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Resolution No. 8996
1 2 RESOLUTION NO. 8996 3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A 4 PROFESSIONAL SERVICES AGREEMENT BY AND BETWEEN THE 5 CITY OF VERNON AND R. W. BECK, INC. FOR CONSULTING SERVICES RELATING TO THE CITY'S ELECTRIC SYSTEM 6 7 WHEREAS, the City of Vernon (the "City") owns and operates a 8 municipal electric system which provides the inhabitants of the City 9 with electric power; and 10 WHEREAS, R. W. Beck, Inc. ("Beck") is a nationally 11 recognized firm which provides engineering and other consulting 12 services to electric utilities; and 13 WHEREAS, the City has determined that it is to the City's 14 advantage and in the public interest of inhabitants of the City, to 15 enter into a Professional Services Agreement with Beck relating to 16 Beck's providing certain consulting and other services in connection 17 with the City's municipal electric system. 18 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE 19 CITY OF VERNON AS FOLLOWS: 20 SECTION 1: The City Council of the City hereby finds and j1 21 determines that the recitals contained hereinabove are true and 22 II correct . 23 SECTION 2: The City Council of the City hereby approves the 24 Professional Services Agreement with Beck, in substantially the same 25 form as the copy which is attached hereto as Exhibit A and 26 incorporated by reference. 27 SECTION 3: The City Council of the City hereby authorizes 28 the Mayor to execute the Agreement for, and on behalf of, the City 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and the Acting City Clerk is hereby authorized to attest thereto. SECTION 4: The City Council of the City hereby authorizes the Acting City Clerk, or his designee, to make whatever nonsubstantive, administrative and/or text changes, upon advice of counsel, to the Agreement. SECTION 5: The City Council of the City hereby authorizes the City Attorney, the Acting City Clerk, or his designee, to execute and deliver Task Authorizations under the Agreement generally described in the form of the Agreement approved herein and such additional Task Authorizations relating to the City's electric system (the "Additional Task Authorizations") as shall be approved by the City Attorney or Acting City Clerk provided that Beck's estimate of the amount necessary to complete the activities in each such Additional Task Authorization at the time of execution thereof shall not be in excess of $65,000.00. SECTION 6: The City Council of the City hereby authorizes the City Attorney, the Acting City Clerk and all other proper offices and officials of the City to execute and deliver such other agreements, documents and certificates, and to perform such other acts and deeds, as may be necessary or convenient to effect the purposes of this Resolution and the transactions herein authorized. s - 2 - 1 2 3 4 5 6 .7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 7: The Acting City Clerk of the City shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 22nd day of March, 2006. LEONIS C. MAtBURG, Mayor IIATTEST: BRUCE V. MALKENHORST, JR., Acting City Clerk - 3 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, BRUCE V. MALKENHORST, JR., Acting City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 8996, was duly adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Wednesday, March 22, 2006, and thereafter was duly signed by the Mayor of the City of Vernon. (SEAL) - 4 - BRUCE V. MALKENHORST, JR. Acting City Clerk EXHIBIT 0 PROFESSIONAL SERVICES AGREEMENT This PROFESSIONAL SERVICES AGREEMENT ("Agreement") is dated 2006, by and between R. W. Beck, Inc. ("Consultant"), with offices at 2710 Gateway Oaks Drive, Suite 300 South, Sacramento, California 95833, and the City of Vernon ("Client'), a California chartered city, with offices at 4305 Santa Fe Avenue, Vernon, California 90058. NOW, THEREFORE in consideration of the promises herein and for other good and valuable consideration, the parties agree as follows: 1. Scope of Services: Consultant and Client agree Consultant will perform such Utility Analysis and Project Analysis and Financing Services included as Exhibit A as requested by Client from time to time. The services to be provided by Consultant shall be agreed to by the parties and authorized in a Task Authorization to this Agreement which sets forth the Scope of Services, schedule, budget, payment provisions and other special provisions, if any, related to the Scope of Services set forth in such Task Authorization. Task Authorizations shall be incorporated into this Agreement and subject to its terms. 2. Independent Contractor: Consultant is an independent contractor and is not an employee of Client. Services performed by Consultant under this Agreement are solely for the benefit of Client. Nothing contained in this Agreement creates any duties on the part of either the Client or the Consultant toward any person not a party to this Agreement. Standard of Care: Consultant will perform services under this Agreement with the degree of skill and diligence normally practiced by professional engineers or consultants of recognized national standing and experienced in each area covered by a Task Authorization performing the same or similar services. No other warranty or guarantee, expressed or implied, is made with respect to the services furnished under this Agreement and all implied warranties are disclaimed. 4. Changes/Amendments: This Agreement and its exhibits constitute the entire agreement between the Parties and together with its exhibits supersede any prior written or oral agreements with respect to the subject matter hereof. This Agreement may not be changed except by written amendment, or through Task Authorizations for individual tasks, signed by both Parties. The estimate of the level of effort, schedule and payment required to complete the Scope of Services, as Consultant understands it, will be in Task Authorizations for individual tasks. Services not expressly set forth therein are excluded. Consultant shall promptly notify Client upon becoming aware that the Scope of Services for a Task Authorization will not be sufficient to satisfy any objectives of the Client for, and set forth in, such Task Authorization. Consultant shall also promptly notify Client if changes to the Scope of Services affect the schedule, level of effort or payment to Consultant and the schedule and payment shall be equitably adjusted, as agreed to by the parties. If Consultant is delayed in performing its services due to an event beyond its control, including but not limited to fire, flood, earthquake, explosion, strike, Ft.*Zwremenl0"1$95 Vemon. City 0AUlility ArdysisWwrm PSA It 4-0.doc Client #001595/Agreement # xx-xxxxx R. W. Beck PSA 1 of 9 PROFESSIONAL SERVICES AGREEMENT transportation or equipment delays, act of war, or act of God, then the schedule or payment under individual Task Authorizations shall be equitably adjusted, if necessary, as agreed to by the parties, to compensate Consultant for any additional costs due to the delay. 5. Fee for Services and Expenses: The fee for the services under this Agreement will be based on the actual hours of services furnished multiplied by Consultant's Billing Rates as of the date of the performance of such services plus all reasonable expenses directly related to the services furnished under this Agreement. Expenses in excess of the budget amount for each Authorized Task shall be approved by the Client. Total expenditures under this Agreement are limited to $500,000 without amendment of the Agreement. Rates for the period July 1, 2005, through June 30, 2006, are set forth in Exhibit B. 6. Payment: Client shall pay Consultant its fee for services furnished under this Agreement upon submission of monthly invoices in the amount determined pursuant to Section 5 above. Additionally, Client shall reimburse Consultant monthly for reasonable expenses, as set forth in Section 5 above, at cost and at cost plus 10% for the services of any Subconsultant. Client shall pay Consultant in U.S. dollars within thirty (30) days of receipt of invoices less any disputed amounts. If Client disputes any portion of the invoice, the undisputed portion will be paid and Consultant will be notified in writing, within ten (10) days of receipt of the invoice of the exceptions taken. Consultant and Client will attempt to resolve the payment dispute within sixty (60) days or the matter may be submitted to arbitration as provided below. Additional charges for interest shall become due and payable at a rate of one and one-half percent (IY2%) per month (or the maximum percentage allowed by law, whichever is lower) on the unpaid, undisputed invoiced amounts. Any interest charges due from Client on past due invoices are outside any amounts otherwise due under this Agreement. If Client fails to pay undisputed 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. 7. Indemnity: To the extent permitted by law, Consultant agrees to indemnify, defend and hold harmless Client and its directors, officers, shareholders and employees from and against any liability (including without limitation, reasonable costs and attorneys' fees) incurred by Client to the extent caused by Consultant's negligent acts, errors or omissions, including judgments in favor of any third party. To the extent permitted by law, Client agrees to indemnify, defend and hold harmless Consultant and its directors, officers, shareholders, employees and subconsultants from and against any liability (including, without limitation, reasonable costs and attorney's fees) incurred by Consultant to the extent caused by Client's negligent acts, errors or omissions, including judgments in favor of any third party. RASsaamuno%001595 vemon, City oWdlity AnalysisWemon PSA t 14.05.do Client #001595/Agreement # xx-xxxxx R. W. Beck PSA 2 of 9 PROFESSIONAL SERVICES AGREEMENT Each party (the "First Party") specifically and expressly waives its immunity under applicable worker's compensation and industrial insurance laws regarding liability againsH*)-A a�, InSt the other party (the "Second Party") for actions brought by any of the First Parry's employees against the Second Party, to the extent the liability is caused by the First Party's negligent acts, errors or omissions. 8. Reperformance of Services: If Client believes any of the services provided under this Agreement do not comply with the terms of this Agreement, Client shall promptly notify Consultant to permit Consultant an opportunity to investigate. If the services do not comply with the terms of this Agreement, it will promptly reperform the services at no additional cost to Client, including assisting Client in selecting remedial actions.' 9. Section Intentionally Left Blank. 10. Insurance: Consultant shall maintain insurance with the following required coverages and minimum limits and upon request, will provide insurance certificates to Client: Worker's Compensation Statutory Employer's Liability U.S. $1,000,000 Commercial General Liability U.S. $1,000,000 per occurrence U.S. $1,000,000 aggregate Comprehensive General Automobile U.S. $1,000,000 combined single limit Professional Liability U.S. $1,000,000 per claim and in the aggregate 11. Work Product: Client shall own, and shall have the unrestricted right to use, the documents, analyses and other data prepared by Consultant under this Agreement ('Work Products'); provided, if Client releases the Work Products to a third party without Consultant's prior written consent, or changes or uses the Work Products other than as intended hereunder, (a) Client does so at its sole risk and discretion, (b) Consultant shall not be liable for any claims or damages resulting from the change or use or connected with the release or any third parry's use of the Work Products and (c) Client shall indemnify, defend and hold Consultant harmless from any and all claims or damages related to the release, change or reuse. Consultant shall retain ownership of its intellectual property. including the procedures, processes, internal resources-, tools, and other means used by Consultant to prepare the Work Products. 12. Limitation of Liability: No employee of Consultant shall have individual liability to Client. To the extent permitted by law, the total liability of Consultant, its officers, directors, shareholders, employees and subconsultants for any and all claims arising out of this Agreement, including attorneys' fees, and whether caused by negligence, errors, omissions, strict liability, breach of contract or contribution, or indemnity claims based on third party claims, shall not exceed U.S. $1,000,000.00). R LSwrwn&Ao=1595 Vemon, City oAthky AnclyrdVar m PSA 114-05.doc Client t1001595/Agreement 0 xx-xxxxx k W. Beck PSA 3 of 9 PROFESSIONAL SERVICES AGREEMENT 13. No Consequential Damages: In no event and under no circumstances shall Consultant be liable to Client for any indirect damages resulting from a breach of this Agreement, including indirect damages constituting principal, interest, loss of anticipated revenues, earnings, profits, increased expense of operation or construction, and loss by reason of shutdown or non -operation due to late completion. 14. Information Provided by gLiqnt or Others: Client shall provide to Consultant in a timely manner any information about the Client or its electric utility operators which Consultant indicates is needed to perform the services hereunder. Consultant may rely on the accuracy of information provided by Client and its representatives. 15.Opinions of Cost: Consultant does not control the cost of labor, materials, equipment or services furnished by others, nor does it control pricing factors used by others to accommodate inflation, competitive bidding or market conditions. Consultant estimates of operation expenses or construction costs represent its best judgment as an experienced and qualified professional and are not a guarantee of cost. This section does not apply to the cost of Consultant performing the Scope of Services. 16. Safety and Security: Consultant has established and maintains programs and procedures for the safety of its employees. Unless specifically included as a service to be provided under this Agreement, Consultant specifically disclaims any authority or responsibility for job site safety and safety of persons other than Consultant's employees. Consultant shall not provide any such services and disclaims any responsibility under this Agreement related to site security or the assessment, evaluation, review, testing, maintenance, operation or safety practices or procedures related to security. 17. Section Intentionally Left Blank. 18. Termination: Either party may terminate this Agreement upon thirty (30) days prior written notice to the other party. Client shall pay Consultant for all services rendered to the date of termination plus reasonable expenses for winding down the services. If either party defaults in its obligations hereunder, the non -defaulting party, after giving seven (7) days written notice of its intention to terminate or suspend performance under this Agreement, may, if cure of the default is not commenced and diligently continued, terminate this Agreement or suspend performance under this Agreement. 19. Dispute Resolution: Consultant and Client 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 within ninety (90) days after either requests mediation, the dispute or conflict shall be subject to arbitration in English under the rules governing commercial arbitration as promulgated by the American Arbitration Association and arbitrability shall be subject to the Federal Arbitration Act. RASacrammw=1595 vmon. City oAtltility AnalosWernon PSA 114-05.doc Client #001595/Agreement # xx-xxxxx R. W. Beck PSA 4 of 9 PROFESSIONAL SERVICES AGREEMENT 20. Section. Intentionally Left Blank. 21. Miscellaneous: a. This Agreement is binding upon and will inure to the benefit of Client and Consultant and their respective successors and assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party. b. Any notice required or permitted by this Agreement to be given shall be deemed to have been. duly given if in writing and delivered personally or five (5) days after mailing by first-class, registered, or certified mail, return receipt requested, postage prepaid and addressed as follows: Client: City of Vernon Attention: Eric T. Fresch City Attorney Address: 4305 Santa Fe Avenue Vernon, California 90058 Consultant: R. W. Beck, Inc. Attention: Kenneth J. Mellor, PE Senior Director of Consulting Address: 2710 Gateway Oaks Drive, Suite 300 South Sacramento, California 95833 With a copy to: Lin Ross (which will not be considered notice) 1001 4th Avenue, Suite 2500 Seattle, Washington 98154-1004 USA c. Client expressly agrees that all provisions of this Agreement, including the clause limiting the liability of Consultant, were mutually negotiated and that but for the inclusion of the limitation of liability clause in the Agreement, Consultant's compensation for services would otherwise be greater and/or Consultant would not have entered into this Agreement. d. If the application of any provision of this Agreement to a particular set of circumstances is invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect and the provision declared invalid or unenforceable shall continue as to other circumstances. e. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California relating to contracts made and to be performed in said state. R:1Swr=nento%001595 Vemon. City *Wtility AnnlysisWarAn PSA 11-"5.400 Client 0001595/Agmement M xx-xxxxx R. W. Beck PSA 5 of 9 PROFESSIONAL SERVICES AGREEMENT f. In any action to enforce or interpret this Agreement, the prevailing party shall be entitled to recover, as part of its judgment, reasonable attorneys' fees and costs from the other party. g. This Agreement shall not be construed against Consultant only on the basis that Consultant drafted the Agreement. h. Notwithstanding any statute to the contrary, the Parties agree that any action to enforce or interpret this Agreement shall be initiated within two (2) years from the time the party knew or should have known of the fact giving rise to its action, and shall not in any case be initiated later than six (6) years after Consultant completes its Scope of Services under this Agreement. i. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original instrument, but all of which taken together shall constitute one instrument. IN WITNESS WHEREOF, the Parties have signed this Agreement the date first written above. City of Vernon Signature Name Title Date R. W. Beck, Inc. Signature Name Title Date Signature Name Title Date Signature Name Title Date RASw mmemdD0159$ Vemun, City oAthi6ly AnrysiAVa w, PSA 1141-05.doc Client #00 1 595/Agrmnad # xx-xxxxx K W. Beck PSA 6 of 9 PROFESSIONAL SERVICES AGREEMENT Exhibit A R. W. Bede, Inc. SCOPE OF SERVICES City of Vemon Except as otherwise agreed to by Consultant in a Task Authorization, services provided under this PSA would be as described under Category A (Utility Analysis) or Category B (Project Analysis and Financing). The City of Vernon will provide Task Authorizations with a specific scope, schedule, and budget for selected services from those described below: Category A — Utility Analysis ■ Utility Asset Management, including inventory, valuation, master planning, and ownership options analysis. ■ Utility Planning, including load,forecasting, resource planning, integrated planning, trans- mission planning and evaluation, contract analysis and negotiation support, resource mix and adequacy. ■ Organization Review, including organization structure, staffing capabilities and levels, consistency of plans with City Charter, ordinances, Council direction, organization size, financial constraints, credit rating objectives, and staff capability. ■ Service Area Expansion and Load Acquisition, including acquisition of SCE facilities, incentives for economic development/attraction of desired industry, net benefit studies for added load. ■ Risk Management, including power purchases and sales risk mitigation, fuels, enterprise risk management, and reserve studies. ■ Revenue Analysis, including cost -of -service and rate analysis. ■ Explore and pursue cogeneration/steam sale options. Category B — Project Analysis and Financing Prefeasibility Analysis, Including Project Technical Review ■ Project Scope, data, and site visit ■ Evaluate Project consistency ■ Review conceptual detail ■ Review construction services and procurement methods ■ Review performance guarantees and tests ■ Review commercial operation issues and contracts ■ Review supply and transport agreements (fuel, water, power, wastewater) ■ Review environmental and regulatory issues ■ Develop projected operating results ■ Prepare Independent Engineer's Report RASacreneuoN001595 Verson, City oflUtitity AnWy"Vwmm PSA 11-"S.doc Client N001595/Agreement # xx-xxxxx R. W. Beck PSA 7 of 9 PROFESSIONAL SERVICES AGREEMENT Construction Monitoring, Including: ■ Attend construction kick-off and monthly project review meetings ■ Review construction contract change orders ■ Prepare Independent Engineer's Report Start -Up and Testing, Including: ■ Review performance testing procedures ■ Witness performance tests ■ Review contractor's test reports ■ Submit letter report(s) to City ■ Verify Project completion Commercial Operation, Including: ■ Conduct periodic site visits ■ Review operator training programs ■ Review budget and operating plan ■ Review proposed modification and retrofit projects ■ Review and monitor Project operating agreements ■ Review environmental compliance ■ Review O&M manuals ■ Submit periodic reports to City (or lender) RAS=vnem6%001595 Vemn, City oAU1i1ity AndysiAVanon PSA 114-05.doa Client 0001595/Agreement # xx-xxxxx R. W. Beck PSA 8 of 9 PROFESSIONAL SERVICES AGREEMENT Exhibit B R. W. Be* Inc. HOURLY BILLING RATES Effective July 1, 2005 — June 30, 2006 Staff Title Rate Evis C. Couppis, PE Senior Director $285.28 Paul J. Harmon, PE Senior Director $273.65 Kenneth J. Mellor, PE Senior Director of Consulting $258.75 Catherine M. Elder Senior Director $248.78 Steven S. Rupp Senior Director $245.47 Taj M. Khan, PE Engineering Anal $234.00 John C. Schmalz Principal Planning Cost Engineer WOO Peter J. Robertshaw, PE Principal Engineer $181.61 Daniel D. Whitney, PE Principal Engineer $149.04 Sebnem Tersezen Ana" t $93.12 Judy Musso Administrative Assistant $80.94 Jeanine Garcia Financial Operations $65.52 R:�SswerneraoNO01595 Vernon, City oMMity Angysis%Vanton PSA I i•6.05.doc Client #001595/Agreement 0 xx-xxxxx R. W. Beck PSA 9 of 9 TASK AUTHORIZATION Task 1 Gas Procurement Plan Scope ■ R. W. Beck will prepare a Market Power Analysis that provides an estimate of natural gas prices and hourly market dispatch prices for electricity in Vernon over a 20-year study period. ■ An economic dispatch model will be run against the hourly electricity prices using constraints provided by Vernon for the Malburg Generating Station. ■ The economic dispatch model will also be applied to a new power plant in Vernon using constraints provided by Vernon. ■ The output from the economic dispatch model will be used to estimate natural gas requirements for Vernon. ■ Those gas requirements and, in particular, the variance and amplitude of changes in them, will drive development of a Gas Procurement Plan. The "Gas Procurement Plan" will evaluate how much natural gas Vernon will need to operate the plant relative to natural gas market risk, with emphasis on when (in terms of days and months) gas will be needed. For example, baseload, constant operations generally allow a much simpler Gas Procurement Plan than one for a plant that operates at a 65% load factor with some days at zero dispatch, while other days are at maximum output. The Gas Procurement Plan will assess how much firm versus interruptible transportation the City should hold; evaluate options for addressing swings in dispatch and gas takes, such as storage or supplier balancing; describe the contractual arrangements the City should consider in buying natural gas; recommend how much of the City's gas should be purchased and priced under fixed price contracts and at monthly index versus daily swing index; and identify key variables the City should watch in order to update the plan. Work Product A Market Power Analysis and a Gas Procurement Plan will be provided. ..........---------- .._.._._ .._. _... ............. - -- '?20 Galewav Oak., Drive, Suite 310 Sacramento, CA 9583 3-4301 Phme i9l hi 929-:3653 fax l9M 929-1710 � Budget The estimated budget for the Gas Procurement Plan assistance is between $55,000 and $75,000. Schedule After task approval and authorization to proceeds, the development of the Gas Procurement Plan should be completed in 5 to 6 weeks. City Objective Acquire a fuel plan for natural gas containing procurement options and costs of options and a general description of benefits of options. Task 2 Organization Review Scope To develop an understanding of the current vision, the short-term and long-term objectives for the utility, and strategies for achieving those objectives within the utility and among key staff and management, interviews will be held with selected management and senior staff. Approximately 10 interviews scheduled over three days are planned. The context of the interviews will include: ■ The tong -term vision, strategies and objectives of the utility ■ Existing and needed strategies for accomplishing the objectives ■ External threats and opportunities facing the utility ■ Internal strengths and weaknesses of the utility ■ Challenges and issues that must be overcome to achieve the objectives R. W. Beck will review the electric utility organization plan developed by Vernon staff and will provide suggestions regarding the suitability of the plan based on projected demands for staff, division of work between internal and outsourced resources, and observations of current utility industry practices with respect to: ■ Division and structure of management responsibilities between the City and the Utility ■ Division and structure of management responsibilities within the Utility ■ Number of staff for each utility function ■ Position descriptions and qualifications ■ Risk management and internal controls Work Product Based on the interviews and review of the organization plan, R. W. Beck will prepare a brief report discussing current strategies and objectives and providing recommendations for Vemon to consider that if implemented could assist with meting the identified objectives of the utility. A draft report will be presented to a selected group and then revised and finalized. Budget The estimated budget for the Organization Review is between $40,000 and $60,000. Schedule After Task 2 approval and authorization to proceed, the Organization Review should be completed in 4 to 8 weeks. Ci y 04edive Identify options for operating arld maintaining utility and relative estimated costs of options. Task 3 Asset Management Review Soope R. W. Beck will work with Vernon to identify and characterize all key assets to be included in the review. Broad asset categories will include: ■ Personnel (tie to Organization Review) ■ Generation ■ Transmission ■ Distribution ■ Power Supply and Fuel Contracts ■ General Plant ■ Systems (mainly TT) Following identification, each asset will be addressed with respect to: ■ How assets are currently utilized. ■ How assets are currently managed. ■ Findings from the Organization Review. ■ Alternative means of utilization and operation. ■ Changes in systems requirements. Operating alternatives will be discussed, including: ■ Operations by Vernon. ■ Operations by Vernon supplemented by contractors for major projects or tasks. ■ Contracted operations. ■ Using City Management in management role. ■ Under a performance -based contract with City oversight. Considerations will include: ■ Management and governance issues ■ Staffing requirements ■ Needs for intermittent technical support ■ Risk management ■ Limitations due to tax-exempt financing ■ Total costs (short and long term) Work Product The pros and cons of each approach will be provided based on the above considerations. If desired, alternatives can be ranked based on a balance between competing attributes. Conclusions will be presented in a draft Asset Management Report that addresses options, considerations of costs, reliability, local control, and staff resources. A final Asset Management Report will be provided after receiving discussion and input from staff. Budget The estimated budget for the Asset Management Review is between $55,000 and $65,000. Schedule After Task 3 approval and authorization to proceed, the Asset Management Review should be completed in 6 to 8 weeks. This task can overlap Task 2 but its completion would lag Task 2 completion by at least 3 weeks. City ONecctive Compare pros and cons of different operations and maintenance alternatives for utility assets. Task 4 Power Supply Sung Scope The key issue to be addressed is the location of power supply assets to serve predicted electric load in Vernon. Considerations include: ■ Transmission transfer capacity ■ Transmission reliability ■ Transmission costs and ownership a Power plant sizes and locations ■ System reliability criteria ■ Reserves ■ Resource Adequacy Tests ■ Renewable Resource Requirements R. W. Beck will evaluate transmission studies already performed by Vernon and its consultants. An attempt will be made to translate study results to allow evaluation of three scenarios: 1. Vernon projected loads with no new internal generation. 2. Vernon projected loads with new internal generation to approximate self-sufficiency. 3. Vernon projected loads and surplus internal generation as set by Vernon, requiring export to locations to be determined. All three scenarios will include an assumption that Vernon complies with the intent of renewable portfolio and resource adequacy standards. ■ R. W. Beck will estimate power supply costs, including transmission and grid management fees for each of the above scenarios. To the extent applicable, assumptions and costs developed to date will be relied upon for this analysis. ■ Key assumptions will be proposed by R. W. Beck for discussion and modification by Vernon. ■ R. W. Beck will provide a qualitative discussion of integrated system reliability considerations for each scenario. Work Product R. W. Beck will provide a Power Supply Siting report that addresses: ■ Considerations ■ Key Assumptions ■ Scenario Definitions ■ Economic Evaluation of Three Scenarios ■ Qualitative discussion of power supply reliability for each scenario Budget The estimated budget for the Power Supply Siting is between $20,000 and $30,000. Schedule After Task 4 approval and authorization to proceed, the Power Supply Siting report is estimated to require 6 to 10 weeks. City Objective Compare pros and cons of siting generation resources within City boundaries. Task 5 Transmission Asset Review Scope The City of Vernon has opportunities to leverage their equity in transmission ownership. Vernon transmission is currently operated and scheduled by the California Independent System Operator (CAISO) in return for a FERC-regulated income to the City (PTO status). R. W. Beck will review the economics and power supply reliability issues associated with: ■ Divestiture of Vernon's transmission assets. ■ Status quo ■ Removal of PTO status with CAISO. ■ Transmission additions to support power generation decisions. Work Product R. W. Beck will provide a Transmission Asset Review report that addresses: ■ Estimated net costs of transmission for each of the three scenarios studied in the Power Supply Siting task. ■ Net costs will be adjusted to reflect the value of equity obtained through divestiture of selected transmission assets. This adjustment will reflect lower costs of money for new financing resulting from equity participation in new projects (if any). ■ Reliability differences with respect to power supply curtailment during CAISO shortages and PTO or Control Area status. Budget The estimated budget for the Transmission Asset Review is between $20,000 and $25,000. Schedule After Task 5 approval and authorization to proceed, the Transmission Asset Review should be completed in G to 8 weeks. City Objective Compare costs and benefits of ownership of transmission assets. RASacramento1001595 Vernon, City o116us DeMask orders_ 12-05%B&W Ltr_Orrick-Ve non fina1.doc SUPPORTING DOCUMENTS CITY COUNCIL LEONIS C. MALBURG Mayor THOMAS A. YBARRA Mayor Pro-Tem WM. "BILL" DAVIS Councilman H. "LARRY" GONZALES Councilman W. MICHAEL McCORMICK Councilman May 16, 2006 4305 Santa Fe Avenue, Vernon, California 90058 telephone (323) 583-8811 Mr. Kenneth J. Mellor, PE R. W. Beck, Inc. Senior Director of Consulting 2710 Gateway Oaks Drive, Suite 300 South Sacramento, CA 95833 SOL BENUDIZ Police Chief MARK C. WHITWORTH Acting Fire Chief LEWIS J. POZZEBON Director of Environmental Health S. KEVIN WILSON Director of Community Services SHARON L. DUCKWORTH Acting City Treasurer Re: Professional Services Agreement & Task Authorizations Nos. 1 - 5 Dear Mr. Mellor: Transmitted herewith are fully executed task authorizations nos. 1 - 5 and a fully executed agreement as referenced above, approved by City Council on March 22, 2006, through Resolution No. 8996. If you have any questions regarding this matter, please call Mr. Donal O'Callaghan, at (323) 583-8811 ext. 834. ery truly yours, Nell�.