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reduce its bill for 1,000 kWh of Residential electric service by <br />approximately $10.00 per 1,000 kWh, i.e., from $123.93 to $113.93 at <br />full implementation. <br />The key factors upon which prompt implementation depends are <br />(1) agreement by FPL that the City's entering into the revised PPA <br />with OUC would not constitute a breach of the City's agreements with <br />FPL, (2) completion of any necessary transmission studies and <br />upgrades to accommodate receipt of the peaking capacity from OUC, <br />and (3) approval by OUC's Board and the City Council. <br />Revised PPA with OUC <br />As previously stated before the City Council, Mr. O'Connor and <br />I met several times with OUC senior management to discuss changes to <br />the 2008 PPA. These discussions culminated last week in the <br />preliminary agreement that OUC's management will recommend the <br />proposed changes to their Governing Board, who are the Commissioners <br />of the Orlando Utilities Commission. This is effectively a set of <br />proposed terms in the nature of an agreement in principle, and <br />remains dependent upon the development and execution of the <br />definitive agreement, as well as on approval by the OUC Board and <br />the Vero Beach City Council. The OUC senior management personnel <br />with whom we met are optimistic that OUC's Board will approve the <br />revised agreement, which will be proposed as an "Amended and <br />Restated Agreement for Purchase and Sale of Electric Energy and <br />Capacity, Gas Transportation Capacity and Asset Management Services <br />Between The City of Vero Beach and Orlando Utilities Commission," <br />thus replacing the existing 2008 PPA. (The new PPA will he refPrrac <br />to as the "Amended PPA" in the remainder of this memo.) <br />The "Discussion Points" (like a term sheet) and a table showing <br />the pricing terms that would produce the $7 million in annual <br />savings for the first 3 years are attached to this memo. Key <br />provisions include: <br />1. Reduction in Capacity Payments as shown on the table. The <br />reductions start with discounts of approximately $7 million per <br />year for the first three years of the Amended PPA, and range <br />between $4.1 million and $5.3 million per year for the <br />remainder of the term. <br />2. Purchase by Vero Beach of 54 MW of peaking capacity to replace <br />the capacity currently provided by the Vero Beach Power Plant. <br />Pricing is as shown on the attached table. This purchase will <br />enable the City to retire the Vero Beach Power Plant and reduce <br />costs accordingly. <br />2 <br />