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HomeMy WebLinkAbout5.874 Original Contract Contract No. 08PB-12397 STANDSTILL AND INTERIM RELIEF PAYMENT AGREEMENT by and between UNITED STATES OF AMERICA , DEPARTMENT OF ENERGY acting by and through the BONNEVILLE POWER ADMINISTRATION and CITY OF PORT ANGELES Table of Contents 5. g 7<1 Section 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Term .......... ...................................................... ................................................. D efini ti 0 ns . ........................................................ ............................................. Exhi bits.......... ................................. ...................... ........................................... BP A Duties and Responsibilities................................................................ Port Angeles' Duties and Responsibilities ............................................... Representations and Acknowledgements Regarding Standstill P aym en t ............................... ........................ ........... ................................... No Waiver of Righ ts ...................................................................................... True-up Payment Events ............................................................................. True-up Calculation and P aymen t............................................................. Stan dard Provisions ......... ..................... ................ ........... ............................ T ermina ti 0 n and Re pa ym en t .............................................. ........................ Signature s .. ................................ .............................................. ....................... Exhibit A Exhibit B Standstill Payment Methodology for Determining Customer Percentage Page 2 3 5 5 5 5 6 6 7 8 9 9 This STANDSTILL AND INTERIM RELIEF PAYMENT AGREEMENT (Agreement) is executed by and between the CITY OF PORT ANGELES (Port Angeles) a municipal corporation organized under the laws of the State of Washington, and the UNITED STATES OF AMERICA, DEPARTMENT OF ENERGY, acting by and through the BONNEVILLE POWER ADMINISTRATION (BPA). Port Angeles and BPA are sometimes referred to herein individually as "Party" and together as "the Parties." RECITALS WHEREAS, section 5(c) of the Northwest Power Act establishes the right of Pacific Northwest electric utilities to participate in the Residential Exchange Program that provides wholesale power cost benefits for residential and small farm consumers; and , , . .. WHEREAS, BPA and the Investor-Owned Utilities entered into Settlement Agreements relating to the determination ofthe Residential Exchange Program benefits for a period commencing October 1, 2001; and I WHEREAS, recently the United States Court of Appeals for the Ninth Circuit has issued a number of opinions, including Portland General Electric, et al. v. Bonneville Power Administration, Golden Northwest Aluminum, Inc. v. Bonneville Power Administration (May Opinions), Public Utility Dist. No.1 of Snohomish County Wash. v. Bonneville Power Administration, and Public Util. Dist. No.1 of Grays Harbor v. Bonneville Power Administration (collectively Opinions); and WHEREAS, as a consequence of BPA's uncertainty regarding its authority to continue payments under the Settlement Agreements after the May Opinions, BPA temporarily suspended payments to the Investor-Owned Utilities under such agreements effective May 21,2007; and WHEREAS, BP A continues to collect the cost of the Settlement Agreements in the rates charged to Port Angeles; and WHEREAS, it is reasonable to assume that some portion of the cost ofthe Settlement Agreements currently being collected by BPA will be credited to BPA's preference customers through the BP A rate process; and WHEREAS, because of the continued collection through BPA preference customer power rates of the suspended Settlement Agreement payments, the electric power bills of certain Pacific Northwest electric utilities, including Port Angeles, have increased and, in some cases, are causing economic hardship to its consumers; and WHEREAS, Port Angeles wishes to receive a partial credit now for such costs on an interim basis subject to true-up at a later date; and WHEREAS, in light of the benefits provided by this Agreement, BP A has determined it would be inequitable to the consumers of Port Angeles to not provide Standstill Payments pending a final determination of the exact amount of Residential Exchange Program payments that should have been collected from Port Angeles for Fiscal Years 2007 and 2008; and WHEREAS, as provided in this Agreement, the Parties have reserved all, and do not waive any, statutory, contractual or other rights, obligations or claims regarding the appropriate level of payments under the Residential Exchange Program including, without limitation, the costs to be recovered through BPA's rates since October 1, 2001. NOW, THEREFORE, in consideration of the promises and the respective representations hereinafter contained, the Parties hereby promise and agree as follows: 1. TERM This Agreement shall become effective on the date of execution by the Parties (Effective Date) arid shall continue through the end of the Term. All obligations hereunder shall be preserved until satisfied. 