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Resolution No. 2013-064RESOLUTION NO. 2013-64 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON AMENDING NATURAL GAS RATE SCHEDULE NOS. G-1 (RESIDENTIAL GAS SERVICE), G-2 (SMALL COMMERCIAL GAS SERVICE), G-3 (LARGE COMMERCIAL GAS TRANSPORTATION) AND RULES FOR GAS SERVICE, FOR GAS DISTRIBUTED AND SUPPLIED BY THE CITY WITHIN ITS BOUNDARIES WHEREAS, in connection with the operation of the Vernon natural gas system, the City owns, operates and maintains a gas distribution system, which includes not only mains and appurtenances but also meters, laterals and other connection infrastructure; and WHEREAS, the City recovers from new gas customers a portion of the cost of installing new connection infrastructure; and WHEREAS, high connection charges can disincentivize potential customers from utilizing the services of the Vernon natural gas system; and WHEREAS, by memorandum dated June 18, 2013, the Director of Light & Power recommended that the City Council amend Natural Gas Service Rule 14, and natural gas tariffs G-1 (Residential Gas Service), G-2 (Small Commercial Gas Service), and G-3 (Large Commercial Gas Transportation) to reduce connection costs charged to customers of the Vernon natural gas system; and WHEREAS, according to a rate study commissioned by the City, a reduction of connection charges will attract new customers and service volumes to the natural gas system and will, over the long term, cause rates for both new and existing gas customers to be lower than they would be otherwise; and WHEREAS, the proposed reduction of connection charges will not cause the rates of any ratepayers to increase; and 052813300 WHEREAS, in connection with the reduction of connection charges, the City wishes to establish additional procedures relating to the location and installation of meters on private property; WHEREAS, the City Council of the City of Vernon desires to approve the recommended rate reduction and the new procedures. 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 finds that this action is, (a) categorically exempt from the California Environmental Quality Act (CEQA), pursuant to CEQA Guidelines 915301(b), because this approval will merely lead to the possible construction of additional laterals to transport gas, and such construction is, at most, a negligible expansion of the existing facilities of the city's natural gas utility; and (b) statutorily exempt, pursuant to CEQA Guidelines § 15273, because the restructuring of the connection charge offsets to allow the city to continue to meet its operating expenses and to obtain the funds for capital projects to maintain service within existing service areas. SECTION 3: The City Council of the City of Vernon hereby revises rate tariffs G-1 (Residential Gas Service), G-2 (Small Commercial Gas Service), and G-3 (Large Commercial Gas Transportation) and Rule 14, to read as set forth in Exhibit A to this Resolution. Such amendments shall become immediately effective. SECTION 4: The City Council of the City of Vernon hereby authorizes the City Administrator to accept license agreements and easements necessary to further the purposes of Rule 14. - 2 - 052813300 SECTION 5: In addition to the findings set forth above, the City Council finds and determines as follows: A. This Resolution merely reduces the rate of the existing connection charges of the Department. These connection charges predate the adoption by the electorate of Article XIII C, Section l(e) of the California Constitution (Proposition 26). B.Natural gas service is available in the City, not only from the City's natural gas system, but also from competing private systems; therefore, customers may elect not to pay connection charges by choosing an alternative source of natural gas service or by using an alternative form of energy. C. The amount of connection charges does not exceed the reasonable costs of installing connection infrastructure serving the customer. D. Connection infrastructure is owned by the City, and — - the connection charge is collected by the City as a condition of making connection infrastructure available to a new customer. E. This Resolution does not increase the rate of any charge imposed by the City in connection with the natural gas system. - 3 - 052813300 SECTION 6: The Interim City Clerk, or Deputy City Clerk, of the City of Vernon shall certify to the passage, approval and adoption of this resolution, and the Interim City Clerk, or Deputy City Clerk, of the City of Vernon, shall cause this resolution and the Interim City Clerk's, or Deputy City Clerk's, certification to be entered in the File of Resolutions of the Council of this City. APPROVED AND ADOPTED this 18t" day oe- of June, 2013. Name W. Michael McCormick Title: Mayor / r, ycr=Pro ism ATTEST: Interim City Clerk APPROVED AS TO FORM: Nicholas G. Rodriguez, City Attorney By: Scott E. Porter, Deputy City Attorney - 4 - 052813300 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. 2013-64, 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, June 18, 2013, and thereafter was duly signed by the Mayor norr( Mayor Pro-Tem of the City of Vernon. Executed this day of June, 2013, at Vernon, California. (SEAL) Dana Reed Interim City Clerk _ - 5 - 052813300 EXHIBIT A CITY OF VERNON I�Gy�ll� 1� [eLI,Y��71_.y 4u I �I�Y Y Schedule G-1 RESIDENTIAL GAS SERVICE APPLICABILITY This schedule applies to natural gas service to individually metered single family premises, including those separately metered in a multi -family complex, that have elected natural gas service from City of Vernon's natural gas distribution system. RATES Monthly Service Charge: $10 Transportation Charge: 29.212 Cents per Therm Commodity Charge: Commodity Charge is equal to the City's Weighted Average Cost of Gas calculated at the SoCalGas Citygate for gas purchased by the City for each month for customers purchasing gas from the City. Gas supply will consist of monthly index price gas, daily market priced gas, and long-term supply purchased for customers purchasing gas from the City. The Commodity Charge includes the cost of transporting the gas to the SoCalGas Citygate. Bond -financed, prepaid gas may be provided to - -- customers at prices not to exceed market prices for monthly index price gas. From time -to -time, the Commodity Charge may include a Purchased Gas Adjustment that will be used maintain a zero sum gain to COV for gas sales. Commodity Administrative Fee: 0.300 Cents per Therm SPECIAL NOTES 1. Residential customers receiving natural gas service from the City of Vernon are not eligible for Schedule G-CARE (SOCaIGas Rate), or any other SoCalGas rates or SoCalGas benefit programs. 2. Costs for connection of Customer's facility to City's gas system shall be shared between Customer and City. City shall contribute an amount equal to the greater of (1) four cents per Therm multiplied by customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay Page 1 of 2 City of Vernon Council Resolution 2013-_ effective June 2013 the balance of costs. The total connection cost includes traffic control, trenching, piping, repaving, and installation of the meter, regulator(s), and other equipment required by the City. See also Rule 14. An "Application and Contract for Natural Gas Service" is required. 3. In the event of curtailment, any Customer unable or unwilling to curtail shall be assessed penalty based on the rate per Therm that SoCalGas would charge customers whose volumes used are in violation of curtailment. The City shall not be liable for damages caused by curtailment, discontinuance, or shut off of gas service. 4. Gas purchased under this schedule shall be used only by the Customer and such Gas may not be sold, transported, assigned, distributed, exchanged, or otherwise transferred to benefit another customer or provide non -municipal natural gas to any natural gas user, transporter, or consumer within the City. 5. Any additional transmission costs, taxes, fees, regulatory surcharges, and interstate or intrastate pipeline charges, incurred by City on behalf of Customer will be passed through to Customer at cost. Page 2 of 2 City of Vemon Council Resolution 2013-_ effective June 18 2013 CITY OF VERNON NATURAL GAS DEPARTMENT Schedule G-2 SMALL COMMERCIAL GAS SERVICE APPLICABILITY This schedule is for combined gas commodity and transportation service to small commercial customers using less than 250,000 Therms per year that have elected gas service through City of Vernon's natural gas system. This schedule is also applicable to all other non-residential customers that have elected Core Service. RATES Monthly Service Charge: $50 Monthly Transportation Charges: Tier I Tier II Commodity Charge: 0 — 4,187 Therms Over 4,187 Therms Rate, in Cents per Therm 17.312 7.735 Commodity Charge is equal to the City's Weighted Average Cost of Gas calculated at the SoCalGas Citygate for gas purchased by the City for each month for customers purchasing gas from the City. Gas supply will consist of monthly index price gas, daily market priced gas, and long-term supply purchased for customers purchasing gas from the City. The Commodity Charge includes the cost of transporting the gas to the SoCalGas Citygate. Bond -financed, prepaid gas may be provided to customers at prices not to exceed market prices for monthly index price gas. From time -to -time, the Commodity Charge may include a Purchased Gas Adjustment that will be used to maintain a zero sum gain to COV for gas sales. Commodity Administrative Fee: 0.30 .Cents per Therm Page 1 of 2 City of Vernon Council Resolution 20122013- effective June 18, 2013 SPECIAL NOTES 1. Customers purchasing Gas Commodity from City of Vernon shall provide an estimate of each month's consumption, days of operation, and a facility contact responsible for natural gas consuming equipment. 2. Costs for connection of Customer's facility to City's gas system shall be shared between Customer and City. City shall contribute an amount equal to the greater of. (1) four cents per Therm multiplied by customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay the balance of the costs. The total connection costs include traffic control, trenching, piping, repaving, and installation of the meter, regulator(s), and other equipment required by the City. See also Rule 14. An "Application and Contract for Natural Gas Service" is required. 3. In the event of curtailment, any Customer unable or unwilling to curtail shall be assessed penalty based on the rate per Therm that SoCalGas would charge customers whose volumes used are in violation of curtailment. The City shall not be liable for damages caused by curtailment, discontinuance, or shut off of gas service. 4. Gas purchased under this schedule shall be used only by the Customer and such Gas may not be sold, transported, assigned, distributed, exchanged, or otherwise transferred to benefit another customer or provide non -municipal natural gas to any natural gas user, transporter, or consumer within the City. 5. Any additional transmission costs, taxes, fees, regulatory surcharges, and interstate or intrastate pipeline charges, incurred by City on behalf of Customer will be passed through to Customer at cost. Page 2 of 2 City of Vernon Council Resolution 20122013- effective June 18, 2013 XNA103 A11 ti TML NATURAL GAS DEPARTMENT Schedule G-3 LARGE COMMERCIAL GAS TRANSPORTATION APPLICABILITY This schedule is for City of Vernon gas transportation service to large commercial customers using at least 250,000 Therms per year. Customers receiving service under this schedule may purchase commodity gas from a Third -Party Supplier or may request to purchase commodity gas from City of Vernon under Schedule G-4. RATES Monthly Customer Charge: $300 Monthly Transportation Charges: Rate, in Cents per Therm Tier I 0 — 20,833 Therms 13.815 Tier II 20,834 — 83,333 Therms 6.412 Tier III Over 83,333 Therms 4.784 SPECIAL CONDITIONS, GENERAL. The following Special Condition is applicable to all customers, whether they receive transportation -only service or both transportation and commodity service. Costs for connection of Customer's facility to City's gas system shall be shared between Customer and City. City shall contribute an amount equal to the greater of: (1) four cents per Therm multiplied by customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay the balance of costs. The total connection costs include traffic control, trenching, piping, repaving, and installation of the meter, regulator(s), and other equipment required by the City. See also Rule 14. An "Application and Contract for Natural Gas Service" is required. SPECIAL CONDITIONS, TRANSPORTATION -ONLY SERVICE. The following Special Conditions are applicable to customers that receive transportation -only service. If customers receive commodity service from COV, the following Special Conditions do not apply and the Special Conditions in Schedule G-4 apply. 1. As a condition precedent to service under this schedule, a "Natural Gas Transportation Agreement" must be executed with City. The Transportation Agreement shall provide specific terms and conditions consistent with this schedule. 2. Transportation of natural gas shall be consistent with SoCalGas Rule No. 30, "Transportation of Customer -Owned Gas," except where it conflicts with Vernon's rates and rules. 3. Nomination procedures shall apply to gas transported and delivered to Customer by Vernon as follows. (a) All nominations shall be communicated to Vernon (or its designated agent) thirty (30) minutes prior to SoCalGas' deadlines. Communication shall be confirmed by email or facsimile. (b) All determinations by Vernon as to allocation points and/or maximum daily quantities related thereto or as to the procedures utilized for any allocation process, when made by Vernon, shall be final. (c) In the event of a declared Over -Nomination Event by SoCalGas, if any Customer is unable or unwilling to reduce its transportation nomination within the two (2) hour window allotted by SoCalGas and Customer's nominations exceed 110% of its gas usage, Customer may, at Vernon's sole discretion, be assessed a charge based on the rate per Therm that SoCalGas would charge customers whose nomination exceed 110%. (d) Winter Deliveries. During November through March, any Customer unable or unwilling to nominate and deliver volumes meeting the minimum requirement as specified by SoCalGas in its current applicable Rule 30, may, at Vernon's sole discretion, be assessed a charge based on the rate per Therm that SoCalGas would charge customers whose nomination and delivery fails to meet the minimum requirement as specified by SoCalGas in its current applicable Rule 30. 4. In the event of curtailment, any Customer unable or unwilling to curtail shall be assessed penalty based on the rate per Therm that SoCalGas would charge customers whose volumes used are in violation of curtailment. The City shall not be liable for damages caused by curtailment, discontinuance, or shut off of gas service. 5. Monthly imbalances shall be resolved as follows. (a) Over -Deliveries. Vernon shall permit Customer to carry-over, to the following month, over -delivery volumes of up to 10% of Customer's consumption for the month in which the over -delivery occurred. Any Customer volumes carried over will be applied first to the following month's consumption. Any volumes of over -deliveries in excess of 10% of Customer's consumption shall be purchased by Vernon by crediting to the Customer an amount that is not less than the volume of over -deliveries times the SoCalGas Buy -Back Rate in SoCalGas Schedule G-IMB for the month in which the excess imbalance was incurred. (b) Under -Deliveries. Vernon shall permit Customer to carry-over, to the following month, under -delivery volumes of up to 10% of Customer's consumption for the month in which the under -delivery occurred. Any volumes of under -deliveries up to 10% of Customer's consumption shall be applied to the following month's consumption. Any volumes of under -deliveries in excess of 10% of Customer's consumption shall be sold to Customer by Vernon at a rate that is not more than the volume of under -deliveries times the SoCalGas Standby Procurement Charge in SoCalGas Schedule G-IMB for the month in which the excess imbalance was incurred. (c) Imbalance Trading. Vernon has no program for trading of monthly imbalances amongst Vernon customers; however, Vernon, or Vernon's gas management agent, may, at its sole discretion, be willing to facilitate imbalance trading through SoCalGas consistent with Schedule G-IMB. As such, Vernon specifically does not imply an obligation to facilitate imbalance trading. (d) Stricter Provisions. Should SoCalGas impose additional, more restrictive, balancing provisions upon Vernon, the stricter provisions will be adopted and implemented by Vernon, as required by SoCalGas, and thereafter will apply to Customer. Such more restrictive balancing conditions may include the winter balancing rules contained in SoCalGas Rule 30. Customer shall be subject to changed balancing requirements at the time such balancing is imposed by SoCalGas upon Vernon, irrespective of prior written notice to Customer; however, Vernon will attempt to provide advance written notice to Customer. 6. Gas transported under this schedule shall be used only by the Customer and such Gas may not be sold, transported, assigned, distributed, exchanged, or otherwise transferred to benefit another customer or provide non -municipal natural gas to any natural gas user, transporter, or consumer within the City. Any additional transmission costs, taxes, fees, regulatory surcharges, and interstate or intrastate pipeline charges, incurred by City on behalf of Customer will be passed through to Customer at cost. CITY OF VERNON GAS MUNICIPAL UTILITIES DEPARTMENT RULES FOR GAS SERVICE The latest revision of the RULES FOR GAS SERVICE has been prepared by the Gas Municipal Utilities Department. The City Council of the City of Vernon shall review and approve these Rules. Subsequent City Council Resolutions are necessary for any and all future updating of these Rules. For each case, those conditions drafted in a Resolution will take precedence until the Rules and Regulations are revised to reflect those changes. Rule Description Revised 1. Definitions 09/1/09 2. Description of Service 10/6/06 3. Application for Service 10/6/06 4. Contracts 10/6/06 5. Special Information Required on Forms 10/6/06 6. Establishment and Reestablishment of Credit 10/6/06 7. Prepayments 10/6/06 8. Notices 10/6/06 9. Presentation and Payment of Bills 10/6/06 10. Disputed Bills 10/6/06 11. Discontinuance and Restoration of Service 10/6/06 12. Rate and Optional Rates 10/6/06 13. Shortage of Supply and Interruption of Service 10/6/06 14. Service Connections and Facilities on Customer's Premises 06/18/13 15. Meter Test and Adjustment of Bills for Meter Error 10/6/06 16. Supply to Separate Premises and Use by Others 10/6/06 Page 1 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No.1. DEFINITIONS For the purpose of these Rules the terms and expressions listed below shall have the meanings set forth opposite them when initially capitalized in the text. Agent Marketer (Agent): Agents are individuals, companies, or consortiums that are appointed by noncore customers to act on their behalf in activities such as the purchasing, nominating and balancing of gas supplies. As an example, however, Agents bear no financial responsibility for the transportation imbalances incurred by the customers they represent. British Thermal Unit Btul The standard unit for measuring a quantity of thermal energy. One Btu equals the amount of thermal energy required to raise the temperature of one pound of water one degree Fahrenheit and is exactly defined as equal to 1,055.05585262 joule, rounded to 1,055.056 joule. (A joule is equal to one watt -second.) Commodity Administrative Fee: Fee charged to customers who procure supply directly from COV to cover gas purchasing expenses. Commodity Charge: Commodity Charge is equal to the City's Weighted Average Cost of Gas calculated at the SoCalGas Citygate for gas purchased by the City for each month for customers purchasing gas from the City. Gas supply will consist of monthly index price gas, daily market priced gas, and long-term supply purchased for customers purchasing gas from the City. The Commodity Charge includes the cost of transporting the gas to the SoCalGas Citygate. Bond - financed, prepaid gas may be provided to customers at prices not to exceed market prices for monthly index price gas. From time -to -time, the Commodity Charge may include a Purchased Gas Adjustment that will be used maintain a zero sum gain to COV for gas sales. COV: City of Vernon Contracted Marketer: Contracted Marketers are individuals, companies, or consortiums that arrange for natural gas procurement -related activities on behalf of noncore customers. Contracted Marketers must enter into a contract with SoCalGas and meet certain credit requirements. They must comply with SoCalGas' Rules 30 and 35 and all other tariffs which address the transportation and management of customer -owned gas on SoCalGas' system. Core Service: Core Service consists of all residential usage regardless of size, all commercial usage less than 20,800 Therms per month, and all other customers that have elected Core Service under Rate Schedule G-2. Curtailment: When SoCalGas and/or Vernon (jointly or separately referred to hereafter in this definition as "Utility") or other transmission pipeline used by Vernon, initiates suspension of gas service, Utility may temporarily reduce the daily quantity of gas it will transport or deliver or terminate service entirely for certain service categories as needed for operational and/or contractual requirements. Curtailment is implemented when, in the Utility's judgment, there exists a restriction or limitation on Utility transmission or distribution pipelines necessary for the Page 2 of 19 City of Vernon Council Resolution _ effective June 18, 2013 acceptance, transportation or subsequent redelivery of gas resulting in Utility being unable to meet its operational, contractual or gas customers' requirements or when the Utility has a deficiency of gas supply available to meet its operational, contractual or sales customers' requirements. Customer -Owned Gas: Natural gas transported by Vernon for customer's own use where title to such natural gas is held by Vernon's customer or third party and is not a part of the Vernon - owned system supplies. Customer's Point of Delivery: The COV natural gas meter located at the Customer's place of consumption. Da . Period commencing at 12:00 midnight (Pacific time) on any calendar day and ending at 12:00 midnight (Pacific time) on the next succeeding calendar day. Decatherm: Ten Therms or 1,000,000 British thermal units (Also 1 MMBtu). Force Majeure: Unanticipated events or conditions beyond the reasonable control of the party claiming Force Majeure which could not have been prevented by the exercise of due diligence. Force Majeure as it applies to tariffs, or rate schedules specifically, does not include required maintenance of customer's facilities, plant closures, or economic conditions. Heating Value: Number of Btus liberated by the complete combustion at constant pressure of one cubic foot of natural gas at a base temperature of sixty degrees Fahrenheit (60°F) and a pressure base of fourteen and seventy-three hundredths (14.73) psia, with air at the same temperature and pressure as the natural gas, after the products of combustion are cooled to the initial temperature of the natural gas, and after the water vapor of the combustion is condensed to the liquid state. The Heating Value of the natural gas shall be corrected for the water vapor content of the natural gas being delivered except that, if such content is seven (7) pounds or less per one million (1,000,000) cubic feet, the natural gas shall be considered to be dry. Marketer: Third party which accesses one or more interstate or intrastate pipeline systems for the purpose of transporting natural gas to SoCalGas on Marketer's own behalf or on the behalf of designated end -use customers. Mcf/d: Thousands of cubic feet per day. Measure quantifies the amount of gas being consumed or transported on a daily basis. Noncore Service: Noncore Service is for all customers not defined as Core Service. Customers receiving noncore service must have Automated Meter Reading (AMR) equipment installed at customer's expense as a condition of noncore service. Premises: The area of land employed in a single enterprise, as determined by the City, whether or not divided by a dedicated street, highway, other public thoroughfare, or a railway. Page 3 of 19 City of Vernon Council Resolution — effective June 18, 2013 Purchased Gas Adjustment (PGA): The PGA is applicable to Customers purchasing Gas from COV. The PGA may be negative or positive and will show as a line item in COV's monthly posted Commodity Charge. The purpose of the PGA is to maintain a zero sum gain to COV for Commodity Gas Sales. Over -Nomination Event: As defined in SoCalGas Rule No. 30. Determined solely by SoCalGas in the event transportation nominations received by SoCalGas for a specific date of gas flow exceed SoCalGas expected system capacity. SoCalGas: Southern California Gas Company, also "The Gas Company." SoCalGas Border: Delivery points for Gas into the SoCalGas system. SoCalGas Citygate: Virtual delivery and pricing point for Gas located within the SoCalGas system, established October 1, 2008. Therm: 100,000 British Thermal Units. Third -Party Supplier: Supplier of natural gas to noncore customers including, but not limited to Energy Service Provider, Contracted Marketer, Agent, or its equivalent. WACOG. See Weighted Average Cost of Gas. Weighted Average Cost of Gas (WACOG): The average cost of purchased gas, based on specific quantities and associated prices. Page 4 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No. 2. DESCRIPTION OF SERVICE The following general rules shall apply to all services. The character of service available at any particular location should be ascertained by inquiry at the City's office. 