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Home My WebLink AboutMETROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA (8)�7 N01' 11EQtJ1UDJWMVU) 4()RK MAY Ir')ROCEED UJIliRK 01C*UNGIL' AGREEMENT NO. A04965 REGARDING INCENTIVES FOR SEASONAL SHIFT STORAGE FOR UNDEPRECIATED SUNK FIXED COSTS (Option 3) This Agreement is made and entered into as of this first day of October, 1997, by and between The Metropolitan Water District of Southern California (herein referred to as "Metropolitan"), a metropolitan water district organized under the Metropolitan Water District Act of the State of California, and the City of'Santa Ana (herein referred to as '*Member Agency"), a rricn-iber public agency of Metropolitan, RECITALS WHEREAS, Metropolitan sells water to its member public agencies under the Seasonal Storage Service (SSS) Program for groundwater replenishment by spreading, injection, or in -lieu groundwater replenishment, and for in -lieu reservoir storage, and direct reservoir storage; WHEREAS, water under the SSS Program is stored for either Seasonal Shift Storage (as hereinafter defined) or Long -Term Storage (as hereinafter defined); WHEREAS, Metropolitan sells SSS Program water at discounted rates to encourage its member public agencies to invest in new water production, storage, treatment, and transmission facilities, or to fully utilize existing facilities in a manner that maximizes the local production during the summer months (May I through September 30); WHEREAS, Metropolitan and its member agencies Participated in a Rate Refinement Process (RRP), to review and develop recommendations to refine Metropolitan's rate structure, including pricing for SSS Program water; WHEREAS, in July 1996 Metropolitan's Board approved and adopted RRP recommendations, inClUdill(l ramping down Seasonal Shift Storage incentives annually in 4n equal increments over a five-year period from July 1996 levels to $85/A1 for treated water and $60/AF for untreated water, respectively. WHEREAS, such RRP recommendations approved by Metropolitan's Board authorized an option for its member public agencies to transition to the new incentive levels for seasonal storage programs, by entering into contracts with Metropolitan, which would -furnish fixed incentives for seasonal shift of $14 1 /AF for treated water and $116/AF for untreated water to allow member public agencies to recover their undepreciated sunk fixed costs for that project or portion of project that was designed to take advantage of the MWD SSS Program and for which a construction contract was let prior to December 31, 1, 1996; WHEREAS, in March 1997 Metropolitan's Board adopted water rates and charges for fiscal year 1997-98 to become effective January 1, 1998, increasing the rate for Seasonal Shift Storage water by $11/AF, to a rate of $301/AF for treated Seasonal Shift Storage water and $244/AF for untreated Seasonal Shift Storage water, in accordance with the RRP recommendations adopted by the Board; and WHEREAS, Member Agency wishes to enter into such an agreement, to fix incentive levels for Seasonal Shift Storage performed by Member Agency, and Metropolitan is willing to fix such incentive levels on the terms and subject to the conditions provided herein, all in accordance with the RRP recommendations approved by Metropolitan's Board; WHEREAS, Exhibit A is a financial analysis of the undepreciated sunk fixed costs for Member Agency of the project that was designed to take advantage of Metropolitan's SSS program; NOW, THEREFORE, the parties hereby agree as follows: AGREEMENT Definitions. (a) "Long -Term Storage" shall mean and include that water delivered by Metropolitan to a member public agency or subagency for storage, by direct or in -lieu methods, beyond the 12-month seasonal storage service period, so that total annual purchases from Metropolitan increase by the amount of Seasonal Storage water which qualifies for long-term storage. Water that a member public agency leaves in storage to replace groundwater overdraft in any previous drought year when Seasonal Storage Service was declared unavailable is considered long-term storage. (b) "Seasonal Shift Storage" shall mean and include additional summer local production offset by an equivalent Metropolitan winter delivery within a 12- month period, during which the member public agency's total annual purchases of Metropolitan water are unchanged from the purchases that would have occurred had Seasonal Storage Service not been in place. (c) "SSS Year" shall mean the period from May 1 of a calendar year through April 3 0 of the following calendar year. (d) Other capitalized terms used herein are defined in the above Recitals. Capitalized terms used herein and not otherwise defined are as defined in Metropolitan's Administrative Code. -2- 2. Representations, Warranties and Covenants of Member Agency. (a) Member Agency agrees that it shall purchase SSS Program water from Metropolitan for purposes of Seasonal Shift Storage in each SSS Year so that it may recover the Luidepreciated sunk fixed costs for that project or portion of project that was designed to take advantage of the MWD SSS Program and for which a construction contract was let prior to December 31, 1996, as shown in Exhibit A. (b) Member Agency agrees that it will certify monthly Seasonal Shift Storage amounts using certification procedures outlined in Metropolitan's User Handbook for Seasonal Storage -Service, and will be subject to the procedures outlined in Metropolitan's User Handbook for Seasonal Storage Service and other regulations and procedures with respect to the SSS Program which are adopted by Metropolitan from time to time. (c) Member Agency agrees that, as part of its annual assessment of the SSS Program, Metropolitan will recalculate Seasonal Storage Service credits to the nearest one whole acre-foot. Member Agency agrees that it will be bound by such recalculations made by Metropolitan, in the absence of manifest error. Following the reconciliation process, Metropolitan will mare appropriate billing adjustments and Member Agency agrees to pay such adjusted billings. 