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Annual Board Meeting
Michael GarveyChair, ABAG POWER Executive Committee
October 19, 2000
Agenda
Welcome Mike Garvey, Chairman
Approval of Minutes Mike Garvey
Executive Committee Report Mike Garvey
Program Overview Eugene Leong, ABAG
Financial Review Joe Chan, ABAG
Gas Program Review Dave Finigan, ABAG
Electric Program Review Jerry Lahr, ABAG
Election of Officers Mike Garvey
Public Commentts Mike Garvey
Adjourn
Structure of ABAG POWER
• POWER Board of Directors• Executive Committee• ABAG POWER staff• Contractors to ABAG POWER
– Energy Suppliers• Electricity• Gas
– Scheduling Coordinators (NCPA/TXU)– Billing agents (APS/IQ Solutions)– Metering Agent (Cellnet/Teldata)
Executive Committeefor FY 1999 - 2000
• Ken Blackman, City of Santa Rosa• Kathy Brown, County of Contra Costa• Robert Fugle, Gold Gate Bridge District• Michael Garvey (Chair), City of San
Carlos• Wayne Green, City of Salinas• Mark Lewis (Vice Chair), City of Union
City• John Lisenko, City of Foster City• Alan Nadritch, City of Benicia
Gas Pool Members
Electric and Gas Pool Members
Electric Pool Members
ABAG POWER Pool MembersCITY/ TOWN
COUNTY
Gas Pool Members
Electric and Gas Pool Members
Electric Pool Members
ABAG POWERELECTRIC AND GAS POOL MEMBERS
Special Districts/Other Agencies
Golden Gate Bridge, Highway & Transportation District
Regional Admin. Facility Corp.
H.A.R.D.
Housing Authority of County of Alameda
Los Trancos Co. Water District
South County Fire Authority
Vallejo Sanitary & Flood Control District
West County Wastewater District
ABAG POWER
Electric Program
• 56 jurisdictions• $52 million
program• Renewable
energy provider
Natural Gas Program
• 42 jurisdictions• $3.9 million
program
Executive Committee’sDirections for Past Year Electric Program
• Obtain 3%
savings on energy• Improve
communications with members
• Increase membership by 10%
Natural Gas Program
• Increase savings by 2%
• Increase membership by 15%
Past Year Results Electric Program
• 1.4% savings on
energy• Improved
communications– Workshop– Member Visits– Info. memos
• Membership– Lost 4 members,
gained 1
Natural Gas Program
• 11 % savings– (5% increase)
• Membership– 3 new members– 8% increase
Future Expectations
• Do not expect significant new generation until 2002.
• Both gas and electric market rates to remain high through next year.– ABAG POWER: fixed-price electrical
contract
• PG&E attempting to recover costs of high power prices by:– Ending rate freeze prior to March 31, 2002.– Attaching surcharge to customers’ bills.
Program BenefitsFY 2000 - 01
• Energy savings– Calpine contract– Renewable rebates
• Program Stability w/ fixed-price rate
• Renewable Energy• Position members for fully
deregulated market
Annual Board Meeting
Eugene LeongPresident, ABAG POWER
October 19, 2000
Program Overview
• ABAG POWER Objectives– Aggregate power purchases --> savings– Provide economical green power option– Take control of deregulated electric future
• What a Difference a Year Makes !!– April ‘98-April ‘00 --> Business as usual– June-August ‘00 --> The quarter from hell– Sept. ‘00-Dec. ‘01 --> Hedging the future
The Big Picture “The overriding lesson of history is the need to
balance market power. History shows that balance cannot be created by regulatory rules alone--it must be in the market structure…a strong consumer presence is essential to help balance the influence of suppliers and make competition work….The coalitions formed…with public power systems, rural cooperatives, municipal associationsmunicipal associations, consumer advocacy and environmental groups, and labor organizations--provide a valuable example of combined interests that might help to balance market power in both state and regional structures”
-- Scott Ridley, “Profile of Power” (1996)
Executive Summary “California is experiencing major problems with electricity
supply and pricing caused by policies and procedures adopted over the past ten years. This summer, California has seen both electricity price volatility – exemplified by huge increases in wholesale electric prices and increases in retail prices in San Diego – and supply and delivery system instability – culminating in unprecedented black-outs in the Bay Area. These serious, but thus far isolated, examples represent a precursor of what lies ahead for examples represent a precursor of what lies ahead for California’s economy over the next 30 monthsCalifornia’s economy over the next 30 months. California’s reliability deficits and retail price volatility may not improve in that time without a mid-course correction.”
