HomeMy WebLinkAbout8.1 PG&E Relicensing Hydro Elect Power Plant I OW-4-fl
CITY OF DUBLIN
AGENDA STATEMENT
• Meeting Date: August 9, 1982
SUBJECT: PG&E request for support for relicensing hydro electric power plants
EXHIBITS ATTACHED: Letter from PG&E, dated July 29, 1982; Excerpts from 1980
FERC Opinion No. 88, Pg. 58 to 62; Sample resolution
RECOMMENDATION: Consider -
a
FINANCIAL STATEMENT: None
DESCRIPTION: • At its meeting of June 14, 1982, the Council discussed PG&E's request
for support for relicensing its hydro electric power plants. The Council continued
the matter to review 1 ) the purpose and intent of the Northern California Power
Agency (NCPA) , 2) the 1980 Federal Energy Regulatory Commission (FERC) decision, and
3) the rate regulations that would apply to NCPA.
The three items which Council wanted to review are discussed as follows:
1 . NCPA is a joint-powers authority for the purpose of developing alternative energy
sources and to provide a broader base from which to respond to PG&E rate increases.
In essence, each city which is a member of NCPA is seeking the best possible price
of energy for the benefit of its residents.
2. The 1980 FERC decision gives municipalities preference over corporate applicants
if the FERC finds the plans of the municipalities and the plans of the corporation
are 'equally well adapted. . .to converve and utilize in the public interest the
water resources of the region. '
• The FERC will use a broad assessment of 'public interest' to include:
a) both physical and non-physical considerations, including social impacts
such as economic costs and benefits.
b) consideration of the varying circumstances and needs of the era.
c) changes in benefit from the public associated with corporate applicant, to the
public associated with the municipalities, and •
d) the spreading of hydro power benefits to as much of the public as possible.
Copies To:
ITEM NO.
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AGENDA STATEMENT PG&E request Page 2
The municipal preference will only take place as a tie breaker if the municipalities
plan and the corporate plan are determined by FERC as equally well adapted to
serve the public interest. In the final analysis, it is the FERC that will
determine the public interest of each application.
3. The NCPA would not be subject to the State PUC for rate regulations. The
local municipalities would each control their own rates. Any surplus revenues
could go to that City's treasury or could be used to reduce the rates of
residents in that city.
Attached is a sample resolution supplied by PG&E for Council consideration. Mr.
Lou Holveck of PG&E will attend the Council meeting to answer questions on the matter.
•
NOTE: The complete 1980 FERC Opinion No. 88 and Opinion No. 88-A are available
for review in the office.
•
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PACIFIC GAS AND ELECTRIC COMPANY
1P-0 14'IS + 998 MURRIETA BOULEVARD LIVERMORE, CALIFORNIA 94550
RECEIVED
July 29, 1982 AUG U 2 1982
City of Dublin DUBLIN PLANNING
P. O. Box 2340
Dublin, CA 94568
Attention: Mr. Larry Tong
Re: Hydro Relicensing
Dear Mr. Tong:
At the June 14 City Council meetiing, the City Council requested additional information
on the relicensing of certain PGa"ndE hydroelectric plants. Following are our responses
to the questions raised as I understand them.
Question 1 - What is the purpose and intent of NCPA?
Answer 1 - NCPA is a joint power organization formed under the -laws of the State of
California. It consists of municipally-owned utilities, who through the
joint power agency vehicle, are attempting to obtain, among other things,
sources of generation for their own utility distribution systems.
Question 2 - Do we have a copy available of the 1980 FERC decision?
Answer 2 - Attached is a copy of the decision consisting of two parts: Opinion
No 88 and Opinion No. 88-A. Pages 59-62 of Opinion No. 88 are particularly
interesting, as they speak of some considerations FERC will make in its
evaluation of the "public interest".
Question 3 - How much excess power do they anticipate receiving that they will be able
to sell to the five southern California cities?
Answer 3 - In both the Mokelumne and the Rock Creek/Cresta application, representa-
tions have been made that power will go to Southern California. However,
only in the Rock Creek/Cresta application have the Southern Cities applied
as a joint applicant. Based on Exhibit B of that application, the
parties have agreed that the Southern Cities will get 35.31 percent of
the power divided as follows:
Anaheim - 20.30%
Azusa - 1.95%
Banning - 0.69%
Colton - 1.20%
Riverside- 11.17%
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City of Dublin
Attention: Mr. Larry Tong -2- July 29, 1982
As previously indicated to your City Council, this issue is of concern to us as it
impacts all our rate payers and customers. The loss of this portion of our lowest
cost electricity source will have to be replaced at a higher cost utilizing more
expensive sources. The higher cost of electricity will then be reflected in the
rates our customers (including the City of Dublin) must pay.
