HomeMy WebLinkAboutAgenda Packet 12/14/2004 UTILITY ADVISORY COMMITTEE
PUBLIC WORKS CONFERENCE ROOM
PORT ANGELES, WA ~836
3:00 P.M.
AGENDA
I, CALL TO ORDER
II. ROLL CALL
III. APPROVAL DF MINUTES FDR NDVEI~4BER
IV, LATE ITENS
V, DISCUSSION ITEMS
A, LONB TERM SEPTAGE RECEIVING AGREEh4ENTS
B, REVISION To CITY'S WATER GHORTABE RESPONSE PLAN
C. LEASE WITH WDF'W ' REARING CHANNEL
D. CITY AUTHORIZED RETAILER AOREEh4ENT CANCELLATION
E, GDLID WASTE RFP PROCESS REVISION
F. RPA TRANSMISSION c:~ETTLEk4ENT
G. ISSUES/CONCERNS FOR 2005
H, ~:~005 CALENDAR UAC DATES
VI, NEXT I~v~EETING DATE - ,IANUARY I '~ ~ '-~005
VII. AD,,JOURNht ENT
UTILITY ADVISORY COMMITTEE
Port Angeles, Washington
November 9, 2004
I. Call to Order:
Chairman Rogers called the meeting to order at 3:00 p.m.
II. Roll Call:
Members Present: Chairman Rogers, Allen Bentley, Mayor Headrick, Dean Reed,
Councilmember Erickson
Members Absent: None
Staff Present: William Bloor, Glenn Cutler, Gary Kenworthy, Michael Puntenney, Scott
McLain, Larry Dunbar, Steve Sperr, Cate Rinehart
Others Present: Paul Lamoureux
IlL Approval of Minutes:
Chairman Rogers asked if there were any additions or corrections to the meeting minutes of
October 12, 2004. A sentence addition and modification was noted under the Manlift Truck item.
Dean Reed moved to approve the minutes as modified. Allen Bentley seconded the motion, which
carried unanimously.
IV. Late Items: Alternative Rate Structures
V. Discussion Items:
A. Unified Bilateral Compliance Agreement ~Vith department Of Health
Steve Sperr, Engineering Manager, reviewed the agreements noting the installation of a cover on the last
uncovered reservoir had been done and a water test for lead and copper had been completed. The two
remaining deliverables have been combined and include the design of a new water treatment plant with a
pH adjustment built into it and a treatment process that includes filtration to meet the Surface Water
Treatment Rule. There was a short discussion in which staff was directed to clarify the water test
information in thc Water Quality Report.
No action taken. Information taken.
UTILiTY ADVISORY COMMITTEE
November 9, 2004
B. Budget Amendment For Economic And Engineering Services Agreement
Larry Dunbar, Power Resources Manager, explained that the Economic and Engineering Services
consultant had been retained to assist staff with pre-closure revenue requirements and post-closure cost
of service analysis of the landfill. A revised scope of work has been developed to include a COSA model
modification, rate design alternatives, and post-closure COSA presentation. A brief discussion followed.
Staffwas directed to include in the memo to Council an amendment history and milestone schedule.
Mayor Headrick moved to forward a favorable recommendation to City Council to amend the not
to exceed amount of the EES agreement to $38,790. Allen Bentley seconded the motion, which
carried unanimously.
C. Alternate Rate Structure
Glenn Cutler, Director of Public Works and Utilities, indicated that he had been approached with the
suggestion of a tiered rate for the wastewater utility. There was a brief discussion. Staff was directed to
present the pro's and con's sometime early in 2005.
No action taken. Information only.
D. Update Of Combined Sewer Overflow Directed Actions By Department Of Ecology
Glenn Cutler, Director of Public Works and Utilities, referred to the schedule table indicating the CSO
Reduction Plan had been submitted to DOE and that the results may take some time to receive. Staff was
commended for a job well done in meeting the completion dates.
No action taken. Information only.
VI. Next meeting date: Decc~nber 14, 2004
VII. Adjournment: The meeting was adjourned at 3:45 p.m.
Chairman Rogers Cate Rinehart, Administrative
Assistant
2
RTANGELES
W A S H I N G T O N, U, $, A.
UTILITY ADVISORY COMMITTEE MEMO
DATE: December 14, 2004
To: UTILITY ADVISORY COMMITTEE
FROM: JeffYoung, WWTP Superintendent
SUBJECT: Long-term Septage Receiving Agreements
Summary: The Wastowater Treatment Plant (WWTP) has processed 388,800 gallons of septage
fi:om private haulers since September 23, 2003. There have been no permit violations or negative
impact on the plant processes during that time. Three septage haulers (Acme, Roto-rooter, and
Goodman Sanitation) currently have annual permits with the City to dump septage at the WWTP.
l'wo of these companies have expressed a desire to have a long range, fixed rate agreement and to be
able to dump septage from Jefferson County at the City's WWTP.
Recommendation: Forward a favorable recommendation to City Council to authorize the
Director of Public Works and Utilities to offer Industrial Wastewater Acceptance 0WA)
permits to Clallam County approved septage pumpers/haulers with terms of three to five years
and a rate of $0.10 or $0.11 per gallon (to be determined at UAC).
Background/Analysis: Local septage pumping/hauling service providers have expressed the desire
to have a long-term agreement with the City in order to make their rates competitive and stable.
These companies regularly utilize our WWTP for disposal of septage from within the county, and
have been responsive in following the plant's Standard Operating Procedures (SOP's). Some of the
septage companies that serve both Clallam County and Jefferson County have expressed the desire to
use our plant for either county's waste in order to provide the most efficient routing of service.
The septage haulers currently operate under an annual permit with an annual fee of $60.00 and rates
that can vary each year. Offering long-term stability in the rates we charge should increase revenues
as disposal volumes increase from both existing permitted companies as well as other permittable
septage companies that would consider using our disposal site because of having long-term
agreements. Additional loading of the WWTP is beneficial since it allows the plant to operate more
effectively by being closer to its design parametem; the current loading considerably undemtilizes its
design capacity. The current rate for accepting septage is eleven cents per gallon.
We currently offer IWA permits to other entities dumping sewage at the WWTP. Our positive
experience with the septic haulers warrants this change from annual septic hauler permits to longer
term IWA permits. The IWA permits have an initial fee of $90.00 for the term of the agreement.
The fee per gallon for septage will be set for the term of the agreement.
pORTANGELES
WASHINGTON, U.S.A.
UTILITY ADVISORY COMMITTEE MEMO
DATE: December 14, 2004
To: UTILITY ADVISORY COMMITTEE
FROM: Stephen Sperr, Engineering Manager
SUBJECT: Revisions to the City's Water Shortage Response Plan
Summary: The City's Water Shortage Response Plan is being revised to address how to
minimize the impact of low flows in the Elwha River. This involves establishing benchmarks for
snowpack and river flows that may trigger the implementation of a given stage in the Plan.
Recommendation: Review and discuss the proposed changes and forward a favorable
recommendation to City Council to amend PANIC 13.46 to address flows in the Elwha
River.
Background/Analysis: In July 2001 the City implemented a Water Shortage Response Plan that
included actions to take, depending on the level of shortage. The City's Public Works and
Utilities Department, in consultation with the Lower Elwha Klallam Tribe, revisited the Plan in
2004 to address periods of unusually low flows in the Elwha River while at the same time
minimizing the impact on providing water to our customers.
A summary of the proposed changes to the Plan is as follows:
STAGE I - INTERNAL PREPARATIONS
When a water shortage is anticipated but not imminent, this stage is implemented. It is proposed
that this action may also be triggered by a snowpack level in the Olympics below 50% of normal
by April 30.
STAGE II - VOLUNTARY CONSERVATION
This stage is implemented if immediate voluntary reductions in consumption are necessary. It is
proposed that this action may also be triggered by instream flows in the Elwha River below 400
cubic feet per second (cfs) as measured at the USGS McDonald Bridge gauge.
PW 0101_06 [Revised 07/24/03]
STAGE 1II - OUTDOOR RESTRICTIONS
This stage is implemented if water supplies are critically impacted and the demand must be
reduced. It is proposed that this action may also be triggered by instream flows in the Elwha
River below 300 cfs for 3-5 days as measured at the McDonald Bridge gauge.
