Resolution No. 2011-170RESOLUTION NO. 2011-170
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ADOPTING A NEW TRANSMISSION REVENUE
REQUIREMENT AND GROSS LOAD FOR 2012 IN ACCORDANCE
WITH VERNON'S TRANSMISSION OWNER TARIFF AND
PROVIDING FOR TARIFF SHEET CHANGES TO IMPLEMENT THE
ADJUSTMENT
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 Corporation
("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, each PTO must include in its TO Tariff its Gross
Load, which the ISO uses to calculate its grid -wide Transmission Access
Charge ("TAC") rates, and which is related to the City's ability to ,
recover its full TRR; and
WHEREAS, the City's transmission entitlements include rights
under certain contracts (each an "ETC") including (i) an agreement with
the City of Los Angeles Department of Water and Power entitled "Los
Angeles -Vernon Adelanto-Victorville-Lugo Firm Transmission Service
Agreement" (the "LAWDP ETC"); (ii) an agreement with Southern
California Edison Company ("SCE") entitled "Amended and Restated
Edison -Vernon Victorville-Lugo Firm Transmission Service Agreement"
(the "SCE Victorville-Lugo ETC"); and (iii) an agreement with SCE
entitled "Amended and Restated Edison -Vernon Mead Firm Transmission
Services Agreement" (the "SCE Mead ETC"); and
WHEREAS, the City's costs under the LADWP ETC, the SCE
Victorville-Lugo ETC, and the SCE Mead ETC have traditionally been
based upon a negotiated fixed "path -specific" rate charged by LADWP or
SCE, based on the actual costs of the specific transmission lines made
available under each ETC, multiplied by the amount of transmission
capacity guaranteed to the City under each ETC; and
WHEREAS, on August 1, 2008, SCE filed a petition with FERC
seeking to amend the pricing structure under the SCE Victorville-Lugo
ETC and the SCE Mead ETC to replace the negotiated path -specific rates
set forth in those ETCs with a "postage -stamp" rate which reflects the
blended rate SCE charges to the ISO for the actual usage of all of
SCE's transmission lines by customers of the ISO; and
WHEREAS, the postage -stamp rate which SCE charges to the ISO
is derived from SCE's TRR and, therefore, will change each time SCE
amends its TRR; and
WHEREAS, on September 30, 2008, FERC accepted, subject to
refund and hearing and settlement procedures, SCE's proposed revisions
under the SCE Victorville-Lugo ETC and the SCE Mead ETC to replace the
negotiated path -specific rates set forth in those ETCs with a postage -
stamp rate, and thus the City's costs under the SCE Victorville-Lugo
ETC and the SCE Mead ETC will vary proportionately with any changes in
SCE's TRR; and
WHEREAS, the City reached a settlement agreement (the "SCE
Settlement") with SCE to amend the SCE Victorville-Lugo ETC and the SCE
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Mead ETC to replace the path -specific rates set forth in those ETCs
with SCE's postage -stamp rate after a phase -in period that began on
August 1, 2009, during which the City's path -specific rates in those
ETCs are gradually stepped -up over three years (the "Phase -In Rates")
until the path -specific rates are equal to SCE's postage -stamp rate as
of January 1, 2013; and
WHEREAS, under the SCE Settlement, the City's costs for the
SCE Victorville-Lugo ETC and the SCE Mead ETC are equal to (i) from
August 1, 2009, until December 31, 2012, the Phase -In Rates, and
beginning on January 1, 2013, the SCE postage -stamp rate, in each case
multiplied by (ii) the amount of transmission capacity guaranteed to
the City under each ETC; and
WHEREAS, FERC approved the SCE Settlement pursuant to an
order issued September 11, 2009, 128 FERC a 61,237 (2009), in FERC
Docket Nos. ER08-1343-000, ER08-1353-000, ER09-187-000, ER09-187-001,
EL09-19-000, and ER09-446-000 ("SCE Settlement Order"); and
WHEREAS, on behalf of the City, the Brattle Group, an
experienced utilities consulting firm, developed a tracking mechanism
for the City's TRR ("TRR Tracking Mechanism") to allow the City's TRR
to be adjusted annually, effective January 1 of each year, to reflect
changes in the City's costs under the SCE Victorville-Lugo ETC and the
SCE Mead ETC that change as a result of (i) the stepped -up rates
implemented between August 1, 2009 and December 31, 2012; or (ii) any
change in SCE's TRR on or after January 1, 2013; and
WHEREAS, on the basis of The Brattle Group's analysis and
evidence from City staff, which was considered during a public meeting
of the City Council held on July 13, 2009, the City, on July 15, 2009
("July 15 FERC Filing"), filed with FERC proposed revisions to its TO
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Tariff proposing stated TRRs for each of the years 2010 to 2012, which
dollar amounts were also included in the SCE Settlement ("TO Tariff
Revisions"); and
WHEREAS, the City also submitted in the July 15 FERC Filing a
request to utilize an "ETC Adjustment Clause" to adjust automatically
each year the costs the City incurs attributable to any changes in
SCE's TRR associated with SCE's High Voltage Existing Contracts Access
Charge ("HVECAC") rate; and
