2004 AGN AUG 03 I19 - Laserfiche WebLink

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Item #19 CITY OF COLTON AGENDA REPORT FOR COUNCIL MEETING OF AUGUST 03, 2004 TO: HONORABLE MAYOR AND CITY COUNCIL FROM: Jeannette Olko, Electric Utility General Manager SUBJECT: Request for Approval of Reimbursement Agreement with PARGEN, LLC DATE: July 26, 2004 BACKGROUND: The Agua Mansa Power Plant was originally conceived as a combined cycle generating facility, but was built as a simple cycle plant because it was more cost-effective. A combined cycle generating facility will allow the plant to operate more efficiently by reducing the heat rate output of the turbine. This in turn reduces the cost of energy, and enormously helps to optimize the plant. The City of Colton Electric Utility received an unsolicited bid from PARGEN, LLC to build out the Agua Mansa Power Plant to a combined cycle generating facility by adding a second turbine and a heat recovery steam generator. DISCUSSION/ANALYSIS: The proposal received from PARGEN, LLC offers to design, build, and own a second natural gas turbine and steam turbine sited next to the existing turbine owned by the City. As part of the proposal, and because it is in the best interests of both parties, a technical assessment study needs to be performed to verify costs and performance estimates of the combined cycle plant. Both the City and PARGEN, LLC have agreed to participate equally in the costs of the technical assessment study. Therefore, the City and PARGEN, LLC have agreed to enter into a reimbursement agreement whereby PARGEN, LLC will reimburse the City for half of the costs of the study. Through an informal bid process, Black and Veatch was selected as the vendor to conduct the technical assessment study. The Professional Services Agreement with Black and Veatch is for an amount not to exceed $50,000; therefore the reimbursement amount the City will receive from PARGEN, LLC will not exceed $25,000. FINANCIAL IMPACT: There is a positive impact to the City, as the City will be reimbursed for half of the costs incurred for the technical assessment performed by Black and Veatch. ENVIRONMENTAL IMPACT: None. CONFLICT OF INTEREST — Gift Disclosure Requirements PARGEN, LLC 30842 Steeplechase Dr. San Juan Capistrano, CA 92675