HomeMy WebLinkAbout000575 Original ContractCONSULTING SERVICES AGREEMENT
EES CONSULTING INC.
Billing Address
570 Kirkland Way, Suite 100, Kirkland, Washington 98033
(425) 889 -2700
I. SCOPE, COMPENSATION AND QUALITY OF CONSULTING SERVICES
EES CONSULTING INC CITY TANGELES
By Gary Saleba 2,-2,-32,-,_ B
V
Title: President Tile: Cr '1y Ilia n&t3 Cr
Date December 5, 2012 Date. 1 J a 13
City of Port Angeles
Record #000575
This Consulting Services Agreement (herein Agreement) Is made between EES Consulting, Inc., (hereinafter "EES CONSULTING and the City of Port Angeles, P.O Box
1150, Port Angeles, WA98362, Attn Mr. Phil Lusk (hereinafter "CLIENT
EES CONSULTING will provide the services and be compensated for these services as descnbed 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 5 signed
II. TERMS 8 CONDITIONS OF CONSULTING SERVICES AGREEMENT
1. Timing of Work EES CONSULTING shall commence work on or about January 1, 2013
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 parry 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
ii. Comprehensive Vehicle Liability Insurance covenng personal injury and property damage claims ansing from the use of motor vehicles with combined
single limits of $1,000,000.
111 Commercial General Liability Insurance doyenne claims for personal injury and property damage weh 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 handless 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 wfth 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 attorneys' 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
CLIENTS or CLIENTS agents proportionate negligence, if any
5 Resolution of Disputes, Attorneys' Fees The law of the State of Washington shall govem 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 wntten notice to the other sent to the
addresses listed herein.
In the event CLIENT ten this agreement, CLIENT specifically agrees to pay EES CONSULTING for all services rendered through the termination date
Note Allocation percentages assume full participation by all membe utilities
1 Customers 8 energy sales values reported for 2011 from NWPPA Directory
2 Investment values as reported for year end 2009, unless noted otherwise
Western Public Agencies Group
Preliminary Indicative Budget for 2013
EES Consulting and Marsh Mundorf Pratt Sullivan McKenzie
Source: 2012-2013 Northwest Electric Utility Directory NWPPA), 2003 EIA Form 412 S 2004 EIA Form 861, Utility Supplied
Total Budget
Labor
Expenses
Total Allocation
BPA Rate Case
Supplemental Allocation
200,000
40,000
240,000
December 0,2012
75,000 1
75,000
Customers'
Energy Sales 1
Net Investment 2
Average of Customers,
Energy Sales and
Investment
Standard
Budget Allocation
with Cap
Supplemental
Budget Allocation
with Cap
Without Cap
18.0%
Cap
percent of
percent of
percent of
percent of
percent of
number
total
Mlowatt -hours
total
dollars
total
total
total
dollars
dollars
Individual Utilities
Benton Electnc REA
15,053
3.5%
544.304251
4,9%
93,440576
7 6%
5 32%
7 02%
16,846
5,264
Clallam County PUD
30533
7.1%
657,526604
5 9%
106,596,449
8 7%
7 20%
9 55%
22,921
7,163
Clark Public ULlbes
184,488
42.7%
4871.980,000
43 6%
347,900,000
28.3%
38 19%
18 00%
43,200
13.500
City of Ellensburg
9,450
2 2%
196,063,028
18
26,419,391
2 1%
2 03%
2 70%
6,474
2,023
Grays Harbor PUD
41,607
96%
1,018,490,172
9 1%
224,895,016
18 3%
12 34%
16 27%
39,058
