|
Seattle City Light Issues & Legislation Summaries:
Council Bills/Ordinances:
C.B. 116443: City of Shoreline Rates (Passed: 2/09/09)
- Amend Seattle Municipal Code, Chapter 21.49 in order to modify City Light's rate schedules for customers in the City of Shoreline.
- Recover a contract payment on the distribution portion of Shoreline customer revenues by increasing the energy rates in all rate schedules for the City of Shoreline.
- Increase on the average rate will be 1.3%
Background:
- 1998 - City of Shoreline passed Ordinance 187 which specified the terms of the agreement in which Seattle City Light would serve the City of Shoreline.
- Subsequently, the Seattle City Council approved the agreement in Ordinance 119312.
- The terms of the agreement allow the city of Shoreline to require Seattle City Light to pay a contract payment of up to 6% on both the power and distribution portions of Shoreline rate revenue.
- To date, Shoreline has exercised the requirement to collect 6% on the power portion of customers' rate revenue and 3% on the distribution portion.
- This proposed bill increases the contract payment on the distribution portion of Shoreline customer rate revenue to 6% in accordance with a City of Shoreline request dated March 30, 2007, and recovers the cost through the average 1.3% rate increase.
C.B. 116425: Broad Street Sub Station (Passed: 2/02/09)
Council Bill 116425 declares certain portions of the Broad Street sub station as surplus and authorizes a lease of the surplus area to King County METRO Transit for the operation of a transit rectifier which supplies power to electric busses and trolleys.
Background:
In 1978, the City of Seattle and King County METRO entered into an agreement to support electric trolleys within the city of Seattle. The agreement called for support from the City of Seattle and a twenty-five (25) year lease of space in the Broad Street Substation at 316 Sixth Avenue North for a rectifier station. It is necessary to execute a new 25 year lease with King County METRO to allow continued use of this site by King County METRO Transit to support the electric trolley and bus system.
Additionally, the original lease expired in 2003, and due to delays including lengthy negotiations, King County METRO has been occupying the space without a lease since that time. The lease presented in the ordinance commences on January 1, 2003 and provides for a lump sum payment of rent from that date through the current month. This payment is accounted for in King County's 2008 budget. The cost of the lease to King County METRO is $17,484 per year.
C.B. 116428: Whatcom County Agreement (Passed 1/05/09)
Council Bill 116428 allows Seattle City Light to enter into a 15 year Impact Payment Agreement with Whatcom County which is home to the Ross, Diablo, and Gorge dams on the Skagit River. Subsequently, entering into this agreement has been approved by the Whatcom County Council.
Background:
Seattle City Light makes annual impact payments through agreements with Whatcom and Pend Oreille Counties which expired on December 31, 2008. These payments are made under state law (RCW 35.21.420, 425, .426, and .427) for city-owned hydroelectric generation facilities to compensate counties and school districts for loss of revenues and increased costs caused by the operation of such facilities. As previously mentioned, City Light operates three dams in Whatcom County and the Boundary Dam in Pend Oreille County.
Under this agreement Whatcom County will receive a total of $7.8 million, which averages out to approximately $780,000 per year over the 10-year duration of the agreement.
C.B. 116338: Redding Electric Utility (Passed: 9/23/08)
Under this 15-year agreement, Seattle City Light will acquire energy and renewable energy credits from the City of Redding Electric Utility. This energy will come from a new 10 MW wood fueled biomass generating resource located in the City of Weed in Northern California. In exchange, City Light will deliver an equal amount of renewable energy credits and energy from its renewable hydroelectric resources located in Washington State which are owned by City Light.
Background:
- Redding entered into a fifteen year power purchase agreement with RLC Industries for the purchase of up to 10 MW of power and environmental attributes to be generated at the Roseburg softwood veneer mill in Weed, Siskiyou County, California in order to help them meet California's Renewable Portfolio Standard and load growth. This new resource is expected to go on-line in November 2008.
