RESOLUTION NO. 2023-19
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON TO
UPDATE AND IMPLEMENT AN ENERGY COST ADJUSTMENT BILLING
FACTOR PROCEDURE AND COMPUTATION METHOD WHICH
ESTABLISHES AN ENERGY COST ADJUSTMENT TO BE BILLED
UNDER ALL ELECTRICAL RATE SCHEDULES FOR ENERGY
TRANSMITTED, DISTRIBUTED, AND SUPPLIED TO CITY OF VERNON
ELECTRIC CUSTOMERS
SECTION 1. Recitals.
A. The City of Vernon (City) is a chartered municipal corporation of the State of California that owns and operates a system for the generation, purchase, transmission, distribution and sale of electric capacity and energy.
B. Pursuant to Vernon Municipal Code Section 13.36.040, existing rates charged for the distribution of energy supplied by the Vernon electric system may include an energy cost adjustment billing factor (ECABF) to be determined by the City Council and which may be adjusted from time to time by resolution when, in the City Council’s opinion, such changes are necessary for the sound financial operation of the Public Utilities Electric Fund.
C. On April 2, 2019, the City Council of the City of Vernon adopted Resolution 2019- 06 establishing an ECABF procedure and computation method to ensure that electric customers are billed for the true cost of service, and to allow Vernon Public Utilities (VPU) to adjust the ECABF when fluctuations in the energy market impact the cost of service.
D. Based on the results of the 2023 Electric Cost of Service Analysis and Rate Design Study (Study), including forecasted power supply expenses, the General Manager of VPU has recommended an ECABF of $0.02 effective July 1, 2023, $0.02 effective July 1, 2024, and $0.01 effective July 1, 2025. The recommended ECABF is subject to adjustment to the extent that actual power supply expenses differ from those included in the Study’s underlying assumptions to ensure the proper recovery of power supply expenses, consistent with the Procedures for Calculating the ECABF attached hereto as Exhibit A.
E. During Fiscal Year 2025-2026, if not earlier depending on current financial and economic conditions as well as any changes to the underlying assumptions of the Study, VPU plans to update the Study to include factors such as electric load projections, operating and maintenance expenses, Malburg Generating Station (MGS) expenses, power supply expenses, multi-year capital plan, and related assumptions, including financial reserves, to determine the appropriate base rates and ECABF to ensure the costs to deliver electric service to customers are properly recovered.
Resolution No. 2023-19
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F. The City Council of the City of Vernon desires to approve and implement these adjustments to the ECABF.
G. The City Council of the City of Vernon finds such adjustment is necessary for the sound financial management of the Public Utilities Electric Fund.
H. The City Council of the City of Vernon has heard and considered all evidence, both written and oral, presented in consideration of the proposed ECABF.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS:
SECTION 2. The City Council of the City of Vernon finds and determines that the above recitals are true and correct.
SECTION 3. The City Council of the City of Vernon hereby approves and adopts the updated Energy Cost Adjustment Billing Factor Calculation, attached hereto as Exhibit A.
SECTION 4. The effective date of the implementation of the ECABF shall be as follows: ECABF of $0.02 effective July 1, 2023, $0.02 effective July 1, 2024, and $0.01 effective July 1, 2025, subject to adjustment in accordance with the Procedures for Calculating the ECABF (Exhibit A), or as may be rescinded or amended by resolution of the City Council of the City of Vernon.
SECTION 5. All resolutions or parts of resolutions, specifically Resolution No. 2019-06, not consistent with or in conflict with this resolution are hereby repealed.
SECTION 6. The City Clerk shall certify the passage and adoption of this resolution and enter it into the book of original resolutions.
APPROVED AND ADOPTED August 15, 2023.
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ATTEST: CRYSTAL LARIOS, Mayor
LISA POPE, City Clerk
(seal)
APPROVED AS TO FORM:
ZAYNAH N. MOUSSA, City Attorney
1 City of Vernon
Procedures for Calculating the
Energy Cost Adjustment Billing Factor
The Energy Cost Adjustment Billing Factor (ECABF) will be applied based on kilowatt-hour (kWh) billed under all schedules to reflect changes in the cost of energy, fuel, and extraordinary expenses. The ECABF shall be calculated monthly and applied to customer bills for the following service month.
The ECABF, expressed to the nearest $ 0.0001 per kilowatt- hour (kWh), is to be calculated pursuant to the following equation:
ECABF = ((ECa - ECb) + (FCa - FCb) + C)
Se
Where,
ECABF= Energy Cost Adjustment Billing Factor per kilowatt-hour sold ECa = Actual cost of Energy (other than cost of renewable energy) for the current month ECb = Energy costs (other than cost of renewable energy) in base rates for the current month FCa = Actual Natural Gas Fuel costs for the current month FCb = Natural Gas Fuel costs in base rates for the current month C = Extra ordinary expenses
Se = Estimated Kilowatt- hour sales in the following service month Resolution No. 2023-19
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2 ECABF Calculation Sheet
Exhibit A is attached to provide the calculation sheet for all months.
