Spare the Air Season starts June 1!
Many East Bay residents could one day buy their electricity through the same agency which now supplies their water -- but should they? In the extended aftermath of the 2001 energy crisis, the East Bay Municipal Utility District (EBMUD) is continuing to explore the potential for providing electric services to its customers.
A public survey and other outreach efforts to EBMUD's service area are soliciting reactions to three options, detailed in a study by consultant RW Beck, Inc. that was delivered to the district's board in February. The three options are: 1) aggregating electric loads and providing service, 2) facilitating development and delivery of renewable energy resources, and 3) becoming a retailer of electric energy service using infrastructure currently owned by PG&E. The third option is probably the common perception of what is meant by "going into the public power business", but the report concluded that it is also the most complex and risky for EBMUD and its customers, while the other two options could have substantial benefits to the area at less cost.
Aggregation is one way to manage energy generation costs, which represent 70 percent of a typical consumer's bill. As an "electric load aggregator", EBMUD would help local customers, both residential and commercial, obtain the best rates possible for electric generation by grouping these customers and bargaining on their behalf. As a larger buyer in the market, EBMUD could effectively find stable pricing and other long-term cost savings, which would benefit both the agency and its customers. It would have the choice of acting as a "middleman" between customers and electricity service providers, or being a service provider itself.
While other agencies have acted as aggregators, including the Association of Bay Area Governments, current California Public Utility Commission (PUC) regulations prevent customers from making their own arrangements to obtain power (called Direct Access), which means that EBMUD cannot become an aggregator now. If the regulations change, EBMUD could move ahead with this option, which is seen as being relatively low risk for both customers and the district. If EBMUD acts as the middleman, there is a slight chance that customers could pay higher prices if costs again become very volatile, but projections are that costs would probably be somewhat lower than PG&E service. If EBMUD acts as an electricity service provider itself, and its energy customers could also use Direct Access, EBMUD would need to provide energy at consistently lower rates to keep customers, or risk losing customers while retaining some fixed expenses. Again, the projection is that rates would stay lower than PG&E.
The second option would put EBMUD into the renewable energy resource business, providing an alternative to traditional energy sources for the part of the community which is interested in reducing dependence on fossil fuels. EBMUD would assist with financing and could possibly own, operate and maintain facilities producing solar, wind or other renewable power. Public utilities already doing this include Sacramento MUD, which operates a solar photovoltaic program allowing self-generation by residential and small commercial customers. Renewable energy benefits are primarily environmentalwhile the program is not anticipated to have substantial costs, it is also not anticipated to result in significant cost savings to either EBMUD or its customers.
Under the third option, becoming a " vertically-integrated electric utility", EBMUD would acquire the PG&E distribution system in part or all of EBMUD's service area and would become responsible for electric supply and delivery to those customers. The RW Beck report warns that this has the highest risk of the three options. However, 29 of the 48 scenarios in the business model developed for the study showed that costs and risks would still be low enough to be worth considering the option.
Historically, municipal power utilities have achieved great savings, which is the reason EBMUD chose to consider this possibility. The greatest savings are available when the utility owns a significant portion of its energy generation; EBMUD's own generation is currently a small percentage of what would be needed to supply just the service area west of the East Bay hills, so the district would need to purchase power from other generators. In addition, the current energy situation raises questions of how much EBMUD would need to expend to cover ongoing electrical restructuring costs and other obligations related to power contracts, as well as acquisition of PG&E facilities. It seems unlikely that PG&E will be willing to sell at a price near book value for its distribution system, both because of its bankruptcy and because EBMUD's takeover of these facilities would represent significant encroachment on its customer base.
Factors favoring this option include lower costs because a public agency is exempt from taxes, can obtain tax-exempt financing for future purchases, and does not pay dividends. Administrative systems such as billing and meter reading could be used for both electricity and water customers, providing economies of scale. There are also the benefits that come with local control, including access to a publicly elected board and greater responsiveness to the needs and requirements of the local community.
In April 1998 EBMUD adopted Policy 83, committing itself to explore potential opportunities offered by deregulation to provide "a broader range of services within its authority under the Municipal Utility District Act." Any new activities must improve the level of service and/or reduce rates for current customers, as well as continue to manage and protect the District's resources and the environment. The policy also states that "new enterprises will not be to the detriment of existing customers or deplete staff resources." This policy will continue to govern the district's exploration of involvement in electrical power.
