HomeMy WebLinkAbout10 Hydroelectric Project Agenda Item #
DONNERPublic Utility District
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Memorandum
To: Board of Directors
From: Stephen Hollabaugh
Date: March 28, 2003
Date of Board Meeting: April 1, 2003
Subject: Poe Hydroelectric Project—Approval of NCPA Member Agreement
1. WHY THIS MATTER IS BEFORE THE BOARD
This item concerns the approval of a member agreement with NCPA concerning
the Poe Hydroelectric Project. The Board is asked to approve this second
phase member agreement.
2. HISTORY
The Poe Hydroelectric Project is located on the North Fork Feather River near
Pulga CA. Attached is a project description and timeline prepared by NCPA.
The Poe Project is up for re-licensing. PG&E missed the re-licensing deadline
and by law cannot be granted preference status for re-licensing. PG&E sought to
backdate the Poe license date with FERC. NCPA intervened and asked FERC
to reject PG&E's motion and FERC denied PG&E's request an opens up
competitive license proceedings. NCPA then appealed FERC's Order to grant
preference to PG&E in the 9t" Circuit Court.
NCPA, on behalf of its Project Members, shall prosecute a competing license
application for the Poe Project, alone or in conjunction with others. Currently the
City of Fremont and Butte County have also filed and are working in conjunction
with NCPA. If NCPA is successful is acquiring the Poe Project, Truckee Donner
Public Utility District will have a participation of 2.0216% as listed in the member
agreement.
The Poe Project is projected to cost about$20.00/MWh (or 2.0 cents per kwh)
after paying PG&E for the value of the project. Jim Feider (Utility Director of
Redding) was once quoted "you can never have enough two cent power'.
3. NEW INFORMATION
The NCPA Commission of which Jim Maass is our commissioner has agreed on
the project percentages for each member that is consistent with how NCPA has
allocated project percentages in the past. From that, this member agreement
has been prepared for each member's Board to approve. Truckee Donner Public
Utility District percentage of 2.0216% of $750,000 would be $15,162. 1 believe
that this is a small amount to pay for the possible opportunity to acquire 2 to 3
MW of generation for our District.
4. RECOMMENDATION
I recommend that the board approve the (Second Phase) Member Agreement
for Financing and Plannig and Development Activities of Hydroelectric Project
Number Two , The Poe Hydroelectric Project.
POE HYDROELECTRIC PROJECT
Project Location: North Fork Feather River -near Pulga, CA.
Installed Capacity: 142.83 MW
Average Generation: 558 GWH (1999—2001)
Normal Max. Flow: 2310 cfs
Plant Type: Run of River—limited storage
FERC License Issued: Sept. 1953
License Expiration: Sept. 2003
PG&E Book Value: $17 million
PG&E's estimate of the cost
of power: $13.6/MWh
NCPA's estimate of the cost: $20.0/MWh
Re-license Application
filing date by PG&E: Sept. 30, 2001
Re-license Application
filed by PG&E: October 2,2001 (late—2 days)
PG&E sought to backdate
Poe License date with FERC: October 12,2001
NCPA Intervened-
asked FERC to reject
PG&E's motion: November 19, 2001
FERC denied PG&E' request,
and opens up competitive
license proceedings: January 16, 2002
NCPA Appealed FERC's Order
to grant preference to PG&E in
the 9th Circuit Court: June 2002
Revised FERC Application
filing date: January 2004
MOU execution date
(expected): March 2003
Initial Consultation Package
to be mailed to the Resource
agencies, and public: March 2003
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NCPA, Fremont and Butte County have agreed to file a joint application.
NCPA to have 50%, and Fremont and Butte each to have 25% shares in the Project.
Total cost of licensing is expected to be around $1.25 million of which NCPA's share
would be$625,000.
Decision by the 9`h Circuit Court is not expected until late 2003, however, we can not
delay filing of the license application.
Camp, Dresser & McKee(CDM) will act as the parties licensing engineer.
NCPA has approved a budget of$750,000 (FY2003-2004) for new generation
development and the Commission has authorized the staff to utilize the funds to
support the licensing activities.
