Loading...
HomeMy WebLinkAboutCC 6 RELIC HYDROELEC 11-21-833 RESOLUTION NO. 83-100 CONSENT CALENDAR NO. 6 !1-21-83 A R~SOLUTION OF THE CITY COUNCIL OF THE CITY OF llJSTIN, CALIFORNIA, IN SUPPORT OF RELICENSING OF HYDROELECTRIC PR(klECTS TO THE SOUlliERN CALIFORNIA EDISON COMPANY Hydroelectric projects, owned and operated by Southern California Edison Company (SCE), have utilized and developed our nation's resources, spreading the benefits of this low-cost electricity to millions of Califor- nians. These customers, Including the residents of the City of Tustin, now face the possibility, however, that the hydroelectric projects which they helped develop and pay for may be taken away by municipal agencies. From the standpoint of the broad public interest, it is preferable for as many people as possible to continue to share the benefits of inexpensive hydro- electric power. 10 11 12 13 14 15 16 17 18 19 2O 21 22 23 24 25 26 27 28 WHEREAS, SCE has over the past century developed a safe, reliable, and economic system of hydroelectric generating facilities dedicated to the use and benefit of more than three million customers representing an area population of over g million people; 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 reli- censing by FERC; and WHEREAS, certai~ municipal entities are endeavoring to secure for themselves two SCE hydroelectric powerplants, ,hich efforts, if successful, would result in the transfer of ownership and operation of these hydroelec- tric facilities from SCE, and would divert low cost power away from millions of central and southern California customers for the benefit of a few thou- sand served by the municipal entities; and WHEREAS, it would be directly contrary both to the best interest of the City of Tustin and to the best interest of the millions of other residential, commercial, agricultural,, and industrial customers served by SCE whose rates have supported the ownership and operation of these hydro- electric facilities, were FERC to remove from the hydroelectric generating systems of SCE the following facilities: SCE Rush Creek Project No. 138g, which is located near June Lake on the Eastern slope of the ,Sierra Nevada about sixty miles north of Bishop, California. SCE' Poole Project No. 1388 which is located on Lee Vtntng Creek also north of Bishop; and WHEREAS, if any of these projects were to be transferred to the municipal entities seeking them, the customers served by SCE would be forced to pay, every year, increased power costs for ~ectrtcity from oil or gas fired generating facilities; and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 WHEREAS, the continued ownership,' operation, and improvement of their hydroelectric generating facilities by SCE is essential to the public interest and to the social and economic well-being of central and southern California' consumers; and WHEREAS, retention of these p~oJects by their current owners is the only course consistent with the fullest improvement and utilization of these resources in the public interest; NOW, THEREFORE, BE IT RESOLVED, that the City of Tustln hereby urges and requests that the Federal Energy Regulatory Commission reltcense these hydroelectric facilities to SCE, and to reject the applications of the municipal agencies seeking to take the benefits of projects away from the millions of customers served by SCE; and BE IT FURTHER RESOLVED, that the City hereby requests that all hearings concerning hydroelectric relicensing applications by SeE be con- ducted in the service territory where the projects are located and where the public they were built to serve lives and works; and BE IT FURTHER RESOLVED, that the City supports proposed legisla- tion to amend the Federal Power Act so as to not allow municipal preference treatment during the relicensing of hydroelectric facilities. PASSED AND ADOPTED at a regular meeting of the City Council of the City of Tustin, California, on the 21st day of November, 1983. I~U~YOR CITY CLERK 28 JQ¥CE $ I~&tt.E¥ Southern Ca//forn/a Ed/~on Company October 18, 1983 Mr. Bill Huston City Manager city of Tustin 30'0 Centennial Way Tustin, CA 92680 Dear Bill: Subject: Relicensing of SCE Hydroelectric Facilities The Southern California Edison Company is currently faced with the potential loss of two of our existing hydroelectric facilities and ultimately all 21 of our hydro projects, including the showcase Big Creek project, are in jeopardy. As the result of a recent (1980) interpretation of the 1920 Federal Power Act-- the law which governs the licensing of hydroelectric projects ~- by the Federal Energy Regulatory Commission (F.'E.R.C.), the Southern California Edison Company is being threatened by the takeover of our Rush Creek and Poole hydroelectric projects by competing municipalities. Even though F.E.R.C. recently reversed itself on that decision, public power interests are appealing, and it is evident that only a clarification of the law by Congress can avert years of costly litigation. In the