HomeMy WebLinkAbout001191 Original Contract City of Port Angeles
Record # 001191 EXHIBIT a
Western Public Agencies Group
2017 scope of services and Budget
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The Western Public Agencies Group ("WPAG") comprises 19 publicly awned utilities in the state
of Washington; Benton RA, Clallam County P.U.D. No. 1, Clark Public Utilities, the City of
Ellensburg, Grays Harbor P.U.D. No. 1, Kittitas County P.U.D. No. 1, Lewis County P.U.D. No. 1,
Masan County P.U.D. No. 1, Mason County P.U.D. No. 3, Pacific County P.U.D. No. 2, Skarnania
County P.U.D. No.1, the City of Port Angeles, and members of the Pierce County Cooperative
Power Association, which includes Alder Mutual Light Company, the Town of Eatonville,
Elmhurst Mutual Power and Light Company, the City of Milton, Chop Mutual Light Company,
Parkland Light and Water Company, and the Town of Steilacoom.
Together the WPAG member utilities serve more than one million customers and purchase
more than 6 billion kilowatt-hours Brom the Bonneville Power Administration ("Bonneville"' or
"BPA") each year under both Load Following and Slice/Block Contracts. WPAG member utilities
also own or receive output from more than 400 megawatts of non-Bonneville generation and
purchase more than 300 megawatts of power from sources other than Bonneville. WPAG
members are generally winter-peaking utilities with lower annual load factors.
WPAG members` similar characteristics have caused them to join together to represent their
interests before Bonneville, and in other regional and national forums since 1980. WPAG has
intervened as a group in every major Bonneville rate proceeding since enactment of the Pacific
Northwest Electric Power Planning and Conservation Act of 1980. WPAG's interests have also
been represented in Congress, before the Northwest Power Planning Council, and in other
regional forums.
The scope of services presented here includes areas that various other organizations, of which
WPAG members might also be members, cannot advocate for WPAG members due to conflicts
of interest within those organizations, lack of staff resources or subject area expertise. WPAG
thus fulls a need that is unmet by membership in the Public Power Council, the Northwest Public
Power Association, the Pacific Northwest Utilities Conference Committee and other similar
groups.
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EXHIBIT A
Scope of Services
The 2017 scope of services for WPAG is proposed as follows:
* General WPAG Activities and Meetings
During 2017, EES Consulting and MMPS&M will monitor and comment on regional and
federal activities of specific interest to WPAG members not covered adequately by other
public power organizations of mutual interest and relevance. Monthly meetings will be held
to brief WPAG members on these activities.
* Regional Activities
BP-18 Rote Case — During 2017, BPA will conduct a combined transmission and power
rate case that will set rates for the two-year FY 2018-2019 rate period ("BP-18"). WPAG
has intervened and will actively participate in the rate case. This, case will present issues
as described below.
Financial Reserve Policy — BPA is proposing to adopt a new financial reserve
policy as part of the BP-18 Rate Case chiefly for the purpose of buttressing its
credit rating with the rating agencies. The new policy would be in addition the
95 percent treasury payment probability standard that BPA currently uses when
setting rates and would use business line specific days' cash-on-hand metrics for
both the Power and Transmission business lines. In the event either business
line falls below 60 days' cash-on-hand, a cost recovery adjustment clause would
trigger to bring the offending business line above its 60 days' cash threshold.
While BPA Transmission currently has cash reserves that well exceed 60 days'
cash-on-hand, BPA Power is approximately $200 million short. While BPA is
proposing to phase in efforts to increase Power's financial reserves over time,
the policy will be yet another source of upward rate pressure for power rates
and at a time when BPA's customers are demanding more rate accountability.
WPAG intends to argue that BPA already has a number of tools available to it
that address the same risk targeted by the proposed policy and that the policy
does not take into account BPA's unique situation in terms of its entrenched
customer base, status a federal agency, and suite of existing risk mitigation tools.
Nonetheless, BPA does appear to be predisposed to adopting a financial reserve
policy in BP-18. Accordingly, WPAG intends to make an alternative proposal that
will attempt to mitigate both the long and short term rate impacts of the policy.
This will be staffed by both EES Consulting and MMPS&M.
Market and Gas Price Forecasts — BPA's forecasts for market and gas prices for
the BP-18 rate period are important inputs into its rate case models and have a
substantial rate impacts. WPAG will review those forecasts to assess whether
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EXHIBIT A
they are reasonable and whether any adjustments should be made to BPA's
methodology or assumptions. This will be staffed by EES Consulting.
