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Resolution No. 2012-204RESOLUTION NO. 2012-204 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON ESTABLISHING A TRANSMISSION REVENUE BALANCING ACCOUNT ADJUSTMENT 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, through charges assessed ISO customers under the ISO Open Access Transmission Tariff ("ISO Tariff"), 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 controlaof the City's transmission entitlements; and WHEREAS, the TO Tariff provides for periodic recalculation of the Transmission Revenue Balancing Account Adjustment ("TRBAA"), which is a ratemaking mechanism designed to ensure that all Transmission Revenue Credits flow through to ISO customers; and WHEREAS, a Notice of Public Hearing was published'on or before October 15, 2012, notifying all interested parties that a hearing to consider evidence to establishtheCity's new TRBAA for 2013 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 notice of public hearing; and WHEREAS, a Public Hearing was held on November 6, 2012, in which the City Council took evidence from staff and those other persons in attendance who wished to be heard on the establishment of the City's new TRBAA; and WHEREAS, the Light & Power Department has prepared a Staff Report, with exhibits, dated on or about October 24, 2012 ("Staff Report"), which determines the new TRBAA for 2013 to be consistent with the TO Tariff and supports the TRBAA and the changes to Appendix I of the TO Tariff to implement the new TRBAA effective January 1, 2013; and WHEREAS, the Light & Power Department has recommended that the TRBAA and Appendix I to the TO Tariff implementing the new TRBAA be approved; and WHEREAS, the City Council has heard and considered all evidence, both written and oral, presented in consideration of the establishment of the City's new TRBAA and revised Appendix I to the TO Tariff implementing the new TRBAA. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION l: 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 establishment of the City's new TRBAA and amended Appendix I to the TO Tariff implementing the new TRBAA, and, after due consideration of any and all evidence submitted - 2 - at the public hearing, determines that there are compelling reasons to justify the establishment of the City's new TRBAA for 2013 and an amended Appendix I to the TO Tariff implementing the new TRBAA for 2013, a copy of which is attached hereto as Exhibit A and made a part hereof. SECTION 3: 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 TRBAA for 2013 and revised Appendix I to the TO Tariff implementing the new TRBAA for 2013, as described in the Staff Report, a copy of which is attached hereto as Exhibit B and made a part hereof. SECTION 4: The City Council of the City of Vernon hereby authorizes outside counsel to submit the City's new TRBAA for 2013, the revised Appendix I to the TO Tariff, and supporting documentation, such as the Staff Report and this City Council Resolution, to FERC on behalf of the City of Vernon. - 3 SECTION 5: 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: William Davis ATT T: Dana teed, Interim City Clerk - 4 - Title: Mayor 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. 2012-204, 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. D a Reed, Interim City Clerk (SEAL) - 5 - EXHIBIT - A APPENDIX I Transmission Revenue Requirement and TRBAA The Vernon Base Transmission Revenue Requirement is $',�3"-,�d02,394,360 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: $8 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 20122013. 