HomeMy WebLinkAbout5.460 Original Contract
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AGREEMENT FOR PROFESSIONAL SERVICES
TIllS AGREEMENT is made and entered into thisl1..~ of February, 1998, by and between THE CITY OF
PORT ANGELES, a non-charter code city ofthe State of Washington, (hereinafter called the "CITY") and
EES Consulting, Inc., located at 12011 Bel-Red Road, Suite 200, Bellevue, W A 98005 (hereinafter called
the "CONSULTANT").
WHEREAS, the CITY desires to complete a strategic plan for its electric utility, and
WHEREAS, the CITY desires to engage the professional services and assistance of a qualified consulting
firm to perform the scope of work as outlined in Attachment "A", and
WHEREAS, the CONSULTANT represents that it is in full compliance with the statutes of the State of
Washington for professional registration and/or other applicable requirements, and
WHEREAS, the CONSULTANT represents that it has the background, experience, and ability to perform the
required work in accordance with the prevailing standards of the profession, and
WHEREAS, the CONSULTANT represents that it will provide qualified personnel and appropriate facilities
necessary to accomplish the work;
NOW, THEREFORE, in consideration of the above representations and the terms, conditions, covenants and
agreements set forth below, the parties hereto agree as follows:
I SCOPE OF WORK
The scope of professional services to be performed and the results to be achieved by the CONSULTANT
shall be as detailed in Attachments "A", "B" and "C" and shall include all services and material necessary to
accomplish the work.
The CITY may review the CONSULTANT'S work product, and if it is not satisfactory, the CONSULTANT
shall make such changes as may be required by the CITY. Such changes shall not constitute "Extra Work" as
related in Section XI of this Agreement.
The CONSULTANT warrants that all services performed under this Agreement shall be in accordance with
the prevailing standards of the profession and in compliance with the applicable federal, state and local laws.
The Scope of Work may be amended upon written approval of both parties.
IT OWNERSIDP OF DOCUMENTS
Upon completion of the work, all documents, exhibits, photographic negatives, or other presentations of the
work shall become the property of the CITY for use without restriction. However, any alteration or reuse of
the documents, by the CITY or by others acting through or on behalf of the CITY, without the written
permission of the CONSULTANT, will be at the CITY'S sole risk.
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ill DESIGNATION OF REPRESENTATIVES
Each party shall designate its representatives in writing. The CONSULTANTS representative shall be
subject to the approval of the CITY.
IV TIME OF PERFORMANCE
The CONSULTANT may begin work upon execution of this Agreement by both parties. The work shall be
completed in accordance with the schedule set forth in Attachment "C".
V PAYMENT
The CITY shall pay the CONSULTANT as set forth in this section of the Agreement. Such payment shall be
full compensation for work performed services rendered, and all labor, materials, supplies, equipment and
incidentals necessary to complete the work.
A. Payment shall be on the basis of the CONSULTANTS labor plus CONSULTANTS direct non-
salary reimbursable (out of pocket) costs as set forth in Attachment "A".
l. Labor costs shall be as shown on Attachment "A".
2. The direct non-salary reimbursable costs are those directly incurred in fulfilling the terms of
this Agreement, including, but not limited to, travel, subsistence, telephone, computer,
reproduction and printing, supplies and fees of outside services and consultants.
B. The CONSULTANT shall submit invoices to the CITY at the completion of each of the six tasks as
set forth in Attachment "A". Invoices shall itemize with receipts and invoices the non-salary direct
costs associated with the task.
C. The CITY shall review the invoices and make payment for the services that have been provided.'
D. The CONSULTANT invoices are due and payable within 30 days of receipt. In the event: of a
disputed billing, only the disputed portion will be withheld from payment.
E. Final payment to the CONSULTANT will be made upon the completion of the work and acceptance
by the CITY.
F. Payment for "Extra Work" performed under Section X of this Agreement shall be as agreed to by the
parties in writing.
VI MAXIMUM COMPENSATION
Unless otherwise agreed to in writing by both parties, the CONSULTANT'S total compensation and
reimbursement under this Agreement, including labor, direct non-salary reimbursable costs and outside
services, shall not exceed the maximum sum of $65,000.
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vn EMPLOYMENT
Employees of the CONSULTANT, while engaged in the performance of any work or services under this
Agreement, shall be considered employees of the CONSULTANT only and not of the CITY, and claims that
may arise under the Workman's Compensation Act on behalf of said employees while so engaged, and any
and all claims made by a third party as a consequence of any negligent act or omission on the part of the
CONSULTANTS employees while so engaged, on any of the work or services provided to be rendered
herein, shall be the sole obligation and responsibility of the CONSULTANT.
In performing this Agreement, the CONSULTANT shall not employ or contract with any CITY employee
without the City's written consent.
VIII NON-DISCRIMINATION
The CONSULTANT shall conduct its business in a manner which assures fair, equal and non-discriminatory
treatment of all persons, without respect to race, creed or national origin, and, in particular:
A. The CONSULTANT shall maintain open hiring and employment practices and will welcome
applications for employment in all positions, from qualified individuals who are members of
minorities protected by federal equal opportunity/affirmative action requirements; and,
B. The CONSULTANT shall comply with all requirements of applicable federal, state or local laws or
regulations issued pursuant thereto, relating to the establishment of non-discriminatory requirements
in hiring and employment practices and assuring the service of all persons without discrimination as
to any person's race, color, religion, sex, Vietnam era veteran's status, disabled veteran condition,
physical or mental handicap, or national origin.
IX SUBCONTRACTS
A. The CONSULT ANT shall not sublet or assign any of the work covered by this Agreement without
the written consent of the CITY.
B. The CONSULTANT will be using the firms submitted with its proposal as subcontractors.
Subcontractors other than those listed shall not be permitted without the written consent of the CITY.
C. In all solicitation either by competitive bidding or negotiation made by the CONSULTANT for work
to be performed pursuant to a subcontract, including procurement of materials and equipment, each
potential subconsultant or supplier shall be notified by the CONSULTANT of Consultant's
obligations under this Agreement, including the nondiscrimination requirements.
X CHANGES IN WORK
Other than changes directed by the CITY as set forth in Section I above, either party may request changes in
the scope of work. Such changes shall not become part of this Agreement unless and until mutually agreed
upon and incorporated herein by written amendments to this Agreement executed by both parties.
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XI EXTRA WORK
The CITY may desire to have the CONSULTANT perform work or render services in connection with this
project, in addition to the Scope of Work set forth in Attachment "A" and minor revisions to satisfactorily
completed work. Such work shall be considered as "Extra Work" and shall be addressed in a written
supplement to this Agreement. The CITY shall not be responsible for paying for such extra work unless and
until the written supplement is executed by both parties.
XII TERMINATION OF AGREEMENT
A. The CITY may terminate this Agreement at any time upon not less than ten (l0) days written notice
to the CONSULTANT. Written notice will be by certified mail sent to the consultant's designated
representative at the address provided by the CONSULTANT.
B. In the event this Agreement is terminated prior to the completion of the work, a final payment shall
be made to the CONSULTANT, which, when added to any payments previously made, shall
compensate the CONSULTANT for the percentage of work completed.
C. In the event this Agreement is terminated prior to completion of the work, documents that are the
property of the CITY pursuant to Section III above, shall be delivered to and received by the CITY
prior to transmittal of final payment to the CONSULTANT.
xm INDEMNIFICATION/HOLD HARMLESS
The CONSULTANT agrees to indemnify the CITY, its officers, officials, employees and volunteers from
any claims, damages, losses and costs, including, but not limited to attorney's fees and litigation costs, arising
out of claims by third parties for property damage and bodily injury, including death, caused solely by the
negligence or willful misconduct of the CONSULTANT, its employees, affiliated corporations, officers, and
subcontractors in connection with this project.
If the negligence of both the CONSULTANT and the CITY (or a person identified above for whom each is
liable) is a cause of such damage or injury, the loss, cost, or expense shall be shared between the
CONSULTANT and the CITY in proportion to their relative degrees of negligence and the right of indemnity
or contribution shall apply for such proportion.
Should a court of competent jurisdiction determine that this Agreement is subject to RCW 4.24.115, then, in
the event of liability for damages arising out of bodily injury to persons or damages to property caused by or
resulting from the concurrent negligence of the CONSULTANT and the CITY, its officers, officials,
employees, and volunteers, the CONSULTANTS liability hereunder shall be only to the extent of the
CONSULTANTS negligence. It is further specifically and expressly understood that the indemnification
provided herein constitutes the CONSULTANTS waiver of immunity under Industrial Insurance, Title 51
RCW, solely for the purposes of this indemnification. This waiver has been mutually negotiated by the
parties. The provisions of this section shall survive the expiration or termination of this Agreement.
The Consultant expressly reserves its rights as a third person as set forth in RCW 51.24.035.
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XIV INSURANCE
The CONSULTANT shall procure and maintain for the duration of the Agreement, insurance against claims
for injuries to persons or damage to property which may arise from or in connection with the performance of
the work hereunder by the CONSULTANT, its agents, representatives, employees or subcontractors.
The CONSULTANT shall provide a Certificate of Insurance evidencing:
1. Automobile Liabilitv insurance with limits no less than $1,000,000 combined single limit per accident for
bodily injury and property damage; and,
2. Commercial General Liabilitv insurance written on an occurrence basis with limits no less than
$1,000,000 combined single limit per occurrence and $2,000,000 aggregate for personal injury, bodily injury
and property damage. Coverage shall include but not be limited to: blanket contractual; products/comple~ed
operations; broad form property damage; explosion, collapse and underground (XCV) if applicable; and
employer's liability; and,
3. Professional Liability insurance with limits no less than $1,000,000 limit per occurrence.
Any payment of deductible or self-insured retention shall be the sole responsibility of the CONSULTANT.
xv APPLICABLE LAW
This Agreement shall be construed and interpreted in accordance with the laws of the State of Washington,
and in the event of dispute the venue of any litigation brought hereunder shall be Clallam County.
