Resolution No. 2018-035RESOLUTION NO. 2018-35
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ADOPTING A NEW TRANSMISSION REVENUE
REQUIREMENT FOR 2019 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
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 proposed revisions
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 ¶ 61,237 (2009), in FERC
Docket Nos. ER08-1343-000, ER08-1353-000, ER09-187-000, ER09-187-001,
EL09-19-000, and ER09-446-000 ("SCE Settlement Order"); and
WHEREAS, on behalf of the City, the Brattle Group, an
experienced utilities consulting firm, developed a tracking mechanism
for the City's TRR ("TRR Tracking Mechanism") to allow the City's TRR
to be adjusted annually, effective January 1 of each year, to reflect
changes in the City's costs under the SCE Victorville-Lugo ETC and the
SCE Mead ETC that change as a result of (i) the stepped -up rates
implemented between August 1, 2009 and December 31, 2012; or (ii) any
change in SCE's TRR on or after January 1, 2013; and
WHEREAS, on the basis of The Brattle Group's analysis and
evidence from City staff, which was considered during a public meeting
of the City Council held on July 13, 2009, the City, on July 15, 2009
("July 15 FERC Filing"), filed with FERC proposed revisions to its TO
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Tariff proposing stated 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 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, on January 6, 2015, the City approved revisions to
the template used to calculate the annual ETC Adjustment Clause; and
WHEREAS, on April 8, 2015, FERC approved the City's 2015
filing with FERC reflecting modifications to the base TRR as calculated
using the revised ETC Adjustment Clause template; and
WHEREAS, on October 24, 2017, the City approved revisions to
the Gross Load included in the City's TO Tariff that updated the Gross
Load to be based on 2016 load data, rather than 2010 load data; and
WHEREAS, on December 8, 2017, FERC approved the City's 2017
filing with FERC reflecting revisions to the Gross Load included in the
City's TO Tariff; and
WHEREAS, the City is required under the TO Tariff Order to
submit annual filings with FERC reflecting modifications to the base
TRR; and
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WHEREAS, a Notice of Public Hearing was published on
September 20, 2018, notifying all interested parties that a hearing to
consider evidence to establish the City's new TRR was scheduled for
October 16, 2018, at approximately 9:00 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 16, 2018, the City Council held a Public
Hearing in which the City Council took evidence from staff and those
other persons in attendance who wished to be heard on the calculation
of the City's new TRR; and
WHEREAS, the TRR for 2019 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.
WHEREAS, the Public Utilities Department has prepared a
Report, dated October 16, 2018, 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, approved by FERC under the
amended TO Tariff, and revised in 2015 are reasonable and which
calculates the amount derived under the ETC Adjustment Clause for 2019;
and
WHEREAS, the Public Utilities 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, 2019; 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.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
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CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the recitals contained hereinabove are true
and correct.
SECTION 2: The City Council of the City of Vernon finds
that this action does not constitute a "project" pursuant to section
15378(b)(2) of the Guidelines to the California Environmental Quality
Act ("CEQA"), because such action constitutes an administrative
activity; and even if the adoption of the proposed item did constitute
a project, it would be exempt in accordance with CEQA Guidelines
section 15061(b)(3), the general rule that CEQA only applies to
projects that may have an effect on the environment.
SECTION 3: The City Council of the City of Vernon hereby
further finds and determines that all persons have had the opportunity
to be heard or to file written comments to the proposed adoption of the
City's TRR, and after due consideration of any and all evidence
submitted at the Public Hearing, determines there are compelling
reasons to justify the adoption of the City's TRR, to be effective
January 1, 2019.
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 date of this
Resolution; and
(b) in no way shall this Resolution affect the City
Council's adoption or determination of any previous TRR or TO Tariff.
SECTION 5: The City Council of the City of Vernon hereby
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approves, pursuant to the TO Tariff and to be effective on January 1,
2019, the.establishment of the City's new TRR and Appendix I to the TO
Tariff implementing the new TRR, as described in the Public Utilities
Department Report dated October 16, 2018.
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 Report, and this City Council Resolution approving the new TRR,
to FERC on behalf of the City of Vernon.
SECTION 7: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of resolutions
of the Council of this City.
APPROVED AND ADOPTED this 16th day of October, 2018.
Name: Yvette Woodruff -Perez
ATTEST:
Mari E. Ayala, City Clerk
APPROVED AS TO FORM:
Katharine Mapes, Esq.
Spiegel & McDiarmid, LLP
Special Counsel to City
Title: Mavor
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Maria E. Ayala, City Clerk of the City of Vernon, do hereby
certify that the foregoing Resolution, being Resolution No. 2018-35,
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
October 16, 2018, and thereafter was duly signed by the Mayor or Mayor
Pro-Tem of the City of Vernon.
Executed this Viay of October, 2018, at Vernon, California.
(SEAL)
Mari E. Ayala, City Clerk
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EXHIBIT A
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $.2,446,805 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: $02,388.720
Balance of Difference between prior year
Forecast and Actual SCE ETC Costs: (417 712
Interest on Difference between prior year
Forecast and Actual SCE ETC Costs: ($?2,683)
The ETC Adjustment Clause is: The projected SCE ETC Cost for the next calendar year,
plus the true -up (positive or negative) of the prior October through September SCE ETC
Cost with interest calculated pursuant to 18 C.F.R. § 35.19a. The ETC Adjustment
Clause will be recalculated annually and filed with the Commission with a proposed
effective date of January 1 of each year.
