HomeMy WebLinkAbout1998-10-05 City Council (14)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL 6
FROM:CITY MANAGER DEPARTMENT:UTILITIES
DATE:OCTOBER 5, 1998 CMR:381:98
SUBJECT:AMENDMENT No. 1 TO EXISTING FINANCING AGREEMENT
No. 94-SAO-00047 BETWEEN THE CITY OF PALO ALTO AND
THE UNITED STATES DEPARTMENT OF ENERGY AND
DEPARTMENT OF INTERIOR FOR SHASTA POWERHOUSE
REWIND PROJECT
REPORT IN BRIEF
This Report requests Council approval of an amendment of a contract between Palo Alto,
the Western Area Power Administration (WAPA) and the U.S. Bureau of Reclamation
(USBR) for funding maintenance work at the Shasta Power Plant which Council
approved in May 1995 (CMR 323:95)
The contract provided for some WAPA customers, including Palo Alto, to fund the
rebuilding of three generators located at the Shasta Dam. The original scope of work is
expected to be completed significantly under budget. This amendment will allow USBR
to use the remaining funds to replace, rather than refurbish, the gener~r runners, thereby~
increasing the project output for the benefit of the funding customers.
CMR:381:98 Page 1 of 3
RECOMMENDATION
Staff recommends that Council approve Resolution of the City of Palo Alto authorizing
the signing of Amendment No. 1 to Contract No. 94-SAO-00047.
BACKGROUND
In the early 1970’s, the USBR identified the need to rebuild five of the generators located
at Shasta Dam. Through the standard government appropriations process, only two of the
five.units were rebuilt prior to 1995. On May 23, 1995, sixteen WAPA customers,
including Palo Alto, entered into a contract for rebuilding the remaining three generating
units, referred to as the Shasta Rewind Project. The Shasta Rewind Project will result in
the three generators being capable of generating an additional 47 megawatts of power.
Under the contract, the customers agreed to advance funds to the USBR for the $21.175
million project in the form of periodic cash calls by USBR. In exchange, WAPA would
credit the customers’ next month power bills for the cash call, plus interest. This funding
mechanism allowed the USBR to proceed with the Shasta Rewind Project and expense
the cost of the project to all customers.
Currently, the USBR has completed the rebuild of Shasta Unit No. 4 on time and
significantly under budget. The USBR now estimates that the entire Shasta Rewind
Project will be completed for approximately $12 million, rather than the initial $21
million.
In May 1998, the USBR approached the funding customers with a proposal to amend the
contract scope of work to replace rather than refurbish the turbine runners for Shasta
Units 3, 4, and 5, without increase to the current contract funding limits. The USBR has
estimated that the three new runners would increase the power output of Shasta Dam by
51 megawatts for an overall increase of 98 megawatts (47 megawatts from rebuilding and
51 megawatts from replacing the runners), and increase the operating efficiency by
approximately 2 percent to 5percent annually. Therefore, the dam would produce more
power and energy with. the same amount of water releases.
The costs for the replacement of the runners would be expensed andpaid for by all
WAPA customers in proportion to their consumption of WAPA’s commercial firm power
product during 2000-2004.
DISCUSSION
Palo Alto is a 35.9 percent participant in the contract. Amendment No. 1 provides the
funding customers, with a right of first refusal to the additional generating capacity at the
time each combined runner/generator project is completed. Therefore, by signing
Amendment No. 1 to the contract, for no additional funding support, Palo Alto would
receive a share of any on-going benefits from the additional 18 megawatts (35.9 percent
of 51 megawatts) of hydro capacity for the years 2001- 2004. These benefits would
accrue via obtaining the additional power at a cost that is reasonably anticipated to be
CIVlR:381:98 Page 2 of 3
below the market price.
Subsequently, when WAPA re-markets the Central Valley Project resources after 2004,
the additional 98 megawatts will be available for allocation, thus providing additional
resources for WAPA’s proposed post-2004 Marketing Plan allocation process. Palo Alto
would benefit by securing approximately 5 additional megawatts via this process, enough
to meet two percent ofPalo Alto’s needs.