08PB-12397, Port Angeles 2 2. DEFINITIONS As used herein, the following terms shall have the following meanings: (a) "Benefit Period" means the period beginning on October 1, 2001 and ending on September 30, 2008. (b) "True-up Payment Amount" means the amount, if any, by which the Standstill Payment made to Port Angeles is less than the Port Angeles Amount. (c) "Port Angeles True-up Payment Amount" means the amount, if any, by which the Port Angeles Amount is less than the Standstill Payment made to Port Angeles. (d) "Port Angeles Amount" means the amount determined by multiplying the Definitive Payment Amount by the Port Angeles' percentage of such amount. The Port Angeles percentage shall be determined by the BP A Administrator in the Definitive Payment ROD. BPA's initial proposal in the WP-07 supplemental rate proceeding for determining such percentage shall conform to the methodology described in Exhibit B of this Agreement. (e) "Definitive Payment Amount" means the resulting difference, if any, between the Settlement Costs and the Residential Exchange Program Costs, all as determined by the BPA Administrator in the Definitive Payment ROD. (f) "Effective Date" has the meaning specified in section 1 of this Agreement. (g) "Expiration of Stay Date" means the day on which BPA issues the earlier of: (1) the Definitive Payment ROD; (2) any other final decision regarding the level of payments under the Residential Exchange Program to which the Investor-Owned Utilities are entitled for any part of the Benefit Period (not including Residential Exchange Interim Relief and Standstill Agreements); or (3) a final BPA decision regarding the rates to be charged Port Angeles for any portion of the Benefit Period or thereafter. (h) "Definitive Payment ROD" means a final record of decision in which the BPA Administrator will make, in addition to any other final decisio'ns, a final determination on the Definitive Payment Amount. The underlying proceeding will not be considered closed for purposes of there being final decisions until the Administrator issues the Definitive Payment ROD. (i) "Fiscal Years 2007-2008" means the period beginning on October 1, 2006 and ending on September 30,2008. 08PB-12397, Port Angeles 3 (j) "Interest Accrual Date" has the meaning specified in section 9 of this Agreement. (k) "Investor-Owned Utilities" means Avista Corporation, Idaho Power Company, NorthWestern Corp., PacifiCorp, Portland General Electric Company, and Puget Sound Energy, Inc., or their respective successor entities. (1) "Standstill Payment" means the payment specified in Exhibit A. (m) "May Opinions" has the meaning specified in the recitals. (n) "Opinions" has the meaning specified in the recitals. (0) "Northwest Power Act" means the Pacific Northwest Electric Power Planning and Conservation Act, P.L. 96-501. (p) "Residential Exchange Interim Relief and Standstill Agreement(s)" means the agreement(s) ofthat title executed by BPA and some or all of the Investor-Owned Utilities. (q) "Residential Exchange Program" means the purchase and sale obligations established under section 5(c) of the Northwest Power Act. (r) "Residential Exchange Program Costs" means the costs of the Residential Exchange Program that should have been included in rates for Fiscal Years 2007 -2008 as determined by the BP A Administrator in the Definitive Payment ROD. (s) "Settlement Agreements" means those existing agreement(s) executed between BPA and the Investor-Owned Utilities that settled their rights and obligations under the Residential Exchange Program for any period overlapping the Benefit Period, which may include any existing amendments, revisions, novations, or replacements thereto. (t) "Settlement Costs" means the costs associated with the Settlement Agreements, which may include costs arising from any heretofore existing amendments, revisions, novations, or replacement to such agreements, included in rates for Fiscal Years 2007-2008 as determined by the BPA Administrator in the Definitive Payment ROD. (u) "Term" means the period from and including the Effective Date and continuing until all true-up payments have been made pursuant to section 9. (v) "True-up Effective Date" has the meaning specified in section 8 of this Agreement. (w) "True-up Payment Event" has the meaning specified in section 8 of this Agreement. 08PB-12397, Port Angeles 4 3. EXHIBITS Exhibits A and B are attached hereto and made a part of this Agreement. 