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HomeMy WebLinkAbout2001/08/30 - Agenda Packet - Special AGENDA RANCHO CUCAMONGA CITY COUNCIL Special Meeting August 30, 2001 - 4:00 p.m. Civic Center - Council Chambers 10500 Civic Center Drive Rancho Cucamonga, California A. CALLTO ORDER 1. Pledge of Allegiance 2. Roll Call: Alexander , Biane , Curatalo , Dutton , Williams __ B. ITEM OF BUSINESS 1. ADOPTION OF A RESOLUTION AUTHORIZING THE FORMATION OF A MUNICIPALLY OWNED UTILITY RESOLUTION NO. 01-193 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, AUTHORIZING THE CREATION AND OPERATION OF A MUNCIPALLY OWNED UTILITY FOR THE PURPOSE OF PROVIDING VARIOUS UTILITY SERVICES, AND AUTHORIZING THE TAKING OF CERTAIN OTHER ACTION IN CONNECTION THEREWITH C. COMMUNICATIONS FROM THE PUBLIC This is the time and place for the general public to address the City Council. State law prohibits the Council from addressing any issue not previously included on the agenda. The Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to five minutes per individual. City Council Meeting Agenda August 30, 2001 Page 2 D. ADJOURNMENT I, Debra J. Adams, City Clerk of the City of Rancho Cucamonga, hereby certify that a true, accurate copy of the foregoing agenda was posted on August 29, 2001, per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California. THE CITY OF .__ i~r. I~ANCflO CUCANONGA DATE: August 30, 2001 TO:. Mayor and Members of the City Council Jack Lam, AICP, City Manager FRO~: William J. O'Neil, City Engineer SUBJECT: Adopt Resolution No. 01-*** Authorizing the Formation of a Municipally Owned Utility RECOMMENDATION: Staff recommends that the City Council adopt Resolution No. 01-*** authorizing the formation of a municipally owned utility for the purpose of providing electrical power, telephone, telecommunications, cable TV and natural gas. While there are currently no immediate plans to undertake providing any of these commodities, the formation of the municipal utility will ensure that the City can keep its options open in providing any of these commodities in the future should it become feasible to do so. BACKGROUND/ANALYSIS: In the current environment, important commodities such as electrical power are subject to temporary shortages and pdce fluctuations. By law, cities are allowed to form municipal utilities for the purpose of providing certain commodities to their residents and businesses. '[his can be advantageous for a number of reasons, particularly in terms of economic development and business retention. VVhile the City is not planning to undertake providing any utility services at this time, adoption of the proposed resolution protects the City's ability to do so if circumstances warrant this level of action in the future. The City will continue to review and research all options available to us in terms of creating new revenue sources, providing cost- savings, and enhancing electdc reliability for the City, our residents, and our local businesses. Adoption of the resolution does not obligate the City to take any further action at this time. The resolution is intended to keep the city's options open. Re.~pec..ffully Submitted, Willi[am' J. O'Neil City Engineer Attachment / RESOLUTIONNO. 01- Iq$ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA AUTHORIZING THE CREATION AND OPERATION OF A MUNICIPALLY OWNED UTILITY FOR THE PURPOSE OF PROVIDING VARIOUS UTILITIY SERVICES, AND AUTHORIZING THE TAK1NG OF CERTAIN OTHER ACTION IN CONNECTION THEREWITH WHEREAS, the City of Rancho Cucamonga (the "City"), a municipal corporation, is authorized pursuant to Article XI, Section 9 (a) of the Califomia Constitution to establish, purchase and operate public works to furnish its inhabitants with light, water, power, heat, transportation, or means of communication; and WHEREAS, the City is experiencing significant growth; and WHEREAS, the City desires to ensure that its citizens are provided with utilities that meet the current and future needs of the community, that utilize advanced technology, that provide utility services at rates and charges that are fair and reasonable, that provide high quality customer service, that provide alternatives to existing providers of utility services and that protect the health, safety, and welfare of its citizens; and WHEREAS, the City has studied, reviewed and analyzed the current status of deregulation of communications systems and elec~ic and natural gas utilities in the State of California; and WHEREAS, the City desires to own and operate municipally-owned natural gas, electric, cable television, telephone and telecommunications utility system, where appropriate; and WHEREAS, the City has consulted with various experts to identify the prospective benefits of establishing a municipally owned utility; and WHEREAS, as a result of deregulation of the communications and electric and natural gas utility industries in California, the City has identified numerous potential benefits that would derive from providing a municipally owned utility, including but not limited to additional revenues for community improvements, the ability to offer competitive rates to citizens and businesses for utility services and high speed communications capability for residential, business and governmental use that support variable bandwidth and seamless communication, community wide; and WHEREAS, the City Council has found and determined that the creation of a municipally-owned utility could significantly enhance the quality of life and provide significant benefits to the citizens and businesses of the City. CITY COUNCIL RESOLUTION September 5, 2001 Page 2 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City as follows: Section 1. The City of Rancho Cucamonga does hereby establish a municipally owned electric, natural gas, telephone and telecommunications utility in the City of Rancho Cucamonga. Section 2. The City Manager or his designee is hereby authorized to take all necessary steps to create and establish a municipally owned utility (the "Municipal Utility") with powers to provide various utility services, including, without limitation, electric, natural gas, cable television, telephone and telecommunications, to be determined