require additions or
upgrades on other systems, to the extent consistent with Section 9a.3.3 of this
TO Tariff the Participating TO shall coordinate construction on its own system
with the construction required by others. The Participating TO, after
consultation with the ISO, the Project Sponsor, and Parties to the Participation
Agreement, as the case may be, may defer construction if the new transmission
facilities on another system cannot be completed in a timely manner. The
Participating TO shall notify such Project Sponsor, Parties to the Participation
Agreement, and the ISO, in writing of the basis for any decision to defer
construction and the specific problems which must be resolved before it will
initiate or resume construction of the new facilities. Within forty Business Days
of receiving written notification by the Participating TO of its intent to defer
construction pursuant to this section, such Project Sponsor, Parties to the
Participation Agreement, or the ISO may challenge the decision in accordance
with the ISO ADR Procedure.
9a.3.3 Expansion by "Local Furnishing Participating TOs." Notwithstanding any
other provision of this TO Tariff, prior to requesting that a Local Furnishing
Participating TO construct or expand facilities, the ISO or Project Sponsor shall
tender (or cause to be tendered) an application under Section 211 of the FPA
requesting FERC to issue an order directing the Local Furnishing Participating
TO to construct or expand facilities as necessary to provide transmission service
as determined pursuant to the ISO Tariff. Such Local Furnishing Participating
TO shall thereafter, within ten Business Days of receiving a copy of the Section
211 application, waive its right to a request for
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 14
Transmission Owner Tariff (cont.)
service under Section 213(a) of the FPA and to the issuance of a proposed order
under Section 212(c) of the FPA. Upon receipt of a final order from FERC
under Section 211 of the FPA that is no longer subject to rehearing or appeal,
such Local Furnishing Participating TO shall construct or expand facilities to
comply with that FERC order and shall transfer to the ISO Operational Control
over the Local Furnishing Participating TO's expanded transmission facilities in
accordance with the ISO Tariff.
10. Interconnection Process for Vernon's Interests in COTP. The interconnection process for
Vernon's Interests in COTP, which it has turned over to ISO operational control, is as stated in
Section 8 above. Section 10a, and its subparts, do not currently apply to those interests or any other
Vernon facilities.
10a. Interconnection Process.
10a.1 Applicability. All requests for Interconnection directly to the ISO Controlled Grid from
parties eligible to request such Interconnection consistent with Section 210(a) of the FPA
shall be processed pursuant to the provisions of this Section 10 which is subject to the
applicable interconnection, integration, exchange, operating, joint ownership and joint
participation agreements, and the rights and obligations of owners of jointly -owned facilities.
10a.2 Applications. Parties requesting Interconnections shall submit written applications to the
Participating TO and shall send a copy of the application to the ISO. The Participating TO
shall time -stamp the application to establish study priority.
10a.3 Completed Application. A Completed Application shall provide all of the information listed
in 18 C.F.R.,§ 2.20, including, but not limited to, the following:
(i) The identity, address, telephone number, and facsimile number of the entity
requesting service;
(ii) The Interconnection point(s) and the location of the transmission addition
contemplated by the applicant;
(iii) The resultant (or new) maximum amount of Interconnection capacity requested at
each point which may experience such an increase; and the increased transmission
capacity of the transmission addition requested;
(iv) The proposed date for initiating an Interconnection. In addition to the information
specified above, when required to properly evaluate system conditions, the
Participating TO also may ask the applicant to provide the following:
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 15
Superceding Original Sheet No. 15
Transmission Owner Tariff (cont.)
(v) The electrical location of the source of the power (if known) to be transmitted
pursuant to the applicant's request for Interconnection. If the source of the power is
not known, a system purchase will be assumed;
(vi) The electrical location of the ultimate load (if known). If the location of the load is
not known, a system sale will be assumed; and
(vii) Such other information as the Participating TO reasonably requires to process the
application.
The Participating TO will treat the information in (v) and (vi) as confidential at the request of
the applicant except to the extent that disclosure of this information is required by this TO
Tariff, by regulatory or judicial order, for reliability purposes pursuant to Good Utility
Practice, or pursuant to RTG or ISO transmission information sharing agreements. The
Participating TO shall treat this information consistent with the standards of conduct
contained in Part 37 of FERC's regulations.
10a.4 Notice of Need for System Impact Study. After receiving a Completed Application for
Interconnection, the Participating TO shall determine on a nondiscriminatory basis whether a
System Impact Study is needed. If the Participating TO determines that a System Impact
Study is necessary to accommodate the requested Interconnection, it shall so inform the
applicant (and shall send a courtesy copy to the ISO), as soon as practicable. In such cases,
the Participating TO shall within twenty Business Days of receipt of a Completed
Application, tender a System Impact Study Agreement that defines the scope, content,
assumptions and terms of reference for such study, the estimated time required to complete it,
and such other provisions as the parties may reasonably require, and pursuant to which the
applicant shall agree to reimburse the Participating TO for the reasonable costs of performing
the required System Impact Study. For an Interconnection request.to remain a Completed
Application, the applicant shall execute the System Impact Study Agreement and return it to
the Participating TO within ten Business Days. If the applicant elects not to execute a System
Impact Study Agreement, its application shall be deemed withdrawn, and the applicant shall
reimburse to the Participating TO and the ISO all costs reasonably incurred in processing the
application.
10a.5 System Impact Study Cost Reimbursement and Agreement.
10a.5.1 Cost Reimbursement. The System Impact Study Agreement shall clearly
specify the maximum charge, based on the Participating To's estimate of the
cost and time for completion of the System Impact Study. The charge shall not
exceed the reasonable cost of the study. In performing the System Impact Study,
the Participating TO shall rely, to the extent reasonably practicable, on existing
transmission planning studies. The applicant will not be assessed a charge for
such existing studies; however, the applicant will be responsible for the
reasonable charges associated with any modifications to existing
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 16
Transmission Owner Tariff (cont.)
planning studies that are reasonably necessary to evaluate the impact of the
applicant's request.
10a.5.2 Multiple Parties. If multiple parties request Interconnection at the same
location, the Participating TO may conduct a single System Impact Study. The
costs of that study shall be pro -rated among the parties requesting
Interconnection.
10a.6 System Impact Study Procedures. Upon receipt of an executed System Impact Study
Agreement, the Participating TO will use due diligence to complete the required System
Impact Study within a sixty day period. The System Impact Study shall identify any system
constraints which cannot be reasonably accommodated through ISO Congestion
Management, such that transmission expansions or upgrades would be required to provide the
requested Interconnection. In the event that the Participating TO is unable to complete the
required System Impact Study within such time period, it shall so notify the applicant and
provide an estimated completion date along with an explanation of the reasons why additional
time is required to complete the required studies. A copy of the completed System Impact
Study and related work papers shall be made available to the applicant and the ISO. The
Participating TO will use the same due diligence in completing the System Impact Study for
others as it uses when completing studies for its affiliated UDC. The Participating TO shall
notify the applicant and the ISO immediately upon completion of the System Impact Study.
10a.6.1 Failure to Execute an Interconnection Agreement. If the Participating TO
finds that the transmission system will be adequate to accommodate all of a
request for Interconnection and that no costs are likely to be incurred for new
transmission additions or upgrades, the applicant must execute an
Interconnection Agreement within ten Business Days of completion of the.
System Impact Study or the application shall be deemed terminated and
withdrawn.
10a.6.2 Facilities Study Procedures. If a System Impact Study indicates that additions
or upgrades to the transmission system are needed to meet an applicant's
request, the Participating TO shall, within fifteen Business Days of the date of
the System Impact Study, tender to the applicant a Facilities Study Agreement
that defines the scope, content, assumptions and terms of reference for such
study, the estimated time required to complete it, and such other provisions as
the parties may reasonably require, and pursuant to which the applicant agrees
to reimburse the Participating TO for performing the required Facilities Study.
For a service request to remain a Completed Application, the applicant shall
execute the Facilities Study Agreement and return it to the Participating TO
within ten Business Days. If the applicant elects not to execute a Facilities
Study Agreement, its application shall be deemed withdrawn and the applicant
shall reimburse to the
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 17
Transmission Owner Tariff (cont.)
Participating TO all costs reasonably incurred in processing the application not
covered by the System Impact Study Agreement.
10a.7 Relevant Sections Apply Upon Receipt of Facilities Study Agreement. Upon receipt of an
executed Facilities Study Agreement by the Participating TO, the relevant portions of
Sections 9a.1.3 through 9a.3.3 of this TO Tariff shall apply.
10a.8 Partial Interim Service. If the Participating TO determines that there will not be adequate
transmission capability to satisfy the full amount of a Completed Application for an increase
in the maximum rate of delivery or receipt associated with a new request for Interconnection,
the Participating TO nonetheless shall be obligated to offer and provide the portion of the
requested Interconnection that can be accommodated without any additions or upgrades.
However, the Participating TO shall not be obligated to provide the incremental amount of
requested interconnection that requires the addition of facilities or upgrades to the
transmission system until such facilities or upgrades have been placed in service.
10a.9 Expedited Procedures for New Facilities. In lieu of the procedures set forth above, the
applicant shall have the option to expedite the process by requesting the Participating TO to
tender at one time, together with the results of required studies, an "Expedited Service
Agreement" "pursuant to which the applicant would agree to compensate the Participating TO
for all costs reasonably incurred pursuant to the terms of this TO Tariff. In order to exercise
this option, the applicant shall request in writing an Expedited Service Agreement covering
all of the above -specified items within twenty Business Days of receiving the results of the
System Impact Study identifying needed facility additions or upgrades or costs incurred in
providing the requested Interconnection. The Participating TO shall tender an Expedited
Service Agreement within ten Business Days of the applicant's request. While the
Participating TO agrees to provide the applicant with its best estimate of the new facility costs
and other charges that may be incurred, unless otherwise agreed by the parties, such estimate
shall not be binding and the applicant must agree in writing to compensate the Participating
TO for all costs reasonably incurred pursuant to the provisions of this TO Tariff. The
applicant shall execute and return such Expedited Service Agreement within ten Business
Days of its receipt or the applicant's request for Interconnection will cease to be a Completed
Application and will be deemed terminated and withdrawn. In that event, the applicant shall
reimburse to the Participating TO all costs reasonably incurred in processing the application
not covered by the terms of the System Impact Study Agreement.
11. Uncontrollable Forces and Indemnification.
11.1 Procedures to Follow if Uncontrollable Force Occurs. In the event of the occurrence of an
Uncontrollable Force which prevents a Party from performing any of its obligations under
this TO Tariff, such Party shall (i) immediately notify the other Parties in writing of the
occurrence of such Uncontrollable Force, (ii) not be entitled to suspend performance in any
greater scope or longer duration
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 18
Transmission Owner Tariff (cont.)
than is required by the Uncontrollable Force, (iii) use its best efforts to mitigate the effects of
such Uncontrollable Force, remedy its inability to perform, and resume full performance
hereunder, (iv) keep the other Parties apprised of such efforts on a continual basis and (v)
provide written notice of the resumption of performance hereunder. Notwithstanding any of
the foregoing, the settlement of any strike, lockout or labor dispute constituting an
Uncontrollable Force shall be within the sole discretion of the Party to this TO Tariff
involved in such strike, lockout, or labor dispute and the requirement that a Party must use its
best efforts to remedy the cause of the Uncontrollable Force and mitigate its effects and
resume full performance hereunder shall not apply to strikes, lockouts, or labor disputes. No
Party will be considered in default as to any obligation under this TO Tariff if prevented from
fulfilling the obligation due to the occurrence of an Uncontrollable Force.
11.2 Indemnification. A Market Participant shall at all times indemnify, defend, and save the
Participating TO harmless from any and all damages, losses, claims, (including claims and
actions relating to injury or to death of any person or damage to property), demands, suits,
recoveries, costs and expenses, court costs, attorney fees, and all other obligations by or to
third parties, arising out of or resulting from the Participating TO's performance of its
obligations under this TO Tariff on behalf of a Market Participant, except in cases of
negligence or intentional wrongdoing by the Participating TO.
12. Regulatory Filings. Nothing contained herein shall be construed as affecting, in any way, the right of
Vernon to unilaterally make application to FERC as it deems necessary and appropriate to recover its
Transmission Revenue Requirements, or for a change in its terms and conditions, including changes in
rate methodology, or for a change in designation of transmission facilities and Entitlements to be
placed under the ISO's control, pursuant to the applicable FERC rules, regulations, policies, and
governing statutes.
13. Miscellaneous.
13.1 Notices. Any notices, demand, or request in accordance with this TO Tariff, unless otherwise
provided in this TO Tariff, shall be in writing and shall be deemed properly served, given, or
made: (i) upon delivery if delivered in person, (ii) five days after deposit in the mail if sent by
first class United States mail, postage prepaid, (iii) upon receipt of confirmation by return
electronic facsimile if sent by facsimile, or (iv) upon delivery if delivered by prepaid
commercial courier service, in each case addressed to a Party at the address set forth in
Appendix II. Any Party may at any time, by notice to the other Parties, change the
designation or address of the person specified in Appendix II to receive notice on its behalf.
Any notice of a routine character in connection with service under this TO Tariff shall be
given in such a manner as the Parties may determine from time to time, unless otherwise
provided in this TO Tariff.
13.2 Waiver. Any waiver at any time by any Party of its rights with respect to. any default under
this TO Tariff, or with respect to any other matter arising in connection with this TO Tariff,
shall not constitute or be deemed a waiver with
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 19
Transmission Owner Tariff (cont.)
respect to any subsequent default or other matter arising in connection with this TO Tariff.
Any delay short of the statutory period of limitations in asserting or enforcing any right shall
not constitute or be deemed a waiver.
13.3 Confidentiality.
13.3.1 Maintaining Confidentiality if Not for Public Disclosure. The Participating TO
shall maintain the confidentiality of all of the documents, data, and information
provided to it by any other Party that such Party may designate as confidential,
provided, however, that the information will not be held confidential by the
receiving Party if (1) the designating Party is required to provide such information
for public disclosure pursuant to this TO Tariff or applicable regulatory
requirements, or (2) the information becomes available to the Public on a non -
confidential basis (other than from the receiving Party).
13.3.2 Disclosure of Confidential Information. Notwithstanding anything in this
Section 11.3.2 to the contrary, if any Party is required by applicable laws or
regulations, or in the course of administrative or judicial proceedings, to disclose
information that is otherwise required to be maintained in confidence pursuant to
this Section 11.3.2, the Party may disclose such information; provided, however,
that as soon as such Party learns of the disclosure requirement and prior to making
such disclosure, such Party shall notify the affected Party or Parties of the
requirement and the terms thereof. The affected Party or Parties may, at their sole
discretion and own costs, direct any challenge to or defense against the disclosure
requirement and the disclosing Party shall cooperate with such affected Party or
Parties to the maximum extent practicable to minimize the disclosure of the
information consistent with applicable law. The disclosing Party shall cooperate
with the affected Parties to obtain proprietary or confidential treatment of
confidential information by the person to whom such information is disclosed prior
to any such disclosure.
13.4 Titles. The captions and headings in this TO Tariff are inserted solely to facilitate reference
and shall have no bearing upon the interpretation of any of the rates, terms, and conditions of
this TO Tariff.
13.5 Severability. If any term, covenant, or condition of this TO Tariff or the application or effect
of any such term, covenant, or condition is held invalid as to any person, entity, or
circumstance, or is determined to be unjust, unreasonable, unlawful, imprudent, or otherwise
not in the public interest, by any court or government agency of competent jurisdiction, then
such'term, covenant, or condition shall remain in force and effect to the maximum extent
permitted bylaw, and all other terms, covenants, and conditions of this TO Tariff and their
application shall not be affected thereby but shall remain in force and effect. The Parties shall
be relieved of their obligations only to the extent necessary to eliminate such regulatory or
other determination, unless a court or
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 20
Superceding Original Sheet No. 20
Transmission Owner Tariff (cont.)
governmental agency of competent jurisdiction holds that such provisions are not severable
from all other provisions of this TO Tariff.
13.6 Preservation of Obligations. Upon termination of this TO Tariff, all unsatisfied obligations
of each Party shall be preserved until satisfied.
13.7 Governing Law. This TO Tariff shall be interpreted, governed by, and construed under the
laws of the State of California, without regard to the principles of conflict of laws thereof, or
the laws of the United States, as applicable, as if executed and to be performed wholly within
the State of California.
13.8 Appendices Incorporated. The appendices to this TO Tariff are attached to this TO Tariff
. and are incorporated by reference as if fully set forth herein.
13.9 Consistency with.ISO Tariff. This TO Tariff is intended to be consistent with the ISO
Tariff, and, if necessary, shall be amended to conform with any changes authorized or
required in any final order in FERC Docket No. ER00-2019.
13.10 Disputes. Except as limited by law, the ISO ADR Procedures shall apply to all disputes
between parties which arise under this TO Tariff or,under or in respect of the proposed terms
and conditions of a Facilities Study Agreement,System Impact Study Agreement or
Expedited Service Agreement. The ISO ADR Procedures set forth in Section 13 of the ISO
Tariff shall not apply to disputes as to whether rates and charges set forth in this TO Tariff
(other than charges for studies) are just and reasonable under the FPA.
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 21
Transmission Owner Tariff (cont.)
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $4,580,591.
The TRBAA is a negative $1,664,556 for calendar year 2008.
All of Vernon's transmission facilities and Entitlements placed under the ISO's Operational Control are High
Voltage Facilities as defined by the ISO Tariff.
The TRBAA will be recalculated annually consistent with the ISO Tariff approved by the Vernon City
Council, and provided to the ISO.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance. by the Commission
Eight Revised Sheet No. 22
Superceding Seventh Revised Sheet No. 22
APPENDIX II
NOTICES
Designated Representative:
Mr. Eric T. Fresch
City Administrator
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90041
Tel. No. (323) 583-8811
Fax No. (323) 581-7924
Authorized by City of Vernon
Ordinance No. 940
Transmission Owner Tariff (cunt.)
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 23
Superceding Original Sheet No. 23
EXHIBIT 4
CITY OF VERNON, CALIFORNIA
TRANSMISSION OWNER TARIFF
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. I
1.
2.
3.
4.
5.
6.
7.
8.
W
TABLE OF CONTENTS
Transmission Owner Tariff (cont.)
Page No.
Preamble................................................................................................................................................. 4
EffectiveDate......................................................................................................................................... 4
TODefinitions........................................................................................................................................ 4
Eligibility................................................................................................................................................ 6
AccessCharges....................................................................................................................................... 6
5.1 Transmission Revenue Requirement......................................................................................... 7
5.2 Transmission Revenue Balancing Account Adjustment("TRBAA")....................................... 7
Ancillary Services —Applicability and Charges..................................................................................... 7
Billingand Payment ............ :................................................................................................................... 7
Obligation to Interconnect or Construct Transmission Expansions and Facility Upgrades .................... 9
8.1 Participating TO Obligation to Interconnect............................................................................. 9
8.2 Participating TO Obligation to Construct Transmission Expansions or Facility Upgrades .... 10
8.3 Request for FERC Deference Regarding Need Determination ............................................... 11
ExpansionProcess................................................................................................................................ 11
9.1 Determination of Facilities...........................................................................................:..........11
9.2 Obligation to Build.................................................................................................................. 12
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No. 2
Superceding First Revised Sheet No. 2
Transmission Owner Tariff (cont.)