± nl Deputy City Clerk NG:dr c: Donal O'Callaghan Dolores Jaunzemis Resolution No. 8996 Agreement File No. 06-035 T'Nulugivelp Inbu wid PROFESSIONAL SERVICES AGREEMENT This PROFESSIONAL SERVICES AGREEMENT ("Agreement") is dated March 30, 2006, by and between R. W. Beck, Inc. ("Consultant"), with offices at 2720 Gateway Oaks Drive, Suite 310, Sacramento, California 95833-4304, and the City of Vernon ("Client"), a California chartered city, with offices at 4305 Santa Fe Avenue, Vernon, California 90058. NOW, THEREFORE in consideration of the promises herein and for other good and valuable consideration, the parties agree as follows: 1. Scope of Services: Consultant and Client agree Consultant will perform such Utility Analysis and Project Analysis and Financing Services included as Exhibit A as requested by Client from time to time. The services to be provided by Consultant shall be agreed to by the parties and authorized in a Task Authorization to this Agreement which sets forth the Scope of Services, schedule, budget, payment provisions and other special provisions, if any, related to the Scope of Services set forth in such Task Authorization. Task Authorizations shall be incorporated into this Agreement and subject to its terms. 2. Independent Contractor: Consultant is an independent contractor and is not an employee of Client. Services performed by Consultant under this Agreement are solely for the benefit of Client. Nothing contained in this Agreement creates any duties on the part of either the Client or the Consultant toward any person not a party to this Agreement. 3. Standard of Care: Consultant will perform services under this Agreement with the degree of skill and diligence normally practiced by professional engineers or consultants of recognized national standing and experienced in each area covered by a Task Authorization performing the same or similar services. No other warranty or guarantee, expressed or implied, is made with respect to the services furnished under this Agreement and all implied warranties are disclaimed. 4. Changes/Amendments: This Agreement and its exhibits constitute the entire agreement between the Parties and together with its exhibits supersede any prior written or oral agreements with respect to the subject matter hereof. This Agreement may not be changed except by written amendment, or through Task Authorizations for individual tasks, signed by both Parties. The estimate of the level of effort, schedule and payment required to complete the Scope of Services, as Consultant understands it, will be in Task Authorizations for individual tasks. Services not expressly set forth therein are excluded. Consultant shall promptly notify Client upon becoming aware that the Scope of Services for a Task Authorization will not be sufficient to satisfy any objectives of the Client for, and set forth in, such Task Authorization. Consultant shall also promptly notify Client if changes to the Scope of Services affect the schedule, level of effort or payment to Consultant and the schedule and payment shall be equitably adjusted, as agreed to by the parties. If Consultant is delayed in performing its services due to an event beyond its control, including but not limited to fire, flood, earthquake, explosion, strike, RASuramentoN001595 Vemon. City oflUtility AnalysisWernon PSA_Final.dw Client #00 1 595/Agreement # xx-xxxxx R. W. Beck PSA 1 of 8 PROFESSIONAL SERVICES AGREEMENT transportation or equipment delays, act of war, or act of God, then the schedule or payment under individual Task Authorizations shall be equitably adjusted, if necessary, as agreed to by the parties, to compensate Consultant for any additional costs due to the delay. 5. Fee for Services and Expenses: The fee for the services under this Agreement will be based on the actual hours of services furnished multiplied by Consultant's Billing Rates as of the date of the performance of such services plus all reasonable expenses directly related to the services furnished under this Agreement. Expenses in excess of the budget amount for each Authorized Task shall be approved by the Client. Total expenditures under this Agreement are limited to $500,000 without amendment of the Agreement. Rates for the period July 1, 2005, through June 30, 2006, are set forth in Exhibit B. 6. Payment: Client shall pay Consultant its fee for services furnished under this Agreement upon submission of monthly invoices in the amount determined pursuant to Section 5 above. Additionally, Client shall reimburse Consultant monthly for reasonable expenses, as set forth in Section 5 above, at cost and at cost plus 10% for the services of any Subconsultant. Client shall pay Consultant in U.S. dollars within thirty (30) days of receipt of invoices less any disputed amounts. If Client disputes any portion of the invoice, the undisputed portion will be paid and Consultant will be notified in writing, within ten (10) days of receipt of the invoice of the exceptions taken. Consultant and Client will attempt to resolve the payment dispute within sixty (60) days or the matter may be submitted to arbitration as provided below. Additional charges for interest shall become due and payable at a rate of one and one-half percent (11/2%) per month (or the maximum percentage allowed by law, whichever is lower) on the unpaid, undisputed invoiced amounts. Any interest charges due from Client on past due invoices are outside any amounts otherwise due under this Agreement. If Client fails to pay undisputed 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. 7. Indemnity: To the extent permitted by law, Consultant agrees to indemnify, defend and hold harmless Client and its directors, officers, shareholders and employees from and against any liability (including without limitation, reasonable costs and attorneys' fees) incurred by Client to the extent caused by Consultant's negligent acts, errors or omissions, including judgments in favor of any third party. To the extent permitted by law, Client agrees to indemnify, defend and hold harmless Consultant and its directors, officers, shareholders, employees and subconsultants from and against any liability (including, without limitation, reasonable costs and attorney's fees) incurred by Consultant to the extent caused by Client's negligent acts, errors or omissions, including judgments in favor of any third party. RASacramento\001595 Vernon. City ol\Uti ity Analysis\Vemon PSA— inal.doc Client #00 1 595/Agreement # xx-xxxxx R. W. Beck PSA 2 of 8 PROFESSIONAL SERVICES AGREEMENT Each party (the "First Party") specifically and expressly waives its immunity under applicable worker's compensation and industrial insurance laws regarding liability against the other party (the "Second Party") for actions brought by any of the First Party's employees against the Second Party, to the extent the liability is caused by the First Party's negligent acts, errors or omissions. 8. Reperformance of Services: If Client believes any of the services provided under this Agreement do not comply with the terms of this Agreement, Client shall promptly notify Consultant to permit Consultant an opportunity to investigate. If the services do not comply with the terms of this Agreement, it will promptly reperform the services at no additional cost to Client, including assisting Client in selecting remedial actions.' 9. Section Intentionally Left Blank. 10. Insurance: Consultant shall maintain insurance with the following required coverages and minimum limits and upon request, will provide insurance certificates to Client: Worker's Compensation Statutory Employer's Liability U.S. $1,000,000 Commercial General Liability U.S. $1,000,000 per occurrence U.S. $1,000,000 aggregate Comprehensive General Automobile U.S. $1,000,000 combined single limit Professional Liability U.S. $1,000,000 per claim and in the aggregate 11. Work Product: Client shall own, and shall have the unrestricted right to use, the documents, analyses and other data prepared by Consultant under this Agreement (`Work Products'); provided, if Client releases the Work Products to a third party without Consultant's prior written consent, or changes or uses the Work Products other than as intended hereunder, (a) Client does so at its sole risk and discretion, (b) Consultant shall not be liable for any claims or damages resulting from the change or use or connected with the release or any third party's use of the Work Products and (c) Client shall indemnify, defend and hold Consultant harmless from any and all claims or damages related to the release, change or reuse. Consultant shall retain ownership of its intellectual property, including the procedures, processes, internal resources, tools, and other means used by Consultant to prepare the Work Products. 12. Limitation of Liability: No employee of Consultant shall have individual liability to Client. To the extent permitted by law, the total liability of Consultant, its officers, directors, shareholders, employees and subconsultants for any and all claims arising out of this Agreement, including attorneys' fees, and whether caused by negligence, errors, omissions, strict liability, breach of contract or contribution, or indemnity claims based on third party claims, shall not exceed U.S. $1,000,000.00). RASacramento001595 Vemon, City ot\Utitity Analysis\Vernon PSA Final.doc Client #001595/Agreement # xx-xxxxx R. W.13eck PSA 3 of 8 PROFESSIONAL SERVICES AGREEMENT 13. No Consequential Damages: In no event and under no circumstances shall Consultant be liable to Client for any indirect damages resulting from a breach of this Agreement, including indirect damages constituting principal, interest, loss of anticipated revenues, earnings, profits, increased expense of operation or construction, and loss by reason of shutdown or non -operation due to late completion. 14. Information Provided by Client or Others: Client shall provide to Consultant in a timely manner any information about the Client or its electric utility operators which Consultant indicates is needed to perform the services hereunder. Consultant may rely on the accuracy of information provided by Client and its representatives. 15.Opinions of Cost: Consultant does not control the cost of labor, materials, equipment or services furnished by others, nor does it control pricing factors used by others to accommodate inflation, competitive bidding or market conditions. Consultant estimates of operation expenses or construction costs represent its best judgment as an experienced and qualified professional and are not a guarantee of cost. This section does not apply to the cost of Consultant performing the Scope of Services. 16. Safety and Security: Consultant has established and maintains programs and procedures for the safety of its employees. Unless specifically included as a service to be provided under this Agreement, Consultant specifically disclaims any authority or responsibility for job site safety and safety of persons other than Consultant's employees. Consultant shall not provide any such services and disclaims any responsibility under this Agreement related to site security or the assessment, evaluation, review, testing, maintenance, operation or safety practices or procedures related to security. 17. Section Intentionally Left Blank. 18. Termination: Either party may terminate this Agreement upon thirty (30) days prior written notice to the other party. Client shall pay Consultant for all services rendered to the date of termination plus reasonable expenses for winding down the services. If either party defaults in its obligations hereunder, the non -defaulting party, after giving seven (7) days written notice of its intention to terminate or suspend performance under this Agreement, may, if cure of the default is not commenced and diligently continued, .terminate this Agreement or suspend performance under this Agreement. 19. Dispute Resolution: Consultant and Client 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 within ninety (90) days after either requests mediation, the dispute or conflict shall be subject to arbitration in English under the rules governing commercial arbitration as promulgated by the American Arbitration Association and arbitrability shall be subject to the Federal Arbitration Act. RASacramento\001595 Vernon. City oflUdlity AnalysisWernon PSA—Filw.doc Client #001595/Agreement # xx-xxxxx R. W: Beck PSA 4 of 8 PROFESSIONAL SERVICES AGREEMENT 20. Section Intentionally Left Blank. 21. Miscellaneous: a. This Agreement is binding upon and will inure to the benefit of Client and Consultant and their respective successors and assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other Pay b. Any notice required or permitted by this Agreement to be given shall be deemed to have been duly given if in writing and delivered personally or five (5) days after mailing by first-class, registered, or certified mail, return receipt requested, postage prepaid and addressed as follows: Client: City of Vernon Attention: Eric T. Fresch City Attorney Address: 4305 Santa Fe Avenue Vernon, California 90058 Consultant: R. W. Beck, Inc. Attention: Kenneth J. Mellor, PE Senior Director of Consulting Address: 2720 Gateway Oaks Drive, Suite 310 Sacramento, California 95833-4304 With a copy to: Lin Ross (which will not be considered notice) R. W. Beck, Inc. 10014th Avenue, Suite 2500 Seattle, Washington 98154-1004 c. Client expressly agrees that all provisions of this Agreement, including the clause limiting the liability of Consultant, were mutually negotiated and that but for the inclusion of the limitation of liability clause in the Agreement, Consultant's compensation for services would otherwise be greater and/or Consultant would not have entered into this Agreement. d. If the application of any provision of this Agreement to a particular set of circumstances is invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect and the provision declared invalid or unenforceable shall continue as to other circumstances. e. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California relating to contracts made and to be performed in said state. RASacramento\001595 Vemon. City oWtitity Analysis\Vernon PSA— mal.doc Client #001595/Agreement # xx-xxxxx R. W. Beck PSA 5 of 8 PROFESSIONAL SERVICES AGREEMENT f. In any action to enforce or interpret this Agreement, the prevailing party shall be entitled to recover, as part of its judgment, reasonable attorneys' fees and costs from the other party. g. This Agreement shall not be construed against Consultant only on the basis that Consultant drafted the Agreement. h. Notwithstanding any statute to the contrary, the Parties agree that any action to enforce or interpret this Agreement shall be initiated within two (2) years from the time the party knew or should have known of the fact giving rise to its action, and shall not in any case be initiated later than six (6) years after Consultant completes its Scope of Services under this Agreement. i. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original instrument, but all of which taken together shall constitute one instrument. IN WITNESS WHEREOF, the Parties have signed this Agreement the date first written above. City of Vernon 11 ATTEST: Signature Name eonis C . Malburg Title Mayor Date R. W. Beck, Inc. Signature Signature Name Kenneth J. or, PE Name Title Senior Dire or of Consulting Title Date 3-30-2006 Date APPROVED AS To F RM: Eric T. Freschl City Attorney Signature Name Title Date BruceUV. Malkenhorst, Jr. Acting City Clerk R:\Sacramento\001595 Vernon. City ofiUtility AnalysisWemon PSA_Finat.doc Client #001595/Agreement # xx-xxxxx R. W. Beck PSA 6 of 8 PROFESSIONAL SERVICES AGREEMENT Exhibit A R. W. Beds, Inc. SCOPE OF SERVICES City of Vemon RASwramento\001595 Vernon, City oW ifity AnalysisWernon PSA_Fimal.doc Client #001595/Agreement # xx-xxxxx R. W. $eck PSA 7 of 8 February 28, 2006 Via a -Mail Mr. Eugene Carron Partner Orrick, Herrington & Sutcliffe, LLP 777 South Figueroa Street, Suite 3200 Los Angeles, California 90017-5855 Subject: City of N�ernon Task Orders Dear Mr. Carron: As discussed at the meeting on November 18, 2005, between you, Donal, and Bruce, the following tasks have been defined and prioritized for approval by the City of Vernon. Each task definition includes a description of scope, estimated budget, and schedule. Gene, I know this has been a long time in coming. Several people were involved and I have been tied up with two major financings. They are wrapping up and we should be able to refine this quickly to meet Vernon's needs. It is understood that once approved in writing by the City for commencement of work, the work will be performed in accordance with an underlying contract between the City of Vernon and R. W. Beck, Inc. Task 1 Gas Procurement Plan Scope ■ R. W. Beck will prepare a Market Power Analysis that provides an estimate of natural gas prices and hourly market dispatch prices for electricity in Vernon over a 20-year study period. ■ An economic dispatch model will be run against the hourly electricity prices using constraints provided by Vernon for the Malburg Generating Station. ■ The economic dispatch model will also be applied to a new power plant in Vernon using constraints provided by Vernon. ■ The output from the economic dispatch model will be used to estimate natural gas, requirements for Vernon. ■ Those gas requirements and, in particular, the variance and amplitude of changes in them, will drive development of a Gas Procurement Plan. The "Gas Procurement Plan" will evaluate how much natural gas Vernon will need to operate the plant relative to natural gas market risk, with emphasis on when (in terms of days and months) gas will be needed. For example, baseload, constant operations generally allow a much simpler Gas Procurement Plan than one for a plant that operates at a 65% load factor with some days of zero dispatch, while other days are at maximum output. The Gas Procurement Plan will assess how much firm versus interruptible transportation the City should hold; evaluate options for addressing swings in dispatch and gas takes, such as storage or supplier balancing; describe the contractual arrangements the City should consider in buying natural gas; recommend how much of the City's gas should be purchased and priced under fixed price contracts and at monthly index versus daily swing index; and identify key variables the City should watch in order to update the plan. Work Product A Market Power Analysis and a Gas Procurement Plan will be provided. 2720 Gateway Oaks Drive, Suite 310 Sacramento, CA 95833-4304 Phone (916) 929-3653 Fax (916) 929-1 i10 . 9 Mr. Eugene Carron February 28, 2006 Page 2 Budget The estimated budget for the Gas Procurement Plan assistance is between $55,000 and $75,000. Schedule After task approval and authorization to proceeds, the development of the Gas Procurement Plan should be completed in 5 to 6 weeks. City Objective Acquire a fuel plan for natural gas containing procurement options and costs of options and a general description of benefits of options. Task 2 Organization Review My To develop an understanding of the current vision, the short-term and long-term objectives for the utility, and strategies for achieving those objectives within the utility and among key staff and management, interviews will be held with selected management and senior staff. Approximately 10 interviews scheduled over three days are planned. The context of the interviews will include: ■ The long-term vision, strategies and objectives of the utility ■ Existing and needed strategies for accomplishing the objectives ■ External threats and opportunities facing, the utility ■ Internal strengths and weaknesses of the utility ■ Challenges and issues that must be overcome to achieve the objectives R. W. Beck will review the electric utility organization plan developed by Vernon staff and will provide suggestions regarding the suitability of the plan based on projected demands for staff, division of work between internal and outsourced resources, and observations of current utility industry practices with respect to: ■ Division and structure of management responsibilities between the City and the Utility ■ Division and structure of management responsibilities within the Utility ■ Number of staff for each utility function ■ Position descriptions and qualifications ■ Risk management and internal controls Work Product Based on the interviews and review of the organization plan, R. W. Beck will prepare a brief report discussing current strategies and objectives and providing recommendations for Vernon to consider that if implemented could assist with meeting the identified objectives of the utility. A draft report will be presented to a selected group and then revised and finalized. Mr. Eugene Carron February 28, 2006 Page 3 Budget The estimated budget for the Organization Review is between $40,000 and $60,000. Schedule After Task 2 approval and authorization to proceed, the Organization Review should be completed in 4 to 8 weeks. City Objective Identify options for operating and maintaining utility and relative estimated costs of options. Task 3 Asset Management Review Scope R. W. Beck will work with Vernon to identify and characterize all key assets to be included in the review. Broad asset categories will include: ■ Personnel (tie to Organization Review) ■ Generation ■ Transmission ■ Distribution ■ Power Supply and Fuel Contracts ■ General Plant ■ Systems (mainly IT) Following identification, each asset will be addressed with respect to: ■ How assets are currently utilized. ■ How assets are currently managed. ■ Findings from the Organization Review. ■ Alternative means of utilization and operation. ■' Changes in systems requirements. Operating alternatives will be discussed, including: ■ Operations by Vernon. ■ Operations by Vernon supplemented by contractors for major projects or tasks. ■ Contracted operations. ■ Using City Management in management role. ■ Under a performance -based contract with City oversight. Mr. Eugene Carron February 28, 2006 Page 4 Considerations will include: ■ Management and governance issues ■ Staffing requirements ■ Needs for intermittent technical support ■ Risk management ■ Limitations due to tax-exempt financing ■ Total costs (short and long term) r e1. MM The pros and cons of each approach will be provided based on the above considerations. If desired, alternatives can be ranked based on a balance between competing attributes. Conclusions will be presented in a draft Asset Management Report that addresses options, considerations of costs, reliability, local control, and staff resources. A final Asset Management Report will be provided after receiving discussion and input from staff. Budget The estimated budget for the Asset Management Review is between $55,000 and $65,000. Schedule After Task 3 approval and authorization to proceed, the Asset Management Review should be completed in 6 to 8 weeks. This task can overlap Task 2 but its completion would lag Task 2 completion by at least 3 weeks. City Objective Compare pros and cons of different operations and maintenance alternatives for utility assets. Task 4 Power Supply Siting Scope The key issue to be addressed is the location of power supply assets to serve predicted electric load in Vernon. Considerations include: ■ Transmission transfer capacity ■ Transmission reliability ■ Transmission costs and ownership ■ Power plant sizes and locations Mr. Eugene Carron February 28, 2006 Page S ■ System reliability criteria ■ Reserves ■ Resource Adequacy Tests ■ Renewable Resource Requirements R. W. Beck will evaluate transmission studies already performed by Vernon and its consultants. An attempt will be made to translate study results to allow evaluation of three scenarios: 1. Vernon projected loads with no new internal generation. 2. Vernon projected loads with new internal generation to approximate self-sufficiency. 3. Vernon projected loads and surplus internal generation as set by Vernon, requiring export to locations to be determined. All three scenarios will include an assumption that Vernon complies with the intent of renewable portfolio and resource adequacy standards. ■ R. W. Beck will estimate power supply costs, including transmission and grid management fees for each of the above scenarios. To the extent applicable, assumptions and costs developed to date will be relied upon for this analysis. ■ Key assumptions will be proposed by R. W. Beck for discussion and modification by Vernon. ■ R. W. Beck will provide a qualitative discussion of integrated system reliability considerations for each scenario. Work Product R. W. Beck will provide a Power Supply Siting report that addresses: ■ Considerations ■ Key Assumptions ■ Scenario Definitions ■ Economic Evaluation of Three Scenarios ■ Qualitative discussion of power supply reliability for each scenario Budget The estimated budget for the Power Supply Siting is between $20,000 and $30,000. Schedule After Task 4 approval and authorization to proceed, the Power Supply Siting report is estimated to require 6 to 10 weeks. City Objective Compare pros and cons of siting generation resources within City boundaries. Mr. Eugene Carron February 28, 2006 Page 6 Task 5 Transmission Asset Review Scope The City of Vernon has opportunities to leverage their equity in transmission ownership. Vernon transmission is currently operated and scheduled by the California Independent System Operator (CAISO) in return for a FERC-regulated income to the City (PTO status). R. W. Beck will review the economics and power supply reliability issues associated with: ■ Divestiture of Vernon's transmission assets. ■ Status quo ■ Removal of PTO status with CAISO. ■ Transmission additions to support power generation decisions. Work Product R. W. Beck will provide a Transmission Asset Review report that addresses: ■ Estimated net costs of transmission for each of the three scenarios studied in the Power Supply Siting task. ■ Net costs will be adjusted to reflect the value of equity obtained through divestiture of selected transmission assets. This adjustment will reflect lower costs of money for new financing resulting from equity participation in new projects (if any). ■ Reliability differences with respect to power supply curtailment during CAISO shortages and PTO or Control Area status. Budget The estimated budget for the Transmission Asset Review is between $20,000 and $25,000. Schedule After Task 5 approval and authorization to proceed, the Transmission Asset Review should be completed in 6 to 8 weeks. City Objective Compare costs and benefits of ownership of transmission assets. Sincerely, R. W. BECK, INC. vvl 4 `KEY Kenneth J. Mellor, PE Senior Director of Consulting R:\Sacramento\001595 Vernon, City ot\Bus Dev\Tuk orders— 12-05\B&W Ltr_0rrick-Vernon_fina1.doc PROFESSIONAL SERVICES AGREEMENT Exhibit B R. W. Beck, Inc. HOURLY BILLING RATES Effective July 1, 2005 - June 30, 2006 Staff Title Rate Evis C. Couppis, PE Senior Director $285.28 Paul J. Harmon, PE Senior Director $273.65 Kenneth J. Mellor, PE Senior Director of Consulting $258.75 Catherine M. Elder Senior Director $248.78 Steven S. Rupp Senior Director $245.47 Taj M. Khan, PE Engineering Analyst $234.00 John C. Schmalz Principal Planning Cost Engineer $204.00 Peter J. Robertshaw, PE Principal Engineer $181.61 Daniel D. Whitney, PE Principal Engineer $149.04 Sebnem Tersezen Analyst $93.12 Judy Musso Administrative Assistant $80.94 Jeanine Garcia Financial Operations $65.52 RASacrament6\001595 Vernon. City oflUtility Analysis\Vernon PSA_Pinal.doc Client #001595JAgteement # xx-xxxxx R. W. $eck PSA 8 of 8 Task Authorization No.1 Task Authorization Description: Gas Procurement Plan Beck's Client Name: City of Vernon Beck's Contract No.: Effective Date: March 30, 2006 R. W. Beck, Inc. and the City of Vernon agree that this Task Authorization No. 1 will be governed by the terms and conditions of the Professional Services Agreement dated March 30, 2006, unless specifically modified herein. Scope of Services ■ R. W. Beck will prepare a Market Power Analysis that provides an estimate of natural gas prices and hourly market dispatch prices for electricity in Vernon over a 20-year study period. ■ An economic dispatch model will be run against the hourly electricity prices using constraints provided by Vernon for the Malburg Generating Station. ■ The economic dispatch model will also be applied to a new power plant in Vernon using constraints provided by Vernon. ■ The output from the economic dispatch model will be used to estimate natural gas requirements for Vernon. ■ Those gas requirements and, in particular, the variance and amplitude of changes in them, will drive development of a Gas Procurement Plan. The "Gas Procurement Plan" will evaluate how much natural gas Vernon will need to operate the plant relative to natural gas market risk, with emphasis on when (in terms of days and months) gas will be needed. For example, baseload, constant operations generally allow a much simpler Gas Procurement Plan than one for a plant that operates at a 65% load factor with some days at zero dispatch, while other days are at maximum output. The Gas Procurement Plan will assess how much firm versus interruptible transportation the City should hold; evaluate options for addressing swings in dispatch and gas takes, such as storage or supplier balancing; describe the contractual arrangements the City should consider in buying natural gas; recommend how much of the City's gas should be purchased and priced under fixed price contracts and at monthly index versus daily swing index; and identify key variables the City should watch in order to update the plan. Work Product A Market Power Analysis and a Gas Procurement Plan will be provided. Budget The estimated budget for the Gas Procurement Plan assistance is between $55,000 and $75,000. Schedule After task approval and authorization to proceeds, the development of the Gas Procurement Plan should be completed in 5 to 6 weeks. RASacrament6\001595 Vernon, City oWtility AnalysisWask Authl.doc Client 001595 Agreement No. TASK AUTHORIZATION NO.1 City Objective Acquire a fuel plan for natural gas containing procurement options and costs of options and a general description of benefits of options. IN WITNESS WHEREOF, the parties have signed this Task Order as of the date first written above. CITY OF VERNON Signature Name/Title Eric T. Fresch, City ttorney Signature Name/Title R. W. BECK, INC. Signature Name/Title Kenneth J. Wlor, PE, Senior Director of Consulting Signature Name/Title RASacra=nto\001595 Vernon, City oflUtility Analysis\Task Authl.doc Client 001595 Agreement No. R. W. Beck 2 Task Authorization No. 2 Task Authorization Description: Organization Review Beck's Client Name: City of Vernon Beck's Contract No.: Effective Date: March 30, 2006 R. W. Beck, Inc. and the City of Vernon agree that this Task Authorization No. 2 will be governed by the terms and conditions of the Professional Services Agreement dated March 30, 2006, unless specifically modified herein. Scope of Services To develop an understanding of the current vision, the short-term and long-term objectives for the utility, and strategies for achieving those objectives within the utility and among key staff and management, interviews will be held with selected management and senior staff. Approximately 10 interviews scheduled over three days are planned. The context of the interviews will include: ■ The long-term vision, strategies and objectives of the utility ■ Existing and needed strategies for accomplishing the objectives ■ External threats and opportunities facing the utility ■ Internal strengths and weaknesses of the utility ■ Challenges and issues that must be overcome to achieve the objectives R. W. Beck will review the electric utility organization plan developed by Vernon staff and will provide suggestions regarding the suitability of the plan based on projected demands for staff, division of work between internal and outsourced resources, and observations of current utility industry practices with respect to: ■ Division and structure of management responsibilities between the City and the Utility ■ Division and structure of management responsibilities within the Utility ■ Number of staff for each utility function ■ Position descriptions and qualifications ■ Risk management and internal controls Work Product Based on the interviews and review of the organization plan, R. W. Beck will prepare a brief report discussing current strategies and objectives and providing recommendations for Vernon to consider that if implemented could assist with meeting the identified objectives of the utility. A draft report will be presented to a selected group and then revised and finalized. Budget The estimated budget for the Organization Review is between $40,000 and $60,000. RASacratnento\001595 Vernon, City oflUtility AnalysisUask Auth2.doc Client 001595 Agreement No. Task Authorization No. 3 Task Authorization Description: Asset Management Review Beck's Client Name: City of Vernon Beck's Contract No.: Effective Date: March 30, 2006 R. W. Beck, Inc. and the City of Vernon agree that this Task Authorization No. 3 will be governed by the terms and conditions of the Professional Services Agreement dated March 30, 2006, unless specifically modified herein. Scope of Services R. W. Beck will work with Vernon to identify and characterize all key assets to be included in the review. Broad asset categories will include: ■ Personnel (tie to Organization Review) ■ Generation ■ Transmission ■ Distribution ■ Power Supply and Fuel Contracts ■ General Plant ■ Systems (mainly IT) Following identification, each asset will be addressed with respect to: ■ How assets are currently utilized. ■ How assets are currently managed. ■ Findings from the Organization Review. ■ Alternative means of utilization and operation. ■ Changes in systems requirements. Operating alternatives will be discussed, including: ■ Operations by Vernon. ■ Operations by Vernon supplemented by contractors for major projects or tasks. ■ Contracted operations. ■ Using City Management in management role. ■ Under a performance -based contract with City oversight. Considerations will include: ■ Management and governance issues ■ Staffing requirements R:ISacrarrento\001595 Vernon, City ollUtility Analysis\Task AudiIdoc Client 001595 Agreement No. TASK AUTHORIZATION NO.3 ■ Needs for intermittent technical support ■ Risk management ■ Limitations due to tax-exempt financing ■ Total costs (short and long term) Work Product The pros and cons of each approach will be provided based on the above considerations. If desired, alternatives can be ranked based on a balance between competing attributes. Conclusions will be presented in a draft Asset Management Report that addresses options, considerations of costs, reliability, local control, and staff resources. A final Asset Management Report will be provided after receiving discussion and input from staff. Budget The estimated budget for the Asset Management Review is between $55,000 and $65,000. Schedule After Task 3 approval and authorization to proceed, the Asset Management Review should be completed in 6 to 8 weeks. This task can overlap Task 2 but its completion would lag Task 2 completion by at least 3 weeks. City Objective Compare pros and cons of different operations and maintenance alternatives for utility assets. IN WITNESS WHEREOF, the parties have signed this Task Order as of the date first written above. CITY OF VERNON Signature Name/Title Eric T. French, City Attorney Signature Name/Title R. W. BECK, INC. Signature ��4 / d-1 Name/Title Kenneth J. Mel , PE, Senior Director of Consulting Signature Name/Title R.