meantime, we are mounting a concerted informa- tion program to ensure the relicensing of the above projects to Edison and thereby continue to secure their very low cost and re!iabil%ty for the benefit of all our customers. The following highlights are interesting to note: While approximately 77% of the nation's 95 million electric customers are served by investor-owned utilities, only about 24% of the nation's hydroelectric projects are owned and operated by .private utilities. In Edison's territory, the loss of the Rush Creek and Poole projects whose licenses are currently being challenged would benefit approximately 3,000 municipal customers at the expense of Edison's nearly 3.3 million customers. ~. Bill. Huston - 2 - October 18, 1983 Of the F.E.R.C.'s 1980 decision, the California Public Utilities Cormnission has stated that it "may well result in an annual increase of many hundreds of millions of dollars in the rates charged to customers of privately owned utilities providing electric service within California." At this state of the licensing process, the support of the City of Tustin would be very beneficial. I have attached a sample resolution (currently under consideration by the Orange County Board of Super- visors) for consideration by the Tustin City Council. Please feel free to contact me if I can provide additional informa- tion on this subject. Sincerely, Joyce $. Bailey JSB:ms ATtach RELJCENSING OF HYDROELECTRIC FACILmES QUESTIONS AND ANSWERS SOUTHERN CAUFORNIA EDISON How long has SouthemCalifomla Edison been in businee4andwhouses its hydro- elect~cpower?. Southern California Edison Company (SCE) has evolved from a handful of small, scattered hydroelectric and steam-power systems that ushered the Age of Electricity into the sparsely settled region between Santa Barbara and Riverside in the mid 1880s. Today, Edison provides electric service in a 50,O00-square-mile area of Central and Southern California that includes some 800 cities and communities with a population of more than nine million people. Why is Edison concemed about relicerming? Edison currently owns and operates 21 hydroelectric pro~ects that provide reliable and efficient service to its customers. However, Edison.s customers are facing the possibility that the hydroelectric projects that they helped develop and pay for may be relicensed to municipal entities. For example, should Edison lose its Rush Creek and Lee Vining Projects, originally licensed in 1936, the number of customers benefiting would be reduced from 3.3 million to about 3,000. Falling water, one of our country's most economic and dependable energy resources, is Southern California Edison's oldest generating resource. And, our utility plans to add 520 megawatts of hydroelectric generation during the next 10 years as the backbone of our program to accelerate the development of renewable and alternative energy resources. Is this just an Edison problem? How does it affect anyone else? Edison and other investor-owned utilities serve more than 72 million, or approx- imately 77 percent of the more than 94 million electric customers who live in the United States, including almost 64 million residential customers. The other 8 mil- lion are commercial, industrial and agricultural customers. Some 734 hydro pro- jects are licensed to investor-owned utilities. Generation from all investor-owned hydro plants was approximately 81.5 million megawatt-hours in 1982. Who's trying to get your power and why? Various municipalities are claiming a preferred status under the Federal Power Act and are filing competing applications for many of the investor-owned utility hydro- electric projects for which relicensing proceedings are pending. There are now 11 of these licenses in this category, and an additional 157 will expire within the next 10 years. The legislative history underlying the relicensing issue involves the 1935 amend- ment by Congress of the Federal Water Power Act of 1920, which, as a result, became the Federal Power Act {16 U:S.C., Section 791, et. seq.). The 1920 law had created the Federal Power Commission, the forerunner of FERC, and authorized licenses for up to 50-year periods for the use of federal lands and waterways in the development of hydroelectric power. In June 1980, FERC interpreted the Ac~ to say that municipal preference, applicable in the initial licensing' of a project since 1920, also applied to the relicensing of exis~ng projects. FERC said it will give preferential treatment to municipal- ities in any relicensing case in which FERC finds that the public interest would be served equally well by a municipality. The Federal Power Act defines a "municipality" as a "city, county, irrigation dis- trict, drainage district, or other political subdivision or agency of a state competent under the laws thereof to carry on the business of developing, trans- mitting, utilizing or distributing power." A municipality also may be a public utility district. Why shouldn't the customers of these municipalities share