(7)AR 100510 Baker Tilly Contract

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DATE: TO: FROM: ITEM NO. 07 STAFF REPORT OCTOBER 5, 2010 HONORABLE MAYOR AND CITY COUNCIL ROD FOSTER, CITY MANAGER/GENERAL MANAGER n PREPARED BY: JAMES EARHART, INTERIM DIRECTOR OF UTILITY SERVI SUBJECT: ELECTRIC COST OF SERVICE RATE STUDY RECOMMENDED ACTION It is recommended that City Council award a three year contract to Baker Tilly Virchow Krause, LLP, to conduct an electric cost of service rate study and annual updates in the amount not -to - exceed $36,043.00 per year, and authorize the City Manager to execute the contract documents. GOAL STATEMENT The proposed action will support the City's goals to provide safe, reliable, affordable, and environmentally sustainable electric service. BACKGROUND On June 19, 2007, the City Council awarded a contract to Navigant Consulting, Inc. to update a previous electric rate study to account for increases in power supply, O&M expenses, and the cost of capital improvement projects. The recommendations from this cost of service update were approved by City Council on March 17, 2009. At that time, the City Council directed staff to issue a Request for Proposal to perform annual updates to the Electric Utility's rate structure. ISSUES/ANALYSIS Per Council Direction, Electric Utility staff issued a Request for Proposal, RFP -RG -9006, to perform a cost of service study and to provide updates to the existing rate structure, in accordance with Municipal Code, Sections 3.08.070 (b), Bidding Requirements — Professional Services, and 3.08.120 (c), Non-public projects — informal bidding procedure. The Request for Proposal was posted on BidNet, the City's online bid system. Notices were sent to 632 companies which had registered for financial and rate consulting services. An addendum was issued on July 13, 2009, to address questions received from potential bidders. Four sealed proposals were received on July 21, 2009.