- Roseburg is interconnected to PacifiCorp's transmission system. The power is transmitted from Roseburg to the point of delivery at the north side of the Malin 500 kV substation ("Malin") at the California Oregon Border ("COB").
- Redding found it uneconomic to transmit the power from the north side of Malin into California. The City of Redding proposed an exchange with City Light whereby City Light takes the biomass power, including the Renewable Energy Credits, at the north side of Malin and delivers it to Seattle. One week later City Light will return an equal amount of energy and renewable energy credits to Redding.
C.B. 116336: King County Easements (Passed: 9/22/08)
Seattle City Light requests City Council acceptance of a number of easements from private parties to the City. These easements are required to provide overhead or underground electrical service to customers.
By way of background, City Light requires an easement when its system or equipment is located on private property, or when conductors must pass over, under, or through private property in order to provide service to a City Light customer. These easements allow City Light access to maintain the electrical service, and require the customer to obtain City Light approval for any new improvements which might affect the service.
C.B. 116335: Bonneville Power Administration Agreement (Passed: 9/22/08)
Council Bill # 116335 authorizes the Superintendent of City Light to enter into a new set of long term contracts with BPA for the purchase of power. These proposed contracts will allow City Light to continue the purchase of low cost power from BPA to help maintain stable rates and reliable service for City Light customers.
I would like to reiterate my point from Council Briefing this morning, which is that this contract is still in the negotiating process so we do not yet know what the finished product will be. However, the Superintendent has committed to informing the members of the Committee, through a special meeting of the ETC if the Budget schedule will allow, of the terms and conditions of the final contract.
Additional details:
- City Light does not yet know the total amount of energy it will be entitled to purchase, but it has good reason to believe that it will get about 530 average megawatts annually, or about half its annual retail load.
- BPA is offering two different types of power product: Block – a fixed contractual amount of power, and Slice – a resource-dependent share of Bonneville's generation. Within the Block product there are three flavors: a fixed hourly amount for the year; a fixed hourly amount per month, shaped to City Light's monthly needs; and, finally the latter with some flexibility on deliveries within the month. Each is priced differently. City Light has not yet determined the best combination of products for the future. Currently, it takes about 65% of its entitlement in Slice and about 35% in shaped Block.
- The prices of the various products will not be known until close to the start of the new contract term, and even then will be subject to periodic review. BPA is planning a two-tier system. Tier 1 would reflect BPA's cost of service for power from the existing federal system and we can therefore expect the price per megawatt-hour to be in the range of $25 to $35 – an exceptionally good deal in today's market. The 530 average megawatts will be at Tier 1 pricing. Tier 2 will similarly reflect BPA's cost of service, but will be based on the cost of new resources it may acquire. As a consequence, it will be closer to the market but may yet be below it. City Light believes that it may be offered up to 20 average megawatts of power from the second Tier.
C.B. 116334: North Downtown area land acquisition (Passed: 9/22/08)
Council Bill #116334 relating to City Light and their required purchase of three additional parcels which are adjacent to a lot already purchased for a possible future substation site.
By way of background, on October 11, 2007 City Council passed Ordinance 122537 which authorized City Light to acquire by negotiation or condemnation a parcel of land located at 1250 Denny Way for a possible North Downtown Substation. The owners of this parcel have requested that City Light also purchase three additional lots owned by them in the same block as a condition of sale. This legislation authorizes City Light to purchase the three additional lots which could be used for construction staging in the event that a new substation is constructed in the future.
I would like to emphasize that at this time there is no legislation in respect to building a new substation in the North Downtown area, however this may be a future possibility.
C.B. 116348: Strategic Partnership
This bill relates to the City Light Department and authorizing their execution of a contract for services with ACES Power Marketing (APM) to support the Utility's Power Marketing Division and provides for supplemental funds in 2008 to allow for implementation prior to the 2009 mountain runoff. By establishing this proposed partnership with APM City Light intends to bring its power management team's business systems and processes up to industry best practices while also enhancing existing risk management capabilities.
