HomeMy WebLinkAbout9 Sierra Pacific Agreements Agenda Item # 9
Public Utl
ACTION
To: Board of Directors
From: Joe Horvath
Date: October 15, 2008
Subject: Authorize Agreements with Sierra Pacific for Underbuild Circuit
Design and Pole Contacts
1. WHY THIS MATTER IS BEFORE THE BOARD
Board approval is required to enter into a Pole Contact Agreement with Sierra Pacific Power
Company (Sierra Pacific) for the District's planned Donner Lake Circuit No. 3 feeder, the
majority of which will be underbuilt on Sierra Pacifies transmission line. Board approval is
also required for Sierra Pacific to provide engineering design services to the District for the
section of Sierra Pacific's transmission line containing the District's underbuilt circuit.
2. HISTORY
The approved FY08 budget includes capital projects necessary for the improvement of the
District's electrical system. One of these capital projects is the new Donner Lake Circuit No. 3
feeder. The Donner Lake Circuit No. 3 feeder is a new 12.47kV distribution feeder that will
originate at the District's Donner Lake Substation and connect to the Tahoe Donner area. This
new feeder will be approximately 12,000 feet long and is planned to be underbuilt on 2,000
feet of the District's existing 60kV transmission line and 10,000 feet of Sierra Pacifies existing
60kV transmission line. Design efforts are in progress for the District-owner portion of this new
feeder. For the portion to be underbuilt on Sierra Pacific's transmission line, the District has
been in discussions with Sierra Pacific since November, 2007. The attached Pole Contact and
Engineering Services Agreements are the result of those discussions.
3. NEW INFORMATION
The right for the District to construct a 10,000 foot long District-owned underbuild circuit on
Sierra Pacific's transmission line has been approved by Sierra Pacific subject to the attached
Pole Contact and Engineering Services Agreements. Costs to the District include a one-time
payment of $5,000 to Sierra Pacific for the right to use their facilities, engineering fees
estimated to be $31,939 payable to Sierra Pacific, and construction costs estimated to be
approximately $600,000. Construction of this new circuit is anticipated to occur in 2009.
Authorization for construction is not included as part of this action.
In addition, the District must also make payment to Sierra Pacific for a tax liability incurred by
Sierra Pacific in allowing joint use of their facilities by the District. The act of constructing,
upgrading and/or improving Sierra Pacific-owned facilities for the purpose of accommodating
their joint use by the District results in a non-cash contribution to Sierra Pacific. The value of
this non-cash contribution triqqers an income tax liability to Sierra Pacific under the 1986
Federal Tax Reform Act and is thus subject to a tax "gross up" in accordance with California
Public Utilities Decision No. 87-09-026 issued in Investigation No. 86-11-019. The 2009
California tax "gross up" rate for distribution facilities (less than 69kV) is 28% of construction
costs. Therefore if construction costs for this new underbuild circuit total $600,000, then a
payment of $168,000 will be due to Sierra Pacific after construction is complete.
4. FISCAL IMPACT
The source of funding for the new Donner Lake Circuit No. 3 feeder is Facilities Fees as this is
an approved Electric System Master Plan Project for providing increased electrical capacity
and improved reliability. Sufficient funds exist in the Electric Facilities Fees account to cover
the monies due Sierra Pacific and future construction costs. The cost breakdown for the Pole
Contact Agreement and the Engineering Services Proposal with Sierra Pacific is as follows:
Pole Contact Agreement Fee $5,000 (Facility Fees)
Engineering Services Agreement $31,939 (Facility Fees)
Tax Liability Payable to Sierra Pacific - 28% of Construction Costs (Facility Fees)
Authorization to construct this new distribution feeder is anticipated to be brought to the Board
for action in the spring of 2009. Authorization to make payment to Sierra Pacific for the tax
liability issue is anticipated to be brought to the Board for action in the fall of 2009 after actual
construction costs are known.
5. RECOMMENDATION
That the Board approve the Pole Contact Agreement with Sierra Pacific and authorize the
Board President to sign the Agreement including payment of a one-time charge of $5,000 for
use of Sierra Pacific's facilities with the funding sources as noted above.
That the Board approve the Engineering Services Agreement with Sierra Pacific and authorize
the Board President to sign the Agreement including a payment of $31,939 for estimated
engineering and design fees with the funding sources as noted above.