2. The Rate Schedules are applicable for service where the Customer transports its entire gas requirements through the City's Gas system, and are not applicable where a part of the Customer's gas requirements are supplied from some other source. The gas supplied by Vernon is natural gas that is obtained from various sources, primarily oil and gas fields, but also includes landfills and other biomass processes. The gas may consist of any combustible gas or gases so produced. The gas is processed to remove condensable constituents, to minimize the concentration of certain impurities as specified by orders of the California Public Utilities Commission and to add a warning odorant. Customers using gas supplied by Vernon for processes which are affected by impurities in excess of specified minimum levels are responsible for testing gas supplied and for rendering the gas suitable for their intended uses. EXCEPT AS PROVIDED IN THIS RULE, VERNON MAKES NO WARRANTIES AS TO THE NATURE, COMPOSITION OR PROPERTIES OF THE NATURAL GAS SUPPLIED AND THE OBLIGATIONS SET FORTH IN THIS RULE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, GUARANTIES OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE (INCLUDING WITHOUT LIMITATION ANY OBLIGATIONS OF VERNON WITH RESPECT TO FITNESS, MERCHANTABILITY AND CONSEQUENTIAL DAMAGES). 4. Heating Value of Gas Served. The heating value of the natural gas served will vary from time to time depending upon the supplies being drawn and the relative quantities being taken. The monthly average heating values (in Btu per cubic foot, dry basis, at normal atmospheric pressure of 30" mercury and a temperature of 60 degrees Fahrenheit) of the gas served 1000-1060 Btu, and the maximum variation will rarely exceed 100 Btu above or below this range. Pressure. The standard delivery pressure at the point of delivery is eight inches of water column. For connected loads of one million Btu/hour or greater, the following delivery pressures can be provided upon request and acceptance by Vernon: a) Two Pounds b) Five Pounds c) Service at as -available fluctuating pressures from the point of service d) Such other pressure as the Vernon and the Customer agree to Page 5 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No. 3. APPLICATION FOR SERVICE A. Application for Service. Each applicant for gas service will be required to sign an Application on a form provided by the City and, upon request, will be required to furnish the following information: 1. Name of applicant (if not an individual, insert business organization and person to be served). 2. Date and place of Application. 3. Location of Premises to be served. 4. Date applicant will be ready for service. 5. Whether the Premises have been heretofore supplied. 6. Purpose for which service is to be used. 7. Applicant's mailing address. 8. Whether applicant is owner or tenant of, or agent for, the Premises. 9. Rate Schedule desired if optional rate is available. 10. Information to establish credit of applicant. 11. Such other information as the City may reasonably require. The Application is a request for service and does not in itself bind the City to provide service except under reasonable conditions, nor does it bind the applicant to take service for a longer period than the minimum requirements of the Rate Schedule. B. Individual Liability for Joint Service. Two or more Persons who join in one Application shall be jointly and severally liable thereunder and shall be billed by means of a single periodic bill mailed to the Person designated on the Application to receive the bill. C. ' Change in Customer's Equipment or Operations. Customers shall give the City written notice of the extent and nature of any material change in the size, character, or extent of its equipment or operations for which the City is supplying gas service before making any such change. Page 6 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No. 4. CONTRACTS A. Facilities Contracts. A contract or agreement to pay for the use, installation, or removal of facilities will be required if the provisions of the rate schedules so specify, in which case the terms of the contract will be governed thereby. When a Person, whether or not a Customer, desires to have the City modify, rearrange, relocate, or remove any of its facilities, the City if it agrees to make such changes may require the Person, at. whose request the changes are made, to agree to pay, in advance or otherwise, the cost to the City of making the changes. B. City Council Approval. Standard contract forms shall be approved by the City Council by resolution pursuant to City Charter Section 8.10. Such standard contracts maybe executed by the City Administrator or his designee in accordance with these Rules and the rate schedules without additional City Council approval. Page 7 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No. 5. SPECIAL INFORMATION REOUIRED ON FORMS A. Applications and Contracts. Each Application and contract for gas service will contain the following provision: This Application or contract for services shall at all times be subject to the rules and regulations of the City of Vernon, which may be changed or modified by the City Council from time to time in the exercise of its jurisdiction. B. Customer's Bills. Information printed on each bill for gas service will include the following: 19 I.Ti1 WITS 9F3'/u I_W" The City of Vernon Customer Service Division, 4305 Santa Fe Avenue, Vernon, CA 90058-1786 is the only authorized payment station. If paid elsewhere, the City is not responsible for payments delayed in reaching said office. Checks shall be made payable to the City of Vernon. PAYMENT Bills are due and payable on the Date of Presentation shown on this bill. Bills become delinquent and subject to a late fee if payment is not received (postmark not acceptable) by the City of Vernon 20 days thereafter. If not paid within this time, service may be discontinued. If discontinued, a reconnection charge, pre -payment of the closing bill equal to twice the average monthly bill, and the entire delinquent bill shall be remitted in full before a discontinued service will be reestablished. RETURNED CHECKS If a check for payment is returned unpaid, a service charge will be assessed. 2. Payment in lieu of the returned check will be accepted only in the form of cash, money order, or cashier's check. Personal or business checks will not be accepted for a period of at least 6 months on accounts with more than one returned check within a 12-month period. INFORMATION If you question this bill, please request an explanation from the Customer Service Division. If you thereafter believe that you have been billed incorrectly, to avoid discontinuance of service send your payment under protest to the Customer Service Division with a copy of the bill and a written statement supporting your belief that the bill is not correct. Such statements regarding disputed gas bills should be made to the attention of the Gas System Manager. The Manager will review the basis of the billed Page 8 of 19 City of Vernon Council Resolution — effective June 18, 2013 amount and authorize any adjustment required in accordance with his findings. If the matter is not satisfactorily resolved by the Manager, you may petition the City Council for final determination. If you need further information, please call the Customer Service Division at (213) 583- 8811 between the hours of 7:00 a.m. and 5:30 p.m., Monday through Thursday. RULES AND REGULATIONS The City of Vernon Gas Service Rules, under which service is rendered are on file at the Customer Service Division. If you wish a copy of any information pertaining to your account, please write to the Customer Service Division. MEASURES OF CONSUMPTION Natural gas meters measure cubic feet of natural gas; however billing quantities are adjusted for the Heating Value of the Gas to yield Therms billed. Rates are stated in terms of Therms. C. Final Notice. The following statement will be printed on each final Notice: This notice includes a late fee. If you question this bill please request an explanation from the Customer Service Division. If you thereafter believe that you have been billed incorrectly, to avoid discontinuance of service send your payment under protest to the Customer Service Division with a copy of the bill and a written statement supporting your belief that the bill is not correct. Such statements regarding disputed gas bills should be made to the attention of the Gas System Manager. The Manager will review the basis of the billed amount and authorize any adjustment required in accordance with his findings. If the matter is not satisfactorily resolved by the Manager, you may petition the City Council for final determination. If you need further information, please call the Customer Service Division at (213) 583-8811 between the hours of 7:00 a.m. and 5:30 p.m., Monday through Thursday. If a discontinued service is reestablished, a reconnection charge will be assessed. Page 9 of 19 City of Vernon Council Resolution _ effective June 18, 2013 Rule No. 6. ESTABLISHMENT AND REESTABLISHMENT OF CREDIT A. Establishment of Credit. Each applicant, before receiving service, will be required to make prepayment in accordance with Rule No. 7 or to satisfactorily establish credit. Credit will be deemed established by one or more of the following means at the sole discretion of the City: The applicant is the owner with a substantial equity, of value satisfactory to the City, in the Premises to be served. 2. The applicant furnishes a guarantor, satisfactory to the City, to secure payment of bills for gas service. 3. The applicant has been a Customer of the City for a similar type of service within the last two years and during the last twelve consecutive months of that prior service did not have more than two past due bills and provided that the credit of the applicants is unimpaired in the opinion of the City. 4. The applicant's credit is otherwise established to the satisfaction of the City. B. Reestablishment of Credit. An applicant or Customer will be required to make prepayment in accordance with Rule No. 7 and/or to reestablish credit in accordance with Rule No. 6 under any of the following conditions: In case applicant previously has been a Customer of the City and services have been discontinued by the City during the last twelve months because of nonpayment of bills. 2. In case a Customer has failed to pay bills before they become past due as prescribed in Rule No. I I -A, and has further failed to pay such bills within two (2) City working days after presentation of a discontinuance of service notice for nonpayment of bills. This condition will apply regardless of whether or not service has been discontinued. In case the conditions of service or basis on which credit was originally established have, in the opinion of the City, materially changed. Page 10 of 19 City of Vernon Council Resolution_ effective June 18, 2013 Rule No. 7 PREPAYMENTS A. Amount of Prepayment. Prepayment shall be required from any applicant or Customer which has not established or reestablished credit. The amount of the prepayment shall be twice the estimated average monthly bill. B. Return of Prepayment. 1. When an application for Gas service has been cancelled prior to the establishment of service, the prepayment will be applied to any charges applicable in accordance with the Rate Schedules and the applicant will be so advised. The excess portion of the prepayment will be refunded. 2. When the Customer's credit has been established in accordance with Rule No. 6, the City will apply the balance of the prepayment as a credit against future bills. 3. Upon discontinuance of Gas service, the City will apply the prepayment to any outstanding charges and the excess portion of prepayment will be refunded. Rule No. 8. NOTICES A. A Notice to a Customer. When a notice from the City to a Customer is required, it will normally be given in writing; either mailed to the Customer's Mailing Address or delivered to the Customer's place of business, except that in emergencies the City may give an oral notice. 1. Final Notice. The "Final Notice" for nonpayment of a delinquent account shall be sent by first class mail, addressed to the Customer to whom the service is billed, at least 10 calendar days prior to proposed termination of service. 2. Notice of Call. Notice of discontinuance of service for nonpayment of a delinquent account shall be given by delivery of a "Notice Call" to the Customer's place of business at least 48 hours prior to proposed termination of service. 13. A Notice from the Customer. A notice from a Customer to the City may be given by written communication mailed to the Customer Service Division or may be given orally by the Customer or its authorized agent at the Customer Service Division or may be given orally by the Customer or its authorized agent at the Customer Service Division except when written notice is specifically required in the applicable Rate Schedule. Page 11 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No. 9 PRESENTATION AND PAYMENT OF BILLS A. Presentation of Bills. Billing Period. Bills for gas service will be presented monthly or as otherwise provided in the applicable Rate Schedules. At the sole discretion of the City, a Customer may be required to make weekly payments based on estimated usage. 2. Metered Service. Bills for metered service will be based on Meter registrations. Meters will be read as required for the preparation of regular bills, opening bills, and closing bills. It may not be possible always to read meters on the same day of the month, and if a monthly Billing Period contains less than 27 days or more than 33 days, a pro rata computation in the bill will be made. Pro Rata Computation. All opening bills, closing bills, and bills for gas service presented for periods of less than 27 days or more than 33 days on a monthly Billing Period will be computed in accordance with the applicable Rate Schedule, but the size of the energy blocks, and the amount of the Customer, service, volumetric, or minimum charges, specified therein, will be prorated on the basis of the ratio of the number of days in the period to the number of days in an average monthly period, which for this purpose shall be taken as 30 days, or as otherwise provided in rate schedules. Energy usage (Therms) will not be prorated. B. Reading of Separate Meters Not Combined. For the purpose of billing, each Meter upon the Customer's premises will be considered separately, and the readings of two or more Meters will not be combined except as follows: 1. Where combinations of Meter readings are specifically provided for in the Rate Schedule. 2. Where the City's Operating Necessity requires the use of more than one Meter. C. Payment of Bills. When bills are presented monthly, they will be due and payable on or before twenty (20) days after the Date of Presentation. When bills are presented weekly, they will be due and payable on or before five (5) days after the Date of Presentation. Payment shall be made at the City of Vernon Customer Service Division, 4305 Santa Fe Avenue, Vernon, CA 90058-1786. A late charge may be imposed at the City's sole discretion equal to five percent of the unpaid balance, or as revised under Rate Schedule G-CS. D. Returned Check Charge. The City will require payment of a charge for any check returned from the bank unpaid. Payment in lieu of the returned check will be accepted only in the form of cash, money order, or cashier's check. Personal or business checks will not be accepted for a period of at least 6 months on accounts with more than one returned check within a 12-month period. A returned check charge may be imposed at Page 12 of 19 City of Vernon Council Resolution — effective June 18, 2013 the City's sole discretion in amount of $20.00, or as revised under Rate Schedule No. G- CS. Rule No. 10 DISPUTED BILLS A. Request for Billing Review. Any request for review of a bill filed by a Customer shall be reviewed by a Customer Service Division representative. The review shall include consideration of whether the Customer should be permitted to amortize the unpaid balance of his account over a reasonable period of time. B. Review by Gas System Manager. Any Customer, whose request for review regarding a bill for gas service has resulted in a determination by the Customer Service Division representative which is adverse, may have such determination reviewed by the Gas System Manager of the City of Vernon. To avoid discontinuance of service, the Customer shall pay the amount claimed by the City to be due. Such payment shall be deemed to be made under protest. In lieu of such payment, a Customer whose credit has been established pursuant to Rule No. 6 may request to amortize payments. Approval of such amortized payments shall be at the sole discretion of the City. 2. Checks or other forms of remittance for such payment under protest shall be accompanied by a letter of explanation to the Gas System Manager. Upon receipt of the payment under protest and letter of explanation the Manager will review the basis of the billed amount. After review the Manager may: a. If special circumstances exist, waive returned check charge, reconnect charge, and late charge, or b. Recommend any adjustment to gas charges as determined by the review. Any recommendation for a credit or refund must be approved by the City Administrator, and, if the amount exceeds $10,000, City Council approval will also be required. . 4. If the matter is not satisfactorily resolved by the Manager, the Customer may petition the City Council for a final decision. C. Discontinuance of Service. Failure of the Customer to make payment under protest of the disputed bill prior to the expiration date of a 48 hour Notice of Call will warrant discontinuance of service without further notice. D. Additional Bills during Review. If before completion of the City Council's review, additional bills become due which the Customer wishes to dispute, the additional amounts claimed by the City to be due for such additional bills shall be paid before they become past due and failure to do so will warrant discontinuance of service in accordance with Rule No. 11. Page 13 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No. 11 DISCONTINUANCE AND RESTORATION OF SERVICE A. Past Due Bills. When bills are presented monthly, they will be considered past due if payment is not received within 20 days after the Date of Presentation. When bills are presented weekly, they will be considered past due if payment is not received within 5 days after the Date of Presentation. B. Nonpayment of Bills. 1. A Customer's service may be discontinued for nonpayment of a bill for service previously rendered by the City provided such bill is not paid within 48 hours after a notice of discontinuance of service by delivery of a "Notice of Call." 2. If a Customer is receiving more than one service, any or all services may be discontinued when any service, regardless of location, is discontinued for nonpayment 3. Under no circumstances may service be discontinued for nonpayment of a bill to correct previously billed incorrect charges for a period in excess of the preceding three months, unless such incorrect charges have resulted from the Customer not abiding by these Rules. 4. Service will not be discontinued on any Saturday, Sunday or legal holiday for delinquency in payment of a bill for gas service. C. Violations or unsafe Equipment 1. The city may refuse or discontinue service to a Customer if the City determines: a. That any part of the Customer's piping or other equipment, or the use thereof, is unsafe or in violation of applicable laws, ordinances, rules or regulations of public authorities. b. That any condition existing upon the Customer's Premises endangers the City's service facilities. 