The TRBAA is a negative $� 176 for calendar year 2012.
Vernon's Gross Load, consistent with its TRR, used by the ISO to develop the Transmission
Access Charge is 1,154,492 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.
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APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $2,446,805 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: $2,388,720
Balance of Difference between prior year
Forecast and Actual SCE ETC Costs: ($417,712)
Interest on Difference between prior year
Forecast and Actual SCE ETC Costs: ($22,683)
The ETC Adjustment Clause is: The projected SCE ETC Cost for the next calendar year,
plus the true -up (positive or negative) of the prior October through September SCE ETC
Cost with interest calculated pursuant to 18 C.F.R. § 35.19a. The ETC Adjustment
Clause will be recalculated annually and filed with the Commission with a proposed
effective date of January 1 of each year.
The TRBAA is a negative $21,176 for calendar year 2019.
Vernon's Gross Load, consistent with its TRR, used by the ISO to develop the Transmission
Access Charge is 1,154,492 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
CITY OF VERNON PUBLIC UTILITIES DEPARTMENT
REPORT REGARDING THE ESTABLISHMENT OF A REVISED NEW
TRANSMISSION REVENUE REQUIREMENT ASSOCIATED WITH VERNON'S
HIGH VOLTAGE ENTITLEMENTS
October 16, 2018
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
("T R Rs") .
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 2019
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 Victorville-Lugo ETC and the SCE
Mead ETC to the uniform HVECAC Rate, and thus the City's costs under those
ETCs will vary proportionately with any changes in SCE's TRR.
The City reached a settlement agreement (the "SCE Settlement") with SCE to
amend the SCE Victorville-Lugo ETC and the SCE Mead ETC to fully transition the
path -specific rates set forth in those ETCs to SCE's HVECAC Rate after a phase -in
period that began on August 1, 2009, during which the City's path -specific rates in
those ETCs have been gradually stepped -up under incrementally increasing fixed
TRR Report 2019
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 ¶ 61, 237 (2009), in FERC Docket
Nos. ER08-1343-000, ER08-1353-000, ER09-187-000, ER09-187-001, EL09-19-
000, and ER09-446-000 ("SCE Settlement Order").
On behalf of the City, The Brattle Group, an experienced utilities consulting firm,
developed a TRR tracking mechanism clause for the City's TRR ("ETC Adjustment
Clause"), which allows the City's TRR to be adjusted annually, effective January 1 of
each year, to reflect changes in the City's transmission expenses associated with
any changes implemented by SCE in the HVECAC Rate associated with the SCE
Victorville-Lugo ETC and the SCE Mead ETC.
On the basis of The Brattle Group's analysis and evidence from City staff, which was
considered during a public meeting of the City Council held on July 13, 2009, the
City, on July 15, 2009 ("July 15 FERC Filing"), filed with FERC the proposed (i)
revisions to its TO Tariff proposing the City's stated TRRs for each of the years 2010
to 2012, which dollar amounts were also included in the SCE Settlement ("TO Tariff
Revisions") and (ii) the ETC Adjustment Clause tracking mechanism.
The July 15 FERC Filing acknowledged that, to the extent that the SCE Settlement
was accepted, because the stated Phase -In Rates would be fixed, the ETC
Adjustment Clause for the term of the Phase -In Rates would be zero
FERC approved the City's July 15 FERC Filing, including the TO Tariff Revisions,
the City's proposed calculations of the TRR for years 2010 to 2012, and the City's
request to utilize an ETC Adjustment Clause, in an order issued September 11,
2009, 128 FERC ¶ 61,235 (2009), in FERC Docket No. EL09-64-000 ("TO Tariff
Order"). The City is required under the TO Tariff Order to submit annual filings each
year with FERC reflecting annual modifications to the base TRR of the City.
In January 2015, the City approved revisions to the template used to calculate the
TRR Report 2019
Page 4 of 6
ETC Adjustment Clause and submitted these revisions to FERC. On April 8, 2015,
FERC approved the City's 2015 TRR filing as calculated using the revised ETC
Adjustment Clause template; the City has prepared this year's filing using that
revised template.
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, 2019 is shown in Exhibit 1. The ETC Adjustment Clause to be
effective for the twelve months starting January 1, 2019 is $1,948,325.
The ETCCF Component
The ETCCF component stands for the forecast of SCE ETC costs for the following
calendar year, in this case 2019. These forecast SCE ETC costs reflect 2019 rates
from Southern California Edison Company's draft FERC Filing, posted on its website
pursuant to its formula rate protocols (approved in FERC Docket No. ER11-3697).
That filing is scheduled to be made at FERC, in its final form, in December 2018;
Vernon will true up any differences in its SCE ETC costs when it makes its 2020
TRR Report 2019
Page 5 of 6
TRR filing.
The ETCCF for 2018 SCE ETC costs are projected to be $2,388,720 as shown in
line 8 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, 2017 and ending September 30, 2018.
