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HomeMy WebLinkAbout000100 Original ContractCONSULTING SERVICES AGREEMENT EES CONSULTING, INC. Billing Address 570 Kirkland Way, Suite 200, Kirkland, Washington 98033 (425)889 -2700 This Consulting Services Agreement (herein Agreement) is made between EES Consulting, Inc., (hereinafter "EES CONSULTING and Pierce County Cooperative Association, c/o Mr Terry Huber, Town of Steilacoom, 1030 Roe Street, Steilacoom, WA 98388 (hereinafter "CLIENT I. SCOPE, COMPENSATION AND QUALITY OF CONSULTING SERVICES EES CONSULTING will provide the services and be compensated for these services as descnbed in Exhibit A, attached hereto EES CONSULTING shall render rIs services in accordance with generally accepted professional practices. EES CONSULTING shall, to the best of its knowledge and belief, comply with applicable laws, ordinances, codes, rules, regulations, permits and other published requirements in effect on the date this Agreement is signed II. TERMS CONDITIONS OF CONSULTING SERVICES AGREEMENT 1 Timing of Work EES CONSULTING shall commence work on or about January 1, 2012 2 Relationship of Parties, No Third Party Beneficiaries EES CONSULTING is an independent contractor under this Agreement This Agreement gives no rights or benefits to anyone not named as a party to this Agreement, and there are no third party beneficianes to this Agreement 3 Insurance. a Insurance of EES CONSULTING EES CONSULTING will maintain throughout the performance of this Agreement the following types and amounts of insurance. 1 Worker's Compensation and Employer's Liability Insurance as required by applicable state or federal law 11 Comprehensive Vehicle Liability Insurance covenng personal injury and property damage claims ansing from the use of motor vehicles with combined single limits of $1,000,000. iu. Commercial General Liability Insurance covering claims for personal injury and property damage with combined single limits of $1,000,000 iv. Professional Liability (Errors and Omissions, on a claims -made basis) Insurance with limits of $1,000,000 b Interpretation Notwithstanding any other provision(s) in this Agreement, nothing shall be construed or enforced so as to void, negate or adversely affect any otherwise applicable insurance held by any party to this Agreement 4 Mutual Indemnification EES CONSULTING agrees to indemnify and hold harmless CLIENT and its employees from and against any and all loss, cost, damage, or expense of any kind and nature (including, without limitation, court costs, expenses, and reasonable attomeys' fees) ansing out of injury to persons or damage to property (including, without limitation, property of CLIENT, EES CONSULTING and their respective employees, agents, licensees, and representatives) in any manner caused by the negligent acts or omissions of EES CONSULTING in the performance of its work pursuant to or in connection with this Agreement to the extent of EES CONSULTING's proportionate negligence, if any CLIENT agrees to indemnify and hold harmless EES CONSULTING and its employees from and against any and all loss, cost, damage, or expense of any kind and nature (including without limitation, court costs, expenses and reasonable attorneys' fees) ansing out of injury to person(s) or damage to property (including, without limitation, property of CLIENT, EES CONSULTING, and their respective employees, agents, licensees and representatives) in any manner caused by the negligent acts or omissions of CLIENT or other(s) with whom CLIENT contracts "CLIENT's agents to perform work pursuant to or in connection with this Agreement, to the extent of CLIENTs or CLIENTs agents proportionate negligence, if any 5 Resolution of Disputes, Attorneys' Fees The law of the State of Washington shall govern the interpretation of and the resolution of disputes under this Agreement If any claim, at law or otherwise, is made by either party to this Agreement, the prevailing party shall be entitled to its costs and reasonable attomeys' fees 6. Termination of Agreement Either EES CONSULTING or CLIENT may terminate this Agreement upon thirty (30) days wntten notice to the other sent to the addresses listed herein. In the event CLIENT terminates this agreement, CLIENT specifically agrees to pay EES CONSULTING for all services rendered through the termination date. EES CONSULTING, INC By. Gary Saleba Title. President Date December 12, 2011 U PIERCE COUNTY COOPERATIVE ASSOCIATION By Title. Date. LEGAL