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June 14, 1990
THE BONOPASLE CITY COUNCIL
Palo Alto. California
2~3) 2(~
Renewal of consultant Service Agreements for epue Gas Uti 1 ity
proceeding
Members of the Council:
This report requests that Council authorize the Mayor to execute
the attached: agreements 'With Recon Research corporation (RECON)
and Mr. Patrick J. Power to provide specialized consulting services
on qas utility matters before the California PUblic utilities
Commission (CPOC). Both consultants are presently under oontract~
representing the city before the CPUC on a variety of izportant qas
issues related to derequlation of the industry which yill continue
to be addressed in the upcoming year. Council approval of the
attached agreements will make them effective through June 30., 19-91.
Discussion
During Fiscal Year 1990-91, the city vill continue active
partici~ition in CPUC qas proceedings on cost allocation,
interstate transportation, gathering charqes, procurement of
sOlpplies, and other related Ilatters which direct.ly affect the
wholesale rate we pay to pacific Gas and Electric (PG&EJ as well
as the City's plans for alternative gas supply and development.
The issues in these bearings bave broadened since their beginnings
in 1984 .. when the Commission instituted its investiqation into
California qas transportation matters and assigned Mr. Power as the
Administrative Law Judge. Important issues re~ain to pe resolved
in the upcoming year, and issues already resolved ~ust be monitored
to protect the City's interests from proposals Which deviate from
establisbed formulas and policies. In addition to close Ilonitoring:
of all phases of these proceedinqs~ the City vill present its own
witnesses, cross-exa1line PG&:E witnesses, submit briefs and file
petitions if necessary~
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The increased compensation -requested for consulting services is for
acScUtl.onal services resulting f"roll. issues which surfaced during a
recently 5cheduled En Bane hearing called by the CPOC on November
I, 1989.. The En Bane is notable in that it shows the CPOC·s
oomJIitment to implementing a new gas utilit.y program structure that
will have a significant impact on Palo Alto~ The CPUC filed an
Order Instituting Rulemaking (OrR), a proceed in<) de-sig-ned to
establish ~ policies, on February 7, 1990, as a result of the En
Bane hearing. The OIR proposes a number of chanqes to California's
current qas procurement and pipeline cap~c1ty access policies 'Which
may materially affect the City and its retail gas customers. As
a result it is extremely important that the City avail itself of
the additional specialized services until these issues have been
resolved.
To accomplish Palo Alto's objectives in these proceedings, reliance
upon outside consultants -with expertise in the CPU<:' arena has
become necessary due to the demanding schedule, technical subject
matter l workload and the multitude of issues under consideration
simultaneously at the hearings a Although the consulting field is
very narrow with respect to specializing in CP""VC gas rate and
regulatory :matters, the city has been fortunate to retain the
bighly regarded services of REOON in 1986 and Hr. Po'Wer in 1981
after bis departure froa the CPUC~ Both consultants are among a
relative few who have been closely involved in the construction ~f
the CpucJ s rate and regulatory proqraII since its inception in 1984.
Equally important, they do not represent any other parties of
record in gas issues being brought before the commissimt Which
would result in a conflict of interest .. Accordingly, RECON and Jir~
PoWer provide specializ&<.: services which are exempt from the normal
Request for Proposal and Consultant sel~tion Process.
These two consultants are of value to the City with regard to
advice on rate design, gas acquisitio-n costs" procurement and
transportation issues at the state and federal levels and various
l,aqal, economic and regulatory matters. Their efforts have
substantially aided the City in obtaining access to PG&E's gas
storage facilities l asserting Palo Alto's unique status as a
wholesale customer, and .facilitat:inq staff's unde!"standing of
critical issues as they bave developed~
It may be noted that Hr. Power, a fo~er CPOC Administrative Law
Judge, resigned in April 19&1 to enter the cOllsultinq field.
Baving presided over the transportation proceedinqsl Mr~ Power
brings invaluable knowledge, experience and legal expertise to the
City's effort before the COmDission. On the other hand, RECOtf
provides strong economic and ratemaking support to the City ia the
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hearinga. Thua, ~helr individual areas of exper~ise co~plement
each other and provide the City with sufficient depth to accomplish
the City's qoa15.