C.B. 116325: Lucky Peak Amendment (Passed: 9/12/08)
Under the Lucky Peak Power Purchase and Sale Contract, between City Light, the Boise-Kuna Irrigation District, Nampa & Meridian Irrigation District, Wilder Irrigation District and Big Bend Irrigation District. Collectively known as the districts. City Light agreed to purchase the electrical output from the Lucky Peak hydroelectric project for the period of October 1988 through September 30, 2038.
This 50 year power purchase arrangement includes provisions for City Light to pay the Districts a royalty payment. The Contract provides for two methods of calculating the royalty payment. The first method expires on September 30, 2008 and is replaced by a formula that includes variables that have changed over the past twenty years and such variables now create uncertainty and potential for conflict. Both City Light and the Districts desire to change this formula to a new formula that provides greater certainty and less potential for conflict. This new formula would apply for the last 30 years of the contract, October 1, 2008 through September 30, 2038.
Background:
- As provided for in the Contract, commencing on the date of commercial operation, October 1, 1988, City Light began making monthly royalty payments to the Districts. In order to settle the differences in interpretation of certain variables in the formula, in May of 1991, City Light and the Districts amended the formula. The amended royalty payment formula fixed the rate at 8.3 mills/kWh. Per this amendment, this rate is multiplied by the actual monthly generation to determine the monthly royalty payment to be paid to the Districts and is effective through September 30, 2008.
2. For the period October 1, 2008 through September 30, 2038 the Contract contemplates a formula for determining the royalty payments that again is likely to result in differences of interpretation and potential conflict. Therefore, City Light and the Districts have negotiated an alternative formula to be effective for the period October 1, 2008 to September 30, 2038. The new negotiated formula fixes the rate at 8.60 mill/kWh commencing October 1, 2008. The rate of 8.60 mills/kWh is escalated each year over the period by applying an annually compounding rate of 3% and is multiplied by the actual monthly generation to determine the monthly royalty payment.
C.B. 116193/116279: Bothell Substation (Passed: 8/11/08)
This legislation authorizes City Light to transfer to the Silver Lake Water and Sewer District (District) a portion of the civil infrastructure, specifically a vault, 80 feet of iron pipe, a valve, and assembly items necessary for the District to provide water service to the City Light's Bothell Substation. The City needs to grant easement rights to the District for the operation and maintenance of water service connection to the Bothell Substation. Receiving water service from the District will allow City Light to remove the existing water tower, which is vulnerable to damage in the event of an earthquake. Currently, the water tower poses a serious risk to City Light's critical electrical infrastructure. This legislation will allow City Light to upgrade and retrofit the substation buildings, facilities and systems, and related structures. The project objective is to provide station security, safe working conditions, and related services, such as water, sewer and lighting
C.B. 116278: PacifiCorp (Passed: 8/11/08)
This Council Bill provides authority to Seattle City Light to enter into multi-year transmission service agreements with PacifiCorp. These agreements will allow City Light to replace existing transmission service agreements that expire in 2008. As the Federal Energy Regulatory Commission (FERC) now requires that long-term transmission rights may only be secured for periods of at least five (5) years, a new transmission services agreement is necessary to transmit power from Stateline located near Walla Walla, Washington, to the Bonneville Power Administration's transmission system network where it can be then transmitted to the City of Seattle.
The cost of not implementing this legislation will place City Light at risk of losing priority right to existing firm transmission. Without this legislation, there would be no intermittent transmission and the City would fall back to a position where we would not be able to transmit the energy associated with City Light's 175 MW Stateline wind purchase in PacificCorp's service territory to the BPA transmission system. To replace such a loss is likely to require a substantial capital outlay and, potentially, years of delay in constructing new transmission lines.