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 & POWER DEPARTMENT STAFF REPORT REGARDING THE ESTABLSHMENT OF A NEW TRANSMISSION REVENUE BALANCING ACCOUNT ADJUSTMENT FOR CALENDAR YEAR 2013 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. The relationship between PTOs and the ISO is governed by a Transmission Control Agreement ("TCA"), which sets forth the specific duties and obligations of all PTOs. The TCA requires all PTOs to file a Transmission Owner Tariff ("TO Tariff") with the Federal Energy Regulatory Commission ("FERC"). Pursuant to Section 5.2 of the TO Tariff, Vernon updates its Transmission Revenue Balancing.Account Adjustment ("TRBAA") annually. The TRBAA is a tariff mechanism designed to ensure that all Transmission Revenue Credits ("TRCs") are flowed through to ISO open access transmission tariff ("ISO Tariff') customers via annual update filings at the FERC by PTOs. Appendix F, Schedule 3, Section 6.1(b), of the ISO Tariff describes the annual TRBAA calculation as "a dollar amount based on the projected Transmission Revenue Credits as adjusted for the true up of the prior year's difference between projected and actual credits." This Staff Report supports the establishment of a new TRBAA based on the requirements of the TO Tariff and the ISO Tariff. SUMMARY Section 5.2 of the Vernon TO Tariff identifies the items to be reflected in the TRBAA Staff Report TRBAA 2013 Page 2 of 5 and sets forth the procedure for revising the Transmission Revenue Balancing Account ("TRBA") on an annual basis, as follows: 6.2 Transmission Revenue Balancing Account Adjustment The Participating TO shall maintain a TRBA that will ensure that all Transmission Revenue Credits and the refunds, specified in Sections 6 and 8 of Appendix F, Schedule 3 of the ISO Tariff, flow through to transmission customers. The TRBAA shall be equal to: TRBAA = TRCF + TRCT + I. TRCT = The balance representing the prior period difference between the projected Transmission Revenue Credits and the actual credits. TRCF = The forecast of Transmission Revenue Credits for the following calendar year. I = The interest balance for the TRBA, which shall be calculated using the interest rate pursuant to Section 35.19(a) of FERC's regulations under the Federal Power Act (18 C.F.R. § 35.19(a)). Interest shall be calculated based on the average TRBA principal balance each month, compounded quarterly. Transmission Revenue Credits ("TRCs") are defined in Section 3.12 of the current Vernon TO Tariff as follows: 3.12 Transmission Revenue Credit. The sum of all revenues received by the Participating TO from the ISO for Wheeling service. The TRBAA is based on the balance in the TRBA as of September 30 of the current year and a forecast of the TRCs expected to be received in the following year. A summary of the elements of the Vernon TRBAA proposed to be effective January 1, Staff Report TRBAA 2013 Page 3 of 5 2013 is shown in Exhibit 1. It shows that the balance in the Vernon TRBA as of September 30, 2012, which reflects services rendered through June 30, 2012, is a credit of $29,859, including interest. TRCs are projected to be a credit of $4,907. Taken together, these items sum up to a TRBAA to be effective for the twelve months starting January 1, 2013. of a credit, or negative, balance of $34,766. All of the Vernon transmission entitlements that are reflected in Vernon's transmission rates and the TRBAA are high voltage facilities. Therefore, there is no need to allocate TRCs or other TRBAA components between high voltage and low voltage rates. CALCULATION OF THE NEW TRBAA The TRBAA is equal to the sum of: TRCT + TRCT+ I. The balance in the TRBA of a credit of $29,859 as of September 30, 2012 represents the sum of the TROT and the I components. The TRCT Component of Vernon's TRBAA TRCT represents a balance that reflects the difference for the prior period between the projected TRCs and the actual credits. 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 Vernon TRBA is shown in Exhibit 2. The TRCT component reflects 1) the previously projected 2011 TRCs for Vernon of $18,109 or $1,509.08 per month, for the months October through December 2011, and 2) projected 2012 TRCs of $105,460 or $8,788.36 per month, for the months January through September 2012-both elements as reflected on Line No. 10 of Exhibit 2. Adjustments for actual payable TRCs reflecting high voltage wheeling revenues payable to the TO (i.e., Vernon) are reflected in Line 11 of Exhibit 2 and produce the under (over) collection figures for the monthly payable TRC balances reflected in Line 14 of Exhibit 2. The monthly balances are carried forward from month to month in Line 14 of Exhibit 