RESOURCE IMPACT
Staff expects no impact on resources associated with approval of the contract amendment.
POLICY IMPLICATIONS
This recommendation is consistent with existing city policy.
TIMELINE
If Council approves, the signed Amendment No~ ~ will be forwarded to WAPA and
USBR to meet their requested time line in early October.
ENVIRONMENTAL REVIEW
This program does not constitute a project for the purposes of the California
Environmental Quality Act.
ATTACHMENTS
Amendment to Contract No. 94-SAO-00047
Resolution
PREPARED BY:Tom Kabat, Senior Resource Planner
Girish Balachandran, Manager Supply Resources
Tom Habashi, Assistant Director of Utilities
DEPARTMENT HEAD:
D
CITY MANAGER APPROVAL:
CMR:381:98 Page 3 of 3
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO
AUTHORIZING THE SIGNING OF AMENDMENT NO. 1 TO
CONTRACT NOi 94-SAO-00047
WHEREAS, on June 20, 1995, the City Council adopted
Resolution No. 7527, approving the $21,175,000 Contract
No. 94-SAO-00047 between the Central Valley Project customers,
including the City of Palo Alto, a 35.9 percent funding
participant, the Western Area Power Administration and the United
States Bureau of Reclamation for the funding of maintenance work at
the Shasta Dam power plant; and ~
WHEREAS, Western and the Bureau wish to amend the scope of
work to authorize additional maintenance work on Shasta Dam
units 3, 4, and 5 and the purchase and installation of new turbine
runners without changing the funding limit; and
WHEREAS, Western will provide additional excess firm
capacity to Western for the benefit of Project customers after the
completion of work;
NOW, THEREFORE, the Council of the City of Palo Alto does
hereby RESOLVE as follows:
SECTIQN io The City Council hereby authorizes the City
Manager to sign the attached Amendment No. 1 to Contract
No. 94-SAO-00047 on behalf of the City of Palo Alto.
SECTIQN 2. The City Council hereby finds that the action
hereby approved does not constitute a project under the California
Environmental Quality Act, and no environmental assessment is
required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT
ABSTENTIONS:
ATTEST:APPROVED:.
Interim City Clerk
APPROVED AS TO FORM:
Senior Asst. City"Attorney
Mayor
City Manager
Director of Administrative
Services
980917 ~yn 0071516
Director of Uti~’ities
’Amendment No. 1
C0ntraet No. 94-SAO-00047
UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
CENTRAL VALLEY PROJECT, CALIFORNIA
AND
UNITED STATES
DEPARTMENT OF THE INTERIOR
BUREAU OF RECLAMATION
CENTRAL VALLEY PROJECT, CALIFORNIA
CONTRACT AMENDMENT NO. I FOR FUNDING OF MAINTENANCE woRK.AT
SHASTA POWERPLANT
CITY OF ALAMEDA
CITY OF BIGGS
CITY OF GRIDLEY
CITY OF HEALDSBURG
CITY OF LODI
CITY OF LOMPOC
NORTHERN CALIFORNIA POWER AGENCY
CITY OF PALO ALTO
PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE, INC.
CITY OF REDDING
¯-CITY OF ROSEVILLE
CITY OF SANTA CLARA
SACRAMENTO MUNICIPAL UTILITY DISTRICT
SAN FRANCISCO BAY AREA RAPID TRANSIT DISTRICT
TURLOCK IRRIGATION DISTRICT
CITY OF.UKIAH
Amendment No. 1
Contract No. 94-SAO-00047
UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
CENTRAL VALLEY PROJECT, CALIFORNIA
UNITED STATES
DEPARTMENT OF INTERIOR
BUREAU OF RECLAMATION "
CENTRAL VALLEY PROJECT, CALIFORNIA
.CONTRACT AMENDMENT NO. 1 FOR FUNDING OF MAINTENANCE WORK AT
SHASTA POWERPLANT
CITY OF ALAMEDA
CITY OF BIGGS
CITY OF GRIDLEY
CITY OF I-IEALDSBURG
CITY OF LODI
CITY OF LOMPOC
NORTHERN CALIFORNIA POWER AGENCY
CITY OF PALO ALTO
PLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE, INC.