SERVICES AGREEMENT THIS AGREEMENT is made between BENTON RURAL ELECTRIC ASSOCIATION, WASHINGTON; CITY OF PORT ANGELES, WASHINGTON; CITY OF ELLENSBURG, WASHINGTON; CITY OF MILTON, WASHINGTON; TOWN OF EATONVILLE, WASHINGTON; TOWN OF STEILACOOM, WASHINGTON; ALDER MUTUAL LIGHT COMPANY, ELMHURST MUTUAL POWER AND LIGHT COMPANY, WASHINGTON; LAKEVIEW LIGHT AND POWER COMPANY, WASHINGTON; OHOP MUTUAL LIGHT COMPANY, WASHINGTON; PARKLAND LIGHT AND WATER COMPANY, WASHINGTON; PUBLIC UTILITY DISTRICT NO. 1 OF CLALLAM COUNTY, WASHINGTON; PUBLIC UTILITY DISTRICT NO. 1 OF CLARK COUNTY, WASHINGTON; PUBLIC UTILITY DISTRICT NO. 1 OF GRAYS HARBOR COUNTY, WASHINGTON; PUBLIC UTILITY DISTRICT OF KITTITAS COUNTY, WASHINGTON; PUBLIC UTILITY DISTRICT NO. 1 OF LEWIS COUNTY, WASHINGTON; PUBLIC UTILITY DISTRICT NO. 1 OF MASON COUNTY, WASHINGTON; PUBLIC UTILITY DISTRICT NO. 3 OF MASON COUNTY, WASHINGTON; PUBLIC UTILITY DISTRICT NO. 2 OF PACIFIC COUNTY, WASHINGTON, PUBLIC UTILITY DISTRICT NO. 1 OF SKAMANIA COUNTY, WASHINGTON; AND PUBLIC UTILITY DISTRICT NO. 1 OF WAHKIAKUM COUNTY, WASHINGTON (Public Utilities); and MARSH MUNDORF PRATT SULLIVAN McKENZIE (Attorney) for the provision of legal services and the payment of compensation as specified herein. WHEREAS, the Public Utilities presently purchase electric power from the Bonneville Power Administration (BPA) pursuant to wholesale rate schedules determined by BPA after public hearing pursuant to Section 7 of the Pacific Northwest Electric Power Planning and Conservation Act (Act); WHEREAS, BPA is considering adoption of various policies, rate forms and long -term contracts which would have a major impact on the wholesale rates of the Public Utilities, and WHEREAS, BPA is preparing to conduct hearings and public processes to decide issues which will affect Bonneville's wholesale rate schedules and Power Sales Contracts for the Public Utilities; and WHEREAS, the Public Utilities wish to actively participate in these hearings and processes to protect the interests of their ratepayers, and WHEREAS, the Public Utilities may wish to diversify their'power supply sources, It is Therefore Agreed That: 1. The Attorney shall advise, assist and appear on behalf of the Public Utilities in hearings and public processes relating to issues set forth Exhibit A referenced herein attached and as directed by the Public Utilities. Page 1 of 2 2. Public Utilities shall compensate the Attorney for these services at an average hourly rate not to exceed $175.00. Out -of- pocket expenses, such as telephone,, telecopy, copying and postage, and reasonable and necessary travel expenses shall be in addition to the hourly rate. The Attorney shall send each of the Public Utilities an itemized statement for legal services rendered and out -of- pocket expenses on a monthly basis. 3. The Attorney fees and out -of- pocket expenses incurred hereunder shall be divided among the Public Utilities according to the formulas attached in Exhibit A. 4. The activities encompassed by this Agreement are set forth in Exhibit A attached hereto. No other activities shall be undertaken without prior authorization of the Public Utilities. It is understood that the length and amount of work necessary in these proceedings is unique and the cost may exceed these estimates. 5. Files of the Attorney relating directly to the foregoing legal services shall be available for examination by the authorized representative of the Public Utilities or their attorneys and shall, upon reasonable request, be turned over the Public Utilities if the Attorney ceases to act as attorney for the Public Utilities. 6. Because the attorney-client relationship is dependent upon mutual trust and full confidence, an individual Public Utility, the Public Utilities collectively, or the Attorney may terminate this Agreement at any time upon written notice. Date: December 12, 2011 Date: 0 /2 /20/ 2• MARSH MUNDORF PRATT SULLIVAN McKENZIE By: 7,e,i-1, c 2 4 Terence L. Mundorf UTILITY Page 2 of 2 QQo (00 EES Consulting December 12, 2011 Mr Charles Dawsey Benton Rural Electric Association Post Office Box 1150 Prosser, WA 99350 Mr Doug Nass Clallam County PUD Post Office Box 1090 Port Angeles. WA 98362 Mr Wayne Nelson Clark Public Utilities Post Office Box 8900 Vancouver, WA 98668 Mr Bob Titus City of Ellensburg 420 North Pearl Street Ellensburg, WA 98926 Mr Rick Lovely Grays Harbor County PUD P O Box 480 Aberdeen, WA 98520 SUBJECT: Proposed WPAG Scone of Services and Contracts for 2012 Dear Ladies