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Item #6 CITY OF COLTON AGENDA REPORT For the City Council/Utilities Commission Adjourned Joint Meeting of August 14, 2001 TO: Honorable Mayor and City Council FROM: Thomas K. Clarke, Utilities Directo'� SUBJECT: APPROVAL OF AMENDMENTS AND RENEWAL OF THE POWER RESOURCE SCHEDULING CONTRACT WITH CORAL POWER DATE: August 7, 2001 BACKGROUND Through a contract approved by City Council, Coral Power has been providing power resource scheduling and dispatching services since July 2000. The existing contract expires on October 31, 2001. DISCUSSION / ANALYSIS The Electric Utility has to continue to monitor its supply and demand on a twenty-four hour basis. At its March 21, 2000 meeting, City Council awarded the contract to Coral Power for sixteen months with an option to extend it for a successive one-year term. However, some amendments are needed in the existing contract to enhance its benefits to the City. Staff has been negotiating with Coral Power to amend the contract. Coral Power has a fixed cost of $48k per year, with an additional $48k per year through profit sharing. There is no change in cost this year. The total annual cost of $96k will cover their basic cost to provide these services, and this option could also bring the City a minimum $112k and a maximum of up to $282k in revenue (based on $500k savings) through profit sharing. Coral Power is also familiar with our load and resources. Staff has successfully negotiated to optimize gas purchases for the existing Pasadena contract. This would allow us to hedge gas prices against what the City would have otherwise been charged by Pasadena. This contract may also help some of the cash-flow issues related to Pasadena invoices and netting arrangements. This contract would only net our Pasadena contract, and transactions between Colton and Coral Power. Section 8, related to value-added fees, has been amended to cease any fees upon termination of this agreement. ALTERNATIVES: The annual cost to the City to provide its own services would be over $500k. FINANCIAL IMPACT The City will continue to pay $96k per year to Coral Power to provide scheduling, dispatching, and optimizing services per the contract. Funds are budgeted and available in Account No. 520-8000-8001- 2330-5550-000. ENVIRONMENTAL IMPACT: None. RECOMMENDATION Staff recommends that the City Council approve amendments and renewal of the previously approved Power Resource Scheduling contract for one year with an option to extend for one additional year. Report Prepared by: Nitin Modi, Electrical Engineering Manager Item #6 Page 1 of 1 (w/attachment)