CITY OF REDDING
CITY OF ROSEVILLE
C1TY OF SANTA CLARA
SACRAMENTO MUNICIPAL LrrILITY DISTRICI~
SAN FRANCISCO BAY AREA RAPID TRANSIT DISTRICT
TURLOCK IRRIGATION DISTRICT
CITY OF UKIAH
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7.
¯ AGREEMENT ....... .. ........ . .
EFFECTIVE DATE AND
.P~~ CQ_NTRACT TOREMAIN IN FULL FORCE AND EFFECT .......3MODIFICATION OF SECTION 6 OF THE PRIMARY CONTRACT ..........i i 3. MODIFICATION OF SECTION 9 OF THE PRIMARY CONTRACT 4EXECUTION IN COUNTERPART." ...........
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UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
CENTRAL VALLEY PROJECT
UNITED STATES
DEPARTMENT OF INTERIOR
BUREAU OF RECLAMATION
CENTRAL VALLEY PROJECT, CALIFORNIA
CONTRACT AMENDMENT NO. 1 FOR FUNDING OF MAINTENANCE WORK AT
SHASTA POWER.PLANT
CITY OF ALAMEDA
CITY OF BIGGS
CITY OF GRIDLEY
CITY OF HEALDSBURG
CITY OF LODI
CITY OF LOMPOC
NORTHERN CALIFORNIA POWER AGENCY
CITY OF PALO ALTOPLUMAS-SIERRA RURAL ELECTRIC COOPERATIVE, INC.
CITY OF REDDING
CITY OF ROSEVILLE
CITY OF SANTA CLARA
SACRAMENTO MUNICIPAL UTILITY DISTRICTSAN FRANCISCO BAY AREA RAPID TRANSIT DISTRICT
TURLOCK IRRIGATION DISTRICT
CITY.OF UKIAH
1. ~l~.,~~: This Contract Amendment is made this ~ day of__ .,
1998, as part of and pursuant to the same authorities as Contract No. 94-SAO-00047, as amended
(Primary Contract), between the UNITED STATES OF AMERICA (United States), (i) acting by
and through the Administrator, Western Area Power Administration, Department of Energy,
hereinafter called Western, represented by the officer exectiting this contract, or a duly appointed
successor, hereinafter called the Contracting Officer, and (ii) acting by and through the’
Commissioner, Bureau of Reclamation, Department ofthe Interior, hereinafter called
Reclamation, represented by the Regional Director, Mid-PacificRegion; and the CITIES OF
ALAMEDA, BIGGS, GRIDLEY, HEALDSBURG, LODI, LOMPOC, PALO ALTO,
REDDING, ROSEVILLE, SANTA CLARA, and UKIAH; the NORTHERN CALIFORNIA
POWER AGENCY; the SACRAMENTO MUNICIPAL UTILITY DISTRICT (SMUD); the
SAN FRANCISCO BAY AREA RAPID TRANSIT DISTRICT. (]3.ART), a rapid transit
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district established pursumtto California Public Utility Code Section 28500et. seq.; the
TURLOCK IRRIGATION DISTRICT (TID); and the 1NLUMAS-SIERRA RURAL ELECTRIC
COOPERATIVE, all organized and existing under the laws of the State of California, hereinafter
called the Customers; and all collectively called the Parties.
o IT :
2.1 Western, Reclamation, and the Customers entered into Contract
Nol 94-SAO-00047 (Primary. Contract) for funding of maintenance work at Shasta
Powerplant.
2.2 ¯The Parties desire to modify the Primary Contract by deleting the requirement to
replace the core iron for unit l~and adding the replacement of the turbine runners on
generating units 3, 4, and 5 at Shasta Dam and Powerplant.