and Gentlemen: Mr Bob Geddes Lewis County PUD Post Office Box 330 Chehalis, WA 98532 Ms Steve Taylor Mason County PUD No 1 North 21971 Highway 101 Shelton, WA 98584 Ms Wyla Wood Mason County P U D No 3 Post Office Box 2148 Shelton, WA 98584 Mr Doug Miller Pacific County P U D Post Office Box 472 Raymond, WA 98577 Mr Larry Dunbar City of Port Angeles P O Box 1150 Port Angeles. WA 98362 Mr Chuck Ward Kithtas County PUD 1400 East Vantage Highway Ellensburg, WA 98926 Mr Robert Gentry Skamama County PUD P O. Box 500 Carson, WA 98610 Mr David'1ranrblie Walikiakum County PUD P 0 Box 248 Cathlamet, WA 98612 Mr Terry Huber Pierce County Cooperative Association c/o Town of Stetlacoom 1030 Roe Street Steilacoom, WA 98388 Attached please find consulting and legal contracts from Terry and me for the 2012 scope of services for the Western Public Agencies Group (WPAG). In recognition of the difficult economic times, the proposed total 2012 budget (including base amount, supplemental rate case and out of pocket costs) has been reduced by $75,000 compared to the 2011 budget. If these contracts are acceptable, please sign and return one copy of each contract for our files. Thank you for allowing EES Consulting and Marsh, Mundorf, Pratt, Sullivan McKenzie (MMPS &M) to serve you for another year. Please call Terry or me if you have any questions. Very truly yours, Gary S. Saleba President 570 Kiikland Way, Suite 200 Kirkland, Washington 98033 Telephone. 425 889 -2700 Facsimile. 425 889 -2725 A registered professional engineering corporation with offices in Kirkland, WA; Portland, OR; and Bellingham, WA Western Public Agencies Group December 12, 2011 Page 2 cc Dan Sharpe, Alder Mutual Light Company Gary Armstrong, Town of Eatonville Daniel Brooks,Elmhurst Mutual Power Light Robin Rego, Lakeview Light Power Company Letncia Neal, City of Milton Isabella Deditch, Ohop Mutual Light Company Mark Johnson, Parkland Light Water Company Mark Burlmgame, Town of Steilacoom Terry Mundorf, MMPS &M Western Public Agencies Group 2012 Scope of Services and Budget EXHIBIT A The Western Public Agencies Group (WPAG) comprises 21 publicly owned utilities in the state of Washington: Benton REA, Clallam County P.U.D. No. 1, Clark Public Utilities, the City of Ellensburg, Grays Harbor P.U.D. No. 1, Kittitas County P.U.D. No. 1, Lewis County P.U.D. No. 1, Mason County P.U.D. No. 1, Mason County P.U.D. No. 3, Pacific County P.U.D. No. 2, Skamania County P.U.D. No.1, Wahkiakum County P.U.D. No. 1, the City of Port Angeles, and members of the Pierce County Cooperative Power Association, which includes Alder Mutual Light Company, the Town of Eatonville, Elmhurst Mutual Power and Light Company, Lakeview Light and Power Company, the City of Milton, Ohop Mutual Light Company, Parkland Light and Water Company, and the Town of Steilacoom. Together the WPAG member utilities serve more than one million customers and purchase more than 6 billion kilowatt -hours from the Bonneville Power Administration (`Bonneville each year under both Load Following and Slice /Block Contracts. WPAG member utilities also own or receive output from more than 400 megawatts of non Bonneville generation and purchase more than 300 megawatts of power from sources other than Bonneville. WPAG members are generally winter peaking utilities with lower annual load factors. WPAG members' similar characteristics have caused them to join together to represent their interests before Bonneville, and in other regional and national forums since 1980. WPAG has intervened as a group in every major Bonneville rate proceeding since enactment of the Pacific Northwest Electric Power Planning and Conservation Act of 1980. WPAG's interests have also been represented in Congress, before the Northwest Power Planning Council, and in other regional forums. The scope of services presented here includes areas that various other organizations, of which WPAG members might also be members, cannot advocate for WPAG members due to conflicts of interest within those organizations, lack of staff resources or subject area expertise. WPAG thus fills a need that is unmet by membership in the Public Power Council, the Northwest Public Power Association, the Pacific Northwest Utilities Conference Committee and other similar groups. Scope of Services The 2012 scope of services for WPAG is proposed as follows: General WPAG Activities and Meetings Regional Activities WP 14 Rate Proceedings and Related Processes Issues Identified for Workshons