HomeMy WebLinkAboutAgenda Report - June 9, 1998'F
CITY OF LODI COUNCIL COMMUNICATION
AGENDA TITLE: Authorize the City Manager to Execute Letter of Agreement 98 -SNR -00048 between the Bureau
of Reclamation (Reclamation), the Sierra Nevada Region of the Western Area Power
Administration and the City of Lodi which will allow participants in the Shasta Rewinds Contract
the opportunity to purchase additional low cost energy resulting from a good hydro year.
MEETING DATE: June 9, 1998
SUBMITTED BY: Electric Utility Director
RECOMMENDED ACTION: That the City Council authorize the City Manager to execute the attached Letter
of Agreement 98 -SNR -00048 between the Bureau of Reclamation (Reclamation),
the Sierra Nevada Region of the Western Area Power Administration and the City
of Lodi.
BACKGROUND: The above LOA delays taking Shasta Unit 5 out of service. This delay will afford
participants in the Shasta Rewinds Contract, such as Lodi, the opportunity to
purchase additional low cost energy resulting from a good hydro year. However,
to maintain the overall maintenance schedule, overtime will have to be used. The
additional costs to the participants will be $250,000. The City of Lodi's share is
estimated to be less than $50,000 - far smaller than the value of the energy
received based on the current summer power market forecast.
FUNDING: Not applicable - net positive impact.
Prepared by: Jack Stone, Manager, Business Planning and Marketing
ANV/JS/Ist
c: City Attorney
Finance Director
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Alan N. Vallow
Electric Utility Director
4 June 1
Letter of Agreement 96 -SNR -00048
City of Alameda
City of Lodi
Modesto Irrigation District
City of Palo Alto
City of Redding
City of Roseville
Sacramento Municipal Utility District
City of Santa Clara
Turlock Irrigation District
To The Customers Listed Above:
This Letter of Agreement 98 -SNR -00048 is made between the Bureau of Reclamation
(Reclamation), the Sierra Nevada Region of the Western Area Power Administration, and
those certain customers purchasing excess capacity during the 1998 season from the
Sierra Nevada Region who are signatories to this agreement by June 12, 1998 (Delay
Customers). This Letter of Agreement enables the Delay Customers to obtain energy and
capacity not otherwise available, and provides for the Delay Customers to compensate
Reclamation for the additional costs associated with a compressed maintenance schedule
for Reclamation's Northern California Area Office resulting from the delay of the Shasta
Unit 5 scheduled outage at the Shasta Powerplant.
Shasta Unit 5 is scheduled to be taken out of service on July 6, 1998 for a 10 -month
period, returning to service May 1, 1999. The Delay Customers are requesting to delay
beginning work on Shasta Unit 5 until October 1, 1998 for a 9 -month period, returning to
service on July 1, 1999. Delaying work on Shasta Unit 5 will allow the Siena Nevada
Region to make approximately 90 MW of additional firm excess capacity available to the
Delay Customers during the months of July and August 1998, and approximately 78 MW
in September 1998.
Letter of Agreement 98 -SNR -00048
In order for Reclamation to delay the schedule to take Shasta Unit 5 out of service on
October 1, 1998, Reclamation will have to change the rewind contractor's schedule. and
place Reclamation's work crew on overtime. The Delay Customers will collectively
advance a total of two hundred fifty thousand dollars ($250,000.00) as set forth in the
attached Schedule of Estimated Allocation Percentages and Associated Deposit Amounts.
1. On or before June 24, 1998, Reclamation will modify the Reclamation 1998-1999
Maintenance Outage Schedule for the Central Valley Project to reflect a Shasta
Unit 5 outage commencing on October 1, 1998, provided that the following have
occurred on or before the dose of business of June 19, 1998:
1.1 The sum of two hundred fifty thousand dollars ($250,000.00) has been
advanced to Reclamation by the Delay Customers pursuant to Section 6 of this
Letter of Agreement.
1.2 Based upon the June 15, 1998, inspection of the Shasta Unit 5 turbine,
Reclamation staff have concluded that there is no need to perform a disassembly
for turbine repair.
