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05-326Council File # �- 321p RESOLUTION Green Sheet # 3026098 OF SAINT PAUL, MINNESOTA t�/7 Presented Committee Date Referred To I Resolution Establishing Schedule A, z the Rates of the Energy Park Utility Company Franchise, Which Is Held by the 3 Saint Paul PortAuthority a WIIEREAS, the City of Saint Paul City Council is granting a franchise to the Energy Pazk I7tility Company, s held by the Saint Paul Port Authority for July 1, 2005 through July 1, 2012 in Council File Number OS 344 ; 6 and � WHEREAS, the Saint Paul City Charter in Section 16.03 requires that all rates and rate increases charged by s the franchise are subject to the approval of the City and require a public hearing ; and 9 WHEREAS, City staff formally reviewed, and the Council approved in Council File Number 04-495, the io demand portion of rate in 2004, and anficipate a review is necessary for the commodity portion of the rate; i� now therefore be it tz RESOLVED, that the Council of the City of Saint Paul hereby adopts the following as rates to be used for i3 the time period January 1, 2005, and continuing through December 31, 2005: 14 SCHEDULE A is General Hot Water Service t6 Availabiliry. Available to all commercial and industrial buildings. Each connection point to the Energy » Distribution System shall be considered one customer. ts Rate: �9 Fixed customer chazge $100.00 per customer per month zo Demand charge equal to budgeted operating expenses plus $270,000.00 divided by budgeted zt MMBT'UI3s, as more fully described in the Demand Charge below. 22 Commodity chazge $9.50 per 10 Btu per customer per month zs Fuel clause. Bills subject to the adjustment provided for in Fuel Adjushnent Chazge. za Surcharge. Residenfial, commercial and industrial bills sha11 be subject to separate chazges provided zs forin surcharge. 65- 3i�, i Determination of demand. Subscribed demand shall be detennined by the Hot and Chilled Water 2 Service Agreement. 3 Residential Hot Water Service a Availability. Available to all residential buildings. Each connection point to the energy distribution system s shall be considered one customer. 6 Rate: � Fised customer charge $100.00 per customer per month s Demand chazge equal to budgeted operating expenses plus $270,000.00 divided by budgeted 9 MD�IBTUHs, as more fully described in the Demand Charge below. io Commodity chazge $9.50 per 10 Btu per customer per month t� Fuel Clause: Bills subject to the adjustment provided for in Fuel Adjustment Charge �z Surcharge. Residential, commercial and industrial bills shall be subject to separate surcharges i3 provided for in surcharge. ia Determination of demand. Subscribed demand shali be determined by the Hot and Chilled Water Service ts Agreement. i6 General Chiiled Water Service t� Availability. Available to all commercial and industrial buildings. Each connection point to the energy ts distribution system shall be considered one customer. i9 Rate: zo Fixed customer charge $100.00 per customer per month 2i Note: The chilled water fixed customer charge shall be waived for customers utilizing both zz hot water and chilled water services. z3 Demand chazge equal to budgeted operating expenses plus $270,000.00 divided by budgeted za MMBTLTHs, as more fully described in the Demand Charge below 2s Commodity charge $6.20 per 10 Btu per customer per month 25 Fuel clause. Bills subject to the adjustment provided far in Fuel Adjustment Charge. z� Surcharge. Residential, commercial and industrial bills shall be subject to sepazate surcharges 2a provided for in surcharge. zv Determination of demand. Subscribed demand sha11 be determined by the Hot and Chilled Water Service so Agreement. i Residential Chilled Water Service �� 3 � 2 Availability. Available to all residential buildings. Each connection point to the energy distribution system 3 shall be considered one customer. a Rate: 5 Fixed customer charge $100.00 per customer per month 6 Note: The chilled water fixed customer charge shall be waived for customers utilizing both � hot water and chilled water services. s Demand chazge equal to budgeted operating expenses plus $270,000.00 divided by budgeted 9 NIIvIBTUHs, as more fully described in the Demand Chazge below io Comxnodity chazge $6.20 per 10 Btu per customer per month it Fuel clause. Bills subject to the adjustment provided for in Fuel Adjustment Chazge. iz Surcharge. Residential, commercial and industrial bills shall be subject to separate surchazges ts provided for in surchazge. ia Determination of demand. Subscribed demand shall be deterxnined by the Hot and Chilled Water Service is Agreement. i6 Administrative Services Charge i� Availability. Available to all commercial and residential customers who wish to have their total monthly bill ts broken down and billed directly to tenants based on allocation factors or submeters. Such service will �9 include prepazing and mailing statements, reading submeters, and prorating total bills to tenants based on zo allocation factors provided by each customer. 