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