HomeMy WebLinkAboutAgenda Packet 12/10/2013
Joint Council/Utility Advisory Committee
Jack Pittis Conference Rooms
Port Angeles, WA 98362
December 10, 2013 @ 3:00 PM
AGENDA
I.Call To Order
II.Roll Call
III.Approval Of Minutes For November 12, 2013
IV.Late Items
V.Discussion Items:
A.Recommendation to City Council for a Medic 1 representative member
to the Utility Advisory Committee
B.Stormwater Education and Outreach Services Interlocal Agreement with
Kitsap County
C.Electric Utility Discount Program Evaluation and 2014 Restructuring
D.Morse Creek Hydroelectric Project Recommendation
VI.Information Only Items:
A.Residential Exchange Program Update (verbal report only)
B.Sea Breeze Power Update (verbal report only)
VII.Next Meeting Date: January 14, 2014
VIII.Adjournment
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Utility Advisory Committee
Jack Pittis Conference Room
Port Angeles, WA 98362
November 12, 2013
4:00 p.m.
I.Call To Order
Chairman Dan DiGuilio called the meeting to order at 4:00 p.m.
II.Roll Call
UAC Assigned
Councilmembers Present: Dan Di Guilio, Cherie Kidd
Other Councilmembers
Present:
Other Councilmembers
Absent: Sissi Bruch, Brooke Nelson, Brad Collins, Patrick Downie, Dan
Gase
Utility Advisory
Committee Members
Present: Paul Elliott, Dean Reed, Lynn Bedford
Utility Advisory
Committee Members
Absent: Mike Jacobs
Staff Present: Dan McKeen, Craig Fulton, Maher Abed, Byron Olson, Phil Lusk,
Gregg King, Bill Bloor, Kathryn Neal, Sondya Wray, Nathan
West, Heidi Greenwood, Rick Hostetler, Jonathan Boehme (4:01)
Others Present: Lee Whetham – City Council Position #2
Jeremy Schwartz (4:03) – PDN
III.Approval Of Minutes
Chairman Dan DiGuilio asked if there were any corrections to the minutes of October 8, 2013.
Dean Reed moved to approve the minutes. Paul Elliot seconded the motion, which carried
unanimously.
IV.Late Items
– None
V.Discussion Items:
A.Stormwater Capital Project Pre-Construction Design Professional Services
Agreement
Kathryn Neal, Engineering Manager discussed the Stormwater Capital Project pre-construction
agreement and explained information on the Decant Facility. Herrera Environmental Consultants
has been selected to provide professional engineering services related to the Stormwater
preconstruction design. They will be working with local businesses, Johnston Land Surveying and
Zenovic & Associates to help complete project management and preconstruction planning tasks. A
brief discussion followed.
Paul Elliot moved to recommend City Council approve and authorize City Manager to sign a
Professional Services Agreement with Herrera Environmental Consultant in an amount not to
exceed $119,844, and to make minor modifications to the agreement, if necessary. Cherie
Kidd seconded the motion, which carried unanimously.
B.Brown & Caldwell Project 06-01, Amendment 18 – Front Street Stormwater
Separation Project
Mike Puntenney, City Engineer reviewed a photo of the Front Street Stormwater Drainage
Addition. There is an opportunity to have this installation done in conjunction with the trenching
and road restoration work that will already occur when the CSO Phase II project is constructed. The
City will save considerable in both design and construction costs. A brief discussion followed.
Dean Reed moved to recommend City Council to authorize City Manager to sign Amendment
18 to the Professional Services Agreement with Brown and Caldwell in an additional amount
not to exceed $67,234, which increases the maximum compensation for CSO Phase 2 design to
$2,627,327, and to make minor modifications to the agreement if necessary. Paul Elliot
seconded the motion, which carried unanimously.
C.Landfill Bluff Stabilization – Phase I, Project SW02-2012, Professional Services
Agreement with Herrera Environmental Consultants, Amendment 5
Kathryn Neal, Engineering Manager, gave a PowerPoint presentation on the Landfill Bluff Cell
Stabilization. Department of Ecology has submitted a supplemental budget requests that could add
an additional $2.5 million in funding assistance for the removal of additional waste as part of the
project. Agreement Amendment would prepare the design and contract documents, provide funding
for the bottom of the east 304 cell pooling groundwater, design of working platforms on top of the
seawall, and add permit assistance on the project. A lengthy discussion followed.