2. The Sierra Nevada Region will, upon receipt of written notification from Reclamation
of the revised maintenance schedule, revise Exlubit A to the Delay Customers'
agreements for excess capacity. The revised Exhibit A will reflect an increase in the
allocation of film excess capacity due to the Shasta Unit 5 remaining in service and
associated energy to each Delay Customer for the months of July, August, and
September 1998. The increase in a Delay Customer's firm excess capacity allocation
will not exceed the balance of their unmet expected peak load after adjustment for its
contract rate of delivery and current allocation of firm excess capacity for the months
of July, August, and September 1998.
3. Subject to Section 2 above, each Delay Customer who is a participant in the Shasta
Rewinds Contract 94 -SAO -00047 will receive its proportional share, based on the
percentages specified in the Shasta Rewinds Contract, of 20 MW for July, August,
and September 1998 from the additional firm excess capacity available due to
delaying the work on Shasta Unit 5.
4. Subject to Section 2 above, each Delay Customer will receive its proportional share of
the remaining additional firm excess capacity available due to delaying the work on
Shasta Unit S. The estimated additional firm excess capacity percentage amounts
and deposit amounts for such additional firm excess capacity are set forth in the
Schedule of Estimated Allocation Percentages and Associated Deposit Amounts
attached hereto.
Page 2
Letter of Agreement 98 -SNR -00048
If the Shasta Unit 5 work is delayed until October 1, 1998, and there is no agreement
in place by that time to fund replacement of the turbine runners for Shasta Unit 5,
then the Delay Customers understand that the turbine work now scheduled to begin
July 6, 1998, must be performed during the rewind outage of Shasta Unit 5 and,
therefore, Shasta Unit 5 will be scheduled to return to service on November 1, 1999,
after the turbine repair and rewind work is completed. In the event there is no
agreement to fund replacement of the turbine runner for Shasta Unit 5, the Delay
Customers agree than
5.1 If water is being spilled at Shasta Dam due to inadequate generation capability
at the Shasta Powerplant, and in the event the Sierra Nevada Region is required
to acquire energy to support project dependable capacity (PDC) as prescribed in
Table One of Article 12(a) of Contract 14-06-200-2948A with the Pacific Gas Sti
Electric Company, then the Delay Customers shall either pay for or replace the
amount of energy necessary to support PDC due to the unavailability of Shasta
Unit 5 from July 1, 1999 to October 3I, 1999. The Delay Customers shall
either pay for or replace up to 105 MW, proportional to the foregone energy
due to the water spilled at Shasta Dam, such amount to be determined by
Reclamation, under the following terms.
5.1.1 The energy for which each Delay Customer will be required to reimburse
the Sierra Nevada Region, at the Siena Nevada Region's actual energy
replacement cost with no additional adders included, will be based on its
prorata share of excess capacity made available to the Delay Customer
resulting from delaying the work at Shasta Unit 5 less any energy
provided pursuant to Section 5.1.2.
5.1.2 Each Delay Customer may provide part or all of its prorata share of the
energy necessary to support the PDC, under terms agreed to by the
Sierra Nevada Region and consistent with the PDC support
requirements of the Sierra Nevada Region, and, to the extent so
providing, avoid paying for its prorata share of the energy purchased.
6. Compensation to Reclamation:
6.1 Upon signing this Letter of Agreement, the Delay Customers will be required to
advance to Reclamation their shares of the sum of two hundred fifty thousand
dollars ($250,000.00), for Reclamation's use pursuant to 43 U.S.C. 397a.
6.2 Reclamation will submit a bill for collection to the Delay Customers, for
payment by close of business on June 19. 1998, based upon the amounts listed
in the attached schedule upon facsimile notification of signatures by each Delay
Page 3
Letter of Agreement 98 -SNR -00048
Customer. Payments due to Reclamation will be sent in check form to the
following address:
U.S. Department of the Interior
Bureau of Reclamation
Attention: Janice Bartlett. MP -3600
2800 Cottage Way
Sacramento. CA 95825
FAX: (916) 978-5392
6.3 Reclamation shall not be obligated to perform any work pursuant to this Letter
of Agreement without advance payment of funds by the Delay Customers.
Upon cessation of work by Reclamation, a determination of the actual costs
incurred during the performance of the work will be made, and any unexpended
funds will be returned to the Delay Customers in proportion to their
contributions made pursuant to Section 6.1.
