AN ORDINANCE relating to the City Light Department; authorizing the Department to participate in the California Independent System Operator’s Energy Imbalance Market, including authorizing the execution of any necessary agreements with the California Independent System Operator, as well as any additional agreements necessary or convenient for implementation and participation in the California Independent System Operator’s Energy Imbalance Market.
The bill passes and the chair will sign it. Please read the report of the Energy and Environment Committee. The Report of the Energy Environment Committee Agenda Item one Constable 118 788 related to the City Light Department authorizing department to participate in the call for an independent systems operators, energy and balance market, including authorizing the execution of the necessary agreements with the California Independent System Operator, as well as any additional agreements necessary or convenient for implementation and participation. As in California, Dependent Systems Operators Energy and Balance Markets Committee recommends the bill passed as amended. Thank you very much. Councilmember Salaam Thank you, brother. This is an ordinance to authorize Seattle to be allowed to explore entering a California energy imbalance market. City Light estimates that it will cost 8 million in infrastructure to join the market and they expect to make 4 to 23 million per year in additional net wholesale revenue once they have entered. This could be a good thing for the city, particularly if it allows you to put more of our clean hydropower on the market to replace the natural gas energy generation that, for example, private companies like Puget Sound Energy Use. However, it is also important for the Council to have sufficient oversight. After all, the last time City Light was part of an energy imbalance market in California. That was when the Enron debacle happened. To be clear, City Light assures us that they have protections in place to avoid something similar in the future. But again, for us as a council, it should be a question of adequate oversight. This got this council bill was amended in committee to allow City Light to explore entering the energy imbalance market while retaining for council the opportunity to take further action before it is finalized. The Energy and Environment Committee recommends passing this Council bill as amended, and I just wanted to note that in the written agenda it leaves out the words as amended. But I just want to make sure the council knows that this is as amended. Thank you. Councilmember Swan, are there any further comments or questions on this legislation? Councilmember Gonzalez I was unable to stay for the ultimate vote in last discussion of this particular council bill, but I have significant concerns about supporting this particular council bill. I think that while the amended version does provide some additional oversight, I think there are a lot of questions in my mind about the amount of money that needs to be spent by Seattle City Light just in order to even engage in that exploratory process and have strong reservations about the fiscal implications of moving forward even with the Council bill as amended. My understanding is that the proposal from Seattle City Light would require the spending of several millions of dollars over the next three years just to begin the process of entering into the energy imbalance market. So I have concerns about this particular. Bill. And we've had I've had conversations with central staff who have told me that waiting a year to pass this bill would not significantly impact Seattle City Lights ability to consider exploring entering into this energy imbalance market in the future . So I'm going to be voting no on this council bill today because although the bill, as amended, does create some oversight, I actually think that they need to go back to the drawing board and do some more work before I would be willing to support even an exploratory phase of entering into the energy imbalance market in California . Thank you. Councilman Gonzales. Councilmember O'Brien. Yeah, I. Councilmember Gonzales. I appreciate those concerns. And actually, I share those. The idea that the city council would ensure that the city would invest $8 million on this is a big chunk of money and raises a lot of concerns. The amendments, as I understand it, would prevent them from doing any investments and would require them to come back to council to get our approval before they can proceed on entering it. The questions we asked the table were about that, the financial payoff, and also about the risks and making sure the oversight was in place. And my understanding with the bill as amended is that they can come back. This this gives them the ability to move forward, to do the research and come back to us. But they cannot proceed in entering the imbalanced market without further approval from the council and making those types of investments. Yes, I know. Just very quickly, I won't repeat what Councilman Brown said. I just wanted to say that if you look at the amendments that were presented as part of the amended bill, they're not minor. They actually changed the bill from allowing City Light to do it, to allowing them to explore and then requiring them to come back to council. Very good. And we can very easily suspend the rules to ask Tony killed off to tell whatever the heck he's telling Councilman Burgess to tell us that we can have a little dialog. But Councilman Gosar, you want to speak? Sure. I mean, I again, I'm not saying that the amendments aren't an improvement from the original version of the bill. There certainly is an improvement to the oversight functions that were absent from the original council bill. You know, my my concern is that I heard from central staff and Tony is here and perhaps ready at their at the ready when we're when we're ready to hear from him. But my my concern is that they're from my recollection of the presentation is that there were significant upfront costs that would be associated with even standing up an exploratory process of this. And this is this is a significant investment. We've never engaged in the imbalance market, an energy imbalance market before. It's a relatively new industry. It's only been around for 2 to 3 years. And so my preference would be that we give ourselves, as a city council, an opportunity to learn more about what this energy imbalance market is and to give Seattle City Light a greater opportunity to tell us exactly what the risks are here. And and from the materials that I have reviewed, from the conversations that I've had with central staff. I personally do not feel that I have enough information to truly appreciate the the risks associated with giving Seattle City light the permission to move forward with even an exploratory phase. I get nervous about saying it's just an exploratory phase because we still have to invest resources to do that exploration. And then there is created sort of an expectation that we're going to continue to move forward. So again, I think the amendments are an improvement, but my preference would be to not move forward with this council bill at this juncture. So I'm going to vote no unless there is interest in in holding it to give the Seattle city light some additional time to get us more information. So if there's no objection, I'm going to suspend the rules, allow Mr. Cool off to address the Council and Mr. cut off. Perhaps you could start off with at least one of my concerns is how time sensitive this is and maybe the intended or the actual effect of the amendments in terms of still having a safeguard against utility in light of the concerns Councilmember Gonzales has raised. Yes, it's it's not time sensitive, other than every with every year that passes City Light and in theory, misses the opportunity to make the additional revenues that it could make by trading in the market in California. And if their analysis is correct, that would be foregone revenue of anywhere from 4 to 20 plus million dollars. The amendments that that I put in were specifically to prevent City Light from making any major investments until they had come back to the Council and provided a better understanding of the costs that would ultimately be be borne to enter into the market and also the revenues that they would expect to receive. We're expecting if the Council did move forward with this, that our city light would come back to the council early next year, probably by the end of the first quarter, with a more detailed description and analysis and information that would make a the final decision easier for the council. Councilman Herbold, thank you. The fiscal bill associated with this camp or this fiscal note, especially with this council bill. Estimates a annual gross benefit of $4 million a year. But Councilmember Gonzales mentioned a cost of the study, and I don't see that the cost noted in the fiscal note. The cost. It's not up the study. If city lights were to actually enter the market, it would need to stand up new software and hardware systems to support it. And that's approximately $8 million. It might be as high as ten, but right now the high end of the estimate is $8 million. That would be an ongoing cost for for additional staffing at City Light of around about two and a half million dollars a year. That was the caution that led me to recommend the the amendment to the bill that we would not spend the $8 million and we would not engage the additional staff until the council had better information. Thank you. Especially considering the fact that this information was not contained in the fiscal notice, I. Believe is our our policy. So when. Possible councilmembers. I'm going I'm sort of heading down the path of holding it for a few weeks, and I don't think the supporters of it have a lot of heartburn over that. But. Councilmember Burgess, go ahead. That's what I was going to raise, that if we could have a motion to hold this for a couple of weeks, I would make that motion. So I'm looking at October 31st is three weeks. That should give us plenty of time to work on that and a lot if we're doing budget. So I'd. Second the. Motion. Okay, I'll make a motion to hold it till October 31st has been seconded by Councilman O'Brien. All those in favor of holding it for three weeks. I, I opposed I have to. We'll hold this until October 31st and hopefully talk it council briefing or other opportunities to discuss it. Before we move. On. Please read the next agenda item into the record.