12/17/2014 (2) - Laserfiche WebLink

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• • • Background As you know, City Manager Jim O'Connor and I have met with OUC several times since August in our ongoing efforts to obtain amendments to the 2008 PPA that would enable the City to reduce our retail electric rates. On October 20, OUC provided to the City a list of "Discussion Points that included: (1) significant reductions in the Capacity Payment rates as compared to those in the 2008 PPA; (2) a minimum take" or "floor" in the amount of base capacity that the City would have to purchase in any year of 85 MW; (3) purchase by the City of 54.5 MW of Peaking Capacity to replace the capacity of the Vero Beach Power Plant; (4) a unilateral option for OUC to terminate the PPA in or after 2020, with 2 years notice to the City; (5) an option for OUC to purchase the City's capacity and energy entitlement from the St. Lucie II Power Plant, pursuant to a PPA (as oppoaed to an assignment); and (6) OUC would receive permanent rights to (and obligations under) the City's gas transportation contracts with FGT. The October 20 Discussion Points and pricing for both the Base Capacity and the Peaking Capacity purchases are included as Attachment B to this memo. Discussion at the City Council and Utilities Commission meetings on October 21 included concerns expressed by members of the Utilities Commission and others that centered on: (1) the fact that the City would still be in a PPA with OUC that would continue through 2029; (2) the uSt. Lucie Option" in the October 20 Discussion Points by which OUC would have an option to acquire the City's share of the output of the St. Lucie II Power Plant from the date when the option would be exercised through the end of the St. Lucie Plant'a useful life (presently expected to be 2043); (3) permanent release to OUC of the City's gas transportation contracts with FGT; and (4) the unilateral opportunity for OUC to terminate the PPA in or after 2020. Responding to those concerns, I communicated the concerns to OUC, and City Manager Jim O'Connor and I met again with OUC senior management on November 19, 2014 to discuss whether there might be alternatives to the terms set forth in the Discussion Points that OUC provided to us on October 20, 2014. Following that meeting, on November 25, 2014, we received revised, alternative terms (Attachment C) that are set forth in a document comparable to the October 20 Discussion Points, as well as a table of revised prices for both the Base Capacity purchase under the PPA and also for the purchase of 54.5 MW of Peaking Capacity (which would enable the City to retire the Vero Beach Power Plant). 2 3�.