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HomeMy WebLinkAbout25696,JVkA AGENDA REGULAR MEETING OF AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL AZUSA LIGHT & WATER MONDAY, JULY 22, 2002 729 N-AZUSA AVENUE 6:30 PM AZUSA, CA 91702 AZUSA UTILITY BOARD DIANE CHAGNON CHAIRPERSON DICK STANFORD DAVE HARDISON VICE CHAIRPERSON BOARD MEMBER CRISTINA C. MADRIDI IOSEPH R. ROCHA BOARD MEMBER BOARD MEMBER 6:30 p.m. - Convene to Regular Meeting of the Azusa Utility Board and Azusa City Council • Call to Order • Pledge to the Flag • Roll Call 1. PUBLIC PARTICIPATION (PersonlGroup shall be allowed to speak without Interruption up to Ave (5) minutes maximum time, subject to compliance with applicable meeting rules. Questions to the speaker or responses to the speaker's questions or comments, shall be handled after the speaker has completed his/her comments. Public Participation will be limited to sixty (60) minutes time.) The Consent Calendar adopting the printed recommended action will be enacted with one vote. If Staff or Count//members wish to address an"y item on the Consent Calendar /ndiv/dual/y, It will be considered under SPECIAL CALL ITEMS. 11. CONSENT CALENDAR A. Minutes. Recommendation: Approve minutes of regular meeting of June 24, 2002, as written. B. Agreement with UBS AG for nurchase and sale of electricity. Recommendation: Approve the Master Confirmation Agreement with UBS AG to enable City to conduct business with UBS in purchase and sale of electricity. C. Amendment of Risk Management Policy and Interim Authority for Short Term Power Purchases. Recommendation: Approve amendment to Risk Management Policy related to purchase and sale of electric power, and convey interim authority to Power Resource Division Personnel for short term power transactions. D. Termination Asureements with BIO Energy (Azusa), L.L.P. Recommendation: Approve Three Agreements with BIO Energy (Azusa), L.L.P. to terminate mutual contractual obligations regarding landfill gas generation project. E. Recommendation: Approve Master Power Purchase and Sale Agreement with SETC to enable City to conduct business with SETC for purchase and sale of electricity. Demolition and Minor Site Improvement at 1160 W. Gladstone Street. Recommendation: Award contract to Pacific Demolition, Inc. in the amount of $41,400 for demolition and minor improvements at 1 160 W. Gladstone Street. A. Northern Transmission Water Main, Project W-183. Recommendation: Approve bid specifications and authorize the City Clerk to advertise for bids for Northern Transmission Water Main, Project W- 183. H. Agreement with R W Beck Incorporated for Telecommunications Feasibility Study, and Budget Amendment for same. Recommendation: Approve (A) agreement with R.W. Beck, Inc. in amount not -to -exceed $180,983 for a Telecommunications Feasibility Study; and (B) budget amendment in amount of $31,000 to supplement existing budget for this project. Water Supply Assessment for Monrovia Nursery Prosect. Recommendation: Approve of selection of Hatch & Parent to perform water supply assessment for the Monrovia Nursery Project as required by SB 610 and SB 221. Ill. SCHEDULED ITEMS A. Contract with Mvcoff & Associates for Recruitment Services. Recommendation: Approve of selection of Mycoff &Associates to conduct recruitment process to fill Assistant Director of Resources Management position. B. Cost of Service Report and Service Fee Adiustments. Recommendation: Approve of fee increases for various utility related services provided by Customer. Services, Water and Electric Divisions. IV. STAFF REPORTS/COMMUNICATIONS A. Monthly Power Resources Update (written only --attached) B. Yard Waste Barrel Graphic C. CEOfrOU Customer Luncheon D. Electric Yard Office Building Rendering V. DIRECTORS' COMMENTS A. Book Review—Boards That Make A Difference, Chapter 1, by John Carver VI. CLOSED SESSION A. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION Government Code Section 54956.9(b) Bankruptcy Case of Enron Power Marketing, Inc. filed December 2, 2001 United States Bankruptcy Court VII. ADIOURNMENT "7n compliance with the Americans with Disabilities Act, Ifyou need special assistance to participate In a dty meeting. please contact the City Clerk at 616-811-5119. Notification three (3) working days prior to the meeting or time when special services are needed will assist staff in assuring that reasonable arrangements can be made to provide access to the meeting. " CITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY, DUNE 24, 2002 - 6:30 P.M. The Utility Board Members of the City of Azusa met in regular session, at the above date and time in the Azusa Light and Water Department Conference Room, located at 729 N. Azusa Avenue, Azusa, California. Chairperson Chagnon called the meeting to order. Call to Order ROLL CALL Roll Call PRESENT: COUNCILMEMBERS: HARDISON, STANFORD, CHAGNON, MADRID ABSENT: COUNCILMEMBERS: ROCHA Also Present ALSO PRESENT: City Attorney Ferre, Director of Utilities Hsu, City Manager Cole, Assistant to the Director of Utilities Kalscheuer, Power Resource Coordinator Richard Torres, Power Scheduler Tim Vuong, Deputy City Clerk Toscano, City Clerk Mendoza. Public Participation Pub Part None None The CONSENT CALENDAR consisting of Items 11-A through 11-D, were approved by motion of Consent Cal. Councilmember Stanford, seconded by Chairperson Chagnon, and unanimously* carried. Appvd Councilmember Stanford abstained from the minutes due to his absence from that meeting. A. The minutes of the regular meeting of May 28, 2002, were approved as written. Min Appvd B. Approval was given to Amend the Public Benefits Program Budget FY 2001-02 in the amount Amend Public of $12,740 with added funding from SB 5X. Benefit Prgm C. Approval was given to Amend the Load Profile Budget FY 2001-02, Time of Use. (TOU) Amend Load Customer Load Profile Project in the amount of $12,230 with added funding from B29X. Profile Bdgt D. A RESOLUTION OF THE UTILITY BOARD/CIN COUNCIL OF THE CITY OF AZUSAACCEPTING Res. 02-C70 CERTAIN GRANT OF EASEMENT AND DIRECTING THE RECORDING THEREOF. Grant of Esmt Scheduled Items LE Discussion was held regarding election for WQA Board Member representing cities with prescriptive pumping rights. Recently a vacancy was created as a result of a Councilman losing re-election, subsequently, a nomination was conducted and list of nominees was established as follows: Mark A. Breceda, City of Irwindale, Greg Nordbak, City of Whittier, Daniel R. Arguello, City of Alhambra and Jack Thurston, EI Monte. Councilmember Stanford offered a Resolution entitled: A RESOLUTION OF THE AZUSA UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, CASTING ITS VOTE(S) FOR COUNCIL MEMBER TO REPRESENT CITIES WITH PUMPING RIGHTS ON THE BOARD OF THE SAN GABRIEL BASIN WATER QUALITY AUTHORITY (GREG NORDBAK, CITY OF WHITTIER). Moved by Councilmember Stanford, seconded by Councilmember Hardison to waive further reading and adopt. Resolution passed and adopted by the following vote of the Council: AYES: COUNCILMEMBERS: HARDISON, STANFORD, CHAGNON, MADRID NOES: COUNCILMEMBERS: NONE ABSENT: COUNCILMEMBERS: ROCHA Sched Items Dis WQA Nomination Res. 02-C71 Casting vote WQA Greg Nordbak City of Whittier Utilities Director Hsu presented FY 2002-03 and FY 2003-04 Budgets for Electric, Water, Solid Utilities Dir Waste and Customer Care & Solutions. He stated that these are all supported by revenues Budget collected by customers, there will be an electric rate increase due to low growth which doesn't Presentation cover operating cost. He stated that he will come back in September and ask for 5% increase and will be working on a 5 year projection. He answered questions regarding Street Light Conversion, where new street lighting will be installed on Azusa Avenue to complement the existing ones in downtown district and stated that they will be fewer and far between. Discussion was held regarding the list of Utility employee position titles and it was noted that the list needs to be revised as many positions have been deleted or added. It was then moved by Councilmember Stanford, seconded by Councilmember Hardison and unanimously* carried to approve the budget. Utilities Director Hsu then responded to questions regarding Resources and why there was spiking Utilities Dir In the numbers for the years 1999, 2000, and 2002. He stated that there is a need to schedule add'I enough resources for summer months that can only be projected. Further during those years, comments there was a cause that more than doubled the electric market. He talked about the guidelines in the risk management policy, specifically that you can only buy for needs and sometimes it's seasonal and depends on the weather. Discussion was held. Assistant to the Director of Utilities Kalscheuer presented the sole bid for Yard Waste Barrels from C. Kalscheuer Toter Incorporated in the amount of $173,248.00 for the purchase of sixty-four hundred 32- Yard Waste gallon yard waste barrels. He presented a barrel that will be used and displayed a sign that will Barrels bid be on the barrel as follows: "Yard Waste Only", etc. He stated that Mr. Tommy Ozoonian, Marketing Director for Athens's Services, received a complaint from a mobile home park stating that Athens's was picking up green waste with trash. He asked if they could tag trash mixed with green waste and not pick them up. Councilmember disagreed with that solution. Discussion was held. 06/24/02 PAGE TWO Councilmembers discussed plans to educate the public regarding green waste recycling and it was noted that the sign on the trash can should have graphics displaying what should or shouldn't be placed in the barrel. Mr. Kalscheuer advised that a survey was conducted to see which apartments and mobile parks did or did not want to have green barrels since some have landscape contractors who haul away their green waste and many of them did not; 1400 homes where eliminated that way. He explained the situation with the Mi. Driever and the Arrow Pines Estates who now would like to have barrels at their mobile home park. He then answered questions posed by Councilmembers. Councilmembers reiterated that they wanted a clear message on the barrels of what could and could not be placed in them. They didn't want the language as presented, but, a graphic that is clearly understood. Mr. Kalscheuer then responded to question regarding the AB939 Fees. It was noted that the final graphic would be circulated to Council for review. Add'I Discussion Moved by Mayor Pro -Tem Hardison, seconded by Councilmember Chagnon and unanimously* Bid award to carried to award the bid to Toter Incorporated in the amount of $173,248.00 for the purchase of Toter Inc. sixty-four hundred 32 -gallon yard waste barrels, and amend the FY 2002-03 Solid Waste Management Budget by said amount to pay for the program. Utilities Director Hsu requested that a credit card be issued to the Light and Water Department in Utilities Dir order to make reservations for conferences, meetings, airlines, etc. He stated that in the past the Request City Manager credit card has been used, but, reconciliation has become a chore. Credit card Moved by Councilmember Stanford, seconded by Mayor Madrid and unanimously* carried to Approved authorize a credit card for Azusa Light & Water. Staff Reports/Communications Staff/Com Power Resource Coordinator Richard Torres presented the Power Resources Division Monthly Pwr Res Report stating that the energy consumption comparison is stable, the peak demand has remained Rpt the same as last year. Utilities Director Hsu responded to a question regarding conservation programs stating that a Utilities Dir committee has been re -activated which will include a person from each department. Conservation Mr. Torres continued with the report stating that energy prices have spiked a little daily and for the remainder of this week natural gas prices have spiked due to hot weather and noted that hybrid conditions in the northwest are better and natural gas is fairly stable. He then talked about Power Resource Cost Accounting stating that long term contracts and short term purchases are stable, and there's a little spike in transmission cost since transmission access to the California - Oregon began. He talked about the contracts and process if power cannot be delivered due'to fires, and stated that the delivery is re -scheduled and/or not billed for non-delivery. Assistant to the Director of Utilities Kalscheuer provided an update on the Telecommunications Feasibility Study stating that last week four firms were interviewed, by the Interview Panel of Robert Person, Joe Hsu, Kevin Morningstar, Federico Langit, Karen Vanca, and himself. Of the four firms interviewed R.W. Beck was selected as a firm to negotiate with; ten proposals were received on the project at an average cost of $161,000 and R.W. Beck came in at $188,000, and since negotiations have begun, It seems like they may be able to bring down amount to $160,000 -$170,000. He stated that he would like to bring this proposal to the Utility Board at it's next meeting in July for consideration. He stated that he is setting up a meeting with the School District as it is a public institution and to see if they would be Interested In this and share costs. He then answered questions posed by Councilmembers regarding experience of Interview Panel, scope of work, and contract duration. 06/24/02 PAGE THREE Pwr Res Coord. C. Kalscheuer Telecom. Feasibility Study Power Resource Coordinator Richard Torres advised that the City will need to replace two power R. Torres , contracts which will terminate in the next 15 months. The Bonneville Power Administration: 12 Pwr Res MW of peaking capacity and energy (June — September) terminates on September 30, 2003 and Coord. the Pasadena Contract: 8MW of peaking capacity and energy terminates on December 31, 2002. Energy He stated that by the end of 2003 they will need about 20 MW of peaking power, especially for Purchase the summer time. He noted the City's Prospective Power needs for the next five years. He then noted considerations of the purchase of power at this time stating that now is the Buyer's market, it's too expensive and too much operational hassle to consider building a power plant, that five years is long enough to provide cost stability, but not long enough to foreclose city's ability for mid -course corrections in planning for future resources and lastly he listed parties who have signed the EEI or EEI equivalent agreements with the City as follows: Duke, American Electric Power, IdaCorp, Sempra and UBS agreements are in the works, and other government agencies. He then stated that the current purchasing authority staff has is up to one-year and multi-year purchases need City Council approval. Due to the price volatility, it made the execution of multi- year transactions almost impossible to achieve. Suppliers are unwilling to keep the price quotes for more than a few hours. He then noted a proposed process for multi-year procurement and recommended the following: (1) The procurement of the following specific power product: 5 - year summer only Qune-September) on -peak power product either @ PV or SP 15. On -peak hours are as defined by FERC ("ceiling price"). (2) The establishment of not -to -exceed price of $50/MWh for all years for the product. (3) Authorize the Director of Utilities through Assistant Director of Resource Management to execute the purchase if market price for "Product" is no more than the "ceiling price". Such authority shall automatically expire if not exercised by December 31, 2002. (4) The Product shall be purchased only from third parties who have signed EEI or EEI equivalent credit support agreement with the City. (5) The Mayor shall execute the confirmation purchase agreement upon its preparation. It was then moved by Councilmember Stanford, seconded by Chairperson Chagnon and unanimously* carried to approved the above recommendations. Directors' Comments Dir Com Chairperson Chagnon requested that a policy be created to govern how the flow of the interest Chagnon from the Light and Water Department. Further that in an effort to get into entrepreneurial things, Interest there is a need to have a revenue stream to pay for things. City Manger Cole stated he could Income bring back the pro's and con's of such a policy and talked about his concern with how this may L&W relate to the Enterprise Fund and to prop 218. Discussion was held. All agreed that there is a need to have consistency with distributing Light and Water interest income and a policy is needed. It was consensus of Councilmembers that staff comeback with suggestions/options and criteria/recommendations for a policy. Assistant Director of Utilities Kalscheuer provided an update on the Annual Refuse Rate C. Kalscheuer Adjustment Process stating that Athens is working with the County Sanitation District to change comments numbers and the correction will be on the side of County Sanitation District. Mr. Kalscheuer will check with the County Sanitation District and stated that the real question is what tonnage is going into the MRF. Discussion was held regarding the review of the book of: Boards That Make A Difference by John Discussion Carver. Utility Director advised that the book provides guidelines of how valuable you areas a Re: Book board, and how you have power to make a difference. He stated that there is going to be a Review workshop, on the subject, in Palm Springs from October 31"to November 2nd. It was consensus of Counciimembers to focus on Chapter one for the next meeting. City Manager Cole expressed concern regarding the Council's split view about consolidating Discussion Council and Utility Board meetings; the many issues that need to be scheduled before Council and the valuable time that is spent at workshops to discuss many of the items. 06/24/02 PAGE FOUR Discussion was held. It was consensus of Councilmembers that the meeting of July 15'h be Discussion adjourned to Monday, July 22n° at 7:30 p.m., directly following the Utility Board meeting, 6:30 Mtg date p.m. — 7:30 p.m ., in order discuss the Fire Contract and other items. Changes It was consensus of Councilmembers to recess to Closed to discuss the following: Closed 1. Session CONFERENCE WITH LEGAL COUNSEL (Gov CodeSec. 54956.9 (al) Federal Energy Regulatory Commission (FERC) Docket Nos. ELOO- 111-002 and ELO1-84-00. City of Azusa et al v. California Independent System Operator. Recess: 8:15 p.m. Recess Reconvened: 8:21 p.m. Reconvened There was no reportable action taken in Closed Session. No Rpts It was consensus of Councilmembers to adjourn.. Adjourn TIME OF ADJOURNMENT: 8:22 P.M. SECRETARY NEXT RESOLUTION NO. 02-058. * Indicates Rocha absent. 06/24/02 PAGE FIVE r r1llah CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES_ DATE: JULY 22, 2002 v SUBJECT: APPROVAL OF MASTER CONFIRMATION AGREEMENT UNDER THE WESTERN SYSTEMS POWER POOL AGREEMENT WITH UBS AG RECOMMENDATION It is recommended that the Utility Board/City Council approve the Master Confirmation Agreement with UBS AG to enable the city to conduct business with UBS in the purchase and sale of electricity in the future. BACKGROUND Due to the recent turmoil in the electricity market in California and the demise of Enron, many market participants in California have been financially shaken including credit rating downgrades by the financial rating agency. In light of these events, the staff initiated a comprehensive review and negotiations of many bilateral enabling agreements between the city and third parties for the purchase and sale of electricity. The goal of this effort is to ascertain the creditworthiness of third parties in conducting purchase and sale transactions. The attached agreement is a follow-up set of parties that have passed the tighter financial scrutiny. The company is UBS AG, which is highly rated in terms of financial strength by the rating agencies. FISCAL IMPACT The agreement does not require the city to buy or sell any quantity of electricity at this time. The cost associated with future purchases of electricity from UBS will be included in the annual power resource budgeting process. Prepared by: Bob Tang, Assistant Director - Resource Management MASTER CONFIRMATION AGREEMENT UNDER THE WESTERN SYSTEMS POWER POOL AGREEMENT This Master Confirmation Agreement under the Western Systems Power Pool Agreement (the "Master Confirmation") sets forth the agreement between UBS AG ("UBS") and City of Azusa ("Azusa") effective as of the _ day of 12002. WHEREAS, this Master Confirmation is being provided pursuant to and in accordance with WSPP Agreement, as amended periodically with FERC approval, and as modified hereby, to which UBS and Azusa are Parties; NOW THEREFORE, in consideration of the mutual consents and agreements contained herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, UBS and Azusa agree as follows: 1. General. This Master Confirmation shall govern all transactions between the Parties under the Western Systems Power Pool Agreement (the "WSPP Agreement"). By entering into this Master Confirmation, the Parties intend to have these provisions modify, supplement and amend the WSPP Agreement and to have these provisions apply to all Confirmation Agreements and transactions. The WSPP Agreement, as modified, supplemented and amended by this Master Confirmation, shall be referred to as the "Agreement". Terns used but not defined herein shall have the meanings ascribed to them in the WSPP Agreement. In the event of any conflict between the terms of this Master Confirmation and the WSPP Agreement, the terms of this Master Confirmation shall control. 2. Bankruptcy Event. (a) Section 22.1(c) of the WSPP Agreement is modified as follows: The following phrase shall be added to the end of subsection 22.1(c): "and in the case of a petition being presented by a third party, such petition is not dismissed, discharged, stayed or restrained within thirty (30) days of the institution or presentation thereof." (b) Section 22.1(e) (iii) of the WSPP Agreement is modified to provide that the defined term "Bankrupt" as applied to a Guarantor shall have the meaning in Section 22.1(c) of the WSPP Agreement, as modified by this Master Confirmation. 3. Non -Reliance Representations. Section 37 of the WSPP Agreement is hereby expanded to include the following: "Each party will be deemed to represent to the other party on the date on which it enters into a transaction or Confirmation Agreement that (absent a written agreement between the Parties that expressly imposes affirmative obligations to the contrary for that transaction or Confirmation Agreement): (i) Non -Reliance. It is acting for its own account, and it has made its own independent decisions to enter into that transaction and Confirmation Agreement and as to whether that transaction and Confirmation Agreement is appropriate or proper for it based upon its own judgment and upon advice from 1 such advisers as. it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into that transaction or Confirmation Agreement; it being understood that information and explanations related to the terms and conditions of a transaction and Confirmation Agreement shall not be considered investment advice or a recommendation to enter into that transaction or Confirmation Agreement. No communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that transaction or Confirmation Agreement. (ii) Assessment and Understanding. It is capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts the terms, conditions and risks of that transaction and Confirmation Agreement. It is also capable of assuming, and assumes, the risks of that transaction and Confirmation Agreement. (iii) Status of Parties. The other party is not acting as a fiduciary for or an adviser to it in respect of that transaction or Confirmation Agreement. 4. Booking of Transactions. In entering into a transaction or Confirmation Agreement under the Agreement, UBS shall act through the branch specified in the long product description on the UBS website or as otherwise provided in the transaction or Confirmation Agreement. Notwithstanding the place of booking office or jurisdiction of, incorporation or organization of such branch, the obligations of UBS are the same as if UBS had entered into the transaction or Confirmation Agreement through its head or home office. 