HomeMy WebLinkAbout001045 Original Contract City of Port Angeles
Record # 001045
EXHIBIT A
Western Public Agencies Croup
2016 Scope of Services and Budget
The Western Public Agencies Group ("WPAG") comprises 20 publicly owned utilities in the state
of Washington: Benton REA, Clallam County P.U.D. No. 1, Clark Public Utilities, the City of
Ellensburg, Grays Harbor P.U.D. No. 1, Kittitas County P.U.D. No. 1, Lewis County P.U.D. No. 1,
Mason County P.U.D. No. 1, Mason County P.U.D. No. 3, Pacific County P.U.D. No. 2, Skamania
County 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, 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" or
"BPA") 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.
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EXHIBIT A
Scope of Services
The 2016 scope of services for WPAG is proposed as follows:
• General WPAG Activities and Meetings
During 2016, 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-18 Pre-Rate Case — BPA will commence a combined transmission and power rate
case in November of 2016 that will set rates for the two year FY 2018-2019 rate period
("BP-18"). BPA will hold a series of pre-rate case workshops through 2016 up to the
beginning of the BP-16 rate case. These workshops will help establish the policy and
technical underpinnings of BPA's initial BP-18 rate proposal for both power and
transmission rates. WPAG will participate actively in the workshop processes leading up
to the rate case, and will intervene in the case once it begins. Many of the expected
workshops are listed below. This will be staffed by EES Consulting and MMPS&M.
Focus 2028 — BPA has stated that is focused on being the low-cost energy provider of
choice when new power contracts are offered in 2028. To this end, and largely at the
request of WPAG and other preference customers, BPA has commenced a new process
it is calling Focus 2028. This forum is intended to establish a common understanding of
industry changes and strategic choices BPA may face to maintain its financial strength
and cost competiveness. Among other issues, Focus 2028 is to include a review of BPA's
approach to capital investment in the hydropower and transmission systems, its internal
operating costs and program delivery models, including energy efficiency. WPAG will
participate in Focus 2028 to ensure that BPA's focus stays centered on being the
region's low-cost energy provider and to emphasize the urgency with which BPA must
bring its unyielding cost structure under control to maintain its competiveness. This will
be staffed by EES Consulting and MMPS&M.
Conservation —As part of the Focus 2028 process, BPA has promised a renewed look at
it the program delivery model for its conservation program. This will include a looking
at moving towards a model where utilities have more flexibility in funding conservation
on their own versus staying with BPA funding. This will also include a review of how BPA
intends to comply with the conservation targets to be established under the Northwest
Power and Conservation Council's Seventh Power Plan. We will work with WPAG's
members to establish positions that are fair to all members. We will also work within
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public power to help build consensus and joint action where possible. This will be
staffed by EES Consulting and MMPS&M.
Financial Reserves Policy— In determining whether to trigger or implement its risk based
adjustment clauses for power rates, BPA considers the total financial reserves of the
entire agency (i.e., the reserves attributable for both Power and Transmission Business
Lines). Currently, the Transmission Business Line has over $500 million in reserves that
are available for use in BPA's risk calculations, whereas the Power Business Line has only
$273 million of such reserves. Some of BPA's IOU and power marketing customers
argued in the BP-16 rate proceeding that BPA should return a sizeable portion of BPA's
transmission reserves to its transmission customers. In the BP-16 Record of Decision,
the Administrator promised to hold workshops during 2016 to develop a financial
reserve policy in large part to address the IOUs concerns. This has the potential to
result in an additional power rate increase if adopted because BPA Power would then
need to increase its own financial reserves to replace the transmission reserves formerly
relied upon in BPA's risk calculations. WPAG will work with other preference customers
to ensure that the financial reserve based arguments of the IOUs and power marketers
does not result in a power rate increase. This will be staffed by EES Consulting and
MMPS&M.
Integrated Program Review (IPR) — The IPR provides BPA's customers with an
opportunity to review and comment on BPA's expense and capital spending levels prior
to their inclusion in the upcoming BP-18 rate case. WPAG will participate in the IPR
process to attempt to reduce the costs that are to be included in the initial BP-18 rate
case proposal in the first instance. The strategy is to reduce those costs in the IPR, and
any associated rate increase, before they are effectively "baked" into BPA's initial BP-18
rate proposal. This will be staffed by EES Consulting and MMPS&M.
Capital Investment Review — This process provides BPA customers an opportunity to
review and comment on BPA's long term asset strategies including asset performance
objectives, prioritizing risks, developing capital project strategies and forecasting costs
and uncertainties. WPAG will also urge BPA to give priority to capital projects that
provide service to preference customers and maintain the reliability of the current FBS
and transmission system. This will be staffed by EES Consulting and MMPS&M.