MEMBER AGREEMENT (SECOND PHASE) FOR
FINANCING OF PLANNING AND DEVELOPMENT ACTIVITIES
OF
HYDROELECTRIC PROJECT NUMBER TWO
THE POE HYDROELECTRIC PROJECT
This Agreement, by and between Northern California Power Agency, a
joint powers agency of the State of California, hereinafter called `NCPA" and its
members who execute this Agreement, hereinafter called "Project Members,"
WITNESSETH:
WHEREAS, NCPA and the Project Members are interested in developing
additional power generation resources for the benefit of the residential,
commercial, and industrial customers of the Project Members; and
WHEREAS, NCPA and the Project Members have evaluated the potential
for obtaining a license for the Poe Hydroelectric Project (Project) from the Federal
Energy Regulatory Commission (FERC) through a competing license application
in competition with the license application of Pacific Gas and Electric Company;
and
WHEREAS, in furtherance of the Project, NCPA has filed with FERC its
Notice of Intent to file a timely license application under the Federal Power Act;
and
WHEREAS, the City of Fremont has expressed an interest in joining with
NCPA in a single competing license application, and both the City of Fremont
and NCPA wish to seek authorization to make the County of Butte a co-licensee
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with them, if NCPA and the City of Fremont, or either of them, are issued a
license for the Poe Project; and
WHEREAS, the City of Fremont and the County of Butte wish to share the
costs and benefits with NCPA of pursuing and securing a license for the Poe
Project and to have NCPA provide project management; and
WHEREAS, the September 22, 1993 Facilities Agreement provides for a
second stage of project planning and design pursuant to a Second Phase
Agreement, as had been provided in the Member Service Agreement; and
WHEREAS, the second phase consists of all work performed after one or
more participants has signed an agreement with NCPA for project study, design,
or development before a Third Phase Agreement becomes effective for the
financing, construction, operation, maintenance and rights to the output of an
NCPA project; and
WHEREAS, to advance the investigation of the Project and further
provide working capital for the study, design, and development of the Project, to
include changes and improvements to the Project to better enhance the public
interest factors under the Federal Power Act, and the licensing and permitting of
the Project, as well as managing pursuit of the Project pursuant to a cost-sharing
agreement with other parties, and litigating the defense of NCPA's competing
license position, NCPA and the Project Members are entering into this Second
Phase Agreement;
NOW THEREFORE, the parties hereto agree as follows:
Section 1. Obligations Formalized - Percentage Participation - Collections
and Aceountin . NCPA, on behalf of itself and the Project Members, shall
prosecute a competing license application for the Project, alone or in conjunction
with others, as provided in this Agreement. Each Project Member agrees to
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continue to pay or advance to NCPA, from its electric department net revenues
(after the payment of operating expenses) only, its percentage participation share
of the costs authorized by Project Members in accordance with this Agreement in
connection with the Project prior to the issuance of a license by the FERC to
NCPA or NCPA and Fremont, or the first issuance of Project bonds. Each Project
Member further agrees that it will fix the rates and charges for services provided
by its electric department so that it will at all times have sufficient money in its
electric department revenue funds to meet this obligation. The percentage
participation of each Project Member is initially established as follows:
Alameda 5.3218
Biggs 0.2570
Gridley 0.5229
Healdsburg 1.1915
Lodi 7.5738
Lompoc 1.9351
Palo Alto 14.2520
Plumas-Sierra R.E.C. 1.8306
Port of Oakland 0.6889
Redding 12.8804
Roseville 16.0598
Santa Clara 33.5810
Truckee Donner Public Utility District 2.0216
Ukiah 1.8835
100.0000%
The percentage participation share of each Project Member shall be
revised proportionately if less than all NCPA members become Project Members
on the effective date hereof, and thereafter if and when any Project Member
withdraws in whole or in part. Any Project Member wholly withdrawing shall
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thereupon cease to be a Project Member for all purposes except for purposes of
Sections 4 and 7(c).
After the expenditure of the $750,000 heretofore appropriated for licensing
activities in the Annual Budget for Fiscal Year 2003-2004, NCPA shall demand
from each Project Member its share of its agreed to financial commitment on a
concurrent basis. Any part of such demand by NCPA which remains unpaid for
sixty days after its billing date shall bear interest from such sixtieth day at the
prime rate of the Bank of America then in effect computed on a daily basis plus
two percent until paid. Interest so earned shall not change any Project Member's
participation percentage, and shall become a part of the working capital account
defined below.
The funds advanced according to this Section 1 shall be used to establish a
working capital account when approved by the Project Members, and in an
amount and subject to any limitations approved by the Project Members.
Nothing in this Section I shall be construed to prohibit a Project Member
from satisfying its financial commitments from unencumbered funds otherwise
on deposit at NCPA.
Section 2. Limited Rights to Participate in Final Implementation and
Financing.
(a) Discretion - Disposition of Power. In consideration of the
payments provided for in Section 1 hereof, each Project Member who has not
wholly withdrawn, or who is not then in default, shall have an exclusive option
to enter into a Third Phase Agreement for all or a part of its participation
percentage of all power made available to NCPA from the Project.
