Resolution No. 2013-087A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ADOPTING A NEW TRANSMISSION REVENUE
REQUIREMENT FOR 2014 IN.ACCORDANCE WITH VERNON'S
TRANSMISSION OWNER,TARIFF AND PROVIDING FOR TARIFF
SHEET CHANGES TO IMPLEMENT THE ADJUSTMENT
WHEREAS, the City of Vernon ("City") is a chartered municipal
corporation of the State of California that owns and operates a.system
for the generation, purchase, transmission; distribution and sale of
electric capacity and energy, and
WHEREAS, the City is a Participating Transmission Owner
("PTO") with the California Independent System Operator Corporation
("ISO:'),. and the Federal Energy Regulatory Commission ("FERC") has
approved its existing Transmission Owner Tariff ("TO Tariff"); and
WHEREAS, the ISO reimburses the City according to the City's
current Transmission Revenue Requirement ("TRR") in return for the City
turning over to the ISO the operation and control of the City's
transmission entitlements; and
WHEREAS, each PTO must include in its TO Tariff its Gross
Load,' which the ISO uses to calculate its grid -wide Transmission Access
Charge ("TAC") rates, and which is related to the City's ability to
recover its full TRR; and
WHEREAS, the City's transmission entitlements' include rights
under certain contracts (each an "ETC") including (i) an agreement with
the City of Los Angeles Department of Water and Power entitled "Los
Angeles -Vernon Adelanto-Victorville-Lugo Firm Transmission Service
Agreement" (the "LAWDP ETC"); (ii) an.agreement with Southern
California Edison Company ("SCE"). entitled "Amended and Restated
100913940
Edison -Vernon Victorville-Lugo Firm Transmission Service Agreement"
(the "SCE Victorville-Lugo ETC"); and (iii) an agreement with SCE
entitled "Amended and Restated Edison -Vernon Mead Firm Transmission
Services Agreement" (the "SCE Mead ETC"); and
WHEREAS, the City's costs under the LADWP ETC, the SCE
Victorville-Lugo ETC, and the SCE Mead ETC have traditionally been
based upon a, negotiated fixed "path -specific" rate charged by LADWP or
SCE, based on the actual costs of the specific transmission lines made'
available under each ETC, multiplied by the amount of transmission
capacity guaranteed to the City under each ETC; and
WHEREAS, on August 1, 2008, SCE filed a petition with FERC
seeking to amend the pricing structure under the SCE`Victorville-Lugo
ETC and the SCE Mead ETC to replace the negotiated path -specific rates
set forth in those ETCs with a "postage -stamp" rate which reflects the
blended rate SCE charges to the ISO for the actual usage of all of
SCE's transmission lines by customers of the ISO; and
WHEREAS, the postage -stamp rate which SCE charges to the ISO
is derived`.from SCE's TRR and, therefore, will change each time SCE
amends its TRR; and
WHEREAS, on September 30, 2008, FERC accepted, subject to
refund and hearing and settlement procedures, SCE's proposedrevisions:
under the SCE Victorville-Lugo ETC and the SCE Mead ETC to replace the
negotiated path -specific rates set forth in those ETCs with a postage -
stamp rate, and thus the City's costs under the SCE Victorville-Lugo
ETC and the SCE Mead ETC will vary proportionately with any changes in
SCE's TRR; and
WHEREAS, the City reached a settlement agreement (the "SCE
Settlement") with SCE to amend the SCE Victorville-Lugo ETC and the SCE
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Mead ETC to replace the path -specific rates set forth in those ETCs
with SCE's postage -stamp rate after a phase -in period that began on
August 1, 2009, during which the City's path -specific rates in ,those
ETCs are gradually stepped -up over three years (the "Phase -In Rates")
until the path -specific rates are equal to SCE's postage -stamp rate as
of January 1, 2013; and
WHEREAS, under the SCE Settlement, the City's costs for the
SCE Victorville-Lugo ETC and the SCE Mead ETC are equal to :(i) from
August 1, 2009, until December 31, 2012, the Phase -In Rates, and
beginning on January 1, 2013, the SCE postage -stamp rate, in each case
multiplied by (ii) the amount of transmission capacity guaranteed to
the City under each ETC; and
WHEREAS, FERC approved the SCE Settlement pursuant to an
order issued September 11, 2009, 128 FERC 1 61,237 (.2009), in FERC
Docket Nos. ER08-1343-000, ER08-1353-000, ER09-187-000, ER09-187-001,
EL09-19-000, and ER09-446-000 ("SCE Settlement Order"); and
WHEREAS, on behalf of the City, the Brattle Group;.an
