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Home My WebLink About2001-197 Agrmt - BPA 01PB-10911 Department of Energy Bonneville Power Administration PO Box 3621 Portland OR 97208 POWER BUSINESS LINE June 21, 2001 In reply refer to: PSW-Portland Contract No. 0lPB-10911 RATE MITIGATION AGREEMENT Mr. Greg Scoles City Administrator City Hall 20 East Main Ashland, OR 97520 Dear Dick: This letter agreement (Agreement) between the Bonneville Power Administration (BPA) and City of Ashland (Ashland) a municipal corporation organized under the laws of the State of Oregon, provides for Rate Mitigation measures that Ashland commits to undertake, and for which BPA agrees to make payment to Ashland in order to reduce the size of the BPA rate increase scheduled to take effect October 1, 2001. The Parties agree: 1. TERM This Agreement takes effect on the date signed by the Parties and continues through September 30, 2003. 2. DEFINITIONS "Rate Mitigation" means measures that are expected to reduce the amount of power provided by BPA to customer loads and/or power sales by the customer to BPA. 3. RATE MITIGATION COMMITMENT Ashland commits to complete the actions specified in this section (3) and Exhibit A which the Parties agree are expected to achieve the following reductions in the amount of power provided by BPA under Contract No. OOPB-12008. BPA agrees to consider such expected power purchase reductions in the calculation of the Load Based Cost Recovery Adjustment Clause (LB CRAC) calculations performed pursuant to section F of the 2002 General Rats Schedule Provisions. • • 2 (a) Price Induced Rate Mitigation As a result of the expected increase in BPA's PF-02 rates, which take effect on October 1, 2001, Ashland shall increase its retail rates on average by not less than 30 percent by October 1, 2001 if BPA's LB CRAC for the October 1, 2001 through March 31, 2002 period is 87.5 percent or higher. The Parties agree that such retail rate increase is expected to result in a reduction in Ashland's power purchases under this Agreement equal to the amounts specified below. To the extent the LB CRAC for the October 1, 2001 through March 31, 2002 period is less than 87.5 percent, Ashland's minimum average retail rate increase obligation shall be reduced proportionally. 10/1/01-9/30/02 10/ 1 /02-9/3 0/03 Month MWh) (MWh) October 893 1,032 November 863 998 December 892 1,031 January 892 1,031 Februar 806 931 March 892 1,031 Total 5,237 6,053 April 862 996 May 892 1,031 June 863 998 Jul 892 1,031 August 892 1,031 September 863 998 Total 5,264 6,084 (b) Additional Rate Mitigation Measures Ashland commits to implement the Rate Mitigation measure(s) specified in section 3(c), below, and Exhibit A. The Parties agree that, if completed, the total of such measure(s) is expected to result in a reduction in Ashland's power purchases under this Agreement equal to the amounts specified in the table below. (c) Total Rate Mitigation Amounts and Percentages Ashland's Rate Mitigation percentage is calculated by dividing Ashland's Total Rate Mitigation Amount, which is the sum of the expected load reductions from sections 3(a) and 3(b), by the total annual MWhs of forecasted sales to Ashland as forecasted at the PF 02 rate as documented in BPA's 2002 Amended Power Rate Proposal, WP-02-E-BPA-58 and/or at the FPS-96 rate as documented in WP-02-FS-BPA-0lA. Category 10/1/01 - 9/30/02 10/1/02. 9/30/03 MWh MWh 3(a) Price Induced 10,501 12,137 3(b) Additional Measures 4,350 6,461 01PB-10911, Ashland • 0 3 Category 10/1/01-9/30/02 10/1/02-9/30/031 MWh MWh Total Rate Mitigation Amount 14,851 18,598 Rate Case Load Assumption 161,705 172,247 Rate Mitigation Percentage 9.18% 10.80% (4) PRESERVATION OF RIGHTS TO POWER (a) Section 5(b) Power Purchase Rights The Rate Mitigation specified in section 3 and Exhibit A is being undertaken by Ashland at the request of BPA. Upon the expiration or termination of this Agreement Ashland may take service from BPA for the amount of retail load reductions stated in section 3 which resulted from the execution of this Agreement and such service shall be billed under the PF-02 rate, or its successor rate, without any charge, surcharge, penalty or TAC. Ashland's right to purchase service from BPA shall be the same as it was prior to the execution of this Agreement. (b) Load Loss and Returning Retail Load The Parties agree that the retail load loss provisions contained in section 5 of Contract No. OOPB-12008 will not apply to the retail reduction resulting from actions taken by Ashland pursuant to section 3. The Parties further agree that retail loads that are served by suppliers other than BPA as a result of this Agreement will be eligible to return to service from BPA upon the termination or expiration of this Agreement without notice to BPA, and at the PF-02 rate without application of any additional charge, surcharge, penalty or TAC. (5) RATE MITIGATION CONTINGENCY (a) As of the execution date of this Agreement the BPA Administrator