EXHIBIT A During 2012, EES Consulting and MMPS &M will monitor and comment on regional and federal activities of specific interest to WPAG members not covered adequately by other public power organizations of mutual interest and relevance. Monthly meetings will be held to brief WPAG members on these activities. BPA will conduct both planning workshops and public processes during 2012 to prepare for a combined power and transmission rate proceeding that will set rates for the next two year rate period. These will present issues in both the power and transmission areas, as well as specific issues identified for workshop treatment prior to the next rate proceeding, as described below. Montana Intertie During the last rate case, Montana wind interests made a concerted effort to have the Montana Intertie rolled into the BPA main grid. While the direct cost impacts of this action are minimal, the long term impacts of adding another area of substantial wind resource development to the Federal transmission system are more troubling. The concern is that this action will stimulate requests for BPA to use Federal base system resources to integrate these resources, further straining the Federal base system and its ability to serve preference customer loads. This issue will be decided in workshops, the first of which is scheduled for December 2012. WPAG will oppose any treatment of the Montana Intertie that will result in any increase in the use of Federal base system resources for purposes other than serving preference customer load. This will be staffed primarily by MMPS &M. Cost Allocation To NT and PTP Transmission Rates In the last rate case, Snohomish PUD asserted that BPA's allocation of costs between NT and PTP rates did not recognize the full costs of services provided to NT customers, to the detriment of PTP customers. Snohomish has been joined by Seattle and Tacoma and has continued to pursue this issue. BPA has already held one rate case workshop on this matter. BPA's current allocation approach reasonably replicates the method recommended by the FERC in conjunction with the OATT, and is similar to that used by regional IOUs. It appears that Snohomish PUD, as a PTP customer, is seeking to shift costs from the PTP rate to the NT rate in a manner that is not cost justified. WPAG will oppose efforts to shift costs between transmission rates in a manner that is not cost justified and will support efforts to A-2 fairly allocate costs between NT and PTP rates. This will be staffed by EES Consulting and MMPS &M. Rate Case Process At the last rate case, WPAG urged BPA to undertake an effort to streamline the rate case process to make it faster and more efficient. BPA has commenced a process to determine if there are ways that the rate case process can be streamlined. There is a potential for savings here if the rate case process, which will occur every two years under the TRM, can be materially shortened. WPAG will participate to advocate changes in the process that will shorten the rate case process while preserving legal and procedural rights. This will be staffed MMPS &M. Rate Case Workshops It has been BPA's practice to commence the rate case workshop process in the fall of the year preceding the year in which the rate case is held. This means that the BPA rate case workshops for the 2014 rate proceeding will commence in September /October of 2012. In these workshops, BPA routinely solicits customer input on new issues, and is at its most receptive to customer ideas. WPAG will use this opportunity to urge BPA to begin the process of retrieving capacity from non- preference customers for use in serving preference customer loads, and to abandon the preferential allocation approaches it has used to shelter wind generation from the true costs of the service they receive. This will be staffed by EES Consulting and MMPS &M. Other BPA 2012 Proceedings EXHIBIT A BPA has already commenced a number of proceedings, and will commence some additional ones during 2012, that will have long -term impacts on preference customers. WPAG will participate in the following BPA processes. Capital Spending BPA has determined that it will run out of borrowing authority well before it expected to when it received its last allocation of borrowing authority. This issue has both short term impacts that will be felt in the rate case, as well as longer term impact in how BPA sets priorities for capital projects, and what steps it will take to extend the borrowing