A summary of the determination of the September 30, 2018 balance in the ETC
Adjustment Clause is shown in Exhibit 1. The ETCCT component reflects 1) the
previously projected 2016 SCE ETC costs of $225,700 per month, for the months
October through December 2017 and projected 2018 SCE ETC costs of $230,510
per month, for the months January through September 2018, 2) actual 2017 SCE
ETC costs of $ 20,9420 per month, for the months October through December 2017
and $227,920 per month, for the months January through September 2018, and 3)
refunds received by the City —all elements as reflected on Line No. 8, 15, and 16 of
Exhibit 1. The net of these elements produce the under (or over) collection figures
reflected in Line 17 of Exhibit 1. The ending balance is the sum of the beginning
balance on October 1 and the (over)/under collection — both elements as reflected
on Line 1 and 17 of Exhibit 1. The cumulative monthly balances are carried forward
from month to month and the ETCCT component on September 30, 2018 of negative
$417,712 is shown in line 19 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."
TRR Report 2019
Page 6 of 6
Interest is calculated monthly on the average cumulative monthly balance and is
compounded quarterly. The interest component is negative $22,683, as shown in
Lines 20-24 of Exhibit 1.
RECOMMENDATIONS
1. Approve the establishment of the City's revised new TRR for 2019 and
revised Appendix I to the TO Tariff.
2. Authorize outside counsel to submit the City's TRR, ETC Adjustment Clause
amount, the revised Appendix I to the TO Tariff, and this City Council
Resolution approving the TRR and ETC Adjustment Clause amount to FERC
on behalf of the City of Vernon.
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TRANSMITTAL COMMUNICATION
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: October 24, 2018
TO: Kelly Nguyen, General Manager of Public Utilities
FROM: Deborah Juarez, Records Management Assistant G �
N ;)
RE: Resolution No. 2018-35 — A Resolution of the City Council of the City of Vernon
Adopting a New Transmission Revenue Requirement for 2019 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. 2018-35 referenced above, for your transmittal,
which was approved by City Council on October 16, 2018.
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. 2018-35
CERTIFICATE
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES)
I, Maria E. Ayala, 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. 2018-35 - A Resolution of the City Council of
the City of Vernon Adopting a New Transmission Revenue
Requirement for 2019 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 —q= day of October 2018.
SEAL:
Mari E. Aya
Cit Clerk
STAFF REPORT
City Council Agenda Item Report
Agenda ItemNo. COV-336-2018
Submitted by: Abraham Alemu
Submitting Department: Public Utilities
Meeting Date: October 16, 2018
SUBJECT
A Resolution Adopting a New Transmission Revenue Requirement for 2019 in Accordance with Vernon!s Transmission
Owner Tariff and Providing for Tariff Sheet Changes to Implement the Adjustment
Recommendation:
A. Find that approval of this action does not constitute a "project" pursuant to section 15378(b)(2) of the
Guidelines to the California Environmental Quality Act ("CEQA'), because such action constitutes an administrative
activity; and even if the adoption of the proposed item did constitute a project, it would be exempt in accordance with
CEQA Guidelines section 15061(b)(3), the general rule that CEQA only applies to projects that may have an effect on
the environment; and
B. Conduct a Public Hearing; and
C. Adopt a resolution adopting a new transmission revenue requirement for 2019 in accordance with Vemods
Transmission Owner Tariff and providing for Tariff Sheet changes to implement the adjustment.
Backgroud:
The City of Vernon ("Vernon" or "Cky) 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 (`°IRRs').
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 Comrnission ("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 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.
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
1. Notice of Public Hearing to Establish Transmission Revenue Requirement
2. Resolution Adopting New TRR 2019.pdf
City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
(323)583-8811
NOTICE OF TWO SEPARATE PUBLIC HEARINGS REGARDING THE ESTABLISHMENT OF
VERNON'S NEW TRANSMISSION REVENUE BALANCING ACCOUNT ADJUSTMENT AND
VERNON'S NEW EXISTING TRANSMISSION CONTRACT ADJUSTMENT
The City of Vernon will conduct a Public Hearing, which you may attend.
PLACE: Vernon City Hall
City Council Chamber
4305 Santa Fe Avenue
Vernon, CA 90058
DATE & TIME: Tuesday, October 16, 2018, at 9:00 a.m. (or as soon thereafter as the matter can be heard)
PURPOSE/SUBJECT: (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, and (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.
DOCUMENTS FOR REVIEW:
Copies of a Resolution Establishing a Transmission Revenue Balancing Account Adjustment for 2019
and a Resolution Adopting a New Transmission Revenue Requirement will be available for public examination at
Vernon City Hall, located at 4305 Santa Fe Avenue, Vernon, California from October 4, 2018 through October 16,
2018.
Please send your comments or questions to:
Abraham Alemu
City of Vernon, Public Utilities
4305 Santa Fe Avenue, Vernon, CA 90058
(323) 583-8811 Ext. 250
AALcmu�t�verno».ca.3ts
PROPOSED CEQA FINDING: Find that approval of the proposed action is exempt from California Environmental
Quality Act ("CEQA") review, because it is a fiscal and administrative activity that will not result in direct or indirect
physical changes in the environment, and therefore does not constitute a "project" as defined by CEQA Guidelines
section 15378.