2. Such discontinuance shall continue until piping, equipment, or use has been put in a safe condition or the violation remedied. In the event of a dangerous condition, the City may without giving prior notice immediately discontinue service to any Premises. 3. The city does not assume any responsibility of inspecting or repairing the Customer's piping or other equipment or any part thereof and assumes no liability therefore. Page 14 of 19 City of Vemon Council Resolution — effective June 18, 2013 D. Service Detrimental to Other Customers. The City will not provide service for equipment, the operation of which will be detrimental to the service of the City's other Customers, and will discontinue gas service to any Customer which continues to operate such equipment after having been given notice to cease by the City. E. Fraud. The City may refuse or discontinue service immediately if the acts of the Customer or the conditions upon its Premises are such as to indicate intent to defraud the City. F. Restoration of Service. Before restoring service that has been discontinued for nonpayment of a bill or for a violation: The City may require payment of a reconnection charge, as defined in Rate Schedule G-CS. In case the Customer requests that such service be reconnected on the day of its request or outside of regular business hours, the reconnection charge may be increased to cover the cost thereof. 2. The Customer will be required to reestablish credit in accordance with Rule No. 6 or make prepayment in accordance with Rule No. 7. The Customer will be required to pay all delinquent bills. Rule No. 12. RATE AND OPTIONAL RATES A. Effective Rates. The rates charged by the City of natural gas service are those approved by resolution of the City Council. A copy of complete Rate Schedules will be maintained for public inspection at the City Clerk's Office. B. Optional Rates. If there are two or more Rate Schedules or optional provisions applicable to the class of service requested by the applicant, the City will call applicant's attention thereto at the time application is made, and the applicant must designate which Rate Schedule of optional provision is desired. C. Change in Equipment of Operation. When the Customer, in accordance with Section C of Rule No. 3, notifies the City of any material change in the size, character, or extent of its equipment or operations the City will, within a reasonable time, advise the Customer of the resulting rate options. In the absence of the notification provided for in Section C of Rule No. 3, the City assumes no responsibility for advising the Customer of lower optional rates under other existing Rate Schedules or optional provisions available as a result of the Customer's changes in equipment of operations. D. New or Revised Rates. If new or revised Rate Schedules are established, the City will, within a reasonable time, bring them to the attention of the Customers which may be affected. Page 15 of 19 City of Vernon Council Resolution — effective June 18, 2013 E. Change of Rate Schedule. 1. A change to another applicable Rate Schedule or optional provision will be made only when a Customer elects in writing to make such change. 2. If a Customer so elects, the change to another Rate Schedule will be made provided: a. A change of Rate Schedule has not been made during the past twelve-month period; or b. The change of Rate Schedule is made to, or from, a new or revised Rate Schedule; or C. There has been a change in the Customer's equipment or operations for that service which, in the opinion of the City, justifies the change of Rate Schedule. 3. The change of Rate Schedule will become effective for the billing period during which the Customer has requested such change. 4. City of Vernon natural gas rates schedules are applicable only for service supplied entirely by the City without interconnection with any other source of natural gas. Rule No.13 SHORTAGE OF SUPPLY AND INTERRUPTION OF SERVICE A. Shortage and Interruption. The City does not guarantee a sufficient supply of gas or freedom from interruption. The City will not be liable for interruption or shortage of supply, nor for any loss or damage occasioned thereby. B. Temporary Suspension for Repairs. Whenever the City finds it necessary to make repairs or improvements to its gas system, it will have the right to suspend temporarily the delivery of gas. In such cases reasonable notice will be given to the Customers. To the extent practicable such repairs or improvements will be performed expeditiously and with as little inconveniences to the Customers as possible. Whenever, in the operation of the City's gas system interruption in the delivery of gas to Customers results from or is occasioned by any other cause, notice of such interruption will not be given to the Customers. The City will exercise reasonable diligence to restore delivery of gas energy. C. Apportionment of Supply During Time of Shortage. If a shortage of supply of gas occurs, the City will apportion its available supply among its Customers as consistent with SoCalGas Rule No. 23. Page 16 of 19 City of Vernon Council Resolution _ effective June 18, 2013 Rule No. 14. SERVICE CONNECTIONS AND FACILITIES ON CUSTOMER'S PREMISES A. General. The City will construct, own, operate and maintain natural gas lines only along public streets, roads and highways which the City owns or has the legal right to occupy, and on public lands and private property across which rights of way or easements satisfactory to the City may be obtained at the Customer's cost and without cost or condemnation by the City. Upon request by the City, the applicant shall provide such rights of way or easements. B. Connection Costs. Connection costs include traffic control, surface sawing, trenching, boring, pipe, tapping, backfill, surface restoration, meter, regulators, electronic corrector, and any other labor and equipment necessary for the City to connect Customer, up to and including the meter, regulator(s) and electronic corrector (meter equipment). Connection costs do not include costs incurred by Customer on the Customer side of the meter equipment. Connection costs shall be shared between Customer and City. City shall contribute an amount equal to the greater of: (1) four cents per Therm multiplied by Customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay the balance of costs. All installed facilities up to and including the meter equipment shall be owned and maintained by City of Vernon. All installed facilities downstream of the meter equipment shall be owned and maintained by Customer. Customer may request City of Vernon to conduct additional work at Customer's expense to modify Customer house line piping. C. Meter Installations. The Customer shall provide an approved location for the Meter or Meters and associated equipment on the Premises which at all times shall be accessible for inspection, reading, and testing. In general, the City will approve a location if it is within close proximity to the property line of the premises, there is no superior alternate location, and it can be installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, safety, social, and technological factors. The Director of Light & Power may approve an alternate location not in proximity to the property line, on written findings that doing so would demonstrably reduce economic costs to the city, foster public safety, mitigate unreasonable disruption or cost to the property owner or occupant, or be preferable for engineering, geologic, or other related concerns. Approval of such alternate location is conditioned upon the City's receiving necessary easements or license agreements to allow maintenance of City equipment. If requested by City, Customer shall allow City, at City's expense, to install and maintain an active phone line terminating at the gas meter for the purpose of City of Vernon Page 17 of 19 City of Vernon Council Resolution — effective June 18, 2013 telephonically communicating with the meter. City, at City's expense, may instead utilize wireless transmission to access meter data. The Customer shall, at its own expense, provide a new and approved location whenever the existing location becomes inaccessible for inspecting, reading, or testing. Rule No.15. METER TEST AND ADJUSTMENT OF BILLS FOR METER ERROR A. Tests. Prior to Installation. Every Meter will be tested at or prior to the time of installation, and no Meter will be placed in service if found to register more than 1 % fast or 1 % slow. 2. On Customer Request. A Customer may, on notice of not less than one week, require the City to test the Meter for its service. A charge will be made for such a test in accordance with Rate Schedule G-CS, but, this amount will be waived if the Meter is found to register more than 2% fast or 2% slow. A Customer shall have the right to require the City to conduct the test in its presence or in the presence of its expert or other appointed representative. The results of the test will be furnished to the Customer within a reasonable time after completion of the test. B. Adjustment of Bills for Meter Error. 1. Fast Meters. When, upon test, any meter is found to be registering more than 2% fast, the City will refund to the Customer the amount of the overcharge based on corrected Meter readings for the preceding six months, subject to the provisions of paragraph 4 hereof. 2. Slow Meters. When, upon test, any meter is found to be registering more than 2% slow, the City may bill the Customer for the amount of the undercharge based on corrected meter readings for the preceding six months, subject to the provisions of paragraph 4 hereof. 3. Nonre isg tering Meters. When, upon test, any Meter is found to be nonregistering, the City may bill the Customer for the estimated amount of gas consumed but not registered for a period of three months, subject to the provisions of paragraph 4 hereof. Bills for this purpose will be estimated from the Customer's prior use, the Customer's subsequent use correctly Metered, the City's experience with other Customers of the same class, and/or the general characteristics of the Customer's operations. Page 18 of 19 City of Vernon Council Resolution — effective June 18, 2013 4. General. When it is found that the error in a Meter is due to causes the date of which can be reliably established, the overcharge or the undercharge will be computed back to but not beyond that date, provided, however, that in no case will a bill for undercharge on domestic service schedules be rendered for a period exceeding three months. When a slow or nonregistering meter has been caused by an action of the Customer, its agents, employees, or licensees, the above time limitations shall not apply. C. Replacement of Meters. Any Meter damaged or destroyed by the Customer, its agents, employees, clients, or visitors shall be replaced by the City at the Customer's expense. 2. Any defective Meter, other that the above, shall be replaced by the City at its expense. Rule No. 16. SUPPLY TO SEPARATE PREMISES AND USE BY OTHERS A. Separate Metering. Separate Premises will not be supplied through the same Meter, except as may be specifically provided for in the applicable Rate Schedule. B. Other uses or Premises. Gas received from the City shall not be used by the Customer upon other Premises or for other purposes than those specified in its application or in the applicable Rate Schedule. C. Use by Others. A Customer shall not charge for gas received from the City and used by another person, except: If the charge to tenants is absorbed in the rental for the Premises or space occupied; or 2. If the Customer is the owner, lessee, or operator of a multiple -occupancy Premises and provides submeters for the gas used by tenants at the same rates that the City would charge for the service if supplied directly. In such cases, the Customer shall furnish, install, maintain, and test the submeters. Page 19 of 19 City of Vernon Council Resolution — effective June 18, 2013 CITY CLERK'S OFFICE INTEROFFICE MEMORANDUM DATE: June 24, 2013 TO: Carlos Fandino, Director of Light & Power Mark Whitworth, City Administrator n FROM: Deborah Juarez, Records Management Assistant ((<JJ RE: Resolution No. 2013-64 — A Resolution of the City Council of the City of Vernon Amending Natural Gas Rate Schedule Nos. G-1 (Residential Gas Service), G-2 (Small Commercial Gas Service) and G-3 (Large Commercial Gas Transportation) and Rules for Gas Service, for Gas Distributed and Supplied by the City within its Boundaries Transmitted herewith is a copy of Resolution No. 2013-64 referenced above, which was approved by City Council on June 18, 2013. Thank you. Attachment c: Dan Bergmann Dan Cordova William Fox Ali Nour Anthony Serrano Resolution No. 2013-64 RECEIVED I* JUN 1 1 2013 RECEI®/EL CITY ADMINISTRATION JUN 12 2013 STAFF REPORT CITY CLERK'S OFFICE DEPARTMENT OF LIGHT & POWER DATE: June 18, 2013 TO: Honorable Mayor and City Council FROM: Carlos R. Fandino, Jr., Director of Light & Powe(* RE: Request for Approval of City of Vernon Revised Natural Gas Tariffs and Rules and Authority for the City Administrator to Accept Easements and Licenses Recommendation It is recommended that the City Council: Find that the approval requested in this staff report is, (a) categorically exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines §15301(b), because this approval will merely lead to the possible construction of additional laterals and related meters to transport gas, and such construction is, at most, a negligible expansion of the existing facilities of the city's natural gas utility, and (b) statutorily exempt pursuant to CEQA Guidelines § 15273, because the restructuring of the connection charge offsets to allow the city to continue to meet its operating expenses and to obtain the funds for capital projects to maintain service within existing service areas; and 2. Approve the resolution to thereby, (a) amend the gas tariffs and rules listed below, (b) authorize the City Administrator to accept licenses and easements to further the purposes of Rule 14, entitled "Service Connections and Facilities on Customer's Premises'; and (c) find the proposed actions comply with Proposition 26 for the reasons stated in the Resolution. The proposed amendments provide additional incentives to prospective gas customers by increasing the Light & Power Department contribution to gas customer connection costs, thereby providing long-term benefits for customers and the Department. The amendments also further regulate where meters may be installed. Changes are being requested to the following City documents: a. Tariff G-1 Residential Gas b. Tariff G-2 Small Commercial Gas c. Tariff G-3 Large Commercial Gas d. Rule 14 of the "Rules for Gas Service" Background The City of Vernon commissioned a rate study to determine the effect on existing and future customers if the City provided new users more funds to offset the costs of installing City owned connections and equipment. The rate study (Exhibit A), establishes that reducing connection charges paid by new customers will avoid an increase of service charges to new and existing customers. Moreover, this proposed rate structure would benefit all rate payers by increasing the number of users, thereby decreasing each customer's pro-rata share of its fixed costs, and therefore creating downward pressure on the need for future rate increases. Presently, the Department contributes an amount equal to four cents per therm times the estimated annual usage up to 50% of the connection cost up to and including the meter, but not including customer -side costs. As proposed, the city would offset the connection costs of new customers in an amount which is the greater of. (1) the existing amount; or (2) "three times the projected annual transportation revenue to the City from the account." The customer would continue to be required to pay the balance of the costs above the City's contribution. As a result, most new customers will pay less to connect to the City's infrastructure than under the existing rate structure, and no new customers will pay more. Increasing Vernon's contribution toward connection costs will also benefit existing customers on the gas system, even though they may have paid more initially to connect than future customers. Existing customers will benefit with every marginal dollar that is collected from new customers. These revenues will offset the fixed cost burden carried by existing customers. In short, the greater the number of customers, the less each customer must pay as its pro-rata share of the substantial fixed costs of maintaining the existing utility infrastructure. As proposed, Rule 14 would state that, in general, the city will approve a gas meter's location if, "it is within close proximity to the property line of the premises, there is no superior alternate location, and it can be installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, safety, social, and technological factors." The Director of Light & Power may approve an alternate location on written findings that doing so "would foster public safety, mitigate unreasonable disruption or cost to the property owner or occupant, or be preferable for engineering, geologic, or other related concerns". Approval of such alternate location would be conditioned upon the City's receiving necessary easements or license agreements to allow maintenance of City equipment. The proposed rule would also clarify existing practice, namely, that all installed facilities downstream of the meter equipment are to be owned and maintained by the customer. Staff also proposes that the City Administrator be authorized to accept license agreements and easements necessary to further the purposes of Rule 14, entitled, "Service Connections and Facilities on Customer's Premises." Expressly authorizing the City Administrator to accept such agreements avoids the need to obtain approval from the City Council for each agreement. The agreements will have no financial impact and will create no liability risk for the City. Proposition 26 In November 2010, California voters approved Proposition 26, a measure that defines every government imposition of any duty to pay funds to a government as a tax unless one of seven stated exceptions applies. The measure states, in pertinent part: (e) As used in this article [i.e. Proposition 218's Article XIII C], "tax" means any levy, charge, or exaction of any kind imposed by a local government, except the following: (2) A charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product. (4) A charge imposed for entrance to or use of local government property, or the purchase, rental, or lease of local government property. City Council may find that the revised connection charges are not "taxes" for purposes of of Proposition 26. This is based on the following: First, the proposed actions merely reduce the rate of the existing connection charges which predate the adoption of Proposition 26, and therefore are not subject to Proposition 26. Second, natural gas service is available in the City not only from the City's natural gas system, but also from competing private systems, such as Southern California Gas Company. Therefore, customers may elect not to pay connection charges by choosing an alternative source of natural gas service or by using an alternative form of energy. Therefore, this is not a charge that is "imposed" by the city. Third, the city is proposing to increase the amount that it subsidizes the actual connections costs that the city incurs. Doing so necessarily means that the amount of the connection charges do not exceed the reasonable costs of installing connection infrastructure serving the customer. Fourth, all of the connection infrastructure is owned by the City, and the connection charge is collected by the City as a condition of making such infrastructure available for use of this local government property by the customer. Last, the proposed actions do not increase the rate of any charge imposed by the City in connection with the natural gas system, but in fact reduce them. Please see the attached supporting documentation: Exhibit A: Rate Study Exhibit B: Proposed Rules and Revisions to Rate Tariff Exhibit C: Redlined Version of Proposed Rules and Revisions to Rate Tariff Fiscal Impact The Light & Power Department estimates an increase in net revenue of up to $468,000 per year. The return on investment for each customer ranges from several months to 2.4 years. EXHIBIT A NATURAL GAS RATE STUDY June 18, 2013 M ON a rl to 00 M en M l�D o N N M O N tD LO r, �N-I l00 N N O ON m M tD M e�-I N W n W rn M Wl O m N �^-I N °' N l0 LO O N e M M N O ON m d' rn lD - ei W I, O n N N W N N am °°N kD �^ M > N c-1 M Ol p� e-I y O O M rl m 00 W O O 0 O N d' t^D rl O n n K O N ti Ln N a Ln O N tD LO 0 > E O W N a -I m lD 0 N N N O 3 3 O m M Ln LO W:T LL U b O N e^-I 1 N r eC L LM b N tD N .