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HomeMy WebLinkAbout4.4 CorrespondenceDear Phil: Mr. Phillip K. Jackson, Manager Clallam County Public Utility District No. 1 P.O. Box 1117 Port Angeles, Washington 98362 RE: Wholesale Water Contract i :y TOURIST MECCA OF THE NORTHWEST 140 WEST FRONT STREET PORT ANGELES, WASHINGTON 98362 December 22, 1980 As you know, we have long been needing to consummate a new whole- sale water contract and rate. We initially delayed negotiations pending outcome of our water cost -of- service study. This analysis was completed in May 1980, and you and your Staff had opportunity to review the results with Rob Orton. I understand that you had comments in the following areas: 1. You observed that the average demand volume allocation factor was computed incorrectly by dividing six months of average demand by 365 instead of 180 days. This was changed in the final report but did not alter the allocation percentages. 2. You questioned that our proposed rate of return, while appropriate, should not apply to sales to another government entity. We disagree with this opinion and believe that the rate of return should be equalized among all customer classes. The water rate charged City Government, County and School District customers re- flects the full rate of return. To do otherwise appears to us to be a subsidy. However, as the rate we proposed to the P.U.D. is interim, we used the effective rate determined at May 31, 1980, that is 2% of the rate base. We feel that this is generous as our average cost of capital, which usually suggests minimum returns, is 5%. T You should note that the rate base calculated for the P.U.D. SEAL net of $106,000.00 of contributions in aid of construction.'• y <iAS' Letter to Phillip Jackson Clallam County P.U.D. //1 December 22, 1980 Continued page 2 3. P.U.D. staff noted that our allocation did not include a distribution of line losses to customer classes. We appreciate your comment but suggest that there is considerable disagreement in the industry as to how this should be computed, and significant divergence between methodologies employed in water versus electric studies. Size and capacity of transmission, main, and service lines appear to be significant factors. Our new rates were implemented on June 1, 1980. We intend to re -new the study in June 1981 after accumulating a year's data. We will consider the line -loss 'issue at that time. The utility revenue requirement, of course, will not change, and we really cannot conceive of a major impact on the allocation to the P.U.D. at any rate. Based upon our May 1980 study, we propose a rate of 0.25per 100 cubic feet per month commencing with the Janaury 1981 billing. The flat rate is calculated against operating costs of $38,400.00; a rate of return component of $6,605.00 (i.e. 2% of the rate base), and considering your most recent 12 month consumption history: 17,970,000 cubic feet, from December 1979 through November 1980. The previous year's consumption was billed to the P.U.D. at about 8.8c per 100 cubic feet, or $15,800.00 for the year. While this increase is large, I trust your reaction will be tempered somewhat by the fact that the present rate (8.8%) has been in effect since 1974, (while our other customers have had three rate increases), and that the operating costs used in our study are now nearly a year old and are actual rather than projected. The rate return component is also lower than any other customer class in our service area. We have also tried, for your sake, to avoid imposing the rate during a peak demand month. We believe it important that our negotiated rate be "cost based" for prudent as well as political reasons. Our original concern in 1979 was that the proposed rate was not the product of a service study, and our Council is concerned that the rate be founded in a cost study to avoid the appearance of subsidy. In view of the foregoing, I do not believe that we are in a position to negotiate further off the suggested rate, and would hope that you will find favor in our proposal in order to expedite settlement of the contract. Letter to Phillip Jackson Clallam County P.U.D. #1 December 22, 1980 Continued The contract document is attached and is virtually unchanged, save for the rate and termination procedures. I hope to hear from you soon. DF:REO:lw enclosure cc: Rob Orton Jack Pittis Marian Parrish Ken Rodocjcer Ralph Wait Mike Kitz w/ attachments Ted Graves