BPA's Risk Model— BPA is using a new risk model for the BP-18 rate period. The
last time BPA updated and revised its risk model for its rate case process, there
were a numbers of errors that had to be identified and then corrected. WPAG
will review the BP-18 model to determine whether there are any similar issues in
the latest iteration. This will be staffed by EES Consulting.
Montana Intertie—Over the last several rate cases, Montana wind interests have
argued that the Montana Intertie should be rolled into the BPA main grid. The
long term impacts of adding another area of substantial wind resource
development to the Federal transmission system are troubling. This action will
stimulate requests for BPA to use Federal base system resources to integrate
these resources, further straining the Federal base system and its ability to serve
preference customer loads. It will also likely increase the costs of resolving over-
supply events. WPAG has strongly opposed the proposal to roll in the Montana
Intertie in prior rate cases and will continue to do so in the BP-18 Rate Case, This
will be staffed primarily by IVIMPS&M.
Cost Allocation to NT and PTP Transmission Rates — Over the last several rate
cases, Snohomish PUD and Tacoma have asserted that BPA's allocation of costs
between Network Transmission ("NT") and Point to Point ("PTP") transmission
rates did not recognize the full costs of services provided to NT customers, to the
detriment of PTP customers. BPA held a number of pre-BP-18 Rate Case
workshops on this matter and in those workshops Tacoma continued to pursue
the same arguments it made in the BP-14 and BP-16 Rate Cases on this issue.
Tacoma proposal seeks to shift costs from the PTP rate to the NT rate in a
manner that is not cost justified. In the initial rate proposal, BPA will propose no
change to its cost allocation methodology. WPAG will oppose efforts to shift
costs between transmission rates in a manner that is not cost justified and will
support efforts to fairly allocate costs between NT and PTP rates. This will be
staffed by EES Consulting and MMPS&M.
Other Issues — WPAG will review the direct cases of the other rate case parties
and will rebut or support such cases as necessary to protect the interests of
WPAG's members. This will be staffed by EES Consulting and MIVIPS&M.
Focus 2028 — BPA has stated that is focused on being the low-cost energy provider of
choice when new power contracts are offered in 2028. To this end, and largely at the
request of WPAG and other preference customers, BPA has commenced its Focus 2028
process earlier this year. This forum is intended to establish a common understanding
of industry changes and strategic choices BPA may face to maintain its financial strength
and cost competiveness. Among other issues, Focus 2028 includes a review of BPA's
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EXHIBIT A
approach to capital investment in the hydropower and transmission systems, its internal
operating costs and program delivery models, including energy efficiency. WPAG will
continue to participate in Focus 2028 to ensure that BPA's focus stays centered on being
the region's low-cost energy provider and to emphasize the urgency with which BPA
must bring its unyielding cost structure under control to maintain its competiveness.
This will be staffed by EES Consulting and MMPS&M.
Conservation► –As part of the Focus 2028 process, BPA has promised a renewed look at
it the program delivery model for its conservation program. This will include a looking
at moving towards a model where utilities have more flexibility in funding conservation
on their own versus staying with BPA funding. This will also include a review of how BPA
intends to comply with the conservation targets to be established under the Northwest
Power and Conservation Council's Seventh Power Plan. We will work with WPAG's
members to establish positions that are fair to all members. We will also work within
public power to help build consensus and joint action where possible. This will be
staffed by EES Consulting and MMPS&M.
Integrated Program Review 2 (lPR 2) – The IPR provides BPA's customers with an
opportunity to review and comment on BPA's expense and capital spending levels prior
to their inclusion in the upcoming BP-18 rate case. BPA concluded its initial IPR for the
BP-18 rate period this last September, but at the same time committed to conduct an
IPR 2 process in the first part of 2017 to find more cost saving before the final BP-18 rate
proposal. WPAG will participate in the IPR 2 process to attempt to reduce the costs that
are to be included in the final BP-18 rate proposal. This will be staffed by EES Consulting
and MMPSM
Amendment to BPA's Transmission Ta – For many years BPA's Open Access
Transmission Tariff (GATT) has included a provision that says that the terms and
conditions of the tariff cannot be changed with the approval of the Federal Energy
Regulatory Commission (FERC). This has created a multitude of problems for BPA over
the last several years where BPA has attempted to amend its tariff in order to
accommodate one or more of its statutory obligations (e.g., to address oversupply
situations), but FERC has rejected the proposed changes because they are inconsistent
with FERC's pro forma GATT. FERC is reluctant to make exceptions for BPA, even when
the need is clear and warranted, because it does not want to establish precedent to be
used by jurisdictional utilities. Early next year, BPA intends to petition FERC for removal
of the requirement to seek FERC's approval of tariff changes. Assuming FERC grants that
request, BPA will also develop and implement a new internal process for amending its
tariff. Less FERC oversight over BPA's activities would allow BPA to focus more on
serving the needs of its core constituency—preference customers. However, any time
BPA goes before FERC is potentially perilous. WPAG will participate in the FERC
proceedings to protect the interest of preference customers and will also participate in
the development of BPA's new process for amending its tariff. This will be staffed by
MMPS&M.