--I CO H m C Q N e-I M M N W N Li yt„ U W U S y no C O O m a m � m a O N Z C W n lO n 00 0 0 > C S O C Lu '^ 00 O N N 01 w E w 0 0 � N N N N V m Oi c V W N c V vt W p V N 0 ki . u v W — - O C n d N C% V V) W N lD d W 0 V n ~ n N n N N 1p �O C •. fl. O N N .N-1 M lN0 O. Z N l0 W 0) ti c CD O y� LL m m O1 ` N M O 11 0 n V V1 r, N d' m L m m O 0 I� N n N u M a w C N rl N MT M 00 N C 0 U N W ID m y in C Ol O N Vl V1 V)en to i } C7 66, uw V1 Il V Ln p N LM y 0 {.7 N CD Ln N N N N O Z O w E O K 0 ~^ N 0 0 0 o 0 o a 0 0 0 LU a > N LM v1 Ln N 0 v O. O. L O m N O` a p m N u °, N Ln Ln Ln ., L yr mc d N N r 1 O ° im/ O Y m 9 W O ,� °' im+ O Y m Y omn i •v, w E a' i' m E `m 0 E 9 m E c a a s �i L6 i LO N } u y VVi u�i O u ii Z City of Vernon Natural Gas System New Customer Connection Economics Customer Calculated Values Per Month Connection Costs Vernon Payback Therms Cust Savings Revenue from Vernon Rate Wholesale Transport Cost Vernon Net After SoCal Wholesale Cost Meter/Reg/ MiniMax/ Pipe/Tie In Mos Yrs $0.0170 / rh Farmer John 5 Accts 363,000 $14,600 $24,250 $6,171 $18,079 $159,000 9 < 1 Denim -Tech 27,000 1,500 2,600 459 $2,141 15,100 8 < 1 Euro Coffee 2,200 _ 240 _ 440 37 $403 8,200 21 1.8 Mixed Nuts 1,000 110 230 17 $213 6,100 29 2.4 Marietta 28,000 1,600 2,700 476 _ $2,224 13,100 6 <1 Ice Graphics 1,100 120 240 19 $221 6,100 28 2.3 Sterigenics 25,000 1,500 2,500 425 $2,075 14,700 8 <1 YaegakiCorp 3,500 390 670 60 $611 8,700 15 1.3 Stantex 3,000 330 580 51 $529 13,200 25 2.1 Arthur Cheese 5,500 520 890 94 $797 13,000 17 1.4 Norman Fox 5,500 520 890 94 $797 16,000 21 1.8 Pactiv 10,000 740 1,250 170 $1,080 10,300 10 < 1 King Meats 11,500 800 1,380 196 $1,185 12,900 11 <1 Vie De France 4,400 470 800 75 $725 6,130 9 < 1 Gavina 28,000 1,600 2,700 476 $2,224 55,000 25 2.1 Fantasy 83,000 4,200 7,100 1,411 $5,689 35,000 7 <1 Totals w/o FJ 238,700 14,640 24,970 4,058 20,912 233,530 12 1 50% probablityfactor 10,456 116,765 25% probablityfactor 5,228 58,383 Totals with FJ 602,700 29,24 2201 10,229 38,991 392,530 11 < 1 Total Annual Net: $468,000 /yr Total Retail Transportation Revenue: $2,300,000 /yr Total Contribution: 20% _ FJ Contribution: 9% Notes: Savings is updated based on January 2013 SoCal rates Revenue from Vernon Rate based on Vernon's rates as of March 2013 Wholesale Transport Cost is Vernon's cost to SoCalGas based on February 2013 SoCal Billing Stmt GN-10 vs. City of Vernon G-2 (Jan 1, 2013) Usage Estimate: 111500 Therms per month Estimate of Average Monthly SoCalGas Charges Therms Rate Amount Subtotals $/Therm Tier 1 Winter 250 0.46282 $115.71 Tier 2 Winter 3,917 0.22725 $890.14 Tier 3 Winter 7 333 0.06931 $508.25 Totals 11,500 $1,514.09 $1,514.09 0.13166 Tier 1 Summer 100 0.46282 $46.28 Tier 2 Summer 4,067 0.22725 $924.23 Tier 3 Summer 7 333 0.06931 $508.25 Totals 11,500 $1,478.76 $1,478.76 0.12859 Calculation of Monthly Average Transportation Rate: Winter Total $6,056.37 Summer Total $11,830.06 $17,886.44 $1,490.54 0.12961 State Mandated Char es G-MSUR (Franchise @$4) 11,500 0.00576 $66.24 G-PPPS Core (CARE) 11,500 0.05295 608.93 0.05871 $675.17 $675.17 0.05871 Month Oust Charge 31 $0.49315 $15.29 $15.29 0.00133 Total SoCalGas Monthly Transportation Charges $2,180.99 0.18965 SoCalGas Commodity Component $4,600.00 0.40000 Total SoCalGas Combined Billing Amount $6,780.99 0.58965 Vernon's G-2 Transportation Rate Therms Rate Amount_ Tier 1 4,167 0.17312 $721.39 Tier 2 7,333 0.07735 $567.21 _ Comm. Admin Fee 11,500 0.003 $34.50 $1,323.10 Monthly Cust Charge $50.00 $50.00 Total Vernon G-2 Monthly Transportation Charges $1,373.10 0.11940 Calculated Cost Difference $9,695 per Year $808 per Month _ $0.0703 per Therm 37% Less Disclaimer: All values and computations should be checked for accuracy by end -use gas customers. Rates and methodolgy are subject to change without notice. All calculated results are estimates. GT-F3 vs. City of Vernon G-3 (Jan 1, 2013) Usage Estimates: 83,000 Therms per month Estimate of Average Monthly SoCalGas Charges GT-F3D Tiers Rate $/Th Amount Subtotals $/Therm Tier 1 20,833 0.14511 $3,023.08 Tier 62J 0.08805 $5,473.80 Tier 3 0 0.05087 $0.00 Tier 4 0 0.03010 $0.00 Totals 83,000 $8,496.88 $8,496.88 0.10237 State Mandated Charges G-MSUR (Franchise@$4) 83,000 0.00576 $478.08 G-PPPS Noncore (CARE) 83,000 0.03092 2 566.36 0.03668 $3,044.441 $3,044.44 0.03668 Monthly Customer Charge $350.00 $350.00 0.00422 Total SoCalGas Monthly Charges $11,891.32 0.14327 Vernon's G-3 Transportation Rate G-3 Tiers Rate Amount Tier 1 20,833 0.13815 $2,878.02 Tier 2 62,167 0.06412 $3,985.97 Tier 3 0 0.04784 $0.00 Totals 83,000 $6,863.99 $6,863.99 0.08270 Monthly Customer Charge $300.00 $300.00 Total Vernon G-3 Monthly Charges $7,163.99 0.08631 Calculated Cost Difference $56,728 per Year $4,727 per Month _ $0.0570 per Therm _ 40% Less Disclaimer: All values and computations should be checked for accuracy by end -use gas customers. Rates and methodolgy are subject to change without notice. All calculated results are estimates. — EXHIBIT B PROPOSED REVISIONS TO RATE TARIFF June 18, 2013 CITY OF VERNON NATURAL GAS DEPARTMENT Schedule G-1 RESIDENTIAL GAS SERVICE APPLICABILITY This schedule applies to natural gas service to individually metered single family premises, including those separately metered in a multi -family complex, that have elected natural gas service from City of Vernon's natural gas distribution system. RATES Monthly Service Charge: Transportation Charge: $10 29.212 Cents per Therm Commodity Charge: Commodity Charge is equal to the City's Weighted Average Cost of Gas calculated at the SoCalGas Citygate for gas purchased by the City for each month for customers purchasing gas from the City. Gas supply will consist of monthly index price gas, daily market priced gas, and long-term supply purchased for customers purchasing gas from the City. The Commodity Charge includes the cost of transporting the gas to the SoCalGas Citygate. Bond -financed, prepaid gas may be provided to customers at prices not to exceed market prices for monthly index price gas. From time -to -time, the Commodity Charge may include a Purchased Gas Adjustment that will be used maintain a zero sum gain to COV for gas sales. Commodity Administrative Fee: 0.300 Cents per Therm SPECIAL NOTES 1. Residential customers receiving natural gas service from the City of Vernon are not eligible for Schedule G-CARE (SoCalGas Rate), or any other SoCalGas rates or SoCalGas benefit programs. 2. Costs for connection of Customer's facility to City's gas system shall be shared between Customer and City. City shall contribute an amount equal to the greater of (1) four cents per Therm multiplied by customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay Page I of 2 City of Vernon Council Resolution 2013-_ effective, June 2013 the balance of costs. The total connection cost includes traffic control, trenching, piping, repaving, and installation of the meter, regulator(s), and other equipment required by the City. See also Rule 14. An "Application and Contract for Natural Gas Service" is required. 3. In the event of curtailment, any Customer unable or unwilling to curtail shall be assessed penalty based on the rate per Therm that SoCalGas would charge customers whose volumes used are in violation of curtailment. The City shall not be liable for damages caused by curtailment, discontinuance, or shut off of gas service. 4. Gas purchased under this schedule shall be used only by the Customer and such Gas may not be sold, transported, assigned, distributed, exchanged, or otherwise transferred to benefit another customer or provide non -municipal natural gas to any natural gas user, transporter, or consumer within the City. 5. Any additional transmission costs, taxes, fees, regulatory surcharges, and interstate or intrastate pipeline charges, incurred by City on behalf of Customer will be passed through to Customer at cost. Page 2 of 2 City of Vernon Council Resolution 2013- effective June 18 2013 CITY OF VERNON NATURAL GAS DEPARTMENT Schedule G-2 SMALL COMMERCIAL GAS SERVICE APPLICABILITY This schedule is for combined gas commodity and transportation service to small commercial customers using less than 250,000 Therms per year that have elected gas service through City of Vernon's natural gas system. This schedule is also applicable to all other non-residential customers that have elected Core Service. RATES Monthly Service Charge: $50 Monthly Transportation Charges: Rate, in Cents per The Tier I 0 — 4,187 Therms 17.312 Tier II Over 4,187 Therms 7.735 Commodity Charge: Commodity Charge is equal to the City's Weighted Average Cost of Gas calculated at the SoCalGas Citygate for gas purchased by the City for each month for customers purchasing gas from the City. Gas supply will consist of monthly index price gas, daily market priced gas, and long-term supply purchased for customers purchasing gas from the City. The Commodity Charge includes the cost of transporting the gas to the SoCalGas Citygate. Bond -financed, prepaid gas may be provided to customers at prices not to exceed market prices for monthly index price gas. From time -to -time, the Commodity Charge may include a Purchased Gas Adjustment that will be used to maintain a zero sum gain to COV for gas sales. Commodity Administrative Fee: 0.30 Cents per Therm Page 1 of 2 City of Vernon Council Resolution 20122013- effective June 18, 2013 SPECIAL NOTES 1. Customers purchasing Gas Commodity from City of Vernon shall provide an estimate of each month's consumption, days of operation, and a facility contact responsible for natural gas consuming equipment. 2. Costs for connection of Customer's facility to City's gas system shall be shared between Customer and City. City shall contribute an amount equal to the greater of. (1) four cents per Therm multiplied by customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay the balance of the costs. The total connection costs include traffic control, trenching, piping, repaving, and installation of the meter, regulator(s), and other equipment required by the City. See also Rule 14. An "Application and Contract for Natural Gas Service" is required. 3. In the event of curtailment, any Customer unable or unwilling to curtail shall be assessed penalty based on the rate per Therm that SoCalGas would charge customers whose volumes used are in violation of curtailment. The City shall not be liable for damages caused by curtailment, discontinuance, or shut off of gas service. 4. Gas purchased under this schedule shall be used only by the Customer and such Gas may not be sold, transported, assigned, distributed, exchanged, or otherwise transferred to benefit another customer or provide non -municipal natural gas to any natural gas user, transporter, or consumer within the City. 5. Any additional transmission costs, taxes, fees, regulatory surcharges, and interstate or intrastate pipeline charges, incurred by City on behalf of Customer will be passed through to Customer at cost. Page 2 of 2 City of Vernon Council Resolution 20122013- effective June 18, 2013 CITY OF VERNON NATURAL GAS DEPARTMENT Schedule G-3 LARGE COMMERCIAL GAS TRANSPORTATION APPLICABILITY This schedule is for City of Vernon gas transportation service to large commercial customers using at least 250,000 Therms per year. Customers receiving service under this schedule may purchase commodity gas from a Third -Party Supplier or may request to purchase commodity gas from City of Vernon under Schedule G-4. RATES Monthly Customer Charge: $300 Monthly Transportation Charges: Rate, in Cents per Therm Tier I 0 — 20,833 Therms 13.815 Tier II 20,834 — 83,333 Therms 6.412 Tier III Over 83,333 Therms 4.784 SPECIAL CONDITIONS, GENERAL. The following Special Condition is applicable to all customers, whether they receive transportation -only service or both transportation and commodity service. Costs for connection of Customer's facility to City's gas system shall be shared between Customer and City. City shall contribute an amount equal to the greater of. (1) four cents per Therm multiplied by customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay the balance of costs. The total connection costs include traffic control, trenching, piping, repaving, and installation of the meter, regulator(s), and other equipment required by the City. See also Rule 14. An "Application and Contract for Natural Gas Service" is required. SPECIAL CONDITIONS, TRANSPORTATION -ONLY SERVICE. The following Special Conditions are applicable to customers that receive transportation -only service. If customers receive commodity service from COV, the following Special Conditions do not apply and the Special Conditions in Schedule G-4 apply. 1. As a condition precedent to service under this schedule, a "Natural Gas Transportation Agreement" must be executed with City. The Transportation Agreement shall provide specific terms and conditions consistent with this schedule. 2. Transportation of natural gas shall be consistent with SoCalGas Rule No. 30, "Transportation of Customer -Owned Gas," except where it conflicts with Vernon's rates and rules. 3. Nomination procedures shall apply to gas transported and delivered to Customer by Vernon as follows. (a) All nominations shall be communicated to Vernon (or its designated agent) thirty (30) minutes prior to SoCalGas' deadlines. Communication shall be confirmed by email or facsimile. (b) All determinations by Vernon as to allocation points and/or maximum daily quantities related thereto or as to the procedures utilized for any allocation process, when made by Vernon, shall be final. (c) In the event of a declared Over -Nomination Event by SoCalGas, if any Customer is unable or unwilling to reduce its transportation nomination within the two (2) hour window allotted by SoCalGas and Customer's nominations exceed 110% of its gas usage, Customer may, at Vernon's sole discretion, be assessed a charge based on the rate per Therm that SoCalGas would charge customers whose nomination exceed 110%. (d) Winter Deliveries. During November through March, any Customer unable or unwilling to nominate and deliver volumes meeting the minimum requirement as specified by SoCalGas in its current applicable Rule 30, may, at Vernon's sole discretion, be assessed a charge based on the rate per Therm that SoCalGas would charge customers whose nomination and delivery fails to meet the minimum requirement as specified by SoCalGas in its current applicable Rule 30. 4. In the event of curtailment, any Customer unable or unwilling to curtail shall be assessed penalty based on the rate per Therm that SoCalGas would charge customers whose volumes used are in violation of curtailment. The City shall not be liable for damages caused by curtailment, discontinuance, or shut off of gas service. 5. Monthly imbalances shall be resolved as follows. (a) Over -Deliveries. Vernon shall permit Customer to carry-over, to the following month, over -delivery volumes of up to 10% of Customer's consumption for the month in which the over -delivery occurred. Any Customer volumes carried over will be applied first to the following month's consumption. Any volumes of over -deliveries in excess of 10% of Customer's consumption shall be purchased by Vernon by crediting to the Customer an amount that is not less than the volume of over -deliveries times the SoCalGas Buy -Back Rate in SoCalGas Schedule G-IMB for the month in which the excess imbalance was incurred. (b) Under -Deliveries. Vernon shall permit Customer to carry-over, to the following month, under -delivery volumes of up to 10% of Customer's consumption for the month in which the under -delivery occurred. Any volumes of under -deliveries up to 10% of Customer's consumption shall be applied to the following month's consumption. Any volumes of under -deliveries in excess of 10% of Customer's consumption shall be sold to Customer by Vernon at a rate that is not more than the volume of under -deliveries times the SoCalGas Standby Procurement Charge in SoCalGas Schedule G-IMB for the month in which the excess imbalance was incurred. (c) Imbalance Trading. Vernon has no program for trading of monthly imbalances amongst Vernon customers; however, Vernon, or Vernon's gas management agent, may, at its sole discretion, be willing to facilitate imbalance trading through SoCalGas consistent with Schedule G-IMB. As such, Vernon specifically does not imply an obligation to facilitate imbalance trading. (d) Stricter Provisions. Should SoCalGas impose additional, more restrictive, balancing provisions upon Vernon, the stricter provisions will be adopted and. implemented by Vernon, as required by SoCalGas, and thereafter will apply to Customer. Such more restrictive balancing conditions may include the winter balancing rules contained in SoCalGas Rule 30. Customer shall be subject to changed balancing requirements at the time such balancing is imposed by SoCalGas upon Vernon, irrespective of prior written notice to Customer; however, Vernon will attempt to provide advance written notice to Customer. 6. Gas transported under this schedule shall be used only by the Customer and such Gas may not be sold, transported, assigned, distributed, exchanged, or otherwise transferred to benefit another customer or provide non -municipal natural gas to any natural gas user, transporter, or consumer within the City. 7. Any additional transmission costs, taxes, fees, regulatory surcharges, and interstate or intrastate pipeline charges, incurred by City on behalf of Customer will be passed through to Customer at cost. CITY OF VERNON GAS MUNICIPAL UTILITIES DEPARTMENT RULES FOR GAS SERVICE The latest revision of the RULES FOR GAS SERVICE has been prepared by the Gas Municipal Utilities Department. The City Council of the City of Vernon shall review and approve these Rules. Subsequent City Council Resolutions are necessary for any and all future updating of these Rules. For each case, those conditions drafted in a Resolution will take precedence until the Rules and Regulations are revised to reflect those changes. Rule Description Revised 1. Definitions 09/1/09 2. Description of Service 10/6/06 3. Application for Service 10/6/06 4. Contracts 10/6/06 5. Special Information Required on Forms 10/6/06 6. Establishment and Reestablishment of Credit 10/6/06 7. Prepayments 10/6/06 8. Notices 10/6/06 9. Presentation and Payment of Bills 10/6/06 10. Disputed Bills 10/6/06 11. Discontinuance and Restoration of Service 10/6/06 12. Rate and Optional Rates 10/6/06 13. Shortage of Supply and Intemiption of Service 10/6/06 14. Service Connections and Facilities on Customer's Premises 06/18/13 15. Meter Test and Adjustment of Bills for Meter Error 10/6/06 16. Supply to Separate Premises and Use by Others 10/6/06 Page 1 of 19 City of Vernon Council Resolution _ effective June 18, 2013 Rule No. 1. DEFINITIONS For the purpose of these Rules the terms and expressions listed below shall have the meanings set forth opposite them when initially capitalized in the text. Agent Marketer (Agent): Agents are individuals, companies, or consortiums that are appointed by noncore customers to act on their behalf in activities such as the purchasing, nominating and balancing of gas supplies. As an example, however, Agents bear no financial responsibility for the transportation imbalances incurred by the customers they represent. British Thermal Unit (Btu): The standard unit for measuring a quantity of thermal energy. One Btu equals the amount of thermal energy required to raise the temperature of one pound of water one degree Fahrenheit and is exactly defined as equal to 1,055.05585262 joule, rounded to 1,055.056 joule. (A joule is equal to one watt -second.) Commodity Administrative Fee: Fee charged to customers who procure supply directly from COV to cover gas purchasing expenses. Commodity Charge: Commodity Charge is equal to the City's Weighted Average Cost of Gas calculated at the SoCalGas Citygate for gas purchased by the City for each month for customers purchasing gas from the City. Gas supply will consist of monthly index price gas, daily market priced gas, and long-term supply purchased for customers purchasing gas from the City. The Commodity Charge includes the cost of transporting the gas to the SoCalGas Citygate. Bond - financed, prepaid gas may be provided to customers at prices not to exceed market prices for monthly index price gas. From time -to -time, the Commodity Charge may include a Purchased Gas Adjustment that will be used maintain a zero sum gain to COV for gas sales. COV: City of Vernon Contracted Marketer: Contracted Marketers are individuals, companies, or consortiums that arrange for natural gas procurement -related activities on behalf of noncore customers. Contracted Marketers must enter into a contract with SoCalGas and meet certain credit requirements. They must comply with SoCalGas' Rules 30 and 35 and all other tariffs which, address the transportation and management of customer -owned gas on SoCalGas' system. Core Service: Core Service consists of all residential usage regardless of size, all commercial usage less than 20,800 Therms per month, and all other customers that have elected Core Service under Rate Schedule G-2. Curtailment: When SoCalGas and/or Vernon (jointly or separately referred to hereafter in this definition as "Utility") or other transmission pipeline used by Vernon, initiates suspension of gas service, Utility may temporarily reduce the daily quantity of gas it will transport or deliver or terminate service entirely for certain service categories as needed for operational and/or contractual requirements. Curtailment is implemented when, in the Utility's judgment, there exists a restriction or limitation on Utility transmission or distribution pipelines necessary for the Page 2 of 19 City of Vernon Council Resolution — effective June 18, 2013 acceptance, transportation or subsequent redelivery of gas resulting in Utility being unable to meet its operational, contractual or gas customers' requirements or when the Utility has a deficiency of gas supply available to meet its operational, contractual or sales customers' requirements. Customer -Owned Gas: Natural gas transported by Vernon for customer's own use where title to such natural gas is held by Vernon's customer or third party and is not a part of the Vernon - owned system supplies. Customer's Point of Delivery: The COV natural gas meter located at the Customer's place of consumption. Day: Period commencing at 12:00 midnight (Pacific time) on any calendar day and ending at 12:00 midnight (Pacific time) on the next succeeding calendar day. Decatherm: Ten Therms or 1,000,000 British thermal units (Also 1 MMBtu). Force Majeure: Unanticipated events or conditions beyond the reasonable control of the party claiming Force Majeure which could not have been prevented by the exercise of due diligence. Force Majeure as it applies to tariffs, or rate schedules specifically, does not include required maintenance of customer's facilities, plant closures, or economic conditions. Heating Value: Number of Btus liberated by the complete combustion at constant pressure of one cubic foot of natural gas at a base temperature of sixty degrees Fahrenheit (60°F) and a pressure base of fourteen and seventy-three hundredths (14.73) psia, with air at the same temperature and pressure as the natural gas, after the products of combustion are cooled to the initial temperature of the natural gas, and after the water vapor of the combustion is condensed to the liquid state. The Heating Value of the natural gas shall be corrected for the water vapor content of the natural gas being delivered except that, if such content is seven (7) pounds or less per one million (1,000,000) cubic feet, the natural gas shall be considered to be dry. Marketer: Third party which accesses one or more interstate or intrastate pipeline systems for the purpose of transporting natural gas to SoCalGas on Marketer's own behalf or on the behalf of designated end -use customers. Mcf/d: Thousands of cubic feet per day. Measure quantifies the amount of gas being consumed or transported on a daily basis. Noncore Service: Noncore Service is for all customers not defined as Core Service. Customers receiving noncore service must have Automated Meter Reading (AMR) equipment installed at customer's expense as a condition of noncore service. Premises: The area of land employed in a single enterprise, as determined by the City, whether or not divided by a dedicated street, highway, other public thoroughfare, or a railway. Page 3 of 19 City of Vernon Council Resolution_ effective June 18, 2013 Purchased Gas Adjustment (PGA): The PGA is applicable to Customers purchasing Gas from COV. The PGA may be negative or positive and will show as a line item in COV's monthly posted Commodity Charge. The purpose of the PGA is to maintain a zero sum gain to COV for Commodity Gas Sales. Over -Nomination Event: As defined in SoCalGas Rule No. 30. Determined solely by SoCalGas in the event transportation nominations received by SoCalGas for a specific date of gas flow exceed SoCalGas expected system capacity. SoCalGas: Southern California Gas Company, also "The Gas Company." SoCalGas Border: Delivery points for Gas into the SoCalGas system. SoCalGas City_gate: Virtual delivery and pricing point for Gas located within the SoCalGas system, established October 1, 2008. Therm: 100,000 British Thermal Units. Third -Party Supplier: Supplier of natural gas to noncore customers including, but not limited to Energy Service Provider, Contracted Marketer, Agent, or its equivalent. WACOG. See Weighted Average Cost of Gas. Weighted Average Cost of Gas (WACOG): The average cost of purchased gas, based on specific quantities and associated prices. Page 4 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No. 2. DESCRIPTION OF SERVICE The following general rules shall apply to all services. 