2. Interest is Staff Report TRBAA 2013 Page 4 of 5 calculated monthly (the I component) on the average monthly balance and is compounded quarterly into the monthly payable TRC balances pursuant to Section 5.2 of the Vernon TO Tariff. The interest calculation for payable TRC balances is shown in Lines 16-20 of Exhibit 2. The TRBA balance on September 30, 2012 is shown in Line 25 of Exhibit 2. The I (Interest) Component of Vernon's TRBAA As discussed above, the I component reflects interest on payable balances and on payments for prior year TRCs. As provided in Section 5.2 of Vernon's TO Tariff, 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." The calculation of interest is reflected in Exhibit 2. and is included as an integral part of the calculation of the TRBA balance on September 30, 2012. It is not reflected as a separate line item in Exhibit 1. The TRCF Component of Vernon's TRBAA The TRCF component of Vernon's TRBAA stands for the forecast of TRCs for the following calendar year, in this case 2013. These forecast TRCs reflect projected wheeling revenues. Wheeling revenues, which correspond to ISO Charge Type 384, are projected to be a credit of $4,907, as shown in Exhibit 3. These projections are based on the accruals for services provided during the twelve- month period ending June 30, 2012, which are reflected in the ISO's invoices to Vernon through September 30, 2012. A summary of the monthly accruals for the twelve months ending September 30, 2012 is shown in Exhibit 4. Staff Report TRBAA 2013 Page 5 of 5 RECOMMENDATIONS 1. Approve the newly calculated TRBAA of a negative $34,766. 2. Approve replacing the existing TRBAA of negative $105,460 with the new TRBAA for 2013 of a negative $34,766. 3. Approve the attached revised Appendix I of Vernon's TO Tariff reflecting the TRBAA of negative $34,766. 4. Approve the submission of Vernon's TRBAA and supporting documentation, such as this Staff Report and the City Council Resolution approving the new TRBAA to FERC. Staff Report TRBAA 2013 Exhibit 1 A B C D E F G H 1 2 3 CITY OF VERNON 4 TRANSMISSION REVENUE BALANCING ACCOUNT ADJUSTMENT (TRBAA) 5 CALENDAR YEAR.2013 6 7 DESCRIPTION TOTAL 8 9 Balance in TRBA on September 30, 2012 ($29,859) 10 including interest 11 12 Forecast Transmission Revenue Credits ($4,907) 13 14 TRBAA ($34,766) 15 16 17 18 Source: 19 Line 9 Exhibit 2, Column N, Line No.25. 20 Line 12 Exhibit 3, Column E, Line No.23. 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 N n 7 J � W o� m SN6 � � U Q 6 00 3 K W Z O Z r aN0 0 N L6 N Z W Y F N N N mod' � - ." O - O Z v v - .7. O U ccR O N V N Z m N " - w m FO J M .... �. .... R m N > W LL } 0 W v ad M w c c4 N- v w o - - is � ry Z A O f` i in Z N m N N n �. ry N n o U' Z F m w NK... IL . r t v .... m .. U WO O U a0 a aO W W J W Z = 5 w rc 5 m N� Staff Report TRBAA 2013 Exhibit 3 A B C I D E F -1 MONTH January-13 February-13 March-13 April-13 May-13 June-13 July-13 August-13 September-13 October-13 November-13 December-13 CITY OF VERNON FORECAST TRANSMISSION CREDITS for Calendar Year 2013 TRBAA Wheelinq ($408.91) ($408.91) ($408.91) ($408.91) ($408.91) ($408.91) ($408.91) ($408.91) ($408.91) ($408.91) ($408..91) 408.91 Total ($408.91) ($408.91) ($408,91) ($408.91) ($408.91) ($408.91) ($408.91) ($408.91) ($408.91) ($408.91) ($408.91) 408.91 2 3 4 5 6 7 8 9 10 11 12 13 -14 15 16 17 18 19 Total ($4,906.95) ($4,906.95) Staff Report TRBAA 2013 Exhibit 4 A B C D E F G H 1 Vernon Historical Transmission Credits for Calendar Year 2013 TRBAA Wheeling Revenues ISO INVOICE Month CT 384 H028 (Cash Basis) Final July-11 ($590.44) $ 86.27 August-11 ($658.43) September-11 ($371.03) October-11 ($458.84) November-11 ($232.63) December-11 ($308.30) January-12 ($318.48) February-12 ($210.14) March-12 ($182.85) April-12 ($408.06) May-12 ($463.92) June-12 ($790.09) Total ($504.18) ($658.43) ($371.03) ($458.84) ($232.63) ($308.30) ($318.48) ($210.14) ($182.85) ($408.06) ($463.92) ($790.09) ($4.906.95) 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ReCEJVJJE® OCT 2 5 2012 CITY CLERKS OFFICE STAFF REPORI LIGHT &POWER DATE: October 16, 2011 TO: Honorable Mayor and City Council FROM: Carlos