--PUC Report to the Governor on Utility Deregulation (Aug. 2, 2000)
C R I S I S
Danger Opportunity
Ongoing Challenges
• Getting the “details” right• Playing ball on uneven playing
field• Growing pool since size does
matter (and local governments loads are small)
Future Opportunities
• Demand side management and other conservation programs / services
• Continuation of CEC rebates for “savings”
• Strengthening aggregation or pool approach
• Pursue legislative changes (?)
Summary• Current market structure results
in minimum competition for retail customers, e.g. local governments
• Aggregation remains viable model for local jurisdictions
• Benefits to ABAG POWER members will accrue over long-term; savings likely to be modest, but real (and will hopefully grow)
Annual Board Meeting
Financial Review
Joe ChanOctober 19, 2000
Annual Board Meeting
Natural GasProgram
Dave FiniganOctober 19, 2000
ABAG POWERGAS POOL MEMBERS
Special Districts/Other Agencies
Golden Gate Bridge, Highway & Transportation District
Regional Administration Facility Corporation
Vallejo Sanitary & Flood Control District
Natural Gas Purchasing Pool
• 43 local jurisdictions are members
• $3.4 million total in Program Cost for FY 99-00
• In operation for 4 years• Total average savings of
6.5% for four years.
Gas Program Contractors
• Gas Supplier: TXU Energy Services
• Billing agent: IQ Solutions
• Gas Management: TXU Energy Services
Natural Gas Program Savings
• 1996-1997 7%• 1997-1998 2%• 1998-1999 6%• 1999-2000 11%
• Four-year average: 6.5%• Four-year savings:
$501,084
Natural Gas ProgramFY 99-00 Program Costs
PG&E Transportation and Distribution
41.9% $1,417,868
Gas Purchases (Daily consumption, storage, imbalances)
55.5% $1,879,344
Administration (Gas management, billing, Program management)
2.7% $ 89,936
TOTAL 100% $3,387,148
98-99 99-00PG&E Trans. & Distr. 2,314,475$ 59.7% 1,417,868$ 41.9%
Gas Purchases 1,457,138 37.6% 1,879,344 55.5%
Program Expenses 107,763 2.8% 89,936 2.7%
Total 3,879,376$ 100.0% 3,387,148$ 100.0%
Natural Gas ProgramCost Comparison
Natural Gas ProgramFY 98-99 and FY 99-00
Gas Consumption
• FY 98-99 6,563,076 Therms
• FY 99-00 6,369,849 Therms
• Difference 193,227 Therms
(3%)
Natural Gas ProgramInterest Earned
• $66,762: FY 99 interest earned by members
• Rebates will be provided to members as a credit to November natural gas bills
Natural Gas ProgramFY 00-01 Forecast
Significantly Higher Gas Commodity
Prices Resulting from Increased Demand
and Higher Oil Prices
Natural Gas ProgramYear 2000
ABAG Gas Purchase Prices
Jan $2.484 /Dth June $4.415
Feb $2.596 July $4.945
Mar $2.628 Aug $4.395
April $3.101 Sept $6.195
May $3.003 Oct $5.885
2000 Natural Gas Prices
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$/D
th
Series1 2.484 2.596 2.628 3.101 3.003 4.415 4.945 4.395 6.195 5.885
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Annual Board Meeting
ElectricProgram
Jerry LahrOctober 19, 2000
Electric Aggregation Program
• 56 member agencies, representing 5,300 meters
• $32.5 million in total FY1999-2000 program costs
• Aggregated annual load of 358,000 megawatt hours with a peak demand of 60 megawatts.