1. The character of service available at any particular location should be ascertained by inquiry at the City's office. 2. The Rate Schedules are applicable for service where the Customer transports its entire gas requirements through the City's Gas system, and are not applicable where a part of the Customer's gas requirements are supplied from some other source. 3. The gas supplied by Vernon is natural gas that is obtained from various sources, primarily oil and gas fields, but also includes landfills and other biomass processes. The gas may consist of any combustible gas or gases so produced. The gas is processed to remove condensable constituents, to minimize the concentration of certain impurities as specified by orders of the California Public Utilities Commission and to add a warning odorant. Customers using gas supplied by Vernon for processes which are affected by impurities in excess of specified minimum levels are responsible for testing gas supplied and for rendering the gas suitable for their intended uses. EXCEPT AS PROVIDED IN THIS RULE, VERNON MAKES NO WARRANTIES AS TO THE NATURE, COMPOSITION OR PROPERTIES OF THE NATURAL GAS SUPPLIED AND THE OBLIGATIONS SET FORTH IN THIS RULE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, GUARANTIES OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE (INCLUDING WITHOUT LIMITATION ANY OBLIGATIONS OF VERNON WITH RESPECT TO FITNESS, MERCHANTABILITY AND CONSEQUENTIAL DAMAGES). 4. Heating Value of Gas Served. The heating value of the natural gas served will vary from time to time depending upon the supplies being drawn and the relative quantities being taken. The monthly average heating values (in Btu per cubic foot, dry basis, at normal atmospheric pressure of 30" mercury and a temperature of 60 degrees Fahrenheit) of the gas served 1000-1060 Btu, and the maximum variation will rarely exceed 100 Btu above or below this range. 5. Pressure. The standard delivery pressure at the point of delivery is eight inches of water column. For connected loads of one million Btu/hour or greater, the following delivery pressures can be provided upon request and acceptance by Vernon: a) Two Pounds b) Five Pounds c) Service at as -available fluctuating pressures from the point of service d) Such other pressure as the Vernon and the Customer agree to Page 5 of 19 City of Vernon Council Resolution _ effective June 18, 2013 Rule No. 3. APPLICATION FOR SERVICE A. Application for Service. Each applicant for gas service will be required to sign an Application on a form provided by the City and, upon request, will be required to furnish the following information: 1. Name of applicant (if not an individual, insert business organization and person to be served). 2. Date and place of Application. 3. Location of Premises to be served. 4. Date applicant will be ready for service. 5. Whether the Premises have been heretofore supplied. 6. Purpose for which service is to be used. 7. Applicant's mailing address. 8. Whether applicant is owner or tenant of, or agent for, the Premises. 9. Rate Schedule desired if optional rate is available. 10. Information to establish credit of applicant. 11. Such other information as the City may reasonably require. The Application is a request for service and does not in itself bind the City to provide service except under reasonable conditions, nor does it bind the applicant to take service for a longer period than the minimum requirements of the Rate Schedule. B. Individual Liability for Joint Service. Two or more Persons who join in one Application shall be jointly and severally liable thereunder and shall be billed by means of a single periodic bill mailed to the Person designated on the Application to receive the bill. C. ' Change in Customer's Equipment or Operations. Customers shall give the City written notice of the extent and nature of any material change in the size, character, or extent of its equipment or operations for which the City is supplying gas service before making any such change. Page 6 of 19 City of Vernon Council Resolution _ effective June 18, 2013 Rule No. 4. CONTRACTS A. Facilities Contracts. A contract or agreement to pay for the use, installation, or removal of facilities will be required if the provisions of the rate schedules so specify, in which case the terms of the contract will be governed thereby. When a Person, whether or not a Customer, desires to have the City modify, rearrange, relocate, or remove any of its facilities, the City if it agrees to make such changes may require the Person, at. whose request the changes are made, to agree to pay, in advance or otherwise, the cost to the City of making the changes. B. City Council Approval. Standard contract forms shall be approved by the City Council by resolution pursuant to City Charter Section 8.10. Such standard contracts maybe executed by the City Administrator or his designee in accordance with these Rules and the rate schedules without additional City Council approval. Page 7 of 19 City of Vemon Council Resolution _ effective June 18, 2013 Rule No. 5. SPECIAL INFORMATION REOUIRED ON FORMS A. Applications and Contracts. Each Application and contract for gas service will contain the following provision: This Application or contract for services shall at all times be subject to the rules and regulations of the City of Vernon, which may be changed or modified by the City Council from time to time in the exercise of its jurisdiction. B. Customer's Bills. Information printed on each bill for gas service will include the following: PLACE OF PAYMENT The City of Vernon Customer Service Division, 4305 Santa Fe Avenue, Vernon, CA 90058-1786 is the only authorized payment station. If paid elsewhere, the City is not responsible for payments delayed in reaching said office. Checks shall be made payable to the City of Vernon. LI1140I Wo Y Bills are due and payable on the Date of Presentation shown on this bill. Bills become delinquent and subject to a late fee if payment is not received (postmark not acceptable) by the City of Vernon 20 days thereafter. If not paid within this time, service may be discontinued. If discontinued, a reconnection charge, pre -payment of the closing bill equal to twice the average monthly bill, and the entire delinquent bill shall be remitted in full before a discontinued service will be reestablished. RETURNED CHECKS If a check for payment is returned unpaid, a service charge will be assessed. 2. Payment in lieu of the returned check will be accepted only in the form of cash, money order, or cashier's check. 3. Personal or business checks will not be accepted for a period of at least 6 months on accounts with more than one returned check within a 12-month period. INFORMATION If you question this bill, please request an explanation from the Customer Service Division. If you thereafter believe that you have been billed incorrectly, to avoid discontinuance of service send your payment under protest to the Customer Service Division with a copy of the bill and a written statement supporting your belief that the bill is not correct. Such statements regarding disputed gas bills should be made to the attention of the Gas System Manager. The Manager will review the basis of the billed Page 8 of 19 City of Vernon Council Resolution — effective June 18, 2013 amount and authorize any adjustment required in accordance with his findings. If the matter is not satisfactorily resolved by the Manager, you may petition the City Council for final determination. If you need further information, please call the Customer Service Division at (213) 583- 8811 between the hours of 7:00 a.m. and 5:30 p.m., Monday through Thursday. RULES AND REGULATIONS The City of Vernon Gas Service Rules, under which service is rendered are on file at the Customer Service Division. If you wish a copy of any information pertaining to your account, please write to the Customer Service Division. MEASURES OF CONSUMPTION Natural gas meters measure cubic feet of natural gas; however billing quantities are adjusted for the Heating Value of the Gas to yield Therms billed. Rates are stated in terms of Therms. C. Final Notice. The following statement will be printed on each final Notice: This notice includes a late fee. If you question this bill please request an explanation from the Customer Service Division. If you thereafter believe that you have been billed incorrectly, to avoid discontinuance of service send your payment under protest to the Customer Service Division with a copy of the bill and a written statement supporting your belief that the bill is not correct. Such statements regarding disputed gas bills should be made to the attention of the Gas System Manager. The Manager will review the basis of the billed amount and authorize any adjustment required in accordance with his findings. If the matter is not satisfactorily resolved by the Manager, you may petition the City Council for final determination. If you need further information, please call the Customer Service Division at (213) 583-8811 between the hours of 7:00 a.m. and 5:30 p.m., Monday through Thursday. If a discontinued service is reestablished, a reconnection charge will be assessed. Page 9 of 19 City of Vernon Council Resolution _ effective June 18, 2013 Rule No. 6. ESTABLISHMENT AND REESTABLISHMENT OF CREDIT A. Establishment of Credit. Each applicant, before receiving service, will be required to make prepayment in accordance with Rule No. 7 or to satisfactorily establish credit. Credit will be deemed established by one or more of the following means at the sole discretion of the City: The applicant is the owner with a substantial equity, of value satisfactory to the City, in the Premises to be served. 2. The applicant furnishes a guarantor, satisfactory to the City, to secure payment of bills for gas service. The applicant has been a Customer of the City for a similar type of service within the last two years and during the last twelve consecutive months of that prior service did not have more than two past due bills and provided that the credit of the applicants is unimpaired in the opinion of the City. 4. The applicant's credit is otherwise established to the satisfaction of the City. B. Reestablishment of Credit. An applicant or Customer will be required to make prepayment in accordance with Rule No. 7 and/or to reestablish credit in accordance with Rule No. 6 under any of the following conditions: In case applicant previously has been a Customer of the City and services have been discontinued by the City during the last twelve months because of nonpayment of bills. 2. In case a Customer has failed to pay bills before they become past due as prescribed in Rule No. 11-A, and has further failed to pay such bills within two (2) City working days after presentation of a discontinuance of service notice for nonpayment of bills. This condition will apply regardless of whether or not service has been discontinued. 3. In case the conditions of service or basis on which credit was originally established have, in the opinion of the City, materially changed. Page 10 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No. 7 A. Amount of Prepayment. Prepayment shall be required from any applicant or Customer which has not established or reestablished credit. The amount of the prepayment shall be twice the estimated average monthly bill. B. Return of Prepayment. When an application for Gas service has been cancelled prior to the establishment of service, the prepayment will be applied to any charges applicable in accordance with the Rate Schedules and the applicant will be so advised. The excess portion of the prepayment will be refunded. 2. When the Customer's credit has been established in accordance with Rule No. 6, the City will apply the balance of the prepayment as a credit against future bills. Upon discontinuance of Gas service, the City will apply the prepayment to any outstanding charges and the excess portion of prepayment will be refunded. Rule No. 8. NOTICES A. A Notice to a Customer. When a notice from the City to a Customer is required, it will normally be given in writing; either mailed to the Customer's Mailing Address or delivered to the Customer's place of business, except that in emergencies the City may give an oral notice. Final Notice. The "Final Notice" for nonpayment of a delinquent account shall be sent by first class mail, addressed to the Customer to whom the service is billed, at least 10 calendar days prior to proposed termination of service. 2. Notice of Call. Notice of discontinuance of service for nonpayment of a delinquent account shall be given by delivery of a "Notice Call" to the Customer's place of business at least 48 hours prior to proposed termination of service. B. A Notice from the Customer. A notice from a Customer to the City may be given by written communication mailed to the Customer Service Division or may be given orally by the Customer or its authorized agent at the Customer Service Division or may be given orally by the Customer or its authorized agent at the Customer Service Division except when written notice is specifically required in the applicable Rate Schedule. Page 11 of 19 City of Vernon Council Resolution _ effective June 18, 2013 Rule No. 9 PRESENTATION AND PAYMENT OF BILLS A. Presentation of Bills. 1. Billing Period. Bills for gas service will be presented monthly or as otherwise provided in the applicable Rate Schedules. At the sole discretion of the City, a Customer may be required to make weekly payments based on estimated usage. 2. Metered Service. Bills for metered service will be based on Meter registrations. Meters will be read as required for the preparation of regular bills, opening bills, and closing bills. It may not be possible always to read meters on the same day of the month, and if a monthly Billing Period contains less than 27 days or more than 33 days, a pro rata computation in the bill will be made. 3. Pro Rata Computation. All opening bills, closing bills, and bills for gas service presented for periods of less than 27 days or more than 33 days on a monthly Billing Period will be computed in accordance with the applicable Rate Schedule, but the size of the energy blocks, and the amount of the Customer, service, volumetric, or minimum charges, specified therein, will be prorated on the basis of the ratio of the number of days in the period to the number of days in an average monthly period, which for this purpose shall be taken as 30 days, or as otherwise provided in rate schedules. Energy usage (Therms) will not be prorated. B. Reading of Separate Meters Not Combined. For the purpose of billing, each Meter upon the Customer's premises will be considered separately, and the readings of two or more Meters will not be combined except as follows: 1. Where combinations of Meter readings are specifically provided for in the Rate Schedule. 2. Where the City's Operating Necessity requires the use of more than one Meter. C. Payment of Bills. When bills are presented monthly, they will be due and payable on or before twenty (20) days after the Date of Presentation. When bills are presented weekly, they will be due and payable on or before five (5) days after the Date of Presentation. Payment shall be made at the City of Vernon Customer Service Division, 4305 Santa Fe Avenue, Vernon, CA 90058-1786. A late charge may be imposed at the City's sole discretion equal to five percent of the unpaid balance, or as revised under Rate Schedule G-CS. D. Returned Check Charge. The City will require payment of a charge for any check returned from the bank unpaid. Payment in lieu of the returned check will be accepted only in the form of cash, money order, or cashier's check. Personal or business checks will not be accepted for a period of at least 6 months on accounts with more than one returned check within a 12-month period. A returned check charge may be imposed at Page 12 of 19 City of Vernon Council Resolution — effective June 18, 2013 the City's sole discretion in amount of $20.00, or as revised under Rate Schedule No. G- CS. Rule No. 10 DISPUTED BILLS A. Request for Billing Review. Any request for review of a bill filed by a Customer shall be reviewed by a Customer Service Division representative. The review shall include consideration of whether the Customer should be permitted to amortize the unpaid balance of his account over a reasonable period of time. B. Review by Gas System Manager. Any Customer, whose request for review regarding a bill for gas service has resulted in a determination by the Customer Service Division representative which is adverse, may have such determination reviewed by the Gas System Manager of the City of Vernon. 1. To avoid discontinuance of service, the Customer shall pay the amount claimed by the City to be due. Such payment shall be deemed to be made under protest. In lieu of such payment, a Customer whose credit has been established pursuant to Rule No. 6 may request to amortize payments. Approval of such amortized payments shall be at the sole discretion of the City. 2. Checks or other forms of remittance for such payment under protest shall be accompanied by a letter of explanation to the Gas System Manager. 3. Upon receipt of the payment under protest and letter of explanation the Manager will review the basis of the billed amount. After review the Manager may: a. If special circumstances exist, waive returned check charge, reconnect charge, and late charge, or b. Recommend any adjustment to gas charges as determined by the review. Any recommendation for a credit or refund must be approved by the City Administrator, and, if the amount exceeds $10,000, City Council approval will also be required. 4. If the matter is not satisfactorily resolved by the Manager, the Customer may petition the City Council for a final decision. C. Discontinuance of Service. Failure of the Customer to make payment under protest of the disputed bill prior to the expiration date of a 48 hour Notice of Call will warrant discontinuance of service without further notice. D. Additional Bills during Review. If before completion of the City Council's review, additional bills become due which the Customer wishes to dispute, the additional amounts claimed by the City to be due for such additional bills shall be paid before they become past due and failure to do so will warrant discontinuance of service in accordance with Rule No. 11. Page 13 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No. 11 DISCONTINUANCE AND RESTORATION OF SERVICE A. Past Due Bills. When bills are presented monthly, they will be considered past due if payment is not received within 20 days after the Date of Presentation. When bills are presented weekly, they will be considered past due if payment is not received within 5 days after the Date of Presentation. B. Nonpayment of Bills. A Customer's service may be discontinued for nonpayment of a bill for service previously rendered by the City provided such bill is not paid within 48 hours after a notice of discontinuance of service by delivery of a "Notice of Call." 2. If a Customer is receiving more than one service, any or all services may be discontinued when any service, regardless of location, is discontinued for nonpayment Under no circumstances may service be discontinued for nonpayment of a bill to correct previously billed incorrect charges for a period in excess of the preceding three months, unless such incorrect charges have resulted from the Customer not abiding by these Rules. 4. Service will not be discontinued on any Saturday, Sunday or legal holiday for delinquency in payment of a bill for gas service. C. Violations or unsafe Equipment The city may refuse or discontinue service to a Customer if the City determines: a. That any part of the Customer's piping or other equipment, or the use thereof, is unsafe or in violation of applicable laws, ordinances, rules or regulations of public authorities. b. That any condition existing upon the Customer's Premises endangers the City's service facilities. 2. Such discontinuance shall continue until piping, equipment, or use has been put in a safe condition or the violation remedied. In the event of a dangerous condition, the City may without giving prior notice immediately discontinue service to any Premises. 3. The city does not assume any responsibility of inspecting or repairing the Customer's piping or other equipment or any part thereof and assumes no liability therefore. Page 14 of 19 City of Vernon Council Resolution — effective June 18, 2013 D. Service Detrimental to Other Customers. The City will not provide service for equipment, the operation of which will be detrimental to the service of the City's other Customers, and will discontinue gas service to any Customer which continues to operate such equipment after having been given notice to cease by the City. E. Fraud. The City may refuse or discontinue service immediately if the acts of the Customer or the conditions upon its Premises are such as to indicate intent to defraud the City. F. Restoration of Service. Before restoring service that has been discontinued for nonpayment of a bill or for a violation: The City may require payment of a reconnection charge, as defined in Rate Schedule G-CS. In case the Customer requests that such service be reconnected on the day of its request or outside of regular business hours, the reconnection charge may be increased to cover the cost thereof. 2. The Customer will be required to reestablish credit in accordance with Rule No. 6 or make prepayment in accordance with Rule No. 7. 