STAGE 1V ~ MANDATORY OUTDOOR RESTRICTIONS AND INDOOR CONSERVATION
This stage is implemented if emergency conditions exist where maximum flow reduction is
immediately required. It is proposed that this action may also be triggered by instream flows in
the Elwha River below 250 cfs for 3 days as measured at the McDonald Bridge gauge.
STAGE V - WATER RATIONING
This stage is implemented if there is an extreme Water Shortage and implements water rationing.
Emergency water distribution may be necessary for customers without water. It is proposed that
this action may also be triggered by instream flows in the Elwha River that drop to an
instantaneous flow of 200 cfs for 3 days as measured at the McDonald Bridge gauge.
Note that none of these so-called fish triggers automatically triggers the implementation of any
of the 5 stages of the Water Shortage Response Plan. They do, however, serve as guidance for
the level of potential impact that diversions of water from the Elwha River may have on our
natural resources, in particular to anadromous fish species. If one of these fish triggers is met, or
is pointed out to the City, the City will consult with entities that appropriate water from the
Elwha River on the need to implement said stage in order to protect natural fisheries resources.
Other options may be available to supplement flows.
While revisions to the Water Shortage Response Plan do not need the approval of the City
Council to be implemented, the proposed revisions will require changes to the Port Angeles
Municipal Code, Chapter 13.46. A copy of the proposed revised PAMC Chapter is attached.
Fish Triggers
Chapter 13.46
WATER SHORTAGE RESPONSE
Sections:
13.46.010 Purpose.
13.46.020 Authority.
13.46.030 Policies and Procedures.
13.46.040 Enforcement.
13.46.050 Variances.
13.46.060 Penalties.
13.46.010 Purpose. It is in the public interest to promote the conservation of the City's
water supply in order to protect the health, welfare, a~n~ safety of water users and natural
resources. To accomplish this declared purpose, the City reserves the right to exercise its police
powers through emergency measures as set forth in this Chapter. (Ord. 3092 §1 (part),
7/27/2001)
13.46.020 Authority. The City Manager and City Council, when necessary for the
protection of the public health, safety, and welfare, or environmental resources, shall have the
authority to declare various stages of water emergencies and to implement the water conservation
measures set forth in this Chapter and in the City's Water Shortage Response Plan. (Ord. 3092
§1 (part), 7/27/2001)
13.46.030 Policies and Procedures. The following policies and procedures shall apply
during the various stages of water emergencies as set forth in this Section. When the snowpack
or Elwha River flow trigger is reached at a given stage, and when notified, the City will consult
with entities that appropriate water from the Elwha River on the need to implement said stage in
order to protect natural fisheries resources. Other options may be available to supplement flows.
A. Stage I. Anticipated water shortage. Internal preparations. The City Manager
may declare a Stage I water emergency, when a water shortage is anticipated but not immediate.
The Public Works and Utilities Department shall conduct public education efforts regarding the
benefits and necessity of conservation by the public.
B. Stage II. Serious water shortage. Voluntary conservation. The City Manager
may declare a Stage II water emergency, when a water shortage exists such that immediate
voluntary reductions in consumption are necessary. The Public Works and Utilities Department
shall conduct an intensified public information campaign and shall coordinate the campaign to
encourage voluntary water conservation through news releases and other methods of providing
information about conservation methods.
C. Stage HI. Critical water shortage. Limited outdoor restrictions. The City
Council may declare a Stage III water emergency, when a water shortage exists such that water
supplies are critically impacted and water demand must be reduced. The City Council may
establish certain specified days or hours for lawn and garden sprinkling and may prohibit or
regulate other non-essential uses of water within the water system during such times as there is
an actual or impending water shortage, extreme pressure loss in the distribution system, or for
any other reasonable cause. The following non-essential uses of water may be prohibited on all
properties connected to the City's water system, whether inside or outside of the City:
1. Washing sidewalks, walkways, driveways, parking lots, patios, and other
exterior paved areas by direct hosing, except as may be necessary to prevent or eliminate
materials dangerous to the public health and safety.
2. Escape of water through breaks or leaks within the customer's plumbing or
private distribution system for any period of time beyond which such break or leak should
reasonably have been discovered and corrected. It shall be presumed that a period of 48 hours
after the customer discovers a leak or break, or receives notice from the City of such leak or
break, whichever occurs first, is a reasonable time in which to correct the same.
3. Non-commercial washing of privately owned motor vehicles, trailers, and
boats, except from a bucket or hose using a shutoffnozzle for quick rinses.
4. Lawn sprinkling and irrigation which allows water to nm off or overspray
the lawn area. Every customer is deemed to have knowledge of and control over his or her lawn
sprinkling and irrigation at all times.
5. Sprinkling and irrigation of lawns, ground cover, or other plants, between
the hours of 9:00 a.m. and 6:00 p.m. or on any day not authorized by the established rotation
schedule.
6. Such other uses as the Council deems appropriate.
D. Stage IV. Emergency water shortage. Mandatory outdoor restrictions and indoor
conservation. The City Council may declare a Stage IV water emergency, when a water shortage
exists such that maximum flow reduction is immediately required, water available to the City is
insufficient to permit any irrigation, watering, or sprinkling, and all available water is needed
solely for human consumption, sanitation, and fire protection. The City Council may prohibit all
non-essential uses of water, including but not limited to all vehicle washing, all lawn watering,
and all of the uses that may be prohibited for a Stage III water emergency. The Public Works
and Utilities Department shall disseminate information using every available means to encourage
customers to reduce indoor water usage to the maximum extent possible.
E. Stage V. Regional disaster. Water rationing. The City Council may declare a
Stage V regional disaster water emergency, when a water shortage exists such that water
rationing must be implemented and emergency water distribution may be necessary for customers
without water. The City Council may restrict water use by rationing the amount of water used by
residential users to a certain number of gallons per day per person residing within the dwelling
unit, by rationing the amount of water used by non-residential users based on a percentage of
their historical usage as calculated by the City, and by any other type of rationing as the Council
deems necessary and appropriate in the cimumstances. The Public Works and Utilities
Department shall disseminate information to customers regarding the rationing plan. (Ord. 3092
§1 (part), 7/27/2001)
13.46.040 Enforcement. The Director of Public Works and Utilities or designee,
including any employee of the Public Works and Utilities Department, field personnel of the
Community Development Department or Fire Department, or Police Officer of the City, shall
have the authority to enforce the provisions of this Chapter. (Ord. 3092 §1 (part), 7/27/2001)
13.46.050 Variances. The Director of Public Works and Utilities may grant temporary
variances for the prospective use of water otherwise prohibited by this Chapter. Such temporary
variances shall be in writing and shall be based on a determination by the Director that, due to
unusual cimumstances, application of this Chapter would cause an extraordinary hardship
adversely affecting the health, sanitation, or fire protection of the applicant or the public. The
Director's determination shall be final and non-appealable. (Ord. 3092 §1 (part), 7/27/2001)
13.46.060 Penalties. Except as otherwise provided in this Chapter, violations of this
Chapter shall be ptmishable as follows:
A. First violation. Warning. For a first violation, notice shall be given to the
customer, explaining the City's present water shortage situation and waming that a second
violation will result in the requirement that a flow restriction device be installed by the City at the
customer's expense.
B. Second violation. Flow restriction device. For a second violation, notice shall
be given to the customer, requiring the installation ora flow restriction device for a period of 7
days, which device will limit water flow to 10 gallons per minute, and including a warning that
service will be discontinued if a third violation occurs.
C. Third and subsequent violations. Water shutoff and $100 turn on charge. For a
third or a subsequent violation, notice shall be given to the customer, informing the customer
that water service to the premises has been shutoff and a $100.00 charge has been assessed to the
utility account in order to turn the service back on. The $100 charge shall be a lien against the
property as set forth in RCW 35.21.290 and RCW 35.21.300.
D. Opportunity to comment and appeal. Prior to imposition of the penalty for either
a second, third, or subsequent violation, the customer shall be given notice of an opportunity to
comment to the Director of Public Works and Utilities or designee within 24 hours of receiving
the notice or such later time as the Director may designate, regarding any reason that the penalty
should not be imposed. If, after such comment, the Director decides to proceed with imposition
of the penalty, the customer shall have the opportunity to appeal to the City Manager or designee
within 24 hours of the Director's determination or such later time as the City Manager may
designate. The City Manager's determination shall be final and non-appealable. Said 24 hour
periods shall exclude Saturdays, Sundays, and legal holidays.