Calculation of Peak Energy Amounts Under CHWM Contracts —The Contract High Water
Mark (CHWM) Contracts, including both the Slice/Block and Load Following Contracts,
include a provision where BPA can invoke a process for purposes of adopting a i
methodology for calculating the amount of "peaking energy" available from the FBS to
serve a preference customer's load under their respective CHWM contract, as well as
the peak capability of non-federal resources used to serve requirements load. By
increasing the peak capability of non-federal declared resources and decreasing the
amount of FBS peak capability, BPA could materially impact the peak capacity available
to serve preference customer loads. For Slice/Block customers to the extent the amount
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EXHIBIT A
of peaking energy available to them from the FBS is insufficient to meet their peaking
energy needs, they will have to acquire additional resources to make up the difference.
For Load Following customers BPA will acquire non-federal resources on their behalf
and roll the costs thereof into their power rates. BPA has recently given some indication
that it intends to invoke the process for determining a methodology for calculating
available peaking energy. This matter invokes issues involving preference, BPA's 7(b)(1)
statutory rate directive to base preference customer rates on the costs of the FBS until
the FBS can no longer meet all preference customer needs, and contractual rights.
WPAG will participate in the process, if and when it is commenced, with the objective of
working towards an outcome that is fair to all preference customers regardless of
whether they take service under the Load Following or Slice/Block contracts. This will
be staffed by MMPS&M.
Energy Imbalance Market — There are currently two separate processes under way
regarding energy imbalance markets (EIM). The first is the move by some Northwest
IOUs to join the California Independent System Operator (Cal-ISO) EIM. To access the
Cal-ISO EIM, these utilities, such as PacifiCorp, will need to use BPA's transmission
system. This initiative could have significant impacts on the transmission rights of
preference customers and BPA's operation of the transmission system. The second is
the Northwest Power Pool's EIM/SCED/CCED initiative. This initiative presents both a
threat and a potential benefit to preference customers. The threat stems from the
creation of a new market that BPA will be tempted to participate in, diverting BPA's
attention from its core mission of 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 both of these processes to ensure that the
interests of preference customers, and WPAG members in particular, are fully protected
in both processes. Any erosion to preference customer rights will be stoutly resisted.
This will be staffed by EES Consulting and MMPS&M.
Transmission Load Service Process — BPA has initiated a new process to address power
customer concerns and issues regarding access to and availability of transmission
capability for load service. It has included issues such as how is transmission capability
ear-marked to serve load, how is such capability made available, and how customers
serving load can get access to transmission without getting in line behind commercial
generators. While BPA has made some preliminary decisions that are favorable to
power customers, much work remains to be done to assure that BPA will have
transmission available when power customers will need it. This will be staffed by
MMPS&M.
■ 9Th Circuit Petition for Review
WPAG filed a petition for review in the 9th Circuit to question whether BPA has the statutory
authority to pay wind generators for their lost RECs, PTCs, and contract damages under
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BPA's Oversupply Management Protocol (OMP). This action has been placed on stayed for
nearly four years, but briefing will begin in early 2016. This will be staffed by MMPS&M.
■ Federal Energy Regulatory Commission
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 interests 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.
• NERC
EES Consulting has been monitoring and advising WPAG members on North American
Electricity Council (NERC) compliance issues since April of 2007. EES Consulting will
continue to monitor compliance issues on behalf of WPAG members in 2016. 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.
• Olympia Legislative Session
EES Consulting and MMPS&M will monitor the activities of the 2016 legislature on behalf of
WPAG's specific interests.
• Other Matters
During the course of each year, matters arise that require WPAG attention to protect the
interests of our customers. These matters are undertaken at the direction of the WPAG
utilities.
Budget
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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EXHIBIT A
EES Consulting
President................................................................................ $180 per hour
SeniorAssociate....................................................................... 175 per hour
Manager................................................................................... 170 per hour
Senior Project Manager........................................................... 165 per hour
ProjectManager ...................................................................... 160 per hour
Senior Analyst or Engineer....................................................... 155 per hour
Analyst...................................................................................... 150 per hour
Clerical...................................................................................... 120 per hour
MMPS&M
Principal ................................................................................. $190 per hour
Associate................................................................................ $190 per hour
These billing rates will remain in effect through December 31, 2016.
On the basis of the above billing rates, the 2016 labor budgets of EES Consulting and MMPS&M
combined are estimated to be $250,000. This labor budget will be split equally between EES
Consulting and MMPS&M. This total labor budget of $250,000 is the same as the total labor
budget in 2014 and 2015.