Paul Elliot moved to recommend City Council to authorize City Manager to sign Amendment
5 to the Professional Services Agreement with Herrera Environmental Consultants in an
amount not to exceed $282,555, which will increase the contract amount to $2,781,326, and to
make minor modifications to the agreement, if necessary. Cherie Kidd seconded the motion,
which carried unanimously.
VII. Next Meeting Dates: December 10, 2013
VIII. Adjournment: 4:35 p.m.
______________________________ ___________________________________
Cherie Kidd, Mayor Sondya Wray, Administrative Specialist
Utility Advisory Committee Memo
Date:
December 10, 2013
To: Utility Advisory Committee
From:
Jonathan Boehme, P.E., Stormwater Engineer
Subject:Stormwater Education and Outreach Services Interlocal Agreement with
Kitsap County
Summary:
The City of Port Angeles has been issued a new Western Washington Phase II Municipal
Stormwater NPDES Permit (Permit). One of the permit requirements is to provide education and
outreach. The proposed Interlocal Agreement will allow the City to more economically provide
education and outreach programs to satisfy the permit requirements.
Recommendation: Forward a favorable recommendation to City Council to authorize the City
Manager to sign the Interlocal Agreement with Kitsap County in an annual amount not to exceed
$8,290, and to make minor modifications to the agreement, as necessary.
Background/Analysis
The Phase II Municipal Stormwater Permit requires the City to continue to
conduct stormwater education and outreach activities related to reducing behaviors that cause or
contribute to stormwater pollution. In 2012 the City entered into a 2 year Interlocal Agreement
with Kitsap County to more effectively meet its education and outreach permit requirements.
This new Interlocal Agreement with Kitsap County will allow the City to continue to meet its
education and outreach permit requirements. The program brings together a consortium of
stormwater permit jurisdictions on the Olympic Peninsula including unincorporated Kitsap
County, Bremerton, Port Orchard, Poulsbo, Gig Harbor, and Bainbridge Island, each of which has
an individual interlocal agreement with Kitsap County. It leverages Kitsap County staff to develop
effective outreach programs and literature that can be used in common by the group. Combining
the resources, expertise, and grant potential of Kitsap County provides a more economical resource
and capability that will enhance the City’s public outreach to our Port Angeles customers. A
summary of the Interlocal Agreement objectives and annual costs follows.
Summary of Interlocal Agreement objectives
Objective1Developandadheretoanannualworkplanforeachyearofthisinterlocal
agreement.
Kitsap Stormwater Education ILA Memo (10DEC13)
Stormwater Education and Outreach Services Interlocal Agreement with Kitsap County
December 10, 2013
Page 2
Objective2Buildonexistingsuccessfuleffortsbymaintainingelevatedawarenesslevelsand
environmentallypositivebehaviortrendsforoneaudienceandbehaviorselected
duringthepreviousPermitterm.
Objective3Selectonenewbehaviorandtargetaudience.Reviewandprioritizethelistof
NPDESPermitaudiencesandpracticestobeaddressedbyabehaviorchange
campaign.Reviseasnecessarybasedonemergingissues,opportunities,and
evaluationresults.
Objective4Designoradoptasocialmarketingcampaignwithbuiltinevaluationprotocolsfor
thehighestprioritybehaviorfromObjective3.
Objective5Implementasocialmarketingcampaignforthehighestprioritybehavior.
Objective6Asresourcesandconsensusofthegroupareavailable,implementadditional
campaignsusingaphasedapproachforeachprioritizedbehaviorandassociated
targetaudience.
Objective7Useadaptivemanagementtorefineprogramsanddirecteducationandoutreach
resourcesmosteffectively.
Objective8RepresenttheWSSOGonlargerregionalstormwateroutreacheffortsthrough
participationasaCorememberofSTORMandthePugetSoundStartsHere(PSSH)
campaigndevelopmentteam.