w/ attachments page 2 Very truly yours, David Flodstrom City Manager THIS AGREEMENT, made and entered into by and between the CITY OF PORT ANGELES, a municiapl corporation, hereinafter called the City, and PUBLIC UTILITY DISTRICT No. 1 of CLALLAM COUNTY, a municipal corporation, hereinafter called the District, WITNESSETH: THAT WHEREAS, there has been in existence between the City and the District a wholesale water contract, and the parties hereto de- sire to continue said contractual relationship and to extend the sale of water by the City to the District commencing January 1, 1981 and continuing until termination by written request of either party. NOW, THEREFORE, the City agrees, -to deliver and sell to the District at the present service connection, the wholesale water requirements of the District at the rate of twenty -five cents (25c) per one hundred (100) cubic feet per month. This rate shall remain in effect until September 1, 1981 and may be renegotiated thereafter. The point of delivery shall be at the present service connection of the District, and the amount of water to be delivered by the City and purchased by the District shall be limited to 55,000 cubic feet per day, which amount will be receivable through the present service connection. In the event of a water shortage or drought conditions, the District will be limited to eight (8) percent of the total "City El 0A Supply" from the Toloolge &r-e k system. The District will be notified when a shortage condition exists and be informed of limitations on their ability to draw water. In the event that the 8% restriction cannot be met by the District and more than eight percent is con- sumed, the City will have the right to place mandatory restrictions and /or monetary penalties on the District. The water purchased by the District shall be for the customers of the areas served by said District East of the City of Port Angeles, and none of said water shall be used or sold for use of pre- mises or in areas for which service has been established from the water system now operated by the City, and it is agreed that neither party will compete with the other in the sale of water in the areas now serviced by the other party. It is further agreed that if, during the term of this Contract, the District should reduce the water rates to its customer served with water purchased from the City, this Contract may be immediately re- negotiated. All water supplied under this Contract after it passes the point of delivery shall be the property of the District and the City shall not be liable for any loss or damage to any person or property whatsoever resulting directly or indirectly from the use thereof of WHOLESALE WATER CONTRACT WHOLESALE WATER CONTRACT December 22, 1980 Continued the District or its customers, and the District agrees to indemnify the City for, and save it harmless from, all loss or damage which the City may suffer or incur by reason of the assertion of any such claim against the City, including all fees, costs, expenses and attorney fees incurred in defending against such claims. The City agrees to use reasonable diligence to furnish unin- terrupted service but shall not be liable for any interruptions caused by strikes or any other labor disputes, accidents, or acts of God, or any cause beyond the control of the City, or by the necessity for making repairs or changes in the pipeline or other facilities, and the District waives and shall not assert any claims against the City for damages to the District caused by any suspen- sion, interruption, failure or curtailment of service under this agreement. It is further specifically agreed that billings for services rendered shall be paid by the District monthly, and in the event the District fails to receive a monthly bill, such failure shall not release the District from liability for payment. Provided, however, if payment in full is not made on or before the close of business of the fortieth day after the due date of the bill, a delayed charge of two (2) percent of the unpaid amount of said bill will be added to the amount due. DATED this day of 19 ATTEST: CITY OF PORT ANGELES ATTEST: PUBLIC UTILITY DISTRICT N0.1 OF CLALLAM COUNTY Approved as to form: City Clerk Mayor Secretary President City Attorney page 2 MEMO: TO: FROM: SUBJECT: City Manager and City Council Public Works Department Water contract between the City of Port Angeles and the Clallam County PUD January 5, 1979 The