Loading...
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 N:\\uac\\final\\121013 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. N:\\UAC\\MEETINGS\\UAC2013\\UAC121013\\Morse Creek Hydroelectric Facility 2013 Recommendation.docx 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 th 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. th 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 th 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 th 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. th Recent 9 Circuit Actions th 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 th 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 th 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 th decided by the 9 Circuit, as this matter has been fully briefed. Next Steps th 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 th 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 th (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 18 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 19 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 20 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) 21