2.3 Replacement of the turbine runners is expected to increase the ultimate hydraulic
capacity of Shasta Powerplant by an additional 51 megawatts (MW) over and above the
47 MW increase set forth in Section 9 of the Primary Contract.
///
///
2A The replacement 0f the turbine runners is not expected to increase the funding
amount required above the original estimate of twenty-one million, one hundred seventy-
five thousand dollars ($21,175,000.00) the Customers agreed to pay under.the Primary
Contract.
2.5 This Contract Amendment revises Section 6 of the Primary Contract to include
work associated with replacement of the turbine runners and revises Section 9 to incr6ase
the amount of excess capacity from 47 MW to 98 MW. .
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2.6 The Parties expect that upon completion of the unit rewind work, any re~ulting
excess capacity will be made available to the Customers pursuant to the terms 0f the
Primary Contract. Upon completion of the installation of each turbine runner, any
resulting excess capacity will be made available to the Customers as set forth in this
Amendment.
A.G.J?~,F.d~d~: The Parties agree to the terms and conditions set forth herein.
EFFECTIVE DATE AND TERM OF CONT--:. This
Contract Amendment shall become effective upon execution by all the Parties and remain in
effect concurrently with the Primary Contract.
5. [~RIMARY CONTRACT TO REMAIN IN ~RCE AND EFFECT: Except
as expressly modified by this Contract Amendment, the Primary Contract shall remain in full
force and effect.
6. MODIFICATION OF SECTION 6’OF ~RIMARY CONTRACT: Section
of the Primary Contract entitled "Work to be Performed.for the Shasta Re.wind Project:" is
hereby modified as follows:
6.1 Section 6.2.5, of the Primary Contract is hereby deleted in its entirety and the
following substituted in lieu thereof:
"6.2.5 Furnishing era new thrust bearing for unit 2."
///
6.2 The following is h~reby added to the Primary Contract as a new Section 6.2.6:
"6.2.6 Furnishing of all necessary material, equipment, and labor for the
replacement of the unit turbine runners and associated components for generating
units 3, 4, and 5."
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7.]~:LP_I]~..C,A.TION OF SECTION 9 OF ~ PRIMARY CONTRACT:
The first paragraph in Section 9 of the Primary Contract is hereby deleted in its entirety and the
following is substituted in lieu thereof:
"9. ]~3~J~LT..Q_EX CE S S CAPACITY:
Reclamation has determined that rewinding and increasing the nameplate ratings of
Shasta units 3, 4, and 5 up to 125 MW each is expected to result in a tota! increase of
approximately 47 MW in the capacity available at Shasta Powerplant when the storage
in Shasta Lake exceeds 3.6 million acre feet (MAF). As requested by the Customers,
Reclamation will increase the generator nameplate ratings of each of these units to
¯ 142 MW, as part of the work generally described in Section 6.2.3 ~nd 6.2.4 hereof.
Additional electrical capacity, above 125 MW, is expected to be available when the
turbine runners are replaced as set forth in Section 6..2.6. With the replacement of
each turbine runner, the full 142 MW of nameplate rating of each unit will be available
depending upon hydraulic conditions. Upon completion of the rewind work generally
described in Section 6 hereof, Reclamation shall notify Western of the.amount of
additional capacity available at Shasta. Upon completion of each turbine runner
replacement, as generally described in Section 6 hereof, Reclamation shall notify
Western of the amount of additional capacity available at Shasta. Reclamation shall
provideWestern with the revised Shasta Powerplant capacity available as a functio~i of
Shasta Lake water storage and reservoir elevations. Western shall use this information
to update Exhibit. C attached hereto which shows the incremental increase, in Shasta
capacity at certain Shasta Lake water storage and reservoir elevations. After~ ~
completion of the rewind work as generally provided under Sections 6.2.3 and 6.2.4 of
this Contract and for the term of this Contract, the Customers will be given a right of
first refusal to purchase excess capacity up tO 47 MW from the CVP in accordance
with this Section 9. After completion of each turbine runner, replacement, as set forth
in Section 6.2.6, and for the term of this Contract, the Customers will be given a righ.t,
of first refusal to purchase excess capacity from the CVP up to 17 MW per unit
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completed in accordance with this Section 9. It is expected that aftdr all work described
in Section 6 has been completed, a total of up to 98 MW of excess capacity from the CVP
will be made available to the Customers for the term of rids Contract."
