Loading...
Resolution No. 2011-184RESOLUTION NO. 2011-184 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON TO ESTABLISH AND IMPLEMENT A RENEWABLE ENERGY COST ADJUSTMENT FACTOR, PROCEDURE AND COMPUTATION METHOD WHICH ESTABLISHES A RENEWABLE ENERGY COST ADJUSTMENT TO BE BILLED UNDER ALL RATE SCHEDULES FOR ENERGY DISTRIBUTED AND SUPPLIED TO CITY OF VERNON ELECTRICAL CONSUMERS 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, pursuant to law, as currently in effect and as may be enacted in the future, the City is required to provide power and energy in a manner consistent with environmental standards, including providing a portion of the electricity delivered by the Electric System from renewable energy sources, purchasing energy from permitted sources including AB 32 costs, acquiring renewable energy credits in connection with the Electric System resource portfolio, acquiring greenhouse gas and other environmental allowances in connection with the power and energy produced and/or acquired by the Electric System, and otherwise satisfying mandates with respect to the power and energy of the Electric System to protect and/or improve the environment (all actions to satisfy such requirements being referred to in this resolution as the acquisition of Renewable Energy); and WHEREAS, the City Council of the City desires to approve, establish and implement a Renewable Energy Cost Adjustment Factor ("RECAF") in connection with the acquisition of Renewable Energy; and WHEREAS, the City Council of the City finds that such adjustment is necessary for the sound financial position of the Light and Power Department operating funds; and WHEREAS, the implementation of the RECAF will be computed based solely on the incremental costs in acquiring Renewal Energy as provided in this resolution; and WHEREAS, the City Council of the City intends to approve the RECAF effective January 1, 2012, in accordance with this Resolution and the exhibit attached hereto; and WHEREAS, the adoption of the RECAF shall continue until rescinded or amended by resolution of the City Council of the City. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the recitals contained hereinabove are true and correct. SECTION 2: The City Council of the City of Vernon hereby approves and adopts the Procedures and the Computation Sheets of the RECAF attached hereto as Exhibit A and incorporated by reference. SECTION 3: The effective date of the implementation of the RECAF shall be January 1, 2012, and shall continue until rescinded or amended by resolution of the City Council of the City. SECTION 4: The RECAF shall be computed for each month based on the City's actual incremental cost of acquiring Renewable Energy for that month over the cost of acquiring a like amount of power and energy from conventional sources as determined pursuant to Exhibit A. Billing for the RECAF will be applied based on actual costs for the second previous month. For example, the RECAF applied to September bills will be based on actual costs from July. - 2 - SECTION 5: The City Council hereby finds and determines that it is the intent of the Director of the Light and Power Department to not acquire any Renewable Energy subject to the RECAF until January 1, 2013, and to consult with the Electric Rates Advisory Committee. SECTION 6: All existing rate schedules are hereby amended to provide for the implementation of the RECAF. SECTION 7: All resolutions, or parts of resolutions not consistent with or in conflict with this resolution are hereby repealed. SECTION 8: 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 15th day of November, 2011. Name: Hilario Gonzales Title: Mayor / May% Pr em - 3 - 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. 