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1976-07-21 Special CC PUB MinutesSPECIAL MEETING OF THE COUNCIL OF THE CITY OF ALAMEDA AND THE PUBLIC UTILITIES BOARD HELD WEDNESDAY, JULY 21, 1976 The meeting convened at 7:30 o'clock p.m. in 'h2 Council Chamber of the City Hall with President Corica presiding. ROLL CALL: The roll of the Council was called and Councilmen Diament, Hurwitz, Sherratt and President Corica, (4), were noted present. Absent: Councilman Beckam, (1), The roll of the Public Utilities Board was called and Commissioners Durgin, Eierman, Goss Monsef and President Kronmiller, (5), were noted present, Absent: None. Also present was Jack R. Shepard, General Manager and Chief Engineer of the Bureau of Electricity. President Corica announced discussion would be limited to members of the Council and the Public Utilities Board, as this was considered a work session. I. Receipt of the Notice of and Agenda of this Special Meeting has been acknowledged by the Councilmen and Commissions and was on file. The purpose of this session was to consider the following items, and take action thereon, if desired: (1) Communication from the Public Utilities Board requesting permission to retain all earnings in excess of budgeted estimates to June 30, 1976; (2) Actions of the Northern California Power Association as they affect the Bureau of Electricity; (3) Proposed project to use solid waste for energy generation; and (4) Any other matters of mutual interest or concern. Also on the Agenda of this Special Meeting, for consideration by the City Council, was a resolution pertaining to a Settlement Agreement among the City of Oakland, City of Alameda, Harbor Bay Isle Association, Utah International, Doric Development Inc., and Reclamation District No. 2105. 2. On request, the City Clerk administered the Oath of Office to Commissioner Joseph Durien, who had been reappointed by the City Council to the Public Utilities Board on July 20, 1976. 3. At the direction of President Corica, and there being no objection, the meeting proceeded to "Resolutions". RESOLUTIONS: 4. The following resolution was introduced by Councilman Sherratt, who moved its adoption: "Resolution No. 8567 Authorizing Approval and Execution of Settlement Agreement Among City of Oakland, City of Alameda, Harbor Bay Isle Associates, Utah International, Doric Development, Inc., and Re]ClomatiDO District No. 2105." The motion to adopt said resolution was seconded by Councilman Hurwitz and carried on the following roll cal] vote. Ayes: Four. Noes: None. Absent: Councilman Beckam, (1). The President declared the foregoing resolution adopted, President Corica reported the Settlement Agreement had already been signed by all other parties and would terminate all pending litigation between them. A ten-minute recess was called in order that the Agreement might be signed by the appropriate city officials. Upon reconvening, the meeting returned to the regular order of business. UNFINISHED BUSINESS: 5. From the Public Utilities Board requesting permission to retain all earnings in excess of budgeted estimates to June 30, 1976. City Manager Goss reported the matter of the retention of earnings had been reviewed by the City Attorney, under Section 12-6 of the City Charter, and based on the data of the operations of the Bureau and applying the formula set out in the Charter, it was his opinion any action by the Council on the retention queStiOn would be unnecessary. He said it would appear in the past when 25% of the fixed capital was sexceeded, then authorization from the Council to provide for any retention above 5% was in order, but apparently this was not the case now and the 10% figure npplied. On question, Mr. Shepard concurred with Mr. Goss' statement, however, he stated, it was the Board's opinion the support of the Council in this regard, and particularly in the regard implied 1n the retention for the use of the funds, was necessary. City Attorney Stroud stated the Charter provided a safeguard whereby the Public Utilities Board was guaranteed a certain reserve margin, but required permission from the Council if it went beyond that margin. Councilman Hurwitz asked what affect retaining funds in excess of the budgeted amount would have upon the dividend paid to the city, if any. Mr. Shepard reported 80% of the Burea4s expenditures went to purchase power with the remaining 20% used for all other operating expenses; if the city did required the transfer of the funds that would mean the Bureao's reserve would be less the next year. He noted that over the past five or six years these reserves had been declining, and if the funds were not retained it would mean a lesser reserve position next year or the alternative of raising the rates to reverse that trench, which they did not recommend, and ultimately would have an adverse effect on the dividend. President Corica commented that the the June 21, 1976 meeting of the Board it had recommended the dividend to the city for the next fiscal year of $900,000, an increase over the previous year of $50,000. Councilman Sherratt said it was his understanding the direction of the Bureau was to find means by which it would be possible to reduce rates; that they were asking support from the Community and the city to work through the Northern California Power Association with some of the projects mentioned in the written memorandum received by the Council, and to look at the feasibility of a refuse power plant. The City Manager expressed the apology of Councilman Beckam for being unable to attend this meeting, because of an important meeting of the ACTEB Governing Board of which he was a member. He said Councilman Beckam had indicated an interest in the fact that PG&E had initiated a lifeline rate on July 15, 1976, was aware the Bureau Staff had been studying their rate structure to maybe include a lifeline factor, and asked the status of their rate study. President Corica said it was his opinion Councilman Beckam's question would be addressed in the discussion of the agenda item. 6. Actions of the Northern California Power Association as they affect the Bureau of Electricity; proposed project to use solid waste for energy generation, and other matters of mutal interest or concern. On request, Mr. Shepard reported