3. The Customer will be required to pay all delinquent bills. Rule No. 12. RATE AND OPTIONAL RATES A. Effective Rates. The rates charged by the City of natural gas service are those approved by resolution of the City Council. A copy of complete Rate Schedules will be maintained for public inspection at the City Clerk's Office. B. Optional Rates. If there are two or more Rate Schedules or optional provisions applicable to the class of service requested by the applicant, the City will call applicant's attention thereto at the time application is made, and the applicant must designate which Rate Schedule of optional provision is desired. C. Change in Equipment of Operation. When the Customer, in accordance with Section C of Rule No. 3, notifies the City of any material change in the size, character, or extent of its equipment or operations the City will, within a reasonable time, advise the Customer of the resulting rate options. In the absence of the notification provided for in Section C of Rule No. 3, the City assumes no responsibility for advising the Customer of lower optional rates under other existing Rate Schedules or optional provisions available as a result of the Customer's changes in equipment of operations. D. New or Revised Rates. If new or revised Rate Schedules are established, the City will, within a reasonable time, bring them to the attention of the Customers which may be affected. Page 15 of 19 City of Vemon Council Resolution _ effective June 18, 2013 E. Change of Rate Schedule. A change to another applicable Rate Schedule or optional provision will be made only when a Customer elects in writing to make such change. 2. If a Customer so elects, the change to another Rate Schedule will be made provided: a. A change of Rate Schedule has not been made during the past twelve-month period; or b. The change of Rate Schedule is made to, or from, a new or revised Rate Schedule; or C. There has been a change in the Customer's equipment or operations for that service which, in the opinion of the City, justifies the change of Rate Schedule. 3. The change of Rate Schedule will become effective for the billing period during which the Customer has requested such change. 4. City of Vernon natural gas rates schedules are applicable only for service supplied entirely by the City without interconnection with any other source of natural gas. Rule No. 13 SHORTAGE OF SUPPLY AND INTERRUPTION OF SERVICE A. Shortage and Interruption. The City does not guarantee a sufficient supply of gas or freedom from interruption. The City will not be liable for interruption or shortage of supply, nor for any loss or damage occasioned thereby. B. Temporary Suspension for Repairs. Whenever the City finds it necessary to make repairs or improvements to its gas system, it will have the right to suspend temporarily the delivery of gas. In such cases reasonable notice will be given to the Customers. To the extent practicable such repairs or improvements will be performed expeditiously and with as little inconveniences to the Customers as possible. Whenever, in the operation of the City's gas system interruption in the delivery of gas to Customers results from or is occasioned by any other cause, notice of such interruption will not be given to the Customers. The City will exercise reasonable diligence to restore delivery of gas energy. C. Apportionment of Supply During Time of Shortage. If a shortage of supply of gas occurs, the City will apportion its available supply among its Customers as consistent with SoCalGas Rule No. 23. Page 16 of 19 City of Vernon Council Resolution — effective June 18, 2013 Rule No. 14. SERVICE CONNECTIONS AND FACILITIES ON CUSTOMER'S A. General. The City will construct, own, operate and maintain natural gas lines only along public streets, roads and highways which the City owns or has the legal right to occupy, and on public lands and private property across which rights of way or easements satisfactory to the City may be obtained at the Customer's cost and without cost or condemnation by the City. Upon request by the City, the applicant shall provide such rights of way or easements. B. Connection Costs. Connection costs include traffic control, surface sawing, trenching, boring, pipe, tapping, backfill, surface restoration, meter, regulators, electronic corrector, and any other labor and equipment necessary for the City to connect Customer, up to and including the meter, regulator(s) and electronic corrector (meter equipment). Connection costs do not include costs incurred by Customer on the Customer side of the meter equipment. Connection costs shall be shared between Customer and City. City shall contribute an amount equal to the greater of. (1) four cents per Thenn multiplied by Customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay the balance of costs. All installed facilities up to and including the meter equipment shall be owned and maintained by City of Vernon. All installed facilities downstream of the meter equipment shall be owned and maintained by Customer. Customer may request City of Vernon to conduct additional work at Customer's expense to modify Customer house line piping. C. Meter Installations. The Customer shall provide an approved location for the Meter or Meters and associated equipment on the Premises which at all times shall be accessible for inspection, reading, and testing. In general, the City will approve a location if it is within close proximity to the property line of the premises, there is no superior alternate location, and it can be installed in a successful manner within a reasonable period of time, taking into account economic, environmental, legal, safety, social, and technological factors. The Director of Light & Power may approve an alternate location not in proximity to the property line, on written findings that doing so would demonstrably reduce economic costs to the city, foster public safety, mitigate unreasonable disruption or cost to the property owner or occupant, or be preferable for engineering, geologic, or other related concerns. Approval of such alternate location is conditioned upon the City's receiving necessary easements or license agreements to allow maintenance of City equipment. If requested by City, Customer shall allow City, at City's expense, to install and maintain an active phone line terminating at the gas meter for the purpose of City of Vernon Page 17 of 19 City of Vernon Council Resolution — effective June 18, 2013 telephonically communicating with the meter. City, at City's expense, may instead utilize wireless transmission to access meter data. The Customer shall, at its own expense, provide a new and approved location whenever the existing location becomes inaccessible for inspecting, reading, or testing. Rule No.15. METER TEST AND ADJUSTMENT OF BILLS FOR METER ERROR A. Tests. Prior to Installation. Every Meter will be tested at or prior to the time of installation, and no Meter will be placed in service if found to register more than 1 % fast or 1 % slow. 2. On Customer Request. A Customer may, on notice of not less than one week, require the City to test the Meter for its service. A charge will be made for such a test in accordance with Rate Schedule G-CS, but, this amount will be waived if the Meter is found to register more than 2% fast or 2% slow. A Customer shall have the right to require the City to conduct the test in its presence or in the presence of its expert or other appointed representative. The results of the test will be furnished to the Customer within a reasonable time after completion of the test. B. Adjustment of Bills for Meter Error. Fast Meters. When, upon test, any meter is found to be registering more than 2% fast, the City will refund to the Customer the amount of the overcharge based on corrected Meter readings for the preceding six months, subject to the provisions of paragraph 4 hereof. 2. Slow Meters. When, upon test, any meter is found to be registering more than 2% slow, the City may bill the Customer for the amount of the undercharge based on corrected meter readings for the preceding six months, subject to the provisions of paragraph 4 hereof. 3. Nonregistering Meters. When, upon test, any Meter is found to be nonregistering, the City may bill the Customer for the estimated amount of gas consumed but not registered for a period of three months, subject to the provisions of paragraph 4 hereof. Bills for this purpose will be estimated from the Customer's prior use, the Customer's subsequent use correctly Metered, the City's experience with other Customers of the same class, and/or the general characteristics of the Customer's operations. Page 18 of 19 City of Vernon Council Resolution — effective June 18, 2013 4. General. When it is found that the error in a Meter is due to causes the date of which can be reliably established, the overcharge or the undercharge will be computed back to but not beyond that date, provided, however, that in no case will a bill for undercharge on domestic service schedules be rendered for a period exceeding three months. When a slow or nonregistering meter has been caused by an action of the Customer, its agents, employees, or licensees, the above time limitations shall not apply. C. Replacement of Meters. Any Meter damaged or destroyed by the Customer, its agents, employees, clients, or visitors shall be replaced by the City at the Customer's expense. 2. Any defective Meter, other that the above, shall be replaced by the City at its expense. Rule No. 16. SUPPLY TO SEPARATE PREMISES AND USE BY OTHERS A. Separate Metering. Separate Premises will not be supplied through the same Meter, except as may be specifically provided for in the applicable Rate Schedule. B. Other uses or Premises. Gas received from the City shall not be used by the Customer upon other Premises or for other purposes than those specified in its application or in the applicable Rate Schedule. C. Use by Others. A Customer shall not charge for gas received from the City and used by another person, except: 1. If the charge to tenants is absorbed in the rental for the Premises or space occupied; or 2. If the Customer is the owner, lessee, or operator of a multiple -occupancy Premises and provides submeters for the gas used by tenants at the same rates that the City would charge for the service if supplied directly. In such cases, the Customer shall furnish, install, maintain, and test the submeters. Page 19 of 19 City of Vemon Council Resolution _ effective June 18, 2013 EXH I BIT C REDLINED VERSION OF THE REVISIONS TO RATE TARIFF June 18, 2013 CITY OF VERNON NATURAL GAS DEPARTMENT Schedule G-1 RESIDENTIAL GAS SERVICE APPLICABILITY This schedule applies to natural gas service to individually metered single family premises, including those separately metered in a multi -family complex, that have elected natural gas service from City of Vernon's natural gas distribution system. RATES Monthly Service Charge: Transportation Charge: $10 29.212 Cents per Therm Commodity Charge: Commodity Charge is equal to the City's Weighted Average Cost of Gas calculated at the SoCalGas Citygate for gas purchased by the City for each month for customers purchasing gas from the City. Gas supply will consist of monthly index price gas, daily market priced gas, and long-term supply purchased for customers purchasing gas from the City. The Commodity Charge includes the cost of transporting the gas to the SoCalGas Citygate. Bond -financed, prepaid gas may be provided to customers at prices not to exceed market prices for monthly index price gas. From time -to -time, the Commodity Charge may include a Purchased Gas Adjustment that will be used maintain a zero sum gain to COV for gas sales. Commodity Administrative Fee: 0.300 Cents per Therm SPECIAL NOTES 1. Residential customers receiving natural gas service from the City of Vernon are not eligible for Schedule G-CARE (SoCalGas Rate), or any other SoCalGas rates or SoCalGas benefit programs. 2. Costs for connection of Customer's facility to City's gas system shall be shared between Customer and City. City shall contribute an amount equal to the greater of (1) four cents per Therm multiplied by customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City: or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay Page 1 of 2 City of Vernon Council Resolution 2010-762013- effective June 18Jul -, ^0'0 .2013 the balance of costs. The total connection cost includes traffic control, trenching, piping, repaving, and installation of the meter, regulator(s), and other equipment required by the City. See also Rule 14. An "Application and Contract for Natural Gas Service" is required. In the event of curtailment, any Customer unable or unwilling to curtail shall be assessed penalty based on the rate per Therm that SoCalGas would charge customers whose volumes used are in violation of curtailment. The City shall not be liable for damages caused by curtailment, discontinuance, or shut off of gas service. 4. Gas purchased under this schedule shall be used only by the Customer and such Gas may not be sold, transported, assigned, distributed, exchanged, or otherwise transferred to benefit another customer or provide non -municipal natural gas to any natural gas user, transporter, or consumer within the City. 5. Any additional transmission costs, taxes, fees, regulatory surcharges, and interstate or intrastate pipeline charges, incurred by City on behalf of Customer will be passed through to Customer at cost. Page 2 of 2 City of Vernon Council Resolution 2010 762013- effective June 1 ° tly+ 2013 CITY OF VERNON NATURAL GAS DEPARTMENT Schedule G-2 SMALL COMMERCIAL GAS SERVICE APPLICABILITY This schedule is for combined gas commodity and transportation service to small commercial customers using less than 250,000 Therms per year that have elected gas service through City of Vernon's natural gas system. This schedule is also applicable to all other non-residential customers that have elected Core Service. RATES Monthly Service Charge: $50 Monthly Transportation Charges: Rate, in Cents per Therm Tier I 0 — 4,187 Therms 17.312 Tier II Over 4,187 Therms 7.735 Commodity Charge: Commodity Charge is equal to the City's Weighted Average Cost of Gas calculated at the SoCalGas Citygate for gas purchased by the City for each month for customers purchasing gas from the City. Gas supply will consist of monthly index price gas, daily market priced gas, and long-term supply purchased for customers purchasing gas from the City. The Commodity Charge includes the cost of transporting the gas to the SoCalGas Citygate. Bond -financed, prepaid gas may be provided to customers at prices not to exceed market prices for monthly index price gas. From time -to -time, the Commodity Charge may include a Purchased Gas Adjustment that will be used to maintain a zero sum gain to COV for gas sales. Commodity Administrative Fee: 0.30 Cents per Therm Page 1 of 2 City of Vemon Council Resolution 2044-762012-7620123- effective jul• ' 0102019June 18 .2013 SPECIAL NOTES 1. Customers purchasing Gas Commodity from City of Vernon shall provide an estimate of each month's consumption, days of operation, and a facility contact responsible for natural gas consuming equipment. 2. Costs for connection of Customer's facility to City's gas system shall be shared between Customer and City. City shall contribute an amount equal to the greater of (1) four cents per Therm multiplied by customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay the balance of the costs. The total connection costs include traffic control, trenching, piping, repaving, and installation of the meter, regulator(s), and other equipment required by the City. See also Rule 14. An "Application and Contract for Natural Gas Service" is required. In the event of curtailment, any Customer unable or unwilling to curtail shall be assessed penalty based on the rate per Therm that SoCalGas would charge customers whose volumes used are in violation of curtailment. The City shall not be liable for damages caused by curtailment, discontinuance, or shut off of gas service. 4. Gas purchased under this schedule shall be used only by the Customer and such Gas may not be sold, transported, assigned, distributed, exchanged, or otherwise transferred to benefit another customer or provide non -municipal natural gas to any natural gas user, transporter, or consumer within the City. 5. Any additional transmission costs, taxes, fees, regulatory surcharges, and interstate or intrastate pipeline charges, incurred by City on behalf of Customer will be passed through to Customer at cost. Page 2 of 2 City of Vernon Council Resolution 2040-7620124620123- effective '••'� �� 1, 2010201 June 18 .2013 CITY OF VERNON NATURAL GAS DEPARTMENT Schedule G-3 LARGE COMMERCIAL GAS TRANSPORTATION APPLICABILITY This schedule is for City of Vernon gas transportation service to large commercial customers using at least 250,000 Therms per year. Customers receiving service under this schedule may purchase commodity gas from a Third -Party Supplier or may request to purchase commodity gas from City of Vernon under Schedule G-4. RATES Monthly Customer Charge: $300 Monthly Transportation Charges: Rate, in Cents per The Tier I 0 — 20,833 Therms 13.815 Tier II 20,834 — 83,333 Therms 6.412 Tier III Over 83,333 Therms 4.784 SPECIAL CONDITIONS. GENERAL. The following Special Condition is applicable to all customers, whether they receive transportation -only service or both transportation and commodity service. Costs for connection of Customer's facility to City's gas system shall be shared between Customer and City. City shall contribute an amount equal to the rg eater of: (Ifour cents per Therm multiplied by customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay the balance of costs. The total connection costs include traffic control, trenching, piping, repaving, and installation of the meter, regulator(s), and other equipment required by the City. See also Rule 14. An "Application and Contract for Natural Gas Service" is required. SPECIAL CONDITIONS, TRANSPORTATION -ONLY SERVICE. The following Special Conditions are applicable to customers that receive transportation -only service. If customers receive commodity service from COV, the following Special Conditions do not apply and the Special Conditions in Schedule G-4 apply. 1. As a condition precedent to service under this schedule, a "Natural Gas Transportation Agreement" must be executed with City. The Transportation Agreement shall provide specific terms and conditions consistent with this schedule. 2. Transportation of natural gas shall be consistent with SoCalGas Rule No. 30, "Transportation of Customer -Owned Gas," except where it conflicts with Vernon's rates and rules. 3. Nomination procedures shall apply to gas transported and delivered to Customer by Vernon as follows. (a) All nominations shall be communicated to Vernon (or its designated agent) thirty (30) minutes prior to SoCalGas' deadlines. Communication shall be confirmed by email or facsimile. (b) All determinations by Vernon as to allocation points and/or maximum daily quantities related thereto or as to the procedures utilized for any allocation process, when made by Vernon, shall be final. (c) In the event of a declared Over -Nomination Event by SoCalGas, if any Customer is unable or unwilling to reduce its transportation nomination within the two (2) hour window allotted by SoCalGas and Customer's nominations exceed 110% of its gas usage, Customer may, at Vernon's sole discretion, be assessed a charge based on the rate per Therm that SoCalGas would charge customers whose nomination exceed 110%. (d) Winter Deliveries. During November through March, any Customer unable or unwilling to nominate and deliver volumes meeting the minimum requirement as specified by SoCalGas in its current applicable Rule 30, may, at Vernon's sole discretion, be assessed a charge based on the rate per Therm that SoCalGas would charge customers whose nomination and delivery fails to meet the minimum requirement as specified by SoCalGas in its current applicable Rule 30. 4. In the event of curtailment, any Customer unable or unwilling to curtail shall be assessed penalty based on the rate per Therm that SoCalGas would charge customers whose volumes used are in violation of curtailment. The City shall not be liable for damages caused by curtailment, discontinuance, or shut off of gas service. 5. Monthly imbalances shall be resolved as follows. (a) Over -Deliveries. Vernon shall permit Customer to carry-over, to the following month, over -delivery volumes of up to 10% of Customer's consumption for the month in which the over -delivery occurred. Any Customer volumes carried over will be applied first to the following month's consumption. Any volumes of over -deliveries in excess of 10% of Customer's consumption shall be purchased by Vernon by crediting to the Customer an amount that is not less than the volume of over -deliveries times the SoCalGas Buy -Back Rate in SoCalGas Schedule G-IMB for the month in which the excess imbalance was incurred. (b) Under -Deliveries. Vernon shall permit Customer to carry-over, to the following month, under -delivery volumes of up to 10% of Customer's consumption for the month in which the under -delivery occurred. Any volumes of under -deliveries up to 10% of Customer's consumption shall be applied to the following month's consumption. Any volumes of under -deliveries in excess of 10% of Customer's consumption shall be sold to Customer by Vernon at a rate that is not more than the volume of under -deliveries times the SoCalGas Standby Procurement Charge in SoCalGas Schedule G-IMB for the month in which the excess imbalance was incurred. (c) Imbalance Trading. Vernon has no program for trading of monthly imbalances amongst Vernon customers; however, Vernon, or Vernon's gas management agent, may, at its sole discretion, be willing to facilitate imbalance trading through SoCalGas consistent with Schedule G-IMB. As such, Vernon specifically does not imply an obligation to facilitate imbalance trading. (d) Stricter Provisions. Should SoCalGas impose additional, more restrictive, balancing provisions upon Vernon, the stricter provisions will be adopted and implemented by Vernon, as required by SoCalGas, and thereafter will apply to Customer. Such more restrictive balancing conditions may include the winter balancing rules contained in SoCalGas Rule 30. Customer shall be subject to changed balancing requirements at the time such balancing is imposed by SoCalGas upon Vernon, irrespective of prior written notice to Customer; however, Vernon will attempt to provide advance written notice to Customer. 6. Gas transported under this schedule shall be used only by the Customer and such Gas may not be sold, transported, assigned, distributed, exchanged, or otherwise transferred to benefit another customer or provide non -municipal natural gas to any natural gas user, transporter, or consumer within the City. Any additional transmission costs, taxes, fees, regulatory surcharges, and interstate or intrastate pipeline charges, incurred by City on behalf of Customer will be passed through to Customer at cost. CITY OF VERNON GAS MUNICIPAL UTILITIES DEPARTMENT RULES FOR GAS SERVICE The latest revision of the RULES FOR GAS SERVICE has been prepared by the Gas Municipal Utilities Department. The City Council of the City of Vernon shall review and approve these Rules. Subsequent City Council Resolutions are necessary for any and all future updating of these Rules. For each case, those conditions drafted in a Resolution will take precedence until the Rules and Regulations are revised to reflect those changes. Rule Description 1. Definitions 2. Description of Service 3. Application for Service 4. Contracts 5. Special Information Required on Forms 6. Establishment and Reestablishment of Credit 7. Prepayments 8. Notices 9. Presentation and Payment of Bills 10. Disputed Bills 11. Discontinuance and Restoration of Service 12. Rate and Optional Rates 13. Shortage of Supply and Interruption of Service 14. Service Connections and Facilities on Customer's Premises 15. Meter Test and Adjustment of Bills for Meter Error 16. Supply to Separate Premises and Use by Others Page 1 of 20 Revised 09/1/09 10/6/06 10/6/06 10/6/06 10/6/06 10/6/06 10/6/06 10/6/06 10/6/06 10/6/06 10/6/06 10/6/06 10/6/06 99/l/0 06/18/13 10/6/06 10/6/06 City of Vernon Council Resolution 40,04-5-leffective September 1,240June 88. 