authority that remains. This is a complex and important process that will impact the costs of both power and transmission for years to come. BPA will be discussing the implications of this issue in a number of processes, and has already held public meeting to introduce this issue. WPAG will participate in these processes and will advocate the use of reasonable approaches that extend the existing borrowing authority as long as possible to forestall going to Congress for additional borrowing authority. WPAG will also urge BPA to give priority access to available capital to projects that provide service to preference customers, and to establish an ongoing process involving customers to ensure that the remaining borrowing authority is wisely and appropriately used in the future. The first meeting on this topic is scheduled for January 30, 2012. This will be staffed by MMPS &M. Environmental Redispatch Recently, wind generation interests filed a petition with the FERC alleging, inter alia, that the application of BPA's Environmental Redispatch ROD did not provide comparable service, and also filed petitions for review A -3 EXHIBIT A in the 9 Circuit seeking legal review of BPA's Environmental Redispatch ROD. WPAG filed comments with the FERC defending BPA's Environmental Redispatch ROD, and also filed its own petition in the 9 Circuit. The petitions in the 9 Circuit are still pending. However, the FERC has just ruled in favor the petitioning wind interests, finding that BPA's Environmental Redispatch ROD does not provide comparable service, and gave BPA 90 days to formulate a new policy. BPA had been attempting to forge a settlement with the wind interests, the IOUs and certain preference customers. It is expected that BPA will commence a more public process to formulate its response to the FERC. WPAG will participate actively in this process to ensure that the FBS resources are reserved for preference customer use, and that all customers (including wind customers) pay the costs that BPA incurs to serve them. We will also be vigilant that BPA does not take, or agree to take, actions that exceed its statutory authority. This will be staffed by EES Consulting and MMPS &M. BOATT Process BPA is currently conducting a process to revise its open access transmission tariff. As originally envisioned, this process was to merely update the BPA OATT. However, the objective of this process recently changed to the formulation of a BPA OATT that would be sufficiently compliant with FERC policies to qualify as a reciprocity tariff. This shift means, in effect, that BPA is seeking to become more compliant with the manner in which the FERC wants transmission service to be provided. At this juncture, it is unclear whether this shift will endanger provisions of the current BPA OATT that provide regional benefits, such as the short distance discount. WPAG will continue to monitor this activity with an eye to preserving those aspects of the current BPA OATT that are beneficial to BPA's preference customers. This will be staffed by MMPS &M. Precedent Transmission Service Agreement Process BPA has signed a number of precedent transmission service agreements with wind project developers which commit it to providing transmission service to these projects once they are completed. Many of these developers now seek to either terminate these agreements with BPA, or to delay for an extended period the corrunencement of service. This raises a number of issues: what conditions (if any) should BPA impose on developers seeking to terminate these agreements in order to hold other transmission customers harmless; how should the transmission capability made available by the termination of these agreements be used; and what changes should 13PA institute in order to avoid making such commitments in the future. WPAG has already submitted comments on these and other topics in this proceeding, and will continue to actively participate in order to ensure that unnecessary costs are not imposed on preference customers. This will be staffed by MMPS &M. BPA Network Open Season Process It is generally agreed that the network open season process that BPA has employed has not been a success, and that a revision of this process could benefit the agency and its transmission customers. However, BPA is reluctant to undertake this process until it deals with the issues presented by the PTSA proceeding. WPAG will participate in the NOS revision process with the intention of improving