experienced utilities consulting.firm;.developed a.tracking mechanism
for the City's TRR ("TRR Tracking Mechanism") to allow the City's TRR
to be adjusted annually, effective January 1 of each year, to reflect
changes in the City's costs under the SCE Victorville-Lugo ETC and the
SCE.Mead ETC that change as a result of (i) the stepped -up rates
implemented between August 1, 2009 and "December `31, 2012; or (ii) any
change in SCE's TRR on or after January 1, 2013; and
WHEREAS, on the basis of The Brattle Group's analysis and
evidence from City staff, which was considered during a public meeting
of the City Council held on July 13, 2009, the City,.on July 15, 2009
("July 15 FERC Filing"), filed with FERC proposed revisions to its TO
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100913940
Tariff proposing stated TRRs for each of the years 2010 to 2012, which
dollar amounts were also included in the SCE Settlement ("TO Tariff
Revisions"); and
WHEREAS, the City also submitted..in'.the July 15 FERC Filing a
request to utilize an "ETC Adjustment Clause" to adjust automatically
each year the costs the City incurs attributable to any changes in
SCE's TRR associated with SCE's High Voltage Existing Contracts Access
Charge ("HVECAC") rate; and.
WHEREAS, FERC approved .the City's request to utilize an ETC
Adjustment Clause to reflect annual projected changes to SCE's TRR, in
an order issued September 11, 2009, 128 FERC 91 61,235 (2009), in FERC
Docket No. EL09-64-000 ("TO Tariff Order"); and
WHEREAS, under the TO Tariff Order, the City's TO Tariff
revisions went into effect on August 1, 2009; and
WHEREAS, the City is required under the TO ,Tariff Order to
submit annual filings with FERC reflecting modifications to the base
TRR; and
WHEREAS, a Notice of Public Hearing was published on
September 26, 2013, notifying all interested parties that a hearing to
consider evidence to establish the City's new TRR was scheduled for.
October 15, 2013, at approximately 9 a.m., subject to the hearing being
continued or adjourned to a.stated time and place without further
notice of public hearing;. and
WHEREAS, on October 15, 2013,.the City Council held a Public
Hearing in which the City Council took evidence from City staff and
those other persons in attendance who wished to be heard on the
calculation of the City's new TRR under the City's amended TO Tariff;
and
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100913940
WHEREAS, the TRR for 2014 is shown in the amended Appendix I
to the TO Tariff, a copy of which is attached hereto as Exhibit A and
made a part hereof; and
WHEREAS, the Light & Power Department has prepared a TRR
Report, dated October.3, 2013, with -exhibits., a copy of which is
attached hereto as Exhibit B and made a part hereof, which reiterates
its previous conclusions that the TRR and ETC Adjustment Clause
mechanism developed by The Brattle Group and approved by FERC under the
amended TO:Tariff are reasonable and which calculates the amount
derived'under the ETC Adjustment Clause for •2014 and
WHEREAS, the Light & Power Department has recommended.the
City adopt the TRR shown in the amended Appendix I to the TO Tariff,
attached as Exhibit A, to be effective on January 1, 2014; and
WHEREAS, the City Council has heard and considered all
evidence; written and oral, presented in consideration of the
establishment of the City's new TRR under the amended TO Tariff.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the above recitals are true and correct.
SECTION 2: The City Council of the City of Vernon finds
that this action is exempt under the California Environmental Quality
Act (CEQA), in accordance with Section 15061(b)(3), the general rule
that CEQA only applies to projects that may have an effect on the
environment because the administrative action of predicting future
financial activity will not have an effect on the environment and is
exempt from CEQA.
SECTION 3: The. City Council of the City of Vernon hereby
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100913940
,further finds and determines that all persons have had the opportunity
to, be heard or to file written comments to the proposed adoption of the
City's TRR, and after due consideration of any and all evidence
submitted at the Public Hearing, determines there are compelling
reasons -to justify the adoption of the City's TRR and Gross Load, to be
effective January 1, 2014..
