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Discussions 2008 PPA.vs. October 20 Proposal vs. November 25 Proposal Attachment A is a table that summarizes the key points of the City's existing 2008 PPA with OUC as compared to the October 20 Discussion Points and the November 25 Discussion Points. In summary, the November 25 Discussion Points address the concerns. mentioned above by: (1) reducing the term of the PPA by 6 years, so that it would terminate at the end of 2023 instead of 2029; (2) the unilateral option for OUC to terminate the PPA is deleted; (3) the 'St. Lucie Option" is deleted; and (4) OUC would still be in to receive or obtain the City's rights to the FGT gas transportation contracts, aneept that the City would get the right to recall or reclaim those contracts if the City were to build new gas-fired generating capacity at the existing Vero Beach Power Plant site to serve the City's native load. Not surprisingly, because of the lesser value to OUC of the revised terms, the Capacity Payinenta in the November 25 Discussion Points are higher than those in the October 20 Discussion Points, but still less than those in the 2008 OUC-COVE PPA. The other changed terms are the same as in the October 20 Discussion Points. Naturally, since the revised, November 25 Capacity Payments are greater than under the October 20 Discussion Points, the savings to the City are less. Because the estimated effective date of the amendments is now assumed to be October 1, 2015, the 2015 savings are significantly less than under the October 20 proposal, about $1.3 million in 2015 vs. about $7 million under the previous proposal. Because of the higher pricing, the savings in 2016-2018 are also less - e.g., about $5.5 million in 2016-2017 vs. about $7 million in 2016-2017 under the October 20 proposal. Also, because the new proposal would terminate the PPA as of 2023, there would be no known or definite savings from the end of 2023 going forward. In nominal dollar terms, the total savings of the October 20 proposal vs. the 2008 PPA would be about $68.7 million (including an adjustment to reflect the current projected implementation date of October 1, 2015), and under the November 25 proposal, the nominal dollar savings are about $37.8 million (also reflecting the October 1, 2015 implementation date). (These savings are summarized in Attachment D to this memo.) In practical terms, this would limit the City's ability to reduce retail electric rates in 2016, 2017, and 2018 to somewhat less than the reductions that would have been possible with the October 20 proposed Capacity Payment rates. The termination as of 2023 would also eliminate any known, definite savings available through PPA amendments as compared to performing the 2008 PPA through its current termination date, December 31, 2029. Actual results may be better or worse than the longer-term option (i.e.., 3 33 • • i I