Objective9Trackandmaintainrecordsofeducationandoutreachactivities.Publishan
annualsummaryofactivitiesthatissuitableforuseinNPDESreporting.
Summary of Interlocal Agreement annual costs
BaseSupplementalAnnualCost
PopulationRelativeStaff
JurisdictionProgramsProgramsper
(2013)PopulationTime
BudgetBudgetJurisdiction
UnincorporatedKC170,50560.7%$26,540$39,460$66,000
N/A
Bremerton37,85013.5%$5,900$8,780$14,680
$0
BainbridgeIsland23,1908.3%$3,630$5,400$9,030
$0
1
PortAngeles19,1206.8%$2,970$4,420$8,290
$900
2
PortOrchard12,8704.6%$2,010$2,990$5,860
$860
3
Poulsbo9,5853.4%$1,490$2,210$5,350
$1,650
4
GigHarbor7,6702.7%$1,180$1,760$5,640
$2,700
TOTAL280,790100.0%$43,720$114,850
$65,020$4,660
1
Includesfundingfor2monthsofcinemaadsinPortAngeles.
It is recommended that the Utility Advisory Committee forward a favorable recommendation to
the City Council to authorize the City Manager to sign the Interlocal Agreement with Kitsap
County in an annual amount not to exceed $8,290, and to make minor modifications to the
agreement, if necessary.
Utility Advisory Committee Memo
Date:
December 10, 2013
To: Utility Advisory Committee
From:
Byron W. Olson, Chief Financial Officer
Rick Hostetler, Customer Services Manager
Subject:
Electric Utility Discount Program Evaluation and 2014 Restructuring
Summary:
As a result of additional funds being available in 2014 and of the 2013 budgeted
utility discount amount not being fully distributed, the distribution of the City of Port Angeles Low
Income Discount Program may be expanded and restructured.
Recommendation:
Forward a favorable recommendation to the City Council to change the
current utility discount and to implement a three tiered (10.0%, 20.0% & 30.0%%) electric utility
discount for qualifying households based on family size and 100%, 125% and 150 % of the
Federal Poverty Level as published in the Federal Register.
B/A:
ACKGROUNDNALYSIS
As of November 25, 2013, we have distributed $52,700 for discounts on electric charges for
qualifying low-income utility customers. The current income limits for the discounts are as
follows: (note: we do not provide for additional income for additional family members in the same
household)
20% Discount Monthly Income Range: $2,501 - $3,375
30% Discount Monthly Income Range: $0 - $2,500
Our estimate for total discounts provided by year-end 2013 is approximately $60,000 out of a
budgeted amount of $83,000 for 2013. The most recent census for November 30, 2013 shows that
we currently have 95 individuals enrolled in the 20% discount and 124 individuals enrolled in the
30% utility discount program – a total of 219 customers enrolled in the City’s utility discount
program.
Council has added an additional $60,000 of General Fund appropriation to be added to the $90,000
already included in the 2014 Budget for a total of $150,000 of funding support for the City’s utility
discount program. The additional $60,000 in funding from the General Fund comes from the
Electric Utility Discount Evaluation and 2014 Restructuring
December 10, 2013
Page 2
additional utility tax received by the General Fund as a result of the recently adopted utility rate
increases for 2014.
In consideration of the additional funding and our recognition that household size is a very
important factor in assessing ability to pay issues related to our utility discount program, staff
recommends expanding and restructuring the program to take into account household size
combined with total household income in determining qualifications for inclusion in the City’s
Utility Discount Program.
In 2014 staff proposes to implement a three-tiered discount level of 10.0%, 20.0%, and 30.0%.
While this represents a reduction in the discount percentage, the proposed program is being greatly
expanded to factor in household size together with the additional income allowed for added
household members to qualify for the discount program. In addition, we are proposing to add a
third tier of discount for household incomes at 100% of the federal poverty guidelines. We are
hopeful that these changes will encourage additional households to apply for participation in the
City utility discount program – some households may previously been ineligible due to the fact
that their household income was above the plan requirements but did not factor in additional
household members and the additional costs incurred by that household.