its operation from the point of view of the preference customers. In particular, the availability of transmission capability for both Tier 2 non federal resources and for A -4 EXHIBIT A preference customer load service will be areas of emphasis. This will be staffed by EES Consulting and MMPS &M. Network Transmission Service Process At the insistence of WPAG and other preference customers taking NT service, BPA has agreed to initiate an intensive process with NT customers to address concerns and issues regarding access to and availability of transmission capability for resource and load service for NT customers. It will include issues such as how is transmission capability ear marked for NT customers, how is such capability made available to NT customers, and can NT customers get access to transmission without getting in line behind all the wind generators. WPAG will participate actively in this process, which will commence in late December of 2012. This will be staffed by MMPS &M. Enerev Imbalance Market The Administrator recently called together various public power leaders (including WPAG) to discuss whether there was interest in exploring an energy imbalance market to address the need for imbalance energy by various output resources. While there was no great enthusiasm for this idea, there was no objection to an initial exploration either. However, as we have seen the development of markets has tended to cloud BPA's focus on its core task, ensuring inexpensive and reliable power supply for its preference customers. It is not clear it this initiative will go anywhere, but WPAG will track it to ensure that any market development is done in a manner that does not erode preference rights to the output of the FBS, or shift BPA's business focus in detrimental ways. This will be staffed by EES Consulting and MMPS &M. TRM Loose Ends and Revisions There have already been some changes to the TRM to correct errors and address omissions. In addition, there are a number of significant issues that were not satisfactorily resolved at the end of the Tier Rate Methodology process that BPA has agreed to revisit, including most importantly the issue of system obligations that BPA treats as off -the -top dedications to the Tier 1 system capability. Additionally, there are significant issues that will arise as the TRM is actually translated into rates that will need to be dealt with in the next year. One such issue is the lack of any agreed upon methodology for determining the capability of the Tier 1 system, which impacts how much Tier 1 power is available to WPAG utilities. This will be staffed primarily by MMPS &M. Conservation BPA has been and will remain engaged in discussions regarding how conservation will be funded under the new TRM contracts and rates. The recent admission that BPA has significantly overspent its conservation budget, combined with its premature exhaustion of its borrowing authority, have brought to the fore the questions regarding BPA's desire to run all customer conservation through BPA programs. These events have renewed the desire among many preference customers be have the option of providing their own funding for conservation, not run these dollars through the BPA rates, and obtain thereby more flexibility in how conservation and demand side programs are managed. This will make conservation and demand side more adaptable for meeting Tier 2 loads. WPAG A -5 will work to ensure that current BPA funded programs will continue to be available to utilities that want to participate in them, and to give preference customers the flexibility of running their own conservation programs without running the funding through BPA. In addition, WPAG will work to ensure that conservation can be used as a Tier 2 resource for those who wish to do so. This will be staffed by EES Consulting and MMPS &M. EXHIBIT A Preference to FBS Capacity BPA has been using increasing amounts of FBS capacity to integrate wind generation on the Federal transmission system. This capacity is deducted from the FBS capability made available to preference customers under Tier 1. For the near term, the primary impact of this activity is to reduce the secondary revenues available to BPA to reduce the PF rate by shifting secondary power sales from heavy load hours to light load hours. However, in the future this reduction in FBS capacity may impinge on service to preference customer loads under both load following and Slice contracts. WPAG will bring to the fore