12,206
Kitties County PUD
4,311
1.0%
89,142,805
0 8%
18,356,529
1 5%
1 10%
1 45%
3,476
1,086
Lewis County PUD No. 1
31,025
7 2%
963,894,871
86
109,236,614
89%
8 23%
10.93
26,242
8,201
Mason County PUD No 1
5,127
12%
72.987,376
0 .7%
13.709,373
11%
098%
1 31
3,136
980
Mason County PUD No 3
32,518
7.5%
666925,701
60%
112,548,253
91%
755%
1000%
24,005
7,502
Pacific County PUD No 2
17,028
39%
296,627,858
27%
38,651,128
31%
3.25%
4 32
10,369
3,240
City of Pod Angeles
10,519
24%
747,350,823
67%
22,618,463
18%
365%
491%
11,785
3,683
Skamania County P00 No 1
5,832
14%
126,024,450
11%
16,602,110
13%
128%
1 ,709°
4,069
1,272
Wahkiakum County PUD No 1
2,413
0,6%
44,103,873
04%
7,363,612
06%
0.52%
069%
1,647
515
Pierce County Cooperative Power Association
Alder Mutual Light Company
283
0.1%
4,787.000
00%
409,409
00
0.05%
006%
152
47
Town of Eatonville
1,178
0 3%
27,271,397
02%
1,150,000
0.1%
020%
027%
656
205
Elmhurst Mutual Power and Light Company
13,792
32%
275,120,620
25%
30,050,620
24%
270%
3.60
8,633
2,698
Lakeview Light and Power Company
11,900
2 8%
268,999,017
24%
29.018,475
24%
251%
334%
8,013
2,504
City of Milton
3,392
08%
60,563,159
0 5%
2,378,975
02%
051%
068
1,637
511
Ohop Mutual Light Company
4,192
10%
84,769,464
08%
8,969,611
07%
082%
1 09%
2,621
810
Parkland Light and Water Company
4,950
1 0%
117,892,068
1 1%
18,854,000
1 5%
1.21%
1 60%
3.831
1,197
Town of Steilacoom
2,823
07%
40,239,147
0 4%
1,571,502
01%
0 38
051%
1,229
384
Subtotal Pierce County Cooperative Power Association
42,010
9 7%
879,641,872
79%
92,402,592
75%
84%
1116%
26,773
8,366
Total
431,914
1000%
11,175,063,684
100.0%
1,230,740,106
100 0 54
1000%
10000%
240,000
75,000
Note Allocation percentages assume full participation by all membe utilities
1 Customers 8 energy sales values reported for 2011 from NWPPA Directory
2 Investment values as reported for year end 2009, unless noted otherwise
Western Public Agencies Group
Preliminary Indicative Budget for 2013
EES Consulting and Marsh Mundorf Pratt Sullivan McKenzie
Source: 2012-2013 Northwest Electric Utility Directory NWPPA), 2003 EIA Form 412 S 2004 EIA Form 861, Utility Supplied
Total Budget
Labor
Expenses
Total Allocation
BPA Rate Case
Supplemental Allocation
200,000
40,000
240,000
December 0,2012
75,000 1
75,000
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;
LAKEVIEW LIGHT AND POWER COMPANY, WASHINGTON; OHOP MUTUAL LIGHT
COMPANY, WASHINGTON; PARKLAND LIGHT AND WATER COMPANY,
WASHINGTON; PUBLIC UTILITY DISTRICT NO. 1 OF CLALLAM COUNTY,
WASHINGTON; PUBLIC UTILITY DISTRICT NO. 1 OF CLARK COUNTY,
WASHINGTON; PUBLIC UTILITY DISTRICT NO. 1 OF GRAYS HARBOR COUNTY,
WASHINGTON; PUBLIC UTILITY DISTRICT OF KITTITAS COUNTY, WASHINGTON;
PUBLIC UTILITY DISTRICT NO. 1 OF LEWIS COUNTY, WASHINGTON; PUBLIC
UTILITY DISTRICT NO. 1 OF MASON COUNTY, WASHINGTON; PUBLIC UTILITY
DISTRICT NO. 3 OF MASON COUNTY, WASHINGTON; PUBLIC UTILITY DISTRICT
NO. 2 OF PACIFIC COUNTY, WASHINGTON, PUBLIC UTILITY DISTRICT NO. 1 OF
SKAMANIA COUNTY, WASHINGTON; AND PUBLIC UTILITY DISTRICT NO. 1 OF
WAHKIAKUM COUNTY, WASHINGTON (Public Utilities); and MARSH MUNDORF
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 from the Bonneville
Power Administration (BPA) pursuant to wholesale rate schedules determined by BPA 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:
1. 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.