WHEREAS, FERC approved the City's July 15 FERC Filing,
including the TO Tariff Revisions and the City's proposed calculations
of the TRR for years 2010 to 2012, and additionally approved the City's
request to utilize an ETC Adjustment Clause to reflect annual projected
changes to SCE's TRR, in an order issued September 11, 2009, 128 FERC 1
61,235 (2009), in FERC Docket No. EL09-64-000 ("TO Tariff Order"); and
WHEREAS, under the TO Tariff Order, the City's TO Tariff
revisions went into effect on August 1, 2009; and
WHEREAS, the City is required under the TO Tariff Order to
submit annual filings no later than November 1 of each year with FERC
reflecting annual modifications to the base TRR; and
WHEREAS, FERC has approved the TRR for 2011 as agreed to by
the City and SCE under the SCE Settlement, and which will be
implemented by the tariff sheet included as Appendix I of the amended
TO Tariff, attached hereto as Exhibit A and made a part hereof; and
WHEREAS, under the SCE Settlement, because the TRRs have been
fixed in each of the years 2010 to 2012, the true -up amount between the
City and SCE is zero with respect to these calendar years, and thus
there are no changes associated with SCE's fixed TRR and no cost
modification needs to be reflected under the ETC Adjustment Clause for
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the 2012 TRR; and
WHEREAS, pursuant to the TO Tariff Order, the approved new
TRR number will take effect as of January 1, 2012; and
WHEREAS the current Gross Load included in the City's TO
Tariff is based on 2007 load data and the Light & Power Department
calculates that Gross Load in 2010 was 1,181,728 MWh, substantially
lower than in 2007; and
WHEREAS, a Notice of Public Hearing was published on or
before October 8, 2011, notifying all interested parties that a hearing
to consider evidence to establish the City's new TRR and Gross Load was
scheduled for October 18, 2011, at approximately 8:00 a.m., subject to
the hearing being continued or adjourned to a stated time and place
without further notice of public hearing; and
WHEREAS, on October 18, 2011, 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 calculation
of the City's new TRR and Gross Load under the City's amended TO
Tariff; and
WHEREAS, the Light & Power Department has prepared a Staff
Report, dated October 5, 2011, with exhibits, a copy of which is
attached hereto as Exhibit B and made a part hereof, which reiterates
its previous conclusions that the TRR and ETC Adjustment Clause
mechanism developed by The Brattle Group and approved by FERC under the
amended TO Tariff are reasonable, and includes the 2012 Gross Load
calculated by the Light & Power Department; and
WHEREAS, the Light & Power Department has recommended the
City adopt the TRR contained in the SCE Settlement and approved by
FERC, to be effective on January 1, 2012; and
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WHEREAS, the Light & Power Department has recommended the
City adopt the 2012 Gross Load it has calculated based on 2010 test
year data; and
WHEREAS, the City Council has heard and considered all
evidence, written and oral, presented in consideration of the
establishment of the City's new TRR and Gross Load under the amended TO
Tariff.
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 TRR and Gross Load, 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 TRR and Gross
Load, to be effective January 1, 2012.
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,
Gross Load, or TO Tariff shall apply only prospectively from the date
of this Resolution; and
(b) in no way shall this Resolution affect the City
Council's adoption or determination of any previous TRR, Gross Load, or
TO Tariff.
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SECTION 4: The City Council of the City of Vernon hereby
approves, pursuant to the TO Tariff and to be effective on January 1,
2012, the establishment of the City's new TRR, Gross Load, and Appendix
I to the TO Tariff implementing the new TRR and Gross Load, as
described in the Light & Power Staff Report dated on or about October
5, 2011.
SECTION 5: The City Council of the City of Vernon hereby
authorizes outside counsel to submit the City's TRR, Gross Load, the
amended Appendix I to the Vernon TO Tariff and supporting
documentation, such as the Staff Report, and this City Council
Resolution approving the new TRR and Gross Load, to FERC on behalf of
the City of Vernon.
SECTION 6: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of Resolutions
of the Council of this City.
APPROVED AND ADOPTED this 18th day of October, 2011.
�0,
Name: Hilario Gonzales
Title: Mayor / -Ma -
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Willard G. Yamaguchi, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution
No. 2011-170, was duly passed, approved and adopted by the City Council
of the City of Vernon at a regular meeting of the City Council duly
held on Tuesday, October 18, 2011, and thereafter was duly signed by
the Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this fV day of October, 2011, at Vernon, California.