in the WP -14 rate proceeding workshops this misuse of FBS capacity, and assert our preference rights to this capacity. Vindication of these preference rights may require litigation. This will be staffed by MMPS &M. DSI Lona -Term Contracts Alcoa has challenged BPA's recent Residential Exchange Settlement with the IOU's with the clear intention of using that suit as leverage to obtain a new, 20 year power supply agreement with BPA. Once again, this will raise issue regarding the cost of such service, the use of FBS resources to provide such service, and what impacts the foregoing will have on the Tier 1 rates paid by preference customers. It will also likely require BPA to negotiate a contract with the DSIs for the delivery of any such benefits. This effort 10 continue to support the DSIs will be aggressively opposed by WPAG. This will be staffed primarily by MMPS &M. 9 Circuit Petition for Review WPAG filed a petition for review in the 9 Circuit to question whether BPA's Environmental Redispatch ROD complied with the statutory provisions regarding the rights of preference customers to federal transmission. The recent issuance of the FERC order essentially invalidating the Environmental Redispatch ROD has shifted the center of activity from the 9th Circuit to the FERC on this topic. However, it this suit may yet provide a means of testing the legality of BPA's actions regarding the impacts of wind generation on the federal systern. In the near term this petition is likely to be inactive, but that may change depending on how BPA reacts to the recent FERC order. WPAG will continue to keep this matter active until the resolution of the high wind/high water issues becomes clearer. This will be staffed by MMPS &M. Federal Energy Regulatory Commission BPA will need to take action in response to the recent order issued by the FERC, either by requesting rehearing, appealing the order, or attempting to formulate a new policy that will comply with the directions of the FERC order while at the same time complying with its A -6 EXHIBIT A statutory obligations. Regardless of what path or paths BPA chooses to follow, it is clear that there will be much activity in the region that will find its way back to the FERC. WPAG will work closely with other preference customers to defend the financial and operational interest of BPA, and ensure that the statutory rights of preference customers are not subordinated to the interests of non preference customers. At times, this may require WPAG to take positions that differ from those of BPA and other preference customers. EES Consulting and MMPS &M will continue to assist PPC in its efforts, and will monitor this process to see if WPAG direct participation is needed. In June 2007, under the direction of FERC, the North American Electricity Council (NERC) began enforcing electric reliability standards. As of that time utilities with greater than 25,000 customers are required to register with NERC and their regional reliability organization or the Western Electricity Coordinating Council (WECC) on the west coast of North America. EES Consulting has been monitoring and advising WPAG members on compliance issues since April of 2007. EES Consulting will continue to monitor compliance issues on behalf of WPAG members in 2011. EES Consulting will alert WPAG members of issues as they arise. To the extent that detailed analysis and /or representation is required by an individual WPAG member with respect to compliance issues, tasks will be completed and billed on an individual utility basis. Olympia Legislative Session EES Consulting and MMPS &M will monitor the activities of the 2012 legislature on behalf of WPAG's specific interests. Other Matters During the course of each year, matters arise that require WPAG attention to protect the interests of our customers. These matters are undertaken at the direction of the WPAG utilities. Budget The budget for the scope of services described above is calculated at the following billing rates for EES Consulting and MMPS &M: EES Consulting President $165 per hour Managing Director 160 per hour Manager 155 per hour Senior Project Manager 150 per hour Project Manager 145 per hour Senior Analyst or Engineer 140 per hour Analyst 135 per hour Clerical 120 per hour A -7 MMPS&M Principal $175 per hour Associate $170 per hour These billing rates will remain in effect through December 31, 2013. On the basis of the above billing rates, the 2012 labor budgets of EES Consulting