HomeMy WebLinkAboutAgenda Report - October 20, 2010 D-06AGENDA ITEM U.6
CITY OF LODI
,. COUNCIL COMMUNICATION
TM
AGENDA TITLE: Adopt Resolution Authorizing the City Manager to Enter into a Letter of Agreement
between the City of Lodi and Scientific Specialties, Incorporatedfor the Sale of
Designated Municipal Electric Distribution Facilities ($36,983)
MEETING DATE: October 20,2010
PREPARED BY: Electric Utility Director
RECOMMENDED ACTION: Adopt a resolution authorizing the City Manager to enter into a
Letter of Agreement between the City of Lodi and Scientific
Specialties, Incorporated for the sale of designated municipal
electric distribution facilities in the amount of $36,983.
BACKGROUND INFORMATION: Scientific Specialties, Incorporated (SSI) has asked the Lodi
Electric Utility Department (EUD) to convert the existing
secondary (480 volt) account to primary (12,000 volt) service. With
primary service, the stated rate is lower, but the customer becomes responsiblefor the cost of electrical
losses in the transformer and other equipment between the new primary metering point and the old low
voltage point, as well as the cost for maintenance and replacement of that equipment.
SSI would buy the existing secondary distribution equipment and one transformer, and replace one
secondary meterwith one new primary electric meter. SSI will pay the EUD $36,983 for the existing
facilities and for EUD labor, materials and equipment to install the new meter and make upgrades
requested by SSI. As stated above, SSI will become responsiblefor future maintenance and
replacement of the transferred equipment and its electrical losses.
The proposed arrangement conforms to past practice and City Council -approved Electric Rules and
Regulations. Over the past several years, the City has engaged in similar primary -metered projects with
CertainTeed Corporation, Lodi Iron Works, Ralcorp/Cottage Bakery, and Schaefer Systems International.
It is anticipatedthat this projectwill be completed by January 15, 2011.
FISCAL IMPACT: The initial sale of facilities and services will result in revenue to the EUD in the
amount d $36,983. The primary rate is approximately 4 percent lower than the
secondary rate; however, this lower rate is offset for EUD by reduced energy losses,
maintenance and replacement expenses. Net fiscal impact is insignificantto EUD.
FUNDING: Not applicable.
li beth A. Kirkidy
Electric Utility Director
Prepared By: Rob Lechner, Manager, Customer Service & Programs
APPROVED:
Konradt artlam, Interim City Manager
LETTER OF AGREEMENT: SALE OF MUNICIPAL FACILITIES
1=1:1IT WA011
THE CITY OF LODI
AND
SCIENTIFIC SPECIALTIES, INCORPORATED
This Letter of Agreement (LOA) is between the City of Lodi (COL) and
Scientific Specialties, Incorporated (SSI). Byway of this signed LOA, SSI agrees
to purchase and maintain designated electric utility facilities as identified on the
attached Appendix A.
In summary, SSI will purchase from COL designated overhead electric
distribution facilities located at the customer's plant site of 1310 E. Thurman
Street, as well as one transformer. In addition, SSI agrees to compensatethe
COL for all required labor, materials, and equipment costs to install said
equipment, including but not limited to all necessary primary metering equipment.
In purchasing the aforementioned equipment (transformer and overhead
electric distribution facilities) SSI also agrees that, henceforth, SSI becomes
responsible for said equipment and to pay for aIl maintenance, repairs and
replacements necessaryfor maintaining said equipment in good and safe
working condition and SSI becomes responsible for any electrical losses within
the designated electric utility facilities.
The total purchase price of the equipment and associated labor costs listed on
Appendix A is in the amount of $36,983. Note: in the event that the labor required
to perform this project occurs outside of COL normal operating hours (generally
7:00am to 4:30pm Monday through Thursday, 7:00am to 3:30pm some Fridays,
excluding holidays), SSI will be charged any/all additionallabor costs above and
beyond the costs identified on Appendix A.
SSI agrees to compensate the COL for the total amount listed in the LOA prior
to completion of said project.
1.
IN WITNESS HEREOF, the parties hereto have entered into this Letterd
Agreement dated October , 2010.
SCIENTIFIC SPECIALTIES, INC. CITY OF LODI
Title:
2.
Konradt Bartlam
Interim City Manager
ATTEST:
Randi Johl, City Clerk
APPROVED AS TO FORM:
D. Stephen Schwabauer
City Attorney
Purchase existing plant & install
additional facilities
Purchase padmount
transformer
Labor and material costs to
install primary metering
equipment
Total
APPENDIX `A
Installation Depreciated
cost Allowance Buy Out Cost/Total
$1,891 $895
$996
$23,000 N/A
$23,000
$12,987
$12,987
$36,983
Depreciationfor overhead material (OHM) based on 40 years service life.
Depreciation for padmount transformer based on 30 years service life.
The scope of work includes, but is not limited to:
1) Install one 12 kV 3-phase metering facility.
2) Lower existing riser assembly.
3) Customer to install metering cabinet to City specifications, at the
customer's expense.
3.
RESOLUTION NO. 2010-178
A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING
CITY MANAGERTO ENTER INTO A LETTER OF AGREEMENT
BETWEEN THE CITY OF LODI AND SCIENTIFIC SPECIALTIES,
INCORPORATED FOR THE SALE OF DESIGNATED MUNICIPAL
ELECTRIC DISTRIBUTION FACILITIES
WHEREAS, Scientific Specialties, Incorporated (SSI)has one utility account assigned to
the G4 -secondary rate tariff; and
WHEREAS, SSI has asked the Lodi Electric Utility Department to convert the existing
480 -volt secondary account to primary service at 12,000 V and, in order to accomplish this task,
would buy the existing secondary distribution equipment and one transformer and replace one
secondary meterwith one new primary electric meter; and
WHEREAS, SSI will pay the City of Lodi Electric Utility Department $36,983 for said
facilities and labor to install the new meter and make upgrades requested by SSI. SSI will
become responsible for maintenance and replacement of the transferred equipment and its
electrical losses; and
WHEREAS, the proposed arrangement conforms to past practice and City Council -
approved Electric Rules and Regulations; and
WHEREAS, staff recommends entering into the Letter of Agreement with SSI for the
facilities and labor as outlined above, thus allowing staff to order the required primary metering
equipment and related materials.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
authorize the City Manager to enter into a Letter of Agreement between the City of Lodi and
Scientific Specialties, Incorporated for the sale of designated municipal electric distribution
facilities in the amount of $36,983. This figure includes the purchase of one transformer, primary
metering equipment and labor costs associated with the installation of said equipment, and
upgrading the existing system to accommodatethe customer's need.
Dated: October 20, 2010
R=
hereby certify that Resolution No. 2010-178 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held October 20,2010, by the following vote:
AYES: COUNCIL MEMBERS — Hansen, Hitchcock, Johnson, Mounce, and
Mayor Katzakian
NOES: COUNCIL MEMBERS— None
ABSENT: COUNCIL MEMBERS— Ne
ABSTAIN: COUNCIL MEMBERS— N
DI
None
L
City Clerk
2010-178