(SEAL)
Wi lard G. am u i ity Clerk
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EXHIBIT A
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $1,346,520 and is comprised of the.
following components:
Base TRR costs not subject to ETC Adjustment Clause: $498,480
ETC Adjustment Clause:
Forecast SCE ETC Costs: $848,040
Balance of Difference between prior year
Forecast and Actual SCE ETC Costs: $0
Interest on Difference between prior year
Forecast and Actual SCE ETC Costs: $0
The ETC Adjustment Clause is: The projected SCE ETC Cost for the next calendar year,
plus the true -up (positive or negative) of the prior October through September SCE ETC
Cost with interest calculated pursuant to 18 C.F.R. § 35.19a. The ETC Adjustment
Clause will be recalculated annually and filed with the Commission with a proposed
effective date of January I of each year.
The TRBAA is a negative $105,460 for calendar year 2012.
Vernon's Gross Load, consistent with its TRR, used by the ISO to develop the Transmission
Access Charge is 1,181,728 MWh.
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.
EXHIBIT B
CITY OF VERNON LIGHT AND POWER DEPARTMENT
STAFF REPORT REGARDING THE ESTABLISHMENT OF A NEW
TRANSMISSION REVENUE REQUIREMENT AND GROSS LOAD ASSOCIATED
WITH VERNON'S HIGH VOLTAGE ENTITLEMENTS
October 6, 2011
The City of Vernon ("Vernon" or "City") is a Scheduling Coordinator and a
Participating Transmission Owner ("PTO") in the California Independent System
Operator Corporation ("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 FERC. Each PTO
must also include in its TO Tariff the Gross Load which the ISO uses to calculate its
grid -wide Transmission Access Charge ("TAC") rates, and which is related to the
City's ability to recover its full TRR.
TRANSMISSION REVENUE REQUIREMENT
At present, the City's high voltage transmission assets consist of three long-
term contracts (known as "existing transmission contracts" or "ETCs") which provide
the City with dedicated access to high voltage transmission facilities owned by other
entities. Specifically, the City has contractual entitlements to utilize transmission
assets pursuant to one long-term transmission contract with the Los Angeles
Department of Water and Power ("LADWP"), and two long-term transmission
contracts with Southern California Edison ("SCE"). The ETCs with SCE consist of
one (the "SCE Victorville-Lugo ETC" described in SCE's FERC Rate Schedule 360)
Staff Report
TRR 2012
Page 2 of 4
providing 11 MW of transmission capacity along the path between the Victorville-
Lugo midpoint and the point of interconnection with the City's internal transmission
system (the "City Gate"), and one (the "SCE Mead ETC" described in SCE's FERC
Rate Schedule 207) providing 26 MW of transmission capacity along the path
between the Mead 230 substation and the City Gate.
The costs of these ETCs make up the majority of the costs recovered through
the City's TRR. Until recently, for each of the ETCs, the City paid the owner of the
transmission facilities a fixed rate which was specific to the transmission path
provided under each ETC.
On August 1, 2008, SCE proposed to increase its TRR and associated rates
in FERC Docket No. ER08-1343-000. In a related filing submitted in FERC Docket
No. ER08-1353-000, SCE proposed to transition both of its ETCs with Vernon from
their current, fixed "path -specific" rates to a so-called "postage stamp" rate
methodology which reflects the blended rate which SCE charges the ISO pursuant
to its own TRRs for the actual usage of all of SCE's transmission facilities by
customers of the ISO (the "HVECAC Rate"). The HVECAC Rate that SCE proposed
in its TO Tariff is derived from SCE's TRR and, therefore, will change each time SCE
amends its TRR.
Ori September 30, 2008, FERC accepted, subject to refund and hearing and
settlement procedures, SCE's proposed revisions to its TO Tariff to transition the
negotiated path -specific rates set forth in the SCE Victorville-Lugo ETC and the SCE
Mead ETC to the uniform HVECAC Rate, and thus the City's costs under those
ETCs will vary proportionately with any changes in SCE's TRR.
The City reached a settlement agreement (the "SCE Settlement") with SCE to
amend the SCE Victorville-Lugo ETC and the SCE Mead ETC to fully transition the
path -specific rates set forth in those ETCs to SCE's HVECAC Rate after a phase -in
period that began on August 1, 2009, during which the City's path -specific rates in
Staff Report
TRR 2012
Page 3 of 4
those ETCs will be gradually stepped -up under incrementally increasing fixed rates
(the "Phase -In Rates") until the path -specific rates are equal to the HVECAC Rate as
of January 1, 2013. FERC approved the SCE Settlement pursuant to an order
issued September 11, 2009, 128 FERC 161, 237 (2009), in FERC Docket Nos.
ER08-1343-000, ER08-1353-000, ER09-187-000, ER09-187-001 EL09-19-000, and
ER09-446-000 ("SCE Settlement Order").
