Resolution No. 2012-203RESOLUTION NO. 2012-203
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ADOPTING A NEW TRANSMI-SSION REVENUE
REQUIREMENT FOR 2013 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" (thee"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, (lii) 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 ETC's 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 1 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 TRR's 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 ContractsAccess
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 91
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 with FERC reflecting modifications to the base
TRR; and
WHEREAS, a Notice of Public Hearing was published on October
18, 2012, notifying all interested parties that a hearing to consider
evidence to establish the City's new TRR was scheduled for November 6,
2012, at approximately 9 a.m., subject to the hearing being continued
or adjourned to a stated time and place without further published
notice of public hearing; and
WHEREAS, on November 6, 2012, 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
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of the City's new TRR under the City's amended TO Tariff; and
WHEREAS, the TRR for 2013 is shown in the amended Appendix I
to the TO Tariff, a copy of which is attached hereto as Exhibit A, and
made a part hereof; and
WHEREAS, the Light & Power Department has prepared a Staff
Report, dated October 24, 2012, 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 which calculates the amount
derived under the ETC Adjustment Clause for 2013; and
WHEREAS, the Light & Power Department has recommended the
City adopt the TRR shown in the amended Appendix I, to the TO Tariff,
attached as Exhibit A, to be effective on January 1, 2013; 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 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 above recitals 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 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, 2013.
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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
(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
approves, pursuant to the TO Tariff and to be effective on January 1,
2013, the establishment of the City's new TRR and Appendix I to the TO
Tariff implementing the new TRR, as described in the Light & Power
Staff Report dated on or about October 24, 2012.
SECTION 5: The City Council of the City of Vernon hereby
authorizes outside counsel to submit the City's TRR, 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, to FERC on behalf of the City of Vernon.
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SECTION 6: The Interim City Clerk of the City of Vernon
shall certify to the passage, approval and adoption of this
resolution, and the Interim City Clerk of the City of Vernon shall
cause this resolution and the Interim City Clerk's certification to be
entered in the File of Resolutions of the Council of this City.
APPROVED AND ADOPTED this 6th day of November, 2012.
Name: Wi7.1 a11n J. DLuis
Title: Mayor
ATT
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Dana Reed, Interim City Clerk of the City of Vernon, do hereby
certify that the foregoing Resolution, being Resolution No,. 2012-203,
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 6, 2012, and thereafter was duly signed by the Mayor
or Mayor Pro-Tem of the City of Vernon.
Executed this day of November, 2012, at Vernon, California.
Uj
Dan Reed, Interim City Clerk
(SEAL)
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EXHIBIT - A
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $1,346,5N2,394,360 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: $848,0401,895,880
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 1 of each year.
The TRBAA is a negative $105;4 $034,766 for calendar year 241-22013.
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.
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $2,394,360 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: $1,895,880
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 1 of each year.
The TRBAA is a negative $34,766 for calendar year 2013.
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 ASSOCIATED WITH VERNON'S
HIGH VOLTAGE ENTITLEMENTS
October 24, 2012
The City of Vernon ("Vernon" or "City") is a Scheduling Coordinator and a
Participating Transmission Owner ("PTO") in the Californial 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 2013
Page 2 of 5
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 2013
Page 3of5
those ETCs have been 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 ¶ 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").
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 allows 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"). The City is required under the TO Tariff Order to submit annual filings each
year with FERC reflecting annual modifications to the base TRR of the City.
Staff Report
TRR 2013
Page 4 of 5
CALCULATION OF THE ETC ADJUSTMENT CLAUSE
Section 5.3 of the Vernon TO Tariff identifies the items to be reflected in the ETC
Adjustment. ETC Adjustment Clause shall be equal to:
ETC Adjustment = ETCCF+ ETCCT+ L.
ETCCT = The balance representing the prior period difference between the
projected cost of the SCE ETCs ("SCE ETC Cost") and the actual cost.
ETCCF = The forecast of SCE ETC Cost for the following calendar year.
= The interest balance for the ETC, 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 ETC true -up balance each month, compounded quarterly.
A summary of the elements of the Vernon ETC Adjustment Clause proposed to be
effective January 1, 2013 is shown in Exhibit 1. The ETC Adjustment Clause to be
effective for the twelve months starting January 1, 2013 is $1,895,880
The ETCCT Component
ETCCT represents a balance that reflects the difference between prior year forecast
and actual SCE ETC costs The prior period in this case is the twelve-month period
starting October 1, 2011 and ending September 30, 2012.