SECTION 4: The City Council of the City of Vernon hereby
declares that:
(a) any determination made pursuant to this Resolution
regarding the validity or reasonableness of any portion of any TRR or
TO Tariff shall apply only prospectively from the dateof this
Resolution; and
(b) in no way shall this Resolution affect the City
Council's adoption or determination of any previous TRR or TO Tariff.
SECTION 5: The City Council of the City .of Vernon hereby
approves, pursuant to the TO Tariff and to be effective on January 1,
2014, the establishment of the City's new TRR and Appendix I to the TO
Tariff implementing the new TRR (Resolution Exhibit A), as described in
the Light & Power TRR Report dated on or about October 3, 2013
(Resolution.Exhibit B):
SECTION 6: The City Council of the City of Vernon hereby
authorizes outside counsel to submit the City's TRR, the amended
Appendix I to the Vernon TO Tariff, and supporting documentation, such
as the TRR Report, and this City Council Resolution approving the new
TRR, to FERC on behalf. of the City.of Vernon.
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100913940
SECTION 7: 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 15°h day of October, 2013.
Name: W. Michael McCormick
Title: Mayor
AT TES I.
V v
Da Reed
Interim City Clerk / Deputy eity '
APPROVED AS TO FORM:
Lisa Dowden, Esq.
Spiegel McDiarmid, LLP
Special Counsel to City
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100913990
STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANGELES )
I, Dana Reed Interim City Clerk /- Hegaty-�itp-C��kf
the City.of Vernon; do hereby certify that<the foregoing Resolution,
being Resolution No. 2013-87, was duly passed, approved and.adopted by
the City Council of the City of Vernon at a regular meeting of the City
Council duly held on Tuesday, October 15, 2013, and thereafter was duly
signed by .the Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this day of October,2013, at 'Vernon, California.
I
t�dna Reed
Interim City Clerk
EXHIBIT A
EXHIBIT - A
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is 2$ 208,426 and is comprised of the - Deist
following components:
Base TRR costs not subject to ETC Adjustment Clause: $498,480
ETC Adjustment Clause:
Forecast SCE ETC Costs: $J,682,760 oeiet
Balance of Difference between prior year
Forecast and Actual SCE ETC Costs: oeiet
Interest on Difference between prior year
Forecast and Actual SCE ETC Costs: 46 - Deist
The ETC Adjustment Clause is: The projected SCE ETC Cost for the next calendar year,
plus the true -up (positive or negative) of the prior October through September SCE ETC
Cost with interest calculated pursuant to 18 C.F.R. § 35.19a. The ETC Adjustment
Clause will be recalculated annually and filed with the Commission with a proposed
effective date of January 1 of each year.
The TRBAA is a osp itive $13,331 for calendar year. -. -- oeiet
Form.
Vernon's Gross Load, consistent with its TRR, used by the ISO to develop the Transmission ZDeletAccess Charge is 1,181,728 MWhs.
All of Vernon's transmission facilities and Entitlements placed under the ISO's Operational
Control are High Voltage Facilities as defined by the ISO Tariff.
The TRBAA will be recalculated annually consistent with the ISO Tariff approved by the
Vernon City Council, and provided to the ISO.
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $2,208,426 and is comprised of the
following components:
Base TRR costs not subject to ETC Adjustment Clause: $498,480
ETC Adjustment Clause:
Forecast SCE ETC Costs: $1,682,760
Balance of Difference between prior year
Forecast and Actual SCE ETC Costs: $26,640
Interest on Difference between prior year
Forecast and Actual SCE ETC Costs: $546
The ETC Adjustment Clause is: The projected SCE ETC Cost for the next calendar year,
plus the true -up (positive or negative) of the prior October through September SCE ETC
Cost with interest calculated pursuant to 18 C.F.R. § 35.19a. The ETC Adjustment
Clause will be recalculated annually and filed with the Commission with a proposed
effective date of January 1 of each year.
The TRBAA is a positive $13,331 for calendar year 2014.
Vernon's Gross Load, consistent with its TRR, used by the ISO to develop the Transmission
Access Charge is 1,181,728 MWhs.
