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WORK ORDER FORM
PURSUANT TO AN AGREEMENT BETWEEN
THE CITY OF FORT COLLINS
AND
R. W. Beck, Inc.
DATED: September 21, 2011
Work Order Number: 2
Purchase Order Number:
Project Title: Strategic Financial Services — Task Authorization Number 2
Commencement Date: October 1, 2011
Completion Date: February 28, 2012
Maximum Fee: (time and reimbursable direct costs): $35,000
Project Description: Provide technical and financial planning assistance to support the Utility with
developing cost of service rates/charges and agreements for the potential sale of excess water treatment
and transmission capacity to special large -use customers.
City of Fort Collins and R. W. Beck agree that this Task Authorization will be governed by the
terms and conditions of the Professional Services Agreement effective November 29, 2010.
Additionally, this Task Authorization will be conducted in consideration of the terms and
conditions of the Work Order Form, pursuant to an agreement between the City of Fort Collins
and R. W. Beck, Inc, dated December 28, 2010.
Scope of Work
Fort Collins Utilities has recently completed a Cost of Service Analysis to define a rate structure
for providing water service. The rate structure is designed to equitably recover the cost of
providing water service primarily for typical residential and commercial customers within the
service area. However, Utilities also provides unique water service to certain large -use
customers located outside of the normal service area through special agreements and rates.
Utilities is contemplating future additional regional special agreements and is interested in: 1)
reviewing the current rate structure to ensure adequate cost recovery for providing service to
potential special large -use customers, and 2) defining a verifiable strategy for sustaining such
long-term arrangements through mutual partnership.
The principal objective of this project is to assist Utilities with validating, or modifying as
necessary, special rates to be used for the potential sale or lease of excess water treatment and
transmission capacity to special large -use customers. As further defined under this scope, our
approach involves a focused evaluation of existing water rates/agreements to understand the
current rate structure philosophy and policies, providing an opinion (through validation or
recommended modifications) regarding special water service rates to unique large -use
customers, developing a general strategy for long-term regional partnerships under future
conditions and developing or refining options for excess capacity sales/use agreement templates
The following is a listing of the specific tasks to be performed.
Task 1: Data Request
Immediately upon receiving authorization to proceed from Utilities, we will prepare and submit a
comprehensive data request listing the information needed to evaluate the current cost of service
and rate design analysis for the water utility. As R. W. Beck has been involved with Utilities in
the ratemaking philosophy and policy objectives and is already in possession of some relevant
information, our request will focus on documents specifically pertaining to the special
rates/charges and agreements. We will review the information and documents provided in
response to the data request and work with Utilities' staff and management to identify additional
information or assumptions necessary to successfully analyze new special water rates.
Task 2: Project Kick-off and Strategy Meetings
Following our receipt of the initial data from Utilities, we will schedule a project kick-off
meeting with the staff/management assigned to this project to review data and discuss strategy
and policy with respect to special water utility rates. During the kick-off meeting it is envisioned
that discussions will address findings of the focused data review, existing rates/agreements,
anticipated costs/expenses, contributing plant/facilities, options for implementation and strategies
for communication/negotiation.
During the course of the project, we will participate in one supplemental face-to-face meeting or
conference call to transfer knowledge among representatives of Utilities and the R. W. Beck
team, to share information, to coordinate activities and to address/resolve any issues that may
arise.
Task 3: Cost Analysis/Rate Review
The purpose of this task is to understand Utilities' unbundled and marginal cost of service
including capacity charges, review the Cost of Service Analysis and the basis thereof, and
provide an opinion as to defensible rate options to equitably recover the cost of providing excess
treatment and/or transmission capacity to special large -use customers, specifically with regards
to Tri-Districts (a partnership consisting of Fort Collins -Loveland Water District, East Larimer
County Water District, and North Weld County Water District). This analysis will incorporate
capital and/or recurring requirements, as defined by Utilities, necessary to provide the anticipated
level of service to such as pipeline connections/cross-ties, sampling/reporting and emergency
storage.