A summary of the determination of the September 30, 2012 balance in the ETC
Adjustment Clause is shown in Exhibit 1. The ETCCT component reflects 1) the
previously projected 2011 SCE ETC costs of $777,000 or $64,750 per month, for the
months October through December 2011, and 2) projected 2012 SCE ETC costs of
$848,000 or $70,670 per month, for the months January through September 2012—
Staff Report
TRR 2013
Page 5 of 5
both elements as reflected on Line No. 7 and 14 of Exhibit 1. The difference
between these two elements produce the under (over) collection figures reflected in
Line 15 of Exhibit 1. The cumulative monthly balances are carried forward from
month to month and the ETCCT component on September 30, 2012 is shown in line
16 of Exhibit 1.
The ETCCF Component
The ETCCF component stands for the forecast of SCE ETC costs or the following
calendar year, in this case 2013. These forecast SCE ETC costs reflect 2013 rates
from Southern California Edison Company FERC Filing, Docket No. ER1 1-3697-
003.
The ETCCF for 2013 SCE ETC costs is shown in line 7 of Exhibit 1.
The I (Interest) Component
The Interest component reflects interest on the difference between prior year
forecast and actual SCE ETC costs.' The monthly interest carrying costs are
calculated using the 18 C.F.R. § 35.19(a) interest rates and calculation method.
These interest rates are published by FERC and reflect the prime rate values
published in the Federal Reserve Bank's "Selected Interest Rates.
Interest is calculated monthly on the average cumulative monthly balance and is
compounded quarterly. The interest calculation is shown in Lines 18-21 of Exhibit 1.
RECOMMENDATIONS
1. Approve the establishment of the City's new TRR for 2013 and revised
Appendix l to the TO Tariff.
2. Authorize outside counsel to submit the City's TRR, ETC Adjustment Clause,
the revised Appendix I to the TO Tariff, and this City Council Resolution
approving the TRR and ETC Adjustment Clause to FERC on behalf of the
City of Vernon.
CITY OF VERNON LIGHT AND POWER DEPARTMENT
STAFF REPORT REGARDING THE ESTABLISHMENT OF A NEW
TRANSMISSION REVENUE REQUIREMENT ASSOCIATED WITH VERNON'S
HIGH VOLTAGE ENTITLEMENTS
October 24, 2012
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 2013
Page 2 of 5
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 2013
Page 3of5
those ETCs have been 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 ¶ 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").
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 allows 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"). The City is required under the TO Tariff Order to submit annual filings each
year with FERC reflecting annual modifications to the base TRR of the City.
Staff Report
TRR 2013
Page 4 of 5
CALCULATION OF THE ETC ADJUSTMENT CLAUSE
Section 5.3 of the Vernon TO Tariff identifies the items to be reflected in the ETC
Adjustment. ETC Adjustment Clause shall be equal to:
ETC Adjustment = ETCCF+ ETCCT+ I.
ETCCT = The balance representing the prior period difference between the
projected cost of the SCE ETCs ("SCE ETC Cost") and the actual cost.
ETCCF = The forecast of SCE ETC Cost for the following calendar year.
= The interest balance for the ETC, 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 ETC true -up balance each month, compounded quarterly.
A summary of the elements of the Vernon ETC Adjustment Clause proposed to be
effective January 1, 2013 is shown in Exhibit 1. The ETC Adjustment Clause to be
effective for the twelve months starting January 1, 2013 is $1,895,880.
The ETCCT Component
ETCCT represents a balance that reflects the difference between prior year forecast
and actual SCE ETC costs The prior period in this case is the twelve-month period
starting October 1, 2011 and ending September 30, 2012.
A summary of the determination of the September 30, 2012 balance in the ETC
Adjustment Clause is shown in Exhibit 1. The ETCCT component reflects 1) the
previously projected 2011 SCE ETC costs of $777,000 or $64,750 per month, for the
months October through December 2011, and 2) projected 2012 SCE ETC costs of
$848,000 or $70,670 per month, for the months January through September 2012—
Staff Report
TRR 2013
Page 5 of 5
both elements as reflected on Line No. 7 and 14 of Exhibit 1. The difference
between these two elements produce the under (over) collection figures reflected in
Line 15 of Exhibit 1. The cumulative monthly balances are carried forward from
month to month and the ETCCT component on September 30, 2012 is shown in line
16 of Exhibit 1.
The ETCCF Component
The ETCCF component stands for the forecast of SCE ETC costs or the following
calendar year, in this case 2013. These forecast SCE ETC costs reflect 2013 rates
from Southern California Edison Company FERC Filing, Docket No. ER11-3697-
003.
The ETCCF for 2013 SCE ETC costs is shown in line 7 of Exhibit 1.
The I (Interest) Component
The Interest component reflects interest on the difference between prior year
forecast and actual SCE ETC costs. The monthly interest carrying costs are
calculated using the 18 C.F.R. § 35.19(a) interest rates and calculation method.
