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HomeMy WebLinkAbout1982-11-09; City Council; 7204; Formation of Joint Powers Agency for SANDAG1 L a w > 0 oc: !i 2 a 0 5 d 0 2 3 0 0 CIT) OF CARLSBAD - AGENDh BILL I LB#.Z I TITLE: FORMATION OF A JOINT POWERS IEPT. IITG- 11’9’82 CM I AGENCY FOR THE SAN DIEGO REGION (SANDAG) I DEPT. HD. CITY Am= CITY MOR.* RECOMMENDED ACTION: That Council consider Resolution No. 70d-9 approving in concept a Joint Powers Agency, as requested by the SANDAG Board in their letter of October 28, 1982. ITEM EXPLANATION: On October 25, 1982, the SANDAG Board of Directors adopted resolutions encouraging local governments to approve in concept the formation of a joint powers agency to make a preference application for federal hydroelectric power for the San Diego Region and requesting that the federal Western Area Power Administration amend its current proposal for allocating hydroelectric power. FISCAL IMPACT: Purchasing electricity from Colorado River Project could result in energy saving of from $3 to $21 per capita in San Diego Region. EXHIBITS: 1. October 28, 1982 letter from SANDAG 2. Resolution No. 70$? , SanDiego ASSOCIATION OF GOVERNMENTS Suite 524, Security Pacific Plaza 1200 Third Avenue San Diego, California 92101 (7 14) 236-5300 Frank Aleshire City Manager City of Carlsbad 1200 Elm Avenue Carlsbad, CA 92008 Dear October 28, 1982 On October 25, 1982, the SANDAG Board of Directors adopted the attached two resolu t i om which: o Encourage local governments to approve in concept the formation of a joint powers agency to make a preference application for federal hydroelectric power for the San Diego region. current proposal for allocating hydroelectric power. o Request that the federal Western Area Power Administration amend its The Board also authorized the Chairwoman or her representative to present testimony at a Western Area Power Administration public hearing on the hydro- electric power allocation proposal on November 23, 1982. A summary of four previous SANDAG staff reports and two previous SANDAG resolutions regarding this subject are also attached. This information should help your council consider the approval of a joint powers agency as requested by the SANDAG Board. The City of San Diego attorney's office is preparing a draft joint powers agreement for consideration by the region's cities. As soon as this draft agreement is available, it will be distributed to you. Please call me, or have your staff contact Debra Greenfield, SANDAG General Counsel, or Steve Sachs, SANDAG Energy Planner, if you have any questions about this issue. Sincerely, RICHARD J. HUFF Executive Direct or R J H /SS /ah m Enclosures EXHIBIT 1 2. MEMBER AGENCIES: Cities of Carlsbad, Chula Vista, Cororado, Del Mar, El Cajon, Imperial Beach, La Mesa, Lemon Grove, Nationai City, Oceanside, Poway, San Dlego. San Marcos. Santee and Vista ADVISORY MEMBERS: Callfornia Department of Transportation and TiJuanaiBaja Caljfornia Norte San Diego ASSOCIATION OF GOVERNMEN23 RESOCUTION / --7 No. ' 83-28 Suite 524, Security Pacific Plaza 3200 Third Avenue Son Diego, California 92101 71 4/236-5300 ENCOURAGING LOCAL GOVERNMENTS TO APPROVE IN CONCEPT THE FORMATION OF A JOINT POWERS AGENCY TO MAKE A PREFERENCE APPLICATION FOR FEDERAL HYDROELECTRIC POWER FOR THE SAN DIEGO REGION WHEREAS, the Western Area Power Administration is proposing to allocate federal hydroelectric power from Hoover, Parker, and Davis Dams; and WHEREAS, under federal law, public agencies are accorded a preference in the allocation of power from federal projects, NOW THEREFORE BE IT RESOLVED that the San Diego Association of Governments Board of Directors encourages local governments to approve in concept the formation of a joint powers agency to make a preference application for federal hydroelectric power for the San Diego region. . - PASSED AND ADOPTED this 25th day of October, 1982 CHAIRWOMAN ATTEST: MEMBER AGENCIES: Cities of Carlsbad, Chula Vista, Coronado, Del Mar, El Cajon, Escondido, Imperial Beach, La Mesa, Lemon Grove, National City'? 7 Oceanside. PowaY, San Diego,San Marcos, Santee and Vista ADVISORY MEMBERS: California Department of Transportation and TijuanalBaja California Norte San Diego ASSOCIATION OF GOVERNMEN- RESOCUTION No. 83-29 Suite 524, Security Pacific Plaza 1200 Third Avenue San Diego, California 92101 71 4/236-5300 REAFFIRMING THE REQUEST THAT THE WESTERN AREA POWER ADMINISTRATION AMEND TI'S POWER ALLOCATION MARKETING CRITERIA TO ALLOCATE POWER TO PUBLIC AND PFUVATE APPLICANTS BASED ON THE POPULATION AND ELECTRICITY NEEDS OF EACH APPLICANT IN PROPORTION TO THOSE OF ALL APPLICANTS WHEREAS, the Western Area Power Administration has published on August 24, 1982 a revised proposal for Marketing Criteria for Boulder City Area Projects, and WHEREAS, the proved marketing criteria do not allocate federal hydroelectric power equitably based on energy needs of potential applicants; and WHEREAS, on September 20, 1982 the SANDAG Board of Directors approved a resolution requesting the Western Area Power Administration to change its proposed marketing criteria; NOW THEREFORE BE