contract between the City and the PUD, which covers the sale of City water to the PUD, did expire at the end of December, 1978. Dis- cussions with the PUD prior to the December date did not result in a new contract beginning January, 1979, because of the following: 1.) The PUD is exploring the possibility of expanded use of Morse Creek water via the City's existing transmission line(currently not in use) and the City's Morse Creek diversion dam(also not in use at this time.) 2.) The City is unable at this time to determine what the appropriate price of water should be now that the PUD receives Elwha River water. A review is currently underway to determine the unit cost of Elwha water and also to gather data for future metered water rates. 3.) The City is currently assessing it's ability and the cost of providing the PUD with sufficient water to meet anticipated future needs. 4.) The PUD is reviewing it's present and future water needs. It appears that these questions will be answered within the first few months of the year and contract negotiations can begin. Page 2 City Manager City Council Water Contract -PUD However, interim arrangements should be made. To this end, I would recommend that the City Council consider a six(6)month extension of the terms and conditions of the present contract. If the Council so desires, the appropriate paperwork can be drawn up and the necessary approval signatures obtained. DF /jh a P.O. Box 1 PORT ANGELES, WASH. 98362 Phone 452 -9771 PKJ/ je Enc: Contract PB U-. Y DSRC Mr. Dave Flodstrom Director of Public Works City of Port Angeles P. 0. Box 711 Port Angeles, Washington 98362 OF CLALLAM COUNTY January 16, 1979 Dear Dave: RE: WHOLESALE WATER CONTRACT Enclosed herewith is a signed copy of the six -month extension to our Wholesale Water Contract. We will be looking forward to working with you on the development of the total area service requirements of the City and the District. Very Truly Yours, Philip K. Jackson Manager 44 A l CLALLAM COUNTY LIVES BETTER Electrically PHILIP K. JACKSON, Manager BOARD OF COMMISSIONERS William McCrorie, President A. E. Fletcher, Vice President Russell Bayton, Secretary P.O. BOX 951 PORT ANGELES, WASH. 98362 Phone 452.9771 CHO /ls Mr. Hal Puddy City Manager City of Port Angeles P. 0. Box 711 Port Angeles, Washington 98362 Dear Mr. Puddy: OF CLALLAM COUNTY November 13, 197 The P.U.D.'s water contract with the City of Port Angeles is due to expire on January 1, 1975: We request that this contract be considered for renewal for another three (3) year period at the existing water rate now in effect. Sincerely, -2 Carl H. Olsen Superintendent CLALLAM COUNTY LIVES BETTER Electrically PHILIP K. JACKSON, Manager BOARD OF COMMISSIONERS James Lotzgesell, President A.E. Fletcher, Vice President lR u s1{b, on, Secretary TO: MAYOR AND CITY COUNCIL` FROM: CITY MANAGER SUBJECT: PUD REQUEST FOR WATER CONTRACT EXTENSION HP :mak Attach. Hal Puddy City Manager DATE: NOVEMBER 15, 1974 The attached letter and existing contract, as modified, explains the Public Utility District No. l's request to extend the contract and what terms and conditions are suggested for a renewal. We recommend that the contract be ext ended for a period of time not to exceed four years and preferably not to exceed two years. The reason for this limiting of time to two years is that our inflationary spiral is increasing so rapidly we are uncertain what conditions will prevail after four years. The rate specified for the second two -year period, and for which we recommend extension for the next two-year period,appears to be adequate to meet our transmission costs and adequately provide the service at their point of use. We plan to place this matter on the agenda for the Council meeting scheduled for November 19, 1974. P.O BOX e51 PORT ANGELES, WASH 98362 Phone 452-9771 CO:cw Mr. Hal Puddy City Manager City of Port Angeles P.O. Box 711 Port Angeles, Washington 98362 Dear Mr. Puddy: Enclosures (3) November 27, 1974 DSRC OF CLALLAM COUNTY Enclosed herewith are three executed copies of the wholesale water agreement between the City of Port Angeles and this District. Very truly yours, Acting Manager CLALLAM COUNTY LIVES BETTER Electrically PHILIP K JACKSON, Manager BOARD OF COMMISSIONERS James Lotzgesell, President A.a Fletcher, Vice President Russell Bayton, Secretary r 4 r TO: MAYOR AND CITY COUNCIL DATE: NOVEMBER 15, 1974 FROM: CITY MANAGER SUBJECT: PUD REQUEST FOR WATER