I will plan to be in attendance at your next Council meeting to answer any questions
that may arise.
Sincerely,
L. R. Holveck
Livermore Manager
LRH:11
Attachment
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
OPINION NO. 88
t
City of Bountiful , Utah )
Utah Power and Light Company ) Docket No . EL78-43
City of Santa Clara, California )
; Pacific Gas and Electric Company )
1
OPINION AND ORDER DECLARING
( MUNICIPAL PREFERENCE APPLICABLE
'( TO HYDRO-ELECTRIC RELICENSINGS
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Issued: June 27, 1980
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1 Docket No. EL78-43 - 57 -
Congress intended that a State' s or municipality' s
entitlement to preference should depend upon an evaluation by
the Commission of public interest factors reflected in the
competing p g plans before the Commission. As Congressmen Doremus
and Raker said on the floor of the House (Dove, at 623-5) :
MR. DOREMUS. You have got to leave the
discretion to determine whether the plans are
adequate to serve the public interest with
somebody, and necessarily it must be with the
commission created in the bill.
MR. RAKER. That being the case they
should be allowed that discretion, and not be
directed absolutely to grant the application.
MR. DOREMUS. They would still have the
discretion to determine whether the plans
submitted by the State or municipality were
adapted to conserve [sic. ] the public interests.
As discussed in previous sections, Congress envisioned
probable private development of water power resources with
ultimate public ownership possible. 55/ The FWPA was enacted
at a time when private interests were prepared to proceed to
;t a much greater extent than the federal, State and local .
governments were, with financing and building hydropower
projects. Congress concluded at the time the FWPA was
passed that the public interest would best be served by
rapid development of water power resources -- by private
or public entities -- leaving the possibility of transfer
of the hydro-facilities from private to public ownership at a
later date should the Commission determine that the public
interest could equally well be served by the public entities
assuming ownership and the right to operate the facilities .
•
As early as 1908, President Roosevelt' s landmark Rainy
River veto message sought water power legislation that would
leave "to future generations the power or authority to renew
or extend the concession [license] in accordance with the
conditions which may prevail at the time. " And Merrill ' s memo-
randum of October 31, 1917 , called for statutory "provisions
that will leave the way open for future public ownership and
operation if the experience of the next fifty years shall
have established the wisdom of such a policy. "
55/ Senate Report No. 180, 66th Congress, lst Session,
quoted on page 27.
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Docket No. EL78-43 - 58 -
Merrill ' s proposal for a purely discretionary municipal
preference 56/ was modified in its movement through Congress
into a preference that is mandatory should the Commission,
in the exercise of its judgment, determine, in the words of
Congressman Doremus, that "the plans are adequate to serve
the public interest" . (Emphasis added. )
Congress in 1920 was focusing on our nation' s water power •
sites and equated the "public interest" with the prompt develop-
ment of those sites . But Congress provided for the possibility
of eventual public ownership even where the private interests
undertook the responsibility for that development. This possi-
bility was made dependent upon an evaluation by the Commission,
at the time a license expires , of how the public interest would
best be served by choosing among the various alternatives .
In sum, the Commission finds and hereby declares that the
statutory scheme of the FP is one in which a municipal or
State applicant competing for a successor license against a
citizen or corporate applicant is entitled by Section 7(a) to
a preference if the Commission finds that the plans of the State
or municipality are, in the words of Section 7 (a) ,
equally well adapted, or shall within a
reasonable time to be fixed by the Commission
be made equally well adapted, to conserve and
utilize in the public interest the water •
resources of the region. . . .
Thus , in determining which competing applicant will receive
a successor license, it is important to look not only at
the "tie-breaker rule" , but also to how the Commission
will determine whether the plans are "equally well adapted" .
Put differently, whether there is a tie to be broken by
municipal preference will depend upon the factors that
the Commission takes into account to determine how well
each of the competing plans would conserve and utilize
the water resources of the region in the public interest.
The Commission does not have before it a record upon
which a definitive statement can be made as to what showings
should and must be made by the applicants in seeking to demon-
strate how their plans compare. However, the record in this
proceeding, the language of the statute itself, and the pertinent
legislative history provide a basis for some generalizations
about the public interest determination.
56/ See the first paragraph of Section 7 of the Administratio
Bill , quoted on page 20 . n
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Docket No. EL78-43 — 59 —
First, we believe the statute contemplates a broad assess-
ment, evaluating both physical and nonphysical considerations
when the public interest is assessed. Congress did not direct
((I the Commission, in choosing among applicants, to limit its
focus merely to plans in the physical or technical sense 57/
. to make beneficial public use of our nation' s waterways.