XVI EXIllBITS AND SIGNATURES
This Agreement, including its exhibits, constitutes the entire Agreement, supersedes all prior written or oral
understandings, and may only be changed by a written amendment executed by both parties. The following
exhibits are hereby made a part of this Agreement:
Attachment "A" - Scope of Work
Attachment "B" - CONSULTANT's letter of February 5, 1998 "Modifications to Scope of Service
for City's Strategic Planning Study"
Attachment "C" - CONSULTANT'S proposal dated December IS, 1998 for preparation of strategic
plan for City's electric utility.
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In WITNESS THEREOF, the parties hereto have executed this Agreement as of the day and year first written
above.
CITY OF PORT ANGELES
BY~~
TI~E:'Jli .
DATE: D"3 ~ 0'3 ~ <\,8
TITLE:
ATTEST:
8~e~~. j J..gn^-
BECKYUP N, TYCLE
DATE: ~( ;::ll\/ q ~ -
A~~K~~r~y
APPROVED AS TO FORM:
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CRAIG SON, CITY ATTORNEY
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ATTACHMENT "A"
City Light Strategic Plan
Scope of Work
Task 1 - Interviews with Key External Customers and Suppliers
Interview 30 customers and suppliers
Provide report on perceived strengths & weaknesses as seen by customers and suppliers
Provide report on perceived quality of customer service as seen by customers and suppliers
Task 2 - Initial Project Conference
Meet with Council Members, City Manager and Project Team
Provide summary of City concerns and sensitivIties
PrOVide summary of utility strengths, weaknesses and needs
Provide revised work plan
Task 3 - Organizational Efficiency Review and Analysis
PrOVide summary of perceived strengths & weaknesses from Interviews with 30 employees
Provide summary of perceived quality of customer service from interviews with 30 employees
Provide summary of bargaining Unit perspectives and level of involvement
PrOVide companson of utility's wires fees to others
Provide functional grouping of written policies
Provide analysis of wntten policies strengths & weaknesses
Provide analysis of unwritten policies strengths & weaknesses and which ones should be adopted
Provide list of new policies needed to deal With future issues and implementation issues
Provide comparison of financial performance of comparable and competing utilities
Provide analYSIS of present and potential stranded costs
PrOVide analysis of current accounting and financial record system with recommendations
PrOVide analYSIS of current management information systems with recommendations
PrOVide analYSIS of current financial/rate analyses performed in-house
PrOVide analysis of debt position
PrOVide analysis of procurement, bidding and contract management with recommendations
Task 4 - Identification and Evaluation of Business Options
Forecast utility trends and business models
Identify business options that mesh forecasted Industry trends, forecasted customer expectations,
preViously Identified utility strengths & weaknesses and desires of policy makers
Develop strategy to optimize policy direction, organizational effectiveness, employee certainty and
morale, and strategic direction and competitiveness
PrOVide list of business options with pros and cons
PrOVide an evaluation of all business options and a transition strategy for top three
Tasks 5 & 6 - Post-Study Conference and Final Report
Meet With CounCil Members, City Manager and Project Team to review process, conclusions,
recommendations and future direction
Work with City to organize final report in a meaningful and useful format
Provide City With reproducable master and two draft copy's of final report
$ 9,000
$ 7,000
$ 1,000
$ 1,000
$ 1,500
$ 1,000
$ 250
$ 250
$
$ 22,500
$ 3,000
$ 3,000
$ 1,000
$ 2,500
$ 1,500
$ 1,500
$ 1,500
$ 1,500
$ 1,000
$ 1,000
$ 1,000
$ 1,000
$ 1,000
$ 1,000
$ 1,000
$ 15,500
$ 2,000
$ 2,000
$ 5,000
$ 2,500
$ 4,000
$ 8,000
$ 4,000
$ 3,000
$ 1,000
Labor Total $ 56,500
Not to Exceed Out-of-Pocket Total $ 8,500
Project Not to Exceed Total $ 65,000
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CITY OF PORT ANGELES LIGHT UTILITY
PROPOSAL TO PROVIDE A
COMPREHENSIVE STRATEGIC PLAN
December 1997
Prepared by:
EES Consulting, Inc.
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A registered professional engineering corporation with
offices in the Seattle and Portland metropolitan areas
in conjundion with
The Charlie Earl Company
Attacmnents "B" and "C"
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Consulting, Inc.
SM
February 5,1998
Mr. Jack Pittis
Mr. Bob Titus
City of Port Angeles
321 East Fifth Street
Port Angeles, Washington 98362
SUBJECT: Modifications to Scope of Service for City's Strategic Planning Study
Dear Jack and Bob:
It was good meeting with you this past week regarding the City of Port Angeles' (City)
Strategic Planning Study (Study) for its Electric Utility. EES Consulting is pleased and
honored to be selected for this important and interesting Study.
At our meeting last week with you and the other Study Steering Committee members, we
discussed changes to the Study's original scope of service as proposed by EES Consulting
under cover of our December 15,1997 proposal document. The purpose of this letter is to
confirm the nature of the changes we made last week, and estimate the associated Study
budget impacts. To this end, below I have summarized my notes from our last meeting by
Study Task number.
You will recall that our original December 15 proposal had six tasks. These proposed tasks
and their key components were:
Task
1
2
3
Components
Interviews with key external customers and suppliers
Initial project conference
Organization efficiency review and analysis to include employee
interviews, benchmarking, utility policy review and financial analysis
Identification and evaluation of business options
Post study conference
Final report writing
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Post Office Box 52810
Bellevue, Washington 98015-2810
Telephone 425452-9200
12011 Bel-Red Road, SUite 200
Bellevue, Washington 98005-2471
FaCSimile 425 452-9299
A registered professional englneenng corporation with
offICes In the Seattle and Portland metropolitan areas
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Mr. Jack Pittis and Mr. Bob Titus
February 5, 1998
Page 2
The City's Steering Committee was generally satisfied with our proposed scope and budget
for Tasks 2, 4, 5 and 6. For Task 1, a detailed list of potential interviewees was requested
along with a list of questions to be asked. The scope of Task 3 was clarified. For both
Tasks 1 and 3, an estimate of City staff support was also requested. Finally, a more detailed
final budget breakout was requested. Based upon these comments from the Study's
Steering Committee, the balance of this letter will focus on changes and/or comments
directed at Tasks 1 and 3, and the requested budget information.
Task I-Clarification of Original Scope and Detail on External Interview Process
The original labor budget for Task 1 was $9,000. This total Task budget was split $7,000
for 30 interviews, and $2,000 to analyze the interview comments and identify the Electric
Utility's strengths and weaknesses. Our proposed list of potential interviewees is as
follows:
Number Type of Interviewee
6 Electric Utility's 6 largest customers
3 Electric Utility's 3 largest equipment vendors
1 BP A Account Executive for Electric Utility
2 ClalIam County Department heads (e.g. Roads, Public Works, Economic Development, etc.)
1 Chamber of Commerce representative
3 Key Downtown business people
3 Clallam County PUD senior management/commissioners
1 School District representative
1 Senior citizen representative
2 Environmental community representatives
1 Port Commission representative
1 Coast Guard representative
3 Small User/Residential representatives
1 Representative from local telephone company
1 Representative from local cable company
30 TOTAL
We anticipate that each interview will take 45-50 minutes. We will need City staff support
to finalize the list of interviewees and schedule meetings with these interviewees. If fewer
or more intervie}Vs are requested by the City, this Task's labor budget should be changed
by $200 per interview.
Regarding questions for the interviewees, a standard form will be developed after EES
Consulting has more interaction with the Study Steering Committee and a final list of
interviewees is developed; however, the general lines of questioning follow:
EES Consulting, Inc.
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Mr. Jack Pittis and Mr. Bob Titus
February 5, 1998
Page 3
. Amount of interaction with Electric Utility.
. Perception of Electric Utility's past performance.
. Electric Utility's strengths and weaknesses.
. Was service adequate/price competitive?
. Is Electric Utility responsive to your needs and requests for change?
. How much value is placed on local control?
. Should Electric Utility service be provided by City government or private sector?
. Perspective on future role of Electric Utility/what needs can it meet?
Again, these questions will be modified after a final list of interviewees is developed.
Task 3-Change in Scope and Clarification
For Task 3, we proposed four differen~ subtasks. These subtasks and the originally
proposed labor budgets follow:
Sub Task Description
Internal mterviews
Benchmarking
Policy review
Financial analysis
Total labor
Labor Budget
$7.000
10,500
6,000
7.000
$30,500
The Study Steering Committee requested additional information on what internal
interviews would be undertaken, the questions to be asked and the budget for this subtask.
We propose to interview 30 internal people. ask the same types of questions noted for the
external interviewees, and need the same level of City support as noted above to identify
the proper interviewees and set up the interviews. Our proposed list of interviewees is
contained on page 6 of our December 15 proposal. We have assumed 30 interviews in our
labor budget. As such, changes in our proposed number of interviewees should change
this subtask's budget by $200 per interview.
The other change to Task 3 discussed with the Study Steering Committee was to limit the
scope of the benchmarking analysis. The $10,500 budget for this subtask assumed a full
benchmarking project as detailed on pages 7-8 of our December 15 proposal. Upon
discussion with the Study Steering Committee, it was concluded that a condensed
benchmarking analysis would be conducted initially where EES Consulting looked at the
Electric Utility's relative competitiveness by separating the "bulk power" and "wires"
components for neighboring utilities and comparing the "wires" component to that of the
Electric Utility's. This rough approximation of competitiveness can be refined later if
EES Consulting, Inc.
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Mr. Jack Pittis and Mr. Bob Titus
February 5,1998
Page 4
necessary. This new scope for the benchmarking subtask will cost $2,500 and reduce the
original Study budget for Task 3 by $8,000.
Revised Budget Detail and Not to Exceed for Labor
Based upon these modifications to our December 15 proposal, EES Consulting will
undertake this modified scope of services for a not to exceed amount for labor of $56,500.