in the benefits of hydro- electric power? The utilities that are currently seeking relicensing of their 11 hydro projects serve more than 8.4 million customers while the competing municipalities serve 836,000 customers. If these projects are licensed to the municipalities, the utilities' 8.4 million customers will face an immediate increase in the average fuel cost of electricity of more than $170 million per year. This will be only the beginning for some of those customers. They also will face rising rates stemming from utility purchases of more expensive replacement power or the need to construct new generating plants. What is wrongwithutilitlea having to share these hydro facilities now thattheir licenses are expiring?. For 80 years, investor-owned utilities have developed, paid for, operated and maintained hydroelectric power plants that save their customers from fuel costs ranging from $1 billion for coal as a replacement fuel to $3.5 biliion per year for oil as a replacement fuel. Transferring all existing licenses from the utilities to municipalities that claim a preference would adversely affect many millions of people by adding significantly to the utility customers' electric bills. By the time a utility seeks to relicense its hydroelectric project, important things have happened. The utility has taken the risks of development. Millions of dollars have been paid by the utility, its investors and its customers to 6onstruct the project. Additional costs have been incurred for operation and maintenance during the term of the license. How much cheaper is hydro than oil and natural gas? Hydroelectric generation has zero fuel cost per kilowatt-hour of generation. In contrast, the current fuel cost to produce a kilowatt-hour of electricity with oil is 7.5 cents; for natural gas, 5.5 cents; and coal, slightly more than I cent. Exactly how muchwould Edison's rates increase if its hydro were lost?. This is very difficult to predict because it is not known just how many plants Edison would, in fact, lose. Possibly the best answer was provided by the California Public Utilities Commission when they stated, "FERC's 'preference' deci- sion and the relicensing contests it has spawned may well result in an annual in- crease of many hundreds of millions of dollars in the rates charged the customers of privately owned utilities providing service within California." How many Edison facilities are currently subject to municipal takeover? In Southern California Edison's service territory,' the June Lake Public Utility District has filed a competing application to obtain the license for Edison's'Rush Creek Hydroelectric {Project No. 1389) in Mono County, near June Lake on the eastern slope of the Sierra Nevada, about 60 mil~s north of Bishop. Also, the City of Vernon, near Los Angeles, has filed a competing application for the license of the Lee 'Vining Creek Project's Poole Powerhouse {Project No. 1388), which is 22 miles north of the Rush Creek Powerhouse. Four other Edison plants with a .combined capacity of more than 70 megawatts Willl be exposed to the relicensing process by 1993, and, eventually, licenses to operate all 21 of Edison's hydro projects, including Big Creek, may be threatened. If FERC ruled in favor of a local municipal utility or PUD, wouldn't Edison be ade- quately compensated at fair market value for its Io~aes? Wouldn't this Include severance damages? Edison may not be compensated at fair market value for its losses if FERC rules in favor of a municipality. On April 26, 1983, FERC Administrative Law Judge Jori G. Lotis found that a small municipality, Clark-Cowlitz Joint Operating Agency (jOA), could take over Pacific Power and Light (Pr&L) Company's Merwin Project in 'Washington. Judge Lotis required JOA to pay the utility only $9.4 million for the project, PP&L's original investment less depreciation. PP&L sought at least $832 million, which it said it would need to construct a coal-fired plant to generate replacement electricity. This decision will be reviewed by the full FERC Commission. If a municipalutilitytakes over aPr irate hydro plant, whatwiml happen tothetax base thatthe local govemmentpresently enjoys? If the hydro plant is located inside the municipality's boundaries, the hydro plant would become exempt from taxation. If the hydro plant is located outside the municipality's boundaries, the land and improvements would remain subject to taxation. Improvements later constructed by the municipality are exempt from tax if they do not replace existing taxable improvements. What can Edison customers do to help? Write a letter addressed to Kenneth F. Plumb; Federal Energy Regulator~Y Commission Secretary; 825 N. Capitol St., N.E.; Washington, DC 20426. Copies should be sent to Robert Dietch, Vice President, Southern California Edison Company, 2244 Walnut Grove Avenue, Rosemead, CA 91770. If you have any unanswered questions about the hydro relicensing issue, please call the Edison Hotline at (213) 572-2341. SCE/September 1983