• 2.5 years in operation
ABAG POWERELECTRIC POOL MEMBERS
Special Districts/Other Agencies
Golden Gate Bridge, Highway & Transportation District
Regional Administration Facility Corporation
H.A.R.D.
Housing Authority of County of Alameda
Los Trancos Co. Water District
South County Fire Authority
West County Wastewater District
Electrical Program Contractors
• Electricity Supplier:– Various: through Mar. ‘00 (Enron, PG&E
Energy Services, PX)
– NCPA: Mar. - Jun.– Calpine Corp.
• Scheduling Coordinator: NCPA• Billing Agent:
– Arizona Public Service (APS)
• MSP/MDMA (interval meters)– Cellnet (Jun ‘99 - Jan ‘00)– Teldata Solutions (Feb ‘00 - Present)
• Total Accounts: 227– 113 no replacement required– 71 replacements complete– 43 remaining installations
• require cel. phone service installation
• Meters use telephone connection rather than RF
Teldata Meter Replacements
Electric Program Elements
Expenses• Energy• PG&E
Distribution and related costs
• Program Expenses
• Rebate Expenses
Revenues• Members’
billings• Renewable
Energy Rebate
Electric Program Forecast Expense and Revenues: FY 2000-2001
Program YearExpenses
Cost of Energy 54% 27,991,000$
PG&E Distribution & Related Costs 42% 21,715,000$
Program Expenses 2% 925,000$
Rebate Expenses 3% 1,400,000$
Total 100% 52,031,000$
Revenues
Sales of Energy 97% 50,631,000$
Renewable Energy Rebates 3% 1,400,000$
Total 100% 52,031,000$
Program Expenses: FY 2000-2001
Electric Program Expenses
Billing Agent Fees 25% 234,000$
Scheduling Coordination Fees 16% 151,000$ *
ABAG Administration 42% 386,000$
Interest Expense 3% 28,000$
Meter Fees 10% 96,000$ Other 3% 30,000$
Total 100% 925,000$
*Revised from approved budget due to change in SC services
ABAG POWER Avg. Monthly Electricity Cost
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$/M
Wh
ABAG POWER Monthly Energy Cost
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
Apr
-98
May
-98
Jun-
98
Jul-9
8
Aug
-98
Sep
-98
Oct
-98
Nov
-98
Dec
-98
Jan-
99
Feb
-99
Mar
-99
Apr
-99
May
-99
Jun-
99
Jul-9
9
Aug
-99
Sep
-99
Oct
-99
Nov
-99
Dec
-99
Jan-
00
Feb
-00
Mar
-00
Apr
-00
May
-00
Jun-
00
Jul-0
0
Aug
-00
Sep
-00
($ m
illi
on
s)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
MW
h
Monthly Cost Monthly Usage
Theoretical Cash Position(Energy Payments in Advance)
(14.00)
(12.00)
(10.00)
(8.00)
(6.00)
(4.00)
(2.00)
-
2.00
4.00
Jul-9
8
Sep-9
8
Nov-9
8
Jan-
99
Mar
-99
May
-99
Jul-9
9
Sep-9
9
Nov-9
9
Jan-
00
Mar
-00
May
-00
Jul-0
0
Sep-0
0
Nov-0
0
Jan-
01
Mar
-01
May
-01
$ m
illi
on
s
Deposits• Currently $6.1 million in member
deposit to cover:– Working capital (cash flow) requirements– Credit requirements
• ISO Deposits• PX Deposits
• Review deposit requirements– Consider revising deposit allocation– Review potential refunds to members
Renewable Power Program
• Currently receiving nearly 100% renewable power from Calpine (geothermal)
• ABAG POWER participates in the CEC’s Customer Credit program– Purchase renewable energy tickets from
Calpine– 1.0 cents per kilowatt rebate is shared
between Calpine and ABAG POWER members
– Public entities prohibited from participating after Dec. 2001 (AB995)
Renewable Energy Rebate
• Total rebate collected for period May ‘99 - June ‘00: $1,474,636