A11 licensed water power projects are required by Section
I10 (a) 58/ to be best adapted physically and technically
to utilize our nation' s water resources for the benefit
of the public and, to the extent that they also conserve
those resources, to do so for the benefit of the public.
We are specifically authorized by Section 10(a) to require
modifications to secure plans (in the physical or technical
sense) that will be best adapted to a comprehensive plan
( in the nonphysical as well as physical sense) for beneficial
public uses . Thus, a project must be "best adapted" , physi-
cally and technically, to beneficial public uses no matter
t which applicant we select.
During the oral argument, the Commission staff counsel
suggested (Tr. 146 ) that our assessment of the "public interest"
should be as broad as the commerce clause of the Constitution,
and the general counsel of the American Public Power Association
[ expressed his agreement (Tr. 187 ) . Without adopting that particu
interpretation here, we agree with the characterization expressed
by the attorney for Utah Power and Light Company (Tr. 190) that
our decision ought to take into account "the public interest
I in its broadest sense. "
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57/ See Footnote 53 . .
1. 58/ Section 10 provides, in pertinent part,
All licenses issued under this Part shall be on the
,[ following conditions:
(a) That the project adopted, including the
maps, plans, and specifications, shall be such as
I in the judgment of the Commission will be best
adapted to a comprehensive plan for improving or
I developing a waterway or waterways for the use or
[ benefit of interstate or foreign commence, for the
improvement and utilization of water power develop-
ment, and for other beneficial public uses, including
C recreational purposes; and if necessary in order to
secure such plan the Commission shall have the authority
to require the modification of any project and of the
plans and specifications of the project works before
approval . Emphasis added.]
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Docket No. EL78-43 — 60 —
To evaluate the public benefits that would attend a
relicensing, necessitates consideration of physical and tech-
nical factors as well as consideration of broader social
impacts such as economic costs and benefits, the distribution
of the benefits of hydropower and similar pertinent potential
impacts. All of these would seem to play a role in the
Commission' s determination as to whether plans are equally
well adapted.
Second, we believe that Congress did not intend the •
"public interest" to be static or frozen as of 1920. To
the contrary, the legislative history of the FWPA shows
that one of the reasons why Congress rejected perpetual
licenses was to reserve for future generations the decisions
as to which segments of the public would receive the benefits
of our nation' s water power resources . We believe that the
"public interest" will vary with the circumstances and needs
of the time period in which it is considered.
Third, public interest implications of competition in
relicensing decisions can be even more complex and complicated
than for initial licenses. When issuing initial licenses for
unconstructed projects, we are permitting the utilization
of then unused or underused water resources. Our choice
between public and private applicants for initial licenses
for unconstructed projects results in allocating the benefits
of relatively inexpensive renewable sources of energy to
either a segment of the public associated with the public
applicant, or the private applicant or a segment of the public
associated with it, none of whom are then receiving those
benefits. But our choice between public and private applicants
for successor licenses may result in reallocating the benefits
of water power resources then in use from the private applicant,
or a segment of the public associated with it,
to
entity and the segment of the public associated withetheblic
public entity. Moreover, transfer itself may have some effects,
possibly disruptive, which are not present with initial licenses .
Fourth, our relicensing decisions may have important
implications for the concentration and distribution of the
benefits of hydropower, and it is important to keep in mind
that FWPA was an outgrowth of a widespread belief -- and
an associated political movement -- that had a basic tenet
that the benefits of hydropower should be spread widely.
A basic goal of the FPA is to assure that hydropower benefits
are enjoyed-by as -much of the public as possible.
p
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Docket No . EL78-43 - 61 -
As previously noted, it will be necessary to develop the
1 information on which to decide whether Bountiful, Santa Clara
f and other municipalities are entitled to a preference, in .
competing for a successor license, and it is important that
((, the Commission be provided with an adequate basis upon which
( to examine broad public interest considerations. •
1 Parties are encouraged to address such additional areas
of consideration as they contend are pertinent to our selection
of licensees for particular successor licenses . We emphasize,
in this connection, that the "public interest" standard of
[ Section 7 (a) has never been litigated in court and has been
addressed in only a few Commission decisions. 59/ It would,
therefore, be premature to address the applicability, relevancy
and materiality of particular areas of consideration. We would
expect such factors to vary from case to case.