Any project-related out of pocket expenses will be billed to the City in addition to labor
charges and at their cost to EES Consulting. A breakout of the labor budget by sub task is
included as Attachment 1 to this letter.
I hope this letter meets your immediate requirements. Please feel free to contact me
directly with requests for additional clarification or more detail on the aforementioned
Study scope and budget changes.
We look forward to working with the City on this interesting study.
Vzr1yyours,
~Q~eba
President
Enclosures
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EES Consulting, Inc.
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Attachment 1
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Attachment I
Budget Details for Strategic Planning Study
Labor BudRet
OriRinal Revised
Task I-Interviews with Key Customers and Suppliers
Interview 30 customers and suppliers $7,000 $7,000
Provide report on perceived strengths & weaknesses as seen by customers and suppliers 1,000 1,000
Provide report on perceived Quality of customer service as seen bv customers and suppliers 1,000 1,000
Subtotal $9,000 $9,000
Task 2-lnitial Project Conferences
Meet with Council Members, City Manager and Project Team $1,500 $1,000
Provide summary of City concerns and sensitivities 250 250
Provide summary of utility strengths, weaknesses and needs 250 250
Provide revised work plan 0 0
Subtotal $2,000 $1,500
Task 3-0rganizational Efficiency Review and Analysis
Provide summary of perceived strengths & weaknesses as seen by employees $3,000 $3,000
Provide summary of perceived quality of customer service as seen by employees 3,000 3,000
Provide summary of bargaining unit perspectives and level of involvement 1,000 1,000
Provide PC based model of utility benchmarking including relevant data of comparable utilities 5,500 0
Provide summary of relevant benchmarks and policy/financial areas needing review 2,500 0
Provide guidelines for how to use data to determine future direction 2,500 0
Provide comparison of City's wires fees to others 0 2,500
Provide functional grouping of written policies 1,500 1,500
Provide analysis of written policies strengths & weaknesses 1,500 1,500
Provide analysis of unwritten policies strengths &weaknesses and which ones should be adopted 1,500 1,500
Provide list of new policies needed to deal with future issues and implementation issues 1,500 1,500
Provide comparison of financial performance of comparable and competing utilities 1,000 1,000
Provide analysis of present and potential stranded costs 1,000 1,000
Provide analysis of current accounting and financial record system with recommendations 1,000 1,000
Provide analysis of current management information systems with recommendations 1,000 1,000
Provide analysis of current financial/rate analyses performed in-house 1,000 1,000
Provide analysis of debt position 1,000 I,OeO
Provide analysis of procurement, biddiOl~ and contract mana~ement with recommendations 1,000 1,000
Subtotal
$30,500
$22,500
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Budget Details for Strategic Planning Study (cont.)
Labor Budget
Original Revised
Task 4-Identification and Evaluation of Business Options
Forecast utility trends and business models $2,000 $2,000
Identify business options that mesh forecasted industry trends, forecasted customer 2,000 2,000
expectations, p~viously identified utility strengths & weaknesses and desires of policy
makers
Develop strategy to optimize policy direction, organizational effectiveness, employee certainty 5,000 5,000
and morale, and strategic direction and competitiveness
Provide list of business options with pros and cons 2,500 2,500
Provide an evaluation of all business options and a transition strategy for top three 4,000 4,000
Subtotal $15,500 $15,500
Task 5 & 6-Post-Study Conference and Final Report
Meet with Council Members, City Manager and Project Team to review process, conclusions, $4,000 $4,000
recommendations and future direction; draft initial report
Work with City to organize final report in a meaningful and useful format 3,000 3,000
Provide City with 20 copies of final report 1,000 1,000
Subtotal $8,000 $8,000
GRAND TOTAL-LABOR $65,000 $56,500
Consulting, Inc.
SM
December 15, 1997
Mr. Robert Titus
Deputy Director of Utility Services
City of Port Angeles
321 East Fifth Street
Port Angeles, Washington 98362-1150
Dear Mr. Titus:
EES Consulting, Inc. (EES Consulting), in association with the Charlie Earl Company, is pleased
to present our proposal to the City to prepare a strategic plan for the City's electric utility. This
proposal has been developed in conformance with the City's request for proposal dated November
17, 1997. This proposal contains a detailed scope of services, along with general information
about EES Consulting, the firm's experience in performing strategic plans, references, cost
estimates and comparisons, and our project team's qualifications to perform the study. This
proposal also identifies the personnel to be assigned to this project. Please note that the City has
requested a document of 30 pages or less. To comply with this request, we have not included full
professional resumes ofEES Consulting, a full client list or extensive background on the firm. We
will gladly provide you with this additional information upon request.
The project team assembled for the City's project brings to the City tremendous strengths in the
area of utility management, operational practices and competitiveness. One of the goals of the
CitY is to have a "road map" of where the City should be heading based upon the changing
competitive electric utility environment. One of the major strengths of our project team is that
over the last two years we have been one of the major participants in helping to shape and
structure this emerging competitive market. We have done so in a number of ways, some of which
include the following:
. Developed long term strategic plans for utilities in a competitive market
. Developed strategic plans for power supply in a competitive market
. Developed and issued requests for proposals (RFP) for a number of utility clients for
competitive bids on wholesale power supply
Post Office Box 52810
Bellevue, Washington 98015-2810
Telephone 425452-9200
12011 Bel-Red Road, SUite 200
Bellevue, Washington 98005-2471
FaCSimile 425452-9299
A registered profeSSional englneenng corporation With
offices In the Seattle and Portland metropolitan areas
,-
Mr. Robert Titus
December 15, 1997
Page 2
. Assessed the organizational and governance issues associated with deregulation
. Analyzed and developed transmission wheeling and retail wheeling rates in conformance with
FERC methodologies
. Assisted a number of business and organizations in aggregating loads and in exploring the
competitive electric utility market by developing and receiving RFPs for power supply and
wheeling services
. Developed unbundled services and rates for utility clients
While the above examples appear to focus on the power supply and transmission portions of the
competitive environment, that is simply a function of the infancy of the evolution of the market,
and where the focus currently lies. In the long term, however, the City will need to develop
strategic plans to deal with its electric utility as a whole, and meet the specific needs of the
customer. It is from that perspective-meeting the customers' needs, that this study has been
developed. It is our belief that in the long run, price will not be the only criteria that customers
will use for selecting an electric service provider. In our opinion, the City must develop a
management team and organizational structure which will be customer focused, and at the same
time efficient and cost effective.
We look forward to discussing our proposal with the City. Should you have any questions about
our approach to this project or any information contained herein, please call me directly. Thank
you for the opportunity to propose to the City on this study. I hope we have the opportunity to
work together on this interesting and challenging project.
Very truly yours,
~~~
Gary Saleba U
President
Enclosure
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EES Consulting, Inc.
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Contents
1 Overview of the Project
Transitioning to a Competitive Environment ..........................................................................1
Overview of the Project.. ......... ...... .................. .............................. ........ .................. ...................2
Summary ............................................ ............ .................. ................... ..................... ...................3
2 Scope of Services
Goals and Objectives for the Study ...........................................................................................4
Detail of the Scope of Services ...................................................................................................4
Summary................. ...... ............... ......... .......... ........... ...................... ........................................ .15
3 Qualifications of the Project Team
EES Co nsul ring, In c. ............... ............ ......... ................ ............................................................ .16
The Charlie Earl Co m pany..... .................. ................................................................................ 2 0
Summary........................................ .......... ................................................................................ .21
4 Project Staffing
Gary S. Saleba, President.. .................................................. ......................................................22
Boris Prokop, Senior Vice President .......................................................................................22
Gail Tabone, Vice President......... ....... ....... .............................................................................. 22
Paul D. Maxwell, Vice President ............................................................................ ......... ...... ...23
Marilynn Semro, Senior Project Manager................ ................................................. .......... ....23
Anne Falcon, Project Manager .......:............................................... ..................... ..... ..... ..........23
Jon Piliaris, Proj ect Manager ................................... ................................................................ 2 3
Gary Baughman, Senior Project Engineer ......... ............. ............................. ........... ...... ......... ..23
Steven Andersen. Senior Project Engineer....... .......... ............ .................. .............. ............ .....24
Charlie Earl. The Charlie Earl Company.................................................................................24
Summary................................................................................................................................... 24
5 Time Schedule and Fees
Budget ................ ~..................................................................................................................... 2 5
Schedule ............ ..'....................................................... .................. ........................................... ..26
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1 Overview of the Project
EES Consulting, Inc. (EES Consulting), in association with The Charlie Earl Company, proposes to
provide a strategic plan for the City of Port Angeles's electric utility (City Light). The City has requested
this review in light of the changing and competitive electric utility market that will require electric utilities
to be well managed, flexible and have a clear understanding of its mission.
This section of the proposal will highlight the general approach to be taken for this project. In general, the
project team proposes to develop this review from a "bottom/up" perspective. That is, the customer has
the most important perspective as to the performance of the City's electric utility, and will ultimately
determine the competitiveness of the utility. Recognizing this important determinate to the City's long
term success is one important deliverable that will be provided by this study.
Transitioning to a Competitive Environment
The electric utility industry is entering an era of rapid change and possible upheaval. Managing a utility in
a regulated, monopolist environment is much different than in an open and competitive market. The
management principles, concepts and thinking used in the past may be of minimal value in the future.
Instead, management concepts such as flexibility, risk/reward, and real-time decisions will be crucial.
In the new competitive environment, it appears that electric utilities will eventually experience one of five
possible results. These results are as follows:
. Thrive and continue to grow in a competitive atmosphere.
. Continue to operate as is, but fail to grow or be competitive.
. Merge or consolidate with other utilities to remain competitive.
. Sell the assets of the utility to another competing utility.
. Fail competitively and financially, and the utility's customers are taken over or served by another
utility.