9.3 Provisions Relating To Transmission Construction On the Systems Of Other TOs ............... 14
10. Interconnection Process........................................................................................................................ 15
10.1
Applicability............................................................................................................................15
10.2
Applications............................................................................................................................
15
10.3
Completed Application............................................................................................................15
10.4
Notice of Need for System Impact Study................................................................................
16
10.5
System Impact Study Cost Reimbursement and Agreement ...................................................
16
10.6
System Impact Study Procedures............................................................................................
17
10.7
Relevant Sections Apply Upon Receipt of Facilities Study Agreement .................................
18
10.8
Partial Interim Service.............................................................................................................
18
10.9
Expedited Procedures for New Facilities................................................................................
18.
11. Uncontrollable Forces and Indemnification..........................................................................................18
11.1 Procedures to Follow if Uncontrollable Force Occurs............................................................ 18
11.2 Indemnification.......................................................................................................................19
12. Regulatory Filings.................................................................................................................................19
13. Miscellaneous.......................................................................................................................................19
13.1
Notices.....................................................................................................................................19
13.2
Waiver............................................................................................:........................................19
13.3
Confidentiality .........................................................................................................................20
13.4
Titles........................................................................................................................................
20
13.5
Severability..............................................................................................................................20
13.6
Preservation of Obligations.....................................................................................................21
13.7
Governing Law........................................................................................................................
21
13.8
Appendices Incorporated.........................................................................................................
21
13.9
Consistency with. ISO Tariff....................................................................................................
21
13.10
Disputes...................................................................................................................................21
APPENDIXI...................................................................................................................................................... 22
APPENDIXII.....................................................................................................................................................23
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No. 3
Superceding First Revised Sheet No. 3
Transmission Owner Tariff (cont.)
1. Preamble. Vernon's TRR for its high voltage transmission facilities and Entitlements placed under
the ISO's operational control, and certain terms and conditions relating to transmission expansion of
and interconnection with Vernon's high voltage transmission facilities and Entitlements placed under
the ISO's operational control, are set forth in this TO Tariff.
2; Effective Date. This TO Tariff is effective on the date on which Vernon became a Participating TO,
January 1, 2001, and shall continue to be effective so long as Vernon is a party to the TCA.
3. TO Definitions. Certain capitalized terms used in this TO Tariff that are set out immediately below
shall have the meanings set out immediately below. Capitalized terms used in this tariff and not
defined below shall have the meanings set out in the ISO Tariff as it may be amended from time to
time.
3.1 Completed Application. An application that satisfies all of the information and other
requirements of this TO Tariff, including any required deposit
3.2 Direct Assignment Facilities. Facilities or portions of facilities that are constructed by the
Participating TO for the sole use or benefit of a particular party requesting Interconnection
under this TO Tariff. Direct Assignment Facilities shall be specified in the Interconnection
Agreement that governs service to such party.
3.3 Facilities Study Agreement. An agreement between a Participating TO and either a Market
Participant, Project Sponsor, or identified principal beneficiaries. pursuant to which the
Market Participants, Project Sponsor, and identified principal beneficiaries agree to reimburse
the Participating TO for the cost of a Facility Study.
3.4 Facility or Facilities Study. An engineering study conducted by a Participating TO to
determine required modifications to the Participating TO's transmission system, including the
cost and scheduled completion date for such modifications that will be required to provide
needed services.
3.5 Local Regulatory Authority. In the case of Vernon, the Vernon City Council.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No. 4
Superceding First Revised Sheet No. 4
Transmission Owner Tariff (cont.)
3.6 Net FTR Revenue. The sum of 1) The revenue received by the Participating TO from the
sale, auction, or other transfer of the FTRs provided to it pursuant to Section 36.4.3 FTR, or
any substantively identical successor provision, of the ISO Tariff; and 2) For each hour: a) the
Usage Charge revenue received by the Participating TO associated with its Section 36.4.3
FTRs; minus b) Usage Charges that are: i) incurred by the Scheduling Coordinator for the
Participating TO under
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Third Revised Sheet No. 5
Superceding Second Revised Sheet No. 5
Transmission Owner Tariff (cont.)
ISO Tariff Section 27.1.2.1.4, ii) associated with the Participating TO's Section36.4.3 FTRs,
and iii) incurred by the Participating TO for its energy transactions but not incurred as a result
of the use of the transmission by a third -party and minus c) the charges paid by the
Participating TO pursuant to Section 27.1.2.1.4, to the extent such charges are incurred by the
Scheduling Coordinator of the Participating TO on Congested Inter -zonal Interfaces that are
associated with the Section 36.4.3 FTRs provided to the Participating TO. The component of
Net FTR Revenue represented by item 2) immediately above shall not be less than zero for
any hour.
3.7 Participating TO. A party to the TCA whose application under Section 2.2 of the TCA has
been accepted and who has placed its transmission assets and Entitlements under the ISO's
Operational Control in accordance with the TCA. A Participating TO may bean Original
Participating TO or aNew Participating TO. For purposes of this TO Tariff, the Participating
TO is Vernon.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No. 5a
Superceding First Revised Sheet No. Sa
Transmission Owner Tariff (cont.)
3.8 Project Proponent. A Market Participant or group of Market Participants that: (i) advocates
a transmission addition or upgrade; (ii) is unwilling to pay the full cost of the proposed
transmission addition and upgrade, and thus is not a Project Sponsor; and (iii) initiates
proceedings under the ISO ADR Procedures to determine the need for the proposed
transmission addition or upgrade.
3.9 System Impact Study. An engineering study conducted by a Participating TO to determine
whether a request for Interconnection to the Participating TO's transmission system would
require new transmission additions or upgrades.
3.10 System Impact Study Agreement. An agreement between a Participating TO and an entity
that has requested Interconnection to the Participating TO's transmission system pursuant to
which the entity requesting Interconnection agrees to reimburse the Participating TO for the
cost of a System Impact Study.
3.11 Transmission Revenue Balancing Account Adjustment ff R.BAA"). A mechanism
established by the Participating TO which will ensure that all Transmission Revenue Credits
and other credits specified in Sections 6 and S of Appendix F, Schedule 3 of the ISO Tariff,
flow through to ISO Tariff and TO Tariff transmission customers.
3.12 Transmission Revenue Credit. Collectively, 1) the sum of a) all revenues received by the
Participating TO from the ISO for Wheeling service, plus b) Usage Charge revenues received
by the Participating TO pursuant to Section 27.1.2.1.6(ii) of the ISO Tariff, plus c) NET FTR
Revenue received by the Participating TO; minus 2) any charges attributable to the
Participating TO (but not attributable to the FTR Holder) pursuant to ISO Tariff 27.1.2.1.7.
3.13 Transmission Revenue Requirement. The TRR is the total annual authorized revenue
requirements associated with transmission facilities and Entitlements turned over to the
Operational Control of the ISO by the Participating TO. The costs of any transmission facility
turned over to the Operational Control of the ISO shall be fully included in the Participating
TO's TRR. The TRR includes the costs of transmission facilities and Entitlements and
deducts Transmission Revenue Credits and credits for Standby Transmission Revenue and the
transmission revenue expected to be actually received by the Participating TO for Existing
Rights and Converted Rights. The TRR is shown in Appendix I.
4. Eligibility. Transmission service over Vernon's high voltage transmission facilities and Entitlements
placed under the ISO's Operational Control shall be provided only to Eligible Customers as defined
by the ISO Tariff. Any dispute as to whether a customer is eligible for wholesale transmission service
shall be resolved by FERC and any dispute as to whether a Vernon End -Use Customer is eligible for
service under this TO Tariff shall be resolved by the Local Regulatory Authority. At the present time,
there are no Vernon End -Use Customers eligible for service under this tariff.
5. Access Charges. The applicable Access Charges are provided in the ISO Tariff.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No. 6
Superceding First Revised Sheet No. 6
Transmission Owner Tariff (cont.)
5.1 Transmission Revenue Requirement. As set forth in the ISO Tariff, the Transmission
Revenue Requirement for each Participating TO shall be used to develop the Access Charges
set forth in the ISO Tariff. Vernon's Transmission Revenue Requirement is set forth in
Appendix 1.
5.2 Transmission Revenue Balancing Account Adjustment ("TRBAA"). The Participating
TO shall maintain a Transmission Revenue Balancing Account (" TRBA") that will ensure
that all Transmission Revenue Credits and the refunds, specified in Sections 6 and 8 of
Appendix F, Schedule 3 of the ISO Tariff, flow through to transmission customers. The
TRBAA shall be equal to: TRBAA = TRCF + TRCT + I .
TRCT = The balance representing the prior period difference between the projected
Transmission Revenue Credits and the actual credits.
TRCF = The forecast of Transmission Revenue Credits for the following calendar year.
I = The interest balance for the TRBA, which shall be calculated using the interest rate
pursuant to Section 35.19(a) of FERC's regulations under the Federal Power Act
(18 C.F.R. § 35.19(a)). Interest shall be calculated based on the average TRBA
principal balance each month, compounded quarterly.
The Vernon TRBAA, calculated in accordance with the ISO Tariff and approved by the City
Council, is stated in Appendix I.
6. Ancillary Services —Applicability and Charges. If any Ancillary Services are required, Vernon will
not provide such services, but transmission customer will be required to meet any such requirement in
accordance with the ISO Tariff.
7. Billing and Payment.
7.1 [intentionally left blank]
7.2 . The ISO, in accordance with the ISO Tariff, shall pay the Participating TO, among other
things, Wheeling, Usage, Access Charge revenues, and FTR auction proceeds (excluding
Usage Charge revenues payable to FTR Holders) in accordance with the ISO Tariff.
7.3 Users of Vernon's high voltage transmission facilities and Entitlements placed under the
ISO's Operational Control shall pay to the ISO all applicable charges in accordance with the
ISO Tariff.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No. 7
Superceding First Revised Sheet No. 7
[Intentionally Left Blank]
Authorized by City of Vernon
Ordinance No. 940
Transmission Owner Tariff (cant.)
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No.8
Superceding First Revised Sheet No. 8
Transmission Owner Tariff (cont.)
8. Obligation to Interconnect or Construct Transmission Expansions and Facility Upgrades.
8.1 Participating TO Obligation to Interconnect.. Sections 8, 9, and 10, and their subparts, are
provided for consistency with other PTOs' TO Tariffs and for potential future application
should Vernon acquire transmission facilities. These Sections 8, 9, and 10 are not presently
applicable to any Vernon facility. If the situation changes so that Vernon has legal authority
over transmission facilities so that Vernon is able to implement the provisions of Sections 8,
9, and 10 so that those provisions become effective, to the extent consistent with Sections
9.2.1 and 9.3.3 of this TO Tariff, the Participating TO shall, at the request of a third party
pursuant to Section 210, interconnect its system to the generation of such third party, or
modify an existing Interconnection. Interconnections under this TO Tariff shall be available
to entities eligible to request interconnection consistent with the provisions of Section 210(a)
of the FPA.
8.1.1 Upgrade to Transmission System. Interconnection must be consistent with
Good Utility Practice, in conformance with all Applicable
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No. 9
Superceding First Revised Sheet No. 9
Transmission Owner Tariff (cont.)
Reliability Criteria, all applicable statutes, and regulations. The Participating
TO will not upgrade its existing or planned transmission system to
accommodate the Interconnection if doing so would impair system reliability, or
would otherwise impair or degrade pre-existing firm transmission service.
8.1.2 Costs Associated with Interconnection. The cost of any Direct Assignment
Facilities constructed pursuant to this section shall be borne by the party
requesting the Interconnection. Any additional costs associated with
accommodating the Interconnection shall be allocated in accordance with the
cost responsibility methodology set forth in the ISO Tariff for transmission
expansions or upgrades. Any disputes regarding such cost allocation shall be
resolved in accordance with the ISO ADR Procedures. If a Market Participant
fails to raise through the ISO ADR Procedures a dispute as to whether a
proposed transmission addition or upgrade is needed, or as to the identity, if
any, of the beneficiary, then the Market Participant shall be deemed to have
waived its right to raise such dispute at a later date. The determination under the
ISO ADR Procedures as to whether the transmission addition or upgrade is
needed and the identity, if any, of the beneficiaries, including any determination
by FERC or on appeal of a FERC determination in accordance with that
process, shall be final.
8.1.3 Execute Interconnection Agreement. Prior to the construction of any
Interconnection facilities pursuant to this TO Tariff, the party requesting an
Interconnection shall execute an appropriate Interconnection Agreement that
will be filed with FERC, or the Local Regulatory Authority, in the case of a
Local Publicly Owned Electric Utility, and that will include, without limitation,
cost, responsibilities for engineering, equipment, and construction costs. All
costs shall be paid in advance by the requesting party.
8.1.4 Coordination with ISO on Interconnection Requests. The Participating TO
shall coordinate with the ISO, pursuant to the provisions of the TCA, in
developing Interconnection standards and guidelines for processing
Interconnection requests under this TO Tariff.
8.2 Participating TO Obligation to Construct Transmission Expansions or Facility
Upgrades. The Participating TO shall be obligated to: (1) perform System Impact or Facility
Studies where the Project Sponsor or the ISO. agrees to pay the study cost and specifies the
project objectives to be achieved, and (2) build transmission additions and facility upgrades
where the Participating TO is obligated to construct or expand facilities in accordance with
and subject to the limitations of the ISO Tariff and this TO Tariff.
8.2.1 Obligation to Construct. A Participating TO shall not be obligated to
construct or expand Interconnection facilities or system upgrades unless
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No. 10
Superceding First Revised Sheet No. 10
Transmission Owner Tariff (cont.)
and until the conditions stated in Section 9.2.1 hereof have been satisfied.
8.2.2 Local Furnishing Participating TO Obligation to Construct. A Local
Furnishing Participating TO shall not be obligated to construct or expand
Interconnection facilities or system upgrades unless and until the conditions
stated in Section 9.3.3 hereof have been satisfied.
8.3 Request for FERC Deference Regarding Need Determination. It is intended that FERC
grant substantial deference to the factual determinations of the ISO, (including the ISO's
ADR Procedures), the Vernon City Council, WSCC, or RTG coordinated planning processes
as to the need for or construction of a facility, the need for full cost recovery, and the
allocation of costs.
9. Expansion Process.
9.1 Determination of Facilities. A Participating TO shall perform a Facilities Study in
accordance with this Section where (1) the Participating TO is obligated to construct or
expand facilities in accordance with the ISO Tariff and this TO Tariff; (2) a Market
Participant agrees to pay the costs of the Facilities Study and specifies the project objectives
to be achieved in terms of increased capacity or reduced congestion; or (3) the Participating
TO is required to perform a Facilities Study pursuant to the ISO Tariff.
9.1.1 Payment of Facilities Study's Cost.
9.1.1.1 Market Participant to Pay for Facilities Study. Where a Market
Participant requests a Facilities Study and the need for the
transmission addition or upgrade has not yet been established in
accordance with the procedures established herein and the ISO
Tariff, the Market Participant shall pay the cost of the Facilities
Study.
9.1.1.2 Project Sponsor or Project Proponent to Pay for Faculties
Study. Where the facilities to be added or upgraded have been
determined to be needed in accordance with the procedures
established herein and the ISO Tariff, the Project Sponsor, Project
Proponent, or the ISO requesting the study shall pay the reasonable
cost of the Facilities Study. When the Participating TO is the
Project Sponsor in accordance with the ISO Tariff, the costs of the
Facilities Study shall be recovered through the Access Charges and
transmission rates.
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No. 11
Superceding First Revised Sheet No. 11
Transmission Owner Tariff (cont.)
9.1.1.3 Principal Beneficiaries to Pay for Facilities Study. Where the
facilities to be added or upgraded have been determined to be
needed and the principal beneficiaries have been identified by the
ISO or ISO ADR Procedures in accordance with the ISO Tariff, the
Project Sponsor and the identified principal beneficiaries shall pay
the reasonable cost of the Facilities Study, in such proportions as
may be agreed, or, failing agreement, as determined in accordance
with the ISO ADR Procedures.
9.1.2 Payment Procedure. Where a Facilities Study is being conducted pursuant to
this TO Tariff, the Participating TO shall, as soon as practicable, tender to the
Market Participant, Project Sponsor, Project Proponent, ISO, or identified
principal beneficiaries, as the case may be, a Facilities Study Agreement that
defines the scope, content, assumptions, and terms of reference for such study,
the estimated time required to complete it, and such other provisions as the
parties may reasonably require and pursuant to which such Market Participant,
Project Sponsor, Project Proponent, the ISO, or identified principal beneficiaries
agree to reimburse the Participating TO the reasonable cost of performing the
required Facilities Study. If the Market Participant, Project Sponsor, Project
Proponent, the ISO, or identified principal beneficiaries, as the case may be,
agree to the terms of the Facilities Study Agreement, they shall execute the
Facilities Study Agreement and return it to the Participating TO within ten
Business Days. If such Market Participant, Project Sponsor, Project Proponent,
the ISO, or identified principal beneficiary elects not to execute a Facilities
Study Agreement, the Participating TO shall have no obligation to complete a
Facilities Study.
9.1.3 Facilities Study Procedures. Upon receipt of an executed Facilities Study
Agreement, a copy of which has been provided to the ISO by the party
requesting the Facilities Study, the Participating TO will use due diligence to
complete the required Facilities Study in accordance with the terms of the
Facilities Study Agreement.
9.2 Obligation to Build.
9.2.1 Due Diligence to Construct. Subject to Section 9.3.3 of this TO Tariff, the
Participating TO shall use due diligence to construct, within a reasonable time,
additions or upgrades to its transmission system that it is obligated to construct
pursuant to the ISO Tariff and this TO Tariff. The Participating TO's obligation
to build will be subject to: 1) its ability, after making a good faith effort, to
obtain the necessary approvals and property rights under applicable federal,
state, and local laws; 2) the presence of a cost recovery mechanism with cost
responsibility assigned in accordance with the ISO Tariff; and 3) a signed
Participation
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
First Revised Sheet No. 12
Superceding Original Sheet No. 12
Transmission Owner Tariff (cont.)
Agreement. The Participating TO will not construct or expand its existing or
planned transmission system, if doing so would impair system reliability as
determined through systems analysis based on the Applicable Reliability
Criteria.