All of Vernon's transmission facilities and Entitlements placed under the ISO's Operational
Control are High Voltage Facilities as defined by the ISO Tariff.
The TRBAA will be recalculated annually consistent with the ISO Tariff approved by the
Vernon City Council, and provided to the ISO.
EXHIBIT B
EXHIBIT - B
CITY OF VERNON LIGHT AND POWER DEPARTMENT
REPORT REGARDING THE ESTABLISHMENT OF A NEW TRANSMISSION
REVENUE REQUIREMENT ASSOCIATED WITH VERNON'S HIGH VOLTAGE
ENTITLEMENTS ("TRR REPORT")
October 3, 2013
The City of Vernon ("Vernon" or "City") is a Scheduling Coordinator and a
Participating Transmission Owner ("PTO") in the California Independent System
Operator Corporation ("ISO"). To participate in the ISO, PTOs are required to turn
over administrative control of their transmission facilities and entitlements to the ISO.
In return, the ISO collects revenues for each PTO pursuant to calculations that
reflect the expenses and capital costs incurred by each PTO to provide transmission
services. These calculations are known as Transmission Revenue Requirements
("TRRs").
The relationship between PTOs and the ISO is governed by a Transmission Control
Agreement ("TCA"), which sets forth specific duties and obligations of all PTOs. The
TCA requires all PTOs to file a Transmission Owner Tariff ("TO Tariff') and TRR with
the Federal Energy Regulatory. Commission ("FERC"). The TCA further requires all
PTOs to file any changes in their TRRs with FERC. Each PTO must also include in
its TO Tariff its Gross Load which the ISO uses to calculate its grid -wide
Transmission Access Charge ("TAC") rates, and which is related to the City's ability
to recover its full TRR.
TRANSMISSION REVENUE REQUIREMENT
At present, the City's high voltage transmission assets consist of three long-term
contracts (known as "existing transmission contracts" or "ETCs") which provide the
City with dedicated access to high voltage transmission facilities owned by other
entities. Specifically, the City has contractual entitlements to utilize transmission
assets pursuant to one long-term transmission contract with the Los Angeles
Department of Water and Power ("LADWP") and two long-term transmission
contracts with Southern California Edison ("SCE"). The ETCs with SCE consist of
one (the "SCE Victorville-Lugo ETC" described in SCE's FERC Rate Schedule 360)
TRR Report 2014
Page 2 of 6
providing 11 MW of transmission capacity along the path between the Victorville-
Lugo midpoint and the point of interconnection with the City's internal transmission
system (the "City Gate"), and one (the "SCE Mead ETC" described in SCE's FERC
Rate Schedule 207) providing 26 MW of transmission capacity along the path
between the Mead 230 substation and the City Gate.
The costs of these ETCs make up the majority of the costs recovered through the
City's TRR. Until recently, for each of the ETCs, the City paid the owner of the
transmission facilities a fixed rate which was specific to the transmission path
provided under each ETC.
On August 1, 2008, SCE proposed to increase its TRR and associated rates in
FERC Docket No. ER08-1343-000. In a related filing submitted in FERC Docket No.
ER08-1353-000, SCE proposed to transition both of its ETCs with Vernon from their
current, fixed "path -specific' rates to a so-called "postage stamp" rate methodology
which reflects the blended rate which SCE charges the ISO pursuant to its own
TRRs for the actual usage of all of SCE's transmission facilities by customers of the
ISO (the "HVECAC Rate"). The HVECAC Rate that SCE proposed in its TO Tariff is
derived from SCE's TRR and, therefore, will change each time SCE amends its
TRR.
On September 30, 2008, FERC accepted, subject to refund and hearing and
settlement procedures, SCE's proposed revisions to its TO Tariff to transition the
negotiated path -specific rates set forth in the SCE VictorviIle- Lugo ETC and the SCE
Mead ETC to the uniform HVECAC Rate, and thus the City's costs under those
ETCs will vary proportionately with any changes in SCE's TRR.