4. BP A DUTIES AND RESPONSIBILITIES In consideration for the duties and responsibilities of Port Angeles as set out in section 5, BPA shall make the Standstill Payment as specified in Exhibit A to Port Angeles. The amount of the Standstill Payment shall be as specified in Exhibit A. Payment shall be by electronic funds transfer pursuant to instructions provided to BP A by Port Angeles. Payment shall be made as soon as practicable after execution of this Agreement. 5. PORT ANGELES' DUTIES AND RESPONSIBILITIES (a) Stay of Litigation Activities In consideration for the Standstill Payment, and subject to section 7 of this Agreement, Port Angeles agrees to abstain until the Expiration of Stay Date from filing any claim, petition or other legal action in any court or administrative body (other than BPA's administrative proceedings) that: (1) Challenges BPA's decision to enter into this Agreement or any other Standstill and Interim Relief Payment Agreement(s) executed by BP A and any other preference customer; (2) Challenges BP A's decision to enter into the Residential Exchange Interim Relief and Standstill Agreement(s) executed by BPA and any Investor-Owned Utility. (b) Nothing in this Agreement shall prohibit Port Angeles from seeking relief under its power sales or transmission agreements with BP A for any other matters unrelated to the matters described in section 5(a) above. (c) Nothing in this Agreement shall prevent Port Angeles from filing any documents or appearing in any court or administrative proceeding in order to seek to uphold the Opinions or their effect, or to respond in any manner or take any action that Port Angeles deems appropriate with regard to any actions taken, or arguments or claims raised, by others with respect to the Opinions or their effect. (d) This Agreement and the Residential Exchange Interim Relief and Standstill Agreement(s) executed by BPA and any Investor-Owned Utility do not constitute final decisions including, but not limited to, final decisions on 2008 Residential Exchange benefits or the level of Residential Exchange Program costs that should or could be included in rates. 6. REPRESENTATIONS AND ACKNOWLEDGEMENTS REGARDING STANDSTILL PAYMENT Each Party hereby represents, acknowledges and agrees that: (a) the Standstill Payment is an interim measure designed to provide financial relief to Port Angeles 08PB-12397, Port Angeles 5 pending the outcome of the BPA rate process addressing the Opinions; (b) the Standstill Payment is not intended to be, nor shall it be interpreted to be, a final and definitive payment or settlement of amounts, if any, that are finally determined due and payable to Port Angeles; and (c) the Standstill Payment made pursuant to this Agreement shall be subject to the reconciliation and true-up process described in section 9 below. This section 6 shall survive the termination or expiration of this Agreement and shall survive even if any other provision(s) of this Agreement is held to be not consistent with law, or void or otherwise unenforceable. 7. NO WAIVER OF RIGHTS Notwithstanding anything in this Agreement to the contrary, it is hereby agreed that neither Party has waived or is waiving, either by virtue of entering into this Agreement, by making or accepting payments under this Agreement, or otherwise, any arguments or claims it has made or may make, or any rights or obligations it has or may have, regarding the appropriate level of Residential Exchange Program payments to the Investor-Owned Utilities, the payments made under the Settlement Agreements, or the calculation or implementation of the Residential Exchange Program including, without limitation, the costs of the Settlement Agreements and the Residential Exchange Program included in the BPA rates for any period of time whether within or outside of the Benefit Period, and each Party hereby expressly reserves all such arguments, claims and rights. This section 7 shall survive the termination or the expiration of this Agreement and shall survive even if any other provision(s) of this Agreement is held to be not consistent with law, or void or otherwise unenforceable. 8. TRUE-UP PAYMENT EVENTS The occurrence of one or more of the events identified below (True-up Payment Event) shall result in the true-up of the Standstill Payment pursuant to section 9 of this Agreement. (a) A court of competent jurisdiction issues a final order or opinion holding that the Settlement Agreements are consistent with law and BP A resumes payments due under the Settlement Agreements; or (b) BPA issues the Definitive Payment ROD. BPA shall provide written notice to Port Angeles of such True-up Payment Event and shall specify in such notice the effective date of the True-up Payment Event (True-up Effective Date); provided, however, that such specified date shall not be a date earlier than three days after receipt by the other Party of such written notice. This section 8 shall survive the termination or expiration of this Agreement and shall survive even if any other provision(s) of this Agreement is held to be not consistent with law, or void or otherwise unenforceable. 