IT RESOLVED that the San Diego Association of Governments Board of Directors reaffirms its request that the federal Western Area Power Administration amend its August 24, 1982 'Troposed General Consolidated Power Marketing Criteria for Boulder City Area Projects, Revision" to require allocation of power to all applicants, based on the population and electricity needs of each applicant in proportion to those of all applicants. PASSED AND ADOPTED this 25th day of October, 1982 CHAIRWOMAN MEMBER AGENCIES: Cities of Carlsbad. Chula Vista, Coronado, Del Mar, El Cajon, Escondido, Imperial Beach. La Mesa. Lemon Grove, National City, 4 Oceanside. Poway, San Diego, San Marcos, Santee and Vista ADVISORY MEMBERS: California Department of Transportation and Tijuana/Baja California Norte POTENTIAL FOR ALLOCATION OF LOW-COST HYDROELECTRIC POWER TO THE SAN DIEGO REGION SUMMARY OF SANDAG STAFF REPORTS October 26, 1982 MAY 5,1982 STAFF REPORT: Introduction Assemblyman Larry Stirling has requested each of the cities in the region to consider authorizing a joint powers agreement among local governments as a means to obtain an allocation of low-cost hydroelectric power from Hoover, Parker, and Davis Dams. Assemblyman Stirling has also requested that SANDAG consider this issue and serve as a central point of contact among local governments. Discussion The concept put forth by Assemblyman Stirling is that since Hoover Dam was built with federal tax dollars, the San Diego area should have access to the low-cost hydroelectric power produced there equal to that of other areas, all factors being equal. Regulations governing the allocation of power from federal facilities apparently give preference to nonprofit and public entities. Therefore, it would be necessary to form a joint powers agency or for an existing public entity to attempt to obtain the allocation of hydroelectric power from Hoover Dam in order to have the best chance of obtaining some of the power. Staff has contacted the Western Area Power Administrator (WAPA) of the Department of the Interior, which is the agency responsible for allocating power from federal facilities, and staff at SDGdcE familiar with this matter. Based on these contacts, the following preliminary information has been gathered. o The WAPA will be issuing a "Marketing Plan" in the Federal Register this summer or fall for allocating the power from Hoover Dam to eligible applicants. Subsequently, applications for power allocations will be accepted and allocation decisions will be made. o Existing contracts allocating Hoover Dam's power to agencies in California, Arizona and Nevada expire in 1987. This is when the new allocations will go into effect. Several issues need to be resolved before a decision to pursue an allocation of hydroelectric power should be made. Staff will develop the information necessary to answer the following questions and report back to the Board in time to allow local governments to consider the formation of a joint powers agreement and submittal of an application to WAPA. h JULY 19, 1982 STAFF REPORT: Discussion Following are the major conclusions from the information supplied by WAPA: Requirements for Qualification as a Preference Applicant. The initial proposal to the region's cities by Assemblyman Stirling was that they consider a joint powers agreement to apply for an allocation of federal hydroelectric power. Federal law requires that public agencies and non-profit corporations be given a preference over private utilities in the allocation of federal power. Therefore, the joint powers agreement or any other public or non-profit entity would have a greater chance of actually obtaining an allocation than would SDG&E. It appears to be WAPA's policy to allocate power to public non-profit entities on a preference basis only if they own and operate a utility system. However, the legislative basis for this policy and the situations under which it might be modified are unknown to staff at this time. Other Potential Applicants for Federal Hydroelectric Power. All entities currently contracting for federal hydroelectric power intend to apply for extensions of their contracts and will probably request allocations of any power from additional facilities. It is anticipated that there will be intense competition for power allocations among existing contractors and new applicants from California, Arizona and Nevada. The California entities with existing contracts are: Cities of Burbank, Glendale, Los Angeles and Pasadena, the Metropolitan Water District of Southern California, and the Southern California Edison Company. It is possible that whatever decision WAPA makes will be appealed in court by one or more of the applicants. Application Costs. WAPA states that the cost of preparing and filing an application will be minimal. However, if this area should decide to apply, the costs of developing an eligible preference organization may be considerable if it is assumed that a public agency or non-profit organization would have to acquire or construct and operate an electric utility. Energy Realistically Available to the San Diego Area. Total