5. Payment Netting. (a) Section 28.1 of the WSPP Agreement is deleted in its entirety and replaced with the following: "The Parties hereby agree that they shall discharge mutual debts and payment obligations due and owing to each other on the same date pursuant to all transactions through netting, in which case all amounts owed by each Party to the other Party for the purchase and sale of electric energy during the monthly billing period under this Agreement, interest, and payments or credits, shall be netted so that only the excess amount remaining due shall be paid by the Party who owes it" (b) Section 28.2 of the WSPP Agreement is deleted in its entirety. Furthermore, the Parties agree that Exhibit A shall not be applicable to any transaction under this Agreement. 6. Governing Law, Waiver of Jury Trial, No WSPP Arbitration. Section 24 of the WSPP Agreement is deleted and replaced with the following: "(a) This Agreement and any Confirmation Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of laws rules thereof. EACH PARTY WAIVES ITS RESPECTIVE RIGHT TO ANY JURY TRIAL WITH RESPECT TO ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT. (b) Sections 34.1 and 34.2 and Exhibit D of the WSPP Agreement are hereby deleted and replaced as follows: 2 34.1 INFORMAL DISPUTE RESOLUTION If a dispute shall arise between the Parties relating to the interpretation of this Agreement or to performance of any transaction under it, before any form of litigation (other than in the application for injunctive relief) may be instituted the Party claiming the existence of a dispute shall notify the other Party in writing. The notice shall set forth the matter in dispute in reasonable detail and a proposed solution. The Parties shall make reasonable commercial efforts to resolve the dispute within 30 calendar days after delivery of the written notice referred to above. If the Parties fail to reach an agreement within 30 days after such referral, each Party shall have the right to pursue any and all remedies provided in this Agceement and as afforded by law. The existence of any dispute or controversy under this Agreement or the pendancy of the dispute settlement or resolution procedures set forth herein shall not relieve or excuse either Party from its ongoing duties and obligations under this Agreement or prevent either Party from exercising any rights it has under this Agreement or any transaction under it. Except to the extent herein provided for, no amendment or modification to this Agreement shall be enforceable unless reduced to writing and executed by both Parties. In WITNESS WHEREOF, the Parties have caused this Master Confirmation to be duly executed by its authorized officers or agents effective as of the date first above written. IDBS AG: By. - Name: Title: By: Name: Title: CITY OF AZUSA 0 Name: Title: 4 0 CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 22, 2002 SUBJECT: AMENDMENT TO THE RISK MANAGEMENT POLICY AND INTERIM AUTHORITY TO CONDUCT SHORT TERM POWER TRANSACTIONS RECOMMENDATION It is recommended that the Utility Board/City Council approve the proposed amendment outlined below to the Risk Management Policy (Risk Policy) and convey interim authority to Power Resource Division (Division) personnel to conduct short term power transactions. BACKGROUND In late 1999, the City Council approved a Risk Policy setting specific guidelines for the Division personnel to carry out the purchases and sales of electric power for the City. Risk Policy, among other things, established specific transaction authorization levels for the personnel as specified in Exhibit A attached herein. Due to the change in position title and recent personnel changes within the Division, the staff hereby proposes one permanent change and seeks interim authorities as follows: Permanent Change: Change the title of Manager of Integrated Resource Planning to Assistant Director of Resource Management in Exhibit A. Interim Authority: 1. Authorize Power Resource Coordinator, in acting as interim Assistant Director of Resource Management, to conduct transactions at authorization levels of Assistant Director of Resource Management. 2. Authorize the Administrative Assistant of the Division, under specific direction and supervision of Director of Utilities or Power Resource Coordinator, to conduct transactions at authorization levels of Real Time Schedulers and Resource Schedulers. 3. The interim authority conveyed under I and 2 shall expire on the earlier of (a) December 31, 2002, or (2) at such time Director of Utilities determines that such interim authority is no longer needed. In such case, the Director of Utilities will inform the early expiration of the interim authority with a report to the Utility Board. FISCAL IMPACT There are no fiscal impacts to the city. Prepared by: Joseph F. Hsu, Director of Utilities PROPRIETARY AND CONFIDENTIAL ENERGY & CREDIT RISK MANAGEMENT POLICY Table 4-1 Transaction Authorizations & Limits EXHIBIT A I (1) The normal limit may be exceeded: a) to cover a short position resulting from an emergency, such as a sudden loss of generation or transmission, b) if part of the purchase displaces energy from a higher cost Azusa - controlled resource, or c) if the counter -party is exceptionally creditworthy. , (2) Since transactions are opened primarily to balance load or generation, risk is primarily volumetric and an accurate load/resource balance is most important. The maximum "estimated available" for a given period is equal to excess resources above the average load requirement. The maximum "estimated requirement" for a.given period is equal to the load calculated from a stress test less available resources. 01999 Henwood Energy Services, Inc. March 16, 1999 4 Manager of Power Integrated Director of Real Time Resource Resource Resource Light & Water Schedulers Schedulers Coordinator Planning Department Type Purchases to Purchases to Purchases to Purchases to Purchases to meet load, meet load, meet load, meet load, meet load, covered sales covered sales covered sales covered sales, covered sales, hedges hed es Term Hourly to Day ahead to Week ahead to Month ahead to Quarter ahead balence of day balance of balance of balance of to balance of week month quarter year Transaction Largest Largest 25 MW 50 MW 75 MW Volume requirement to requirement to (1) meet load, meet load, sales from sales from excess excess al Volume Up to 100% Up to 100% Up to 100% Up to 110% Up to 110% of of estimated of estimated of estimated of estimated estimated [(20)t requirement or requirement or requirement or requirement or requirement or available available available available available From pre- unter- From pre- From pre- From pre- . From pre- approved credit party credit approved credit approved credit approved credit approved credit list or with list list list list Letter of Credit (1) The normal limit may be exceeded: a) to cover a short position resulting from an emergency, such as a sudden loss of generation or transmission, b) if part of the purchase displaces energy from a higher cost Azusa - controlled resource, or c) if the counter -party is exceptionally creditworthy. , (2) Since transactions are opened primarily to balance load or generation, risk is primarily volumetric and an accurate load/resource balance is most important. The maximum "estimated available" for a given period is equal to excess resources above the average load requirement. The maximum "estimated requirement" for a.given period is equal to the load calculated from a stress test less available resources. 01999 Henwood Energy Services, Inc. March 16, 1999 4 ff,wF,vD,0 CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL . FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIFS�I�C DATE: JULY 22, 2002 ���lll "`tth"' SUBJECT: TERMINATION AGREEMENT BETWEEN THE CITY OF AZUSA AND BIO ENERGY (AZUSA), L.L.C. RECOMMENDATION It is recommended that the Utility Board/City Council approve the Termination Agreements between the City and BIO Energy (Azusa), L.L.P. ("BIO ENERGY") to terminate mutual contractual obligations and refund to BIO ENERGY the unused funds for the engineering design in the amount of $32,627.62. BACKGROUND The City entered into a series of agreements with BIO ENERGY in November 2000 for the engineering design, interconnection, and the purchase of electric output under a fifteen -year contract from a landfill gas generation project ("Project") proposed by BIO ENERGY. The output was estimated to be 5 MW based on the assessment at that time of methane gas production available. The City was to conduct the engineering design of electric interconnection for the Project at BIO ENERGY's expense. BIO ENERGY paid $42,500 to the City for the initial engineering design of interconnection facilities, with the understanding that the City would refund any unused money to BIO ENERGY upon completion of engineering design work. However, BIO ENERGY Informed the staff in May 2001 that the project development was encountering difficulties due to several factors: Higher than anticipated depletion rate of methane gas production, which would require a substantial downsizing of the Project by as much as sixty percent. 2. Due to the downsizing, BIO ENERGY would need to negotiate a new contract pricing to make the Project economically viable for BIO ENERGY. BIO ENERGY proposed a substantial increase in contract rate in the magnitude of fifty percent. BIO ENERGY has not obtained all the needed permits and has not finalized the site use agreements with the landfill co-owners (Waste Management and Allied Waste). Recently, BIO ENERGY further informed the staff that BIO ENERGY is abandoning the development of the Project due to deteriorating methane gas production and the inability to conclude the permitting process and site use agreements. BIO ENERGY requested the City to cease all engineering design work, and refund BIO ENERGY any unused funds. Accordingly, the staff has closed out the engineering design contract with R.W. Beck, and determined the unused funds amount to be $32,627.62. In light of the above, staff recommends the Utility Board the termination of all agreements with BIO ENERGY and refund $32,627.62 to BIO ENERGY. The agreements to be terminated are: Energy Development, Inc/Azusa Interconnection Service - Facilities Design Agreement 2. Interconnection Agreement between City of Azusa and BIO ENERGY (AZUSA), L.L.C. 3. Power Purchase Agreement between City of Azusa and BIO ENERGY (AZUSA), L.L.0 FISCAL IMPACT There is no fiscal impact to the city. Prepared by: Bob Tang, Assistant Director of Resource Management TERMINATION AND RELEASE AGREEMENT THIS TERMINATION AND RELEASE AGREEMENT (this "Agreement") is made and entered into by and between the CITY OF AZUSA, a municipality duly organized and existing under and by virtue of the laws of the State of California ("C"), and BIO ENERGY (AZUSA), L.L.C., a limited liability company duly organized and existing under and by virtue of the laws of the State of Delaware ("Producer'). City and Producer are each referred to as a "Par " and collectively the "Parties". WITNESSETH: WHEREAS, City and Producer entered into that certain that certain Interconnection Service Facilities Design Agreement, dated December 21, 2000 (the "Azusa Design Agreement") relating to the design by City of certain interconnection facilities required to provide interconnection service to a landfill gas fuelled power station to be constructed by Producer (the "Facilities"); and WHEREAS, Producer desires to terminate the Azusa Design Agreement effective the day of July, 2002 (the "Termination Date"), and City is willing to agree to such termination. NOW, THEREFORE, in consideration of the mutual covenants set forth herein, Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows (capitalized terms used herein having the meaning attributed to them in the Azusa Design Agreement unless specifically otherwise provided): 1. Termination of the Azusa Design i Agreement. City and Producer hereby mutually agree to terminate the Azusa Design Agreement and all rights, privileges, duties and obligations thereunder effective as of the Termination Date. Following the Termination Date, (i) City shall have no further claim for payment for the design of the Facilities from Producer, and (ii) except as set forth in Paragraph 3 below, Producer shall have no further claim regarding the design of the Facilities. -1- CADocuments and Settings\Bob TangU ocal Settings\Temporary Internet Files\OLK3\Azusa Design Tennination.DOC 2. Waiver and Release. City and Producer each hereby unconditionally and irrevocably waive, release, discharge and relinquish the other from any and all obligations, claims, suits, liabilities, losses, costs, expenses and causes of action whatsoever, including, without limitation, attorneys' fees, whether past, present or future, attributable to, arising or accruing from, under or in connection with the Azusa Design Agreement or any acts or omissions of any party in any way pertaining to the Azusa Design Agreement. The parties hereto stipulate and agree that included within the obligations, claims, suits, liabilities, losses, costs, expenses and causes of action waived, released, discharged and relinquished hereunder are any of the same in the nature of or founded upon breach of the Azusa Design Agreement, trespass, business interference (tortious or otherwise), constructive eviction, non-compliance with any applicable statutory provisions, fraud, deception, negligence and/or conversion. 3. Refund of Estimated Design Costs. City will refund to Producer, without interest, any amounts received by City in excess of the cost of design work performed by City prior to the Termination Date. 4. Multiple Counterparts. This Agreement may be executed in multiple counterparts, and each counterpart when fully executed and delivered by each of the parties signatory hereto shall constitute an original instrument, and all such multiple counterparts shall constitute but one and the same instrument. 5. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of City, Producer and their respective heirs, executors, administrators, legal representatives, successors and assigns. -2- CADocuments and Settings\Bob Tang\Lmal Settings\Temporary Intemet Files\OLK3\Azusa Design Tennination.DOC EXECUTED effective as of the day of July, 2002. CITY OF AZUSA By: Name: Title: BIO ENERGY (AZUSA), L.L.C., a Delaware limited liability company, M Bio Energy (I), L.L.C., a Delaware limited liability company, its sole member By: Bio Energy (US), L.L.C., a Delaware limited liability company, its sole member By: EDL Holdings (US), Inc., a Delaware corporation, its sole member M Name: Title: -3- C:\Doeuments and Settings\Bob Tang\Local Settings\Temporary Internet Files\OLK3\Azusa resign Termination.DOC TERMINATION AND RELEASE AGREEMENT THIS TERMINATION AND RELEASE AGREEMENT (this "Agreement') is made and entered into by and between the CITY OF AZUSA, a municipality duly organized and existing under and by virtue of the laws of the State of California ("C"), and BIO ENERGY (AZUSA), L.L.C., a limited liability company duly organized and existing under and by virtue of the laws of the State of Delaware ("Producer'). City and Producer are each referred to as a "Party" and collectively the "Parties". WITNESSETH: WHEREAS, City and Producer entered into that certain Interconnection Agreement, dated November 6, 2000 (the "Azusa Interconnection Agreement") relating to the delivery of power to be generated at a landfill gas power station to be built by Producer through the City's interconnection facilities and transmission lines (the "Interconnection Facilities"); and WHEREAS, Producer desires to terminate the Azusa Interconnection Agreement effective the day of July, 2002 (the "Termination Date"), and City is willing to agree to such termination. NOW, THEREFORE, in consideration of the mutual covenants set forth herein, Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows (capitalized terms used herein having the meaning attributed to them in the Azusa Interconnection Agreement unless specifically otherwise provided): 1. Termination of the Azusa Interconnection Agreement. City and Producer hereby mutually agree to terminate the Azusa Interconnection Agreement and all rights, privileges, duties and obligations thereunder effective as of the Termination Date. Following the Termination Date, (i) City shall have no further claim regarding the payment and/or construction of the Interconnection Facilities, and (ii) Producer shall have no further claim regarding the use and/or construction of the Interconnection Facilities. -I- CADocuments and ScUings\Bob TangTocal Scuings\Tempormy Intemet Files\OLK3VA = Interconnection Agmt.DOC 77 2. Waiver and Release. City and Producer each hereby unconditionally and irrevocably waive, release, discharge and relinquish the other from any and all obligations, claims, suits, liabilities, losses, costs, expenses and causes of action whatsoever, including, without limitation, attorneys' fees, whether past, present or future, attributable to, arising or accruing from, under or in connection with the Azusa Interconnection Agreement or any acts or omissions of any party.in any way pertaining to the Azusa Interconnection Agreement. The parties hereto stipulate and agree that included within the obligations, claims, suits, liabilities, losses, costs, expenses and causes of action waived, released, discharged and relinquished hereunder are any of the same in the nature of or founded upon breach of the Azusa Interconnection Agreement, trespass, business interference (tortious or otherwise), constructive eviction, non-compliance with any applicable statutory provisions, fraud, deception, negligence and/or conversion. 3. Multiple Counterparts. This Agreement may be executed in multiple counterparts, and each counterpart when fully executed and delivered by each of the parties signatory hereto shall constitute an original instrument, and all such multiple counterparts shall constitute but one and the same instrument. 4. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of City, Producer and their respective heirs, executors, administrators, legal representatives, successors and assigns. -2- CADocuments and Settings\Bob Tang\Local Settings\Temporary Intemet Files\OLK3\Azusa Interconnection Agmt.DOC EXECUTED effective as of the day of July, 2002. CITY OF AZUSA By: Name: Title: BIO ENERGY (AZUSA), L.L.C., a Delaware limited liability company, LOU Bio Energy (I), L.L.C., a Delaware limited liability company, its sole member By: Bio Energy (US), L.L.C., a Delaware limited liability company, its sole member By: EDL Holdings (US), Inc., a Delaware corporation, its sole member 0 Name: Title: -3- CADocuments and Settings\Bob TangUL al Settings\Temporary Intemet FileAUK3\Azusa Interconnection Agmt.DOC TERMINATION AND RELEASE AGREEMENT THIS TERMINATION AND RELEASE AGREEMENT (this "Agreement") is made and entered into by and between the CITY OF AZUSA, a municipality duly organized and existing under and by virtue of the laws of the State of California ("C"), and BIO ENERGY (AZUSA), L.L.C., a limited liability company duly organized and existing under and by virtue of the laws of the State of Delaware ("Producer'). City and Producer are each referred to as a "Par ' and collectively the "Parties". WITNESSETH: WHEREAS, City and Producer entered into that certain that certain Power Purchase Agreement, dated November 6, 2000 (the "Azusa PPA") relating to the sale to City of power to be generated at a landfill gas power station to be built by Producer; and WHEREAS, Producer desires to terminate the Azusa PPA effective the day of July, 2002 (the "Termination Date"), and City is willing to agree to such termination. NOW, THEREFORE,. in consideration of the mutual covenants set forth herein, Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows (capitalized terms used herein having the meaning attributed to them in the Azusa PPA unless specifically otherwise provided): 1. Termination of the Azusa PPA. City and Producer hereby mutually agree to terminate the Azusa PPA and all rights, privileges, duties and obligations thereunder effective as of the Termination Date. Following the Termination Date, (i) City shall have no further claim for the purchase of power from Producer, and (ii) Producer shall have no further claim regarding the sale of power to City. 2. Waiver and Release. City and Producer each hereby unconditionally and irrevocably waive, release, discharge and relinquish the other from any and all obligations, claims, suits, liabilities, losses, costs, expenses and causes of action whatsoever, including, without limitation, attorneys' fees, whether past, present or future, attributable to, arising or 4- HOU:2033423.1 accruing from, under or in connection with the Azusa PPA or any acts or omissions of any party in any way pertaining to the Azusa PPA. The parties hereto stipulate and agree that included within the obligations, claims, suits, liabilities, losses, costs, expenses and causes of action waived, released, discharged and relinquished hereunder are any of the same in the nature of or founded upon breach of the Azusa PPA, trespass, business interference (tortious or otherwise), constructive eviction, non-compliance with any applicable statutory provisions, fraud, deception, negligence and/or conversion. 3. Multiple Counterparts. This Agreement may be executed in multiple counterparts, and each counterpart when fully executed and delivered by each of the parties signatory hereto shall constitute an original instrument, and all such multiple counterparts shall constitute but one and the same instrument. 4. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of City, Producer and their respective heirs, executors, administrators, legal representatives, successors and assigns. -y HOU:2033423.1 I EXECUTED effective as of the day of July, 2002. CITY OF AZUSA By: Name: Title: BIO ENERGY (AZUSA), L.L.C., a Delaware limited liability company, M. Bio Energy (I), L.L.C., a Delaware limited liability company, its sole member By: Bio Energy (US), L.L.C., a Delaware limited liability company, its sole member By: EDL Holdings (US), Inc., a Delaware corporation, its sole member 0 Name: Title: HOU:2033423.1 -3- 1E_E. CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIESI DATE: JULY 22, 2002 SUBJECT: APPROVAL OF EEI MASTER POWER PURCHASE AND SALE AGREEMENT BETWEEN THE CITY OF AZUSA AND SEMPRA ENERGY TRADING CORP. RECOMMENDATION It is recommended that the Utility Board/City Council approve the Master Power Purchase and Sale Agreement (Master Agreement) with Sempra Energy Trading Corp. (SETC) to enable the city to conduct business with SETC in the purchase and sale of electricity in the future. BACKGROUND Due to the recent turmoil in the electricity market in California and the demise of Enron, many market participants in California have been financially shaken including credit rating downgrades by the financial rating agency. In light of these events, the staff initiated a comprehensive review and negotiations of many bilateral enabling agreements between the city and third parties for the purchase and sale of electricity. The goal of this effort is to ascertain the creditworthiness of third parties in conducting purchase and sale transactions. The attached agreement is a follow-up set of parties that have passed the tighter financial scrutiny. The company is SETC, which is backed by the parent company Sempra Energy, an A - rated company by investment rating agencies. FISCAL IMPACT The agreement does not require the city to buy or sell any quantity of electricity at this time. The cost associated with future purchases of electricity from SETC will be Included in the annual power resource budgeting process. Prepared by: Bob Tang, Assistant Director - Resource Management MASTER POWER PURCHASE AND SALE AGREEMENT COVER SHEET This Master Power Purchase and Sale Agreement ("Master Agreement' ) is made as of the following date: April 19, 2002 ("Effective Date"). The Master Agreement, together with the exhibits, schedules and any written supplements hereto, the Party A Tariff, if any, the Party B Tariff, if any, any designated collateral, credit support or margin agreement or similar arrangement between the Parties and all Transactions (including any confirmations accepted in accordance with Section 2.3 hereto) shall be referred to as the "Agreement." The Parties to this Master Agreement are the following: Name ("Sempra Energy Trading Corp." or "Party A") All Notices: Street: 58 Commerce Road City: Stamford, CT Zip: 06902 Attn: Operations Phone: 203 355-5602 Facsimile: 203 355-5630 Duns: 60-9746565 Federal Tax ID Number: 13-3653551 Invoices: Attn: Operations Phone: 203 355-5613 Facsimile: 203 355-6614 Scheduling: Atm: David Mueller Phone: 203-355-5077 Facsimile: 203-355- 5435 Payments: Attn: Operations Phone: 203 355-5613 Facsimile: 203 355-6614 Wire Transfer: BNK: Bank One, N.A.. ABA: 071000013 ACCT: 1001320 Credit and Collections: Atm: Credit Phone: 203 355-5430 Facsimile: 203-355-6430 Name ("City Of Azusa " or "Party B'� All Notices:Light and Water Dept., c/o Director of Utilities Street: 729 N. Azusa Ave., P.O. Box 9500 City: Azusa Zip: 91702 Atm: Contract Administration Phone: (626) 812-5214 Facsimile: (626) 334-3163 Duns:040371361 Federal Tar ID Number: 95-6000-670 Invoices: Atm: Assistant Director — Resource Management City of Azusa Light & Water 729 N. Azusa Ave. P.O. Box 9500 Phone: (626) 812-5214 Facsimile: (626) 334-3163 Scheduling: Attn: Assistant Director — Resource management Phone: (626) 812-5138 Facsimile: (626) 334-3163 Payments: Atm: Assistant Director — Resource Management Phone: (626) 812-5214 Facsimile: (626) 334-3163 Wire Transfer: BNK: Wells Fargo Bank, City of Azusa, Branch ABA: 1210-00248 ACCT: 4950041244 Credit and Collections: Attri: Phone: Facsimile: Version 2.1 (modified 4/25/00) CCOPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association With additional Notices of an Event of Default or Potential Event of Default to: Attn: Legal Department Phone: 203-355-5407 Facsimile: 203-355-5410 With additional Notices of an Event of Default or Potential Event of Default to: Attn: Legal Department Phone: 203-355-5407 Facsimile: 203-355-5410 With additional Notices of an Event of Default or Potential Event of Default to: Attn: City of Azusa 213 E. Foothill Blvd Azusa, CA 91702 C/o City Attorney Phone: Facsimile: With additional Notices of an Event of Default or Potential Event of Default to: F.M. Phone: _ Facsimile: Version 2.1 (modified 425100) OCOPYRIGIIT 2000 by the Edison Electric hwimte and National Energy Marketers Association The Parties hereby agree that the General Terms and Conditions are incorporated herein, and to the following provisions as provided for in the General Terms and Conditions: Party A FERC Rate Schedule No. 1 Dated November 28, 1994 Docket Number ER94-1691-" Party B Tariff Tariff Article Two Transaction Terms and Conditions Article Four Remedies for Failure to Deliver or Receive Article Five Events of Default; Remedies Article 8 Credit and Collateral Requirements Dated Docket Number ❑ Optional provision in Section 2.4. If not checked, inapplicable. El Accelerated Payment of Damages. If not checked, inapplicable ❑ Cross Default for Party A: ElB 'Party A: Cross Default Amount $3% of Party A's Guarantor's tangible net worth ❑ Other Entity: Cross Default Amount $ ❑ Cross Default for Party B: OB Party B: Cross Default Amount $3% of Party B's Total Fund Equity ❑ Other Entity: Cross Default Amount $ 5.6 Closeout Setoff ❑ Option A (Applicable if no other selection is made.) ❑ Option B - Affiliates shall have the meaning set forth in the Agreer ❑ Option C (No Setoff) 8.1 Party A Credit Protection: (a) Financial Information: ❑ Option A O Option B Specify: ❑ Option C Specify: (b) Credit Assurances: ❑ Not Applicable ❑O Applicable (c) Collateral Threshold: Version 21 (modified 4125/00) OCOPYRIGHT 2000 by the Edison Electric fnsNmte and National Energy Marhetm Association E If applicable, complete the following Parry B Collateral Threshold: $ See Other Changes ; provided, however, that Party B's Collateral Threshold shall be zero if an Event of Default or Potential Event of Default with respect to Party B has occurred and is continuing. Party B Independent Amount: $N/A Party B Rounding Amount: $ See Other Changes (d) Downgrade Event: ❑ Not Applicable HIS Applicable If applicable, complete the following: OB It shall be a Downgrade Event for Party B if Party B's C -Fed i Rating fell Total Fund Equity level falls below 570 millions S&P OF fro,—„ ❑ Other: Specify: (e) Guarantor for Party B:_ Guarantee Amount: 8.2 Partv B Credit Protection: (a) Financial Information ❑ Option A ❑O Option B Specify: Sempra Energy ❑ Option C Specify: (b) Credit Assurances: ❑ Not Applicable ❑x Applicable (c) Collateral Threshold: ❑ Not Applicable ElB Applicable If applicable, complete the following: Party A Collateral Threshold: $ See Other Changes ; provided, however, that Party A's Collateral Threshold shall be zero if an Event of Default or Potential Event of Default with respect to Party A has occurred and is continuing. Party A Independent Amount: $N/A Version 2.1 (modified 4/25/00) OCOPYRIGHT 2000 by the Edison Electric Institute and National Energy Markctm Association Party A Rounding Amount: S See Other Changes Vmion 2.1 (MOMed 4n5M0) OCOPYRIGHT 2000 by the Edn= Electric bstmm and Na mW Energy Marketm Aseociedon Article 10 Confidentiality (d) Downgrade Event: ❑ Not Applicable 08 Applicable If applicable, complete the following: O@ It shall be a Downgrade Event for Party A if Party A's Credit Rating falls below BBB from S&P or Baa3 from Moody's or if Party A is not rated by either S&P or Moody's ❑ Other: (e) Guarantor for Party Guarantee Amount: ❑ Confidentiality Applicable If not checked, inapplicable. Schedule M ❑ Party A is a Governmental Entity or Public Power System ❑ Party B is a Governmental Entity or Public Power System ❑ Add Section 3.6. If not checked, inapplicable ❑ Add Section 8.6. If not checked, inapplicable Other Cbanees 1) In section 1.4 insert "Fridav," after "a" in the first line. 442 In section 1.12 insert "and if such ratings are different, the lowest of such ratings shall apply" after the word "Sheet" in the last line. 2-L3JIn section 1.50, replace Section 2.4 with Section 2.5 -744iIn section 1.5 1, delete the phrase "at Buyer's option," from the fifth line, and replace with, "absent a purchase." In Section 1.53, delete the words "at Seller's option," from the fifth line, and replace with, "absent a sale." 445 In section 2. 1, delete "either Party" in the second line and replace with "both Parties". In section 2.5, delete "Unless a Party expressly objects to a Recording (defined below) at the beginning of a telephone conversation,". L6ZIn section 2.5, insert the phrase "absent manifest erroe' after the fust appearance of the word "Confirrnation'on the eleventh line. 7) In section 5.1 (a) chance "three (3) Business Days" to "two (2) Business Days". 668 In section 6.3, lines 3, 16 & 18, change twelve (12) months to twenty - fetHei_ghteen (2-4 months. 8) The following sections replace Section 8.1(c) and 8.2(c) on the Version 2.1 (modified 4/25/00) OCOPYRIGHT 2000 by the Edison Electric Institam and National Energy Marketers Association Coversheet: Section 8.1(x) and 8.2 (c) Collateral Threshold 0) The Collateral Threshold applicable to Partv A and the corresoondin Rounding Amount shall be the amount specified below opposite Parry A's applicable Credit Rating at that time: S 100 million > TFE > $90 million S4MM Credit Rating: S90 million > TFE > S80 million $2MM S&P/Moodys Collateral Threshold Rounding Amount BBB+/Baal or above Open Open BBB/Baa2 Sl5-MM S250.000 BBB-.Baa3 S 5MM 5250000 Below BBB-/Baa3 S 0 $1 Total Fund Equity ("TFE") Collateral Threshold Rounding Amount TFE > $100 million $6MM $100000 S 100 million > TFE > $90 million S4MM S100,000 S90 million > TFE > S80 million $2MM S 50,000 S80 million> TFE > S 1 0 million Sl MM S 50.000 TFE < $70 million $ 0 sl iii In sections 8.1(b) and 8.2 (b) change "three (3) bBusiness dDays" to ..two (2) bBusiness dDays". In sections 8.1(c) and 8.2 (c) on line 4 after "Day." insert "by 9:30 a.m. Pacific Standard Time("Notification Time")" and on lines 9, 10 and 16 change "three (3) bBusiness dDays" to "enetwo (42D bBusiness dDays_". On line 10 after "request" delete the period and insert "and if any such request is made after the Notification Time. such Performance Assurance will be delivered on the third Business Day after the date ofsuch request. Notwithstanding anything to the contrary in this subparagraph (c), if such request is made by the Notification time on a Thursday, such Performance Assurance shall be delivered by close of . Business on the next Business Day and if such request is made after the Notification Time such Performance Assurance shall be delivered on the second Business Day thereafter." and *n the tenth lifie delete !he phrase of.,__..._,__..:'_.... ter ....... .. .. .. ...... ................. Payment "^ eaW '^'^"'. In section 8.1(d) and 8.2(d) on line 5. change "three (3) Business Days" to "two (2) Business Days" 849 In Section 8.3, insert the following at the end of the section, "All cash collateral shall bear interest calculated on a daily basis at overnight LIBID as from time to time in effect (as reported on Telerate), with the net amount of interest accrued monthly being payable on the third Business Day of the following month. Each party shall have the fixe and unrestricted right to use and dispose of all cash collateral which it holds, subject only to its obligations to return such collateral if and when so required under this Agreement" Version 2.1 (modified 425/00) OCOPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association 10) In section 10.9 delete the words "and during normal working hours" and insert the words "copies of after the word "examine". In line 9, change twelve (12) months to Pwenfy-feureieh[een (24L8) months. Version 2.1 (modified 4MM) OMPYRIGHT 2000 by the Edison Electric Institute and National Energy Matketm Association IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first above written. Party A Sempra Energy Trading Corp. Party B City Of Azusa Light & Water Department By: By: _ Name: Name: Title: Title: DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of representatives of Edison Electric Institute' ("EEI') and National Energy Marketers Association ("NEM') member companies to facilitate orderly trading In and development of wholesale power markets. Neither EEI nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for its use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be achieved and their legal interests are adequately protected. Version 2.1 (modified 425/00) OCOPYRIGHT 2000 by the Edison Electric Insduft and National Energy Marketm Association FERC RATE SCHEDULE NO. 1 1. Availability: Sempra Energy Trading Corp. ("SET") makes electric energy and capacity available under this Rate Schedule to any purchaser for resale. 2. Applicabiliri: This schedule is applicable to all sales of energy or capacity by SET not otherwise subject to a particular rate schedule of SET. 3. Rates: All sales shall be made at rates established by agreement between the purchaser and SET. 4. Other Terms and Conditions: All other terms and conditions shall be established by agreement between the purchaser and SET. 5. Affiliates Sales Prohibited: No sales may be made pursuant to this Rate Schedule to any entity ... controlled by, under common control with, or controlling SET. 6. Effective Date: This Rate Schedule is -effective November 28, 1994. Version 2.1 (modified 4M=) OMPYRIGHT 2000 by dw Edison Electric lnstimte ard Nation] Energy Marketers Amociefion ' CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES �,� DATE: JULY 22, 2002 7J SUBJECT: AWARD CONTRACT FOR DEMOLITION AND MINOR SITE IMPROVEMENT AT 1 160 WEST GLADSTONE ST. (AZUSA 2nd SUBSTATION PROJECT) RECOMMENDATION It is recommended that the Utility Board/City Council award contract to Pacific Demolition, Inc. in the amount not to exceed $41,400 for demolition work and preliminary minor improvements at proposed electric substation site. BACKGROUND After nearly three years of diligent efforts to acquire a substation site, AL&W will take possession of real property located at 1160 West Gladstone Street when escrow closes on Friday, July 19, 2002. As a next step in substation project development, the site needs to be cleared by demolishing all existing improvements including. removal of surface slabs. Thereafter, substation design and engineering will follow. Staff solicited informal proposals for demolition and the following bid proposals were received: Company Amount 1) Pacific Demolition Inc. $41,400 2) Premier Demolition Service $43,670 3) The Reynolds Group $45,100 4) Central City Enterprises $82,986 Staff has reviewed submitted proposals and determined that Pacific Demolition, Inc., the lowest lump sum proposal including contingency allowance, meets the requirements for this improvement project. FISCAL IMPACT This project is budgeted during this fiscal year under Substation Capital Improvement Project and funds are available in account # 33-80-000-730-7101/82000A. Preparedby: FLaVt/r. PE EkarIcatErtglneer C.Idemo//donSubstatlon.doc .990MEQ. w CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES �j Al DATE: DATE: JULY 22, 2002 SUBJECT: APPROVAL OF BID SPECIFICATIONS AND AUTHORIZATION TO ADVERTISE FOR BIDS FOR PROJECT W-183, NORTHERN TRANSMISSION MAIN RECOMMENDATION It is recommended that the Utility Board/City Council approve the bid specifications and authorize the City Clerk to advertise for bids for construction of Project W-183, Northern Transmission Water Main. BACKGROUND The Water Division has designed a water main, called the Northern Transmission Main to carry water from the spreading ground wells southerly to the Azusa,Light & Water service area south of the 210 Freeway. The pipeline will be approximately 3 miles long and the Engineer's Estimate for construction of the project is $1.5 million. The bid specifications are available for review in the Light & Water Offices. FISCAL IMPACT City will administer the bidding process for this project and pay for minor costs associated with duplicating bid package. Fiscal impact of the project is negligible as the construction cost of the project will be reimbursed by other parties. Prepared by: Chet Anderson, Assistant Director of Water Operations ]EL 4M tv 4a A4MP, CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 22, 2002 SUBJECT: AGREEMENT WITH R.W. BECK, INCORPORATED, FOR PROFESSIONAL SERVICES REGARDING TELECOMMUNICATIONS FEASIBILITY STUDY. RECOMMENDATION It is recommended that the Utility Board/City Council: 1) Award contract & approve negotiated agreement with RW Beck, Inc. in the amount not to exceed $180,983 for Professional Services to conduct a Telecommunications Feasibility Study; and 2) Amend Electric Operations Operating budget by an additional amount of $31,000 to supplement the existing budget for this project. BACKGROUND Pursuant to the Utility's strategic planning efforts, a Request for Proposals (RFP) was released on March 4, 2002, to solicit proposals on a telecommunications feasibility study to: a) Evaluate new services that could be developed and provided by Azusa Light & Water. b) Determine the cost savings, market potential, risk, and return on investment, for various services that could be provided using a fiber optic network. c) Evaluate different business scenarios or models, and provide recommendations on which model, if any, should be pursued by our Utility. The three-phase study which will be carried out by RW Beck, Inc. may be summarized as follows: Phase 1: Review our existing dark fiber network to see how the City and schools may be able to make use of this resource to lower telephone, Internet and networking costs, and possibly to enhance our services. Phase 2: Evaluate a business model which would consist of the utility acting as a wholesaler— in other words, an entity that leases either dark fiber or lit fiber, to private companies that would provide retail services such as telephone, high speed internet, cable television, security, and computer networking for businesses. Phase 3: Evaluate a business model which would consist of the utility acting as a retail service provider for various services, including, but not limited to, telephone, high speed internet, cable television, security, and computer networking for businesses. R W Beck's approach to studying each of these three phases is detailed in their work plan which is attached to the Agreement as Exhibit A. The City received ten proposals in response to our RFP. Proposals were evaluated by a interdepartmental team of employees. Four firms were selected to be interviewed on June 19, 2002, and at the end of a rigorous evaluation process, R.W. Beck's proposal, in the amount of $188,597, was ranked number one. The average cost of the proposals received was $161,887. Since this project may result in some benefits to the Azusa Unified School District, they were contacted and asked to consider sharing costs of about $20,000. While the School District is willing to participate in the study, they politely declined our request to share costs for the study due to budgetary constraints. Thereafter, staff negotiated some changes to RW,Beck's original cost proposal which resulted in a reduction of their original price to an amount not -to -exceed $164,530. The negotiated change will not materially affect their performance or the integrity of their study. FISCAL IMPACT Staff has added a 10% contingency to the negotiated cost of $164,530, which brings the total Agreement amount to $180,983. The contingency of $16,453 will allow staff some flexibility in authorizing any unforeseen work that may arise through this study and avoid delays. Because this project was budgeted at $150,000, staff also recommends that a budget amendment be approved in the amount of $31,000 to bring the total budget in account 33- 40-739-230-6340 to $181,000. The funding source for the $31,000 is account 33-00-000- 000-3605, electric retained earnings. Prepared by: Cary Kalscheuer, Assistant to the Director of Utility Federico Langit, Electric Engineer CITY OF AZUSA PROFESSIONAL SERVICES AGREEMENT 1. PARTIES AND DATE. This Agreement is made and entered into this 22nd day of July, 2002 by and between the City of Azusa, a municipal organization organized under the laws of the State of California with its principal place of business at 213 East Foothill Boulevard, Azusa, California 91702-1295 ("City") and R.W. Beck, Incorporated, a Washington Corporation with its principal place of business at 1001 Fourth Avenue, Suite 2500, Seattle, Washington 98154-1004 ("Consultant"). City and Consultant are sometimes individually referred to as "Party" and collectively as "Parties." 2. RECITALS. 2.1 Consultant. Consultant desires to perform and assume responsibility for the provision of certain . professional services required by the City on the terms and conditions set forth in this Agreement. Consultant represents that it is experienced in providing Telecommunications Market Research to public clients, is licensed in the State of California, and is familiar with the plans of City. 2.2 Project. City desires to engage Consultant to render such services for the Telecommunications Feasibility Study project ("Project") as set forth in this Agreement. 3. TERMS. 3.1 Scope of Services and Term. 3.1.1 General Scone of Services. Consultant promises and agrees to furnish to the City all labor, materials, tools, equipment,.services, and incidental and customary work necessary to fully and adequately supply the professional Telecommunications Feasibility Study consulting services necessary for the Project ("Services"). The Services are more particularly described in Exhibit "A" attached hereto and incorporated herein by reference. All Services shall be subject to, and performed in accordance with, this Agreement, the exhibits attached hereto and incorporated herein by reference, and all applicable local, state and federal laws, rules and regulations. RVPUBWGS344364 3.1.2 Term. The term of this Agreement shall be from July 22, 2002, until six (6) months following date of the Notice To Proceed, unless earlier terminated as provided herein. Consultant shall complete the Services within the term of this Agreement, and shall meet any other established schedules and deadlines. 3.2 Responsibilities of Consultant. 3.2.1 Control and Payment of Subordinates-. Independent Contractor. The Services shall be performed by Consultant or under its supervision. Consultant will determine the means, methods and details of performing the Services subject to the requirements of this Agreement. City retains Consultant on an independent contractor basis and not as an employee. Consultant retains the right to perform similar or different services for others during the term of this Agreement. Any subcontractors performing the Services under this Agreement on behalf of Consultant shall also not be employees of City and shall at all times be under Consultant's exclusive direction and control. Consultant shall pay all subcontractors in connection with their performance of Services under this Agreement and as required by law. 3.2.2 Schedule of Services. Consultant shall perform the Services expeditiously, within the term of this Agreement, and in accordance with the Schedule of Services set forth in Exhibit "B" attached hereto and incorporated herein by reference. Consultant represents that it has the professional and technical personnel required to perform the Services in conformance with such conditions. In order to facilitate Consultant's conformance with the Schedule, City shall respond to Consultant's submittals in a timely manner. Upon request of City, Consultant shall provide a more detailed schedule of anticipated performance to meet the Schedule of Services. 3.2.3 Conformance to Anolicable Requirements. All work prepared by Consultant shall be subject to the approval of City based on conformance to section 3.2.8. 3.2.4 Substitution of Key Personnel. Consultant has represented to City that certain key personnel will perform and coordinate the Services under this Agreement. Should one or more of such personnel become unavailable, Consultant may substitute other personnel of at least equal competence upon written approval of City. In the event that City and Consultant cannot agree as to the substitution of key personnel, City shall be entitled to terminate this Agreement for cause. As discussed below, any personnel who fail or refuse to perform the Services in a manner acceptable to the City, or who are determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property, shall be promptly removed from the Project by the Consultant at the request of the City. The key personnel for performance of this Agreement are as follows: Wendy Warner, Rebecca Shiflea, Michael Feld, John Eichner, Bary O'Brien, Dale Smith, Tom Thompson, Sean Beatty, Steve Brodsky. 3.2.5 City's Representative. The City hereby designates Cary Kalscheuer and/or RVPUBWGS\5M366 2 Federico Langit to act as its representative for the performance of this Agreement ("City's Representative"). City's Representative shall have the power to act on behalf of the City for all purposes under this Contract. Consultant shall not accept direction or orders from any person other than the City's Representative or his or her designee. 3.2.6 Consultant's Representative. Consultant hereby designates Wendy Warner, or his or her designee, to act as its representative for the performance of this Agreement ("Consultant's Representative"). The Consultant's Representative shall supervise and direct the Services, using her best skill and attention, and shall be responsible for all means, methods, techniques, sequences and procedures and for the satisfactory coordination of all portions of the Services under this Agreement. Keith Platte, Principal, shall have full authority to represent and act on behalf of the Consultant for all purposes under this Agreement. 3.2.7 Coordination of Services. Consultant agrees to work closely with City staff in the performance of Services and shall be available to City's staff, consultants and other staff at all reasonable times. 3.2.8 Standard of Care; Performance of Employees. Consultant shall perform all Services under this Agreement in a skillful and competent manner, consistent with the standards generally recognized as being employed by professionals in the same discipline in the State of California. Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant represents that its own employees and subcontractors have sufficient skill, experience and licenses, to do the job as referenced in the City's "Request for Proposals" and Consultant's "Proposal," included in Exhibit D attached hereto and incorporated herein by reference. Finally, Consultant represents that it has all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Services, including a City Business License, and that such licenses and approvals shall be maintained throughout the term of this Agreement. As provided for in the indemnification provisions of this Agreement, Consultant shall perform, at its own cost and expense and without reimbursement from the. City, any services necessary to correct errors or omissions which are caused by the Consultant's failure to comply with the standard of care provided for herein. Any employee of the Consultant or its sub -consultants who is determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to perform the Services in a manner acceptable to the City, shall be promptly removed from the Project by the Consultant and shall not be re-employed to perform any of the Services or to work on the Project. 