¯~ION IN COUNTERPART: This Contract Amendment may be executed
in a number of counterparts and shall constitute a single document with the same force
and effect as if each Party had signed all other counterparts.
IN WITNESS WI-IEREOF, the parties have caused this Contract Amendment to be
executed the day and year f’trst above written. The signatories hereto represent that they have
been appropriately authorized to enter into this Contract on behalf of the Party for whom they
sign.
WESTERN AREA POWER ADMINISTRATION
By:
Title:~ -
Address:~ore Drive "__
-4710 .
BUREAU OF RECLAMATION
By:
Title:_" -"r __
Address:
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ciTY OF ALAMEDA
By:
Title:
Address:
CITY OF BIGGS
By:
Title:
Address:.
CITY OF GRIDLEY
By:
Title:
Address:.
CITY OF HEALDSBURG
By:
Title:
Address:_ .
CITY OF LODI
By:
Title:
Address:,
CITY OF LOMPOC
By:
Title:
Address:.
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NORTHERN CALIFORNIA pOWER AGENCY
By:
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CITY OF PALO ALTO
By:
Title:_
.Address:
PLUMAS-SIERRA RURAL.
ELECTRIC COOPERATIVE
By:
Title:
Address:,
CITY OF REDDING
By:
Title:
Address:
CITY OF ROSEVILLE
By:
Title:,
Address:
CITY OF SANTA CLARA
By:
Title:.
Address:
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(Seal)
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SACRAMENTO MUNICIPAL
UTILITY DISTRICT
By:
Title:
Address:,
SAN FRANCISCO BAY AREA RAPID
TRANSIT DISTRICT
By:
Title:
Address:
TURLOCK IRRIGATION DISTRICT
By:
Title:
Address :,
cITY OF UKIAH
By:
Title:
Address:,
Contract No. 94-SAO-00047
RESOLUTION NO.
BE IT RESOLVED BY THE ’OF
The is authorized, on behalf of
to execute this Contract Amendment With the
Western Area Power Administration and Bureau ofReclamation titled Amendment No. 1
Contract No. 94-SAO-00047.
Adopted:
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NORTHERN CALIFORNIA POWER AGENCY
By:
Title:
Address:
CITY OF PALO ALTO
By:
Title:
Address:_
PLUMAS-SIERRA RURAL
ELECTRIC COOPERATIVE
By:
Title:
Address:.
CITY OF REDDING
By:
Title:
Address:,
CITY OF ROSEVILLE
By:
Title: .......
Address:
CITY OF SANTA CLARA
By:
Title:
Address:_
Revision 1, Exhibit A
:~ i~ Contract No. 94-SAO-00047
(Estimated Funding and Project Work Schedule)
1.This Revision 1 to Exhibit A, to be effective under and as a part of Contract
No. 94-SAO-00047, shall become effective on ,1998, and shall remain in effect
until superseded by another revised Exhibit A or upon termination of the Contract..
2. The revised schedule for the work generally set forth in Section 6 and the.funding for
such work is set forth as follows:
AE_T.ISIT__Y
Award Bid ’
Initial Contribution Date
~Disassembly of Unit 4
Delivery of Materials
Install Components - Unit 4
Reassembly of Unit 4
Delivery of Materials
Publish Turbine Spec
Disassembly of Unit 5
Install Components - Unit 5
Award Turbine Contract 3/
¯ Reassembly of Unit 5
COMPLETION FUNDING FUNDING
DATE ’/
~un 95
Feb 97
Jun 97
Dec 97
Oct 98
Oct, 98
Dec 98
Mar 99
Mar 99
Jun 99
Jan 96 $23,679
Jul 96 $150,314
Aug 96 $71,186
Nov 96 $55,000
Dec 96 $677,~622
Jan 97 $738,000
Mar 9.7
May 97
$867,000
$749,500
Jul 97 "$689,500
Aug 97 $541,149
Oct 97
Nov 97
$732,500"
$774,577
Feb 98 $I,068,850
May 98 $395,538
Aug 98 $372,.674
Oct 98 $265,126
Dec. 98 $110,087
.Feb 99 $483,798
$700,’000
Apt 99 ~$320,317
Jun 99 $517,753
Aug 99
Oct 99
Dec 99
$87,000.