E. Method of giving notice. Notice provided under this Section shall be given either
by hand-delivering written notification to an occupant at the customer's service address,
provided that in the absence of an occupant the written notification may be posted conspicuously
at the premises, or by certified mail. (Ord. 3092 §1 (part), 7/27/2001)
N:\UAC\FINAL\PAMC 13.46 CHG 12-04.DOC
December 9, 2004
pORTANGELES
W A S H I N G T O N, IJ. $. A.
UTILITY ADVISORY COMMITTEE. MEMO
DATE: December 14, 2004
TO: UTILITY ADVISORY COMMITTEE
FROM: Stephen Sperr, Engineering Manager
SUBJECT: Lease for WDFW Rearing Channel
Summary: The Lease that the Washington State Department ofFish and Wildlife (WDFW) has
to operate a fish rearing channel on City property along the Elwha River has expired. A new
Lease has been negotiated with WDFW that addresses issues the City wanted included in the
lease to protect its interests in the area, which include the City's Ranney Collector potable water
source and Elwha River Industrial Water Line infrastructure.
Recommendation: Review and discuss the proposed changes and forward a favorable
recommendation to City Council to approve the new Lease and authorize the Mayor to sign
on behalf of the City.
Background/Analysis: Since 1974, the Washington State Department ofFish and Wildlife
(WDFW) has been operating a fish rearing channel on City property along the Elwha River
under a lease agreement. The most recent lease expired July 14, 2002. City staff worked on
revising the lease agreement in 2002 and 2003, and forwarded a new draf~ lease to WDFW in
April 2003. Since that time we have been negotiating the specific wording of that lease while
they operated under a de facto month-to-month extension of the expired lease.
A final draft of the 3-year lease has been agreed upon by City staff and WDFW, and is ready for
concurrence from the UAC and City Council before execution. A summary of the substantive
changes to the lease are as follows:
1. The Lessee (WDFW) agrees to support the efforts of the National Park Service (NPS) and
the City in obtaining long-term permits, as needed, to allow the City to direct, temporarily
relocate, or retain Elwha River flow next to the City's existing Rarmey well during future
low flow periods as needed to maintain adequate Ranney well water yield.
2. Lessee agrees to commit to contributing a reasonable, proportionate share to the future
operation and maintenance of facilities associated with the Elwha Surface Water Intake that
PW0101_06 [Revised 07/24/03]
will be constructed by the NPS as part of the water mitigation facilities to be constructed
under the Elwha River Ecosystem and Fisheries Restoration Act (EREFRA).
3. Lessee shall fully participate and cooperate with the NPS and the City during the permitting
and construction phases of the Industrial Water Treatment facilities associated with the
EREFRA.
4. The amount of water the Lessee is allowed to appropriate from the Elwha River under the
City's water right for fish rearing purposes has been decreased from 50 cubic feet per
second (cfs) to 44 cfs.
5. Several indemnification and liability clauses have been revised or added to further protect
the City's interests.
The terms of the lease are for a period of three years, by which time the dam removal process
under EREFRA should be underway and all facilities constructed to mitigate the impact of the
dam removal process in place and being operated by the federal government. At that time, the
terms of the lease will be reviewed, and the issue of the long term operations and maintenance of
the intake structure facilities, including in particular fish screens, will be revisited.
City staff are satisfied that the terms of the proposed new lease adequately protect the City's
interests in their property, and recommend that the UAC forward a favorable recommendation to
City Council to approve the lease.
WDFW Lease
pORTA GELES
W A S H I N G T O N, I.J, $. A.
UTILITY ADVISORY COMMITTEE MEMO
DATE: December 14, 2004
TO: UTILITY ADVISORY COMMITTEE
FROM: Larry Dunbar, Power Resources Manager
SUBJECT-' City Authorized Retailer Agreement Cancellation
Summary: The purpose of the City Authorized Retailer Agreement was to provide a better local
selection of Energy Star~ lighting products. The agreement should now be cancelled since local
retailers are no longer supporting a variety of Energy Star~ lighting products.
Recommendation: Forward a favorable recommendation to City Council to cancel the
City Authorized Retailer Agreement.
Background/Analysis: Following the 2001 Energy Crisis, the Northwest Energy Efficiency
Alliance initiated a Compact Fluorescent Lamp (CFL) market transformation campaign. The
City participated in this campaign by providing coupons to its utility customers for the purchase
of Energy Star~ CFLs and torchiere floor lamps (TFLs). Local retailers were recruited by NEEA
to provide a selection of Energy Star~ CFLs and had agreements with NEEA for redeeming
coupons.
During the first year of the campaign staff received numerous customer complaints including
limited local availability of CFLs and TFLs, limited products (breadth and depth), and numerous
instances of premature CFL failures. In response to the customer complaints, staff worked with
local retailers in an attempt to improve the availability of Energy Sta~ CFLs, TFLs and fixtures
and consistent after sale product support (i.e., retums and exchanges). In return for increased
local retailer involvement, the City agreed to provide rebates for qualified Energy Sta~ products
purchased by customers only from retailers that enter into the City Authorized Retailer
Agreement. A total of five (5) local retailers entered into the agreement in the spring of 2002.
The intent of the City Authorized Retailer Agreement was to assure our customers had
reasonable local availability of Energy Star~ lighting products and after sales product support.
City Authorized Retailers initially provided an acceptable breadth and depth of qualified lighting
product. However, staffhas recently been receiving customer complaints of the lack of local
Energy Sta~ products.
N:\UAC~Final~Lighting Retailer Agreement.doc
December 14, 2004 Utility Advisory Committee
RE: City Authorized Retailer Agreement Cancellation
Page 2
In response to customer complaints, on November 5, 2004 staff visited City Authorized Retailers
and viewed their Energy Star~ lighting product end caps, shelf areas, and fixture display areas.
The table below summarizes our findings.
Energy Star~
CFL Shelf Fixture
City Authorized Energy Star~ Area Display Strip
Retailer CFL End Cap (Size Variety-) Area Lighting Fixtures TFLs
Thurman's Yes Yes Yes Yes Limited Yes
Swaiffs No Six (6) CFLs None None None None
Hartnagel's No None >lone None None None
Angeles Millwork No One (1) CFL None None None None
Sunset Wire & Rope No Four (4) CFLs None None None None
Local retailers are no longer supporting the City Authorized Agreement and customers should be
allowed to purchase Energy Star lighting products from any retailer and obtain a rebate from the
City. The Energy Star~ website list over 1,600 different qualified CFLs and over 9,200 different
qualified light fixtures. In comparison to the quantity of Energy Star~ qualified products, the
products available from City Authorized Retailers is severely limited.
In accordance with the Agreement, the City can cancel the Agreement without cause upon thirty
days written notice to the retailer. Staff recommends the City Authorized Retailer Agreements
are cancelled and rebates be made available to utility customers that purchase qualifying Energy
Star~ products from any retailer.
N:\UAC~inaBLighting Retailer Agzeement.doc
pORTANGELES
W A S H I N G T O N, U. $. A,
UTILITY ADVISORY COMMITTEE MEMO
DATE: December 14, 2004
To: UTILITY ADVISORY COMMITTEE
FROM: Larry Dunbar, Power Resources Manager
SUBJECT: Solid Waste RFP Evaluation Process Revision
Summary: A request for proposal (RFP) to solicit Contractors to design/build and operate a
solid waste transfer station and moderate-risk waste facility is underway. The RFP also includes
services for waste transport and disposal, recycling, composting, and landfill post-closure
maintenance. Due to necessary clarifications and corrections to the RFP, a revision to the
proposal evaluation, selection and negotiation plan must be made.
Recommendation: No action required, for information only.
Background/Analysis: On June 8, 2004, the City Council authorized staffto proceed with
advertising the "Solid Waste Processing Facility Development and Management Services"
request for proposal (RFP). The RFP was advertised on July 25, 2004 and Technical and Cost
Proposals were due by October 29, 2004. On October 12, 2004, the UAC supported the proposal
evaluation, selection and negotiation plan (plan) presented by staff.
During the evaluation process it became evident that additional clarifications and corrections to
the RFP were needed and a new Technical and Cost Proposal due date was set for December 16,
2004. Staff will provide information on the clarifications and corrections to the RFP and
highlight the revisions to the plan at the Utility Advisory Committee meeting. The revised plan
is attached.
