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• <br />the October 20 proposal) depending on whether the longer -run cost of <br />capacity in the market is greater than or less than the costs <br />available to the City under the October 20 proposal. <br />Additionally, although not reflected on the term sheet, OUC's <br />senior management have indicated that they would be happy to receive <br />and process employment applications from any City employees whose <br />positions would be terminated upon retirement of the Power Plant. <br />Additional Analyses Needed for City Decision <br />At my request, OUC senior management have confirmed to me that <br />the City can choose either the October 20 terms or the November 25 <br />terms, subject to the approval of the OUC Board. There are a number <br />of elements ('moving parts") to be addressed in analyzing the three <br />alternatives available to the City, i.e., simply performing the 2008 <br />PPA until its termination in 2029, the October 20 proposal, and the <br />November 25 proposal. Needed additional analyses will, I believe, <br />include sensitivity analyses relating to future costs of capacity <br />and energy in the market since, under the November 25 proposal, the <br />City will be in the market as of January 1, 2024, and what the City <br />believes about the relationship between OUC's proposed Capacity <br />Payment rates and the market rates for Base Capacity and Peaking <br />Capacity fraan 2024 through 2029; the value of the St. Lucie Option; <br />the value to the City of possibly keeping, or being able to recall, <br />the rights to the FGT contracts; how these variables would fit into <br />the City's electric rates; and other variables and considerations. <br />I would recommend that the City undertake such analyses as soon <br />as practicable so that the City Council will be in the best possible <br />position to make an informed decision as soon as practicable. <br />Because of the need to make transmission arrangements to accommodate <br />either set of amendments, at some point, delay will almost certainly <br />impinge on the City's ability to implement either option in October <br />2015. <br />Thank you again for the opportunity to be of service to the <br />City of Vero Beach and your citizens. I look forward to seeing you <br />again soon. If you have any questions, please call me any time. <br />Attachments <br />COPIES: CINDY LAWSON, FINANCE DIRECTOR <br />TOM RICHARDS, ELECTRIC UTILITIES DIRECTOR <br />4 <br />