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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 08/19/2008 - ITEMS RELATING TO CONTRACTS WITH PLATTE RIVER POWE ITEM NUMBER: 20 A-B AGENDA ITEM SUMMARY DATE: August 19, 2008 FORT COLLINS CITY COUNCIL STAFF: Steve Catanach Brian Janonis SUBJECT Items Relating to Contracts with Platte River Power Authority. RECOMMENDATION Staff recommends adoption of these Ordinances on First Reading. EXECUTIVE SUMMARY A. First Reading of Ordinance No. 099, 2008,Authorizing an Amended and Restated Organic Contract for Platte River Power Authority. B. First Reading of Ordinance No. 100,2008,Authorizing an Amended and Restated Contract With Platte River Power Authority for the Supply of Electric Power and Energy. The Organic Contract between PRPA and member cities of Estes Park,Fort Collins,Longmont and Loveland was originally signed in 1975 and last amended in 1998. A change to the Organic Contract requires the approval of all four member municipalities. The proposed changes add renewable resources as a type of resource PRPA will develop and adds a requirement that PRPA will develop products and services in support of efficiency improvements. The expiration dates of the appointed Board of Directors are also made current. Changes also allow the Directors to participate in PRPA Board meetings by teleconference. Also,the updates to the Organic Contract provide the PRPA Board with the authority to appoint an interim PRPA General Manager if necessary. The contract term will be extended from 2040 to 2050. In addition, staff proposes changes to update the Contract for the Supply of Electric Power and Energy which include amending it to add terms currently contained in a Transmission Facilities Agreement. Changes to the Organic Contract call for termination of the Transmission Facilities Agreement. BACKGROUND Organic Contract In June1975, the municipalities of Fort Collins, Longmont, Loveland and Estes Park established Platte River Power Authority to develop both energy resources for the production of electrical energy and transmission infrastructure to deliver electric energy to the four member municipalities. August 19, 2008 -2- Item No. 20 A-B The Amended and Restated Organic Contract Establishing Platte River Power Authority as a Separate Governmental Entity dated March 31, 1980 defined the roles of each of the municipalities within the organizational structure of PRPA, defined membership on the board of directors, and established the by-laws within which the board operates. In July 1998, the Organic Contract was amended to allow PRPA to provide additional functions, services or facilities to any combination of two or more of the member municipalities. An example of an expanded service is PRPA's provision and management of the Banner Customer Information System used by both Longmont and the City of Fort Collins. The modification also allowed PRPA to enter into telecommunication activities, which it continues to manage for the City. The amendments that staff and PRPA are presenting to Council in the Amended and Restated Organic Contract Establishing Platte River Power Authority as a Separate Governmental Entity(the "Updated Organic Contract")add to the services that PRPA may provide to Fort Collins by noting that PRPA will assist Fort Collins in reaching its renewable energy requirements. Additionally, language has been added which specifically details that PRPA will provide services and products that improve the efficiency of generation,transmission and use of electrical energy. The proposed changes also bring current the expiration dates of the terms of the PRPA appointed Directors. Those dates are as follows: December 31, Ol l for Estes Park, December 31, 2008 for Fort Collins, December 31,2010 for Longmont and 9ecernber 31,2009 for Longmont. Additional changes allow Directors to participate in board meetings via teleconferencing. Also, another change provides authority to the Board to appoint an interim PRPA General Manager if and when a vacancy exists in that office instead of automatically designating the chairman of the PRPA Board. The Updated Organic Contract also extends the term of the Contract from an end date of 2040 to 2050. Amended Contract for the Supply of Electric Power and Energy Fort Collins and PRPA are proposing an Amended Contract for the Supply of Electric Power and Energy(the"Updated Supply Contract"). The Transmission Facilities Agreement reached between PRPA and Fort Collins dated February 22, 1980 is terminated with the execution of the Updated Supply Contract and some of its terms are incorporated into the Updated Supply Contract while others are addressed in an Appendix B to the Updated Supply Contract. The Updated Supply Contract between the City of Fort Collins and PRPA requires PRPA to sell