The City reached a settlement agreement (the "SCE Settlement") with SCE to
amend the SCE Victorville-Lugo ETC and the SCE Mead ETC to fully transition the
path -specific rates set forth in those ETCs to SCE's HVECAC Rate after a phase -in
period that began on August 1, 2009, during which the City's path -specific rates in
those ETCs have been gradually stepped -up under incrementally increasing fixed
TRR Report 2014
Page 3 of 6
rates (the "Phase -In Rates") until the path -specific rates are equal to the HVECAC
Rate as of January 1, 2013. FERC approved the SCE Settlement pursuant to an
order issued September 11, 2009, 128 FERC 161, 237 (2009), in FERC Docket
Nos. ER08-1343-000, ER08-1353-000, ER09-187-000, ER09-187-001, EL09-19-
000, and ER09-446-000 ("SCE Settlement Order").
On behalf of the City, The Brattle Group, an experienced utilities consulting firm,
developed a TRR tracking mechanism clause for the City's TRR ("ETC Adjustment
Clause"), which allows the City's TRR to be adjusted annually, effective January 1 of
each year, to reflect changes in the City's transmission expenses associated with
any changes implemented by SCE in the HVECAC Rate associated with the SCE
Victorville-Lugo ETC and the SCE Mead ETC.
On the basis of The Brattle Group's analysis and evidence from City staff, which was
considered during a public meeting of the City Council held on July 13, 2009, the
City, on July 15, 2009 ("July 15 FERC Filing"), filed with FERC the proposed (i)
revisions to its TO Tariff proposing the City's stated TRRs for each of the years 2010
to 2012, which dollar amounts were also included in the SCE Settlement ("TO Tariff
Revisions") and (ii) the ETC Adjustment Clause tracking mechanism.
The July 15 FERC Filing acknowledged that, to the extent that the SCE Settlement
was accepted, because the stated Phase -In Rates would be fixed, the ETC
Adjustment Clause for the term of the Phase -In Rates would be zero
FERC approved the City's July 15 FERC Filing, including the TO Tariff Revisions,
the City's proposed calculations of the TRR for years 2010 to 2012, and the City's
request to utilize an ETC Adjustment Clause, in an order issued September 11,
2009, 128 FERC ¶ 61,235 (2009), in FERC Docket No. EL09-64-000 ("TO Tariff
Order"). The City is required under the TO Tariff Order to submit annual filings each
year with FERC reflecting annual modifications to the base TRR of the City.
TRR Report 2014
Page 4 of 6
CALCULATION OF THE ETC ADJUSTMENT CLAUSE
Section 5.3 of the Vernon TO Tariff identifies the items to be reflected in the ETC
Adjustment. The ETC Adjustment Clause shall be calculated as:
ETC Adjustment = ETCCF+ ETCCT+ I.
ETCCF = The forecast of SCE ETC Cost for the following calendar year
ETCCT = The balance representing the prior period difference between the
projected cost of the SCE ETCs ("SCE ETC Cost") and the actual cost.
I = The interest balance for the ETC, which shall be calculated using the
interest rate pursuant to Section 35.19(a) of FERC's regulations under the
Federal Power Act (18 C.F.R. 35.19(a)). Interest shall be calculated based on
the average ETC true -up balance each month, compounded quarterly.
A summary of the elements of the Vernon ETC Adjustment Clause proposed to be
effective January 1, 2014 is shown in Exhibit 1. The ETC Adjustment Clause to be
effective for the twelve months starting January 1, 2014 is $1,709,946.
The ETCCF Component
The ETCCF component stands for the forecast of SCE ETC costs or the following
calendar year, in this case 2014. These forecast SCE ETC costs reflect 2014 rates
from Southern California Edison Company FERC Filing, Docket No. ER11-3697-
006.
The ETCCF for 2014 SCE ETC costs are projected to be $1,682,760 as shown in
line 7 of Exhibit 1.
The ETCCT Component
ETCCT represents a balance that reflects the difference between prior year forecast
and actual SCE ETC costs The prior period in this case is the twelve-month period
starting October 1, 2012 and ending September 30, 2013.