PW 0101_06 [Revised 07/24/03]
Solid Waste Processing Facility
Development and Management Services
Request For Proposal
12/14/2004 Revised Proposal Evaluation, Selection and Negotiation Plan
10/26/04 Evaluation, Selection and Negotiation Team Kick~Off Meeting *
12/16/2004 Technical and Cost Proposal Revised Due Date
Committee Purposes:
Mike Puntennev '~ -Reviews 1. Technical Proposals and 2. Construction
Karen Rogers 1. Technical
Tom McCabe ~ Proposal Conceptual Designs
Craig Jacobs Evaluation i-Reviews Cost Summary
Bob Martin Committee I-Completes Evaluations
(Jeff Young)
Larry Dunbar ~ Cost Summary lntetw'iews Proposal Committee
(Clint Stanovsky)~ Available I, 11/10/2004 ~" Amendments ~ Meeting *
11/1/2004 & l 1/15/2004 Due 12/16/2004 12/20/2004
PeterGary KenworthYBattuello -- -~ [ 2. Construction T Joint Committee Meeting Purposes:
ScottSteve McLainSperr ['>-[ Conceptual I-R iewscommittee evaluation results
Bob Martin ( Design -Reviews Revised Cost Summary
Evaluation -Conducts Interviews
] Committee -Chairs submit report to Source Selection Board
(Jeff Young) _~d on recommended Contractor(s) and exceptions after
Joint Meeting.
£
Glenn Cutler
MikeOuinn -'~ I Source I GaryKenw°rthy, Sour~I
Richard tteadrick I Mike Puntenney Negotiation I Selection
Glenn Cutler Selection ] Cr,,i~.. lacnb~ .'~.'1/3./2004 -' ~' Board *
YvonneZiomkowski Board* I Larry Dunbar I 1/28/2005 I 'l
(Larry Dunbar) 12/27/2004 j (BillBloor} 1/31/2005
Scott McLain '~ Cost of Service UAC Executive Revisions to
Larry Dunbar ~ Rate Impacts Session / City Ordinances
(Angie Sanchez) Results Due ( f necessary) ~ ( f needed)
(CJI Pierce) 12/27/2004
[
(Julie Dunbar)
Source Selection Board Purposes:
-Review committee evaluation results and rate impacts to determine if negotiations will proceed.
-Obtains Utility .~ldvisory Committee concurrence (executive session) on apparently successful
Proposer(s) and City performance of any service component prior to negotiation.
-Provide strategy and direction to City negotiation team as necessary
IIHearingrequiredbyT/IRcw35.21.156($), composting equipm n
~ Public City Council
Committee and to excess co- I - I Heating ~ Approval
2/8/2005 I 2/15/2005 3/1/2005
Names underlined indicate chair of committee or board. ('Names) in parenthesis are advisors and may be called
upon as needed. * ~genda and meetings lead by Larry Dunbar as RFP Procurement Project Manager
w A S H I N G T O N, Ii, $, A.
UTILITY ADVISORY COMMITTEE MEMO
DATE: December 14, 2004
TO: UTILITY ADVISORY COMMITTEE
FROM: Scott McLain, Deputy Director for Power Systems
SUBJECT: Bonneville Power Administration Transmission Rate Settlement Proposal
Summary: The Bonneville Power Administration (BPA) has recently offered a settlement
:proposal for the rate case on power transmission rates. Initial rate proposals for the rate case
were for an overall increase of 20%, with increases to Network Transmission (NT) rates of
il 0.2%. The settlement would increase NT rates by 8.9%. This would increase our transmission
charges from BPA by $170,000.
Recommendation: Forward a favorable recommendation to City Council to support the
proposed settlement agreement with BPA.
Background/Analysis: The Bonneville Power Administration, Transmission Business Line,
began the formal process for a transmission rate case in the spring of 2004. The initial proposal
for rates was a 20% overall increase to the transmission charges and a 10.2% increase to the
Network Transmission (NT) rates. The City signed a NT contract with BPA that is in effect until
September 30, 2006.
The increases to rates are being driven by several factors. BPA has seen a drop in network
transmission sales of more than 3000 MW since 2001. These reductions in load were mostly
from reduced sales to direct service industries (DSI's) and to other customers finding more
efficient ways to use their existing firm transmission fights. There are also increased debt
service costs associated with infrastructure investments built to improve reliability and
strengthen the system.
Transmission revenue has decreased $57 million in 2003 and an additional $21 million in 2004
even after a 1.5% increase in 2004. Revenues are projected to be flat in 2005 and BPA is
expecting a $150 million net loss in fiscal years 2006 and 2007.
While the settlement proposal is not a large decrease from the initial proposal, the settlement will
avoid a lengthy and expensive formal rate case. Staff is recommending support for the
settlement proposal.
N:\UAC~Final\transmission rate settlement 2005.doc
- UAC DATES
2005
JANUARY FEBRUARY MARCH
26 27 28 29 30~ 1 1 2 3 4 5 1 2 3 4 5
2 3 4 5 6 7 8 6 71 9 10 11 12 6 71 9 10 11 12
9 10~1~ 12 13 14 15 t3 14 15 16 17 18 19 13 14 15 15 17 18 19
16~ 18 19 20 21 ?? 201 22 23 24 2.= 26 20 211 22 23 24 25 26
23 24 25 26 27 28 29 27 28 27 28 29 30~ 31
30 31
APRIL MAY JUNE
1 2 1 2 3 4 5 6 7 1 2 3 4
3 4 5 6 7 8 9 8 9 I 11 12 13 14 5 6 7 8 9 10 11
17 18 1~c 20 21 22 23 22 23 24 25 26 27 28 19 20 21 22 23 24 25
24 25 26 27 22 29 30 29[] 31 26 27 28 29 30
JULY AUGUST EPTEMBER
1 2 1 2 3 4 5 6 1 ~ 3
10 111 13 14 15 16 14 15 16 17 18 19 20 11 121~ 14 15 16 17
17 18 19 2£ 21 22! 23 21 22 23 24 25 26 27 18 19 20 21 22 23 24
24 25 26 27 28 29 30 28 20 30 31 251 26 27 28 29 30
31
OCTOBER NOVEMBER DECEMBER
I
1 1 2 3 4 5 1 2 3
I
2 3 4 5 6 7 8 6 7 9 10 12 4 5 ~ 7 8 9 10
9 1(30 12 13 14 15 13 14 15 16 17 18 19 11 12~ 14 15 16 17
16 17 18 19 20 21 22 20 21 22 231~ 26 18 19 20 21 22 23 24
23 24 25 26 27 28 29 27 28 29 30 25[] 27 28 2~c 30 31
30 31
CITY OF PORT ANGELES
VISION STATEMENT
COUNCIL GOALS - OBJECTIVES AND
DEPARTMENTAL PROGRAMS / PROJECTS
2005 - Public Works and Utilities Work Plan
GOAL: FINANCIAL STABILITY
Programs / Projects
1. Conduct Utility Rate Analysis for the Electric Utility.
2. Conduct Utility Rate Analysis for the Water Utility.
3. Conduct Utility Rate Analysis for the Waste Water Utility.
4. Review Solid Waste rate adjustment to meet capital projects.
5. Complete Cost of Service review for Solid Waste Transfer Station services.
6. Develop a strategy for funding and executing the Combined Sewer Overflow Plan.
GOAL: INTERGOVERNMENTAL RELATIONS
1. Implement the General Agreement with the National Park Service and Lower Elwha
Klallam Tribe on the Elwha River Restoration Project.
2. Implement the solid waste agreement with Clallam County to develop a transfer station
operation at the landfill site.
3. Coordinate with Clallam County to design a sewer extension and connection to the
Wastewater Treatment Plant (WWTP) to serve the eastern UGA.
4. Finalize the agreement with the Lower Elwha Klallam Tribe (LEKT) to allow discharge of
wastewater to the City's WWTP for treatment.
5. Participate in the update of the Clallam County Comprehensive Solid Waste Management
Plan.
6. Update the Wildlife Hazard Management Plan.
-1-
GOAL: QUALITY MUNICIPAL SERVICES
A. General Services:
1. Implement the Emergency Response Plan for the Water Utility.
2. Develop a Capital Facility Plan to improve the security of the water utility infrastructure.
3. Negotiate the final Combined Sewer Overflow Plan with Washington State Department of
Ecology.
4. Develop a strategy for implementing the comprehensive Combined Sewer Overflow
(CSO) Plan.
5. Ensure adequate property is available to meet the growing demands of the Utilities.
6. Develop an operation and maintenance plan for the operation of the Port Angeles Water
Treatment Plant (PAWTP) funded by the National Park Service.
