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HomeMy WebLinkAbout5.375G Original ContractThis Consulting Services Agreement (herein Agreement) is made between EES Consulting, Inc (hereinafter "EES CONSULTING and the City of Port Angeles, Mr Scott McClain, P Box 1150, Port Angeles, WA 98362 (hereinafter "CLIENT EES CONSULTING will provide the services and be compensated for these services as described in Exhibit A, attached hereto EES CONSULTING shall render its services in accordance with generally accepted professional practices EES CONSULTING shall, to the best of its knowledge and belief, comply with applicable laws, ordinances, codes, rules, regulations, permits and other published requirements in effect on the date this Agreement is signed 11. TERMS CONDITIONS OF CONSULTING SERVICES AGREEMENT 1 Timing of Work EES CONSULTING shall commence work on or about January 1, 2008 2 Relationship of Parties, No Third -Party Beneficiaries EES CONSULTING is an independent contractor under this Agreement This Agreement gives no nghts or benefits to anyone not named as a party to this Agreement, and there are no third party beneficianes 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 1 Worker's Compensation and Employer's Liability Insurance as required by applicable state or federal law u Comprehensive Vehicle Liability Insurance covenng personal injury and property damage claims arising from the use of motor vehicles with combined single limits of $1,000,000 m Commercial General Liability Insurance covering claims for personal injury and property damage with combined single limits of $1,000,000 iv Professional Liability (Errors and Omissions, on a claims -made basis) Insurance with limits of $1,000,000 b Interpretation Notwithstanding any other provision(s) in this Agreement, nothing shall be construed or enforced so as to void, negate or adversely affect any otherwise applicable insurance held by any party to this Agreement 4 Mutual Indemnification EES CONSULTING agrees to indemnify and hold harmless CLIENT 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) ansing out of injury to persons or damage to property (including, without limitation, property of CLIENT, EES CONSULTING, and their respective employees, agents, licensees, and representatives) in any manner caused by the negligent acts or omissions of EES CONSULTING in the performance of its work pursuant to or in connection with this Agreement to the extent of EES CONSULTING's proportionate negligence, if 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 attomeys' fees) arising out of injury to person(s) or damage to property (including, without limitation, property of CLIENT, EES CONSULTING, and their respective employees, agents, licensees and representatives) in any manner caused by the negligent acts or omissions of CLIENT or other(s) with whom CLIENT contracts "CLIENT's agents to perform work pursuant to or in connection with this Agreement, to the extent of CLIENT's or CLIENT's agents proportionate negligence, if any 5 Resolution of Disputes, Attorneys' Fees The law of the State of Washington shall govern the interpretation of and the resolution of disputes under this Agreement If any claim, at law or otherwise, is made by either party to this Agreement, the prevailing party shall be entitled 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 specifically agrees to pay EES CONSULTING for all services rendered through the termination date EES CONSULTING, INC By Gary Saleba Title President Date January 14, 2008 CONSULTING SERVICES AGREEMENT EES CONSULTING, INC. Billing Address 570 Kirkland Way, Suite 200, Kirkland, Washington 98033 (425) 889-2700 1. SCOPE, COMPENSATION AND QUALITY OF CONSULTING SERVICES CITY OF PORT ANGELES By f2. ('777a4 Title et( t i 6 /y 4 6 6/ f. Date 4, Alie 5.37,G Western Public Agencies Group 2008 Scope of Services and Budget EXHIBIT A The Western Public Agencies Group (WPAG) comprises 22 publicly owned utilities in the state of Washington: Benton REA, 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, Mason County P.U.D. No. 1, Mason County P.U.D. No. 3, Pacific County P.U.D. No. 2, Skamania County PUD, Wahkiakum County P.U.D. No. 1, Peninsula Light Company, 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, Lakeview Light and Power Company, the City of Milton, Ohop 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 from the Bonneville Power Administration (`Bonneville each year. 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 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 forums in the Pacific Northwest and the United States 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 fills 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. Scope of Services The 2008 scope of services for WPAG is proposed as follows: General WPAG Activities and Meetings Regional Dialogue Activities 7(b)(2) Remand Rate Proceeding Tiered Rate Methodology (TRM) Rate Proceeding IOU Benefits Discussions EXHIBIT A During 2008, 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, including BPA- related legislation, progress on regional transmission and wholesale market design issues, and any other new topic of mutual interest and relevance. Monthly meetings will be held to brief WPAG members on these activities. BPA intends to commence a 7(i) to respond to the remand of the 9 Circuit Court in the Golden Northwest and PGE cases. This case will establish the amount of the over collection on Residential Exchange settlement costs for the 2002 -2006 and 2007 -2008 periods, and the operation of the 7(b)(2) rate test for the remainder of this rate period and future rate periods. It short, it will be the process that establishes the limit on how much money BPA can charge public utilities to provide cash payments to the IOUs. This will be staffed by