1999 AGN FEB 23 I01 - Laserfiche WebLink

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p.-. 14 CITY OF COLTON AGENDA REPORT For the City Council Meeting of February 23, 1999 TO: HONORABLE MAYOR AND CITY C UNC APPROVAL: HENRY T. GARCIA, CITY MANAGE _ / FROM: . THOMAS K. CLARKE UTILITY DIRECTOR ' SUBJECT: ELECTRIC UTILITY RESTRUCTURING DATE: Wednesday, February 17, 1999 BACKGROUND Electric utility restructuring in California is proceeding according to the process established by Assembly Bill 1890. The intent of the legislation is to lower electrical energy costs for all ratepayers, while maintaining a modest level of public benefit programs and respecting. the rights of municipalities with electric utilities to govern those utilities with the flexibility of local control. The new California system created by AB1890 began full operations on April 1, 1998. ANALYSIS To date, restructuring is not resulting in the cost savings that many customers hadhoped for. It is fostering the merger and acquisition of existing utilities into ever larger companies seeking to exploit new economies of scale. Publicly owned electric utilities have survived in the face of competition from larger private companies. They may continue to use their strengths to compete, but they must do so in new ways. ALTERNATIVES 1. Establish unbundled rates, including a new Competition Transition Charge, and schedule a phased implementation of restructuring starting on March 31, 2000, and finishing no later than December 31, 2010. Establish a Customer Choice Section of the Customer Service Division to administrate the provision of customer choice of energy provider. Sell stranded energy into the best market available to mitigate loss of retail sales. 2. Match or beat surrounding rates and customer services provided outside the City without establishing complex systems for the management of multiple energy providers. Instead, focus on providing customers with the service options they are looking for within the context of the City being the sole provider. FINANCIAL IMPACT For either alternative, average system revenue per customer will decline by 10 to 25 percent over the implementation period. Customers will obtain more innovative service and lower rates. Interest costs for financing new generation may increase under alternative 1 due to less certainty of revenues. RECOMMENDATION None. Report prepared by Timothy C. Trewyn, P.E., Assistant Electric Utility Director \\server\utim\dereg\feb99wkshpstfrep.doc