7. Perform the first phase of an equipment efficiency review.
B. Infrastructure Maintenance:
1. Complete the final phase of a 3-phase project to replace electrical underground service to
the Elwha pump station.
2. Construct the Downtown Gateway Project.
3. Complete the design for the next phase to replace major portions of the concrete water
main transmission service.
4. Replace the Spruce Street water pump station with a new pump station at Fairmotmt.
5. Repair City Pier.
6. Repair the Peabody Heights Weir Facility.
7. Expand the methane gas collection system at the landfill.
8. Obtain a license modification from the Federal Energy Regulatory Commission for the
Morse Creek Hydro Facility.
9. Pursue fimding for integrating the City's traffic signals into a single system as part of the
Highway 101 Safety Corridor Project.
10. Design and construct the Waterfront Promenade.
11. Double chip seal city streets utilizing a private contractor.
12. Upgrade Valley Creek Substation relays.
13. Design and construct stormwater system improvements to accommodate the transfer
station, water treatment plant and final landfill closure.
-2-
GOAL: EMPLOYEE EXCELLENCE
1. Integrate the Parks and Recreation functions with Public Works and Utilities functions.
2. Hold informal meetings with employees to facilitate a better understanding of the
Department's vision and obtain insight into employee issues.
3. Provide training to permit employees to improve their ability to successfully compete for
promotions.
4. Conduct a team building session with the PW&U Depastment Management Team.
GOAL: COMMUNITY DEVELOPMENT
1. Reevaluate the requirements of the SE reservoir for the high zone system with the
cooperation of Clallam PUD.
2. Select a final streetscape design for the 8th Street Bridges.
3. Complete design and commence construction of the 8t" Street Bridges.
4. Design the Underground support for the Laurel Street sidewalk fi.om Railroad to First.
5. Obtain permits to design and construct a revetment wall to stabilize the sea bluff at the
Landfill.
6. Negotiate a contract to design, construct and operate the transfer station at the Port
Angeles Landfill.
7. Construct infrastructure improvements in the vicinity of Campbell (street widening) and
Park (sewer) avenues as part of the New Improvements for Community Enhancement
(NICE) Neighborhoods Program.
8. Extend electrical service to the unserved area by the Airport.
GOAL: ECONOMIC DEVELOPMENT
1. Complete the design and construct the final phase improvements for the Downtown Water
Main and Sidewalk Replacement project.
2. Perform an engineering analysis on the Lauridsen Boulevard Bridge to determine the most
cost effective approach for widening to enable designation of an alternate track route.
-3-
GOAL: COMMUNITY LIVABILITY
1. Coordinate fluoridation of the City's water system.
2. Complete an agreement between the City and Clallam County for the westward expansion
of the Olympic Discovery Trail through Port Angeles to the Elwha River.
3. Added emphasis on vacant lot cleating and weeding in high visibility areas.
N:\GLENICCCRPTSk2005\Work Plan 2005.DOC
-4-
! his year, U.S. electricity consumers will spend more fives, state regulation, and legislation). The Electric Reliability
than $1 billion financing the operation of six regional Council of Texas (ERCOT)--the only non-FERC jurisdic-
transmissionorganizations(RTOs).tRTOcostshave tionalRTO is contained within the state ofTexas and thus is
nearly doubled since 2001 and now outweigh nearly ali not subject to FERC regulation, which applies only to inrer-
of the benefits anticipated by the national cost-benefit studies, state energy commerce. In response to state deregulation legis-
Operating costs consist of salaries, employee benefits, leas- lation, ERCOT expanded its staff and constructed two new
es, facility costs, legal and consulting services, amortization buildings (an administrative headquarters and a new control
and depredation on capital costs, insurance, travel expenses, center) in 2000. ERCOT quickly becameTexas' single control
and the like. Since2000, thetotalannualU.S. RTOoperating areaforTexasin2001 and instituted a massive retail choice
expenses increased by 143 percent--growing at an annualized program in 2002. ERCOT and theTexas Public Utility Com-
rate of 2O percent per year (see Figure l). lndividually, theexist- mission (PUC) are now undertaking a wholesale market
ing RTOs exhibit a similar
trend. Costs at the Pennsyl- I iii'fiji{ J
vania-New Jersey-Mary-
land Interconnection
(PJM), the first to intro-
duce a bid-based wholesale t0co ~'~
energy market, have grown
from $21.4 million in
1997 to $215 million in
2004.2 With the most pro-
notmced growth, spending c~00
by the Midwest Indepen-
dent System Operator 4ao
(MISO) jumped from
$20.7 million in 2000 to ~00
PJM. CAISO,
a budgeted $210 million
in 2004 (914 percent in I ~ I ~a~ t ~000 I ~ I ~002 a~ I ~ J
4 years) ? Others, like ISO t ms.m~ ~ ta02.~a~ ~ ~.~.~ t ~s~.~.~m t sm. *0m4 ~*.~0~.aa2 ~ tm ~ ~,
New England (ISO-NE),
orchestrated a slower
expansion, increasing costs
from $57.5 million in : : P,IM
1998 to a budgeted $122 : : MIS0
million in 2004/Figure 2 . a ERCOT
dlsphys the operating costs : : NVB0
· · ISO-NE
for each RTO/ISO indud-
ing amortization, depreci-
ation and interest (in 2003
dollars). /
This upward trend
reflects an expansion of the $mo,0oo,o~o
RTOs' organizational size
and scope. The RTOs have
grown in response to inter-
hal pressure (e.g., requests
from members, staffdirect-
ed projects) and external ~0 · .
pressure (e.g., FERC initia-
w'ww. fortnightly, com DECEMBER 2004 Pu~ucllTal/tss
redesign effort called Texas Nodal Pricing. dollars). MISO is exduded from this calculation because no
One measure of growth is how quickly a business adds reliable annual energy data are available.7
employees. Figure 3 shows the employee levels for each of the
RTOs? Review of Cost-Benefit Studies: Order No. 2000
PJM systematically has added markets~some at the request In Order No. 2000, FERC asserts that its "best estimate of
of its membership. PJM was the first to introduce a bid-based cost savings from RTO formation is $2.4 billion annually,
wholesale energy market in 1997. The following year, a loca- with potential cost savings estimated to be as high as $5.1 bil-
tional marginal pricing system (location-based energy prices lion annually. This represents about 1.1 percent to 2.4 pement
reflect congestion on the transmission system) was implement- of the current total costs of the U.S. dectric power industty.''8
ed to manage congestion. PJM added real-time energy and This analysis is the result of an environmental assessment (EA)
capacity markets in 1999, and a spinning reserves market in performed as a precursor to the order. The EA did not take
2002. Most RTOs have expanded in similar ways. ISO-NE into account RTO startup or operating costs. This year, exist-
launched a wholesale energy market in 1999; began a demand ing RTOs in the United States will spend a litde more than
response program and created five new departments in 2002; $1 billion (in operating costs) at a weighted average of
and rolled out a major market redesign in 2003. In contrast, $0.73/MWh. By applying this average rate to the remaining
development of the California ISO often is described a "big national load, we can estimate nadonal RTO expenditure at
bang"wherethemajotityoffunctionswerebuiltinmtheinitial $2.4 billion per year ($1.03 billion + $0.73/MWh '1934
market design and large invesnnents were made upfront. TWh).9 Assuming no increase in operating costs over 2004
Most RTOs also have made considerable efforts to comply levels, FERC's ~best estimate" of benefits is completely offset
with FERC initiatives such as standard market design (SMD). by new annual costs.