3. Covenants of Metropolitan. Metropolitan agrees that it will bill Member Agency for water purchased as Seasonal Shift Storage pursuant to this Agreement at a discounted rate equal to its rates for Pull Service water prevailing at the time of purchase, less an incentive of $141/AF and S 116/AF for treated and witreated water, respectively. 4. Term of Agreement. This Agreement shall be effective as of October 1, 1997, and shall remain in effect until May 1, 2001, or until a cumulative maximum of $2,205,568 in incentives at the higher discount of $141/acre-foot for Seasonal Shift Storage has been received under this Agreement as calculated in Sections 2(b) and 5, whichever comes first. Since the cumulative maximum amount is an estimate at the time of execution of this contract, the cumulative maximum and term may change with actual numbers. Any changes in these amounts shall be evidenced by a written amendment to this agreement executed as provided in Section 8 (e) below. -3 5. Calculations. Metropolitan will recalculate Seasonal Storage Service credits to the nearest one whole acre-foot, as part: of its annual assessment of the SSS Program, all as provided in Section 2 above. G. Amendments to Schedule 1. In the event that the User Handbook for Seasonal Storaize Service is amended or Metropolitan's other regulations and procedures with respect to the SSS Program are revised in a maiuler which would materially impact Member Agency's ability to receive Shift Credits, Metropolitan and Member Agency agree to review the length of the Term of this Agreement. Metropolitan and Member Agency hereby delegate to their respective General Managers full power and authority to amend this Agreement to change the term of this agreement solely under the circunistances provided in this Section G. 7. Records Each of the parties hereto shall maintain and make available for inspection by any other party during regular office hours, records pertaining to the Member Agency's local production and Iong-term storage, Metropolitan deliveries, and certification of SSS shift credits. 8. Miscellaneous Provisions. (a) This Agreement is of a specific and unique nature. No party may assign or transfer its interest in this Agreement without the prior written consent of the other parties. (b) Metropolitan designates Ms. Nina Jazmadarian or any alternate designated by her, as Metropolitan's Agreement Administrator. Metropolitan reserves the right to change this designation upon written notice to Member Agency. Metropolitan's Agreement Administrator or her designee, shall act on behalf of Metropolitan in the performance of this Agreement. Any approval or notice to be given or any determination to be made by Metropolitan under this Agreement shall be given or made at Metropolitan's Agreement Administrator's sole discretion. (c) Any notice or communication given under this Agreement shall be effective when deposited, postage prepaid, with the United States Postal Service and addressed to the parties as follows, or when received by the intended recipient if sent by facsimile transmission to the following FAX number: 4- The Metropolitan Water District of Southern California Post Office Box 54153 Los Angeles, California 90054-0153 Attention: Ms, Nina Jazmadarian FAX: (213) 217-5535 City of Santa Ana Public Works Agency 220 South Daisy Avenue, Bldg. A, M-82 Santa Ana, California 92703 Attention: Mr. Thom Coughran FAX: (714) 647-3345 Any party may change the address to which notice or communication is to be sent by providing advance written notice to the other parties. (d) This Agreement shall be deemed a contract under the laws of the State of California, and for all purposes shall be interpreted in accordance with such laws. The parties hereby agree and consent to the exclusive jurisdiction of the courts of the State of California and that the venue of any action brought hereunder shall be Los Angeles County, California. (e) It is mutually understood and agreed that this Agreement represents the entire agreement and understanding of the parties and supersedes all prior agreements and Lunderstandings relating to the subject matter hereof, This Agreement may not be amended, supplemented, waived or otherwise modified without formal amendment in writing signed by the parties hereto. (f) All parties have participated in the drafting of this Agreement. (g) This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement. -5- IN WITNESS WHEREOF, the parties have hereunto affixed their names as of the day and year hereinabove first written. MEMBER AGENCY N . ig uel Pulido Title Mayor Date— IATFEC"�' �JTOO APPROVED AS TO FORM TAMARA A. TRODDEN Assistant City Attorney In duplicate o:\o psexec\co n tradm\J pac9 7\o 1)0 sa. do c City M, ';,mal'y'er -6- THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA J m . Wodraska ener I Manager APPROVED AS TO FORM: N. Gregory 'Taylor General Counsel B EXHIBIT A TO AGREEMENT NO. A04965 City of Santa Ana SSS Credits Since October 1989 Fiscal Year Line h12 Suminer Total Shift Long -terra N, 1, Rate Shift rate Shift Savings 1989-90 4733 0 4223.1 0 4223.1 $230 $186 $0 1990-91 4172 0 4785.1 613.1 4172 $230 $130 $61,310 1991-92 18176 0 9466.1 0 9466.1 $261 $149 $0 1992-93 0 4613.9 4613.8 0 4613.80 $322 $203 $0 1993-94 10000 0 8151.6 0 10000 $385 $253 $0 1994-95 1685.1 0 1741.8 56.7 1685.1 $412 $275 $7,768 Well 34 1995-96 0 0 4421.0 4421.0 0 $426 $286 $618,940 Jul - Dec 96 0 0 2519.3 2519.3 0 $426 $286 $352,702 Wells 35, 37, 38 Jan - Apr 97 0 0 3571.1 3571.1 0 $431 $290 $503,525 Total 43492.9 11181.2 34160.1 $1,544,245 Savings between July 94 and July 96 $626,708 Original Costs for Well 34 $578,703 Savings since July 96 $856,227 Costs for Wells 35, 37, 38 and modifications to $3,061,795 34 Difference $2,205,568 6000 AF Shift * $141/AF $846,000 Savings Number of Years 4,0 years Stranded Costs Analysis Amount remaining in contract as undepreciated sunk fixed costs as of October 1, 1997: $2,205,568 Projected yearly shift amount: 6000 AF Projected yearly shift savings: $846,000 Time required to pay oft' stranded investment: 4 years In