2003 AGN APR 01 I11 - Laserfiche WebLink

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CITY OF COLTON Item #11 AGENDA REPORT For City Council Meeting of April 01, 2003 TO: Honorable Mayor and Council Members FROM: Thomas K. Clarke, Electric Utility Director SUBJECT: Lease agreement with Ionics Ultrapure Water DATE: March 25, 2003 BACKGROUND On October 15, 2002, the Council approved the Operating and Maintenance Agreement between the City and EI Colton, LLC for the Agua Mansa Power Plant (AMPP). As part of the agreement, all goods and services required for the operation of the plant are to be between the City of Colton and the third party supplier. DISCUSSION/ANALYSIS A Request for Proposal was sent to the three primary water treatment companies in Southern California — USF, Ionics Ultrapure Water, and Ecolochem. Ionics Ultrapure Water was the low bid. Attached is the analysis of the bids as provided by EI Colton, LLC. Also attached is the lease agreement with Ionics Ultrapure Water is submitted for your review and approval. The lease agreement is for water treatment equipment for demineralizing (purifying) water that will be used in the turbine. Water purification is necessary to keep any corrosive or abrasive materials in the water from entering the turbine/generator components. The following are the basic terms and conditions of the agreement: • Term: The term of the agreement is for 2 years, with an option to extend the agreement to a five or ten-year lease. • Price: The base charge will be $13,600 per month. An additional water charge per thousand gallons of water that is treated will be applied. Both charges will be adjusted annually at the CPI rate. ALTERNATIVES Take no action at this time, which would negatively impact the start-up of the power plant. FINANCIAL IMPACT The price negotiated for the lease agreement is included in both the AMPP pre -commencement budget, and the AMPP operating budget for fiscal year 2003-2004. The AMPP pre -commencement budget was approved by council on March 18, 2003. The AMPP operating budget will be presented to council as part of the City's budget process in May 2003. Sufficient funds are available this fiscal year to cover the costs of the lease agreement. Page 1 of 2 (w/attachments)