C.B. 116265: City Light Net Metering Program (Passed: 7/21/08)
This Council Bill amends Seattle Municipal Code regarding Seattle City Light's Net Metering Program. Net metering allows City Light to credit customers who generate electricity via their own solar or other renewable technologies, which subsequently helps reduce the Utility's overall system load. The amendments are necessary to remain in compliance with recent changes in state law, and will help to enhance participation for City Light customers who choose to net meter. In addition, this legislation broadens the definition of net metering systems to include additional renewable energy technologies, and provides an extended date for the use of net metering credits. The legislation also raises the caps on the electrical generating capacity of individual net metering systems, and on the cumulative generating capacity of all of City Light's net metering customers.
And last, by using a practice known as meter aggregation City Light will have the ability to bill net metering customers by allowing the Utility to combine readings from all meters on the premises of a given net metering customer.
C.B. 116231: T-Mobile (Passed: 6/09/08)
This proposed ordinance authorizes an agreement between Seattle City Light and T-Mobile USA, Inc. to permanently vacate and relocate certain City Light (fixed point-to-point) microwave radio systems at T-Mobile's expense.
The agreement was designed to allow Seattle City Light and T-Mobile to accommodate the rather aggressive timeline to install the new system with T-Mobile willing to take all of the financial risk in the event Council did not approve.
T-Mobile did not complete construction of the new system by the agreement's original date of December 31, 2007. For this reason, T-Mobile has requested an extension to June 30, 2008, in order to complete its system, and for the relocation of Seattle City Light's communication lines. The extension provides sufficient time for relocation.
By background, the FCC previously licensed certain frequencies to City Light for communication purposes. The FCC reallocated and auctioned certain frequencies including those paths used by City Light to commercial enterprises for use by emerging technologies known as the Advanced Wireless Services. T-Mobile was the winner of the FCC Auction of the particular frequencies previously licensed to City Light.
T-Mobile has determined that its Advanced Wireless Services system may cause interference to City Light's frequency paths and desires that City Light permanently vacate (in accordance with the FCC's actions), its licenses to operate in the affected frequency paths and relocate its operations onto other microwave frequencies or other communication paths available to City Light.
Because City Light and T-Mobile desire to negotiate the replacement of the current microwave systems used by City Light, T-Mobile has agreed to design, construct and provide City Light -- at T-Mobile's expense -- newly installed communication systems to replace the current systems.
C.B. 116194: Grand Coulee, Avista (Passed: 5/12/08)
Council Bill 116194 was passed by the Energy and Technology Committee on May 7th, and by Full Council on May 12th. This is a bill that authorizes City Light to execute three agreements to provide for the transmission of power from the Summer Falls and Main Canal Hydroelectric Projects to the City of Seattle. This bill replaces an expired transmission agreement with the Avista Corporation for the transmission of power from the Summer Falls and Main Canal Hydroelectric Projects.
The agreements employ the services of both Avista and Public Utility District #2 of Grant County and will provide an efficient and cost-effective alternative to either interconnecting with the Bonneville Power Administration grid or continuing service under Avista's previous contract.
The execution of these contracts will result in a net savings of $46,100 in 2008.
A range of transmission options were considered by City Light. One option, a $28 million transmission contract with Avista was considerably more expensive, where an option of a $10.5 million proposal for the City to construct new facilities was less expensive. The rroposed contracts are $11.3 million in net present value terms. Although the build option is marginally better on a straight present value basis, it exposes City Light to the cost risk and regulatory risk associated with building new transmission facilities. The contract option also resolves the dispute with the Grand Coulee Projects Hydroelectric Authority and results in a more efficient use of the region's existing transmission facilities.
C.B. 116176: Sacramento Municipal Utility District (Passed: 4/21/08)
Council Bill 116176 was passed by Full Council on April 21st, 2008. This ordinance provides authority to City Light to extend an existing delivery contract with the Sacramento Municipal Utility District (or SMUD). The contract extension has two components: (1) a power delivery component and (2) a power purchase component.