\Sacramento=1595 Vernon, City oflUtility Analysiffask AuthIdoc Client 001595 Agreement No. R. W. Beck 2 Task Authorization No. 4 Task Authorization Description: Power Supply Siting Beck's Client Name: City of Vernon Beck's Contract No.: Effective Date: March 30, 2006 R. W. Beck, Inc. and the City of Vernon agree that this Task Authorization No. 4 will be governed by the terms and conditions of the Professional Services Agreement dated March 30, 2006, unless specifically modified herein. Scope of Services The key issue to be addressed is the location of power supply assets to serve predicted electric load in Vernon. Considerations include: ■ Transmission transfer capacity ■ Transmission reliability ■ Transmission costs and ownership ■ Power plant sizes and locations .■ System reliability criteria ■ Reserves ■ Resource Adequacy Tests ■ Renewable Resource Requirements R. W. Beck will evaluate transmission studies already performed by Vernon and its consultants. An attempt will be made to translate study results to allow evaluation of three scenarios: 1. Vernon projected loads with no new internal generation. 2. Vernon projected loads with new internal generation to approximate self-sufficiency. 3. Vernon projected loads and surplus internal generation as set by Vernon, requiring export to locations to be determined. All three scenarios will include an assumption that Vernon complies with the intent of renewable portfolio and resource adequacy standards. ■ R. W. Beck will estimate power supply costs, including transmission and grid management fees for each of the above scenarios. To the extent applicable, assumptions and costs developed to date will be relied upon for this analysis. ■ Key assumptions will be proposed by R. W. Beck for discussion and modification by Vernon. ■ R. W. Beck will provide a qualitative discussion of integrated system reliability considerations for each scenario. RASacramentob01595 Vemon, City oAUtility Analysis\Task AuthCdoc Client 001595 Agreement NO. TASK AUTHORIZATION NO.4 Work Product R. W. Beck will provide a Power Supply Siting report that addresses: ■ Considerations ■ Key Assumptions ■ Scenario Definitions ■ Economic Evaluation of Three Scenarios ■ Qualitative discussion of power supply reliability for each scenario Budget The estimated budget for the Power Supply Siting is between $20,000 and $30,000. Schedule After Task 4 approval and authorization to proceed, the Power Supply Siting report is estimated to require 6 to 10 weeks. City Objective Compare pros and cons of siting generation resources within City boundaries. IN WITNESS WHEREOF, the parties have signed this Task Order as of the date first written above. CITY OF VERNON Signature Name/Title Eric T. Fresch, City Attorney Signature Name/Title R. W. BECK, INC. Signature C-;�A'J(" Name/Title Kenneth J. Mellor, , Senior Director of Consulting Signature Name/Title RASaaament6\001595 Vernon, City oWtility AnalysisWask AuthCdoc Client 001595 Agreement No. R. W. Beck 2 Task Authorization No. 5 Task Authorization Description: Beck's Client Name: Beck's Contract No.: Effective Date: Transmission Asset Review City of Vernon March 30, 2006 R. W. Beck, Inc. and the City of Vernon agree that this Task Authorization No. 5 will be governed by the terms and conditions of the Professional Services Agreement dated March 30, 2006, unless specifically modified herein. Scope of Services The City of Vernon has opportunities to leverage their equity in transmission ownership. Vernon transmission is currently operated and scheduled by the California Independent System Operator (CAISO) in return for a FERC-regulated income to the City (PTO status). R. W. Beck will review the economics and power supply reliability issues associated with: ■ Divestiture of Vernon's transmission assets. ■ Status quo ■ Removal of PTO status with CAISO. ■ Transmission additions to support power generation decisions. Work Product R. W. Beck will provide a Transmission Asset Review report that addresses: ■ Estimated net costs of transmission for each of the three scenarios studied in the Power Supply Siting task. ■ Net costs will be adjusted to reflect the value of equity obtained through divestiture of selected transmission assets. This adjustment will reflect lower costs of money for new financing resulting from equity participation in new projects (if any). ■ Reliability differences with respect to power supply curtailment during CAISO shortages and PTO or Control Area status. Budget The estimated budget for the Transmission Asset Review is between $20,000 and $25,000. Schedule After Task 5 approval and authorization to proceed, the Transmission Asset Review should be completed in 6 to 8 weeks. City objective Compare costs and benefits of ownership of transmission assets. R.'Sacrarrento\001595 Vernon, City of Utility Analysis\Task AuW.doc Client 001595 Agreement No. TASK AUTHORIZATION NO.5 IN WFFNESS WHEREOF, the parties have signed this Task Order as of the date first written above. CITY OF VERNON Signature Name/Title Eric T. Fresch, Cit Attorne Signature Name/Title R. W. BECK, INC. Signature Name/Title Kenneth J. Mellor E, Senior Director of Consulting Signature Name/Title RASacramento\001595 Vernon, City oWtility Analysis\06 Task AuW.doc Client o01595 Agreement No. R. W. Beck 2 E ri 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583-8811 November 8, 2007 Mr. Kenneth J. Mellor, PE R. W. Beck, Inc. Senior Director of Consulting 2720 Gateway Oaks Drive, Suite 310 Sacramento, CA 95833-4304 Re: Professional Services Agreement - Task Authorization No. 7 Dear Mr. Mellor: Transmitted herewith is a fully executed task authorization for professional services as referenced above, approved by City Council on November 6, 2007. If you have any questions regarding this matter, please call Mr. Donal O'Callaghan, at (323) 583-8811 ext. 834. Very truly yours, Nelly i on City Clerk NG:dr c: Donal O'Callaghan Dolores Jaunzemis Resolution No. 8996 Agreement File No. 06-035 E ,cfusive(y Industriaf Adjourned City Council Meeting Agenda November 6, 2007 Police Department 11. Request for authorization and funds for personnel to attend the following: • "Basic Geographic Profiling Training Course" • "Taser X26 Advanced Instructor Recertification Training Course" (2) • "Geographic Profiling Advanced Training Course" (2) • "Internal Affairs Seminar" (2) • "Polygraph Work Conference" • ,9th Annual California Background Investigators Association (CBIA) Training Symposium • "Search Warrant Class" (2) 12. Police Department Activity Log for the period of October 11 through October 31, 2007, to be received and filed. End of Consent Calendar Request from the Director of Light & Power for approval of and authorization to execute Task Authorization No. Seven of the contract with R.W. Beck in accordance with the estimated budget on page one of said authorization for Malburg Generating Station outage monitoring and associated testing and review. Request from the Director of Community Services &. Water for ratification of the execution of Change Order No. Five to the contract with R.E. Fiege Company, Inc. in the amount of $26,565.0.0 for the removal and installation of roofs on three Furlong Place housing units.6� Ul Request from the Director of Community Services & Water for approval of and authorization to execute Change Order to No. One in the amount of $27,000.00 for installation of interior wall insulation in three 50th Street housing units.. - I �Ar RESOLUTION NO. 9449 - A Resolution of`the City Council of the City of Vernon Authorizing the Sale of Surplus Property from the Following Departments: City Clerk, Community Services & Water, Finance, Fire, Light & Power, and Police Pursuant To Section 2.31 of the Vernon City Code Task Authorization Description: Effective Date: Client Name and :Number: Contract No.: TASK AUTHORIZATION NO.7 Malburg Project — Outage Monitoring, Start -Up and Testing and Independent Engineering Review Update October 10, 2007 City of Vernon (001595) 02-01612 Consultant and Client agree that this Task Authorization No. 7 will be governed by the terms and conditions of the Agreement dated March 30, 2006, as amended, unless specifically modified herein. Scope of Services Exhibit A Scope of Services is attached and made a part hereto. Work Product Consultant will witness outage work on the Malburg Project. Consultant will develop performance test procedures, testing services and will provide a perfonnance test report for testing of the Malburg Project. Separately, Consultant will provide an update to the Independent Engineering Report for Stapled Financing. Document Request Documentation will be requested as necessary during execution of the Scope of Services, attached hereto as Exhibit A. Budget The estimated budget is as follows: Estimated Budget Description Estimate Outage Work Witnessing $15,000-$20,000 per week Development of Performance Test Procedures, Testing Services, and providing a Performance Test Report of $70,000-$130,000 the Malburg Project Independent Engineering Report Update See attached Exhibit B Billing Rates attached and made a part hereto. $5,000 PAAgrecnnlsL00-ACity of Vernon Task Aulh No 7_10-18-07.doc Client # 001595/Agreement ll 02-01612 11. W. [leek PSA 1 of 7 TASK AUTHORIZATION NO.7 Schedule Due to the ambiguous nature of the outage on Unit 1, including parts availability, the budget has been provided on a week -to -week basis. Should turbine reassembly be stopped for an extended period of time due to parts availability, Consultant and the Client will mutually agree whether Consultant will remain on -site during the work stoppage. Subsequent to turbine reassembly, commissioning and start-up, the Start-up and Testing Tasks I through 4 of the Scope of Services is anticipated to be complete within 3 weeks while the Project Technical Review Task i of the Scope of Services is anticipated to be complete within 2 weeks following receipt of the preliminary Siemens Outage Report. City Objective Support to Stapled Financing option. IN WITNESS WHEREOF, the Parties have signed this Task Authorization No. 7 as of the date first written above. City of Vernon Signa=_ Name Donal O'Callaghan Title Director of Light and Power R W. Beck, Inc. Signatur �s%0 Name Keith J. Plane Title Principal I TTEST: L. WAN UELA GIRO C ty Clerk AS TO FORM: SON, City Attorney PAAgrecmtsL007\City or Vernon Task Auth No 7 IQ-18-07.doc Clicm 8 DOI M1Agteentent tG 03-01612 R. W. Dcck PSA 2 of 7 EXHIBIT A SCOPE OF SERVICES A. Outage Monitoring (Phase II Services) The role of Consultant during the outage of the Malburg Generating Station (THE "Project") is to provide verification of work performed by Siemens and Wood Group ("Contractor") and to report to the Client on the Project outage progress. This requires communication with the Contractor, Project Plant Management, and Client personnel. The Consultant will perform the following tasks during the outage period of the Project. Task 1: Provide Third -Party Engineering Services for the Outage The Consultant will provide third -party engineering services for the Project outage. This will include attendance at daily outage meetings between the Contractor, Project Plant Management, and Client personnel. The meetings will assess daily progress in schedule and repair activities and to review the Contractor's presentation of problem areas. The review will include the following: Services Relating to the Outage The Consultant will: • Review the overall outage }progress. ® Review proposed work plans and quality control procedures. ® Observe the work in progress to determine that the Project outage is proceeding in general accordance with the milestone schedule and with the agreed -upon concepts. H Review quality control reports and field laboratory test reports. • Consult with the Client, owner, and Contractor in advance of important work phases. B. Start -Up and Testing (Phase III Services) The Consultant will perform the following tasks during the start-up and testing phase of the Project. Task 1: Develop Performance Testing Procedures The Consultant will develop detailed test procedures in accordance with guidelines specified by the Client. Task 2: Witness Performance Tests The Consultant will monitor data collection procedures, testing instrumentation, and operating and testing personnel during the Project's performance test. It is assumed that testing will be accomplished over a two (2)-day period. PAAgreemtsL0071Ci1y of Vernon Task Auth No 7_10-15-07.doc Client 11001545/Agreement ft 02-01612 R. W. Deck PSA 3 or 7 EXHIBIT A SCOPE OF SERVICES Task 3: Develop a Performance Test Report The Consultant will develop the test report based on proper data reduction procedures and correction calculations to the guaranty conditions. Task 4: Submit Letter Report(s) to Client The Consultant will prepare a letter report summarizing the results of each performance test specified by the Client, comment on the accuracy of the test report, and identify any discrepancies or errors noted. C. Project Technical Review (Phase I Services) The Consultant will update the Phase I Independent Engineer's Report. Task 1: Update Independent Engineer's Report The Consultant will: • Update the monthly and annual operating statistics for the Project. a Update the Phase I Independent Engineer's Report based on the conclusion of the Contractor outage report. The Consultant will incorporate the necessary updates to the Phase I Independent Engineer's report. As the report is an update, it is anticipated that only one report issuance, the final report, will be necessary. D. Services Furnished by Client The Client will assist the Consultant in obtaining the following, as applicable: a Identification of and access to project participants' representatives. a Copies of engineering information relating to the Project. a Copie§ of contract documents to be reviewed. a Copies of permit applications, permits, correspondence, and other documentation relating to any necessary environmental permits or licenses for the Project. a Identification of and access to representatives of any public agency having jurisdiction over any necessary environmental permits or licenses for the Project. E. Limits of Authority The Consultant's comments, opinions, and recommendations are solely in connection with its duties as a consultant to the Client. The overall responsibility for design and construction of the Project rests with the contractor, and the Consultant is not PilAgrcen1ts\2007\City of Vernon Task Auth No 7_I0-18.07.doc Client,! 001595/Agreement 9 02-01612 R. W. Beck PSA 4 of 7 EXHIBIT A SCOPE OF SERVICES responsible for the acts nor omissions of the Client nor any contractor. Employees of the Consultant will not: • Undertake any of the responsibilities of the Client, contractor, subcontractor, nor of the contractor's superintendent. • Expedite work for the Client nor contractor, unless the Client requests and reimburses the Consultant for costs associated with specific expediting fiuictions. • Advise the Client nor contractor on, nor issue directions as to, safety precautions and programs in connection with the work. VAA-,reeml6t?0071City of Vernon Task Auth No 7_10-18-O7.doe Client,, 001595/Agreement ;f 02-01612 R. W. Beek PSA 5 of 7 EXHIBIT B BILLING RATES R. W. Beck, Inc. Billina Rates Billing Class Hourly Rate (US$) Typical Project Roles 1 20.00 2 34.00 3 48,00 Clerical, Administration, Junior Engineers and Technicians 4 62.00 5 76,00 6 90.00 7 104.00 8 118.00 Staff Engineers, Consultants 9 132.00 and Technicians 10 146.00 11 160.00 12 174.00 Senior Engineers, Consultants and Technicians, and 43 Project Managers 188.00 14 202.00 15 216.00 16 230.00 17 244.00 Executive Engineers and Consultants, Senior Project Managers, and Principals 18 258.00 19 272.00 20 286.00 21 300.00 .......... 22 314.00 23 ., 328.00 Executive Engineers and Consultants, Senior Project 24 328.00 Managers, and Senior Principals 25 356.00 26 370.00 27 384.00 'Salaries of personnel are subject to change In accordance with R. W. Beck's annual salary adjustment program. P:U1,grccm1s120071City of Vernon Task Auth No 7 10-18-07.doe Clieut f! 001595IAgrecmcnt 0 02-01612 R. W. Beck PSA 6 of 7 PROFESSIONAL SERVICES AGREEMENT This PROFESSIONAL SERVICES AGREEMENT ("Agreement") is dated March 30, 2006, by and between R. W. Beck, Inc. ("Consultant"), with offices at 2720 Gateway Oaks Drive, Suite 310, Sacramento, California 95833-4304, and the City of Vernon ("Client"), a California chartered city, with offices at 4305 Santa Fe Avenue, Vernon, California 90058. NOW, THEREFORE in consideration of the promises herein and for other good and valuable consideration, the parties agree as follows: 1. Scope of Services: Consultant and Client agree Consultant will perform such Utility Analysis and Project Analysis and Financing Services included as Exhibit A as requested by Client from time to time. The services to be provided by Consultant shall be agreed to by the parties and authorized in .a Task Authorization to this Agreement which sets forth the Scope of Services, schedule, budget, payment provisions and other special provisions, if any, related to the Scope of Services set forth in such Task Authorization. Task Authorizations shall be incorporated into this Agreement and subject to its terms. 2. Independent Contractor: Consultant is an independent contractor and is not an employee of Client. Services performed by Consultant under this Agreement are solely for the benefit of Client. Nothing contained in this Agreement creates any duties on the part of either the Client or the Consultant toward any person not a party to this Agreement.. 3. Standard of Care: Consultant will perform services under this Agreement with the degree of skill and diligence normally practiced by professional engineers or consultants of recognized national standing and experienced in each area covered by a Task Authorization performing the same or similar services. No other warranty or guarantee, expressed or implied, is made with respect to the services furnished under this Agreement and all implied warranties are disclaimed. 4. Changes/Amendments: This Agreement and its exhibits constitute the entire agreement between the Parties and together with its exhibits supersede any prior written or oral agreements with respect to the subject matter hereof. This Agreement may not be changed except by written amendment, or through Task Authorizations for individual tasks, signed by both Parties. The estimate of the level of effort, schedule and payment required to complete the Scope of Services, as Consultant understands it, will be in Task Authorizations for individual tasks. Services not expressly set forth therein are excluded. Consultant shall promptly notify Client upon becoming aware that the Scope of Services for a Task Authorization will not be sufficient to satisfy any objectives of the Client for, and set forth in, such Task Authorization. Consultant shall also promptly notify Client if changes to the Scope of Services affect the schedule, level of effort or payment to Consultant and the schedule and payment shall be equitably adjusted, as agreed to by the parties. If Consultant is delayed in performing its services due to an event beyond its control, including but not limited to fire, flood, earthquake, explosion, strike, R4S30anrntaW15M Vernon, City otllldrity Malysl%%Vemm PSA Ftnal.dac Client 800I595/Agreement # xx-xxxxx R. W. Beck PSA i of 8 PROFESSIONAL SERVICES AGREEMENT transportation or equipment delays, act of war, or act of God, then the schedule or payment under individual Task Authorizations shall be equitably adjusted, if necessary, as agreed to by the parties, to compensate Consultant for any additional costs due to the delay. Fee for Services and Expenses: The fee for the services under this Agreement will be based on the actual hours of services furnished multiplied by Consultant's Billing Rates as of the date of the performance of such services plus all reasonable expenses directly related to the services furnished under this Agreement. Expenses in excess of the budget amount for each Authorized Task shall be approved by the Client. Total expenditures under this Agreement are limited to $500,000 without amendment of the Agreement. Rates for the period July 1, 2005, through June 30, 2006, are set forth in Exhibit B. 6. Payment: Client shall pay Consultant its fee for services furnished under this Agreement upon submission of monthly invoices in the amount determined pursuant to Section 5 above. Additionally, Client shall reimburse Consultant monthly for reasonable expenses, as set forth in Section 5 above, at cost and at cost plus 10% for the services of any Subconsultant. Client shall pay Consultant in U.S. dollars within thirty (30) days of receipt of invoices less any disputed amounts. If Client disputes any portion of the invoice, the undisputed portion will be paid and Consultant will be notified in writing, within ten (10) days of receipt of the invoice of the exceptions taken. Consultant and Client will attempt to resolve the payment dispute within sixty (60) days or the matter may be submitted to arbitration as provided below. Additional charges for interest shall become due and payable at a rate of one and one-half percent (I1/x%a) per month (or the maximum percentage allowed by law, whichever is lower) on the unpaid, undisputed invoiced amounts. Any interest charges due from Client on past due invoices are outside any amounts otherwise due under this Agreement. If Client fails to pay undisputed 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. 7. Indemnity: To the extent permitted by law, Consultant agrees to indemnify, defend and hold harmless Client and its directors, officers, shareholders and employees from and against any liability (including; without limitation, reasonable costs and attorneys' fees) incurred by Client to the extent caused by Consultant's negligent acts, errors or omissions, including judgments in favor of any third party. To the extent permitted by law, Client agrees to indemnify, defend and hold harmless Consultant and its directors, officers, shareholders, employees and subconsultants from and against any liability (including, without limitation, reasonable costs and attorney's fees) incurred by Consultant to the extent caused by Client's negligent acts, errors or omissions, including judgments in favor of any third party. ltl,Sacra=nto1001595 Vcmon. Ciry 0AUdlity AnalysisWemen PSA_f'Inal.doc Client 1100 15951Agreement # xx-xxxxx R. W. Beck PSA 2 of 9 PROFESSIONAL SERVICES AGREEMENT Each party (the "First Party") specifically and expressly waives its immunity under applicable worker's compensation and industrial insurance laws regarding liability against the other party (the "Second Party") for actions brought by any of the First Party's employees against the Second Party, to the extent the liability is caused by the First Patty's negligent acts, errors or omissions. 8. Reperformance of Services: If Client believes any of the services provided under this Agreement do not comply with the terms of this Agreement, Client shall promptly notify Consultant to permit Consultant an opportunity :to investigate. If the services do not comply with the terms of this Agreement, it will promptly reperform the services at no additional cost to Client, including assisting Client in selecting remedial actions.' 9. Section intentionally Left Blank. 10. Insurance: Consultant shall maintain insurance with the following required coverages and minimum limits and upon request, will provide insurance certificates to Client: Worker's Compensation Statutory Employer's Liability U.S. $1,000,000 Commercial General Liability U.S. $1,000,000 per occurrence U.S. $1,000,000 aggregate Comprehensive General Automobile U.S. $1,000,000 combined single limit Professional Liability U.S. $1,000,000 per claim and in the aggregate 11. Work Product: Client shall own, and shall have the unrestricted right to use, the documents, analyses and other data prepared by Consultant under this Agreement (`Work Products'); provided, if Client releases the Work Products to a third party without Consultant's prior written consent, or changes or uses the Work Products other than as intended hereunder, (a) Client does so at its sole risk and discretion, (b) Consultant shall not be liable for any claims or damages resulting from the change or use or connected with the release or any third party's use of the Work Products and (c) Client shall indemnify, defend and hold Consultant harmless from any and all claims or damages related to the, release, change or reuse. Consultant shall retain ownership of its intellectual property, including the procedures, processes, internal resources, tools, and other means used by Consultant to prepare the Work Products. 12. Limitation of Liability: No employee of Consultant shall have individual liability to Client. To the extent permitted by law, the total liability of Consultant, its officers, directors, shareholders, employees and subconsultants for any and all claims arising out of this Agreement, including attorneys' fees, and whether caused by negligence, errors, omissions, strict liability, breach of contract or contribution, or indemnity claims based on third party claims, shall not exceed U.S. $1,000,000.00). tt_15acramento1001595 Venaaa, City otlUtility AnalysiskVeman PSA_Fwal.dtt Client 0001595/Agreement N xx-xxxxx R. W. Beck PSA 3 of 8 PROFESSIONAL SERVICES AGREEMENT 13. No Consequential Damages: In no event and under no circumstances shall Consultant be liable to Client for any indirect damages resulting from a breach of this Agreement, including indirect damages constituting principal, interest, loss of anticipated revenues, earnings, profits, increased expense of operation or construction, and loss by reason of shutdown or non -operation due to late completion. 14. Information Provided by Client or Others: Client shall provide to Consultant in a timely manner any information about the Client or its electric utility operators which Consultant indicates is needed to perform the services hereunder. Consultant may rely on the accuracy of information provided by Client and its representatives. 15. Opinions of Cost: Consultant does not control the cost of labor, materials, equipment or services furnished by others, nor does it control pricing factors used by others to accommodate inflation, competitive bidding or market conditions. Consultant estimates of operation expenses or construction costs represent its best judgment as an experienced and qualified professional and are not a guarantee of cost. This section does not apply to the cost of Consultant performing the Scope of Services. 16. Safety and Security: Consultant has established and maintains programs and procedures for the safety of its employees. Unless specifically included as a service to be provided under this Agreement, Consultant specifically disclaims any authority or responsibility for job site safety and safety of persons other than Consultant's employees. Consultant shall not provide any such services and disclaims any responsibility under this Agreement related to site security or the assessment, evaluation, review, testing, maintenance, operation or safety practices or procedures related to security. 17. Section Intentionally Left Blank. 18. Termination: Either party may terminate this Agreement upon thirty (30) days prior written notice to the other party. Client shall pay Consultant for all services rendered to the date of termination plus reasonable expenses for winding down the services. If either party defaults in its obligations hereunder, the non -defaulting party, after giving seven (7) days written notice of its intention to terminate or suspend performance under this Agreement, may, if cure of the default is not comrnenced and diligently continued, terminate this Agreement or suspend performance under this Agreement, 19. Dispute Resolution: Consultant and Client 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 within ninety (90) days after either requests mediation, the dispute or conflict shall be subject to arbitration in English under the rules governing commercial arbitration as promulgated by the American Arbitration Association and arbitrability shall be subject to the Federal Arbitration Act. RMacmmw(0401575 Vemon,City af\Utiliry AnAYSISWamonPSA-19maldoe Client1100I595/Agrcement #xx-xxxxx R. W. Beek PSA 4of 8 PROFESSIONAL SERVICES AGREEMENT 20. Section Intentionally Left Blank. 21. Miscellaneous: a. This Agreement is binding upon and will inure to the benefit of Client and Consultant and their respective successors and assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party. b. Any notice required or permitted by this Agreement to be given shall be deemed to have been duly given if in writing and delivered personally or five (5) days after mailing by first-class, registered, or certified mail, return receipt requested, postage prepaid and addressed as follows: Client: City of Vernon Attention: Eric T. Fresch City Attorney Address: 4305 Santa Fe Avenue Vernon, California 90058 Consultant: R. W. Beck, Inc. Attention: Kenneth J. Mellor, PE Senior Director of Consulting Address: 2720 Gateway Oaks Drive, Suite 310 Sacramento, California 95833-4304 With a copy to: Lin Ross .(which will not be considered notice) R. W. Beck, Inc. 10014th Avenue, Suite 2500 Seattle, Washington 98154-1004 c. Client expressly agrees that all provisions of this Agreement, including the clause limiting the liability of Consultant, were mutually negotiated and that but for the inclusion of the limitation of liability clause in the Agreement, Consultant's compensation for services would otherwise be greater and/or Consultant would not have entered into this Agreement. d. If the application of any provision of this Agreement to a particular set of circumstances is invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect and the provision declared invalid or unenforceable shall continue as to other circumstances. e. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California relating to contracts made and to be performed in said state. RASacramcata1001595 Vernon, City oRUdlhy Analys!AVcmon PSA_Finai.doc Client U001595/Agreement 4 xx-xxxxx R. W. Beck PSA 5 of 8 PROFESSIONAL SERVICES AGREEMENT f. In any action to enforce or interpret this Agreement, the prevailing party shall be entitled to recover, as part of its judgment, reasonable attorneys' fees and costs from the other party. g. This Agreement shall not be construed against Consultant only on the basis that Consultant drafted the Agreement. h. Notwithstanding any statute to the contrary, the Parties agree that any action to enforce or interpret this Agreement shall be initiated within two (2) years from the time the party knew or should have known of the fact giving rise to its action, and shaft not in any case be initiated later than six (6) years after Consultant completes its Scope of Services under this Agreement. i. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original instrument, but all of which taken together shall constitute one instrument. IN WITNESS WHEREOF, the Parties have signed this Agre ment the date first written above. City of Vernon ATTEST: Signature„ jj/fr Signature Name / (Leonis C. Malbura Name Bruce V. Malkenhorst, Jr. Title Mayor Title Acting City Clerk Date Date R. W. Beck, Inc. Signature J Signature Name Kenneth J. or, PE Name Title Senior Dire or of Consulting Title Date 3-30-2006 Date 1 APPROVED AS TO FORM: Eric T. Presch City Attorney (L•LSaeramcnm100t595 Vemon. City otWUtlty Analyslsftmoo PSA_FWat.dnc Client 0001595/Agreement 8 xx-xxxxx R_ W. Beek PSA 6 of 8 Rate Table List Tuesday, July25, 2006 R.W. BECK, INC. 2:26:50 PM Table Employee Employee Name Rate 1226 090043101000 01169 01851 02282 02405 02668 03812 03643 03887 03945 03956 03969 04032 " End of Report — COUPPIS, EVIS C MUSSO, JUDITH MELLOR,KENNETH ROBERTSHAW,PECER HARMON,PAULJ WHITNEY, DANIEL D SCHMALZ, JOHN C KHAN, TAJ M TEZSEZEN,SEBNEM RUPP, STEVEN S GARCIA, JEANINE Y ELDER, CATHERINE M. m 285.28 p _.86 S1 g6 . / 258.75 273.65 149.04 204.00 234.00 93.12 245.47 65.52 248.78 v7.Od (pmcnutt) -Page 1 AGMT F[l-E 0e-035- 02/13/07 TTU 11:26 FAX 323 826 1425 CITY OF VERNON UtiliCies [a002 �J TASit' &HORIZATION NO.6 Task Authorization Description: Malburg Project - Independent Engineering Review and Phase I EnAronrnerital Site Assessment Effective. Date: December 6, 2006 Client Name and Number: City ofVernon (001595) Contract No.: 02-01612 Consultant and Client agree that this Task Authorization will be governed by the terms and conditions of the Agreement dated March 30; N06, as amended, unless specificallymodified herein. Scope of Services - Exhibit A Scope -of Services is attached and made a part.hereto. Work Product R. W. Beck will provide an Independent Engineering Report for Stapled Financing: Separately, R. W. Beck wi°ll provide a Phase I Environmental Site'Assessment for the Malburg Project site. Document Request Exhibit B Document Request is attached and made a part hereto. Budget 'Me estimated budget for the Independent Engineering review is between $80,000 a_ nd $1a0,000. The estimated budget for. the Phase I Environmental Site Assessment is $16,000. See attached Exhibit C Billing Rates attached and made a part hereto. Schedule After this Task Authorization No. 6 approval and authorization to proceed, the Malburg Project Independent Engineering Review as described in Tasks 1 through 8 of the Scope of Services, as well as the Phase I Environmental Site Assessment as described in Task 9 of the Scope of Services should be completed in S weeks from receipt of data and notice -to -proceed- City Objective Support to Stapled Financing option. CAD=ments and SntfiWs rom rkocal Stalnsffemporary lotemet PilMO KEUty of Vernon Task Avth No'6 final 12-6-06.dovOrnt 0 0015951A&eemtn1 H 02-01612 R• V4t 13-Feb-07 12:20P 02'13/07 TUE 11:28 FAX 323 820 1425 CITY OF VERNON Utilities 1003 TA K AUTHOPMATION N0. 6 I IN WITNIE�SS WHEREOF, the Parties have signed this Task Authorization as of the date rirst Il written above. City of Vernon Name D nal 0a a an.. Title Director of. Light & Power R. W, Sack, Inc. Sipatwe Name Tide P:�nNr�m�t�7fla65CltYntYcmon7axkAHahN hAnn)124-0-dw Glim-000159VAgmLimmAQ2•ulfl: R W U;�LP:SA Suri6 13-Feb-07 12:28P Exhibit A SCOPE OF SERVICES A. Scope of Services for Malburg Generating Station Al: Project Technical Review (Phase f Services) The role of R. W. Beck, Inc. (the ".Independent Engineer") is to review the principal aspects of the Malburg Generating Station's (the "Project") engineering design, the technical provisions in the principal project contracts and permits and the operating history of the Project. The Project is located in Vernon, California and is a combined cycle facility utilizing the Alstom GTX100 combustion turbines. The Independent Engineer will identify issues uncovered during the review, and may propose an approach to address those which are within its area of expertise. In general, the Independent Engineer reviews work prepared by others and does not prepare original engineering design products. This Scope of Services does not include any assessment, evaluation, review, testing, or discussion of facility security issues, including but not limited to protection from terrorist acts, that may impact Client's facilities, systems, or human life or those of other entities with which CIient has business or operational relations. Task 1: Obtain Project Documentation Initial Project Scope Meeting The Independent Engineer will attend a meeting with the Client and other project participants during which time the scope of services provided by the Independent Engineer will be finalized and explained, and the data and documentation required from the participants to conduct those services will be defined. Finally, protocols for communication between the Independent Engineer, the Client, and other project participants will be established. Site Visit Following an initial review of project documentation, operating history, and principal project agreements, the Independent Engineer- will visit the project site to conduct a walkthrough to confirmand supplement the data reviewed. This visit will also be Used to collect additional documentation and data. Task 2: Review Project Design The Independent Engineer's review of the Project's design will focus primarily on the overall design, performance capabilities, major equipment and redundancies and life expectancy of the electric generating unit, as well as interconnections with off -site PAAgrecntl5L.006" C.ilc of Vernon IaA. Anih No 6 final 12-6-06.doc (Aicnl N 001575Mgreemcnl ff 02-01612 R. W. Hed PSA 3 of 16 Exhibit A - Scope of Services facilities such as electric transmission, fuel delivery, water supply, and wastewater and storniwater discharge. Major equipment components and systems will be reviewed by mechanical, electrical, civil/structural and environmental engineers with regard to: a Capability of design to perform as required in all anticipated operating modes. ]a Capability of design to meet availability and reliability requirements. Conformance of design with "good engineering practice" (i.e., industry standards). Based on the above evaluation, the Independent Engineer will identify any major equipment component or system design feature that does not, in its opinion, appear to meet the required design, performance or operating requirements, or fails to adhere to industry standards. The major equipment and systems to be reviewed will include: a Gas turbines and auxiliaries 0 Heat recovery stearn generators and auxiliaries m Steam turbine and auxiliaries w Fuel systems m Cooling water system iz Air pollution control system Water and wastewater treatment system Electric equipment * Control systems in Equipment layout Task 3: Review Operating History Performance The Independent Engineer will request and review the monthly and annual operating reports for the Project in order to assess its net electrical production, fuel usage (heat rate), performance indices, environmental compliance and outage history. Unit heat balances, test reports, and current performance will be compared to assess the units' performance at various ambient temperatures and load levels. Outage History, Condition of Major Equipment and Capital Improvement History The Independent Engineer will request and review monthly and annual operations and maintenance reports in order to assess the impact of forced and scheduled outages on past performance and project future forced and scheduled outages. The Independent Engineer will request and review capital improvements history and all major equipment inspection and/or condition assessment reports prepared by others for the Project. These reports will be useful in determining the condition of major equipment and useful in assessing future major maintenance costs and schedules. Yi•. L,racnlC. 2006Ci(y of Vernon T;ksk Auth No 6 fipal 12-6-00.doc Clienl p 0015951Agrcement 4 02-01612 K. W. Bed. ['SA 4 of 10 Exhibit A - Scope of Services Operations and Maintenance Costs The Independent Engineer will request and review historical and planned non -fuel operations and maintenance costs .for the Project. This information will provide input as to past maintenance, as well as a baseline for projecting future operations and maintenance costs. Regulatory Compliance The Independent Engineer will review the Project's compliance with environmental pennits and regulatory requirements. Particular attention will be given to any Notices of Violation, Consent Orders and Compliance Plans. Task 4: Review operating Agreements The Independent Engineer will conduct an engineering review of the key technical issues of all major project agreements, including power sales (if applicable), steam sales (if applicable) and gas supply and transportation. The review will be limited to engineering issues and their possible impacts on commercial issues, but will not address legal or regulatory Issues associated with the Project. The review will determine if the provisions contained therein are compatible with the expected output of the Project. The review will focus on the conditions that must be satisfied in order to qualify for capacity and/or energy payments under any power purchase agreements and will include a review of: is Purchaser's and seller's obligations * Tenn and termination provisions * Availability requirements Dispatching provisions im Regulatory provisions in Force majettre provisions Task 5: Review Operations and Maintenance Agreement/Plan The Independent Engineer will review the terns of the Operations & Maintenance ("O&M") Agreement and/or the provisions of the O&M Plan to identify and determine the adequacy of the plan or agreement to provide for operation and maintenance of the Project in a cost-effective manner and provide for developing long-term operating procedures. The Independent Engineer's review of the O&M Agreement (if applicable) and/or O&M Plan will include a review of m Term and termination provisions H Payment and bonus/penalty provisions M Reporting requirements Requirement for compliance with project agreements and pennits Pr, Agieenus 3on6 City of Vernon Task Auth No 6 final 12-6-06.dor Client # 0)1595iAgreentent 0 02-01612 11. W. Beck PSA 5 of 16 Exhibit A - Scope of Services is Procurement procedures • Annual budgetiner procedure ID • Natural gas purchase and resale (i f applicable) • Provisions for capital improvements This task will be coordinated with the review of the non -fuel O&M cost estimate noted in Task 3. Task 6: Review Technical Input to the Project Pro Forma The Independent Engineer will review the technical data input to the Project's project pro forma. The performance model used by the Project to estimate annual fuel and operating costs and annual revenues from the sale of power will be evaluated to determine if it accurately accounts for variations in ambient temperature, power sales, estimated plant availability, and utility dispatching constraints. The financial model will reflect the provisions of the operating agreements and technical operating assumptions. It will be determined how well the assumptions and projections made in the pro forma are supported by contract guarantees, performance testing, quality of the design and equipment, and the experience of the project participants. The scope of work will include the review and comment on the technical assumptions used in the financial model and will verify that the following assumptions are reasonable and consistent with the design of the Project's operating scenarios and Project agreements. I Revenue projections in FUCI consumption and efficiency is Dispatch constraints (if any) as per the power purchase agreement including: hot, cold, and warm starts, curtailments and part load operation • Any ISO agreements • Annual O&M expense inputs in Bonus/penalty arrangements in Adequacy of existing inventories Capital projects The Independent Engineer will not opine on fuel and power price forecasts or projected dispatch or the specific assumptions related to the debt financing, associated ratios, and calculation of distribution of cash/incorne between the ownership interests. Task 7: Review Environmental Regulatory requirements The Independent Engineer will review the status of permits and environmental regulatory compliance of the Project. As part of the site visit, the Independent Engineer will: P':ilgrccnn; ](10(,%Cily of Vernon Task Awl) No 6 final I-144)6.doc Client 8 001595/Agreement ' 02-01612 It. W. Reek RSA 6 of 16 Exhibit A - Scope of Services m Interview key operating personnel and review with them ongoing operations with respect to environmental regulations and compliance with existing permits and approvals. a Review emission/effluent monitoring programs and recordkeeping. a Obtain copies of selected environmental compliance information. a Review ongoing operations with respect to compliance with operating permit conditions and limitations. The Independent Engineer will examine current permits to ascertain currency and that limitations imposed will not impact operations. The Independent Engineer will review compliance with current permits by examining internal records and monitoring reports submitted to various agencies. ' The potential impact of any Notices of Violation, Consent Orders or Compliance Plans on future operations and costs will be evaluated. During the site visit, the Independent Engineer will review compliance with major non -permit environmental regulatory programs, such as requirements for spill response plans, hazardous materials handling and reporting, hazardous and solid waste disposal and PCB management. Task 8: Prepare Independent Engineer's Report Five copies of a first draft report identifying issues raised during the Phase I review will be prepared and submitted to the Client for continent within 5 weeks of release and receipt of data. Having addressed issues raised in the draft report, to the extent possible, the Independent Engineer will incorporate the Client's comments and present the status of each issue in a final report, which will be within 15 days of receiving comments on the draft report. Due to the uncertainty of the number of drafts of the hidependent Engineer's Report which must be prepared, the cost of services in preparing additional draft reports beyond the incorporation of the first round of client comments will be provided under additional services and is not included in the estimated fee for Phase I services. In the event that a "Stapled Financing" is provided by the Client's financial advisor, Lehman Brothers, the Independent Engineer will issue a Final Independent Engineer's Report ("Final Report") in a fore compliant with a 144A Securities Issuance. The Independent Engineer understands that the Final Report will be included in the 144A Securities offering document or similar offering document. Task 9: Conduct an ESA The Independent Engineer will provide a Phase I ESA of the project site. The purpose of the Phase I ESA is to identify environmental conditions regarding the potential for environmental liabilities which exist as a result of previous or ongoing contamination of the project site from hazardous substances or petroleum products from on- or off - site sources, which could cause a potentially significant financial liability for cleanup, hinder plant operations or impose restrictive operational protocols. Tile Phase I ESA will consist of three tasks, including data acquisition, a site visit, and report. The Phase I ESA does not include any sampling. P.Ageemt.:1000 City of Vemon Tall: Auth 10 6 NO I'_-6-06.duc Client"001i95/Ap"mcnt " 112-01412 R. 1:1. 13cck PSA 7 of 16 Exhibit A - Scope of Services ESA Limitations The results of the Phase I ESA investigations are intended to provide the Client with information relative to the potential for site contamination. The Independent Engineer will conduct the Phase I ESA in a manner consistent with industry standards and with the care, skill, and methods generally exercised by reputable professionals under similar circumstances. In no case should an Environmental Site Assessment or the report described by this task be portrayed as having the ability to determine whether a property is absolutely clean and free of hazardous materials or other environmental risks, since it is impossible to determine that contaminants are not on site. Data Acquisition As required, the Independent Engineer will meet with the project participants to discuss and exchange specific information about the Project. The project participants shall provide a list of contacts and share their understanding of the history, current uses and current condition of the subject properties. The Independent Engineer will use reasonably ascertainable standard historical sources such as aerial photographs, current and historical topographic snaps and reports of prior environmental investigations to assist in identifying the historical land uses of the project site. State and federal databases from California and the U.S. Environmental Protection Agency ("EPA"), as available, will be identified which typically document known or suspected hazardous waste or contaminated sites. As they pertain to potential contamination issues and to the extent allowed by agency protocols, public records regarding the project site and off -site documented hazardous waste and contaminated sites which have the potential to impact the project site will be reviewed. Methodology will include a review of relevant files as made available to the Independent Engineer by the project sponsors, including reports of previous ESAs conducted at the project site. Additionally, interviews will be conducted with project owners and public officials, as appropriate. Site Visit Visual observation of the grounds and terrain and of the structures on the property will be conducted, identifying surface conditions and the use of the project site, such as building function; topography; drainage; surface water; soil; vegetation and visible locations of accumulated debris, tanks, drums or other containers with hazardous or unidentified substances. Particular attention will be paid to spills, stains, unidentified Liquids, odors, dead or stressed wildlife/vegetation, evidence of burial and other indicators that suggest environmental liability or areas of concern. Conditions inconsistent with the historical land use will be noted. Identification of wetland boundaries are not included in the Phase I ESA. Interior examination of project buildings is also part of the site visit. Relevant observations will include attention to petroleum product storage areas, transformers, chemical supply areas, storage and disposal practices of hazardous wastes and potential spill areas. Potential for the presence of asbestos and polychlorinated biphenyls ("PCBs") will be determined. P. _\rrcums'2006\CityofvcntouTask Auth No 6 final 12-6.06.iloc Client'; 0015951Agtecownt"02-01612 K. W. Bcch PSA 8 of 16 Exhibit A - Scope of Services As provided by project personnel, the Independent Engineer's assessment will include a review of spill report logs, environmental audit reports, underground storage tank data and evidence of compliance with regulations, such as oil spill prevention rules, community right -to -know laws, hazardous wastes and- stormwater pollution prevention. Areas nmimediately adjacent to the project site also will be observed regarding the 1.7 presence of obvious indications of impacts to the subject property or potential areas of concern. These observations will be made from the perimeter boundary of the subject property and from accessible public thoroughfares. Report Preparation The Phase I ESA draft report will include findings resulting from the data acquisition and site visit, describing suspected areas of contamination, potential environmental liability and other areas of concern as determined by the Phase I ESA. Recommendations will be made as to whether a Phase II investigation is warranted, based upon the results of the Phase I study. The discussion will justify tile reasons, if any, for conducting the investigation and will provide a concise plan for the recommended range of sampling and additional investigations suggested during the Phase II probe. Appropriate independent engineering personnel will be available to answer questions and discuss the findings and recommendations of the Phase I ESA draft report with the Client. One copy of the draft report will be submitted to the Client for review and comment. Upon receipt of consolidated comments from the Client, the Independent Engineer will incorporate the comments, as appropriate, and will prepare and submit to the Client three copies of the final report. The final report of findings will include a detailed description of the Iustorical records review of the properties and existing site conditions as determined by the site visit. Relevant documents, figures and photographs also will be included with the final report. The Phase I ESA Report will be separate from the report discussed in Task 8. B. Services Furnished by Client The Client will assist the Independent Engineer in obtaining the following, as applicable: • Identification of and access to project participants' representatives. • Copies of engineering information relating to the Project. • Copies of contract documents to be reviewed. • Copies of pei7mit applications, permits, correspondence and other documentation relating to any necessary environmental permits or licenses for the Project. • Identification of and access to representatives of any public agency having jurisdiction over any necessary environmental permits or licenses for the Project. • Investigations at the property. if any. Y: •Agreeinrs 20DG`City of Veman Task Au(h 10 6 6na1 12-6-00.doc Clienl8 0.015951Agreernenl S (C-Dif l'_ R. W. Beck I'SA 9 or ib Exhibit A - Scope of Services In order to perform the Phase I ESA scope of services described in Task 9 of the Scope of Services in a cost-efficient and timely manner, the Client will coordinate Nvith the current property owners or operators, as appropriate, to make available to the Independent Engineer, at no cost, the following items or services: • Copies of site plans and/or land surveys with property boundaries. • The legal description for the project site as described by the appropriate taxing authority. • Copies of prior environmental investigations and monitoring data (as appropriate) performed at the project site, if any. im A chain of title for the property, i f available Services of the Client's representatives (engineers, enviroiumeiital consultants) to address questions by the Independent Engineer regarding prior enviroiunental investigations at the property, if any. C. Additional Services Available from the Independent Engineer The services under this section are in addition to the typical services provided by the Independent Engineer in a project financing situation as described in Section A. Such services will be provided at the request of the Client. At the time of a request by the Client for additional services, the Independent Engineer will provide a time and cost estimate to complete the requested services. Review Additional Revisions of Project Data The Independent Engineer will review additional revisions to the various documents initially provided in response to the data request, as required and specified by the Client when the updated information becomes available. D. Limits of Authority The Independent Engineer's comments, opinions and recommendations are solely in connection with its duties as a consultant to the Client. The overall responsibility for design, construction and operation of the Project rests with the contractor or operator, and the Independent Engineer is not responsible for the acts nor omissions of the Client, operator nor any contractor. Employees of the Independent Engineer will not: • Undertake any of the responsibilities of the Client, contractor, subcontractor, contractor's superintendent, nor operator. • Expedite work for the Client, operator nor contractor, unless the Client requests and reimburses the Independent Engineer for costs associated with specific expediting fiinctions. P Agreennsl2006':City of Vernon Task Audi No ri final 12-6-0.6.doc Clienl ;V 001595lAgreetnent H II2-01612 R. W. Beck PSA LU of 16 Exhibit A - Scope of Services Advise the Client, operator nor contractor on, nor issue directions as to, safety precautions and programs in connection with the work. P: Agnengs,2006`.CiIVorVernon Task Awh ti-6 final 12-(06doc Client," 00151)5/Amucumunt :1 024)1611 R. W. Beck PSA I I of 16 ■ General m A general description of the facility, including the following information: Design criteria document (original EPC Contract) 0 Site plan a Electrical one -lisle diagram a Design water balance diagram a Plant design heat and material process diagrams at "typical summer" and "typical winter" ambient conditions w Independent Engineer's Report for initial finaticinfr m Fuel consultant report Plant Performance ® Monthly operating summaries showing: * kWh generated * Forced outage rate In Equivalent availability » Capacity factor B Outage hours and causes z Auxiliary power requirements M Fuel consumption M Average ambient conditions for the month, if available M Raw water consumption ® Demineralized water consumption Final performance test results from acceptance testing Financial Information z Annual operating cost summaries since initial operation showing: Cost of raw materials (e.g., water) and chemicals * Cost of O&M and administrative staff salaries 11:•.Aarccnns120061City of Vcnion -fnsk Aumh No 6 final 12-6-06.tloc Client Pf 001595/Aureemem 4 0_'-01612 It. W- IRA PSA' 12 of 16 Exhibit B Operating Phase I Documentation Request • Cost of parts and supplies • Cost of contract maintenance • Capital spent on renewals, replacements and improvements • Fuel cost • Total O&M cost Agreements (with Amendments) w Power sales (if applicable) m Fuel supply and transportation n Water supply Wastewater disposal m Operations and maintenance » Other relevant current or proposed agreements Operation and Maintenancei A copy of the following (to be reviewed during site visit) a Plant operating program M Plant personnel training program 2 Planned maintenance program, including backlog level M Work order system, including backlog level ® Spare parts management program, including total value of inventory level and any significant deviation from recomnnended levels m A plant staff organizational chart or listing showing the number of each type of employee on the staff and the organizational relationship of the plant staff = A list of major operating problems and breakdowns or failures which have occurred in the past five years. A basic description, the cause and status of resolution for each problem should be included. m An outage schedule for currently scheduled planned outages with a list of major scheduled maintenance items, including cost, schedule, duration, etc. m Long-term major repairs, renewals and replacements schedule, including expected costs M Most recent inspection reports from the boiler and machinery insurer P:L•\grecmu 20U6+.Cityof Vernon Tall AuUi No 6 final 12-6-06.doc Oicnl r! 001505: Atrecmcm J 02-01612 11, W. neck 1'SA 13 of to Exhibit D Operating Phase I Documentation Request Environmental and Regulatory a List of permits required to construct and operate the project with the agencies having the authority to issue each identified permit im Copies of periodic reports submitted to regulatory agencies covering air and water discharges a Copies of any notices of violation or public complaints im Copy of major project pernits or permit applications, including Title V, if applicable » Copy of any environmental site assessments • Flow diagram of stonnwater collection system m and information on stonnwater pernits or stonnwater pollution prevention plans • Copy of NPDES P:\Agreernls\29061Ci1-v of 4crnon I a;k Auth No 6 final 12-6.06.doe Client # 001 596: AEreemenl l? 02.01612 R. W. Beck PSA 1•1 of 16 Exhibit C Billina Rates R. W. Beck, Inc. Billing Rates Billing Class Hourly Rate (US$) Typical Project Roles 1 20.00 2 34.00 3 48.00 Clerical., Administration, Junior Engineers and Technicians 4 62.00 - 5 76.00 6 90.00 7 104.00 8 118.00 Staff Engineers, Consultants 9 132.00 and Technicians 10 146.00 11 160.00 12 174.00 Senior Engineers, Consultants and Technicians, and Project Managers 13 188:00 14 202.00 15 216.00 16 230.00 17 244.00 Executive Engineers and Consultants, Senior Project Managers, and Principals 18 258.00 19 272.00 20 286.00 21 .. 300.00 22 314.00 23 328.00 Executive Engineers and Consultants, Senior Project 24 328.00 Managers, and Senior Principals 25 356.00 26 370.00 "Salaries of personnel are subject to change in accordance with R. W. Beck's annual salary adjustment program. P;tAgreemLt'-20064Cht nfVenum Task Auth No 6 Cnal 12-6-06.doe Clicnt 10 0(11i4 rAgeement ,".02-01612 R. W- Beck PSA 13 of 16 Exhibit C Billing Rates R. W. Back Kay Personnel Dame Class Keith Platte 22 Vic Derks 18 Mike O'Dell 15 Bill Stark 15 Scott Buniliam 14 Bill Mundt 13 Michael Fisher 11 Sue Bondch 7 P:\A,-,rcun1WMJ061Ciry of Vernon Task Ault No 0 final 42-6-06.doc Client 001395,A-grccmcnt 0 03-01612 R. W. Beck P_tiA Io of If, PROFESSIONAL. SERVICES AGREEMENT This PROFESSIONAL SERVICES AGREEMENT ("Agreement") is dated March 30, 2006, by and between R. W. Beck, Inc. ("Consultant"), with offices at 2720 Gateway Oaks Drive, Suite 310, Sacramento, California 95833-4304, and the City of Vernon ("Client"), a California chartered city, with offices at 4305 Santa Fe Avenue, Vernon, California 90058. NOW, THEREFORE in consideration of the promises herein and for other good and valuable consideration, the parties agree as follows: 1. Scope of Services: Consultant and CIient agree Consultant will perform such Utility Analysis and Project Analysis and Financing Services included as Exhibit A as requested by Client from time to time. The services to be provided by Consultant shall be agreed to by the parties and authorized in a Task Authorization to this Agreement which sets forth the Scope of Services, schedule, budget, payment provisions and other special provisions, if any, related to the Scope of Services set forth in such Task Authorization. Task Authorizations shall be incorporated into this Agreement and subject to its terms. 2. Independent Contractor: Consultant is an independent contractor and is not an employee of Client. Services performed by Consultant under this Agreement are solely for the benefit of Client. Nothing contained in this Agreement creates any duties on the part of either the Client or. -the Consultant toward any person not a party to this Agreement. 3. Standard of Care: Consultant will perform services under this Agreement with the degree of skill and diligence normally practiced by professional engineers or consultants of recognized national standing and experienced in each area covered by a Task Authorization performing the same or similar services. No other warranty or guarantee, expressed or implied, is made with respect to the services furnished under this Agreement and all implied warranties are disclaimed. 4. Changes/Amendments: This Agreement and its exhibits constitute the entire agreement between the Parties and together with its exhibits supersede any prior written or oral agreements with respect to the subject matter hereof. This Agreement may not be changed except by written amendment, or through Task Authorizations for individual tasks, signed by both Parties. The estimate of the level of effort, schedule and payment required to complete the Scope of Services, as Consultant understands it, will be in Task Authorizations for individual tasks. Services not expressly set forth therein are excluded. Consultant shall promptly notify Client upon becoming aware that the Scope of Services for a Task Authorization will not be sufficient to satisfy any objectives of the Client for, and set forth in, such Task Authorization. Consultant shall also promptly notify Client if changes to the Scope of Services affect the schedule, level of effort or payment to Consultant and the schedule and payment shall be equitably adjusted, as agreed to by the parties. If Consultant is delayed in performing its services due to an event beyond its control, including but not limited to fire, flood, earthquake, explosion, strike, R.'Sacramcnto1d191595 Vernon. aty oRUdlity Analyais%Vu on P,SA_Fmg.doc Client 800t595/Agreement It xx-xxxxx R. W. Beck PSA 1 of 8 PR©F€SSIONAL SERVICES AGREEMENT transportation or equipment delays, act of war, or act of God, then the schedule or payment under individual Task Authorizations shall be equitably adjusted, if necessary, as agreed to by the parties, to compensate Consultant for any additional costs due to the delay. 