6.4 Reclamation shall refund to each Delay Customer the funds that have been
received pursuant to Section 1.1 of this Letter of Agreement. from that Delay
Customer, and no additional excess capacity will be made available to the
Delay Customers because Shasta Unit 5 will be removed from service on July 6,
1999, in the event that either:
6.4.1 Reclamation finds, based upon the June 15, 1998 inspection of Shasta
Unit 5 turbine, that there is a need to perform a disassembly for turbine
repair; or,
6.4.2 Reclamation has not received sufficient funds from the Delay Customers
by close of business June 19, 1998 as stated in Section 1. I of this Letter
of Agreement to implement the Shasta Unit S outage delay.
If one or more of the customers listed on page one of this Letter of Agreement does
not execute this Letter of Agreement by June 12, 1998, then the Delay Customers
will have the option to provide additional funds, on an equal or other agreeable basis,
no later than the dose of business on June 19, 1998. Those Delay Customers
providing additional funds will receive additional increased excess capacity allocations
in proportion to the additional funds they have provided_ However, an increase in a
Delay Customer's firm excess capacity allocation may not exceed the balance of their
unmet expected peak load after adjustment for its contract rate of delivery and ail
allocations of firm excess capacity for the months of July, August, and September
1998. The Sierra Nevada Region will revise the Schedule of Estimated Allocations
and Associated Deposits Amounts to reflect any changes in allocations and
Page 4
Letter of Agreement 98 -SNR -00048
contributions and submit the revised schedule to Reclamation no later than close of
business on June 16, 1998.
8. This Letter of Agreement may be executed in a number of counterparts and shall
constitute a single document with the same force and effect as if each Party had
signed all other counterparts.
If you are in agreement with the conditions stated above, please sign and date all three
original signature pages and return two to Ms. Peggy Muit, N6205, at Sierra Nevada
Region's office as shown above.
Sincerely,
Jerry W. Toenyes
Regional Manager
Western Area Power Administration
Attachment
In Duplicate
Roger K. Patterson
Regional Director
Bureau of Reclamation
Page 5
City of Alameda
By:_
Title:
Modesto Imgation District
By:
Tide:
City of Redding
By:
Title:
Sacramento Municipal Utility District
By:
Title:
Turlock Irrigation District
By:
Tide:
Letter of Agreement 98 -SNR -00048
City of Lodi
By:
Title:
City of Palo Alto
By:—
Title;
City of Roseville
By:_
Title:
City of Santa Clara
By:
Tide:
Page 6
Letter of Agreement 98 -SNR -00048
SCHEDULE OF ESTIMATED ALLOCATIONS
AND ASSOCIATED DEPOSIT AMOUNTS
Customer
Percentage
Cost $250,000
City of Alameda
8.61%
S 21,535.58
City of Lodi
8.61%
$ 21,535.58
Modesto Irrigation District
8.24%1
$ 20,599.25
City of Palo Alto
16.85%
5 42,134.83
City of Redding
11.24%
S 28,089.89
City of Roseville
10.11%
S 25,280.90
Sacramento Municipal Utility District
15.730
S 39,325.84
City of Santa Clara
11.24%
S 28,089.89
Turlock Irrigation District
9.3696
5 23,408.241
I
100.00%
$ 250,000.00
Page 7
Jun 04 98 09x55a Electric Utility ❑epartme 333-6839 p.l
AM.LOA
City of Alameda
City of Lodi
Modesto Irrigation District
City of Palo Alto
City of Redding
City of Roseville
Sacramento Municipal Utility District
City of Santa Clara
Turlock irrigation District
To The Customers Listed Above:
Page ?
i,etaer of Agreement 98 -SNR -00048
This Letter of Agreement 9"NR-00048 is made between the Bureau of Reclamation (Reclamation), the Siena
Nevada Region of the Western Area Power Administration, and those certain customers purchasing excess
capacity during the 1998 season from the Sierra Nevada Region hli who are signatories to this agreement by
June 12, 1998 (Delay Customers). 'lids letter of Agreement provides for the Delay Customers to compensate
Reclamation for the additional costs associated with a compressed maintenance schedule for Reclamation's
Northern California Area Office resulting from the delay of the Shasta Unit 5 scheduled outage at the Shasta
Powerplant-
Shasta Unit 5 is scheduled to be taken out of service on July b, 1998 for a 10 -month period, ret timing to service
May 1, 1999. The Delay Customers are requesting to delay beginning work on Shasta Unit 5 until October 1,
1998 for a 9 -month period, returning to service on July 1, 1999. Delaying work on Shasta Unit 5 will allow the
Sierra Nevada Region to make approximately 90 MW of additional excess capacity available to the Delay
Customers during the months of July and August 1998, and approximately 78 MW in September 1998.
