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Sec. 23.136. Authority of the Department of Water and Power to Sell Electric Energy and Related Products and Services, Water Related Products and Services, Utility Products and Services and Information Technology Products and Services to Persons or Entities Inside or Outside the City of Los Angeles and Inside or Outside the State of California.
(1) The City Council of the City of Los Angeles expressly finds that it is in the best interest of the City of Los Angeles that the Department of Water and Power be authorized to engage in other business enterprises to sell and deliver expanded services through Department of Water and Power resources or through those resources that may exist through other marketing and sales channels such as Brokers, Marketers or strategic alliances which the Department of Water and Power may develop from time to time. It is further found that expanded products and services as set forth in this section will provide benefits to the City of Los Angeles and will not interfere with the role of the Department of Water and Power as a provider of water and power to the City’s inhabitants.
(2) Notwithstanding any other ordinance, rule or law of the City of Los Angeles to the contrary and under the authority of Charter Section 680, the Department of Water and Power is authorized to engage in the following business enterprises whether inside or outside the City of Los Angeles or the State of California:
(a) Sell electric energy, electric capacity and related products and services including but not limited to products that generate, store, deliver, use, conserve, affect, monitor, manage or measure energy and services related to the design, procurement, installation, use, operation, or maintenance of energy or energy related products to any person or entity, on a wholesale, retail or exchange basis.
(b) Provide utility products and services, including, but not limited to services for the maintenance, management, or administration of electric energy, equipment or systems associated with the production, transmission, distribution or use of electricity.
(c) Arrange, bundle, finance, facilitate or market products and services of other providers whose products and services are related to energy.
(d) Buy, sell, or otherwise trade natural gas on a wholesale basis.
(e) Provide information technology, products and services including but not limited to fiber optic leases, network services and communications services related to energy and water services in accordance with City Council policies.
(3) The Department of Water and Power is further authorized to sell water related products and services pertaining to water delivery, water quality, water storage, metering, water audits and the design, procurement, installation, operation, and maintenance of water related equipment and systems to any person or entity within its retail service areas.
(4) Notwithstanding any other provision of this section, the Department of Water and Power is not authorized to provide electric services or any other services which may be provided by another utility or direct competitor to any person or entity whether situated inside or outside the City of Los Angeles unless and until the City Council has authorized direct transactions between electricity suppliers and end use customers as provided by Section 680(b) of the City Charter.
SECTION HISTORY
Added by Ord. No. 171,634, Eff. 7-27-97.
Amended by: Ord. No. 173,236, Eff. 6-19-00, Oper. 7-1-00.
(a) Findings and Requirements.
(1) The California Electric Utility Industry has experienced and is continuing to experience a dramatic unprecedented restructuring which entreats all electric utilities both publicly owned and privately owned to operate efficiently and competitively.
(2) In order to meet the demands of this new direct competition for power supply which exists in the California electric utility industry, and expeditiously take advantage of opportunities for competitive sales which are presented to the Department of Water and Power, the Department must be reposed with contract authority which is subject to certain criteria which can be exercised quickly and without undue administrative encumbrances.
(3) The Los Angeles City Charter reposes in the Mayor and the City of Los Angeles, with the concurrence of the Board of Water and Power Commissioners wide authority to set, by way of ordinance, the contract authority of the General Manager of the Department of Water and Power.
(4) The City Council and the Mayor desire to authorize the Board of Water and Power Commissioners to delegate contract authority to the General Manager of the Department of Water and Power to enter into certain long term contracts with Department customers so long as the Department’s Chief Accounting Employee concludes that the contracts satisfy the conditions of this Section 23.137. These contracts may bind the Department for a minimum of 7 and a maximum of 10 years in duration. The contracts entered into pursuant to this authorization must exceed certain costs to the Department of providing the arrangements embraced in such contracts; and the revenues from the contracts must meet the Section 23.137(b) specified requirements.