5. Fee for Services and Expenses: The fee for the services under this Agreement will be based on the actual hours of services furnished multiplied by Consultant's Billing Rates as of the date of the performance of such services plus all reasonable expenses directly related to the services furnished under this Agreement. Expenses in excess of the budget amount for each Authorized Task shall be approved by the Client. Total expenditures under this Agreement are limited to $500,000 without amendment of the Agreement. Rates for the period July 1, 2005, through June 30, 2006, are set forth in Exhibit B. 6. Payment: Client shall pay Consultant its fee for services furnished under this Agreement upon submission of monthly invoices in the amount determined pursuant to Section 5 above. Additionally, Client shall reimburse Consultant monthly for reasonable expenses, as set forth in Section 5 above, at cost and at cost plus 10% for the services of any Subconsuitant. Client shall pay Consultant in U.S. dollars within thirty (30) days of receipt of invoices less any disputed amounts. If CIient disputes any portion of the invoice, the undisputed portion will be paid and Consultant will be notified in writing, within ten (10) days of receipt of the invoice of the exceptions taken. Consultant and Client will attempt to resolve the payment dispute within sixty (60) days or the matter may be submitted to arbitration as provided below. Additional charges for interest shall become due and payable at a rate of one and one-half percent (11lz%) per month (or the maximum percentage allowed by law, whichever is lower) on the unpaid, undisputed invoiced amounts. Any interest charges due from Client on past due invoices are outside any amounts otherwise due under this Agreement. If CIient fails to pay undisputed 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. 7. fndemnity: To the extent permitted by law, Consultant agrees to indemnify, defend and hold harmless Client and its directors, officers, shareholders and employees from and against any liability (including without limitation, reasonable costs and attorneys' fees) incurred by Client to the extent caused by Consultant's negligent acts, errors or omissions, including judgments in favor of any third party. To the extent permitted by law, Client agrees to indemnify, defend and hold harmless Consultant and its directors, officers, shareholders, employees and subconsultants from and against any liability (including, without limitation, reasonable costs and attorney's fees) incurred by Consultant to the extent caused by Client's negligent acts, errors or omissions, including judgments in favor of any third party, ftd52aamMILOW01595 Vernon, Ciry af\Uuliiy AnalyslsWemmn PSA Fina(Am Client n0015951AgrCement it xx-xX%XX R. W. Beck PSA 2 of 8 PROFESSIONAL SERVICES AGREEMENT Each party (the "First Party"). specifically and expressly waives its immunity under applicable worker's compensation and industrial insurance laws regarding liability against the other party (the "Second Party") for actions brought by any of the First Party's employees against the Second Party, to the extent the liability is caused by the First Party's negligent acts, errors or omissions. $. Reperformance of Services: If Client believes any of the services provided under this Agreement do not comply with the terms of this Agreement, Client shall promptly notify Consultant to permit Consultant an opportunity to investigate. If the services do not comply with the terms of this Agreement, it will promptly reperform the services at no additional cost to Client, including assisting Client in selecting remedial actions.' 9. Section Intentionally Left Blank. 10.Insurance: Consultant shall maintain insurance with the following required coverages and minimum limits and upon request, will provide insurance certificates to Client: Worker's Compensation Statutory Employer's Liability U.S. $1,000,000 Commercial General Liability U.S. $1,000,000 per occurrence U.S. $1,000,000 aggregate Comprehensive General Automobile U.S_ $1,000,000 combined single limit Professional Liability U.S. $1,000,000 per claim and in the aggregate 11. Work Product: Client shall own, and shall have the unrestricted right to use, the documents, analyses and other data prepared by Consultant under this Agreement ('Work Products'); provided, if Client releases the Work Products to a third party without Consultant's prior written consent, or changes or uses the Work Products other than as intended hereunder, (a) Client does so at its sole risk and discretion, (b) Consultant shall not be liable for any claims or damages resulting from the change or use or connected with the release or any third party's use of the Work Products and (c) Client shall indemnify, defend and hold Consultant harmless from any and all claims or damages related to the release, change or reuse. Consultant shall retain ownership of its intellectual property, including the procedures, processes, internal resources, tools., and other means used by Consultant to prepare the Work Products. 12. Limitation of Liability: No employee of Consultant shall have individual liability to Client. To the extent permitted by law, the total liability of Consultant, its officers, directors, shareholders, employees and subconsultants for any and all claims arising out of this Agreement, including attorneys' fees, and whether caused by negligence, errors, omissions, strict liability, breach of contract or contribution, or indemnity claims based on third party claims, shall not exceed U.S. $1,000,000.00). RASacramaamt001595 Vcmon. City onUtility Analysis%Veman P5A_Final.doc Client n001595/Agreement # xx•xxxxx R. W. Seek PSA 3 of 8 PROFESSIONAL SERVICES AGREEMENT 13. No Consequential Damages: In no event and under no circumstances shall Consultant be. liable to Client for any indirect damages resulting from a breach of this Agreement, including indirect damages constituting principal, interest, loss of anticipated revenues, earnings, profits, increased expense of operation or construction, and loss by reason of shutdown or non -operation due to late completion. 14. Information Provided by Client or Others: Client shall provide to Consultant in a timely manner any information about the Client or its electric utility operators which Consultant indicates is needed to perform the services hereunder. Consultant may rely on the accuracy of information provided by Client and its representatives. 15. Opinions of Cost: Consultant does not control the cost of labor, materials, equipment or services furnished by others, nor does it control pricing factors used by others to accommodate inflation, competitive bidding or market conditions. Consultant estimates of operation expenses or construction costs represent its best judgment as an experienced and qualified professional and are not a guarantee of cost. This section does not apply to the cost of Consultant performing the Scope of Services. 16. Safety and Security: Consultant has established and maintains programs and procedures for the safety of its employees. Unless specifically included as a service to be provided under this Agreement, Consultant specifically disclaims any authority or responsibility for job site safety and safety of persons other than Consultant's employees. Consultant shall not provide any such services and disclaims any responsibility under this Agreement related to site security or the assessment, evaluation, review, testing, maintenance, operation or safety practices or procedures related to security. 17. Section Intentionally Left Blank. 18. Termination: Either party may terminate this Agreement upon thirty (30) days prior written notice to the other party. Client shall pay Consultant for all services rendered to the date of termination plus reasonable expenses for winding down the services. If either party defaults in its obligations hereunder, the non -defaulting party, after giving seven (7) days written notice of its intention to terminate or suspend performance under this Agreement, may, if cure of the default is not commenced and, diligently continued, terminate this Agreement or suspend performance under this Agreement. 19. Dispute Resolution: Consultant and Client 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 within ninety (90) days after either requests mediation, the dispute or conflict shall be subject to arbitration in English under the rules governing commercial arbitration as promulgated by the American Arbitration Association and arbitrability shall be subject to the Federal Arbitration Act. RASa raimnto=15?5 Wman, City 00diliy Ana1ysis4Veman PSA_Fnnl.Jnc Client fP00L595/Ag eerrtenl if xx-xxxxx R. W. Beck PSA 4 of 8 PROFESSIONAL SERVICES AGREEMENT 20. Section Intentionally Left Blank. 21. MiscelIaneous: a. This Agreement is binding upon and will inure to the benefit of Client and Consultant and their respective successors and assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party. b. Any notice required or permitted by this Agreement to be given shall be deemed to have been duly given if in writing and delivered personally or five (5) days after mailing by first-class, registered, or certified mail, return receipt requested, postage prepaid and addressed as follows: Client: City of Vernon Attention: Eric T. Fresch City Attorney Address: 4305 Santa Fe Avenue Vernon, California 90058 Consultant: R. W. Beck, Inc. Attention: Kenneth I. Mellor, PE Senior Director of Consulting Address: 2720 Gateway Oaks Drive, Suite 310 Sacramento, California 95833-4304 With a copy to: Lin Ross (which will not be considered notice) R. W. Beck, Inc. 1001 4th Avenue, Suite 2500 Seattle, Washington 98154.1004 c. Client expressly agrees that all provisions of this Agreement, including the clause limiting the liability of Consultant, were mutually negotiated and that but for the inclusion of the limitation of liability clause in the Agreement, Consultant's compensation for services would otherwise be greater and/or Consultant would not have entered into this Agreement. d. If the application of any provision of this Agreement to a particular set of circumstances is invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect and the provision declared invalid or unenforceable shall continue as to other circumstances. e. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California relating to contracts made and to be performed in said state. R:�Saerameaic\OUI595 vcrnon. City oWtiSity AnalyslAVemon PSA_Frnal.dnc Client #?001595/Agreement If xx-xxxxx R. W. Beck PSA 5 of 8 PROFESSIONAL. SERVICES AGREEMENT f. In any action to enforce or interpret this Agreement, the prevailing party shall be entitled to recover, as part of its judgment, reasonable attorneys' fees and costs fro in the other party. g. This Agreement shall not be construed against Consultant only on the basis that Consultant drafted the Agreement. h. Notwithstanding any statute to the contrary, the Parties agree that any action to enforce or interpret this Agreement shall be initiated within two (2) years from the time the party knew or should have known of the fact giving rise to its action, and shall not in any case be initiated later than six (6) years after Consultant completes its Scope of Services under this Agreement. i. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original instrument, but all of which taken together shall constitute one instrument. IN WITNESS WHEREOF, the Parties have signed this Agre meet the date first written above. City of Vernon ATTEST: Signaturel 4 Signature Name fl6.eonis C. Malburg Name Bruce V. Malkenhorst, Jr. Title Mayor Title Acting City Clerk Date Date R. W. ]Beek, Inc. Signature 4,6L Signature Name Kenneth J. yiror, PI; Name Title Senior Dire of Consulting Title Date 3-30-2006 Date APPROVED AS TO FORM: Eric T. Fresch, dity Attorney R.-kSaeramentdU1595 Vemon. City oRUulity AoalyNhWemoo PSA_Final.Joc Client 0001595/Agreement 9 xX-Xxxxx R. W. Beck PSA 6 of 8 CITY OF VERNON oe. Light & Power Department Change Order No. 1 to the R.W. Beck Contract dated March 30, 2006 CONSULTANT: R. W. Beck — (PO # 055.0000075) TO: Steven Rupp Vice President REQUESTED BY: City of Vernon You are hereby authorized to make the herein described changes, or do the following described work not included in the original agreement. ADDITIONAL SCOPE OF WORK AND/OR ADJUSTMENTS IN COMPENSATION AS IDENTIFIED BELOW FOR THE FISCAL YEAR (2008-2009): • Provide electric system inventory, valuation, modeling and mapping assistance as more particularly described in Task Authorization No. 8 attached hereto as Exhibit and incorporated by reference in an amount not to exceed: $ 254,061.00 `*) Total amount of this requested Change Order not to exceed: $ 254,061.00 Except as specifically modified herein, all terms and conditions of the original Agreement remain in full force and effect, and apply to the additional compensation as if said compensation was originally included in the Agreement Base Amount of Contract: $500,000.00 Approved Contract Change Order #1: 254,061.00 Revised contract Amount `(including,this requested Change Order No.1): $754,061.00 Approved: Date: DoN HAN, Di actor, Light & Power O T1O� ATTEST: �- j'it�yClerk Date: BY.NUELA IRO Approved as to Form: Date: J ISON, City Attorney We, the undersigned Consultant/Vendor, have given careful consideration to the change proposed and.hereby agree. If this Change Order is approved we will continue to provide the necessary support services with additional compensation NOT to exceed the amount written above. Accepted: R. W, Beck(*) ' Date: G12 q f o`ti By: Title: V(cJ ?Raiatol drjuirY ZA4. PLAW Cc: Phasing (4) t ZS'4, O�- I IS i'AR71AL. Farb 04 Foc I .A, N6. 8 . sty ew-e,L PROM CAnws FAPN40 � t"7A71:0 to i Zql ag ib TASK AUTHORIZATION NO.8 IN WITNESS WHEREOF, the Parties have signed this Task Authorization as of the date first written above. City of Vernon Signa Name Donal O'Callaghan \� Title Director of Light & Power R. W. Beck, Inc. Signature(/�• Name $—TAT1mye'-Jx W. '3►3.rv-A _ Title V.P. Urdt..,ry Eacy�etiea�� ,�� 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO. 8 Page 2 of 2 4 Exhibit A SCOPE OF SERVICES R. W. Beck will provide professional consulting services to Vernon related to the management of its utility assets and its associated asset management policies and procedures. The work to be performed is organized into three distinct phases: ® Phase 1 — Work Plan and Assessment of Existing Systems and Data • Phase 2 -- Asset Inventory, Valuation and Depreciation m Phase 3 - Engineering Model Update and System Map Book Production The following sections describe how the work will be organized in phases and the tasks necessary to produce the deliverables for each individual phase of the project. Phase' - Work Plan and Assessment of Existing Systems and Data In Phase 1, R. W. Beck will work closely with Vernon staff in developing the Project Team and to further review and/or refine Vernon's asset management needs for the preparation of a detailed plan for completing Phases 2 and 3 of the project. At the beginning of the project, R. W. Beck will meet with Vernon management and staff to discuss the overall project understanding and approach, develop schedules and work plans, and assess existing systems and data. We will also prepare. a data request to facilitate data collection from Vernon. We will meet with City staff to review existing maps, data and records of the electric system. This initial kick-off meeting will give an overview of work activities associated with Phase'2 that will involve Vernon staff from various business departments. The kick- off meeting will be held at Vernon facilities and should last approximately four hours. The purpose of this meeting is to educate Vernon staff on the overall goal of the Asset Management Project and the extent to which they will be needed to support the subsequent activities in Phases 2 and 3. R. W. Beck anticipates that the meeting should be attended by Vernon staff and management from Finance and Accounting, GIS, Information Systems, and Engineering (electric and water). Other Vernon staff may also be included. Other break-out meetings with Project Team Task Leaders will last approximately one to two days. Once initial data is acquired, a more in-depth follow-up from the R. W. Beck team members will be required to further investigate aspects of Vernon's current Asset Management Program (AMP), including current: practices, policies and business processes. R. W. Beck team members may review the data, systems, and business processes in Vernon's offices or via teleconference and Net meetings. These additional meetings will take place once the data is required and will require one or two days for each team lead for a given project task. 1198•CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO. 8 R. W. Beck, Inc. Page 3 of 16 Exhibit A Scope of Services Following the Phase 1 project meetings, R. W. Beck and Vernon will review the schedule and R. W, Beck/Vernon project team members responsibilities (hours of effort) and modify the Scope of Services and Budget as necessary for Phases 2 and 3 in developing the Detailed Work Plan. 1.1 Develop Work Plan R. W. Beck will consult with Vernon Staff to identify and define project needs and begin the work to craft. the Work Plan to address specific project challenges and enhancements that should be made to the AMP. 1.1,1 Prepare Draft Work Plan with Scope of Work, Schedule and Budget R. W. Beck will consult with Vernon staff to determine the prescribed project approach. Once the basic approach to the project is determined, R. W. Beck will develop a draft: Scope of Work, Work Plan, Schedule and Preliminary Budget for general resource scheduling and budgetary purposes. 1.1.2 Conduct Project Kickoff Meeting with Vernon to Determine Project Objectives R. W. Beck will document the results of the Project Kickoff Meeting in a Statement of Project Objectives (SPO) developed by the Project Team, The SPO will establish the specific changes and enhancements and upgrades that will be made to the AMP systems and processes including, for example, how the CPR by Property Unit will be maintained in the future, Pending further review and discussions with Vernon staff, we anticipate the SPO will address the following areas: ® Existing accounting policies and procedure changes, including: 0 Work order implementation/closeout process n Capitalization and expense policies M Use of blanket versus individual work orders R Accounting for individual versus group (mass) assets 0 Review of depreciation practices/methods e Existing AMP systems and.business processes changes, including: N EDEN asset inventory accounting and plant management system e Design of the work order system process ® G1S systern use and integration into Work Management and CPR ® Update and maintenance of the CPR, including: ® Establishing new/updated Property Unit definitions ® Establishing book cost by Property Unit a Maintaining book cost byProperty Unit going forward 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO. 8 R. W. Beck, Inc. page 4 of 16 1.1.3 Prepare and Submit Detailed Work Plan After the project objectives have been established, the Project Team will spell out the in-depth approach for achieving those objectives in a Detailed Work Plan. Based on comments to the draft Work Plan and findings from the SPO, R. W. Beck will prepare the Detailed Work Plan and submit to Vernon for review. The Detailed Work Plan will basically lay out the step-by-step process for accomplishing the work in the remaining phases of the project, The Detailed Work Plan will identify the following items for each Project Objective: ® A general statement of the work • Data request and review • Logical sequence of tasks/sub-tasks necessary to complete the objective s Task leader ■ Schedule for completion Careful consideration will be given to Vernon staff availability and commitments needed to implement the Project Objectives. We also propose to have one roundtable discussion with department managers to convey the Detailed Work Plan and communicate the anticipated benefits of the project to Vernon. This will play an important part in getting "buy in" across the organization. 1,2 Perform initial Evaluation of Existing Systems, Data and Business Processes R. W. Beck will investigate aspects of Vernon's current AMP, including current: practices, policies and business processes. R. W. Beck will consult with Vernon staff to identify and define the current work practices and systems used. R. W. Beek will document specific changes and enhancements that should be made to the AMP based on staff interviews and industry experience of practices from other utilities. The review work, will include one-on-one interviews with managers from accounting, engineering, GIS, construction, and maintenance and information systems, conducted during on -site visits and follow-up conference calls (if necessary). It will also encompass further investigations and understanding of Vernon's existing policies and procedures, existing databases (e.g., GIS data) and historical accounting records. More specifically, the areas that will be covered during the on -site review work include the following,. 1.2.1 Review and Document Current Policies and Procedures for Accounting R. W. Beck will review existing procedures, policies and assumptions for fixed asset accounting, including the current procedures used to close construction work orders and the policies and methods used to capitalize Vernon's assets into its fixed asset records. Subjects to be covered in this task include: s Capitalization andexpense policies • Mass asset accounting policies 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH, NO.8 R. W. Beck, Inc, Page 5 of 16 Exhibit A Scope of Services ® Accounting for purchase of bench stock (i.e., stores inventory) 0 Current assumptions/methods regarding the capitalization of overhead and ` administrative costs ® Current service lives for various property classifications used to detenmine depreciation ■ Property unit definitions for utility assets ■ Overall review of the CPR system and/or processes ■ Treatment of contributed capital assets ® Asset retirement practices 1.2.2 Review and Document Current Engineering Design, Construction and Work Order Practices R. W. Beck will meet with key electric engineering personnel to review current design practices (e.g., assembly unit definitions), construction cost estimating practices and work order implementation procedures. The primary purpose of this task will be to gain a working understanding of the identification and accounting of assets created vis-a-vis the construction process and to determine what changes in the current processes (e.g,, additional automation) may be needed for unitizing work orders after project completion. 1.2.3 Review and Document Existing EDEN System for Suitability for Asset Inventory, Work Order and CPR Purposes R. W. Beck will investigate the EDEN system for suitability for asset inventory, work order and CPR• purposes, and historical data contained on the EDEN system. 1.2.4 Research Available Asset Data for Suitability R. W. Beck will review Vernon's existing inventory of assets including the Electric System Master Plan and the electric system maps, drawings, inspection records, engineering analysis model and other sources to determine the usefulness of those . existing data sources and the level of detail that will be required in the inventory. This will also allow us to understand the procedures used to generate the inventory and the extent to which it can be utilized in the overall asset management process. R. W. Beck will work with Vernon staff to determine what data is missing from record and cannot be observed in the field to determine what additional records will need to be added to the CPR to address missing and indeterminate data: The available data will be reviewed for things such as asset data definitions, data fields, vintage year, location code and the process for entry from "as -built drawings. This review will provide a basis for understanding the level of detail of field work, document research, data contained in the EDEN system, and historical accounting practices for.certain assets (e.g., retirements), and will identify possible duplicate entries, Data contained in other sources will also be addressed (e,g. spreadsheets and other databases). 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 6 of 16• Exhibit A Scope of Services The review will generally examine: ® Original costs of fixed assets by year a Historical assumptions regarding administrative and other overhead costs capitalized ® Methods used to unitize capital assets into property units a Treatment of contributed capital from developers ■ Asset retirements M Duplicate asset entries 1.2.5 Determine Asset Data Structure Model R. W. Beck will work with Vernon staff to develop a workable set of property (or retirement) unit definitions for the CPR. Consideration will be given to current needs as well as potential future asset descriptions and changes in engineering design. The property unit definitions will be embodied in a Property Unit catalog that will be implemented in Phase 3 of the project. The Property Unit catalog generally will include the asset name, detailed description of components included in the property unit, property unit number and FERC account/sub-account identifier. Vernon does not have an up-to-date inventory of certain electric assets, at a level needed to establish Property Unit data for input to the CPR. The non -inventoried assets include electric power generation and substations and transmission and distribution facilities. R. W. Beck will develop a unitized list of CPR based on FERC accounts. R, W Beck will identifyVernon's ® "Mass" Assets 0 Transmission, distribution, and a Transmission, distribution, and secondary conductor secondary poles and pole hardware. . ® Distribution transformers a Fuses w Distribution capacitor banks m Services 0 Disconnect switches 0 Meters ® "Major" Assets ■ Substation structures ■ Substation control houses 0 Substation foundations 0 Generator structures 0 Substation transformers 0 Generator foundations 0 Substation circuit breakers is Generators 0 Substation switches 0 Generator transformers 0 Substation capacitor banks ® Generator controls n Substation controls a Generator control houses 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH, NO. 8 R. W. Beck, Inc. Page 7 of 16 Exhibit A Scope of Services 1.2.6 Prepare Data Requirements Document R, W. Beck will prepare a data requirements document that will specify the data to be collected and how each asset's vintage and size/type will be obtained. Experience shows that there will be significant amount of missing information from the field inventory, In this task, we will develop a set of assumptions to be used to fill in these data gaps. Expected data that may be difficult or impossible to obtain include conductor sizes and types, transformer ratings, pole heights and classes and the age of equipment. Applying proven methods, we will recommend for Vernon's consideration reasonable assumptions to fill-in the missing data. 1.2.7 Determine Method and Means to Store and Manage Asset Inventory Data R. W. Beck will consult with Vernon staff to determine the method and means to store and manage asset inventory data. Options for consideration include spreadsheets'' databases, GIS, and Vernon's accounting system. R. W. Beck will plan for the conversion of the valued and depreciated plant assets to the selected means for storage and retrieval. Phase 2- Asset Inventory, Valuation, and Depreciation R. W. Beck will develop an inventory of the electric system facilities. R. W. Beck will perform field reviews to establish the inventory of facilities, determine typical construction standards, and assess the condition and age of the facilities, Where vintage (age) of facilities cannot be directly read, it will be estimated by field technicians. 2.1. Perform Asset Inventory In order to perform the asset inventory, R. W. Beck will develop data collection processes for the electric system facilities. R. W. Beck will then conduct field reviews of major assets and use GPS to collect mass assets. 2.1.1. Define Data Collection Process R. W. Beck will develop field inventory data gathering procedures for transmission, distribution and secondary electric utility plant facilities' mass assets using a GI'S data collection process. This will include: A Design a data dictionary for mass assets using a GPS field inventory to facilitate CPR, Asset Management, and GIS initiatives containing methodology to: ® Collect vintage of asset (to determine age) ■ Collect size/type for massing assets ® Characterize assets physical attributes n Catalog of asset attributes and condition R. W. Beck will develop field inventory data gathering procedures for substation and generation electric utility plant facilities' major _ assets using a combination of Vernon's records research and field data collection. This will include: 1198•CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO. 8 R. W. Beck, Inc. Page 8 of 16 Exhibit A Scope of Services m Design of a system for collecting major assets using a spreadsheet methodology to capture field verification work, as -built records for unobservable assets, and documented major (capitalized) maintenance events. 2,1.2. Perform Field Work to Collect and Validate Data R. W. Beck will capture mass assets in the field with sub -meter, professional -grade GPS systems using the data dictionary to provide: IN Mass asset. attribute data developed within the data dictionary IN GPS position R.W. Beck will capture major assets using document review spreadsheets and field visual identification work. This will include: ■ Collect vintage of asset (to determine age) ® Collect model/size/type data for major assets E Characterize assets physical attributes 2.1.3. Prepare Database of Asset Information R. W. Beck will prepare a database from the field investigation of mass and major assets for use in the valuation financial models that will be usedto determine the current construction cost of the facilities. 2.2. Develop Valuation of Assets Once assets have been collected and a database made from the GPS inventory, and field review, R. W. Beck will develop a valuation of Vernon's assets. ® Develop current construction cost of assets ■ Estimate original cost m Conduct depreciation review ■ Establish "Per Books" cost of assets by property unit 2.2.1. Determine Current Construction Cost of Assets R. W. Beck will perform engineering cost studies to determine the current construction cost of the facilities based on the inventory of assets established in Task 2.1. R. W. Beck may use the following sources for current replacement costs: industry databases; R. W. Beck data obtained from ongoing construction and cost estimating work; vendor inquiries, other utility inquiries, and Vernon's records and experience with current construction costs. 2.2.2. Develop Recommended Depreciation ]Rates R. W. Beck will perform a review of Vernon's current depreciation practices and. . components used to depreciate the electric system assets, R. W. Beck will develop a schedule of recommended depreciation rates and based on comparisons with electric industry depreciation statistics and depreciation rates of neighboring electric utilities; discussions with Vernon staff regarding expected service lives for different types of plant; and our own engineering judgment. 1198-CITY Or VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO. 8 R. W. Beck, Inc. Page 9 of 16 Exhibit X Scope of Services R, W. Beck will also investigate typical depreciation practices used by neighboring utilities and make comparisons with Vernon's depreciation components (e.g,, average service life, depreciation methods such as use of straight line and inclusion of net salvage rates). R. W. Beck will summarize its review in a brief letter report to Vernon. 2.2.3. Estimate Original Cost, Accumulated Depreciation and Book Value of Assets R. W. Beck will perform trended cost analyses using industry recognized cost indices (e.g., Handy Whitrnan Index of Public Utility Construction Costs) to estimate the original cost (i.e., book cost) of the facilities. Based on the age of the facilities, R. W. Beck will apply the recommended depreciation rates to the original cost of the facilities to determine the amount of accumulated depreciation. Using the Property Unit database compiled from the asset inventory in Task 2.1, R. W. Beck will develop the estimated per -books cost values (historical cost) to be assigned to such Property Units. 