1n order for Reclamation to delay the schedule to take Shasta Unit 5 out of service on October 1, 1998,
Reclamation will have to change the rewind contractor's schedule, and place Reclamation's work crew on
overtime. The Delay Customers will collectively advance a total of two hundred fifty thousand dollars
($250,0I81.00) as set forth in the attached Schedule of Estimated Allocation Percentages and Associated Deposit
Amounts.
1. On or before June 24, 1998, Reclamation will modify the Reclamation 1998-1999 Maintenance Outage
Schedule for the Central Valley Project to reflect a Shasta Unit 5 outage commencing on October 1, 1998,
when the following have occurred on or before June 19, 1998:
1.1 The 'sum of two hundred fifty thousand dollars ($250,000) has been deposited by the Delay Customers
into a Trust Fund designated by Reclamation.
1.2 Based upon the June 15, 1998, inspection of the Shasta Unit 5 turbine, Reclamation staff have
concluded that there is no treed to perform a disassembly for turbine repair.
JUN -04-1996 08:39 333 6839 P.01
Jun 04 98 09:56a Electric Utility Departme 333-6939 p•2
AT ILOA
page.
2. The Sierra Nevada Region will, upon receipt of written notification from Reclamation of the revised
maintenance schedule, revise Exhibit A to the Delay Customers' agreements for excess capacity_ The revised
Exhibit A will reflect an increase in the allocation of firm excess capacity clue to the Shasta Unit 5 remaining
in service and associated energy to each Delay Customer for the months of July, August, and September
1998- The increase in a Delay Customer's firm excess capacity allocation will not exceed the balance of their
unmet expected peak load after adjustment for its contract rate of delivery and current allocation of firm
excess capacity for the months of July, August, and September 1998.
3. Subject to Section 2 above, each Delay Customer who is a participant in the Shasta Rewinds Contract
94 -SAO -00047 will receive its proportional share, s lag-- based on the percentages specified in the
Shasta Rewinds Contract, of (___ for July, _ for August, and _ for September 1998) from the additional
fun excess capacity available due to delaying the work on Shasta Unit 5.
4. Subject to Section 2 above, each Delay Customer will receive its proportional share of the remaining
additional firm excess capacity available due to delaying the work on Shasta Unit 5. The estimated additional
firm excess capacity percentage amounts and deposit amounts for such additional firm excess capacity 4s -are
set forth in the Schedule of Estimated Allocation Percentages and Associated Deposit Amounts attached
hereto_
5. If the Shasta Unit 5 work is delayed until October 1, 1998, and there is no agreement in place by that time to
fund replacenwt of the turbine runners for Shasta Unit 5, then the Delay Customers understand that the
turbine work now scheduled to begin July 6, 1998, must be performed during the rewind outage of Shasta
Unit 5 and, therefore, Shasta Unit 5 will be scheduled to return to service on November 1, 1999, after the
turbine repair and rewind work is completed. In the event there is no agreement to fund replacement of the
turbine runner for Shasta Unit 5, the Delay Customers agree that:
5.1 If water is being spilled from Shasta Lake due to inadequate generation capability at the Shasta
Powerplant, and in the event the Sierra Nevada Region is required to acquire energy to support projea
dependable capacity (PDC) as prescribed in Table One of Article 12(a) of Contract 14-06-200-2948A
with the Pacific Gas & Electric Company, then the Delay Customers shall either pay for or replace the
amount of energy necessary to support FDC due to the unavailability of Shasta Unit 5 from July 1, 1999
to October 31, 1999, up to 105 MW, proportional to the foregone energy due to the water spilled at the
Shasta Powerplant, as determined by Reclamation, under the following terms.