9.2.2 Delay in Construction or Expansion. If any event occurs that will materially
affect the time for completion of new facilities, or the ability to complete them,
the Participating TO shall promptly notify: (1) the Project Sponsor with regard
to facilities determined to be needed; (2) the Parties to the Participation
Agreement with regard to facilities determined to be needed pursuant to the ISO
Tariff where principal beneficiaries were identified; and (3) the ISO. In such
circumstances, the Participating TO shall, within thirty days of noticing such
Project Sponsor, Parties to the Participation Agreement, and the ISO of such
delays, convene a technical meeting with such Project Sponsor, Parties to the
Participation Agreement, and the ISO to discuss the circumstances which have
arisen and evaluate any options available. The Participating TO also shall make
available to such Project Sponsor, Parties to the Participation Agreement, and
the ISO, as the case may be, studies and work papers related to the cause and
extent of the delay and the Participating TO's ability to complete the new
facilities, including all information that is in the possession of the Participating
TO that is reasonably needed to evaluate the alternatives.
9.2.2.1 Alternatives to the Original Facility Additions. If the review
process of Section 9.2.2 determines that one or more alternatives
exist to the originally planned construction project, the Participating
TO shall present such alternatives for consideration to the Project
Sponsor, Parties to the Participation Agreement, and the ISO, as the
case may be. If upon review of any alternatives, such Project
Sponsor, the ISO, or Parties to the Participation Agreement wish to
evaluate or to proceed with one of the alternative additions or
upgrades, such Project Sponsor, the ISO, or Parties to the
Participation Agreement may request that the Participating TO
prepare a revised Facility Study pursuant to Sections 9.1.1, 9.1.2,
and.9.1.3 of this TO Tariff. In the event the Participating TO
concludes that no reasonable alternative exists to the originally
planned addition or upgrade and the Project Sponsor or Parties to
the Participation Agreement or the ISO disagree, the dispute shall
be resolved pursuant to the ISO ADR Procedure.
9.2.2.2 Refund Obligation for Unfinished Facility Additions. If the
Participating TO and the Project Sponsor, the ISO, or Parties to the
Participation Agreement, as the case may be, mutually agree that no
other.reasonable alternatives exist, the obligation to construct the
requested additions or upgrades shall terminate and any deposit not
yet applied toward the expended project
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
First Revised Sheet No. 13
Superceding Original Sheet No. 13
Transmission Owner Tariff (cont.)
costs shall be returned with interest pursuant to FERC Regulation
35.19(a)(2)(iii). However, the Project Sponsor and any identified
principal beneficiaries, as the case may be, shall,be responsible for
all costs prudently incurred by the Participating TO through the
time the construction was suspended.
9.3 Provisions Relating To Transmission Construction On the Systems Of Other TOs.
9.3.1 Responsibility for Third Party Additions. A Participating TO shall not be
responsible for making arrangements for any engineering, permitting, and
construction of any necessary facilities additions on the system(s) of any other
entity or for obtaining any regulatory approval for such facilities. The
Participating TO will undertake reasonable efforts through the coordinated
planning process to assist in making such arrangements, including, without
limitation, providing any information or data required by such other electric
system pursuant to Good Utility Practice.
9.3.2 Coordination of Third -Party System Additions. Where transmission
additions or upgrades being built pursuant to the ISO Tariff require additions or
upgrades on other systems, to the extent consistent with Section 9.3.3 of this TO
Tariff the Participating TO shall coordinate construction on its own system with
the construction required by others. The Participating TO, after consultation
with the ISO, the Project Sponsor, and Parties to the Participation Agreement,
as the case may be, may defer construction if the new transmission facilities on
another system cannot be completed in a timely manner. The Participating TO
shall notify such Project Sponsor, Parties to the Participation Agreement, and
the ISO, in writing of the basis for any decision to defer construction and the
specific problems which must be resolved before it will initiate or resume
construction of the new facilities. Within forty Business Days of receiving
written notification by the Participating TO of its intent to defer construction
pursuant to this section, such Project Sponsor, Parties to the Participation
Agreement, or the ISO may challenge the decision in accordance with the ISO
ADR Procedure.
9.3.3 Expansion by "Local Furnishing Participating TOs."Notwithstanding any
other provision of this TO Tariff, prior to requesting that a Local Furnishing
Participating TO construct or expand facilities, the ISO or Project Sponsor shall
tender (or cause to be tendered) an application under Section 211 of the FPA
requesting FERC to issue an order directing the Local Furnishing Participating
TO to construct or expand facilities as necessary to provide transmission service
as determined pursuant to the ISO Tariff. Such Local Furnishing Participating
TO shall thereafter, within ten Business Days of receiving a copy of the Section
211 application, waive its right to a request for
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
First Revised Sheet No. 14
Superceding Original Sheet No. 14
Transmission Owner Tariff (cont.)
service under Section 2.13(a) of the FPA and to the issuance of a proposed order
under Section 212(c) of the FPA. Upon receipt of a final order from FERC
under Section 211 of the FPA that is no longer subject to rehearing or appeal,
such Local Furnishing Participating TO shall construct or expand facilities to
comply with that FERC order and shall transfer to the ISO Operational Control
over the Local Furnishing Participating TO's expanded transmission facilities in
accordance with the ISO Tariff.
10. Interconnection Process.
10.1 Applicability. All requests for Interconnection directly to the ISO Controlled Grid from
parties eligible to request such Interconnection consistent with Section 210(a) of the FPA
shall be processed pursuant to the provisions of this Section 10 which is subject to the
applicable interconnection, integration, exchange, operating, joint ownership and joint
participation agreements, and the rights and obligations of owners of jointly -owned facilities.
10.2 Applications. Parties requesting Interconnections shall submit written applications to the
Participating TO and shall send a copy of the application to the ISO. The Participating TO
shall time -stamp the application to establish study priority.
10.3 Completed Application. A Completed Application shall provide all of the information listed
in 18 C.F.R. § 2.20, including, but not limited to, the following:
(i) The identity, address, telephone number, and facsimile number of the entity
requesting service;
(ii) The Interconnection point(s) and the location of the transmission addition
contemplated by the applicant;
(iii) The resultant (or new) maximum amount of Interconnection capacity requested at
each point which may experience such an increase; and the increased transmission
capacity of the transmission addition requested;
(iv) The proposed date for initiating an Interconnection. In addition to the information
specified above, when required to properly evaluate system conditions, the
Participating TO also may ask the applicant to provide the following:
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Second Revised Sheet No. 15
Superceding First Revised Sheet No. 15
Transmission Owner Tariff (cont.)
(v) The electrical location of the source of the power (if known) to be transmitted
pursuant to the applicant's request for Interconnection. If the source of the power is
not known, a system purchase will be assumed;
(vi) The electrical location of the ultimate load (if known). If the location of the load is
not known, a system sale will be assumed; and
(vii) Such other information as the Participating TO reasonably requires to process the
application.
The Participating TO will treat the information in (v) and (vi) as confidential at the request of
the applicant except to the extent that disclosure of this information is required by this TO
Tariff, by regulatory or judicial order, for reliability purposes pursuant to Good Utility
Practice, or pursuant to RTG or ISO transmission information sharing agreements. The
Participating TO shall treat this information consistent with the standards of conduct
contained in Part 37 of FERC's regulations.
10.4 Notice of Need for System Impact Study. After receiving a Completed Application for
Interconnection, the Participating TO shall determine on a, nondiscriminatory basis whether a
System Impact Study is needed. If the Participating TO determines that a System Impact
Study is necessary to accommodate the requested Interconnection, it shall so inform the
applicant (and shall send a courtesy copy to the ISO), as soon as practicable. In such cases,
the Participating TO shall within twenty Business Days of receipt of a Completed
Application, tender a System Impact Study Agreement that defines the scope, content,
assumptions and terms of reference for such study, the estimated time required to complete it,
and such other provisions as the parties may reasonably require, and pursuant to which the
applicant shall agree to reimburse the Participating TO for the reasonable costs of performing
the required System Impact Study. For an Interconnection request to remain a Completed
Application, the applicant shall execute the System Impact Study Agreement and return it to
the Participating TO within ten Business Days. If the applicant elects not to execute a System
Impact Study Agreement, its application shall be deemed withdrawn, and the applicant shall
reimburse to the Participating TO and the ISO all costs reasonably incurred in processing the
application.
10.5 System Impact Study Cost Reimbursement and Agreement.
10.5.1 Cost Reimbursement. The System Impact Study Agreement shall clearly
specify the maximum charge, based on the Participating To's estimate of the
cost and time for completion of the System Impact Study. The charge shall not
exceed the reasonable cost of the study. In performing the System Impact Study,
the Participating TO shall rely, to the extent reasonably practicable, on existing
transmission planning studies. The applicant will not be assessed a charge for
such existing studies; however, the applicant will be responsible for the
reasonable charges associated with any modifications. to existing
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
First Revised Sheet No. 16
Superceding Original Sheet No. 16
Transmission Owner Tariff (cont.)
planning studies that are reasonably necessary to evaluate the impact of the
applicant's request.
10.5.2 Multiple Parties. If multiple parties request Interconnection at the same
location, the Participating TO may conduct a single System Impact Study. The
costs of that study shall be pro -rated among the parties requesting
Interconnection.
10.6 System Impact Study Procedures. Upon receipt of an executed System Impact Study
Agreement, the Participating TO will use due diligence to complete the required System
Impact Study within a sixty day period. The System Impact Study shall identify any system
constraints which cannot be reasonably accommodated through ISO Congestion
Management, such that transmission expansions or upgrades would be required to provide the
requested Interconnection. In the event that the Participating TO is unable to complete the
required System Impact Study within such time period, it shall so notify the applicant and
provide an estimated completion date along with an explanation of the reasons why additional
time is required to complete the required studies. A copy of the completed System Impact
Study and related work papers shall be made available to the applicant and the ISO. The
Participating TO will use the same due diligence in completing the System Impact Study for
others as it uses when completing studies for its affiliated UDC. The Participating TO shall
notify the applicant and the ISO immediately upon completion of the System Impact Study.
10.6.1 Failure to Execute an Interconnection Agreement. If the Participating TO
finds that the transmission system will be adequate to accommodate all of a
request for Interconnection and that no costs are likely to be incurred for new
transmission additions or upgrades, the applicant must execute an
Interconnection Agreement within ten Business Days of completion of the
System Impact Study or the application shall be deemed terminated and
withdrawn.
10.6.2 Facilities Study Procedures. If a System Impact Study indicates that additions
or upgrades to the transmission system are needed to meet an applicant's
request, the Participating TO shall, within fifteen Business Days of the date of
the System Impact Study, tender to the applicant a Facilities Study Agreement
that defines the scope, content, assumptions and terms of reference for such
study, the estimated time required to complete it, and such other provisions as
the parties may reasonably require, and pursuant to which the applicant agrees
to reimburse the Participating TO for performing the required Facilities Study.
For a service request to remain a Completed Application, the applicant shall
execute the Facilities Study Agreement and return it to the Participating TO
within ten Business Days. If the applicant elects not to execute a Facilities
Study Agreement, its application shall be deemed withdrawn and the applicant
shall reimburse to the
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification of Vernon
First Revised Sheet No. 17
Superceding Original Sheet No. 17
Transmission Owner Tariff (cont.)
Participating TO all costs reasonably incurred in processing the application not
covered by the System Impact Study Agreement.
10.7 Relevant Sections Apply Upon Receipt of Facilities Study Agreement. Upon receipt of an
executed Facilities Study Agreement by the Participating TO, the relevant portions of
Sections 9.1.3 through 9.3.3 of this TO Tariff shall apply.
10.8 Partial Interim Service. If the Participating TO determines that there will not be adequate
transmission capability to satisfy the full amount of a Completed Application for an increase
in the maximum rate of delivery or receipt associated with a new request for Interconnection,
the Participating TO nonetheless shall be obligated to offer and provide the portion of the
requested Interconnection that can be accommodated without any additions or upgrades.
However, the Participating TO shall not be obligated to provide the incremental amount of
requested Interconnection that requires the addition of facilities or upgrades to the
transmission system until such facilities or upgrades have been placed in service.
10.9 Expedited Procedures for New Facilities. In lieu of the procedures set forth above, the
applicant shall have the option to expedite the process by requesting the Participating TO to
tender at one time, together with the results of required studies, an "Expedited Service
Agreement" pursuant to which the applicant would agree to compensate the Participating TO
for all costs reasonably incurred pursuant to the terms of this TO Tariff. In order to exercise
this option, the applicant shall request in writing an Expedited Service Agreement covering
all of the above -specified items within twenty Business Days of receiving the results of the
System Impact Study identifying needed facility additions or upgrades or costs incurred in
providing the requested Interconnection. The Participating TO shall tender an Expedited
Service Agreement within ten Business Days of the applicant's request. While the
Participating TO agrees to provide the applicant with its best estimate of the new facility costs
and other charges that may be incurred, unless otherwise agreed by the parties, such estimate
shall not be binding and the applicant must agree in writing to compensate the Participating
TO for all costs reasonably incurred pursuant to the provisions of this TO Tariff. The
applicant shall execute and return such Expedited Service Agreement within ten Business
Days of its receipt or the applicant's request for Interconnection will cease to be a Completed
Application and will be deemed terminated and withdrawn. In that event, the applicant shall
reimburse to the Participating TO all costs reasonably incurred in processing the application
not covered by the terms of the System Impact Study Agreement.
11. Uncontrollable Forces and Indemnification.
11.1 Procedures to Follow if Uncontrollable Force Occurs. In the event of the occurrence of an
Uncontrollable Force which prevents a Party from performing any of its obligations under
this TO Tariff, such Party shall (i) immediately notify the other Parties in writing of the
occurrence of such Uncontrollable Force, (ii) not be entitled to suspend performance in any
greater scope or longer duration
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
First Revised Sheet No. 18
Superceding Original Sheet No. 18
Transmission Owner Tariff (cont.)
than is required by the Uncontrollable Force, (iii) use its best efforts to mitigate the effects of
such Uncontrollable Force, remedy its inability to perform, and resume full performance
hereunder, (iv) keep the other Parties apprised of such efforts on a continual basis and (v)
provide written notice of the resumption of performance hereunder. Notwithstanding any of
the foregoing, the settlement of any strike, lockout or labor dispute constituting an
Uncontrollable Force shall be within the sole discretion -of the Party to this TO Tariff
involved in such strike, lockout, or labor dispute and the requirement that a Party must use its
best efforts to remedy the cause of the Uncontrollable Force and mitigate its effects and
resume full performance hereunder shall not apply to strikes, lockouts, or labor disputes. No
Party will be considered in default as to any obligation under this TO Tariff if prevented from
fulfilling the obligation due to the occurrence of an Uncontrollable Force.
11.2 Indemnification. A Market Participant shall at all times indemnify, defend, and save the
Participating TO harmless from any and all damages, losses, claims, (including claims and
actions relating to injury or to death of any person or damage to property), demands, suits,
recoveries, costs and expenses, court costs, attorney fees, and all other obligations by or to
third parties, arising out of or resulting from the Participating TO's performance of its
obligations under this TO Tariff on behalf of a Market Participant, except in cases of
negligence or intentional wrongdoing by the Participating TO.
12. Regulatory Filings. Nothing contained herein shall be construed as affecting, in any way, the right of
Vernon to unilaterally make application to FERC as it deems necessary and appropriate to recover its
Transmission Revenue Requirements, or fora change in its terms and conditions, including changes in
rate methodology, or for a change in designation of transmission facilities and Entitlements to be
placed under the ISO's control, pursuant to the applicable FERC rules, regulations, policies, and
governing statutes.
13. Miscellaneous.
13.1 Notices. Any notices, demand, or request in accordance with this TO Tariff, unless otherwise
provided in this TO Tariff, shall be in writing and shall be deemed properly served, given, or
made: (i) upon delivery if delivered in person, (ii) five days after deposit in the mail if sent by
first class United States mail, postage prepaid, (iii) upon receipt of confirmation by return
electronic facsimile if sent by facsimile, or (iv) upon delivery if delivered by prepaid
commercial courier service, in each case addressed to a Party at the address set forth in
Appendix II. Any Party may at any time, by notice to the other Parties, change the
designation or address of the person specified in Appendix II to receive notice on its behalf.
Any notice of a routine character in connection with service under this TO Tariff shall be
given in such a manner as the Parties may determine from time to time, unless otherwise
provided in this TO Tariff.
13.2 Waiver. Any waiver at any time by any Party of its rights with respect to any default under
this TO Tariff, or with respect to any other matter arising in connection with this TO Tariff,
shall not constitute or be deemed a waiver with.
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 19
Transmission Owner Tariff (cont.)
respect to any subsequent default or other matter arising in connection with this TO Tariff.
Any delay short of the statutory period of limitations in asserting or enforcing any right shall
not constitute or be deemed a waiver.
13.3 Confidentiality.
13.3.1 Maintaining Confidentiality if Not for Public Disclosure. The Participating TO
shall maintain the confidentiality of all of the documents, data, and information
provided to it by any other Party that such Party may designate as confidential,
provided, however, that the information will not be held confidential by the
receiving Party if (1) the designating Party is required to provide such information
for public disclosure pursuant to this TO Tariff or applicable regulatory
requirements, or (2) the information becomes available to the Public on a non -
confidential basis (other than from the receiving Party).
13.3.2 Disclosure of Confidential Information. Notwithstanding anything in this
Section 11.3.2 to the contrary, if any Party is required by applicable laws or
regulations, or in the course of administrative or judicial proceedings, to disclose
information that is otherwise required to be maintained in confidence pursuant to
this Section 11.3.2, the Party may disclose such information; provided; however,
that as soon as such Party learns of the disclosure requirement and prior to making
such disclosure, such Party shall notify the affected Party or Parties of the
requirement and the terms thereof. The affected Party or Parties may, at their sole
discretion and own costs, direct any challenge to or defense against the disclosure
requirement and the disclosing Party shall cooperate with such affected Party or
Parties to the maximum extent practicable to minimize the disclosure of the
information consistent with applicable law. The disclosing Party shall cooperate
with the affected Parties to obtain proprietary or confidential treatment of
confidential information by the person to whom such information is disclosed prior
to any such disclosure.
13.4 Titles. The captions and headings in this TO Tariff are inserted solely to facilitate reference
and shall have no bearing upon the interpretation of any of the rates, terms, and conditions of
this TO Tariff.
13.5 Severability. If any term, covenant, or condition of this TO Tariff or the application or effect
of any such term, covenant, or condition is held invalid as to any person, entity, or
circumstance, or is determined to be unjust, unreasonable, unlawful, imprudent, or otherwise
not in the public interest, by any court or government agency of competent jurisdiction, then
such term, covenant, or condition shall remain in force and effect to the maximum extent
permitted bylaw, and all other terms, covenants, and conditions of this TO Tariff and their
application shall not be affected thereby but shall remain in force and effect. The Parties shall
be relieved of their obligations only to the extent necessary to eliminate such regulatory or
other determination, unless a court or
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 20
Superceding Original Sheet No. 20
Transmission Owner Tariff (cont.)
governmental agency of competent jurisdiction holds that such provisions are not severable
from all other provisions of this TO Tariff.