2.2.4. Implement Continuing Property Records Database During this phase of the project, the work completed in Phases 1 and 2 will be used as the basis to update the CPR system, make needed changes to fixed asset accounting processes, procedures and documentation (including changes to work order implementation and closeout) and assist Vernon in making changes (if any) to the automation of its fixed asset accounting processes. It is contemplated that this work - would be accomplished in four separate tasks, described as follows: ® R. W. Beck will provide conversion of the GPS and other inventory data into the valuation database/spreadsheet model incorporating the mass assets from the GPS field inventory and major assets collected from observation of facilities, asset records and as -built drawings and maintenance records. ■ The Property Unit database compiled in Phase 2 will be used to develop Vernon's CPR on the EDEN system as of the fiscal year ending 2008. Before updating the CPR it will be necessary to make certain changes (i.e., additions) to the data fields contained therein. It is estimated that the changes would take approximately 120 person -hours to complete by a Vernon staff mernber. Implementation of the revised CPR will likely involve certain material adjustments to Vernon's financial records, ® R. W. Beck will review the results of the Phase 2 work with Vernon's independent auditors prior to the actual update or changes to book value of assets. ® R. W. Beck will provide files suitable to be uploaded into GIS format using ESRI .Shp files or Autodesk Map .dwg files with object data. Phase,3 -- Engineering Model Update and System Map Book Production Since the completion of the Electric System Master Plan in 2007, Vernon has not updated its distribution system engineering model to reflect improvements made to the 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 10 of 16 . Exhibit A Scope of Services system. Before the City can begin using the model for engineering studies, it must be updated to reflect the work that has been completed. Vernon's operating maps — the definitive documents used by engineering and operating personnel to track changes to the electric system and present its current operating state to engineering and operating personnel — are out of date and do not reflect many of the changes that have occurred in recent years. Our approach to the collection of data for the asset inventory affords Vernon the opportunity to update these important records in an efficient and accurate manner. Once completed, this Phase of the work will provide Vernon with: s An up-to-date engineering model of the system, geographically represented with an accurate connectivity model that tells engineers and operating personnel which customer is connected to which transformer and how each transformer is connected to each distribution circuit, and exactly where and what primary distribution component is in the system. ® Up-to-date system operating maps, geographically and electrically correct for engineering and operating personnel to use in the office and in the field that depict the current configuration of the distribution system. 3.1. Update Engineering Model As the asset inventory process progresses, R. W. Beck will convert the field data into geographically located elements in the engineering model, WindMil®, originally developed by R..W. Beck as part of the Electric System Master Plan. The engineering model wilt be an electrical and graphical representation of the electric distribution system including the electrical connectivity from customer to transformer, to distribution circuit to substation. When the model is updated, Vernon will have the ability to: N Evaluate the impact of changes to the electrical configuration resulting from circuit switching a Analyze the loading of distribution and substation transformers including the ability to identify overloaded and underutilized distribution transformers and feeders m Evaluate the impact of customer additions and changes on the distribution system ® Use the engineering model as a stand alone GIS system or integrate the electrical system information with Vernon's GIS system ■ Manage and track electric system assets to improve record keeping ■ Develop relay protection settings and coordinate protective devices to improve system reliability ® Plan for and manage the 7-kV to 16-kV voltage conversion projects ® Evaluate the impact of large customer additions to the distribution system and identify capital system improvements needed to accommodate new customer loads ® Analyze and resolve customer service quality issues 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 • R. W. Beck, Inc. Page 11 of 16 =N Exhibit A Scope of Services. Deliverables from this task will include: ■ An up-to-date electric system model in WindMil format ■ A base case analysis of load flows and voltages ® A. summary of system overloads and undervoltages 3.2. Develop and Produce Electric System Operating Maps Upon completion of the engineering model in Task 3.1, R. W. Beck will produce a set of electric system maps suitable for use by engineering and operating personnel. The system maps will be.provided in AutoCAD 2008 format based by using the WindMil 2 Map product from Milsoft. Maps will contain: • Transmission and primary and secondary distribution pole locations • Transmission and primary and secondary distribution circuits including circuit number, voltage, conductor size and type and circuit phase orientation. ® Location of and identification of transformers including transformer number, kva rating and phase connections • Location of and identification of switching devices including disconnects and cutouts ® Location of and identification of underground vaults ■ Other such information. is typically found in electric system operating maps Deliverables from this task include: ■ Electronic set of map books in AutoCAD and Adobe .pdf format ■ 10 Sets of l 1"x17" full color map books Additional Services If unexpected problems are encountered with securing the appropriate data, or if Vernon needs assistance in providing its services, R, W. Beek may need to request Additional Services and a corresponding budget increase. Other items'not priced in the budget estimates include, but are not limited to: • Inventory and valuation of Vc�mon's real property, fleet, equipment, gear, tools office/habitable/warehouse buildings and other assets ® Asset accounting for land and land rights ■ Review of the results with Vernon's external auditors 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W, Beck, Inc. Page 12 of 16 Exhibit A Scope of Services Expectations of Client involvement The estimated.costs for the above Scope of Services assume that Vernon can provide the following data and services for completing Phases I through 3. ® Facilitation and scheduling of on -site work with Vernon staff • Data requested by R. W. Beck (in a timely manner) m Sufficient details on historical assets in the existing CPR System ® GIS and Field Inventory data needed to establish the Property Unit database ® Appropriate personnel to assist R. W. Beck in conducting the on -site and condition assessment of facilities 1198-CITY OF VERNON INVENTORY, VALUATION, AZASSET MANAGEMENT, TASK AUTH, N0.8 R. W. Beck, Inc. Page 13 of 16. 3 Exhibit B Billinq Rates Billing Rates and Budget Estimate and Schedule R. W. Beck's Rates are as follows: R. W. Beck, Inc. Billing Rates Billing Class Hourly Rate (US$) Typical Project Roles 1 20.00 2 34.00 3 48.00 Clerical, Administration, Junior Engineers and Technicians 4 � 62.00 5 76.00 6 90,00 7 104.00 8 118.00 Staff Engineers, Consultants 9 132.00 and Technicians 10 146.00 11 160.00 12 174.00 Senior Engineers, Consultants and Technicians, and 13 188.00 Project Managers 14 202.00 15 216.00 16 230.00 17 244.00 Executive Engineers and Consultants, Senior Project Managers, and Principals 18 258.00 19 272.00 20 286.00 21 300.00 22 314.00 23 328.06 24 342,00 Executive Engineers and Consultants, Senior Project Managers, and Senior Principals 25 356.00 26 370.00 'Salaries of personnel are subject to change in accordance with R. W. Beck's annual salary adjustment program. 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 14 of 16 Exhibit B Billing Rates R. W. Beck's Key Personnel: Personnel ! Project Role Class Steve Rupp, Client Liaison 23 Bruce Hamer, P.E. Senior Project Manger 17 Nancy Hughes, ASA, Valuation and Depreciation Task Manager 18 Greg Broeking, CPA, Asset Accounting and CPR Task Manager 16 Dave Herron, P.E., Asset Inventory and Project Data Manager 12 Lowell Wessel, TO Field Services Supervisor 10 John Bakken, P,E„ Substation Asset Task Manager 16 Bill Healey, Generation Asset Task Manager 12 Jim Byerley, P.E., Substation Assets 15 Significant assumptions that define the expected level of effort for the asset inventory are summarized below. Asset Units Total TO Poles 3000 $ 82,618 Secondary Poles 1000 $ 23,025 PM Transformers and Switches 75 $ 13,544 Vaults 150 $ 6,772 Area Lighting 0 $ 13,544 Minisubslations 0 $ 16,930 Primary Substations 8 $ 16,930 Generating Facilities 1 $ 4,062 Total 4,234 $ 177,425 R. W, Beck's proposed fee for services described herein is summarized below. Project Task Est. Fee Project Management $62,487 Phase 1 Workplan and Assessment $25,895 Phase 2 - Inventory and Valuation $254,061 Phase 3 - Model Update and Map Books $76,701 TOTAL $419,144 The work will be completed on a time and materials not to exceed the stated budget amounts. Labor will be. billed at the current R. W. Beck billing rates. All expenses will be subject to a 10 percent administrative mark-up. Billing will be monthly with accounts receivable due with 30 days upon receipt of invoice. Late payments will be subject to interest on past due amounts of 1.5 percent per month. 1198-CITY OP VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. No. 8 R. W. Beck, Inc. Page 15 of 16 Exhibit B: Biliina Rates Project Schedule ■ Phase.l will be complete within 3 weeks of notice to proceed ■ Phase 2 will be complete within 15 weeks of notice to proceed ■ Phase 3 will be complete within 18 weeks of notice to proceed 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Fleck, Inc. Page 16 o116 ` a , A_ TASK AUTHORIZATION NO.8 Task Authorization Description: Inventory, Valuation, and Asset Management Project . Effective Date: ,tune 16, 2008 Client Name and Number: City of Vernon (001595) Contract No.: 09-00431 - Consultant and Client agree that this Task Authorization will be governed by the terms and conditions of the Agreement dated March 30, 2006, as amended, unless specifically modified herein, Scope of Services Exhibit A Scope of Services is attached and made a part hereto, Project Team R. W. Beck will provide inventory, valuation and management of the City of Vernon's electric system assets. Budget The estimated budget for'the Inventory, Valuation, and Asset Management Project is $419,144. See attached Exhibit B Billing Rates attached and made a part hereto: Schedule After this Task Authorization No. 8 approval and authorization to proceed, the inventory, valuation, and asset management should be completed per the following schedule: a Phase 1 will be complete within 3 weeks of notice to proceed a Phase 2 will be complete within 15 weeks of notice to proceed u Phase 3 will be complete within 18 weeks of notice to proceed City Objective Provide plant accounting support and facilitate asset management and bookkeeping for the Electric Utility. 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 Page 1 of 16 1 2 3 4 5 6 7 8 9 10 11- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION N0.,10,064 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF TASK AUTHORIZATION NO. 9 TO THE PROFESSIONAL SERVICES AGREEMENT BY AND BETWEEN THE CITY OF VERNON AND R.W. BECK, INC. WHEREAS, on March 22, 2006, the City Council of the City of Vernon adopted Resolution No. 8996 approving and authorizing the execution of a Professional Services Agreement (the "Agreement") with R.W. Beck, Inc. ("Beck") for Consulting Services relating to the City's Electric System; and WHEREAS, the Agreement provides that services to be provided by Beck shall be authorized in a task authorization to the Agreement, and that the Agreement may not be changed except by written amendment or through task authorizations for individual tasks; and WHEREAS, the City and Beck have executed Task Authorization Nos. 1-5 effective March 30, 2006, Task Authorization No. 6 effective December 6, 2006, Task Authorization No. 7 effective October 10, 2007 and Task Authorization No. 8 effective June 16, 2008; and WHEREAS, by memo dated September 9, 2009, the Director of Light & Power has recommended that Task Authorization No. 9 with. Beck be approved for services relating to the electric system inventory, valuation, modeling, and mapping project and additional funds of $29,618.13 be appropriated to the Agreement; and WHEREAS, the requested amount of $29,618.13 is derived by subtracting the amount of funds remaining under a prior Purchase Order of $98,881.87 from the estimated budget for Task Authorization No. 9 which is $128,500.00; and WHEREAS, the City Council of the City of Vernon has I determined that, pursuant to the provisions of subsection (a) of 2 Section 2.27 of the Vernon City Code, it is in the public interest and 3 necessity to enter into Task Authorization No. 9 to the Agreement to 4 facilitate services relating to the electric system inventory, 5 valuation, modeling, and mapping project. 6 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE 7 CITY OF VERNON.AS FOLLOWS: 8 SECTION 1: The City Council of the City of Vernon does 9 hereby find and determine that the recitals contained hereinabove are 10 true and correct. 11 SECTION 2: The City Council of the City of Vernon hereby 12 approves the Task Authorization No. 9, in substantially the same form 13 as the copy of which is attached hereto as Exhibit A and incorporated 14 by reference. 15 SECTION 3: The City Council of the City of Vernon hereby 16 authorizes the Director of Light & Power to execute Task Authorization 17 No. 9 for, and on behalf of, the City of Vernon and the City Clerk, or 18 Deputy City Clerk, is hereby authorized to attest thereto. 19 SECTION 4: The City Council of the City of Vernon hereby 20 authorizes the City Administrator, or his designee, to take whatever 21 actions are deemed necessary.or desirable for the purpose of 22 implementing and carrying out the purposes of this Resolution and the 23 transactions herein approved or authorized. 24 SECTION 5: The City Council of the City of Vernon hereby 25 directs the City Clerk, or her designee, to send a fully executed Task 26 Authorization No. 9 to Beck. 27 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SECTION 6: The City Clerk of the City of Vernon shall certify to the passage, approval and adoption of this resolution, and the City Clerk of the City of Vernon shall cause this resolution and her certification to be entered in the Book of Resolutions of the Council of this City. APPROVED AND ADOPTED this 21st day of September, 2009. ATTEST: MANUELA GIRON, City Clerk Name: Hilario Gonzales Title: Mayor / 4a—__ ---- - - 3 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 10,064, was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Monday, September 21, 2009, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this e:�7,1,7 day of September, 2009, at Vernon, California. (SEAL) MANUELA GIRON, City Clerk - 4 - EXHIBIT A TASK AUTHORIZATION NO.9 Task Authorization Description: Inventory, Valuation, and Asset Management Project Effective Date: Client Name and Number: Contract No.: July 9, 2009 City of Vernon (001595) 09-00431 Consultant and Client agree that this Task Authorization will be governed by the terms and conditions of the Agreement dated March 30, 2006, as amended, unless specifically modified herein. Scope of Services Exhibit A Scope of Services is attached and made a part hereto. Budget The estimated budget for this Task Authorization is $128,500. See attached Exhibit B Billing Rates attached and made a part hereto. Schedule After approval of this Task Authorization No. 9 and authorization to proceed, the tasks described in Exhibit A, Scope of Services, will be completed within six months of notice to proceed. City Objective Provide plant accounting support and facilitate asset management and bookkeeping for the Electric Utility. Utilize electric system asset inventory data to provide an updated Engineering Analysis model for loss management. Implement asset management techniques using GIS for transmission and distribution assets. 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.9 Page 1 of 8 TASK AUTHORIZATION NO.9 IN WITNESS WHEREOF, the Parties have signed this Task Authorization as of the date first written above. City of Vernon Signature Name Title R. W. Beck, Inc. Signature AM Name Steven Rupp Title Vice President 1198•CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.9 Page 2 of 8 Exhibit A SCOPE OF SERVICES R. W. Beck will provide professional consulting services to the City of Vernon (Vernon) to support the development and implementation of work and asset management business processes, data and systems including: • Convert Pole Mass Assets to Individual Assets • Develop Asset and Work Management Business Process Development • Update Asset Inventory Data in Fixed Asset Records • Update the WindMil Engineering Analysis Model • Implement Electric System Assets in a Geographic Information System (GIS) • General Support for Implementation of Asset and Work Management Systems The following sections describe our approach and how the work will be executed. Conversion of Pole Mass Assets to Individual Assets Vernon's pole and structure assets are recorded as mass assets in the fixed assets database. Vernon requires that these mass assets be converted to individual assets in the fixed assets database. This will create a record for each pole representing a unique asset recorded individually and assist in tracking based on pole number. This will provide an added benefit of helping manage asset records jointly between the fixed assets database and the GIS. R. W. Beck will "rebuild" the current book of assets to reflect poles as individual assets. Deliverables from this task will include: • Excel spreadsheet book of assets with poles and structures recorded as individual assets, reconciled to last year's book closing Asset and Work Management Workshop Vernon has elected to implement two new modules in its enterprise accounting system. The two modules are the Fixed Assets module used to manage continuing property records and the Project Management module for work order management. R. W. Beck will perform a two-day workshop to assist Vernon in designing its work order and asset management processes. R. W. Beck will assist in articulating current work processes and determining what changes are required to meet goals regarding Work and Asset Management. Deliverables from this task will include: • Develop desired work order and asset management processes based on FERC standard accounts • Develop a gap analysis to identify potential modifications to the EDEN accounting system needed to achieve the desired work order management process • Document work order and assets management processes to provide for accurate accounting of assets including capitalization of labor and equipment 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.9 R. W. Beck, Inc. Page 3 of 8 Exhibit A Scope of Services ■ Develop an interim work order management process to update Spreadsheet Book of Assets Update Asset Inventory Data Vernon has been collecting and holding work orders from the past fiscal year in order to make an update and capitalize new assets, as well as retire old ones from the books. R. W. Beck will assist Vernon by taking the work orders from the past year and update the spreadsheet Book of Assets. Deliverables from this task will include: m New Excel spreadsheet book of assets with poles and structures as individual assets, including the current fiscal year capital plant additions and retirements. Update WindMil Engineering Model Since the completion of the Electric System Master Plan in 2007, Vernon has not updated its distribution system engineering model to reflect improvements and other changes made to the system. Before Vernon can begin using the modal for engineering studies, it must be updated to reflect the work that has been completed. Our approach to the collection of data for the asset inventory affords Vernon the opportunity to update these important records in an efficient and accurate manner. Once completed, this work will provide Vernon with an up-to-date, geographical engineering model representation of the electric distribution system. R. W. Beck will convert the field data into geographically located elements in the engineering model, WindMil®, originally developed by R. W. Beck as part of the Electric System Master Plan. The engineering. model will be an electrical and graphical representation of the electric distribution system including the electrical connectivity from customer to transformer, to distribution circuit, to substation. When the model is updated, Vernon will have the ability to: ® Evaluate the impact of changes to the electrical configuration resulting from circuit switching • Analyze the loading of distribution and substation transformers including the ability to identify overloaded and underutilized distribution transformers and feeders • Evaluate the impact of customer additions and changes on the distribution system ■ Use the engineering model as a stand alone GIS system or integrate the electrical system information with Vernon's GIS system ■ Manage and track electric system assets to improve record keeping ■ Develop relay protection settings and coordinate protective devices to improve system reliability ® Plan for and manage the 7-kV to 16-kV voltage conversion projects ■ Evaluate the impact of large customer additions to the distribution system and identify capital system improvements needed to accommodate new customer loads 1198•CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.9 - R. W. Beck, Inc. Page 4 of 8 Exhibit A Scope of Services ■ Analyze and resolve customer service quality issues Deliverables from this task will include: ■ An updated electric system model in WindMil format ® A base case analysis of load flows and voltages e A summary of system overloads and undervoltages from base case Implement GIS for the Electric System Assets Vernon desires the development of a GIS system to manage the electric system assets. The new GIS system will be based on Vernon's existing GIS base mapping data but the electric system asset representation will be managed by the Electric Department. Once R. W. Beck updates the electric system in WindMil, Vernon will have a geographic representation of its electric linework that is portable to GIS format. Upon completion of the engineering model update, R. W. Beck will convert the electric line network model to GIS format, and convert the electric system structure assets to an ESRI format. It is intended that Vernon will manage their linework in the WindMil environment, and structure type assets in the ESRI environment. R. W. Beck will provide one license of Milsoft's WindMil and Landbase as well as on license of ArcGIS, ArcView level. R.W. Beck will come to Vernon's offices to install and set-up WindMil and ArcGIS environments. We will create layers of the electric system assets based on the WindMil model and GPS asset inventory records. We will also provide GIS querying capable of color by circuit, color by conductor size and layered by voltage class. R. W. Beck believes that this scope for GIS provides a functional, cost-effective GIS solution that will be an easy -to -use, foundation element for expansion as needs and funding dictate. If the electric department sees advantages in additional GIS software and chooses to grow its GIS capabilities, it will be positioned to easily do so upon completion of this project. Milsoft Utility- Solutions' WindMilMap and DisSPatch outage management are examples of additional Milsoft software available that. Vernon may choose to implement at a future date. Vernon may also find it advantageous in the future to implement ArcGIS Editor and some of the many add-ons ESRI offers for the ArcGIS family of products. The Electric System GIS data will contain: ■ Transmission; primary and secondary distribution pole locations e Transmission and primary distribution circuits including circuit number; voltage; and conductor size, type, and phasing. • Location of and identification of transformers including transformer pole number, kVA rating, and phase connections ■ Location and identification of switching devices including disconnects and cutouts a Location and identification of underground vaults 1198•CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH: NO.9 R. W. Beds, Inc. Page 6 of 8 Exhibit A Scope of Services ■ Asset information collected with the Asset Inventory will be converted from its GPS format and placed in the GIS Secondaries and Customer meter locations have not been obtained with GPS, and are not included in this scope. Deliverables from this task will include: s One License seat of Milsoft WindMil ■ One License seat of Milsoft Landbase for WindMil a One license seat of ESRI ArcGIS ArcView a Updated electric system GIS data files based on the WindMil model e Electric system GIS data files based on the GPS Asset Inventory ■ WindMil engineering model client installation and configuration ■ ESRI ArcGIS client installation and configuration n System Map in ESRI .mxd format representing the 7-kV, 16-kV and 69-kV systems General Support for Implementation of Asset and Work Order Management Systems R. W. Beck will provide up to 40 hours of on -call support for the following: ■ Transition to and implementation of EDEN Project Management and Fixed Asset Models a ESRI GIS map book/atlas creation and maintenance from new work orders held during the project execution a WindMil engineering model maintenance from new work orders held during the project execution Additional support may be provided on a time and materials basis as defined in Exhibit B. Expectations of Client Involvement The estimated costs for the above Scope of Services assume that Vernon will provide the following: n Facilitation and'scheduling of on -site work with Vernon staff w Data requested by R. W. Beck (in a timely manner) 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.9 R. W. Beck, Inc. Page 6 of 8 Exhibit B Billing Rates, Budget Estimate, and Schedule Billing Rates, Budget Estimate, and Schedule R. W. Beck's Rates are as follows: R. W. Beck, Inc. Billing Rates Billing Class Hourly Rate (US$) Typical Project Roles 1 20.00 2 34.00 3 48.00 Clerical, Administration, Junior Engineers and Technicians 4 62.00 5 76.00 6 90.00 7 104.00 8 118.00 Staff Engineers, Consultants 9 132.00 And Technicians 10 146.00 11 160.00 12 174.00 Senior Engineers, Consultants and Technicians, and 13 188.00 Project Managers 14 202.00 15 216.00 16 230.00 17 230.00 Executive Engineers and Consultants, Senior Project Managers, and Principals 18 258.00 19 272.00 20 286.00 21 300.00 22 314.00 23 328.00 24 Executive Engineers and Consultants, Senior Project 342.00 Managers, and Senior Principals 25 356.00 . 26 370.00 'Salaries of personnel are subject to change in accordance with R. W. Beck's annual salary adjustment program. 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.9 R. W. Beck, Inc. Page 7 of 8 Exhibit B Billing Rates, Budget Estimate, and Schedule R. W. Beck's Key Personnel: Personnel 1 Project Role Class Steve Rupp, Client Liaison 25 Joni Batson, P.E., Project Manager 15 Dave Herron, P.E., Asset Inventory and Project Data Manager 12 Sebnem Tersezen, Asset Data Analyst 11 John Bakken, P.E., Substation Asset Task Manager 17 Terrie Pedigo, GIS Technician 6 Tyler Patton, Junior Engineer and Distribution Modeling 7 Keith Mullen, P.E., Senior Engineer and WindMil Expert 13 Trishia Swayne, Junior Engineer and Quality Control 8 R. W. Beck's proposed fee for services described herein is summarized below. Project Task Est. Fee Convert Pole Mass Assets to Individual Assets $4,000 Develop Asset and Work Management Business Process $23,200 Update Asset Inventory Data in Fixed Asset Records $11,500 Update the WindMll Engineering Analysis Model $22,200 Implement Electric System Assets in a Geographic Information $61,300 System (GIS) General Support for Implementation of Asset and Work $6,300 Management Systems TOTAL $128,500 The work will be completed on a time and materials not to exceed the stated budget amounts. Labor will be billed at the current R. W. Beck billing rates. All expenses will be subject to a 10 percent administrative mark-up. Billing will be monthly with accounts receivable due with 30 days upon receipt of invoice. Late payments will be subject to interest on past due amounts of 1.5 percent per month. Project Schedule Project Task Completion •Convert Pole Mass Assets to Individual Assets NTP + 3 weeks Develop Asset and Work Management Business Process NTP + 5 weeks Update Asset Inventory Data in Fixed Asset Records NTP + 6 weeks Update the WindMil Engineering Analysis Model NTP + 12 weeks Implement Electric System Assets in a Geographic Information NTP + 16 weeks System (GIS) General Support for Implementation of Asset and Work NTP + 6 months Management Systems 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.9 R. W. Beck, Inc. Page 8 of 8 oL-0357 CITY OF VERNON �bNo • 2i°iU Light & Power Department Change Order No. 1 to the R.W. Beck Contract dated March 30, 2006 CONSULTANT: R. W. Beck - (PO # 055.0000075) TO: Steven Rupp Vice President REQUESTED BY: City of Vernon You are hereby authorized to make the herein described changes, or do the following described work not included in the original agreement. ADDITIONAL SCOPE OF WORK AND/OR ADJUSTMENTS IN COMPENSATION AS IDENTIFIED BELOW FOR THE FISCAL YEAR (2008-2009): • Provide electric system inventory, valuation, modeling and mapping assistance as more particularly described ittached hereto as Exhibit A and incorporated by reference in an amount not to exceed: $ 254,061.00 kl Total amount of this requested Change Order not to exceed: $ 254,061.00 Except as specifically modified herein, all terms and conditions of the original Agreement remain in full force and effect, and apply to the additional compensation as if said compensation was originally included in the Agreement Base Amount of Contract: $500,000.00 Approved Contract Change Order #1: 254,061.00 Revised contract Amount (including this requested Change Order No.1): $754,061.00 Approved: Date: DON rL HAN, D ctor, Light & Power ATTEST:' ��. .:__:_ Date: BY: NUELA IRON, ity Clerk Approved as to Form: Date: J IsoN, City Attorney We, the undersigned Consultant/Vendor, have given careful consideration to the change proposed and hereby agree. If this Change Order is approved we will continue to provide the necessary support services with additional compensation NOT to exceed the amount written above. Accepted: R. W. BeckC*� )"V' �da►l�� Date: .4/z.1 /as By: Title: V iW iaest awi d vi t.kvi C46- It Pia*w cc: Phasing W TZSq- 0(oI 15 PAR7an� PuA06, FbC AA. SEe E1iw4w- Foam CARws I- W D0 DA7SO (o d 2y 1 68 Irb Task Authorization Description Effective Date: Client Name and Number: Contract No.: TASK AUTHORIZATION NO.8 Inventory, Valuation, and Asset Management Project June 16, 2008 City of Vernon (001595) 09-00431 Consultant and Client agree that this Task Authorization will be governed by the terms and conditions of the Agreement dated March 30, 2006, as amended, unless specifically modified herein. Scope of Services Exhibit A Scope of Services is attached and made a part hereto. Project Team R. W. Beek will provide inventory, valuation and management of the City of Vernon's electric system assets. Budget The estimated budget for the Inventory, Valuation, and Asset Management Project is $419,144. See attached Exhibit B Billing Rates attached and made a part hereto. Schedule After this Task Authorization No. 8 approval and authorization to proceed, the inventory, valuation, and asset management should be completed per the following schedule: ■ Phase 1 will be complete within 3 weeks of notice to proceed ■ Phase 2 will be complete within 15 weeks of notice to proceed ■ Phase 3 will be complete within 18 weeks of notice to proceed City Objective Provide plant accounting support and facilitate asset management and bookkeeping for the Electric Utility. 