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HomeMy WebLinkAboutResolution - 605 - Contracut - Economic & Engineering Services Inc - Cost Of Service Study, LP&L - 09/11/1980i ' DWR:cl RESOLUTION #605 - 9/11/80 RESOLUTION +L� BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized and 4a4 directed to execute for and on behalf of the City of Lubbock a Consultation Contract between the City of Lubbock and Economic and Engineering Services, "y Inc., attached herewith which shall be spread upon the minutes of the Council and as spread upon the minutes of this Council shall constitute and be a part Q. of this Resolution as if fully copied herein in detail. Passed by the City Council this lith day Of September 21980. BILL McALISTER, MAYOR ATTEST: '..Evelyn Gaffga,:Cit� ec a -Treasurer APPROVED AS TO,.- CONTENT: c Carroll McDonald, Director ElectricUtilities Sales and Service APPROVED AS'TO FOR4sta David W. Reagan, Aty Attorney RESOLUTION #605 - 9/11/80 CONSULTATION CONTRACT This contract, entered into by and between the City of Lubbock, Texas, hereinafter called City, and Economic and Engineering Ser- vices, Inc., hereinafter called EES, witness: WHEREAS, the City is desirous of obtaining a cost of service. study for the municipally owned utility known as Lubbock Power and Light (LP&L) , and WHEREAS, the City is desirous of acquiring the assistance of EES in determining the Section 111 Rate Standards of the Public Utility Regulatory Policies Act of 1978. Now, THEREFORE, the parties hereby agree as follows: I. Scope of Services EES shall perform the following services under the terms and conditions hereinafter stated and EES hereby accepts and agrees to perform such services: A. EES will define the management objectives of LP&L as they generally apply to tariff administration. More specifically, EES will define to the extent which LP&L wishes to use the cost of services as a basis for class rate designs and revenue requirements. B. EES will assist in the generation of a pro forma in- come statement based upon LP&L's most recently audited financials. C. All LP&L expenses will be functionalized as to their nature. Each expense item on LP&L's revenue require- ment will be placed into the categories of production, transmission, distribution, general or common related. Debt service, replacements and improvements will also be functionalized. Functionalized annual expense totals then will be classified by their cost causal nature, into customer, demand, or energy relat9d. D. Total classified expenses will be allocated among customer classes based upon the classes' contribution to total system customer, demand and commodity re- quirements. These allocations will be aggregated to determine cost of service revenue requirements for each customer class. The classes' allocational units will be divided into retrospective revenue requirements to calculate unit costs for subsequent rate design pur- poses. f v K - 2 - E. EES will use the class unit cost and revenue require- ments derived in the cost of service study to help LP&L to determine the Section 111 Rate Standards of the Public Utility Regulatory Policies Act of 1978. EES will assist LP&L in determining a common position in the required rate determinations. EES will either present these findings or assist LP&L personnel in this endeavor. System operational characteristics, cost of service results and the. LP&L management objectives will be incorporated into this critique. II. Duties of City The City will provide through LP&L the following informa- tion if it is available. Any of the following information which the City does not have available, EES will assist in gather- ing such information to the maximum extent possible. A. Base Data 1. Rate revenues by tariff. 2. Copies of the computer back-up for all operating ex- penses. A split between labor and other expenses will be helpful. 3. Base data for the calculation of annual depreci- ation expense. Depreciation by function should be provided (i.e., production,.transmission, distri- bution, meters, services, etc.). 4. Interest expense functionalized by major capital facility. 5. Original cost and accumulated depreciation for capital facilities by function. CWIP and con- tributions in aid of construction should be sep- arately identified if possible. B. Consumption Data 1. Kilowatt hour sales and number -of customers by tariff. 2. Maximum system monthly demands at a common voltage level. 3. All peak demand data from distribution feeders which serve homogeneous groups of customers. 4. Any borrowed load data available from Southwestern Public Service. This data should include load fac- tors and coincident factors for all major classes of customers. - 3 - C. Miscellaneous Data 1. Minimum service study for the distribution system. This exercise must be conducted to -accurately class- ify distribution -expenses between customer and demand components. To facilitate this analysis, the number and size of.distribution poles, wires and transformers will be needed, along with an estimate of their currently installed unit costs. If Southwestern Public Service has done such a study for the Lubbock service area, this would be ,extremely helpful. 2. Any major facilities dedicated to serving only one customer. 3. A line loss estimate for transmission, primary dis- tribution and to secondary distribution systems. 