The power delivery component would allow for City Light to deliver up to 15 Megawatts of energy to SMUD in exchange for SMUD deliveries of the equivalent amount of energy to City Light. This would allow City Light to continue to schedule the output of energy from the Northwest Project in Burlington, WA, and SMUD would reciprocate by providing City Light with reliable capacity and energy in the winter months.
This Ordinance allows the current 18-month contract to be extended to a ten-year term and operates in conjunction with SMUD's ten-year agreement with Sierra Pacific Inc. (SPI). SMUD's agreement with SPI provides for the purchase of a portion of the output of SPI's new wood-waste (biomass) co-generation project in Burlington, Washington. Because of the location of this project, SMUD required a counterpart to provide delivery services from the site. While City Light is currently providing that service on a short-term basis, it now brings the request before the Full Council and seeks authority to continue to provide the service for the term of the contract.
The power purchase component will allow City Light to purchase energy from the project in excess of the agreed delivery amount. In other words, City Light will be in a position to purchase power at cost, even though the amount of energy is very small (approximately 3 average megawatts). While the contract cost is $62 per megawatt-hour (with a contract escalation rate of 1.75% per year), we know these figures will likely remain competitive over the term of the contract.
The project plant has been certified carbon neutral by Green-E, the national certifier of renewable energy, and the California Energy Commission. Because the output from the plant is considered carbon neutral, the project will help City Light meet its requirements under the state's Renewable Portfolio Standard established through Initiative 937. However, as to not overstate the green effects of this transaction, the payment in energy that City Light will receive from Sacramento for the delivery service is not carbon neutral and City Light estimates that the energy will add approximately 7,800 metric tons of carbon to its balance sheet that will need to be offset and such costs were factored into this analysis.
In sum, passage of this legislation will contribute to meeting three of City Light's Integrated Resource Plan goals: resource adequacy, adding new renewable resources, and reducing portfolio volatility.
C.B. 116174: Boulder Creek (Passed: 4/21/08)
This ordinance accepts a deed to the 1,080-acre Boulder Creek property in the Skagit River watershed and places the acquired properties under the jurisdiction of the City Light Department. City Light originally purchased the property in the Cascade watershed with $742,300 in grant funds from the US Fish and Wildlife Service and the Washington Department of Natural Resources and was purchased pursuant to authority under Ordinance 121114. City Light and the citizens of Seattle can be proud of City Light's efforts in this regard. This Ordinance will help to preserve more than one thousand acres of a high quality stream and an important ecosystem for salmon, trout, and other aquatic species.
In addition, included in this deed will be 200 acres of old growth forest that provides a high quality habitat for threatened species, including Spotted Owls.
The Energy and Technology committee believes passage of this legislation will further demonstrate the City of Seattle's commitment to salmon recovery and habitat preservation for the benefit of its citizens and future generations and therefore unanimously agreed on its approval.
C.B. 116138: Lucky Peak (Passed: 2/25/08)
An ordinance that authorizes City Light to enter into a 10 year, Generator Interconnection Agreement with Idaho Power and a 5 year transmission Agreement with Idaho Power.
By way of background, as many of you know, as far back as 1984, City Light has purchased power from the Lucky Peak Hydro-electric facility near Boise, Idaho. The arrangement provided for the interconnection of the facility to Idaho Power's transmission grid and transmission across that grid to the Bonneville Power Administration's grid. The Federal Energy Regulatory Commission or FERC, as it is affectionately known, issued an Order that has the net effect of requiring City Light to enter into the Interconnection Agreement for a term of at least 10 years and a transmission agreement for a term of at least 5 years, in order to continue to have certainty of access to the power from Lucky Peak.
In short, the agreements are necessary for City Light to continue to have unrestricted access to power from Lucky Peak and without them, our ability to use or market the power from the plant could be severely limited, possibly resulting in a significant loss of revenue to the utility. This bill does include a ratify and confirm clause, which is not our favored practice but in this case, it is necessary because the contracts here should be executed by March 10, 2008 or City Light runs the risk of losing its grandfathered status in the arrangement with Idaho Power.