CONTRACT EXTENSION The attached letter and existing contract, as modified, explains the Public Utility District No. l's request to extend the contract and what terms and conditions are suggested for a renewal. We recommend that the contract be ext ended for a period of time not to exceed four years and preferably not to exceed two years. The reason for this limiting of time to two years is that our inflationary spiral is increasing so rapidly we are uncertain what conditions will prevail after four years. The rate specified for the second two -year period., and for which we recommend extension for the next HP :mak Attach. two-year period,appears to be adequate to meet our transmission costs and adequately provide the service at their point of use. We plan to place this matter on the agenda for the Council meeting scheduled for November 19, 1974. Hal Puddy City Manager 1 P.O. BOX 951 PORT ANGELES, WASH 98362 Phone 452 -9771 CHO /ls Mr. Hal Puddy City Manager City of Port Angeles P. 0. Box 711 Port Angeles, Washington 98362 Dear Mr. Puddy: OF CLALLAM COUNTY Y D SRC November 13, 197 The P.U.D.'s water contract with the City of Port Angeles is due to expire on January 1, 1975. We request that this contract be considered for renewal for another three (3) year period at the existing water rate now in effect. Sincerely, Carl H. Olsen Superintendent CLALLAM COUNTY LIVES BETTER Electrically PHILIP K JACKSON, Manager BOARD OF COMMISSIONERS James Lotzgesell, President A E Fletcher, Vice President r Russillpa}c off, Secretary I 1 P O. BOX 951 PORT ANGELES, WASH 98362 Phone 452 -9771 Gentlemen: PKJ l j v City Council City Hall Port Angeles, Washington Enclosures: 2 _B_C 11 Y DS RC OF CLALLAM COUNTY Attention Mr. Donald Herrman, City Manager March 10, 1971 Our Board of Commissioners has executed the Wholesale Water Contract between the City and the District for the period commencing January 1, 1971. We are returning herewith two copies of the contract, both of which have been signed by the members of our Board. The District is appreciative of the cooperation extended by the Council in the execution of the contract. CLALLAM COUNTY LIVES BETTER Electrically Very truly yours, Philip K. Jackson Manager PHILIP K JACKSON, Manager BOARD OF COMMISSIONERS Russell Bayton, President James Lotzgesell, Vice President Alvin E. Fletcher, Secretary q r S P.O BOX 951 PORT ANGELES, WASH 98362 Phone 452 -9771 Mr. Donald D. Herrman City Manager City of Port Angeles 140 West Front Street Port Angeles, Washington 98362 Dear Mr. Herrman: The Board of Commissioners and staff have reviewed the City's proposed rate increase in our wholesale water contract. The increase as proposed sets forth for the first 100,000 cubic feet a rate of $200.00, and for all over 100,000 cubic feet 8Q per 100 cubic feet. It is respectfully requested that the City reconsider the proposed contract changes for a modification as follows: PKJ:ljv P-.B_c ft\ SR C OF CLALLA COUNTY February 2, 1971 For the next two year period, the minimum be increased for the first 100,000 cubic feet to $175.00, and for all over 100,000 cubic feet 7 -3/4Q for each 100 cubic feet; then for the next two year period the rate be increased to that which was pro- posed at this time, $200.00 for the first 100,000 cubic feet, and 8Q per 100 cubic feet for all over the first 100,000 cubic feet. The District's operating experience during the last contract period and the knowledge of certain unanticipated distribution system improvements due to County road relocations have created a serious budgetary problem for us. Anticipated consumer growth in the District's service area, along with certain operational changes, should enable us to maintain a contrac- tual obligation as proposed by the' Dist'rict':' The Board of Commissioners urges the City Council's earnest consideration of our proposals for the modification. c,_ Very truly yours, Phili Manager, S CLALLAM COUNTY LIVES BETTER Electrically son PHILIP K JACKSON, Manager BOARD OF COMMISSIONERS Russell Bayton, President James Lotzgesell, Vice President Alvin E Fletcher, Secretary P.O BOX 951 PORT ANGELES, WASH. 98362 Phone 452 -9771 or 457 -3307 Dear Mr. Herrman: MDParrett /my c p t 064 Mr. Donald D. Herrman, City Manager 140 West Front Street Port Angeles, Washington 98362 #r Y OF CLALLAM COUNTY SR C- December 2, 1970 A contract presently exists between the City of Port Angeles and the PUD for the purpose of supplying water from facilities