The point to be made is the City needs to consider which of the end results it wants and desires to work
toward. The City should work towards maintaining or enhancing the value of the utility for the citizens of
Port Angeles. It is clear that of the five potential results above, failure would not be desirable. But any of
the other four results could be planned and worked toward to ideally maximize the interests of the
citizenry. The project team proposed herein is highly capable of assisting the City in meeting its desired
goals.
At the present time, utilities appear to be taking either two courses of action in reaction to the changing
competitive environment. Some utilities are burying their heads in the sand, assuming that the
competitive electric environment will not come to pass. In other words, these utilities believe that they
have the exclUSIve right to serve the customers in their service territory. If they are changing for the
competitive environment, it is begrudgingly. In contrast to this, a growing number of utilities are
positioning themselves for this significant change. For example, they are undertaking cost studies to
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determine and establish retail wheeling rates before a single customer has requested this service. At the
same time, these utilities are also closely examining their cost structures to reduce or eliminate any
stranded costs. Finally, a number of utilities are reducing their own power supply costs by purchasing bulk
power supplies via a competitive bid process and are transmitting this power via t.~e open access
transmission system.
The City appears to be one of the utilities that is preparing for the competitive electric utility environment.
This study is a significant step in that direction. The results of this study should enable the City's electric
utility to begin the process of adjusting its management structure, and thinking about how electric utilities
should be managed and operated in a competitive environment.
Overview of the projed
The RFP states a complex set of study objectives. We have considered these very carefully in outlining our
approach; an approach designed to accomplish the work and deliver a result that satisfies Port Angeles' "big
picture" needs as well as the level of detail necessary to meet the objectives in the RFP.
The City's objectives for the study are to:
. Assess the utility's current strengths and weaknesses,
. Identify business options including pros and cons,
. Rank business options according to a set of criteria, and
. Provide recommendations and a time line to achieving the options.
The analysis of the organization including the effectiveness of management, financial condition, operations
and the condition of the system, will enable us to recommend options that will enhance Port Angeles'
capability to perform effectively in the competitive times ahead.
Our approach and methodology to evaluating the effectiveness of City Light's management, financial
condition, system operations and plant maintenance has to take into consideration what is going on in the
environment outside City Light. That environment includes the balance of the City organization and a
multitude of customers, suppliers, regulators, and others who have influence but are not part of the City
structure. In order to understand the current effectiveness of the electric utility, the perceptions held by those
in the external environment are very important.
Identifying what customers want and need (customer service) and the most cost effective method to provide
customer service (low cost, convenient and reliable service) will provide guidance in establishing changes to
City Light in order to be successful in a competitive environment. The model below depicts the utility
operating within the context of two categories of customers and suppliers.
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. Inside the City organization includes the customers and suppliers inside the City including employees of
other departments, management, and the City Council.
. Outside the City organization includes customers and suppliers outside the City including the citizens of
Port Angeles who purchase electricity and other services from the utility, and electricity and material
suppliers.
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We propose to perform interviews with customers and employees in order for the City and project team to
gain an understanding of how others perceive City Light's strengths and weaknesses. Information from this
process would be provided to council and selected senior City management staff during an initial project
conference. This conference would be for the study leadership to jointly:
. Review utility strengths and weaknesses,
. Review preliminary information gathered by the project team, and
. Provide up to date information of City concerns.
The individual tasks of the study will include those we propose in addition to the specific tasks called for in
the RFP.
. Task 1 * - Interviews with key external customers and suppliers
. Task 2*- Initial project conference
. Task 3-0rganizational Efficiency Review and Analysis
Interviews with employees
Benchmark study
Policy evaluation
Financial review
. Task 4-Identification and evaluation of business options
. Task S-Post study conference""
. Task 6-Report including next steps and time line
>4-Not called for in the RFP
Summary
This section of the proposal has provided a brief conceptualization of our project team's thoughts on the
changing electric utility environment. Also included in this section was a brief overview of the study to be
conducted for the City. A more detailed scope of services, by task, is provided in the next section of the
proposal.
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2 Scope of Services
This section of the proposal will provide a detailed scope of services for the project. This scope of services
has been developed based upon the City's request for proposal (RFP). The scope of services has been
developed by the Project team in a manner which generally follows the City's RFP. However, in certain
areas it has been expanded in an attempt to meet the City's goals and objectives for this project.
Goals and Objedives for the Study
The goals and objectives for this study, as identified by the project team, are based upon the information
provide by the City within their RFP. The project team's perceived goals and objectives for the City from
this study are as follows:
. Assess the utility's current competitiveness.
. Identify the business options including addressing the pros and cons.
. Provide recommendations to position the utility for a more competitive future.
. Map the transition path for City Light's competitive future.
While the above goals and objectives appear to be broad in scope, they do provide a clear signal as to the
direction that the utility would like to head. Each of the tasks detailed within this scope of services has
been designed to help achieve one or more of the goals and objectives noted above. Taken together, this
study should achieve all of these stated goals and objectives.
Detail of the Scope of Services
The scope of services has been developed around six (6) tasks or work elements. Each of these tasks is
discussed in detail below.
Task 1-lnterviews with Key External Customers and Suppliers
In order for any business to survive, much less thrive, it is essential to provide a high level of
customer service. Although the City's RFP does not specifically mention customer service it appears
to be implied in City Light's desires to be successful in the electric utility business in the future. That
is key both from the perspective of a city government's desire to be in touch with, and have the
confidence of its ,.citizens, but also from the business need to be well thought of by customers. It is
very important to the success of the study that it be directed to the needs of the customers - who in
this case happen to largely overlap with the citizenry.
What are the needs of the customers of Port Angeles City Light? Our expertise in the energy industry
gives us insight and perspective, and our later interviews with City staff will provide much internal
information. But the study can be much better directed to solve questions of customer service if we
can hear it from them.
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We propose to accomplish approximately 20 to 30 face to face interviews with a variety of customers
and suppliers using a variant of Garvin's eight dimensions of quality, as an interview tool. Interview
information will be categorized under the following topics:
1. Utility performance
(a) Electric system
(b) Business functions
2. Electrical service features
3. Reliability
4. Conformance
5. Service
(a) Electric operations
(b) Business functions
6. Aesthetics
7. Perceived quality
8. Cost effectiveness (value of service)
The information received from these interviews will be provided to the City for the initial project
conference and used as baseline information for the other tasks of the study.
Work Product Deliverables as a Result of Task l-External Interviews. From the work accomplished
above, the deliverables for this task will be as follows:
Description of strengths and weaknesses of the utility as perceived by knowledgeable people
outside the City.
Composite descriptions of eight quality dimensions of the utility.
Task 2-lnitial Project Conference
We propose a 3 to 5 hour initial project conference to be attended by Council members, the City
Manager, and anyone else the City chooses. The purpose is to assure, insofar as possible, that the
project team fully understands the needs and goals of City leadership as we get started. Up to the
time of this conference most of the .communication between the project team and the City will have
been written. Our experience has been that for studies of similar importance, complexity. and scope,
we can improve our understanding of client concerns and sensitivities with a frank and open
discussion of the issues.
We plan to facilitate a meeting utilizing our knowledge of the industry, competitiveness, future
uncertainties, interviews with your customers, and your knowledge of strengths, weaknesses,
perceptions, and needs. We have found that such events are very productive in assuring that
complex sets of study objectives are successfully addressed. The result of this conference will be used
to finalize the work plan and guide our efforts. It also will give you assurance that we fully
understand your needs from the study.
Work Project Deliverables as a Result of Task 2-Initial Project Conference. From the work above, the
deliverables for this task will be as follows:
A summary of City concerns and sensitivities concerning the study.
A summary of utility strengths, weaknesses, and City needs from the study.
An amended work plan to guide the project team.
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Task 3-0rganizational Efficiency Review and Analysis
Task 3 and its sub-tasks develop the groundwork for identifying and recommendiIlg alternatives in
Tasks 4 and 5. We separately identified the tasks and sub-tasks for ease of identification and
explanation, but in reality, they must mesh together in considering the best future options. The
subtasks involved in this review include employee interviews, a benchmark analysis, policy
evaluation and financial review. These subtasks are designed to evaluate the effectiveness of utility
management, financial condition, system operations and condition of the system.
Employee lnterviews
This task involves interviews with employees in order to understand the employees' perception of the
organization's effectiveness in providing good customer service. We will design an interview tool
similar to the eight quality dimensions discussed in Task 1 to capture employees knowledge of utility
performance categorized by specific business activities.
For efficiency, we plan to utilize these interviews for gathering information for study sub tasks:
benchmarking, policy analysis, financial review and any other detailed analyses that may be
discovered through the interview process. The information will be summarized in a composite for
each study task highlighting strengths and weaknesses.
We have planned for approximately 30 interviews, however, this may need to be adjusted as the
scope becomes more defined. We prefer a mix of management and direct service employees to
ensure we can assess the organization's effectiveness from a variety of perspectives. Tentatively, we
plan the following number of employee interviews within each department:
Department
Department Head
Administrative Services
Engineering
Operations/Maintenance
Resources
Customer Service
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2
4
7
2
2
City
City Attorney
Development Services/Public Works
Finance
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Customer Service
Personnel
General Services
Council/Manager
1
2
1
1
1
1
4
At least 200/0 of the interviews shoula be with bargaining unit members.
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Work Product Deliverables for Employee Interviews. From the work described above, the deliverables
for the task will be as follows:
Summary of employees perception of organizational and procedural strengths and
weaknesses.
Identification of how the employees view the quality of the utility's performance.
Involvement of the bargaining unit and knowledge of bargaining unit perspectives.
Identification of employee concerns regarding policy, organization staffing, and
benchmarks.
Benchmark Analysis
The purpose of benchmark analysis is to compare organization performance to others and to
ascertain whether performance is getting better or worse over time. The determination of what
statistics to utilize partially depends upon what is readily available from other utilities and wruch
statistics have been historically kept by Port Angeles.
APP A has been keeping statistics from various utilities for years and will have a rich supply for
comparative purposes for those financial and operating functions that it has chosen. Beyond that
source, for private utilities, FERC Form 1 's are available that may be useful for comparative purposes.