has not issued any final rate decisions in Docket No. WP-02. In the event that the Load-Based Cost Recovery Adjustment Clause (LB CRAC), materially consistent with the Joint Customer Group and BPA staff proposal is not adopted in the Administrator's final Supplemental Record of Decision, this Agreement shall terminate effective October 1, 2001. (b) If, in calculating the LB CRAC (excluding true-ups) applicable for the period October 1, 2001 through March 31, 2002, pursuant to section F(1) of the General Rate Schedule Provisions (GRSPs), BPA is able to meet either criterion (1) below (through contracts executed no later than 7 calendar days prior to the final workshop explaining the calculation of the LB CRAC for the period from October 1, 2001, through March 31, 2002), or criterion (2) below, then this Agreement shall remain in effect. If BPA fails to meet both criterion (1) and criterion (2) below, then this Agreement shall terminate effective October 1, 2001. (1) BPA includes in the calculation of the LB CRAC (excluding true-ups) no more than 2200 aMWs (including all purchases made by BPA prior 01PB-10911, Ashland • • 4 to April 10, 2001) per month of market power purchases for meeting LB CRAG augmentation on average for the period October 1, 2001, to March 31, 2002, where market power purchases for purposes of calculating the application of this contingency clause do not include (i) power buy-backs of public agency and cooperative customers, investor- owned utilities, or direct service industrial customers; or, (ii) power purchases from public agency and cooperative customers, investor- owned utilities, or direct service industrial customers to the extent such buy-backs and purchases were executed between April 10, 2001 and the final date for execution of contracts used in the calculation of the LB CRAG for the period from October 1, 2001, through March 31, 2002. (2) The rate after application of the LB CRAG (excluding all true-ups) is no more than 1.87 times the PF, RL, and IP-TAG rates. In the event that contracts executed between April 10, 2001, and the final date for execution of contracts used in the calculation of the LB CRAC (excluding true-ups) for the period from October 1, 2001, through March 31, 2002, exceed the amount necessary to reduce market power purchases below 2200 aMW per month in criterion (1), such additional load reductions shall be used to reduce the level of the LB CRAG. (c) If, in calculating the LB CRAG (excluding true-ups) applicable for the period April 1, 2002 through September 30, 2002, pursuant to section F(1) of the General Rate Schedule Provisions (GRSPs), BPA is able to meet either criterion (1) below (through contracts executed no later than 7 calendar days prior to the final workshop explaining the calculation of the LB CRAG for the period from October 1, 2001, through March 31, 2002), or criterion (2) below, then this Agreement shall remain in effect. If BPA fails to meet both criterion (1) and criterion (2) below, then this Agreement shall terminate effective April 1, 2002. (1) BPA includes in the calculation of the LB CRAG (excluding true-ups) no more than 2200 aMWs (including all purchases made by BPA prior to April 10, 2001) per month of market power purchases for meeting LB CRAG augmentation on average for the period April 1, 2002, to September 30, 2002, where market power purchases for purposes of calculating the application of this contingency clause do not include (i) power buy-backs of public agency and cooperative customers, investor- owned utilities, or direct service industrial customers; or, (ii) power purchases from public agency and cooperative customers, investor- owned utilities, or direct service industrial customers to the extent such buy-backs and purchases were executed between April 10, 2001 and the final date for execution of contracts used in the calculation of the LB CRAG for the period from October 1, 2001, through March 31, 2002, or are extensions of such buy-backs or purchases that were executed prior to April 10, 2001, and are extended prior to calculation 01PB-10911, Ashland • • 5 of the LB CRAC for the period from April 1, 2002, through September 30, 2002. (2) The rate after application of the LB CRAC (excluding all true-ups) is no more than 1.87 times the PF, RL, and IP-TAC rates. In the event that contracts executed between April 10, 2001, and the final date for execution of contracts used in the calculation of the LB CRAC (excluding true-ups) for the period from October 1, 2001, through March 31, 2002, or extensions of buy-backs or purchases that were executed prior to April 10, 2001, and are extended prior to calculation of the LB CRAC for the period from April 1, 2002, through September 30, 2002 exceed the amount necessary to reduce market power purchases below 2200 aMW per month in criterion (1), such additional load reductions shall be used to reduce the level of the LB CRAC. (d) If, during the period October 1, 2001 through September 30, 