ISO-NE implemented an SMD market redesign in March of Although the EA study ignored operating costs, FERC pm-
2003. New York ISO (NY-ISO), currently in the process of vided an explanation ofits assumptions regarding costs. FERC
implementing SMD, is trailing close behind. MISO has inte- replied that concerns over costs "fails to account for the flexi-
grated SMD into its market design (launch date March 2005), bility we have built into this rule.... Accordingly, we do not
and PJM is working with MISO to develop a common market believe it will be necessary m expend the sarne level of resources
design. The California ISO is performing market simulations that were expended, e.g., in California.... The Final Rule will
and is implementing the first stages of its SMD redesign allow RTOs to create streamlined organizational structures
(MD02). that are not overly costly.~ '°
Although it is easy to develop a laundry list of costs for each Five years ago, when Order No. 2000 was written, the Cal-
ISO, it is difficult to make an objective comparison without ifornia ISO was spending from three to 10 times more than the
putting these numbers into a larger context. Three of the U.S. other ISOs. Although the California ISO remains the most
ISOs serve a single state (California, New York, and Texas), expensive, today it is not even twice as expensive as any of the
while the other three serve multiple states. To make a fair eom- other RTOs. While ISO-NE, NY-ISO, and ERCOT remain in
parison, it is useful to consider the size of the area served by the $120 million to $140 million per-year level, PJM and MISO
each RTO as measured by annual energy demand. MISO serves closely trail Caiifornia's level ofspending ($229.2 million in
the largest electrical load, followed by PJM, ERCOT, Califur- 2004). Moreover, ERCOT is forecasted to match California's
nia ISO, NY-ISO, and finally, ISO-NE.S With the exception of current spending levd in the next three yeah ($228.6 million in
pJM, the annual demand ofthe lSOs has remained fairly con- 2007). Clearly, the California ISO is no longer an oudier.
stant. Consequendy, PJM is the only RTO whose budget has Moreover, FERC asserted in Order No. 2000 that~with five
been driven, in part, by geographical expansion. ISOs now operating in the United States, there is considerable
Annual demand provides an objective measure for compar- experience available regarding what works and what does not
ing RTO operating costs. Although ISO New England has the with respect to regional transmission entities. This experience
lowest annual expenditure of any U.S. RTO, its dollar per should make it somewhat easier, and more cost-effsdent, to cre-
megawatt hour ($/MWh) unit carrying cost is second only to ate new RTOs."n No doubt, the existing ISOs can provide vol-
the California ISO. Conversely, although PJM has one of the umes in the way of experience. Howeves, keeping costs low dom
highest operating costs, its membership and geographical scope not seem to be one of them. In 2000, the averaga annual cost of
have expanded, and thus its unit carrying cost has remained the four established U.S. ISOs, exduding California, was $41.9
amongthelowest(seeFigure4).Theweightedaveragecarrying million per year. Average operating costs ofthe same four enti-
cost of the U.S. RTOs/ISOs for 2004 is $0.73/MWh (2003 ties in 2004 is $160.5 million, nearly four dmes more.
40 I~JBLIC UTILITIES FORTNIGHTLY DECEMBER 2004 www.fodnightly.com
a benefit of $1.8 billion per
year in the near term (2005-
2010), $1.6 billion to $1.7
billion in the mid-term
(2011-2015) and $1.5 bil-
lion in the long term (2016-
2020) J:
According to the data pro-
vided in the EIA study, the
nine new RTOs would
cover 65 percent (2,350
TWh) of the annual elec-
tricity demand (the study
exdudes ERCOT).'s Using
updated data, the 2004
weighted average unit cost
for NY-ISO, ISO-NE, Cal-
ifornia ISO, and PJM is
$0.81/MWh. IfERCOT is
added into the mix, the
weighted average drops to
$0.73/MWh. Multiplying
$1.0s ~ the annual energy demand
: : CATS0 (provided in the EIA smdy)
$0.90 -- : -- ISO-N[
: -- I~S0 by the updated average car-
: -- pJM rying costs results in an
$0.75- : : :RC0~ annualcostfortheremain-
S0.60 ing RTOs of $1.7 billion to
$1.9 billion In the
per year.
~0.45 near term, the net benefit is
roughly zero ($1.8 billion
~0.30 in benefits minus $1.7 bil-
lion to $1.9 billion in costs
~0.15 equals $100 million to
-$100 million), suggesting
19~? 1~ 19g0 2000 ~001 am ~ a~04 that RTO creation may
have a neutral impact on
consumers. In the mid
£1& $tutb/ term, the net benefit ranges from zero to -$300 million per
In April 2003, the Department of Energy's Energy Information year ($1.6 billion to $1.7 billion in benefits minus $1.7 billion
Administradon(EXA)releasedareporttitledlmpactofthePro- to $1.9 billion in costs). In the long term, the net impact on
posedFederalEnergy Regulatory Commission's Proposed Standard consumers is - $200 million to - $300 million per year ($1.5
Market Design (SMD). SMD is a FERC initiative based on the billion in benefits minus $1.7 billion to $1.9 billion in costs).
assumption that all areas will be served by RTOs and that RTOs This is a liberal estimate of net benefits. The real negative
must to be standardized to remove impediments to function- impact of creating nine new standardized RTOs may be much
lng, competitivewholesale markets. The EIAstudyanalyzes the larger. This estimate is based on the assumption that RTO
costs and benefits associated with establishing nine new stan- costs will not increase over their 2004 levels. With the excep-
dardized RTOs, and converting four existing RTOs (California tinn of the California ISO, no RTO shows signs of leveling
lSO, NY-ISO, PJM, and ISO-NE) to SMD. The study shows costs. ERCOT's revenue requirement is slated to increase by
roughly 60 percent in the next two ~l[~ ~,~,tt~lfJ~,~,',m~,'~a,
y~. In ad~fion to conse~ ~st ~ of Tmnsmi~ion Tmnsmi~ion Gene~m R~O
estimates, the theoretic~ benefits ~s ~p~nsion: Ra~s: E~cien~ M~in: Sharing:
E~ Base C~e 4 N0 e~ansi~ HurdE a~ Higher in non-~O
[ncJu~c income [cnc~t¢~ ~y pa~m~ areas
[n~ ~sm~ion ~p=d~ in ~c non-RTO
[o~ ~dn~ [TOs ~zt ~c convened EIA-SMD ~ ~n~) 5% incr~se in~ansmi~i0n charg~N° tm~m~Sbnwi~in H~her in all ar~,
to ~ S~D piano,m, ~mov[n~ ~mc ~p~i~ (10% for RTOs, ~ cha~
sensiUv~ ~) helen ~Os
savJn~ ~om ~¢ ~¢nc~ ~c~=tJon ICF-B~ ~e 0 Hurdle
l~dy ~d tip ~e net ben~u ~fi- c~in
mates into the ne~tive r~m for ~1 ICF-~ P01l~ fi 5% inem~ N0 ~nsm~n
time ~fi~. ~se transmi~i~
Capa¢~ ~n0 HT0s, 2~W~ 6% ~ 2010, Ume t013% ~nsfer
It shoed be noted ~at the E~ in 2004
s~dy ~o ~der~fimat~ ~e corn of ICY-~ 5 Mme aa ~1~ ~me
implementing SMD. It ~umed zero Tmsmission 0nly ¢8~ ~ ~ c~ ~li~ ~a~
incrementM implementation cost for
~-ISO ~d ISO-NE, ~d limit~ incre~e for CMi~rnla ISO ICF5 main model run (Lc., MI o~er runs ~e v~iations of~is
~d PJM. In addition, it ~m~ ~t SMD ~e~ywo~d pr~ c~e). The "~mnsmission Onlf ~e is identi~ to the ~RTO
vide a 10 pe~ent d<r~ in ~e ~nuM operating cost of RTOs, PoliO' ~ ~ one ~pfion~t d~ not Mdude ~mpdom
r~ting in m ann~ SMD ~st d$0.22/M~? Most RTOs regaMing generator improvemenu (6 percent improvement in
have ~m steps to implment S~, rm~ting in inc~ o~r- h~t ratm, ~d a 2.5 p~t ~pm~ent in ~mtor a~Ui-
a~g ~ ~d mpi~ ~ in 2003 ~d 2004. ~). ~ ~o~ inTable 2 on p~ 43 ~e ~mde dRTO ~e-
fin ~ly st~n~y on ~e ~med ~m~r imp~men~.
~C'$ Cost-~ene~ ~g~ ~suming that the benefiu rem~n consmt be~n
In 2002, FERC M~d ICF ~m~fing to pedo~ ~ ~nomic y~ tist~ in ~e ICF study (Lc., $405 m~ion for ~e "T~-
~mmt of RTO poUff.'qCF concluded ~at RTOs provide mission Only" ~e bene~ in 2004-2005, $356 million in
nadonM ~nu~ ben~u in ~e r~ge of $405 milton to $1.15 2006-2009, ~d so on), then ~e to~ estimated benefit for
b~on in ~e n~ term. ~ ~ FERC~ ~lier ~, ICF~ study ~e "Tmsmi~ion OMf ~e ~n 2~4 ~d 2020 is $11.4
i~om ~e impac~ ds~p ~d ongoMg o~m~g cos~. ICF billion dollm. ~ previomly d~cribed, appl~ng ~e cur~nt
dM~ ~at ~e projected $4.2 bilUon to $7.3 b~ion in stoup 2004 $/~ rote to non-RTO r~om r~ M ~ intimated
cosu "would be rewaMed ~er s~erM years with <onomic $2.4 bilUon per y~ to suppo~ ~fionwide RTO opemtiom.
gains that app~r to jus~ ~e initi~ expense."'" F~er, ICF ~sming no e~afion, RTO ~s~ b~en 20~ ~d 2020
asserts ~at operating cosu are a"relatively unimport~t ele- would amount to $40.8 billion. The "Transmission Only"
ment of~e over~ e~no~c impact ofRTO poli~ on~ e~st- case over ~is time period wo~d ~us leave a net deficit of
lng ~tem o~ cos~ ~ ~n Mto comidemfion." $29.4 b~ion.