Option two, focusing on renewable resources, would be relatively low-cost to pursue. Becoming an aggregator could cost $100,000-$300,000 in addition to internal costs for staffing and organizational changes. Full municipalization would require a feasibility study costing approximately $1 million, implementation costs of $10-50 million, plus internal staffing and organizational costs, plus an amount still to be determined to actually acquire facilities and switch service from one utility to the other. The RW Beck report notes that if this third option is pursued, the board will need to determine "off-ramps" at which the project can be abandoned if it is obviously infeasible or overly expensive.
EBMUD is asking the public to respond with evaluations of each option, and to indicate which factors are most important in deciding how to move forward. Eight factors identified in the survey are:
By midsummer 2002, the results from the first phase of outreach and other staff research will be on the EBMUD board agenda, and board members will decide if additional outreach is needed before they consider which option to pursue. If they choose renewable resource development, they will be able to move ahead immediately. Aggregation would be dependent on action by the CPUC to allow Direct Access to resume. Municipalization of PG&E facilities would take the longest, probably as much as 10 years, because of legal, financial and political requirements, and could require a public vote. Any of the three choices will mean major changes and an expanded arena for an agency which for decades has been focused on water supply and treatment.
Leslie Stewart
For more information: Charles Hardy, EBMUD, 510-287-0141
Environmental Justice and Community Outreach Program are the focus of a new Community Outreach Plan prepared by the Bay Area Air Quality Management District (Air District). Comments from the public on the draft plan are currently being considered, and the proposed final plan is being prepared. The plan will improve the Air District's ability to communicate with the public and will promote a dialogue with members of the Bay Area's diverse communities. It outlines the tasks to be performed, including detailed elements of each task, and the strategies that will employed to widen the Air District's involvement with communities in the Bay Area.
The tasks are:
To increase the involvement of stakeholders, the plan proposes the following strategies:
While the Community Outreach Plan is being prepared for adoption, the Air District is already pursuing some of the tasks it contains. The district has been conducting community informational meetings, most recently in May in Martinez and in West Oakland, where the community is concerned about emissions from the LaSaffre Yeast Corporation (formerly Red Star Yeast) plant. On June 20, a public hearing on LaSaffre Yeast Corporation's Title V permit will be held in Oakland, preceded by a meeting with Air District board members and staff and company personnel. Title V of the federal Clean Air Act Amendments of 1990 provides for a program that coordinates all the applicable requirements of the Act that pertain to air emissions, plus any state and local permit requirements, into one permit process. The program, which applies to large facilities, resolves conflicting requirements and gives all parties a clear picture of what is expected. The Title V permit process includes periodic review and subjects all permits to public comment.
During the month of July, the Air District will be proposing draft Title V permits to operate for the Bay Area's refineries. Public hearings will be held in the communities where the refineries are located. A schedule of the meetings is given in the table below.
Community Focus, the non-profit organization that coordinates the Spare the Air Program under a contract with the Air District, has been given the charge of identifying and engaging potential members for resource teams that will be established in Contra Costa County, East Palo Alto, and San Francisco. Community Focus will facilitate meetings of the new teams, identify concerns and possible projects, and coordinate projects. The Spare the Air Resource Team, which oversees the activities of the six resource teams that already are a part of the Spare the Air Program, is identifying and recruiting new members for the teams, particularly people from economically disadvantaged communities. The East Bay team is being urged to focus on expanding its membership in southern Alameda County. The other existing teams are in Marin/Sonoma, Napa/Solano, San Francisco/San Mateo, Santa Clara, and Tri-Valley areas.
Resource team projects to promote voluntary actions to reduce air pollution include conducting youth focus groups in high schools, holding community workshops on transportation alternatives, promoting free bike rack or locker programs for employers, developing a brochure on implementing a commuter choice program, and supporting lawn mower buyback events.
By implementing the Community Outreach Plan, the Air District hopes to improve its relationships with all segments of the Bay Area and work together with them to achieve clean, healthful air.