2011-184, 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, November 15, 2011, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this /7 day of November, 2011, at Vernon, California. (SEAL) - 4 - EXHIBIT A EXHIBIT A City of Vernon Procedures for Calculating the Renewable Energy Cost Adjustment Factor The Renewable Energy Cost Adjustment Factor (RECAF) will be applied based on kWhs billed under all schedules to reflect the incremental costs of the City's providing power and energy through the City's Electric System in a manner consistent with environmental standards mandated pursuant to law, as currently in effect and as may be enacted in the future, including providing a portion of the electricity delivered by the Electric System from renewable energy sources, purchasing energy from permitted sources including AB 32 costs, acquiring renewable energy credits in connection with the Electric System resource portfolio, acquiring greenhouse gas and other environmental allowances in connection with the power and energy produced and/or acquired by the Electric System, and otherwise satisfying mandates with respect to the power and energy of the Electric System to protect and/or improve the environment (all actions to satisfy such requirements being referred to in this Exhibit A as the acquisition of Renewable Energy). The Renewable Energy Cost Adjustment Factor, expressed to the nearest $0.0001 per kilowatt-hour (kWh), is to be calculated pursuant to the following equation: RECAF = (RPS — E*B) Se Where, RECAF = Renewable Energy Cost Adjustment Factor per Kilowatt Hour sold. RPS = Cost of acquiring Renewable Energy (expressed in dollars ($)). E = Amount of Renewable Energy acquired and produced (expressed in Kilowatt Hours). B = Cost of conventional market power as determined by the City from time to time (expressed in dollars ($)). Se = Kilowatt hours sold. RECAF Computation Sheet Schedule REC-1 is attached to provide the computation sheet for all period once implementation of the RECAF commences. A-1 REC - I City of Vernon Renewable Energy Cost Adjustment Factor Computation Sheet For the Month of 20 Incremental Costs of Acquiring Renewable Energy a. Cost of Acquiring Renewable Energy b. Renewable Energy Acquired (kWh) C. Cost of Conventional Market Power (per kWh) d. Incremental Renewable Energy Cost to be recovered [a - (b * c)] Calculation of Factor e. Incremental Renewable Energy Cost to be recovered f. Total Kilowatt Hours Sold (Se) g. Renewable Energy Cost Adjustment Factor (e / f) A-2 CITY CLERK'S OFFICE INTEROFFICE MEMORANDUM DATE: November 17, 2011 TO: Carlos Fandino, Director of Light &%Power FROM: Willard Yamaguchi, City Clerk W-4T RE: Resolution No. 2011-184 - A Resolution of the City Council of the City of Vernon to Establish and Implement a Renewable Energy Cost Adjustment Factor, Procedure and Computation Method Which Establishes a Renewable Energy Cost Adjustment to be Billed Under All Rate Schedules for Energy Distributed and Supplied to City of Vernon Electrical Consumers Transmitted herewith is a copy of Resolution No. 2011-184 referenced above, which was approved by City Council on November 15, 2011. Thank you. WY:dj Attachment c: Ordinance No. 2011-184 RECEIVED NOV 10 2011 CITY CLERK'S OFFICE C'CC4P ci a�ivc� 1;;12011-1W STAFF REPORT LIGHT & POWER DATE: November 9, 2011 CEWED NOV 10 2011 CITY ADMINISTRATION TO: Honorable Mayor and City Council FROM: Carlos Fandino Jr., Director of Light & Power AA RE: Renewable Energy Cost Adjustment PURPOSE: Senate Billx1_2 requires load serving entities such as the City of Vernon to increase the amount of electricity generated from eligible renewable energy resources per year, so that amount of renewable energy equals at least 33% of total retail sales of electricity per year by December 31, 2020. Consistent with the requirements of the law, the City is in the process of procuring long-term renewable power. The cost of the Renewable Power to the City is not fully known at this time. Further, the City incurs Greenhouse Gas allowance cost associated with power generation. The City of Vernon Light & Power Department is proposing to add a "Renewable Energy Cost Adjustment Factor" to its electric rate structure. The Renewable Energy Cost Adjustment Factor will be applied based on kWh billed under all schedules to reflect the incremental renewable power cost and the net Greenhouse gas cost. If approved, the proposal makes the cost of renewable power cost and greenhouse gas allowance cost a direct pass -through to customers outside the tariff approved electric rates. Another reason for the proposal is that Light & Power Department is currently in the process of securing a bond. In order to prove credit worthiness to rating agencies and bond holders, the City must be able show how it will meet State mandate renewable power costs. Computation of the RECAF will be in accordance with the Renewable Energy Cost Adjustment Tariff attached as Exhibit A and Exhibit B. All existing electric rate schedules have been amended to provide for the RECAF assessment. The "Renewable Energy Cost Adjustment Factor" will be based on actual costs, Page — 2 RECOMMENDATION The City of Vernon Light and Power Department recommends the following: 1. The inclusion of the RECAF clause to all electric rate schedules be approved. 