Tbe current agreements expire June 30, 1990. A.rproval of the
attached REOON aqreement will renew the present agreement through
June 30 1 1991 and allow for an annual compensation level not to
excee·'J $150,000. With regard: to Mr. power, the attached agreement
provides. lor a t.erm through June 30, 1991, and. allows for an ann·ual
compensatIon ceiling-up to $30.., 000. Neverthelt:'!ss, the combined
consultant expenditures for CP'OC activities shall be lImited to
$l~O,OOQ. Funds for this purpose have been budgeted for FY 1S90-
91 In the Gas Fund. Approval of these agreements vi11 provide
adequate leq.al and econoJlic analysis support. for an ongoing effort
in 9&S proceeding before the CPUC in the upcoming year.
Recomnendat.ions
Staff recommends that Council approve the attached agreements with
Recon. Research Corporation and Hr. Patrick. J. Power lor onqoinq
consulting services on gas rate, procurement and transport ~atters
before the California Public Utilities Commission.
Respectfully s~itted,
~~f!~.", l'~ALD P. RLVAL
xanaqer, Energy Planning
/.; _ -f~_~ ~'~ """ ~U
RICHARD L. YOC'N
Director of Utilities
~~~
Assistant City Manager
Attachments
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PALO ~~TO VTXLTV
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f-'. ~-.o! W~::--'9 TUO< 9.3' ",TY OF
(), AGREEMENT No.
e:v~ ~ ~!MENT MACi A,.,o £N1VEtl MQ 0\Ij ~i aA'I C4 ___ _
IV ArC! fIIETwaIt M (;tTY OF PALO Ai.. TO (Io'EJIe:I~Fge~ RE.F~ '1i!110 TQ,&.$ ClTY.,&.NO
..
~(1'. 'Ero' 'ESMarK rOR'QOliATIQX ~ . ____ , ___ ,_
~~SSi U8Q Yfhbh· )JVd 51"re I5,ClL ~i'I'VJ J..D:$ ~e.l..es_---CA..._~1I'l..;:S0C4& " (r~.1 .(213).. _
~~.u;..~~~,:(iO.t.i CONiRAtTORi iN ~~~i;.I'\<..~ '-.,," t~,1II' 1oIt.f'\.i.ott. CO"5l':A,~T$. ,.,.i,,~ JE~r'T'O A.G"'-tE;'''S ~()IJ
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• CONTRACToR ~ PFIOII1."~ O~ F\lJ;.~S1oI TO!.E ;:ou.CWNQ sPiClf'::tI $to:r.-'::; 1<. ~ ~"rC.~ SPEO"I6D ~ 0...1&,1' _
'. "nAOEI)HliIW7O.AND~t£O~E~IV:)<.1$RIi;:-''''.tNC..e-Se::;'I1cu 5"'311 be 'u'tldC!!rt.a"IWn "nd",r tr . .!; ;~r:3Cr.~1
dirElc-t1oll 'Of -D'r. J:.d:-rew Sat1:-, hu!c~~t. 0'0 'Who,~ IoIc.i,u. q'l.a11f1ear.1ous t.he: Cit.Y h tel,.1':"'..~
121. ~k!1!I1 tMs a,: .. meot. $.Qf"l~n will 'b~ prov1.ad h C;o'llclltct.iOQ Vi.tb. Cit,·, g:~$ t-l'!l~_o;:
PQ~cattOQ rate. Vboles~e tatQ, .~d regul¢tory .~1Y1!. of p~opos&ll betQ~~ the C~li!~r~ll
'Pub11C. 'C'tUl.t.:l.e:!l COIIIfI:lss1ou and 00. goU tx-a.I'I$pcrtatioo rr.a,cl:er, 41netl,. v1th Paciftc C~S ~~d
ile.ct%1c ~an: ... Add.it.loo.al se.rv1,1t.$ will b~ p'tovtded ;:-'Ca.t'ditl.& ca. a.equiSitiol"l .;:>l".d. r'rcc, .. r0':"
• EXHIBITS 1)4I~"'TT~tl:~Ii's,":e~Ea'f.-AE""""tllli 'oIlA1'eJllMS; Ar;piilYtNT: WlItter:l fot' City's oti.lit.:io!!:~_
n.u. ASrteme.!lIt 1I'hall I',.\perscd. Cont:r.lct roo. SO 006208.