Adelia Sabiston
For more information:
Environmental Justice/Community Outreach: Darrell Waller, Air District, 415-749-4987, dwaller@baaqmd.gov
Title V: Air District, 415-749-4684; http://www.baaqmd.gov/mop/vol2/v2part3.pdf
Resource Teams: http://www.communityfocus.org
| Public Hearings on Title V Permits | ||
|---|---|---|
| 6:30-7:00 pm - Meet with BAAQMD staff, facility personnel, etc. 7:00-9:00 pm - Public hearing |
||
| Date | Facility | Location |
| June 20 | LaSaffre Yeast Corp. (Red Star Yeast) | Prescott Elem. School Auditorium 920 Campbell St, Oakland |
| July 8 | Phillips 66 (Tosco) | Rodeo Senior Center 587 Parker Ave., Rodeo |
| July 10 | Valero (Exxon) | Benicia City Council Chambers 250 East L St, Benicia |
| July 15 | Tesoro (Ultramar) | Martinez City Council Chambers 525 Henrietta St., Martinez |
| July 18 | Shell (Equilon) | Martinez City Council Chambers 525 Henrietta St., Martinez |
| July 29 | Chevron/Texaco | Richmond City Council Chambers 2600 Barrett Ave., Richmond |
| All facilities hold at least 100 people, are handicapped-accessible, and are served by public transit. | ||
Drivers crossing Bay Area bridges can often glance out their windows and see their toll dollars at work. New spans for the Carquinez and Benicia- Martinez bridges and a widening project on the San Mateo Bridge are some of the most visible results of the dollars handed to a toll taker or clicked up on the FasTrak electronic toll collection system. Other toll-funded projects include rehabilitation of the Richmond-San Rafael bridge, seismic upgrading for the west span of the San Francisco-Oakland Bay Bridge, and the replacement of the east span of the Bay Bridge. However, less-visible programs which also receive toll money may be responsible for toll increases in the future.
Most of the toll-funded bridge construction was authorized by Regional Measure 1 (RM1), a ballot measure passed by a regionwide vote in 1988 to allocate income from the basic $1 toll to operations and maintenance of the state-owned Bay Area toll bridges, traffic congestion mitigation measures, support of ferries and transit, bicycle and pedestrian improvements, and specific bridge construction projects. The Bay Area Toll Authority (BATA) assumed administration of the basic $1 toll on the Bay Area bridges from the California Transportation Commission in January 1998. The agency is staffed by the Metropolitan Transportation Commission (MTC) and MTC commissioners serve as its governing body.
BATA was created as part of legislation passed in August 1997, after Caltrans decided to replace, rather than retrofit, the east span of the Bay Bridge. The legislation also established a $1 surcharge for eight years, beginning in January 1998, to fund the seismic program for the region's state-owned toll bridges. The seismic surcharge is administered by Caltrans, which owns and operates the toll bridges. (The Golden Gate Bridge is not owned by the state and is operated separately by the Golden Gate Bridge, Highway and Transportation District, GGBHTD). In October 2001, AB1171 extended the surcharge through December 2037 and allocated additional funding from the Highway Bridge Rehabilitation and Replacement Program.
Five years after BATA's creation, the RM1 projects are well underway. Widening of the San Mateo Bridge is almost complete and the new roadway will open to traffic in December. Less than a year later, in October 2003, the new Carquinez span is scheduled to open. Drivers will be able to watch the towers rise over the next few months. By December 2004, the new Benicia-Martinez Bridge, complete with relocated toll plaza, will be ready. Other RM1 projects include rehabilitation of the Richmond- San Rafael Bridge, improvements at the I880/State Route 92 interchange in Hayward, widening of the Bayfront Expressway (State Route 84) near the Dumbarton Bridge, and improving the US 101/University Avenue interchange in Palo Alto.
Work funded by the seismic surcharge has appeared to move more slowly. Although seismic retrofitting of the west span of the Bay Bridge is now in the third and final phase, groundbreaking on the biggest project in the region—replacing the Bay Bridge's east span—did not take place until the end of January. The first visible work on the project, dredging, is expected to begin in May, followed by piledriving which is scheduled to begin in late summer 2002. The seismic surcharge also covers retrofits on other state-owned toll bridges, including two in southern California.
Before the seismic surcharge was extended in October 2001 to cover rapidly rising estimates of retrofit and replacement costs, an extension was being considered as a possible source of additional regional transportation funds for other projects. Although many drivers in the region seldom cross a toll bridge, tolls are often cited by poll respondents as one of the most popular ways to fund congestion relief projects on freeways and bridges. The GGBHTD uses bridge tolls to subsidize bus and ferry service which help to reduce bridge traffic, and under RM1, existing Bay Area ferry routes currently receive support from an allocation of 5% of the basic $1 toll.