Stephen Hollabaugh Michael D. Holley
Assistant General Manager General Manager
POLE CONTACT AGREEMENT
BETWEEN
SIERRA PACIFIC POWER COMPANY
AND
TRUCKEE DONNER PUBLIC UTILITY DISTRICT
This Pole Contact Agreement("Agreement") is entered into as of the date of execution by
and between Sierra Pacific Power Company, a public utility organized and existing under the
laws of the State of Nevada ("Sierra"), and Truckee Donner Public Utility District, a public
utility organized and existing under the laws of the State of California ("TDPUD"), each
being a "Party" hereto and said entities collectively being sometimes referred to as "the
Parties";
RECITALS
WHEREAS Sierra owns and controls power poles, overhead power lines, easements and
related personal and real property which is suitable for the placement of TDPUD distribution
facilities.
WHEREAS TDPUD and Sierra are electric utilities providing similar electric services to
customers in their respective service territories.
WHEREAS the Parties recognize there to be economic, environmental, and aesthetic
benefits for TDPUD to underbuild(attach distribution circuits under Sierra's transmission
circuits)on Sierra's power poles in lieu of purchasing and installing new power poles.
WHEREAS TDPUD shall not serve customers in Sierra's service territory through the
use of any right granted to TDPUD by this Agreement.
WHEREAS the Parties are entering into and desire to execute an Agreement in which
Sierra shall grant to TDPUD a license to use Sierra's power poles, or the replacements
thereof, for the installation and maintenance of the wires and necessary equipment for a 3
phase 12.47kV distribution feeder along Sierra's#607 60kV transmission line that connects
TDPUD's Donner Lake and Tahoe Donner Substations.
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the section of Sierra's #607 60kV transmission line described below and as shown on Exhibit
"A"attached to and made part of this Agreement, or the replacements thereof, that connects
TDPUD's Donner Lake and Tahoe Donner Substations.
Begin: First wood pole on the east side of Donner Lake Road, Bearings 39' 19' 46.93"N
1200 17' 08.48"W Elevation 6293 ft.
End: First wood pole on the east side of Ski Slope Way, Bearings 39' 20' 21.44"N
1200 15' 12.59"W Elevation 6769ft.
Section 2.2. Term of Agreement: This Agreement shall be effective from the date of its
execution by both Parties and shall continue for forty (40) years thereafter. Upon expiration
of forty(40) years from the date of execution, this Agreement shall remain in effect and may
be terminated by either Party, its successors in interest or assigns, one-hundred-eighty(180)
days after written notice of termination is given to the other Party.
Section 2.3. Payment for Use of Facilities: TDPUD shall pay to Sierra, within thirty (30)
days of full execution of this Agreement and prior to TDPUD installing its power circuits and
attachments, a one time charge in the amount of five thousand dollars ($5,000) for the use of
Sierra's power poles shown on Exhibit A. Sierra shall remain sole owner of the Joint Poles
throughout the term of this Agreement.
Section 2.4. Installation and Use of Circuit: TDPUD is responsible for all costs for
engineering, designing and installing any distribution Power Circuit to be attached to the Joint
Poles. TDPUD may elect to contract the installation of the distribution Power Circuit to
Sierra or to an otherwise qualified electrical contractor acceptable to Sierra. TDPUD shall
own and operate the distribution Power Circuit so installed. TDPUD shall reimburse Sierra
within thirty (30) days of receipt of invoice for any actual and direct costs Sierra incurs for
work approved in writing in advance by TDPUD pursuant to this section, including labor and
overhead expenses.
Section 2.9. Removal of Equipment: Within sixty(60)days after the effective date of
termination pursuant to Section 2.2, TDPUD shall remove all Power Circuits and
Attachments. In the event of TDPUD's failure to remove Power Circuits and Attachments
within said period, Sierra may remove the same at the sole expense of TDPUD.