2i Rate. One dollar and fifty cents ($1.50) per submetered or allocated account per month pius postage or zz delivery charges. zs In addition to other demand-related expenses, the company sk�a11 be allowed to charge a fiscal and 2a administrative fee in the amount of $28,000 for calendar year 2005 and be adjusted each yeaz by a dollar 25 amount expressed in percentages equal to the percentage increase or decrease in the All Urban Consumers; z5 Area: Minneapolis/St. Paul index (or its successor index) for the latest twelve-month period, the adjushnents z� to be cumulative and based on the amount of the latest adjustment plus the previous year's payment. 2s Note: Customer is responsible for providing monthly allocation factors or submetering data. 29 Fuel Adjustment Charge so The commodity portion of the hot water and chilled water rate schedules will be adjusted upward or s t downward each month based on the difference between actual variable costs and base variable costs. (The sz base variable costs built into the initial rate schedule aze $6.20 / 10 Btu for chilled water and $9.50 / 10 Btu ss for hot water.) Actuat variable costs will be computed each month by dividing the cost of fuel (electricity, 3a gas, oil, propane and any other fuel) plus water treatment expenses to operate the central energy plant by 35 sales made during the conesponding month. The fuel adjushnent chazge applied to each customer's ��3zt� i bill wili be the difference between actual variable costs and base variable costs (expressed dollazs per 10 2 Btu) mulfiplied by that customer's heating or cooling energy use during the corresponding month. Actual s variable costs for the current month will not be known at the time of billing; and, therefore, for the purpose a of computing the fuel adjustment charge, actual variable costs shall be deemed to be the average monthly s actual variable costs over the preceding twelve (12) months. 0 Succhazge � AII rates for providing chilled water and hot water services will be subject to the City of Saint Paul franchise s fee and other appropriate state and local taYes. � Demand Chazge io The demand portion of the hot water and chilled water rate schedules sha11 be established using the ii following formula: 12 Fixed reimbursement $270,000 13 14 15 16 17 18 19 20 21 Plus budgeted demand-related eacpenses Subtotal Multiplied by Budgeted demand revenues before 10% reserve for repairs, replacements, modifications and eacpansions Divided by Budgeted total demand revenues Divided by budgeted energy demand (MIviBtuh per monffi) Demand chazge (cost per MMBtuh per month) Requested by Department oE / � � ;- ���si1 / Form Approved by City Attorney � 567,250 837,250 1 837,250 90% 930,278 1,260 $738.32 for sy: s , / , ,�,�sd� Approved � yor: Date c� ,,,�� � � Adopted by Council: Date `T aOf�'s Adoption Certified by Co}�cil Secretary � Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Green Sheet Fs �� suv�� Contact Person & Phone: L.arie L,ee 2 66-86 71 Must 8e on Counal Agenda by (Dete): ZO-APR�OS ContractType: RE-RESOLUTION 13APR-05 � ' Assi9n Number For Roudng Order Total # M Signalure Pages _(Clip All Locations for SignaW re) Green Sheet NO: 3026098 0 4"...ancial Se " I I 1 cial Se " artment ' 2 korne 3 or•s t 4 5 � 3Zl.o InitiaUDate Establishing Schedule A, the Rates of the Energy Park Utility Company Frnncluse, wluch is held by the Saint Paul Port Authority. Mations: Appm�e (A) rn F Planning Cotnmission CIB Committee Ciul Senice Commission 1. Has this person/firtn e�er wvrked under a caitract for this departmeM? Yes Na 2. Nas this petsoNfirtn e�er been a city empioyee? Yes No 3. Does this persoMfirtn possess a skill not namally possessed by any cwrerrt city employce? Yes No Explain all yes answers on separate sheet and affich to green sheet Initiating Problem, Issues, OpporWnity (Who, What, When, Where, Why): AdvanWges MApproved: DisadvaMages NApproved: Disadvantages H Not Approved: Transaction: Funding Souroe: Financial Information: (Explain) CostlRevenue Budgeted: Attivity Number: Apri! 13, 2005 7:11 PM Page 1 Energy Park Utility Company Franchise pS.�ZG Briefing Sheet on Franchises Changes for City Council Public Hearing Background.