On behalf of the City, The Brattle Group, an experienced utilities consulting
firm, developed a TRR tracking mechanism clause for the City's TRR ("ETC
Adjustment Clause"), which will allow the City's TRR to be adjusted annually,
effective January 1 of each year, to reflect changes in the City's transmission
expenses associated with any changes implemented by SCE in the HVECAC Rate
associated with the SCE Victorville-Lugo ETC and the SCE Mead ETC.
On the basis of The Brattle Group's analysis and evidence from City staff,
which was considered during a public meeting of the City Council held on July 13,
2009, the City, on July 15, 2009 ("July 15 FERC Filing"), filed with FERC the
proposed (i) revisions to its TO Tariff proposing the City's stated TRRs for each of
the years 2010 to 2012, which dollar amounts were also included in the SCE
Settlement ("TO Tariff Revisions") and (ii) the ETC Adjustment Clause tracking
mechanism.
The July 15 FERC Filing acknowledged that, to the extent that the SCE
Settlement was accepted, because the stated Phase -In Rates would be fixed, the
ETC Adjustment Clause for the term of the Phase -In Rates would be zero.
FERC approved the City's July 15 FERC Filing, including the TO Tariff
Revisions, the City's proposed calculations of the TRR for years 2010 to 2012, and
the City's request to utilize an ETC Adjustment Clause, in an order issued
September 11, 2009, 128 FERC 161,235 (2009), in FERC Docket No. EL09-64-
000 ("TO Tariff Order"). Specifically, for 2012, FERC approved a TRR of
Staff Report
TRR 2012
Page 4 of 4
$1,346,520. The City is required under the TO Tariff Order to submit annual filings
no later than November 1 of each year with FERC reflecting annual modifications to
the base TRR of the City.
Because FERC approved the SCE Settlement, and the City's TRR is fixed for
calendar year 2012, the ETC Adjustment Clause reflecting the amount required to
true -up the TRR between the City and SCE is zero.
GROSS LOAD
Gross Load is the City's aggregate annual demand for electricity. The Light &
Power Department calculates and projects Gross Load as part of Its normal
operations. Since2008, the Gross Load stated in the City's TO Tariff has been
1,288,684 MWh, a figure based on the City's 2007 actual load data. The City's
Gross Load has declined since 2007. In 2010, the City's Gross Load, as measured
by ISO -certified revenue quality meters, was 1,181,728 MWh.
This decline in Gross Load means that the City will not recover from the ISO
the full amount of its TRR unless its stated TO Tariff Gross Load is revised to reflect
the City's actual load. Staff recommends submitting an amended version of the
City's Appendix I to its TO Tariff that states the City's Gross Load for 2012 at
1,181,728 MWh, in accordance with a 2010 test year (the data supporting the
calculation of this figure is attached hereto as Exhibit 1.
1. Approve the establishment of the City's new TRR and Gross Load for 2012
and revised Appendix I to the TO Tariff.
2. Authorize outside counsel to submit the City's TRR, ETC Adjustment Clause
and Gross Load for 2012, the revised Appendix I to the TO Tariff, and this
City Council Resolution approving the TRR, ETC Adjustment Clause, and
Gross Load to FERC on behalf of the City of Vernon.
EXHIBIT 1
A
B
C
1
2
3
CY 2010 ISO Metered Gross Load
4
Month
MWh
6
1 Jan-10
95,336
7
Feb-10
88,506
8
Mar-10
100,405
9
Apr-10
97,925
10
May-10
98,876
11
Jun-10
101,007
12
Jul-10
102,440
131
Aug-10
104,225
14
Sep-10
99,614
15
Oct-10
102,071
16
Nov-10
97,575
17
Dec-10
93,747
18
1,181,728
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: October'19, 2011
TO: Carlos Fandino, Director of Light & Power
FROM: Willard Yamaguchi, City Clerk
RE: Resolution No. 2011-170 — A Resolution of the City Council of the City of Vernon
Adopting a New Transmission Revenue Requirement and Gross Load for 2012 in
Accordance With Vernon's Transmission Owner Tariff and Providing for Tariff Sheet
Changes to Implement the Adjustment
Transmitted herewith is a certified copy of Resolution No. 2011-170 referenced above, for your
transmittal, which was approved by City Council on October 18, 2011.
Please ensure that a copy of the transmittal communication is sent to my attention for the file.
Thank you.
WY:dj
Enclosure
c: Resolution No.2011-170
CERTIFICATE
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES)
I, Willard Yamaguchi, 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. 2011-170 - A Resolution of the City Council of
the City of Vernon Adopting a New Transmission Revenue
Requirement and Gross Load for 2012 in Accordance With
Vernon's Transmission Owner Tariff and Providing for Tariff
Sheet Changes to Implement the Adjustment
IN WITNESS WHEREOF,
the official Seal of the
State of California, on
SEAL:
I have hereunto set my hand and affixed
City o Vernon, County of Los Angeles,
this day of October 2011.