Clerk Files:
C.F. 309147: Superintendent Jorge Carrasco Reconfirmation (Passed: 6/23/08)
Clerk file:
Resolutions:
Resolution 31053: City Light Risk Management Policy (Passed: 9/8/08)
A representative from City Light is scheduled to present their proposed Risk Management Plan at an Energy and Technology Meeting in the near future. The Risk Management Plan is necessary because "City Light faces significant uncertainty regarding both the quantity of power available to the utility and the range of prices prevailing in the wholesale power market."
In a typical year the supply of power inherent to City Light exceeds the demand of its customers, creating a surplus. This surplus power is then sold in the wholesale power market. The revenue generated by selling is "used to offset costs that would otherwise be borne by City Light's retail rate payers." City Light can sell its surplus power in two different manners. One is that they sell the power in the "spot market" as the power makes itself available, or it can sell the power in the "forward market" for delivery in the future. Both methods of selling involve risk.
If City Light chooses to sell the surplus in the spot market, it exposes the utility to the possibility of selling at a low rate "because the wholesale market is flush with power." Selling projected surplus in the forward market reduces this risk, but then City Light is presented with the possibility of being forced to purchase power at higher prices "in order to meet those forward commitments (as well as retail demand) in the event actual supplies" are significantly less than estimated.
Resolution 31076: Seattle City Light Integrated Resource Plan (Passed: 8/11/08)
The Integrated Resource Plan is a fluid document that is updated every two years in order to account for the uncertain nature of future energy market prices, resource availability, demand growth, changes in technology, regulation, and City policy initiatives. The intent of the IRP is to achieve a balance of low costs, low risk, and low environmental impacts.
The Plan has been developed to be compliant with I937 and the recommended resource strategy is a continuation of the utility's policy of obtaining low cost power for customers with low environmental impact, while making the most of existing resources. Conservation is the first choice resource, followed by seasonal exchanges that help shape resources to load.
At the May 7th 2008 Energy and Technology Committee meeting Seattle City Light Superintendent Jorge Carrasco presented a briefing on the 2008 Integrated Resource Plan (IRP). The IRP is a long term plan that outlines how the utility will meet the projected needs of customers over the next twenty years. The IRP helps to ensure that City Light meets their responsibility to provide customers with reliable, reasonably priced electricity with an added focus of alternative forms of energy. Given the complex nature of generating and transmitting electricity IRP's are usually based on "load forecasts and resource options that extend well into the future." Being that the IRP focuses on the long term it must be flexible in order to respond "to changing market conditions and future uncertainties."
Resolution 31056: Skagit Environmental Endowment Commission (Passed: 5/12/08)
This Legislation is in the form of a Resolution that sought Council's approval of the "Skagit Environmental Endowment Commission's (SEEC) 2008 Budget for its fiscal year of April 1, 2008 through March 31, 2009.
The Commission and Endowment was established in the mid-80's as a part of an agreement between the City of Seattle and the Province of British Columbia relating to a proposed "High Ross Dam". Earnings from the endowment plus annual supplemental payments by Seattle City Light and British Columbia Hydro allow the Commission to support a variety of educational and environmental projects in the upper Skagit watershed.
Although the SEEC's funds come from an endowment and are separate from City funds, the "High Ross Dam" Treaty requires the Commission to submit its annual budget to the Seattle City Council and British Columbia for review and approval. In other words, this Resolution does not have any financial implications as indicated in the fiscal note.
The Commission allocated approximately $300,000 to continue support for projects relating to water quality, grizzly bear recovery, fisheries assessment, education, development of recreational facilities and land protection. The SEEC's goal to develop new strategies to protect these lands is consistent with the 1984 High Ross Treaty.
The Energy and Technology Committee believes the passing of Resolution 31056 will further demonstrate the City of Seattle's commitment to conserve and protect wilderness and wildlife habitat, as well as enhance recreational opportunities in the Skagit Valley for the benefit of the citizens of Seattle and future generations. |