TRR Report 2014
Page 5 of 6
A summary of the determination of the September 30, 2013 balance in the ETC
Adjustment Clause is shown in Exhibit 1. The ETCCT component reflects 1) the
previously projected 2012 SCE ETC costs of $848,000 or $70,670 per month, for the
months October through December 2012 and projected 2013 SCE ETC costs of
$1,895,880 or $157,990 per month, for the months January through September
2013, and 2) actual 2012 SCE ETC costs of $ $70,670 per month, for the months
October through December 2012 and $160,950 per month, for the months January
through September 2013—both elements as reflected on Line No. 7 and 14 of
Exhibit 1. The difference between these two elements produce the under (over)
collection figures reflected in Line 15 of Exhibit 1. The cumulative monthly balances
are carried forward from month to month and the ETCCT component on September
30, 2013 of positive $26,640 is shown in line 16 of Exhibit 1.
The I (Interest) Component
The Interest component reflects interest on the difference between prior year
forecast and actual SCE ETC costs. The monthly interest carrying costs are
calculated using the 18 C.F.R. § 35.19(a) interest rates and calculation method.
These interest rates are published by FERC and reflect the prime rate values
published in the Federal Reserve Bank's "Selected Interest Rates."
Interest is calculated monthly on the average cumulative monthly balance and is
compounded quarterly. The interest component is $546, as shown in Lines 18-21 of
Exhibit 1.
TRR Report 2014
Page 6 of 6
RECOMMENDATIONS
1. Approve the establishment of the City's new TRR for 2014 and revised
Appendix I to the TO Tariff.
2. Authorize outside counsel to submit the City's TRR, ETC Adjustment Clause,
the revised Appendix I to the TO Tariff, and this City Council Resolution
approving the TRR and ETC Adjustment Clause to FERC on behalf of the
City of Vernon.
EXHIBIT - 1
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CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: October 22, 2013
TO: Carlos Fandino, Director of Light & Power
FROM: Deborah Juarez, Records Management Assistant
RE: Resolution No. 2013-87 — A Resolution of the City Council of the City of Vernon
Adopting a New Transmission Revenue Requirement for 2014 in Accordance With
Vernon's Transmission Owner Tariff and Providing for Tariff Sheet Changes to
Implement the Adjustment
Transmitted herewith is a certified copy of Resolution No. 2013-87 referenced above, for your transmittal,
which was approved by City Council on October 15, 2013.
Please ensure that a copy of the transmittal communication is sent to my attention for the file.
Thank you.
Enclosure
c: Abraham Alemu
Resolution No. 2013-87
CERTIFICATE
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES)
I, Dana Reed, Interim City Clerk of the City of Vernon,
County of Los Angeles, State of California, hereby certify that
the attached is a full and complete copy of:
RESOLUTION NO. 2013-87 - A Resolution of the City Council of
the City of Vernon Adopting a New Transmission Revenue
Requirement for 2014 in Accordance With Vernon's Transmission
Owner Tariff and Providing for Tariff Sheet Changes to
Implement the Adjustment
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the official Seal of the City of Vernon, County of Los Angeles,
State of California, on this i6 day of October 2013.
SEAL:
Dan Reed
Interim City Clerk
RECEIVED
OCT 0 9 2013
CITY CLERK'S OFFICE
STAFF REPORT
LIGHT & POWER DEPARTMENT
/,?i oi3— P7
RECEIVED
OCT 0 9 2013
CITY ADMINISTRATION
DATE: October 15, 2013
TO: Honorable Mayor and City Council
FROM: Carlos Fandino, Director of Light & Power
Vv
RE: Establishment of New Transmission Revenue Requirement (TRR) Associated
with Vernon's High Voltage Entitlements ("TRR Report")
Recommendation
It is recommended that the City Council conduct a Public Hearing and:
Find that the approvals referenced in the resolution are exempt under the California
Environmental Quality Act (CEQA) in accordance with Section 15061(b)(3), the
general rule that CEQA only applies to projects that may have an effect on the
environment; and
2. Approve the attached Resolution to thereby:
a. Approve pursuant to the Transmission Owner Tariff, and to be effective on
January 1, 2014, the establishment of the City's new Transmission Revenue
Requirement (TRR) and Appendix I to the TO Tariff implementing the new
TRR, as described in the Light & Power Staff TRR Report dated on or about
October 3, 2013; and
b. Authorize outside counsel to submit the City's TRR, the amended Appendix I
to the Vernon TO Tariff, and supporting documentation such as the TRR
Report, to the Federal Energy Regulatory Commission (FERC) on behalf of
the City of Vernon.
Backaround
The City of Vernon ("Vernon" or "City") is a Scheduling Coordinator and a Participating
Transmission Owner ("PTO") in the California Independent System Operator Corporation
("ISO"). To participate in the ISO, PTOs are required to turn over administrative control of their
transmission facilities and entitlements to the ISO. In return, the ISO collects revenues for each
PTO pursuant to calculations that reflect the expenses and capital costs incurred by each PTO to
provide transmission services. These calculations are known as Transmission Revenue
Requirements ("TRRs").
The relationship between PTOs and the ISO is governed by a Transmission Control Agreement
("TCA"), which sets forth specific duties and obligations of all PTOs. The TCA requires all
PTOs to file a Transmission Owner Tariff ("TO Tariff) and TRR with the Federal Energy
Regulatory Commission ("FERC"). The TCA further requires all PTOs to file any changes in
their TRRs with FERC. Each PTO must also include in its TO Tariff its Gross Load which the
ISO uses to calculate its grid -wide Transmission Access Charge ("TAC") rates, and which is
related to the City's ability to recover its full TRR.
TRANSMISSION REVENUE REQUIREMENT
At present, the City's high voltage transmission assets consist of three long-term contracts
(known as "existing transmission contracts" or "ETCs") which provide the City with dedicated
access to high voltage transmission facilities owned by other entities. Specifically, the City has
contractual entitlements to utilize transmission assets pursuant to one long-term transmission
contract with the Los Angeles Department of Water and Power ("LADWP") and two long-term
transmission contracts with Southern California Edison ("SCE"). The ETCs with SCE consist of
one (the "SCE Victorville-Lugo ETC" described in SCE's FERC Rate Schedule 360) providing
1 I MW of transmission capacity along the path between the Victorville-Lugo midpoint and the
point of interconnection with the City's internal transmission system (the "City Gate"), and one
(the "SCE Mead ETC" described in SCE's FERC Rate Schedule 207) providing 26 MW of
transmission capacity along the path between the Mead 230 substation and the City Gate.
The costs of these ETCs make up the majority of the costs recovered through the City's TRR.
Until recently, for each of the ETCs, the City paid the owner of the transmission facilities a fixed
rate which was specific to the transmission path provided under each ETC.
The attached TRR Report supports the establishment of a new transmission revenue requirement
associated with Vernon's high voltage entitlements.
Fiscal Impact
The cost of Existing Transmission Service Contracts (ETC) incurred by the City will be
recovered.
Attachments
NOTICE OF THREE SEPARATE PUBLIC HEARINGS
The City of Vernon will conduct three Public Hearings which you
may attend.
PLACE: Vernon City Hall
City Council Chambers
4305 Santa Fe Avenue
Vernon, CA 90058
DATE AND TIME: Tuesday, October 15, 2013, at 9:00 a.m., or as
soon thereafter as the matters may be heard
PURPOSES: (1) To consider evidence to establish Vernon's
new Transmission Revenue Balancing Account
Adjustment for its high voltage (over 200 kV)
transmission entitlements (all located outside
the City) pursuant to Vernon's Transmission
Owner Tariff, (2) To consider evidence to
establish Vernon's new Existing Transmission
Contract Adjustment for its high voltage (over
200 kV) transmission entitlements (all located
outside the City) pursuant to Vernon's
Transmission Owner Tariff, and (3) To consider
evidence on whether to establish a policy to
limit the costs the city may incur in procuring
renewable energy pursuant to the "City of
Vernon Renewable Resources Procurement Plan and
Enforcement Program (SBX1 2 Compliance Plan)".
Any interested person may attend and may make an oral
presentation to the City Council at the time of each of the hearings,
or may present written comments prior to each hearing.
If you challenge the approval of the establishment of Vernon's
new Transmission Revenue Balancing Account Adjustment, Vernon's new
Existing Transmission Contract Adjustment, or the cost limitation
policy, or any provision thereof in court, you may be limited to
raising only those issues you or someone else raised at the respective
hearing(s) described in this notice or in written correspondence
delivered to the City of Vernon at, or prior to, the meeting.
Information may be obtained by contacting the office of the City
Clerk at the above address.
The hearing(s) may be continued or adjourned to a stated time and
place without further notice of a public hearing.
Dated: September 23, 2013
Carlos Fandino, Directo Light & Power