A recent study by State Senator Don Perata showed that the public would support adding another dollar to state-owned bridge fares if the increase went to support alternative transportation modes such as BART and ferries. A $3 fare would be comparable to the toll now being charged on the Golden Gate Bridge (GGBHTD may soon raise this toll to avoid bus and ferry fare increases, making Perata's $3 proposal even more acceptable.) This could provide important support for new ferry service being planned by the San Francisco Bay Area Water Transit Authority, which must find new funding sources for any new service according to its authorizing legislation. Other proposals which have emerged during the recent regional transit planning process might also benefit from an allocation of additional toll money similar to that in RM1.
An option which has surfaced repeatedly over the past decade and is still on the table is a variable toll based on the time of day a driver crosses a bridge, with higher tolls during commute periods, Usually referred to as "congestion pricing", this has been slow to catch on because of the complications of administering different tolls at different times, in addition to the need to educate the public on the benefits and mechanisms. Now, electronic toll collection may make such a move more feasible.
New tolls or surcharges are the only sure way to gain more revenue from Bay Area bridge drivers. Projections by BATA show no increase in long-term bridge traffic on the Bay Bridge and only very slight increases on other bridges. All bridge traffic dropped after the terrorist attacks in September 2001, but car traffic is back up. However, truck traffic remains at a lower level, primarily due to the economic downturn, a trend which is particularly evident on the southern bridges. The BATA budget for 2002-2003 shows only a slight increase over original projections, due to the elimination of the discount for FasTrak electronic toll users.
The steady stream of income from bridge tolls is especially attractive when contrasted with sales taxes and other revenues impacted by the recent economic downturn. It is likely to continue as a favored source of transportation funding in the Bay Area.
Leslie Stewart
For more information: Rod McMillan, BATA, 510-464-3260, rmcmil@mtc.ca.gov; http://www.mtc.ca.gov/about_mtc/bata.htm
When the Peninsula Rail Joint Powers Board, or Caltrain, proposed recent increases in fares and other fees, many riders said they should drop the fares instead and make up the loss by attracting more riders. Unfortunately, the Woolworth theory does not work for transit. A smaller profit multiplied by more customers works only if there is at least some profit from each sale. In fact, while riders may feel that they are paying a sizeable amount, none of that money represents a profit for the transit district. Usually, fares represent less than half of the cost of the service riders receive.
Transit districts cannot realistically expect riders to pay the full price of the transit services they use. To provide good transit service for those who cannot or prefer not to drive, and to reduce pollution by decreasing vehicle use, farebox revenues are augmented by federal, state and local subsidies. The subsidy is usually from dedicated tax revenues or from a jurisdiction's general funds, although the Golden Gate Bridge, Highway and Transportation District (GGBHTD) uses only bridge tolls. When those other funding sources shrink, even fare increases may not be enough to stave off service cuts and other impacts.
Financial difficulties for many districts began last summer with the energy crisis. Increased energy costs meant dipping into reserves, postponing projects, or holding off on hiring. Meanwhile, ridership was decreasing as local high-tech companies laid off workers. Sales tax revenue, already dropping, dropped even faster due to the post-September 11 decreases in travel and tourism, at the same time that many government agencies were forced to spend unbudgeted funds on security improvements. For some districts, such as BART, labor contracts negotiated during the region's employment boom began to take effect despite the changed economic outlook. At the state level, the energy crisis drained surpluses which might otherwise have been in place to buffer the impacts of lower sales tax and income tax revenues and higher spending on security measures. In the space of approximately a year, the financial picture for transit agencies became very dark.
Although transit agencies have attempted to shelter riders from the effects of financial difficulties, Caltrain is not the only district where fares will rise in the next few months. Almost every district in the Bay Area will be increasing fares, fees and other charges, as well as cutting costs wherever possible. (See fare-increase table). The impact has perhaps been greatest for the Santa Clara County Transportation Authority (VTA) because of the major economic downturn in Silicon Valley. The district will raise fares and decrease service on light rail and bus lines, including dropping routes or providing only weekday service.
VTA has also deferred some voter-approved capital expenditure projects, because the sales tax revenues dedicated to support them have dropped. However, in other areas riders will see major projects continue to move ahead, such as the first stages of the Caltrain express train and BART to San Jose. In many cases, funds already obtained for these projects cannot be moved to operating budgets.
