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CITY OF COLTON <br />AGENDA REPORT <br />FOR COUNCIL MEETING OF JULY 20, 2004 <br />TO: HONORABLE MAYOR AND CITY COUNCIL <br />FROM: Jeannette Olko, Electric Utility General Manager <br />Item #15 <br />SUBJECT: Request for approval of Amendment and Termination Agreement <br />with EI Colton, LLC <br />DATE: July 12, 2004 <br />BACKGROUND: <br />Upon completion of construction of the Agua Mansa Power Plant, the City entered into an <br />Administrative Services Agreement and an Operations and Maintenance Agreement with EI <br />Colton, LLC for operation of the power plant. The term of the Administrative Services Agreement <br />is from October 15, 2002 to June 30, 2006; the term of the Operations and Maintenance <br />Agreement is from October 15, 2002 to June 30, 2010. <br />DISCUSSION/ANALYSIS: <br />The Administrative Services Agreement provides for accounting, ERC management, fuel <br />management, and project expansion services in connection with the operation of the Agua Mansa <br />Power Plant. Since operation of the plant in July, 2003, however, many of these services are <br />being duplicated either by city personnel or other parties that make the Administrative Services <br />Agreement unnecessary. In addition, Noresco, the parent company of EI Colton, LLC, eliminated <br />their business development group and were not able to provide project expansion services to the <br />City's satisfaction. Based on those reasons, the City expressed the desire to terminate the <br />Administrative Services Agreement to Noresco effective June 30, 2004. It was agreed that the <br />ERC management portion of the monthly fee, $9,321.43, be transferred over to the Operations <br />and Maintenance Agreement. The City agreed to pay twelve months fee as called for in the <br />termination clause of the agreement. <br />FINANCIAL IMPACT: <br />The $692,900 termination fee will be paid from the power plant management fee account number <br />520-8000-8009-2353-0548-000. There are sufficient funds to cover the payment in fiscal year <br />2003 -2004. There are sufficient funds in FY 04-05 to cover the additional monthly $9,321.43 fee <br />in the Operations and Maintenance agreement. <br />ENVIRONMENTAL IMPACT: <br />None. <br />CONFLICT OF INTEREST — Gift Disclosure Requirements <br />EI Colton, LLC <br />2040 Agua Mansa Rd <br />Colton, CA 92324 <br />President: Ted O'Brien <br />Contact: Wayne Feragen, Plant Manager <br />