long-term electric energy potentially available for allocation from the Colorado River area projects is 5.4-billion KwH per year. This potential could increase another 2 billibn KwH per year if a proposed addition to the Hoover Dam Complex is undertaken. If this power were allocated on a percentage of population basis within the power marketing area designated by WAPA (Arizona, Southern Nevada and Southern California), the San Diego region would be entitled to 11% of the annual 5.4 billion KwH available, or 594 million KwH per year. This is about 6% of current yearly electric sales in the region. Although allocation on a percentage of population basis appears to be an equitable method, previous allocation proposals by WAPA and the positions of the existing California contractors and the states of Arizona and Nevada indicate that the total power available for allocation to all new applicants may be 15% of the actual potential of 5.4 billion KwH. TKs is because existing contracts with renewal clauses account for about 85% of the total power available for allocation. The legality of these clauses is being disputed by the States of Arizona and Nevada. Potential Cost Savings. The purchase cost of energy from the Colorado River Drojects is currently less than 14!/KwH. SDG&E indicates that the average ..- comparable price f& energy it generates or purchases is about 8WKwH. This 7WKwH differential translates into $42 million per year if an allocation could be obtained for 11% of the total available power (594 million KwH). This is an average annual savings of $21 per capita. If existing contracts are renewed before new applicants are allowed allocations the total annual savings to this region might be as low as $6 million per year, if an allocation could be secured. This is an annual per capita savings of $3. AUGUST 16,1982 STAFF REPORT: There appear to be three alternatives available for local governments in approaching this issue: 1. 2. Take steps to initiate a preference application. Request SDGdcE to make a non-preference application. nonprofit groups can be granted a preference in the allocation process.) (Only public and 3. Take no further action. It is my RECOMMENDATION that 1. The SANDAG Board of Directors request San Diego Gas and Electric Company to make an application for an allocation of federal hydroelectric power, and 2. The SANDAG Board of Directors request the federal Western Area Power Administration to accommodate an allocation of power to the San Diego region based on this area's population and electricity needs in proportion to those of other applicants. Discussion The Western Area Power Administration (WAPA) is the federal agency responsible for making the allocation of power from Hoover, Parker and Davis Dams when current contracts expire over the next several years. It is WAPA's administrative policy that in order to qualify as preference applicants, local governments or other public or nonprofit entities must own and operate a utility system and that they may not simply contract with a private utility to perform these functions. It is staff3 opinion that in order to attempt to change this policy, a significant expenditure of local resources would be required. This would include a full-time legal effort over several months to challenge WAPA's policy and a major lobbying effort in Congress to enact a clarification of the preference provision in existing law in favor of the San Diego area. The chances of these efforts succeeding appear to be low, given interests in Los Angeles and Orange Counties, and Nevada 7 and Arizona that would probably oppose them. There is nothing currently preventing SDGdcE from making a non-preference application to WAPA. An SDG&E application should be strongly supported by local elected officials and the area's Congressional delegation if it is to be successful. The WAPA is expected to issue allocation proposals in the Federal Register this month. SANDAG staff will review these proposals and report to the Board regarding local comments. SEPTEMBER 20.1982 STAFF REPORT: Staff review of WAPA's revised allocation proposal indicates that the federal government does not intend to allocate hydroelectric power based on equitable energy needs of applicants. Therefore, the SANDAG Board should formally reaffirm its previous position on this issue in response to WAPA's most recent allocation proposal. It is my RECOMMENDATION that the San Diego Association of Governments Board of Directors request that the federal Western Area Power Administration change its August 24, 1982 "Proposed General Consolidated Power Marketing Criteria for Boulder City Area Projects; Revision" to require allocation of power to all applicants, based on the population and electricity needs of each applicant in proportion to those of all applicants. Discussion WAPA Allocation Proposal. The August 24, 1982 allocation proposal would renew existing contracts for over 2,000 MW of hydroelectric power with no opportunity for new applicants to receive an allocation. Existing contractors include the Metropolitan Water District of Southern California, the Los