2. The Renewable Energy Cost Adjustment Tariff as attached be approved and be effective January 1, 2012. 3. The proposed Renewable Energy Cost Adjustment be a separate charge on customer's bill in cents per kilowatt-hour consumed. CRF:ah Attachments ": i 17cClaffWJ0441 City of Vernon Procedures for Calculating the Renewable Energy Cost Adjustment Factor The Renewable Energy Cost Adjustment Factor (RECAF) will be applied based on kWh billed under all schedules to reflect the incremental renewable power cost and the net Greenhouse gas cost; consisting of renewable power cost, the cost of conventional market power in the base rates, the cost of greenhouse gas allowances associated with power generation, AB32 implementation charges, and the proceeds from free greenhouse gas allowances allocated to load serving entities. The Renewable Energy Cost Adjustment Factor, expressed to the nearest $0.0001per kilowatt-hour (kWh), is to be calculated pursuant to the following equation: RECAF = (RPS — E*B) +(GHG +C — F) Se Where, RECAF = Renewable Energy Cost Adjustment Factor per Kilowatt Hour sold. RPS = Renewable power cost. E = Renewable energy purchased. B = The price of conventional market power in the base rates. GHG = The cost of greenhouse gas allowances associated with power generation. C = AB32 implementation charges. F = Proceeds from free greenhouse gas allowances allocated to load serving entities Se = Kilowatt Hours sold ATTACHMENT B RECAF Computation Sheet Schedule REC-1 is attached to provide the computation sheet for all period once implementation is completed. Renewable Energy Cost Adjustment Factor (RECAF) Items I through 2 represent the incremental renewable power cost and the net Greenhouse gas cost which are to be used in computing the period's RECAF. Line 1 represents the incremental renewable power cost, which is the renewable power cost adjusted for the cost of conventional market power in the base rates. Line 2 represents in the net greenhouse cost; including cost of greenhouse gas allowances associated with power generation and AB32 implementation charges adjusted for the proceeds from free greenhouse gas allowances allocated to load serving entities. ATTACHMENT B REC-1 City of Vernon Renewable Energy Cost Adjustment Factor Computation Sheet For the Month of 20 Renewable Energy Costs 1. Incremental Renewable Power Cost a. Renewable Power Cost b. Renewable Energy Purchased c. Price of Conventional Market Power in the Base Rates d. Incremental Renewable Power Cost to be recovered,[ a - (b* c)] 2. Net Greenhouse Gas Cost e. Cost of Greenhouse gas allowances Associated with power generation f. AB32 Implementation Charges g. Proceeds from free greenhouse gas allowances allocated to Load Serving Entities h. Net Greenhouse gas cost, ( e + f — g ) Calculation of Factor i. Renewable Cost to be recovered, (1+2) j. Kilowatt Hours Sold (Se) k. Renewable Energy Cost Adjustment Factor, ( i / j ) SUPPORTING DOCUMENTS RERECEIVE 1 JUN 0 9 2016 9ff RE0' 1-9OR € CITY ADMINISTRATION STAFF REPORT * VERNON GAS & ELECTRIC DEPARTMENT DATE: June 21, 2016 TO: Honorable Mayor and City Council ,01 . A^ ---- FROM: Peter Hervish, Interim Director of Vernon Gas & Electric Department Originator: Abraham Alemu, Electric Resources Planning and Development Manager RE: Correction to the Procedures for Calculating the Renewable Energy Cost Adjustment Factor Recommendation A. Find that (a) the Correction to the Procedures for Calculating the Renewable Energy Cost Adjustment Factor is not in reference to a "project" subject to the California Environmental Quality Act (CEQA) under Guidelines section 15378 because it involves the administrative activity of correcting an existing procedure and (b) even if this approval were a "project" subject to CEQA, the approval requested is exempt in accordance with CEQA Guidelines Section 15301(b), the general rule that CEQA only applies to projects that may have an effect on the environment because correcting the procedures for calculating the renewable energy cost adjustment factor is purely an administrative activity, and any construction that may occur by a private party in the future in reliance on this approval would be subject to CEQA review by another governmental agency at that time when actual details of any physical proposal would be more than speculative; and B. Approve the Correction to the Procedures for Calculating the Renewable Energy Cost Adjustment Factor, in substantially the same form as attached herewith, for the purpose to aligning the computation of the Renewable Energy Cost Adjustment Factor with the intent of Resolution No. 2011-184. Background On November 15, 2011, City Council approved Resolution No. 2011-184. The Resolution intended to establish and implement a Renewable Energy Cost Adjustment Factor and the procedure and computation method which establishes a Renewable Energy Cost Adjustment to be billed under all Rate Schedules. Page 1 of 2 Pursuant to Section 4 of Resolution No. 2011-184, the Resolution intended for the Renewable Energy Cost Adjustment Factor (RECAF) to be computed for each month based on the City's actual incremental cost of acquiring renewable energy for that month over the cost of acquiring a like amount of power and energy from conventional sources as determined pursuant to Exhibit A. While the Resolution intended for the computation to be based on actual monthly cost (dynamic in nature), one of the components in the formula for the RECAF as outlined in Exhibit A is based on an historical value (static). Specifically, component `B" in the formula is set as the price of conventional market power in the base electric rates instead of reflecting the cost of power in the current (prevailing) month. The Correction to the Procedures for Calculating the Renewable Energy Cost Adjustment Factor will align the computation of the Renewable Energy Cost Adjustment Factor with the intent of Resolution No. 2011-184. Specifically, the definition of component "B" in the RECAF formula will be revised from: "The price of conventional market power in the base rates," to read "The price of acquiring like amount of conventional market power for the month." VG&E staff recommends that the Correction to the Procedures for Calculating the Renewable Energy Cost Adjustment Factor, which has been reviewed and approved as to form by the City Attorney's office, be approved in order to align the computation of the Renewable Energy Cost Adjustment Factor with the intent of Resolution No. 2011-184. Fiscal Impact The proposed correction, if approved, will eliminate the time lag between the recognition of revenues and expenses incurred in connection with the procurement of renewable energy resources. Attachment(s) 1. Attachments A and B to Exhibit A, clean 2. Attachments A and B to Exhibit A, redline 3. Resolution No. 2011-184 Page 2 of 2 ATTACHMENT A City of Vernon Procedures for Calculating the Renewable Energy Cost Adjustment Factor The Renewable Energy Cost Adjustment Factor (RECAF) will be applied based on kWh billed under all schedules to reflect the incremental renewable power cost and the net Greenhouse gas cost, consisting of renewable power cost, the cost of conventional market power in'', tesfor the month for like amount, the cost of greenhouse gas allowances associated with power generation, AB32 implementation charges, and the proceeds from free greenhouse gas allowances allocated to load serving entities. The Renewable Energy Cost Adjustment Factor, expressed to the nearest $0.0001per kilowatt-hour (kWh), is to be calculated pursuant to the following equation: RECAF = (RPS — E*B ) +(GHG +C — F) Se Where, RECAF = Renewable Energy Cost Adjustment Factor per Kilowatt Hour sold. RPS = Renewable power cost. E = Renewable energy purchased. B = The price of acquiring like amount of conventional market power for the month. GHG = The cost of greenhouse gas allowances associated with power generation. C = AB32 implementation charges. F = Proceeds from free greenhouse gas allowances allocated to load serving entities Se = Kilowatt Hours sold Formatted: Indent: Left: 0", Hanging: 1" ATTACHMENT B RECAF Computation Sheet Schedule REC-I is attached to provide the computation sheet for all period once implementation is completed. Renewable Energy Cost Adjustment Factor (RECAF) Items 1 through 2 represent