Section 2.10. Upgrade, Replacement or other Required Modifications of Power Poles and
Associated Facilities: TDPUD and Sierra acknowledge that power poles and related facilities
to which TDPUD desires to attach its distribution Power Circuits as an"underbuild" may
require modification, improvement and/or replacement to accommodate the additional
distribution Power Circuits. The Parties also acknowledge that changes or improvements in
Sierra's facilities may be required in the future to accommodate modifications that might be
made by TDPUD at some future date to the distribution Power Circuits TDPUD desires to
attach to Sierra's power poles. Any such upgrades, modifications or replacement of facilities
will be made in accordance with the following provisions:
Section 2.10.1. Facility Standards: All facilities owned by Sierra and jointly
used by TDPUD as a result of this Agreement will be designed, constructed, operated
and maintained in accordance with Sierra's standards and be consistent with all
applicable rules and regulations of the State of California.
Section 2.10.2. Cost Responsibilities: In the event Sierra-owned facilities that
are to be jointly used by TDPUD require upgrades or replacements to accommodate
such use, the cost of such upgrades or replacements will be borne solely by TDPUD.
TDPUD shall also obtain and is responsible for, at its own expense, any and all
necessary rights of way(easements), permits, fees, rents, or otherwise, required for
TDPUD to access, mobilize, demolish, change, construct, attach, repair, modify,
maintain and de-mobilize as required to complete the purposes of this Agreement.
TDPUD shall indemnify, defend and hold harmless Sierra from any and all claims
asserted against Sierra related to the acquisition or non-acquisition of such rights of
way(easements), permits, fees, rents or otherwise. Such indemnity includes all legal
fees and costs incurred by Sierra to defend any such claims.
in TDPUD's total cost and shall be collected by Sierra. The current tax gross up rates
for California depreciable property are .15 (151/0) for Transmission (greater than 69
kV) and .17 (17%) for Distribution (less than 69 kV). The current tax gross up rate for
California non-depreciable property is .538 (53.80NO). These rates will change January.
1, 2009.
Section 2.11. CPUC Governance: This Agreement is subject to any changes or
modifications the California Public Utilities Commission may require.
ARTICLE THREE:
INSURANCE
Section 3.1. The Parties agree to maintain insurance sufficient to cover any risk created
by this Agreement including but not limited to Commercial General Liability containing a
contractual liability endorsement, Auto Liability, Workers Compensation and Employers
Liability. The above insurance policies shall provide such limits as are carried by similarly
situated electric utilities. This Section (Section 3) of this Agreement may be opened for re-
negotiation by either Party at any time.
ARTICLE FOUR:
LIABILITY
Section 4.1. Personal Iniury or Death of Employee: Liability for injury to or death of an
employee of either Party arising out of the field inventory, installation, maintenance, use,
relocation, dismantling, abandonment, or removal of Joint Poles or Attachments will be borne
by the Party-employer. The Party-employer will defend, indemnify, and hold harmless the
other Party against liability.
Section 4.2. Personal Injury or Death of Non-Employee; Property Damage: Subject to
Section 4.1 above, any liability for the death or personal injury of a non-employee of either
Party, and for loss, destruction, or damage to property, including the property of the Parties,
arising out of the field inventory, installation, maintenance, use, relocation, dismantling,
t
performed in accordance with Sierra's Switching and Operating Procedures and prevailing
industry standards.
Section 5.2. Maintenance: TDPUD at its own risk and expense shall place, maintain, and
keep in good condition, its own Power Circuits and Attachments upon Joint Poles. TDPUD
shall be responsible for tree trimming necessary for the operation of its own Power Circuits.
TDPUD and Sierra will share equally the cost of maintaining(which includes operating,
repairing and replacing as necessary)and testing Joint Poles.
Section 5.3. Repair:
Section 5.3.1. TDPUD, at its own risk and expense, shall repair its own Power
Circuits and Attachments upon Joint Poles, and will promptly replace or repair any of its
defective Power Circuits and Attachments when notified to do so by Sierra. Upon written
notification from Sierra, TDPUD shall have fourteen (14) days to perform the necessary
repairs or replacements to its Power Circuits and Attachments.
Section 5.3.2. When, in the course of operations, Sierra must make repairs to Joint
Poles or to its own Attachments on the Joint Poles, and TDPUD's Power Circuits and
Attachments also require repairs, which Sierra performs on an emergency basis or because
TDPUD failed to perform the repairs within fourteen(14)days after written notice, TDPUD
will be responsible for the cost associated with repair of the Power Circuits or Attachments
owned by TDPUD.
Section 5.3.3. If repair to Power Circuits or Attachments on Joint Poles is necessary
due to damage caused by neither Party, the cost of repair will be borne solely by the Party
owning the Power Circuits or Attachments in need of repair.