$133,000
$236,674
1 of 6 ,-
Revision 1, Exhibit A
:Contract No. 94-SAO-00047
A C _TJ_Y LT_Y
Turbine Model Evaluation
Disassembly of Unit 3
Delivery of Materials
Install Components - Unit 3
Reassembly of Unit 3
Delivery of First Turbine
Disassembly of Unit 4
Installation of First Turbine
Reassembly of Unit 4
Disassembly of Unit. 5
Delivery of Second Turbine
Installation of Second Turbine
Reassembly of Unit 5
Disassembly of Unit 3
Delivery of Third Turbine
InstallaHon of Third Turbine
Reassembly of Unit 3
Contingencies
Total Cost
COMPLETION
DATE 1/
Dec 99
Jan 00
Apr 00
May 00
Jul 00
Dec 00
Dec 00
Jan, 01
May 01
Oct 01
Dec 01
Jan 02
May 02
Oct 02
Dec 02
Jan 03-
May 03
FUNDING
Feb 00
Apr 00
Jun 00
FUNDING
$i,i00,000
$266,126
$313,174
$162,000
$2,000,000
$150,000
$100,000
$150,000
$150,000
$2,000,000.
$i00,000
$150,000
$15o,ooo
$2~ooo,ooo
$i00,000
$150,000
$21,175,0.00
1/
2/
3/
Completion dates may be revised upon award of contract(s) by Reclamation.
Funding dates listed are for the rew’md.
Funding Dates for turbine runner installation to be inserted upon award of Contract(s)by ~
Reclamation. "
3.~RPART: This Contract Amendment may be executed in
a number of counterparts and shall constitute a single document with the same force and effect as
if each.Party had signed all other counterparts.
2 of 6
Revision 1, Exhibit A
Contract No. 94-SAO-00047
IN WITNESS WHEREOF, the parties have caused this Revision 1, Exhibit A, to be
executed the day and year first above written. The signatories hereto represent that they have
been appropriately authorized to enter into this Contract on behalf of the Party for whomthey
sign.
WESTERN AREA POWER ADMINISTRATION
By:
Title: Regional Manager
Address; 114 !~arkshore Drive
Folsom: CA 956i0-4710
BUREAU OF RECLAMATION
By:
Title:Regional Director
Address:
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’ ~Contract No. 94-SAO-00047
CITY OF ALAMEDA
By:
Title:.
Address:
CITY OF BIGGS
¯By:
Title:
Address:.
CITY OF GRIDLEY
By:
Title:
Address:,
CITY OF HEALDSBURG
By:
Title:
Address:
oCITY OF LODI
By:
. Title:
Address:
CITY OF LOMPOC
By:
Title:,
¯ Address:
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NORTHERN CALIFORNIA POWER AGENCY
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CITY OF PALO ALTO
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PLUMAS-SIERRA RURAL
ELECTRIC COOPERATIVE
By:
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CITY OF REDDING
By:
Title:
Address:
CITY OF ROSEVILLE
By:
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CITY OF SANTA CLARA
By:
Title:
Address:.
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i~2ontract No. 94-SAO-00047
SACRAMENTO MUNICEPAL
UTILITY DISTRICT
By:
Title:
Address:.
(Seal)
Attest
By:.
Title:
SAN FRANCISCO BAY AREA RAPID
TRANSIT DISTRICT
By:
Title:.
Address:
(Seal)
Attest
By:.
Title:
TURLOCK IRRIGATION DISTRICT
By:
Title;.
Address:
CITY OF UKIA.H
By:
Title:.
Address:
(Seal)
Attest
By:.
Title:
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