R. Fandino, Jr. I� Director of Light & Power U�' !c7'lb^�Z RE: Public Hearing on November 6, 2011 PURPOSE Cc )W(-"elRECEIVED 11 1to 1 I 2 OCT 18 2011 CITY ADMINISTRATION 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 Transmission Revenue 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 cc vI EI ( C iD RECEIVED OCT 2 4 2012 OCT 2 6 2012 CITY ADMINISTRATION MY CLERK'S OFFICE STAFF REPORT LIGHT & POWER DATE: October 24, 2012 TO: Honorable Mayor and City Council FROM: Carlos R. Fandino, Jr. tiOWN' RE: Transmission Revenue Balancing Account Adjustment for 2013 Purpose: Detailed Staff Report is enclosed. Recommendation: 1. Approve the newly calculated .TRBAA of a negative $34,766. 2. Approve replacing the existing TRBAA of negative $105,460 with the new TRBAA for 2013 of a negative $34,766. 3. Approve the attached revised Appendix I of Vernon's TO Tariff reflecting the TRBAA of negative $34,766. .4. Approve the submission of Vernon's TRBAA and supporting documentation, such as this Staff Report and the City Council Resolution approving the new TRBAA to FERC Staff would like this matter to be addressed on the November 6, 2012 City Council meeting. Fiscal Impact: There is no known fiscal impact. CRF:AA Attachments INTEROFFICE MEMORANDUM Light & Power Department Date: October 24, 2012 To: Carlos Fandino Director of Light and Power From: Abraham Alemu Resource Planning & Development Manager SUBJECT: Transmission Revenue Balancing Account Adjustment and Transmission Revenue Requirement To be placed on the November 6t", 2012 City Council Agenda Attached for your review.and approval is documentation for the establishment of the Transmission Revenue Balancing Account Adjustment (TRBAA) and the establishment of a new Transmission Revenue Requirement (TRR) associated with Vernon's existing high voltage transmission contract entitlements to be effective January 1, 2013. Staff requests this item to be placed on the November 6t", 2012 City council agenda. CF:AA Attachments C: Abraham Alemu Document Control 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. 2012-204 — A Resolution of the City Council of the City of Vernon Establishing a Transmission Revenue Balancing Account Adjustment 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. 2012-204 referenced above, which was approved by City Council on November 6, 2012. Thank you. AB: yb Attachment c: Resolution No. 2012-204 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. 2012-204 - A Resolution of the City Council of the City of Vernon Establishing a Transmission Revenue Balancing Account Adjustment 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 I of November 2012. SEAL: J Dan Reed, Interim City Clerk AFFIDAVIT OF CARLOS R. FANDINO JR. STATE OF CALIFORNIA ss. COUNTY OF LOS ANGELES Carlos R. Fandino, Jr., being duly sworn, deposes and states that he is the Director of the Vernon Light and Power Department; that the "City of Vernon Light and Power Department Staff Report Regarding the Establishment of a New Transmission Revenue Balancing Account Adjustment for Calendar Year 2013," including Exhibit 1 through 4 that are part of that Report, were prepared under his supervision; that the report and exhibits are correct to the best of his knowledge, information, and belief; and that he presented this report to the Vernon City Council as the basis for the Transmission Revenue Balancing Account Adjustment and Transmission Owner Tariff Appendix I Amendment that is being filed by Vernon at the Federal Energy Regulatory Commission. 11 /15/2012 Carlos R. Fandino J . Date ACKNOWLEDGMENT State of California) County of Los Angeles) On November 15, 2012 before me, Marisol Trujillo (insert name and title of the officer) personally appeared Carlos R. Fandino Jr. who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)X/are subscribed to the within instrument and acknowledged tome that We/sKe/they executed the same in Vs/b/r/their authorized capacity(ies), and that by 1 s*r/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. ,F Sign ture MAR150L TRUJILLO Commission # 1918415 LQ Notary Public • California Los Angeles County r M Comm. Ex ires Dee 23, 2014