These interest rates are published by FERC and reflect the prime rate values
published in the Federal Reserve Bank's "Selected Interest Rates."
Interest is calculated monthly on the average cumulative monthly balance and is
compounded quarterly. The interest calculation is shown in Lines 18-21 of Exhibit 1.
RECOMMENDATIONS
1. Approve the establishment of the City's new TRR for 2013 and revised
Appendix I to the TO Tariff.
2. Authorize outside counsel to submit the City's TRR, ETC Adjustment Clause,
the revised Appendix I to the TO Tariff, and this City Council Resolution
approving the TRR and ETC Adjustment Clause to FERC on behalf of the
City of Vernon.
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�E r ULLffSOFFICE
STAFF REPORT
LIGHT & POWER
DATE: October 16, 2011
TO: Honorable Mayor and City Council
FROM: Carlos R. Fandino, Jr.
Director of Light & Power !c�-Ib��Z�
RE: Public Hearing. on November 6, 2011
PURPOSE
To consider evidence to establish Vernon's new Transmission Revenue Balancing
Account Adjustment for its high voltage (over 200 kV) transmission entitlements (all
located outside the City) pursuant to. Vernon's Transmission Owner Tariff, and to
consider evidence to establish Vernon's new Existing Transmission Contract
Adjustment for its high voltage (over 200 kV) transmission entitlements (all located
outside the City) pursuant to Vernon's Transmission Owner Tariff.
CRF:ah
Attachment
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: Tuesday, November 6, 2012, at 9:00 a.m., or
as soon thereafter as the matter may be
heard
PURPOSE: To consider evidence to establish. Vernon's
.new Transmission Revenue Balancing Account
Adjustment for its high voltage (over 200
kV) transmission entitlements (all located
outside the City) pursuant to Vernon's
Transmission Owner Tariff, and to consider
evidence to establish Vernon's new Existing
Transmission Contract Adjustment for its
high voltage (over 200 kV) transmission
entitlements (all located outside the City)
pursuant to Vernon's Transmission Owner
Tariff.
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
Vernon's new TransmissionRevenue Balancing Account Adjustment 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.
.Information may be obtained by contacting the office of the
City Clerk at the above address.
The hearing may be continued or adjourned to a stated time
and place without further notice of a public hearing.
Dated: October 15, 2012
S/
Dana Reed, Acting City Clerk
RECEIVED
OCT 2 5 2012
CITY CLERK'S OFFICE
STAFF REPORT
LIGHT &POWER
DATE: October 24, 2012
TO: Honorable Mayor and City Council
FROM: Carlos R. Fandino, Jr. lot23��Z
RE: Transmission Revenue Requirement
CC4it�'Jc
IIL(o�IZ
CEIVE[�
OCT 2 4 2012
CITY ADMINISTRATION
Purpose:
Detailed Staff Report is enclosed.
Recommendation:
1 Approve the establishment of the City's new TRR for2013 and revised Appendix
to the TO Tariff.
2. Authorize outside counsel to submit the City's TRR, ETC Adjustment Clause, the
revised Appendix I to the TO Tariff, and this City Council Resolution approving
the TRR and ETC Adjustment Clause to FERC on behalf of the City of Vernon.
Staff would like this matter to be addressed on the November 6, 2012 City Council
meeting.
Fiscal Impact:
Recovers the cost of Existing Transmission Service Contracts (ETC) incurred by the
City.
CRF:AA
Attachments
CITY CLERK'S OFFICE;
INTEROFFICE MEMORANDUM
DATE: November 14, 2012
TO: Carlos R. Fandino, Director of Light & Power
FROM: Ana Barcia, Deputy City Clerk
RE: Resolution No. 2012-203 = A Resolution of the City Council of the City of Vernon
Adopting a New Transmission Revenue Requirement for 2013 In Accordance with
Vernon's Transmission Owner Tariff and Providing for Tariff Sheet Changes to
Implement the Adjustment
Transmitted herewith is a copy of Resolution No. 2012-203 referenced above, which was approved by
City Council on November 6, 2012:
Thank you.
AB: yb
Attachment
c: Resolution No. 2012-203
Audra Hunter
Tania Tolmasoff
CERTIFICATE
STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANGELES)
I, Dana Reed, Interim 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. 2012-203 - A Resolution of the City Council of
the City of Vernon Adopting a New Transmission Revenue
Requirement for 2013 in Accordance With Vernon's Transmission
Owner Tariff and Providing for Tariff Sheet Changes to
Implement the Adjustment
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 this /'� day of November 2012
SEAL:
Reed
In erim City Clerk