EES Consulting and MMPS &M. BPA has commenced the formulation of the TRM that will govern the pricing of both Tier 1 and Tier 2 power under the new BPA power sales contracts. The TRM will determine whether, and to what degree, the BPA proposal to implement tiered rates will benefit or impose a detriment to WPAG utilities. It will also establish the rate design that will be used under the next power sales contract. There has already been one informal draft and work session on the TRM, and the rate proceeding to adopt the TRM is expected to commence during March, 2008, while the Remand 7(b)(2) rate case is still in progress. This will be staffed by EES Consulting and MMPS &M. As a result of the success in the Golden Northwest and PGE cases, there have been ongoing negotiations between the publics, IOUs and BPA on the appropriate level of benefits that should be paid to the IOUs during the next contract term. These discussions are ongoing, and given the central role WPAG played in the litigation and subsequent discussions, it is expected that WPAG will continue to participate actively in order to protect the interests of the WPAG utilities and the litigation results. This will be staffed primarily by MMPS &M. A -2 Ten Year Financial Plan Consultation BPA will in the next year be formulating its financial plan for the next ten years. This plan directly impacts rates, because if governs the level and amount of risk dollars that BPA will recognize and include in its rates during the next contract. An increase in the risk dollars translates directly into higher rates. This will be staffed primarily by EES Consulting. Average System Cost Methodology Consultation Concurrently with the 7(b)(2) Remand Rate Case, BPA will be conducting a consultation process to revise the Average System Cost Methodology, which the is detailed formula used by Residential Exchange Program participants to calculate how much each individual utility is entitled to receive by way of cash payments from BPA under the Residential Exchange Program. This will be a notice and comment process, and is important to WPAG utilities for two reasons. First, it determines the maximum level of payments they will be responsible for to each Residential Exchange Program participant. And second, for those WPAG utilities that may wish to participate in the Residential Exchange, it will be vital to ensure that the Average System Cost Methodology properly treats public utilities. This will be staffed by EES Consulting and MMPS &M. Power Sales Contract Negotiations Residential Exchange Contract EXHIBIT A BPA has already begun preliminary discussion with customers on the power contracts that are expected to be offered to customers in December, 2008. Intensive negotiations of these agreements are expected to take place in the February to May, 2008, time period. The contracts that will be negotiated during this period will include power contracts for load following customers (full requirements and partial), block and Slice product purchasers. Concurrently with these contract negotiations, BPA will be developing the methodology that will govern the operation of the Slice product. This will be staffed primarily by MMPS &M. BPA has indicated that it will offer both the next series of power sales contracts and the new Residential Exchange contract, under which both public and IOUs will receive Residential Exchange benefits, at the same time. This means that while BPA is negotiating the next series of power sales contracts, it will also be negotiating the new Residential Exchange contract. Since it is under this contract that BPA will make cash payments to the IOUs, and since public utilities are the ones that fund this program, WPAG utilities will have a direct stake in the terms of this agreement. This will be staffed by EES Consulting and MMPS &M. DSI Long -Term Contracts Power Product Catalogue Transmission Access Non Federal Tier Two Power Supply Federal Energy Regulatory Commission EXHIBIT A During the coming calendar year, BPA will also be dealing with the issue of what, if anything, should it do with the DSIs. To the extent that BPA decides to provide benefits to the DSIs, the cost of doing so will likely be imposed on Tier 1 customers, including WPAG utilities. It will also require BPA to negotiate a contract with the DSIs for the delivery of any such benefits. This will be staffed primarily by MMPS &M. The Power Product Catalogue will set out the types of products that BPA will offer for both Tier 1 and Tier 2 service under the post 2011 BPA power contracts, including partial requirements service, full requirements service, block and Slice. In addition, efforts will be made to ensure that a range of Tier 2 products are offered to fulfill power supply and legal requirements of WPAG utilities. This will be staffed by EES Consulting and MMPS &M. Issues have arisen regarding the ability of NT transmission customers to access the Federal transmission system for the delivery of power under the post -2011 BPA power contracts, as well as the ability to use the Federal Transmission system to deliver non- federal power to tier 2 loads. Some of these issues have been addressed by BPA, but the successful resolution of all these issues is key to the implementation of BPA's tiered rates approach. This will be staffed primarily by MMPS &M. If BPA goes forward with tiering of the Federal power system, it will likely require customers to make choices regarding the use of Federal and non Federal resources to serve Tier 2 load sometime in 2009. It will be necessary to investigate and evaluate resource and supply alternatives to serve Tier 2 load. This would include non federal options, and exploration of pooling opportunities should be undertaken. This will be staffed primarily by EES Consulting. The Federal Energy