(5) The Los Angeles City Council and the Mayor further desire to authorize the Board of Water and Power Commissioners to delegate contract authority to the General Manager of the Department of Water and Power to enter into any contract to invest in cost effective energy efficiency projects for customers, including any contract to finance such a project with Department funds so long as the Department’s Chief Accounting Employee concludes that the contracts satisfy the conditions of this Section 23.137. These contracts may be granted only if that customer has signed a long term contract for generation with
(i) the Department;
(ii) the Department recovers the principal amount of payments it makes plus accrued interest over a period not to exceed seven years from the date of execution of the long term contract or the term of the contract less 1 year, whichever is shorter;
(iii) the total investment does not exceed one year of the total contract revenues from that customer;
(iv) the interest rates to be charged will be at or above the Department of Water and Power’s cost of funds;
(v) sufficient tangible collateral, credit ratings and/or approved bank letters of credit shall be provided by the customer to fully protect the amount of the DWP investment; and
(vi) the Department shall not use funds which are planned for debt reduction.
This authorization does not limit the existing authority of the Board of Water and Power Commissioners and the General Manager to continue energy efficiency programs subject to Commission and Council approval.
(6) The Department of Water and Power’s Chief Accounting Employee must certify that each contract conforms with the provisions of this Ordinance. Each contract will be reviewed, on a quarterly basis, by the Chief Accounting Employee and an independent auditing firm approved by the City Council to assure the contract complies with the authority granted to the General Manager of the Department of Water and Power.
(7) Each contract as provided in this section shall be subject to quarterly reports from the General Manager of the Department of Water and Power to the Board of Water and Power Commissioners and to the City Council and the Mayor. The report shall identify and enumerate all contracts entered into pursuant to the authorization, provide the essential provisions of the contracts, certify that the conditions of this contract authority have been fully complied with and evaluate the financial impact on the DWP Action Plan of any discounts which have been provided under the terms of this ordinance.
(b) Delegation. Notwithstanding any ordinance, rule or law of the City of Los Angeles to the contrary and under the authority of Charter Sections 373 and 604(c), the Board of Water and Power Commissioners is hereby authorized to delegate to the General Manager of the Department of Water and Power, without further authorization or approval, the power and authority to enter into long term contracts with Department of Water and Power customers, subject to the following limitations:
(1) The Chief Accounting Employee of the Department must first certify that the proposed contract satisfies all the requirements of this Section 23.137.
(2) The term of any such contract shall be a minimum of seven years and shall not exceed ten years.
(3) Prior to completing the negotiation of any long term contracts, the Department of Water and Power shall complete or contract to complete, and keep up-to-date a cost of service study (“Study”) which shall include, but not be limited to, generation, transmission and distribution costs for the Department’s customers. The Study shall be reviewed and concurred in by the independent auditor described in Section 23.139 and the Department’s Chief Accounting Employee. Any disagreement regarding the Study among the independent auditor, the Department’s Chief Accounting Employee, and the General Manager shall be resolved by the Board of Water and Power Commissioners.
(4) The Department of Water and Power shall collect from each customer the revenues necessary to cover the marginal costs of generation, the debt service applicable to that customer, and such additional margins as can be obtained competitively.
(5) Prior to the start of negotiations with a given customer, the DWP’s Chief Accounting Employee shall furnish to the General Manager complete information on the cost to serve that customer and negotiations shall not be completed until the Study specified in Section 23.137(b)(3) is completed.
(6) The Department of Water and Power shall collect transmission and distribution revenues based on the costs identified in the Study.
(7) Notwithstanding the cost of recovery requirements described above in Sections 23.137(b)(3), (4), (5) and (6), until the Department’s market is open to competition, the total rate for each customer only can be reduced below the Electric Rate Ordinance rates in effect as of October 1, 1997 by a maximum of 5% (actual discount to be calculated at 1/2% for each year of a long-term contract commitment). The contract shall provide that after the Department’s market is open to competition the customer shall pay to the Department the California Power Exchange (Cal PX) rate for generation, the applicable Department Electric Rate Ordinance rate for transmission and distribution, and all other standard charges applicable for the balance of the contract term. In the event that the Cal PX rate is no longer accepted by Department as the regional pricing index for the market rate of generation or in the event that the Cal PX ceases to exist, the Department is authorized to replace the Cal PX rate with the average rate of the top four western power trading hubs.