Page 1 of 2
Public Utilities shall compensate the Attorney for these services at an average
hourly rate not to exceed $175.00. 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.
MARSH MUNDORF PRATT SULLIVAN McKENZIE
Date: December 5 2012 By: -2-11-7--- X
Terence L. Mundorf
CITY OF PORT ANGELES
Date: a l 1 3 By:
Manager
Page 2 of 2
Western Public Agencies Group
2013 Scope of Services and Budget
EXHIBIT A
The Western Public Agencies Group (WPAG) comprises 21 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. I, 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 P.U.D. No.1, Wahkiakum 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, 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 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 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.
A -1
Scope of Services
The 2013 scope of services for WPAG is proposed as follows:
General WPAG Activities and Meetings
During 2013, 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 -I4 Rate Proceedings and Related Processes
BPA will conduct transmission, power and over supply rate cases in 2013. WPAG
participated actively in the workshop processes leading up to these rate cases, and has
intervened in all of these cases. These cases will set power and transmission rates for the
next two years, and will establish the treatment of over supply costs during such period.
WPAG will participate in both planning workshops and public processes during 2013 to
monitor the proceeding that will set rates for the next two year rate period. These will
present issues as described below.
Issues Identified for Workshops
EXHIBIT A
Montana Intertie During the last rate case, Montana wind interests made a
concerted effort to have the Montana Intertie 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 more 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. In the initial rate proposal,
BPA declined to roll in the Montana Intertie. WPAG will oppose any treatment of the
Montana Intertie that will result in any increase in the use of Federal base system
resources for purposes other than serving preference customer load. This will be staffed
primarily by MMPS &M.
Cost Allocation To NT and PTP Transmission Rates In the last rate case,
Snohomish PUD asserted that BPA's allocation of costs between NT and PTP rates did
not recognize the full costs of services provided to NT customers, to the detriment of PTP
customers. Snohomish has been joined by Seattle and Tacoma and has continued to
pursue this issue. BPA has held a number of rate case workshops on this matter. In the
initial rate proposal, BPA declined to implement the approach advocated by Snohomish.
The Snohomish proposal seeks to shift costs from the PTP rate to the NT rate in a manner
that is not cost justified. Snohomish is a PTP customer. WPAG will oppose efforts to
shift costs between transmission rates in a manner that is not cost justified and will
A -2
EXHIBIT A
support efforts to fairly allocate costs between NT and PTP rates. This will be staffed by
EES Consulting and MMPS &M.
TRvI Issues Because of load loss and decreased economic activity, BPA has
over purchased power needed to serve the Load Growth pool. BPA has suggested that it
will allocate the costs of these over purchases to members of that pool, even though they
will not be taking service from BPA under that pool during the rate period. A number of
our smaller members will be adversely impacted by this proposal. WPAG will oppose
the imposition of purchased power costs on Load Growth pool members who will not
take power from Load Growth service from BPA during the rate period.
Delivery Charge BPA is proposing a 25% increase to the Delivery Charge,
which charge is levied on WPAG members still taking service from BPA facilities. This
is a much larger than the general rate increase, and will have an adverse impact on some
WPAG members. We will work with these members to find a way to mitigate this
proposed increase.