and MMPS &M combined are estimated to remain at $200,000, which holds the line on budget increases. This labor budget will be split equally between EES Consulting and MMPS &M. In addition, an amount of $75,000 in supplemental funding has been provided to staff the WP -14 Power and Transmission rate cases workshops and related BPA processes. This is a $75,000 reduction to the overall 2011 WPAG budget. In addition to labor costs, out -of- pocket expenses will be billed to WPAG members at their cost to EES Consulting and MMPS &M. It is estimated that $40,000 in total out -of- pocket expenses will be incurred for all work non -rate case elements in total. Out -of- pocket costs will be billed by whichever organization actually incurs the expense. The total estimated annual WPAG budget for 2012 is estimated at $240,000, and a supplemental budget of $75,000 for rate case activities. As always, the allocation of the budget among WPAG members is open to negotiation by the participants. We have attached an inter utility allocation predicated on the most recent available utility data. After a discussion of the foregoing issue, a final budget by utility will be prepared. An example of the budget's allocation is attached at the end of this narrative. Project Staffing EXHIBIT A The staffing for these projects will be similar to that for past WPAG activities. Gary Saleba and Terry Mundorf will be the principal representatives for EES Consulting and MMPS &M, respectively, with Ryan Neale providing support for the activities of Terry Mundorf. Additional MMPS &M and EES Consulting staff will assist as needed. Western Public Agencies Group Preliminary Indicative Budget for 2012 EES Consulting and Marsh Mundorf Pratt Sullivan McKenzie Source: 2010-2011 Northwest Electric Utility Directory (NWPPA), 2003 EIA Form 412 2004 EIA Form 861, Utility Supplied Dacambar 9, 2011 Total Budget Labor 200.000 Expenses 40,000 Total Allocation 240,000 BPA Rate Case 75,000 Supplemental Allocation 75,000 Average of Customers, Energy Sales and Investment Standard Supplemental Customers 1 Energy Sales' Net Investment 2 18 0% Budget Allocation Budget Allocation Without Cap Cap with Cap with Cap percent of percent of percent of percent of percent of number total kilowatt -hours total dollars total total total dollars dollars Individual Utilities Benton Electnc REA 14,592 3 4% 565,802,985 5 0% 93,440,576 7 6% 5 34% 7 06% 16,938 5,293 Clallam County PUD 30,031 7 0% 762,660,906 6 8% 106,596,449 8 7% 7 48% 9 93% 23,831 7,447 Clark Public Uhlbes 183,015 42 6% 4,946,000,000 43 9% 347,900,000 28 3% 38 27% 18 00% 43,200 13,500 City of Ellensburg 9,200 2 1% 222,215,504 2 0% 26,419,391 2 1% 2 09% 2 78% 6,670 2,084 Grays Harbor PUD 41,690 9 7% 978,550,115 8 7% 224,895,016 18 3% 12 22% 16 13% 38,720 12,100 Kittitas County PUD 4,252 1 0% 84,029,083 07% 18,356,529 1 5% 1 08% 1 42% 3,415 1,067 Lewis County PUD No 1 30,892 7 2% 933,660,601 8 3% 109,236,614 8 9% 8 12% 10 80% 25,921 8,100 Mason County PUD No 1 5,143 1 2% 70,296,782 0 6% 13,709,373 1 1% 0 98% 1 30% 3,119 975 Mason County PUD No. 3 32,634 7 6% 660,405,008 5 9% 112,548,253 9 1% 7 54% 10 00% 23,995 7,499 Pacific County PUD No 2 17,091 4 0% 299,128,325 2 7% 38,651,128 31 3 26% 4 34% 10,423 3,257 City of Port Angeles 10,919 2 5% 689,775,650 61 22,618,463 1 8% 3 50% 4 71% 11,305 3,533 Skamania County PUD No 1 5,791 1 3% 130,110,119 1 2% 16,602,110 1 3% 1 28% 1 71% 4,102 1,282 Wahkrakum County PUD No 1 2,404 0 6% 41,592,833 0 4% 7,363,612 0 6% 0 51% 0 68% 1,622 507 Pierce County Cooperative Power Association Alder Mutual Light Company 283 0 1% 4,787,000 0 0% 409,409 0 0% 0 05% 0 06% 152 47 Town of Eatonville 1,178 0 3% 27,271,397 0 2% 1,150,000 0 1% 0 20% 0 27% 657 205 Elmhurst Mutual Power and Light Company 13,884 3 2% 269,750,037 2 4% 30,050,620 2 4% 2 69% 3 59% 8,614 2,692 Lakeview Light and Power Company 11,434 2 7% 278,291,000 2 5% 29,018,475 2 4% 2 50% 3 33% 7,992 2,498 City of Milton 3,389 0 8% 62,183,202 0 6% 2,378,975 0 2% 0 51% 0 69% 1,654 517 Ohop Mutual Light Company 4,189 1 0% 82,889,733 0 7% 8,969,611 0 7% 0 81% 1 09% 2,605 814 Parkland Light and Water Company 4,425 1 0% 118,504,536 1 1% 18,854,000 1 5% 1 20% 1 60% 3,833 1,198 Town ofSteilacoom 2,816 07% 40,428,000 04% 1,571,502 0 1% 038% 051% 1,232 385 Subtotal Pierce County Cooperative Power Association 41,598 9 7% 884,104,905 7 8% 92,402,592 7 5% 8 3% 11 14% 26,739 8,356 Total 429,252 100 0% 11,268,332,816 100 0% 1,230,740,106 100 0% 100 0% 100 00% 240,000 75,000