RECEIVED
RECEIVED1* OCT 06 2011
OCT 11 2011 CITY ADMINISTRATION
CITY CLERK'S OFFICE STAFF REPORT
LIGHT & POWER j� ,
"v
DATE: October 5, 2011
TO: Honorable Mayor and City Council
FROM: CarlosR. Fandino, Jr. Q/W
RE: Transmission Revenue Requirement and Gross Load
Purpose:
Detailed Staff Report is enclosed.
Recommendation:
1. Approve the establishment of the City's new TRR and Gross Load for 2012 and
revised Appendix I to the TO Tariff.
2. Authorize outside counsel to submit the City's TRR, ETC Adjustment Clause and
Gross Load for 2012, the revised Appendix I to the TO Tariff, and this City
Council Resolution approving the TRR, ETC Adjustment Clause, and Gross Load
to FERC on behalf of the City of Vernon.
Staff would like this matter to be addressed on October 18, 2011 City Council meeting.
Fiscal Impact:
There is no known fiscal impact.
CRF:ah
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RESOLUTION NO. 30=
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF VERNON ADOPTING A NEW TRANSMISSION REVENUE
REQUIREMENT AND GROSS LOAD FOR 2012 IN
ACCORDANCE WITH VERNON'S TRANSMISSION OWNER
TARIFF AND PROVIDING FOR TARIFF SHEET CHANGES
TO IMPLEMENT THE ADJUSTMENT
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
Corporation ("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, each PTO must include in its TO Tariff its
Gross Load, which the ISO uses to calculate its grid -wide
Transmission Access Charge ("TAC") rates, and which is related to
the City's ability to recover its full TRR; and
WHEREAS, the City's transmission entitlements include
rights under certain contracts (each an "ETC") including (i) an
agreement with the City of Los Angeles Department of Water and
Power entitled "Los Angeles -Vernon Adelanto-Victorville-Lugo Firm
Transmission Service Agreement" (the "LAWDP ETC"); (ii) an
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agreement with Southern California Edison Company ("SCE")
entitled "Amended and Restated Edison -Vernon Victorville-Lugo
Firm Transmission Service Agreement" (the "SCE Victorville-Lugo
ETC"); and (iii) an agreement with SCE entitled "Amended and
Restated Edison -Vernon Mead Firm Transmission Services Agreement"
(the "SCE Mead ETC"); and
WHEREAS, the City's costs under the LADWP ETC, the SCE
Victorville-Lugo ETC, and the SCE Mead ETC have traditionally
been based upon a negotiated fixed "path -specific" rate charged
by LADWP or SCE, based on the actual costs of the specific
transmission lines made available under each ETC, multiplied by
the amount of transmission capacity guaranteed to the City under
each ETC; and
WHEREAS, on August 1, 2008, SCE filed a petition with
FERC seeking to amend the pricing structure under the SCE
Victorville-Lugo ETC and the SCE Mead ETC to replace the
negotiated path -specific rates set forth in those ETCs with a
"postage -stamp" rate which reflects the blended rate SCE charges
to the ISO for the actual usage of all of SCE's transmission
lines by customers of the ISO; and
WHEREAS, the postage -stamp rate which SCE charges to
the ISO is derived from SCE's TRR and, therefore, will change
each time SCE amends its TRR; and
WHEREAS, on September 30, 2008, FERC accepted, subject
to refund and hearing and settlement procedures, SCE's proposed
revisions under the SCE Victorville-Lugo ETC and the SCE Mead ETC
to replace the negotiated path -specific rates set forth in those
ETCs with a postage -stamp rate, and thus the City's costs under
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the SCE Victorville-Lugo ETC and the SCE Mead ETC will vary
proportionately with any changes in SCE's TRR; and
WHEREAS, the City reached a settlement agreement (the
"SCE Settlement") with SCE to amend the SCE Victorville-Lugo ETC
and the SCE Mead ETC to replace the path -specific rates set forth
in those ETCs with SCE's postage -stamp rate after a phase -in
period that began on August 1, 2009, during which the City's
path -specific rates in those ETCs are gradually stepped -up over
three years (the "Phase -In Rates") until the path -specific rates
are equal to SCE's postage -stamp rate as of January 1, 2013; and
WHEREAS, under the SCE Settlement, the City's costs for
the SCE Victorville-Lugo ETC and the SCE Mead ETC are equal to
(i) from August 1, 2009, until December 31, 2012, the Phase -In
Rates, and beginning on January 1, 2013, the SCE postage -stamp
rate, in each case multiplied by (ii) the amount of transmission
capacity guaranteed to the City under each ETC; and
WHEREAS, FERC approved the SCE Settlement pursuant to
an order issued September 11, 2009, 128 FERC 5 61,237 (2009), in
FERC Docket Nos. ER08-1343-000, ER08-1353-000, ER09-187-000,
ER09-187-001, EL09-19-000, and ER09-446-000 ("SCE Settlement
Order"); and
WHEREAS, on behalf of the City, the Brattle Group, an
experienced utilities consulting firm, developed a tracking
mechanism for the City's TRR ("TRR Tracking Mechanism") to allow
the City's TRR to be adjusted annually, effective January 1 of
