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