A cuno~ revi~ of u~iw ~mission operating ~pens~ Using ~e s~e ~smpfiom, ~n~ RTO ~ ~ ~e
(Lc., consi&fing a smattering of ufiliti~ in ~ch RTO) Mdi- ben~ f~m ~e "RTO Poli~ ~e" in ~e n~ term, a<u-
cares that RTOs have not, in aggregate, had the effect of m~ting a n~ d~cit of $3.5 b~on ~n 2004 ~d 2009.
d<r~ing ut~i~-l~el o~mtMg cosu. In some ~, su~ ~ ~nsider a ~ird ~e where ~nefiu ~1 h~y be~n ~e
C~ifomia,~e~ionopem~g~pemmoftheinv~tor- "RTO Polio" level and the "Tr~smission Only" level
o~ ut~ifim have inc~ subsmfi~y sMce ~e ISO ~ (2004 $742.5 mUlion, 200~$1,272.5 million, 201
formed~226 percent for S~ Diego G~ and ~ectric Co. $3,001 m~ion, 201~3,562 m~ion, 202~4,380.5 m~-
b~n 1997 ~d 2002, 23 p~nt for Pacific G= ~d Elec- lion). ~n, ~ ~e n~ term, ~e cosu ou~ei~ ~e ~,
tric, ~d 134 percent for Southern California Edison? If accmingto a net deficit of$7.8 b~lion by2009. In2010,
RTOs are not o~etting ~e operating expenses of utilities, net benefit cflculation turns to a positive $601 million ($3
· en ~e addition~ cos~ of RTOs ~e an impo~t element billion in benefi~ minm $2.4 billion in cos~). The deficit
of ~e ~nomlc ~pa~ ofRTO ~Uff. ~om the pr~iom y~s ($7.8 mi~on), how~, neu out ~e
The m~ ofbene~ ~at~ by the ICF study ~m wide- smMl positive bm~u ~ ~e ~ 2019.
ly d~m~ng on ~e ~umpdons med. Table 1 lism ~e ~sump- RTO ~sts more ~ completely subsme benefiu f~m
tions used in ~o ICF mod~ runs. The ~RTO Poli~' ~se is ~smi~ion ~provemen~ (no ~mi~ion m~, low ~po~
42 Pfmuc Ih'a~s FognasmL, t OECEMBER 2004 www.for~nightly.com
fees, lowered reserve margins, increased capability, and caps are removed. New Jersey is a particularly bad case; utili-
increased capacity sharing). For regions where improvements ties racked up deficits (or "deferred balances") of more than
in heat rates are likely to be small, the costs appear to outweigh $1 billion while rate caps were in place (1999-2003). This
by fiat the benefits. To provide net beneflts between 2004 and translared to a $171 m $794 per cnstomer hill, depending on
2020, the nation must realize at least half of the assumed gen- which utility served them.:° In California, the average residen-
erator improvements, rial electricity bill increased 20 percent between 1997 and
It should be noted that the "RTO Policy Case" is the sec- 2002.:~ This July, rate caps were removed for a few Maryland
ond most optimistic model run provided in the study and utilities~Pepco raised residential rates 16 percent and Conec-
assumes only five RTOs (including ERCOT). Several RTOs tiv raise them 12 percent.:: Similarly, residential power prices
have engaged in merger discussions (MISO/PJM, inTexasincreased16percentbetween2000and20033~
NYISO/ISO-NE, MISO/Southern Power Pool [SPP]), The success or failure of®ulation cannot alone be meas-
though no mergers have been implemented to date. Conse- ured by these rate increases. Additional factors such as
quenfly, the assumption of four large RTOs and ERCOT is increased fuel prices directly influence energy prices. Still,
unrealistic in the near term. restructuring the energy industry was more cosily and more
In conclusion, so far, the war over deregulation has been risky than anticipated, and reasonable estimates of RTO costs
fought with rhetoric by the true believers and the naysayers, outweigh nearly all of the benefits antidpated in the national
FERC appears to fall in the true-believer camp~its policy on cost-benefit studies. Considering the escalation in both prices
RTOs was not based on a comprehensive analysis of the posei- and RTO costs, additional analysis dearly is needed to detet-
ble costs, benefits, and risks. Rather, it was based in an opti- mine whether restructured markets are, in fact, providing net
mistic assumption--"competition in wholesale electricity benefits. []
markets is the best way to protect the public interest and ensure
that electricity consumers pay the lowest price possible for Margot £utzen&er is associate economist at the Public Power
reliable service.''~ Council. Contact her at margot@lclark, edu.
Unfortunately, the path to competitive wholesale power
markets has been littered with market crises (most notably but Data Sources
not uniquely in California), bankruptcies (among them, Padf- PJM:
ic Gas & Electric, Texas Commercial Energy, Mirant, Enron, Operating Cosu, Amortization, Depreciation, and lntm~t F. xpeme:
NRG, and Northwestern Corp.), and near bankruptcies (such 1997-2003 (FERC Form 1 submissions); 2004 (Approved2004 Budgetand
Serv/ce Category Rater, 1012812003).
as energy marketers Aquila Energy, Allegheny Energy, and a~u~l Encr~ 1997-1999 (1999 Annual Ro~on on OFera~om); 2000
Reliant Eneq~y). Moreover, competition has not produced the f2OOOAnnualRe~n o. Operations); 200! (200~ A..ual Report on Opera-
highly touted price reductions. Some, like former Enron CEO ao~u); 2002-2003 (Corresponding Annual Repom); 2004 (Approved2004
Kenneth Lay, argued that state restructuring should be expect- Budget andSemice Category Rate$, 10/28/2003).
ed to produce savings of 20 percent to 40 percent (in a 1998 Stafllng Leah: 1998-2001 (FERC Form 1 submi~inns); 2002 (448
employees as of 9/30/2002 noted in PJM's 2002 3rd Quarter Financial
letter to then Gov. George Bush). ~ Generally, state legislators Statement); 2003 (NYISO 2003 Budget Rodew ilar die Budget, Performance,
and regulators were promised that deregulation would lower and Standaeds Committee, 9/30/2002).
retail rates in the near term. In an attempt to ensure success, Startup Co~: PJM staffindicated that they have not
protect retail customers, and smooth over the transition to calculated their overall stam~p cost~. Esdmate provided by the Ontar/o IMO
2001-2003 Budness plan, 11/13/2000, p. 41.
deregulated markets, many states (among them California, N~,¥ork ISO:
New Jersey, Ohio, Maryland, Illinois, and Vhginia) instituted ol~,~g
retail rate caps or mandatory rate reductions. 2000-2003 (FERC Form 1 ~ubrni~iom}; 2004 (N~-ISO2OO4Budg~
In many cases, customers face large rate increases when Re, on for die Budget, Standards and Performmace Subcontmittee.
Annual Energ~ 2000-2002 (NYISO 2003 GoM Baok - Load and Ca/~c/ty
Data); 2003-2004 (Backed into using revenue requiremen~ and $/MWh
tares in NYISO2OO4BndgetReport, 11/12/2003).
StufFing L~d$: 2000 {AnnualRe~ort); 2001 (NY-ISO Budget vs. Actual
Rem/ts, Febmav/2002); 2002 (2003 Budget Rode~v, 9/30/2002}; 2003-2004
'RI0 Policy' Case (2004 Budget OvervLwv, 9/26/2003).
'Transmission Only' Stoup Costs: Tabon Cammani$ RID Wet Cost Benefit S~, 3/l 1/2002.