The recommended household income levels and corresponding discount are as noted below:
Household100%2013Fed.PovertyGuidelines125%2013Fed.PovertyGuidelines150%2013Fed.PovertyGuidelines
SizeAnnualMonthlyDiscountAnnualMonthlyDiscountAnnualMonthlyDiscount
1$11,490$957.5030.00%$14,363$1,196.9220.00%$17,235$1,436.2510.00%
2$15,510$1,292.5030.00%$19,388$1,615.6720.00%$23,265$1,938.7510.00%
3$19,530$1,627.5030.00%$24,413$2,034.4220.00%$29,295$2,441.2510.00%
4$23,550$1,962.5030.00%$29,438$2,453.1720.00%$35,325$2,943.7510.00%
5$27,570$2,297.5030.00%$34,463$2,871.9220.00%$41,355$3,446.2510.00%
6$31,590$2,632.5030.00%$39,488$3,290.6720.00%$47,385$3,948.7510.00%
7$35,610$2,967.5030.00%$44,513$3,709.4220.00%$53,415$4,451.2510.00%
8$39,630$3,302.5030.00%$49,538$4,128.1720.00%$59,445$4,953.7510.00%
AddedPersons$4,020$335.00$4,020$335.00$6,030$502.50
For comparison, we have surveyed surrounding utility agencies on the low income utility discount
program:
Clallam PUD
Low income senior:
$1,000.00 - $12,500.00 discount is $0.73/day
$12,501.00 - $20,000.00 discount is $0.53/day
$20,001.00 - $25,000.00 discount is $0.33/day
Low income disabled
Must be 125% of poverty receive discount of $0.73/day
Puget Sound Energy
They do not give discounts thru utilities all is done thru help agencies.
Electric Utility Discount Evaluation and 2014 Restructuring
December 10, 2013
Page 2
Gray’s Harbor
Low income senior or disabled:
Must be 62 or older can make under:
$14,363.00 receive 35%
$20,363.00 receive 30%
$26,363.00 receive 20%
$30,363.00 receive 10%
Low income gets help thru the help agencies.
Mason County PUD
Low income senior
Must be full time resident and home is not subsidized and make under $35,000.00 they
receive the daily charge of $0.60 waived
Low income they must qualify thru CAC when they do they get the daily charge of $0.60
waived.
If UAC approves the recommendation to Council, we would anticipate it will be on the January 7,
2014 Council meeting for consideration with an implementation date of February 1, 2014.
Our plan is to monitor performance of the program on a monthly basis that can be reported back to
UAC and the City Council. Recommendations for any changes are projected to be presented to the
UAC in the August/September 2014 timeframe so that discussions at UAC and consideration by
Council can be accomplished prior to the start of the winter heating season in November 2014.
Utility Advisory Committee Memo
Date:
December 10, 2013
To: Utility Advisory Committee
From:
Phil Lusk, Deputy Director of Power and Telecommunications Systems
Subject:
Morse Creek Hydroelectric Project Recommendation
Summary:
Staff is seeking a recommendation from the Utility Advisory Committee to the City
Council to determine the permanent future of the Morse Creek hydroelectric project.
Recommendation:Provide a recommendation to City Council to proceed with one of the two
following options related to the Morse Creek hydroelectric project:
1. Retire the project and maintain ownership, or
2. Sell the project and property in their present condition, after declaring them to be surplus
to the City’s needs.
Background/Analysis:
On June 12, 2012, staff updated the Utility Advisory Committee
(UAC) on the cost of operating and maintaining the Morse Creek hydroelectric project. This is
slightly after the time it was discovered that the generator bearings require replacement. On July
10, 2012, staff shared that a $100,000 cost estimate was received for the generator repairs
necessary to enable operation. Due to the repair costs and future operating risk, staff
recommended that the retirement or sale of the project and property be considered. Staff notified
stakeholders about possible retirement of the project and requested they share their needs and
interests. On August 14, 2012, staff summarized the stakeholder responses received, and the UAC
asked staff to complete an economic analysis. On November 13, 2012, staff presented the results
of the economic analysis, which determined that the costs of operating the project would be
significantly higher than purchasing additional wholesale power from the Bonneville Power
Administration. The UAC then recommended to the City Council that it consider options for the
project other than continued operation. On November 20, 2012, City Council directed that the
project be placed in standby mode to minimize costs, and to return later to the City Council with
additional information.
