HomeMy WebLinkAbout12 Stampede Power Plant geneation Agenda Item # 12
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DONNER
Public Utility District
To: Board of Directors
From: Stephen Hollabaugh
Date: March 29, 2007
Subject: Contract with the Western Area Power Administration for purchase of generation from
the Stampede Power Plant.
History:
Truckee Donner PUD has been involved and interested in the Stampede Generation for a long time.
This generation is located on the Little Truckee River approximately eight miles above the confluence
of the Little Truckee and the Truckee River. The dam and reservoir are in Sierra County, California,
about 11 miles northeast of the town of Truckee. The Stampede power plant was completed in 1987
and Western initially allocated the remaining energy (after project use) to Truckee Donner Public
Utility District, a preference entity within the service area of Sierra Pacific, on October25, 1985. Due
to unsuccessful negotiations with Sierra, Truckee Donner was unable to enter into a contract with
Western to take delivery of the energy from the power plant.
Truckee Donner staff has been working with Western to try to take delivery of the energy from
Stampede Generation. Western requested solicitation for eligible customers to provide the same
service which Sierra Pacific Power Company (Sierra) is providing WAPA pursuant to certain Contract
for Energy Exchange Services between Western and Sierra dated April 30, 1994.
A copy of the Contract for Energy Exchange Services together with Western's May 17, 2006 e-mail
solicitation for proposals is attached. The Truckee Donner PUD and the City of Fallon are the only
two Western "preference customers" located in Sierra's control area which are readily able to receive
the electric energy generated from the Stampede Power Plant under said contract.
On June 7, 2006 the Board authorized the submission of a proposal to the Western Area Power
Administration for the purchase of generation from the Stampede Power Plant. (Minute Order
attached). The submission to Western's solicitation to enter a contract with Western to provide the
required services and to, with a proposal that Truckee Donner PUD in coordination with the City of
Fallon, submit a joint (or individually coordinated) proposal to purchase energy in the $30.00 to $35.00
per megawatt hour range by June 9, 2006. (Copy attached)
Also attached as background information of the Stampede Generation Plant is Western's October
2005 Proposed Rate Adjustment Brochure, May 2005. This brochure gives a good background of the
plant and history. The contract between Western and Sierra Pacific Power Company is also attached.
New Information:
Since the submission in June 2006, Truckee Donner PUD and the City of Fallon have been
negotiating with Western concerning the terms of the contract. The parties have finally come close to
a final contract. A copy of draft 9 of the contract is attached. Western, Truckee Donner PUD and the
City of Fallon believe that this is very close to the final version. Western is currently sending the
Page 1 of 4
contract around for final internal review. There may be some minor clerical changes but the contract
but these changes will not substantially change the contract.
Highlights of the contract:
• 4. Effective Date.Term and Termination of contract:
o This Contract shall become effective on July 1, 2007, subject to Western's termination of
Contract 00010 with SPPC, and shall remain in effect through December 31, 2024; subject to
prior termination as otherwise provided for herein.
• 6. Scope:
o The purpose of this Contract is to create a mechanism to provide project use benefit to
Stampede and the project use loads on a first priority basis.
• 7. Delivery Arrangements for Stampede Energy
o Subject to the provisions of this Contract,Western shall provide solely to TDF and TDF shall
accept all energy delivered pursuant to Section 7.2 below. All Stampede Energy shall be
dedicated exclusively to TDF for the defined scope for the term of this Contract. (TDF
represents Truckee Donner and Fallon)
• 10 Value Calculation:
o The calculation to be used in determining the value of Stampede Energy is provided in Exhibit A
attached hereto. The value is based on the current and previous years' monthly running average of
Mid C prices as determined by the Intercontinental Exchange(ICE). (This calculation is outlined
in Exhibit A.)
EXHIBIT A
(Value Calculation)
1.This Exhibit A is to be effective under and as a part of Contract 07-SNR-009XX, shall become effective
upon execution of the Contract; and shall remain in effect until either superseded by another Exhibit A or
termination of the Contract.
2.Stampede Energy is considered non-firm energy. The value of Stampede Energy shall be considered
approximately 75 percent of firm energy.
3.The value of Stampede Energy shall be determined using the monthly average of the current and
previous years' Mid-C price index as determined by the Intercontinental Exchange (ICE). This average
shall be calculated and updated monthly using the most recent published indices in the following
calculation:
Calculation
0.75(Average of the current and previous year month's ICE Mid-C On-Peak average
index price * month's total On-Peak daily Stampede Energy)=Month's On-Peak value
of Stampede Energy
0.75(Average of the current and previous year month's ICE Mid-C Off-Peak average
index price * month's total Off-Peak Stampede Energy)=Month's Off-Peak value of
Stampede Energy
• 11. Stampede Energy Exchange Account:
o Truckee shall establish and maintain the SEEA,as provided in this Section. Using the value
calculation as provided for in Section 10 above and Exhibit A attached hereto,a credit entry
will be made to the SEEA for the total dollar amount associated with the energy provided to
TDF. Any payments made from the SEEA will be listed as a debit. An example of SEEA
Page 2 of 4
Monthly Transactions is provided in Exhibit B, attached hereto. At no time during the term of
this Contract will a debit entry be made to the SEEA in excess of the then-existing credit
balance of such account, unless otherwise agreed to in writing by the Parties.
• 16 Creditworthiness:
o For the purpose of determining the ability of TDF to meet its obligations related to service
hereunder, Western may require reasonable credit review procedures. In addition, Western may
require TDF to:
16.1 Provide and keep in effect during the term of this Contract, an unconditional and irrevocable
letter of credit as security to meet its responsibilities and obligations under this Contract.
16.1.1 Truckee and Fallon,each, shall be required to provide and maintain separate letters of
credit for the term of this Contract in amounts equal to their respective shares of the most recent
six(6) months of the value of the generation.
16.1.2 The Parties hereby agree that, initially,Truckee and Fallon shall each provide letters
of credit in the amount of Fifty Thousand($50,000)Dollars, representing their equal shares of
one-half of one (1)year's average generation of 11,000 MWh at a price of$17.89 per MWh and
rounded up to the next thousand.
16.1.3 At the end of each contract year,the Parties agree to re-evaluate the credit
requirements and adjust the letters of credit based on the principles of Subsection 16.1.1, if
necessary; or
16.2 Provide an alternate form of security acceptable to Western and TDF.
16.3 If Western has declared a default pursuant to this Contract, Western may use the above letters of
credit to cure the default in accordance with the default provisions of Section 15.
Concerning the Value or Cost of this Generation
The contract calls for averaging the current month with the prior years same month.
Here is some historical monthly data from ICE for the Mid-Columbia Index (Mid-C Index).
2004 thru 2006 Jan Feb Mar Apr May Jun
On Peak Average 51.55 46.72 44.81 40.57 39.60 37.02
Off Peak Average 42.91 43.49 41.20 32.57 26.40 22.23
Monthly Avg *
75%
On Peak Avg *
75% 38.67 35.04 33.61 30.43 29.70 27.76
Off Peak Avg *
75% 32.19 32.61 30.90 24.43 19.80 16.67
2004 thru 2006 Jul Aug Sep Oct Nov Dec
On Peak Average 60.64 61.64 55.93 61.26 60.13 74.52
Off Peak Average 41.95 48.91 46.79 54.52 52.88 64.47
Monthly Avg *
75%
On Peak Avg *
75% 45.48 46.23 41.95 45.95 45.10 55.89
Off Peak Avg *
75% 31.46 36.69 35.09 40.89 39.66 48.35
Page 3 of 4
Positives of this Contract for the District:
This contract fits well into the District's need for resource. It is a small hydro based resource located
pretty close to the District's boundaries and meets the Renewal Portfolio Standard for renewable
resource. This generation will meet the need of the District and start to move the District closer to its
goal of 21% renewable resources by 2010. This generation is priced well considering it is a non firm
run of the river generation.
Negatives of the Contract for the District:
Stampede Energy is considered non-firm energy due to the run of the river nature of this generation.
This may create some issues scheduling the energy but the District believes it can work through this.
The value of Stampede Energy shall be considered approximately 75 percent of firm energy due to its
non-firm nature. At 75 percent of firm energy priced from the Mid-C index, this is a reasonable price
for this generation.
The Positives outweigh the Negatives:
This generation will be a great asset to the District's customers and should be attained if at all
possible by the District. This contract is the first step to having energy from this plant delivered to the
District. Truckee Donner PUD will negotiate a contract with the City of Fallon to share the benefits
and energy from this plant in a 500/o/50% manner.
Recommendation:
The Board of Directors adopts and authorizes the Board President to sign the Contract for Energy
Exchange Services with the Western Area Power Administration for the Stampede Energy in
substantially the form presented.
Page 4 of 4
Contract 07-SNR-009XX
UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
CENTRAL VALLEY PROJECT, CALIFORNIA
CONTRACT
FOR
ENERGY EXCHANGE SERVICES
WITH
THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT
AND
THE CITY OF FALLON
Draft 9 March 28, 2007
Contract 07-SNR-009XX
UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
CENTRAL VALLEY PROJECT, CALIFORNIA
CONTRACT
FOR
ENERGY EXCHANGE SERVICES
WITH
THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT
AND
THE CTY OF FALLON
Section Table of Contents Page
1. Preamble .................................................................................................................1
2. Explanatory Recitals................................................................................................2
3. Agreement...............................................................................................................3
4. Effective Date, Term, and Termination of Contract..................................................3
5. Definition of Terms...................................................................................................3
6. Scope ......................................................................................................................4
7. Delivery Arrangements for Stampede Energy..........................................................4
8. Metering...................................................................................................................4
9. Maintenance ............................................................................................................5
10. Value Calculation.....................................................................................................5
11. Stampede Energy Exchange Account.....................................................................5
12. Energy Deliveries to Western ..................................................................................7
13. Examination and Correction of Transaction Summaries..........................................7
14. Audit ........................................................................................................................8
15. Default Provisions....................................................................................................8
16. Creditworthiness......................................................................................................9
17. General Power Contract Provisions.........................................................................9
18. Enforceability...........................................................................................................9
19. Exhibits Made Part of Contract..............................................................................10
Certificates
General Power Contract Provisions (June 15, 2005)
Exhibit A — Value Calculation
Exhibit B — Example of Stampede Exchange Account Monthly Transactions
Exhibit C — Mailing Addresses
i
1 Contract 07-SNR-009XX
2
3 UNITED STATES
DEPARTMENT OF ENERGY
4 WESTERN AREA POWER ADMINISTRATION
5 CENTRAL VALLEY PROJECT, CALIFORNIA
6 CONTRACT
FOR
7 ENERGY EXCHANGE SERVICES
8 WITH
9 THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT
10 AND
THE CITY OF FALLON
11
12
13 1. PREAMBLE:
14 This Contract is made this day of , 2007, pursuant to
15 the Acts of Congress approved June 17, 1902 (32 Stat. 388); August 1, 1956
16 (70 Stat. 775); August 4, 1939 (53 Stat. 1187); and August 4, 1977 (91 Stat. 565); and
17 Acts amendatory or supplementary to the foregoing Acts; between the UNITED
18 STATES OF AMERICA (United States), acting by and through the Administrator,
19 WESTERN AREA POWER ADMINISTRATION, DEPARTMENT OF ENERGY,
20 represented by the officer executing this Contract, or a duly appointed successor,
21 hereinafter called Western or Contracting Officer; and the TRUCKEE DONNER PUBLIC
22 UTILITY DISTRICT, a Public Utility District, organized and existing under the laws of the
23 State of California, hereinafter referred to as Truckee; and the CITY OF FALLON, a
24 political subdivision organized and existing under the laws of the State of Nevada,
25 hereinafter referred to as Fallon; jointly referred to as TDF, their successors and
26 assigns; all also hereinafter referred to individually as Party and together as Parties.
27
28
Contract 07-SNR-009XX
1 2. EXPLANATORY RECITALS:
2 2.1 The United States owns, and the U.S. Department of the Interior, Bureau
3 of Reclamation (Reclamation) operates, the Stampede Powerplant (Stampede)
4 located in Sierra County, California. Stampede has an installed capacity of 3.65
5 megawatts, with an average annual energy generation of approximately 11,000
6 megawatthours.
7
8 2.2 Western, on October 25, 1985, allocated the Stampede Energy (as
9 defined hereafter) to Truckee as a preference entity within the service area of
10 Sierra Pacific Power Company (SPPC). However, at that time, Truckee was
11 unsuccessful in negotiating transmission service with SPPC and, consequently,
12 Truckee was initially unable to enter into a contract with Western to take delivery
13 of Stampede Energy.
14
15 2.3 Western entered into Contract DE-MP65-85WP59076 (Contract 59076)
16 with SPPC on August 16, 1985. Contract 59076 provides for SPPC to construct
17 a tie line, at Western's expense, from the Stampede facilities for interconnection
18 to SPPC's 60-kV transmission line. Contract 59076 remains in effect through
19 December 31, 2035.
20
21 2.4 Western also entered into Contract 94-SAO-00010 (Contract 00010) with
22 SPPC on April 30, 1994. Contract 00010 provides for SPPC to take the
23 generation available from Stampede into its system and, through an energy
24 exchange account, serve two U.S. Department of the Interior, Department of Fish
25 and Wildlife Service project use loads located within its service territory.