13.6 Preservation of Obligations. Upon termination of this TO Tariff, all unsatisfied obligations
of each Party shall be preserved until satisfied.
13.7 Governing Law. This TO Tariff shall be interpreted, governed by, and construed under the
laws of the State of California, without regard to the principles of conflict of laws thereof, or
the laws of the United States, as applicable, as if executed and to be performed wholly within
the State of California.
13.8 Appendices Incorporated. The appendices to this TO Tariff are attached to this TO Tariff
and are incorporated by reference as if fully set forth herein.
13.9 Consistency with ISO Tariff. This TO Tariff is intended to be consistent with the ISO
Tariff, and, if necessary, shall be amended to conform with any changes authorized or
required in any final order in FERC Docket No. ER00-2019.
13.10 Disputes. Except as limited by law, the ISO ADR Procedures shall apply to all disputes
between parties which arise under this TO Tariff or under or in respect of the proposed terms
and conditions of a Facilities Study Agreement, System Impact Study Agreement or
Expedited Service Agreement. The ISO ADR Procedures set forth in Section 13 of the ISO
Tariff shall not apply to disputes as to whether rates and charges set forth in this TO Tariff
(other than charges for studies) are just and reasonable under the FPA.
Authorized by City of Vernon
Ordinance No. 940
Issued on: April 24, 2001 Resolution No. 7751 Effective: January 1, 2001
Sheet No. 21
Transmission Owner Tariff (cont.)
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement $918,137.
The TRBAA is a negative $1,664,556 for calendar year 2008.
All of Vernon's transmission facilities and Entitlements placed under the ISO's Operational Control are High
Voltage Facilities as defined by the ISO Tariff.
The TRBAA will be recalculated annually consistent with the ISO Tariff approved by the Vernon City
Council, and provided to the ISO.
Authorized by City of Vernon
Ordinance No. 940
Issued on:, March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
and notification by Vernon
Ninth Revised Sheet No. 22
Superceding Eight Revised Sheet No. 22
Transmission Owner Tariff (cont.)
APPENDIX II
NOTICES
Designated Representative:
Mr. Eric T. Fresch
City Administrator
City of Vernon
4305 Santa Fe Avenue
Vernon, California 90041
Tel. No. (323) 583-8811
Fax No. (323) 581-7924
Authorized by City of Vernon
Ordinance No. 940
Issued on: March 24, 2008 Resolution No. Effective: Upon Acceptance by the Commission
First Revised Sheet No. 23
Superceding Original Sheet No. 23
EXHIBIT 5
PREPARED DIRECT TESTIMONY OF
PHILLIP Q. HANSER AND GREGORY N. BASHEDA
ON BEHALF OF THE CITY OF VERNON
MARCH 19, 2008
1 I. INTRODUCTION, QUALIFICATIONS AND SUMMARY
2
3 Q. Please state your name, title, place of employment, and business address.
4 A. My name is Philip Q. Hanser. I am a Principal of The Brattle Group, an economic
5 consulting firm with offices in Cambridge, Massachusetts; Washington, D.C.; San
6 Francisco, California; London, England; and Brussels, Belgium. My business
7 address is 44 Brattle Street, Cambridge, MA 0213 8.
8 My name is Gregory N. Basheda. I am a Senior Consultant of The Brattle Group.
9 My business address is 1850 M Street N.W.; Suite 1200, Washington, DC 20036.
10 Q. Please describe your background and employment experience.
11 I (Philip) have been a Principal at The Brattle Group in its Cambridge office for the
12 last ten years. I have appeared as an expert witness before the Federal Energy
13 Regulatory Commission ("FERC" or "Commission"), various state public utility
14 commissions, and in federal and state courts. I have served as an instructor on cost
15 of service studies and rate design at the Edison Electric Institute's Rate Schools.
16 Prior to joining The Brattle Group, I served as the Project Manager for Rates and
17 Rate Design at the Electric Power Research Institute ("EPRI") and, later, as the
18 Manager of the Demand -Side Management Program._ While at EPRI, I served as the
19 project manager for the Electric Utility Rate Design Study, the industry -sponsored
20 multi -volume study to support utilities and commissions in implementing the Public
21 Utilities Regulatory Policies Act of 1978.
22 1(Greg) have been an Associate and Senior Consultant at The Brattle Group in its
23 Washington office for almost 11 years. I have appeared as a witness before the
24 Pennsylvania Public Utility Commission and have written numerous papers and
25 presentations on various ratemaking topics, including automatic adjustment clauses,
26 rate phase -ins and other means of mitigating rate shock, and performance -based
27 ratemaking. In addition, I have assisted in the preparation of testimony filed before
28 the FERC and numerous state commissions. Prior to joining The Brattle Group, I
29 served as a senior economist with the Office of Electricity Policy at the U.S.
30 Department of Energy ("DOE") in Washington, DC, where I helped develop DOE
1
I policy on priority electric power industry issues, including electric restructuring and
2 transmission access and pricing.
3 The statements of our qualifications are attached to this testimony as Exhibit A.
4 Q. On whose behalf are you testifying?
5 A. We are testifying on behalf of the City of Vernon, California ("Vernon" or "the
6 City').
7 Q. What is the purpose of your testimony?
8 A. Vernon has asked us to calculate its revised transmission revenue requirement
9 ("TRR). The California Independent System Operator Corporation ("CAISO")
10 collects revenues for all Participating Transmission Owners ("PTO"), including
11 Vernon, pursuant to TRRs, which in turn reflect expenses and capital costs incurred
12 by PTOs to provide transmission services.
13 Our testimony and exhibits, as well as the final [and interim] Vernon TRR have
14 been adopted by the Vernon City Council. The Vernon City Council is Vernon's
15 official rate setting body.
16 Q. Why is Vernon filing a revised TRR?
17 A. Vernon is in the process of selling its transmission assets. Vernon's transmission
18 assets (or gross transmission plant) are comprised of interests in three transmission
19 projects: (1) the California Oregon Transmission Project ("COTP"); (2) the Mead-
20 Adelanto Project ("MAP"); and (3) the. Mead -Phoenix Project ("MPP" and,
21 collectively with MAP, the "Mead Projects"). Vernon has entered into an agreement
22 with the Transmission Agency of Northern California ("TANC") to sell its full
23 interest in the COTP. The City also has agreed to sell its full interests in the two
24 Mead Projects to Startrans IO, L.L.C. ("Startrans").1 Upon the completion of these
25 transactions, Vernon will no longer own any transmission assets and therefore will
26 no longer have a transmission rate base on which it earns a return and collects
27 depreciation expenses. The sale of these interests significantly impacts Vernon's
1 Startrans has requested Commission approval to purchase these assets pursuant to Section 203 of the
Federal Power Act. Strarans IO, L.L.C., Request for Section 203 Approval,, Docket No. EC08-33-000
(filed Jan. 4, 2008).
2
1 transmission -related expenses and therefore requires that the City file a revised TRR
2 pursuant to the CAISO Open Access Transmission Tariff.
3 Q. [Why are you calculating an interim TRR without COTP?
4 A. Vernon has disposed of its entire interest in COTP and expects to dispose of the
5 Mead Projects in the near future. At that time, Vernon's only remaining
6 transmission assets will be its ownership interests in three long-term transmission
7 contracts ("ETCs"), as described more fully below. To cover the interim time period
8 before Vernon disposes of the Mead Projects, Vernon has asked us to develop an
9 interim TRR that reflects Vernon's ownership of the Mead Projects and the three
10 ETCs. This interim TRR will remain in place until Vernon has closed the transaction
11 disposing of the Mead Projects.]
12 Q. [Why are you calculating an interim TRR without the Mead Projects?
13 A. - Vernon has disposed of its entire interest in the Mead Projects and expects to dispose
14 of COTP in the near future. At that time, Vernon's only remaining transmission
15 assets will be its ownership interests in three long-term transmission contracts
16 ("ETCs") as described more fully below. To cover the interim time period before
17 Vernon disposes of COTP, Vernon has asked us to develop an interim TRR that
18 reflects Vernon's ownership of the Mead Projects and the three ETCs. This interim
19 TRR will remain in place until Vernon has closed the transaction disposing of
20
21
22
23
24
25
26
27
28
29
30
COTP.]
Q. What is Vernon's interim TRR?
A. [Vernon's TRR with COTP removed from its rate base, but with the Mead Projects
remaining, is $3,131,282.] [Vernon's TRR with the Mead Projects removed from its
rate base, but with COTP remaining, is $4,580,591.]
Q. Are you able to calculate a final TRR reflecting the sale of all three assets?
A. Yes. We have calculated a final TRR for Vernon based upon the conclusion that,
after the Mead Projects and the COTP interests are sold, Vernon will no longer have
a transmission rate base on which it earns a return and collects depreciation
expenses, but will continue to incur costs associated with three long-term existing
transmission contracts that continue to remain in effect. Vernon also. will incur
3
I Administrative and General ("A&G") expenses and regulatory expenses associated
2 with transmission.
3 Q. What is Vernon's TRR upon the completion of the sale of its transmission assets
4 to both TANC and to Startrans?
5 A. Vernon's TRR once all of its assets are sold is $918,137.
6
7 II. OVERVIEW OF VERNON'S TRANSMISSION ENTITLEMENTS
8 Q. When did Vernon become a member of the CAISO?
9 A. Vernon became a PTO effective January 1, 2001.
10 Q. Please describe Vernon's transmission facilities and entitlements which are
11 under the operational control of the CAISO.
12 A. Vernon owns interests in facilities that are portions of COTP, MAP, and MPP. All
13 of these facilities are operated by third parties under operation agreements. COTP
14 consists of a 340 mile, 500 kV transmission line that interconnects the Bonneville
15 Power Administration's (`BPA") transmission system at the BPA Captain Jack
16 Substation in Southern Oregon with the Pacific Gas & Electric Company's
17 transmission system at the Tesla Substation in Northern California. The MAP is a
18 1,296 MW, 500 kV transmission line extending 202 miles from the Marketplace
19 Switching Station in Southern Nevada to the Adelanto Switching Station in Southern
20 California. The MPP is a 1,300 MW, 500 kV transmission line extending 256 miles
21 from the Perkins Switchyard near Sun City, Arizona, to the Marketplace Switching
22 Station in Southern Nevada.
23 In addition, Vernon receives transmission service from Southern California
24 Edison Company ("SCE" or "Edison") and the Los Angeles Department of Water
2.5 and Power ("LADWP") under three ETCs that will continue to remain in effect.
26 Q. Will these facilities remain under the CAISO's control after they are sold by
27 Vernon?
28 A. The Mead Projects, which are being purchased by Startrans, a FERC jurisdictional
29 entity, will remain under the CAISO's operational control. The COTP facilities,
30 however, will not remain under the CAISO's control, as they are being purchased by
2
I TANC, a non jurisdictional entity that is not a member of the CAISO. TANC's
2 transmission entitlements are operated by the Sacramento Municipal Utility District.
3 Q. Please describe Vernon's ETCs with Edison.
4 A. Vernon has two ETCs with Edison. Under the first ETC, Vernon receives 11 MW of
5 firm, bi-directional transmission service from the midpoint of the Victorville-Lugo
6 500 kV line, where Edison accepts schedules of energy for Vernon, to the Vernon
7 City Gate (the interconnection of Vernon and Edison's systems). Under a second
8 agreement, Vernon receives up to 26 MW of firm transmission service from the
9 Mead substation, where Edison accepts energy from the Western Area Power
10 Administration for Vernon's account, to the Vernon City Gate. This contract enables
11 Vernon to transmit its allocation of energy and capacity from the Hoover Dam to
12
Vernon's local customers.
13
Q.
Please. describe Vernon's ETC with LADWP.
14
A.
The Vernon ETC with LADWP provides Vernon with 81 MW of firm, long-term
15
transmission service between the mid -point of the 500 kV Victorville-Lugo
16
transmission line (a point of interconnection between LADWP's and SCE's
17
respective control areas) and the 500 kV bus at Adelanto.
18
19
III. CALCULATION OF VERNON'S TRR
20
Calculation Of Vernon's TRR After All Assets Are Sold
21
Q.
How will Vernon's TRR change after all of the transmission assets are sold?
22
A.
Subsequent to the sale of all of its transmission interests in COTP and the Mead
23
Projects, Vernon's TRR will consist of just three items: (1) the cost of transmission
24
services purchased under the three, long-term ETCs; (2) A&G expenses allocable to
25
these agreements; and (3) regulatory expenses allocable to these agreements.
26
Q.
What is the test year you have used for purposes of determining Vernon's
27
TRR?
28
A.
We used a historical, 12-month period of July 1, 2006 through June 30, 2007 (Fiscal
29
Year 2007), with adjustments, where appropriate, for known and measurable
30
changes.
5
1 Q. How did you calculate Vernon's transmission service expense?
2 This is the cost associated with Vernon's three ETCs, described above. We
3 reviewed approximately three years' worth of invoices paid by. Vernon for
4 transmission services provided by SCE and LADWP under these ETCs. In 2007, the
5 total monthly expense associated with these three contracts was $55,866. We based
6 this primarily on the June 2007 invoices. Based on our reading of the contract and
7 the invoices we received, the payments made in June were representative of the
8 monthly payments made in 2007. These are a conservative representation of the
9 monthly payments for the last three years. On an annualized basis, this expense is
10 $670,399. Exhibit B shows the monthly expenses associated with each of these
11 contracts.
12 Q. How were Vernon's A&G expenses determined?
13 A. This element of an entity's TRR generally includes an allocation of all expenses
14 charged (or chargeable) to FERC Accounts 920 through 935. As a non jurisdictional
15 entity, Vernon is not required to maintain FERC accounts. However, Vernon has
16 provided us with an estimate of administrative personnel time and costs associated
17 with transmission -related activities, such as contract administration, monitoring
18 CAISO activities, and providing general regulatory support. According to Vernon,
19 three of the City's employees will devote a very small portion of their time to these
20 activities once all of the transmission assets are sold. To be precise, Vernon
21 estimates that, after the transmission assets are sold, the Resource Planning manager
22 will devote 36 hours per year to such activities, and a Scheduler and Assistant
23 Scheduler will devote 12 and 6 hours per year, respectively, to such activities. The
24 total of salaries and overhead costs associated with this personnel commitment is
25 $4,738 per year. This information is included in our workpapers.
26 Q. How were Vernon's regulatory expenses determined?
27 A. Regulatory expenses are the expenses that Vernon incurs for legal and consulting
28 services associated with federal regulatory activities and litigation (such as the filing
29 of a revised TRR at FERC). These expenses will vary somewhat from year to year,
30 because they depend greatly on the City's need for litigation support. We have
31 reviewed Vernon's estimated actual legal expenses associated with the transmission-
3
I related federal regulatory activities in 2006 and 2007, which were approximately
2 $579,200 in 2006 and $473,200 in 2007. We have also reviewed a budget for
3 Vernon's anticipated annual regulatory expenses for 2008 and thereafter, which is
4 approximately $243,000. This budget appears conservative in light of historical
5 experience, but after consulting with Counsel for the City, we believe that $243,000
6 is a reasonable estimate of the City's annual regulatory expenses associated with
7 transmission.
8 Q. What is your calculation of Vernon's TRR subsequent to the sale of the Mead
9 Assets and COTP?
10 A. With all of its transmission interests sold, Vernon's TRR is $918,137, as shown in
11 Exhibit C.
12
13 Calculation Of The Interim TRR (COTP Out Scenario)
14 Q. What is the test year you have used for purposes of determining Vernon's
15 TRR?
16 A. In determining Vernon's TRR after the sale of COTP, but before the sale of the
17 Mead Projects (the "COTP Out Scenario"), we used a historical, 12-month period of
18 July 1, 2006 through June 30, 2007 (Fiscal Year 2007), with adjustments, where
19 appropriate, for known and measurable changes.
20 Q. In November 2007, CAISO filed proposed adjustments to Vernon's TRR. Are
21 these adjustments reflected in your calculation of Vernon's interim TRR?
22 A. Yes.. In November 2007, CAISO filed proposed adjustments to Vernon's TRR that
23 CAISO states are designed to implement the Commission's directives in Opinion
24 Nos. 479 and 479-A2 issued in Docket Nos. EL00-105 and ER00-21.3 While the
25 City does not necessarily concur with the adjustments proposed by CAISO, counsel
26 for Vernon directed us, with one exception, to accept these adjustments for the
27 purpose of calculating an interim TRR for the COTP Out Scenario. Therefore, while
z City of Vernon, Cal. Opinion No. 479 111 FERC 161,092 (2005) on reh' 112 FERC ¶ 61 207 (2005)•
g> >
City of Vernon, Cal., Opinion No. 479-A, 112 FERC 161,207 (2005).
3 City of Vernon, Cal., Motion of the California Independent System Operator for Order on Remand
Authorizing Adjustment of Rates and Refunds and Confirming Authority to Recover Amounts Refunded,
Docket Nos. EL00-105-000 et al. (filed Nov. 13, 2007) ("CAISO November 2007 Filing").
7
1 we include the CAISO's adjustments in our calculation of Vernon's TRR, this should
2 not be construed as an endorsement of those adjustments.
3 Q. Please summarize the adjustments proposed by the CAISO in its November
4 2007 filing.
5 A. The CAISO proposed several adjustments to the TRR established by Vernon in its
6 Filing,4 which has been in effect since January 2001. The primary adjustment is the
7 removal of Allowance for Funds Used During Construction from the calculation of
8 Vernon's Gross Plant. This adjustment reduces Vernon's Gross Plant from
9 $69,499,223 (per the November 2000 Compliance Filing) to $56,881,151. CAISO
10 also proposed a reduction in the rate of return from 9.29 percent to 8.89 percent, as
11 well as changes to the depreciation rate. In addition, CAISO proposed that Vernon's
12 Gross Plant be increased by $11,789 to reflect an alleged error in the calculation of
13 capital additions at COTP in 1999.5 All of these adjustments are included in our
14 calculation of Vernon's interim TRR.
15 Q. Which CAISO recommended adjustment is not included in your calculations?
16 A. The CAISO proposed an increase to the A&G expenses included in Vernon's
17 November 2000 Compliance Filing. However, as explained further below, instead of
18 . using CAISO's proposed A&G figure, we are using the same figure for A&G
19 expenses in our calculation of both Vernon's interim TRR and its final TRR. This
20 A&G figure only reflects the expenses associated with the ETCs even though the
21 interim TRR will be applied to the interim period covering Vernon's ownership of
22 both the ETCs and the Mead Projects. As a result, the A&G expense is conservative
23 and much lower than the number proposed by CAISO.
4 City of Vernon, Calif, Modified Transmission Revenue Requirement, Docket No. EL00-105-001 (filed
Nov. 9, 2000) ("November 2000 Compliance Filing").