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(b) Increase in Purchases. A Project Member can, at the time of
entering into the Third Phase Agreement, purchase more than its participation
percentage of Project power if additional power is available by reason of the non-
participation in the Third Phase Agreement by one or more Project Members.
Such excess power shall be reallocated among those who do participate in the
same proportion as their shares bear to the total shares of those who do
participate. If Project Members so entitled do not wish to contract for all the
excess power, such remaining excess shall be disposed of as agreed to by the
Project Members.
(c) Exercise and Effect of Taking Less Than Full Entitlement.
The Project Members shall establish the terms and provisions of an agreement to
purchase power of the Project prior to the expiration of this Agreement, to be
known as the Third Phase Agreement. They shall also establish the date by
which the Third Phase Agreement must be executed by Project Members and
delivered to NCPA if they are to participate in the purchase of power from the
Project. Failure to execute the Third Phase Agreement for any of its total
participation share and to deliver it to NCPA by that date or 30 days after Project
Member receipt, whichever is later, will be an irrevocable decision on the part of
that Project Member not to purchase any such power or otherwise participate in
the Project. Execution and delivery of the Third Phase Agreement for less than its
original total participation percentage, and delivery of that Project Member
executed agreement to NCPA by the date established or 30 days after Project
Member's receipt, whichever is later, will likewise be an irrevocable decision on
the part of that Project Member not to purchase any such power in excess of the
share set forth in its delivered agreement. Supplemental agreements or other
agreements will be entered into for the excess or surplus power. The procedure
for processing supplemental agreements shall be consistent with those
prescribed immediately above in this subsection (c) for making purchases of
power. Failure to return an executed agreement for any additional power within
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the prescribed period is an irrevocable decision not to purchase such additional
power. The Project Member making any herein defined irrevocable decision not
to purchase all of its original share of power shall be foreclosed from receiving,
and shall be relieved of further burdens related to, power which it has declined
to purchase or further expense relative to the future development of the Project.
Section 3. Member Direction and Review. NCPA shall comply with all
lawful directions of the Project Members with respect to this Agreement, while
not stayed or nullified, to the fullest extent authorized by law. Actions of Project
Members, including giving above directions to NCPA, will be taken only at
meetings of authorized representatives of Project Members duly called and held
pursuant to the Ralph M. Brown Act. Ordinarily, voting by representatives of
Project Members will be on a one member/one vote basis, with a majority vote
required for action; however, upon request of a Project Member representative,
the voting on an issue will be by percentage participation with a 65% or more
favorable vote necessary to carry the action.
Any decision related to the Project taken by the favorable vote of
representation of Project Members holding less than 65% of percentage
participation can be reviewed and revised if a Project Member holding any
participation percentage gives Notice of Intention to seek such review and
revision to each other Project Member within 48 hours after receiving written
notice of such action. If such Notice of Intention is so given, any action taken
specified in the Notice of Intention shall be nullified, unless the NCPA
Commissioners of Project Members holding at least 65% of the total participation
percentage then in effect vote in favor thereof at a regular or specially called
meeting of Project Members. If the Notice of Intention concerned a failure to act,
such action shall nevertheless be taken if NCPA Commissioners of Project
Members holding at least 65% of the total Participation Percentage vote in favor
thereof at a regular or specially called meeting of Project Members.
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_ _ ..
Section 4. Conditional Repayment to Members. All payments and
advances made heretofore, and those hereafter made pursuant to Section 1,
excluding interest paid on delinquent payments, shall be repaid to each of the
Project Members making such payments and advances pursuant to this
Agreement out of the proceeds of the first issuance of the Project bonds or as and
when there are sufficient funds available from the partial sale of bonds. Such
reimbursements shall be made within 60 days following the sale of any Project
bonds. If NCPA is not successful in financing the Project, there shall be no
reimbursement except out of unused Project funds along with all other receipts
to which NCPA is entitled in connection with the Project.
Section 5. Term. This Agreement shall take effect on April 24, 2003, or
whenever executed by NCPA members holding 85% of the initial percentage
participation, whichever is later, and it shall not take effect at all if not in effect
by June 30, 2003. This Agreement shall be superseded by the Third Phase
Agreement into which Project Members shall enter any time prior to the issuance
of the Project bonds, pursuant to Section 2, except that Section 4 shall remain in
effect. Changes in this provision, except as to Section 4, shall be in accordance
with Section 3 hereof.
Section 6. Financial Commitments. Each Project Member agrees to a total
financial commitment for its respective percentage participation of a total sum,
including payments and advances heretofore made, up to $2 million in costs
allocable to NCPA as authorized and approved by Project Members.