Generation Inputs One of the major areas of controversy in the rate cases is the
pricing and provision of generation inputs by BPA Power to BPA Transmission for the
integration generating resources, including wind generation. The majority of WPAG
members have some degree of involvement in wind generation, including purchase power
arrangements, REC purchases and ownership interests. Further, all WPAG members buy
the bulk of their power supply from BPA. WPAG will attempt to promote rates and
policies by BPA that preserve for load serve as much of the Federal base system as
possible, which reflect the true costs of providing generation inputs, and which give those
receiving service the incentive and means to manage generation integration costs. This
will be staffed by EESC and MMPS &M.
Rate Case Workshops WPAG had substantial success in the pre -rate case
workshops, particularly in the area of NT cost allocation and Montana Intertie. It will be
the objective of WPAG during the rate proceedings to protect these gains, and to expand
the areas where BPA adopts positions advanced by WPAG. This will be staffed by EES
Consulting and MMPS &M.
Oversupply Cost Allocation BPA is proposing to allocate one -half of the costs
of implementing its Over supply Protocol, which includes paying wind interests costs of
PTC, RECs, and penalties for non delivery, when their production is curtailed due to high
wind/high water. WPAG will challenge this allocation based on cost causation. WPAG
in addition will set the stage to challenge legally whether BPA has the right to charge
preference customers such costs when we cannot review them, and whether there is
statutory authority to pay such costs. This will be staffed by EES Consulting and
MMPS &M.
A -3
Other BPA 2013 Proceedings
EXHIBIT A
BPA has already commenced a number of proceedings, and will commence some additional ones
during 2013, that will have long -term impacts on preference customers. WPAG will participate
in the following BPA processes.
Capital Spending BPA has determined that it will run out of borrowing
authority well before it expected to when it received its last allocation of borrowing
authority. BPA has initiated a pre payment program to access the credit of its customers
in order to fund some of its capital needs. It is unclear how much capital BPA will obtain
through this program. In a situation where going to DC for additional borrowing
authority is ill- advised, even if the pre payment program is successful this issue will
continue to pose challenges for BPA and its customers. WPAG will remain involved in
this issue where ever it appears, and will advocate that BPA husband its remaining
borrowing authority and use it for the needs of its preference customers. WPAG will
advocate the use of reasonable approaches that extend the existing borrowing authority as
long as possible to forestall going to Congress for additional borrowing authority.
WPAG will also urge BPA to give priority access to available capital to projects that
provide service to preference customers, and to establish an ongoing process involving
customers to ensure that the remaining borrowing authority is wisely and appropriately
used in the future. This will be staffed by MMPS &M.
Environmental Redispatch Wind generation interests filed a petition with the
FERC alleging, inter alia, that the application of BPA's Environmental Redispatch ROD
did not provide comparable service, and also filed petitions for review in the 9 Circuit
seeking legal review of BPA's Environmental Redispatch ROD. WPAG filed comments
with the FERC defending BPA's Environmental Redispatch ROD, and also filed its own
petition in the 9 Circuit. The petitions in the 9th Circuit are still pending. The FERC has
ruled in favor the petitioning wind interests, finding that BPA's Environmental
Redispatch ROD does not provide comparable service, and gave BPA 90 days to
formulate a new policy. BPA responded with the Over supply Management Protocol
under which it pays wind generators for PTCs, RECs and delivery penalties when they
are displaced. Throughout this process, BPA had been attempting to forge a settlement
with the wind interests, the IOUs and certain preference customers. WPAG will
participate actively in this process to ensure that the FBS resources are reserved for
preference customer use, and that all customers (including wind customers) pay the costs
that BPA incurs to serve them. We will also be vigilant that BPA does not take, or agree
to take, actions that exceed its statutory authority. This will be staffed by EES
Consulting and MMPS &M.