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 Page 1 of 16 TASK AUTHORIZATION NO.8 IN WITNESS WHEREOF, the Parties have signed this Task Authorization as of the date first written above. City of Vernon Signat e,.,_ Name Donal O'Callaghan Title Director of Light & Power R. W. Beck, Inc. Signature (/V - '46,, Name Jpry?S vi. 4� Ltot Title V.P. UnWrV E.)WAftft0CA 4 V111t` 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 Page 2 of 2 Exhibit A SCOPE OF SERVICES R. W. Beck will provide professional consulting services to Vernon related to the management of its utility assets and its associated asset management policies and procedures. The work to be performed is organized into three distinct phases: ■ Phase 1 — Work Plan and Assessment of Existing Systems and Data ■ Phase 2 — Asset Inventory, Valuation and Depreciation ■ Phase 3 — Engineering Model Update and System Map Book Production The following sections describe how the work will be organized in phases and the tasks necessary to produce the deliverables for each individual phase of the project. Phase 1- Work Plan and Assessment of Existing Systems and Data In Phase 1, R. W. Beck will work closely with Vernon staff in developing the Project Team and to further review and/or refine Vernon's asset management needs for the preparation of a detailed plan for completing Phases 2 and 3 of the project. At the beginning of the project, R. W. Beck will meet with Vernon management and staff to discuss the overall project understanding and approach, develop schedules and work plans, and assess existing systems and data. We will also prepare a data request to facilitate data collection from Vernon. We will meet with City staff to review existing maps, data and records of the electric system. This initial kick-off meeting will give an overview of work activities associated with Phase 2 that will involve Vernon staff from various business departments. The kick- off meeting will be held at Vernon facilities and should last approximately four hours. The purpose of this meeting is to educate Vernon staff on the overall goal of the Asset Management Project and the extent to which they will be needed to support the subsequent activities in Phases 2 and 3. R. W. Beck anticipates that the meeting should be attended by Vernon staff and management from Finance and Accounting, GIS, Information Systems, and Engineering (electric and water). Other Vernon staff may also be included. Other break-out meetings with Project Team Task Leaders will last approximately one to two days. Once initial data is acquired, a more in-depth follow-up from the R. W. Beck team members will be required to further investigate aspects of Vernon's current Asset Management Program (AMP), including current: practices, policies and business processes. R. W. Beck team members may review the data, systems, and business processes in Vernon's offices or via teleconference and Net meetings. These additional meetings will take place once the data is required and will require one or two days for each team lead for a given project task. 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 3 of 16 Exhibit A Scope of Services Following the Phase 1 project meetings, R. W. Beck and Vernon will review the schedule and R. W. Beck/Vemon project team members responsibilities (hours of effort) and modify the Scope of Services and Budget as necessary for Phases 2 and 3 in developing the Detailed Work Plan. 1.1 Develop Work Plan R. W. Beck will consult with Vernon Staff to identify and define project needs and begin the work to craft the Work Plan to address specific project challenges and enhancements that should be made to the AMP. 1.1.1 Prepare Draft Work Plan with Scope of Work, Schedule and Budget R. W. Beck will consult with Vernon staff to determine the prescribed project approach. Once the basic approach to the project is determined, R. W. Beck will develop a draft: Scope of Work, Work Plan, Schedule and Preliminary Budget for general resource scheduling and budgetary purposes. 1.1.2 Conduct Project Kickoff Meeting with Vernon to Determine Project Objectives R. W. Beck will document the results of the Project Kickoff Meeting in a Statement of Project Objectives (SPO) developed by the Project Team. The SPO will establish the specific changes and enhancements and upgrades that will be made to the AMP systems and processes including, for example, how the CPR by Property Unit will be maintained in the future. Pending further review and discussions with Vernon staff, we anticipate the SPO will address the following areas: ■ Existing accounting policies and procedure changes, including: ■ Work order implementation/closeout process ■ Capitalization and expense policies ■ Use of blanket versus individual work orders ■ Accounting for individual versus group (mass) assets ■ Review of depreciation practices/methods ■ Existing AMP systems and business processes changes, including: ■ EDEN asset inventory accounting and plant management system ■ Design of the work order system process ■ GIS system use and integration into Work Management and CPR ■ Update and maintenance of the CPR, including: ■ Establishing new/updated Property Unit definitions ■ Establishing book cost by Property Unit ■ Maintaining book cost by Property Unit going forward 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 4 of 16 Exhibit A Scope of Services 1.1.3 Prepare and Submit Detailed Work Plan After the project objectives have been established, the Project Team will spell out the in-depth approach for achieving those objectives in a Detailed Work Plan. Based on comments to the draft Work Plan and findings from the SPO, R. W. Beck will prepare the Detailed Work Plan and submit to Vernon for review. The Detailed Work Plan will basically lay out the step-by-step process for accomplishing the work in the remaining phases of the project. The Detailed Work Plan will identify the following items for each Project Objective: ■ A general statement of the work ■ Data request and review ■ Logical sequence of tasks/sub-tasks necessary to complete the objective ■ Task leader ■ Schedule for completion Careful consideration will be given to Vernon staff availability and commitments needed to implement the Project Objectives. We also propose to have one roundtable discussion with department managers to convey the Detailed Work Plan and communicate the anticipated benefits of the project to Vernon. This will play an important part in. getting "buy in" across the organization. 1.2 Perform Initial Evaluation of Existing Systems, Data and Business Processes R. W. Beck will investigate aspects of Vernon's current AMP, including current: practices, policies and business processes. R. W. Beck will consult with Vernon staff to identify and define the current work practices and systems used. R. W. Beck will document specific changes and enhancements that should be made to the AMP based on staff interviews and industry experience of practices from other utilities. The review work will include one-on-one interviews with managers from accounting, engineering, GIS, construction and maintenance and information systems, conducted during on -site visits and follow-up conference calls (if necessary). It will also encompass further investigations and understanding of Vernon's existing policies and procedures, existing databases (e.g., GIS data) and historical accounting records. More specifically, the areas that will be covered during the on -site review work include the following. 1.2.1 Review and Document Current Policies and Procedures for -Accounting R. W. Beck will review existing procedures, policies and assumptions for fixed asset accounting, including the current procedures used to close construction work orders and the policies and methods used to capitalize Vernon's assets into its fixed asset records. Subjects to be covered in this task include: ■ Capitalization and expense policies ■ Mass asset accounting policies 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 5 of 1 Exhibit A Scope of Services ■ Accounting for purchase of bench stock (i.e., stores inventory) ■ Current assumptions/methods regarding the capitalization of overhead and administrative costs ■ Current service lives for various property classifications used to determine depreciation ■ Property unit definitions for utility assets ■ Overall review of the CPR system and/or processes ■ Treatment of contributed capital assets ■ Asset retirement practices 1.2.2 Review and Document Current Engineering Design, Construction and Work Order Practices R. W. Beck will meet with key electric engineering personnel to review current design practices (e.g., assembly unit definitions), construction cost estimating practices and work order implementation procedures. The primary purpose of this task will be to gain a working understanding of the identification and accounting of assets created vis-a-vis the construction process and to determine what changes in the current processes (e.g., additional automation) may be needed for unitizing work orders after project completion. 1.2.3 Review and Document Existing EDEN System for Suitability for Asset Inventory, Work Order and CPR Purposes R. W. Beck will investigate the EDEN system for suitability for asset inventory, work order and CPR purposes, and historical data contained on the EDEN system. 1.2.4 Research Available Asset Data for Suitability R. W. Beck will review Vernon's existing inventory of assets including the Electric System Master Plan and the electric system maps, drawings, inspection records, engineering analysis model and other sources to determine the usefulness of those existing data sources and the level of detail that will be required in the inventory. This will also allow us to understand the procedures used to generate the inventory and the extent to which it can be utilized in the overall asset management process. R. W. Beck will work with Vernon staff to determine what data is missing from record and cannot be observed in the field to determine what additional records will need to be added to the CPR to address missing and indeterminate data. The available data will be reviewed for things such as asset data definitions, data fields, vintage year, location code and the process for entry from "as -built drawings. This review will provide a basis for understanding the level of detail of field work, document research, data contained in the EDEN system, and historical accounting practices for certain assets (e.g., retirements), and will identify possible duplicate entries. Data contained in other sources will also be addressed (e.g. spreadsheets and other databases). 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 6 of 16 Exhibit A Scope of Services The review will generally examine: ■ Original costs of fixed assets by year ■ Historical assumptions regarding administrative and other overhead costs capitalized ■ Methods used to unitize capital assets into property units ■ Treatment of contributed capital from developers ■ Asset retirements ■ Duplicate asset entries 1.2.5 Determine Asset Data Structure Model R. W. Beck will work with Vernon staff to develop a workable set of property (or retirement) unit definitions for the CPR. Consideration will be given to current needs as well as potential future asset descriptions and changes in engineering design. The property unit definitions will be embodied in a Property Unit catalog that will be implemented in Phase 3 of the project. The Property Unit catalog generally will include the asset name, detailed description of components included in the property unit, property unit number and FERC account/sub-account identifier. Vernon does not have an up-to-date inventory of certain electric assets, at a level needed to establish Property Unit data for input to the CPR. The non -inventoried assets include electric power generation and substations and transmission and distribution facilities. R. W. Beck will develop a unitized list of CPR based on FERC accounts. R. W Beck will identify Vemon's: ■ "Mass" Assets ■ Transmission, distribution, and ■ Transmission, distribution, and secondary conductor secondary poles and pole hardware ■ Distribution transformers ■ Fuses ■ Distribution capacitor banks ■ Services ■ Disconnect switches ■ Meters ■ "Major" Assets ■ Substation structures ■ Substation control houses ■ Substation foundations ■ Generator structures ■ . Substation transformers ■ Generator foundations ■ Substation circuit breakers ■ Generators ■ Substation switches ■ Generator transformers ■ Substation capacitor banks ■ Generator controls ■ Substation controls ■ Generator control houses 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 7 of 16 Exhibit A Scope of Services 1.2.6 Prepare Data Requirements Document R. W. Beck will prepare a data requirements document that will specify the data to be collected and how each asset's vintage and size/type will be obtained. Experience shows that there will be significant amount of missing information from the field inventory" In this task, we will develop a set of assumptions to be used to fill in these data gaps. Expected data that may be difficult or impossible to obtain include conductor sizes and types, transformer ratings, pole heights and classes and the age of equipment. Applying proven methods, we will recommend for Vernon's consideration reasonable assumptions to fill-in the missing data. 1.2.7 Determine Method and Means to Store and Manage Asset Inventory Data R. W. Beck will consult with Vernon staff to determine the method and means to store and manage asset inventory, data. Options for consideration include spreadsheets, databases, GIS, and Vernon's accounting system. R. W. Beck will plan for the conversion of the valued and depreciated plant assets to the selected means for storage and retrieval. Phase 2 - Asset Inventory, Valuation, and Depreciation R. W. Beck will develop an inventory of the electric system facilities. R. W. Beck will perform field reviews to establish the inventory of facilities, determine typical construction standards, and assess the condition and age of the facilities. Where vintage (age) of facilities cannot be directly read, it will be estimated by field technicians. 2.1. Perform Asset Inventory In order to perform the asset inventory, R. W. Beck will develop data collection processes for the electric system facilities. R. W. Beck will then conduct field reviews of major assets and use GPS to collect mass assets. 2.1.1. Define Data Collection Process R. W. Beck will develop field inventory data gathering procedures for transmission, distribution and secondary electric utility plant facilities' mass assets using a GPS data collection process. This will include: ■ Design a data dictionary for mass assets using a GPS field inventory to facilitate CPR, Asset Management, and GIS initiatives containing methodology to: ■ Collect vintage of asset (to determine age) ■ Collect size/type for massing assets ■ Characterize assets physical attributes ■ Catalog of asset attributes and condition R. W. Beck will develop field inventory data gathering procedures for substation and generation electric utility plant facilities' major assets using a combination of Vernon's records research and field data collection. This will include: 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 8 of 16 Exhibit A Scope of Services ■ _ Design of a system for collecting major assets using a spreadsheet methodology to capture field verification work, as -built records for unobservable assets, and documented major (capitalized) maintenance events. 2.1.2. Perform Field Work to Collect and Validate Data R. W. Beck will capture mass assets in the field with sub -meter, professional -grade GPS systems using the data dictionary to provide: ■ Mass asset attribute data developed within the data dictionary ■ GPS position R.W. Beck will capture major assets using document review spreadsheets and field visual identification work. This will include: - ■ Collect vintage of asset (to determine age) ■ Collect model/size/type data for major assets ■ Characterize assets physical attributes 2.1.3. Prepare Database of Asset Information R. W. Beck will prepare a database from the field investigation of mass and major assets for use in the valuation financial models that will be used to determine the current construction cost of the facilities. 2.2. Develop Valuation of Assets Once assets have been collected and a database made from the GPS inventory and field review, R. W. Beck will develop a valuation of Vernon's assets. ■ Develop current construction cost of assets ■ Estimate original cost ■ Conduct depreciation review ■ Establish "Per Books" cost of assets by property unit 2.2.1. Determine Current Construction Cost of Assets R. W. Beck will perform engineering cost studies to determine the current construction cost of the facilities based on the inventory of assets established in Task 2.1. R. W. Beck may use the following sources for current replacement costs: industry databases; R. W. Beck data obtained from ongoing construction and cost estimating work; vendor inquiries, other utility inquiries, and Vernon's records and experience with current construction costs. 2.2.2. Develop Recommended Depreciation Rates R. W. Beck will perform a review of Vernon's current depreciation practices and components used to depreciate the electric system assets. R. W. Beck will develop a schedule of recommended depreciation rates and based on comparisons with electric industry depreciation statistics and depreciation rates of neighboring electric utilities; discussions with Vernon staff regarding expected service lives for different types of plant; and our own engineering judgment. 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 9 of 16 Exhibit A Scope of Services R. W. Beck will also investigate typical depreciation practices used by neighboring utilities and make comparisons with Vernon's depreciation components (e.g., average service life, depreciation methods such as use of straight line and inclusion of net salvage rates). R. W. Beck will summarize its review in a brief letter report to Vernon. 2.2.3. Estimate Original Cost, Accumulated Depreciation and Book Value of Assets R. W. Beck will perform trended cost analyses using industry recognized cost indices (e.g., Handy Whitman Index of Public Utility Construction Costs) to estimate the original cost (i.e., book cost) of the facilities. Based on the age of the facilities, R. W. Beck will apply the recommended depreciation rates to the original cost of the facilities to determine the amount of accumulated depreciation. Using the Property Unit database compiled from the asset inventory in Task 2.1, R. W. Beck will develop the estimated per -books cost values (historical cost) to be assigned to such Property Units. 2.2.4. Implement Continuing Property Records Database During this phase of the project, the work completed in Phases 1 and 2 will be used as the basis to update the CPR system, make needed changes to fixed asset accounting processes, procedures and documentation (including changes to work order implementation and closeout) and assist Vernon in making changes (if any) to the automation of its fixed asset accounting processes. It is contemplated that this work would be accomplished in four separate tasks, described as follows: ■ R. W. Beck will provide conversion of the GPS and other inventory data into the valuation database/spreadsheet model incorporating the mass assets from the GPS field inventory and major assets collected from observation of facilities, asset records and as -built drawings and maintenance records. ■ The Property Unit database compiled in Phase 2 will be used to develop Vernon's CPR on the EDEN system as of the fiscal year ending 2008. Before updating the CPR it will be necessary to make certain changes (i.e., additions) to the data fields contained therein. It is estimated that the changes would take approximately 120 person -hours to complete by a Vernon staff member. Implementation of the revised CPR will likely involve certain material adjustments to Vernon's financial records. ■ R. W. Beck will review the results of the Phase 2 work with Vernon's independent auditors prior to the actual update or changes to book value of assets. ■ R. W. Beck will provide files suitable to be uploaded into GIS format using ESRI .Shp files or Autodesk Map .dwg files with object data. Phase 3 — Engineering Model Update and System Map Book Production Since the completion of the Electric System Master Plan in 2007, Vernon has not updated its distribution system engineering model to reflect improvements made to the 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 10 of 16 Exhibit A Scope of Services system. Before the City can begin using the model for engineering studies, it must be updated to reflect the work that has been completed. Vernon's operating maps — the definitive documents used by engineering and operating personnel to track changes to the electric system and present its current operating state to engineering and operating personnel — are out of date and do not reflect many of the changes that have occurred in recent years. Our approach to the collection of data for the asset inventory affords Vernon the opportunity to update these important records in an efficient and accurate manner. Once completed, this Phase of the work will provide Vernon with: ■ An up-to-date engineering model of the system, geographically represented with. an accurate connectivity model that tells engineers and operating personnel which customer is connected to which transformer and how each transformer is connected to each distribution circuit, and exactly where and what primary distribution component is in the system. ■ Up-to-date system operating maps, geographically and electrically correct for engineering and operating personnel to use in the office and in the field that depict the current configuration of the distribution system. 3.1. Update Engineering Model As the asset inventory process progresses, R. W. Beck will convert the field data into geographically located elements in the engineering model, WindMile, originally developed by R. W. Beck as part of the Electric System Master Plan. The engineering model will be an electrical and graphical representation of the electric distribution system including the electrical connectivity from customer to transformer, to distribution circuit to substation. When the model is updated, Vernon will have the ability to: ■ Evaluate the impact of changes to the electrical configuration resulting from circuit switching ■ Analyze the loading of distribution and substation transformers including the ability to identify overloaded and underutilized distribution transformers and feeders ■ Evaluate the impact of customer additions and changes on the distribution system ■ Use the engineering model as a stand alone GIS system or integrate the electrical system information with Vernon's GIS system ■ Manage and track electric system assets to improve record keeping ■ Develop relay protection settings and coordinate protective devices to improve system reliability ■ Plan for and manage the 7-kV to 16-kV voltage conversion projects ■ Evaluate the impact of large customer additions to the distribution system and identify capital system improvements needed to accommodate new customer loads ■ Analyze and resolve customer service quality issues 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 11 of 16 Exhibit A Scope of Services Deliverables from this task will include: ■ An up-to-date electric system model in WindMil format ■ A base case analysis of load flows and voltages ■ A summary of system overloads and undervoltages 3.2. Develop and Produce Electric System Operating Maps Upon completion of the engineering model in Task 3.1, R. W. Beck will produce a set of electric system maps suitable for use by engineering and operating personnel. The system maps will be provided in AutoCAD 2008 format based by using the WindMil 2 Map product from Milsoft. Maps will contain: ■ Transmission and primary and secondary distribution pole locations ■ Transmission and primary and secondary distribution circuits including circuit number, voltage, conductor size and type and circuit phase orientation. ■ Location of and identification of transformers including transformer number, kva rating and phase connections ■ Location of and identification of switching devices including disconnects and cutouts ■ Location of and identification of underground vaults ■ Other such information is typically found in electric system operating maps Deliverables from this task include: ■ Electronic set of map books in AutoCAD and Adobe .pdf format IN 10 Sets of 11"xl7" full color map books Additional Services If unexpected problems are encountered with securing the appropriate data, or if Vernon needs assistance in providing its services, R. W. Beck may need to request Additional Services and a corresponding budget increase. Other items not priced in the budget estimates include, but are not limited to: ■ Inventory and valuation of Vernon's real property, fleet, equipment, gear, tools office/habitable/warehouse buildings and other assets ■ Asset accounting for land and land rights ■ Review of the results with Vernon's external auditors 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 12 of 16 Exhibit A Scope of Services Expectations of Client Involvement The estimated costs for the above Scope of Services assume that Vernon can provide the following data and services for completing Phases 1 through 3. ■ Facilitation and scheduling of on -site work with Vernon staff ■ Data requested by R. W. Beck (in a timely manner) ■ Sufficient details on historical assets in the existing CPR System ■ GIS and Field Inventory data needed to establish the Property Unit database ■ Appropriate personnel to assist R. W. Beck in conducting the on -site and condition assessment of facilities 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO. 8 R. W. Beck, Inc. Page 13 of 16 Exhibit B Billing Rates Billing Rates and Budget Estimate and Schedule R. W. Beek's Rates are as follows: R. W. Beck, Inc. Billing Rates Billing Class Hourly Rate (US$) Typical Project Roles 1 20.00 2 34.00 3 48.00 Clerical, Administration, Junior Engineers and 4 62.00 Technicians 5 76.00 6 90.00 7 104.00 8 118.00 Staff Engineers, Consultants 9 132.00 and Technicians 10 146.00 11 160.00 12 174.00 Senior Engineers, Consultants and Technicians, and 13 188.00 Project Managers 14 202.00 15 216.00 16 230.00 17 244.00 Executive Engineers and Consultants, Senior Project Managers, and Principals 18 258.00 19 272.00 20 286.00 21 300.00 22 314.00 23 328.00 24 342.00 Executive Engineers and Consultants, Senior Project 25 356.00 Managers, and Senior Principals 26 370.00 *Salaries of personnel are subject to change in accordance with R. W. Beck's annual salary adjustment program. 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 14 of 16 Exhibit B Billina Rates R. W. Beck's Kev Personnel: Personnel 1 Proiect Role Class Steve Rupp, Client Liaison 23 Bruce Hamer, P.E. Senior Project Manger 17 Nancy Hughes, ASA, Valuation and Depreciation Task Manager 18 Greg Broeking, CPA, Asset Accounting and CPR Task Manager 16 Dave Herron, P.E., Asset Inventory and Project Data Manager 12 Lowell Wessel, T&D Field Services Supervisor 10 John Bakken, P.E., Substation Asset Task Manager 16 Bill Healey, Generation Asset Task Manager 12 Jim Byerley, P.E., Substation Assets 15 Significant assumptions that define the expected level of effort for the asset inventory are summarized below. Asset Units Total T&D Poles 3000 $ 82,618 Secondary Poles 1000 $ 23,025 PM Transformers and Switches 75 $ 13,544 Vaults 150 $ 6,772 Area Lighting 0 $ 13,544 Minisubstations 0 $ 16,930 Primary Substations 8 $ 16,930 Generating Facilities 1 $ 4,062 Total 4,234 $ 177,425 R. W. Beck's proposed fee for services described herein is summarized below. Project Task Est. Fee Project Management $62,487 Phase 1 - Workplan and Assessment $25,895 Phase 2 - Inventory and Valuation $254,061 Phase 3 - Model Update and Map Books $76,701 TOTAL $419,144 The work will be completed on a time and materials not to exceed the stated budget amounts. Labor will be billed at the current R. W. Beck billing rates. All expenses will be subject to a 10 percent administrative mark-up. Billing will be monthly with accounts receivable due with 30 days upon receipt of invoice. Late payments will be subject to interest on past due amounts of 1.5 percent per month. 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 15 of 16 Exhibit B Billing Rates Project Schedule ■ Phase 1 will be complete within 3 weeks of notice to proceed ■ Phase 2 will be complete within 15 weeks of notice to proceed ■ Phase 3 will be complete within 18 weeks of notice to proceed 1198-CITY OF VERNON INVENTORY, VALUATION, AND ASSET MANAGEMENT, TASK AUTH. NO.8 R. W. Beck, Inc. Page 16 of 16 June 24, 2008 Mr. Donal O'Callaghan Director of Light & Power Light & Power Department City of Vernon 4305 Santa Fe Avenue Vernon, CA 90058 Subject: R. W. Beck - (PO #055-0000075) Change Order No. 1 to the R. W. Beck Contract Dear Mr. O'Callaghan: Attached is an executed copy of the Change Order No. 1 related to Task Authorization No. 8: Inventory, Valuation and Asset Management. This letter is to confirm our agreement regarding R. W. Beck starting work on your project before executing an agreement for the full funding of the project of $419,144. R. W. Beck and Light & Power Department staff will begin the project with a project kick-off meeting scheduled for July 1", 2008. The initial services will be provided pursuit to Task No. 8, Exhibit A of the purchase order. The services will be limited to the amount approved by the City of Vernon which is currently $254,061. R. W. Beck will continue to provide the services as defined in the agreement as funding is authorized in writing pursuant to the Purchase Order. We appreciate the opportunity to serve the City and look forward to working with your staff to complete this project. If our understanding is incorrect, please advise before July 1, 2008. If you have any questions, please contact me at (615) 431-3290 or Steve Rupp at (916) 614-8246. Sincerly, X K, INC. 644&__� James Baxter Vice President, Utility Engineering and Planning Attached: Email correspondence from Mr. Carlos Fandino, T&D Manager — City of Vernon cc. Steve Rupp, Vice President - R. W. Beck RECEIVED �JUN 2 5 2008 Qvk LIGHT & POWER DEPT. 131 Mir Parkway, Suite 300 Hendersonville, TN 37075 Phone (615) 431-3200 Fax (615) 824-7570 APPROVED JUN 16 '08 CITY COUNCIL INTEROFFICE r ; v 9 DATE: TO: FROM: SUBJECT: Light & Power Department June 10, 2008 Eric Fresch, City Administrator Donal O'Callaghan, Director of Light & Power MEMORANDUM CITY CLERK DISTRIBUTION Request for Approval of Change Order for Task No. 8 — R.W. Beck The City of Vernon Light & Power Department (City) seeks to address a complete asset inventory valuation and management of its electric system assets which include development of a thorough inventory and physical and financial assessment of Vernon's electrical assets. R.W. Beck will provide professional consulting services to Vernon related to the management of its utility assets and its associated asset management policies and procedures. The work to be performed is organized into two distinct phases: Phase 1 - Work plan and Assessment of Existing Systems and Data Phase 2 - Asset Inventory, Valuation and Depreciation Phase 1 In Phase 1, R. W. Beck will work closely with Vernon staff in developing the Project Team and to further review and/or refine Vernon's asset management needs for the preparation of a detailed plan for completed Phases 2 and 3 of the project. Phase 2 R.W. Beck will develop an inventory of the electric system facilities. R.W. Beck will perform field review to establish the inventory of facilities, determine typical construction standards, and assess the condition and age of the facilities. Where vintage (age) of facilities can not be directly read, it will be estimated by field technicians. On March 22, 2006, the City Council approved R.W. Beck professional services agreement and Resolution No. 8996. It is hereby recommended that Vernon approve the attached proposed inventory. Valuation and Asset Management and issue Contract Change order, not to exceed $254,061 to the existing R.W. Beck Master Agreement. If you have any questions, please contact me. DOC:rmt c: Project Control Document Control Y PREPARED FOR: CITY OF VERNON, CALIFORNIA May 8, 2008 Carlos Fandino Transmission and Distribution Manager Light and Power Department City of Vernon 4305 Santa Fe Ave. Vernon, CA 90058 Subject: Proposal for Inventory, Valuation and Asset Management Services Dear Mr. Fandino: We are pleased to submit the enclosed proposal to provide electric system inventory, valuation, modeling and mapping assistance to the City of Vernon As you will see from this proposal, our team brings the combined technical expertise and business insight to provide the full depth and breadth of services we have identified with you through prior discussions. In developing the enclosed proposal we have combined knowledge gained from our experience in working for the City, our industry expertise, as well as your objectives based on recent conversations with City of Vernon staff. We value the successful working relationship we have with the City of Vernon and look forward to helping the City leverage focused asset management to ultimately manage aging infrastructure. Please contact me at 916.614.8246 or srupp@rwbeck.com if you require additional information or clarification related to our proposal. Sincerely, R. W. BECK, INC. Steven Rupp Vice President V1 AY 12 2 LIUc ; ovvffl DER 201 South Lake Avenue, Suite 604 South Pasadena, CA 91101 Phone (916) 929-3653 Fax (916) 929-1710 TABLE OF CONTENTS Letter of Transmittal SECTION Scope of Services ....... .... ..... ... .... ..... ..... . ..... ..1 Project Team ......... .............................. .......... ........ ......... ............... 2 Relevant Experience . ......... ......... ......... ............................................. 3 Budget Estimate and Schedule ......... ......... ......... ......... ......... ............... 