Improving the Economic Condition of California - Research Paper Example

? Nursing Research Proposal Introduction The of California made evaluations based on its public policies and formulated a strategic goal aimed at improving the economic condition of the city. The timeline for the strategy included the period between 2002 and 2007. The most evident goals of the city’s public policies included efforts of improving the overall services offered to the community, attracting more businesses to Irvine and improving revenue collection for the city. This is a case study analysis on the feasibility test study on the establishment of an electricity utility project in the city of Irvine. The case study involves the identification of the issue at relating to the distribution of electricity around Irvine, making assessment on the initial recommendations and finally making suggestions on alternative policies on the establishment of an electricity utility project in Irvine. Problem/Issue Statement The city of Irvine is searching for the best policy option that will ensure that residents access reliable and cost effective electricity utility (Forsyth, 2005). There are two available policies including private and public power. Private power involves the continuation of the provision of electricity by SCE that will include the expansion of electricity supply from the other areas of California to the ‘study areas.’ Under the policy, the project has no timeline but remains to be a continuation of the supply of electricity by SCE. The policy is based on the experience of SCE in supplying California City with electricity. Public power will involve establishing of a municipal electricity utility in a timeline of 20 years and will only concentrate on the ‘study areas’ only. There is need to adopt a policy that will ensure customers get reliable electricity utility at effective costs. The policy is based on the assumption that the city will collect a lot of revenue from the project. Stakeholders City of Irvine The city if Irvine plays a significant role in the formulation of public policies concerning the establishment of the municipal electricity utility project. The city of Irvine is in California and not all its parts have electricity. This has necessitated the municipality within the city to start a project that would ensure that businesses and residents have adequate supply of electricity at their disposal. The city of Irvine had various interests that applied across all the other stakeholders. However, not all the interests of the city applied to all the other stakeholders. As noted earlier all the stakeholders reached an agreement to establish the municipal electricity utility project. The city has developed strategic business goals that influence the interests of the city in the project. According to the public policy statement prepared by the city, the main interests of the city in the project include the provision of the highest services in the city in terms of costs. The city aims at providing electric utility at cost effective rates. The cit also aims at increasing its revenue base because it is expecting to collect a lot of money in terms of electricity utility revenue. This will ensure that the city has a strong revenue base that will enable it to run its operations effectively and efficiently. The city has developed a public policy based on public power that will see the community owning majority of the electricity utilities. The concept of pursuing a public power policy is supported by the fact that the United States has a large number of electricity utilities owned by the community or the public. This city’s public policy notes that “There are over 2,000 community-owned or public electric utilities in the United States, including 39 in California, which provide 25% of electric requirements in the State. Fifty percent of these US utilities are comparable by number of customers and 83% by revenues to the City’s proposed utility” (Demirkan, 2011). The main reason for the city to pursue the public power policy can be cited to the fact that the city expects that the electricity utility cost will be very low and that the utilities will improve the reliability of the electricity. It also expected that the electricity utility project will contribute the General Fund and that the locals will have great control of their resources. Control and affordable rates by the city are the main influences for the city in making recommendations on the implementation of municipal electricity utility project. The city makes its recommendations on the basis of its public policy on public power with expectations of reducing the costs of electricity utilities within the accessed areas that have been lacking electricity. Electric customers outside Study Area The main objective of the electricity utility project is to ensure that the city has its utility rates lower that the neighboring communities. This is greater inter interest for the communities living outside the city because they will be able to transfer their business from 5their areas to the identified areas that will have the electricity utility project. The cost of electricity utility has been cited as one of the major causes of business failures. A lower cost will provide them with a relief on operational costs and improve their revenue base. There is also the possibility that some of the residents in the areas outside the study area will move to the study areas in order to access the reliable electricity in their residential areas (Sahakian, 2011). In making recommendations, the interests of the electric customers outside the study areas will be expanded distribution of the electricity utility to reach their premises in order to ensure low costs and reliable supply of power. The customers propose the establishment of an electricity utility project that will be comparable to the other utilities in the neighboring communities. Their interests include local control as characterized in their own communities and their establishment of safety measure similar to their environment. This will ensure a bit of similarities between their electric utility supplies. Electric customers inside Study Area Electricity customers within the study area have been experiencing inadequate supply of electricity utility supplies and will be the greatest beneficiary of the project. The city has introduced municipal electricity programme with the main aim of ensuring that businesses and residents have access to adequate and reliable supply of electricity at effective rates. This will serve to ensure that customers have access to electricity utilities unlike before. As stakeholders in the supply and management of electricity supply, the customers within the study area have an interest in the project and this can be pointed out to improved living standards. Before the introduction of the municipal electricity project, residents within the study