More than a year has passed, and keeping the facility in the current standby mode is not a
permanent solution. Since the beginning of 2013, the project has required the spending of more
than $25,000 in staff time and for other basic expenses. The risk factors that could increase the
City’s financial exposure continue to exist. Therefore, staff recommends that the retirement or sale
of the Morse Creek hydroelectric project be considered.
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Morse Creek Hydroelectric Project Recommendation
December 10, 2013
Page 2
Summary of options presented in 2012 for the Morse Creek hydroelectric project
Options Description Advantages Disadvantages
1Continue to operate
Compliance with the Power The $100,000 repair cost has a
the project, including
Sales Agreement. 0.5% retail rate impact.
proceeding with
Maintains Tier 1 resource. Continued operating risk with
$100,000 of repairs
an aging facility.
Continued transmission
necessary to enable
agreement the Clallam Continued impact on retail
operation.
County PUD. rates.
2Place the facility in
Reduces impact on retail Increases wholesale power
standby mode, and
rates. costs absent BPA agreement.
delay the repairs until
Amended transmission
if/when City Council
agreement with the Clallam
desires operation to
County PUD.
resume.
Continued inspection and
maintenance costs to maintain
even in a mothballed status.
3 Retire the facility and
Delays impact on retail rates.Western Public Agencies
maintain ownership.
Group would be needed to
remove the facility from the
Power Sales Agreement.
Amended transmission
agreement with the Clallam
County PUD.
Termination of FERC license.
Potential decommissioning
costs may be required by
FERC.
4 Sell the facility and
Two parties had recently Terminated transmission
property in their
expressed interest in 2012. agreement with the Clallam
present condition,
County PUD.
Eliminates likely impact on
after declaring them to
retail rates. Transfer of FERC license.
be surplus to the
Avoids potential Sale is uncertain.
City’s needs.
decommissioning costs.
Ends continual inspection and
Could avoid Power Sales maintenance costs.
Agreement complications
and costs.
Eliminates risk of failing
aged infrastructure.
5Pursue entering into a Due to market conditions and since
A commitment from another
long-term power sales the facility is not considered to be
utility to help fund the cost
agreement with a a renewable resource, this option is
of operating the facility.
potential purchaser not worthy of further consideration
at this time.
Continued risk from failure of aged
infrastructure.
WESTERN PUBLIC AGENCIES GROUP
UPDATE ON RESIDENTIAL EXCHANGE LITIGATION
Background
In 2000, BPA entered into a settlement with the investor owned utilities (“IOUs”) to fix BPA’s
payments to them under the Residential Purchase and Sale Program (“Res Ex”). The Western
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Public Agencies Group (“WPAG”) challenged the lawfulness of this settlement in the 9 Circuit,
alleging that it provided to the IOUs benefits not authorized under the Regional Power Act, and
unlawfully charged preference customers the costs of the settlement.
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The 9 Circuit agreed with the WPAG arguments, and held the Res Ex settlement unlawful. The
case was remanded to BPA, and directed BPA to calculate the amount unlawfully charged
preference customers and refund that amount to them. BPA conducted a rate proceeding (WP-
07S), computed the refund it felt the preference customers deserved, and refunded that amount.
First Res Ex Settlement Litigation
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WPAG and nearly all preference utilities challenged in the 9 Circuit BPA’s determination of
the refund amount they were due, in part because BPA had failed to refund over $500 million in
Res Ex benefits it had provided to PacifiCorp under the unlawful Res Ex settlement. Before this
challenge was decided, BPA commenced a new settlement process involving both the IOUs and
preference customers. In 2012 BPA entered a settlement with the IOUs which was intended to
resolve all pending Res Ex litigation, including the WPAG challenge to the amount of the refund
determined by BPA in the WP-07S rate case. Most preference customers elected to sign this
settlement and dismiss their pending challenges to BPA’s refund determination. However, a
number of WPAG utilities (including your utility) elected not to sign the settlement, and not to
dismiss their pending challenge to BPA’s refund determination made in the WP-07S rate case.