!XalBlt A • WAtt.;~~~ A -Co~?~ns~t1onn
• TERMS ~ seMC;ll ANC),IQIII".A1V!:I,t;t.S ~."III.NlS~';.:J '$0£.:1. 1'".$ t,GI4E:e:lr4'tr~.J. ~~t OJ.\ _~ 1.. l.9':}Q
ANO~I'i~1i1Oft( Jyn,...' 'KL .. _U9..L. _____ _
• COMPENSA.TION (I:C~ n-.e FlJU.. ~F-;.OI:M.I.rd '::F :11::;, "G~E"~r
G C1n$tW.I.PA'fCCNT1'AC"'"..c~ Se. Att&eb.o:l.enc A
• CITY ACCOUNT NUMBER: r:~,
2'423400 3103
24423!o~O 310'
• GENERAL TEAMS AND CONOfTIONS ARE ONClUOE" eN SOn< SIDES 0' ""'$ =-""
$l;'.COO
$12D.C'CO
TWS ~~NT,HAU IIECOIoIE!f'ItCTM VPONi ITS APPFl:::1' .... 4l 4UO mci!:'~ IV CI!Y, II "W11"frt!SS ~ERrof-_ rKE fl'AJWf:.: ~t,Jt. EXECUn-O ;,,~s
AGIIEfME1f1 tM! DAV. UON1'H. Ma:l 'f'lAA: FtRSr~ A8OV{.
• M'LIMUoUSS. ~~ ... ta ~Vl1(1if'J. ",rc"iS".,il P".o:cl ~rm~u em-. iS~. 2;W11l.. QI'od Cfl1pfo)JMs tom at\):ar'ICJ d ~~ ",;t'I!! '!' ~~~~t')' 'll
~ ~~ ~dWI\.~ ~ r.t l:':':li!"i; N" C<mit;~~~'l. .~ .. ;Jjjt"lUo· tt~OJ.U ~ -ae:,..tr<v ... ~ <)1r.~IQ"';, ef ~·!I(:...:
~ .«rncfiJcrfor..ticl a» ~ 1m.P1n«S 'It'C ~ eon CO"'!~ ia \1'.11 t't~nc.e Qf~"!11 ,lffatT'll !li&W'H:T.c:ht ~ ;:JfoIfR.6.C'CR
D11RI AQJIEMOO" TM IIIr"1f11'*11:1M' It!t Iran Fit C"MIMCH; jMl ...... M"St !\!:rt¢ ~~ :!1' ~11IQ,~man: ~ z:w jU.."tiIeS ... :rfI ~~d ,'t ~t: ~"":";I~"
•• ;r4 SOh ~ 'N ~ ~:aN!s ::r $I.I~ 01 N,t!I!r'It. 10r S8'T"~cn ",".c'" IN3' Dt N JI;~t~ .. t!IiI: ~r'~ Nt"".. ~l'ttM'lc"'" t'"..jJ",NJ';Jl"\O'1~ ,:"Itt:"~w,
.... PRoJECT ·MANAGER ~ ~e~SE..,rAr~~ ~~ t::rrv ~TRACT . •
~""~w!ItDIer oraItrW1"~16".;rl aUlle'S<iat4 .. ~·.t.y ~4
NAME: 'C:r.,A.p lel",,?) ""'!!'''8cr ... ~i~n. !y . _.~_ ._
·.··~T,~t'i~,tf;:i!cetll;·!j?rn,,,,;~~_.__ rrru . t?~~k~'":· _~ .. _ .. ___ , __ _
. r,O. 801( _ .