5 See page 3 of Exhibit A, CAISO November 2007 filing, for further explanation of this adjustment.
I Q.. Please explain your calculation of Vernon's rate base without COTP.
2 A. Vernon's gross plant in service, with the CAISO's adjustments, is $56,881,151.
3 Using information from Vernon's August 2000 TRR filing,6 we determined that the
4 portion of gross plant allocable to COTP is $35,448,988, or 62 percent of Vernon's
5 gross plant in service.
6 We recalculated accumulated depreciation taking into account: (1) the changes in
7 the value of Vernon's gross plant; and (2) the revised depreciation rates proposed by
8 the CAISO. Consistent with the CAISO's November 2007 filing, we depreciated
9 Vernon's gross plant using a 2.857 percent depreciation rate through December 31,
10 2000 and a 3.14 percent depreciation rate beginning January 1, 2001 (as opposed to
11 the 3.2 percent depreciation rate used in Vernon's November 2000 Compliance
12 Filing). We depreciated Vernon's gross plant through 2007 to obtain total
13 accumulated depreciation of $21,860,936. The portion of accumulated depreciation
14 _ allocable to COTP is $14,744,884. Knowing the portion of gross plant and
15 accumulated depreciation allocable to COTP enables us to "carve out" that asset
16 from Vernon's rate base. As a result, Vernon's net plant in service is $14,316,112
17 with COTP removed from its rate base. We then added $52,149 of cash working
18 capital to obtain a rate base of $14,368,260.7 These calculations are shown in
19 Exhibit D.
20 Q. Would it be appropriate to characterize this calculation of Vernon's rate base
21 as conservative?
22 A. Yes, it is very conservative in that our calculation assumes that there have been no
23 capital additions at either COTP, MAP or MP since 1999. It is very unlikely that
24 this is the case; indeed, our review of Startrans' Section 205 filing' suggests there
25 have been significant capital additions to the Mead Projects since 1999. However,
26 since this is an interim TRR that only will be in effect for a short period of time, we
6 City of Vernon, Cal., Petition for Declaratory Order, Docket No. EL00-105-000 (filed Aug. 30, 2000).
' Cash working capital was obtained by multiplying the total of Vernon's O&M expense, A&G expense,
and regulatory expense by 0.125. This was the same approach used in Vernon's November 2000
Compliance Filing and accepted by CAISO in its November 2007 filing.
I
I were instructed by counsel for Vernon to ignore capital additions in our calculation
2 of the City's rate base.
3 Q. What is Vernon's annual return requirement for the COTP Out Scenario?
4 A. Using a rate of return of 8.89 percent, per CAISO's November 2007 filing, we
5 calculate a return on rate base of $1,277,338.
6 Q. What is Vernon's annual depreciation expense for the COTP Out Scenario?
7 A. This is derived by multiplying Vernon's adjusted gross plant in service -by the
8 annual depreciation rate of 3.14 percent. This calculation yields an annual
9 depreciation expense of $672,970.
10 Q. How did you calculate Vernon's operation and maintenance ('O&M")
11 expenses?
12 A. CAISO's November 2007 filing assumes no change in the O&M expenses incurred
13 by the City for any of the transmission assets. The $445,821 figure assumed by
14 CAISO is, however, outdated, as it was based upon a test year of July 1, 1998
15 through June 30, 1999. To ascertain the current O&M expenses associated with the
16 Mead Projects, we reviewed the invoices Vernon has received from the MAP and
17 MPP project managers over the last 3 years. Based on this review, the annual O&M
18 cost associated with MPP in the test year is $69,264, while the annual O&M cost
19 related to MAP is $100,188. Given that this is an interim TRR that will only be in
20 effect for a short period of time and that we were instructed to prepare the TRR using
21 conservative assumptions, we chose not to use an escalation. factor for these
22 expenses. Therefore, based on the City's historical experience, we used an annual
23 O&M expense of $169,452 in the calculation of Vernon's interim TRR.
24 Q. Are the costs associated with Vernon's transmission service expense the same as
25 were calculated for the final TRR?
26 A. Yes, the expenses associated with Vernon's three ETC's remain the same, regardless
27 of when the sale of the Mead Assets is completed.
8 5tartrans IO, L.L.C., Application to Establish Transmission Revenue Requirements and Transmission
Owner Tariff as a participating Transmission Owner, Docket No. ER08-413-000 (filed Jan. 24, 2008)
("Startrans' Section 205 filing").
ME
1 Q. Why are the same figures used for Vernon's A&G expense under the interim
2 TRR and the final TRR?
3 A. We were instructed to use conservative figures for the interim TRR. Thus, while we
4 would expect the A&G expenses associated with the interim period that includes the
5 A&G expense of both the Mead Projects.and the ETCs would be much higher than
6 the A&G expense associated with only the ETCs, we chose the very conservative
7 approach of using Vernon's post -transactions A&G expenses estimate for both the
8 interim TRR and final TRR.
9 Q. How was Vernon's property tax determined for the COTP Out Scenario?
10 A. We relied on Startrans' Section 205 filing to determine current property taxes on the
11 Mead Projects because CAISO's figures were outdated (based on a test year of July
12
1, 1998, to June 30, 1999). Statement AK of Startrans' workpapers indicates that the
13
property taxes paid on the Mead Projects in 2007 were $93,385.9 Startrans grosses
14
up this number to account for inflation and for the effect of new plant. However, to
15
be conservative, we do not use the inflation factor because of the short duration that
16
this interim TRR will be in effect, and therefore use $93,385 in the calculation of
17
Vernon's TRR.
18
Q.
Are the costs associated with Vernon's regulatory expenses the same as were
19
calculated for the final TRR?
20
A.
For as long as Vernon maintains ownership of the Mead Projects, we would expect
21
that the City's regulatory expenses could very well exceed the 2008 budget
22
estimates, which we understand to be based on the presumption that all of the
23
transmission assets will be sold. However, because this is an interim TRR, we chose
24
the very conservative approach of using Vernon's 2008 budget estimates without
25
making any adjustment for potentially higher regulatory expenses for as long as
26
Vernon continues to own the Mead Projects.
27
Q.
What is Vernon's interim TRR for the COTP Out Scenario?
28
A.
As shown in Exhibit D, the summation of each of these items yields a TRR of
29
$3,131,282.
30
11
I Calculation Of The Interim TRR (Mead Out Scenario)
2 Q. What is the test year you have used for purposes of determining Vernon's
3 TRR?
4 A. In determining Vernon's TRR after the sale of the Mead Projects, but before the sale
5 of COTP (the "Mead Out Scenario"), we used a historical, 12-month period of July
6 1, 2006 through June 30, 2007 (Fiscal Year 2007), with adjustments, where
7 appropriate, for known and measurable changes.
8 Q. In November 2007, CAISO filed proposed adjustments to Vernon's TRR. Are
9 these adjustments reflected in your calculation of Vernon's interim TRR? .
10 A. Yes. In November 2007, CAISO filed proposed adjustments to Vernon's TRR that
11 CAISO states are to implement the Commission's directives in Opinion Nos. 479
12 and 479-A10 issued in Docket Nos. EL00-105 and ER00-219.11 While the City.does
13 not necessarily concur with the adjustments proposed by CAISO, counsel for Vernon
14 directed us, with one exception, to accept these adjustments for the purpose of
15 calculating an interim TRR. Therefore, while we include the CAISO's adjustments
16 in our calculation of Vernon's TRR, this should not be construed as an endorsement
17 of those adjustments.
18 Q. Please summarize the adjustments proposed by the CAISO in its November
19 2007 filing.
20 A. The CAISO proposed several adjustments to the TRR established by Vernon in its
21. November 2000 Compliance Filing and which has been in effect since January 2001.
22 The primary adjustment is the removal of Allowance for Funds Used During
23 Construction from the calculation of Vernon's Gross Plant. This adjustment reduces
24 Vernon's Gross Plant from $69,499,223 (per Vernon's November 2000 Compliance
9 Startrans' Section 205 Filing, Statement AK, Taxes Other than Income Taxes.
10 Cityo Vernon, Cal. Opinion No. 479 111 FERC ¶ 61 092 (2005) on reh' 112 FERC ¶ 61 207 (2005)•
.f � p� g> ,
City of Vernon, Cal., Opinion No. 479-A, 112 FERC ¶ 61,207 (2005).
11 City of Vernon, Cal., Motion of the California Independent System Operator for Order on Remand
Authorizing Adjustment of Rates and Refunds and Confirming Authority to Recover Amounts Refunded,
Docket Nos. EL00-105-000 et al. (filed Nov. 13, 2007) ("CAISO November 2007 Filing").
12
1 Filing)" to $56,881,151. CAISO also proposed a reduction in the rate of return from
2 9.29 percent to 8.89 percent, as well as changes to the depreciation rate. In addition,
3 CAISO proposed that Vernon's Gross Plant be increased by $11,789 to reflect an
4 alleged error in the calculation of capital additions at COTP in 1999.13 All of these
5 adjustments are included in our calculation of Vernon's interim TRR.
6 Q. Which CAISO recommended adjustment is not included in your calculations?
7 A. The CAISO proposed an increase to the A&G expenses included in Vernon's
8 compliance TRR. However, as explained further below, instead of using CAISO's
9 proposed A&G increase, we are using the same figure for A&G expenses _in our
10 calculation of both Vernon's interim TRR and its final TRR. The A&G figure only
11 reflects the expense associated with the ETCs even though the Interim TRR will be
12 applied to the interim period covering Vernon's ownership of both the ETCs and
13 COTP. As a result, the A&G figure used in our calculations is conservative and
14 much lower than the number proposed by CAISO.
15 Q. Please explain your calculation of Vernon's rate base without MAP and MPP.
16 A. Vernon's gross plant ,in service, with the CAISO's adjustments, is $56,881,151.
17 Using information from Vernon's August 2000 TRR filing, 14 we determined that the
18 portion of gross plant allocable to the Mead Assets is $21,432,163 or 38 percent of
19 Vernon's gross plant in service.
20_ We recalculated accumulated depreciation taking into account: (1) the changes in
21 the value of Vernon's gross plant; and (2) the revised depreciation rates proposed by
22 the CAISO. Consistent with the CAISO's November 2007 filing, we depreciated
23 Vernon's gross plant using a 2.857 percent depreciation rate through December 31,
24 2000 and a 3.14 percent depreciation rate beginning January 1, 2001 (as opposed to
25 the 3.2 percent depreciation rate used in Vernon's November 2000 Compliance
26 Filing). We depreciate Vernon's gross plant through 2007 to obtain total
27 accumulated depreciation of $21,860,936. The portion of accumulated depreciation
12 City of Vernon, Calif, Modified Transmission Revenue Requirement, Docket No. EL00-105-001 (filed
Nov. 9, 2000) ("November 2000 Compliance Filing").
13 See page 3 of Exhibit A, CAISO November 2007 filing, for further explanation of this adjustment.
14 City of Vernon, Cal., Petition for Declaratory Order, Docket No. EL00-105-000 (filed Aug. 30, 2000).
13
1 allocable to the Mead assets is $7,116,051. Knowing the portion of gross plant and
2 accumulated depreciation allocable to MAP and MPP enables us to "carve out" these
3 assets from Vernon's rate base. As a result, Vernon's net plant in service is
4 $20,704,104 with MAP and MPP removed from its rate base. We then add $118,248
5 of cash working capitally to obtain a rate base of $20,822,352. These calculations
6 are shown in Exhibit E.
7 Q. Would it be appropriate to characterize this calculation of Vernon's rate base
8 as conservative?
9 A. Yes, it is very conservative in that our calculation assumes that there have been no
10 capital additions at either COTP, MAP or MPP since 1999. It is very unlikely that
11 this is the case; indeed, our review of Startrans' Section 205 filing suggests that there
12 have been capital additions at the Mead assets since 1999, and we have seen
13 indications that there have been capital additions to COTP since 1999 as well.
14 However, since this is an interim TRR that only will be in effect'for a short period of
15 time, we were instructed by counsel for Vernon to ignore capital additions in our
16 calculation of the City's rate base.
17 Q. What is Vernon's annual return requirement in the Mead Out Scenario?
18 A. Using a rate of return of 8.89 percent, per CAISO's November 2007 filing, we
19 calculate a return on rate base of $1,851,127.
20 - Q. What is Vernon's annual depreciation expense in the Mead Out Scenario?
21 A. This is derived by multiplying Vernon's adjusted gross plant in service by the
22 annual depreciation rate of 3.14 percent. This calculation yields an annual
23 depreciation expense of $1,113,098.
24 Q. How did you calculate Vernon's operation and maintenance ("O&M") expenses
25 in the Mead Out Scenario?
26 A. The City provided us with invoices showing its billed O&M expenses for COTP.
27 Over the 12-month test year, Vernon was billed a total of $698,249 for O&M
15 Cash working capital was obtained by multiplying the total of Vernon's O&M expense, A&G expense,
and regulatory expense by 0.125. This was the same approach used in Vernon's November 2000
compliance filing, accepted by CAISO in its November 2007 filing.
14
I expenses related to the operation of COTP. These invoices are included in our
2 workpapers.
3 Q. Are the costs associated with Vernon's transmission service expense the same as
4 were calculated for the final TRR?
5 A. Yes, the expenses associated with Vernon's three ETC's remain the same, regardless
6 of when the sale of COTP is completed.
7 Q. Why are the same figures used for Vernon's A&G expense under the interim
8 TRR and the final TRR?
9 A. We were instructed to use conservative figures for the interim TRR. Thus, while we
10 would expect the A&G expenses associated with the interim period that includes the
11 A&G expenses of both the COTP assets and the ETCs would be much higher than
12 the A&G expense associated with only the ETCs, we chose the very conservative
13 approach of using Vernon's post -transactions A&G expenses .estimate for both the
14 interim TRR and final TRR.
15 Q. How was Vernon's property tax determined in the Mead Out Scenario?
16 A. Vernon does not pay property taxes on COTP, so with the Mead Assets sold Vernon
17 does not have any property tax liability.
18 Q. Are the costs associated with Vernon's regulatory expenses the same as were
19 calculated for the final TRR?
20 A. For as long as Vernon maintains ownership of COTP, we would expect that the
21 City's regulatory expenses could very well exceed the 2008 budget estimates, which
22 we understand to be based on the presumption that all of the transmission assets will
23 be sold. However, because this is an interim TRR, we chose the very conservative
24 approach of using Vernon's 2008 budget estimates without making any adjustment
25 for potentially higher regulatory expenses for as long as Vernon continues to own
26 COTP.
27 Q. What is Vernon's TRR in the Mead Out Scenario?
28 A. As shown in Exhibit E, the summation of each of these items yields a TRR of
29 $4,580,591.
30 Q. Does this conclude your direct testimony?
31 A. Yes.
15
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
City of Vernon, California ) Docket No. EL08- -000
AFFIDAVIT OF PHILIP Q HANSER
Commonwealth of Massachusetts
County of Middlesex
I, Philip Q Hanser, being duly sworn, depose and say that the statements
contained in the testimony and supporting exhibits of Philip Q Hanser and Gregory
Basheda served on behalf of the City of Vernon, California in these proceedings are true
and correct to the best of my knowledge, information and belief, and I hereby adopt said
testimony and supporting exhibits as if given by me in a formal earing, under oath.
Philip Q Kdnser
SUBSC ED AND SWORN to before me
This �5ay of March, 2008
WMA A. R M
o
caftw4um of
�Ncarn w+on6 .oIla
Notary Public Middlesex County,
Commonwealth of Massachusetts
My Commission expires: DC"oe. 01,3)
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
City of Vernon, California ) Docket No. EL08-_-000
AFFIDAVIT OF GREGORY BASHEDA
Washington, D.C. )
I, Gregory Basheda, being duly sworn, depose and say that the statements
contained in the testimony and supporting exhibits of Philip Q. Hanser and Gregory
Basheda served on behalf of the City of Vernon, California in these proceedings are true
and correct to the best of my knowledge, information and belief, and I hereby adopt said
testimony and supporting exhibits as if given by me in a formal hearing, under oath.
Gregory s a
SUBSCRIBED AND SWORN to before me
This � day of March, 2008
L
Notary Public ,
Washington, D.C.
My Commission expires: / o o
Exhibit
5-A
PHILIP HANSER
Principal
Philip Hanser is a Principal at The Brattle Group in its Cambridge office. His practice
includes issues ranging from industry structure and market power and associated
regulatory questions, to specific operational and strategic questions, such as transmission
pricing, generation planning,. tariff strategies, fuels procurement, environmental issues,
forecasting, marketing and demand -side management, and other management and
financial issues. He has also supported clients' efforts in insurance recovery of
environmental liabilities arising .from former manufactured gas plant sites, assessed
liability risk in mass tort suits, and designed statistical database auditing procedures.
He has appeared as an expert witness before the Federal Energy Regulatory Commission
(FERC), the California Energy Commission (CEC), the New Mexico Public Service
Commission (NMPSC), the Public Service Commission of Wisconsin (PSCW), the Vermont
Public Service Board (VPSB), the Public Utilities Commission of Nevada (PUCN), the
Connecticut Siting Commission, the Pennsylvania Department of Environmental
Protection, and in Federal and state courts. He has also presented before the National
Association of Regulatory Utility Commission (NARUC) and the New York State Energy
Research and Development Authority (NYSERDA). He served six years on the American
Statistical Association's Advisory Committee to the Energy Information Administration
(EIA). Prior to joining The Brattle Group, his past employment experience included a
number of different academic positions and serving as the Manager of the Demand -Side
Management Program at the Electric Power Research Institute (EPRI). He has been
published widely in leading industry and economic journals and testified frequently before
regulatory agencies. Mr. Hanser has taught at the University of the Pacific, University of
California at Davis, and Columbia University, and guest lectured at the Massachusetts
Institute of Technology, Stanford University, and the University of Chicago.
REPRESENTATIVE RECENT EXPERIENCE
• For the Keystone-Conemaugh Project Office performed a benchmarking analysis to
identify the areas in which Keystone and Conemaugh coal units were better
performing or under -performing compared to other units with similar
characteristics. This involved Comparing the historical operational and cost
performance of the Keystone and Conemaugh coal units against their peer groups;
identifying the areas where the performance of the Keystone and Conemaugh coal
units were above and below. the average, top quartile and top decile of their peer
groups; and developing metrics and methodologies to combine the results of
individual comparisons across the operational and cost performance assessments.
PHILIP Q HANSER
Principal 2
• For Ameren/UE's Missouri subsidiary provided expert testimony on its rate
design before the Missouri Public Utility Commission.
• For an electric utility in the Southeast reviewed the existing weather
normalization process, diagnosed problems with weather data and
regression model. Developed alternative daily and monthly normalization
models, improved degree day specification, selection of weather stations, and
regression specification to doubled prediction accuracy and improve stability
of normalization process.
• For the Edison Electric Institute co-authored a series of papers with regard to
issues facing utilities such as fuel adjustment clauses and the Energy Policy
Act of 2005.