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EXHIBIT A
BPA's Engagement with CAISO—As the Northwest's investor owned utilities (IOUs), and
some public utilities, continue to integrate more and more with the CAISO, BPA has and
will be forced engage with the CAISO to protect its strategic interests and to satisfy its
statutory obligations. One such example is how legacy transfer service agreements
between BPA and an IOU for preference customer load service will be treated in the
event an IOU joins the CAIISO. Another example is ensuring that the IOUs use of BPA's
transmission system to participate in the CAISO"s energy imbalance market does not
negatively affect preference customer load service. WPAG will continue to monitor and
work with other preference customer groups to ensure that BPA's engagement with
CAISO does not come at the cost of preference customer load service or pocketbooks.
Transmission Load Service Process — BPA has initiated a new process to address power
customer concerns and issues regarding access to and availability of transmission
capability for load service. It has included issues such as how is transmission capability
ear-marked to serve load, how is such capability made available, and how customers
serving load can get access to transmission without getting in line behind commercial
generators. While BPA has made some preliminary decisions that are favorable to
power customers, much work remains to be done to assure that BPA will have
transmission available when power customers will need it. This will be staffed by
IVIMPS&M.
* NERC
EES Consulting has been monitoring and advising WPAG members on North American
Electricity Council (NERC) compliance issues since April of 2007. EES Consulting will
continue to monitor compliance issues on behalf of WPAG members in 2017. EES
Consulting will alert WPAG members of issues as they arise. To the extent that detailed
analysis and/or representation is required by an individual WPAG member with respect to
compliance issues, tasks will be completed and billed on an individual utility basis,
* Olympia Legislative Session
EES Consulting and IVIMPS&M will monitor the activities of the 2017 legislature on behalf of
WPAG's specific interests.
* Other Matters
During the course of each year, matters arise that require WPAG attention to protect the
interests of our customers. These matters are undertaken at the direction of the WPAG
utilities.
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EXHIBIT A
Budget
The budget for the scope of services described above is calculated at the following billing rates
for EES Consulting and MMPS&M:
EES Consulting
President....................................... ..................................._. $185 per hour
Senior Associate/Manager..................................................... $180 per hour
Senior Project Manager......................................................... $170 per hour
Project Manager........... ........ ............................ ............ $165 per hour
Senior Analyst or Engineer .................................................... $160 per hour
Analyst............................................ ....................................... $155 per hour
Clerical........................................ ........................................... $120 per hour
MMPS&M
Principal .................................................... ....................... .... $190 per hour
Associate.................................................... .............. .......... $190 per hour
These billing rates will remain in effect through December 31, 2017.
On the basis of the above billing rates, the 2017 labor budgets of EES Consulting and MMPS&M
combined are estimated to be $250,000. This labor budget will be split equally between EES
Consulting and MMPS&M. This total labor budget of $250,000 is the same as the total labor
budget in 2014, 2015 and 2016. The EES Consulting/MMPS&M contract for 2017 starts
January 1, 2017 and ends December 31, 2017. The 2017 allocation for the City of Port Angeles
is$12,627.00 for this contract period.
In addition to labor costs, out-of-pocket expenses will be billed to WPAG members at their cost
to EES Consulting and MMPS&M. It is estimated that $40,000 in total out-of-pocket expenses
will be incurred. Out-of-pocket costs will be billed by whichever organization actually incurs the
expense. The total estimated annual WPAG budget (including the supplemental funding) for
2017 is estimated at $290,000. This represents no increase over the total 2014, 2015 or 2016
annual WPAG budgets.
As always, the allocation of the budget among WPAG members is open to negotiation by the
participants. We have attached an inter-utility allocation predicated on the most recent
available utility data. After a discussion of the foregoing issue, a final budget by utility will be
prepared. An example of the budget's allocation is attached at the end of this narrative.
