REPORT TO COUNCIL
SUBJECT
Title
Action on Resolutions of the City of Santa Clara Amending Rate Schedules for Electric Service for All Classes of Customers Effective April 1, 2019 and Authorizing the City Manager to Amend City Rate Schedules for the Electric Utility Service for changes of the State Surcharge
Report
BACKGROUND
The City Council adopted a Resolution (No.18-8620) at its regularly scheduled meeting on November 13, 2018 to amend City rate schedules for Electric Utility Service to increase Electric rates and charges in each rate schedule by two percent (2.0%) beginning January 1, 2019 (Bill Cycle 680). At its regularly scheduled meeting on November 27, 2018, the City Council adopted a Resolution (No. 18-8629) Establishing New Electric Rate Schedules for Large Customers.
The State Surcharge is a non-bypassable charge required by the Energy Resources Surcharge Law (California Revenue & Taxation Code section 40001 et seq.). In California, consumed electrical energy purchased from an electrical utility on and after January 1, 1975 is subject to the surcharge. Every electric utility in California, including Silicon Valley Power (SVP), making energy sales to consumers must collect and remit to the state the amount of surcharge applicable to its consumers.
The California Energy Commission (CEC) determines the State Surcharge Rate in each November for the next calendar year, and under no circumstances may the rate exceed $0.0003 per kWh.
DISCUSSION
In late December 2018, the City received a notice from the California Department of Tax and Fee Administration informing that the Electric Energy Surcharge Rate will increase from $0.00029 per kWh to $0.0003 per kWh, effective January 1 through December 31, 2019. The State Surcharge Rate, which might be subject to future changes in the law and is subject annually to changes as determined by the CEC, is equal to kWh consumed in each billing period times $0.0003 per kWh. SVP needs to amend all the electric rate schedules to account for this state surcharge increase to pass the correct amount to the State.
Since the effective date for the new Surcharge Rate is January 1, 2019 and the proposed effective date for the amended Rate Schedules for Electric Services is April 1, 2019, there will be three months of the difference in state surcharge the Electric Department will be responsible for, the estimated cost of which is less than $9,000.
Although the State Surcharge Rate had not changed in the previous five years until now, it was and is subject to future revisions by CEC. Therefore the staff is proposing to amend all the rate schedules to replace the fixed figure shown on the rate schedules with a link to SVP’s website showing the current State Surcharge Rate. Staff is also proposing to adopt a Resolution that authorizes the City Manager to amend all rates schedules, as needed, if the CEC, or any successor State agency, revises the State Surcharge Rate in the future This will allow SVP to avoid requiring future Council votes on a Resolution amending rate schedules only for the purpose of a new State Surcharge Rate.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
Since the effective date for the new Surcharge Rate is January 1, 2019 and the proposed effective date for the amended Rate Schedules for Electric Services is April 1, 2019, there will be three months of the difference in state surcharge the Electric Department will be responsible for, the estimated cost of which is less than $9,000. Going forward there will be no financial impact on SVP or City as the State Surcharge is a pass through charge and the rate schedules will adjust without requiring new Council approval.
COORDINATION
This Report was coordinated with the City Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Adopt a Resolution of the City of Santa Clara Amending Rate Schedules for Electric Service for all Classes of Customers Effective April 1, 2019; and
2. Adopt a Resolution of the City of Santa Clara Authorizing City Manager to amend City Rate Schedules for Electric Utility Service for changes of the State Surcharge.
Staff
Reviewed by: Manuel Pineda, Assistant City Manager/Interim Chief Electric Utility Officer
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Resolution Amending Rate Schedules for Electric Services for all Classes of Customers
2. Rate Schedules to be effective April 1, 2019
3. Resolution Authorizing City Manager to Amend Rate Schedules for State Surcharge