the incremental renewable power cost and the net Greenhouse gas cost which are to be used in computing the period's RECAF. Line 1 represents the incremental renewable power cost. which is the renewable power cost adjusted for the price of acquiring like amount of conventional market power for the month, est of eefiveiiti fiat market power in the base Fates Line 2 represents in the net greenhouse cost; including cost of greenhouse gas allowances associated with power generation and AB32 implementation charges adjusted for the proceeds from free greenhouse gas allowances allocated to load serving entities. ATTACHMENT B REC - 1 City of Vernon Renewable Energy Cost Adjustment Factor Computation Sheet For the Month of 20 Renewable Energy Costs 1. Incremental Renewable Power Cost a. Renewable Power Cost b. Renewable Energy Purchased c. Price of like amount Conventional Market Power in the for the month d. Incremental Renewable Power Cost to be recovered,[ a - (b* c)] 2. Net Greenhouse Gas Cost e. Cost of Greenhouse gas allowances Associated with power generation f AB32 Implementation Charges g. Proceeds from free greenhouse gas allowances allocated to Load Serving Entities h. Net Greenhouse gas cost, ( e + f — g ) Calculation of Factor i. Renewable Cost to be recovered, (1+2) j. Kilowatt Hours Sold (Se) k. Renewable Energy Cost Adjustment Factor, ( i / j ) ATTACHMENT A City of Vernon Procedures for Calculating the Renewable Energy Cost Adjustment Factor The Renewable Energy Cost Adjustment Factor (RECAF) will be applied based on kWh billed under all schedules to reflect the incremental renewable power cost and the net Greenhouse gas cost; consisting of renewable power cost, the cost of conventional market power for the month for like amount, the cost of greenhouse gas allowances associated with power generation, AB32 implementation charges, and the proceeds from free greenhouse gas allowances allocated to load serving entities. The Renewable Energy Cost Adjustment Factor, expressed to the nearest $0.0001per kilowatt-hour (kWh), is to be calculated pursuant to the following equation: RECAF = (RPS — E*B )+GHG +C — F) Se Where, RECAF = Renewable Energy Cost Adjustment Factor per Kilowatt Hour sold. RPS = Renewable power cost. E = Renewable energy purchased. B = The price of acquiring like amount of conventional market power for the month. GHG = The cost of greenhouse gas allowances associated with power generation. C = AB32 implementation charges. F = Proceeds from free greenhouse gas allowances allocated to load serving entities Se = Kilowatt Hours sold ATTACHMENT B RECAF Computation Sheet Schedule REC-1 is attached to provide the computation sheet for all period once implementation is completed. Renewable Energy Cost Adjustment Factor (RECAF) Items 1 through 2 represent the incremental renewable power cost and the net Greenhouse gas cost which are to be used in computing the period's RECAF. Line 1 represents the incremental renewable power cost, which is the renewable power cost adjusted for the price of acquiring like amount of conventional market power for the month. Line 2 represents in the net greenhouse cost; including cost of greenhouse gas allowances associated with power generation and A1332 implementation charges adjusted for the proceeds from free greenhouse gas allowances allocated to load serving entities. ATTACHMENT B REC - 1 City of Vernon Renewable Energy Cost Adjustment Factor Computation Sheet For the Month of , 20 Renewable Energy Costs 1. Incremental Renewable Power Cost a. Renewable Power Cost b. Renewable Energy Purchased c. Price of like amount Conventional Market Power for the month d. Incremental Renewable Power Cost to be recovered,[ a - (b* c)] Net Greenhouse Gas Cost e. Cost of Greenhouse gas allowances Associated with power generation f. A1332 Implementation Charges g. Proceeds from free greenhouse gas allowances allocated to Load Serving Entities h. Net Greenhouse gas cost, ( e + f — g ) Calculation of Factor i. Renewable Cost to be recovered, (1+2) j. Kilowatt Hours Sold (Se) k. Renewable Energy Cost Adjustment Factor, ( i / j ) RESOLUTION NO. 2011-184 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON TO ESTABLISH AND IMPLEMENT A RENEWABLE ENERGY COST ADJUSTMENT FACTOR, PROCEDURE AND COMPUTATION METHOD WHICH ESTABLISHES A RENEWABLE ENERGY COST ADJUSTMENT TO BE BILLED