08PB-12397, Port Angeles 6 9. TRUE-UP CALCULATION AND PAYMENT Except as provided in section 11, the Parties hereby agree that on the True-up Effective Date the Standstill Payment paid hereunder shall be subject to reconciliation and true-up in accordance with this section 9. (a) Calculation and Commencement of True-up Payment BPA shall calculate the difference, if any, between the Standstill Payment made to Port Angeles and the Port Angeles Amount. If there is any difference between the Port Angeles Amount and the Standstill Payment amount, then the following provisions shall apply: (1) If there is a BPA True-up Payment Amount, then BPA shall pay Port Angeles such amount. BP A may make such payment to Port Angeles in a lump sum (without interest) or in equal monthly amounts (including interest as calculated in section 9(a)(3)) for a period of seven (7) months, as determined by BP A. If BP A chooses to make a lump sum payment, the payment shall be by electronic funds transfer pursuant to instructions provided to BP A by Port Angeles. If BP A chooses to make payment in equal monthly amounts, the payment will appear as credits to the customer's monthly power bills. In either case, payment shall be made as promptly as practicable after the issuance of the Definitive Payment ROD. (2) If there is a Port Angeles True-up Payment Amount, then Port Angeles shall pay BP A such amount. Port Angeles may make such payment to BPA in a lump sum (without interest) or pay such amount through a charge that BP A establishes that is applicable only to customers that have signed Standstill Agreements, as determined by Port Angeles. Such charge shall be determined pursuant to the applicable provision(s) of BPA's General Rate Schedule Provisions (GRSPs) as published in the WP-07 supplemental rate proceeding and shall be applicable for at least a period of seven (7) months. The charge included in such GRSPs will include interest as calculated in section 9(a)(3). If Port Angeles elects to make a lump sum payment, such payment must be made to BP A no later than the date payment is due on the first power bill issued by BPA to Port Angeles after the date of issuance of the Definitive Payment ROD. (3) The interest on the BPA True-up Payment made in equal monthly payments shall be simple interest computed on the declining balance from the later of October 1, 2008 or the True-up Effective Date (Interest Accrual Date) until paid. The interest rate applied to such outstanding balances shall equal the one (1) year annual rate of interest posted under the title "Daily Treasury Yield Curve Rates" as published on the U.S. Treasury Department's web site at 3:30 pm Eastern Prevailing Time on the Interest Accrual Date. The interest rate is available at the following website: www. treasury .gov/offices/domestic- finance/debt- management/interest- rate/yield.shtml. 08PB-12397, Port Angeles 7 (b) In addition to using the true-up provision described in section 9(a) above, th~ Parties further agree and acknowledge that if a Court of competent jurisdiction remands, vacates or otherwise reverses BPA's decision to enter into this Agreement, or BPA's determination of the Definitive Payment Amount or the Port Angeles Amount, then the Parties will work cooperatively and in good faith together and take such actions as are necessary to conform this Agreement to such order(s). This section 9 shall survive the termination or expiration of this Agreement and shall survive even if any other provision(s) of this Agreement is held to be not consistent with law, or void or otherwise unenforceable. 10. STANDARD PROVISIONS (a) Amendment All amendments to this Agreement shall be set forth in a written instrument signed by authorized representatives of each Party. (b) Entire Agreement and Order of Precedence This Agreement, including the exhibits incorporated as part of this Agreement, constitutes the entire agreement between the Parties with respect to the subject matter ofthis Agreement. This Agreement supersedes all previous communications, representations, or contracts, either written or oral, which purport to describe or embody the subject matter of this Agreement. The body of this Agreement shall prevail over the exhibits to this Agreement in the event of a conflict. (c) No Third Party Beneficiaries This Agreement is made and entered into for the sole protection and legal benefit of the Parties, and no other person or entity shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with this Agreement. (d) Waivers No waiver of any provision or breach of this Agreement shall be effective unless such waiver is in writing and signed by the waiving Party, and