:PALO Al.:'rQ. CA. 9't303
TeIIpf"Iol\II -(415) 329-229L
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• "INV04CfNG 1IHO,1.,:t. ~ 1<6 ~ GI""". Am .... ~OJEC1' W/IIWGEE;
.... ·~Ct~TY~~OF:~~P~A~L~O~'~· ;~~~~~~~:,:,,~,:o:u'~'~>C<~~$.~~;_~.~S~=~:OO~O~"":· ;'T\l~'~'_~~. ~;,~.,..,...,.,~~.~' .... ~~ao~::~~S~~7)~ !
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EXHlBITA
ATIACHMENT 'A'
RECON RESEARCH CORPORATION
July I, 1990 to June JO. 1991
Shoo FO<I!1 AgreerMnt
COMPENSATION; CITY shall pay CONTRACTOR; Monthly based on written invoices
for services rendered, not 10 exceed $130.00 per bour for the services
of Dr, Safir. Less compte. services, (){ services provided by associates
under Dr. Safic's supervision and dire<.-tion, shan be billed at RECOtII"s
current rates, ranging from $40.00 per bour to $130.00 per hour.
Compensation under this Agreement Wlll Dot exceed 5150,000 ","'ben
added 10 the t.ota! cornpeTL"iation nnder Contract Numb<:r __ _
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" AGREEMENT ;,
S'I' ':""HIS AGREEMENT ko! .... ::;lE .ll,ND Er..{TEF. jfllTO ON THE ___ DAY O~ _ __ __ <'______ _ ~_ 1 ~ _ ~
By AND BETWEE~ ThE CIT'( OF PALO At TO IHE",EI"'nf~ !'IE-FERRE;:) TQAS ClT'!', ,.l, ..... !':)
l'NAMF1111 _____ !_~ __ tr i Ck J. P C~_~ __ r:_______ _____________________ __._ 12',
(ADORE 551 .-t1..Pl~p~t~T _____ ~_1!:~_~!. ~ ____ ~_lJ_1._~_~ ___ lI QO____ _ __ ICrnl Q_:q~) a_T1.c:I.
("'EREIN.AfiEI'I P-EFERPEll ro AS CONTR).CTORl-IN CQNSIOE,.i'lA.HON Of THErR iIoIl.rru~t. CO'i£NAATS. TH(P"ATI£S HE~n0 ""'':'HE Ell.::; ,.::>1. l'~ '/.";
• CONTRACTOR SHAll.. PRO\/Ioe OR _LrRl'OISH THE FOUOWING SPECIf"i';:::> SEAV'CES )'~D,'O~ loIArrRJ,J;tS Senices sha 11 b""
undertaken by Patric~ Power on ~hase unique qualjficatrons the City is rel~in9. legal dna
consLlltation s.en'ices 11/;11 be provided in connection witn the City's gas transportation ri":e-.
who1esa1e rate. and analysis of regu1atton proposals before the Ca1Hornl! Public Gtilit'o;5
COOlmJSS;Ofl and. on gas transportation matters directlj witn Paclfic Sas and Electric Co!r!p,:i'lY~
Additional senlces will be provided regarding g3S acquisition ana procurement I!latt':ls f')r t~('
Citj's utilft1es.
TM;S agreement snall supersede Contract ~o. 50-6196
• EXHIBITS THE FOLLOWING 'H;ACHED EXHlsns HEREBY ARE MADE PART OF rHIS A~f1£E\IlE~i:
EXHIBIT ~ -AAttachment A -Compensation"
• COMPENSATION FeR iHE FULL PECfFORI,.,Ar-oCE Of THIS AGF!EE'·,.oIE:~T.