5.1.1 The energy for which each Delay Customer will be required to pay, at dwa pass-through cost,
will be based on its prorata share of excess capacity made available to the Delay Customer
resulting from delaying the work at Shasta Unit 5 less any energy provided pursuant to
Section 5.1.2.
5.1.2 Each Delay Customer may provide part or all of its prorata share of the energy necessary to
support the PDC, under terms agreed to by the Sierra Nevada Region, and, to the extent so
providing, avoid paying for its prorata share of the energy purchased,
6. Compensation to Reclamation:
6.1 Upon signing this Letter of Agreement, the Delay Customers will be required to advance to
Reclamation their shares of the sum of two hundred fifty thousand dollars ($250,000.00), to, for
Reclamation's use pursuant to 43 U.S.C. 397a.
6.2 Reclamation will submit a bill for collection to the Delay Customers for payment by June 19, 1998
based upon the amounts Bated in the attached schedule upon facsimile notification of signatures by each
.It.N-04-1998 06'40
333 6839 P.02
Jun 04 98 09:56a Electric Utility Departme 333-6839 p.3
AT73.LOA
_._ Page
Delay Customer. Payments due to Reclamation will be sent in check form to the following address:
U.S. Department of the Interior
Bureau of Reclamation
Attention: Janice Barg, W-3600
28M Cottage Way
Sacramento, CA 95825
FAX: (916) 978-5392
6.3 'Reclamation shall not be obligated to perform any work pursuant to this Getter of Agreement without
advance payment of funds by the Delay Customers. Upon cessation of work by Reclamation, a
determination of the actual costs incurred during the performance of the work will be made, and any
unexpended funds will be returned to the Delay Customers in proportion to their contributions made;
pursuant to Section 6.1.
7. If one or more of the customers listed on page one of this Letter of Agreement daft not execute this Letter of
Agreement by June 12, 1998, then the Delay Customers will have the option to provide additional fends, on
an equal or other agreeable basis. Those Delay Customers providing additional funds will receive additional
increased excess capacity allocations in proportion to the additional funds they have provided. However, an
increase in a Delay Customer's firm excess capacity allocation may not exceed the balance of their unmet
expected peak load after adjustment for its contract rate of delivery and all allocations of firm excess capacity
for the months of July, August, and September 1998. The Sierra Nevada Region will revise the Schedule of
Estimated Allocations and Associated Costs to reflect any changes in allocations and contributions.
S. This Letter of Agreement may be executed in a number of counterparts and shall constitute a single document
with the same force .and effect as if each Party had sighed all other counterparts.
If you are in agreement with the conditions stated above, please sign and date both originals and return one to Ms.
Peggy Muir, N6205, at Sierra Nevada Region's office as shown above.
Jerry W. Toenyes
Regional Manager
Western Area Power
Administration
Attachment
In Duplicate
City of Alameda
By:
Title:
City of Lodi
By -
Sincerely,
Roger K. Patterson
Regional Director
Bureau of Reclamation
JUN -04-1998 09 40 333 6839 P.03
ATT3.LOA Page 4
Title:
Modesto Irrigation District
By:
Title:
City of Palo Alto
By:
Title:
City of Redding
By:
Title:
City of Roseville
By:
Title:
Sacramento Municipal Utility District
By:
Title:
City of Santa Clara
By:
Title:
Turlock Irrigation District
By:
Title:
AT7'3.LOA Page 5
ATTILOA Page 6
SCHEDULE OF ESTIMATED ALLOCATIONS AND ASSOCIATED COSTS
A"T4.WPD
Billing Addresses and Billing and Contract Contact People