UNDER ALL RATE SCHEDULES FOR ENERGY DISTRIBUTED AND SUPPLIED TO CITY OF VERNON ELECTRICAL CONSUMERS 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, pursuant to law, as currently in effect and as may be enacted in the future, the City is required to provide power and energy in a manner consistent with environmental standards, including providing a portion of the electricity delivered by the Electric System from renewable energy sources, purchasing energy from permitted sources including AB 32 costs, acquiring renewable energy credits in connection with the Electric System resource portfolio, acquiring greenhouse gas and other environmental allowances in connection with the power and energy produced and/or acquired by the Electric System, and otherwise satisfying mandates with respect to the power and energy of the Electric System to protect and/or improve the environment (all actions to satisfy such requirements being referred to in this resolution as the acquisition of Renewable Energy); and WHEREAS, the City Council of the City desires to approve, establish and implement a Renewable Energy Cost Adjustment Factor ("RECAFN) in connection with the acquisition of Renewable Energy; and WHEREAS, the City Council of the City finds that such adjustment is necessary for the sound financial position of the Light and Power Department operating funds; and WHEREAS, the implementation of the RECAF will be computed based solely on the incremental costs in acquiring Renewal Energy as provided in this resolution; and WHEREAS, the City Council of the City intends to approve the RECAF effective January 1, 2012, in accordance with this Resolution and the exhibit attached hereto; and WHEREAS, the adoption of the RECAF shall continue until rescinded or amended by resolution of the City Council of the City. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the recitals contained hereinabove are true and correct. SECTION 2: The City Council of the City of Vernon hereby approves and adopts the Procedures and the Computation Sheets of the RECAF attached hereto as Exhibit A and incorporated by reference. SECTION 3: The effective date of the implementation of the RECAF shall be January 1, 2012, and shall continue until rescinded or amended by resolution of the City Council of the City. SECTION 4: The RECAF shall be computed for each month based on the City,s actual incremental cost of acquiring Renewable Energy for that month over the cost of acquiring a like amount of power and energy from conventional sources as determined pursuant to Exhibit A. Billing for the RECAF will be applied based on actual costs for the second previous month. For example, the RECAF applied to September bills will be based on actual costs from July. - 2 - SECTION 5: The City Council hereby finds and determines that it is the intent of the Director of the Light and Power Department to not acquire any Renewable Energy subject to the RECAF until January 1, 2013, and to consult with the Electric Rates Advisory Committee. SECTION 6: All existing rate schedules are hereby amended to provide for the implementation of the RECAF. SECTION 7: All resolutions, or parts of resolutions not consistent with or in conflict with this resolution are hereby repealed. SECTION 8: 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. Wi APPROVED AND ADOPTED this 15th day of November, 2011. ity Clerk Name: Hilario Gonzales Title: Mayor / Mava�__PrRtiem - 3 - 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. 2011-184, 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, November 15, 2011, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this /7 day of November, 2011, at Vernon, California. (SEAL) - 4 - EXHIBIT A EXHIBIT A City of Vernon Procedures for Calculating the Renewable Energy Cost Adjustment Factor The Renewable Energy Cost Adjustment Factor (RECAF) will be applied based on kWhs billed under all schedules to reflect the incremental costs of the City's providing power and energy through the City's Electric System in a manner consistent with environmental standards mandated pursuant to law, as currently in effect and as may be enacted in the future, including providing a portion of the electricity delivered by the Electric System from renewable energy sources, purchasing energy from permitted sources including AB 32 costs, acquiring