Simple surveys of other municipal utilities will generate additional data that we may need.
The circumstances in Port Angeles will determine which benchmark statistics to track. However, in
our previous efforts with benchmark information, we have found statistics in the following categories
to be among those most useful.
Financial performance
./ Sales
./ Revenues/customer
./ Net operating income
./ Sales as % oftota! income
./ Rates
./ Average annual bill/customer
./ Average net system investment/customer
./ Ratio of power cost to total cost
./ Ratio of direct O&M to plant investment
./ Ratio of A&G to total cost
./ Ratio of direct O&M to total cost
./ Ratio of taxes and transfer payments to total cost
./ Ratio of customer service costs to total cost
./ Custqmer service cost/customer
./ Meter reading cost/customer
./ Billing cost per customer
./ Meter installation cost/customer
Electric system performance
./ Line losses
./ Peak demand
./ Load factor
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Customer service
./ Timeliness of service connections
./ Bill complaints
./ Other customer complaints
./ Response time to customer phone calls
./ Customer service policies (bill paying ease, requests for clarification, budget billing,
electronic bill paying, etc.)
./ Demand side activities
Employee productivity
./ Number of employees
./ Number of customers/employee
./ Salary expense/ customer
Reliability
./ Outage frequency
./ Outage time/customer
./ Outage restoration time
It will be most cost effective for the project team to recommend the statistical categories, comparable
utilities, and format, and then have City staff collect and assimilate the data. The project team will
design a spreadsheet model for this purpose. The advantage of this approach is that the City will
receive direct training in maintaining this data, so that this effort can be carried forward into the
future. In addition, by utilizing City staff to assimilate the data, the project costs for this task have
been minimized to the City.
The project team has not only had experience developing performance measurement systems for
utilities, but general purpose local governments as well. This broader perspective may assist Port
Angeles in not only getting good benchmark comparisons for its electric department but an outline
of a set of statistics for other areas of the City as well.
The benchmark analysis must be used with the other tasks in this study. The analytic process will be
iterative. The information we gather in the other tasks helps us determine which statistics to use for
comparison. Similarly, what we find in the comparative statistical benchmark analysis will give us
leads into problems and opportunities that need a closer review in management policies, financial,
operations, and maintenance analysis.
The project team will also recommend how benchmark information can best be used to help set
policy and manage the utility into the future.
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Work Product Diliverables as a Result of the Benchmark Analysis. From the work accomplished
above, the deliverables for the task will be as follows:
A PC based benchmark model including relevant statistics and format.
Identification of comparable utilities.
Statements of the relevance of benchmark information to the organization, financial, and
policy recommendations.
Uses of the data for leading the utility.
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Utility Policies
Policies are an important linkage between the policymaker(s) and utility staff and the effectiveness
of the organization. It is the project team's perspective that policies must strike the delicate
balance between direction and flexibility. Well written policies should provide clear direction to
utility staff, yet provide for flexibility on implementing and administering them. Too far in either
direction creates a policy which is unworkable from both the policymaker's and utility staffs
perspective. The important aspect of the discussion on policy analysis is that in the future, clear
policy direction is going to be even more important, and there will be a need for policies to be
developed which are not in place today. Finally, well crafted policies should keep the policymaker
informed and attuned to the operation of the utility. Where necessary, the policy should provide a
process to assure sufficient feedback to keep the policymaker informed.
Given the above brief overview of the project team's perspective on policies and how they should
be utilized in the utility setting, this task will begin by identifying all written policies of the utility.
An important aspect of this portion of the study is that the project team is not proposing to write
or re-write any policies of the City. Rather, this is a critique of the utility's policies from a planning
and operational perspective. This task should be used by the City to guide the revision of existing
policies and the development of policies in the future.
Once identified, the written policies will then be categorized into functional groupings. The
specific functional categories will be developed as a part of the study process, but may include the
major functions of power supply, financial and rates, personnel, customer service, etc. By
separating written policies into these functional categories, it will be much easier to recognize any
gaps, holes or inconsistencies in the City's current policies.
The above task will also undoubtedly uncover weakness in the written policy process. For
example, are all written policies easy to find and obtain a copy of? Are all key management
employees aware of these policies? Are there any conflicts between the policy statements? These
and other issues will be developed in the review of the written policy process. The final aspect of
reviewing the written policies will be to consider the "quality" of the implementation of these
policies. The project team will review the level of conformance to the written policy statements,
along with how well the policy statements can be used for implementation. In other words, are the
policy statements written in too general of a manner to make them effective. In summary, a
through review of the written policy statements and their implementation will be undertaken as a
part of this task.
The next aspect of this policy review process is a review of the "unwritten" policies of the utility.
Unwritten policies are those "policies" which the utility may be guided by, but for whatever
reason, they hav~ never been formally adopted as a written policy. From the list of unwritten
policies, the project team will identify those unwritten policies which should probably be more
formalized and placed into writing. Most likely, a certain number of unwritten policies will
remain in an unwritten form. However, the project team will recommend to the City to formally
develop and adopt certain unwritten policies in a written format.
The final area of policy analysis will be to consider policies which will need to be developed in the
future as a result of the changing competitive electric utility environment. The regulatory and
management structure of the utility will need to change as a result of the competitive electric utility
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environment. As a result, new policies will need to be developed. This part of the task will be a
first step in that direction. However, it will recognize that change is inevitable and the policies of
the utility must change accordingly. As an example, in the future, the utility may need to develop a
policy on real time pricing decisions. If this occurs, it would seem that the utility should have a
policy about the desirability of such real-time transactions, pre-authorization for real-time
transactions of a certain size, and any other parameters which may be of importance. These are
the types of future policy issues which will be identified.
Deliverables as a result of Policy Analysis. From the work developed above, the deliverables for the
task will be as follows:
Identification of written policies by functional grouping.
Identification of strengths/weaknesses of current written policies.
Identification of unwritten policies by functional grouping.
Identification of strengths/weaknesses of current unwritten policies.
Identification of unwritten policies that should be converted to written policies.
Implementation issues associated with written and unwritten policies.
New policies the City should adopt in the future to meet the changing electric utility
environment.
In summary, well written and dear policies will help move the City's electric utility to a more
streamlined and consistent decision making process. The utility of the future will need to make
better decisions more quickly, and effective, well written policies will be one step towards good
decision-making.
Financial Analysis
In many ways, the overall performance of any utility is measured by its financial performance.
From its financial performance, Wall Street bond ratings are developed, electric retail rates are
implemented, and customers ultimately make decisions to either consume or not consume
electricity based upon the cost of that commodity. One portion of this task will review, in a
cursory manner, the current financial performance of the City's electric utility. More importantly
however, this task will closely review the financial and management systems in place to deal with
the electric utility's financial issues, now and into the future.
To begin this review process, the project team will review the financial performance of the electric
utility. There needs to be an understanding of where the utility is positioned today. In particular,
the project team will explore the current competitiveness of the utility. An important aspect of
this analysis will be defining "competition" and which electric and/or natural gas utilities that may
be. Furthermore, in defining cost competitiveness, costs would likely be separated or divided
between power s,,!pply, transmission and distribution related costs. This is an important aspect of
the utility's current rates. In the future, competition will primarily be at the power supply level, as
retail wheeling rates are simply the pass-through of local distribution costs. However, this aspect
of the study will identify any cost areas which appear to be un-competitive in today's market.
The second part to the above analysis, will be a review of the utility's current or potential stranded
costs. In a competitive electric utility environment, stranded costs will be a major financial
problem, and potential downfall, for certain utilities. Avoidance of investments or projects which
may become stranded costs is critical to the long term financial performance of the utility.
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Therefore, this task will identify any potential stranded costs and indicate methods or means to
potentially reduce those risks, if at all possible.
The third part of the review of the existing financial performance of the utility will focus on
accounting and financial records. Municipal electric utilities normally use a "municipal budgetary
format" for its accounting system. A more functional accounting format (e.g. power supply,
transmission, distribution, etc.) lends itself to better cost accounting and analyses of costs and
rates. This is particularly true in the area of cost of service and the development of retail wheeling
rates. The development of ancillary charges (e.g. reserves, load shaping, etc.) for retail wheeling is
particularly difficult to isolate and determine under a municipal budgetary accounting format of
tracking costs. Therefore, the project team will explore the advisability and impacts of moving to
an alternative systems of accounting such as the FERC system of accounts.
The fourth area to be reviewed will be the utility's management information systems. Simply
stated, this is a review of the reports or information that is developed from the accounting/billing
systems. These systems provide key information and reports to management. This task will
review the various reports generated by these systems and discuss them in detail and critique
them. In particular, management information reports on power supply and production costs will
be reVIewed in detail. In the future, this is one area where the City will need reports and
information in a timely, accurate and detailed basis. The project team will also make
recommendations regarding reports or information that should be developed which is currently
not being provided by these systems.
The fifth area to be reviewed is the quality of the analysis currently being utilized by the electric
utility staff. This task will review and briefly critique the models used by the City and discuss the
strengths and weaknesses of these models. In particular, the types of models that will be reviewed
include, but are not limited to, decision models associated with financial forecasting, power supply
forecasting, integrated resource plans, DSM, resource acquisition, customer and load forecasts,
revenue requirements, cost of service, and retail wheeling. The reason why a review of these
models is needed is that these are the types of models which will be used extensively in the future
to make decisions in the competitive environment.
Two additional areas will be reviewed under this task. The first area concerns the current level of
debt (bonding) for the utility and whether additional funding, or refinancing or refunding of
existing debt would be beneficial. The project team can easily determine if the utility appears to be
too heavily indebted or has an insufficient level of debt, based upon our experience in financial
planning, rates and bond work. The last part of the issue, concerns whether the utility should
refinance or refund a bond issue. Quite frankly, this is more difficult to answer within the context
of this study. This is a very specific analysis, which the project team is capable of performing, but
within the context of the goals and objectives of this study, probably is not appropriate. The
project team wouJd propose to take a "quick look" at this issue, and based upon a simple review of
the issue, provide an opinion as to whether the City should further explore or independently
pursue this issue with the City's financial advisor and bond counsel.