and deliver and Fort Collins to purchase and receive all electrical energy which Fort Collins requires as did past versions of the Contract for the Supply of Electric Power and Energy. The Updated Supply Contract defines the roles and responsibilities of each of the entities with respect to providing electric energy, the disposition of excess energy, the responsibility to maintain adequate rates, and required compliance with Western Area Power Administration requirements for the purchase of federally generated power. The Updated Supply Contract addresses the amount of generation the City can develop for its own use. To insure the strength of PRPA's bond rating (AA), the cities designated PRPA as the sole provider to all four entities. This limited the amount of generation the cities could develop on their own. Each city was able to keep any generation resources it owned prior to the establishment of PRPA. This allowed Longmont and Loveland to continue to own and operate their small hydro- electric plants. PRPA believes that the extension of the members' limit to 1%of peak demand will be recognized as having minimal affect on the total capacity of PRPA and,as a result,no impact to August 19, 2008 -3- Item No. 20 A-B PRPA bond holders. The clarification, though, will have a very positive effect on the City. Fort Collins will have the authority to develop up to 3 megawatts of generation. Three megawatts is enough to power approximately 1,000 to 1200 homes. Depending on the resource developed,three megawatts of generation could reduce carbon dioxide emissions by 7,000 to 19,000 tons per year. Fort Collins and PRPA jointly occupy all of the substations serving the City. The proposed changes clarify that each Party has license to occupy any substation where the parties jointly use facilities. The language of the Updated Energy Supply Contract clarifies the planning requirements and the timelines needed to ensure that adequate time is given for the siting,design and construction of new transmission and substation facilities. For example,it reduces from four years to two years the prior notification the City must give PRPA of the need for a new substation if no new transmission is required. If new transmission is required the City must give PRPA four years notification. The Updated Supply Contract term is also extended from 2040 to 2050. Appendix B to the Updated Energy Supply Contract specifies the responsibilities of each entity as either the owner or joint user of a facility. The responsibilities for site work, foundation construction, operation and maintenance tasks are defined in Appendix B. PRPA purchases energy from the Western Area Power Administration (WAPA) on behalf of the Cities. The WAPA General Power Contract Provisions have been added as an exhibit to the Updated Supply Contract. The amendments to both agreements provide additional flexibility to both PRPA and the City in addressing the request by Governor Ritter and the requirement established by City Council to reduce the City's carbon emissions by 20% below 2005 levels by 2020 and 80% below 2005 levels by 2050. The development or acquisition of additional renewable resources, along with the implementation of energy efficiency programs and services for PRPA and the City's ability to develop generation resources,renewable resources for its own use,provide both PRPA and the City new avenues towards this goal. Additionally, the amendments provide clarity to the roles and responsibilities of each entity. ORDINANCE NO. 099, 2008 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING AN AMENDED AND RESTATED ORGANIC CONTRACT FOR PLATTE RIVER POWER AUTHORITY WHEREAS,the City is one of four member municipalities that have entered into an organic contract establishing Platte River Power Authority ("Platte River"); and WHEREAS, the first such contract was entered into in 1975, and the contract was last amended by the execution of an"Amended and Restated Organic Contract Establishing Platte River Power Authority as a Separate Governmental Entity" dated July 1, 1998 (the "Existing Organic Contract'), with a termination date of December 31, 2040; and WHEREAS, the parties have recently negotiated a proposed, updated agreement entitled "Amended and Restated Organic Contract Establishing Platte River Power Authority as a Separate Governmental Entity" (the "Updated Organic Contract'), a copy of which is on file with the City Clerk,dated August 13,2008,the purpose of which is to replace and supersede the Existing Organic Contract; and WHEREAS, the Updated Organic Contract, if approved by the parties, would amend the provisions of the Existing Organic Contract so as to: reflect the current manner in which the parties conduct business; expand the kinds of services that Platte River will provide to Fort Collins; and obligate Platte River to assist Fort Collins in reaching its renewable energy requirements to develop products and services to improve the efficiency of generation, transmission and use of electrical energy; bring current the dates of the terms of the appointed utilities directors of the member municipalities and allow such directors to attend and fully participate in Platte River meetings by electronic teleconference; and extend the termination date of the Existing Organic Contract by ten years to December 31, 2050. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby finds that it is in the best interests of the City to enter into the Updated Organic Contract, which agreement will supersede the Existing Organic Contract. Section 2. That the Updated Organic Contract in substantially the form on file in the office of the City Clerk and dated August 13, 2008, is hereby approved, and the Mayor is hereby authorized and directed to execute the same on behalf of the City. Introduced, considered favorably on first reading, and ordered published this 19th day of August,A.D. 2008, and to be presented for final passage on the 2nd day of September, A.D. 2008. Mayor ATTEST: City Clerk Passed and adopted on final reading this 2nd day of September, A.D. 2008. Mayor ATTEST: City Clerk ORDINANCE NO. 100, 2008 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING AN AMENDED AND RESTATED CONTRACT WITH PLATTE RIVER POWER AUTHORITY FOR THE SUPPLY OF ELECTRIC POWER AND ENERGY WHEREAS, on February 22, 1980, the City and Platte River Power Authority ("Platte River") also entered into a "Transmission Facilities Agreement" (the "Facilities Agreement") to establish the parties' rights and obligations related to their respective electric system facilities and to provide for shared use or lease of certain specified facilities; and WHEREAS, on March 31, 1980, the City also entered into a"Contract for the Supply of Electric Power and Energy" (the "Existing Supply Contract") with Platte River Power Authority which establishes the terms and conditions of the City's purchase of electric power and energy from Platte River; and WHEREAS, on July 21, 1998, the City Council approved an amendment to the Existing Supply Contract extending its termination date from December 31,2020 to December 31,2040;and WHEREAS, the City and Platte River have recently negotiated an updated "Amended and Restated Contract for the Supply of Electric Power and Energy" (the"Updated Supply Contract"), a copy of which is on file with the City Clerk, dated August 13, 2008, the purpose of which is to replace and supersede the Facilities Agreement and the Existing Supply Contract; and WHEREAS,under the proposed Updated Supply Contract,Platte River will continue to sell and deliver to the City, and the City will continue to purchase and receive from Platte River, all electric power and energy that the City requires for the operation of its municipal electric system; however, the City may also generate power and energy for its own use from any new generation resource(s) owned and operated by the City provided that the City's total rated capacity does not exceed 1,000 kilowatts or one percent of the peak load of the City, whichever is greater; and WHEREAS, the proposed Updated Supply Contract also: states that each party will be granted a revocable license to occupy the property of the other party as necessary to deliver and receive power and energy under the Updated Supply Contract in accordance with specified terms regarding the use of certain facilities; allocates costs and maintenance responsibility for certain facilities; outlines the process for the parties to engage in system planning; acknowledges Platte River's contract with the Western Area Power Administration("WAPA");requires,as a condition of the purchase of federally generated power, that the City comply with WAPA's "General Power Contract Provisions;" and amends the term of the Existing Supply Contract so as to extend its termination date by ten years to December 31, 2050. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the Council hereby finds that it is in the best interests of the City to replace and supercede the Facilities Agreement and Existing Supply Contract with the Updated Supply Contract. Section 2. That the Updated Supply Contract is hereby approved, and the Mayor is hereby authorized and directed to execute the same on behalf of the City in substantially the form on file in the office of the City Clerk and dated August 13, 2008. Introduced, considered favorably on first reading, and ordered published this 19th day of August,A.D. 2008, and to be presented for final passage on the 2nd day of September,A.D. 2008. Mayor ATTEST: City Clerk Passed and adopted on final reading on the 2nd day of September, A.D. 2008. Mayor ATTEST: City Clerk