Annual Board Meeting Michael Garvey Chair, ABAG POWER Executive Committee October 19, 2000

Agenda

Structure of ABAG POWER

Executive Committee for FY 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

ABAG POWER ELECTRIC 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’s Directions 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 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, – Attaching surcharge to customers’ bills.

Program Benefits FY Energy savings – Calpine contract – Renewable rebates Program Stability w/ fixed-price rate Renewable Energy Position members for fully deregulated market

Annual Board Meeting Eugene Leong President, 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 municipal associations “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 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 examples represent a precursor of what lies ahead for California’s economy over the next 30 months “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 California’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)

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 Chan October 19, 2000

Annual Board Meeting Natural Gas Program Dave Finigan October 19, 2000

ABAG POWER GAS 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 In operation for 4 years Total average savings of 6.5% for four years.

Gas Program Contractors

Natural Gas Program Savings % % % % Four-year average: 6.5% Four-year savings:$501,084

Natural Gas Program FY Program Costs

Natural Gas Program FY and FY Gas Consumption FY ,563,076 Therms FY ,369,849 Therms Difference 193,227 Therms (3%)

Natural Gas Program Interest 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 Program FY Forecast Significantly Higher Gas Commodity Prices Resulting from Increased Demand and Higher Oil Prices

Natural Gas Program Year 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

Annual Board Meeting Electric Program Jerry Lahr October 19, 2000

Electric Aggregation Program 56 member agencies, representing 5,300 meters $32.5 million in total FY program costs Aggregated annual load of 358,000 megawatt hours with a peak demand of 60 megawatts. 2.5 years in operation

ABAG POWER ELECTRIC 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

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 Program Year

Program Expenses: FY

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 (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 Savings 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

Electricity Cost Breakdown 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-peak 30 MW off-peak – Payment Terms: 20 days in arrears Additional Energy requirements to be purchased through the PX.

Program Benefits FY 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) – Loans for Energy Efficiency Projects – CEC provides loans for installing energy saving projects. – (916) –

PG&E Energy Efficiency Programs SmarterEnergy – /energy/smart/ My Business / Energy Efficiency –

Summary Points End of price freeze? Teldata continuing meter replacements Continue to receive renewable energy credits through Dec New fixed-price energy contract

Annual Board Meeting Michael Garvey Chair, ABAG POWER Executive Committee October 19, 2000

Proposed Executive Committee for FY 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