At this juncture, the Association of Public Agency Customers (“APAC”) challenged the
lawfulness of BPA’s most recent Res Ex settlement with the IOUs. The WPAG utilities that did
not sign this most recent BPA Res Ex settlement decided not to join in the APAC challenge,
because they judged that this BPA Res Ex settlement was unlikely to be found unlawful by the
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9 Circuit. Instead, these utilities decided to continue to pursue their pending challenge to
BPA’s determination of the original refund amount from the first BPA Res Ex settlement.
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Recent 9 Circuit Actions
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When APAC filed its challenge to the most recent BPA Res Ex settlement, the 9 Circuit stayed
the any further action on the pending challenge to BPA’s determination of the refund due from
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the first Res Ex settlement until the APAC challenge was decided. The 9 Circuit recently
issued a decision in that case, denying the APAC challenge to BPA’s most recent Res Ex
th
settlement. The 9 Circuit held that BPA had the authority to settle its Res Ex payment
obligation with the IOUs, and that the manner in which it had done so was lawful.
Western Public Agencies Group Update on Residential Exchange Litigation Page 2
Impacts of APACDecision
TheAPACdecision does not decide or dispose of our pending challenge to BPA’s
determination of the original refund amount, as the APAC decision only deals with the
challenge to the lawfulness BPA’s most recent Res Ex settlement.
The stay that prevented litigation of our challenge to BPA’s determination of the original
refund amount will be lifted.
The motions to dismiss our challenge filed by BPA and the settling utilities, which
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motions have already been answered, are now ready for decision by the 9 Circuit.
If the motions to dismiss our pending challenge are granted, our pending challenge to
BPA’s determination of the original refund amount will come to an end.
If the motions to dismiss our pending challenge are denied, our challenge to BPA’s
determination of the original refund amount will be set for oral argument and then will be
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decided by the 9 Circuit, as this matter has been fully briefed.
Next Steps
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Our next step is to await the decision of the 9 Circuit on the motions to dismiss our challenge to
BPA’s original refund amount. If we prevail on the motions to dismiss, we will then prepare for
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oral argument on this matter, and then await a decision from the 9 Circuit.
Other Matters – Exhibit H
Recently, BPA has offered to non-settling utilities an amendment to their power sales contracts
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(Exhibit H) to implement a portion of the Res Ex settlement recently affirmed by the 9 Circuit.
This amendment addresses the disposition of Tier 1 and 2 renewable energy and carbon credits,
and is the same amendment that was offered when this Res Ex settlement was offered for
execution. At that time, the non-settling utilities declined to sign this amendment because the
lawfulness of that Res Ex settlement had not been determined, and the impact of the amendment
on the pending challenge to BPA’s determination of the original refund amount was unclear.
th
Since the most recent Res Ex settlement has now been determined to be lawful by the 9 Circuit,
there is no legal reason for non-settling utilities to withhold execution of the offered Exhibit H if
it makes business sense to do so. Executing this amendment will have no detrimental impact on
our pending challenge.