m CITY SHALt PAY CONrnAC Te R
o CQt.oTA.ACTQFI: SHAU_ PAY crv
• PAYME'1T RECORD
WARRANT ItO. OJ, TE AAtOll!""T
01 ___ _ ,..,
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eGENERAL TERMS AND CONDITIONS
_ cOin ACCDlJlI\IT ~_u", B!_" -:::r
24~23400 3]01 : S ---------------
ANOU"'!:_
1_5_,Oi22
1-I04..D KAA~ss. C.01'ltractOI agree ... 10 lndemn\f)l. de~encj and ~ld ham.:eosr:. the city. its ofti<:ers. agent ... and emplo,eesl-icm .In), il"C all
dem.iilr1ds, claims Of liabiTity of any nature, caused by or ar:sir;g olft of 1t1e peorforma~e 01 ttl,s a~reement
[NSURAI\ICf. ContriK1or shall file .... ith ft1e cJty .. certifICate of ins:uran.ce before comme:1cirl~ din)' ser'\lfCe!S under this agreement 1T1t.>etJng
minimlUll cOllerage requirements estabrrshed by cItY's risk manager
NON~I)I'SCRjMINAT1ON.. No discrimination sllan be made in tfle employment of persons undal" tt>1S agreement ~ause of :he race.. color
natKlI'al origin. a~ ancestry, n!ligion or :;eJ( Of st)CiI pe~O<",
rNTEFI£ST ~ COfIITRACTOft, • fs understood arld agretd t11at tt1i!S 3\treemertt is not ill Ct'nlract at emp1oJ'ment in tnt': 5-<:','5," ttlat tr1e
reralion or m.;tSter arid 5e!Vam e-~;sts bet .. een tne city and undersigned At alll;lT,es. contra-c1or sr1an be deemed ttl be .. '1 ind.:pende-rrt
cantrac1Q( and' contractor 'is r"l~ authorized 10 !::lind the city to ar.V con.tracts or oU'er ObligatJons. 11" e.eoc.rti:-wol tt.!!;; agre'Omenl cr~'nl~.a..::-L)r
certifies that no one wflo !'las 01" WI~ r1ave an:r finanCIa;r in!ere!>t uncial :t1 is agreement is an ClWocer Of em;::llcyee of Ci~.
C HANGIE S. fi'lfs agreement shOll! nol oe asSigned' or transferre't ~lfl'1oLJ!:tIe '."nttft!1. consent of theeit)'. Nocl'la.n~es or 113r;at,0 n5.-.]f <In" Io,.In1
are a\Jtt'>oli"l-e1i wi{hoo,r\ tt.e 'Wfitten CQ('&E.M 0{ the cih,o l1lar,at;;er.
TERM4NATION. Thi$agreem&nf may be lermi,-,ate<;f b)' city upon ten 110) da!"5 ·."r't1ell (lo!;ce 10con!rador Yonies ttlen OWing bas",d UP,)n
work $<Jfisfactonly ;tCCOmplished shan be paid Ie contr3C1or.
This agreemanl al1a11 become el're<:tive upon its approlla! and e_ecution by CITY. In .,tnI3'SS wIlereo(, t!'1". p<l!rties have e_ec'.lfed r1:o5
agreemenllhe day and year fir5t writ'ler"l above
• CONTRACT co.ORDI NA TOR "NO REPRESeNTATIVE FOA CrT\'
N}lMr::: RO_!l~ 1 ~ __ P. !e 1 "i a 1._ f..,P P R_ClVJJ~;
Dm _ umDfi'sl~NERGY l'LANNI~G-=---
P.O. 60)( 10250
PALO ALTO, CA 94303
"TEl.EPHONE 329-______ f(~J_
lET."" C:;Ri.'U'II COP'(
FOil ¥o ... 1t FlU3
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CONTRACTOR
ev 24l.",.,»J'L-...r::y
1mE __ AB-Jc<-~_
~~-I~~ S;;~~~~ ~_ S _3. __ 1-=_ ~ __ ~ _-I '1 1 8
CITY OF PALO ALTO
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EXHIBIT A
AITACHMDiT "A"
PATRICK J. POWER
July 1,1990 10 June 30,1991
Short F Ofm Agreement
COMPENSATION: CITY shall pay CONlRACfOR: Monthly ba.<oed on written ,nvoic""
foe services rendered, not to exceed S 13(1.00 per hour for the services
of Patrick J. Power. Less complex services shall be billed ranging from
$40JlO per hour 10 $130.00 per hour. Compensation "nder this
Agreement will 001 exceed $30,000 provided that the total
compensation nnder this Agreement wben added to the total
compensation paid under Contract Number ___ . __ sb~J:l Dot, in the
aggregate, «ceed $150,000.
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