Section 5.3.4. If repair to Joint Poles or Attachments is necessary due to damage
caused by either Party, the cost of repairs shall be borne solely by the Party responsible for
the damage.
Section 5.3.5. If repair to Joint Poles is necessary due to damage caused by neither
Party, each Party will share equally in the cost of the repairs.
y
Section 7.2. Assignment Of Agreement This Agreement is made for the benefit of the
successors and assigns of the Parties, and will bind the successors in interest and assigns of
Sierra and TDPUD. Neither Party will assign any or all rights under this Agreement without
the prior written consent of the other. Such consent will not be unreasonably withheld.
Section 7.3. Entire Agreement. Together with the Exhibits, this Agreement constitutes
the entire agreement between the Parties with respect to the subject matter of the Agreement.
All prior agreements, representations, statements, negotiations, and understandings with
respect to the subject matter of this Agreement are superseded by this Agreement.
Section 7.4. Modification. This Agreement may be modified only by a written
agreement executed by both Parties.
Section 7.5. Severability. If any part of this Agreement is held invalid by a regulatory
body or court of competent jurisdiction, the remainder will remain in full effect if and to the
extent that continued enforcement of the remainder will not frustrate the Parties' essential
objectives as expressed herein, and will not deny one Party a material benefit bargained for in
this Agreement.
Section 7.6. Choice of Law. This Agreement will be governed by, construed and
enforced in accordance with the laws of the State of California, without regard to the conflict
of law rules of that state.
Section 7.7. Survival of Indemnities. All indemnities in this Agreement will survive the
expiration or other termination of this Agreement for any reason and any investigation made
by any Party.
Section 7.8. No Waivers. Failure by either Party to object to or to exercise its rights with
respect to a default by the other Party shall not constitute a waiver of the right to later object
to or exercise its rights with respect to the same default, and shall not be deemed to amend the
provisions of this agreement.
Section 7.9. Multiple Originals. Two (2) originals of this Agreement will be executed by
the Parties. Counterparts shall constitute the same, single instrument.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on this day
of 12008.
TRUCKEE DONNER PUBLIC UTILITY DISTRICT SIERRA PACIFIC POWER COMPANY
By: By:
Name: Name:
Title: Title:
Date: Date:
13
Erl
y CEP 2 3
Sierra Pacific
POWER COMPANY
www.sieffapacific.com
Gregory P.Lambert
Major Accormtr Executive
6100 Neil Road,P.O.Box 10100'Mail Code S2A41 Reap,Nevada 89520-0024•Phone:775.834.5247•Fax:775.834.5778•E-Mail:glamben@ sppc.com
September 22, 2008
Mr. Joe Horvath
Electric System Engineer
Truckee Donner PUD
P.O. Box 309
Truckee, CA 96160
Re: Truckee Donner PUD 607 Line 60kV Rebuild Project
Dear Steve:
Sierra Pacific is prepared to begin work on the project to (1) construct approximately two miles of
Sierra owned 60kV transmission line connecting TDPUD's Donner Lake and Tahoe Donner
Substations and (2) install the District's 3 phase 12.47kV distribution feeder as an underbuild circuit
along Sierra's line. This work is being requested by TDPUD to accommodate its plans to upgrade the
District's electric system in the area. Based on the information provided by TDPUD regarding the
project's requirements and scheduling needs, Sierra is prepared to begin the planning, design and
engineering phase of the project after it has received your authorization to proceed and your advance
payment in the amount of$31,939 to cover the costs associated with these activities.
An overview of the proposed project is provided in the sections that follow.
Scope of Project
The project involves the planning, design and construction of approximately two miles of Sierra's
60kV transmission line that connects TDPUD's Donner Lake and Tahoe Donner Substations and the
installation of TDPUD's 3 phase 12.47kV distribution feeder as an underbuild circuit along Sierra's
line. The starting point for the underbuild on the 607 line is to be the tap pole for the District's
Donner Lake Substation tap line {just south of I-80 next to Donner Lake Rd) and the end point is
where the 607 line crosses Ski Slope Way in the Tahoe Donner Subdivision, a distance of
approximately 10,000 feet.