BOATT Process BPA recently concluded a second BOATT process. The first
BOATT process was to merely update the BPA OATT. However, the objective of this
process recently changed to the formulation of a BPA OATT that would be sufficiently
compliant with FERC policies to qualify as a reciprocity tariff. At the conclusion of this
first BOATT process, BPA started a second BOATT process to find a way to eliminate
DSO 216, apparently in an effort to implement what BPA perceived as the consensus of
A -4
EXHIBIT A
its settlement discussions with the wind interests. This second BOATT process did not
result in a single proposal, so BPA has carried into the rate case a number of options
which it would implement in lieu of relying on DSO 216. It is expected that these
discussions will continue into 2013 as BPA seeks to placate the wind interests. WPAG
will participate in this process to ensure that BPA has the operational tools to deal with
high wind/high water events, and that such operational tools work fairly for all forms of
generation. This will be staffed by MMPS &M.
Precedent Transmission Service Agreement Process BPA has signed a number
of precedent transmission service agreements with wind project developers which
commit it to providing transmission service to these projects once they are completed.
Many of these developers now seek to either terminate these agreements with BPA, or to
delay for an extended period the commencement of service. This raises a number of
issues: what conditions (if any) should BPA impose on developers seeking to terminate
these agreements in order to hold other transmission customers harmless; how should the
transmission capability made available by the termination of these agreements be used;
and what changes should BPA institute in order to avoid making such commitments in
the future. BPA recently released proposed term sheets with several developers that
provide for either terminations of their PTSAs or modifications thereof. WPAG has
already submitted comments on these and other topics in this proceeding, and will
continue to actively participate in order to ensure that unnecessary costs are not imposed
on preference customers. This includes reviewing and commenting on the recently
released terms sheets. This will be staffed by MMPS &M.
BPA Network Open Season Process The network open season process that BPA
has employed has not been a success, and that a revision of this process is needed.
However, BPA is reluctant to undertake this process until it deals with the issues
presented by the PTSA proceeding. WPAG will continue to participate in the NOS
revision process with the intention of improving its operation from the point of view of
the preference customers. In particular, the availability of transmission capability for
both Tier 2 non federal resources and for preference customer load service will be areas
of emphasis. This will be staffed by EES Consulting and MMPS &M.
Network Transmission Service Process BPA has initiated an intensive process
with NT customers to address concerns and issues regarding access to and availability of
transmission capability for resource and load service for NT customers. It has included
issues such as how is transmission capability ear marked for NT customers, how is such
capability made available to NT customers, and can NT customers get access to
transmission without getting in line behind all the wind generators. While BPA has made
some preliminary decisions that are favorable to NT customers, much work remains to be
done to assure NT customers that BPA will have transmission available when it is needed
by NT customers. This will be staffed by MMPS &M.
Energy Imbalance Market There are currently three separate processes under
way to investigate the hows and whys of energy imbalance markets. These initiatives
present both a threat and a potential benefit to preference customers. The threat stems
A -5
EXHIBIT A
from the creation of a new market that BPA will be tempted to participate in, diverting
Federal base system capability from service to preference customer loads. The potential
benefit is that wind integration needs will be met from the market, freeing up Federal
base system capability currently used for that purpose for use to serve preference
customer loads. WPAG will participate in all of these processes to ensure that any
energy imbalance market is structured in a way to minimize the detrimental aspects and
maximize the benefits to preference customers. Any erosion to preference customer
rights will be stoutly resisted. This will be staffed by EES Consulting and MMPS &M.
TRM Revisions
There are a number of significant issues that were not satisfactorily resolved at the end of
the Tier Rate Methodology process that BPA has agreed to revisit, including most
importantly the issue of system obligations that BPA treats as off -the -top dedications to
the Tier 1 system capability, and the lack of any agreed upon methodology for
determining the capability of the Tier 1 system, which impacts how much Tier 1 power is
available to WPAG utilities. This will be staffed primarily by MMPS &M.