• Feb. ‘00: $749,087 paid to members for period May ‘99 - Oct. ‘00
• Remaining rebate: $725,549– Distribute prior to end of year
Electric Program Savings1999 - 2000
• Energy costs roughly equivalent to PG&E
• Estimated 1.4% energy savings resulting from:– Reduction program expense fee
from 8% to 4%– Renewable rebates
Energy Savings
Total Rebate (Jul '99-Jun '00) 1,140,365$
Program Expenses (919,220)$
Net Remaining for Program Savings 221,145$
Total 1999-2000 Energy Cost 15,930,102$
Savings (% of Energy Cost) 1.4%
* Assumes energy costs same as PG&E's
Electricity Cost Breakdown$/kWh
Generation 0.070$ Electric Energy (PX Credit) 0.03$ CTC 0.04$
Transmission 0.010 Distribution 0.030 Public Purpose Prog. 0.005 Nuclear Decom. 0.005 TTA 0.010
Total 0.130$
• PX Credit: amount PG&E would have incurred to purchase electricity on your behalf
• PX Credit and Competitive Transition Charge (CTC) vary month-to-month, but must total to equal the generation charge
New Power Purchase Contract
• Calpine Corp.– Price: $81.00/MWh ($.081/kWh),
24x7
– Quantity: 40 MW on-peak30 MW off-peak
– Payment Terms: 20 days in arrears
• Additional Energy requirements to be purchased through the PX.
ABAG POWER Load Profile
0
5
10
15
20
25
30
35
40
45
50
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Hour
MW
Load (9/29/00)
Energy Purchased from Calpine
MWhCalpine 25,760 2,073,000$ PX 3,018 368,101 *PX -816 (67,493) *
Total 27,962 2,373,608$
CalPX Cost 3,147,370$ "Savings" 773,762$
*Subject to final PX settlement
September Power Purchases
Program BenefitsFY 2000 - 01
• Energy savings– Calpine contract– Renewable rebates
• Program Stability w/ fixed-price rate
• Renewable Energy• Position members for fully
deregulated market
Staff Recommendations
• Continue electric program w/ fixed price contract through 2001
• Explore different hedging and risk management strategies
• Expand Membership• Strive for 100% renewable energy• Explore energy efficiency grants• Explore longer-term arrangements
Energy Efficiency Programs for Public Agencies
• Energy Partnership Program– California Energy Commission program to
help city and county governments save money and energy.
– (916) 654-4008– http://www.energy.ca.gov/efficiency/partnership
• Loans for Energy Efficiency Projects– CEC provides loans for installing energy
saving projects.– (916) 654-4008– http://www.energy.ca.gov/contracts/
efficiency_pon.html
PG&E Energy Efficiency Programs
• SmarterEnergy– http://www.pge.com/customer_services/
business/energy/smart/
• My Business / Energy Efficiency– http://www.pge.com/toc/
bus_energ_1.html
Summary Points
• End of price freeze?• Teldata continuing meter
replacements• Continue to receive renewable
energy credits through Dec. 2001• New fixed-price energy contract
Annual Board Meeting
Michael GarveyChair, ABAG POWER Executive Committee
October 19, 2000
Proposed Executive Committee
for FY 2000-01
• Kathy Brown, County of Contra Costa• Robert Fugle, Gold Gate Bridge District
(Vice Chair)• Michael Garvey, City of San Carlos• Wayne Green, City of Salinas• Jeff Kolin, City of Santa Rosa• Mark Lewis, City of Union City (Chairman)• John Lisenko, City of Foster City• Natasha Merkuloff, County of Napa• Alan Nadritch, City of Benicia