The final area to be reviewed under this task is a review of the electric utility's procurement.
bidding procedures and contract management procedures. The review undertaken will focus more
on global issues and procedures. One of the areas to be reviewed under this task is the knowledge
of the procurement officers and their day-to-day dealings with the electric utility. Often in
municipal settings. procurement officials work for the entire City and given the unique equipment
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and requirements of the electric utility, there can be lapses in communication and knowledge as to
the specific needs of the electric utility. In the area of contract management procedures, the
overall procedures will be reviewed, and the existence or non-existence of contracting procedures
or a "contracting model" will be determined. At this time it is unclear as to how in-depth this
particular review will need to be taken, without further specificity on the part of the City. This
review may take the form of reviewing past contracts and the problems encountered in the
process, or it may simply compare the City's contract management procedures with other
comparable utilities, or a "best practices" type review. Regardless of the process used to review
this area, the resulting work product will be a review of the current strengths and weaknesses of the
utility's contract management procedures with recommendations for change and improvement.
Work Product Deliverables as a Result of Financial Analysis. From the work developed above, the
deliverables for the task will be as follows:
Status of the current financial performance of the electric utility in relation to other
comparable and competing utilities.
Review, identification and quantification of present and potential stranded costs.
Review of the current accounting and financial record system, with recommendations for
change/improvement.
Review of the current management information systems, with recommendations for
change/improvement.
Review level and quality of financial/rate analyses being performed in-house.
Review the level of outstanding debt and provide a cursory review of the need for
additional financing, and refinancing or refunding of existing debt issues.
Review current procurement, bidding procedures and contract management procedures.
Provide recommendations for change/ improvement in each area.
In summary, the financial analysis review will focus on the systems and procedures which must be
in place for the City's electric utility to be competitive in the future. In times of change, absent
timely and accurate financial information, it is difficult to manage effectively.
Task 4-ldentification and Evaluation of Business Options
The competitive energy industry of the 21" century will look very different from the regulated,
vertically integrated electric industry of today. Today's electric industry is composed of utilities
that typically provide one service - electricity. The local utility acquires the power either through
their own generation or purchases, transmits and distributes the power to the retail customer,
reads the meters and bills the customer. The utility is a monopoly and the customer is captive.
Cost-based rates predominate. In the 21st century, the electric utility will be replaced by service
companies that provide a broad range of products and services. Existing utilities will be
unbundled and r~structured. Only the transmission and distribution of power will continue to be
regulated. There will be competitive markets for power supply, metering, meter reading, and
billing. Restructuring, merging and acquisitions to cut costs and increase efficiency will dominate
the energy industry for years. -
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The utilities of today will likely refocus themselves under deregulation into one or a combination
of the following areas:
Generator. Build and/or sell generating plant output
Aggregator. Aggregate power supply for resale at wholesale or retail or aggregate load for
purchase of power
LDC (Local Distribution Company) or Wires. Build and operate distribution systems
Combined Services. Including power, gas, telephone, water, internet, cable television,
satellite television, data transmission, wireless modem, security, metering, meter reading,
billing, demand side management, load information.
In addition, new highly specialized entities (sometimes subsidiaries of utilities and sometimes not)
are being formed to support the industry and provide specialized cost-effective products and
services. These already include:
Marketers who aggregate natural gas and power to resell at wholesale or retail. Many of
the new marketers will not have ever been associated with utilities and may not own any
generating assets
Brokers who put together buyers and sellers of oil, gas, electricity, etc. for a fee, but do not
take title to the power
Software companies who design:
./ Customer information systems
./ Billing systems for aggregating bills and unbundling costs
./ Power scheduling systems for exponentially increased numbers of transactions over
that which is occurring today
./ Systems to support automated meter reading
Energy services companies
Energy services companies provide more than electric service. Services may include gas,
water, security, telecommunications, etc. etc. Energy service companies will make the
customer's life easier by providing one location and one phone number for multiple
services and customers will come to expect more from the utility of the future than merely
a power provider. The better the customer service the utility can provide, the more
competitive the utility will be. The complexities of this business mostly include acquiring
adequate staff expertise and business infrastructure. Mergers, acquisitions, partnerships,
alliances, etc. are expeditious ways of gaining expertise in these areas.
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Although most utilities believe they know what their customers want, such as reliable
electric service and low rates and bills, often customer service can be improved. This may
include providing more information on bills, joint bills with other services, a single point
of contact for all utility services, budget payment plans, electronic or internet billing and
payment plans, consolidated billing, assisting customers in managing their power supply,
creating flexible pricing strategies. Creating new and innovative products and services
should be included in this evaluation as well.
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It is important to look into the business trends of private electric utilities, who are also looking
competition in the eye. Further, there are lessons to learn from the natural gas and
telecommunications industries since many companies have moved from protected monopolies to
competitive markets. The project team has sources knowledgeable in all these industries that will
enable us to find and report examples of innovative organizing developed specifically to respond to
competitive environments.
This comparative information will be combined with the data gathered in Tasks 1,2, and 3 to develop
viable business alternatives. Each will be described with its strengths, weaknesses, and suitability for
Port Angeles. A recommended business strategy may be identified based upon current and projected
customer needs and City Light's strengths and weaknesses.
A business strategy will be developed that will optimize the following considerations:
Council/Manager policy direction
Organization effectiveness
Employee certainty and morale
Strategic direction and competitiveness
These considerations are very important in deciding whether or not to proceed with new business
alternatives. They comprise the payoffs for change. But such strategy should not include actual
transition planning at this time.
We strongly recommend that any transition planning be done with City employees utilizing quality
improvement techniques, not done to them by consultants. We have the expertise to guide your staff
through an improvement process that will improve effectiveness in each work unit. With maximum
employee involvement, not only will the solutions be realistic and innovative, but the changes will be
embraced by those who must implement them and do the work.
Work Project Deliverables as a Result of Task 4-ldentification and Evaluation of Busmess Options.
From the work above, the deliverables for this task will be as follows:
Descriptions of business options
Pros and cons of business options
Evaluation of the business options based on criteria provided
A transition strategy for each of three options
Task 5-Post-Study Conference
In addition to the written report and recommendations we propose a three to five hour post-study
conference. This'should be attended by at least all the people that were in the project initiation
conference (Task 2), and perhaps a few department people. We have found much more complete
communication occurs with a detailed discussion of study recommendations and the information
that was considered in developing our conclusions. Other topics will include uncertainties,
alternatives, and how the City should monitor and evaluate the recommendations. At this time, the
project team would foresee the agenda as follows: '
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Study objectivf;S
Study components
Process of data gathering
Conclusions
Recommendations
Alternatives and uncertainties
Monitoring and evaluation
We anticipate the post study conference being very open, collaborative, and thoughtful.
Task 6-Report
Throughout this scope of service, the project team has attempted to clearly identify all of the
deliverables for each task. One of the clear objectives of this study was to create a written
document which could be used by the City to guide them into the future and continue to use as a
reference. The difficult part of this task is creating a document, which in the eyes of the City, is
useful and meets this objective. An analogy to this problem is looking at "how to" books on
electrical wiring. All of these books will tell you how to wire a switch. Yet, simply due to the way
this information is presented, one book may be more useful and valuable to the reader than
another. Therefore, in an attempt to make this document as useful as possible, the City will be
requested to "assist" the project team in identifying the type of document that the City generally
finds most useful and informative. Only through this collaborative process can a document be
developed which in the long-term will be valuable to the City.
The initial role of the City in this process will be to identify formats, contents, organization, etc.
which will add value to the document from the City's perspective. It is important to note that this
does not imply that the City will have editorial control of the content or recommendations of the
document, but rather, they will assist in the development of the organization and presentation of
this voluminous material. In addition, the issuance of the draft report should again provide ample
opportunity for the City to provide comments on the organization and presentation of this
information. At the conclusion of this process, the project team will provide twenty (20) copies of
the final report to the City.
Summary
This section of the proposal has provided a detailed scope of services to meet the City's request for
proposal. This scope of services has been prepared based upon the somewhat limited information
provided by the City within their RFP. Therefore, given the overall complexity of this study, the project
team is willing to modify their scope of services to meet the specific needs of the City.
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3 Qualifications of the projert Team
The project team of EES Consulting, Inc. and the Charlie Earl Company have combined their talents and
resources to develop this comprehensive proposal to the City. Each of these firms brings to the project
unique talents, skills and experience to provide, what we believe to be, an ideal project team.
EES Consulting, Inc. (EES Consulting) is a multi-disciplinary consulting firm which specializes in working
primarily with public utility clients. (The major strength that EES Consulting brings to this project is their
depth of experience in assisting electric utilities in moving towards the competitive electric utility
environment.) For the last year, EES Consulting has been assisting utilities to come to grips with the
competitive electric utility environment by providing an array of services to our clients. These services
include developing integrated resource plans, developing and issuing competitive power supply RFP's,
and developing open access transmission and retail wheeling rates.
The Charlie Earl Company provides valuable talent and experience to our project team. In particular,
Charlie Earl served as the General Manager of the Snohomish County PUD for seven years. During that
time, the utility went through a reorganization process, not unlike that which may occur with the City. His
actual day to day experience in managing a major Pacific Northwest public utility will provide an
important perspective which will be required from the consulting team selected for this project.
Previously, Mr. Earl served 3-1/2 years as City Administrator for the City of Cheney, Washington which
has a municipal electric utility. He also served for two years as Deputy Administrator for King County
under Gary Locke.
A more detailed discussion of the qualifications of each of these firms is provided below.
EES Consulting, Inc.
Strategic Planning involves assessment of current market conditions versus the key competitIve
advantages of the business, in order to define an action plan to ensure future success. Given the pace of
change and new level of competition in the energy industries today, strategic planning has become almost
a continuous process.