Financial support for transit from the state, already diminished in early budget projections, may drop again during the annual budget debate. Passage of Proposition 42 on the March ballot ensured that funds from the Transportation Congestion Relief Program cannot be diverted into the state's general fund except when an emergency is declared by the legislature and the governor (see Feb/March 2002 issue), but theoretically such a determination could be made if projected deficits increase.
With few other places to turn, transit agencies may need to look carefully at budgets and allow for future cuts and fare increases if circumstances change. Caltrain has a fare study underway as part of its plans to switch from its current ticket sales procedures to ticketing through vending machines on the platforms. Now the fare study may become a tool to fine-tune the new fare increases and determine if more are needed. GGBHTD is studying increasing bridge tolls, possibly as high as $5, continuing annual transit fare increases, and identifying new revenue sources and cost-cutting measures.
During Caltrain's public process to consider fare increases, several riders commented that a more stable funding source was needed for transit. Ironically, this was what many felt had been achieved with the passage of half-cent sales tax measures in counties around the region, and recently with passage of Proposition 42 which allocates gas tax revenues. The president of the VTA riders association suggested that VTA consider following the example of San Francisco MUNI, which so far has not been faced with the same cutbacks as most other major transit districts; MUNI receives some funding from development fees and a portion of the tax revenue from parking lot operators. For most districts, however, fare and fee increases and service cuts will be in the forecast until the economy improves.
Leslie Stewart
For more information:
Jayme Maltbie, Caltrain & SamTrans, 650-508-6238
Mary Currie, GGBHTD, 415-257-4548, mcurrie@goldengate.org
Mike Healy, BART, 510-464-7110
Note: This table is subject to change as budget hearings continue. SamTrans will have a hearing on June 12 on cutting bus routes. BART's options are also in flux.
| Fare Increases by Bay Area Transit Agencies | ||||
|---|---|---|---|---|
| Agency | Effective Date | Regular fare increase (old/new) | Selected other fare increase (old/new) | Other Measures |
| AC Transit | 7/1/02 | $1.35/ $1.50 or $1.60 | Sr & disabled pass: $13/$15 | delay startup of express buses, new bus stations |
| BART | decisions pending at press time | sold company cars; job cuts; reducing # and length of trains, maintenance; may add parking fees | ||
| Caltrain | 7/1/02 | 10% | Peninsula Pass (interdistrict): $30/$33 | increased parking & bicycle locker fees; drop 4 rush-hr trains, 5 business park shuttles |
| GGBHTD | 7/1/02 | 5.4% increase (15-30 cents/trip) | 2.7% increase for intercounty paratransit | decrease bus service;study raising bridge tolls; study other revenue sources and cost-cutting measures |
| SamTrans | 8/25/02 | $1.10/$1.25; $3.00/$3.50 | monthly pass: $38/$40 (no increase for sr/disabled) | hiring freeze; rescheduled improvement projects (North County bus facility) |
| VTA | 7/1/02 | 15% | check with VTA | job cuts; 5 bus routes dropped, 49 less service; light rail runs every 12 min. instead of 10; voter-approved capital projects deferred |
As a second round of Smart Growth Strategy workshops took place in counties around the Bay, legislation in Sacramento created uncertainty about the future of two of the five regional agencies involved in the Smart Growth Strategy process. SB 1243 (Torlakson) proposed a merger of the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Authority (MTC). The two agencies share quarters in Oakland but have differing authorities and structures. ABAG is a voluntary association of local governments; MTC is a transportation planning agency created by the state, empowered to distribute state and federal transportation funds in the region.
The bill originally required a two-year study, with ABAG and MTC participation, to design the merger, detail the costs involved and designate who would serve on the new regional agency. Amendments were intended to maintain state control of the merger process and new regional body by focusing on MTC, adding ABAG's housing planning functions to MTC's current structure and mandating that the study define other ABAG functions which would also be transferred to the new agency. This raised concerns that the new body would be mostly MTC and not much ABAG, and brought calls for more changes.
The Smart Growth Strategy process is one response to the need for coordinated, cohesive regional planning and development. A single regional agency under one governing body may not be realistic, but fewer and more powerful agencies may be. As SB 1243 demonstrates, however, there are many questions yet to be answered about how to make any proposal both practical and acceptable.
Leslie Stewart