each year, to reflect changes in the City's costs under the SCE
Victorville-Lugo ETC and the SCE Mead ETC that change as a result
of (i) the stepped -up rates implemented between August 1, 2009
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and December 31, 2012; or (ii) any change in SCE's TRR on or
after January 1, 2013; and
WHEREAS, on the basis of The Brattle Group's analysis
and evidence from City staff, which was considered during a
public meeting of the City Council held on July 13, 2009, the
City, on July 15, 2009 ("July 15 FERC Filing"), filed with FERC
proposed revisions to its TO Tariff proposing stated TRRs for
each of the years 2010 to 2012, which dollar amounts were also
included in the SCE Settlement ("TO Tariff Revisions"); and
WHEREAS, the City also submitted in the July 15 FERC
Filing a request to utilize an "ETC Adjustment Clause" to adjust
automatically each year the costs the City incurs attributable to
any changes in SCE's TRR associated with SCE's High Voltage
Existing Contracts Access Charge ("HVECAC") rate; and
WHEREAS, FERC approved the City's July 15 FERC Filing,
including the TO Tariff Revisions and the City's proposed
calculations of the TRR for years 2010 to 2012, and additionally
approved the City's request to utilize an ETC Adjustment Clause
to reflect annual projected changes to SCE's TRR, in an order
issued September 11, 2009, 128 FERC 1 61,235 (2009), in FERC
Docket No. EL09-64-000 ("TO Tariff Order"); and
WHEREAS, under the TO Tariff Order, the City's TO
Tariff revisions went into effect on August 1, 2009; and
WHEREAS, the City is required under the TO Tariff Order
to submit annual filings no later than November 1 of each year
with FERC reflecting annual modifications to the base TRR; and
WHEREAS, FERC has approved the TRR for 2011 as agreed
to by the City and SCE under the SCE Settlement, and which will
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The implemented by the tariff sheet included as Appendix I of the
lamended TO Tariff, attached hereto as Exhibit A and made a part
hereof; and
WHEREAS, under the SCE Settlement, because the TRRs
have been fixed in each of the years 2010 to 2012, the true -up
amount between the City and SCE is zero with respect to these
calendar years, and thus there are no changes associated with
SCE's fixed TRR and no cost modification needs to be reflected
under the ETC Adjustment Clause for the 2012 TRR; and
WHEREAS, pursuant to the TO Tariff Order, the approved
new TRR number will take effect as of January 1, 2012; and
WHEREAS the current Gross Load included in the City's
TO Tariff is based on 2007 load data and the Light & Power
Department calculates that Gross Load in 2010 was 1,181,728 MWh,
substantially lower than in 2007; and
WHEREAS, a Notice of Public Hearing was published on or
before October 8, 2011, notifying all interested parties that a
hearing to consider evidence to establish the City's new TRR and
Gross Load was scheduled for October 18, 2011, at approximately 8
a.m., subject to the hearing being continued or adjourned to a
stated time and place without further notice of public hearing;
and
WHEREAS, on October 18, 2011, 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 calculation of the City's new TRR and Gross Load under the
City's amended TO Tariff; and
WHEREAS, the Light & Power Department has prepared a
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Staff Report, dated October 5, 2011, with exhibits, a copy of
which is attached hereto as Exhibit B and made a part hereof,
which reiterates its previous conclusions that the TRR and ETC
Adjustment Clause mechanism developed by The Brattle Group and
approved by FERC under the amended TO Tariff are reasonable, and
includes the 2012 Gross Load calculated by the Light & Power
Department; and
WHEREAS, the Light & Power Department has recommended
the City adopt the TRR contained in the SCE Settlement and
approved by FERC, to be effective on January 1, 2012; and
WHEREAS, the Light & Power Department has recommended
the City adopt the 2012 Gross Load it has calculated based on
2010 test year data; and
WHEREAS, the City Council has heard and considered all
evidence, written and oral, presented in consideration of the
establishment of the City's new TRR and Gross Load under the
amended TO Tariff.
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 TRR and Gross Load, and after due
consideration of any and all evidence submitted at the Public
Hearing, determines there are compelling reasons to justify the
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adoption of the City's TRR and Gross Load, to be effective
January 1, 2012.
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, Gross Load, or TO Tariff shall apply only prospectively from
the date of this Resolution; and
(b) in no way shall this Resolution affect the City
Council's adoption or determination of any previous TRR, Gross
Load, or TO Tariff.
