1999 AGN DEC 21 I02 - Laserfiche WebLink

Browse Search

CITY OF COLTON AGENDA REPORT For the City Council Meeting of December 21, 1999 TO: Honorable Mayor and City Council APPROVAL: Henry T. Garcia, City Manager FROM: Thomas K. Clarke, Utility Director SUBJECT: APPROVE REVISION TO COMPETITION TRANSITION CHARGE (CTC) DATE: December 9, 1999 BACKGROUND California Assembly Bill 1890 provides for the "restructuring" of the State's electric utilities. The purpose of restructuring is to lower electricity costs by introducing a limited and new form of competition in the industry. In the new electric utility environment, customers will be able to choose who provides their energy. The local electric utility will remain a monopoly enterprise with respect to ownership of the physical plant required to deliver the energy, much like local phone companies were until recently. Customers in this new environment will be getting a more complex bill. In fact, they might get two bills involving electricity, one from the City, and another from their energy company. In the case of the single bill, the previous single charge for electricity service will be broken down into the following components (recent system values are inserted as an example): ►1.`l;<L�I_�I�13>Rit7t�� Id�b�91.1'JI: CTC $0.0329 ENERGY CHARGE $0.0260 TRANSMISSION CHARGE $0.0070 DISTRIBUTION ACCESS CHARGE $0.0354 PUBLIC BENEFIT CHARGE $0.0029 TOTAL $0.1042 "CTC" stands for Competition Transition Charge. AB1890 established the CTC in recognition of the large, long-term investments utilities have made in electric -generating facilities under the assumption that they were monopoly providers of energy for their service territory. AB1890 allows municipal utilities to continue to collect appropriate monies from customers who choose to purchase energy from another source. This ensures that the utilities can honor their debt service obligations. The City of Colton has power sales agreements involving debt service that extend to the year 2020, and it is likely that the City will need to impose a CTC until that time. DISCUSSION/ANALYSIS The new Schedule CTC is very similar to CTC's currently in use by the investor-owned utilities. Customers will see a different CTC and energy price on every bill because the market price for energy varies. Because of the utility's fixed annual revenue requirement, the sum of the CTC and the energy charge should be the same for each kilowatt-hour from month to month. Colton customers will not see a "Trust Transfer Amount" because the City has not borrowed money to provide a rate reduction, nor will Colton customers see a separate charge for nuclear decommissioning. Page 1 of 2 (w/attachments) Item #2