2003, the amount of power forecast to be delivered by BPA to the direct service industrial customers in the calculation of the LB CRAC (excluding true-ups) exceeds 400 aMWs per month on average for any six month period used in calculating the LB CRAC, then this Agreement shall terminate on the first day of such six month period. (e) If the amount of power actually delivered to the direct service industrial customers exceeds 400 aMW per month on average for any six month period as determined by BPA through written notice to its customers or during the true-up of the LB CRAC, then this Agreement shall terminate effective on the first day of the month following such determination. (f) BPA acknowledges that Ashland may acquire the output of new generating resources or purchase firm power to meet the load reductions agreed to in Exhibit A. If such new generating resources were energized or such purchases were made after April 10, 2001, BPA hereby determines that, through reasonable measures, the firm planning capability of such resources in the amount of the load reductions agreed to in this Agreement cannot be conserved or otherwise retained for use in the region for the period after the load reduction provided in this Agreement expires or terminates through September 30, 2006. Ashland shall identify their newly added post April 10, 2001, resources or purchases and their firm planning capability by written notice to BPA by September 30, 2001 or as otherwise mutually agreed. BPA further determines that the use of any such non-hydroelectric resource, that would otherwise be considered a market resource under BPAs policy implementing section 9(c) of the Northwest Power Act, to meet loads in the region resulting from load reduction contracts with BPA that are subject to this section 5 shall not be considered a regional resource as a result of such use. This paragraph shall remain in effect subsequent to the expiration or termination of this Agreement. 01PB-10911, Ashland , • 0 6 If the foregoing terms are acceptable, please sign both originals and return one original of this Agreement to BPA by June 22, 2001. The remaining original is for your files. Sincerely, Ac unt Executive Name V 6 I ei~S (PrintlType) ACCEPTED: City of Ash d By W Name lee,, (Print/Type) ^ f Title NO/~ Date I a ~D r PBLLAN:W\PSW\PM\11 16\Ashland\5_30 redraft 01PB-109110verarching Letter Agreement.doc O1PB-10911, Ashland Exhibit A ADDITIONAL RATE MITIGATION MEASURES The Rate Mitigation amounts shown in the table below will be achieved through measures undertaken in separate contracts. Such measures are not subject to section 5, Rate Mitigation Contingency, of the body of this Agreement. Additional Measures 10/1/01- 10/1/02- 9/30/02 9/30/03 MWh MWh October 209 335 November 202 323 December 209 334 January 209 334 February 189 302 March 209 334 April 202 323 May 209 334 June 202 323 Jul 209 334 August 209 334 September 2 Sub Total 2,458 3,935 Load Reduction Power Purchase 10/1/01- 10/1/02- 10/1/01- 10/1/02- 9/30/02 9/30/03 9/30/02 9/30/03 MWh MWh MWh MWh October 209 335 October 0 0 November 202 323 November 0 0 December 209 334 December 0 0 January 209 334 January 0 0 February 189 302 Februar 0 0 March 209 334 March 0 0 Aril 202 323 Aril 0 0 May 209 334 May 0 0 June 202 323 June 0 0 Jul 209 334 Jul 0 0 August 209 334 August 0 0 September 202 323 September 0 0 Sub Total 2,458 3,935 Sub Total 0 0 PBLLAN:W\PSw\PM\11_16\Ashlend\5_30 redraft 01PB-109110verarching Letter Agreement.doc O1PB-10911, Ashland ii I~~. . ENT OFE. • Department of Energy ~ i Bonneville Power Administration P.O.Box3621 'lum 'l L Portland, Oregon 97208-3621 ~g1ES OF _ _ POWER BUSINESS LINE June 21, 2001 In reply refer to: PSW-6 Mr. Greg Scoles City Administrator City Hall 20 East Main Ashland, OR 97520 Dear Greg: Enclosed is the Rate Mitigation agreement for your signature. If the agreement is acceptable please sign both copies, keep one of the original signed copies for your records and mail the other to me at the address below. In order to count the City of Ashland's (Ashland) participation as a customer who is achieving 10% reduction, I need to have a signed signature page faxed to me no later than COB June 22. My fax number is 503/230-3544. Ashland is one of very few Bonneville Power Administration (BPA) customers who has managed to find the savings entirely via conservation and curtailment measures. Your efforts and that of other BPA customers will help us lower the rate substantially from what it would have been. June 29 is the date the final rates will be announced. Dick Wanderscheid did an excellent job of identifying conservation and curtailment opportunities and negotiating contract language so we could provide funding for a substantial portion of Ashland's conservation efforts. We appreciate his experience and expertise in this area. Please call if you have any questions - I am at 503/230-3965 Sincerely, e~ dz° o P. Lebens cc Dick Wanderscheid, Acting Director of Power Telecommunications