Energy Costs (EC)
Items 1 through 6 represent the actual cost of energy (ECa) to be used in calculating the ECABF.
It is comprised of the cost of capacity, energy (other than the cost of renewable energy), transmission service and grid management charge for the current month.
Items 7 through 12 represent the cost of energy in the base rates (ECb) to be used in calculating the ECABF. It is comprised of the cost of capacity, energy (other than the cost of renewable energy), transmission service and grid management charge in the base rates for the current month.
Fuel Cost (FC)
Items 14 through 19 represent the actual cost of fuel (FCa) to be used in calculating the ECABF.
It is comprised of the cost of fuel and natural gas transportation for the current month.
Items 20 through 25 represent the cost of fuel in base rates (FCb) to be used in calculating the ECABF. It is comprised of the cost of fuel and natural gas transportation for the current month.
Extraordinary Expenses (C)
Items 27 represents extraordinary expenses incurred in the current month.
Estimated Kilowatt Hours (Se)
Item 29 represents the estimated kilowatt hour sales in the next service month.
Adjustment for Interruptible Service Under Recovery
Represents the revenue shortfall from providing the bill credit to Interruptible Service for 2.5 % of the prevailing average billing rate.
Energy Cost Adjustment Billing Factor (ECABF)
Item 36 represents the Energy Cost Adjustment Billing factor for the current month. Applies to all services except for Interruptible Service.
Interruptible Service ECABF
Item 37 represents the Energy Cost Adjustment Billing factor to be charged to Interruptible Service for the current month.
ECABF Over/(Under) Collection
The ECABF Over/(Under) Collection will be tracked monthly. There shall be a true-up of the ECABF Over/(Under) collection amount on a quarterly basis, if not earlier, subject to the extent that actual power supply expenses differ from those included in the 2023 Electric Cost of Service Analysis and Rate Design Study’s underlying assumptions to ensure the proper recovery of power supply expenses. The ECABF over/(under) collection amount, or portion thereof, may be included in the calculation of the ECABF for that month.
Resolution No. 2023-19
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Exhibit A
City of Vernon
Energy Cost Adjustment Billing Factor (ECABF)
Calculation Sheet
For the Month________________
To be applied to _____ monthly Billables billed in __________ Energy Cost
Actual Energy Cost (ECa):
1 Energy and Capacity $0
2 Transmission (TAC, SCE, LADWP) $0
3 CAISO Grid Management and A/S Charge $0
4 Less: Wholesale sales revenue (RA, AS) $0
5 Less: Transmission Revenue Requirement Revenue $0
6 Actual Energy Cost (ECa) Total: [1+2+3-4-5] $0.0000
Energy Cost in base rate (ECb):
7 Energy and Capacity $0
8 Transmission (TAC, SCE, LADWP) $0
9 CAISO Grid Management and A/S Charge $0
10 Less: Wholesale sales revenue (RA, AS) $0
11 Less: Transmission Revenue Requirement Revenue $0
12 Energy Cost in base Rate Cost (ECb) Total: [7+8+9-10-11] $0.0000 13 Energy Cost difference [6-12] $0.0000
Fuel Cost
Actual Natural Gas Fuel Cost (FCa):
14 Fuel (L&P and Gas) $0
15 Transportation (L&P and Gas) $0
16 Less:Wholesale Sales (Prepay and Retail) $0
17 Less: Retail Sales $0
18 Less: Retail service transportation Charge $0
19 Actual Natural Gas Fuel Cost Total( FCa): [14+15-16-17-18] $0.0000 Natural Gas Fuel Cost in base rates (FCb):
20 Fuel (L&P and Gas) $0
21 Transportation (L&P and Gas) $0
22 Less:Wholesale Sales (Prepay and Retail) $0
23 Less: Retail Sales $0
24 Less: Retail service transportation Charge $0
25 Natural Gas Fuel Cost in base rates (FCb): [20+21-22-23-24] $0.0000 26 Natural Gas Fuel Cost difference [19-25] $0.0000
Extraordinary Expense
27 Extraordinary Expense $0.0000
Adjustment for Interruptible Service Under Recovery
28 Cost difference [13+26+27+39] $0.0000
29 Estimated Kilowatt-hours sales for the next service month (Se) $0.0000 30 Prevailing Billing Rate (Interruptible), per KWh $0.0000 31 Interruptible Service Kilowatt Hours Sold $0.0000
32 Interruptible Service Charges, ([28/29] - 0.025*[ 30])*[31] $0.0000 Calculation of ECABF
33 Cost Difference , [13+26+27+39] $0.0000
34 Interruptible Service Charges, [32] $0.0000
35 Kilowatt Hours Sold (Se
), [29] $0.0000
36 Energy Cost Adjustment Billing Factor, ([33] - [ 32])/[35-31] $0.0000 Interruptible Service ECABF
37 Interruptible Service ECABF, ([28/29] - 0.025*[30]) $0.0000 ECABF Over/(Under) Collection
38 ECABF Monthly Over/(Under) Collection $0.0000
39 ECABF Cumulative Over/(Under) Collection $0.0000
Resolution No. 2023-19
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