The exact extent of the work to be performed, as well as the cost and project schedule, will be known
with a greater degree of certainty and will be reviewed with you, after the planning, design and
engineering phases of the project have been completed.
c
Taxability
The act of constructing, upgrading and/or improving Sierra-owned facilities for the purpose of
accommodating their joint use by TDPUD has been determined to result in a non-cash contribution to
Sierra, the value of which triggers an income tax liability to Sierra under the 1986 Federal Tax
Reform Act and is thus subject to a tax gross up in accordance with California Public Utilities
Decision No. 87-09-026 issued in Investigation No. 86-11-019. This tax gross up shall be included in
TDPUD's total cost and shall be collected by Sierra. The current tax gross up rates for California
depreciable property are .15 (15%) for Transmission (greater than 69 kV) and .17 (17%) for
Distribution (less than 69 W). These rates will change effective January 1, 2009, to .24 (24%) for
Transmission(greater than 69 kV) and to .28 (28%) for Distribution(less than 69 W). The tax gross-
up rate applied will be the one in effect at the time the project is completed.
Invoicing and Payment Procedures
Regarding the process of paying for costs incurred by Sierra as a result of its activities on this project,
TDPUD will be asked to submit to Sierra an advance payment in the amount of$31,939 to be applied
against expenses incurred by Sierra during the planning, design, and engineering phases of the
project. These expenses are listed on page 2 of 2 of the accompanying Project Estimate and are
identified as shown below.
Drafting $ 2,904
Civil Engineering $ 22,399
Surveying $ 3,318
Lands 3,318
TOTAL $ 313939
Should any portion of this advance not be spent, the amount remaining will either be refunded to
TDPUD,or will be applied against other expenses incurred by Sierra during the construction phase.
If TDPUD chooses to have Sierra construct the new line, prior to the purchasing of materials and the
actual start of construction, a second payment will be requested to pay for"total stores" and/or other
"voucher"or material costs that will be incurred by Sierra.
Should TDPUD choose to construct the new line, Sierra will require that one of its inspectors be on-
site to view the construction activities and ensure the line is built to Sierra's standards. The cost
associated with this function, which is to be borne by TDPUD, is estimated to be$14,518 and will be
billed to TDPUD after the project is completed.
As discussed earlier, after the project has been completed, estimated costs will be adjusted to reflect
actual costs incurred and an invoice will be submitted to TDPUD for payment within 30 days after the
date of the invoice. The net amount due will be calculated based on all available cost information and
invoices at the time the project is completed and will be subject to a final adjustment after Sierra has
finished its normal internal audit and review of the project's cost components, a process that takes
approximately ninety(90) days to complete. Once this process has been concluded and approval has
been given to the project and all of its costs, the final result will be compared against the total amount
paid by TDPUD. If necessary, an adjustment will be made in the form of either a refund to TDPUD
or a request for payment of the additional charge due.
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PROJECT ESTIMATE PAGE 1 OF 2
("4/4
PROJECT TITLE: Truckee Donner PLED 607 Line 60kV Rebuild
DESCRIPTION: =':;onstr uct approx. 2 miles of new 6ukV line;pith d ist, underbLdd.
JOB LENGTH: 1.89 Flex
ESTIMATOR: 1`01k_e Braithwaite
SPPCO STOCK MATERIAL OUANTITY REO'D UNIT PRICE TOTAL COST
J197.5 AA Cantina Corduc*or 30,900 ft. $0.92 $28,514
60kV Target Structure 25 ea. $9,000 $225,000
60kV Dead End Structure 9 ea. $10,500 $94,500
Material contingency 10% $34,801
TOTAL STORES COST:
' ' „i,,,, ov.r,..,, ., ,y<,. .s,!„,,,mow,,, r,,,,..!i..,, „, ,. ✓/,,.,,.,..i.✓ni ;,. ,,„ !;� .i,r,c
VOUCHERS:
MATERIALS QUANTITY REO'D UNIT PRICE TOTAL COST
None 0 ea. $0 $0
TOTAL MATERIAL VOUCHERS:
CONTR LABOR & MISC QUANTITY REO'D UNIT PRICE TOTAL COST
"Jew Expenses $0 $0
Equipment rr:ntai t
3, $0 $0
Misc vouchers 1 -`�• $0 $5fi9
TOTAL MISCELLANEOUS VOUCHERS:
TOTAL VOUCHERS 69