26
27 2.5 At times when Stampede is not generating, SPPC provides station service
28 power to Stampede.
Contract 07-SNR-009XX 2
1 2.6 Truckee and Fallon each now have Network Integration Transmission
2 Service Agreements (NITS) with SPPC and, therefore, have the ability to receive
3 the Stampede Energy.
4
5 2.7 TDF desire to assume the responsibilities currently performed by SPPC
6 under Contract 00010 and, under the terms and conditions of this Contract,
7 Western is willing to allow TDF to assume said responsibilities.
8
9 3. AGREEMENT:
10 The Parties agree to the terms and conditions set forth herein.
11
12 4. EFFECTIVE DATE, TERM, AND TERMINATION OF CONTRACT:
13 4.1 This Contract shall become effective on July 1, 2007, subject to Western's
14 termination of Contract 00010 with SPPC, and shall remain in effect through
15 December 31, 2024; subject to prior termination as otherwise provided for herein.
16
17 4.2 Western may terminate this Contract pursuant to Section 15 and, also,
18 upon a one (1) year advance written notice to TDF. This Contract may also be
19 terminated by either Party if Stampede ceases to generate for a period of time
20 longer than one (1) year without an established schedule to restart.
21
22 4.3 The Parties may mutually agree in writing to terminate this Contract.
23
24 4.4 All obligations incurred under this Contract shall be preserved until
25 satisfied.
26
27
28
Contract 07-SNR-009XX 3
1 5. DEFINITION OF TERMS:
2 As used herein, the following terms whether singular or plural, or used with or without
3 initial capitalization, shall have the following meanings:
4
5 5.1 Stampede Energy shall mean electrical energy generated at Stampede as
6 part of the Washoe Project, owned by the United States and operated by
7 Reclamation, located in Sierra County, California.
8
9 5.2 Stampede Energy Exchange Account (SEEA) shall mean the account
10 established as provided in Section 11 of this Contract to maintain the
11 transactions of Stampede Energy received by TDF and the dollar value credits
12 and debits made pursuant to this Contract.
13
14 5.3 Transaction Summary shall mean the record provided by Truckee to
15 Western of transactions made in the SEEA during a specific time period.
16
17 6. SCOPE:
18 The purpose of this Contract is to create a mechanism to provide project use benefit to
19 Stampede and the project use loads on a first priority basis.
20
21 7. DELIVERY ARRANGEMENTS FOR STAMPEDE ENERGY:
22 7.1 Subject to the provisions of this Contract, Western shall provide solely to
23 TDF and TDF shall accept all energy delivered pursuant to Section 7.2 below.
24 All Stampede Energy shall be dedicated exclusively to TDF for the defined scope
25 for the term of this Contract.
26
27
28
Contract 07-SNR-009XX 4
1 7.2 TDF shall take delivery of the Stampede Energy over the transmission
2 system of SPPC at the Western-owned disconnect switch (6001-13) at the
3 Stampede Switchyard adjacent to Stampede.
4
5 7.3 The Parties acknowledge that this Contract does not provide for either
6 Party to furnish transmission, distribution, ancillary services, or control area
7 services to the other Parry, and in no circumstances shall a Party be responsible
8 under this Contract for providing any such services.
9
10 7.4 TDF understands that Stampede Energy is a run-of-the-river energy
11 resource. However, to the extent information is available, Western will assist
12 TDF, no later than March 31 st of each year with developing a monthly estimate of
13 the energy to be delivered under this Contract for the following twelve (12)
14 months (April through March). At any time during the month, to the extent
15 Western is aware, Western will notify TDF of any changes to the output of
16 Stampede that differ with the already submitted schedule.
17
18 8. METERING:
19 8.1 Western has installed in-out revenue meters, current transformers,
20 potential transformers, and metering pedestals on the high-side of the power
21 transformer at the Stampede Switchyard. Western owns, and shall have the
22 responsibility to operate, maintain, replace and test, as necessary, the meters
23 and associated equipment. TDF personnel shall be afforded reasonable
24 opportunity to be present for any testing of the metering facilities.
25
26 8.2 The quantity of energy delivered to TDF shall be determined by Western's
27 metering equipment. All meter data shall be made electronically available to TDF
28 for scheduling, balancing and billing purposes. If additional equipment is
Contract 07-SNR-009XX 5
1 required to make such data electronically available, Western shall work with TDF
2 to install the necessary equipment, the cost of which shall be borne by TDF.
3 Metering data will be provided to TDF by Western on a monthly basis with
4 generation records accounted for and maintained by both Parties. Stampede
5 Energy delivered to TDF shall be accounted for pursuant to Section 11 of this
6 Contract.
7
8 8.3 TDF may install check-metering equipment at its own expense, and under
9 Western's guidelines and supervision.
10
11 9. MAINTENANCE:
12 TDF understands that the Washoe Project is operated and maintained by Reclamation.
13 TDF shall not have any control, whatsoever, over Reclamation's maintenance schedule
14 of the Washoe Project.
15
16 10. VALUE CALCULATION:
17 The calculation to be used in determining the value of Stampede Energy is provided in
18 Exhibit A attached hereto. The value is based on the current and previous years' monthly
19 running average of Mid C prices as determined by the Intercontinental Exchange (ICE).
20
21 11. STAMPEDE ENERGY EXCHANGE ACCOUNT:
22 Truckee shall establish and maintain the SEEA, as provided in this Section. Using the
23 value calculation as provided for in Section 10 above and Exhibit A attached hereto, a
24 credit entry will be made to the SEEA for the total dollar amount associated with the
25 energy provided to TDF. Any payments made from the SEEA will be listed as a debit.
26 An example of SEEA Monthly Transactions is provided in Exhibit B, attached hereto. At
27 no time during the term of this Contract will a debit entry be made to the SEEA in
28 ///
Contract 07-SNR-009XX 6
1 excess of the then-existing credit balance of such account, unless otherwise agreed to
2 in writing by the Parties.
3
4 11.1 On the first day of each month during the term of this Contract, Truckee
5 shall debit and/or credit the SEEA for the previous month, as follows:
6 11.1.1 A credit entry shall be made equal to the dollar value of the
7 Stampede Energy delivered to TDF. Truckee shall determine the dollar
8 value using the calculation provided for in Exhibit A of this Contract.
9 11.1.2 Station Service: By the due date reflected on the SPPC electric
10 service billing for power service to Stampede, Truckee shall make
11 payment in full to SPPC at the address provided on the bill; or, if directed
12 by Western, within ten (10) days of receipt of the SPPC bill, Truckee shall
13 make payment to Reclamation at the address provided in Exhibit C.
14 Truckee will then debit the SEEA in the amount of said payment.
15 11.1.3 Project Use: By the due date reflected on the SPPC electric
16 service billing for power service to the project use loads, Truckee shall
17 make payment in full to SPPC at the address provided on the bill; or, if
18 directed by Western, within ten (10) days of receipt of the SPPC bill,
19 Truckee shall make payment to FWS at the address provided in Exhibit C.
20 Truckee will then debit the SEEA in the amount of said payment.
21 11.1.4 In the event that there are not enough funds in the SEEA to make
22 payment in full as provided in Sections 11.1.2 and 11.1.3 above, Truckee
23 shall immediately notify Western of such shortage in the SEEA. Western
24 shall direct Truckee on the manner in which payment, if any, should be
25 made.
26 11.1.5 A debit amount equal to the monthly administrative charge owed
27 to Truckee for transaction accounting and billing in the amount of Two
28 Hundred Fifty ($250.00) Dollars per month.
Contract 07-SNR-009XX 7
1 11.2 On the first day of each month, Truckee shall provide a Transaction
2 Summary to Western, at the address provided in Exhibit C attached hereto,
3 including the balance of the SEEA as of the first day of such month and the
4 transactions for the immediately preceding month.
5
6 11.3 Western may, upon thirty (30) days advance written notice to Truckee,
7 request that Truckee pay to Western, and debit the SEEA, an amount up to the
8 full dollar amount in the SEEA.
9
10 12. ENERGY DELIVERIES TO WESTERN:
11 12.1 Western may, upon reasonable notice, request TDF to deliver to Western
12 a quantity of energy specified by Western on a non-firm basis. The quantity of
13 energy requested by Western shall not amount to a value in excess of the
14 balance of the SEEA. TDF may elect to honor the request and provide non-firm
15 energy in quantities and prices to be determined by both parties at the time of the
16 requested transaction.
17
18 12.2 Truckee shall debit the SEEA by an amount equal to the total dollar
19 amount of the transaction.
20
21 12.3 The specific delivery arrangements, including but not limited to,
22 transmission, losses, and delivery point, of each request will be agreed to by the
23 Parties at the time of the request.
24
25 13. EXAMINATION AND CORRECTION OF TRANSACTION SUMMARIES:
26 13.1 As soon as practicable, but no later than one (1) year after Western's
27 receipt of each Transaction Summary, Western shall provide written notice to
28 ///
Contract 07-SNR-009XX 8
1 Truckee, at the address provided in Exhibit C attached hereto, of any alleged
2 error in such summary.
3
4 13.2 If Western notifies Truckee of an alleged error in a Transaction Summary,
5 the Parties agree to make good faith efforts to reconcile the transactions and
6 mutually agree on the appropriate remedy, if any.
7
8 13.3 If Truckee discovers an error in a Transaction Summary within one (1)
9 year of preparation of said summary, Truckee shall notify Western in writing of
10 the error. The Parties agree to make good faith efforts to reconcile the
11 transactions and mutually agree on the appropriate remedy, if any.
12
13 13.4 If a correction is determined to be required in either Section 13.2 or 13.3
14 above, Truckee will provide an adjusted Transaction Summary to Western within
15 thirty (30) days.
16
17 14. AUDIT:
18 The Parties shall have the right to review during normal business hours the relevant
19 books and records of the other Party to confirm the accuracy of such as they pertain
20 only to transactions under this Contract. The review shall be consistent with standard
21 business practices and shall follow reasonable notice to the other Party. Reasonable
22 notice for a review of the previous month's records shall be a minimum of fifteen (15)
23 business days. If a review is requested for other than the previous month's records,
24 then the requesting Party shall provide notice of that request with a minimum of thirty
25 (30) business days. The notice shall specify the period to be covered by the review.
26
27
28 15. DEFAULT PROVISIONS:
Contract 07-SNR-009XX 9
1 15.1 The failure of Truckee to perform any of its payment obligations under this
2 Contract shall constitute a default by both Truckee and Fallon. If Western
3 determines TDF to be in default, Western shall notify TDF in writing.
4
5 15.2 If TDF is determined to be in default and does not cure such default in a
6 manner and within the timeframe established by Western, Western shall have the
7 right to terminate this Contract thirty (30) days after the end of the timeframe
8 provided to TDF by Western. Western will promptly calculate the damages
9 associated with the default. Such damages shall be limited to the amounts owed
10 to Western when all credits and debits to the SEEA are taken into account. As
11 soon as practical, Western will provide notice to TDF of the amount of the
12 damages. Payment for the damages shall be made by TDF to Western within
13 ten (10) business days after such notice is received.
14
15 16. CREDITWORTHINESS:
16 For the purpose of determining the ability of TDF to meet its obligations related to
17 service hereunder, Western may require reasonable credit review procedures. In
18 addition, Western may require TDF to:
19 16.1 Provide and keep in effect during the term of this Contract, an
20 unconditional and irrevocable letter of credit as security to meet its
21 responsibilities and obligations under this Contract.
22 16.1.1 Truckee and Fallon, each, shall be required to provide and
23 maintain separate letters of credit for the term of this Contract in amounts
24 equal to their respective shares of the most recent six (6) months of the
25 value of the generation.
26 16.1.2 The Parties hereby agree that, initially, Truckee and Fallon shall
27 each provide letters of credit in the amount of Fifty Thousand ($50,000)
28 Dollars, representing their equal shares of one-half of one (1) year's
Contract 07-SNR-009XX 10
1 average generation of 11,000 MWh at a price of $17.89 per MWh and
2 rounded up to the next thousand.
3 16.1.3 At the end of each contract year, the Parties agree to re-evaluate
4 the credit requirements and adjust the letters of credit based on the
5 principles of Subsection 16.1.1, if necessary; or
6
7 16.2 Provide an alternate form of security acceptable to Western and TDF.
8
9 16.3 If Western has declared a default pursuant to this Contract, Western may
10 use the above letters of credit to cure the default in accordance with the
11 default provisions of Section 15.
12
13 17. GENERAL POWER CONTRACT PROVISIONS:
14 The GPCP, effective June 15, 2005, attached hereto, are hereby made a part of this
15 Contract, the same as if they had been expressly set forth herein.
16
17 18. ENFORCEABILITY:
18 It is not the intent of the Parties that this Contract confer any rights on third parties to
19 enforce the provisions of this Contract except as required by law or express provision in
20 this Contract. Except as provided in this Section, this Contract may be enforced, or
21 caused to be enforced, only by Western or TDF, or their successors or assigns.
22
23 19. EXHIBITS MADE PART OF CONTRACT:
24 Exhibit A, Value Calculation; Exhibit B, Example of Stampede Energy Exchange
25 Account Monthly Transactions; and Exhibit C, Mailing Addresses, attached to and
26 existing under this Contract may vary during the term hereof. Said Exhibits shall
27 become a part of this Contract during the term fixed by their provisions. Exhibits A, B,
28 and C are attached hereto, and shall be in force and effect in accordance with their
Contract 07-SNR-009XX 11
1 terms until superseded by a subsequent Exhibit, as allowed by the terms of the Exhibit,
2 or terminated.
3
4 IN WITNESS WHEREOF, the Parties have caused this Contract to be executed
5 the day and year first above written.
6
7 WESTERN AREA POWER ADMINISTRATION
8
9
By:
10 Name: Thomas R. Boyko
Title: Power Marketing Manager
11 Address: 114 Parkshore Drive
12 Folsom, CA 95630-4710
13
14 TRUCKEE DONNER PUBLIC UTILITY DISTRICT
15
16 Attest: By:
Name: Tim F.Taylor
17 Title: Board President
18 By: Address: Post Office Box 309
Title: Truckee, California 96160
19
20 CITY OF FALLON
21
22
Attest: By:
23 Name:
24 Title: Mayor
By: Address: 55 West Williams Avenue
25 Title: Fallon, Nevada 89406
26
27
28
Contract 07-SNR-009XX 12
THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT
AND
THE CITY OF FALLON
CERTIFICATE
Page 1 of 1
Truckee Donner Public Utility District
City of Fallon
Exhibit A to
Contract 07-SNR-009XX
EXHIBIT A
(Value Calculation)
1. This Exhibit A is to be effective under and as a part of Contract 07-SNR-009XX,
shall become effective upon execution of the Contract; and shall remain in effect until
either superseded by another Exhibit A or termination of the Contract.
2. Stampede Energy is considered non-firm energy. The value of Stampede Energy
shall be considered approximately 75 percent of firm energy.
3. The value of Stampede Energy shall be determined using the monthly average of
the current and previous years' Mid-C price index as determined by the
Intercontinental Exchange (ICE). This average shall be calculated and updated monthly
using the most recent published indices in the following calculation:
Calculation
0.75(Average of the current and previous year month's ICE Mid-C
On-Peak average index price * month's total On-Peak daily
Stampede Energy) = Month's On-Peak value of Stampede Energy
0.75(Average of the current and previous year month's ICE Mid-C
Off-Peak average index price * month's total Off-Peak Stampede
Energy) = Month's Off-Peak value of Stampede Energy
Page 1 of 1
Truckee Donner Public Utility District
City of Fallon
Exhibit B to
Contract 07-SNR-009XX
EXHIBIT B
(Example of Stampede Energy Exchange Account Monthly Transactions)
1 . This Exhibit B is to be effective under and as a part of Contract 07-SNR-009XX,
shall become effective upon execution of the Contract; and shall remain in effect until
either superseded by another Exhibit B or termination of the Contract.
2. Example First Month of Contract:
Example Transaction Credit Debit Balance
$ 0.00
January 2007
On-Peak Generation = 300 MWh
Current and previous years' (2006 and
2007) January average On-Peak Price =
$68
Off-Peak Generation =200 MWh
Current and previous years' (2006 and
2007) January average Off-Peak Price =
$42
0.75 300*$68 + 200*$42 $ 21,600.00 $ 21,600.00
Reclamation's Power Bill from SPPC ($ 301.28) $ 21,298.72
FWS' Power Bill from SPPC ($ 19,485.10) $ 1,813.62
Page 1 of 1
Truckee Donner Public Utility District
City of Fallon
Exhibit C to
Contract 07-SNR-009XX
EXHIBIT C
(Mailing Addresses)
1. This Exhibit C is to be effective under and as a part of Contract 07-SNR-009XX,
shall become effective upon execution of the Contract; and shall remain in effect until
either superseded by another Exhibit C or termination of the Contract.
2. The following Mailing Addresses are to be used for any notices and/or payments
as provided for in the Contract:
Western Area Power Administration - Notices
Rates Manager
Western Area Power Administration
Sierra Nevada Region
114 Parkshore Drive
Folsom, California 95630
Western Area Power Administration — Payments
U.S. Department of Energy
Western Area Power Administration
File No. 4185
Post Office Box 894185
Los Angeles, California 90189-4185
Bureau of Reclamation
Fish & Wildlife Service
Truckee Donner Public Utility District
City of Fallon
Page 1 of 1
OF A
Public Utility District
O F
Ms Sandee Peebles June 7, 2006
Public Utilities Specialist
Sierra Nevada Region
Western Area Power Administration
114 Parkshore Drive-N600
Folsom CA 95630-4710
Dear Sandee:
In accordance with your request for an expression of interest in replacing the contract
WAPA has with Sierra Pacific Power Company for energy exchange services, Truckee Donner
Public Utility District and the City of Fallon desire to submit the attached Power Purchase
Agreement. This proposal is consistent with the letter we sent Tom Boyko on March 24, 2006.
Truckee and Fallon believe that we can provide equivalent service to that offered by Sierra at a
price more consistent with today's energy market, with substantially reduced administrative
costs and transmission fees. Our proposal specifically addresses the following items:
1. Service to Project Use loads
We understand that Sierra banks a portion of the energy payment for later distribution by
Western to project use loads. We are prepared to distribute a portion of our payment for
Western's distribution to project use loads.
2. Administrative fees
We propose to eliminate the administrative charges, the transmission fees and losses in
your current contract. Truckee and Fallon are both transmission customers of Sierra
Pacific and as such are paying network transmission access and losses based on our
individual load requirements.
3. Energy Pricing
Our pricing proposal of $32.78/MWh is consistent with non-firm purchases in today's
market and is offered for 20 years, a substantial premium over the discounted pricing in
your current contract.
4. Energy Banking
It is our understanding that the energy banking and replacement energy portions of your
current contract are features currently unused and of limited value to Western and we
have elected not to include those provisions.
P.O.Box 309—Truckee,CA 96160—Phone 530-587-3896—www.tdpud.org
Sambe, as you know. Truckee and Failoa are preference customers of Westem and
existing network transmission customers of Sierra Pacift, inside their conlaol area. We have
agreed, between ourselves to arrange to share the energy from Stampede and will Cake the
energy directly to our respective retail c uskxners In California and Nevada. Truckee's Board of
DirectDrs and Fallon's City Council have approved going forward with this contract under the
terms offered and we are prepared b complete this contract with no delays.
As a separate matter, should Western resolve their dispute in Borne manner with Sierra
that has Sierra providing replacement energy, we are prepared to acquire such energy under
SkAW terms offered here.
Thank you for your consideration. We look forward to working with you for the bent of
all concerned.
Sincerely-
41r
Stephen Hotlabeugh ' Steven D.King
Assistant General Manager Assistant City Attorney
Truckee Dormer PUD City of Fallon
I
M
P.0.1W 3"-TnKkw,CA 96160-Pbooe 530-587-36%-www.tdp*&wj
PURCHASED POWER AGREEMENT
AMONG
UNITED STATES DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
(WASHOE PROJECT STAMPEDE PLANT)
AND
TRUCKEE DONNER PUBLIC UTILITY
DISTRICT
AND
THE CITY OF FALLON
Dated: June , 2006
1 PURCHASED POWER AGREEMENT
2
3 This Purchased Power Agreement (this "Agreement") is made and
4 entered into effective the day of June 2006, pursuant to the Acts of
5 Congress approved June 17, 1902 (32 Stat.388) (Reclamation Act); August
6 4, 1939 (53 Stat. 1187) (Reclamation Project Act); August 1, 1958 (70 Stat.
7 775) (Washoe Project, Stampede Hydroelectric Facilities Authorization);
8 August 4,1977 (91 Stat.565) (DOE Organization Act); and Acts amendatory
9 or supplementary to the foregoing Acts by and among the UNITED STATES
io OF AMERICA, acting by and through the Administrator, Western Area Power
11 Administration, Department of Energy, herein after called "Western" or
12 "Seller", represented by the officer executing this contract or a duly
13 appointed successor, hereinafter called the "Contracting Officer"; and the
14 Truckee Donner Public Utility District, a public utility district organized and
15 existing under the laws of the State of California, hereinafter called
16 "Truckee"; and the City of Fallon, a political subdivision organized and
17 existing under the laws of the State of Nevada ("City"). Truckee and City,
18 hereinafter, referred to as "Buyers". Truckee, City and Western hereinafter
19 are sometimes referred to individually as "Party" and collectively as
20 "Parties".
21
22 WHEREAS, Western owns, operates and maintains a hydroelectric
23 generating facility with a total of approximately 3.65 Mw of electric
24 generating capacity, together with their auxiliaries, accessories,
25 and housings located at the Stampede Hydro Plant approximately
26 5 miles east of Truckee, California on the Stampede Reservoir in
27 California ("Project"); and
28
29 WHEREAS, the Project is connected to the Transmission System of
30 Sierra Pacific Power Company ("Sierra") under a separate interconnection
31 agreement between Sierra and Western; and
32
33 WHEREAS, The Buyers own and operate electrical utility systems
34 serving electric retail customers; and
35
36 WHEREAS, The Buyers are experiencing rapid growth and are in need
37 of new electrical resources to help meet those loads; and
38
39 WHEREAS, The Buyers are transmission customers of Sierra; and
40
41 WHEREAS, Pursuant to Section 203 of the Department of Energy
42 Organization Act (42 U.S.C. 7152), Western is authorized to market the
43 energy produced by Stampede; and
WAPA/TDPUD/City of Fallon Purchased Power Agreement Page 3
Stampede Hydro Plant
I Defaulting Party shall mean a Party that is in Default of this
2 Agreement.
3
4 Delivered Amount means, with respect to any Dispatch Hour, the
5 actual amount of Energy delivered by Supplier to Buyer at the Delivery Point
6 during such Dispatch Hour.
8 Delivery Point means the Western owned disconnect switch (6001-B)
9 at Sierra's Stampede substation.
10
11 Dispatch Hour means each hour from the Operation Date through the
12 end of the Term.
13
14 Effective Date shall mean the date on which this Agreement becomes
15 effective, upon execution by the Parties.
16
17 Emergency means any circumstance or combination of circumstances
18 or any condition of the Generating Facility, the Interconnection Facilities, the
19 Transmission System, or the transmission system of other electric utilities,
20 which is reasonably likely to endanger life or property and necessitates
21 immediate action to avert injury to a person or persons or serious damage
22 to property or is reasonably likely to adversely affect, degrade or impair
23 Transmission System reliability or transmission system reliability of other
24 electric utilities.
25
26 Energy means electrical energy (measured in MWh) that is generated
27 by the Generating Facility.
28
29 FERC shall mean the Federal Energy Regulatory Commission or its
30 successor.
31
32 Force Majeure shall mean any act of God, labor disturbance, act of
33 the public enemy, war, insurrection, riot, fire, storm or flood, explosion,
34 breakage or accident to machinery or equipment. It shall also include
35 regulatory charge by a Governmental Authority which would impose severe
36 impediments to a Party's performance of its obligations hereinabove. A
37 Force Majeure event does not include economic hardship or an act of
38 negligence or intentional wrongdoing.
39
40 Generating Facility means Supplier's hydro generating power
41 plant, located at the Stampede Plant near Truckee, California with
42 an aggregate installed total nominal nameplate capacity of
WAPA/TDPUD/City of Fallon Purchased Power Agreement Page 5
Stampede Hydro Plant
1 Non-Defaulting Party shall mean the Party other than the Defaulting
2 Party.
3
4 OATT shall mean Transmission Provider's or Control Area Operator's
5 then effective Open Access Transmission Tariff, which has been accepted for
6 filing by the FERC.
7
8 Operating Representative of a Party means any of the individuals
9 designated by that Party, as set forth in Article 14.8.2, to transmit and
10 receive routine operating and Emergency communications required under
11 this Agreement. A Party may change its Operating Representative by
12 providing notice of the change to the other Party in accordance with the
13 notice procedures set forth in Article 14.8.
14
15 Parallel Operation shall mean the two-way flow of power between a
16 generator and a Transmission System. Generators that operate in parallel
17 with a Transmission System require additional protection and control
18 devices. This may be contrasted with a stand-alone generator that operates
19 isolated from the utility company's electric system.
20
21 Product shall mean (i) all Energy produced by the Generating Facility,
22 except Station Usage and (ii) all RECs associated with the energy produced
23 by the Generating Facility.
24
25 PUCN shall mean the Public Utilities Commission of Nevada and any
26 successor entity thereto.
27
28 RECs shall mean all renewable energy credits, offsets or other benefits
29 allocated, assigned or otherwise awarded or certified to Supplier or Buyer by
30 any Governmental Authority that are derived from the ownership or
31 operation of, or production of Energy or purchase of Energy from the Project
32 or due to the Project's use of hydro or "water power" resources for
33 generation.
34
35 REC Administrator shall mean an entity appointed by the PUCN to
36 administer any REC trading program, pursuant to any law, including, without
37 limitation, the requirements of Nevada Revised Statutes §§ 704.7801 to
38 704.7828, inclusive, as amended or superseded, and regulations
39 promulgated thereunder by the PUCN, which impose an obligation on Buyer
40 to meet a required percentage of its retail load or energy requirements by
41 purchasing or generating electricity derived from renewable energy
42 generating facility systems or which provide for the trading of RECs, as such
43 laws may be amended or superseded.
44
WAPA/TDPUD/City of Fallon Purchased Power Agreement Page 7
Stampede Hydro Plant
1 (including scheduling) for delivery of electricity with the
2 Transmission Provider.
3 2.2 Responsibilities of the Parties.
4 2.2.1 The Parties shall perform all obligations of this Agreement
5 in accordance with all applicable laws and regulations,
6 operating requirements, and Good Utility Practice.
7 2.2.2 Seller shall operate and maintain its Generating Facility
s and operate and maintain its Interconnection Facilities in
9 accordance with the applicable manufacturer's
10 recommended maintenance schedule, in compliance with
11 all aspects of the rules therefore and, in accordance with
12 this Agreement, and with Good Utility Practice.
13 2.2.3 Each Party shall operate, maintain, repair, and inspect,
14 and shall be fully responsible for the facilities that it now
15 or subsequently may own.
16 2.3 Parallel Operation Obligations. Seller shall abide by all rules and
17 procedures pertaining to the Parallel Operation of the Generating
is Facility in the applicable Control Area, including, but not limited to,
19 the rules and procedures concerning the operation of generation set
20 forth in the OATT or by the system operator for Transmission
21 Provider's Transmission System.
WAPA/TDPUD/City of Fallon Purchased Power Agreement Page 9
Stampede Hydro Plant
I Article 6 - Rate
2 6.1 Payment for Energy. Seller shall be paid monthly for the Energy
3 as determined from monthly meter readings. Buyer shall pay Seller
4 at the Yearly Rate for all Energy delivered pursuant to the terms of
5 this Agreement. The Yearly Rate is based upon a base price of
6 $32.78/Mwh for the term of the contract.
7 Article 7 - Renewable Energy Credits
8 7.1 Transfer of RECs. Seller hereby transfers to Buyer all RECs
9 derived from the ownership or operation of, or production of Energy
10 from, the Project, if any. Seller shall timely take all reasonable
11 actions necessary under Nevada law or regulation or other laws to
12 cause the RECs to vest in or be transferred to Buyer, including the
13 registration of the Project with the PUCN or other Governmental
14 Authority, the provision of periodic production data to the PUCN or
15 any REC Administrator and the filing of requests for transfers of
16 RECs to Buyer. The quantity of RECs, transferred to Buyer shall be
17 the amount of RECs, measured in kWh's, attributable to the
18 ownership or operation of the Project pursuant to the terms of this
19 Agreement.
20 Article 8 - Metering
21 Seller's Delivered Amount shall be determined by Meters installed at or
22 compensated to the Delivery Point. The metered quantities shall be the gross
23 Project output less Station Usage. Either Party, at its own expense, may
24 install check meters. Any check-metering equipment to be installed by one
25 Party on the other Party's facilities shall be mutually agreed upon and
26 installation procedures shall be developed. All Meter data will be made
27 electronically accessible to Buyer for Scheduling and billing purposes. If
28 additional equipment is required to make such data electronically available,
29 Seller will work with Buyer to install the necessary equipment, the cost of
30 which shall be borne by the Buyer.
31 Article 9 — Invoicing & Payment
32 9.1 Invoicing and Payment. On or before the thirtieth (30th) day of
33 each month, Seller shall send to Buyer an Invoice for the prior
34 month ("Billing Period"). The Invoice shall be calculated based upon
35 Meter data available to Buyer and Seller and shall comply with this
36 Article.
WAPA/TDPUD/City of Fallon Purchased Power Agreement Page 11
Stampede Hydro Plant
1 Buyer's option, Buyer may offset such amount against a
2 subsequent monthly payment to Seller.
3 9.4.3 If Seller fails to provide notice of an alleged error within
4 twelve (12) months of receipt of an Invoice, then Seller
s shall be deemed to have waived all rights to object to the
6 Invoice for the subject Billing Period.
7 9.4.4 Buyer may correct any Invoice errors it discovers and
s make adjustments in payments as a result thereof within
9 twelve (12) months of each Invoice.
10 9.5 Overdue Amounts and Refunds. Overdue amounts shall bear
11 interest from and including the due date to the date of payment of
12 such overdue amounts at a rate of six (6) percent per anum.
13 9.6 Right to Review. Buyer and Seller each shall have the right to
14 review during normal business hours the relevant books and records
1s of the other Party to confirm the accuracy of such as they pertain
16 only to transactions under this Agreement. The review shall be
17 consistent with standard business practices and shall follow
18 reasonable notice to the other Party. Reasonable notice for a review
19 of the previous month's records shall be a minimum of seven (7)
20 business days. If a review is requested of other than the previous
21 month's records, then the requesting Party shall provide notice of
22 that request with a minimum of fourteen (14) business days. The
23 notice shall specify the period to be covered by the review.
WAPA/TDPUD/City of Fallon Purchased Power Agreement Page 13,
Stampede Hydro Plant
1 satisfactory to it in order to settle and terminate a strike or other labor
2 disturbance
3 Article 12 - Default
4 12.1 General. No Default shall exist where such failure to discharge an
5 obligation (other than the payment of money) is the result of Force
6 Majeure or the result of an act or omission of the other Party. Upon
7 a Default, the Non-Defaulting Party shall give written notice of such
8 Default to the Defaulting Party. The Defaulting Party shall have
9 thirty (30) days from receipt of the Default notice within which to
10 cure such Default; provided however, if such Default is not capable
11 of cure within thirty (30) days, the Defaulting Party shall commence
12 such cure within thirty (30) days after notice and continuously and
13 diligently complete such cure within ninety (90) days from receipt of
14 the Default notice; and, if cured within such time, the Default
15 specified in such notice shall cease to exist.
16 12.2 Right to Terminate. If a Default is not cured as provided in this
17 article, or if a Default is not capable of being cured within the period
18 provided for herein, the Non-Defaulting Party shall have the right to
19 terminate this Agreement by written notice, and be relieved of any
20 further obligation hereunder and, to recover from the Defaulting
21 Party all amounts due hereunder, plus all other damages and
22 remedies to which it is entitled at law or in equity. The provisions of
23 this article will survive termination of this Agreement.
24 Article 13 - Remedies
25 Upon either Party's failure to perform any obligation under this Agreement,
26 the other Party, except to the extent specifically limited by this Agreement,
27 may exercise, at it's election, any rights or remedies it may have in law or in
28 equity including but not limited to compensation for monetary damages,
29 injunctive relief and specific performance; provided, however, that neither
30 Party shall be liable to the other Party for any indirect, consequential,
31 incidental, punitive or exemplary damages. The definition of consequential
32 damages shall include a claim for lost profits by Seller or Buyer.
33 Article 14. Miscellaneous
34 14.1 Governing Law, Regulatory Authority and Rules. The validity,
35 interpretation and enforcement of this Agreement and each of its
36 provisions shall be governed by the laws of the State of California,
37 without regard to its conflicts of law principles.
WAPA/TDPUD/City of Fallon Purchased Power Agreement Page 15
Stampede Hydro Plant
1 Authority permits, licenses, or other documents necessary for the
2 operation of the Project and the sale of Product to Buyer. In the
3 event any approvals or authorizations are required from any
4 Governmental Authority for the continued operation of the Project,
5 Supplier shall be responsible for obtaining and maintaining such
6 approvals or authorizations. If Seller has not obtained and
7 maintained such permits, licenses and authorizations that are
8 material and necessary for the operation of the Project or
9 maintained the status and approvals they represent, Seller shall not
10 be required to deliver Product to Buyer and Buyer shall have no
11 obligation to accept same until the appropriate approvals or
12 authorities are obtained or reinstated. Buyers' obligation to
13 purchase shall be reinstated only upon receipt of proof that such
14 permits, licenses and authorizations have been obtained or
15 reinstated. Seller shall provide Buyer prior written notice of its
16 intent to seek any application, modification, extension or other
17 change to any FERC licenses required for the operation of the
18 Project.
19 14.8 Notices. Unless otherwise provided in this Agreement, any notice,
20 demand or request required or permitted to be given by either Party
21 to the other and any instrument required or permitted to be
22 tendered or delivered by either Party in writing to the other shall be
23 effective when delivered and may be so given, tendered or
24 delivered, by recognized national courier, or by depositing the same
25 with the United States Postal Service with postage prepaid, for
26 delivery by certified or registered mail, addressed to the Party, or
27 personally delivered to the Party, at the address set out below:
28 Western
29 Area Manager
30 Western Area Power Administrator
31 Truckee Donner Public Utility District
32 General Manager
33 Peter Holzmeister
34 P.O. Box 309
35 Truckee CA 96160
36 (530) 582 3916
37
38
39
40
41
WAPA/TDPUD/City of Fallon Purchased Power Agreement Page 17
Stampede Hydro Plant
1 deemed separate and independent; (2) the Parties shall negotiate in
2 good faith to restore insofar as practicable the benefits to each Party
3 that were affected by such ruling; and (3) the remainder of this
4 Agreement shall remain in full force and effect.
5 14.13 Indemnity. The Parties shall at all times indemnify, defend, and
6 save the other Party harmless from, any and all damages, losses,
7 claims, including claims and actions relating to injury to or death of
8 any person or damage to property, demand, suits, recoveries, costs
9 and expenses, court costs, attorney fees, and all other obligations
10 by or to third parties, arising out of or resulting from the Party's
11 action or inaction of its obligations under this Agreement, except in
12 cases of gross negligence or intentional wrongdoing by the other
13 Party.
14 14.14 Authority to Execute. The Parties acknowledge and agree that
15 their below designated representative to this Agreement has the
16 requisite authority to act for said Party and execute this Agreement.
17
18 Article 15. Signatures
19
20 IN WITNESS WHEREOF, Parties have caused this Agreement to be
21 executed by their respective duly authorized representatives as of the
22 effective date set forth above.
23
24
25
26 Western Area Power Administration
27
28
29 Name:
30
31 Signature:
32
33 Title:
34
35 Date:
36
37
38
39
40
WAPA/TDPUD/City of Fallon Purchased Power Agreement Page 19
Stampede Hydro Plant
Agenda Item #
DONNER
Public
Memorandum
To: Board of Directors
From: Ste he , I<labaauggh
Date June 1, 2006
Subject: u mission of a proposal to the Western Area Power Administration for purchase of
generation from the Stampede Power Plant.
History:
Truckee Donner PUD has been involved and interested in the Stampede Generation for a long time.
This generation is located on the Little Truckee River approximately eight miles above the confluence
of the Little Truckee and the Truckee River. The dam and reservoir are in Sierra County, California,
about 11 miles northeast of the town of Truckee. The Stampede power plant was completed in 1987
and Western initially allocated the remaining energy (after project use) to Truckee Donner Public
Utility District, a preference entity within the service area of Sierra Pacific, on October 25, 1985. Due
to unsuccessful negotiations with Sierra, Truckee Donner was unable to enter into a contract with
Western to take delivery of the energy from the power plant.
New Information:
Truckee Donner staff has been working with Western to try to take delivery of the energy from
Stampede Generation. Western has recently requested solicitation for eligible customers to provide
the same service which Sierra Pacific Power Company (Sierra) is providing WAPA pursuant to certain
Contract for Energy Exchange Services between Western and Sierra dated April 30, 1994.
A copy of the Contract for Energy Exchange Services together with Western's May 17, 2006 e-mail
solicitation for proposals is attached. The Truckee Donner PUD and the City of Fallon are the only
two Western "preference customers" located in Sierra's control area which are readily able to receive
the electric energy generated from the Stampede Power Plant under said contract.
Staff recommends the District respond to Western's solicitation to enter a contract with Western to
provide the required services and to, with a proposal that Truckee Donner PUD in coordination with
the City of Fallon, submit a joint (or individually coordinated) proposal to purchase energy in the
$30.00 to $35.00 per megawatt hour range by June 9, 2006.
Recommendation:
I recommend the Board authorize the Assistant General Manager to submit a proposal to the Western
Area Power Administration to provide the required services and to, with a proposal that Truckee
Donner PUD in coordination with the City of Fallon, submit a joint (or individually coordinated)
proposal to purchase energy in the $30.00 to$35.00 per megawatt hour range by June 9, 2006.
Page 1 of 1
TRUCKEE
i . s
Public
PO Box 309, 11570 Donner Pass Road
Truckee, Ca. 96160
Minute Order
June 7, 2006
No. 2006 — 60
CONSIDERATION OF AUTHORIZING SUBMISSION OF A
PROPOSAL TO THE WESTERN AREA POWER ADMINISTRATION
FOR PURCHASE OF GENERATION FROM THE STAMPEDE POWER
PLANT.
Director Sutton moved and Director Thomason seconded, a motion to
authorize the Assistant General Manager to submit a proposal to the
Western Area Power Administration to provide the required services and
to, with a proposal that Truckee Donner PUD in coordination with the
City of Fallon, submit a joint (or individually coordinated) proposal to
purchase energy generation from the Stampede Power Plan in the
$30.00 to $35.00 per megawatt hour range by June 9, 2006.
ROLL CALL: Director Aguera, absent; All other Directors, aye. SO
MOVED.
Post Office Box 309— 11570 Donner Pass Road—Truckee, CA 96160
Phone 530 587-3896—Fax 530 587-1 189
Stephen Hollabau h
From: Sandee Peebles[PEEBLES@wapa.govj
Sent: Wednesday, May 17,2006 12:37 PM
To: Don Battles; Matt Foskett; Steven King; marshall@psin.com; Stephen Hollabaugh
Cc: Tom Boyko; Jeanne Haas
Subject: Stampede Energy
AR-M450U200605
17.pc f(457 KB)...
Hi,
As you are probably aware, SNR has a contract with the Sierra Pacific Power Company to
serve 2 project use loads, the Lahontan National Fish Hatchery and he Marble Bluff Fish
Facility, located near the Washoe Project. tinder that contract, SPPC purchases the
generation from tie Stampede Powerplant. The funds from that sale are held in an account
by SPPC and are used to pay for serving the PU loads and SPPC's administrative charges.
We have recently reviewed the rate at which SPPC is crediting the account for Stampede
energy and have determined that Western is not receiving the full value of the energy.
This e-mail is to solicit interest from those SNR customers who may have the ability to
provide the same services SPPC is providing at a rate which is more reflective of today's
energy market. I have attached a copy of SNR's contract with SPPC for the specific
details of the services provided by SPPC. If you are interested in submitting a proposal,
please send it to me by close of business on Friday, June 9, 2006.
if you have any questions with regard to the above, please feel free to contact ^te. Thank
you.
Sandee Lea Peebles
Public Utilities Specialist
Sierra Nev:-zda Region
Western Area Power Administration
(916) 353-4454
1
Contract No. 94-SAO-00010
Cook
UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
WASHOE PROJECT, CALIFORNIA-NEVADA
CONTRACT WITH THE SIERRA PACIFIC POWER COMPANY
FOR ENERGY EXCHANGE SERVICES
GOAA
Contract No. 94-SAO-00010
UNITED STATES qp
DEPARTMENT OF ENERGY 'rWESTERYjy
AREA POWER ADMINISTTION
WASHOEN PROJECT, CALIFORNIA-NEVADA C�rF�Corr
CONTRACT WITH THE SIERRA PACIFIC POWER COMPANY
FOR ENERGY EXCHANGE SERVICES
Table of Contents
Section Pa4e
1. PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. EXPLANATORY RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. TERMINATION OF EXISTING CONTRACT . . . . . . . . . . . . . . . . . . 3
5. EFFECTIVE DATE AND TERM . . . . . . . . . . . . . . . . . . . . 3
6. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
8. WSPP AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 5
9. DELIVERY OF STAMPEDE ENERGY TO SIERRA . . . . . . . . . . . . . . 6
10 OPERATION OF THE STAMPEDE EXCHANGE ACCOUNT . . . . . . . . . . . . 6
11. DELIVERIES TO WESTERN . . . . . . . . . . . . . . . . . . . . . . . . 9
12. SIERRA'S RATES AND CHARGES . . . . . . . . . . . . . . . . . . . . 10
13. BILLING AND PAYMENT . . . . . . . . . . . . . . . . . . . . 11
14. OPERATING GUIDELINES AND PROCEDURES . . . . . . . . . . . . . . . 11
15. METERING . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
16. REGULATORY APPROVAL . . . . . . . . . . . . . . . . . . . . . . . . . 12
17. AUTHORIZED REPRESENTATIVES . . . . . . . . . . . . . . . . . . . . . 12
18. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
19. GENERAL CONTRACT PROVISIONS . . . . . . . . . . . . . . . . . . 13
20. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 15
CERTIFICATE
Appendix A
p k
AUT uEvT�CATFD Co
Pr
2.2 Sierra is an investor-owned electric utility engaged in the
2 generation, transmission, distribution, and sale of electric power in
3 the States of Nevada and California.
4
5 , 2.3 Pursuant to Section 203 of the Department of Energy Organization
6 Act (42 U.S.C. 7152), Western is authorized to market the energy
7 produced by Stampede.
8
9 2.4 The Parties hereto have entered into Contract No. DE-MS65-
10 85WP59076, which provided, among other things, for the Contractor to
11 construct, at Western's expense, a 60-kV transmission line, with
12 necessary appurtenant facilities, between the Stampede Switchyard and
13 the interconnecting point on the Contractor's 60-kV transmission line.
14 .
15 2.5 The Parties hereto have entered into Contract No. DE-MS65-
16 86WP59067, which provided for Western to sell the energy produced by
17 Stampede to Sierra.
18
19 2.6 Sierra and Western are both signatories to the Western Systems
20 -Power Pool (WSPP) Agreement (WSPP Agreement), which was accepted for
21 filing by the Federal Energy Regulatory Commission (FERC) on October 18,
195-000
22 1991, in FERC Docket No. 91 , and are members of WSPP.
23
l� 24 2.7 Sierra and Western are entering into this Contract, pursuant to
25 9
i the WSPP Agreement, to facilitate Sierra's drought water storage
26 arrangements in Washoe Project reservoirs and the disposition of energy
127 produced by Stampede.
28
1 2
AD�EN��A 'D
Goat'
1 5.2 Sierra does not receive notification from Western on or before
2 March 1st of any year of Western's intent to extend the term of the
3 Contract.
4
5 6.3 Sierra receives an Adverse Regulatory Action and the Parties fail
6 to renegotiate the Contract as prescribed in Section 16.
1 '
8 6.4 Western provides sixty (60) days notice of termination of the
9 Contract.
10
11 6.5 In the event that the terms of this Contract become an undue
12 burden to either Party as mutually agreed upon by both Parties.
13
14 7. DEFINITIONS:
15 The following terms, when used in this Contract with initial capitalization,
16 whether in the singular- or plural , shall have the following meanings:
17
is 7.1 Adverse Regulatory Action:
19 An action by any regulatory authority with jurisdiction .over the
20 Contract disapproving this Contract.
y 21
22 7.2 Authorized Reoresentatives:
23 The individual or individuals designated by the Parties to carry out the
24 duties and functions provided in Section 17.
25
26 7.3 CSPP:
( ' )27 Sierra Pacific Power Company's California quarterly Short-Term Purchase
1 28 Price Schedule For As-Available Purchases From Qualifying Facilities
4 AUTHENTICATED COPY
AMD
PY
I that it no longer accommodates this Contract, the Parties shall use their best
2 efforts to amend this Contract as may be necessary for filing by Sierra with
3 FERC. Sierra shall then promptly file the amended Contract with FERC, which
4 filing shall be supported by Western, and all reasonable associated filing
5 costs, excluding attorney's fees, paid by Western, and will be subject to the
6 provisions of Section 16.
1
8 9. DELIVERY OF STAMPEDE ENERGY TO SIERRA:
9 Sierra agrees to accept delivery into its electrical system of all energy
10 generated by Stampede. Unless otherwise agreed by the Parties, the points of
11 receipt for such deliveries shall be the Western-owned disconnect switch
12 (6001-3) at the Stampede Switchyard adjacent to Stampede. The quantity of
13 energy delivered to Sierra shall be determined by metering installed, owned,
14 and operated at Western's expense. Metering data will be provided to Sierra
` 15 by Western on a monthly basis with generation records accounted for and
16 maintained by both .Parties. Stampede Energy delivered to Sierra shall be
11 accounted for pursuant to Section 11*
.
18
19 10. OPERATION OF THE STAMPEDE EXCHANGE ACCOUNT:
20 On the effective date of this Contract, Sierra shall establish, and thereafter
21 maintain, the Stampede Exchange Account, as provided in this section.
22 Appendix A, attached hereto and incorporated herein, sets forth an example
23 month. calculation that illustrates the operation of the Stampede Exchange
24 Account. At no time will a debit entry be made to the Stampede Exchange
25+ Account in excess of the credit balance of such account, unless otherwise
26 agreed to by both Parties. Amounts owed to Sierra for services provided to
�27 Western that exceed the credit balance will be billed by Sierra pursuant to
28 Section 13.
6
AUTHEAMCATM COPY
1 10.1.6 If directed by Western, a debit entry shall be made equal
2 to the dollar value of the Stampede Energy purchased by Sierra as
3 valued in Paragraph 10.1.1. Payment by Sierra to Western
4 associated with such debit entry shall be made in accordance with
5 Section 13.
6
7 10.2 Sierra shall notify Western of the balance of the Stampede
8 Exchange Account as of the first day of each calendar quarter, and
9 provide Western with a summary of Stampede Exchange Account transactions
10 1 for the immediately preceding quarter. Within fourteen (14) days after
11 the last day of March following the effective date of this Contract, and
12 within fourteen (14) days after the last day of March of each year .
13 thereafter in the event the Contract term is extended, Sierra shall
14 notify Western of the balance of the Stampede Exchange Account after all
'15 debit and credit entries, described above, have been made for the annual
16 period ending with the month of March. Sierra and Western shall then
17 agree as to the disposition of the bal-once in the Stampede Exchange
18 Account. Unless otherwise agreed by the Parties, the balance in the
19 Stampede Exchange Account as of the last day of March shall be reduced
20 to zero by April 30th through one of the applicable debit methods
21 , described in Subsection 10.1; gxcept, That the time limit on such annual
22 reduction shall be extended for a mutually agreeable period of time in
23 the event that operating constraints as described in Subsection 11.3
24 prevent the delivery of energy as contemplated in Paragraph 10.1.3.
25
26 11. DELIVERIES TO WESTERNi
27 11.1 Upon notification by Western, Sierra shall deliver to Western a
28 quantity of energy specified by Western on a non-firm basis. The
8 AU;HExnc. 9 COPY
1 11.3 Sierra shall not be obligated to deliver Stampede Energy to CAP P
2 Western at any time when Sierra determines, consistent with Prudent
3 Utility Practice, that transmission constraints or unacceptable
4 operational conditions exist on Sierra's system.
5
6 12. SIERRA'S RATES AND CHARGES:
7 12.1 Sierra shall provide Western's Authorized Representative a copy of
8 the CSPP rates on or before the effective date of the Contract and as
9 such rate may be from time to time revised and approved or accepted for
10 filing by the California Public Utilities. Commission.
11
12 12.2 Sierra's rate for non-firm transmission service, for deliveries of
13 energy to Western as provided in Section 11, shall be established
141 pursuant to the WSPP Agreement, Service Schedule D, which is included
15 herein by reference. The Parties have agreed that the rate for such
16 service shall be S0.003/kWh. In addition, Western shall compensate
17 Sierra for its system transmission losses associated with such
18 deliveries. Sierra's' system transmission loss factor, for purposes of
19 this Contract, is four percent (4%). The transmission service rate
20 shall be renegotiated if such rate is found to be in violation of the
21 WSPP Agreement.
22 '
23 12.3 Western shall pay Sierra an administrative services charge of
24 Three Hundred Twenty Dollars ($320.00) per month each month when a debit
25 and/or credit is made to the Stampede Energy Account.
26
• 28 /// A1IC1►
10
e'1 4 1
AftrjMC
copy
1 ' operate, maintain, replace, and test the demand tape recorders, all at
2 the expense of Sierra. Sierra shall be given access to the tape demand
3 recorders at reasonable times arranged in advance with Western.
4
i
5 15.3 Sierra shall have the right to install its own meter seals on
6 Western-owned revenue meters.
7
8' 15.4 Sierra reserves the right to review and approve any modifications
9 performed by Western on the metering facilities referenced in
10 Subsection 15.1 above.
11
12 16. REGULATORY APPROVAL:
13 In the event of any Adverse Regulatory Action, the Parties shall make best
14 efforts to renegotiate the provisions of this Contract in an attempt to
_ 15 restore balance of benefits and burdens to the Parties originally established
16 and contemplated by this Contract. If, after ninety (90) days from the date
17 of any such Adverse Regulatory Action, the Parties have failed in their
18 attempts to renegotiate the Contract, the Contract shall terminate.
19 �
20 17. AUTHORIZED REPRESENTATIVES OF THE PARTIES:
21 Each Party to the Contract, by written notice to the other, shall designate
22 the representative(s) who is (are) authorized to act in its behalf with
23 respect to those matters contained in the Contract which are the functions and
24 responsibilities of the Authorized Representatives of the Parties. Each Party
25 may change the designation of its Authorized Representative(s) upon oral
26 notice given to the other, confirmed promptly by written notice delivered
'27 pursuant to Section 18.
28
12
"DMCAM C,,
r
I Congress making the necessary appropriations required for the continued
2 performance of Western obligations under this Contract. In case such
3 appropriation is not made, Sierra hereby releases Western from its
4 contractual obligations and from all liability due to the failure of
5 Congress to make such appropriation.
6
7 19.2 Officials Not to Benefit
8 No member of or delegate to Congress or resident commissioner shall be
9 admitted to any share or part of this Contract or to any benefit that
10 may have arisen therefrom, but this restriction shall not be construed
11 to extend to this Contract if made with a corporation or company for its
12 general benefit.
13
14 19.3 Covenant Against Contingent Fees
15 The Parties warrant that no person or selling agency has been employed
16 or retained to solicit or secure this Contract upon an agreement or
17 understanding for a commission, percentage, brokerage, or contingent
18 fee, excepting bona fide employees or bona fide established commercial
19 or selling agencies maintained by the Parties for the purpose of
20 securing business. For breach of violation of this warranty, Western
21 shall have the right to withdraw from this Contract without liability
22 or, in its discretion, to deduct from the contract price or
23 consideration Western's share of the full amount of such commission,
24 percentage, brokerage, or contingent fee.
25
26 19.4 Contract Work Hours and Safety Standards
27 ` This Contract to the extent that it is of a character specified in
28 Section 103 of the Contract Work Hours and Safety Standards Act (Act) ,
MOOMMED
14
1 40 U.S.C.A. Section 329 (1986) , is subject to the provisions of the Act,
2 , 40 U.S.C.A. Sections 327-333 (1984) , and to regulations promulgated by
3 the Secretary of Labor pursuant to the Act.
4
I
5 19.5 Ecual Opportunity Employment Practices
6 Section 202 of Executive Order No. 11246, 43 Fed.Reg. 46501 (1978),
7 which provides, among other things, that the Parties will not
8 discriminate against any employee or applicant for employment because of
9 r.ace, . color, religion, sex, or national origin, is incorporated by
10 reference in this Contract.
11
12 , 19.6 Use of Convict Labor
13 The Parties agree not to employ any person undergoing sentence of
14 imprisonment in performing work under this Contract except as provided
15 by 18 U.S.C. 4082(c)(2) and Executive Order 11755, December 29, 1973.
16
17 20. ENTIRE AGAEEMEW':
18 This Contract constitutes the entire agreement of the Parties and supersedes
i
19 all previous agreements for services provided for herein, whether written or.
20 oral . This Contract may be amended only by an instrument in writing, executed
21 by both Parties.
22
23
24
25
26'
27
281
15
a it
1 IN WITNESS WHEREOF, the Parties have caused this Contract to be executed
2 the day and year first above written.
3
4 WESTERN AREA POWER ADMINISTRATION
5
i
6 By; G
7 Title: Area Manager
B Address: 1825 Bell Street, Suite 105
9 Sacramento, CA 95825
10
11i SIERRA PACIFIC POWER COMPANY
12
A
13 (Seal) By:
14 Attest: Title: Vice President, Wholesal is Business
_ 15: By: Address6l00 Neil Road
16 Title: Tom, Reno, W 89520-0400
17
18 APPVD.
19
20
21 '
22
23
24
25
26
) 27
28 �C��
16
` AUTHENT GATED copy
Sierra Pacific Power Company
Contract No. 94-SAO-00010
Appendix A
Appendix A
(Stampede Exchange Account — Example Month Calculation)
Debit Credit
Account Account Balance
Gross Stampede Hydro Generation:
525,143 kWh x
85% Non-Time Diff. CSPP Energy Rate
$0.021225 (1st Qrt) $11,146 $11,146
(§9 & 10.1.1)
Payment to Accounts Specified by Western $(5,422) $ 5,724
(§10.1.2)
Sierra Administrative Fee $ (320) $ 5,404
(§10', 10.1.5, & 12.3)
Energy Delivered to Western With Losses
200,000 kWh x 85% Time-Diff. Off-Peak
CSPP Rate $0.019610 (1st Qrt) x 1.04 $(4,079) $ 1,325
(§10.1.3 & 11)
Transmission Service Charge
200,000 kWh Delivered to Western x
$0.003 kWh _ $ 600) $ 725
(§10.1.4 & 12.2)
Stampede Energy Purchased by Sierra as
Directed by Western $ (500) $ 225
(§10.1.6)
Balance Remaining in Exchange Account at
Month End2 $ 225
�i
' Section 10 provides that "...at no time will a debit entry be made to the stampede Exchange
Account in excess of the credit balance of such account, unless otherwise agreed to by the Parties. Amounts CYV
owed to Sierra for services provided to Western that exceed the credit balance will be billed by Sierra."
2
ti
Options for Disposition of Credit Balance: ►
(1) Sierra purchases and makes payment to Western per ;10.1.S. 0
(2) Balance is carried forward to next month (zero out annually March-end balance Q,
during April).
WESTERN
AREA POWER ADMINISTRATION
Sierra Nevada Region
STAMPEDE POWERPLANT
(box■ denotes powerplant)
STAMPEDE RE-50
Baca Reis
F -
Y I 7»A,wlO tAKE f fISHWAY /
{ rTRAMIa LAK �.
MARRLE SLUR OAM CARSC.
I
ERU=K RA'--.—
ruckee
DIVERSION OA/A� ..
]n.r.w p'I,�: �'��~ -•^al CARSCN RIVER i1tR.ci:.
a•^w.0'O OIVERSiON OAM tuw•:
STAMPEDE RES IY. �,--.;_y �,,.•
Wllw
�� S ;Arlcrr.tN vEs
I - iRCSSFR CREEK 7E5
rY IV ` ' �.Vo•nuw to.•
����•1 a_lti`.,� 7wu^] UVER URSCN:aRF rAS:'JRE
LAKE-AHCE DAM 1" cn'Y f1EOJEC:
i,
!AKE-MICE
� I
\\ � DRESSLER APTERRAY
N ` I
CARSON CaAL1
J NATASHEAMU RES \`\ \
♦ .� \KA{KFR:ARE
o
A/\
�lasizoe P;-Igiect
October 00, P;-ol:os ed Power Rates
Adjustment
October 2005 Proposed Rate Adjustment Brochure
May 2005
Table of Contents
Section Page
I Summary—Proposed Rates or Stampede Power 3
( II Rate Adjustment Procedures
i A. Public Process ( 5
B. Written Comments I 6
C. Revision of Proposed Rates I 6
D. Decision of Proposed or Revised Proposed Rates I 6
E. Final Decision on the Rate Adjustment I i
F. Additional Information 7
III Stampede Project Description 8
( I
IV Stampede Rate History 1
A. Summary I 10
B. Sierra Pacific Power Company ( 13
C. U.S. Fish and Wildlife Contract ! 14
! ; D. Stampede Enemy Exchange Account (SEER)
i
V I Power Re avment Studv (PRS) I
j A. PRS Summary I 15
B. Washoe PRS History ! 15 1
j C. Cost Allocation i 16
D. Revenue Requirements ! 171
E. Cost Projections I 18 I
F. Interest Rates I 18
( G. Deferred Expenses I 19
f I H. Repayment Periods I 20
L Status o Re avment I -'0
VI I Proposed Rate or Stampede Power
VII ! Appendices _ I 26 l
A. Proposed Rates Federal Re.,ister,Votice (FR.'V)
i B. Washoe PRS Executive Sunnnan
C. Average Cost of Washoe Project to be Included in CVP Porter
Revenue Requirement (PRR)
D. List of Documents Available on Request _
Section
SUMMARY — PROPOSED RATES FOR STAMPEDE
POWER
This brochure provides information on the Sierra Nevada Region, Western Area
Power Administration's (Western) proposed adjustment of power rates for the
Washoe Project, Stampede Division (Stampede), to be effective October 1, 2005.
According to Reclamation Law and Department of Energy (DOE) policies, chiefly
DOE Order RA6120.2 Power Marketing Administration Financial Reporting
(RA6120.2), Western must establish power rates sufficient to recover annual
expenses and to repay the Federal government's investment in building
generation and transmission facilities. Rates must also be set to cover interest
expenses on the unpaid balance of power-related facilities, replacements and
additions.
The present Stampede rate schedule (SNF-5) was confirmed and approved by
the Federal Energy Regulatory Commission (Commission) pursuant to
Delegation Order No. 0204-108 on October 19, 2000 in Docket No EF00-5161-
000. The rate was approved for the period from October 1 , 2000 through
September 30, 2005. The rate schedule established floor and ceiling -aces. 1 he
floor rate is the Stampede Energy Exchange Account (SEER) rate. The ceiling
rate is the rate necessary to repay the Stampede annual expenses and power
investments over the remaining repayment period.
To serve project use loads and provide alternative marketing strategies for the
energy from Stampede, Western's contract with Sierra Pacific Resources (Sierra)
established the SEEA. The SEEA is an annual energy exchange account for all
generation from the Stampede powerplant. Under this contract, Sierra accepts
delivery of all energy generated from Stampede into Sierra's electrical system.
The dollar value of the Stampede energy received by Sierra during any month is
credited into the SEEA. In the past, Western has used the SEEA to benefit
project use facilities and market energy from Stampede to preference entities.
Beginning October 1, 2005, the costs remaining after meeting project use
requirements are included in the CVP power revenue requirement (PRR) on an
annual basis. This situation makes it unnecessary to establish a new proposed
ceiling rate for Stampede. Western's Contract No. 94-SAO-00010 with Sierra
sets the floor rate. The formula for the proposed floor rate is equal to 85 percent
of the then-effective, non-time differentiated rate provided in Sierra's California
Quarterly Short-Term Purchase Price Schedule for As-Available Purchases from
Qualifying Facilities with Capacities of 100 kilowatts (kW) or less. This floor rate
reflects the rate used to determine the value cf:he .E`A for the benefit of
project use facilities. The current -1c cr -GLe a 1 7.39 miilsik0cwatt-hour (kWh).
Section II
Rate Adjustment Procedures
A. Public Process
Procedures for Public Participation in Power and Transmission Rate Adjustments
and Extension, 10 CFR Part 903, as amended (Procedures), is being followed for
the Washoe Project, Nonfirm Energy Rate Adjustment. These procedures
stipulate that if a power system has either "annual sales normally less than 100
million kilowatt hours or an installed capacity of less than 20,000 kilowatts", then
it qualifies as a minor rate adjustment. As a minor rate adjustment, there is no
public information or comment period for this rate process.
The first step required by the Procedures is the publication of a Federal Register
Notice (FRN). Western published the FRN announcing the Proposed Rates and
the public consultation and comment period on May 6, 2005. The public
consultation and comment period began with the publication date of the FRN and
closes 30 days thereafter. The FRN is included in this brochure as Attachment 1.
Table ll-1 is a schedule of major steps for the Proposed Rate Adjustment
prcceedings.
Table II-1
Schedule of Major Steps
Washoe Project, Stampede Division
Proposed Rate Adjustment Proceeding
P-.,ciication of FRN for Proposed Rates announcing the
I
beginning of the consultation and comment period for tita 6, 2005
Rate Process.
End of Comment and Consultation Period June 6, 2005
Planned Publication of Rate Order in FRN September 1, 2005
Effective Dates of Rates October 1, 2005
B. Written Comments
Interested parties may submit written comments to Western at any time during
the comment and consultation period. Written comments should be submitted to:
Ms. Debbie Dietz
Rates Manager
Western Area Power Administration
114 Parkshore Drive
Folsom, CA 95630
Western must receive the written comments by June 6, 2005, which marks the
end of the consultation and comment period, to ensure consideration in
Western's decision process.
C. Revision of Proposed Rates
After the comment period closes and consideration of written comments is
complete, Western may revise the proposed rates. If Western's Administrator
determines that further public comment should be invited, the Administrator shall
afford interested persons an appropriate period to submit further written
comments to Western regarding the revised proposed rates.
D. Decision on Proposed or Revised Proposed Rates
Fallowing the end of the comment period, Western's Administrator will submit 'he
proposed rates to the Deputy Secretary of Energy to confirm, approve, and place
- 6- -
in effect on an interim basis as Provisional Rates. The decision by the Deputy
Secretary of DOE, with an explanation of the principal factors leading to the
decision, will be announced in a final FRN.
E. Final Decision on the Rate Adjustment
The Deputy Secretary will submit all information concerning the Provisional
Rates to the Commission, and request approval of the Provisional Rates for a 5-
year period (through September 30, 2010). The Commission will then confirm
and approve the Provisional Rates on a final basis; remand the Provisional Rates
back to Western for further clarification and study; or disapprove the Provisional
Rates.
F. Additional Information
Additional information regarding the Proposed Rates or any questions regarding
this brochure may be directed to Ms. Debbie Dietz, Rates Manager, Sierra
Nevada Customer Service Region, Westem Area Power Administration, 114
Parkshore Drive, Folsom, CA 95630-4710, (916) 353-4453, e-mail
ddietz@wapa.gov.
Section III
Stampede Project Description
Stampede Darn and Reservoir are located on the Little Truckee River
approximately eight miles above the confluence of the Little Truckee and Truckee
River. The dam and reservoir are in Sierra County, California, about 11 miles
northeast of the town of Truckee. The water source for Stampede Reservoir is
the Little Truckee River drainage basin containing about 136 square miles of
densely wooded slopes and grass meadowlands.
When the Stampede Dam and Reservoir project was authorized in 1956, under
Public Law 858 on August 1, 1956, hydroelectric power development was
included. However, during the period 1966-1970 when Stampede Dam was built,
power facilities were not constructed because the power function was not
economically ju
stified.ustified. Nevertheless, provisions were made to facilitate the
addition of power facilities at a later date.
Subsequently, in July 1976, a preliminary reevaluation of a powerplant at
Stampede was conducted and published in a special U.S Department of Interior,
Bureau of Reclamation (Reclamation) report, Adding Powerglants at Existing
Federal Dams in California. In he report. Reclamation recommended
construction of a Stampede pcwerciant. as a result, definitive plan studies were
initiated in FY 1977, and construction of the powerplant was completed in 1987.
A one-half mile 60 kilovolt transmission line interconnects the Stampede power
facilities with Sierra's transmission system.
Stampede Dam and Reservoir are operated for four specific purposes: flood
control, fisheries enhancement, recreation, and power generation. The
powerplant has a 3.65 megawatt (MW) generator, and it provides approximately
11 million kilowatt-hours (kWh) annually. The energy generated by the
powerplant has a priority reservation for designated Washoe Project loads. All
remaining energy generation is sold on a nonfirm basis under the conditions
outlined in Western's contract with Sierra. Energy generated at Stampede
Powerplant is dependent on the run of the river, and is therefore nonfirm. Further
information on Stampede's historical generation is available upon request.
The Lahontan National Fish Hatchery and the Marble Bluff Fish Facility are
project use facilities entitled to energy from Stampede Powerplant. The Marble
Bluff Fish Hatchery is located on the Truckee River about 3.5 miles upstream
from Pyramid Lake. The other project use facility, the Lahontan National Fish
Hatchery, is located off the Carson River just south of Carson City in
Gardnerville, Nevada. The loads at these facilities are projected to be
approximately two million kWh annually. Further information on project use loads
is available upcn request.
n December 2002,January NO' and Marclh'w', debit:entries exceeded the SEER balance. in these
J itl S. the iilierence .vas billed to `PVC 1 •` Jkc^,3 s ±1 `.3r1±.' c11Cdtli,�.
Section IV
STAMPEDE RATE HISTORY
A. Summary (Jan 1988 —July 1993)
As part of the Washoe Project, Reclamation constructed the 3.65 (MW)
Stampede Powerplant that has an expected generation of approximately 11
million kWh of energy annually. Western markets the power generated at
Stampede Powerplant located on the Little Truckee River in California.
Congress has designated the Fish and Wildlife Service (FWS) loads at the
Lahontan National Fish Hatchery and the Marble Bluff Fish Facility as project use
loads in accordance with the Washoe Project Act of August 1, 1956, 70 Stat.
775, and 50 FIR 21350 (Washoe Act) and, thus, entitled those entities to the
energy available from Stampede powerplant on a nonreimbursable, first-priority
basis. The loads at these facilities are projected to be approximately 9.7 million'.
kWh annually.
For the initial Stampede rate action, Western requested and received approval of
cost recovery rates of 40.45 mills/kWh and 27.86 mills/kWh from the Commission
for the energy remaining after meeting project use, depending upon whether or
not the Federal Government assumed operation and maintenance (0&N1)
responsibilities fcr the facility.
ERRATA SHEET
Washoe Project
October 2005 Proposed Power Rate Adjustment
Revisions to the Rate Brochure.
Page 10. 2"d paragraph.
Revise the last sentence in the paragraph to read, "The loads at these facilities are
projected to be approximately 2 million kWh annually."
Western initially allocated the remaining energy to the Truckee-Donner Public
Utility District (Truckee-Donner), a preference entity within the service area of
Sierra, on October 25, 1985. Due to unsuccessful negotiations with Sierra,
Truckee-Donner was unable to enter into a contract with Western to take delivery
of the energy from the powerplant. Recognizing Truckee-Donner's inability to
use Stampede energy, Western negotiated Contract No. DE-MS65-86WP59067
(Contract 59067) under which Western marketed the Stampede energy to Sierra
at a rate equal to 85 percent of the then-effective, non-time differentiated rate
provided in Sierra's California Quarterly Short-Term Purchases from Qualifying
Facilities with Capacities of 100 kW or less approved by the California Public
Utilities Commission, for one year commencing January 14, 1988. By letter of
November 8, 1988, Truckee-Donner informed Western their inability to contract
for Stampede energy. As a result, Western rescinded the allocation of Stampede
energy to Truckee-Donner.
The rate methodology under which Western began selling Stampede energy to
Sierra was extended through a series of four amendments to Contract 59067
through June 30, 1990 to allow time to develop a procedure for setting power
rates that should be formally submitted to the Commission. Western'submitted a
second rate adjustment to the Deputy Secretary of DOE on January 10, 1990.
On March 28, 1990, the Deputy Secretary of DOE approved the rate adiustment
on an interim basis for Stampede, and the rate adjustment received Commission,
approval in June 7, 1991 .
The second rate adjustment established an annual bidding process for the sale
of Stampede energy. The energy was sold to the entity offering the highest price
for the energy, provided that the bidding price was between the floor and ceiling
rate established by Western. The floor rate was based on the greater of either:
(a) the rate necessary to recover the projected annual O&M expenses for the
powerplant plus 2 mills/kWh, or (b) 85 percent of the purchaser's projected
average marginal energy cost. The ceiling rate was the full cost recovery rate
determined by the power repayment study (PRS). At the time of the second rate
adjustment, this PRS ceiling rate was 50.96 mills/kWh.
Western first accepted bids for Stampede energy in 1990 for the sale from July 1,
1990 to June 30, 1991. Western did not receive any bids that comported with the
bidding process set forth under the rate adjustment. However, in a letter dated
C:
June 7, 1990, Sierra did offer tc continue to purchase the Stampede energy for a
15-month period under essentially the same rate methodology as set forth in
Contract 59067, at a rate less than the floor rate. Subsequently, based on
negotiations between Western and Sierra, Sierra agreed to pay 19.52 mills/kWh
for the Stampede energy, the floor price established in the rate adjustment.
However, Sierra did not agree to the retroactive cost adjustment feature set forth
in the approved rate. Western entered 'nto a 1-year agreement with Sierra at the
19.52 mills;'k'Nh rate, `vnicn was 3r:Droved by the 'Nestern's Administrator in
accordance with Delegation Order No. 0204-108. A copy of the Delegation
Order is available upon request.
Since 1988, the Stampede power rates have not been competitively bid.
Western initiated a number of bid processes and while preference customers did
express an interest in participating in the bidding process, however they were
unable to secure the necessary contractual arrangements under the
Commission-approved rate process, to receive the power. As a result, Western
entered into short-term arrangements at Administrator-approved short-term rates
below the floor rate established in accordance with the rate schedule.
B. Sierra Pacific Power Company Contract
On April 1. 1994, Western executed Contract No. 94-SAO-00010 (Contract
00010) with Sierra which provides Western the mechanism necessary to provide
power to FINS project use facilities at Lahontan National Fish Hatchery and the
Marble Bluff Fish Facility. The contract also established the Stampede Energy
Exchange Account (SEEA) which provides Western the option to market all
energy, in excess of the energy which is required to provide service to project
use loads, outside of Sierra's control area. This contract is renewable annually
and has continued to be renewed every year since its inception due to its ability
to deliver energy to project use loads and to provide flexible options to Western
`or the disposition of any additional energy.
Section IV
STAMPEDE RATE HISTORY
A. Summary (Jan 1988 —July 1993)
As part of the Washoe Project, Reclamation constructed the 3.65 (MW)
Stampede Powerplant that has an expected generation of approximately 11
million kWh of energy annually. Western markets the power generated at
Stampede Powerplant located on the Little Truckee River in California.
Congress has designated the Fish and Wildlife Service (FWS) loads at the
Lahontan National Fish Hatchery and the Marble Bluff Fish Facility as project use
loads in accordance with the Washoe Project Act of August 1, 1956, 70 Stat.
775, and 50 FIR 21350 (Washoe Act) and, thus, entitled those entities to the
energy available from Stampede powerplant on a nonreimbursable, first-priority q
basis
The loads at these facilities are projected to be approximately 9.7 million'.
annually.
kWh
For the initial Stampede rate action, Western requested and received approval of
cost recovery rates of 40.45 mills/kWh and 27.86 mills/kWh from the Commission
for the energy remaining after meeting project use, depending upon whether or
not the Federal Government assumed operation and maintenance (O&M)
responsibilities for the facility.
ERRATA SHEET
Washoe Project
October 2005 Proposed Power Rate Adjustment
Revisions to the Rate Brochure.
Page 10. 2nd paragraph.
Revise the last sentence in the paragraph to read, "The loads at these facilities are
projected to be approximately 2 million kWh annually."
Western initially allocated the remaining energy to the Truckee-Donner Public
Utility District (Truckee-Donner), a preference entity within the service area of
Sierra, on October 25, 1985. Due to unsuccessful negotiations with Sierra,
Truckee-Donner was unable to enter into a contract with Western to take delivery
of the energy from the powerplant. Recognizing Truckee-Donners inability to
use Stampede energy, Western negotiated Contract No. DE-MS65-86WP59067
(Contract 59067) under which Western marketed the Stampede energy to Sierra
at a rate equal to 85 percent of the then-effective, non-time differentiated rate
provided in Sierra's California Quarterly Short-Term Purchases from Qualifying
Facilities with Capacities of 100 kW or less approved by the California Public
Utilities Commission, for one year commencing January 14, 1988. By letter of
November 8, 1988, Truckee-Donner informed Western their inability to contract
for Stampede energy. As a result, Western rescinded the allocation of Stampede
energy to Truckee-Donner.
The rate methodology under which Western began selling Stampede energy to
Sierra was extended through a series of four amendments to Contract 59067
through June 30, 1990 to allow time to develop a procedure for setting power
rates that should be formally submitted to the Commission. Western submitted a
second rate adjustment to the Deputy Secretary of DOE on January 10, 1990.
On March 28, 1990, the Deputy Secretary of DOE approved the rate .adjustment
on an interim basis for Stampede, and the rate adjustment ,eceivad C,:rnmissicn
approvail in June 7, 1991.
The second rate adjustment established an annual bidding process for the sale
of Stampede energy. The energy was sold to the entity offering the highest price
for the energy, provided that the bidding price was between the floor and ceiling
rate established by Western. The floor rate was based on the greater of either:
(a) the rate necessary to recover the projected annual O&M expenses for the
powerplant plus 2 mills/kWh, or (b) 85 percent of the purchaser's projected
average marginal energy cost. The ceiling rate was the full cost recovery rate
determined by the power repayment study (PRS). At the time of the second rate
adjustment, this PRS ceiling rate was 50.96 mills/kWh.
Western first accepted bids for Stampede energy in 1990 for the sale from July 1,
1990 to June 30, 1991. Western did not receive any bids that comported with the
bidding process set forth under the rate adjustment. However, in a letter dated
June 7 1990 Sierra did offer to continue to purchase the Stampede energy for a
,
15-month period under essentially the same rate methodology as set forth in
Contract 59067, at a rate less than the floor rate. Subsequently, based on
negotiations between Western and Sierra, Sierra agreed to pay 19.52 mills/kWh
for the Stampede energy, the t1oor price established in the rate adjustment.
However, Sierra did not agree to the retroactive cost adjustment feature set forth
in the approved rate. Western entered into a 1-year agreement with Sierra at the
19.0-2 millsikWh rate. 'wnicn was 3coreved by the 'Nestem's Administrator in
accordance with Delegation Order No. 0204-108. A copy of the Delegation
Order is available upon request.
Since 1988, the Stampede power rates have not been competitively bid.
Western initiated a number of bid processes and while preference customers did
express an interest in participating in the bidding process, however they were
unable to secure the necessary contractual arrangements under the
Commission-approved rate process, to receive the power. As a result, Western
entered into short-term arrangements at Administrator-approved short-term rates
below the floor rate established in accordance with the rate schedule.
B. Sierra Pacific Power Company Contract
On April 1 . 1994, Western executed Contract No. 94-SAO-00010 (Contract
00010) with Sierra which provides Western the mechanism necessary to provide
oower to FINS project use facilities at Lahontan National Fish Hatchery and the
Marble Bluff Fish Facility. The contract also established the Stampede Energy
Exchange Account (SEEA) which provides Western the option to market all
energy, in excess of the energy which is required to provide service to project
use loads, outside of Sierra's control area. This contract is renewable annually
and has continued to be renewed every year since its inception due to its ability
o deliver energy to project use loads and to provide flexible options to Western
'or the disposition of any additional energy,
C. U. S. Fish and Wildlife Service Contract
On June 27, 1994, Western executed Letter of Agreement No. 94-SAO-00013
with FVVS which established arrangements for billing credits from Sierra for FWS
loads up to the value of energy banked into the SEEA under Contract 94-SAO-
00010. This letter of agreement became effective May 1, 1994, with options for
annual renewal. It has been renewed every year since with the most recent
renewal occurring in April 2005 for the period through March 2006.
D. Stampede Energy Exchange Account (SEEA)
The SEEA is credited for energy generated at Stampede using Sierra's non-time
differentiated California Quarterly Short-Term Purchase Price Schedule for As-
Available Purchases from Qualifying Facilities with Capacities of 100 kW or less
rates at the time of receipt. Since 1999, this rate has remained static at 17.89
mills/kWh because of Sierra's unchanged tariff.
i,
The SEEA can be debited for: 1) project use load power costs; 2) Sierra's
administrative charge; 3) station service costs; and 4) energy to be delivered to
Western based on 85 percent of the CSPP rate at the time of the delivery and
associated transmission charges. Debit entries shall not exceed the credit
balance.2 The SEEA shall be zeroed out by April 30 of each year unless
otherwise agreed to by Sierra and Western. The SEEA provides a method for
providing project use benefits to FWS, as contemplated by the Washoe Act.
Historical information on the SEEA is available upon request.
Section V
POWER REPAYMENT STUDY
A. PRS Summary
Western's power rates are based on the costs associated with the production and
delivery of power to Western's customers. The historical costs and revenues
from accounting records and the future projected costs are scheduled year-by-
year in a Power Repayment Study (PRS). The PRS determines the level of
future revenues required to repay all of the costs within the allowed time periods
and within legislative requirements. The PRS does not set the actual rate
design; it merely determines the amount to be repaid.
A PRS is prepared each year to test the adequacy of the existing rates. The
annual update involves actual revenues and expenses for the previous year, plus
j`
new projections of revenues and expenses for the remainder of the repayment
period. If the PRS demonstrates that repayment requirements will not be
recovered or will be exceeded under the existing rates, Western prepares and
recommends a plan to meet those repayment requirements. This plan is
supported by a revised PRS and may include increased power rates, decreased
costs, modified contracts, or other practicable means.
B. Washoe PRS History
Historical Stampede revenues have been derived from nonfarm short-term sales
of energy. Annual expenses include O&M, project use and interest. Capitalized
costs include payment of any deficits and repayment of associated replacements
and additions.
The PRS begins in 1987 when generation first began from Stampede Power
plant. Repayment requirements are dictated by the authorizing act for power
facilities, other applicable acts, and DOE policies, chiefly RA6120.2.
C. Cost Allocation
J « O&M and investment costs associated with the Stampede Powerplant are
allocated by Reclamation. The existing cost allocation, updated to reflect FY
2003 levels, is used for this rate adjustment.
is
T he standard Separable Costs-Remaining Benefits method of cost allocation is
not used for Stampede. Western and Reclamation agreed to adopt a method
that is referred to as Planning Instruction No. 81-02 (71 06), documented in a
January 22, 1981 , memorandum from the Commissioner of Reclamation,
Subject: Allocating Joint Costs to Small Add-on Hydropower Plants.
Since execution of Contract 94-SA000010 with Sierra in FY 1994, which
provides the benefit of Stampede power for project use loads, a portion of the
costs assigned to power are non reimbursable and no longer recovered through
-- 16 - -
the Stampede power rates. Generally, the amount of nonreimbursable O&M
expense, interest expense, and capital costs are determined by a ratio of the
annual project use power costs debited from the SEEA to the annual revenues
credited to the SEEA. This calculation is performed each year resulting in a
different percentage of reimbursable costs each year. Over the past seven
years, the reimbursable percentage recovered by power has averaged 40
percent.
All project use costs are reimbursable and under the PRS are considered a
separate expense.
D. Revenue Requirements
In aenerai. revenue must be sufficient to recover the reimbursable portion of the
following expenses:
1 . Annual OEM, project use, and interest on unpaid investment;
2. After payment of annual expenses, deferred expenses (deficits) are
repaid, starting with the highest interest-bearing deferred expense first;
3. After payment of annual expenses and deferred expenses, the Federal
investment allocated or assigned to the power function must be repaid
within the allowable repayment period. Once again, the highest interest-
bearing investment is repaid first. These Federal investments include:
a. Hydroelectric generation facilities;
b. Transmission facilities;
c. Additions; and,
d. Replacements.
E. Cost Projections
RA6120.2 specifies that expenses may be adjusted for inflation and other
anticipated conditions during the cost evaluation period, which is normally the
first five future years of the PRS period. By applying this escalation, the
expenses more accurately reflect the required revenues during the first five future
years that are involved in this rate adjustment period. O&M expenses for the rate
case period are coordinated with Western and Reclamation staff and reflect FY
2005 budget documents.
Project use costs are considered as a separate annual expense and have ranged
from S 97,853 in 1998 to $190,313 in 2004.
F. Interest Rates
The annual interest expense is determined by multiplying the various unpaid
investments by the appropriate interest rate. A list of interest rates for FY 3 :o
FY 99 follows:
Fiscal Year I Interest Rate
1987 I 8.875
1988 8.500
1989 9.250
1990 i 8.875
1991 8.750
1992 1 8.500
1993 7.875
1994 I 7.125
1995 7.250
1996 I 7.625
' 1997 ( 6.875
1998 6.000
1999 I 5.750
2000 5.750
2001 ( 6.250
2002 5.500
2003 j 4.780
2004 5.125
For Stampede Powerplant, a 2.591 percent interest rate is applicable to power
investment authorized for the construction of the project. The interest rate to be
applied to new investments, additions, and replacements is determined by the
interest rate criteria of RA6120.2, effective October 1, 1983. For Stampede,
these interest rates range from 4.780 to 9.250 percent. The interest rate criterion
in RA6120.2 makes the applicable interest rate equal to the average yield during
the preceding fiscal year on interest-bearing securities of the United States
which, at the time the computation is made, have terms of 15 years or more
remaining to maturity. The applicable rate will be for the year in which
construction of the facilities is initiated.
G. Deferred Expenses
Deferring payment of annual expenses is allowed under RA6120.2 for short
periods of time. For repayment ourposes, when a deferral or deficit occurs, it is
assumed that a loan is taken out for jhe amount of the deficit. Then the initial
loan, plus interest, must be repaid from future years' revenues. The applicable
interest rate for deficits is also determined from the rate criteria of RA6120.2.
H. Repayment Periods
Investments and additions allocated to power must be repaid with interest within
50 years after the related facility is placed in service. Replacements must be
repaid within the estimated service life of each piece of equipment, or 50 years,
whichever is shorter.
I. Status of Repayment
Due to the difficulty in selling the energy from Stampede Powerplant at full cost
recovery rates. Western has entered into short-term arrangements at rates which
oroviae the maximum cost recovery possible. Washoe revenues were sufficient
to repay the annual expenses and$ 984,575 of capitalized deficits through FY
CO4 repayment of investment has occurred. In most years, portions of the
N � to rep y
G&M and interest expenses have been deferred and capitalized.
?eeinning Cctober 1, 2005, the costs remaining after meeting project use
requirements are included in the Central Valley Project (CVP) power revenue
requirement (PRR). Based on this situation, the status of repayment for
Stampede will improve dramatically. Beginning in FY 2006, Western expects
-evenues sufficient to repay annual expenses and all capitalized deficits by 2023.
In addition, this repayment schedule repays all capitalized investments within the
allowable repayment period.
The Washoe PRS Executive Summary prepared for the proposed rates can be
found in Section VII, Appendix B.
Section VI
Proposed Rate for Stampede Power
Current rates for the sale of non-firm energy from Stampede consist of floor
and ceiling rates and are designed to recover an annual revenue requirement.
The proposed floor rate for non-firm energy from Stampede is 17.89
mills/kilowatthour (miils/kWh) and on average for the 5-year rate period provides
sufficient revenue to pay for 96 percent of O&M expenses, excluding interest
expense. The current ceiling rate was set by a power repayment study and
provides sufficient revenues to repay all annual costs, including interest expense,
and the investment within the allowable period.
The 2004 CVP Power Marketing Plan states that the output from the Washoe
Project remaining after meeting project use toads will be marketed to CVP
preference customers. Beginning October 1, 2005, the costs remaining after
meeting project use requirements are included in the CVP power revenue
requirement (PRR) on an annual basis. This situation makes it unnecessary to
establish a new proposed ceiling rate for Stampede. Western's Contract No. 94-
SAO-00010 with the Sierra sets the floor rate. Based on estimated expenses
and projected revenues generated from the floor rate, Western anticipates
including an annual average cost of$401,000 in the CVP PRR for the 5-year rate
case period (FY) 2006-2010). See Section VII, Appendix C for more information
on this estimate.
This proposed floor rate is used to calculate the value or the S'=*A and
determines the benefit of Stampede power for project use loads. Western
applies the ratio of projected project use costs to the projected revenue recorded
in the SEEA to determine a non-reimbursable percentage. This non-
reimbursable percentage is then applied to the appropriate power-related costs
to determine the non-reimbursable costs. The difference between total power
related costs and non-reimbursable costs is reimbursable costs. The
reimbursable costs are reduced by revenues from sales made at the floor rate.
Under the 2004 CVP Power Marketing Plan, the remaining reimbursable costs
and the estimated energy remaining after meeting project use service are then
transferred to the CVP.
The proposed rate formula for Stampede power is:
1
Stampede Annual Transferred PRR = Stampede Annual PRR— Stampede Revenue
i
Where:
Stampede Annual Transferred PRR = Stampede annual costs (Power
Revenue Requirement) transferred to
the CVP.
Stampede Annual PRR = The total power revenue requirement for
Stampede required to repay all annual
costs, including interest and the
investment within the allowable period.
Stampede Revenue = Revenue generated from the floor rate
and project generation.
Western will review the total PRR for Stampede annually in or around April of
each year. According to Contract No. 94-SAO-0010 that governs SEEA
administration, in April of each year, Western calculates the balance of the
SEEA. According to the current rate procedures for the CVP (Rate Schedule
CV-F11), Western will review the CVP PRR in March and September of each
year. Western will analyze the CVP financial data from October through
February, to the extent information is available, as well as forecasted data for
March through September. In the case of Stampede, Western will use the
disposition of the SEEA account through February and estimate March through
September to determine the amount of costs to be included in the CVP PRR.
Again, in September when the next review occurs, Western will use the same
methodology to include costs in the CVP PRR. Western estimates the Stampede
Annual Transferred PRR for October 2005 through September 2006 to be
$401,000.
A comparison of existing and proposed rates follows:
Comparison of Existing and Proposed Rates
Washoe Project, Stampede Powerplant
Non-Firm Energy Rates Existing Proposed Rates Percent
Rates as (effective Change i
of 1011/00 10/1/05)
(Mills/kWh)I !
Floor Rate Mills/kWh 17.89 j 17.89 ' 0%
Ceiling Rate 190.07 NIA NIA l
Due to the inclusion of Washoe output in the 2004 CVP Power Mark-eting Plan
and the rate design for the CVP, which uses percentages of a revenue
requirement instead of a per unit cost, the calculation of a ceiling rate is no longer
necessary.
Truckee Bonner Public Wility District
1 ,PFn<R..Aquera
J Rcn,z,d Hemig
Business Office (530) 527-3896 F-X (530) 587;5056 FatriciaS. al tCn
.im Taylcr
William L.Thcmascn
General Manager
September 1, 2005 peter L.Holzmeister
Melinda Grow
Public Utilities Specialist
Rates Division
Western Area Power Administration
114 Parkshore Drive
Folsom CA 95630
Re: WAPA Stampede Hydro Generation
Dear Ms Grow:
Truckee Donner PUD and the City of Fallon notified you on June 1, 2005 of our interest in acquiring energy
from the Stampede project. Since that date, we have reviewed the contract you have with Sierra Pacific
Power Company for Energy Exchange Services, contract No. 94-SAO-00010. Our consultants,
EnergySource are very familiar with the contract. The contract, sectionl0 through 13, specifies that Sierra
will make debit and credit entries to the Exchange Account based on a formula using the "then effective
CSPP non-time differentiated energy rate". However, it appears from further research with Sierra and the
CPUC that Sierra hasn't updated their California CSPP rate in a number of years. We believe that this tariff
should have been updated at least annually.
Sierra is currently paying another California based QF their Nevada CSPP tariff, which calls for a formula
pricing based on the hourly COB index. We understand their justification to the CPUC of the use of the
Nevada CSPP tariff for a California QF, is that Nevada retail customers pay 90% of Sierra's total energy
costs on an allocated basis.
We are raising this issue for your consideration, as we believe the exchange account may have been credited
with far less value than you have received. We further believe that resolving this matter could have
substantial value to WAPA and potentially to us if we have an opportunity to pursue further discussions
relative to acquiring Stampede hydro energy. We believe there is substantial value in maintaining the current
exchange agreement with Sierra and taking advantage of delivery options under section 11 of the Agreement.
Regardless of the resolution to the CSPP tariff issue, TDPUD and the City of Fallon desire to explore the
purchase of energy from the Stampede project. We would like to meet with WAPA at your earliest
convenience to discuss this matter further.
Sincerely J
Stephen Hollabaugh f
Assistant General Manager TDPUD
cc
Steve King,Assistant City Attorney,City of Fallon
Randy Harris-EnergySource
Tom Parker-EnergySource
pratE..;Yfi, ? 3,ox '09 :i '7rorr..er 4 ':i5 Ro:A