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EXHIBIT A
Project Staffing
The staffing for these projects will be similar to that for past WPAG activities. Gary Saleba will
be the principal representative for EES Consulting. Ryan Neale and Terry Mundorf will be the
principal representatives for MMPS&M. Additional MMPS&M and EES Consulting staff will
assist as needed.
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LEGAL SERVICES AGREEMENT
THIS AGREEMENT is made between BENTON RURAL ELECTRIC ASSOCIATION,
WASHINGTON; CITY OF PORT ANGELES, WASHINGTON; CITY OF ELLENSBURG,
WASHINGTON; CITY OF MILTON, WASHINGTON; TOWN OF EATONVILLE,
WASHINGTON; TOWN OF STEILACOOM, WASHINGTON; ALDER MUTUAL LIGHT
COMPANY, ELMHURST MUTUAL POWER AND LIGHT COMPANY, WASHINGTON;
OHOP MUTUAL LIGHT COMPANY, WASHINGTON; PARKLAND LIGHT AND WATER
COMPANY, WASHINGTON; PUBLIC UTILITY DISTRICT NO. I OF CLALLAM
COUNTY, WASHINGTON; PUBLIC UTILITY DISTRICT NO. I OF CLARK COUNTY,
WASHINGTON; PUBLIC UTILITY DISTRICT NO. I OF GRAYS HARBOR COUNTY,
WASHINGTON; PUBLIC UTILITY DISTRICT OF KITTITAS COUNTY, WASHINGTON;
PUBLIC UTILITY DISTRICT NO. I OF LEWIS COUNTY, WASHINGTON; PUBLIC
UTILITY DISTRICT NO. I OF MASON COUNTY, WASHINGTON; PUBLIC UTILITY
DISTRICT NO. 3 OF MASON COUNTY, WASHINGTON; PUBLIC UTILITY DISTRICT
NO. 2 OF PACIFIC COUNTY, WASHINGTON, AND PUBLIC UTILITY DISTRICT NO. I
OF SKAMANIA COUNTY, WASHINGTON; (Public Utilities); and MARSH MUNDOR.F
PRATT SULLIVAN & McKENZIE (Attorney) for the provision of legal services and the
payment of compensation as specified herein.
WHEREAS, the Public Utilities presently purchase electric power and transmission from
the Bonneville Power Administration (BPA) pursuant to wholesale rate schedules determined by
SPA after public hearing pursuant to Section 7 of the Pacific Northwest Electric Power Planning
and Conservation Act (Act);
WHEREAS, BPA is considering adoption of various policies, rate forms and long-term
contracts which would have a major impact on the wholesale rates of the Public Utilities, and
WHEREAS, BPA is preparing to conduct hearings and public processes to decide issues
which will affect Bonneville's wholesale rate schedules and Power Sales Contracts for the Public
Utilities; and
WHEREAS, the Public Utilities wish to actively participate in these hearings and
processes to protect the interests of their ratepayers, and
WHEREAS, the Public Utilities may wish to diversify their power supply sources,
It is Therefore Agreed That:
I. The Attorney shall advise, assist and appear on behalf of the Public Utilities in
hearings and public processes relating to issues set forth Exhibit A referenced
herein attached and as directed by the Public Utilities.
Pagel of 2
2. Public Utilities shall compensate the Attorney for these services at an average
hourly rate not to exceed $190.00. Out-of-pocket expenses, such as telephone,
telecopy, copying and postage, and reasonable and necessary travel expenses shall
be in addition to the hourly rate. The Attorney shall send each of the Public
Utilities an itemized statement for legal services rendered and out-of-pocket
expenses on a monthly basis.
3. The Attorney fees and out-of-pocket expenses incurred hereunder shall be divided
among the Public Utilities according to the formulas attached in Exhibit A.
4. The activities encompassed by this Agreement are set forth in Exhibit A attached
hereto. No other activities shall be undertaken without prior authorization of the
Public Utilities. It is understood that the length and amount of work necessary in
these proceedings is unique and the cost may exceed these estimates.
5. Files of the Attorney relating directly to the foregoing legal services shall be
available for examination by the authorized representative of the Public Utilities
or their attorneys and shall, upon reasonable request, be turned over the Public
Utilities if the Attorney ceases to act as attorney for the Public Utilities.
6. Because the attorney-client relationship is dependent upon mutual trust and full
confidence, an individual Public Utility, the Public Utilities collectively, or the
Attorney may terminate this Agreement at any time upon written notice.
7. MMPS&M shall commence work on or about January 1, 2017 through December
31,2017.