of the City to those of the PUD. That contract expires December 31, 1970. It is our desire to continue the arrangement weih'ow have. We suggest a meeting to discuss this at a time and place most convenient for you. Sincerely yours, Manager CLALLAM COUNTY LIVES BETTER Electrically e tt M.D. Parrett, Manager BOARD OF COMMISSIONERS Alvin E. Fletcher, President Russell Bayton, Vice President James Lotzgesell, Secretary M. D. Parrett, Manager Board of Commissioners Public Utility District P. 0. Box 951 Port Angeles, Washington Dear Mr. Parrett: February 18, 1966 The City Council discussed your letter of February 17, 1966 after the regular meeting on February 17, 1966. Certainly, they_.agree that your item, number one, is correct and that the contract should read, "First 100,000 cubic feet or lass per month at $150.00 per month and "All over 100,000 cubic feet per month at 7'g cents per 100 cubic feet. As far as item number two is concerned, the Council feels that they have bent over backward in giving you the rate that they have. Ac- tually, our consulting engineers have recommended that we not sell any water at wholesale rate, which we are doing in your case. The Council raised the water charges to everyone in the community more than 40% about two years ago. We have made no change in your charge since that time. Certainly, we do not feel that a 20% increase in your case is out of line. The water cannot be termed "surplus water" any more than water sold to anyone else in the city, certainly, not since your highest request for water is during a time when we have the greatest need for it. In your item number three you suggest that the limitation of 55,000 cubic feet per day be raised, but make no suggestion, therefore, we feel that it should remain at the 55,000 cubic feet per day, since this is more than you have ever used. Concerning item number four, the Council would be agreeable to chang- ing the wording of the contract from "residents" to "customers We feel that item number three gives us necessary control as to type of customers. M. D. Parrett February 18, 1966 Page -2- The Council considered item number five and felt that this was entirely legal and customary and certainly desireable on their part. If the city, by any chance, did want to raise the price of water within the next five years the contract could be re- negotiated at that time without necessarily requiring you to raise your rates again. The City feels that they have been more than generous in their deal- ings with the Public Utility District. We did not insist on a raise at the time we raised other city residents and when the contract was up we gave you a year of grace because you felt that you could not financially stand an increase in water costs without again raising the cost of water to your Gales Addition customers. It was brought out in our last meeting that the Gales Addition water system is making more than adequate revenues and that in effect it is support- ing Sekiu and Clallam Bay mater .systems. Therefore, we see no reason why you cannot pay a more than reasonable price for water, which you buy from the City of Port Angeles. It would be appreciated if you would give this your consideration once more at your next meeting and then notify us of your intentions. Yours truly, Donald D. Herrman, City Manager DDH /aih P 0 BOX 951 PORT ANGELES, WASH 98362 Phone 457 -3307 Gentlemen: PB_C U Y DSR OF CLALLAM COUNTY February 17, 1966 The City Council City of Port Angeles, Port Angeles, Washington 98362 At the regular meeting of February 15, 1966, the Board of Commissioners gave attention to a wholesale Water Contract which was presented by the City for consideration. It is respectfully requested that the Council re- consider several sections of the proposed contract for deletion or modification as follows: 1, The rate appearing in the third paragraph on Page 1 should read, "First 100,000 cubic feet or less per month $150.00 per month "All over 100,000 cubic feet per month per 100 cubic feet." 2. The District objects to the increase in the second step of the existing rate from 6 per 100 cubic feet per month to 724 per 100 cubic feet per month. An increase of 20% seems unwarranted since the City has surplus water to sell with no apparent increase in cost to deliver it. The reason pre- viously advanced that "the District can stand an increase" has no basis in the concept for which public utility districts were formed. The