TITLE
Recommendation to authorize City Manager to enter into a California Direct Access Mitigation Consulting Agreement with Utility Resource Management Group, Inc., to provide utility cost containment information and materials relating to Direct Access electricity refunds and/or settlements. (Citywide)
DISCUSSION
On March 15, 2005, the City Council authorized the City Manager to enter into a Direct
Access Recovery Non-Disclosure Agreement with Utility Resource Management Group Inc.
(URM) to provide utility cost containment information and materials relating to Direct Access
electricity refunds and/or settlements (Council letter attached). Subsequent to this date,
URM has prepared an analysis of fees and charges related to Direct Access Services
provided through New West Energy (NWE). Further, URM has projected the potential
expenditures to the City of Long Beach to return to Southern California Edison from Direct
Access as a result of NWE's cancellation of our Direct Access agreement.
The proposed California Direct Access Mitigation Consulting Agreement will allow URM to
serve as the City's exclusive consultant in connection with recovery and/or mitigation of past
and future charges, including surcharges and overcharges related to the City's former
contracts with New West Energy. The term of the agreement shall continue until such time
that any claim brought by URM under the agreement is concluded, either by way of final
award, settlement or for any other reason.
Between September 1998 and January 2001 , the City of Long Beach contracted with New
West Energy for a discounted electric commodity supply for all 2,000 City electric accounts
in accordance with the Direct Access provisions of Assembly Bill 1890, which authorized the
restructuring of California's electric utilities.
In December 2000, New West Energy notified the City that, due to the volatility of the
electricity market and financial losses sustained in providing electricity to the City, it was
suspending Direct Access service to the City. The City returned to Southern California
Edison (SCE) as a bundled service customer in February 2001. On September 20, 2001,
the California Public Utilities Commission (CPUC) suspended Direct Access service
altogether. On May 7, 2003, the CPUC, in Decision 03-05-034, adopted rules permitting
Direct Access customers who had returned to bundled utility service the option to switch
back to Direct Access service.
URM approached Long Beach Energy Department (LBE) as a cost containment specialist.
URM proposed to supply LBE particular information relating to various strategies,
recommendations and analysis relating exclusively to Direct Access electricity refunds
and/or settlements that were potentially available to the City.
URM provides the services on a 50 percent shared savings basis. If LBE implements any
recommendations within 12 months of the date of the agreement and it results in savings,
refunds, credits, or settlements recovered in any manner, including but not limited to
settlements, negotiations, and/or damages awarded as a result of arbitration, mediation
and/or any legal or non-legal proceeding and actually received by LBE in immediately
available funds, LBE agrees to pay URM 50 percent of any and all gross savings.
TIMING CONSIDERATIONS
[Timing Considerations]
FISCAL IMPACT
[Fiscal Impact]
SUGGESTED ACTION
Approve recommendation.
BODY
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Respectfully Submitted,
[Respectfully Submitted,]