Regulatory Commission (FERC) has begun investigations into transmission service provided under the NT and PTP contract under the auspices of updating of its landmark Order No. 888. This may result in changes to the way transmission dependent utilities have access and pay for access on transmission facilities and will have significant implications for WPAG members. To date, PPC has done a good job of working this issue. EES Consulting and MMPS &M will continue to assist PPC in its efforts, and will monitor this process to see if WPAG direct participation is needed. A -4 Olympia Legislative Session EES Consulting and MMPS &M will monitor the activities of the 2008 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. Budget At this juncture it is not possible to determine with certainty the degree of WPAG involvement that will be needed in all of these processes. It may be the case that other organizations (such as PPC) will adequately staff and address issues raised in some of the processes, making WPAG involvement unnecessary. However, it is clear that WPAG will need to participate as a party in the 7(b)(2) Remand and TRM proceedings, the ongoing IOU benefit discussions, as well as the power sales and Residential Exchange contract negotiations. Decisions on participation in the other processes will be made as more is known about them. For budgeting purposes, it has been assumed that the WPAG will participate as a party in the 7(b)(2) Remand and TRM rate cases, and continue its direct participation in the power sales contract negotiations. 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 $150 per hour Vice President/Managing Director 140 per hour Senior Project Manager 130 per hour Project Manager 120 per hour Senior Analyst 110 per hour Analyst or Engineer 100 per hour Clerical 60 80 per hour MMPS &M Principal $165 per hour Associate 130 per hour These billing rates will remain in effect through December 31, 2008. EXHIBIT A EXHIBIT A On the basis of the above billing rates, the 2008 labor budgets of EES Consulting and MMPS &M combined, and exclusive of BPA's Wholesale Power Rates proposal, are estimated to remain at $200,000. This labor budget will be split equally between EES Consulting and MMPS &M. 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 $30,000 in total out -of- pocket expenses will be incurred for all work non -rate case elements in total. Out -of- pocket costs will be billed by whichever organization actually incurs the expense. The total estimated WPAG budget for 2008 is estimated at $230,000. 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. Project Staffing The staffing for this project will be similar to that for past WPAG activities. Gary Saleba and Terry Mundorf will be the principal representatives for EES Consulting and MMPS &M, respectively. Additional MMPS &M and EES Consulting staff will assist as needed. Western Public Agencies Group 2008 Budget Addendum At the beginning of the year, it was not possible to determine with certainty the degree of WPAG involvement that would be needed in all of the processes listed for the year. However, WPAG so far has participated as a party in both the 7(b)(2) Remand and TRM proceedings, the ongoing IOU benefit discussions, as well as the power sales and Residential Exchange contract negotiations. At this time, the initial budget has been spend and additional budget is requested in order to finish up the year. Below, please find a proposed budget by task for the remainder of 2008. Budget Addendum The budget for the scope of services described below is calculated at the following billing rates for EES Consulting and MMPS &M: EES Consulting President $150 per hour Vice President/Managing Director 140 per hour Senior Project Manager 130 per hour Project Manager 120 per hour Senior Analyst 110 per hour Analyst or Engineer 100 per hour Clerical 60 80 per hour MMPS&M Principal $165 per hour Associate 130 per hour EXHIBIT A These billing rates will remain in effect through December 31, 2008. The scope of services for the remainder of the year for WPAG is proposed as follows: General WPAG Activities and Meetings Proposed budget: During 2008, 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 A -1 X13( public power organizations, including BPA- related legislation, progress on regional transmission and wholesale market design issues, and any other new topic of mutual interest and relevance. Monthly meetings will be held to brief WPAG members on these activities. Regional Dialogue Activities 7(b)(2) Remand Rate Proceeding BPA has commence a 7(i) to respond to the remand of the 9 Circuit Court in the Golden Northwest and PGE cases. This case will establish the amount of the over collection on Residential Exchange settlement costs for the 2002 -2006 and 2007 -2008 periods, and the operation of the 7(b)(2) rate test for the remainder of this rate period and future rate periods. At this time, initial testimony rebuttle has been submitted. Additional clarification and cross of WPAG witness panel will occur during May, 2008 with a final decision occurring by July 18, 2008. Tiered Rate Methodology (TRM) Rate Proceeding BPA has commenced the formulation of the TRM that will govern the pricing of both Tier 1 and Tier 2 power under the new BPA power sales contracts. The TRM will determine whether, and to what degree, the BPA proposal to implement tiered rates will benefit or impose a detriment to WPAG utilities. It will also establish the rate design that will be used under the next power sales contract. At this time, the TRM process has not been finalized, however, it is likely to require significant legal and technical analysis of TRM options. Rate modeling work required to evaluate TRM rate proposals has begun and will continue to evolve as more information becomes available" to