If you challenge the adoption/approval of the establishment of Vernon's new Transmission Revenue Balancing
Account Adjustment, or Vernon's new Existing Transmission Contract Adjustment or any provision thereof in
court, you may be limited to raising only those issues you or someone else raised at the hearing described in this notice
or in written correspondence delivered to the City of Vernon at, or prior to, the meeting.
Americans with Disabilities Act (ADA): In compliance with ADA, if you need special assistance to participate in the
meeting, please contact the Office of the City Clerk at (323) 583-8811 ext. 546.
The hearing may be continued or adjourned or cancelled and rescheduled to a stated time and place without
further notice of a public hearing.
Dated: September 13, 2018
Matthew Ceballos, Deputy City Clerk
CALIFORNIA NEWSPAPER SERVICE BUREAU
DAILY JOURNAL CORPORATION
Mailing Address: 915 E FIRST ST, LOS ANGELES, CA 90012
Telephone (800) 788-7840 / Fax (800) 464-2839
Visit us @ www.LegalAdstore.com
MATTHEW CEBALLOS
CITY OF VERNON CITY CLERK
4305 SANTA FE AVE
VERNON, CA 90058
COPY OF NOTICE
Notice Type: GPN GOVT PUBLIC NOTICE
Ad Description NOTICE OF TWO SEPARATE PUBLIC HEARINGS
REGARDING THE ESTABLISHMENT OF VERNON'S
NEW TRANSMISSION REVENUE BALANCING
To the right is a copy of the notice you sent to us for publication in the
HUNTINGTON PARK BULLETIN. Please read this notice carefully and call us
with any corrections. The Proof of Publication will be filed with the County
Clerk, if required, and mailed to you after the last date below. Publication
date(s) for this notice is (are):
09/20/2018
An invoice will be sent after the last date of publication. If you prepaid this
order in full, you will not receive an invoice.
11E $1111111111111111111111111111111111111111111111 1l1 1111$ 1111
PRE# 3174920
NOTICE OF TWO SEPARATE PUBLIC
HEARINGS REGARDING THE
ESTABLISHMENT OF VERNON'S NEW
TRANSMISSION REVENUE BALANCING
ACCOUNT ADJUSTMENT AND VERNON'S
NEW EXISTING TRANSMISSION CONTRACT
ADJUSTMENT
The City of Vernon will conduct a Public Hearing,
which you may attend.
PLACE: Vernon City Hall
City Council Chamber
4305 Santa Fe Avenue
Vernon, CA 90058
DATE & TIME: Tuesday, October 16, 2018, at
9:00 a.m. (or as soon thereafter as the matter can
be heard)
PURPOSE/SUBJECT: (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, and (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.
DOCUMENTS FOR REVIEW:
Copies of a Resolution Establishing a
Transmission Revenue Balancing Account
Adjustment for 2019
and a Resolution Adopting a New Transmission
Revenue Requirement will be available for public
examination at Vernon City Hall, located at 4305
Santa Fe Avenue, Vernon, California from
October 4, 2018 through October 16, 2018.
Please send your comments or questions to,
Abraham Alemu
City of Vernon, Public utilities
4305 Santa Fe Avenue, Vernon, CA 90058
(323) 583-8811 Ext. 250
AALemu(d,)ci.vernon ca us
PROPOSED CEQA FINDING: Find that approval
of the proposed action is exempt from California
Environmental Quality Act ("CEQA") review,
because it is a fiscal and administrative activity
that will not result in direct or indirect physical
changes in the environment, and therefore does
not constitute a "project" as defined by CEQA
Guidelines section 15378.
If you challenge the adoption/approval of the
establishment of Vernon's new Transmission
Revenue Balancing Account Adjustment, or
Vernon's new Existing Transmission Contract
Adjustment or any provision thereof in court, you
may be limited to raising only those issues you or
someone else raised at the hearing described in
this notice or in written correspondence delivered
to the City of Vernon at, or prior to, the meeting.
Americans with Disabilities Act (ADA): In
compliance with ADA, if you need special
assistance to participate in the meeting, please
contact the Office of the City Clerk at (323) 583-
8811 ext. 546.
The hearing may be continued or adjourned or
cancelled and rescheduled to a stated time and
place without further notice of a public hearing.
Dated: September 13, 2018
Is/
Matthew Ceballos, Deputy City Clerk
9/20/18
PRE-3174920A
HUNTINGTON PARK BULLETIN
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ADOPTING A NEW TRANSMISSION REVENUE
REQUIREMENT FOR 2019 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
E
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 proposed revisions
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
- 2 -
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
E
- 3 -
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 1 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, on January 6, 2015, the City approved revisions to
the template used to calculate the annual ETC Adjustment Clause; and
WHEREAS, on April 8, 2015, FERC approved the City's 2015
filing with FERC reflecting modifications to the base TRR as calculated
using the revised ETC Adjustment Clause template; and
WHEREAS, on October 24, 2017, the City approved revisions to
the Gross Load included in the City's TO Tariff that updated the Gross
Load to be based on 2016 load data, rather than 2010 load data; and
WHEREAS, on December 8, 2017, FERC approved the City's 2017
filing with FERC reflecting revisions to the Gross Load included in the
City's TO Tariff; and
WHEREAS, the City is required under the TO Tariff Order to
submit annual filings with FERC reflecting modifications to the base
TRR; and
- 4 -
c
WHEREAS, a Notice of Public Hearing was published on
September 20, 2018, notifying all interested parties that a hearing to
consider evidence to establish the City's new TRR was scheduled for
October 16, 2018, at approximately 9:00 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 16, 2018, the City Council held a Public
Hearing in which the City Council took evidence from staff and those
other persons in attendance who wished to be heard on the calculation
of the City's new TRR; and
WHEREAS, the TRR for 2019 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.