Assess Market Conditions and Trends
EES Consulting can assess current market conditions and future market trends through our
extensive network of industry contacts and our access to the most recent transaction information.
Weare in daily contact with decision makers at utilities concerning developing market trends. We
actively participate in industry forums, conferences and roundtable discussions. Over the past
three years, we have issued RFP's and evaluated responses for power purchases, power plants and
fuel supplies on behalf of dozens of clients from as large as 500 MW to as small as 1 MW. We have
access to daily price information from energy markets nationwide. '
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This broad network of industry contact and experience base allows us to evaluate and recommend
several alternative strategies for positioning in a competitive environment. Strategies may range
from renegotiation of existing energy contracts to merger or acquisition of complementary
businesses.
Assess Customer Perceptions
Through the use of focus groups or one on one interviews, EES Consulting can poll the opinion of
customers concerning utility rates, customer service, communications and overall quality of
service provided. Results reveal important information about acceptance of existing utility
products and services, and possible new products or services that can be marketed.
Benchmark Performance Against Competitors
EES Consulting is experienced at "benchmarking" the performance of an organization against
competitors in the marketplace. Comparison of operating parameters such as rates, customers
per employee, employee salary levels, operation and maintenance (O&M) expenditures per
customer and other ratios yields important information about the current and future cost
competitiveness of the organization.
Assess Stranded Cost Exposure
New competition in the energy markets has brought deflating energy prices and spawned the issue
of stranded costs. Stranded costs are those costs that customers would not pay (strand) if they left
the utility system in favor of less expensive energy provided by alternative suppliers. Customers
remaining on the system would face higher rates to recover these costs over a smaller sales volume.
In the worst case, spiraling rates would result in additional defections, revenue shortfalls and
eventual sale or dissolution of the organization.
EES Consulting can perform and asset by asset review of the potential stranded cost liability of an
organization, including energy purchases, supply resources, and even distribution. systems.
Strategies can then be developed to mitigate or eliminate stranded costs,. including retirement of
debt, renegotiation of contracts or even sale of assets. Rate impacts of strategies are also
considered in comparison to rates of competitors.
Assess Organization Strudure
EES Consulting can make an objective assessment of the organization structure and quality of
internal communications. Recommendations can be made to consolidate or expand certain
functional groups and modify reporting lines. In some cases, deficiencies in management talent
are identified. Oyerall, the organization is evaluated based on the skill sets and functions that
would be necessary to remain market competitive.
EES Consulting has recently provided strategic planning services to the following clients. The list is not
exhaustive due to the limits of this forum; however, a complete client list is included at the end of this
proposal.
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City of Redding, California
760 Parkview Avenue
Redding, California 96001-3396
Mr. Michael Warren, City Manager, (916) 225-4083
Mr. Kurt Starman, Assistant City Manager, (916) 225-4083
EES Consulting performed a Comprehensive Management Audit and Strategic Plan of the City's
electric utility. This included customer and employee surveys, benchmarking against other
municipal utilities, assessment of stranded costs with mitigation strategies and rate impacts,
review of policies, regulation, communication and reporting lines. An action plan to mitigate
stranded costs was developed, along with certain organization structure and regulatory changes.
These recommendations were developed against a backdrop of the dynamic and evolving
regulatory framework of the California utility industry.
Clark Public Utilities
1200 Fort V ancouver Way
Vancouver, Washington 98668
Mr. Wayne Nelson, Interim General Manager, (360) 699-3239
EES Consulting has assisted in strategic planning activities for Clark Public Utilities for the past
several years. Activities completed include load forecasting, evaluation of rates from the
Bonneville Power Administration, feasibility studies on generation projects, integrated resource
planning, and conservation implementation planning and organizational changes to meet the
upcoming competitive changes. EES Consulting issued requests for proposals (RFPs) on Clark's
behalf for power generation projects, natural gas supplies and power purchases. As a result of the
RFPs, EES Consulting was instrumental in helping Clark to secure construction, generation
service and fuel supply contracts for the River Road Combustion Turbine Project. Weare
currently acting as Clark's owner's agent in overseeing the construction of the River Road Project.
We have also assisted Clark's policymakers in charting a course for their utility that is" generally
considered innovative and progressive. "
Lower Valley Power If Light, Inc.
Post Office Box 188
Afton, Wyoming 83110
Mr. Jim Webb, General Manager, (307) 886-3175
Mr. Dick Peck, Past General Manager, (206) 419-9090
EES Consulting ~sisted Lower Valley Power & Light, Inc. (Lower Valley) in evaluating the
potential to merge with a neighboring utility. Issues examined included financial and economic
aspects, power supply options, legal aspects, and management and staffing issues.
EES Consulting also prepared an Integrated Resource Plan (IRP) for Lower Valley for submission
to the Wyoming Public Utilities Commission. In addition to conventional demand and supply-
side options, the IRP evaluated" the costs and benefits of constructing a natural gas-fired
combustion turbine and natural gas pipeline in Lower Valley's service area. It also included fuel-
switching options associated with availability of natural gas to Lower Valley's customer-members.
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The IRP was filed with and defended at the Wyoming Public Utility Commission. EES Consulting
worked closely with Lower Valley's Member Advisory Committee during the IRP process. Finally,
EES Consulting performed a feasibility study of Liquefied Natural Gas service to the Lower Valley
service area. This initial study eventually led to construction of a LNG supply and transportation
infrastructure.
West Kootenay Power Ltd.
Post Office Box 130
Trail, British Columbia VIR 4L4, Canada
Mr. Robert Hobbs, Senior Vice President, (250) 368-3321
EES Consulting has assisted West Kootenay Power Ltd. for submission of an RFP to the British
Columbia Utilities Commission. This IRP includes supply- and demand-side resource analysis
and least-cost evaluation. Of particular note in West Kootenay's I~P was the inclusion of a "social
accounting" method that is being used in British Columbia to evaluate the environmental and
other social effects of various resources. The social accounting and IRP process included
numerous public meetings. EES Consulting also defended the IRP at hearings before the British
Columbia Utilities Commission. EES Consulting has also assisted West Kootenay Power in
identifying new potential lines of business and assessing the staffing changes associated therewith.
Pend Oreille County P.U.D.
Post Office Box 190
Newport, Washington 99156
Mr. Larry Weis, General Manager
(509) 447-9330
EES Consulting prepared a comprehensive IRP for Pend Oreille County P.U.D. This IRP includes
analysis of Pend Oreille's hydroelectric generation (both owned, at Box Canyon Dam, and
assigned from Seattle City Light, at Boundary Dam), as well as the utility's new large industrial
load. Pend Oreille is considering expansion of hydroelectric facilities, combustion turbines,
demand-side management, and purchases from BP A or other utilities to meet future needs.
City of Anaheim
200 South Anaheim Boulevard
Anaheim, California 92805
Mr. Lon Topaz, Integrated Resources Manager, (714) 254-5255
EES Consulting qas assisted the City of Anaheim in determining what business lines it should
pursue. We have assisted the City's staff in defining the most appropriate lines of business. We
have also assisted the City in the evaluation of an RFP for a strategic partner. Finally, we have
developed for the City a strategy for dealing with retail rates, customer choice and stranding under
AB 1890.
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Facilitation Services
EES Consulting has facilitated numerous policymaker strategic planning retreats for a myriad of
Pacific Northwest utilities. These retreats focus policymakers on the various options available for
a public utility in the new competitive environment. We have performed strategic planning
retreats for board and city council members of the following entities:
. Clark Public Utilities . Grays Harbor PUD
. Okanogan REA . Pierce County Cooperatives
. Northern Wasco PUD . Mason County PUD
. Canby Utility Board . Lower Valley Power & Light
. Klickitat County PUD . Big Bend Electric Cooperative
. City of Tacoma . Western Montana G&T Cooperative
. Peninsula Light Company
Regarding professional references for EES Consulting, feel free to call any of the aforementioned
clients. The best three given the nature of this project are likely Wayne Nelson at Clark Public
Utilities, Kurt Starman at the City of Redding, and Lon Topaz and the City of Anaheim.
The Charlie Earl Company
The Charlie Earl Company is a management consulting firm specializing in organizational and
management consulting. With over twenty-two years of experience in chief administrative and general
management roles in both government and utilities, Charlie Earl has experience in effectively working at
all levels of government and instituting positive change.
In each of his administrative and management positions during his career, Charlie Earl was challenged
with meeting the high expectations for service that are placed upon governmental agencies and public
utilities, while at the same time working within the financial and political constraints of the job. His
extensive level of experience provides for "real world" solutions to complex management and
organizational issues.
As the former manager of the Snohomish County PUD, Charlie Earl developed a keen understanding of
the organizational issues and management teams required to effectively manage a utility with over 200,000
customers. At the same time, the PUD was experiencing rapid growth and needed to address a number of
complex power supply, financial, customer service and rate related issues. His "blue print" for the
reorganization of the utility during this period, set the stage for their current positive positioning within
the competitive electric utility environment. During Mr. Earl's tenure, the utility did not raise rates, grew
in customer size by 30 percent, reduced line crew size, sold "mini" bonds out of the business office, and
developed a management ,Performance monitoring set of key indicators.
The Charlie Earl company focuses on three primary areas of service. These areas of service are as follows:
. Setting Management Objectives and Developing Strategies
. Improving Management to Achieve Positive Results
. Implementing New Initiatives
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Each of these areas plays an important part in the ability of management to reorganize and effectively
manage their resources. Charlie Earl has provided a number of facilitative sessions to focus the
policymakers on the issues which must be addressed so that management objectives and long-term
strategies can be developed. From that point, he has assisted a number of clients in effectively re-
organizing to help achieve the desired objectives. Finally, any change is stressful from everyone's
perspective. Charlie Earl has developed methods and techniques which aid in implementing new
initiatives. Only through the positive implementation of change will effective results of the change be
achieved. In the end, the marriage of these three services is required to effectively implement change.