any such waiver shall not be deemed a waiver of any other provision of this Agreement or any other breach of this Agreement. (e) Uncontrollable Forces Neither Party shall be in breach of their respective obligations under this Agreement to the extent the failure to fulfill any obligation is due to orders or injunctions issued by a court of competent jurisdiction (Uncontrollable Force). If an Uncontrollable Force prevents a Party from performing any of its obligations under this Agreement, such party shall: (1) immediately notify the other Party of such Uncontrollable Force by any means practicable and confirm such notice; (2) attempt in good faith to stay, suspend or mitigate the effects of such Uncontrollable Force as soon as reasonably practicable; 08PB-12397, Port Angeles 8 (3) keep the other Party apprised of such efforts on an ongoing basis; and (4) provide written notice of the resumption of performance. 11. TERMINATION AND REPAYMENT (a) Basis for Termination Port Angeles may terminate this Agreement if BP A fails to use in the Definitive PaYment ROD the methodology set out in Exhibit B to determine the Slice and non-Slice Definitive PaYment Amounts or Port Angeles' percentage(s) of the Definitive Payment Amount. (b) Notice and Repayment To be effective, Port Angeles must give BP A written notice of its election to terminate this Agreement no later than ten (10) days after the issuance of the Definitive PaYment ROD. If such written notice of termination is given, Port Angeles must repay to BP A the Standstill Payment no later than fifteen (15) days after the issuance of the Definitive Payment ROD by wire transfer in accordance with instructions provided by BP A. (c) Early Termination Notwithstanding any other provision of this Agreement, in the event that BP A has not yet made the Standstill PaYment pursuant to this Agreement and BPA is enjoined or otherwise judicially precluded for any period of time from making either Standstill Payments pursuant to the Standstill and Interim Relief Payment Agreements or Interim Payments pursuant to the Residential Exchange Interim Relief and Standstill Agreements, then this Agreement shall be void ab initio and without any force and effect whatsoever. 12. SIGNATURES Each signatory represents that he or she is authorized to enter into this Agreement on behalf of the Party for which he or she signs. CITY OF PORT ANGELES UNITED STATES OF AMERICA Department of Energy Bonneville Power Administration By %tf.~ Mark E. Madsen By ~;)I<~ , Name Name Shannon K. Greene (Print / Type) Title (Print/Type) City Manager Title Account Executive Date tY\A:Rcr\ \4) 'Z.oo8 Date IY1~6L4J tWo ~ , (PSW/SeattJe-S. \PM\ CUST_SKG \ PORT ANGELES \REP _2008_Standsbll \PA_12397 _20080225_Standstill AgreemenCFinal doc) 02/25/2008 08PB-12397, Port Angeles 9 Exhibit A STANDSTILL PAYMENT 1. Customer Percentage The percentage used to calculate Port Angeles' Standstill Payment is 1.5147 percent. 2. Standstill Payment Amount The Standstill Payment amount Port Angeles shall receive under the terms of this Agreement is $2,404,900. (PSW/Seattle-S \PM\CDST_SKG \PORT ANGELES \REP _2008_StandstIll \PA_12397 _20080225_StandstIll AgreemenCFmal doc) 02125/2008 08PB-12397, Port Angeles Page 1 of 1 Exhibit B METHODOLOGYFORDETERMnrrNGCUSTOMERPERCENTAGE Because the Slice Product includes an annual true-up to actual costs (Annual Slice True-up), some specific issues must be dealt with to put Slice customers on parity with non-Slice customers when determining each customer's percentage of the Definitive Payment Amount under the proposed Standstill Agreement. The following approach was used to address such issues when determining the Standstill Payment, and will be used in BPA's initial rate proposal in the WP-07 supplemental rate proceeding: 1. The Definitive Payment Amount will be divided between non-Slice and Slice purchasers on a 77.3722% - 22.6278% basis. This will result in a non-Slice Definitive Payment Amount (77.3722% ofthe Definitive Payment Amount) and a Slice Definitive Payment Amount (22.6278% of the Definitive Payment Amount). 2. Individual customer Definitive Payment Amounts will be set by applying percentages to the non-Slice Definitive Payment Amount and the Slice Definitive Payment Amount. For each customer, its non-Slice percentage is equal to the ratio of the FY07 PF non-Slice revenues from each such customer to total non-Slice PF revenues, which would include Block purchases by Slice customers. For each Slice customer, its Slice percentage is equal to the ratio of the FY07 PF Slice revenues from each such customer to total Slice revenues excluding any Annual Slice True-up amounts. Each Slice customer would have a Slice percentage and a non-Slice percentage. (PSW/Seattle-S: \PM\CUST_SKG \ PORT ANGELES \REP _2008_StandstIll \PA_12397 _20080225_StandstIll Agreement]mal.doc) 02/25/2008 08PB-12397, Port Angeles Page 1 of 1