• Appendix G of the Legislative Code, the Energy Park Utility Company (EPUC) Franchise Agreement, is a franchise granting the Saint Paul Port Authority use of the C�ty's right-of-way for the pispose of delivermg hot and chilled water to heat and air condition buildings within Energy Pazk. The CYty also regulates the rates and charges used by EPUC and paid by its customers. EPUC paid $120,750 m franchise fees in 2004. Negotiated Changes to the Franchise Agreement: Previously, this was a 20-year franchise. Now, it is being established as a 7-year franchise. This makes the franchise agreement coterminous with EPUC's customer service agreements. The City and EPUC have the option to renew the franchise agreemeirt for 3 years. (Sec.l) If EPUC chooses to contract the management of the utility outside of the Port Authority, then: 1) the Port must provide 30 days notice to the Ciry; 2) the contractor is subject to the (same) terms and conditions of this franchise; and 3) the management contract shall not exceed 4 years. Currently, EPUC is tnanaged by Market Street Energy, LLC. (Sec. 4) RaYes and chazges used by EPUC with its customers may not be approved for longer than a 4yeaz time period (Sec. 5) There is now a provision in the franchise agreemeut thnt franchise fees will not be collected on heat provided to residents from the months of November through April, consistent with the e�sting special state law prohibiting collection of franchise fees on heat during wmter months in the City of Saint PauL (Sec. 5) The customer service agreement used by the Port Authority with EPUC customers can be changed with 30 days notice to the City, and will be effective within 60 days if no action is taken by the City CotmciL However, changes to the customer service agreement pertaining to rates aad charges used by EPUC require approval by City Council resolution before they can take effect. (Sec. 6) An annual regulatory fee of $25,000, rather than the previous $15,000, will be paid begmning m May of 2006. There is an inflation index buih in for future annual adjustme�s. (Sec. 8) In the past, audited infonnaYion on EPUC was not directiy available. Rather, the City had audited statements on the Port Authority as a whole, and annual (un-audited) financial reports from EPL3C. The proposed cl�ange to the franchise agreement makes it easier for the CSty to review annual financial information from EPUC and compare it to audited records, without an undue burden on the Port Authority for separate, additional, auditing ea�penses. (Sec.9) The types of charges and rates used by EPUC are now defined in the franchise agreement. These chazges and raYes are also (and have been) defined in the.Port Authority's agreement used with EPUC customers. (Sec. 16) The old Schedule A attached to Appendix G set forth rates and charges used by EPUC at the time the franchise was adopted. Subsequent chaages to rates and charges were adopted by resolution — per the franchise agreement. Now, the definition and structure ofrates and chazges is contained in the agreement, but the actuai rates will be adopted hy resolution, aad amended by resolution in the future. This is a house-keeping matter. The achial rates and charges to be used through the end of 2005, have been put forward in resolution form, and this is also on for public hearing 5-4-05. The rates in the resolution aze a continuation of Council approved "fixed" and "demand" rates, and the energy rate is set up to be a pass-through to customers. A rate review is anticipated later in 2005 for rates used in 2006. EPUC Briefing SAeM 5/2/OS I .. City of Saint Paul City Council Research Center Room 310 City Hall Saint Paul, MN 55102 651 266-8570 INTER-DEPARTMENTAL MEMORANDUM April 13, 2005 To: Saint Paul City Council � �iPf From: Marcia Moermond �G�� Re: Public Hearing on Rates for Energy Pazk Utility Company Franchise Held by the Saint Paul Port Authority As a member of Energy Park Utility Company (EPUC) franchise team, I haue been asked by my colleagues to provide public notice of Council hearing on the rates charged for this franchise. The franchise team has forwazded for Council consideration both a renegotiated franchise agreement and a new rate schedule for use in 2005. The City's Charter requires that 10 days notice be provided on proposed rates and rate changes for franchises. Both the ordinance containing the new Energy Park franchise and the resolurion establishing the rates aze scheduled for: Public Hearing Wednesday May 4, 2005 at 5:30 p.m. City Council Chambers Room 300 Saint Paul City Ha11 Please contact me or Lori Lee, the EPUC franchise team leader, with question on franchise, rates, or hearing.