renewable energy credits in connection with the Electric System resource portfolio, acquiring greenhouse gas and other environmental allowances in connection with the power and energy produced and/or acquired by the Electric System, and otherwise satisfying mandates with respect to the power and energy of the Electric System to protect and/or improve the environment (all actions to satisfy such requirements being referred to in this Exhibit A as the acquisition of Renewable Energy). The Renewable Energy Cost Adjustment Factor, expressed to the nearest $0.0001 per kilowatt-hour (kWh), is to be calculated pursuant to the following equation: RECAF = (RPS — E*B) S, Where, RECAF = Renewable Energy Cost Adjustment Factor per Kilowatt Hour sold. RPS = Cost of acquiring Renewable Energy (expressed in dollars ($)). E = Amount of Renewable Energy acquired and produced (expressed in Kilowatt Hours). B = Cost of conventional market power as determined by the City from time to time (expressed in dollars Se = Kilowatt hours sold. RECAF Comptutation Sheet Schedule REC-1 is attached to provide the computation sheet for all period once implementation of the RECAF commences. A-1 REC - 1 City of Vernon Renewable Energy Cost Adjustment Factor Computation Sheet For the Month of Incremental Costs of Acquiring Renewable Energy ,20 a. Cost of Acquiring Renewable Energy b. Renewable Energy Acquired (kWh) C. Cost of Conventional Market Power (per kWh) d. Incremental Renewable Energy Cost to be recovered [a - (b * c)] Calculation of Factor e. Incremental Renewable Energy Cost to be recovered f. Total Kilowatt Hours Sold (S,,) g. Renewable Energy Cost Adjustment Factor (e / f) A-2 ATTACHMENT A City of Vernon Procedures for Calculating the Renewable Energy Cost Adjustment Factor The Renewable Energy Cost Adjustment Factor (RECAF) will be applied based on kWh billed under all schedules to reflect the incremental renewable power cost and the net Greenhouse gas cost; consisting of renewable power cost, the cost of conventional market power in the base rates, the cost of greenhouse gas allowances associated with power generation, AB32 implementation charges, and the proceeds from free greenhouse gas allowances allocated to load serving entities. The Renewable Energy Cost Adjustment Factor, expressed to the nearest $0.0001per kilowatt-hour (kWh), is to be calculated pursuant to the following equation: RECAF = (RPS — E*B)+(GHG +C — F) Se Where, RECAF = Renewable Energy Cost Adjustment Factor per Kilowatt Hour sold. RPS = Renewable power cost. E = Renewable energy purchased. B = The price of conventional market power in the base rates. GHG = The cost of greenhouse gas allowances associated with power generation. C = AB32 implementation charges. F = Proceeds from free greenhouse gas allowances allocated to load serving entities Se = Kilowatt Hours sold ATTACHMENT B RECAF Computation Sheet . Schedule REC-1 is attached to provide the computation sheet for all period once implementation is completed. Renewable Energy Cost Adjustment Factor (RECAF) Items I through 2 represent the incremental renewable power cost and the net Greenhouse gas cost which are to be used in computing the period's RECAF. Line 1 represents the incremental renewable power cost, which is the renewable power cost adjusted for the cost of conventional market power in the base rates. Line 2 represents in the net greenhouse cost; including cost of greenhouse gas allowances associated with power generation and AB32 implementation charges adjusted for the proceeds from free greenhouse gas allowances allocated to load serving entities. ATTACHMENT B REC - I City of Vernon Renewable Energy Cost Adjustment Factor Computation Sheet For the Month of , 20 Renewable Energy Costs 1. Incremental Renewable Power Cost a. Renewable Power Cost b. Renewable Energy Purchased c. Price of Conventional Market Power in the Base Rates d. Incremental Renewable Power Cost to be recovered,[ a - (b* c)] 2. Net Greenhouse Gas Cost e. Cost of Greenhouse gas allowances Associated with power generation f. AB32 Implementation Charges g. Proceeds from free greenhouse gas allowances allocated to Load Serving Entities h. Net Greenhouse gas cost, ( e + f — g ) Calculation of Factor i. Renewable Cost to be recovered, (1+2) j. Kilowatt Hours Sold (Se) k. Renewable Energy Cost Adjustment Factor, ( i / j )