MARSH MUNDORF PRATT SULLIVAN
& McKENZIE, PSC
A
Date: December 27, 2016 By:
L. Mundorf
CITY OF PORT ANGELES
Date: By:
Manager
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CONSULTING SERVICES AGREEMENT
EES CONSULTING,iiNC.
Billing Address
570 Kirkland Way Sure 10i0,Kirkland,Washington 98033
(425)889-2700
This Consulting Servlces Agreement(herein Agreement)is made between EES,Consulting,Inc.,(hereinafter"EES CONSULTING")and the City of Port Angeles,P.O.Box
1150,Port Angeles,WA 98362',AtIn Gregg King/Sltailesh Shiere(hereinafter CLIENT'").
I. SCOPE,COMPENSATION AND QUALITY OF CONSULTING SERVICES
FES CCNSULTlNG Mil provide the services and be compensated for these services as desenbed in Exhort A,attached hereto.
EES CONSULTING shall render its services lin accordance with generaily accepted professional practices. FES CONSULTING shall,to the best of its knormiedgeand
belief,comoy with applicable Ilawds,ordinarves,codes,rules,reguitations,permits and other published requirements kn effect on the date thisAgreernent is signed
11. TERMS&CONDITIONS OF CONSULTING SERVICES AGREEMENT
I Timing ofWork. EES CONSULTING shall commence work on or about January 1,2017 through December 31,2017
2 Relationship of Parties,No Third-Party Beneficiaries, EES CONSULTING is anindependent contractor under this Agreement. This Agreement gives no rights or
benefits to anyone not named as a party to this Agreement,and there are no third party beneficiaries to this Agreement,
3, insurance.
a. Insurance of EES CONSULTING. EES CONSULTING will maintain throughout the performance of this Agreement the following types and amounts of
insurance:
i. Worker's Compensation and Employer's Liability lnsurance as required by apoicabie state or federai law,
di, Comprehensive Vehde Liabifty insurance covering personal intury and property damage calms arising from time use of motor vehicles YAth combOed
single limits of$1,000,0010.
iii. Commerclai General Liabrity Insurance covering clamrs for personai injiLffy and property damage with combined single hmits of$1,01i
N, Professworral Liatrifity(Errors and Omissions,on a dairris-made basks)Insurance with irmits of$1,000,000,
tr. Interpretation, Notwithstanding any olni provision(s)in hs Agreement,nothng shelf be construed or enforced so as to void,negate or adversety affect any
otherMse appi insurance haul by any party to this Agreement,
4 Mutual Inderrinification, EES CONSULTiNG agrees to Bndei and hold harinless CLIENT and its employees from and against any and ali loss,cost,damage,
or expense of any kind and nature(including, without iinnitation, court costs,expenses,and reasonable attorneys'fees)arising out of injury to persons of damage to
property(including,without limilattion,property of CLIENT, EES CONSULTING,and their respective employees, agents,licensees, and representatwes)in any manner
caused by the negligent acts or omissions of EES CONSULTING in the performance of its work pursuarit to or in connection with this Agreement to the extent of EES
CONSULTING's proportionate negligence,d any.
CLIENT agrees to indemnify and hold harmless EES CONSULTING and its employees from and against any and all loss,cost,damage,or expense of any kind and
nature(including without limitation, court costs,expenses and reasonable attorneys'fees)arising out of in(wwry to person(s)or damage to property(including,41houl
Irmitatron,property of CLIENT,EES CONSULTING„and their respective empitryees,agents,Iiicensees,and representatives)in any manner caused by the neghgerft acts or
omissions of CLIENT or other(s)with whom CLIENT contracts("CUENT's agents`" to perform work pursuant to or in connection with this Agreenrent,to the extent of
CLIENT's or CUENT's agents proporfionale neghgence,d any,
5. Resolution of Disputes,Audi Fees, The law of the State of Wash#ngton shale govern the interprelation of and the resolution of disputes under this
Agreement, if any claim,at law or otherwise,is rnade by either party to this Agreement,the prevailing party shall be enblied to its costs and reasonable attorneys'fees
6, Termination of Agreement Either EES CONSULTING or CLIENT may terminate this Agreement upon thirty(30)days written notice to the other sent to the
addresses listed herein,
In the event CLIENT terminates this agreement,CLIENT speciftaitly agrees to pay EES CONSULTING for all services rendered through the termination date
EES CONSULTING,INC, CITY OF PORI ANGELES
L Gary Saleba
Title: President Tftie:
Date: December 27,20116 Date