Agenda 03/12/2002 - Laserfiche WebLink

Home Browse Search

Enclosure Martinsville A CITY WITHOUT LIMITS Date: March 1, 2002 To: Earl B. Reynolds, Jr., City Manager From: John H. Dyches, Director of Water Resources Sub: AEP Electricity Rates The Water Resources Department purchases electricity from AEP for three raw water pumping stations located outside the City. For many years these facilities have been charged electricity at the "Public Authority" (PA) rate, meaning that we paid an established rate for all KWH's used but did not pay a demand charge. While the Beaver Creek (Reservoir) PS ran daily, the Leatherwood Creek PS and Little Beaver Creek PS operated infrequently, so the PA rate worked well with these facilities. However, as of Julyl, 2002, the PA rate will disappear and these facilities will be subject to regular tariff schedules that include demand charges. This should not .significantly affect the Beaver Creek PS that operates with favorable demand characteristics, but the change may be disastrous for the other two, depending on the pattern of usage. Robert Harris, Manager of Business and Technical Services for the City's Electric Department, has considered alternatives and provided rate comparison representative of the Beaver Creek PS as detailed in the attached memo. We are still communicating with AEP to better determine the eventual impact on the other two pUmping facilities. Note that a number of smaller services will be affected by this change, including two for Blue Ridge Library locations. We cannot prevent the elimination of the PA rate. Each locality, however, has supposedly been given three options regarding their accounts after July 1, 2002. In reality, Robert and I agree, after analyzing docUments and conversing with attorneys representing VML plus AEP personnel, there is really only one option, which is identified as Option (3) in the enclosed docUments. While this will not preserve the rates we have enjoyed in the past, it will provide some protection against nm-away fuel adjustments through June 30, 2007. I recommend that Option (3) be chosen, and Robert supports the same in his attached memo. To exercise this option, Council needs to approve the attached resolution as prepared by legal council for VML. This document is ridiculously lengthy and legalistic, but is the form,provided to other localities so is being used for consistency. The resolution must be acted upon at the regular March 12 Council Meeting so a response can be conveyed through VML legal council to AEP before the March 20 deadline. Cc: Wade Bartlett, Directorate of Finance/General Services 55 We~i Church %II'cci P.(). B{>x l112 Martinsvillc. VA 24114-1112 540-656-5000 www.ci.mal'tii~svillc.vzl.us