• For the California Department of Water Resources California Energy
Resources Scheduling, provided expert testimony in Federal Bankruptcy
Court with regard to the public interest standard to be applied to Calpine
Corporation's rejection of its contracts.
• For PJM, conducted a comprehensive review of its models for forecasting
peak demand and . re -estimated new models to validate
recommendations. Individual models were developed for 18
transmission zones as well as a model for the entire PJM system.
• For a southwestern utility, using primary data on, customer loads,
weather conditions and economic activity, developed models for
forecasting monthly sales andloads for the residential, commercial and
industrial customer classes.
• For the California Department of Water Resources California Energy
Resources Scheduling, provided expert testimony in its dispute with Sempra
Energy Resources regarding its long-term contract in both arbitration
hearings and state court.
• For Northeast Utilities, provided expert testimony before the FERC in
support of its application for market -based rate authority.
PHILIP Q HANSER
Principal
• For Dominion Electric Marketing, Inc. (DEMI) provided assistance in their
response to the complaint by United Illuminating (UI) regarding their
wholesale supply contract. The dispute centered on the allocation of
reliability must run costs,(RMR) between UI as a load -serving entity (LSE)
and DEMI as wholesale supplier.
For the California Department of Water Resources, California Energy
Resources Scheduling has provided assistance in the renegotiation of its
long-term power contracts. In this regard, he proposed modifications to the
California Independent System Operations (CAISO) Market Based Redesign
and Technology Update (MRTU) which have been incorporated into its
filing.
For Northeast Utilities he provided testimony before the FERC with regard to
the economics of imposing local installed capacity (LICAP) requirements on
ISO -NE.
For NSTAR he has provided testimony before the FERC on several matters
including the necessity of imposing bid caps on the New England electricity
market, replacement energy rates for generators when transfer capability is
reduced because of system upgrades, and the appropriateness of granting
market -based rate authority to a generator in a transmission -constrained
zone.
For Nevada Power Company, he provided expert testimony before the FERC
for its market -based rate authority application.
For Southern California Edison, he submitted testimony before the FERC
describing the implications for the electricity market of the manipulation of
gas market prices.
For Otter Tail Power Company, Mr. 'Hanser provided an affidavit to the
FERC assessing how the Midwest ISO's proposed Transmission and Energy
Market Tariff will affect Otter Tail Power both operationally and financially.
3
PHILIP Q HANSER
Principal 4
• For an eastern utility with substantial coal -generating facilities he has
provided advice with regard to maintenance procedures and risk exposure to
New Source Review standards under the Clean Air Act Amendments.
• For a western generator with substantial coal -generating facilities he has
provided assistance with regard to responding to allegations by the
Environmental Protection Agency of failure to comply with the New Source
Review standards under the Clean Air Act Amendments.
• For Edison Mission Energy's subsidiary Midwest Gen, provided expert
testimony to the FERC for its market -based rate authority application.
• For the California Parties, he provided litigation support and testimony
regarding manipulation of energy and ancillary service market prices and the
outage behavior of gas fired power plants during 2000-01. The proceeding,
before the Federal Energy Regulatory Commission involved Enron, Dynegy,
Mirant, Reliant, Williams, Powerex and many other suppliers in the U.S. and
Canada.
• For Sierra Pacific Resources Company, he provided expert testimony before
the Public Utilities Commission of Nevada and the FERC, regarding the
market power implication of generation asset divestiture required for the
merger of Sierra Pacific Power and Nevada Power Company.
• For the Public Service Company of New Mexico, he provided expert
testimony before the Public Utilities Commission of New Mexico regarding
the forecasted growth of the El Paso, Texas and Juarez, Mexico markets and
their electricity requirements.
• For Central Vermont Public Service, he provided expert testimony on the
impact of its demand -side management programs before the Vermont Public
Service Board.
• For Connecticut Light and Power, Mr. Hanser provided testimony in support
of a application for a Certificate of Environmental Compatibility and Public
Need for the construction of a 345-kV electric transmission line and
PHILIP Q HANSER
Principal
reconstruction of an existing 115-kV electric transmission line between
Connecticut Light and Power Company's Plumtree Substation in Bethel,
through the Towns of Redding, Weston, and Wilton, and to Norwalk
Substation in Norwalk, Connecticut.
• For the investor -owned utilities of Wisconsin, he provided testimony before
the Public Service Commission of Wisconsin on the cost of capital.
• For the Pennsylvania —New Jersey —Maryland Interconnection, LLC (PJM)
he co-authored the first annual report on the state of its markets. The report
included an assessment of the Market's competitiveness and potential
structural deficiencies, and identified potential instances of market abuse.
• For PJM, he developed an ensemble of metrics for assessing market power in
its markets. The metrics included an early warning system to permit PJM
interventions into market abuse at the earliest possible stage.
• For PJM, he developed software for unilateral market power assessment and
assisted PJM in its preliminary implementation. Its use was demonstrated
with an incident involving potential market power abuse by PJM members.
• He co-authored a report for the New York Independent System Operator's
(NYISO) assessing the reliability implications of modification of its rules
regarding installed capacity.
• Before staff members of the FERC, he assisted in the development of a review
of the implications of the restructuring in transmission assets' cost of capital.
• Assisted a U.S. electric utility in the preparation of a bid proposal to an
industrial firm for the leasing of a portion of a new power plant. The
assignment included risk analysis of the proposal, assessment of financial
and rate impacts, and market assessment of competitors' potential offerings.
• For a U.S. electric utility, he assisted in the development of a legislative and
regulatory strategy with regard to restructuring. This assignment included
generation asset valuation in a competitive market, development of stand-
5
PHILIP Q HANSER
Principal
alone transmission and distribution rates under cost -of -service and
performance -based regulation, and estimation of strandable costs.
• For a Midwest utility, he examined the- implications of differing
configurations of the independent system operator on potential market
power concerns.
• For Illinois Power Company, provided expert testimony in Federal Court on
the regulatory and rate base implications of the Clean Air Act Amendments,
in support of the calculation of noncompliance economic damages arising
from New Source Review.
• Provided expert testimony on the damages incurred by a power plant
developer as a result of alleged contractual violations by a supplier for a
plant constructed in ISO -NE.
• For a power marketer and developer of independent power projects in Great
Britain, he assisted in the preparation of comments on proposals by the U.K.
pool regarding the pricing of transmission losses and the role of demand -side
bidding.
• Designed a statistically valid database sampling procedure for assessing the
validity of insurance claims arising from mass tort actions.
• For a European transmission company, he provided an analysis of the likely
development of the European electricity market. He also assessed the market
implications for the transmission company of modifications to the
transmission grid.
• Assessed the liability risk of an insurance company that provided coverage
relevant to a mass tort suit.
• For a U.S. electric utility, he assisted in the valuation of generation assets for
use in its testimony on stranded costs. This included developing a financial
model to determine the generation assets' market value, development of a
convolution algorithm to convert market scenarios into a probability
L
PHILIP Q HANSER
Principal 7
distribution of asset values, and statistical analysis of the relationship of the
utility's generation assets' operating costs in comparison to its competitors.
The assignment also included testimony preparation, interrogatories, and
rebuttals.
• For a Florida utility, provided a confidential expert report and assisted in the
negotiation of a co -generation contract with a large industrial customer.
REPRESENTATIVE PAST EXPERIENCE
• For a gas utility, he assisted in the development of potential manufactured
gas liabilities for use in insurance recovery. For this assignment, he assisted
in estimating potential recovery under a variety of insurance allocation
theories and estimated the risk distribution of the estimates.
• He assisted a gas utility in the development of an assessment of the
announcement effect of environmental liabilities on its cost of capital. This
assignment included estimation of changes in betas for pre- and post -
environmental liability announcement.
• For an international development bank, he assisted in a generation resource
needs assessment for an Eastern European country as well as a determination
of alternative means to meet those generation needs. This assignment
included an evaluation of the impact of privatization on the country's
economy, its import and export sectors and future development of Russian
electricity and gas resources.
• For a California utility, he supervised short- and long-term forecasts of sales
and peak demand for use in resource and corporate planning. He supervised
and helped prepare forecast documentation for public hearings before the
California Energy Commission and represented the utility to the Commission
on the forecast. He supervised the design and implementation of long-term
strategic planning and financial models for the utility, and prepared both
marginal and embedded cost of service studies for the utility and assisted in
their use for the design of customer rates. He evaluated the impact of energy
conservation programs and legislation on long-term system resource
PHILIP Q HANSER
Principal
requirements. Designed and implemented the residential survey of
appliance holdings and commercial customer equipment survey. He also
designed and implemented the load research survey for use in PURPA 133
submittals and cost of service studies.
• For the Electric Power Research Institute (EPRI), he was responsible for
developing and directing a research program to provide electric utilities the
following capabilities: marketing, marketing research, pricing and rate
design, integrated resource planning, capital budgeting, environmental
impacts of electric utilities and end -use technologies, load research,
forecasting, and demand -side management through software tools, database
development and technology development. He served as the final project
manager of the Edison Electric Institute (EEI), National Rural Electric
Cooperatives Association (NRECA), American Public Power .Association
(APPA), and National Association of Regulatory Utility. Commissioners
(NARUC) jointly sponsored Electric Utility Rate Design Study (EURDS).
Represented the Institute before various regulatory commissions, Federal
agencies, and utility executives. He served on the Environmental Protection
Agency's advisory committee for the Clean Air Act Amendments. He also
served as the operating agent for Annex IV, Improved Methods for
Integrating Demand -Side Options into Utility Resource Planning, of the
International Energy Agency Agreement on Demand -Side Management.
TESTIMONY AND REGULATORY FILINGS
0
Before the American Arbitration Association, Case No. 74Y1980019606MAVI, Prepared
Rebuttal Report on Behalf of the California Department of Water Resources to evaluate the
reports that William Hogan, Jeffrey Tranen, and Ellen Wolfe provided on behalf of Sempra
Generation, June 4, 2007.
Before the American Arbitration Association, Case No. 74Y1980019606MAVI, Prepared
Expert Report on Behalf of the California Department of Water Resources to evaluate
certain claims made by the California Department of Water Resources ("DWR") in its
Demand for Arbitration regarding the performance of Sempra Energy Resources, now
known as Sempra Generation, under the Energy Purchase Agreement between the parties,
PHILIP Q HANSER
Principal 9
and to calculate amounts that Sempra would owe to DWR assuming liability is established,
May 14, 2007.
Before the United States Bankruptcy Court, Northern District of Ohio, Eastern Division,
Case Nos. 0144007 through 01-44015, Expert Report in regard to McKesson's inventory
reclamation in the Phar-Mor bankruptcy, March 9, 2007.
Before the Public Utility Commission of Texas, Docket No. 33416, Prepared Rebuttal
Testimony on Behalf of Constellation New Energy, Inc.'s appeal and complaint of ERCOT
decision to approve PRR 676, PRR 674 and request for expedited relief, January 11, 2007.
Before the Public Utility Commission of Texas, Docket No. 33416, Prepared Direct
Testimony on Behalf of Constellation NewEnergy, Inc. to analyze and discuss the flaws and
potential negative impacts of the allocation methods under Protocol Revision Request
("PRR") 676 which relates to procurement costs for Replacement Reserve Service ("RPRS")
and Out of Merit Capacity, November 22, 2006.
Before the American Arbitration Association, Case No. GIC 789291, Prepared Rebuttal
Report on Behalf of California Department of Water Resources vs. Sempra Energy
Resources, July 11, 2006.
Before the State Office of Administrative Hearings, Prepared Expert Report on Behalf of
TXU Energy Solutions, regarding their demand -side management program and the
difference between the actual and projected savings in the energy bill of University of
Texas, July 7, 2006.
Before the Missouri Public Service Commission, Case No. ER-2007-0002, Prepared Direct
Testimony on Behalf of Union Electric Company with regard to Ameren UE's rate design
proposals, July 5, 2006.
Before the American Arbitration Association, Case No. GIC 789291, Prepared Expert Report
on Behalf of California Department of Water Resources vs. Sempra Energy Resources, June
9, 2006.
Before the Superior Court of the State of California, J.C.C.P. Nos. 4221, 4224, 4226 and 4228,
Prepared Declaration in support of California State Agencies' opposition to motion on
PHILIP Q HANSER
Principal 10
shortened time and motion in support of preliminary approval of class action settlement,
June 8, 2006.
Before the Superior Court of the State of California, J.C.C.P. Nos. 4221, 4224, 4226 and 4228,
Prepared Declaration in support of California State Agencies' opposition to proposed
publication notice, January 13, 2006.
Before the United States Bankruptcy Court, Case No. 05-60200 (BRL), Prepared Declaration
on Behalf of Calpine Corporation with regard to the public interest standard for the
rejection of the contract, December 30, 2005.
Before the FERC, Docket No. EL05-76-001, Prepared Direct Testimony on Behalf of
Dominion Energy Marketing, Inc. (DEMI), regarding a dispute between DEMI and The
United Illuminating Company as to which party is responsible for paying certain costs
associated with Reliability Must -Ran agreements under a December 28, 2001 Power Supply
Agreement between the two parties, December 5, 2005.
Before the American Arbitration Association, Case No. 74Y1980019304VSS, Prepared
Expert Report on Behalf of California Department of Water Resources vs. Sempra Energy
Resources with regard to damages from multiple contract breaches, May 2005.
Before the FERC, Docket No. EL03-180-000, Prepared Supplemental Testimony on Behalf of
the California Parties with regard to Enron s circular scheduling and paper trading gaming
practices, January 31, 2005.
Before the FERC, Docket No. ER96-496-010, et al., Prepared Affidavit on Behalf of Northeast
Utilities Service Company and affiliated companies market -based rate authorization,
September 27, 2004, Revised December 9, 2004.
Before the Connecticut Siting Board, Docket 217, Prepared Testimony on Behalf of
Connecticut Light and Power in support of its application for a Certificate of
Environmental Compatibility and Public Need for the construction of a 345-kV electric
transmission line and reconstruction of an existing 115-kV electric transmission line
between Connecticut Light and Power Company's Plumtree Substation in Bethel, through
the Towns of Redding, Weston, and Wilton, and to Norwalk Substation in Norwalk,
Connecticut, November, 2004.
PHILIP Q HAN5ER
Principal
11
Before the FERC, Docket No. ER04-691-000, Prepared Affidavit on Behalf of Otter Tail
Power Company (OTP) regarding problems that may result from the implementation of
MISO's markets tariff in OTP's region, May 7, 2004.
Before the FERC, Docket No. ER03-563-030, Prepared Joint Affidavit with Judy W. Chang
on Behalf of Devon Power LLC, et al., March 24, 2004.
Before the FERC, Docket No. EL03-180-000, Prepared Direct Testimony on Behalf of the
California Parties with regard to Enron s circular scheduling and paper trading gaming
practices, February 27, 2004
Before the Commonwealth of Massachusetts, Case No. 99-6016, Prepared Expert Report on
Behalf of Alstom Corporation and Black and Veatch vs. Meriden Corporation, LLC, Review
of "Value of the Meriden Power Project", January 9, 2004
Before the FERC, Docket No. EL03-159-000, Prepared Declaration on Behalf of The
California Parties, Re: Gaming Activities Of Modesto Irrigation District, October, 2003.
Before the FERC, Docket No. ER03-118-000, Prepared Affidavit on Behalf of Otter Tail
Power Company. For Otter Tail Power Company, assessing how the Midwest ISO's
proposed Transmission and Energy Market Tariff will affect Otter Tail Power both
operationally and financially, September 15, 2003.
Before the Pennsylvania Environmental Hearing Board, New Jersey Department of
Environmental Protection vs. Pennsylvania Department of Environmental Protection and
Lower Mount Bethel Energy, LLC, Docket No. 2001-280-C, Prepared Expert Report on
Behalf of Pennsylvania Power and Light, May 2, 2003.
Before the FERC, Docket No. EL00-95-069, Prepared Rebuttal Testimony on Behalf of
Southern California Edison for the California Parties regarding manipulation of energy and
ancillary service market prices and the outage behavior of gas fired power plants, March
20, 2003.
Before the FERC, Docket No. EL00-95-069, Prepared Testimony on Behalf of Southern
California Edison for the California Parties regarding manipulation of energy and ancillary
service market prices and the outage behavior of gas fired power plants, February 24, 2003.
PHILIP Q HANSER
Principal 12
Before Southern District Court of Illinois, Docket No.99-833-MBR, Prepared Expert Report
for Department of Justice, Environmental Protection Agency vs. Illinois Power Company
and Dynegy Midwest Generation regarding the likely rate treatment of, July 29, 2002.
Before the FERC, Docket No. ER99-3693-000, Prepared Direct Testimony on Behalf of
Edison Mission Energy and Edison Mission Marketing and Trading, Inc. on behalf of
Midwest Generation's application for market -based rate authority, April 1, 2002.
Before the FERC, Docket No. ER01-890-000, Prepared Rebuttal Testimony on Behalf of
NSTAR on the appropriate rates for generators during transmission upgrades or
enhancements requiring substantial and sustained reduction in transfer capability,
September 21, 2001.
Before the FERC, Docket No. EL01-79-000, Prepared affidavit on Behalf of NSTAR, in their
intervention of the granting of market -based rate authority to Sithe, May 2001.
Before the FERC and the Public Utilities Commission of Nevada, Docket No. ECO-173-000,
Prepared Affidavit on Behalf of Sierra Pacific Resources Company, regarding the market
power implication of generation asset divestiture required for the merger of Sierra Pacific
Power and Nevada Power Company, February 23, 2001.
Before the California Energy Commission, Prepared Expert Report on Behalf of Calpine
Corporation; Socioeconomic Resources: Economic Benefits of the Metcalf Energy Center,
October 27, 2000.
Before the FERC, Docket No. EL00-83-000, Prepared Affidavit on Behalf of NSTAR with
regard to the necessity of imposing bid caps on the New England electricity market, June
23, 2000.
Before the FERC, Docket No. ER99-2338-001, Prepared Direct Testimony on Behalf of
Nevada Power Company in support of the divestiture of its generation assets, June 24,
1999.
Before the FERC, Docket No. ER99-2338-001, Prepared Direct Testimony on Behalf of
Nevada Power Company in support of the divestiture of its generation assets, March 30,
1999.
PHILIP Q HANSER
Principal 13
Before the Vermont Public Service Board, Docket No. 6018, Prepared Rebuttal Testimony
on Behalf of Central Vermont Public Service Corporation on the impact of its demand -side
management programs, April 10, 1998.
Before the New Mexico Public Utility Commission, Case No. 2769, Prepared Direct
Testimony prepared on Behalf of the Public Service Company of New Mexico regarding
forecasted growth of the El Paso and Juarez, Mexico markets, 1997.
Before the Public Service Commission of Wisconsin, Docket No. 05-EP-7, Prepared Direct
Testimony on Behalf of investor -owned utilities of Wisconsin on the utilities cost of capital,
May 8, 1995.