3.2.9 Laws and Regulations. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services, including all Cal/OSHA requirements, and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations in connection with Services. If the Consultant performs any work knowing it to be contrary to such laws, rules and regulations and without giving written notice to the City, RVnMWG9d"364 3 Consultant shall be solely responsible for all costs arising therefrom. Consultant shall defend, indemnify and hold City, its officials, directors, officers, employees and agents free and harmless, pursuant to the indemnification provisions of this Agreement, from any claim or liability arising out of any failure or alleged failure to comply with such laws, rules or regulations. 3.2. 10 Insurance. 3.2.10.1 Time for Compliance. Consultant shall not commence Work under this Agreement until it has provided evidence satisfactory to the City that it has secured all insurance required under this section and has received Notice to Proceed from the City. In addition, Consultant shall not allow any subcontractor to commence work on any subcontract until it has provided evidence satisfactory to the City that the subcontractor has secured all insurance required under this section. 3.2.10.2 Minimum Requirements. Consultant shall, at its expense, procure and maintain for the duration of the Agreement insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the Agreement by the Consultant, its agents, representatives, employees or subcontractors. Consultant shall also require all of its subcontractors to procure and maintain the same insurance for the duration of the Agreement. Such insurance shall meet at least the following minimum levels of coverage: (A) Minimum Scope of Insurance. Coverage shall be at least as broad as the latest version of the following: (1) General Liability: Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001); (2) Automobile Liability: Insurance Services Office Business Auto Coverage form number CA 0001, code 1 (any auto); and (3) Workers' Compensation and Employer's Liability: Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance. (B) Minimum Limits of Insurance. Consultant shall maintain limits no less than: (1) General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with general aggregate limit is used, either the general aggregate limit shall apply separately to this Agreement/location or the general aggregate limit shall be twice the required occurrence limit; (2) Automobile Liability: $1,000,000 per accident for bodily injury and property damage; and (3) Workers' Compensation and Employer's Liability: Workers' Compensation limits as required by the Labor Code of the State of California. Employer's Liability limits of $1,000,000 per accident for bodily injury or disease. 3.2.10.3 Professional Liabilitv. Consultant shall procure and maintain, and require its sub -consultants to procure and maintain, for a period of five (5) years following completion of the Project, errors and omissions liability insurance appropriate to their profession. Such insurance shall be in an amount not less than $1,000,000 per claim, and shall be endorsed to include contractual liability. RVPUBMGSS544364 4 3.2.10.4 Insurance Endorsements. The insurance policies shall contain the following provisions, or Consultant shall provide endorsements on forms supplied or approved by the City to add the following provisions to the insurance policies: (A) General Liability. The general liability policy shall be endorsed to state that: (1) the City, its directors, officials, officers, employees, agents and volunteers shall be covered as additional insured with respect to the Work or operations performed by or on behalf of the Consultant, including materials, parts or equipment furnished in connection with such work; and (2) the insurance coverage shall be primary insurance as respects the City, its directors, officials, officers, employees, agents and volunteers, or if excess, shall stand in an unbroken chain of coverage excess of the Consultant's scheduled underlying coverage. Any insurance or self-insurance maintained by the City, its directors, officials, officers, employees, agents and volunteers shall be excess of the Consultant's insurance and shall not be called upon to contribute with it in any way. (B) Automobile Liability. The automobile liability policy shall be endorsed to state that: (1) the City, its directors, officials, officers, employees, agents and volunteers shall be covered as additional insureds with respect to the ownership, operation, maintenance, use,'loading or unloading of any auto owned, leased, hired or borrowed by the Consultant or for which the Consultant is responsible; and (2) the insurance coverage shall be primary insurance as respects the City, its directors, officials, officers, employees, agents and volunteers, or if excess, shall stand in an unbroken chain of coverage excess of the Consultant's scheduled underlying coverage. Any insurance or self-insurance maintained by the City, its directors, officials, officers, employees, agents and volunteers shall be excess of the Consultant's insurance and shall not be called upon to contribute with it in any way. (C) Workers' Compensation and Employers Liability Coverage. The insurer shall agree to waive all rights of subrogation against the City, its directors, officials, officers, employees, agents and volunteers for losses paid under the terms of the insurance policy which arise from work performed by the Consultant. (D) All Coverages. Each insurance policy required by this Agreement shall be endorsed to state that: (A) coverage shall not be canceled except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the City; and (B) any failure to comply with reporting or other provisions of the policies, including breaches of warranties, shall not affect coverage provided to the City, its directors, officials, officers, employees, agents and volunteers. Consultant shall provide thirty (30) days prior written notice of any suspension, void, or reduction of insurance coverage. 3.2.10.5 Separation of Insureds, No Special Limitations. All insurance required by this Section shall contain standard separation of insureds provisions. In addition, such insurance shall not contain any special limitations on the scope of protection afforded to the City, its directors, officials, officers, employees, agents and volunteers. RVPUBWGS\544364 5 3.2.10.6 Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating no less than A:VIII, licensed to do business in California, and satisfactory to the City. 3.2.10.7 Verification of Coverage. Consultant shall furnish City with original certificates of insurance and endorsements effecting coverage required by this Agreement on forms satisfactory to the City. The certificates and endorsements for each insurance policy shall be signed by a person authorized by that insurer to bind coverage on its behalf, and shall be on forms provided by the City if requested. All certificates and endorsements must be received and approved by the City before work commences. The City reserves the right to require complete, certified copies of all required insurance policies, at any time. 3.2.8 Safely. Consultant shall execute and maintain its work so as to avoid injury or damage to any person or property. In carrying out its Services, the Consultant shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed. Safety precautions as applicable shall include, but shall not be limited to: (A) adequate life protection and life saving equipment and procedures; (B) instructions in accident prevention for all employees and subcontractors, such as safe walkways, scaffolds, fall protection ladders, bridges, gang planks, confined space procedures, trenching and shoring, equipment and other safety devices, equipment and wearing apparel as are necessary or lawfully required to prevent accidents or injuries; and (C) adequate facilities for the proper inspection and maintenance of all safety measures. Except in regard to safety obligations set forth herein, Consultant shall not be liable for site safety or security. 3.3 Fees and Payments. 3.3.1 Compensation. Consultant shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit "C" attached hereto and incorporated herein by reference. The total compensation shall not exceed One Hundred and Eighty Thousand Nine Hundred and Eighty -Three dollars ($180,983), which is inclusive of a ten percent (10%) contingency in the amount of Sixteen Thousand Four Hundred and Fifty -Three dollars ($16,453) for Extra Work, which may be authorized by the City, as described below. 3.3.2 Payment of Compensation. Consultant shall receive compensation from the City based on the following formula, for professional services rendered or work product completed and delivered to the City: (A) Twenty Thousand Eight Hundred Dollars ($20,800) billed by Consultant at RVPUBWGW44364 6 the close of the month in which the survey interviews begin. , (B) Approximately Forty -Two Thousand Four' Hundred Thirty Dollars ($42,430) billed by Consultant during month in which thirty percent (30%) of the forecast hours of work have been completed. (C) Approximately Forty -Two Thousand Four Hundred Thirty Dollars ($42,430) billed by Consultant during month in which sixty percent (60%) of the forecast hours of work have been completed. (D) Approximately Forty -Two Thousand Four Hundred Thirty Dollars ($42,430) billed by Consultant during month in which ninety percent (90%) of the forecast hours of work have been completed. (E) Balance of costs or approximately Sixteen Thousand Four Hundred and Forty Dollars ($16,440) billed by Consultant at close of month in which the City has accepted all outstanding work deliverables completed by Consultant. (F) Contingency for Extra Work,as authorized by the City, up to Sixteen Thousand Four -Hundred and Fifty -Three dollars ($16,453) billed by the Consultant at the close of the month in which work has been completed. Consultant shall submit to City an itemized statement which indicates work completed and hours of Services rendered by Consultant. The statement shall describe the amount of Services and supplies provided since the initial commencement date, and reflect prior billing periods by task for each phase of this Project, as appropriate, through the date of the statement. City shall, within 45 days of receiving such statement, review the statement and pay all approved charges thereon. If City disputes any portion of the invoice, the undisputed portion will be paid and Consultant will be notified in writing of the exceptions taken within 10 days of the invoice. 3.3.3 Reimbursement for Expenses. Consultant shall be reimbursed for expenses included in Consultant's not -to -exceed lump sum proposal. Such expenses are included as part of total compensation given in section 3.3.1, and are included in Exhibit C. Reimbursable Expenses are listed on line items entitled "Expenses" for each phase of this project in Exhibit C, and are more fully described in Exhibit C., 3.3.4 Late Payments. Additional charges for interest shall become due and payable at a rate of 1-1/2 percent per month (or the maximum percentage allowed by law, whichever is lower) on the unpaid amounts. Any interest charges due from the City on past due invoices are outside any maximum billing amounts established for this Agreement and shall not be included in calculating the maximum. If the City fails to pay invoiced amounts within sixty (60) days after delivery of invoice, Consultant, at its sole discretion, may suspend services hereunder or may initiate collections proceedings, including mandatory binding arbitration, without incurring any liability or waiving any right established hereunder or by law. 3.3.5 Extra Work. At any time during the term of this Agreement, City may request that Consultant perform Extra Work. As used herein, "Extra Work" means any work which is determined by City to be necessary for the proper completion of the Project, but which Rvruawcs544364 7 the parties did not reasonably anticipate would be necessary at the execution of this Agreement. Consultant shall not perform, nor be compensated for, Extra Work without written authorization from City's Representative. 3.3.6 Contingency Acknowledgement. Consultant acknowledges and agrees that Agreement compensation in section 3.3.1 includes a ten percent (10%) contingency allowance which has been added by the City to Consultant's base lump sum fee of One Hundred Sixty -Four Thousand Five Hundred and Thirty Dollars ($164,530). Said ten percent (10%) contingency amounts to Sixteen Thousand Four Hundred and Fifty -Three dollars ($16,453), and is intended to cover written change orders or unforeseen extra work authorized by the City pursuant to Section 3.3.5. If there are no change orders made by the City or issued during the execution or performance of work under this Agreement, Consultant's total compensation shall not exceed the "not -to -exceed" lump sum fee of One Hundred Sixty -Four Thousand Five Hundred and Thirty dollars ($164,530). 3.4 Accounting Records. 3.4.1 Maintenance and Inspection. Consultant shall maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Consultant shall allow a representative of City during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three (3) years from the date of final payment under this Agreement. 3.5 General Provisions. 3.5.1 Termination of Apyeement. 3.5.1.1 Grounds for Termination. City may, by written notice to Consultant, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Consultant of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. Upon termination, Consultant shall be compensated only for those services which have been adequately rendered to - City through the date of termination, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause. 3.5.1.2 Effect of Termination. If this Agreement is terminated as provided herein, City may require Consultant to provide all finished or unfinished Documents and Data and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request. 3.5.1.3 Additional Services. In the event this Agreement is terminated in RVPUBWGS\544364 whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, service`s similar to those terminated. 3.5.2 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the following address, or at such other address as the respective parties may provide in writing for this purpose: Consultant: City: Ms. Wendy Warner R.W. Beck, Incorporated 1125 Seventeenth Street, Suite 1900 Denver, Colorado 80202-2615 Telephone (303) 299-5345 Facsimile (303) 297-2811 e-mail wwamer(a)rwbeck.com Mr. Cary Kalscheuer and/or Federico Langit City of Azusa 729 N. Azusa Avenue Azusa, CA 91702-9500 Telephone (626) 812-5174 Facsimile (626) 334-3163 e-mail ckalscbeuer(a)ci.azusa.ca.us and/or flaneit(a)ci. azusa. ca.us Such notice shall be deemed made when personally delivered or when mailed, forty-eight (48) hours after deposit in the U.S. Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service. 3.5.3 Ownership of Materials and Confidentiality. 3.5.3.1 Documents & Data, Licensing of Intellectual Pronertv. This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including,but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consultant under this Agreement ("Documents & Data"). Consultant represents that it has the legal right to license any Documents & Data. Consultant shall require all subcontractors to agree in writing that City is granted a non-exclusive and perpetual license for any Documents RVPURVWS"364 & Data the subcontractor prepares under this Agreement. Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by design professionals other than Consultant or provided to Consultant by the City. City shall not be limited in any way in its use of the Documents & Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City's sole risk. 3.5.3.2 Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents and Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of City, be used by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Consultant will not be prohibited from disclosing or using any information which: A. is or becomes generally available to the public; B. was already in Consultant's possession before any disclosure of the Information by the City; C. has been or is obtained by Consultant from a third party (other than one acting on behalf of the City) who Consultant has no reason to believe is not lawfully in possession of the Information and who Consultant has no reason to believe is in violation of any contractual, legal or fiduciary obligation to the City with respect to the Information; D. is required to be disclosed by a subpoena or other directive of a court, administrative agency, quasi-judicial body or arbitration panel; or E. is independently developed by Consultant for purposes other than the project. Consultant shall not use City's name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Project in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City. 3.5.4 Cooperation; Further Acts. The Parties shall fully cooperate with one another, and shall take any additional acts or sign any additional documents as may be necessary, appropriate or convenient to attain the purposes of this Agreement. RVPUBWG9544364 10 3.5.5 Attorney's Fees. If either party commences an action against the other party, either legal, administrative or otherwise, arising out of or in connection with this Agreement, the prevailing party in such litigation shall be entitled to have and recover from the losing party reasonable attorney's fees and all other costs of such action. 3.5.6 Indemnification. Following operation of applicable rights of contribution and to the extent permitted by law, Consultant agrees to indemnify, defend and hold harmless City and its directors, officers and employees from and against any and all loss, damage, claim or liability (including without limitation, reasonable attorneys' fees) incurred by City to the extent arising out of Consultant's negligent acts, errors or omissions, including claims by any third party or claims made by employees of Consultant. Consultant explicitly and expressly waives any right it has to immunity under applicable industrial insurance laws with respect to any action against City and agrees to assume liability for actions brought by its own employees against City as provided above. Following operation of applicable rights of contribution and to the extent permitted by law, City agrees to indemnify, defend and hold harmless Consultant and its directors, officers, employees and subconsultants from and against any and all loss, damage, claim or liability (including, without limitation, reasonable attorney's fees) incurred by Consultant to the extent arising out of City's negligent acts, errors or omissions, including claims by any third party or claims made by employees of City. City explicitly and expressly waives any right it has to immunity under applicable industrial insurance laws with respect to any action against Consultant and agrees to assume liability for actions brought by its own employees against Consultant as provided above. In no event and under no circumstances shall Consultant be liable to City for any principal, interest, loss of anticipated revenues, earnings, profits, increased expense of operation or construction, loss by reason of shutdown or non -operation due to late completion or otherwise or for any other economic, consequential, indirect or special damages. 3.5.7 Entire Agreement. This Agreement contains the entire Agreement of the parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings or agreements. This Agreement may only be modified by a writing signed by both parties. 3.5.8 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Los Angeles County. Consultant and City shall attempt to resolve conflicts or disputes under this Agreement in a fair and reasonable manner and agree that if resolution cannot be made to attempt to mediate the conflict by a professional mediator (except for payment disputes which may be submitted directly to arbitration). If mediation does not settle any dispute or action which arises under this Agreement or which relates in any way to this Agreement or the subject matter of this Agreement, it may be subject to arbitration upon mutual consent of the Parties under the rules governing commercial arbitration as promulgated by the American Arbitration Association and arbitrability shall be subject to the Federal Arbitration Act 3.5.9 Time of Essence. Time is of the essence for each and every provision of RVPUBWCS%W364 11 this Agreement. 3.5.10 City's Right to Employ Other Consultants. City reserves right to employ other consultants in connection with this Project. 3.5.11 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the parties. 3.5.12 Assignment or Transfer. Neither Party shall assign, hypothecate, or transfer, either directly or by operation of law, this Agreement or any interest herein without the prior written consent of the other Party. Any attempt to do so shall be null and void, and any assignees, hypothecates or transferees shall acquire no right or interest by reason of such attempted assignment, hypothecation or transfer. . 3.5.13 Construction; References, Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be deemed calendar days and not work days. All references to Consultant include all personnel, employees, agents, and subcontractors of Consultant, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, and volunteers except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement. 3.5.14 Amendment: Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties. 3.5.15 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel, or otherwise. 3.5.16 No Third Party Beneficiaries. There are no intended third party beneficiaries of any right or obligation assumed by the Parties. 3.5.17 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect. 3.5.18 Prohibited Interests. Consultant represents that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid nor has it agreed to pay any company or person, other than a bona fide employee working solely for RVPUBWGSt544364 _ 12 Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this statement, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom. 3.5.19 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer and it shall not discriminate against any subcontractor, employee or applicant for employment because of race, religion, color, national origin, handicap, ancestry, sex or age. Such non-discrimination shall include; but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Consultant shall also comply with all relevant provisions of City's Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currently in effect or hereinafter enacted. 3.5.20 Labor Certification. By its signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordance with the provisions of that Code, and agrees to comply with such provisions before commencing the performance of the Services. 3.5.21 Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party. 3.5.22 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original. 3.6 Subcontracting. 3.6.1 Prior Approval Required. Consultant shall not subcontract any portion of the work required by this Agreement, except as expressly stated herein, without prior written approval of City. Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in this Agreement. RVKWNc5�544364 13 CITY OF AZUSA Attest: 0 Rick Cole City Manager City Clerk Approved as to Form: Best Best & Krieger LLP City Attorney RVPUBWGS\5"364 14 R.W. BECK, INC. Keith J. Platte, P.E. Operations Director Paul J. Harmon, P.E. Client Services Director Wendy T. Warner Project Manager EXHIBIT "A1l SCOPE OF SERVICES WORK PLAN DELIVERABLES (ATTACHED) RVPUBWGS1541364 Introduction Azusa Light and Water is interested in assessing the costs and benefits associated with using its fiber optic allocation from Charter Communications to provide City and school telecommunications services, and evaluating the market and financial viability of offering a wide range o f t elecommunications a nd b roadband s ervices o ver a n ew municipal area network. These services might be offered directly to business and residence customers or might be made available by service providers who purchase city wholesale telecommunication services. The objective of this work plan is to provide sufficient market intelligence and financial analysis to enable AL&W to make sound telecommunications entry and investment decisions. Decisions enabled by this work plan include: ■ Markets to serve ■ Services to offer ■ Technology to deploy ■ Business role to undertake (self -provisioning for City, wholesale and/or retail) ■ Barriers to address (legal/regulatory, competitive, skill sets, etc.) ■ Identification of financial requirements The proposed work plan has a strong emphasis on understanding market and demand factors and creating a credible financial analysis. It is our experience that the greatest single cause of telecommunication venture failure is the overestimation of market demand or the rates at which that demand materialize. R. W. Beck, with its long history of interaction with the financial community, will give AL&W the type of market and financial analysis that can be used confidently both in local decision-making and in seeking funding. R. W. Beck has created a work plan that addresses all three phases of the Request for Proposals (RFP). Although the work plan for each phase is presented separately, we have, in fact, taken advantage of the synergies of the three phases by combining certain tasks across phases or using information gathered in one phase in another phase. This is particularly true for competitive, legal/regulatory, and technical analyses. This work plan calls for two reports (with both draft and final versions) and two presentations. The first report will cover Phase 1 — Government and Institutional Fiber Network — the decision for the City to self -provide some or its own entire telecommunications services. Contract Attachment A Section The objective of this work plan is to provide sufficient market intelligence and financial analysis to enable AL& W to make sound telecommunications entry and investment decisions. This report is issued separately as it is anticipated that there may be some recommendations upon which the City may wish to take action to receive immediate financial or service benefits. The second report will cover Phases 2 & 3 — the decisions to proceed with entry into commercial telecommunications on either a wholesale or retail basis. This proposal section presents a description of the work proposed for each phase. At the close of this section, please find foldout Task Summaries for each of the three phases, which summarize the objective, steps and deliverables for each task in the phase. Project Management and Communications In our experience with dozens of telecommunications projects across the country, R. W. Beck has found that an approach that features good communications and sharing of findings throughout the project has provided the most actionable programs. Such an approach will allow AL&W to understand the findings, analysis and conclusions and to surface questions or provide input throughout the project. This sharing also enhances knowledge transfer and creates a solid basis for future implementation. Examples of this are: ■ A full review of the questionnaire and analysis methods with AL&W before any interviewing, focus group or survey effort. ■ Issuance of the market research top -line results immediately after survey completion (instead of waiting for the final project report). ■ Discussion and agreement on cost input to the financial model based on AL&W's specific capabilities as a municipal utility, as well as our experience. ■ Financial scenarios that revolve around typical municipal and investor/lender concerns. To begin this project, we propose an initial kickoff meeting with the AL&W project manager and team and selected R. W. Beck team members during which we will outline the steps and schedule of the project, and the points at which we will need AL&W's help and participation (see AL&W Requirements below). There will be a single kick-off meeting that will cover all three project phases. Throughout the project, the Project Manager will be available to answer questions and receive input.. In addition, the R. W. Beck consultants responsible for each task will be in communication with AL&W's project manager. Project progress reports will be sent to the AL&W project manager via e-mail twice a month. At the close of this project, all AL&W will have the opportunity to review, question and comment on a draft report. The final report and presentation will therefore reflect the input from AL&W. 2 Scope of Services Phase 1: Government and Institutional Fiber Network Phase 1: Objectives and Overview The City of Azusa has a 6 -strand dark fiber network available through its franchise agreement with its Cable TV franchisee, Charter Communications. This dark fiber reaches some, but not necessarily all City and school facilities. The objective of Phase 1 is to evaluate the opportunity to provide some or all City and school telecommunications services using this dark fiber capability. This evaluation includes needs assessment, capital and operations cost identification and a cost/benefit analysis. Self -provision of services has been an excellent starting point for many cities considering entering into telecommunications. R. W. Beck's approach will consider the benefits from three standpoints: the efficiencies and cost savings to AL&W and the City; the enhanced services and functionality that can be provided to government and public institutions; and the experience and market positioning that can be gained for possible future wholesale or retail telecommunications offerings. R. W. Beck and Partner Communications bring a unique combination of experience and skills to this phase. R. W. Beck has conducted similar city needs analyses for such municipal utilities as Eugene Water and Electric (EWEB), Lafayette Utilities System (LUS) and Brownsville PUB. Partner Communications has developed campus -wide networks for many large companies, as well as having municipality experience. Of particular note is the inclusion of consultants on this team who have recently introduced innovative uses of broadband telecommunications for the Hartford, Connecticut City and K-12 Schools, and for the University of Oregon. Task 1-1: Stakeholder Identification and Input Initial Identification of Stakeholders This task consists of identifying key contacts within Azusa organizations that might be interested in a governmental -institutional fiber network. Organizations under consideration will include: ■ Administration of the Azusa Unified School District; ■ Information Technology Division of the School District; ■ Members of the School Board; ■ Staff members at schools within the district; ■ Utility staff, ■ Utility Board members; R. W. Beck, Inc. 3 ■ City Manager; ■ City Department Heads, such as Police, Library, Recreation and Parks, Community Development; ■ City Administrative Departments, such as Finance, Human Resources, Administration; ■ City Information Technology Department; ■ Program Directors of community organizations, such as Neighborhood Improvement Zone Coordinator. R. W. Beck will communicate with the target organizations via telephone to ascertain the appropriate contact person. Additional stakeholders may be identified through study of the City and School District's departmental organization chart and through conversations with already identified stakeholders. Initial Interviews This task consists of primary market research with institutional and governmental entities. The objective of the proposed market research is to assess market potential for communication and video services provided by the proposed government -institutional network. Once the appropriate contact person has been identified within the governmental and institutional organizations, R. W. Beck will conduct a combination of personal interviews to determine current and future telecommunications needs. Areas of inquiry will include: ■ Current usage and costs of telecommunication services (Internet, cable TV, data, and voice). ■ Satisfaction with current telecommunications products and providers. ■ Expectations of future requirements and desired new services. ■ Functions that could be performed differently with the availability of advanced telecommunications and broadband services; expected benefits, including enhanced task performance and cost- or time -savings. ■ Synergies and relationships with other government entities that could influence telecommunications needs and use. ■ How decisions are made on telecommunications additions, changes or enhancements, including possible barriers to change. R. W. Beck will develop the survey instrument. AL&W management will have the opportunity to give input to, and approve the interview guide to ensure all information needs are met. R. W. Beck personnel will conduct face-to-face or telephone interviews with up to 12 representatives from key institutional and governmental organizations. A summary of the findings of these interviews will be available in the Phase 1 Final Report and will also be used in service definitions for this phase. Task 1-2: Current Service and Network Analysis Current Telecommunications Services, Billing and Contract Review The R. W. Beck team will conduct a voice and data billing and contract analysis to understand services currently in place that support City and school networking in order to understand how to leverage the existing fiber network from both an expense -reduction and cost -avoidance perspective. The baseline information developed from this review will allow Azusa to develop a strategy for ongoing expense management of telecommunication expenditures. The steps associated with this analysis include the following: ■ Billing statement analysis using current network and equipment information. ■ Equipment and services inventory and maintenance analysis. ■ Contract analysis and benchmarking to understand the competitiveness of current rates. Based upon the results from the above analysis, R. W. Beck will work with Azusa to obtain immediate expense reduction measures, which may include the following: Assistance in negotiation of contract renewal and enforcement. ■ Recovery and credit for erroneously or improperly billed amounts. Azusa will benefit from this analysis in the following ways: ■ Identification of existing voice and data services that can be placed on the government -institutional network. ■ Overall telecommunication cost savings through the identification of unnecessary or underused services. Our experience with municipalities and schools indicate a potential savings of 10-20% is achievable. ■ Accurate inventory that will become the baseline for future contract negotiation. ■ Identification of school and library services that qualify for reimbursement under the SLC Universal Services Fund. Existing Dark Fiber Network R. W. Beck will conduct an in-depth review of the existing dark fiber network deployment. The steps associated with this task include the following: R W. Beck, Inc. ■ Inventory current infrastructure and design. The design appears to be a star configuration with City Hall as center and four tentacles. ■ Determine current limitations and potential enhancements. We will determine the additional municipal government and educational sites that could to be added. Azusa will benefit from this analysis by obtaining a "fresh look" based upon R. W. Beck and Partner Communications' experience in dealing with fiber network applications. Example: ■ Design analysis should look at a Web (multiple point-to-point fiber links) utilizing SONET ring design. This appears to be a limitation of the current network. ■ A deficiency in the current use of the four fibers per site is the dedication of one pair to data and one pair to voice (for two sites with EPN cabinets). A converged network would be more efficient. The findings of this task will be included in the Phase 1 Final Report and will be used in several of the following tasks. Task 1- 3: Services for Public Sector R. W. Beck will leverage its knowledge and experience in the municipal, education and utility environments to inventory existing services available for conversion to the network as well as identify new potential applications. The specific steps associated with this phase of the analysis will be done on a departmental basis. The review will consider the types of applications that might benefit from advanced telecommunications capabilities: ■ What are the current municipal applications that might benefit from advanced telecommunications capabilities? For example: ■ Financial administration ■ Personnel/payroll ■ Public Works, property assessment and taxation, licenses & inspections, planning, etc ■ Video, i.e. traffic cameras ■ What current education applications might benefit? ■ Student records (S'ASI?) ■ Financial and personnel administration ■ Remote learning including audio and video conferencing ■ What Library system applications might benefit? ■ On-line catalog ■ Audio/video on demand Input will come from both the previously described stakeholder interviews and from secondary research of city and school applications from around the nation. In addition to the departmental applications, a significant area of opportunity is the planning for Voice Over IP telephony. The ability to access a robust fiber backbone is essential for this application. An in-depth understanding of the current platform's ability to migrate to VoIP technology is essential for planning purposes. USF/e-rate funding for the support of education and library telecom needs is available predicated on Azusa's current reimbursement status. The R. W. Beck team has recent experience in this area with the City of Hartford. The results of this task, published in the Phase 1 Final Report and used in following ,steps, will be a table of potential services and service definitions, categorized as follows: ■ Current services possibly accomplished more cost effectively via the City's own network ■ New service concepts that could be implemented in the near future and that provide service quality, speed or cost savings benefits ■ Future ideas enabled by network deployment for which further research and concept development is required. Task 1-4: Service Concept Testing (Optional) Service Concept Testing is an optional task that is not included in the initial contract. However, it is available as an optional task if AL&W desires to further test and define specific offerings to these stakeholders during or at the conclusion of the contracted project. This task consists of conducting qualitative primary market research with institutional and governmental entities via focus groups. Upon determination of potential telecommunications services that could be offered over the government -institutional network R. W. Beck proposes to conduct three focus groups among key stakeholders to clarify interest in the proposed services. One group would consist of representatives of K-12 schools in Azusa, the Azusa Unified School District administration, and the library. A second group would be composed of utility representatives and the third group would consist of representatives of other city departments. R. W. Beck will provide the focus group moderator, a focus group interview guide and analysis of the results, as well as being responsible for recruiting participants. Additionally, R W. Beck will provide for audio recording of the sessions. To minimize costs, R. W. Beck R. W. Beck, Inc. recommends conducting the groups at an appropriate AL&W or City meeting room. AL&W will provide a list of key organizations from its database, letterhead stationary for mailing invitations, the meeting facility itself and a cash incentive and snack for group participants. If neither AL&W nor the City has facilities that are conducive to hosting a focus group, R. W. Beck will arrange to hold the groups at another location, at an additional cost. A summary of these focus groups, along with copies of the tapes, will be provided with the Phase I Final Report. Results will also be key to the preliminary network design and costing. Task 1-5: High Level Infrastructure and Operations Costs The construction of a fiber based telecommunications infrastructure involves much more than the actual transmission equipment. The overall costs are directly related to the number and kinds of services the network will offer to its customers. Paramount among these items is a clear and focused list of potential services. Also critical is an understanding of the required operational resources needed to accurately provision, provide and manage these services. The data from the stakeholder analysis, focus groups and network review will detail the product mix, existing installed infrastructure and current municipal, educational and utility demographics. A preliminary design will be created in conjunction with Azusa staff that addresses such requirements as: ■ Layer 2 and Layer 3 transmission devices ■ OSS and provisioning process ■ IADs and Voice/Data Gateways ■ NOC Construction and Procedures ■ Maintenance We will then produce a multi-level construction estimate, assigning a "root base" cost to the critical or essential portions of the items listed above. Added to this will be optional "sub -designs" that represent follow on products and services. Examples of these services are: ■ High-speed, dedicated Internet access ■ Voice over IP is VPN and private Networking ■ Video on demand services ■ Traditional voice services Design, specification and cost estimates will be derived by utilizing the data provided by the evaluation of the existing government -institutional network augmented by common industry standards and procedures such as those propounded by NEBS and IEEE. All of these services represent both incremental costs (capital and operational expense) as well as incremental revenue. High-level design descriptions and infrastructure and operations cost estimates will be included in the Phase 1 Final Report and used in the following Financial Analysis. Task1-6: Financial Analysis R. W. Beck will conduct a financial analysis of AL&W's provisioning of internal telecommunications services. On the cost side, this high-level analysis will include the following: ■ Estimate of the capital costs required to internally provision certain telecommunications services ■ Estimate of the operating, maintenance, staffing, and other expenses associated with running a government -institutional system. Our analysis of these costs will be based on our extensive of experience in implementing other, similar systems. In addition to the cost -side of the problem, it is our opinion that a government -institutional system will potentially result in numerous financial benefits. Our experience with other municipal systems has found that financial savings or benefits can be found in the following: ■ Internally owned telephone (switched) systems might cost less over time than AL&W's incumbent provider. We will conduct an analysis of your existing telephone bills to estimate such savings. ■ Operating internal data systems may preclude the need for existing leased lines. We will work with your staff to estimate AL&W's current cost of such lines and the savings associated with replacement. ■ Many municipal utilities lease dedicated data lines to support the high-speed SCADA requirements. Replacing incumbent's lines with an internal system can result in significant savings. ■ An internally operated system can be more flexible and cost effective in supporting automatic meter reading (AMR). ■ By aggregating the telecommunications usage of a larger number of customers, a government -institutional system can make more efficient use of the number of required trunk lines, thus reducing the cost of service. The above items pertain solely to a quantitative estimate of the benefits associated with a government -institutional system. However, qualitative benefits will also be realized. Some specific examples include: ■ An internally operated system can be more flexible and responsive to AL&W's unique needs. R. W. Beck, Inc. ■ An internally operated system can more rapidly respond to AL&W's changing needs. R. W. Beck's report will aggregate the above costs and benefits in order to determine the overall economic feasibility of a government - institutional system. This cost -benefit analysis will also be augmented with recommendations about how to improve the cost -benefit ratio. Task 1-7: Conclusions, Recommendations and Next Steps Based on the findings of tasks 1-1 through 1-6, the R. W. Beck team will develop conclusions and recommendations regarding the possible City use of the Charter Communications Fiber for self -provisioning of services. Recommendations will include services to offer based on efficiency, improved operations and improved service to constituents, as ranked by stakeholders. Included will be a matrix that specifically illustrates internal customer groups benefiting from specific service offerings. The report will also discuss potential barriers to implementing these network services, including departmental and school district decision processes. Finally, if the recommendation is to proceed with the development of the internal telecom system, the R. W. Beck will provide an outline of implementation steps. Task 1-8: Phase 1 Reports and Presentation Following completion of all analyses, R. W. Beck will develop and prepare a Phase 1 Draft Final Report which will include Executive Summary, summaries of the major findings from all tasks, Conclusions and Recommendations, Next Steps and Appendices. The appendices will include the specific task reports for this phase. Five (5) copies of the Draft Final Report and appendices will be issued to AL&W for comment. The Project Manager will serve as the central point of contact for clarification and questions during the review period, although the expert of the subject matter may give specific answers. Following the agreed upon review period, R. W. Beck will make appropriate modifications based on the review and issue the Final Report. AL&W will receive 15 copies of the Final Report plus five (5) copies of the Appendices. At the conclusion of the study, all reports, appendices and presentations will be made available to AL&W in electronic format. At AL&W's convenience following the issuance of either the Phase 1 Draft Report or the Phase .1 Final Report, R. W. Beck will host a conference call with the 'AL&W Team to .review the findings, conclusions and recommendations of Phase 1 and answer any questions. The results of Phase 1 will also be included in the on-site Final Report presentation at the conclusion of Phases 2 and 3 to Phase 2: Wholesale Telecommunications Services Phase 2: Objectives and Approach Another telecommunications approach for AL&W might be the provision of wholesale telecommunications services to those telecommunications participants that are offering or could provide retail services to Azusa residences and businesses. It appears (legal analyses to verify) that the City will be able to use the Charter dark fiber for this commercial purpose beginning in 2003, although it is probable that the network will need to be enlarged to meet carrier and provider needs. The purpose of the phase is to evaluate the opportunity to provision the full spectrum of wholesale telecommunications services. This evaluation includes identification of potential customers, needs analysis and subscription interest, high-level capital and operations cost development, identification of any legal or regulatory barriers, a financial analysis and appropriate recommendations on services to offer, markets to serve and steps to implement. Many cities have taken the approach of offering wholesale rather than retail telecommunications services, ranging from dark fiber to bandwidth services, and including rental of city facilities for cell tower locations. The cities' motivations for using this approach include the desire to encourage more telecommunications choices and lower prices for constituents, thus increasing both economic development and quality of life. Some.cities have taken this approach because quantitative research has shown that sufficient customers are not willing to buy services from the city, or, the city or municipal utility does not want to undertake the financial risk of a retail operation. These later cases prove that there is a strong relationship between the retail Phase 3 portion of this project and this phase. R. W. Beck brings to this phase very specific experience in the market assessment and development of wholesale telecommunications systems, including a major project in the LA Basin. Our familiarity with the telecommunications players in the Los Angeles area, as well as the wholesale approaches workable for municipal utilities will benefit Azusa with more realistic and rapid analyses. Recent experience that will aid in the completion of this phase includes the following: ■ For a confidential client in Los Angeles, R. W. Beck evaluated the opportunity to develop an extensive wholesale bandwidth network. This included evaluation of the underlying market demand that drives carriers and retail service providers, development of a map of the potential network, identification and interviews with potential carriers to determine interest and a complete pro forma analysis. ■ For a confidential carrier client, the proposed Project Manager for this Azusa project evaluated the potential reach of the Los Angeles Department of Water and Power network to targeted R. W. Beck, Inc. I I high-speed Intemet and data customers based on criteria typically important to carriers. ■ For Lafayette Utilities System, R. W. Beck conducted both retail and wholesale analyses, which resulted in the LUS decision to offer wholesale bandwidth services. R. W. Beck identified and interviewed potential carrier and partner candidates and developed a complete pro forma analysis and tool for the venture. We are currently assisting LUS in the recruitment of carrier and retail service provider customers for the bandwidth system. ■ A technical team member assigned to this project, Dale Smith, has designed the fiber optic system planned for use in provision of wholesale services in Eugene Oregon. Task 2-1: Identification of Potential Wholesale Services Wholesale services are those component services that retail telecommunications and broadband service providers use in the production of their own services. Some examples of wholesale services currently being provided or considered by municipal utilities include: ■ Dark Fiber ■ Bandwidth Services ■ Open Access ■ Interconnection between carrier facilities (e.g., connection of cell towers) ■ Connection of carrier or ISP to a ILEC Central Office or other POPS ■ Connection of a carrier or ISP to the Intemet ■ Connection between a carrier POP and an end-use customer, including drop construction ■ Use of City facilities for cell towers, virtual location or other for other facilities R. W. Beck will conduct secondary market research to identify the various wholesale services that could be offered to customers. The three enabling architectures to be specifically explored are metropolitan area network (MAN), fiber to the curb (FITC) or fiber to the home (FTTH). Task 2-2: Identification of Potential Wholesale Customers A key component of assessing the: communications and media opportunity is understanding the market landscape. The market players have the potential to be competitors, partners or customers of utility fiber optic services. For example, in the LA Basin study, we found that an ILEC that normally would have been considered a competitor for 12 wholesale traffic was in fact a potential customer for specific routes due to shortage of facilities. Task 2-2 consists of secondary market research to identify and define customer segments and specific candidates for wholesale services provided by AL&W. R. W. Beck will identify, by company name, the carriers, competitive access providers (CAPS), cable TV operators, Internet Service Providers (ISPs), long-haul fiber providers, wireless and fixed wireless providers, and applications service providers (ASPS) that would be possible customers of AL&W. R. W. Beck will begin this process with the list of over 100 carriers and service providers found to be operative in the LA area from previous research. The current operation of these entities will be verified by telephone. P lease note that our experience is that not all of these entities will be reachable and that, in fact, some are shell companies set up for other purposes than direct offering of telecommunications services to customers. Secondary research will also be done to determine any additional potential customers. In some cases, large multiple location companies may also look like wholesale customer due to their use of bandwidth or dark fiber to connect various buildings within a city for their own self -provisioning of services. R. W. Beck will examine the business locations of major companies to note the possibility of these networks. The result of this task will be a list of known telecommunications and broadband service providers (including ISPs and ASPS) known to be operating in the LA area and associated contact numbers and addresses. This document will be included in the Final Report for Phases 1 and 2 and will be used in Task 2-4. Task 2-3: Wholesale Service Competitive Analysis R. W. Beck will use the information gathered for Task 2.2 to conduct secondary research on major competitors' product and service offerings. The competitive assessment will include identification of potentially competitive companies, their current product offerings, publicly available pricing, and the companies' respective target markets in the area. To ensure relevance, R. W. Beck will discuss the proposed competitors to be analyzed with AL&W staff to be sure that all major players have been covered. The competitive analysis, consisting of a competitive analysis framework, list of potential competitors and analysis of the competitive market for wholesale telecommunications services in Azusa, will be included in the Phase 2 & 3 Final Report. Task 2-1: Estimate Wholesale Service Market Size The size of the wholesale market is highly dependent on the underlying retail demand for telecommunications, video and broadband services and the business plans and financial well being of the providers of these R W. Beck, Inc. 13 services. In the current economy, it is possible that telecommunications providers that previously would have built their own facilities will now lease facilities, and current leasers may look for ways to cut overall operational costs through lower priced lease rates. Estimation of the total size of the Azusa market for wholesale telecommunications services will be done from two perspectives: ■ Global Top -Down View — R. W. Beck will estimate the total telecommunications and broadband services expenditures in Azusa and estimate the total proportion of that revenue that could be associated with wholesale services. Please note that the majority of services belong to incumbent facility based providers, so much of the total market is not addressable. Also, these estimates should be considered very high level, as they will be based on state or national data, apportioned to Azusa by market size. ■ Venture Specific View — R. W. Beck will initiate contact by mail, followed by telephone call, with all operational potential wholesale customers as identified in Task 2.2. Two call attempts will be made to each prospective customer. These potential customers will be asked such questions as: ■ Do they currently serve the Azusa market? ■ How do they access this market today? ■ What are their unmet needs that could be satisfied by the proposed Azusa network? ■ Estimated changes in demand over the next 10 years? ■ Likelihood to purchase wholesale services from AL&W vs. competitors? ■ Required interconnection points (e.g., central office or POP collocation)? These responses will be used to estimate demand across all like entities (segment analysis). Please note, past experience indicates that only a small number of potential wholesale customers will agree to be interviewed. A map or description of the conceptual network will be required for the discussion. The results of this task will be documented in the Phase 2 & 3 Final Report and will be used in the following tasks. Documentation will include a summary of each individual interview. Task 2-5: Estimate AL&W Market Share Based on the results of both the global and venture specific estimates, R. W. Beck will estimate the Market Share for AL&W wholesale services, both as a percentage of the total base of wholesale services (including self -provision by incumbent facility carriers such as Verizon) and as a percentage of the competitively available wholesale market. 14 Growth estimates in the underlying market will be made based on national or regional estimates. Changes in Market Share will be shown as scenarios based on potential adoption curves over time. The results of this analysis will be reported in the Phase 2 & 3 Final Report. They will also be used as the revenue basis for the Financial Analysis in this phase. Task 2-6: High Level Infrastructure and Operations Costs The construction of a fiber based telecommunications infrastructure involves much more than the actual transmission equipment. The overall costs are directly related to the number and kinds of services the network will offer to its customers. Paramount among these items is a clear and focused list of potential services. Also critical is an understanding of the required operational resources needed to accurately provision, provide and manage these services. The data from the service identification and demand analysis, as well as from the initial network review in Phase 1 and legal review of the franchise contract to determine ability to use existing fiber, will serve as input to a preliminary network design for wholesale services. This high-level design will address such requirements as: ■ Layer 2 and Layer 3 transmission devices ■ OSS and provisioning process ■ IADs and Voice/Data Gateways ■ NOC Construction and Procedures ■ Redundancy and Disaster Avoidance (eg SONET Rings) ■ Maintenance We will then produce a multi-level construction estimate, assigning a "root base" cost to the critical or essential portions of the items listed above. Added to this will be optional "sub -designs" that represent the specific wholesale products desired by customers, such as: ■ Dark fiber leasing ■ Bandwidth management ■ Interconnection.Services ■ Fiber build Technology components could include: ■ Open access fiber backbone ■ Municipal are network (MAN) ■ Fiber to the curb (FTTC) ■ Fiber to the home (FTTH) R W. Beck, Inc. 15 Engineering and design must adhere to current and emerging industry standards in order to provide compatibility and interoperability to target markets (i.e. common industry standards and procedures such as those propounded by NEBS and IEEE). High-level design descriptions and infrastructure and operations cost estimates will be included in the Phase 2 and 3 Final Report and used in the following Financial Analysis. Task 2-7: Identify any Legal and Regulatory Barriers This task is a combined task with Task 3-7 for Retail Services. Please see Task 3-7 for a detailed discussion. The results will be provided to AL&W immediately upon completion and will also be included in the Phase 2 & 3 Final Report. Task 2-8: Conduct Financial Analysis The cost/benefit and financial analyses required by Phase I are based on serving the telecommunications needs of the public sector. In Phase 2, those previous models are greatly expanded to provide a more comprehensive forecast of the economic considerations associated with serving the wholesale market. Here, we integrate market research into financial analysis to produce a ten-year pro forma (financial forecast) that includes a Cash Flow Statement, Income Statement and assessment of the qualitative benefits that would be realized by AL&W's stakeholders. Together, these documents provide AL&W with the right financial information to make fact -based decisions on whether to stop at Phase 1 (serving only the public sector) or at Phase 2 (serving the public sector and/or the wholesale market). These forecasts will provide AL&W with substantive insights into its key questions: ■ When will the wholesale business break even? ■ How much will AL&W need to initially invest to make this business work? ■ What is AL&W's return on investment over ten years? ■ What is the forecasted debt service coverage ratio (DSC)? ■ How much financial risk is associated with serving the wholesale market? ■ How much revenue would be provided to the City's General Fund? ■ What are forecasted revenues, prices, capital and expenses? ■ Who are AL&W's future customers? R. W. Beck's financial analyses are specifically tailored to assess a municipality's entry into telecommunications. Cases where we have specifically analyzed municipal wholesale telecommunications include: 16 ■ Los Angeles Basin — Completed extensive dark and lit fiber market research and financial forecasts for providing wholesale services throughout the Los Angeles basin for an alternative provider. This analysis included the identification of over 100 candidate wholesale customers in the greater Los Angeles area. ■ Eugene, Oregon (EWEB) — Completed market research and financial forecasts for providing retail (universal service) and wholesale telecommunications services. This analysis gave EWEB the confidence to move slowly into providing wholesale services. This was the right solution for its unique business environment. ■ Lafayette, Louisiana (LUS) — Completed market research and financial forecasts for public sector, retail, wholesale and partnership scenarios. Based on our analysis, LUS is currently offered open access, wholesale services to its community. ■ Grant County, Oregon — Completed market research and financial forecasts for provisioning telecommunications services to the public sector, retail and wholesale markets. Today, Grant County is widely touted as the seminal case of fiber to the home (FTTH). R. W. Beck's proposed pro forma will include a cash flow for each year of a 10 -year planning horizon. Key line items will include: ■ Number of customers by service by year ■ Price by service by year ■ Gross revenue by service ■ Capital costs and debt service ■ Operating costs ■ Net income (NI) ■ Net present value of net income (NPV of NI) ■ Return on investment (ROI) ■ Debt service coverage ratio (DSC) ■ Financial break even While not included in AL&W's requested scope of work, it should be noted that R. W. Beck's financial analyses have been previously used by the investment community to support a long list of municipal projects. Task 2-9: Recommendations, Conclusions and Next Steps Based on the findings of Tasks 2-1 through 2-8, as well as input from both the quantitative survey and the financial analysis of Phase 3, the R. W. Beck team will develop conclusions and recommendations R. W. Beck, Inc. 17 regarding the viability of a wholesale telecommunications capacity service. Recommendations will include services to offer, segments to target and revenue and profit expectations. The report will also discuss potential barriers to implementing these wholesale network services. Finally, if the recommendation is to proceed with the development of a MAN for provisioning wholesale services, R. W. Beck will provide an outline of implementation steps. These recommendations, conclusions and next steps will be issued in the Draft Report for Phases 2 & 3 and will be specifically discussed with AL&W prior to issuance of the Final Report. Task 2-10: Reports and Presentations The final reports and presentation for Phase 2 will be completed jointly with Phase 3. Please see Task 3-10 for more information on the proposed draft report, client input, final report and presentation process. Phase 3: Retail Telecommunications Services Phase 3: Objectives and Approach In this final phase, The City of Azusa wishes to consider offering retail telecommunications, video and broadband services, including expanded city applications. ,Services would be provided through a MAN, extended to the end user via fiber, hybrid fiber coax (HFC) or a broadband wireless network. The purpose of this phase is to evaluate and quantify the opportunity and risks for entering into these retail telecommunications and broadband services for an entry decision. This evaluation includes identification of target markets and services, competitive analysis, quantification of demand, high-level capital and operations cost development, identification of any legal or regulatory barriers, a financial analysis and appropriate recommendations on services to offer, markets to serve and steps to implement. As evidenced by the many recent failures of CLECs and broadband providers, the provision of retail telecommunications, subscription television and broadband services in competition with current providers come with significant risks. The most. common failure is for new ventures to not live up to expectations for market penetration and revenue. In telecommunications, a realistic understanding of demand levels and the time required to achieve market penetration is the single most important part of the feasibility study. R. W. Beck provides special focus to quantifying market potential by conducting a very thorough quantitative study designed to bring an understanding of all facets of demand. The survey instrument and analysis methods are designed in a way to be input into our demand estimation model, which also takes into consideration the results of the Competitive Analysis. The result is a 10 -year demand estimate based on a R. W. Beck developed methodology, which has been accepted by such Is telecommunications venture investors as Bank of America and GE Capital. Our demand and revenue model is fully integrated into the Financial Model to give AL&W a complete view of its retail telecommunications, video and broadband opportunity. Different lines of business can be examined to find the best financial combination. This model has been used for over 20 venture analyses. Task 3-1: Identify Target Markets Final identification of target markets (this task) and services to offer (Task 3-2 below) is an iterative process. Initial information is needed from market research in order to understand what products the network and operations are to support and what client groups the network must reach. However, after costs and revenues are combined in the Pro Forma (financial analysis), the choices of markets and services are often narrowed and refined to achieve a profitable combination. In this fust iteration, R. W. Beck will identify market segments for typical combinations of retail telecommunications, subscription television and broadband services that could be provided by AL&W. In conjunction with Task 3-6 (Infrastructure Costs) the location of these target markets will also be considered in the definition. Task 3-2: Identify Enhanced Services from City Based on secondary research and the R. W. Beck team's experience with ILECs, CLECs, other municipalities and other municipal utilities, we will identify a "long list" of potential services to be offered by the City. This will include conventional retail services such as voice telephone, long distance, dial-up Internet, high-speed Internet, ISP services (Web hosting, Web design, encryption, etc), subscription television (including pay for view, expanded packages, etc.) and services for the City and school system to offer their constituents. Our sources of information will include secondary research of publications and articles, interviews with utilities and municipalities about services offered using advanced telecommunications technology, our direct experience with in assisting municipalities and municipal utilities in developing online services, and an R. W. Beck exclusive study of city and municipal utilities across the nation detailing online services and functionality offered to constituents. R. W. Beck will categorize this list into services immediately possible to offer with the advanced network, value added services for later implementation, and a future list for which more extensive work is required for implementation. This list will be discussed with AL&W via a conference call, and services will be then selected for testing in the quantitative research. Both the categorized long list and the test list and description of services will be included in the Phase 2 & 3 Final Report. R. W. Beck, Inc. 19 Task 3-3: Competitive Analysis This task would build from Tasks 2-2 and 2-3 of Phase 2, adding an analysis of the retail offerings of the local market players in Telecommunications, Internet, Data and Subscription Television. This will include products, pricing where available and target market. The Competitive Analysis, consisting of a competitive analysis framework, list of potential competitors and analysis of the competitive environment for retail telecommunications, subscription television and Internet services in Azusa, will be included in the Phase 2 & 3 Final Report. Task 34: Conduct Focus Groups (Optional) This task has been designated an Optional Task and can be found in the Scope Exclusions and Addenda Section. The reason the Retail Services focus groups have been excluded is that it is our experience that enough is known about the telecommunications market to construct the quantitative questionnaire and that the focus groups will not serve enough additional benefit to warrant the expense. Task 3-5: Conduct Quantitative Research This task consists of primary market research with residential and business customers. The objective of the proposed market research is to assess market potential for communication and video services provided by AL&W. This survey will be carefully constructed to produce data proven to be appropriate for developing demand estimates that can be used both for City decision-making and for the financial community should the City seek financing for this venture. Areas of inquiry will include: ■ Current usage of telecommunication services (Internet, cable TV, data, and voice). ■ Satisfaction with current telecommunications products and providers. ■ Likelihood to buy telecommunication services (High-speed Internet and data, Voice over IP) from a competitive provider at different price levels. ■ Criteria for selection of a telecommunications provider and provider preferences. ■ Attitudes toward AL&W as a telecommunications provider. The residential survey instrument will also include questions to determine the types of cable TV programming desired as well as interest in Pay -per -View and Video on Demand services. 