2
Morse Creek Hydroelectric Project Evaluation
City of Port Angeles
Utility Advisory Committee Meeting
December 10, 2013
Philip D. Lusk
Deputy Director of Power and
Telecommunications Systems
Department of Public Works & Utilities
Agenda
Background
Project Economic Evaluation
Recommendation
2
Morse Creek Hydroelectric Project Background
The City holds a 50-year Federal Energy
Regulatory Commission (FERC) license to operate
the project
License issued in 1985, and the project began operating in
October 1987
The project was shut down from 1997-2004 due to non-
competitive power and maintenance costs
The diversion dam, intake structure, tunnel, and a water
pipeline were part of the City’s Emergency Water Supply
System until 1987
The system was actively used for municipal water supply from 1926
through 1977
3
Morse Creek Hydroelectric Project Background
The project consists of a diversion dam (10 ft high x 25 ft
wide), a screened intake structure at river mile (RM) 7.2, a
750-ft concrete tunnel, an 11,400-ft buried 24-inch
diameter pipeline, and a 1,500-ft long high-pressure
penstock leading to the powerhouse at RM 4.3
The powerhouse contains a single Peltonwheel turbine
with a generating capacity of 465-kW. The project
operates at a constant hydraulic head of 394 ft
FERC license amendment in 2008 stipulated minimum
flows to protect resident trout populations in the bypass
reach, as well as any anadromousfish using the 0.7 mile
accessible section of bypass reach
4
Morse Creek Hydroelectric Project Background
Under the state’s Energy Independence Act, the project
does not qualify as a renewable energy resource
Electric output value is greatly diminished as a result
The project has been off-line since April 2012 due to
bearing replacement and main penstock valve repair
issues
Estimated replacement and repair cost is $100,000
5
6
7
Project Economic Evaluation
Key Assumptions
Model income statement uses a five-year
historical lookbackand a five-year projection
Forecasts future power, energy, and operation &
maintenance expenses
Anticipates future BPA wholesale power and
transmission rate increases
Accounts for self-insurance, project depreciation
and decommissioning expenses
9
Project Operational Cost Comparisons
$/MWh BPA %
BPA-12 Prior Average$29.38Base
Morse Creek 2008-2012$46.4458%
Morse Creek FY13-FY17 Projected $42.4344%
Morse Creek FY08-FY17 Combined $44.3851%
BP14 Current Average$32.32Base
Morse Creek FY08-FY12 Actual $46.4444%
Morse Creek FY13-FY17 Projected $42.4331%
Morse Creek FY08-FY17 Combined $44.3837%
BP16 Projected Average$35.55Base
Morse Creek FY08-FY12 Actual $46.4431%
Morse Creek FY13-FY17 Projected $42.4319%
Morse Creek FY08-FY17 Combined $44.3825%
10
Recommendations
Utility Advisory Committee Recommendation
Staff requests the UAC recommend that City Council
proceed with one of the following options:
1. Continue the project, including proceeding with $100,000
of repairs necessary to enable operation, or
2. Place the project in standby mode to minimize costs, and
delay the repairs until if/when City Council desires operation
to resume, or
3. Retire the project and maintain ownership, or
4. Sell the project and property in their present condition,
after declaring them to be surplus to the City’s needs
12
DescriptionAdvantagesDisadvantages
Retire the facility and Delays impact on retail rates.Western Public Agencies Group
maintain ownership.would be needed to remove the
facility from the Power Sales
Agreement.
Amended transmission
agreement with the Clallam
County PUD.
Termination of FERC license.
Potential decommissioning costs
may be required by FERC.
Sell the facility and Two parties had recently Terminated transmission
property in their present expressed interest in 2012.agreement with the Clallam
condition, after Eliminates likely impact on County PUD.
declaring them to be retail rates.Transfer of FERC license.
surplus to the City’s Avoids potential Sale is uncertain.
needs.decommissioning costs.
Could avoid Power Sales
Agreement complications and
costs.
Eliminates risk of failing aged
infrastructure.
Ends continual inspection
and maintenance costs.
13
Questions
Retirement Option Advantages
What is the likely impact on retail rates? A low to high range
would be helpful if this is not known.
Retirement Option Disadvantages
What is the likely FERC decommissioning cost? A low to high
range would be helpful if this not known.
Sale Option Advantages
What are the potential complications to the BPA Power Sales
Agreement?
Summarize the inspection and ongoing maintenance
activities and costs that would not be required if the facility is
retired.