SECTION 4: The City Council of the City of Vernon
hereby approves, pursuant to the TO Tariff and to be effective on
January 1, 2012, the establishment of the City's new TRR, Gross
Load, and Appendix I to the TO Tariff implementing the new TRR
and Gross Load, as described in the Light & Power Staff Report
dated on or about October 5, 2011.
SECTION 5: The City Council of the City of Vernon
hereby authorizes outside counsel to submit the City's TRR, Gross
Load, the amended Appendix I to the Vernon TO Tariff and
supporting documentation, such as the Staff Report, and this City
Council Resolution approving the new TRR and Gross Load, to FERC
on behalf of the City of Vernon.
SECTION 6: The City Clerk of the City of Vernon
shall certify to the passage of this resolution, and thereupon
and thereafter the same shall be in full force and effect.
APPROVED AND ADOPTED this 18th day of October, 2011.
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ATTEST:
City Clerk
Name: [fix]
Title: Mavor
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STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANGELES )
I, , City Clerk of the City of
Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. , was duly adopted by the City Council of the
City of Vernon at a regular meeting of the City Council duly held
on Monday, October 18, 2011, and thereafter was duly signed by
the Mayor of the City of Vernon.
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(SEAL)
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[#tX] , City Clerk
E
EXHIBIT A
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $1,346,520 and is comprised of the
following components:
Base TRR costs not subject to ETC Adjustment Clause: $498,480
ETC Adjustment Clause:
Forecast SCE ETC Costs: $848,040
Balance of Difference between prior year
Forecast and Actual SCE ETC Costs: $0
Interest on Difference between prior year
Forecast and Actual SCE ETC Costs: $0
The ETC Adjustment Clause is: The projected SCE ETC Cost for the next calendar year,
plus the true -up (positive or negative) of the prior October through September SCE ETC
Cost with interest calculated pursuant to 18 C.F.R. § 35.19a. The ETC Adjustment
Clause will be recalculated annually and fled with the Commission with a proposed
effective date of January 1 of each year.
The TRBAA is a negative $105,460 for calendar year 2012.
Vernon's Gross Load, consistent with its TRR, used by the ISO to develop the Transmission
Access Charge is 1,181,728 MWh.
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.
EXHIBIT B
CITY OF VERNON LIGHT AND POWER DEPARTMENT
STAFF REPORT REGARDING THE ESTABLISHMENT OF A NEW
TRANSMISSION REVENUE REQUIREMENT AND GROSS LOAD ASSOCIATED
WITH VERNON'S HIGH VOLTAGE ENTITLEMENTS
October 5, 2011
The City of Vernon ("Vernon" or "City") is a Scheduling Coordinator and a
Participating Transmission Owner ("PTO") in the California Independent System
Operator Corporation ("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 FERC. Each PTO
must also include in its TO Tariff the Gross Load which the ISO uses to calculate its
grid -wide Transmission Access Charge ("TAC") rates, and which is related to the
City's ability to recover its full TRR.
TRANSMISSION REVENUE REQUIREMENT
At present, the City's high voltage transmission assets consist of three long-
term contracts (known as "existing transmission contracts" or "ETCs") which provide
the City with dedicated access to high voltage transmission facilities owned by other
entities. Specifically, the City has contractual entitlements to utilize transmission
assets pursuant to one long-term transmission contract with the Los Angeles
Department of Water and Power ("LADWP"), and two long-term transmission
contracts with Southern California Edison ("SCE"). The ETCs with SCE consist of
one (the "SCE Victorville-Lugo ETC" described in SCE's FERC Rate Schedule 360)
Staff Report
TRR 2012
Page 2 of 4
providing 11 MW of transmission capacity along the path between the Victorville-
Lugo midpoint and the point of interconnection with the City's internal transmission
system (the "City Gate"), and one (the "SCE Mead ETC" described in SCE's FERC
Rate Schedule 207) providing 26 MW of transmission capacity along the path
between the Mead 230 substation and the City Gate.
The costs of these ETCs make up the majority of the costs recovered through
the City's TRR. Until recently, for each of the ETCs, the City paid the owner of the
transmission facilities a fixed rate which was specific to the transmission path
provided under each ETC.
On August 1, 2008, SCE proposed to increase its TRR and associated rates
in FERC Docket No. ER08-1343-000. In a related filing submitted in FERC Docket
No. ER08-1353-000, SCE proposed to transition both of its ETCs with Vernon from
their current, fixed "path -specific" rates to a so-called "postage stamp" rate
methodology which reflects the blended rate which SCE charges the ISO pursuant
to its own TRRs for the actual usage of all of SCE's transmission facilities by
customers of the ISO (the "HVECAC Rate"). The HVECAC Rate that SCE proposed
in its TO Tariff is derived from SCE's TRR and, therefore, will change each time SCE
amends its TRR.