Before the FERC, Docket No. 'RP95-363-015, Prepared Affidavit on Behalf of Southern
California Edison describing the implications for the electricity market of the manipulation
of gas market prices.
ACADEMIC HISTORY
Guest Lecturer, Energy Laboratory Short Courses, Massachusetts
1997-1998
Institute of Technology, Cambridge, MA
Visiting Lecturer, Department of Economics,
1981-1982
University of California, Davis; Davis, CA
Assistant Professor, Departments of Economics and Mathematics,
1975-1980
University of the Pacific, Stockton, CA
Ph.D. Candidacy Requirements Completed, Columbia University, NY
1975
Phil.M. (Economics and Mathematical Statistics) Columbia University
1975
A.B. (Economics and Mathematics) The Florida State University, FL
1971
Time Series and Econometric Forecasting, University of California
September 1979
at Berkeley Engineering Extension Course
Data Analysis and Regression, American Statistical Association
August 1978
Short Course, San Diego, CA
PROFESSIONAL MEMBERSHIPS
American Statistical Association, 1974-current
Member of Committee on Energy Statistics, 1993-1999
Institute of Electrical and Electronics Engineers 1986-current
PHILIP Q HANSER
Principal 14
Association of Energy Service Professionals, Board Member,
Journal of ADSMP, Editor,
American Economic Association
HONORS
Teaching Incentive Award, University of the Pacific
Teaching Assistantship in Econometrics, Columbia University .
National Science Foundation Research Traineeship
Undergraduate and Graduate Research Assistantships,
Florida State University
Omicron Delta Epsilon, Economics Honor Society
PUBLICATIONS AND PRESENTED PAPERS
1991-1995
1995
1979
1974
1972-1974
1968-1972
1971
"Utility Supply Portfolio Diversity Requirements" (with Frank Graves), The Electricity
Journal, Vol. 20, Issue 5, June 2007.
Electric Utility Automatic Adjustment Clauses Revisited: Why They Are Needed More
Than Ever" (with Frank Graves and Greg Basheda), The Electricity Journal, Vol. 20, Issue 5,
June 2007.
"Rate Shock Relief" (with Frank Graves and Greg Basheda), Electric Perspectives, May/June
2007.
"Rate Shock Mitigation" (with Frank Graves and Greg Basheda), prepared for Edison
Electric Institute, May 2007.
"Wire We Here? Coal in the West," Law Seminars International, Coal in the West
Conference, Denver, Colorado, March 30, 2007.
"Electric Utility Automatic Adjustment Clauses: Benefits and Design Considerations" (with
Frank Graves and Greg Basheda), Edison Electric Institute, August 2006.
"Can Wind Work In An IMP Market?" (with Serena Hesmondhalgh and Dan Harris),
Natural Gas & Electricity, November 2005.
PHILIP Q HANSER
Principal 15
"The CAISO'S Physical Validation Settlement Service: A Useful Tool for All LMP-Based
Markets" (with Jared S. des Rosiers, Metin Celebi, Joseph B. Wharton), The Electricity
Journal, September 2005.
"Does SMD Need a New Generation of Market Models? Or How I Learned to Stop
Worrying and Enjoy Carrying a Pocket Protector," SMD Conference, Washington, D.C.,
December 5, 2002.
"A Summary of FERC's Standard Market Design NOPR," Edison Electric Institute, August
2002.
"Standard Market Design in the Electric Market: Some Cautionary Thoughts," SMD
Conference, May 10, 2002, Chicago, Illinois.
"The Design of Tests for Horizontal Market Power in Market -Based Rate Proceedings"
(with James Bohn and Metin Celebi), The Electricity Journal, May 2002.
"The State of Performance -Based Regulation in the U.S. Electric Industry" (with D.E.M.
Sappington, J.P. Pfeifenberger, and G.N. Basheda), The Electricity Journal, October 2001.
"Deregulation and Monitoring of Electric Power Markets" (with R.L.Earle and J.D. Reitzes),
The Electricity Journal, October 2000.
"Shortening the NYISO's Installed Capacity Procurement Period: Assessment of Reliability
Impacts," NYISO, May 2000.
"PJM Market Competition Evaluation White Paper; (with Frank C. Graves), prepared for
PJM, L.L.C., October 1998.
"Lessons from the First Year of Competition in the California Electricity Market" (with
R.L.Earle, W.C. Johnson, and J.D. Reitzes), The Electricity Journal, October 1999.
Comments to the FERC concerning Regional Transmission Organizations Notice of
Proposed Rule N'Iaking, RM99-2, (with Peter Fox -Penner), September 17,1999.
"In What Shape is Your ISO?" (with J.P. Pfeiffenberger, G.M. Basheda and P.S. Fox -Penner),
The Electricity Journal, Vol. 11, No. 6, July 1998.
"What's in the Cards for Distributed Resources?" (with J. P. Pfeifenberger and P.R.
Ammann), in Special Issue of The Energy Journal, Distributed Resources: Towards a New
Paradigm of the Electricity Business, January 1998.
PHILIP Q HANSER
Principal 16
"One -Part Markets for Electric Power: Ensuring the Benefits of Competition" (with F.C.
Graves, E.G. Read, and R.L. Earle), in Power Systems Restructuring: Engineering and
Economics, ed. M. Ilic, F. Galiana, and L. Fink, (Boston, MA: Kluwer Academic Publishers,
1998)
"Power Market Price Forecasting: Pitfalls and Unresolved Issues" (with R.L. Earle and F.C.
Graves), forthcoming in The Energy journal.
Five EPRI reports and approximately 20 articles in EPRI Reports and Conference
Proceedings.
"Insurance Recovery for Manufactured Gas Plant Liabilities" (with G.S. Koch and K.T.
Wise), Public Utilities Fortnightly, April 1997.
"Real -Time Pricing - Restructuring's Big Bang?" (with J.B. Wharton and P. Fox -Penner),
Public Utilities Fortnightly, March 1997.
"Load Impact of Interruptible and Curtailable Rate Programs" (with D.W. Caves, J.A
Herriges, and R.J. Windle), IEEE Transactions on Power Systems, Vol. 3, No. 4, November
1988.
"Estimating Hourly Electric Load with Generalized Least Squares Procedures" (With N.
Toyama and C.K. Woo.), The Energy Journal, April 1986.
"Transfer Function Estimation Using TARIMA," SAS User's .Group International, 1982
Proceedings. Cary, North Carolina: SAS Institute. Inc.,1982.
"Invited Editorial Response to Behavioral Community Psychology: Integrations and
Commitments," by Richard Winett, The Behavior Therapist 4(5), Convention, 1981.
Statistics Through Laboratory Experiences (with D. Christianson and D. Hughes), Stockton,
CA: University of the Pacific 1976-1977.
"Unsolved Advanced Problem," American Mathematical Monthly, May 1975.
"Multiattribute Utility Theory and Earthquake Mitigation Policy" (with T. Munroe),
Western Economic Association Conference, June 1978.
"Introduction to Multivariate Data Analysis Techniques," Bureau of Applied Social
Research, Columbia University, New York, NY, 1973.
25 Oct 07
_Gregory N. Basheda Senior Concultanf
Mr. Basheda is a consultant in the firm's electric utility practice, which performs economic
studies and analyses to help clients develop strategies in response to changing markets and state
and federal regulatory initiatives. The practice also provides expert testimony on a wide range of
electricity -related regulatory and policy issues. Before joining The Brattle Group in 1997, Mr.
Basheda spent seven years as a senior economist with the Office of Electricity Policy at .the U.S.
Department of Energy (DOE) in Washington, DC, where he assisted in developing DOE policy
on priority electric power industry issues, including electric restructuring, transmission
access/pricing, and wholesale competition. He also prepared comments for Congressional
hearings, as well as for Federal Energy Regulatory Commission (FERC) and state proceedings.
Prior to that, as an economist for Argonne National Laboratory in 1989, Mr. Basheda conducted
research on electric utility and related environmental issues. From 1987 to 1989, while working
as an Energy Policy Analyst for the Pennsylvania Energy Office, he developed policy positions
for various state and federal proceedings and prepared main and reply briefs for a state PURPA
investigation. Prior to 1987, Mr. Basheda worked as an Economic Policy Analyst for the
Pennsylvania Public Utility Commission, where he prepared -testimony and reports on electric
utility industry issues and assisted in the development of regulations. He holds an M.A. in
Economics from Binghamton University, Binghamton, New York, and a B.S. in Business
Administration from Kutztown University, Kutztown, Pennsylvania.
REPRESENTATIVE RECENT EXPERIENCE
Mr. Basheda assisted in the preparation of expert testimony filed at the Illinois
Commerce Commission that recommended guidelines for the development and
implementation of demand -side management programs for the state's gas utilities. The
testimony also identified state-of-the-art DSM programs implemented by other U.S. gas
utilities.
• Assisted in the preparation of expert testimony filed at the Arizona Corporation
Commission that identified the potential difficulties associated with a proposed partial
reopening of the state's retail electric market. The testimony recommended that certain
policies be in place (such as a well -designed provider of last resort service) before a state
proceeds with retail competition.
Co-authored a report for PJM that examined the organization's market monitoring and
mitigation procedures and which recommended modifications to those procedures. The
report included a thorough review of the market monitoring and mitigation procedures
used in other U.S. power markets and in selected foreign power markets.
Gregory N. Basheda
Senior Consultant
• Co-authored a report for the Edison Foundation that documented and described the
underlying reasons behind the significant increase in the construction cost of electric
infrastructure. This report demonstrated that the installation cost of generation
technologies has increased over the past few years at a rate far in excess of the general
inflation rate.
Assisted in the preparation of expert testimony filed at the California Public Utility
Commission in support of Pacific Gas & Electric's request to earn financial incentives in
return for achieving aggressive energy and demand savings goals established by the
Commission. The testimony reviewed the empirical literature on incentive ratemaking
and concluded that PG&E's proposed incentive rate was reasonable and would give the
Company a meaningful incentive to acquire energy efficiency resources at least cost
while providing the large majority of economic benefits to consumers.
• Co-authored a report for the Edison Electric Institute that described and evaluated various
mechanisms to mitigate retail rate shock. This report examined both ad hoc mechanisms,
such as the deferral or phase -in of a large rate increase, as well as alternative ratemaking
approaches, such as trended original cost, that yield less front -loaded rates (and smaller
initial rate increases) by design.
• Was part of The Brattle Group team that supported Ameren, a large Midwestern utility,
with a $350 million rate increase request filed with the Missouri Public Service
Commission. Mr. Basheda assisted in the preparation of testimony on several topics,
including fuel adjustment clauses, rate design, including interruptible rates and lifeline
rates, and the recent evolution in the Midwestern wholesale power market.
• Mr. Basheda assisted in the preparation of expert testimony filed at the FERC in support
of a rate filing submitted by a generating company pursuant to a Reliability Must Run
agreement with ISO New England. This testimony described the regulations that apply to
"must run" generating units and explained why such units were having trouble earning
sufficient revenues in the New England wholesale power market.
• Co-authored a report for the Edison Foundation that examined the factors underlying the
recent increases in electricity prices and the potential impact of these factors on the
industry's financial condition. The report also reviewed projected trends in costs and the
need for investment in electric infrastructure.
• Co-authored a report for EEI that examined the need for and design of automatic
adjustment clauses (AACs). This report demonstrated that AACs are needed more than
ever given the risks and circumstances facing electric utilities in both traditionally -
regulated and open -access states.
Gregory N. Basheda,
Senior Consultant
• Co-authored a report for EEI that reviewed the electric utility industry's past experience
with avoided cost pricing for Qualifying Facilities and identified "lessons learned" for
prospective application of this pricing method. The report also reviewed state policies
with respect to net metering programs and offered recommendations to ensure that such
programs are implemented in an economical manner. .
• Assisted with the preparation of expert testimony filed at the FERC in a contract dispute
over the responsibility for fixed RMR payments assessed by ISO New England. This
testimonyprovided a detailed chronology of the evolution of New England's wholesale
power market and changing policies with respect to the regulatory treatment of "must
run" generating units.
• Directed a contestable load analysis in support of a section 203 filing at FERC. This
analysis involved a detailed analysis of the applicant's existing wholesale power
transactions and contracts and demonstrated, through several indicia, that the applicant
had neither the incentive nor the ability to raise prices.
• Helped with the preparation of expert testimony filed at the FERC that critiqued aspects
of the ISO New England's proposed locational capacity market. Brattle's testimony
identified various risks and uncertainties associated with the ISO's proposed approach to
measuring and defining generator availability as well as potential flaws in the ISO's
proposed method of setting capacity prices. Mr. Basheda helped direct analyses that
showed that the ISO's original price -setting mechanism (subsequently modified) yielded
highly volatile prices.
Authored a report that provided recommendations on how states and provinces that are
within the region served by the Midwest ISO could coordinate, under existing law, on the
siting of interstate transmission lines. The report also summarized the current
transmission siting processes in the Midwestern. states, based on the findings of a survey
designed and conducted by Mr. Basheda and the National Regulatory Research Institute.
This report was prepared on behalf of the Edison Electric Institute and the Organization
of Midwest States.
Assisted with the.preparation of expert testimony filed at the FERC that critiqued a
proposal —made by the PJM market monitor —to impose a price cap on sales on installed
capacity in northern Illinois. In addition to questioning the need for the price cap, the
Brattle-assisted testimony critiqued the level of the price cap, which purportedly reflected
the fixed "incremental" or "to go" costs of keep an old peaking unit in service. Mr.
Basheda also assisted with an analysis which showed that the incremental cost of keeping
an old peaking unit in service could be significantly more than that assumed by the PJM
market monitor.
Gregory N. Basheda
Senior Consultant
4
• Assisted with the preparation of a report filed with the FERC that critiqued an expert
report that purported to show that new gas -fired generating plants selling into the
California power market would be unable to recover all of their costs —fixed and
variable —if the FERC mitigated (reduced) the spot prices that occurred during the
California power crisis. Brattle's report prepared an estimate of the long -run marginal
cost of generation —the cost of building new power plants —and compared this cost to the
revenues that a new power plant would have earned by participating in California's
energy and ancillary services markets. Brattle.'s analysis showed that new gas -fired
power plants (combined -cycle and combustion turbine units) would have earned more
than enough to recover their costs even with mitigated spot prices.
• Assisted with the preparation of testimony filed with FERC which explained and .
quantified the economic harm incurred by California power purchasers as a result of two
of the trading practices used by Enron during the California power crisis. This testimony
showed that such practices were not economically efficient arbitrage and had an adverse
financial impact on wholesale purchasers.
• Co-authored a white paper for Midwest Generation EME that set forth economic
guidelines for the prospective procurement of wholesale power by Illinois utilities.
Illinois has retail choice but most of the state's small residential customers continue to
purchase generation service from the local utility. Brattle's white paper proposed a
portfolio approach in which utilities periodically file flexible resource acquisition and
risk management strategies that would be reviewed by the Illinois Commerce
Commission and which would rely significantly on competitive procurement if wholesale
markets are reasonably robust.
Assisted in the preparation of an expert report filed in U.S. District Court on behalf of the
Overton Power District in regard to a power contract dispute between Overton and
Idacorp Energy. The expert report concluded that an overlapping series of government
actions, coupled with changes in underlying market conditions, caused western power
prices to fall dramatically in 2001. The report also found that at the time Overton and
Idacorp entered into the contested service agreement western power prices were well
above the workably competitive market price for long-term power. Mr. Basheda directed
and summarized the analysis used to calculate the workably competitive price of long-
term power in the Western U.S.
Assisted in the preparation of a report that evaluated the competitiveness of the western
U.S. power market from June 2000 through June 2001 and whether market conditions
justified the modification of certain contested forward power contracts. Among other
tasks, Mr. Basheda directed the research and analysis of confidential trading data and
other information produced by several power marketers. He also wrote portions of the
report, including a summary and analysis of the various market mitigation measures
implemented by FERC to address dysfunctions in the westernpower market. Mr.
Gregory N. Basheda
Senior Consultant 5
Basheda also tracked and prepared periodic summaries of FERC's findings and actions in
parallel investigations of alleged market manipulation in the western power market.
• Assisted in the preparation of an expert report filed in U.S. District Court on behalf of the
Tennessee Valley Authority in regard to a contract dispute between TVA and several of
its large industrial customers. The expert report addressed the meaning of "incremental
cost" as this term has been used in the electric power industry and explained that different
utilities define and measure incremental cost in different ways. The conclusions of the
expert report were based, in part, on extensive research of cost -based wholesale power
tariffs and retail real -tune pricing tariffs directed and performed by Mr. Basheda.
Assisted in the preparation of testimony filed at the Missouri Public Service Commission
on behalf of Ameren. This testimony reviewed the important changes in the electric
power industry over the past fifteen years and explained why, given these changes, the
drawbacks of cost -of -service regulation are more significant today than they were in the
past. The testimony identified the potential benefits of incentive regulation and
contrasted this form of regulation with cost -of -service regulation.
Assisted in the preparation of testimony filed at the Public Utility Commission of Nevada
on behalf of Nevada Power Company (NPC). This testimony provided a high-level
prudence review of NPC's power purchases over the 1997-2001 period. Among other
things, the testimony reviewed the unprecedented and unexpected increase and
subsequent decrease in western U.S. spot electric prices over 2000-2001. The testimony
also reviewed Nevada's (aborted) restructuring process and compared it to other state
restructuring processes. The testimony also included a survey which showed that very
few utilities in states transitioning to retail competition signed new long-term power.
purchase contracts. Mr. Basheda also reviewed and edited companion testimony
prepared by NPC staff and other expert witnesses.
Mr. Basheda was a principal contributor and director of a project to help a western U.S.
electric utility decide which of two emerging western Regional Transmission
Organizations (RTOs) it should join. A comparative analysis of the two RTOs was
prepared on the basis of several criteria, including transmission pricing and potential cost
shifting, congestion management, market design, governing process, and likelihood of
regulatory approval. In addition, a detailed analysis of the utility's recent wholesale
power purchases and sales was performed to determine which RTO was most
advantageous from a commercial standpoint.
Assisted in the development and preparation of analyses performed for a large western
U.S. electric utility. This analysis calculated the long -run marginal cost of generation for
delivery to the utility's service area and compared this cost to the price of a long-term
purchase power agreement for which the utility required regulatory approval.
Gregory N. Basheda
Senior Consultant
6
• Mr. Basheda assisted in the preparation of testimony filed at FERC on behalf of the
Midwest Independent System Operator (Midwest ISO). This testimony reviewed the
nascent coordination agreement between the Midwest ISO and the Alliance and evaluated
the extent to which this agreement could help the Midwest ISO meet the scope and
configuration requirement of FERC's RTO rule. The testimony also evaluated the
adequacy of the Midwest ISO's boundaries with entities other than the Alliance. Mr.
Basheda also reviewed and edited companion testimony prepared by Midwest ISO staff.