Based on the information gathered from the data request, we anticipate reviewing and
commenting on the proposed plant investment fee (PIF) and rates under two to three rate
structure options. We also intend to estimate net revenue potential based on review of
anticipated capital infrastructure requirements (and associated cost) in addition to recurring
expenses and revenues. Based on input received from Utilities' staff and management, various
financing options will be considered and evaluated as part of the PIF analysis. At this point our
cost estimate has assumed that we will be able to work within the current model architecture.
As part of PIF and rates review, we will work with Utilities to evaluate, prioritize and provide
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input on rate structure options such as flat/constant, "tiered", seasonal, or variable peak pricing.
These evaluations and recommendations will form the basis for developing a strategy for long-
term regional partnerships under future conditions and developing or refining options for excess
capacity sales agreement templates.
For a point of comparison, we will also review Tri-Districts systems to develop an estimate of
capital and recurring expenditures that Tri-Districts would incur to add capacity within their
existing water system in order to meet future service demand projections. This will be used to
form an opinion of anticipated future Tri-Districts additional revenue requirement in the absence.
of an excess treatment and/or transmission capacity supply agreement with Utilities..
Task 4: Develop a Long -Term Regional Partnership Strategy
The long-term success of a regional agreement to sell excess treatment or transmission capacity
will ultimately rely on a well -developed strategy that promotes fairness, trust and transparency.
R. W. Beck will work with Utilities' staff to develop and define a general implementation
strategy to address the plan for communication/collaboration, assigning authority/responsibility,
risk mitigation, contracting vehicles, and other relevant policies. Lynn Adams of Levidy Adams
Consulting will provide assistance to ensure the regional partnership strategy is aligned with the
broader Utilities philosophy and priorities. To the extent possible, the partnership strategy will
consider and address City-wide key initiatives such as conservation and energy efficiency.
We anticipate participation in one face-to-face meeting with Utilities staff and management to
discuss considerations, limitations and implications of a long-term regional partnership strategy.
Task 5: Develop Excess Capacity Agreement Templates
Based on the findings of Task 3 and Task 4, R. W. Beck will provide assistance to Utilities in the
development of up to two excess capacity agreement templates. Such templates are assumed to
be in an intergovernmental agreement format. We will design the templates to be consistent with
existing agreements to the extent possible.
It is anticipated that agreement templates would potentially be required for: 1) the sale of excess
treatment and/or transmission capacity, and/or 2) the partial use or operation of treatment
facilities. The agreement templates will define specific details of the partnership including terms
and conditions, charges/rates, capital cost recovery procedures, management/staff responsibilities
and other policy/governance considerations such as water quality expectations, conservation
goals, dispute resolution and emergency/drought procedures.
Task 6: Letter Report
A draft letter report will be prepared that details the results of the cost of service rate/charge
evaluation, regional partnership strategy and agreement template analyses. The letter report will
be submitted to staff and management for review prior to presentation to the Board. Following
our receipt of review comments from staff the draft letter report will be updated and finalized.
An electronic copy of the letter report will be provided at the conclusion of the project.
Up to two members of the project team will prepare and make one presentation of our study
results to Utilities staff and management. It has been assumed that we will not be preparing
and/or delivering additional presentations (i.e. for the Water Board/Council) but would be
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available to do so upon request on a time and materials basis.
Deliverables
Our initial scope and cost estimate, as detailed above, is based on the following deliverables:
■ Three meetings, includes agenda and materials preparation, facilitation and documentation; attended by
two members of the R. W. Beck team
■ Preparation and delivery of one presentation to staff and management
■ Draft and final report to present findings of the cost analysis/rate review, regional partnership strategy and
agreement templates.
In order to minimize costs, all data provided by the City and Fort Collins Utilities will be relied
on and utilized in the preparation of studies; such data and information will not be independently
verified by the firm for accuracy and/or completeness.
R. W. Beck will provide three copies of final reports together with an electronic copy.
Schedule for Completion
The project is expected to begin work in October 2011 and be completed by February 28, 2012.