Difference: [SO New
Opezating Co~l~, Amortization, Depa~zfion, and Interest E~me:
www.fortnightly, com DECEMSts 2004 PUI~U¢ II~Ln~S Fom~mmtv 43
1998-2002 ( Corre~pondingAnnual Repom); 2003 (2003 Final.4ud/ted Staling Levels: 2000, 2002 (IMO Business Plan 2001-2003, 11 / 13/20OO)~
Financial Stamaent, 31312004); 2004 (1SO-NE Manh ForecastjSr End of 2002 (Annual Report); 2003-2004 (IMO Business Plan 2004-2006 Finandal
Year2004, Match 2004). O~rview, 9/30/2003 Note: 2003 is projected, 2004 is budgeted}.
Annual Energ~ 1998-2004 (1999-2004 Annual CapadO¢ Enog~ l~ads, Starmp Co~I$: Ontario IMO 2001-2003 Business Plan, 11/13/2000.
and Transmission (CELl) Reporc~, Note: 2004 is a foreost). Total U.S. Annual D~
Stafi~g Levels: 1998-2001 (FERC Form 1 Submissions); 2002 0{nnua/ North American Electric Reliability Council 0qERC) 2003 Electricity Sup-
/~rt); 2003 (NYISO 2003 Budget Rev/ew, 9/3012002); 2004 (1SO-NE ply and Demand Detab~e.
March Forecaster End of Year 2004, March 2004, Note: Projected FEE).
Startup Co~t~: FERC order, "Accepdng for Filing and Suspending Cost
Raco~ety Propo:al, Subject to Retired and F~tablishing Hearing", D~ket No.
ER.99-4235-OO0, 10/13/1999. 1. The California Independent System Operator (Callfomia ISO), New
Callfomia ISO: York ISO (NY-ISO), Pennsylvania-New Jeney-Maq4and lnterconnec-
Operating Co~ts, Amoni~atlum Depreciation, and Interest Expend: tion (PJM), Midwest ISO (MISO), ISO New England (ISO-NE) and the
1998-2002 (FERC Form 1 submhsions); 2003 (DecemberMond~ Finch- Elec~c Reliability Council of Texas (ERCOT). "RTO" is used in this arti-
cialReport, 12/31/2003 No~. Actual 2003 numbers - unaudited); 2004 cie as a general term to include both regional transmission operators
(l~posed FY2004 Opemtln~ & Malntenance Budget and Capltal Budg~, alii independent system operators.
9118103). 2. 1997 PJM FERC Form 1 Submission (2003 dollars); Approved 2004
Annual Encee 1998 (2000,~nnuallOporton Marketlssuesand Budget and Service Category Rates, 10/28/2003.
PeoSrmance, November 2001); 1999-2001 (2002AnnuadReFort on Market 3. 2000 Annual Repo~; Updated 2004 Budget Presentation, 3/18/2004.
luues and Per~rmance, April 2003); 2002-2003 (2003 Market/'~rmance 4. ISO-NE 1998 Annual Report (2003 do0ars); ISONE March Forecast for
Ri,dew dom the Office of Market Analysis, April 2004); 2004 (Proposed End of Year 2004, March 2004 (2004 dollars).
FY2004 Opera,lng &Maintenance Budget and CapltaIBudget, 9/18/03}. 5. Many of the RTOs do not consmtentiy repo~ stafl'mg levels. Whenever
Sed~ng Levels: 2000-2001 (FERC Form 1 submi~ion$); 2002 (Proposed s~af~ng data reported consultan~ they were excluded, so that the data
l;Y2003 Budget, 10/16/2002, Note: "revised and approved stafiVm§' level); as closely as possible represents the core staff of each ovganization.
2003 (December Month~ FinancialReimrt, 12/3112003); 2004 (Proposed 6. MISO does not collect or compote annual energy demand, so this is
FY2004 Operating &Maintenance Budgetand CapitalBudget, 9/18/2003 based on an estimate taken from Energy in fo~natinn Administration
No= projected FI'E). report, lmpoctoftbo~EnergyRegul~7 Camm~ion}l~roposedStandard
Startup Cosu: Financing Plan Execution, 412311998. MarketDedgn, April 2003, p.14 Table 3.2.
ERCOT: 7. Once MISO's wholesale market design is in place, it will calculate
Operating Costa, Amor~izatlon, Depreciation, anti ln~ere$t Expcnae: annual energy.
2000-2003 (2003 Annual Re~rt); 2004 (2004 Texa~ PUC ram filing 8. 18 CFR Pa~. 35, Order No. 2000, Docket No. RM99-2-O00, pp. 95-96.
[Docket No. 28832]). 9. Calculated using RTO/ISO annual demand levels (data sources by
AnnualE~erg~20~O-2004(2004TexasPUCrate£ding-DocketNo. 28832, ISO/RTO in endnotes) and projected 2004 U.S. annual demand
Note: 2001-2002 a~e actuala, 2003 is part actual and parr budgeted and reported in the No/th American Electric Reliability Council's (NERO
2004 is budgeted). 2003 Electricity Supply and Demand Database.
Stal~ Le~ls: 2000, 2001, 2003 (2003 AnnuallL~ort); 2002 (E~dmare 10. Id p. 91.
bssed on rate Filing information); 2004 (2004 Texas PUC rate filing [Docket 11./a{ p. 91-92.
# 28832]). 12. Impact of tho FederalEnen~ Regulato~ Comm~slon's Proposed Standard Madeet
Sta~up cosu: Tabors Caramanls RTO West Cost Benq~t Study, 3/1112002. LM'/gn, April 2003, p. 23 Table 3.6, (Same near and long-term results
Midw~t ISO: for both 5 percem and 10 percent inc~ase in tax capability cases).
Operating C.o~, Amortization, Depreciation, and Inter,t: 13 Id p. 14, Table 3.2, (excludes ERCOT).
2000-2003 ( Corr"u~ponding Annual Reports); 2OO4 (U]~4ated 2~O4 Bndget 14.1CF Economic Asse~ment of RTO PoOcy, 2/26/2002, Docl~t No. RM01-12
Feeseraation, 3/18/2004, Note: original budget from M1SO Budget Advisory (hup~ndm'act/nv/c°st/O2-2~O2'repor~tx~Jg.
CommittetPresentation, 12110103). 15 la~ p. 79.
Annual Ency. MISO does not co0ect or compute annual energy demand 16. FERC Form 1 data for each utility.
at this time. An estimate of MISO's annual demand provided in the EIA 17. ICF Economic Assessment of RTO Policy, 2/26/2002, DocketNo.
cost benefit report entided lm!~ct of tho lamp, seal Federal Ener~ RMO I-12, p. vi.
Regulalorycomndssion'sProposedStandardMarketDeslgn,Apfil2OO3, p.14. 18. Letter sent 11/16/98 available at
Sta.!g!~g Leml$: 2000 (MISO Order 2000 Compliance hap://wwmthesmokinggun.com/archivdbushlay l 1.htmt
Fi~ng [RTO1-87-OOO]; lll t12001); 2001, 2002, 2004 (2~ Bndget Advl- 19. State ofNewJemy Defl. n~ Balances Task Force Rrport, 8/30/O2 p. 1.
sory Commillee Presentation, 12/10/2003.); 2003 (2003 Annual Report). 20. EIA data: Hlslotical 1990 through Current Month Retail Sales, Rev-
Startup Costs: MISO 2000 Annual Report enues, and Average Retail Price of Eledtricity by State and by sec~-,
Ont~io IMO: available at
Opei'ating Cost*, Amortization, Depr~ciatinn, an~ Interest Ex!aem~: 21. Average Retail Price of Electricity by State and by Sector, available at:
1999-2002 ( Corre~onding Annual Repom); 2003 (2003 Final Audlted h~p://unom da. dae. godcneaflek~ty/~agdat_a ~lanedsales_tab~html
FinancialStau~nent, lll2104);2OO4(IMOBusineuPlan2OO4-2OOtFinan- 22. Marylam:t Office of People's Council Web site announcement, "Peo-
ria/ Overvitw, 9/30/2003). pie's Council to Assist Pepoo and Connec0v's Residential Customers
Annual Ener~:. Demand Overview section of Ontario 1MO's Web pag~ with Electricity Rate increases" at http://uma~ opc. state, ndusL
htip://wwuzdlelmo, com/imoweb/media/md_deman~a~o. 23. EIA data source listed above.
44 PUBLIC If~u~s FO~TNIr, HTLY DEC~E8 2004 www.fortnightly.com