Summary
The project team assembled for the City's project brings together two important perspectives. First, EES
Consulting provides the real-world experience in dealing with and operating in a competitive electric
utility environment. EES Consulting has the skills and experience to deal with all the complex issues the
City faces. With the addition of The Charlie Earl Company to the project team, an additional perspective
has been added to the project team. That perspective is of an individual that professionally managed an
electric utility of over 200,000 customers, and has experienced the efforts required to re-organize a utility
to bring about effective change. EES Consulting and The Charlie Earl Company have worked together
extensively over the past two years and offer a "seamless" project team of uniquely qualified experts.
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4 projert Staffing
This section of the proposal will provide a brief overview of the key personnel that will be assigned to this
project. Each of these individuals has expertise in the areas which are required of this study. Detailed
resumes of each of these individuals is attached at the conclusion of this proposal.
The following personnel are a part of the EES Consulting project team. Based upon their experience and
skills, they will be assigned to specific or various tasks on the project.
Gary s. Saleba, President
As both a management and strategic planning consultant, Mr. Saleba is a principal and president of EES
Consulting. He provides overall quality control and insight for all of EES Consulting's electric utility
engagements. As a founding member of EES Consulting, Mr. Saleba has over 25 years of experience with
electric, natural gas, water, wastewater, and disposal utilities. He has overseen more than 100 integrated
resource planning studies. He also has acted as project manager and owner's agent for the development of
large electric generation resources. Finally, Mr. Saleba has assessed virtually all ofEES Consulting's clients
in dealing with fundamental changes in the energy and natural resource industries. These changes include
increased competition, more emphasis on public input in major decision making, and strategic planning
under an uncertain future.
Boris Prokop, Senior Vice President
Mr. Prokop has responsibility for supervising economic and statistical analysis for EES Consulting. He has
done so for numerous technical studies in the electric, natural gas, water, and wastewater areas over the
past 15 years. Mr. Prokop brings his extensive modeling capabilities to the strategic planning process,
providing insights into both long-term planning, and dispatching using linear and mixed-integer
programming tools.
Gail Tabone, Vice President
Ms. Tabone joined EES Consulting in 1988 and has applied her skills in strategic planning, integrated
resource planning, resource evaluation, load forecasting, economic feasibility studies, cost-of-service
analysis, conservation planning, and surveys in the many work products related to comprehensive power
supply planning. A strong educational background combined with years of experience in the utility
industry provide her with the skills to assess the needs of the client, to develop an approach to meet the
need, provide the expertise necessary to conduct the economic analysis, and to make recommendations on
future actions. Ms. Tabone has the primary responsibility in directing s~aff in the preparation of the
various studies performed by EES Consulting.
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Paul D. Maxwell, PE, Vice President
Drawing from his 8 years of utility power generation experience and 4 years of experience as a project
development manager in the independent power industry, Mr. Maxwell specializes in the areas of power
resource feasibility studies, new resource development, construction, and operation. Mr. Maxwell is
experienced with many power generation technologies, including combustion turbines, biomass
generation, fuel cells, and other renewable resources, including wind and solar.
Marilynn Semro, Senior Projed Manager
Ms. Semro provides project management expertise 'and project support in the areas of financial and
economic analysis and in the area of utility rate and regulatory proceedings. Ms. Semro has over 20 years
of experience in the areas of utility accounting, rates, transmission and power supply. She has prepared
hundreds of financial and economic studies, including cost-of-service and power and transmission system
cost studies, in addition to designing and developing the models. She has filed cost-of-service studies and
prepared testimony and exhibits for numerous rate proceedings before state and federal regulatory bodies.
Prior to joining EES Consulting, Ms. Semro was a manager at a major Pacific Northwest electric utility.
She worked in the power planning area for seven years, the rates area for ten years and spent the early years
of her career in accounting and budget.
Anne Falcon, Projed Manager
Ms. Falcon's primary focuses at EES Consulting are least-cost planning, load forecasting, demand-side
management studies, and cost-of-service studies. Ms. Falcon applies her extensive econometric and
technical knowledge to develop resource-related computer models for use by electric, natural gas, water,
wastewater, and solid waste utilities. Her work at EES Consulting has included extensive work in multi-
attribute decision-making. This method allows comparisons of both economic and non-economic criteria
within the same analysis structure.
Jon Piliaris, Senior Projed Analyst
Mr. Piliaris provides analytical and technical expertise to EES Consulting in the areas of electric and gas
resource evaluations, wholesale and retail wheeling rates, land-use and growth management, wholesale
power rate evaluations, cost-of-service analysis, and numerous aspects of power supply planning. He is
also adept in the use of sophisticated mathematical and computer applications. Drawing from a strong
and diverse educational background as well as a keen understanding of the changing electric industry, Mr.
Piliaris provides clear an~ comprehensive solutions for many of our clients.
Gary Baughman, Senior Projed Engineer
Mr. Baughman brings an extensive knowledge of the natural gas industry and experience in utilizing
financial products to manage energy ris~. Prior to joining EES Consulting, he was an energy futures
trader with a major natural gas brokerage firm where he determined optimal hedging strategies for
procurement, sale, and storage of natural gas.
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Steven Andersen, Senior Projed Engineer
Mr. Andersen is responsible for providing economic analysis for electric utility clients and for analysis of
issues related to power transmission and scheduling. Since joining EES Consulting, Mr. Andersen has
been involved in monitoring Bonneville Power Administration (BP A) rates and contract activities and
analyzing their long-term impact on clients. He has experience working with BP A rates and penalties as
they apply to computed requirements customers. He is familiar with Pacific Northwest energy markets,
how they function on a daily basis, and their inherent nonfirm price determinants.
Resumes of all key EES Consulting project team members are attached at the end of this proposal.
Charlie Earl, The Charlie Earl Company
For this project, The Charlie Earl Company will act as a subconsultant to EES Consulting. The following is
a short description of the experience and background of Charlie Earl.
Charlie Earl has extensive experience as an administrator and manager in general government and utilities.
Beginning with his experience as a City Administrator (Manager) in a small city with an electric utility, he
moved on to become the Chief Administrative Officer for Thurston County in the State of Washington. In
this role and during his tenure, he dealt with a number of issues, particularly growth related and finance
related. From the County, he assumed the General Manager's position with the Snohomish County PUD.
This is one of the largest electric public utilities in the Pacific Northwest and the U.S. In this role, he re-
organized the utility to stream-line operations and be more customer sensitive. He implemented a
number of unique and innovative policies for the utility industry during that period, such as allowing
customer payment via VISA or Mastercard. In his most recent position, he was the Deputy County
Executive for King County, the largest populated County within the State of Washington. As can be seen,
Mr. Earl has an extensive range of experience in executive positions, working for various government and
utility entities.
Summary
EES Consulting and The Charlie Earl Company have developed a project team which is rich in experience
and contains the necessary personnel to review and recommend the course of action the City's electric
utility should take in order to compete in the competitive electric utility environment.
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5 Time Schedule and Fees
Listed below are the budget and schedule for the project.
Budget
The following hourly rates would apply to this project:
President........................... .................... .... ........................... .................. ............ ........ .......... $12 0 per hour
Senior Vice President ..........................................................................................................$11 0 per hour
Vice President................ ....................... .................................. ............................ ............ .....$1 05 per hour
Senior Project Manager.... ................. ............... ........... .... ........................ ......... ............ ........ $95 per hour
Project Manager ........... .................... .................. ........ ................... ................. ....... ............... $90 per hour
Senior Analyst or Engineer .................................................................................................. $80 per hour
Analyst or Engineer .............................................................................................................. $70 per hour
Senior Administrative Assistant .......................................................................................... $45 per hour
Administrative Assistant....... ................. ................................ ................. ......... ....... ............. $35 per hour
Charlie Earl.............. ............... ............. ......... .............................. ............. ...... .................... ..$120 per hour
Charlie Earl Technicians ...................................................................................................... $90 per hour
All travel and out-of-pocket expenses (photocopier, courier, postage, etc.) will be billed at cost. Invoices
for labor and expenses will be presented directly to City Light at the end of each month.
At the above hourly rates, the project team proposes the following labor budget for the project, as
described in the section entitled "Scope of Services".
Interview External Customers and Suppliers (Task 1) ................................................................ $ 9,000
I nitial Project Co nference (T ask 2).......... ............................ .......... ........... ........,...............................2,000
Organizational Efficiency Review and Analysis (Task 3) ............................;,:,,~;:...........................30.500
Identification of Evaluation of Business Options (Task 4) ............................................................15.500
Post Study Conference (Task 5) .. .................. ............ ............... ............. ............... ............................2.000
Report (T ask 6)................. ................................... .......... ................... ................ ..... ...... ................. ~
Total Labor Budget.......... ............ ................................ .................... .......... .............. ..... ................. $65,000
As noted above, expenses will be billed separately from labor and are not included in the above amounts.
Projects such as this typically accrue out-of-pocket expenses equal to 10-20 percent of the labor budget.
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Schedule
EES Consulting is prepared to begin work on this project immediately upon authorization from the City.
This time provides for approximately three months to develop the preliminary report to the City Manager.
Based upon this time schedule, the project team has developed a project schedule designed to fit within
this time frame. The following estimates of elapsed time are provided for general guidance:
Interview External Customers and Suppliers (Task 1) ................................................................ 2 weeks
Initial Project Conference (Task 2)...............................................................................................5 weeks
Organize Efficiency Review and Analysis (Task 3) .................................................................. 5.5 weeks
Identification of Evaluation of Business Options (Task 4) ..........................................................2 weeks
Post Study Conference (Task 5) ...................................................................................................5 weeks
Report (Task 6)...... ......... ............ ..................................................... .......... ....... .......... ................ 1.5 weeks
This time schedule may be modified once a final scope of services is developed for this City or to
accommodate the needs of the City. This schedule assumes a timely start to the project and prompt
responses to data and information from the City. The above time estimates assume that information from
the City will be available when needed.
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