Cost Estimate
R. W. Beck proposes to conduct this scope on a time and materials basis with a budget not to
exceed $35,000 including expenses. To the extent that the scope varies from our estimate as
identified and highlighted in our above scope of work we will promptly notify the client with
respect the additional services required and the associated costs.
Services under this proposal will be provided on a time and materials basis. Non -labor expenses
are billed at -cost with no markup, and may include costs for items such as travel, printing, and
telecommunications. Sub -consultants will be billed at a cost plus 10 percent mark-up to cover
R. W. Beck's administrative costs. En -route travel time incurred for the benefit of the project
shall be considered as billable labor hours.
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Professional agrees to perform the services identified above and on the attached forms in
accordance with the terms and conditions contained herein and in the Professional Services
Agreement between the parties. In the event of a conflict between or ambiguity in the terms of
the Professional Services Agreement and this work order (including the attached fors) the
Professional Services Agreement shall control.
The attached fors consisting of Exhibits , _, _, consisting of _ U pages are
hereby accepted and incorporated herein, by this reference, and Notice to Proceed Is
hereby given.
cc: Purchasing
Professional:
By: C�?7 141
Joseph A. Mancinelli, Vice President
Date: 9/21 /11
City of Fort Collins: -
Submitted by: �ki L a f C 1< Q
Project Manager
Review
r
Approved by:
Utilities General Manager
Date:
Approved by:
Director of Purchasing & Risk Management
(if over $30,000)
Date:
5
Shannon Gallegos
From:
Rita Decourcey
Sent:
Friday, October 14, 2011 2:43 PM
To:
Shannon Gallegos; Lisa Voytko
Cc:
Harriet Davis
Subject:
RE: Work Order for RW Beck/SAIC
Hi Shannon,
Please charge this work order to 502.220000.521040. I have a request into Accounting to
add the object number. I will let you know when that is completed.
Thanks,
Rita
Rita DeCourcey
Financial Analyst
Fort Collins Utilities
970-416-2524
rdecourcey@fcgov.com
-----Original Message -----
From: Shannon Gallegos J
Sent: Friday, October 14, 2011 2:20 PM
To: Lisa Voytko; Rita Decourcey
Cc: Harriet Davis
Subject: Work Order for RW Heck/SAIC
Good Afternoon,
Patty Bigner gave me this work order and said that Lisa or Rita would provide the charge
number. Would you please look this over and provide me with a charge number?
Lisa - Would this be something you would sign in Kevin's absence or do I need to wait for
him to return? Also, will you or would you want to be looking over these invoices or
would Kevin?
Thanks for all of your help.
Have a good weekend everyone!
Shannon
x-2273
-----Original Message -----
From: REC_Xerox7120 [mailto:REC_Xerox7120@fcgov.com]
Sent: Friday, October 14, 2011 1:52 PM
To: Shannon Gallegos
Subject: Scan from REC Xerox7120
1
Shannon Gallegos
From:
Shannon Gallegos
Sent:
Friday, October 14, 2011 2:20 PM
To:
Lisa Voytko; Rita Decourcey
Cc:
Harriet Davis
Subject:
Work Order for RW Beck/SAIC
Attachments: img-X14135202-0001.pdf
t
mg-X14135202-OOC
1.pdf (132 KB...
Good Afternoon,
Patty Bigner gave me this work order and said that Lisa or Rita would provide the charge
number. Would you please look this over and provide me with a charge number?
Lisa - Would this be something you would sign in Kevin's absence or do,I need to wait for
him to return? Also, will you or would you want to be looking over these invoices or
would Kevin?
Thanks for all of your help.
Have a good weekend everyone!
Shannon
x-2273
-----Original Message -----
From: REC_Xerox7120[mailto:REC_Xerox7l20@fcgov.coml
Sent: Friday, October 14, 2011 1:52 PM
To: Shannon Gallegos .
Subject: Scan from REC Xerox7120
1