from time to time by the City Council, to the residents and businesses of the City. The City Manager or his designee is further authorized to take all necessary actions to provide for the operation and maintenance of the municipal utility including but not limited to, determining the level of additional staffing required, if any, identifying outsourcing needs, negotiating agreements with consultants, special counsel, underwriter(s) and/or financial advisors in connection with regulatory, legal or financial matters for approval by the City Council. Section 3. The Mayor (or in the Mayor's absence, the Mayor Pro Tem), the City Manager, or their designee are hereby authorized to execute and deliver any and all documents and instruments and to do and cause to be done and any and all acts and things necessary or proper for carrying out the transactions contemplated by this Resolution. Section 4. The City Clerk shall certify to the adoption of this Resolution which shall be in full force and effect immediately upon adoption. The foregoing Resolution was duly and regularly adopted by the City Council of the City of Rancho Cucamonga at a meeting on the 5t~ day of September, 2001, by the following vote of the Council: .3 Special City Council Meeting City of Rancho Cucamonga August 30, 200'1 My name is Cheryl Karns, the Public Affairs Region Manager for Southern California Edison. I appreciate the opportunity to address the Council on the issues of how the City should respond to the current California energy crisis. We recognize that the generation market in California is dysfunctional and the City wants to consider all of its energy options. However, the creation and operation of a small new municipal electric utility - which is a costly and complex undertaking - does nothing to address the real problem facing California. The problem today is one of the availability and cost of the electric commodity, not the quality or cost of the distribution service that delivers that commodity to customers. Establishing a new municipal utility, however, means getting to the wires business, and because of bond funding obligations, it is a commitment of decades. As you meet tonight, the energy market problem already appears to have begun to abate as the market place seems to be moving from an energy shortage to an energy_ glut. As a result of this and conservation, we have not experienced a rotating outage yet this summer and none are presently projected. In addition, in the past few months we have seen a fairly dramatic drop in wholesale energy costs. This drop is expected to continue over the long run as even more generation comes on line. The State of California currently has more than 20,000 Mw of new generation in the construction and approval process with much of it due online within the next two years. With that increased supply should come lower and more predictable prices. Therefore, we recommend that the City first commission a comprehensive feasibility study to determine the costs, risks and benefits of forming a municipal electric utility before it considers any resolution to establish such a utility and commits the city and its residents to an expensive long-term endeavor to a short-term problem. Without the completion of a comprehensive feasibility study, the City will not have the economic information to ascertain if there are economic benefits or whether the City should take "steps towards creation and commencement of the operation of a municipally owned utility". Once the study is completed, the public including the impacted utilities should have the opportunity to review and comment on the study. The feasibility study should address such major issues as: 1. Where would the City's municipal electric utility purchase its energy and at what price? 2. Would the price of that energy be cheaper than the price under the Governor's program? 3. How will the City deliver the energy? 4. Will the City want to municipalize SCE's distribution system? 5. What would it cost and will the distribution service be as cost effective and reliable as SCE's? 5. What will happen in case of an emergency situation? 6. How will all citizens and businesses benefit? 7. Would community aggregation - which lets a City contract for the electric commodity without having to get into the wires business - be a better option than municipalization? 8. Why does the City believe the legislature will allow it to avoid the obligation to repay their share of the costs already incurred since May 2000 to obtain power? The State recognizes "exit fees" will be a necessary part of its efforts to obtain financing in an effort to recoup the billions of dollars already expended to procure energy that customers have used. 9. Wouldn't using an independent third party - that will have no vested interest in the results ultimately selected by the City - be a better choice to conduct the feasibility and economic study? We want the Council to understand the formation of a municipal electric utility will not exempt the City of Rancho Cucamonga and its constituents from possible rotating outages because, unlike the City of Los Angeles, the City's energy commodity still will be delivered through the ISO-controlled grid. As such, when CA- ISO calls for load shed, customers of the City of Rancho Cucamonga would still be subject to the rotating outages just like all other Edison customers. With the amount of additional generation expected in the State in the coming years, we believe the need for rotating outages will be greatly diminished. Finally, we would like to note that Article Xl, Section 9 of the California constitution and Public Utilities Code Section 1002 authorize municipal corporations to acquire, construct, own, operate, or lease any public utility. We are not aware of any pending constitutional amendments or legislative directive that will deny these rights to cities and municipal corporations. Therefore, we find it puzzling that the City finds it necessary to pass a resolution to guarantee a right that it already has. Proposed legislation, now or in the future, cannot take away that constitutional right. Thank you for the opportunity to address you. I will be pleased to answer any questions.