WHEREAS, the Public Utilities Department has prepared a
Report, dated October 16, 2018, 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, approved by FERC under the
amended TO Tariff, and revised in 2015 are reasonable and which
calculates the amount derived under the ETC .Adjustment Clause for 2019;
and
WHEREAS, the Public Utilities 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, 2019; 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.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
1C
- 5 -
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the recitals contained hereinabove are true
and correct.
SECTION 2: The City Council of the City of Vernon finds
that this action does not constitute a "project" pursuant to section
15378(b)(2) of the Guidelines to the California Environmental Quality
Act ("CEQA"), because such action constitutes an administrative
activity; and even if the adoption of the proposed item did constitute
a project, it would be exempt in accordance with CEQA Guidelines
section 15061(b)(3), the general rule that CEQA only applies to
projects that may have an effect on the environment.
SECTION 3: The City Council of the City of Vernon hereby
further finds and determines that all persons have had the opportunity
to be heard or to file written comments to the proposed adoption of the
City's TRR, and after due consideration of any and all evidence
submitted at the Public Hearing, determines there are compelling
reasons to justify the adoption of the City's TRR, to be effective
January 1, 2019.
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 date of this
Resolution; and
(b) in no way shall this Resolution affect the City
Council's adoption or determination of any previous TRR or TO Tariff.
SECTION 5: The City Council of the City of Vernon hereby
11
- 6 -
approves, pursuant to the TO Tariff and to be effective on January 1,
2019, the.establishment of the City's new TRR and Appendix I to the TO
Tariff implementing the new TRR, as described in the Public Utilities
Department Report dated October 16, 2018.
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 Report, and this City Council Resolution approving the new TRR,
to FERC on behalf of the City of Vernon.
SECTION 7: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of resolutions
of the Council of this City.
APPROVED AND ADOPTED this 16th day of October, 2018.
ATTEST:
Maria E. Ayala, City Clerk
APPROVED AS TO FORM: l
Katharine Mapes, Esq.
Spiegel & McDiarmid, LLP
Special Counsel to City
Name:
Title: Mavor
`M
- 7 -
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Maria E. Ayala, City Clerk of the City of Vernon, do hereby
certify that the foregoing Resolution, being Resolution No. , 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 October
16, 2018, and thereafter was duly signed by the Mayor or Mayor Pro-Tem
of the City of Vernon.
Executed this day of October, 2018, at Vernon, California.
(SEAL)
- 8 -
Maria E. Ayala, City Clerk
13
EXHIBIT A
14
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $.2 446,805 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: $,Z.388,720
Balance of Difference between prior year
Forecast and Actual SCE ETC Costs: (417 712)
Interest on Difference between prior year
Forecast and Actual SCE ETC Costs: ($r2,683)
The ETC Adjustment Clause is: The projected SCE ETC Cost for the next calendar year,
plus the true -up (positive or negative) of the prior October through September SCE ETC
Cost with interest calculated pursuant to 18 C.F.R. § 35.19a. The ETC Adjustment
Clause will be recalculated annually and filed with the Commission with a proposed
effective date of January 1 of each year.
The TRBAA is a negative $� 1,176 for calendar year 201F).
Vernon's Gross Load, consistent with its TRR, used by the ISO to develop the Transmission
Access Charge is 1,154,492 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.
_ ___.
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15
APPENDIX I
Transmission Revenue Requirement and TRBAA
The Vernon Base Transmission Revenue Requirement is $2,446,805 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: $2,388,720
Balance of Difference between prior year
Forecast and Actual SCE ETC Costs: ($417,712)
Interest on Difference between prior year
Forecast and Actual SCE ETC Costs: ($22,683)
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 fled with the Commission with a proposed
effective date of January 1 of each year.
The TRBAA is a negative $21,176 for calendar year 2019.
Vernon's Gross Load, consistent with its TRR, used by the ISO to develop the Transmission
Access Charge is 1,154,492 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.
W.
EXHIBIT B
17
CITY OF VERNON PUBLIC UTILITIES DEPARTMENT
REPORT REGARDING THE ESTABLISHMENT OF A REVISED NEW
TRANSMISSION REVENUE REQUIREMENT ASSOCIATED WITH VERNON'S
HIGH VOLTAGE ENTITLEMENTS
October 16, 2018
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 18
one (the "SCE Victorville-Lugo ETC" described in SCE's FERC Rate Schedule 360)
TRR Report 2019
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
On September 30, 2008, FERC accepted, subject to refund and hearing and
settlement procedures, SCE's proposed revisions to its TO Tariff to transition the
negotiated path -specific rates set forth in the SCE Victorville-Lugo ETC and the SCE
Mead ETC to the uniform HVECAC Rate, and thus the City's costs under those
ETCs will vary proportionately with any changes in SCE's TRR.
The City reached a settlement agreement (the "SCE Settlement") with SCE to
amend the SCE Victorville-Lugo ETC and the SCE Mead ETC to fully transition the
path -specific rates set forth in those ETCs to SCE's HVECAC Rate after a phase -in
period that began on August 1, 2009, during which the City's path -specific rates in
those ETCs have been gradually stepped -up under incrementally increasing fixed 19
TRR Report 2019
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 ¶ 61, 237 (2009), in FERC Docket
Nos. ER08-1343-000, ER08-1353-000, ER09-187-000, ER09-187-001, EL09-19-
000, and ER09-446-000 ("SCE Settlement Order").
On behalf of the City, The Brattle Group, an experienced utilities consulting firm,
developed a TRR tracking mechanism clause for the City's TRR ("ETC Adjustment
Clause"), which allows the City's TRR to be adjusted annually, effective January 1 of
each year, to reflect changes in the City's transmission expenses associated with
any changes implemented by SCE in the HVECAC Rate associated with the SCE
Victorville-Lugo ETC and the SCE Mead ETC.
On the basis of The Brattle Group's analysis and evidence from City staff, which was
considered during a public meeting of the City Council held on July 13, 2009, the
City, on July 15, 2009 ("July 15 FERC Filing"), filed with FERC the proposed (i)
revisions to its TO Tariff proposing the City's stated TRRs for each of the years 2010
to 2012, which dollar amounts were also included in the SCE Settlement ("TO Tariff
Revisions") and (ii) the ETC Adjustment Clause tracking mechanism.
The July 15 FERC Filing acknowledged that, to the extent that the SCE Settlement
was accepted, because the stated Phase -In Rates would be fixed, the ETC
Adjustment Clause for the term of the Phase -In Rates would be zero.
FERC approved the City's July 15 FERC Filing, including the TO Tariff Revisions,
the City's proposed calculations of the TRR for years 2010 to 2012, and the City's
request to utilize an ETC Adjustment Clause, in an order issued September 11,
2009, 128 FERC ¶ 61,235 (2009), in FERC Docket No. EL09-64-000 ("TO Tariff
Order"). The City is required under the TO Tariff Order to submit annual filings each
year with FERC reflecting annual modifications to the base TRR of the City.
In January 2015, the City approved revisions to the template used to calculate the 2C
TRR Report 2019
Page 4 of 6
ETC Adjustment Clause and submitted these revisions to FERC. On April 8, 2015,
FERC approved the City's 2015 TRR filing as calculated using the revised ETC
Adjustment Clause template; the City has prepared this year's filing using that
revised template.
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, 2019 is shown in Exhibit 1. The ETC Adjustment Clause to be
effective for the twelve months starting January 1, 2019 is $1,948,325.
The ETCCF Component
The ETCCF component stands for the forecast of SCE ETC costs for the following
calendar year, in this case 2019. These forecast SCE ETC costs reflect 2019 rates
from Southern California Edison Company's draft FERC Filing, posted on its website
pursuant to its formula rate protocols (approved in FERC Docket No. ER11-3697).
That filing is scheduled to be made at FERC, in its final form, in December 2018;
Vernon will true up any differences in its SCE ETC costs when it makes its 2020 21
TRR Report 2019
Page 5of6
TRR filing.
The ETCCF for 2018 SCE ETC costs are projected to be $2,388,720 as shown in
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, 2017 and ending September 30, 2018.
A summary of the determination of the September 30, 2018 balance in the ETC
Adjustment Clause is shown in Exhibit 1. The ETCCT component reflects 1) the
previously projected 2016 SCE ETC costs of $225,700 per month, for the months
October through December 2017 and projected 2018 SCE ETC costs of $230,510
per month, for the months January through September 2018, 2) actual 2017 SCE
ETC costs of $ 20,9420 per month, for the months October through December 2017
and $227,920 per month, for the months January through September 2018, and 3)
refunds received by the City —all elements as reflected on Line No. 8, 15, and 16 of
Exhibit 1. The net of these elements produce the under (or over) collection figures
reflected in Line 17 of Exhibit 1. The ending balance is the sum of the beginning
balance on October 1 and the (over)/under collection — both elements as reflected
on Line 1 and 17 of Exhibit 1. The cumulative monthly balances are carried forward
from month to month and the ETCCT component on September 30, 2018 of negative
$417,712 is shown in line 19 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."
22
TRR Report 2019
Page 6 of 6
Interest is calculated monthly on the average cumulative monthly balance and is
compounded quarterly. The interest component is negative $22,683, as shown in
Lines 20-24 of Exhibit 1.
RECOMMENDATIONS
1. Approve the establishment of the City's revised new TRR for 2019 and
revised Appendix I to the TO Tariff.
2. Authorize outside counsel to submit the City's TRR, ETC Adjustment Clause
amount, the revised Appendix I to the TO Tariff, and this City Council
Resolution approving the TRR and ETC Adjustment Clause amount to FERC
on behalf of the City of Vernon.
23
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City of Vernon
4305 Santa Fe Avenue
Vernon, CA 90058
(323) 583-8811
NOTICE OF TWO SEPARATE PUBLIC HEARINGS REGARDING THE ESTABLISHMENT OF
VERNON'S NEW TRANSMISSION REVENUE BALANCING ACCOUNT ADJUSTMENT AND
VERNON'S NEW EXISTING TRANSMISSION CONTRACT ADJUSTMENT
The City of Vernon will conduct a Public Hearing, which you may attend.
PLACE: Vernon City Hall
City Council Chamber
4305 Santa Fe Avenue
Vernon, CA 90058
DATE & TIME: Tuesday, October 16, 2018, at 9:00 a.m. (or as soon thereafter as the matter can be heard)
PURPOSE/SUBJECT: (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, and (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.
DOCUMENTS FOR REVIEW:
Copies of a Resolution Establishing a Transmission Revenue Balancing Account Adjustment for 2019
and a Resolution Adopting a New Transmission Revenue Requirement will be available for public examination at
Vernon City Hall, located at 4305 Santa Fe Avenue, Vernon, California from October 4, 2018 through October 16,
2018.
Please send your comments or questions to:
Abraham Alemu
City of Vernon, Public Utilities
4305 Santa Fe Avenue, Vernon, CA 90058
(323) 583-8811 Ext. 250
AAl.,ci-nu i.vernon.ca.us
PROPOSED CEQA FINDING: Find that approval of the proposed action is exempt from California Environmental
Quality Act ("CEQA") review, because it is a fiscal and administrative activity that will not result in direct or indirect
physical changes in the environment, and therefore does not constitute a "project" as defined by CEQA Guidelines
section 15378.
If you challenge the adoption/approval of the establishment of Vernon's new Transmission Revenue Balancing
Account Adjustment, or Vernon's new Existing Transmission Contract Adjustment or any provision thereof in
court, you may be limited to raising only those issues you or someone else raised at the hearing described in this notice
or in written correspondence delivered to the City of Vernon at, or prior to, the meeting.
Americans with Disabilities Act (ADA): In compliance with ADA, if you need special assistance to participate in the
meeting, please contact the Office of the City Clerk at (323) 583-8811 ext. 546.
The hearing may be continued or adjourned or cancelled and rescheduled to a stated time and place without
further notice of a public hearing.
Dated: September 13, 2018 � Matthew Ceballos, Deputy City Clerk
CALIFORNIA NEWSPAPER SERVICE BUREAU
DAILY JOURNAL CORPORATION
Mailing Address: 915 E FIRST ST, LOS ANGELES, CA 90012
Telephone (800) 788-7840 / Fax (800) 464-2839
Visit us @ www.LegalAdstore.com
MATTHEW CEBALLOS
CITY OF VERNON CITY CLERK
4305 SANTA FE AVE
VERNON, CA 90058
COPY OF NOTICE
Notice Type: GPN GOVT PUBLIC NOTICE
Ad Description NOTICE OF TWO SEPARATE PUBLIC HEARINGS
REGARDING THE ESTABLISHMENT OF VERNON'S
NEW TRANSMISSION REVENUE BALANCING
To the right is a copy of the notice you sent to us for publication in the
HUNTINGTON PARK BULLETIN. Please read this notice carefully and call us
with any corrections. The Proof of Publication will be filed with the County
Clerk, if required, and mailed to you after the last date below. Publication
date(s) for this notice is (are):
09/20/2018
An invoice will be sent after the last date of publication. If you prepaid this
order in full, you will not receive an invoice.
..000004ea=9.,.
PRE# 3174920
NOTICE OF TWO SEPARATE PUBLIC
HEARINGS REGARDING THE
ESTABLISHMENT OF VERNON'S NEW
TRANSMISSION REVENUE BALANCING
ACCOUNT ADJUSTMENT AND VERNON'S
NEW EXISTING TRANSMISSION CONTRACT
ADJUSTMENT
The City of Vernon will conduct a Public Hearing,
which you may attend.
PLACE: Vernon City Hall
City Council Chamber
4305 Santa Fe Avenue
Vernon, CA 90058
DATE & TIME: Tuesday, October 16, 2018, at
9:00 a.m. (or as soon thereafter as the matter can
be heard)
PURPOSE/SUBJECT: (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, and (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.
DOCUMENTS FOR REVIEW:
Copies of a Resolution Establishing a
Transmission Revenue Balancing Account
Adjustment for 2019
and a Resolution Adopting a New Transmission
Revenue Requirement will be available for public
examination at Vernon City Hall. located at 4305
Santa Fe Avenue, Vernon, California from
October 4, 2018 through October 16, 2018.
Please send your comments or questions to:
Abraham Alemu
City of Vernon, Public Utilities
4305 Santa Fe Avenue, Vernon, CA 90058
(323) 583-8811 Ext. 250
AAI-emuCa�ci.vernon.ca. u s
PROPOSED CEQA FINDING: Find that approval
of the proposed action is exempt from California
Environmental Quality Act ("CEQA") review,
because it is a fiscal and administrative activity
that will not result in direct or indirect physical
changes in the environment, and therefore does
not constitute a "project" as defined by CEQA
Guidelines section 15378.
If you challenge the adoption/approval of the
establishment of Vernon's new Transmission
Revenue Balancing Account Adjustment, or
Vernon's new Existing Transmission Contract
Adjustment or any provision thereof in court, you
may be limited to raising only those issues you or
someone else raised at the hearing described in
this notice or in written correspondence delivered
to the City of Vernon at, or prior to, the meeting.
Americans with Disabilities Act (ADA): In
compliance with ADA.. if you need special
assistance to parucipate in the meeting, please
contact the Office of the City Clerk at (323) 583-
8811 ext. 546.
The hearing may be continued or adjourned or
cancelled and rescheduled to a stated time and
place without further notice of a public hearing.
Dated: September 13, 2018
/s/
Matthew Ceballos, Deputy City Clerk
9/20/18
PRE3174920#
HUNTINGTON PARK BULLETIN
HUNTINGTON PARK BULLETIN
3731 WILSHIRE BLVD STE 840, LOS ANGELES, CA 90010
Telephone (323) 556-5720 / Fax (213) 835-0584
This space for filing stamp only
MATTHEW CEBALLOS
CITY OF VERNON CITY CLERK
PRE#: 3174920
4305 SANTA FE AVE
NOTICE OF TWO SEPARATE PUBLIC
REGARDING THE
VERNON,EARINGS
ERNON, CA - 90058
ESTABLISHMENT OF VERNON'S NEW
TRANSMISSION REVENUE BALANCING
ACCOUNT ADJUSTMENT AND VERNON'S
NEW EXISTING TRANSMISSION CONTRACT
ADJUSTMENT
The City of Vernon will conduct a Public Hearing,
PROOF OF PUBLICATION
You may attend.
VernonCity
PLACE: on Cty Hall
City Council Chamber
4305 Santa Fe Avenue
(2015.5 C.C.P.)
Vernon, CA 90058
DATE & TIME: Tuesday, October 16, 2018, at
State of California )
9:00 a.m(or as soon thereafter as the matter can
County of LOS ANGELES ) ss
beheard)
PURPOSE/SUBJECT: (1) To consider evidence
to establish Vernon's new Transmission Revenue
Balancing Account Adjustment for its high voltage
Notice Type: GPN - GOVT PUBLIC NOTICE
(over 200 kV) transmission entitlements (all
located outside the City) pursuant to Vernon's
Transmission Owner Tariff, and (2) To consider
evidence to establish Vernon's new Existing
Ad Description:
Transmission Contract Adjustment for its high
voltage (over 200 kV) transmission entitlements
NOTICE OF TWO SEPARATE PUBLIC HEARINGS
located outsideCi )pursuant to Vernon's
W.,rismsson
OwnerhTariff
DOCUMENTS FOR REVIEW:
I am a citizen of the United States and a resident of the State of California, I am
copies ofa Resolution Establishing a
Transmission Revenue Balancing Account
over the age of eighteen years, and not a party to or interested in the above
Adjustment for 2019
entitled matter. I am the principal clerk of the printer and publisher of the
and a Resolution Adopting a New Transmission
Revenue Requirement will be available for public
HUNTINGTON PARK BULLETIN, a newspaper published in the English
examination at Vernon City Hall, located at 4305
language in the city of HUNTINGTON PARK, county of LOS ANGELES, and
Santa Fe Avenue, Vernon, California from
October 4, 2018 through October 16, 2018.
adjudged a newspaper of general circulation as defined by the laws of the State
Please send your comments or questions to:
of California by the Superior Court of the County of LOS ANGELES, State of
Abraham Alemu
California, under date 06/14/1943, Case No. 485073. That the notice, of which
City of Vernon, Public Utilities
4305 Santa Fe Avenue, Vernon, CA 90058
the annexed is a printed copy, has been published in each regular and entire
(323) 583-8811 Ext. 250
issue of said newspaper and not in any supplement thereof on the following
AALemuc3ci.vernon.ca.us
dates, to -wit:
PROPOSED CEQA FINDING: Find that approval
of the proposed action is exempt from California
Environmental Quality Act ("CEQA") review,
because it is a fiscal and administrative activity
that will not result in direct or indirect physical
changes in the environment, and therefore does
not constitute a "project" as defined by CEQA
Guidelines section 15378.
If you challenge the adoption/approval of the
establishment of Vernon's new Transmission
Revenue Balancing Account Adjustment, or
Vernon's new Existing Transmission Contract
Adjustment or any provision thereof in court, you
09/20/2018
may be limited to raising only those issues you or
someone else raised at the hearing described in
this notice or in written correspondence delivered
to the City of Vernon al, or prior to, the meeting.
Executed on: 09/20/2018
At Los Angeles, California
Americans with Disabilities Act (ADA): In
compliance with ADA, if you need special
assistance to participate in the meeting, please
of that the foregoing is true and
contact the Office of the City Clerk at (323) 583-
I certify (or declare) under penalty perjury
8811 ext. 546.
correct.
The hearing may be continued or adjourned or
cancelled and rescheduled to a stated time and
place without further notice of a public hearing.
Dated: September 13. 2018
LL
Signature
IIIIIII IIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIIII IIII IIII
* A 0 0 0 0 0 4 8 6 8 7 4 9
Email
Matthew Ceballos, Deputy City Clerk
9/20/18
PRE-3/749200
HUNTINGTON PARK BULLETIN