the "TRM Rate Proceeding" section. The proposed process will require the majority of work during May, June and July and will culminate in a final ROD by the end of September. IOU Benefits Discussions EXHIBIT A Propsed Budget: As a result of the success in the Golden Northwest and PGE cases, there have been ongoing negotiations between the publics, IOUs and BPA on the appropriate level of benefits that should be paid to the IOUs during the next contract term. These discussions are ongoing, and given the central role WPAG played in the litigation and subsequent discussions, it is expected that WPAG will continue to participate actively in order to protect the interests of the WPAG utilities and the litigation results. This will be staffed primarily by MMPS &M. Ten Year Financial Plan Consultation BPA will in the next year be formulating its financial plan for the next ten years. BPA will start workshop meetings in Mid -May and requests comments during the summer. This resulting plan directly impacts rates, because if governs the level and amount of risk A -2 EXHIBIT A dollars that BPA will recognize and include in its rates during the next contract. An increase in the risk dollars translates directly into higher rates. This will be staffed primarily by EES Consulting. Average System Cost Methodology Consultation Concurrently with the 7(b)(2) Remand Rate Case, BPA has been conducting a consultation process to revise the Average System Cost Methodology, which the is detailed formula used by Residential Exchange Program participants to calculate how much each individual utility is entitled to receive by way of cash payments from BPA under the Residential Exchange Program. EES Consulting and MMPS &M continues to monitor this process. Power Sales Contract Negotiations BPA has already begun preliminary discussion with customers on the power contracts that are expected to be offered to customers in December, 2008. Intensive negotiations of these agreements have been taking place and will continue through May, 2008. The ongoing negotioations will be staffed primarily by MMPS &M. Residential Exchange Contract BPA has indicated that it will offer both the next series of power sales contracts and the new Residential Exchange contract, under which both public and IOUs will receive Residential Exchange benefits, at the same time. This means that while BPA is negotiating the next series of power sales contracts, it will also be negotiating the new Residential Exchange contract. Since it is under this contract that BPA will make cash payments to the IOUs, and since public utilities are the ones that fund this program, WPAG utilities will have a direct stake in the terms of this agreement. This will be staffed by EES Consulting and MMPS &M. DSI Long -Term Contracts Power Product Catalogue Transmission Access EXHIBIT A During the coming calendar year, BPA will also be dealing with the issue of what, if anything, should it do with the DSIs. To the extent that BPA decides to provide benefits to the DSIs, the cost of doing so will likely be imposed on Tier 1 customers, including WPAG utilities. It will also require BPA to negotiate a contract with the DSIs for the delivery of any such benefits. This will be staffed primarily by MMPS &M. The Power Product Catalogue will set out the types of products that BPA will offer for both Tier 1 and Tier 2 service under the post 2011 BPA power contracts, including partial requirements service, full requirements service, block and Slice. In addition, efforts will be made to ensure that a range of Tier 2 products are offered to fulfill power supply and legal requirements of WPAG utilities. This will be staffed by EES Consulting and MMPS &M. Issues have arisen regarding the ability of NT transmission customers to access the Federal transmission system for the delivery of power under the post -2011 BPA power contracts, as well as the ability to use the Federal Transmission system to deliver non- federal power to tier 2 loads. Some of these issues have been addressed by BPA, but the successful resolution of all these issues is key to the implementation of BPA's tiered rates approach. This will be staffed primarily by MMPS &M. Non Federal Tier Two Power Supply If BPA goes forward with tiering of the Federal power system, it will likely require customers to make choices regarding the use of Federal and non Federal resources to serve Tier 2 load sometime in 2009. It will be necessary to investigate and evaluate resource and supply alternatives to serve Tier 2 load. This would include non federal options, and exploration of pooling opportunities should be undertaken. This will be staffed primarily by EES Consulting. Federal Energy Regulatory Commission Proposed Budget: The Federal Energy Regulatory Commission (FERC) has begun investigations into transmission service provided under the NT and PTP contract under the auspices of updating of its landmark Order No. 888. This may result in changes to the way transmission dependent utilities have access and pay for access on transmission facilities and will have significant implications for WPAG members. To date, PPC has done a good job of working this issue. EES Consulting and MMPS &M will continue to assist PPC in its efforts, and will monitor this process to see if WPAG direct participation is needed. A -4 Olympia Legislative Session Propsoed Budget:$ EES Consulting and MMPS &M will monitor the activities of the 2008 legislature on behalf of WPAG's specific interests. Other Matters Proposed Budget: TBD EXHIBIT A 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. On the basis of the above billing rates and the additional work remaining for the year, it is proposed to increase the budget for 2008 by $200,000. This labor budget will be split equally between EES Consulting and MMPS &M.