2013 Rule No. 1. DEFINITIONS For the purpose of these Rules the terms and expressions listed below shall have the meanings set forth opposite them when initially capitalized in the text. Agent Marketer (Agent): Agents are individuals, companies, or consortiums that are appointed by noncore customers to act on their behalf in activities such as the purchasing, nominating and balancing of gas supplies. As an example, however, Agents bear no financial responsibility for the transportation imbalances incurred by the customers they represent. British Thermal Unit (Btu): The standard unit for measuring a quantity of thermal energy. One Btu equals the amount of thermal energy required to raise the temperature of one pound of water one degree Fahrenheit and is exactly defined as equal to 1,055.05585262 joule, rounded to 1,055.056 joule. (A joule is equal to one watt -second.) Commodity Administrative Fee: Fee charged to customers who procure supply directly from COV to cover gas purchasing expenses. Commodity Charge: Commodity Charge is equal to the City's Weighted Average Cost of Gas calculated at the SoCalGas Citygate for gas purchased by the City for each month for customers purchasing gas from the City. Gas supply will consist of monthly index price gas, daily market priced gas, and long-term supply purchased for customers purchasing gas from the City. The Commodity Charge includes the cost of transporting the gas to the SoCalGas Citygate. Bond - financed, prepaid gas may be provided to customers at prices not to exceed market prices for monthly index price gas. From time -to -time, the Commodity Charge may include a Purchased Gas Adjustment that will be used maintain a zero sum gain to COV for gas sales. COV: City of Vernon Contracted Marketer: Contracted Marketers are individuals, companies, or consortiums that arrange for natural gas procurement -related activities on behalf of noncore customers. Contracted Marketers must enter into a contract with SoCalGas and meet certain credit requirements. They must comply with SoCalGas' Rules 30 and 35 and all other tariffs which address the transportation and management of customer -owned gas on SoCalGas' system. Core Service: Core Service consists of all residential usage regardless of size, all commercial usage less than 20,800 Therms per month, and all other customers that have elected Core Service under Rate Schedule G-2. Curtailment: When SoCalGas and/or Vernon (jointly or separately referred to hereafter in this definition as "Utility") or other transmission pipeline used by Vernon, initiates suspension of gas service, Utility may temporarily reduce the daily quantity of gas it will transport or deliver or terminate service entirely for certain service categories as needed for operational and/or contractual requirements. Curtailment is implemented when, in the Utility's judgment, there exists a restriction or limitation on Utility transmission or distribution pipelines necessary for the Page 2 of 20 City of Vernon Council Resolution 'mileffective Septe -,;;ems , '^009June 88. 2013 acceptance, transportation or subsequent redelivery of gas resulting in Utility being unable to meet its operational, contractual or gas customers' requirements or when the Utility has a deficiency of gas supply available to meet its operational, contractual or sales customers' requirements. Customer -Owned Gas: Natural gas transported by Vernon for customer's own use where title to such natural gas is held by Vernon's customer or third party and is not a part of the Vernon - owned system supplies. Customer's Point of Delivery: The COV natural gas meter located at the Customer's place of consumption. Day: Period commencing at 12:00 midnight (Pacific time) on any calendar day and ending at 12:00 midnight (Pacific time) on the next succeeding calendar day. Decatherm: Ten Therms or 1,000,000 British thermal units (Also 1 MMBtu). Force Majeure: Unanticipated events or conditions beyond the reasonable control of the party claiming Force Majeure which could not have been prevented by the exercise of due diligence. Force Majeure as it applies to tariffs, or rate schedules specifically, does not include required maintenance of customer's facilities, plant closures, or economic conditions. HeatingValue: alue: Number of Btus liberated by the complete combustion at constant pressure of one cubic foot of natural gas at a base temperature of sixty degrees Fahrenheit (60°F) and a pressure base of fourteen and seventy-three hundredths (14.73) psia, with air at the same temperature and pressure as the natural gas, after the products of combustion are cooled to the initial temperature of the natural gas,and after the water vapor of the combustion is condensed to the liquid state. The Heating Value of the natural gas shall be corrected for the water vapor content of the natural gas being delivered except that, if such content is seven (7) pounds or less per one million (1,000,000) cubic feet, the natural gas shall be considered to be dry. Marketer: Third party which accesses one or more interstate or intrastate pipeline systems for the purpose of transporting natural gas to SoCalGas on Marketer's own behalf or on the behalf of designated end -use customers. Mcf/d: Thousands of cubic feet per day. Measure quantifies the amount of gas being consumed or transported on a daily basis. Noncore Service: Noncore Service is for all customers not defined as Core Service. Customers receiving noncore service must have Automated Meter Reading (AMR) equipment installed at customer's expense as a condition of noncore service. Premises: The area of land employed in a single enterprise, as determined by the City, whether or not divided by a dedicated street, highway, other public thoroughfare, or a railway. Page 3 of 20 City of Vernon Council Resolution 30;043-!effective Sepiembef 1, 2009June 18, 2013 Purchased Gas Adjustment (PGA): The PGA is applicable to Customers purchasing Gas from COV. The PGA may be negative or positive and will show as a line item in COV's monthly posted Commodity Charge. The purpose of the PGA is to maintain a zero sum gain to COV for Commodity Gas Sales. Over -Nomination Event: As defined in SoCalGas Rule No. 30. Determined solely by SoCalGas in the event transportation nominations received by SoCalGas for a specific date of gas flow exceed SoCalGas expected system capacity. SoCalGas: Southern California Gas Company, also "The Gas Company." SoCalGas Border: Delivery points for Gas into the SOCaIGas system. SoCalGas Citygate: Virtual delivery and pricing point for Gas located within the SoCalGas system, established October 1, 2008. Therm: 100,000 British Thermal Units. Third -Party Supplier: Supplier of natural gas to noncore customers including, but not limited to Energy Service Provider, Contracted Marketer, Agent, or its equivalent. WACOG. See Weighted Average Cost of Gas. Weighted Average Cost of Gas (WACOG): The average cost of purchased gas, based on specific quantities and associated prices. Page 4 of 20 City of Vernon Council Resolution 49,045-!effective September-1,-2MJune 88. 2013 Rule No. 2. DESCRIPTION OF SERVICE The following general rules shall apply to all services. 1. The character of service available at any particular location should be ascertained by inquiry at the City's office. 2. The Rate Schedules are applicable for service where the Customer transports its entire gas requirements through the City's Gas system, and are not applicable where a part of the Customer's gas requirements are supplied from some other source. The gas supplied by Vernon is natural gas that is obtained from various sources, primarily oil and gas fields, but also includes landfills and other biomass processes. The gas may consist of any combustible gas or gases so produced. The gas is processed to remove condensable constituents, to minimize the concentration of certain impurities as specified by orders of the California Public Utilities Commission and to add a warning odorant. Customers using gas supplied by Vernon for processes which are affected by impurities in excess of specified minimum levels are responsible for testing gas supplied and for rendering the gas suitable for their intended uses. EXCEPT AS PROVIDED IN THIS RULE, VERNON MAKES NO WARRANTIES AS TO THE NATURE, COMPOSITION OR PROPERTIES OF THE NATURAL GAS SUPPLIED AND THE OBLIGATIONS SET FORTH IN THIS RULE ARE EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, GUARANTIES OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE (INCLUDING WITHOUT LIMITATION ANY OBLIGATIONS OF VERNON WITH RESPECT TO FITNESS, MERCHANTABILITY AND CONSEQUENTIAL DAMAGES). 4. Heating Value of Gas Served. The heating value of the natural gas served will vary from time to time depending upon the supplies being drawn and the relative quantities being taken. The monthly average heating values (in Btu per cubic foot, dry basis, at normal atmospheric pressure of 30" mercury and a temperature of 60 degrees Fahrenheit) of the gas served 1000-1060 Btu, and the maximum variation will rarely exceed 100 Btu above or below this range. Pressure. The standard delivery pressure at the point of delivery is eight inches of water column. For connected loads of one million Btu/hour or greater, the following delivery pressures can be provided upon request and acceptance by Vernon: a) Two Pounds b) Five Pounds c) Service at as -available fluctuating pressures from the point of service d) Such other pressure as the Vernon and the Customer agree to Page 5 of 20 City of Vernon Council Resolution 40-,045-!effective September 4,-2809June 88. 2013 Rule No. 3. APPLICATION FOR SERVICE A. Application for Service. Each applicant for gas service will be required to sign an Application on a form provided by the City and, upon request, will be required to furnish the following information: 1. Name of applicant (if not an individual, insert business organization and person to be served). 2. Date and place of Application. 3. Location of Premises to be served. 4. Date applicant will be ready for service. 5. Whether the Premises have been heretofore supplied. 6. Purpose for which service is to be used. 7. Applicant's mailing address. 8. Whether applicant is owner or tenant of, or agent for, the Premises. 9. Rate Schedule desired if optional rate is available. 10. Information to establish credit of applicant. 11. Such other information as the City may reasonably require. The Application is a request for service and does not in itself bind the City to provide service except under reasonable conditions, nor does it bind the applicant to take service for a longer period than the minimum requirements of the Rate Schedule. B. Individual Liability for Joint Service. Two or more Persons who join in one Application shall be jointly and severally liable thereunder and shall be billed by means of a single periodic bill mailed to the Person designated on the Application to receive the bill. C. Change in Customer's Equipment or Operations. Customers shall give the City written notice of the extent and nature of any material change in the size, character, or extent of its equipment or operations for which the City is supplying gas service before making any such change. Page 6 of 20 City of Vernon Council Resolution 44,04-5-leffective Sept "e1, ^^June 88. 2013 Rule No. 4. CONTRACTS A. Facilities Contracts. A contract or agreement to pay for the use, installation, or removal of facilities will be required if the provisions of the rate schedules so specify, in which case the terms of the contract will be governed thereby. When a Person, whether or not a Customer, desires to have the City modify, rearrange, relocate, or remove any of its facilities, the City if it agrees to make such changes may require the Person, at whose request the changes are made, to agree to pay, in advance or otherwise, the cost to the City of making the changes. B. City Council Approval. Standard contract forms shall be approved by the City Council by resolution pursuant to City Charter Section 8.10. Such standard contracts maybe executed by the City Administrator or his designee in accordance with these Rules and the rate schedules without additional City Council approval. Page 7 of 20 City of Vernon Council Resolution IQ94Sleffective September ^^^ June 88. 2013 Rule No. 5. SPECIAL INFORMATION REOUIRED ON FORMS A. Applications and Contracts. Each Application and contract for gas service will contain the following provision: This Application or contract for services shall at all times be subject to the rules and regulations of the City of Vernon, which may be changed or modified by the City Council from time to time in the exercise of its jurisdiction. B. Customer's Bills. Information printed on each bill for gas service will include the following: PLACE OF PAYMENT The City of Vernon Customer Service Division, 4305 Santa Fe Avenue, Vernon, CA 90058-1786 is the only authorized payment station. If paid elsewhere, the City is not responsible for payments delayed in reaching said office. Checks shall be made payable to the City of Vernon. PAYMENT Bills are due and payable on the Date of Presentation shown on this bill. Bills become delinquent and subject to a late fee if payment is not received (postmark not acceptable) by the City of Vernon 20 days thereafter. If not paid within this time, service may be discontinued. If discontinued, a reconnection charge, pre -payment of the closing bill equal to twice the average monthly bill, and the entire delinquent bill shall be remitted in full before a discontinued service will be reestablished. RETURNED CHECKS If a check for payment is returned unpaid, a service charge will be assessed. 2. Payment in lieu of the returned check will be accepted only in the form of cash, money order, or cashier's check. Personal or business checks will not be accepted for a period of at least 6 months on accounts with more than one returned check within a 12-month period. UPIall) 00/:VY(1W If you question this bill, please request an explanation from the Customer Service Division. If you thereafter believe that you have been billed incorrectly, to avoid discontinuance of service send your payment under protest to the Customer Service Division with a copy of the bill and a written statement supporting your belief that the bill is not correct. Such statements regarding disputed gas bills should be made to the attention of the Gas System Manager. The Manager will review the basis of the billed Page 8 of 20 City of Vernon Council Resolution 44,4 451effective September 0097une 18. 2013 amount and authorize any adjustment required in accordance with his findings. If the matter is not satisfactorily resolved by the Manager, you may petition the City Council for final determination. If you need further information, please call the Customer Service Division at (213) 583- 8811 between the hours of 7:00 a.m. and 5:30 p.m., Monday through Thursday. RULES AND REGULATIONS The City of Vernon Gas Service Rules, under which service is rendered are on file at the Customer Service Division. If you wish a copy of any information pertaining to your account, please write to the Customer Service Division. MEASURES OF CONSUMPTION Natural gas meters measure cubic feet of natural gas; however billing quantities are adjusted for the Heating Value of the Gas to yield Therms billed. Rates are stated in terms of Therms. C. Final Notice. The following statement will be printed on each final Notice: This notice includes a late fee. If you question this bill please request an explanation from the Customer Service Division. If you thereafter believe that you have been billed incorrectly, to avoid discontinuance of service send your payment under protest to the Customer Service Division with a copy of the bill and a written statement supporting your belief that the bill is not correct. Such statements regarding disputed gas bills should be made to the attention of the Gas System Manager. The Manager will review the basis of the billed amount and authorize any adjustment required in accordance with his findings. If the matter is not satisfactorily resolved by the Manager, you may petition the City Council for final determination. If you need further information, please call the Customer Service Division at (213) 583-8811 between the hours of 7:00 a.m. and 5:30 p.m., Monday through Thursday. If a discontinued service is reestablished, a reconnection charge will be assessed. Page 9 of 20 City of Vernon Council Resolution d8,04Sleffective September a r' ''^P9June 88. 2013 Rule No. 6. ESTABLISHMENT AND REESTABLISHMENT OF CREDIT A. Establishment of Credit. Each applicant, before receiving service, will be required to make prepayment in accordance with Rule No. 7 or to satisfactorily establish credit. Credit will be deemed established by one or more of the following means at the sole discretion of the City: The applicant is the owner with a substantial equity, of value satisfactory to the City, in the Premises to be served. 2. The applicant furnishes a guarantor, satisfactory to the City, to secure payment of bills for gas service. The applicant has been a Customer of the City for a similar type of service within the last two years and during the last twelve consecutive months of that prior service did not have more than two past due bills and provided that the credit of the applicants is unimpaired in the opinion of the City. The applicant's credit is otherwise established to the satisfaction of the City. B. Reestablishment of Credit. An applicant or Customer will be required to make prepayment in accordance with Rule No. 7 and/or to reestablish credit in accordance with Rule No. 6 under any of the following conditions: 1. In case applicant previously has been a Customer of the City and services have been discontinued by the City during the last twelve months because of nonpayment of bills. 2. In case a Customer has failed to pay bills before they become past due as prescribed in Rule No. 11-A, and has further failed to pay such bills within two (2) City working days after presentation of a discontinuance of service notice for nonpayment of bills. This condition will apply regardless of whether or not service has been discontinued. 3. In case the conditions of service or basis on which credit was originally established have, in the opinion of the City, materially changed. Page 10 of 20 City of Vernon Council Resolution 44,044�-leffective Sept,... , ^^^"June 88. 2013 Rule No. 7 PREPAYMENTS A. Amount of Prepayment. Prepayment shall be required from any applicant or Customer which has not established or reestablished credit. The amount of the prepayment shall be twice the estimated average monthly bill. B. Return of Prepayment. When an application for Gas service has been cancelled prior to the establishment of service, the prepayment will be applied to any charges applicable in accordance with the Rate Schedules and the applicant will be so advised. The excess portion of the prepayment will be refunded. 2. When the Customer's credit has been established in accordance with Rule No. 6, the City will apply the balance of the prepayment as a credit against future bills. 3. Upon discontinuance of Gas service, the City will apply the prepayment to any outstanding charges and the excess portion of prepayment will be refunded. Rule No. 8. NOTICES A. A Notice to a Customer. When a notice from the City to a Customer is required, it will normally be given in writing; either mailed to the Customer's Mailing Address or delivered to the Customer's place of business, except that in emergencies the City may give an oral notice. 1. Final Notice. The "Final Notice" for nonpayment of a delinquent account shall be sent by first class mail, addressed to the Customer to whom the service is billed, at least 10 calendar days prior to proposed termination of service. 2. Notice of Call. Notice of discontinuance of service for nonpayment of a delinquent account shall be given by delivery of a "Notice Call" to the Customer's place of business at least 48 hours prior to proposed termination of service. B. A Notice from the Customer. A notice from a Customer to the City may be given by written communication mailed to the Customer Service Division or may be given orally by the Customer or its authorized agent at the Customer Service Division or may be given orally by the Customer or its authorized agent at the Customer Service Division except when written notice is specifically required in the applicable Rate Schedule. Page 11 of 20 City of Vernon Council Resolution - t9;94Sleffective SepteinbeF ,2009June 88. 2013 Rule No. 9 PRESENTATION AND PAYMENT OF BILLS A. Presentation of Bills. Billing Period. Bills for gas service will be presented monthly or as otherwise provided in the applicable Rate Schedules. At the sole discretion of the City, a Customer may be required to make weekly payments based on estimated usage. 2. Metered Service. Bills for metered service will be based on Meter registrations. Meters will be read as required for the preparation of regular bills, opening bills, and closing bills. It may not be possible always to read meters on the same day of the month, and if a monthly Billing Period contains less than 27 days or more than 33 days, a pro rata computation in the bill will be made. 3. Pro Rata Computation. All opening bills, closing bills, and bills for gas service presented for periods of less than 27 days or more than 33 days on a monthly Billing Period will be computed in accordance with the applicable Rate Schedule, but the size of the energy blocks, and the amount of the Customer, service, volumetric, or minimum charges, specified therein, will be prorated on the basis of the ratio of the number of days in the period to the number of days in an average monthly period, which for this purpose shall be taken as 30 days, or as otherwise provided in rate schedules. Energy usage (Therms) will not be prorated. B. Reading of Separate Meters Not Combined. For the purpose. of billing, each Meter upon the Customer's premises will be considered separately, and the readings of two or more Meters will not be combined except as follows: 1. Where combinations of Meter readings are specifically provided for in the Rate Schedule. 