From time to time as needs arise, representatives of Project Members may,
by a favorable vote as provided in Section 3, authorize an increased financial
commitment above $2 million which can be shown to support the completion of
the Project, but only after 30 days' written notice of such proposed increase has
been given to all Project Members.
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Section 7. Assignment.
(a) Notwithstanding any other provision of this Agreement, if
NCPA shall require funds to carry out the terms of this Agreement prior to the
receipt of adequate funds from the Project Members, it may assign its right to
receive any payments under this Agreement to a bank or other financial
institution to secure a borrowing by NCPA or in exchange for an amount of
money equal to the then present value of those payments, as determined by
NCPA. Project Members hereby consent to such assignment, and upon
notification in writing by NCPA, each such Project Member will make each such
assigned payment directly to the assignee. The assignee shall not be liable to
Project Members for the amounts so assigned, and NCPA shall use the proceeds
of such borrowing or assignment for the purposes provided into this Agreement.
If an assignment is made tinder this section, then upon the failure of any
Project Member to make any payment so assigned, the percentage participant
share of each non-defaulting Project Member shall be automatically increased for
the term of the assignment pro rata with that of the other non-defaulting Project
Members, and the defaulting Project Member's share shall (but only for purposes
of computing the respective percentage participation shares of the non-
defaulting Project Members) be reduced correspondingly; provided that the sum
of such increase for any non-defaulting Project Member shall not exceed without
written consent of the non-defaulting Project Members an accumulated
maximum of 25% of the non-defaulting Project Member's original percentage
participation share.
If the Project Member shall fail or refuse to pay any amounts due to
NCPA, the fact that other Project Members shall increase their obligations to
make such payments shall not relieve the defaulting Project Member of its
liability for such payments and any Project Member increasing such obligation
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shall have a right of recovery from the defaulting Project Member to the extent of
such respective increase.
In addition, NCPA may terminate the provisions of this Agreement
insofar as they entitle the defaulting Project Member to its percentage
participation share of Project output.
(b) For the purposes of such assignment, NCPA may fix and
schedule the total amount payable by each Project Member into any number of
semi-annual payments, not less than four nor to exceed ten, and the dates on
which such payments will be made, and each Project Member agrees to abide by
such schedule. NCPA shall provide a reasonable opportunity for any Project
Member to prepay its total obligation.
(c) After such an assignment is made, no Project Member may
avoid the obligation so assigned by withdrawal pursuant to Section 7 hereof or
otherwise.
Section 8. Withdrawal From Further Participation. If at any time
following the execution of this Agreement, there is an increase in the financial
commitment beyond that contemplated in Section 6, Project Members may
partially withdraw, i.e., from participation in the increase, or may withdraw
wholly from the Project. Any withdrawal shall be subject to honoring any
commitments made by them or on their behalf pursuant to authorization of this
Agreement. To withdraw, such Project Members shall give NCPA written notice
of such withdrawal, in part or in whole, within thirty (30) days of the receipt of
the notice by them of the increase.
Section 9. Voting Rights and Duration. A Project Member is participating
for purposes of Section 3 percentage voting until it completely withdraws, but a
partial withdrawal will result in a reduction in its percentage participation share
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to the ratio of its payments after such withdrawal to the total amount of
payments by all Project Members after such withdrawal. When the Third Phase
Agreement is executed, or revised, revised participation percentages for voting
shall be established by dividing the amount of power agreed to be purchased by
each Project Member by the total amount of power to be purchased by all Project
Members except that the 65% of percentage participation specified in Sections 3
and 9 shall be reduced by the amount that the percentage participation of any
Project Member shall exceed 35%,but such 65% shall not be reduced below 50%.
Section 10. Quorum Defined. The presence of either a majority of the
Project Members, or of Project Members then having a combined participation
percentage of at least 65%, shall constitute a quorum for the purpose of action.
IN WITNESS WHEREOF, each Project Member has executed this
Agreement with the approval of its governing body, and NCPA has authorized
this Agreement in accordance with the authorization of its Commission.
NORTHERN CALIFORNIA CITY OF ALAMEDA
POWER AGENCY
By: By:
By: By:
CITY OF BIGGS CITY OF GRIDLEY
By: By:
By: By:
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CITY OF HEALDSBURG CITY OF LODI
`s
B By y:
x
By: By
CITY OF LOMPOC CITY OF PALO ALTO
3
B
By:
y:
s
BY: y:
PLUMAS—SIERRA RURAL CITY OF REDDING
ELECTRIC COOPERATIVE
By:
By:
By:
By:
CITY OF ROSEVILLE CITY OF SANTA CLARA
By:
By:
By:
By:
TRUCKEE DONNER PUBLIC CITY OF UKIAH
UTILITY DISTRICT
By:
By:
By:
By:
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