District is steadfast in its contention that water of good quality and reasonable rates will return progress- ively increasing revenue to the City. As an example the Council's attention is directed to the water billing of August, 1965. The City Manager was advised that the District would make a temporary reduction in its rate to accommodate owners of small gardens who would use the water for irrigation purposes. The District paid water bills for the months of July and September of $546.06 and $555.66 respectively. In August, it is assumed due largely to the reduction, the District paid the City a water bill of $906.66: The Board of Commissioners feel this is the logical basis for increased revenue to the City. q M.D. Parrett, Manager COMMISSIONERS Alvin E. Fletcher Harold H. Hartman James Lotzgesell r. The City Council Page 2 February 17, 1966 3. It is desirable that the existing limitation of 55,000 per day be raised to a more realistic figure. Daily meter readings are not practical as in August, 1965, when the daily limit was approached. Daily allowable quantity should be set as high as possible but within the amount the City can deliver. 4. The proposed contract specifies that "The water purchased by the District shall be for residents of the areas served by said District It is requested that the word "residents" be changed to "users" or "customers" since the District serves important commercial customers, a fire district, etc. 5. The District not only opposes the first full para- graph of the second page of the proposed contract, but questions that the Board of Commissioners can legally adopt rates for its customers which contain restrictions or conditions imposed by others. The subject paragraph follows: "It is further agreed that the District will at no time charge their water customersless than the City of Port:Angeles charges their water customers. The District's present rate for its users shall not be lowered and in the event it is lowered, this contract shall be immediately re-negotiated." In previous correspondence or in joint meetings the City has given the District no reason why this rettriction should appear in the contract. A question which quite logically arises is what would the result be if the City should raise its water rates. This paragraph is interpreted to mean the District would be compelled to increase its rates to conform. 6. The question of a fair and logical termination agree- ment in the contract was discussed by the Board of Commissioners. However, it was felt this would not be important if the five foregoing items were satis- factorily resolved. While no objection is raised to the last paragraph relating to payment of water to the City, it has come to the District's attention that payment has, at times, been in arrears. Within the memory of responsible District personnel the only occasions when payment was made after the due date resulted in errors appear- ing in the billing which made it necessary to return the bill for correction. The City Council Page 3 The Board of Commissioners respectfully asks the City Councils earnest consideration of the foregoing comments relative to the proposed water contract and stands ready to cooperate and assist in every way possible to consummate a fair and equitable agreement. Yours very truly February 17, 1966 r Manager for The Board of Commissioners MDP:mt Public Utility District of Clallam County rrett Gentlemen: D. b Herrman City Manager DDH:bm 140 WEST FRONT STREET Public Utility District No. 1 of Clallam County Boulevard Oak Streets Port Angeles, Washington Attention: M. D. Parrett, Manager TOURIST MECCA OF THE NORTHWEST PORT ANGELES, WASHINGTON January 22, 1965 Enclosed you will find three (3) copies of the Wholesale Water Contract between the City of Port Angeles and Public Utility District No 1 of Clailam County. i f Please complete and return two copies to the City. Sincerely, P.O. BOX 951 PORT ANGELES, WASHINGTON Phone 457 -3307 0 P_B_C UT_YDSRC City of Port Angeles 140 West Front Street Port Angales, Washington Att'n Mr. D. D. Herrman, City Manager Dear Mr. Herrman: Enclosed are two executed copies of a Wholesale Water Contract between the District and the City of Port Angeles. You will note the changes to which we have mutually agreed. MDP:mt Encl. 2 _A LLA, OF CLALLAM COUNTY February 10, 1965 Yours very t M'D. �a-rett Manager n M.D. Parrett, Manager COMMISSIONERS Alvin E. Fletcher Harold H. Hartman James Lotzgesell