On September 30, 2008, FERC accepted, subject to refund and hearing and
settlement procedures, SCE's proposed revisions to its TO Tariff to transition the
negotiated path -specific rates set forth in the SCE Victorville-Lugo ETC and the SCE
Mead ETC to the uniform HVECAC Rate, and thus the City's costs under those
ETCs will vary proportionately with any changes in SCE's TRR.
The City reached a settlement agreement (the "SCE Settlement") with SCE to
amend the SCE Victorville-Lugo ETC and the SCE Mead ETC to fully transition the
path -specific rates set forth in those ETCs to SCE's HVECAC Rate after a phase -in
period that began on August 1, 2009, during which the City's path -specific rates in
Staff Report
TRR 2012
Page 3 of 4
those ETCs will be gradually stepped -up under incrementally increasing fixed rates
(the "Phase -In Rates") until the path -specific rates are equal to the HVECAC Rate as
of January 1, 2013. FERC approved the SCE Settlement pursuant to an order
issued September 11, 2009, 128 FERC 161, 237 (2009), in FERC Docket Nos.
ER08-1343-000, ER08-1353-000, ER09-187-000, ER09-187-001, EL09-19-000, and
ER09-446-000 ("SCE Settlement Order").
On behalf of the City, The Brattle Group, an experienced utilities consulting
firm, developed a TRR tracking mechanism clause for the City's TRR ("ETC
Adjustment Clause"), which will allow the City's TRR to be adjusted annually,
effective January 1 of each year, to reflect changes in the City's transmission
expenses associated with any changes implemented by SCE in the HVECAC Rate
associated with the SCE Victorville-Lugo ETC and the SCE Mead ETC.
On the basis of The Brattle Group's analysis and evidence from City staff,
which was considered during a public meeting of the City Council held on July 13,
2009, the City, on July 15, 2009 ("July 15 FERC Filing"), filed with FERC the
proposed (i) revisions to its TO Tariff proposing the City's stated TRRs for each of
the years 2010 to 2012, which dollar amounts were also included in the SCE
Settlement ("TO Tariff Revisions") and (ii) the ETC Adjustment Clause tracking
mechanism.
The July 15 FERC Filing acknowledged that, to the extent that the SCE
Settlement was accepted,, because the stated Phase -In Rates would be fixed, the
ETC Adjustment Clause for the term of the Phase -In Rates would be zero.
FERC approved the City's July 15 FERC Filing, including the TO Tariff
Revisions, the City's proposed calculations of the TRR for years 2010 to 2012, and
the City's request to utilize an ETC Adjustment Clause, in an order issued
September 11, 2009, 128 FERC ¶ 61,235 (2009), in FERC Docket No. EL09-64-
000 ("TO Tariff Order"). Specifically, for 2012, FERC approved a TRR of
Staff Report
TRR 2012
Page 4 of 4
$1,346,520. The City is required under the TO Tariff Order to submit annual filings
no later than November 1 of each year with FERC reflecting annual modifications to
the base TRR of the City.
Because FERC approved the SCE Settlement, and the City's TRR is fixed for
calendar year 2012, the ETC Adjustment Clause reflecting the amount required to
true -up the TRR between the City and SCE is zero.
GROSS LOAD
Gross Load is the City's aggregate annual demand for electricity. The Light &
Power Department calculates and projects Gross Load as part of Its normal
operations. Since 2008, the Gross Load stated in the City's TO Tariff has been
1,288,684 MWh, a figure based on the City's 2007 actual load data. The City's
Gross Load has declined since 2007. In 2010, the City's Gross Load, as measured
by ISO -certified revenue quality meters, was 1,181,728 MWh.
This decline in Gross Load means that the City will not recover from the ISO
the full amount of its TRR unless its stated TO Tariff Gross Load is revised to reflect
the City's actual load. Staff recommends submitting an amended version of the
City's Appendix I to its TO Tariff that states the City's Gross Load for 2012 at
1,181,728 MWh, in accordance with a 2010 test year (the data supporting the
calculation of this figure is attached hereto as Exhibit 1.
RECOMMENDATIONS
1. Approve the establishment of the City's new TRR and Gross Load for 2012
and revised Appendix I to the TO Tariff.
2. Authorize outside counsel to submit the City's TRR, ETC Adjustment Clause
and Gross Load for 2012, the revised Appendix I to the TO Tariff, and this
City Council Resolution approving the TRR, ETC Adjustment Clause, and
Gross Load to FERC on behalf of the City of Vernon.
EXHIBIT 1
A
B
C
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CY 2010 ISO Metered Gross Load
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Month
MWh
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1 Jan-10
95,336
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Feb-10
88,506
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Mar-10
100,405
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Apr-10
97,925
10
May-10
98,876
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Jun-10
101,007
12
Jul-10
102,440
131
Aug-10
104,225
14
Sep-10
99,614
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Oct-10
102,071
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Nov-10
97,575
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Dec-10
93,747
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1,181,728