{ In the final analysis, it is left to the Commission to
determine the "public interest" in the light of the facts and
contentions in each particular application. The processing
and consideration of the pending applications in which States
t and municipalities, and citizens or corporations, have
requested successor licenses for the same water resources
should go forward in the light of this declaratory order.
59/ Although it has never been disputed that the municipal
preference is applicable to initial licensings, and
although the Commission has been issuing initial water
power licenses for almost 60 years, there are no court
decisions and few Commission decisions on the "public
interest" standard of Section 7 (a) . In Holyoke Water
Power Co. , et al. , Project Nos. 2004 and 2014, 8 FPC
717371-51.9) , wherein it was said, at 487, that the
f preference under Section 7 (a) "is not an absolute one" ,
a municipality that was unable and unwilling to meet its
competitor' s plans was denied an initial license. And
in Pacific Northwest Power Company, Project Nos. 2243
and 2273 , 31 FPC 247 (1964) ; affirmed sub nom Washington
Public Power Supply System v. Federal Power Commission,
358 F.2d 840 (D.C. Cir. 1966) ; reversed on other grounds
sub nom Udall v. Federal Power Commission, 387 U.S. 428
196777 a Commission majority indicated by way of dictum,
at 270, that after a hearing
. . .we would then determine if preference accrues to the
[municipality] , and the effect of such a preference, if
any, in the light of all the other factors relevant to a
disposition of these [competing licensing] applications . . . .
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Docket No. EL78-43 - 62 - •I
Finally, the Commission' s Opinion Nos . 36 and 36A (Escondido
Mutual Water Company, et al . , Project No. 176) , involving a
successor license and discussed briefly in Footnote 10, are
subject to a pending appeal .
By the Commission.
( SEAL )
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4;ftarTAe.V.14"..4( .1
Kenneth F. Plumb , I
Secretary.
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Sloe
RESOLUTION NO. •
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
A RESOLUTION IN SUPPORT OF RELICENSING
OF HYDROELECTRIC PROJECTS TO THE
PACIFIC GAS AND ELECTRIC COMPANY
WHEREAS, the Pacific Gas and Electric Company has. over the past 100 years
developed a safe, reliable, and economic system of hydroelectric generating
facilities for the benefit of its customers living throughout central and northern
California; and,
WHEREAS, PG&E's 3.4 million customers represent an area population of
over 9 million people who now enjoy the benefits offthis power PG&E generates
without the use of fossil fuels; and,
WHEREAS, certain of these hydroelectric facilities, consisting of projects
licensed by the Federal Power Commission, now known as the Federal Energy
Regulatory Commission (FERC) are subject to consideration for relicense by
FERC; and,
WHEREAS, efforts are being made by certain municipal entities to secure
for themselves six PG&E powerhouses on the Mokelumne and Feather Rivers through
application to FERC; efforts which, if successful , would transfer ownership and
operation of these hydroelectric facilities away from PG&E and divert the low
cost power away from PG&E's customers and into their hands ; and,
WHEREAS, it would be directly contrary to the best interests of the citizens of
Dublin and to the best interests of the millions of PG&E customers throughout
northern and central California whose rates have supported PG&E's ownership
and operation of these facilities , if the Rock Creek and Cresta plants on the
Feather River (Project No. 1922) and the Mokelumne River Project (Project No. 137)
were cut out of the hydroelectric generating system PG&E uses to serve them; and,
WHEREAS, if these projects were to be transferred to the municipalities seeking
them, PG&E's customers will be forced to pay, every year, increased costs for
electricity from oil or gas fired generating facilities in amounts up to $100,000,000;
and,
WHEREAS, the continued ownership, operation and improvement of its hydro-
electric generating facilities by PG&E is essential to the social and economic
well being of the people of northern and central California; and,
WHEREAS, retention of these projects by PG&E is the only course providing
for the fullest improvement and utilization of these resoureces in the public
interest,
NOW, THEREFORE, BE IT RESOLVED that the City of Dublin hereby urges and
requests that the Federal Energy Regulatory Commission promptly grant Pacific
Gas and Electric Company's relicensing applications and to reject the applica-
tions of the municipalities and associations seeking to take these projects
away from PG&E and its customers,
BE IT FURTHER RESOLVED, that copies of this resolution be provided to:
Federal Energy Regulatory Commission
U. S. Senators
(Appropriate U. S. Congressmen)
(Appropriate State Senators)
(Appropriate State Assemblymen)
California Public Utility Commission
Pacific Gas and Electric Company
PASSED, APPROVED AND ADOPTED, this day of August, 1982, by the following
vote:
AYES: COUNCILMEMBERS
NOES:
ABSENT:
Mayor
ATTEST:
City Clerk