Mr. Basheda was the primary researcher and author of testimony filed at the Wyoming
Public Service Commission on behalf of Cheyenne Light, Fuel, and Power Company.
This testimony demonstrated the unprecedented nature of the western U.S. power crisis
by comparing spot electric prices in western U.S. power markets to those in other U.S.
markets and several foreign markets. The testimony also showed the significant and
widespread retail rate increases resulting from the western power crisis.
Co-authored a white paper prepared for the National Propane Gas Association (NPGA).
This paper reviewed propane's role in the U.S. energy market and set forth the provisions
that NPGA proposed to include in federal energy legislation.
Assisted in the preparation of testimony for a large industrial customer that critiqued a
market power analysis submitted by the customer's electric utility as part of a merger
application. Mr. Basheda performed and supervised analyses that showed deficiencies in
the horizontal and vertical market power analysis prepared by the merger applicants.
Co-authored a white paper on incentive regulation prepared on behalf of Ameren and
filed at the Missouri Public Service Commission. This paper identified the potential
benefits of well -designed incentive regulation and showed that such regulation is more
likely to encourage efficient operation and investment than traditional cost -of -service
regulation. The paper also compared Ameren's current rate mechanism to other incentive
rate or rate freeze mechanisms currently in effect in the U.S. electric industry.
Assisted in the preparation of testimony filed at FERC on behalf of the Midwest ISO.
This testimony explained the potential harms that could result if certain transmission
owners were permitted to leave the Midwest ISO, including the effect of such departures
on the Midwest ISO's ability to perform FERC-mandated functions. The testimony also
recommended standards for the FERC to use in evaluating a company's request to leave
an ISO.
Directed the preparation of an "alternative" market power analysis for a U.S. electric
utility, Bangor Hydro Electric, which was purchased by Emera, a Canadian power
company. This analysis showed that the merger raised no horizontal or vertical market
power issues and that there was no need to perform the Delivered Price Test normally
Gregory N. Basheda
Senior Consultant
7
required in merger filings. Mr. Basheda also assisted in the preparation of testimony filed
at FERC that explained the methodology and results of this market power analysis.
• Contributed to a financial and regulatory analysis of standard offer service (SOS) that
was prepared for -an electric utility. Mr. Basheda prepared a report that summarized state
regulatory policies on SOS and identified the potential drawbacks of certain aspects of
these policies, such as their encouragement of frequent customer switching between
competitive and regulated service and the potentially large financial risk placed on
utilities with SOS obligations.
Assisted in the preparation of testimony filed at FERC on behalf of NSTAR, a New
England -based electric utility. This testimony showed that, under certain conditions,
generators selling into the New England market had the ability to exercise market power.
The testimony proposed near -term and long-term remedies to the potential exercise of
market power and showed that these remedies would not inhibit the development of new
generating capacity in New England. Mr. Basheda also assisted NSTAR's counsel with
the preparation of related FERC filings.
Co-author of a report prepared for the New York Independent System Operator (NYISO)
which evaluated the potential reliability impact of a proposed change in the NYISO's
rules governing the procurement of installed generating capacity (ICAP) by Load Serving
Entities. Mr. Basheda wrote a chapter of the report that summarized and compared the
NYISO's market structure and rules governing the procurement of various generation
services, including ICAP, to those of four other ISOs in North America. He also
identified the potential problems that could arise if a market with an ICAP requirement,
such as New York, is situated near one or more markets without such a requirement.
Contributed to the preparation of testimony filed at FERC on behalf of merger applicants
Carolina Power & Light and Florida Power. This testimony used the Delivered Price
Test, as required by FERC's regulations, to evaluate the merger's potential impact on
horizontal generation market power. Mr. Basheda analyzed the merger's potential impact
on medium- and long-term markets and prepared testimony and several exhibits that
summarized this analysis. He also assisted with the analysis of short-term markets and
was the lead reviewer and editor of the testimony as it was finalized.
Assisted with financial analysis performed on behalf of the California Independent
System Operator (CAISO). This analysis, which supported the CAISO's establishment
of a new transmission access charge methodology, estimated the rate impacts and "cost
shifts" associated with moving from utility -specific access charges to a state- or ISO -
wide access charge. Mr. Basheda supervised the preparation of and reviewed many of
the financial analyses submitted to the client. He also assisted counsel with tariff
language and helped draft implementation guidelines for the new access charge.
Gregory N. Basheda
Senior Consultant
8
• Mr. Basheda was a principal contributor to a project that helped a utility estimate the
financial and rate impacts of joining a RTO. Various types and sizes of RTOs were
considered in this financial analysis. Mr. Basheda performed a thorough analysis of
FERC's rapidly evolving policies on RTOs and assessed the type and magnitude of
financial "incentives" that FERC may be willing to grant. to .encourage RTO
development. He also helped the client estimate the increased costs associated with RTO
membership, such as RTO start-up and operating costs, and the transmission service
revenues lost because of rate depancaking.
Acted as the primary assistant and researcher for a Brattle principal providing oral
testimony in federal court on behalf of a New Hampshire electric utility seeking to
recover the total cost of generation and transmission services purchased from its parent
company. He reviewed and supervised the review of numerous documents pertaining to
the case, including Federal Court filings, orders issued by the New Hampshire Public
Utility Commission, state laws and court opinions, and least -cost resource plans filed by
the client. Mr. Basheda helped draft a short, pre-trial summary of the opinions offered by
The Brattle Group's expert witness.
Assisted in the preparation of two detailed studies of generation market power prepared
on behalf of merger applicants Nevada Power and Sierra Pacific Power. One study was
filed with the Public Utility Commission of Nevada (PUCN); the other with the FERC.
Mr. Basheda authored a portion of the study filed with the PUCK and edited and
managed the production of the full report. For the FERC testimony, Mr. Basheda
acquired and interpreted some of the data used in the Delivered Price Test and reviewed
and edited drafts of the testimony. Mr. Basheda also authored a work paper that
summarized the modeling process and data used to perform the delivered price test. This
paper was designed to give FERC staff a good overview of the modeling process and to
guide them through the detailed work papers, data, and computer files submitted with the
testimony.
• Assisted in the preparation of a study that described the key functions and related
resource needs of a commodity seller of retail electricity. This study was prepared for the
retail service unit of a vertically -integrated utility operating in a state that has yet to
deregulate retail electricity service. Mr. Basheda prepared a description of several of the
key functions, or "value chain activities," performed by a commodity seller of electricity.
Mr. Basheda also researched and analyzed standard offer service and other transition
issues that could affect the marketing strategies of competitive retail sellers.
Acted as the primary researcher and author of testimony filed at the New Mexico Public
Regulation Commission on behalf of El Paso Electric. This testimony described the
"regulatory bargain" under which the state's utilities have provided electric service, and
critiqued a proposal to revalue the Company's generation portfolio at the current market
price of generation. Mr. Basheda reviewed the state law establishing utility service
Gregory N. Basheda
Senior Consultant 9
obligations and precedential orders on the same topic issued by the Public Regulation
Commission and worked with counsel to draft discovery materials.
• Assisted in the research and preparation of testimony on behalf of an electric utility
seeking approval from state regulators to increase its retail rates. The testimony provided
support for the client's management of its demand -side management programs. In
addition, the testimony identified and evaluated incentive regulatory mechanisms that
could be used to encourage utility implementation of cost-effective DSM programs in a
more competitive electricity market and recommended that the State adopt a specific
incentive mechanism. Mr. Basheda also helped with the preparation of companion
testimony submitted on behalf of the same client. This testimony compared the client's
performance on the delivery of its DSM programs to both a regional and national control
group of similarly -regulated utilities.
Assisted in the preparation of testimony on behalf of a group of electric utilities seeking
FERC approval to form a regional ISO. He also assisted in the preparation of analyses
and exhibits subsequently presented by a Brattle Principal at a regional FERC hearing on
ISOs, as well as the statement accompanying the presentation. The presentation cited the
potential benefits of the proposed ISO; known as the "Midwest ISO" or "MISO."
Assisted in the research and preparation of testimony filed at FERC on behalf of El Paso
Electric in support of the Company's request to recover stranded generation costs. He
prepared testimony on the company's expectation to serve a departing customer— the
' L" factor in the FERC's stranded cost formula. Mr. Basheda assisted with other
portions of the testimony and helped counsel with the preparation of discovery materials
and cross-examination of opposing witnesses.
Mr. Basheda was a principal contributor to a project that helped the senior management
of a large southern U.S. electric utility develop a strategy in response to prospective state
restructuring legislation and related regulatory initiatives. At the project's outset, he
prepared an overview of state and federal restructuring initiatives across the country that
was presented to the company's senior management.. He prepared reports and analyses
showing how the company's retail operations in a competitive environment could be
affected by potential regulatory initiatives on standard offer service, codes of conduct,
and reciprocity with public power entities, among others. Mr. Basheda prepared a report
that showed that the state's current tax structure would tax in -state, private sellers of
electricity more heavily than other sellers. He also prepared a report that reviewed and
evaluated policies to continue the delivery of public interest programs that have
traditionally been provided by regulated electric utilities. Mr. Basheda also helped draft
the executive summary of the entire project, which was presented to the Company's
Board of Directors.
Gregory N. Basheda
Senior Consultant
SELECTED PUBLICATIONS
10
"Sticker Shock!" (with Marc Chupka), Public Utilities Fortnightly, December 2007, pp. 56-61.
"Mitigating -Rate. Shock",.Proceedings of Rate.Case Essentials Conference, Electric Utility
Consultants, November 2007.
"Means of Mitigating Rate Shock" (with Frank Graves and Philip Hanser), The Electricity
Journal, October 2007, Vol. 20, No. 8, pp. 23-35.
"Electric Utility Automatic Adjustment Clauses Revisited: Why They Are Needed More Than
Ever" (with_ Frank Graves and Philip Hanser), The Electricity Journal, June 2007, Vol. 20, No.5,
pp. 33-47.
"Restructuring Revisited: What We Can Learn From Retail -Rate Increases in Restructured and
Non -Restructured States" (with J.P. Pfeifenberger and A.C. Schumacher), Public Utilities
Fortnightly, June 2007, pp. 64-69.
"Regional State Committees Can Help Provide a Regional Perspective to Planning and Siting
Decisions, Reducing the Need for Federal Preemption," The Electricity Journal, March 2006,
Vol. 19, No. 2, pp. 43-51.
"Power Procurement for Second -Stage Retail Access" (with Frank Graves), presented at Illinois
Commerce Commission's `Post 2006 Symposium', Chicago, IL, April 29, 2004.
"The State of Performance -Based Regulation in the U.S. Electric Utility Industry" (with David
E.M. Sappington, Johannes P. Pfeifenberger, and Philip Hanser), The Electricity Journal,
October 2001, Vol. 14, No. 8, pp. 71-79.
"A Short Honeymoon for Utility Deregulation" (with Peter Fox -Penner), Issues in Science and
Technology, Spring 2001, Vol. 17, No. 3, pp. 51-56.
"Comparison of ISO Market Structure and Rules," Proceedings of Ancillary Services
Conference, Electric Utility Consultants, September 2000.
"Setting Stranded Costs for Retail -Turned Wholesale Customers: Why FERC Needs to Change
its Approach," Utilities Policy, June 1999, Vol. 8, No.2, pp. 121-137.
"In What Shape Is Your ISOT' (with J.P.Pfeifenberger, P.Q. Hanser, and P.S. Fox -Penner), The
Electricity Journal, July 1998, Vol. 11, No. 6, pp. 80-87.
Gregory N. Basheda
Senior Consultant
11
"The FERC, Stranded Cost Recovery, and Municipalization" (with Darrell B. Chodorow, Peter
S. Fox -Penner, Jason A. Hicks, Eric Hirst, James K. Mitchell, Dean M. Murphy, and Joseph B.
Wharton), Energy Law Journal, December 1998.
"Application of Performance -Based Ratemaking to Electric.Transmission Service" NARUC
BRIC-X Proceedings, September 1996.
"Regional Transmission Groups: Ultimate Destination or Layover?" NARUC BRIC-IX
Proceedings, September 1994.
Exhibit 5
-B
Brattle Group Testimony
Exhibit B
City of Vernon, California
Transmission Service
Fiscal 2007
Annualization of Vernon's ETC Payments
Monthly 2007 Payments:
DWP Adelanto-
Victorville/Lugo $ 23,020
SCE Mead -Laguna $ 27,236
SCE Victorville-Lugo $ 5,610
Total ETC Payments: $ 55,866
Annualization of ETC Payments: $ 670,399
Exhibit 5-C
Brattle Group Testimony
i Exhibit C
City of Vernon, California
Total Cost of Service
[Final]
Fiscal 2007
Line No.
Description
Amount
1
Transmission Service ETCs
$670,399
2
A&G Expenses
$4,738
3
Regulatory Expenses
$243,000
4
Total Cost of Service (TRR)
$918,137
Exhibit 5-D
Brattle Group Testimony
Exhibit D
City of Vernon, California
Total Cost of Service
[Without COTP]
Fiscal 2007
Line No.
Description
Amount
1
Gross Plant
$56,881,151
COTP Gross Plant
$35,448,988
Adjusted Gross Plant
$21,432,163
2
Accumulated Depreciation
$21,860,936
COTP Accumulated Depreciation
$14,744,884
Adjusted Accumulated Depreciation
$7,116,051
3
Net Plant in Service
$14,316,112
4
Cash Working Capital
$52,149
5
Total Rate Base
$14,368,260
6
Return Requirement at 8.89%
$1,277,338
7
Annual Depreciation Expense
$672,970
8
O&M Expense
$169,452
9
Transmission Service (ETCs)
$670,399
10
A&G Expenses
$4,738
11
Pro erty Tax
$93,385
12
Regulatory Expenses
$243,000
13
Total Cost of Service (TRR)
$3,131,282
Exhibit
5-E
Brattle Group Testimony
Exhibit E
City of Vernon, California
Total Cost of Service
[Without Mead Projects]
Fiscal 2007
Line No.
Description
Amount
1
Gross Plant
$56,881,151
Mead Gross Plant
$21,432,163
Adjusted Gross Plant
$35,448,988
2
Accumulated Depreciation
$21,860,936
Mead Accumulated Depreciation
$7,116,051
Adjusted Accumulated Depreciation
$149744,884
3
Net Plant in.Service
$20,704,104
4
Cash Working Capital
$118,248
5
Total Rate Base
$20,822,352
6
Return Requirement at 8.89%
$1,851,127
7
Annual Depreciation Expense
$1,113,098
8
4&M Expense
$698,249
9
Transmission Service (ETCs)
$670,399
10
A&G Expenses
$4,738
11
Property Tax
-
12
Regulatory Expenses
$243,000
13
Total Cost of Service (TRR)
$4 580 591
NOTICE OF PUBLIC HEARING
The City of Vernon will conduct a Public Hearing which
you may attend.
PLACE: Vernon City Hall
City Council Chambers
4305 Santa Fe Avenue
Vernon, CA 90058
DATE AND TIME: Monday, March 17, 2008, at 10:00 a.m.,
or as soon thereafter as the matter may
be heard
PURPOSE: To consider evidence regarding the
adoption of a new Transmission Revenue
Requirement associated with the City's
High Voltage (over 200 KV) Entitlements
located outside the City, and to also
consider evidence regarding the
adoption of an amended Transmission
Owner Tariff, pursuant to the City's
participation in the California
Independent System Operator
Any interested person may attend and may make an oral
presentation to the City Council at the time of the
hearing, or may present written comments prior to the
hearing.
If you challenge the approval of the establishment of
the new Transmission Revenue Requirement and adoption of an
amended Transmission Owner Tariff or any provision thereof
in court, you may be limited to raising only those issues
you or someone else raised at the hearing described in this
notice or in written correspondence delivered to the City
of Vernon at, or prior to, the meeting.
The hearing may be continued or adjourned to a stated
time and place without further notice.
Dated: March 6, 2008
�` Manuela Giro , City Clerk
AFFIDAVIT OF POSTING
I, Manuela Giron, City Clerk, of the City of Vernon do hereby certify
that on the 6th day of March 2008, I did post three (3) copies each of
the following:
NOTICE OF PUBLIC HEARING - To consider evidence
regarding the adoption of a new Transmission Revenue Requirement
associated with the City's High Voltage (over 200 kV)
Entitlements located outside the City, and to also consider
evidence regarding the adoption of an amended Transmission Owner
Tariff, pursuant to the City's participation in the California
Independent System Operator
On each of the following places, to wit: on the bulletin board outside
the main entrance to the City Hall of the City of Vernon located at
4305 Santa Fe Avenue; at the northwest corner of 38th Street and Santa
Fe Avenue; the northeast corner of Leonis Blvd., and Pacific Blvd.,
all in said City, there being no newspaper of general circulation
printed and publish d in the City of Vernon.
Date:
anuela Gi on
City Clerk
State of California )
)ss
County of Los Angeles)
On -9.1a'/d� o #V before me, j-dIr-11 /�, 1-1e l -
Notary Public, personally appeared Manuela Giron
who proved to me on the basis of satisfactory evidence to be the
person � whose name(, is/awe subscribed to the within instrument and
acknowledged to me that Ore/she/- executed the same in --h-i�/her/t-i�-
authorized capacity (i-es) , and that by h4:-s/her/t4e-i— signature (/) on
the instrument the person(j), or the entity upon behalf of which the
person(k acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of
California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
+.i.wr 6_�_�.�
JUDITH A. IEHR
Commisslon # 1846365
10-wComm,
Notary Public - Callfomla
Los Angeles County
Expires Feb 19. 201
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: March 24, 2008
TO: Donal O'Callaghan, Director of Light & Power
FROM: Nelly.Giron, City Clerk
RE: Resolution No. 9562 - A Resolution of the City Council of
the City of Vernon Adopting a New Transmission Revenue
Requirement Associated With Vernon's High Voltage (Over 200
kV) Entitlements Located Outside of the City and Adopting an
Amended Transmission Owner Tariff for Purposes of the City's
Participation in the California Independent System Operator
Transmitted herewith is a copy of Resolution No. 9562 referenced
above, which was approved by City Council on March 3, 2008. A
certified copy of the resolution was given to Dennis Ehling this
morning.
Thank you.
NG:dr
c: Resolution File No. 9562
CERTIFICATE
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES)
I, Manuela Giron, City Clerk of the City of Vernon, County
of Los Angeles, State of California, hereby certify that the
attached is a full and complete copy of:
RESOLUTION NO. 9562 - A Resolution of the City Council of
the City of Vernon Adopting a New Transmission Revenue
Requirement Associated With Vernon's High Voltage (Over 200
kV) Entitlements Located Outside of the City and Adopting
an Amended Transmission Owner Tariff for Purposes of the
City's Participation in the California Independent System
Operator
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the official Seal of the City of Vernon, County of Los Angeles,
State of California, on this1day of March 2008.
SEAL:
Manuela Giron
City Clerk
l