(8) If the Los Angeles City Council modifies the electric rate provisions in the Electric Rate Ordinance No. 168436, in effect as of October 1, 1997, prior to opening the Department’s market to competition, then the Customer may choose the lower of the rate established in Subsection 23.137(b)(7) or the rate provisions applicable to the Customer under the modified Electric Rate Ordinance. If the electric rate provisions set forth in a modified Electric Rate Ordinance are higher than the applicable rates set forth in the Electric Rate Ordinance in effect as of October 1, 1997, then the Customer will pay the higher applicable rate discounted by the same percentage applied to the contract.
(9) The Department General Manager and the Chief Accounting Employee shall certify that the conditions described in this ordinance have been met before executing any contract with the signature of both individuals. The Chief Accounting Employee and independent auditor described in Section 23.139 shall then verify, on at least a quarterly basis, whether the conditions described in this Section have been met.
SECTION HISTORY
Added by Ord. No. 171,969, Eff. 5-9-98.
Amended by: Subsecs. (f), (g), and adding (h), Ord. No. 172,551, Eff. 5-20-99; Ord. No. 173,236, Eff. 6-19-00, Oper. 7-1-00..
The Board of Water and Power Commissioners under the authority of Charter Sections 373 and 604(c) is authorized to delegate to the General Manager of the Department of Water and Power the authority and the power to enter into contracts with Department of Water and Power customers for energy efficiency projects, subject to the following limitations:
(a) The Chief Accounting Employee of the Department must first certify that the proposed contract satisfies all the requirements of this Section 23.138.
(b) Only customers that have signed long term contracts with the Department for generation service pursuant to the provisions of Section 23.137 shall be eligible for the abovementioned energy efficiency project contracts.
(c) The funds provided by the Department of Water and Power to finance these customer energy efficiency projects pursuant to the long term contracts, along with the applicable interest payments which must be at or above the Department’s cost of funds, shall be fully recovered by the Department within a period not to exceed 7 years from the date of execution of the long term contract specified in Section 23.137, or within the term of the long term contract less 1 year, whichever is shorter.
(d) The funds provided by the Department of Water and Power to finance a customer energy efficiency project shall not exceed one year’s worth of the long term contract revenues to be derived by the DWP from that customer and shall not be from funds which are planned for debt reduction.
(e) The Department’s Chief Accounting Employee and independent auditor described in Section 23.139 shall determine, on at least a quarterly basis, whether the conditions described in this Section have been met. These quarterly audits shall include a description of the number and type of energy efficiency contracts entered into and an analysis and summary of delinquency and default rates by customers.
(f) The Department’s General Manager and the Department’s Chief Accounting Employee shall conduct credit checks on customers seeking DWP energy efficiency investments and develop necessary safeguards to insure repayment.
SECTION HISTORY
Added by Ord. No. 171,969, Eff. 5-9-98.
Amended by: Ord. No. 173,236, Eff. 6-19-00, Oper. 7-1-00.
SECTION HISTORY
Added by Ord. No. 171,969, Eff. 5-9-98.
Amended by: Ord. No. 173,236, Eff. 6-19-00, Oper. 7-1-00.
(a) The General Manager of the Department of Water and Power, on a quarterly basis within 30 days of the end of any calendar quarter, shall provide to the Board of Water and Power Commissioners and to the Mayor and the Los Angeles City Council:
(1) a report summarizing the essential provisions of all new contracts entered into pursuant to the authority vested in the General Manager herein including an evaluation of the financial impact on the Department of Water and Power Action Plan dated November 13, 1997 of any rate discounts provided to customers under the terms of this ordinance, and
(2) copies of the reports of the independent auditor hired under the provisions of Section 23.139 herein who shall certify in their report that all conditions and limitations upon the General Manager’s contracting authority set forth in Section 23.137 and 23.138 of the Los Angeles City Administrative Code have been satisfied.
(b) If and when the City Council requires the Department of Water and Power to allow its customers to purchase generation from an alternative supplier, this ordinance will terminate.
SECTION HISTORY
Added by Ord. No. 171,969, Eff. 5-9-98.
Amended by: Ord. No. 173,236, Eff. 6-19-00, Oper. 7-1-00.
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