the actions of NCPA covered three basic areas of activity. (1) Intervention in the hearings before the Federal Power Commission for a number of rate filings by PG&E and the Central Valley Project, from which some of the members of NCPA purchased power. (2) Court actions supported not only by NCPA but by the American Public Power Association and similar associations to NCPA all over the United States, along with actions aimed at causing both local, and particularly federal, legislation to revise the Federal Power Act in order to meet modern-day requirements in controlling the wholesale costs for power. He stated the Federal Power Act had not been revised since 1935 and there were bills before Congress to accomplish this, at least three of them as a direct result of NCPA. (3) NCPA's long time goal of developing power generation by NCPA for the benefit of its twelve members, which was going ahead. He said, more specifically as far as the rate cases were concerned, there were three of vital interest to the Bureau and these were set out in his written summary to the Public Utilities Board of actions being taken to mitigate purchased power costs, copies of which had been distributed to the Council. Mr. Shepard reviewed this summary, which also included information on the Geysers project and the feasibility of the generation of electric power in Alameda through the use of solid waste as a fuel, in detail. As to the refuse power station, Mr. Shepard reported a session would be held, probably the third or fourth week of August, to analyze all possibilities, and technical experts and public officials would participate. He said it was important a decision be reached as soon as possible, as costs were rising quickly, and no matter how well the job was done, the station would not be in operation until 1980. He commented the Bureau was doing all it could to cut internal costs; that since a peak in August, 1974, it had reduced the number of employees, had gone to computer billing, consolidated offices, was in the process of revising systems and procedures and installing management information system reporting which would give cost control and organizationally over the Bureau as well as over jobs and functions and provide an inventory control, wa. conducting long-range planning and studies and priority establishments had reallocated Bureau vehicles resulting in four vehicles now being up for sale. Councilman Sherratt asked if the electricity derived from the geysers project and the proposed solid waste station would both be needed to supply the needs of the city. Mr. Shepard replied they would, as the power derived from the geysers project would be distributed to all cities participating in the project. EVen with both projects, he said, the city would still have to purchase its peak power from PG&E, however there was a study underway for NCPA to operate as a power pool where it would supply all the power so its member cities and get it from whatever source it could. Commissioner Durein noted when the geothermal geysers project was proven and financing arranged the city could receive a refund of its seed money. Mr. Shepard reported the development fund within NCPA was supported by eight cities, hopefully a'ninth city would also join to pull together $5,000,000 over the next five years, and Alameda's participation would be 12T/). He said when any project was developed, bonded, and financed by NCPA, all of the moneys which the cities had put into the project wouldbe refunded with 8% interest. He stated the total money which would be risked by the City of Alameda would be $100,000 should the project fail. However, should any other project brought about by NCPA be successful, the losses on the one which failed would also be covered by the bond issue and returned with interest. There followed a discussion of the details of the project. President Corica remarked that at the recent U.S. Conference of Mayors, the city was successful in having a resolution adopted which was a request for federal assistance for local governments to be incurred for unique pilot programs for converting potential energy from resources such as solid waste. He said this would be a recommendation of the Conference to Congress. He noted the 176 Public Utilities Board had been corresponding with various SEnators and Congressmen along similar lines and asked if the Board wished Council support in these matters. Mr. Shepard said it would be helpful if the City Council were to adopt and send a resolution supporting the Bureau's request for reform of the 1935 Federal Power Act, to Senators Tunney and Cranston and to all members of the Senate Finance Committee. Councilman Sherratt requested a resolution supporting HR 12608 and SB 3311 be prepared and placed on the Council agenday of August 3, 1976 for consideration. It was so ordered. Councilman Diament questioned the status of the study on the lifeline factor. Mr. Shepard said it was his understanding a lifeline rate was a form of assistance to certain groups of people, however the Bureau staff was not trained or qualified to determine who should receive this assis- tance. He stated it was hoped the study would work out a mechanism whereby some agency other than the Bureau would determine who justly deserved this assistance, and from this dev3op an appropriate rate structure. Councilman Diament recalled that at one time windmill generated power had been suggested. She asked if this would be feasible. Mr. Shepard said an application had been made to the Energy Resources Development Administration for a demonstration windmill installed in Alameda, however it was found forty acres of land would be required per windmill and even the largest would only generate about one-seventh of the city's requirements. At the conclusion of discussion, Councilman Sherratt moved approval of the Public Utilities Board's use of the retained earnings, as set out in its report dated June 22, 1976. The motion was seconded by Councilman Diament and carried on the following roll call vote. Ayes: Four. Noes: None. Absent: Councilman Beckam, (1). ADJOURNMENT: 7. There being no further business to come before this meeting, the Council and Public Utilities Board adjourned at 9:00 o'clock p.m. Respectfully submitted, City Clerk