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