area received electricity in small amounts or could at times not have access to electricity utilities. However, the introduction of the electricity projected assured them constant supply electricity utility. This is an improvement in the living standards among the residents of the study areas. The customers will now be able to enjoy better services offered by the supply of electricity utility. The services may include improved security in the regions due to improved lighting. The city has introduced a pubic policy commonly referred to as public power that will ensure the management of the electricity utility is in the hands of the community. This will result in low costs of electricity since low costs is one of the major characteristics of public goods. The good will be accessed by many individuals and as such there are economies of scale that will ensure that the municipality shares the costs among the residents. The residents will be able to manage the electricity utilities according to their needs since they will have the power and authority in allocating resources among themselves (Nerserian, 2010). Developers The city of Irvine created the timeline for the electricity utility project to be between the year 2002 and 2007. This is a very short time for the municipality to complete its project of lighting the study areas. Developers assist in the development of identified areas. They are part of the stakeholders because they have the capacity to offer assistance to the city in carrying out the project within the timeline. They provide financial assistance and strategic advice that will ensure the project is carried out in the right manner. According to the public policy statement drafted by the municipality, developers have only one major interest of ensuring the project is completed in time. The completion of the project within the timeline will reduce costs incurring in carrying out the project and will ensure that the project starts collecting cash inflows to compensate for outflows. The city will start collecting revenues from then services of providing electricity utilities and this will assure returns to developers who have also made contributions to the completion of the project. Their main role is installing the local distribution system during the project. Developers will also find the provision of electricity utility useful in their future development projects. Electricity will be useful in speeding up the completion of projects and ensuring that there is less spending on electricity utilities (Benes, 2011). Their recommendation is the speeding up of the project to ensure that there is good business provided by the effective costs of electricity utility. As stated earlier, lower costs are always associated with increased revenue base and this will be the same scenario for the developers in the study areas. The establishment of an effective supply of electricity utility is one of the characteristics of developing and this will boost the confidence of developers in establishing projects within the study areas in the near future. Southern California Edison (“SCE”) Southern California has the major role of supplying electricity within the region of California. The company has expertise in the field of electricity supply and offers guidance to the municipal electricity utility project (Arceivela, 2007). This will ensure that the municipality is able to carry out its project using the right approaches. There needed to make comparisons in the way different tasks are performed in carrying out the projects. The interest of the company in the projects includes determining the available loopholes in the execution of the project and making recommendations on the appropriate manner to carry out the project to completion. This can be achieved through the research study on the municipality policies. Irvine Ranch Water District (IRWD) The above organization is also one of the major stakeholders and plays an important role in ensuring that there is adequate generation of electricity within the city and conservation of the water resources. There is need that the city conserves the available supply of water in California to ensure that there is constant supply of electricity supply in the city. The company also acts as the advising agency on the potential efficient methods of generating electricity in the city. The main interest of the company in the generation of electricity is ensuring that there is conservation of the water resources and use of efficient methods of generating electricity. The company has the influence of determining the source of electricity generation for the city. Issue Formalization The establishment of the electricity utility required that there be an analysis of costs and benefits. The feasibility study focused on analyzing the revenues and expenses that would be incurred in designing and implementing the project in Irvine city. Revenues are associated with the expected rates to be charged on customers whereas expenses included the expenditure on power, the cost of making transmissions and, programs that would benefit the public. The two determinant factors of revenues and expenses are based on historical consumption indices, the rates of tariffs, market indices and the industry averages. Based on the determining factors that include revenues and expenses, there are two structures identified by the feasibility study. They include assigning all the responsibilities of installing the electricity utility to the SCE and establishing a municipal utility. Pursuing the first option will mean that the city maintains the status quo whereby SCE has been supplying electricity to the city. A municipal utility will ensure that the municipality manages the supply of electricity in the city. These structures are different from each other in terms of revenues and expenses. Under the municipality structure, the city would assume the responsibility of distributing electricity utility for domestic and commercial use. The established structure included allowing developers to install the supplying station in the area whereas the city provided the necessary infrastructure for the interconnection of the electricity facilities to the electricity transmission facilities (Benes, 2011). The availability of the two main options or structures of the project have resulted in the issue as to whether the city of Irvine should establish a municipal utility to supply electricity services to areas of the city that have not had electricity services. This leads to a difficult situation in identifying the best structure that the Irvine city could pursue. Both structures appear to be lucrative and this led to the city of Irvine to commission a number of individuals to conduct a feasibility study that evaluated both structures. The role of the government in the project is establishing necessary legal frameworks that will ensure the success of the project at every