20 Survey Method R. W. Beck proposes to design the study, develop the survey instruments, recruit and manage the survey vendor. The survey will be conducted via telephone interviews of 16 to 17 minutes in length. Three hundred (300) residential and 200 business interviews will be completed giving a sampling error +/- 5.6% and +/- 6.7%, respectively, at the 95% confidence level. MARKET: AZUSA, CALIFORNIA INTERVIEWS AND SAMPLING Group # of Interviews Sample Frame Customers 300 Random sample from customer rolls Commerical/Business 200 Random sample from Customers customer rolls Questionnaire R. W. Beck will develop the survey instruments. AL&W management will have the opportunity to give input to, and approve the questionnaires to ensure all information needs are met. The research vendor will be responsible for conducting the telephone interviews and for production of the statistical tables for analysis. Statistical analyses will include frequencies and cross -tabulations. Sample Selection AL&W will provide a list of its residential and business customers to R. W. Beck in electronic format. Each list will be sampled by the research field operation to conduct interviews with a random sample of entities and consumers. Tabulations Frequency tabulations (number and percentages) for all questions will be performed. In addition, cross -tabulations of all questions will be provided for up to 6 demographic or attitudinal variables that will be used to analyze the responses to the remainder of the survey. Analysis of Results The R. W. Beck Marketing team will evaluate survey results. This will include analysis of customer satisfaction, competitive positioning, purchase intent from AL&W, and new product offering penetration estimates adjusted for survey effect. Deliverables The following deliverables will result from the project: R W. Beck, Inc. 21 ■ Focus Group Interview Guides (consumer and business) ■ Video and audio tapes of Focus Groups ■ Competitive Analysis framework ■ Competitive Analysis proposed companies ■ Survey instruments ■ Final Report, summarizing the analysis and conclusions (five copies) ■ Detailed Findings Appendix (statistical tables — two copies) Task 3-6: High Level Infrastructure and Operations Costs The data from the target market identification/assessment as well as the City of Azusa Phase I billing and contract review (municipal, utility, education services inventory) will detail the appropriate retail service offerings. Services offerings may range from: ■ Basic telephony services (residential, small business) ■ High-speed access and transport (e.g. Northrop Grumman, University) ■ Metropolitan Area Network Services (Unified School Districts) ■ Telemetry services (i.e. automatic meter reading, load management) ■ CATV and Video on Demand ■ High -Speed Internet Technology components could include: ■ Fiber ■ Hybrid fiber coax ■ Wireless ■ Layer 2 and Layer 3 transmission devices ■ IADs and Voice/Data Gateways Operational Support Systems must address: ■ NOC Construction and Procedures ■ OSS and provisioning process ■ Billing ■ Customer Service ■ Maintenance Design, specification and cost estimates will utilize common industry standards and procedures. All of these services represent both 22 incremental costs (capital and operational expense) as well as incremental revenue. It will be the goal of the engineering design to develop a platform that allows for initial service offerings to be followed by successive new product introductions. The following results of this task will be included in the Final Report: ■ Diagrams illustrating how the network will be deployed ■ Cost estimates for purchase and management ■ Description of process and staff required to run system. Task 3-7: Identify Legal and Regulatory Barriers R. W. Beck's telecommunications legal firm for this project, Cooper, White and Cooper of San Francisco, will summarize in a written report the applicable federal and state legal and regulatory barriers to market entry and service delivery, and will describe the California Public Utilities Commission licensing requirements and costs. The firm will also review the City charter to ensure City and/or Azuza Light & Water are not prohibited from offering telecommunications services at either wholesale or retail level and will review the Charter Communications Franchise agreement regarding the use of the limited fiber capacity for commercial services. These analyses will cover both retail and wholesale services. This task is a combined task with Task 2-7 for Wholesale Services. The results will be provided to AL&P immediately upon completion and will also be included in the Phase 2 & 3 Final Report. Task 3-8: Financial and Benefit Analysis Market Forecasts The market potential for telecommunications is based on the size of the market opportunity (number of accessible customers), customer dissatisfaction with current services or providers (unmet needs), expressed intentions to switch to a new provider, price sensitivity and competitive positioning. R. W. Beck will translate the market research information obtained in Task 3-5 (Quantitative Market Research) into a forecast for market share and revenue, adjusting for respondents' tendencies to overstate purchase intent in survey research. Ten-year penetration forecasts will be developed for each service category. Business and Financial Model Development As demonstrated in the enclosed resumes, R. W. Beck has had a great deal of experience in creating business models and pro forma analyses that are used to support the needs of the investment community. Our proposed pro forma will include a cash flow for each year of a ten-year planning horizon. Key line items will include: ■ Number of customers by service by year R. W. Beck, Inc. 23 ■ Price by service by year ■ Gross revenue by service ■ Capital costs and debt service ■ Operating costs ■ Net income (NI) ■ Net present value of net income (NPV of NI) ■ Return on investment (ROI) ■ Debt service coverage ratio (DSC) ■ Financial break even Since the needs and circumstances of AL&W are inherently unique, R. W. Beck will generate a pro forma that is specific to AL&W, and not use an "off the shelf' model. Task 3-9: Recommendations, Conclusions and Next Steps Based on the findings of Tasks 3-1 through 3-8 (including iterations of service combinations based on financial findings), the R. W. Beck team will develop conclusions and recommendations regarding the viability of various lines of retail telecommunications, subscription television and broadband Internet services. Recommendations will include services to offer, segments to target and revenue and profit expectations. The report will also discuss potential barriers to implementing these retail network services, including anticipated competitive reaction and legal/regulatory issues. Tradeoffs of wholesale versus retail entry strategy (and the variety of associated business models) will be discussed. Finally, if the recommendation is to proceed with the development of retail services and supporting network, R. W. Beck will provide an outline of implementation steps. These recommendations, conclusions and next steps will be issued in the Draft Report for Phases 2 & 3 and will be specifically discussed with AL&W prior to issuance of the Final Report. Task 3-10: Reports and Presentation Following completion of all analyses, R. W. Beck will develop and prepare a Draft Final Report for this phase which will include Executive Summary, summaries of the major findings from all tasks, recommendations, and appendices from Phases 2 & 3. The appendices will include the specific task reports for this phase. Five (5) copies of the Draft F"mal Report and appendices will be issued to AL&W for comment. The Project Manager will serve as the central point of contact for clarification and questions during the two-week AL&W review period, although specific answers may be given by the subject matter expert. 24 Following the agreed upon review period, R. W. Beck will make appropriate modifications based on the review and issue the Final Report. AL&W will receive 15 copies of the Final Report plus five (5) copies of the Appendices and two (2) copies of the Market Research Statistical tables (the latter bound separately). The Draft and Final Reports will look across all three phases in the formulation of conclusions and recommendations. The Executive Summary will specifically provide recommendations on AL&W's most advantageous strategy and positioning in telecommunications, including retail vs. wholesale roles, markets to serve, products to offer and overall entry strategy. Any impact of these recommendations on the previously issued report on Phase 1 — Government and Institutional Network, will also be discussed. At the conclusion of the study, all reports, appendices and presentations will be made available to AL&W in electronic format. At AL&W's convenience, R. W. Beck will make an on-site PowerPoint presentation of the results of all three project phases. Services to be Provided by AL&W With regard to the performance of work by R. W. Beck, we request that AL&W provide the following services or information: ■ A single point of contact for purposes of information collection and study coordination. ■ Timely review and approval of the survey questionnaires and interview guides, and drafts. ■ Other information as specified in Section J, Data Request. R. W. Beck, Inc. 25 PHASE 1—GOVERNMENTAL AND INSTITUTIONAL FIBER NETWORK Task Objective Steps Deliverables 1. Identify City, School and Public a. Obtain current lists from sponsor, focusing on persons with telecommunications List of stakeholders and city/school constituencies represented 1 Stakeholder Input Sector Stakeholders responsibility. b. Obtain organization charts to determine all city and scirool departments and locations and Contact Information for stakeholders List of stakeholders willing to participate in study identify uncovered departments. Reasons for non-padicipallon, if any. c. Brief telephone Interviews with those with telecom responsibilities to verify departmental coverage and arrange Interviews. Obtain additional names if required. 2. Determine current and future needs a. Author pre -Interview letter on AL&W stationary giving preview of Interview, asking for Pre -Interview letters of these stakeholders inclusion of representative users in the interview, and requesting one -month's bill (see Interview Guide below). Letter to be sent by AL&W. b. Conduct interviews with telecommunications managers and representative users. c. Summarize results for use in Task 2 and 3 1. Determine the existing services and a. Obtain one month's telecommunications bills for all city departments and the school district. 2. _ . _ Current Inventory amounts paid by City departments b. Perform bill analysis to determine potential savings for existing services. Analysis and School District. 2. Determine capabilities and a. Examine location and capacity capability of existing fiber network Summary of existing system availability and capabilities (input limitations of existing Charter fiber b. Examine all other telecommunications and broadband equipment owned by the city and to next steps) available for City use and schools. . . recommend additions/modifications c. Based on physical examination and bill analysis, determine if a different high-level network plan using Charter fiber could provide greater functionality, more efficiency and/or lower cost. Identify and prioritize a. Identify current service needs based on Task 1.2 list of telecommunication services for city and school use and concept testing. List include services to school use 3 peed $ems for telecommunications services for city b. Based on secondary research, Interviews and experience, develop list of additional service vi replace existing services via self -provided network plus Public Sector and school stakeholders opportunities additional service opportunities.c. Create prioritized Ilsl of services for use in focus groups d. Review list with AL&W T:\Telewm P *povl�\3P-16]3 Fi�ufP 1 Teek Summery Cha PHASE 1— GOVERNMENTAL AND INSTITUTIONAL FIBER NETWORK Task Objective Steps Deliverables 4 Obtain stakeholder input to AL&W a. With assistance of telecommunications managers, obtain list of likely 'user' participants for Letter to focus group participants Service Concept Testing proposed services focus groups. Interview Guide (Optional — not Included b. With AL&W assistance, obtain city approval for attendance at focus group during work hours Focus Group tapes In the Initial contract) (except classroom personnel) Focus Group Report and Analysis (to be included In final 'report) c. Author explanatory letter to potential participants requesting participation to be sent by AL&W. d. Arrange city facility for focus group and recorders (if required) e. Conduct focus groups f. Complete analysis g. Preliminary recommendation of prioritized new services for consideration 5 Develop high-level network design and a. Obtain current topological maps of the Infrastructure Diagrams laying out how network will be deployed Infrastructure and determine network and operational b. Determine network requirements to deliver prioritized services Cost estimates for purchase and management Operations Costs Costs c. Produce drawings and other documentation for purchase, installation, delivery and Description of process and staff required to run system. maintenanceloperations of these services. 6 Identify the benefits and costs of a. Develop Financial Model on Excel Quantitative and qualitative assessment of the benefits and Financial Analysis serving the public sector b. Review AL&Ws existing needs and cost of service to assess savings costs c. Translate focus group data Into unmet needs J. Integrate above data Into costlbenefil analysis J Synthesize Study Output into a. In team meeting of all disciplines, discuss stakeholder, technical and financial findings and Conclusions, recommendations and Next Steps sections of the Concluslons, conclusions, recommendations and agree upon recommended course of action. Final Report Recommendations and steps to Implement. b. Review initial recommendations with AL&W Na conference call and obtain Input Next Steps c. Develop multkfunctlonal action plan (next steps) to implement course of action. 8 Develop and Issue draft and final a. Develop draft report, including technical appendices Phase 1 Draft Report Final Report & reports. Review findings in a b. Circulate draft report to AL&W for comment (t week) Phase 1 Final Report Presentation conference call. c. Modify final report as appropriate and Issue as Final Report Conference call presentation of Report Results d. Develop and schedule final presentation Copies of presentation e. Deliver final presentation via conference call. TATelaom Pmlroee1.0 .UP4677)R.Uhme I Teak Summery ChWAM PHASE 2— WHOLESALE TELECOMMUNICATIONS SERVICES Task Objective Steps Deliverables 1 Identify potential customers of a. Search secondary sources to develop a list of wholesale product offerings List of services for MAN architecture Identification of Potential wholesale services b. Examine product offerings of CAPs and municipal utilities offering wholesale bandwidth List of services for FTC architecture Wholesale Services services List of services for FTTH architecture c. Compile list of potential wholesale offerings 2 Identify potential customer segments for a. Begin with previously developed R. W. Beck list of over 100 retail and wholesale List of names of carers, cable TV operators, ISPs, ASPS, Identification of Potential wholesale services telecommunications providers In the LA area. long-haul providers, wireless and fixed wireless providers that Wholesale Customers b. Screen list for those no longer in business or not offering services in or though Azusa via may be prospects for AL&W services brief telephone survey. c. Search Internet and other secondary sources to identify any now carriers, cable TV operators, ISPs. ASPS, long-haul providers, wireless and fixed wireless providers. Also include those prospects identified by AL&W and other area municipal utilities offering wholesale services. it. Identify mul&location companies that may have wholesale needs. . ..I e. Finalize list of wholesale prospects and categorize by segment and product now. 3 Identify wholesale product and service a. Research secondary sources to develop a list of wholesale product offerings currently List of names of wholesale providers and their respective Wholesale Service offerings available In the market, including pricing and target markets where available. product offerings. Competitive Analysis b. Analyze findings for Implications toAL&Ws market entry. Summary of Implications to AL&W market entry. 4 Estimate the dollar sae and number of a. Estimate the total retail market and wholesale share for telecommunications and broadband Summary of survey findings , Estimate Wholesale potential customers for wholesale services in Azusa Estimate of market size for wholesale services in Azusa over Service Market Size services In Azusa. b. Send letter and description of potential offerings (including map of hypothetical network) to 10 years. prospects. c. Follow up letter with brief survey to determine needs and possible interest. d. Determine the sae of the addressable market for wholesale services provided by AL&W. 5 Estimate probable share of wholesale a. Based upon survey in Task 24, estimate the market demand and revenue from a wholesale High-level demand and revenue estimates for AL&W Estimate AL&W Market market obtainable by AL&W over 10 operation. wholesale network services. Share year period b. Structure output for use in financial model 6 Develop high-level network design and a. Obtain current topological maps of the infrastructure Diagrams laying out how network will be deployed Conceptual Network and determine network and operational b. Determine network requirements to deliver prioritized services Cost estimates for purchase and management Costs costs for commercial wholesale network c. Produce drawings and other documentation for purchase, installation, delivery and Description of process and staff required to run system. and business. mairdenanceloperations of these services. T:%-r0jmm Pmposh\A=n .16]3 FmUhss 2 Teak Snunery Chm dm PHASE 2 —WHOLESALE TELECOMMUNICATIONS SERVICES Task Objective Steps Deliverables 7 Determine IegaUregulatory barriers Complete federal and state legal and regulatory review by fine specializing in telecommunications Written rt both includedhase time 2 & 3 Final Report and Identify Legal and which may Impact market entry or and broadband legal and regulatory issues. ofin it Issued cem separately P Regulatory Barriers operation (Note: Joint task with Task 3.7) 8 Create a financial forecast (pro forma) a. Translate focus group/market research data into a demand forecast Financial forecast (Cash Flow and Income Statement) for serving the public sector and/or the wholesale market. Conduct Financial to quantitatively support decision b. Create a forecast for pricing services over len-years Qualitative assessment of benefits to AL&W's stakeholders Analysh making c. Create a ten-year Cash Flow and Income Statement In Excel d. Assess the qualitative benefits to AL&W's stakeholders g Synthesize Study Output into a. In team meeting of all disciplines, discuss stakeholder, technical and financial findings and Conclusions, recommendations and Next Steps sections of the Conclusions, condusions, recommendations and agree upon recommended course of action. Final Report Recommendations and steps to implement. ti. Review Initial recommendations with AL&W via conference call and obtain input Next Steps c. Develop multi -functional action plan (next steps) to Implement course of action. 10 Develop and issue draft and final a. Develop draft report, including technical appendices Combined Phase 2 & 3 Draft Report Reports and reports and present findings. b. Circulate draft report to AL&W for comment (1 week) Combined Phase 2 & 3 Final Report Presentations c. Modify report as appropriate and issue as Final Report On -she presentation of Report Results d. Develop and schedule final presentation Copies of presentation e. Deliver final presentation T.\'Mao, PmpweJ�M .VP -1673 Fi.Hhw 2 Tuk Summuy Chrt PHASE 3 — RETAIL TELECOMMUNICATIONS SERVICES Task Objective Steps Deliverables 1 Identify potential market segments to a. From examination of existing municipal and CLEC telecommunications and broadband List and description of possible customer segments for retail Identify Target Markets serve. businesses, develop the Initial view of customer segments and sub -segments. telecommunications, subscription television and broadband b. Qualify segments based on probable sizing In Azusa Market. services. 2 Identify comprehensive list of potential a. Research secondary sources to develop a list of potential retail product offerings. List of potential services to be offered by the AL&W Identify Enhanced services b. Categorize services for appropriate Initial introduction versus value-added product line Services from City extensions or futuristic services. 3 Identify retail product and service a. Search secondary sources to develop a list of retail product offerings currently available in List of names of retail providers and their respective product Competitive Analysis offerings of existing providers market, including current pricing and apparent customer target offerings. b. Analyze competitive environment—curent and probable changes with AL&W entry. Summary of competitive environment for retail services in Azusa 4 Conduct optional qualitative a. Develop interview guide Interview guide Conduct Focus Groups assessment of service offerings b. Develop sampling plan for participants (Optional — not included c. Recruit participants Screening guidelines, Detailed List of participant in the Initial contract) d. Conduct focus group demographics e. Analyze results Findings and recommendations 5 Assess market potential for a. Design survey Residential and business versions of questionnaire Conduct Quantitative communication and video services b. Obtain sample Research pmvided by AL&W. c. Field survey List of potential respondents d. Analyze data Frequencies and cross -tabulations of data e. Prepare report Findings and recommendations S Develop high-level network design and a. Obtain current topological maps of the infrastructure Diagrams laying out how network will be deployed Conceptual Network and determine network and operational b. Determine network requirements to deliver prioritized services Cost estimates for purchase and management Costs costs for commercial wholesale network c, Produce drawings and other documentation for purchase, Installation, delivery and Description of process and staff required to run system. and business. maintenance/operations of these services. 7 Determine legal/regulatory barriers, Complete federal and state legal and regulatory overview by firm specializing in Written report both included in Phase 2 &3 Final Report and Identify Legal and which impact market entry or telecommunications and broadband firms operating in California. also issued separately at time of completion Regulatory Barriers operations. (Note: Joint task with Task 2-7) & Create a financial forecast (pro forma) a. Translate focus group/market research data into a demand forecast Financial forecast (Cash Flow and Income Statement) for Financial and Benefit to quantitatively support decision b. Create a forecast for pricing services over ton -years serving the public sector, wholesale and/or retail markets. Analysis making c. Create a ten-year Cash Flow and Income Statement in Excel Qualitative assessment of benefits to AL&W's stakeholders d. Assess the qualitative benefits to AL&NPs stakeholders TATelewm PpbA=.\3P4613 FimmThex 3 Teek Summery Chert PHASE 3 — RETAIL TELECOMMUNICATIONS SERVICES Task Objective Steps Deliverables g Synthesize study output Into a. In team meeting of all disciplines, discuss stakeholder, technical and financial findings and Conclusions, recommendations and Next Steps sections of the Conclusions, conclusions, recommendations and agree upon recommended course of action. Final Report Recommendations and steps to implement. b. Review initial recommendations with AL&W via conference call and obtain input Next Steps c. Develop multi -functional action plan (next steps) to Implement course of action. - 10 Develop and issue draft and final a. Develop draft report, including technical appendices Combined Phase 2 & 3 Draft Report Reports and Final reports and present findings. b. Circulate draft report to AL&W for comment (7 week) Combined Phase 2 & 3 Final Report Presentation c, Modify report as appropriate and issue as Final Report On -she presentation of Report Results for all three phases d. Develop and schedule final presentation Copies of presentation. e. Deliver final presentation covering all three phases TATeleoom Pmpovle�W31?