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HomeMy WebLinkAboutMinutes 08/12/1996UTILITY ADVISORY COMMITTEE Port Angeles, Washington August 12, 1996 Call to Order: Chairman Michalczik called the meeting to order at 1:34 p.m. Roll Call: Members Present: Members Absent: StaffPresent: Public Present: Councilmen Braun, Campbell, and Doyle, Joe Michalczik, and Bill Myers. None. B. Titus, J. Pitfis, C Knutson, C. Hagar, K. Ridout, and S. McLain. N. Schaefer. III. Approval of Minutes: Councilman Braun moved to approve the minutes of the June 17, 1996, meeting. Councilman Doyle seconded the motion, which carried unanimously. Councilman Doyle moved to approve the minutes of the July 29, 1996, meeting. Councilman Campbell seconded the motion, which carried unanimously. IV. Discussion Items: A. PUD Wholesale Water Agreement Public Works Director Pittis stated this was an issue of great frustration. Meetings have been conducted since January 1995, and staffhas drafted seven versions of an agreement with PUD. He felt a lot of time was spent responding to questions during the PUD meetings. Director Pittis felt the PUD understands the fact that this will be an expensive situation, and the PUD percentage on projects cannot be lowered. The PUD only has two very small reservoirs plus the Monroe Road reservoir from which to draw its flow. The Monroe Road reservoir is about 500,000 gallons, of which only one-half can be used due to the elevation. The PUD has not put a lot of money into reservoirs for its system. The new PUD rates would almost double to help pay for the necessary reservoirs, and the City will be the banker for this project. The PUD has proposed to pay its share out of rates. Should areas be annexed to the City, the PUD flows will decrease and, consequently, the dollar value to the PUD will decrease. Director Pittis responded to questions posed by the Committee and explained that the City should -1- Utility Advisory Committee August 12, 1996 purchase a site for the new reservoir now, in order to save future costs and preserve land for location prior to building out in the area. A new reservoir will serve City residents now and in the future. Concern was expressed over the City paying for water improvements, and then having to pay a second time if annexation occurs and the City purchases PUD facilities. Councilman Braun moved to recommend that the City Council authorize the Public Works Director to send a strongly worded letter to the PUD, along with draft/17 of the Wholesale Water Agreement, requesting a written response or counter proposal. Councilman Campbell seconded the motion. Further lengthy discussion ensued, and Bill Myers suggested the motion be amended to defer the wording of Section 9 of draft #7 of the agreement, pending completion of the annexation study. A vote was taken on the amending language, which carried unanimously. A vote was then taken on the amended motion, which carried unanimously. B. Update on BPA Contract Negotiations Light Director Titus distributed copies of the latest Power Sales Contract and stated the sections on Dispute Resolution and Retail Wheeling were fairly close to being settled to the City's satisfaction. Director Titus then reviewed the changes in the document and responded to questions posed by the Committee. Nick Schaefer, Daishowa, was concerned that the section on retail wheeling was too vague. With the current wording, it appears that the City may be penalized if industrial customers choose retail wheeling. Lengthy discussion ensued on this issue. Director Titus explained that the wording is as specific as practical and that the final contract will be presented to the Committee prior to going to Council. Negotiations are continuing today in Olympia. The only issue of real concern still being negotiated is, if the size of a new load exceeded the amount of estimated load growth, would the City be able to go to the open market for power purchase. Director Titus stated he will notify the Committee as soon as a final agreement is achieved. No action was taken. C. Retail Electric Rates Director Titus explained that it appears an error may have been made in the numbers BPA submitted regarding load. If the numbers are off, then the wholesale power expense estimated in the cost of service study would be off Director Titus then distributed handouts on Non-Industrial Electric Rates and Rate Financed Conservation. He explained that a 15% power purchase from Louisville Gas and Electric will realize a 1.5% rate reduction for non-industrial users. Director Titus went on to list the other factors affecting rates, reviewed other considerations regarding reserves, and explained current conservation funding. Discussion followed, and Director Titus responded to questions posed by the Committee regarding rate reductions. No action was taken. -2- Utility Advisory Committee August 12, 1996 D. Regional Review - "Strctwman" Proposal Director Titus felt this proposal was unfavorable and the whole process was adverse to public power. No utility wants to be obligated to Bonneville for 30 years without knowing what the costs would be. This proposal was put together by a neutral group and both ends of the spectrum are unhappy with the results. Director Titus asked the Committee for direction on this issue. It was the general consensus of the committee that they were in favor of having the City Council phone or send letters to our legislators in order to reduce the consequences of this proposal. Director Titus indicated that he would provide the Council with information on this issue at the next Council meeting. V. Late Items None. VI. Next Meeting: The next meeting of the Utility Advisory Committee will be held on Monday, September 9, 1996, at 4:30 p.m. VIII. Adjournment: The meeting adjourned at 4:50 p.m. De"~t~ City Cle'-~k -3-