stage of implementation. The legal framework acts to control and oversee the implementation of the project for the common good of the inhabitants within the Irvine state. The government also channel funds to the project through the local authorities and vet the qualifications of private companies in managing the supply of electricity in the city of Irvine (Michaels, 2002). Research studies indicate that the residents had confidence in the government managing such a project as opposed to the private sector managing it. Policy Alternatives The policy on public power involves giving the municipal control over the supply of electricity services in Irvine City. The policy pursues the interests of the public rather than profits for the business. The policy will allow the community to own and control public power utilities. The municipal will hire independent contractors such as SCE who have the relevant expertise and control the supply of the utilities to the customers. The role of the SCE is developing the distribution facilities which will be the source of public power. The alternative to public power is private power. Private power involves making a continuation of the previous practice of allowing SCE to supply electricity for the city. SCE has the potential of completing the project within the required time given its experience. The firm has been in operation for over a century and has grown into a large company that enjoys the economies of scale. The company employs a total of 12,600 workers and has a wide customer base of over 4 million customers. The feasibility study indicates that the company has the necessary infrastructure that will enable it serve the study areas safely. According to the comments made by DR. Robert Michaels, the policy on private power will ensure that customers are protected against the rising gas prices. The prices of gas have been volatile and the project faces a risk of being affected by the fluctuating prices of gases in the economy. The company has diverse customers making the company lower the costs of serving its customers thus translating to low costs. Alternative Assessment The best policy alternative is allowing private companies provide and supply electricity in the region. The feasibility study has provided an alternative as the privatization of the electricity generation project to SCE. However, the study fails to provide a deep analysis of the alternative. According to study conducted by the Edison Company there are is a revelation that the feasibility research study did not indicate that the proposed utility was costly and risky. SCE has the main advantage of providing hedge to its customers against rising prices of gases through its diverse resources. SCE is has also made contracts with private generating company to enable the company protect its customers against the unstable gas prices (Wagner, 2005). The only supporting stakeholder is the SCE because they are going to be directly involved in the project. This translates to high revenues for the company. The city of Irvine is against the policy because it will generate low revenue of $18.3 million. Both the electric users in and out of the study areas are also against the policy because privatization of the supply of electricity means high costs of access. Developers are against the policy because it will deny them the chance to participate in the provision of electricity. This is because the company has adequate expertise to accomplish the project without much assistance. IRWD also did not support the policy on private power because it would be very for the private company to adhere to the requirements on environment conservation. The policy alternatives have been evaluated on the basis of the amount of revenue that will be collected when each of the policies are implemented. Revenues have been the main point of differences between the two policies. It is expected that the private policy will generate $18.3 million for the city whereas the public policy is expected to generate $109.3 million. The private policy is associated with access costs of $14.9 cents per kWh in residential premises, $14.8 cents per kWh in commercial use and $11.3 cents in industrial use. The other policy on public power is associated with access costs of $9.9 cents per kWh in residential premises, $9.9 cents per kWh in commercial use and $7.7 cents in industrial use The other measurable aspects included in the policy alternative include legal procedures. Legal issues included the regulation of utility services, the procedure of determining utility rates and the establishment of public benefit programs. It was necessary that all the policy alternatives adheres to the established laws that govern the electricity sector and monitors the activities of the different stakeholders. Conclusion/Recommendation The analysis of the alternatives indicates that there is the issue of costs involved in the implementation of the different policies. According to the study conducted by the SCE system, there are recommendations that the feasibility research study might have not analyzed the cost implications of the project to a greater length (Yankelovich, 2011). I would like to recommend that the municipality conducts further study in order to get the true cost implications of running the “spot” electricity utility supply. The city of Irvine should establish a municipal electricity utility project but after a careful analysis of the cost implications of the project on the finances of the municipality. However, based on the current feasibility test the city should adopt the policy on public power because it is in agreement with most of the stakeholders and generates a higher revenue than the policy on private power. References Arceivela, S. (2007). Wastewater Treatment for Pollution Control and Reuse. Chicago: Tata McGraw-Hill Education. Benes, C. (2011). Urban Legends: Civic Identity and the Classical Past in Northern Italy and the US. Rome: Penn State Press. Demirkan, H. (2011). Service Systems Implementation. New York: Springer. Forsyth, A. (2005). Reforming suburbia: the planned communities of Irvine, Columbia, and the Woodlands. California: University of California Press. Michaels, R. (2002). Irvine’s proposed Northern Sphere Municipality utility: power risks and benefits. California: The South California Edison Company. Nerserian, R. (2010). Energy for the 21st Century: A Comprehensive Guide to Conventional and Alternative Services. New York: M.E. Sharpe. Sahakian, B. (2011). Oxford Handbook of Neuroethics. Oxford: Oxford University Press. Sanction, A. (2009). Foundations of governance: municipal government in Canada's provinces Toronto: University of Toronto Press. Wagner, F. (2005). Revitalizing the city: strategies to contain sprawl and revive the core. California: M.E. Sharpe. Yankelovich, D. (2011). Toward Wiser Public Judgment. Vanderbilt: Vanderbilt University Press, 2011 Read More