14
15
FIGURE 3: Morse Creek Hydro Project
kW Forecast Based On January 2006 to March 2012 Actual Production
600
500
400
300
kW
200
y = -0.0791x 6+ 3.0346x 5-44.354x 4+ 308.37x 3-1040.3x 2+ 1520.3x -403.04
R² = 0.3119
100
0
123456789101112
-100
16
FIGURE 4: Morse Creek Hydro Project
HLH Forecast Based On January 2006 to March 2012 Actual Production
200,000
180,000
160,000
140,000
120,000
100,000
kWh
80,000
y = -19.639x 6+ 754.37x 5-10959x 4+ 74952x 3-245288x 2+ 340060x -43302
60,000
R² = 0.3253
40,000
20,000
0
123456789101112
-20,000
-40,000
17
FIGURE 5: Morse Creek Hydro Project
LLH Forecast Based On January 2006 to March 2012 Actual Production
180,000
160,000
140,000
120,000
100,000
80,000
60,000
65432
y = -14.943x+ 575.21x-8366x+ 57180x-186276x+ 254844x -28636
R² = 0.3276
40,000
20,000
0
123456789101112
-20,000
-40,000
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FIGURE 6: Morse Creek Hydro Project
Actual and Projected Annual Operating & Maintenance Expenses
$120,000
$100,000
y = 27879ln(x) + 25377
R² = 0.5293
$80,000
$/Year
$60,000
$40,000
$20,000
$0
200620072008200920102011201220132014201520162017
Actual O&M Expenses
$30,258 $33,903 $56,883 $61,769 $68,042 $109,653 $54,806
Projected O&M Expenses
$25,377$44,701$56,005$64,026$70,247$75,329$79,627$83,350$86,633$89,571$92,228$94,654
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FIGURE 7: Average Wholesale Power and Transmission Costs
for the City of Port Angeles
2002-2027
$60.00
$50.00
$40.00
$/MWh
$30.00
$20.00
Forecasted Values
$10.00
$0.00
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ACTUAL & FORECASTED CASHFLOW (GAAP)
Project ID:COPA
Proj Name :Morse Creek Hydroelectric Project
FY FY FY FY FY FY FY FY FY FY
2008200920102011201220132014201520162017
INVESTMENT OUTLAYS
Equity
Debt
DEPRECIATION($26,000)($26,000)($26,000)($26,000)($26,000)($26,000)($26,000)($26,000)($26,000)($26,000)
REVENUES
BPA Wholesale Generation Offset$27,340$28,038$60,604$24,805$49,227$68,048$73,564$73,564$80,921$80,921
TOTAL REVENUES$27,340$28,038$60,604$24,805$49,227$68,048$73,564$68,048$80,921$80,921
VARIABLE EXPENSES
BPA Transmission Charges($4,734)($4,757)($7,275)($4,025)($3,183)($4,930)($5,576)($5,576)($5,857)($5,857)
Operation & Maintenance($55,448)($56,350)($62,882)($109,907)($64,105)($83,350)($86,633)($89,571)($92,228)($94,654)
TOTAL VARIABLE EXPENSES($60,182)($61,107)($70,157)($113,931)($67,288)($88,280)($92,209)($95,147)($98,085)($100,511)
FIXED EXPENSES
Decommissioning($6,500)($6,500)($6,500)($6,500)($6,500)($6,500)($6,500)($6,500)($6,500)($6,500)
Insurance($1,006)($1,006)($1,006)($1,006)($1,006)($1,006)($1,006)($1,006)($1,006)($1,006)
Utilities($500)($500)($500)($500)($500)($500)($500)($500)($500)($500)
Administrative Charges($3,499)($3,564)($5,228)($5,547)($4,658)($6,250)($6,628)($6,525)($7,157)($7,254)
Emergency Mgmt Allocation($30)($30)($44)($47)($39)($53)($56)($55)($61)($61)
Professional/Contract Svcs($178)($181)($265)($282)($237)($317)($336)($331)($363)($368)
PW Administrative Charges($726)($739)($1,084)($1,150)($966)($1,296)($1,374)($1,353)($1,484)($1,504)
IT Charges($258)($263)($386)($409)($344)($461)($489)($482)($528)($535)
TOTAL FIXED EXPENSES($12,696)($12,783)($15,014)($15,441)($14,250)($16,384)($16,890)($16,752)($17,599)($17,729)
INCOME($71,539)($71,853)($50,566)($130,568)($58,311)($62,615)($61,536)($69,850)($60,763)($63,319)
add Depreciation$26,000$26,000$26,000$26,000$26,000$26,000$26,000$26,000$26,000$26,000
Asset Replacement$0$0$0$0($45,000)($100,000)$0$0$0$0
NET CASH FLOW($45,539)($45,853)($24,566)($104,568)($77,311)($136,615)($35,536)($43,850)($34,763)($37,319)
CUMU CASH FLOW($695,539)($741,392)($765,958)($870,526)($947,836)($1,084,452)($1,119,987)($1,163,838)($1,198,601)($1,235,921)
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