-rb73 FimrThme 3 Tmk Summery Chmtd. EXHIBIT "B" SCHEDULE OF SERVICES SCHEDULES FOR EACH PHASE (ATTACHED) Contract Attachment B Fiber Network Phase 1 •• Governmental and InstGosts Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 weeks 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16117118119 20 21 22 23 24 Task 1 — Stakeholder Identification and Input Task 2 — Current Service and Network Analysis Task 3 — Services for Public Sector Task 4 — Service Concept Testing (optional) Task 5 — High Level Infrastructure and Operati Task 6 — Financial Analysis Task 7 — Conclusions, Recommendations & Next Steps Task 8 — Reports & Presentation Contract Attachment B Phase 2 -- Wholesale Telecommunications Services Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Weeks 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Task 1 — Identification of Potential Wholesale Services Task 2 — Identification of Potential Wholesale Customers Task 3 — Wholesale Services Competitive Analysis Task 4 — Estimate Wholesale Service Market Size Task 5 — Estimate AL&W Market Share Task 6 — High Level Infrastructure and Operations Costs Task 7 — Identify Legal[Regulatory Barriers Task 8 — Conduct Financial Analysis Task 9 — Recommendations, Conclusions & Next Steps Task 10 — Reports & Presentation D - Draft Report C - Client Comments F - Final Report P - Presentation Contract Attachment B Phase 3 -- Retail Telecommunications Servicesweeks Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 —21T22123 1 2 3 4 5 6 7 8 9 10111112113114115116 17 18 19 20 24 kets Task 1 -Identify TariPresentaton Task 2 — Identify EnhServices from City Task 3 — Competitivesis Task 4 — Conduct Foups (optional) Task 5 — Conduct Qive research Task 6 — High Level ucture and Operations Costs Task 7 — Identify LegRegulatory Barriers Task 8 — Financial aefit Analysis Task 9 — Recommen, Conclusions & Next Steps Task 10 — Reports &ntation ' Should AL&W decide to conduct focus group meetings, the schedule for following activities will be postponed by 2 weeks. D - Draft Report C - Client Comments F - Final Report P - Presentation EXHIBIT ."C" COMPENSATION R. W. Beck will provide the services outlined in Exhibit A of this contract based on lump sum not - to -exceed total fee of $164,530. Total fixed fees, including labor and expenses, to complete each phase are tabled below. As requested, the tables on the following pages provide cost breakdown by task. .Azusa Light & Water Telecommunications F ibility Stud Task Not -to -Exceed Lump Sum Fee Phase I—Govemmentaland lnstitutionalFiberNetwork $41,672 Phase 2 — Wholesale Telecanmunications Services $51,068 Phase 3 — Retail Telecanmunications Services $71,790 TOTAL FOR ALL PHASES $164,530 Assumptions ■ Although priced separately, the fixed fees presented above assumes award of all three project phases. ■ For the legal and regulatory issues, we have assumed 25 hours of work divided this equally among Phase 2 and Phase 3. . ■ This fees assume a single kickoff meeting a single on-site presentation for all three phases. Detailed cost breakdowns for each Phase are presented on the following pages. Invoicing City shall compensate Consultant pursuant to section 3.3.3 of this Agreement based on the milestone schedule therein. Consultant shall submit invoices that invoice the lump sum amounts and will provide backup documentation of the hours and costs incurred for the milestone period. The cost breakdowns provided in this exhibit were calculated inclusive of labor, subconsultant charges with administrative markup, and expenses. City s hall c ompensate C onsultant for r eimbursable expenses in an amount equal to the actual reasonable cost incurred plus 10 percent for services of any Subcontractor. Sample reimbursable expenses may include but are not limited to the following: (1) Long distance telephone expenses. RVPUBVIGS544360 (2) Charges for use of computers and computer programs based on Beek's standard rates as of the date of the invoice. (3) Printing and reproduction at the applicable rates as of the date of invoice. (4) Reasonable travel and living expenses for personnel. (5) Rentals, communications, furnishings and utilities for field offices. Other direct expenses related to services furnished. Billing amounts by Consultant for Reimbursable Expenses shall not exceed the lump sutra not -to - exceed amounts listed in Exhibit C of this Agreement as "Expenses" for each Phase of this Project. RVPUBW'GS1544364 2 Task Breakdowns Phase 1— Governmental and Institutional Fiber Network TaskAssigned Hourly Rate Hours Total Charges =let Budgeted Task 1 — Stakeholder Shiflea 113 24 $7,818 Identification and Brodsky 149 24 Input Smith 138 8 Task 2 — Current Service and Feld 200 8 $3,754 Network Analysis Peruse 75 16 Smith 138 8 Task 3 — Services for Public Shiflea 113 4 $2,560 Sector Brodsky 149 4 Eichner 1 125 12 Task 4 — Service Concept Warner 183 0 0 Shiflea 113 0 Testing (Optional Task—Not included in quote) Task 5 — High Level Feld 200 8 $3,937 Infrastructure and Eichner 125 4 Operations Costs Smith 138 16 Task 6—Financial Analysis Brodskv 149 16 $2.344 Task 7—Conclusions, Eichner 125 16 $5,993 Recommendations Smith 138 4 and Next Steps Warner 183 8 Shiflea 113 8 Brodsky 149 8 Task 8 — Reports and Feld 200 2 $5,467 Presentation O'Brien 150 4 Eichner 125 2 Peruso 75 2 Smith 138 2 Brodsky 183 11 113 5 149 6 Phase 1 Labor Cost $31,871 Project Kick -Off and Set-up Warner 183 8 $3,669 Feld 200 8 Expenses $6,132 PHASE 1 TOTAL FEE $41,672 Note: All Administrative and Clerical costs are included within each task RVPII13WGS'544164 3 Phase 2 — Wholesale Telecommunications Services Task Assigned Personnel Hourly Rate Hours Budgeted Total Charges Task 1 — Identification of Potential Wholesale Services Warner Brodsky Feld 183 149 200 8 4 4 $3,296 Smith 138 4 Task 2 — Identification of Potential Wholesale Thompson Shiflea 138 113 2 16 $2,599 Customers Task 3 — Wholesale Services Competitive Analysis Warner Shiflea Thom son 183 113 138 8 12 4 $3,699 Task 4 — Estimate Wholesale Service Market Size Warner Shiflea 183 113 2 24 $5,245 Task 5 — Estimate AL&W Market Share Warner Brodsky 183 149 8 4 $2,031 Task 6 — High Level Infrastructure and Operations Costs Feld O'Brien Smith 200 150 138 20 8 16 $7,099 Task 7 — Identify Legal and Regulatory Barriers Warner Beatty 183 358 1 12.5 $4,324 Task 8 — Conduct Final - Brodsky 149 32 $4,687 Analysis Task 9—Recommendations, Conclusions and Next Smith Warner 138 183 8 8 $3,514 Step Brodsky 149 8 Task 10—Reports and Presentation Feld O'Brien Warner 200 150 183 12 6 32 $12,402 Strifes 113 4 Brodsky 149 12 Phase 2 Labor Cost $48,897 Ex crises $2,171 PHASE 2 TOTAL FEE 1 1 $51 068 Note: All administrative and clerical costs are included within each task Rveuawcs5a+364 q Phase 3 — Retail Telecommunications Services Task Assigned Hourly Rate Hours Total Charges Personnel Budgeted Task 1 — Identify Target Warner 183 8 $2,349 Markets Shiflea 113 8 Task 2 — Identify Enhanced Warner 183 4 $4,411 Services from City Shiflea 113 16 Feld 200 4 Task 3 — Competitive Analysis Shiflea 113 16 $ 1788 Task 4 — Conduct Focus Warner 183 0 0 Grou s (optional) Shiflea 113 Task 5 —Conduct Quantitative Warner 183 4 $5,197 Research Shiflea 113 40 Task 6 — High Level Feld 200 32 $10,669 Infrastructure and O'Brien I50 8 Operations Costs Smith 138 16 Thompson 138 8 Task 7 — Identify Legal and Beatty 358 12.5 $4,558 Regulatory Barriers Task 8 — Financial and Benefit Warner 183 8 $6,177 Analysis Brodsky 149 32 Task 9—Recommendations Warner 183 8 $3,141 and Conclusions and Brodsky 149 8 Next Steps Smith 138 2 Thompson 138 2 Task 10 — Reports and Warner 183 32 $10,309 Presentation Shiflea 113 4 Brodsky 149 12 Feld 200 2 O'Brien 150 6 Phase 3 Labor Cost $48,600 Expenses $23 190' PHASE 3 TOTAL FEE $71,790 Includes $20,800 in expenses to conduct quantitative survey and analysis plus 10% R. W. neck subcontractor tee. Note: All Administrative and Clerical costs are included within each task RvruRwcs544364 5 EXHIBIT "D" CITY'S REQUEST FOR PROPOSAL CONSULTANT PROPOSAL (ATTACHED) _f loorw CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: July 22, 2002 SUBJECT: APPROVAL OF SELECTION OF CONSULTANT TO PERFORM SB 610/SB 221 WATER SUPPLY ASSESSMENT FOR THE PROPOSED MONROVIA NURSERY DEVELOPMENT PROJECT RECOMMENDATION It is recommended that the Utility Board/City Council approve the selection of Hatch & Parent to perform the SB 610 and SB 221 water supply assessment for the proposed Monrovia Nursery Development Project. BACKGROUND The State of California Legislature has instituted the requirement of performing an assessment of the available water supply when a proposed subdivision project containing 500 or more homes is presented to an agency for approval, and the project is subject to the requirements of the California Environmental Quality Act (CEQA). The assessment addresses the availability of sufficient water supply, including water rights, to meet the water demand of the proposed subdivision for twenty years without adverse impact to the local public water system and the population served by the local public water system. FISCAL IMPACT No fiscal impact. The consultant fee for preparing the water supply assessment will be reimbursed by the developer. Prepared by: Chet Anderson, Assistant Director of Water Operations AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 22, 2002 SUBJECT: CONTRACT TO RETAIN A PROFESSIONAL RECRUITMENT FIRM RECOMMENDATION It is recommended that the Utility Board/City Council approve contract with Mycoff & Associates to recruit a replacement for Mr. Bob Tang, Assistant Director of Resource Management, and authorize the City Manager to execute the contract. BACKGROUND With Mr. Bob Tang's departure, it leaves a big void in Azusa Light & Water's management team, but most importantly, in the Power Resource Management of this Department at this critical time as the energy market is just recovering from the devastation of deregulation. With the City's recent experience in recruiting high level management position, it is very difficult to seek out qualified candidates from just the run of mill advertisements. With Mr. Rick Cole, City Manager's concurrence, staff has solicited proposals from three known professional recruitment firms that have the experience in recruiting electric utility executives. They are: The Hawkins Company (Los Angeles), Mycoff &Associates (Denver), and Shannon Executive Search (Sacramento). Professional fee ranges from $12,500 to $25,000, plus expenses. Staff is recommending award of the contract to Mycoff &Associates which happens to be the one with the highest fee. Here are the reasons: (1) Mycoff & Associates specialize in recruiting executive and professional positions for public power agencies. Its past clients included utilities large and small, from east coast to west coast. In southern California, six public power agencies have engaged Mycoff &Associates for its services past and present. Currently it is working with two southern California municipal utilities. (2) Its proposal has a Guarantee which states that "Mycoff &Associate will conduct an additional search for no additional fee should the candidate we recommend terminate employment for any reason other than lack of work, illness, injury, or death within one year of the employment date." FISCAL IMPACT This expense can be covered by salary savings from the position being recruited. Prepared by: J. Hsu TIT R AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 22, 2002 SUBJECT: COST OF SERVICE STUDY RECOMMENDATIONS RECOMMENDATION It is recommended that the Utility Board/City Council approve the fee increases contained herein. BACKGROUND During FY 2002, the City retained the services of Revenue and Cost Specialists, LLC to conduct a revenue and cost analysis and to develop a computerized cost distribution and cost control system for the City for all of its services. The motivation for this study is the need of both the City Council and City staff to maintain the City's services at a level commensurate with the standards previously set by City Council and to maintain effective policy and management control of all City services. All services provided by Azusa Light & Water were included in this study. We have reviewed the consultant's recommendations and have provided our own recommendations which are included in the attached spreadsheet report. Staff has provided a rationale in attached spreadsheet to justify staff recommended fees, where our recommended fees differ with those recommended by the consultant. The Cost of Service Report is being sent with City's agenda packet. FISCAL IMPACT Approval of all staff recommendations would result in small increase of revenue. Since most of the Light and Water services included in the study are already fee based, additional increase will be very moderate. Actual amount of Increase will depend on the amount of services requested and rendered. Prepared by: Joseph F. Hsu, Director of Utilities RECOMMENDED FEE SCHEDULE FOR AZUSA LIGHT AND WATER Ref # Services Existing Fee Cost of Service Study Staff Recommendation Justification Fiscal Impact Recommendation A. CUSTOMER SERVICES 5-105 Processing a new utility account $7.50--Apartment Tum on - $ 27 Tum on - $12 Using average of utilities Moderate increase $10.00 -- all others Meter Read Only - $21 Meter Read On - $ 10 neighboring S-108 Processing delinquent utility bills Delinquent Tum-on: Delinquent Tum-on: Delinquent Tum-on: Extra high charges burden on No change as well as delinquent tum-offs. 7 am - 5 pm - $20 7 AM-5 PM - $30 7 AM - 5 PM - $20 5 PM 12 AM - $75 put customers who are 5 pm - 12 am - $75 12 am - 7 am - $125 5 PM - 12 AM - $100 12 AM - 7 AM - $175 - 12 AM - 7 AM - $125 already in financial Late payment penalty Late Payment Penalty- $7.50 or Late Payment Penalty - $7.50 or despair. $7.50 or 5°/6 of out- 5% of total outstanding balance, 5% of total outstanding balance, standina balance. whichever is qreater. whichever is greater. S-107 Investigation of the possibility that Charge the estimated If it is shown that an individual has Charge the estimated cost of stolen Not an industry will have No change an individual Is using water or electricity cost of stolen water used water or electricity without electricity or water, plus Investigation practice, difficult time to without paying for A. or electricity, plus paying for it, then that person should costs at $25 per hour, plus actual actual costs of be charged the full cost of the costs of materials damaged, collect. material damaged investigation and damages and triple the cost of the estimated usage. $ 250 minimum & WATER of the water pressure at the None 1 free test per calendar year i free test per calendar year Minor change, Moderate increase of a customer. $ 50 per test - each subsequent test, $ 50 per test - each subsequent test no change in refunded if there is a system problem. within the same calendar year, refunded charge 4request If there is a stem roblem. ng and testing of a water meter Charge time and Charge the Fully Allocated Hourly Rates No change from consultant suggestion. Moderate increase equest to Insure its accuracy at material it the meter plus any outside costs if the meter Is Customer's reauest. Is running propertyrunning S-110 Test of the water quality at the Charge the costs of $ 90 per test plus lab costs $ 90 per test plus lab costs Moderate increase request of a customer. outside lab for the test S-111 Perforin a water flow test on request $75 per test $ 205 per test $ 205 per test Estimated $12,000 increase by developers. 8-112 Installation and removal of a temporary $1,000 deposit plus $ 100 per meter plus $ 1,000 deposit $ 150 per temporary meter including - Minor modification Moderate Increase water meter for construction purposes. $5 application fee $ 95 per meter for a move Installation and removal plus $ 1,000 to consultant de osit. sug2estion Page 1 RECOMMENDED FEE SCHEDULE FOR AZUSA LIGHT AND WATER Ref # Services Existing Fee Cost of Service Study Staff Recommendation Justification Fiscal Impact Recommendation S-113 Install a new water meter to allow (see S-114) connection to the CWs water system S-114 Install a new water service to allow Deposit based on No change No change connection to the City's water system. estimate, reconcile based on actual labor, equipment and material S-114 Review the test results and inspect None $ 250 per device $ 250 per device Moderate increase the Installation of a new backflow device. S-11e Annual inspection and review of None$ 80 per device $ 25 per device Overstated work Moderate increase involved. existing backflow devices. S-117 Sale of potable water to commercial, Retail water rates No change No change residential Industrial and other uses. C. ELECTRIC S-122 Pulling and testing of an electric 1 at test in a months - One free test per calendar year. One free test per calendar year. Overstated labor Moderate increase meter on request to Insure its accuracy. no charge. Residential - $150, refunded if the meter Residential - $75, refunded if the meter Is costs • 2nd test in 8 months - Is running fast, running fast. $50 Commercial - $285, refunded if the meter Commercial (three-phase) - $100, Is running fast. refunded if the meter is running fast. Industrial - $420, refunded if the meter is Industrial - $150, refunded If the meter is running fast. running fast. S-123 Reinstallation of a total electric $150 per service $ 340 per service plus materials. $150 per service Minimize hardship No change service at the request of a customer serviceal customers already in despair because the service was disconnected due to non-payment of bills. 5-124 Installation of an additional electric span $150 per installation $ 340 per installation plus materials Allocated labor cost per installation Moderate increase at the request of a customer for a temporary plus materials. seMce. S-125 Installation of a temporary electric $75-averhead <100' $ 340 per installation plus materials for Actual allocated labor costs per More reflective of Moderate Increase service at the request of a customer. $100-underground<50' overhead or underground installation plus materials for overhead the actual costs or underground. 7/18/2002 Page 2 RECOMMENDED FEE SCHEDULE FOR AZUSA LIGHT AND WATER Fe Services Installation of a temporary single-phase transformer at the request of a customer. Existing Fee $1,800 per installatlon Cost of Service Study Recommendation Charge the fully allocated hourly rates for all personnel Involved, plus materials w th a $1 800 minimum. Staff Recommendation Same as consultant suggestion Justification Fiscal Impact Moderate Increase Installationof a temporary three-phase transformer at the request of a customer. $3,500 per Installation Charge the fully allocated hourly rates for all personnel involved, plus materials with a $3,500 minimum. Same as consultant suggestion Moderate increase S-128 Extension of upgrade of electrical service at the request of a customer. Charge actual time and material Charge the fully allocated hourly rates for all personnel involvedplus materials. Same as consultant suggestion Moderate increase 5-129 Providing electric services to the City's Retail Electric tariff No change. No change No change utility customers. S-130 Installation and removal of a banner across a City street for a private group. None $ 380 per banner to recover 50% of the cost of service. No charge to civic agencies Pa�9 a�6lics of No change ower 7/18/2002 Page 3 Azusa Utility Board Meeting July 22, 2002 AZK! LIGHT AZUSA LIGHT & WATER Power Resources Division Monthly Report • Power Consumption Comparison • Wholesale Market Trend • Power Resource Budget Update • FY 01-02 Estimated Year -End Financial Results AVERAGE MONTH ON PEAK PRICE AVERAGE OFF PEAK PRICE MAY 01 $251.00 JUN 01 ! $86.00 ..._.___._ _.. __._. JUL 01 -.-.-_. $67.10 i AUG 01 $52.00 i... SEP 01 _ _ $29.00 -. ._ OCT 01 ' _ $28.00' I NOV 01 $25.00 DEC 01 $28.00 ; JAN 02 - $23-00 FEB 02 $23.00 MAR 02 $34.00 APR 02 $29.00 ! $79.00 $31.00 $36.00 $27.00 $19.00 $19.00 $17.00 $19.00 $16.00 $17.00 $28.00 $17.00 $15.05 $11.26 Power Resource Cost Accounting FY 'O1-'02 LONGTERM SHORT TERM TRANSMISSION_ ANCILLARY SCHEDULING TOTAL - WHOLESALE REVENUES j NET COSTS MONTH CONTRACTS PURCHASES -I COSTS SERVICE COSTS DISPATCHING COSTS COSTS JUL01 01 954,155.97 10,624,872.34 144,924.11 65,501.51 953,130.51 8,145,426.00 144,828.11 18,450.29 _11,807,904.22_; 18,642.03 -- -- _ 9,309,305.15 '', -- __.(8,226,574.92); _3,581,329.30 (4,064,532.78) 5,224,772.37 1 AUG (•) _47,280.50 --- 146,450.70 20,336.78 17,969.81 8.378,1-- ' (4,625,478.86) _ 3,752,668.40 SEP Ot (••) 973,951.22 7,219,438.75 _ _ _— 119,240.70 13,898.67' 17,978.33 .L_—__.--_ 2,416,680.761__ (1,033,318.24) 1,363,362.52 OCT01(•'•) 1,168,474.21 1,097,088.85 113,330.70 12,440.25 16,548.01 ! (394 ,670.72732,258.44 _0 __ NOV Ot •'••) ( 949,384.77 1,035,225.43 _ 1,045,920.96 112,681.70 11,623.52 ------ 17,254.79 "--2,126,929.18 1,243,797.74 -_ (877,505.78)] 366,291.96 DEC01 56,316.77 81,237.77 861,457.30 113,330.70 20,238.52 _ ' JAN02 _18,410.01 ---- 974,557.77 766,825.85 113,652.70 18,3Y1.55(7,11,238.39 1_,15186 FEB02 02 974,557.77 783,061.57 112,275.59 , ,. . ,, 671 .,---_(833,6.63)1 —__261,017..46 (721,020 (411,84537)1 1,178,041.64 1,369,807.77 A PR 02 972,911.51 664,28576 112,27559 15,000.00 . . 17,180.28 17,180.28 1,78MAR 1,85314j" ,774,882.96 ; _-_1,420,12433 (354,758 995,143.38 601,613.34 145,945.96AY02 _15,000.00 —i -5.0 -06 -00—L -----I,99-5,541.15 17,180.28 1 (388,59 1,606,941.17 JUN02 984,49277 832,600.14 148,267.96 $1;525,202.52 $253,348.30 $218,492.28 $45,713,171.81 ($22,684,860.80)1 $23,028,311.01 $33,677,816.29 _ _ DUE TO SAN JUAN OUTAGE AMOUNT TO $4,416,670. __ ___-LESALEREVENUESDUETOSANJUANOUTAGEAMOUNTTO$3,011,924. ESALE REVENUES WTOTAL$10,03a,314.4214.42 "___..._".___ CONTRACTS INCLUDED $204,104 OF SAN JUANCOSTTRUE-UPFORFY00-01.LESALE REVENUES DUE TO SAN JUAN OUTlSaE AMOUNT T_O $407,585.7_5 - -- -- -- (1) -- INCLUDES SCPPALONG TERM CONTRACTSAND PASADENACONTRA.CT I (2) INCLUDES ALL SHORT TERM PURCHASES FOR HEDGING AND LOAD BALANCING PURPOSES (3) INCLUDESALL SHORT TERMAND AND MISSIONLONNTRACT COSTS -------- CHARGED BY CALIFORNIAINDEPENDENT SYSTEM OPERATOR FOR SYSTEM RELIABILITY FUNCTIONS___ _� "._"_,__- __ _ (4) (4) COSTS (5) INCLUDES COSTS FOR SCHEDULING AND DISPATCHING OF ELECTRICITY— (8) SUM OF (1)THROUGH (5) —_—. (7) — WHOLESALE REVENUES DERRIED FROM SALES OF EXCESS POWER _ _j__ _ _ } (8) )DIFFERENCE OF (6)AND }—_ ja FY 01-02 Estimated Year -End Financial Results NET POWER RESOURCE COST: $ 23,029,000.00 SUMMER 2001 LOAD REDUCTION PAYMENTS: $ 300,000.00 ENRON DEFAULT (NOV. AND DEC.): $ 403,000.00 OPERATING COST: $ 7,000,000.00 TOTAL COST $ 30,732,000.00 ESTIMATED RETAIL REVENUES: $ 20,670,000.00 ONE CENT SURCHARGE: $ 1,900,000.00 TOTAL RETAIL REVENUES: $ 22,570,000.00 NET LOSSES: $ (8,162,000.00) The bulk of net loss is due to costs incurred during San Juan unit outage in the summer and fa11.2001 at $7,800,000. The remainder of the losses is due to reduced retail sales, Enron default and load reduction program costs. 7` ►� i INFORMATIONAL ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES^ DATE: JULY 22, 2002 v SUBJECT: YARD WASTE BARREL GRAPHIC It is recommended that the Utility Board/City Council consider attached graphic to affix to yard waste barrels, and approve of graphic in Exhibit A. BACKGROUND At the June 2002 Board meeting, the Utility Board approved the purchase of yard waste barrels for distribution to residents, and expressed interest in having the draft graphic changed. The Board's comments and preferences were conveyed to Proforma Quality Printing, and Proforma developed the attached sample graphics. Staff recommends approval the graphic In Exhibit A. FISCAL IMPACT None. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities '.7 'IFN \ V I rri CIL NO Trash or Plastic Bags Q Grass Leaves �✓( Weeds Plants L� Tree Clippings Use Your Own Barrels To Separate Additional Yard Waste EXHIBIT A. NO Trash or Plastic Bags Use Your Own Barrels To Separate Additional Yard Waste Q' Grass 2 Leaves Q Weeds 2 Plants [� Tree' Clippings EXHIBIT B w6r 4— Electric Rate Comparisons g AZUSA • Small Business GS -1 rate — Summer & Winter 50 kW Demand and 12,600 kWh usage/mo. * Summer: • Azusa: $ 1,433 (*) • Azusa: $ 1,499 (*) & 5% Inc. * Edison: $ 2,666 • Winter: * Azusa: $ 1,433 (*) • Azusa $ 1,499 (*) & 5% Inc. * Edison: $ 1,871 * With 5% Increase: • Azusa 44% lower in the summer • Azusa 20% lower in the winter Summer Winter * Cost includes $0.01/kWh temporary surcharge as of Sept. 01, 2001 Electric Rate Comparisons'm A Z U -SA • Small Business GS -2 rate — Summer & Winter 150 kW Demand and 34,800 kWh usage/rrlo. • Summer: • Azusa: $ 3,712 (*) * Azusa: $ 3,841 (*) & 5% Inc. • Edison: $ 6,189 * Winter: • Azusa: $ 3,712 (*) • Azusa $ 3,841 (*) & 5% Inc. • Edison: $ 5,026 * With 5% increase: • Azusa 38% lower In the summer * Azusa 24% lower in the winter Summer Winter * Cost includes $0.01/kWh temporary surcharge as of Sept 01, 2001 ■ Azusa ® Azusa (5% increase) ® SCE Electric Rate. Comparisons Targe Business TOIL rate — Summer & Winter 1 100 kW rdand 7ov kWh * Summer: Azusa: $ 65,244 (*) Azusa: $ 67,634 (*) & 5% Inc. Edison: $ 110,925 • Wince: Azusa: $ 56,300 (*) Azusa $ 58,547 (*) & 5% Inc. Edison: $ 79,858 * With 5% Increase: Azusa 39% lower in the summer Azusa 27% lower in the winter Summer Winter *Cost includes $0.01/kWh temporary surcharge as of Sept. 01, 2001 _6 AZUSA ® Azusa ® Azusa (5% increase) ® SCE m; -_'w Electric Rate Comparisons M AZUSA . Residential rate: 33 days 488 kWh usage Azusa: $ 51.31(*) Azusa: $ 53.63 (*) & 5% inc. Edison: $ 71.94 With 5% increase: . Azusa: 26% lower * Cost includes $0.01/kWh temporary surcharge as of Sept. 01, 2001 B Azusa ® Azusa (5% increase) ■ SCE DATE: TO: F"TX The City of Azusa JULY 18, 2002 ; MEMBERS OF THE CITY COUNCIL OF THE CITY OF AZUSA NOTICE OF A SPECIAL/ADJOURNED MEETING to be held on MONDAY, JULY 22, at 7:30 p.m., (immediately following the Utility Board meeting) at Azusa Light and Water Department, 729 North Azusa Avenue, Azusa, California, for the purpose of: A. Cost of Service Study ' B. Presentation on Proposed Schedule of Maior Development Processing. C. Discussion Regarding Fire and Paramedic Services Contract Renewal D. Resolution Regarding the Ninth Circuit Court Ruling. DATED: July 22, 2002 CANDACE TOSCANO DEPUTY CITY CLERK I HEREBY CERTIFY that a true copy of the attached "NOTICE OF SPECIAL MEETING" was served on the hereinafter persons who are members of the City Council of the City of Azusa, at the date and time set after their respective names. NAME DATE & TIME DELIVERED BY CRISTINA CRUZ -MADRID DIANE CHAGNON DAVE HARDISON DICK STANFORD JOSEPH ROCHA IA -Sr ��� �,--/01-,�a CANDACE TOSCANO, DEPUTY CITY CLERK 7nzroz 07/19/2002 08:27 FAX 626 303 8865 JUL.18'2002 17:14 6268125155 LA TIMES Azusa Cty G1rk 10 001 #0291 P.003/003 I HEREBY CERTIFY that the below listed media were duly notified by Special Messenger or by fax the "NOTICE OF SPECIAL MEETING." AZUSA HE AI.D/SAN GABRIEL VALLEY TRIBUNE (signature) DATE CHARTER COMMUNICATIONS CABLE TV (signature) LOS ANGELES TIMES (signature) DATE DATE -74%s is �lS,�_ 4h ajv"lcjNj 04Gtce, C-/ f^ `f CANDACE TOSCANO, DEPUTY CITY CLERK /t 7nvo2