4. Discussion with LP&L planning personnel on the design criteria used in the sizing of various capital facilities. III. Compensation EES will provide the scope of services herein provided for a fee not to exceed $20,000. The scope of work can be increased or decreased by mutual consent of EES and the City if certain areas of the project need re-evaluation. The fee or compensation for such variations in the scope of work will vary accordingly. IV. Time of Performance The services of EES are to commence on or about the date this contract is entered into and - shall - be undertaken and com- pleted in such sequence as to assure the expeditious completion and rendition of such services as required by this contract. On the date that this contract is entered into, LP&L will begin data collection as specified in the contract. After data collec- tion is completed by LP&L and furnished to EES, EES will, if necessary, visit Lubbock to review the input data, establish an analytical framework and begin the analysis. Upon comple- tion of these tasks, a five week period will be provided to complete the draft narrative. Senior EES personnel then will return to Lubbock for two additional days of staff training, discussion of the draft report and presentation. of their initial position on Section 111 of the Public Utility Regulatory Policies Act of 1978. The final paper will then be provided. Time is of the essence. - 4 - V. Independent Contractor Relationship Nothing herein shall be construed as creating a relation- ship of employer and employee between the parties. The City shall not be subject to any obligations or liabilities of EES incurred in the performance of this contract unless otherwise herein authorized. EES expressly agrees to indemnify and hold harmless the City of -Lubbock from any•and all liabilities and obligations incurred due to the negligence of EES or its employees. VI. Law Governing the Contract The parties hereto agree that the situs of "this agreement and the law governing its interpretation is the State of Texas and the laws of that state. VII. Method of Payment EES will submit monthly invoices to the City of all labor and expenses accrued during the execution of this engagement. The City will pay all invoiced amounts not disputed in writing within thirty (30) days of receipt from EES. VIII. Termination Either party hereto may terminate this contract if the other party is responsible for.a breach thereof and fails to correct such breach for a period of ten days after receipt of written notice to correct same. IX. Notice Any notices required under this contract shall be suffi- cient if sent by certified mail., return receipt requested, to the City of Lubbock at the following address, City Manager, City of Lubbock, P.O. Box 2000, Lubbock, Texas 79457, and to EES at the following address, Economic and Engineering Services, Inc., Management Consultants, P.O. Box 3182, Bellevue, Washington 98009. X. Liability and Cancellation Rights EES warrants its work will be performed according to the terms of this agreement and the best of its professional capacity under the control of one or more principals experienced in the services outlined herein. EES warrants that it will apply best efforts to obtain the results client has requested and that client will be kept informed of all major developments and bearing on this work agreement, providing client,,is available, and where client is deemed unavailable, a ting forth details addressed to the client location in this agreement shall release EES from any duty to further. incidents reasonably letter set - set forth proceed The liability of EES for services performed hereunder shall be limited to the fees collected by EES, or the limits of its applicable insurance coverages whichever is larger. EES shall not be liable to third parties or others -not a party to this agreement unless such potential- liability is ex- pressedly recognized in this agreement through client represen- tations. Where client negligently fails to reveal such third party interests in this- agreement and the- ser'vi ces reasonably arising thereunder, client agrees to save harmless EES from such third party claims. XI. Acts of God EES and client agree that acts of God which prevent, frus- trate or otherwise render this agreement beyond reasonable per- formance according to its terms shall terminate this agreement and fix liabilities, fees, costs and expenses. The parties . agree to settle all accounts under this clause within 30 days. XII. Ownership Work Product/License EES agrees that client shall own exclusively all data and work products developed under this agreement, except that EES shall retain the rightto copies of all data for its files and a license to use all methodologies or devices developed provided' that each such use shall not.represent a violation of privacy to client, loss of competitive advantage to the client, or be in controvention of statute specifically applicable to the data, method or device. XIII. Entire Agreement This contract. constitutes and expresses the entire agree- ment of the parties hereto in reference to the professional and expert services of EES for the City and no other agreement, either expressed or implied exist between the parties hereto. 1980. Signed and entered into this 11th day of September , r 041 C y of L oc , Texas Bill McAlister, Mayor Attest: elyn Ga ga,. -Czty ary- Tr_easurer Approved as to Content: Carroll McDonald-, Director of Electric Utilities Sales and Service Approved as to Form: AssistantCity ( ZR &Idb"4 a Eco omic and Engineering S-964ices, Inc. Robert L. Wubbena, President Attest: & Q2 ary ale a, Secretary- Treas er Economic and Engineering Services, Inc.