for Shasta Unit 5 LOA
City of Alameda
Bureau of Electricity
Attn: Accounts Payable
Post Office Box H
Alameda, California 94501
Billing Contact: Juelle-Ann Boyer
Billing Phone: (510) 748-3910
Fax: (209) 748-3956
Contracts Contact: NCPA,
Matt Foskett (916) 781-4217
City of Lodi
Electric Utility
Attn: Accounts Payable
Post Office Box 3006
Lodi, CA 95241-1910
Billing Contact: John L. Stone
Billing Phone: (209) 333-6748
Fax: (209) 333-6839
Contracts Contact: NCPA,
Matt Foskett (916) 781-4217
Modesto Irrigation District
Attn: Blair Jackson
Post Office Box 4060
Modesto, CA 95352-4060
Billing Contact: James Cabrell
Billing Phone: (209) 526-7515
Fax: (209) 526-7315
Contracts Contact:
Lena Ford (209) 526-7595
City of Palo Alto
Attn: Raveen Maan
250 Hamilton Avenue
Palo Alto, CA 94301
ATT4:WPD
Billing_ Contact: Girish Balachandran
Billing Phone: (650) 329-2214
Fax: (650) 326-1507
Contracts Contact:
Tom Kabat (650) 329-2659
City of Redding
Electric Department
760 Parkview Avenue
Redding, CA 96001
Billing Contact: Kathy Babcock
Billing Phone: (530) 245-7003
Fax: (530) 245-7010
Contracts Contact:
Tim Nichols (530) 245-7062
City of Roseville
Attn: Mr. Michael Brozo
2090 Hilltop Circle
Roseville, CA 95747
Billing Contact: Michael Brozo
BillingP_ hone: (916) 774-5623
Fax: (916) 784-3956
Contracts Contact:
Michael Brozo (916) 774-5623 or NCPA, Matt Foskett (916) 781-4217
Page 2
ATT4.WPD
Billing Addresses and Billing and Contract Contact People for Shasta Unit 5 LOA
Sacramento Municipal Utility District
Attn: Doug Calvert
Post Office Box 15830
Sacramento, California 95852-1530
Billing Contact: Karen Webber
Billing Phone: (916) 732-5364
Fax: (916) 732-6313
Contracts Contact:
Ed Roman (916) 732-5667
City of Santa Clara
Finance Department
1500 Warburton Avenue
Santa Clara, CA 95050-3796
Billing Contact: Wayne Ware
Billing Phone: (408) 261-5029
Fax: (408) 261-2758
Contracts Contact•
Wayne Ware (408) 261-5029 or
Bryan Griess, RMI, (916) 852-1300
Turlock Irrigation District
Attn: Mr. Rick Marquez
Post Office Box 949
Turlock, CA 95381
Billing Contact: Rick Marquez
Billing Phone: (209) 883-8315
Fax: (209) 632-3864
Contracts Contact:
Ken Weisel (209) 883-8412
Page 3
RESOLUTION NO. 98-91
A RESOLUTION OF THE LODI CITY COUNCIL APPROVING THE
LETTER OF AGREEMENT BETWEEN THE BUREAU OF
RECLAMATION, THE SIERRA NEVADA REGION OF THE
WESTERN AREA POWER ADMINISTRATION (WAPA) AND THE
CITY OF LODI WHICH ALLOWS PARTICIPANTS IN THE SHASTA
REWINDS CONTRACT THE OPPORTUNITY TO PURCHASE
ADDITIONAL LOW COST ENERGY RESULTING FROM A GOOD
HYDRO YEAR, AND FURTHER AUTHORIZING THE CITY
MANAGER TO EXECUTE SAID LETTER OF AGREEMENT ON
BEHALF OF THE CITY OF LODI
--------------------------------------------------------------------
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BE IT RESOLVED, that the Lodi City Council hereby approves the Letter of
Agreement between the Bureau pf Reclamation, the Sierra Nevada Region of the
Western Area Power Administration (WAPA) and the City of Lodi, which allows
participants in the Shasta Rewinds Contract the opportunity to purchase additional low
cost energy resulting from a good hydro year.
BE IT RESOLVED, that the Lodi City Council hereby authorizes the City Manager
to execute said Letter of Agreement on behalf of the City of Lodi.
Dated: June 9, 1998
I hereby certify that Resolution No. 98-91 was passed and adopted by the Lodi
City Council in a special meeting held June 9, 1998 by the following vote:
AYES: I COUNCIL MEMBERS — Johnson, Land, Pennino and Sieglock_(Mayor)
NOES: COUNCIL MEMBERS - None
ABSENT:. COUNCIL MEMBERS - Mann
ABSTAIN: COUNCIL MEMBERS - None
A-)A*7�
E M. REIMCHE
City Clerk
98-91