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. Out-of-pocket costs will be billed by whichever organization actually incurs the
expense. The total estimated annual WPAG budget (including the supplemental funding) for
2015 is estimated at $290,000. This represents no increase over the total 2014 and 2015
annual WPAG budgets.
As always, the allocation of the budget among WPAG members is open to negotiation by the
participants. We have attached an inter-utility allocation predicated on the most recent
available utility data. After a discussion of the foregoing issue, a final budget by utility will be
prepared. An example of the budget's allocation is attached at the end of this narrative.
Project Staffing
The staffing for these projects will be similar to that for past WPAG activities. Gary Saleba will
be the principal representative for EES Consulting. Ryan Neale and Terry Mundorf will be the
principal representatives for MMPS&M. Additional MMPS&M and EES Consulting staff will
assist as needed.
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CONSULTING SERVICES AGREEMENT
EES CONSULTING,INC.
Billing Address
570 Kirkland Way,Suite 100,Kirkland,Washington 98033
(425)889-2700
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,WA 989362,Attn:Phillip Lusk(hereinafter"CLIENT").
1. SCOPE,COMPENSATION AND QUALITY OF CONSULTING SERVICES
EES CONSULTING will provide the services and be compensated for these services as described in ExhibitA,attached hereto.
EES CONSULTING shall render its services in accordance with generally accepted professional practices. EES CONSULTING shall,to the best of its knowledge and
belief,comply with applicable laws,ordinances,codes,rules,regulations,permits and other published requirements in effect on the date this Agreement is signed.
H. TERMS&CONDITIONS OF CONSULTING SERVICES AGREEMENT
1. Timing of Work. EES CONSULTING shall commence work on or about January 1,2016.
2. Relationship of Parties,No Third-Party Beneficiaries. EES CONSULTING is an independent contractor under this Agreement. This Agreement gives no rights or
benefits to anyone not named as a party to this Agreement,and there are no third party beneficiaries 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:
i. Worker's Compensation and Employer's Liability Insurance as required by applicable state or federal law.
ii. Comprehensive Vehicle Liability Insurance covering personal injury and property damage claims arising from the use of motor vehicles with combined
single limits of$1,000,000.
iii. Commercial General Liability Insurance covering claims for personal injury and property damage with combined single limits of$1,000,000.
iv. Professional Liability(Errors and Omissions,on a claims-made basis)Insurance with limits of$1,000,000.
b. s Interpretation. Notwithstanding any other provision(s)in this Agreement,nothing shall be construed or enforced so as to void,negate or adversely affect any
otherwise applicable insurance held by any party to this Agreement.
4. Mutual Indemnification. EES CONSULTING agrees to indemnify and hold harmless CLIENT and its employees from and against any and all loss,cost,damage,
or expense of any kind and nature (including,without limitation, court costs, expenses, and reasonable attorneys'fees)arising out of injury to persons or damage to
property(including,without limitation, property of CLIENT, EES CONSULTING,and their respective employees,agents, licensees,and representatives)in any manner
caused by the negligent acts or omissions of EES CONSULTING in the performance of its work pursuant to or in connection with this Agreement to the extent of EES
CONSULTING's proportionate negligence,if any.
CLIENT agrees to indemnify and hold harmless EES CONSULTING and its employees from and against any and all loss,cost,damage,or expense of any kind and
nature (including without limitation, court costs, expenses and reasonable 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
CLIENT's or CLIENT's agents proportionate negligence,if any.
5. Resolution of Disputes, Attorneys' Fees. The law of the State of Washington shall govern the interpretation of and the resolution of disputes under this
Agreement. If any claim,at law or otherwise,is made by either party to this Agreement,the prevailing party shall be entitled to its costs and reasonable attorneys'fees.
6. Termination of Agreement. Either EES CONSULTING or CLIENT may terminate this Agreement upon thirty(30)days written notice to the other sent to the
addresses listed herein.
In the event CLIENT terminates this agreement,CLIENT specifically agrees to pay EES CONSULTING for all services rendered through the termination date.
EES CONSULTING,INC. CITY OF ANGELES
By: Gary Saleba
G
Title: President
Date: December 21,2015 Date:
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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;
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 and transmission 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.
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or
2. Public Utilities shall compensate the Attorney for these services at an average
hourly rate not to exceed $180.00. 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, PSC
Date: December 21 2015 By
Terence L. Mundorf
CITY OF PORT ANGELES
Date: /J � By: . @�
t
Manager
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