Angeles Department of Water and Power, Southern California Edison Company, the Arizona Power Authority, and several smaller entities in California and Nevada. New power capacity from further development of existing projects would be allocated among new and existing contractors, with equal distribution among the states of California, Arizona and Nevada. Preference entities (public and nonprofit applicants) would have first priority in contracting for power. The new capacity available for allocation to California is expected to amount to 188 MW. Another 60 MW is expected to be divided between the three states. The only rationale contained in the allocation proposal for renewal of the 2,000 MW existing capacity to existing contractors was "the dependence of the existing contractors have on their existing allocation." San Mego ASSOCIATION OF GOVERNMENTS No. 83-8 Suite 524, Security Pacific Plaza 1200 Third Avenue Sen Diego, California 92101 71 4/236-5300 REQUESTING THE SAN DIEGO GAS AND ELECTRIC COMPANY TO MAKE AN APPLICATION FOR AN ALLOCATION OF FEDERAL HYDROELECTRIC POWER, AND REQUESTING THE FEDERAL WESTERN AREA POWER ADMINISTRATION TO ACCOMMODATE AN ALLOCATION OF POWER TO THE SAN DIEGO REGION BASED ON THIS AREA'S POPULATION AND ELECTRICITY NEEDS IN PROPORTION TO THOSE OF OTHER APPLICANTS WHEREAS, the Western Area Power Administration will be allocating federal hydroelectric power from Hoover, Parker and Davis Dams to customers in its marketing area during the next several months; and WHEREAS, the San Diego Association of Governments has been acting as a central point of information and contact for local governments in evaluating the potential for otaining an allocation of federal hydroelectric power; NOW THEREFORE BE IT RESOLVED that: 1. The SANDAG Board of Directors requests the San Diego Gas and Electric Company to make an application for an allocation of federal hydroelectric power; and 2. The SANDAG Board of Directors requests the federal Western Area Power Administration to accommodate an allocation of power to the San Diego region based on this area's population and electricity needs in proportion to those of other applicants. PASSED AND ADOPTED this 16th day of August, 1982. MEMBER AGENCIES: Cities of Carlsbad, Chula Vista, Coronado, Del Mar, El Cajon, Escondido, Imperial Beach, La Mesa, Lemon Grove, National City,\''/ Oceanside, PowaY, San Diego, San Marcos, Santee and Vista ADVISORY MEMBERS: California Department of Transportation and TijuanaBaja California Norte San Mego ASWCIATION OF GOVERNMENTS NO. 83-14 Suit. 624, Security Pacific Plau 1200 Thlrd Avanua &n Diego, California 92101 714/236-5300 REQUESTING THE WESTERN AREA POWER ADMINISTRATION TO CHANGE ITS POWER ALLOCATION MARKETING CRITERIA TO ALLOCATE POWER TO PUBLIC AND PRIVATE APPLICANTS BASED ON THE POPULATION AND ELECTRICITY NEEDS OF EACH APPLICANT IN PROPORTION TO THOSE OF ALL APPLICANTS WHEREAS, the Western Area Power Administration has published on August 24, 1982 a revised proposal for Marketing Criteria for Boulder City Area Projects; and WHEREAS, the proposed marketing criteria do not allocate federal hydroelectric power based on equitable energy needs of potential applicants; NOW THEREFORE BE IT RESOLVED that the San Diego Association of Governments Board of Directors requests that the federal Western Area Power Administration change its August 24,1982 "Proposed General Consolidated Power Marketing Criteria for Boulder City Area Projects, Revision" to require allocation of power to all applicants, based on the population and electricity needs of each applicant in proportion to those of all applicants. PASSED AND ADOPTED this 20th day of September, 1982. CHAIRMAN ATTEST: :-? SECRETARY '4 MEMBER AGENCIES: Cities of Carlsbad, Chula Vista, Coronado, Del Mar, El Cajon, Imperial Beach, La Mesa, Lemon Grove, National City, Oceanside. Poway, San Diego, San Marcor, Santee and VirtdEx Officio Member: California Department of TrencportrtionlHonorary Member: Tijuana, 8. CFA. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 . RESOLUTION NO. 7059 . A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, APPROVING IN CONCEPT THE FORMATION OF A JOINT POWERS AGENCY TO MAKE A PREFERENCE APPLICATION FOR FEDERAL HYDROELECTRIC POWER FOR THE SAN DIEGO REGION WHEREAS, the Western Area Power Administration is proposing to allocate federal hydroelectric power from Hoover, Parker, and Iavis Dams; and WHEREAS, under federal law, public agencies are accorded a ?reference in the allocation of power from federal projects; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City sf Carlsbad as follows: 1. That the above recitations are true and correct. 2. That the City Council of the City of Carlsbad approves in zoncept the formation of a joint powers agency to make a prefer- 2nce application for federal hydroelectric power for the San Diego Zegion. adjourned PASSED, APPROVED AND ADOPTED at a/regular meeting of the City Zouncil of the City of Carlsbad held the 9th day of Moveder f L982, by the following vote to wit: AYES : Council Members Casler, Lewis, Kulchin, Chick and Prescott NOES : None ABSENT: None ITTEST: