Loading...
HomeMy WebLinkAbout7 FSA Review Agenda Item # 7 7. TRUCKEE DONNER Public Utility District CONSENT To: Board of Directors From: Stephen Hollabaugh Date: March 04, 2009 Subject: Approve FSA review for transfer of 5MW of Nebo Natural Gas generation from the City of Payson to Truckee Donner PUD 1. WHY THIS MATTER IS BEFORE THE BOARD This matter is before the Board for consideration in obtaining the Financial Services Authority (FSA) approval of the transfer of a portion of the Nebo natural gas generation project from the City of Payson to Truckee Donner PUD. 2. HISTORY Information concerning the Payson Project was presented in a workshop on May 7th, 2008, an action item on June 4th, 2008 and an action item on November 5, 2008. Natural Gas Power Generation: The Payson Natural Gas Project has been named the Nebo power plant. Nebo is the name of a nearby mountain. The Payson Project is a UAMPS project and is owned by UAMPS members. This project has been discussed with the Board numerous times between 2005 and 2008. The Board approved and executed the pooling appendix between the City of Payson and Truckee Donner PUD in June 2008. The Board also approved and executed the resolution concerning the assignment agreement and power sales contract on November 5th, 2008. The City of Payson has also approved the assignment agreement and power sales contract for selling 3.6765% of their allocation at the Nebo plant (Payson Project). This transaction has been handled through UAMPS and was initially done through the pooling appendix. This natural gas plant will be a good fit with the District's diversified power supply. It gives the District a high load hour generation source and will give the District a supply to back up wind or geothermal resources. There are five steps for finalizing this transaction which include: 1. Approve and Execute the Pooling Appendix by City of Payson and Truckee Donner PUD (completed June 2008). 2. Submit the offer to the Payson Project participants (first right of refusal, completed Oct 2008). 3. Approve and execute an Assignment and Assumption Agreement/Power Sales Contract (completed November 2008) 4. Obtain FSA approval (this action) 5. Transfer effective (TDPUD will pay $164,287 after the transfer is effective) Steps 1 through 3 have been completed. The cost to the District will be the All-In Cost of operating the transferred percentage of the plant. There is a one time fee of $164,287 upon consummation of the permanent entitlement share transfer. This one time fee is the amount that the City of Payson paid into the maintenance account for this portion of the plant that may be transferred to the District. 3. NEW INFORMATION In order to complete the transfer, FSA approval is needed. FSA will audit both the buyer and seller of the project to confirm that the overall project is not affected by this transfer. This is required as part of the original contracts and bonding requirements for any transfers. 4. FISCAL IMPACT FSA will perform this audit for $50,000. This quote seems high, so staff has been working with UAMPS, City of Payson and FSA to lower this cost. Staff will continue to try to mitigate this cost as best we can, but FSA is standing firm on the $50,000 estimate. This cost will be paid from the approved FY09 purchased power budget. 5. RECOMMENDATION Approve the expenditure of up to $50,000 for Financial Services Authority for services necessary to approve the transfer of 3.6765% of the Nebo natural gas generation project from the City of Payson to Truckee Donner Public Utility District. /144 _ Stephen Hollabaugh Michael D. Holley Assistant General Manager General Manager