2. Where the City's Operating Necessity requires the use of more than one Meter. C. Payment of Bills. When bills are presented monthly, they will be due and payable on or before twenty (20) days after the Date of Presentation. When bills are presented weekly, they will be due and payable on or before five (5) days after the Date of Presentation. Payment shall be made at the City of Vernon Customer Service Division, 4305 Santa Fe Avenue, Vernon, CA 90058-1786. A late charge may be imposed at the City's sole discretion equal to five percent of the unpaid balance, or as revised under Rate Schedule G-CS. D. Returned Check Charge. The City will require payment of a charge for any check returned from the bank unpaid. Payment in lieu of the returned check will be accepted only in the form of cash, money order, or cashier's check. Personal or business checks will not be accepted for a period of at least 6 months on accounts with more than one returned check within a 12-month period. A returned check charge may be imposed at Page 12 of 20 City of Vernon Council Resolution40-,04-5-leffective September 09June 88. 2013 the City's sole discretion in amount of $20.00, or as revised under Rate Schedule No. G- CS. Rule No.10 DISPUTED BILLS A. Request for Billing Review. Any request for review of a bill filed by a Customer shall be reviewed by a Customer Service Division representative. The review shall include consideration of whether the Customer should be permitted to amortize the unpaid balance of his account over a reasonable period of time. B. Review by Gas System Manager. Any Customer, whose request for review regarding a bill for gas service has resulted in a determination by the Customer Service Division representative which is adverse, may have such determination reviewed by the Gas System Manager of the City of Vernon. To avoid discontinuance of service, the Customer shall pay the amount claimed by the City to be due. Such payment shall be deemed to be made under protest. In lieu of such payment, a Customer whose credit has been established pursuant to Rule No. 6 may request to amortize payments. Approval of such amortized payments shall be at the sole discretion of the City. 2. Checks or other forms of remittance for such payment under protest shall be accompanied by a letter of explanation to the Gas System Manager. 3. Upon receipt of the payment under protest and letter of explanation the Manager will review the basis of the billed amount. After review the Manager may: a. If special circumstances exist, waive returned check charge, reconnect charge, and late charge, or b. Recommend any adjustment to gas charges as determined by the review. Any recommendation for a credit or refund must be approved by the City Administrator, and, if the amount exceeds $10,000, City Council approval will also be required. 4. If the matter is not satisfactorily resolved by the Manager, the Customer may petition the City Council for a final decision. C. Discontinuance of Service. Failure of the Customer to make payment under protest of the disputed bill prior to the expiration date of a 48 hour Notice of Call will warrant discontinuance of service without further notice. D. Additional Bills during Review. If before completion of the City Council's review, additional bills become due which the Customer wishes to dispute, the additional amounts claimed by the City to be due for such additional bills shall be paid before they become past due and failure to do so will warrant discontinuance of service in accordance with Rule No. 11. Page 13 of 20 City of Vernon Council Resolution 4,-0451effective SepteP beF ,-00June 88. 2013 Rule No. 11 DISCONTINUANCE AND RESTORATION OF SERVICE A. Past Due Bills. When bills are presented monthly, they will be considered past due if payment is not received within 20 days after the Date of Presentation. When bills are presented weekly, they will be considered past due if payment is not received within 5 days after the Date of Presentation. B. Nonpayment of Bills. A Customer's service may be discontinued for nonpayment of a bill for service previously rendered by the City provided such bill is not paid within 48 hours after a notice of discontinuance of service by delivery of a "Notice of Call." 2. If a Customer is receiving more than one service, any or all services may be discontinued when any service, regardless of location, is discontinued for nonpayment 3. Under no circumstances may service be discontinued for nonpayment of a bill to correct previously billed incorrect charges for a period in excess of the preceding three months, unless such incorrect charges have resulted from the Customer not abiding by these Rules. 4. Service will not be discontinued on any Saturday, Sunday or legal holiday for delinquency in payment of a bill for gas service. C. Violations or unsafe Equipment The city may refuse or discontinue service to a Customer if the City determines: a. That any part of the Customer's piping or other equipment, or the use thereof, is unsafe or in violation of applicable laws, ordinances, rules or regulations of public authorities. b. That any condition existing upon the Customer's Premises endangers the City's service facilities. 2. Such discontinuance shall continue until piping, equipment, or use has been put in a safe condition or the violation remedied. In the event of a dangerous condition, the City may without giving prior notice immediately discontinue service to any Premises. 3. The city does not assume any responsibility of inspecting or repairing the Customer's piping or other equipment or any part thereof and assumes no liability therefore. Page 14 of 20 City of Vernon Council Resolution 488451effective Septembef 1, 200 June 18, 2013 D. Service Detrimental to Other Customers. The City will not provide service for equipment, the operation of which will be detrimental to the service of the City's other Customers, and will discontinue gas service to any Customer which continues to operate such equipment after having been given notice to cease by the City. E. Fraud. The City may refuse or discontinue service immediately if the acts of the Customer or the conditions upon its Premises are such as to indicate intent to defraud the City. F. Restoration of Service. Before restoring service that has been discontinued for nonpayment of a bill or for a violation: 1. The City may require payment of a reconnection charge, as defined in Rate Schedule G-CS. In case the Customer requests that such service be reconnected on the day of its request or outside of regular business hours, the reconnection charge may be increased to cover the cost thereof. 2. The Customer will be required to reestablish credit in accordance with Rule No. 6 or make prepayment in accordance with Rule No. 7. 3. The Customer will be required to pay all delinquent bills. Rule No.12. RATE AND OPTIONAL RATES A. Effective Rates. The rates charged by the City of natural gas service are those approved by resolution of the City Council. A copy of complete Rate Schedules will be maintained for public inspection at the City Clerk's Office. B. Optional Rates. If there are two or more Rate Schedules or optional provisions applicable to the class of service requested by the applicant, the City will call applicant's attention thereto at the time application is made, and the applicant must designate which Rate Schedule of optional provision is desired. C. Change in Equipment of Operation. When the Customer, in accordance with Section C of Rule No. 3, notifies the City of any material change in the size, character, or extent of its equipment or operations the City will, within a reasonable time, advise the Customer of the resulting rate options. In the absence of the notification provided for in Section C of Rule No. 3, the City assumes no responsibility for advising the Customer of lower optional rates under other existing Rate Schedules or optional provisions available as a result of the Customer's changes in equipment of operations. D. New or Revised Rates. If new or revised Rate Schedules are established, the City will, within a reasonable time, bring them to the attention of the Customers which may be affected. Page 15 of 20 City of Vernon Council Resolution 404 4-5-!effective Se^'� 09June 88. 2013 E. Change of Rate Schedule. A change to another applicable Rate Schedule or optional provision will be made only when a Customer elects in writing to make such change. 2. If a Customer so elects, the change to another Rate Schedule will be made provided: a. A change of Rate Schedule has not been made during the past twelve-month period; or b. The change of Rate Schedule is made to, or from, a new or revised Rate Schedule; or C. There has been a change in the Customer's equipment or operations for that service which, in the opinion of the City, justifies the change of Rate Schedule. The change of Rate Schedule will become effective for the billing period during which the Customer has requested such change. 4. City of Vernon natural gas rates schedules are applicable only for service supplied entirely by the City without interconnection with any other source of natural gas. Rule No. 13 SHORTAGE OF SUPPLY AND INTERRUPTION OF SERVICE A. Shortage and Interruption. The City does not guarantee a sufficient supply of gas or freedom from interruption. The City will not be liable for interruption or shortage of supply, nor for any loss or damage occasioned thereby. B. Temporary Suspension for Repairs. Whenever the City finds it necessary to make repairs or improvements to its gas system, it will have the right to suspend temporarily the delivery of gas. In such cases reasonable notice will be given to the Customers. To the extent practicable such repairs or improvements will be performed expeditiously and with as little inconveniences to the Customers as possible. Whenever, in the operation of the City's gas system interruption in the delivery of gas to Customers results from or is occasioned by any other cause, notice of such interruption will not be given to the Customers. The City will exercise reasonable diligence to restore delivery of gas energy. C. Apportionment of Supply During Time of Shortage. If a shortage of supply of gas occurs, the City will apportion its available supply among its Customers as consistent with SoCalGas Rule No. 23. Page 16 of 20 City of Vernon Council Resolution i nee c !effective Sept fnbe.�F1,2009June 1.8 2013 Rule No. 14. SERVICE CONNECTIONS AND FACILITIES ON CUSTOMER'S A. General. The City will construct, own, operate and maintain natural gas lines only along public streets, roads and highways which the City owns or has the legal right to occupy, and on public lands and private property across which rights of way or easements satisfactory to the City may be obtained at the Customer's cost and without cost or condemnation by the City. Upon request by the City, the applicant shall provide such rights of way or easements. B. Connection Costs. Connection costs include traffic control, surface sawing, trenching, boring, pipe, tapping, backfrll, surface restoration, meter, regulators, electronic corrector, and any other labor and equipment necessary for the City to connect Customer, up to and including the meter, regulator(s) and electronic corrector (meter equipment). Connection costs shalldo not include costs incurred by Customer on the Customer side of the meter equi mgnt. T e e��Connections costs shall be shared between Customer and City. City shall contribute an amount equal to the greater of ti._,.�ws--the vreieeeed annual ei4a4J an _,.. enu to City from eaeh ee (1) —four cents per Therm multiplied by Customer's projected annual usage, not to exceed fifty percent of the total connection cost incurred for work done by the City; or (2) three times the projected annual transportation revenue to the City from the account. Customer shall pay the balance of costsabovethe Cky's eentribution. All installed facilities up to and including the meter equipment, : 'tea eleetr-ante ,,,."e _ shall be owned and maintained by City of Vernon. All installed facilities downstream of the meter equipment shall be owned and maintained by Customer. Customer may request City of Vernon to conduct additional work at Customer's expense to modify Customer house line piping. C. Meter Installations. The Customer shall provide an approved location for the Meter or Meters and associated equipment on the Premises which at all times shall be accessible for inspection, reading, and testing. In general, the City will approve a location if it is within close proximity to the property line of the premises there is no superior alternate location, and it can be installed in a successful manner within a reasonable period of time taking into account economic, environmental, legal safety, social and technological factors. The Director of Light & Power may approve an alternate location not in proximity to the property line, on written findings that doing so would demonstrably_ reduce economic costs to the ci1y, foster public safety, mitigate unreasonable disruption or cost to the property owner or occupant or be preferable for engineering,geologic, or other related concerns. Approval of such alternate location is conditioned upon the City's receiving necessary easements or license agreements to allow maintenance of Citv equipment. Page 17 of 20 City of Vernon Council Resolution 49,04-5-leffective Septefnbe::, 2009June 88. 2013 If requested by City, Customer shall allow City, at City's expense, to install and maintain an active phone line terminating at the gas meter for the purpose of City of Vernon telephonically communicating with the meter. City, at City's expense, may instead utilize wireless transmission to access meter data. The Customer shall, at its own expense, provide a new and approved location whenever the existing location becomes inaccessible for inspecting, reading, or testing. Page 18 of 20 City of Vernon Council Resolution 4&045-_ effective September '�^^9June 88. 2013 Rule No. 15. METER TEST AND ADJUSTMENT OF BILLS FOR METER ERROR A. Tests. Prior to Installation. Every Meter will be tested at or prior to the time of installation, and no Meter will be placed in service if found to register more than 1% fast or 1% slow. 2. On Customer Request. A Customer may, on notice of not less than one week, require the City to test the Meter for its service. A charge will be made for such a test in accordance with Rate Schedule G-CS, but, this amount will be waived if the Meter is found to register more than 2% fast or 2% slow. A Customer shall have the right to require the City, to conduct the test in its presence or in the presence of its expert or other appointed representative. The results of the test will be furnished to the Customer within a reasonable time after completion of the test. B. Adjustment of Bills for Meter Error. Fast Meters. When, upon test, any meter is found to be registering more than 2% fast, the City will refund to the Customer the amount of the overcharge based on corrected Meter readings for the preceding six months, subject to the provisions of paragraph 4 hereof. 2. Slow Meters. When, upon test, any meter is found to be registering more than 2% slow, the City may bill the Customer for the amount of the undercharge based on corrected meter readings for the preceding six months, subject to the provisions of paragraph 4 hereof. Nonre istering Meters. When, upon test, any Meter is found to be nonregistering, the City may bill the Customer for the estimated amount of gas consumed but not registered for a period of three months, subject to the provisions of paragraph 4 hereof. Bills for this purpose will be estimated from the Customer's prior use, the Customer's subsequent use correctly Metered, the City's experience with other Customers of the same class, and/or the general characteristics of the Customer's operations. 4. General. When it is found that the error in a Meter is due to causes the date of which can be reliably established, the overcharge or the undercharge will be computed back to but not beyond that date, provided, however, that in no case will a bill for undercharge on domestic service schedules be rendered for a period exceeding three months. When a slow or nonregistering meter has been caused Page 19 of 20 City of Vernon Council Resolution 4#,-Q45-leffective Sept- : 1,-2009June 88. 2013 by an action of the Customer, its agents, employees, or licensees, the above time limitations shall not apply. C. Replacement of Meters. 1. Any Meter damaged or destroyed by the Customer, its agents, employees, clients, or visitors shall be replaced by the City at the Customer's expense. 2. Any defective Meter, other that the above, shall be replaced by the City at its expense. Rule No.16. SUPPLY TO SEPARATE PREMISES AND USE BY OTHERS A. Separate Metering. Separate Premises will not be supplied through the same Meter, except as may be specifically provided for in the applicable Rate Schedule. B. Other uses or Premises. Gas received from the City shall not be used by the Customer upon other Premises or for other purposes than those specified in its application or in the applicable Rate Schedule. C. Use by Others. A Customer shall not charge for gas received from the City and used by another person, except: If the charge to tenants is absorbed in the rental for the Premises or space occupied; or 2. If the Customer is the owner, lessee, or operator of a multiple -occupancy Premises and provides submeters for the gas used by tenants at the same rates that the City would charge for the service if supplied directly. In such cases, the Customer shall furnish, install, maintain, and test the submeters. Page 20 of 20 City of Vernon Council Resolution 49;04 Sleffective September1,-200Wune 18: 2013 DATE: June 10, 2013 TO: Carlos Fandino, Director of Light & Power FROM:' Ali N , Engineering Manager SUBJECT: Natural Gas Rate Tariff Revision — Rate Study and Revenue Analysis We asked Dan Bergmann, IGService, to provide a rate study and revenue analysis for the new customer connection cost allowances in the proposed revisions to the rate tariff. I have reviewed the cash flow, new customer connection economics, the sample rate comparisons and recommend proceeding with proposal. From the study it is evident that changes to the existing rate tariff benefits all new as well as the existing gas customers connected to City gas system and within three years, the Gas Division will increase its revenue by $468,000 annually as opposed to not proceeding with the proposal. Should you need additional information, please let me know. ARN/ C: D. Bergmann D. Cordova INTEROFFICE MEMORANDUM Light & Power Department DATE: May 23, 2013 TO: Ali Nour Engineering Manager FROM: Dan Bergmann IGService for COV Natural Gas Enterprise Fund SUBJECT: Rate Study and Revenue Analysis for Proposed Change in Connection Cost Allowance This review is in response to the proposal for COV to increase its contribution to gas customer connection costs. Analysis of Vernon's gas transportation net revenue in comparison to customer connection costs reveals that it makes economic sense for Vernon to contribute more to offset the customers' portion of the cost. Doing so would benefit both Vernon and Customers. Please seethe attached spreadsheet "New Customer Connection Economics." This shows the economics associated with 16 prospective customers under the increased connection allowance. Net transportation revenue is calculated for each by subtracting wholesale transportation cost (paid by COV to SoCalGas) from the total transportation revenue received from the customer. The fraction of wholesale transportation expense to COV is small, at approximately 16% of the total revenue. For each customer, net revenue is divided into estimated connection cost to determine the time required for COV to cover the connection cost using 100% of net revenue. The longest payback is 2.4 years, and most are less than one year. The weighted payback for all of them is also less than one year. For Vernon, one year is the same as 100% return on investment, which is excellent. Farmer John indicates they are ready to convert, assuming city council approval. The payback to COV for Farmer Johns' five accounts combined is nine months. Farmer John will experience approximate savings of $14,600 per month. After nine months, Vernon will experience a return of approximately $18,000 per month. Farmer John alone accounts for a nine percent overall increase in COV net gas revenue. The other combined 15 customers account for an additional 11%. Assuming all 16 customers converted, the increase in net revenue would be $468,000 per year. The attached cash flow analysis assumes Farmer John connects, plus 50 percent of the other load from the list of 15. This is reasonable because the president of Farmer John has already verbally committed, several others have expressed a strong interest under the proposed new connection terms. The cash flow analysis shows the investments as a negative numbers during 2014 and 2015. Following the investment value for each customer is the net annual financial benefit to the entire gas enterprise, shown as a positive number from each customer. Notice that during year 3, in 2016, already all the cumulative investments are covered. Beyond year three, the gas enterprise is collecting $342,673 per year net revenue that it would not otherwise have collected had this tariff change not been made. This benefits existing customers on the system before the tariff change. To quantify the benefit, I will assume fixed costs to operate the system do not change because we will not need to hire additional staff or incur other significant infrastructure expenses to serve the new customers. This is because we are still in the process of building the gas system customer base, yet the infrastructure to serve is in place. Net revenue to cover fixed costs (after wholesale transportation costs) from the Gas Enterprise presently is approximately $2 million per year. If the $342,673 is applied to offset coverage of the $2 million, that would be a 17% reduction in rates for existing customers (and new customers). This value is significant. The reason is that Farmer John is a large customer. Farmer John will be #2 in size when it comes on the distribution system, behind Owens Illinois. Farmer John is not willing to proceed without this tariff change, and we may gain only a few over the others over the next several years, but Farmer John is most important because it represents 61% of the total benefit on the cash flow sheet with the proposed tariff change. Below the table for the proposed change is a similar table showing cash flows for customers that may change under the existing tariff language. Though COV's investment toward each customer is 50% lower, COV loses return into the future, in this scenario gaining only $62,736 per year. Accordingly, this proposed tariff change benefits all customers within the gas enterprise.