Preference to FBS Capacity
BPA has been using increasing amounts of FBS capacity to integrate wind generation on
the Federal transmission system. This capacity is deducted from the FBS capability made
available to preference customers under Tier 1. For the near term, the primary impact of
this activity is to reduce the secondary revenues available to BPA to reduce the PF rate by
shifting secondary power sales from heavy load hours to light load hours. However, in
the future this reduction in FBS capacity may impinge on service to preference customer
loads under both load following and Slice contracts. WPAG has brought to the fore in
the BP -14 rate proceeding workshops this misuse of FBS capacity, and has asserted our
preference rights to this capacity. Vindication of these preference rights may require
litigation. This will be staffed by MMPS &M.
9 Circuit Petition for Review
WPAG filed a petition for review in the 9 Circuit to question whether BPA's Environmental
Redispatch ROD complied with the statutory provisions regarding the rights of preference
customers to federal transmission. This action has been placed on stay. Subsequent to the
FERC order essentially invalidating the Environmental Redispatch ROD, BPA issued the
Over Supply Management Protocol in response. The wind generators filed petitions
challenging this action, as did WPAG. FERC has not ruled on the motions for rehearing on
the original Environmental Redispatch order, and has not passed judgment on the Over
Supply Management Protocol. The wind interests have not wanted to litigate these petitions,
but WPAG has informed the court that we are unwilling to stay the Over Supply
Management petition, since it is unclear when if ever the FERC will act. The purpose is to
take the initiative away from the wind interests, become pro- active rather than reactive, and
create leverage in case settlement discussions become serious. This will be staffed by
MMPS &M.
A -6
Federal Energy Regulatory Commission
NERC
Olympia Legislative Session
Other Matters
Budget
EXHIBIT A
Given the apparent sympathy the FERC has for wind generation, it is clear that much of the
transmission issues relating to wind will find their way back to the FERC. This will require
more active participation by WPAG in FERC processes in order to vindicate our interests as
preference customers. This may require litigation, as it is clear from recent FERC actions
that it does not take very seriously the obligations that BPA has with regard to preference
customers. —WPAG will work closely with other preference customers to defend the
financial and operational interest of BPA, and ensure that the statutory rights of preference
customers are not subordinated to the interests of non preference customers. At times, this
may require WPAG to take positions that differ from those of BPA and other preference
customers. -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.
In June 2007, under the direction of FERC, the North American Electricity Council (NERC)
began enforcing electric reliability standards. As of that time utilities with greater than
25,000 customers are required to register with NERC and their regional reliability
organization or the Western Electricity Coordinating Council (WECC) on the west coast of
North America. EES Consulting has been monitoring and advising WPAG members on
compliance issues since April of 2007. EES Consulting will continue to monitor compliance
issues on behalf of WPAG members in 2013. 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.
EES Consulting and MMPS &M will monitor the activities of the 2013 legislature on behalf
of WPAG's specific interests.
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.
The budget for the scope of services described above is calculated at the following billing rates
for EES Consulting and MMPS &M:
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EES Consulting
President $170 per hour
Managing Director 165 per hour
Manager 160 per hour
Senior Project Manager 155 per hour
Project Manager 150 per hour
Senior Analyst or Engineer 145 per hour
Analyst 140 per hour
Clerical 120 per hour
MMPS&M
Principal $175 per hour
Associate $170 per hour
These billing rates will remain in effect through December 31, 2013.
Project Staffing
EXHIBIT A
On the basis of the above billing rates, the 2013 labor budgets of EES Consulting and
MMPS &M combined are estimated to remain at $200,000, which holds the line on budget
increases. This labor budget will be split equally between EES Consulting and MMPS &M. In
addition, an amount of $75,000 in supplemental funding has been provided to staff the BP -14
Power and Transmission rate cases workshops and related BPA processes. This is a $75,000
reduction compared to the 2011 WPAG budget.
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 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 annual WPAG budget
for 2013 is estimated at $240,000, and a supplemental budget of $75,000 for rate case activities.
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.
The staffing for these projects 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, with Ryan Neale providing support for the activities of Terry Mundorf Additional
MMPS &M and EES Consulting staff will assist as needed.
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