4 APPENDIX Acronyms...................................................... ......... ................... ............... A © Copyright 2008, R. W. Beck, Inc., All Rights Reserved it a SECTION 1 SCOPE OF SERVICES Purpose The City of Vernon Light and Power Department (Vernon) seeks to address several challenges pertaining to the inventory, valuation and management of its electric system assets which include: ■ Compliance with GASB 34 guidelines for continuing property records and depreciation and capitalization of assets ■ Development of a thorough inventory and physical and financial assessment of the City's electrical assets ■ Update of engineering model (WindMil®) based on asset inventory, ® and complete connectivity model from customer to transformer, to circuit to substation ® ■ Production of up-to-date system map books for use by operating and �. engineering personnel Vernon does not currently have a formal system for managing its assets. Records pertaining to the identification and condition of assets exist in ® varying degrees of completeness and accuracy within the enterprise but are not "connected" or maintained at a level that provides the critical information needed by Vernon to manage assets as effectively as desired. Assets are not consistently capitalized, depreciated or retired. The result of which is a lack of clarity as to the real value of the assets and the work ® needed to be accomplished in the future to achieve desired levels of financial disclosure, system reliability and prioritization of capital ® improvements. Like most utilities facing a tremendous aging infrastructure replacement challenge, developing and implementing ® effective asset management strategies is an important objective. To accomplish these important objectives, R. W. Beck will guide Vernon in the development of continuing property record (CPR) asset unit ® definitions based upon the Federal Regulatory Commission (FERC) uniform system of accounts. Vernon understands that a comprehensive ® asset inventory will be required, so that the age and value of assets can ® be determined for the electric utility assets. During this process, it will be necessary to update depreciation rates for these assets. ® Vernon also understands that since R. W. Beck will collect asset data for valuation and CPR purposes, it makes good sense to collect the data in a ® manner which can then be uploaded into a Geographic Information M System (GIS) and asset management systems. This approach also affords Vernon the opportunity to update its engineering model of the M electric system and produce up-to-date system map books for use by engineering and operating personnel. 1198.0408 1 1 SECTION 1 Scope of Services R. W. Beck will provide professional consulting services to Vernon related to the management of its utility assets and its associated asset management policies and procedures. The work to be performed is organized into three distinct phases: ■ Phase l — Workplan and Assessment of Existing Systems and Data ■ Phase 2 — Asset Inventory, Valuation and Depreciation ■. Phase 3— Engineering Model Update and System Map Book Production The following sections describe how the work will be organized in phases and the tasks necessary to produce the deliverables for each individual phase of the project. Phase 1 Workplan and Assessment of Existing Systems and Data In Phase 1, R. W Beck will work closely with Vernon staff in developing the Project Team and to further review and/or refine Vernon's asset management needs for the preparation of a detailed plan for completing Phases 2 and 3 of the project. At the beginning of the project, R. W. Beck will meet with Vernon management and staff to discuss the overall project understanding and approach, develop schedules and work plans, and assess existing systems and data. We will also prepare a data request to facilitate data collection from Vernon. We will meet with City staff to review existing maps, data and records of the electric system: This initial kick-off meeting will give an overview of work activities associated with Phase 2 that will involve Vernon staff from various business departments. The kick-off meeting will be at Vernon facilities and should last approximately four hours.. The purpose of this meeting is to educate Vernon staff on the overall goal of the Asset Management Project and the extent to which they will be needed to support the subsequent activities in Phases 2 and 3. R. W. Beck anticipates that the meeting should be attended by Vernon staff and management from Finance and Accounting, GIS, Information Systems, and Engineering (electric and water). Other Vernon staff may also be included. Other break-out meetingswith Project Team Task Leaders will last approximately one to two days. Once initial data is acquired, a more in-depth follow-up from the R. W. Beck team members will be required to further investigate aspects of Vernon's current Asset Management Program (AMP), including current: practices, policies and business processes. R. W. Beck team members may review the data, systems, and business processes in Vernon's offices or via teleconference and Net meetings. These additional meetings will take place once the data is required and will require one or two days for each team lead for a given project task. Following the Phase l project meetings, R. W Beck and Vernon will review the schedule and R. W. Beck/Vernon project team members responsibilities (hours of effort) and modify the Scope of Services and Budget as necessary for Phases 2 and 3 in developing the Detailed Work Plan. 1.1 Develop Work Plan R. W. Beck will consult with Vernon Staff to identify and define project needs and begin the work to craft the Work Plan to address specific project challenges and enhancements that should be made to the AMP. 1-2 1198 - 0408 SCOPE OF SERVICES 1.1.1 Prepare Draft Work Plan with Scope of Work, Schedule and Budget R. W. Beck will consult with Vernon staff to determine the prescribed project approach. Once the basic approach to the project is determined, R. W. Beck will develop a draft: Scope of Work, Workplan, Schedule and Preliminary Budget for general resource scheduling and budgetary purposes. 1.1.2 Conduct Project Kickoff Meeting with Vernon to Determine Project Objectives R. W. Beck will document the results of the Project Kickoff Meeting in a Statement of Project Objectives (SPO) developed by the Project Team. The SPO will establish the specific changes and enhancements and upgrades that will be made to the AMP systems and processes including, for example, how the CPR by Property Unit will be maintained in the future. Pending further review and discussions with Vernon staff, we anticipate the SPO will address the following areas: ■ Existing accounting policies and procedure changes, including: ■ Workorder implementation/closeout process ■ Capitalization and expense policies • Use of blanket versus individual work orders ■ Accounting for individual versus group (mass) assets ■ Review of depreciation practices/methods ■ Existing AMP systems and business processes changes, including: EDEN asset inventory accounting and plant management system ■ Design of the workorder system process ■ GIS system use and integration into Work Management and CPR ■ Update and maintenance of the CPR, including: • Establishing new/updated Property Unit definitions ■ Establishing book cost by Property Unit ■ Maintaining book cost by Property Unit going forward 1.1.3 Prepare and Submit Detailed Work Plan After the project objectives have been established, the Project Team will spell out the in-depth approach for achieving those objectives in a Detailed Work Plan. Based on comments to the draft Work Plan and findings from the SPO, R. W. Beck will prepare the Detailed Work Plan and submit to Vernon for review. The Detailed Work Plan will basically lay out the step-by-step process for accomplishing the work in the remaining phases of the project. The Detailed Work Plan will identify the following items for each Project Objective: ■ A general statement of the work ■ Data request and review ■ Logical sequence of tasks/sub-tasks necessary to complete the objective ■ Task leader ■ Schedule for completion 1-3 R. W. Beck, Inc. SECTION 1 Careful consideration will be given to Vernon staff availability and commitments needed to implement the Project Objectives. We also propose to have one roundtable discussion with department managers to convey the Detailed Work Plan and communicate the anticipated benefits of the project to Vernon. This will, play an important part in getting "buy in" across the organization. 1.2 Perform Initial Evaluation of Existing Systems, Data and Business Processes R. W. Beck will investigate aspects of Vernon's current AMP, including current: practices, policies and business processes. R. W. Beck will consult with Vernon staff to identify and define the current work practices and systems used. R. W. Beck will document specific changes and enhancements that should be made to the AMP based on staff interviews and industry experience of practices from other utilities. The review work will include one-on-one interviews with managers from accounting, engineering, GIS, construction and maintenance and information systems, conducted during on -site visits and follow-up conference calls (if necessary). It will also encompass further investigations and understanding of Vernon's existing policies and procedures, existing databases (e.g., GIS data) and historical accounting records. More specifically, the areas that will be covered during the on -site review work include the following. 1.2.1 Review and Document Current Policies and Procedures for Accounting R. W. Beck will review existing procedures, policies and assumptions for fixed asset accounting, including the current procedures used to close construction workorders and the policies and methods used to capitalize Vernon's assets into its fixed asset records. Subjects to be covered in this task include: ■ Capitalization and expense policies ■ Mass asset accounting policies ■ Accounting for purchase of bench stock (i.e., stores inventory) ■ Current assumptions/methods regarding the capitalization of overhead and administrative costs ■ Current service lives for various property classifications used to determine depreciation ■ Property unit definitions for utility assets ■ Overall review of the CPR system and/or processes ■ Treatment of contributed capital assets ■ Asset retirement practices 1.2.2 Review and Document Current Engineering Design, Construction and Workorder Practices R. W. Beck will meet with key electric engineering personnel to review current design practices (e.g., assembly unit definitions), construction cost estimating practices and workorder implementation procedures. The primary purpose of this task will be to gain a working understanding of the identification and accounting of assets created vis-a-vis the construction process and to determine what changes in the current processes (e.g., additional automation) may be needed for unitizing work orders after project completion. 1.2.3 Review and Document Existing EDEN System for Suitability for Asset Inventory, Workorder and CPR Purposes R. W, Beck will investigate the EDEN system for suitability for asset inventory, workorder and CPR purposes, and historical data contained on the EDEN system. 1-4 1198 - 0408. SCOPE OF SERVICES 1.2.4 Research Available Asset Data for Suitability R. W. Beck will review Vernon's existing inventory of assets including the Electric System Master Plan and the electric system maps, drawings, inspection records, engineering analysis model and other sources to determine the usefulness of those existing data sources and the level of detail that will be required in the inventory. This will also allow us to understand the procedures used to generate the inventory and the extent to which it can be utilized in the overall asset management process. R. W. Beck will work with Vernon staff to determine what data is missing from record and cannot be observed in the field to determine what additional records will need to be added to the CPR to address missing and indeterminate data. The available data will be reviewed for things such as asset data definitions, data fields, vintage year, location code and the process for entry from "as -built drawings. This review will provide a basis for understanding the level of detail of field work, document research, data contained in the EDEN system, and historical accounting practices for certain assets (e.g., retirements), and will identify possible duplicate entries. Data contained in other sources will also be addressed (e.g. spreadsheets and other databases). The review will generally examine: ■ Original costs of fixed assets by year ■ Historical assumptions regarding administrative and other overhead costs capitalized ■ Methods used to unitize capital assets into property units ■ Treatment of contributed capital from developers ■ Asset retirements ■ Duplicate asset entries 1.2.5 Determine Asset Data Structure Model R. W. Beck will work with Vernon staff to develop a workable set of property (or retirement) unit definitions for the CPR. Consideration will be given to current needs as well as potential future asset descriptions and changes in engineering design. The property unit definitions. will be embodied in a Property Unit catalog that will be implemented in Phase 3 of the project. The Property Unit catalog generally will include the asset name, detailed description of components included in the property unit, property unit number and FERC account/sub-account identifier. Vernon does not have an up-to-date inventory of certain electric assets, at a level needed to establish Property Unit data for input to the CPR. The non -inventoried assets include electric power generation and substations and transmission and distribution facilities. R. W. Beck will develop a unitized list of CPR based on FERC accounts. R. W Beck will identify Vernon's: ■ "Mass" Assets ■ Transmission, distribution, and secondary conductor • Distribution transformers • Distribution capacitor banks ■ Disconnect switches • Transmission, distribution, and secondary poles and pole hardware ■ Fuses ■ Services ■ Meters R. W. Beck, Inc, 1-5 SECTION t "Major" Assets ■ Substation structures Substation control houses ■ Substation foundations Generator structures ■ ■ Substation transformers Generator foundations ■ ■ Substation circuit breakers Generators ■ Substation switches Generator transformers ■ Substation capacitor banks 0 Generator controls ■ Substation controls W Generator control houses 1.2.6 Prepare Data Requirements Document R. W. Beck will prepare a data requirements document that will specify the data to be collected and how each asset's vintage and size/type will be obtained. Experience shows that there will be significant amount of missing information from the field inventory. In this task, we will develop a set of assumptions to be used to fill in these data gaps. Expected data that may be difficult or impossible to obtain include conductor sizes and types, transformer ratings, pole heights and classes and the age of equipment. Applying proven methods, we will recommend for Vernon's consideration reasonable assumptions to fill-in the missing data. 1.2.7 Determine Method and Means to Store and Manage Asset Inventory Data R. W. Beck will consult with Vernon staff to determine the method and means to store and manage asset inventory data. Options for consideration include spreadsheets, databases, GIS, and. Vernon's accounting system. R. W. Beck will plan for the conversion of the valued and depreciated plant assets to the selected means for storage and retrieval. Phase 2 — Asset Inventory, Valuation, and Depreciation R. W. Beck will develop an inventory of the electric system facilities. R. W. Beck will perform field reviews to establish the inventory of facilities, determine typical construction standards, and assess the condition and age of the facilities. Where vintage (age) of facilities cannot be directly read, it will be estimated by field technicians. 2.1 Perform Asset Inventory In order to perform the asset inventory, R. W. Beck will develop data collection processes for the electric system facilities. R. W. Beck will then conduct field reviews of major assets and use GPS to collect mass assets. 2.1.1. Define Data Collection Process R. W. Beck will develop field inventory data gathering procedures for transmission, distribution and secondary electric utility plant facilities' mass assets using a GPS data collection process. This will include: ■ Design a data dictionary for mass assets using a GPS field inventory to facilitate CPR, Asset Management, and GIS initiatives containing methodology to: ■ Collect vintage of asset (to determine age) ■ Collect size/type for massing assets 1-6 1198 - 0408 a 9 w w w m 0 w u w 0 u w w W_- F � N ■ c �. iv w n n n x a N d ■ ■ c CD a CD tat CD x (� Cn C) .'S CD A� O 5, �. r O �. t o 0 _ CfQ CD CD CD CD .y Ci < CD CD $U O CD N p a O - CD N v� CD p O ram. (� O `� ¢ y �n �p CD CD v n 0 CD p CD oEL O < . n r� D �' R CAD 0 CD CD CA CD n O h �. p .J• rr Q' O p.CL :3 CA CD CD (TQ O CD O CD O4 m CD p CD H SD CD CD o' C1 G HCD 0 CD CD "! CD aq CD CD O CD�. CD. i .+� �. tC O yr CD CD CD n O CD CDtr ►� p, C) CD CD ot CD CD n O < O C C1 CD CD CD c PD CD CD CD O CD << n A G- O C)CD CD O VCD'� Q- p r0 n CZ O rahCD N n G CCD t CD - K CD L � O. CD s cn Ci O 0 m O m U m 0 m SECTION 1 neighboring electric utilities; discussions with Vernon staff regarding expected service lives for different types of plant; and our own engineering judgment. R. W. Beck will also investigate typical depreciation practices used by neighboring utilities and make comparisons with Vernon's depreciation components (e.g., average service life, depreciation methods such as use of straight line and inclusion of net salvage rates). R. W. Beck will summarize its review in a brief letter report to Vernon. 2.2.3. Estimate Original Cost, Accumulated Depreciation and Book Value of Assets R. W. Beck will perform trended cost analyses using industry recognized cost indices (e.g., Handy Whitman Index of Public Utility Construction Costs) to estimate the original cost (i.e., book cost) of the facilities. Based on the age of the facilities, R. W. Beck will apply the recommended depreciation rates to the original cost of the facilities to determine the amount of accumulated depreciation. Using the Property Unit database compiled from the asset inventory in Task 2. 1, R. W. Beck will develop the estimated per -books cost values (historical cost) to be assigned to such Property Units. 2.2.4. Implement Continuing Property Records Database During this phase of the project, the work completed in Phases 1 and 2 will be used as the basis to update the CPR system, make needed changes to fixed asset accounting processes, procedures and documentation (including changes to workorder implementation and closeout) and assist Vernon in making changes (if any) to the automation of its fixed asset accounting processes. It is contemplated that this work would be accomplished in four separate tasks, described as follows: ■ R. W. Beck will provide conversion of the GPS and other inventory data into the valuation database/spreadsheet model incorporating the mass assets from the GPS field inventory and major assets collected from observation of facilities, asset records and as -built drawings and maintenance records. ■ The Property Unit database compiled in Phase 2 will be used to develop Vernon's CPR on the EDEN system as of the fiscal year ending 2008. Before updating the CPR it will be necessary to make certain changes (i.e., additions) to the data fields contained therein. It is estimated that the changes would take approximately 120 person -hours to complete by a Vernon staff member. Implementation of the revised CPR will likely involve certain material adjustments to Vernon's financial records. ■ R. W. Beck will review the results of the Phase 2 work with Vernon's independent auditors prior to the actual update or changes to book value of assets. ■ R. W. Beck will provide files suitable to be uploaded into GIS format using ESRI .shp files or Autodesk Map .dwg files with object data. Phase 3 — Engineering Model Update and System Map Book Production Since the completion of the Electric System Master Plan in 2007, Vernon has not updated its distribution system engineering model to reflect improvements made to the system. Before the City can begin using the model for engineering studies, it must be updated to reflect the work that has been completed. Vernon's operating maps - the definitive documents used by engineering and operating personnel to track changes to the electric system and present its current operating state to engineering and operating personnel - are out of date and do not reflect many of the changes that have occurred in recent years. 1-8 1198 - 0408 SCOPE OF SERVICES Our approach to the collection of data for the asset inventory affords Vernon the opportunity to update these important records in an efficient and accurate manner. Once completed, this Phase of the work will provide Vernon with: ■ An up-to-date engineering model of the system, geographically represented with an accurate connectivity model that tells engineers and operating personnel which customer is connected to which transformer and how each transformer is connected to each distribution circuit, and exactly where and what primary distribution component is in the system. ■ Up-to-date system operating maps, geographically and electrically correct for engineering and operating personnel to use in the office and in the field that depict the current configuration of the distribution system: 3.1. Update Engineering Model As the asset inventory process progresses, R. W. Beck will convert the field data into geographically located elements in the engineering model, WindMil®, originally developed by R. W. Beck as part of the Electric System Master Plan. The engineering model will be an electrical and graphical representation of the electric distribution system including the electrical connectivity from customer to transformer, to distribution circuit to substation. When the model is updated, Vernon will have the ability to: ■ Evaluate the impact of changes to the electrical configuration resulting from circuit switching ■ Analyze the loading of distribution and substation transformers including the ability to identify overloaded and underutilized distribution transformers and feeders ■ Evaluate the impact of customer additions and changes on the distribution system ■ Use the engineering model as a stand alone GIS system or integrate the electrical system information with Vernon's GIS system ■ Manage and track electric system assets to improve record keeping ■ Develop relay protection settings and coordinate protective devices to improve system reliability ■ Plan for and manage the 7-kV to 16-kV voltage conversion projects ■ Evaluate the impact of large customer additions to the distribution system and identify capital system improvements needed to accommodate new customer loads ■ Analyze and resolve customer service quality issues Deliverables from this task will include: ■ An up-to-date electric system model in WindMil format ■ A base case analysis of load flows and voltages ■ A summary of system overloads and undervoltages 3.2. Develop and Produce Electric System Operating Maps Upon completion of the engineering model in Task 3.1, R. W. Beck will produce a set of electric system maps suitable for use by engineering and operating personnel. The system maps will be provided in AutoCAD 2008 format based by using the WindMil 2 Map product from Milsoft. Maps will contain: ■ Transmission and primary and secondary distribution pole locations R. W. Beck, Inc. 1-9 SECTION 1 Fission and primary and secondary distribution circuits including circuit number, voltage, tor size and type and circuit phase orientation. aon of and identification of transformers including transformer number, kva rating and phase connections ■ Location of and identification of switching devices including disconnects and cutouts ■ Location of and identification of underground vaults ■ Other such information is typically found in electric system operating maps Deliverables from this task include: ■ Electronic set of map books inAutoCAD and Adobe .pdf format ■ 10 Sets of 11 "x 17 full color map books Additional Services If unexpected problems are encountered with securing the appropriate data, or if Vernon needs assistance in providing its services, R. W. Beck may need to request Additional Services and a corresponding budget increase. Other items not priced in the budget estimates include, but are not limited to: ■ Inventory and valuation of Vernon's real property, fleet, equipment, gear, tools office/habitable/warehouse buildings and other assets ■ Asset accounting for land and land rights ■ Review of the results with Vernon's external auditors Expectations of Client Involvement The estimated costs for the above Scope of Services assume that Vernon can provide the following data and services for completing Phases 1 through 3. ■ Facilitation and scheduling of on -site work with Vernon staff ■ Data requested by R. W. Beck (in a timely manner) ■ Sufficient details on historical assets in the existing CPR System ■ GIS and Field Inventory data needed to establish the Property Unit database ■ Appropriate personnel to assist R. W. Beck in conducting the on -site and condition assessment of facilities 1-10 1198 - 0408. Project Team R. W. Beck has assembled a team of knowledgeable professionals to support the City of Vernon with inventory, valuation, and management of its assets. Bruce Hamer, P.E., an industry professional with more than 33 years of experience, has been chosen to lead this effort as Project Manager. Mr. Hamer's career has been spent serving in high-level positions with a California electric municipal utility and has a good understanding of the issues facing California utilities. Mr. Hamer will provide management of the overall project. He will be supported by Nancy Hughes, Valuation and Depreciation Task Manager. Ms. Hughes has been working in the public utility industry since 1977 and brings her extensive experience with utility depreciation and valuation to this project. Greg Broeking, a CPA with 26 years of advanced finance, accounting, and auditing experience, will act as Asset Accounting and CPR Task Manager. Dave Herron, P.E. has 13 years of experience providing utility engineering services and will serve in the capacity of Asset Inventory and Project Data Manager. With more than 45 years of experience in distribution design, inspection, inventory, and mapping services for electrical facilities, Lowell Wessel, will serve as T&D Field Services Supervisor. John Bakken, P.E., Substation Asset Task Manager, has 27 years of experience and specializes in high voltage and extra -high voltage substations. Bill Healey has 36 years of extensive utility power and I&C experience and will act as Generation Asset Task Manager. Steve Rupp will serve as the Client Liaison for this effort and will provide general oversight of the project. He will act to make sure that R. W. Beck's work is in accordance with applicable standards to the reasonable satisfaction of the City. The above named key personnel will be further supported by additional- R. W. Beck staff the qualifications of whom are described, along with those staff in primary positions, in the Team Table on the following page. 1198_0408 2-1 SECTION 2 PROJECT TEAM 1 SECTION 2 Team Table Key Project Personnel: Steve Rupp Cent Liaison ■ Planning, engineering,TM lectric System Master Plan, design, construction, and ity of Vernon, California Years of Experience: 20+ O&M of electric power systems, including the lectric Distribution System Master production, .transmission, Plan, Pasadena Water and Power and distribution of electric Dept/ California energy ■ Electric System Master Plan, City of Banning, California ■ Electric System Master Plan, City of Azusa, California Nancy Hughes, ASA Specializes in valuation and Performed numerous valuation and Valuation and depreciation of electric depreciation studies to determine Depreciation Task utility infrastructure the value of a wide range of utility Manager ■ Accredited Senior Appraiser property Years of Experience: 30+ of utility property ■ Certified Depreciation Professional Dave Herron, P.E. Utility engineering services Extensive experience in Global Asset Inventory and including implementing Positioning System (GPS) inventory Project Data Manager utility information system and condition assessment of ancillary Years of Experience: 10+ infrastructure and providing plant features distribution system ,planning and design 2-2 1198.0408 PROJECT TEAK John Bakken, P.E. - High voltage and extra -high Experience includes planning studies, Substation Asset Task voltage substations concept development, permitting Manager support; equipment selection, detail Years of Experience: 25+ design development, grounding system analyses and design, insulation coordination, protective relay applications, relay setting calculations, shop drawing reviews, factory test witnessing, construction support, and preparation of testing and checkout procedures Jim Byerley, P.E. Engineering design, _ ■ Diverse range of experience in Substation Assets employee and facility working with utilities allows him to Years of Experience: 40+ management, and technical critically examine all aspects of a evaluation for utilities utility's operations ■ Responsibilities include line routing, siting, engineering design, procurement, and project management of substation projects from 46 kV through 500 kV and for transmission and distribution projects from 13 kV through 500 kV 2-3 SECTION 3 RELEVANT EXPERIENCE Relevant Experience This section includes descriptions of several similar projects completed by R. W Beck. Also included in this section is a list of appraisal and depreciation studies completed by the Firm. Electric Distribution System Master Plan City of Pasadena Water and Power Department/Pasadena, California R. W. Beck prepared an Electric Distribution System Master Plan for the City of Pasadena's Water and Power Department. The City needed the plan to provide a long-term strategy to address critical infrastructure issues including replacement of aging electrical distribution equipment, modernization of protection and control systems, compliance with state and federal environmental regulations, and grid interconnection reliability. Key elements of this project included: ■ Inspection of distribution and substation system infrastructure to assess condition and environmental deficiencies ■ Evaluation of the organization and assessing the capability to implement Master Plan recommendations ■ Development of a detailed implementation plan and capital improvement budget for substation additions, distribution additions, replacement of aging distribution cable, transformers, oil -filled equipment, oil containment, and voltage conversion projects ■ Development of functional requirements for work and asset management systems Work Order/Continuing Property Records Implementation Dothan Utilities/Dothan, Alabama R. W. Beck was engaged to assist in the implementation of a utility work order and continuing property records system. In preparation for deregulation, Dothan wanted to streamline its distribution work processes and create a continuing asset records system to support rate levels under a regulated environment. R. W. Beck reviewed current manual processes relating to distribution activities including work orders, inventory control, job costing; and construction types. Through participation in user training for the work order (WO)/continuing property record (CPR) systems, R. W. Beck identified configuration options and work processes that should be changed during the implementation process. The project also includes establishing a value for transmission, distribution, substation, and meter assets from data contained on electronic maps and other sources. 3-1 1198_0408 SECTION 3 AssetManagement Procedure Review Rochester Public Utilities/Rochester, Minnesota Rochester Public Utilities (RPU) engaged R. W. Beck to develop a plan to modify and supplement its current asset accounting/management procedures. The primary drivers for improving asset management at RPU included new accounting rules (e. g. GASB Statement No. 34); the need to establish asset accounting policies; increased customer growth; continued movement toward electric deregulation; and the desire to better integrate RPU's existing accounting systems. Working closely with RPU staff and management, R. W. Beck developed a detailed work plan that would establish the book value of RPU utility assets by retirement unit, develop comprehensive fixed asset policies, review current depreciation practices, and develop new procedures and processes for on -going fixed asset accounting. Asset Management Services Brownsville Public Utilities Board/Brownsville, Texas R. W. Beck was retained by the Brownsville Public Utilities Board (PUB) to provide services in connection with fixed asset accounting procedures and practices. The work included two distinct projects. Project l included a review of current fixed asset accounting procedures and the valuation of historical mass asset data utilizing a GIS database. Project 2 involved the development of a detailed functional specification of PUB needs for work orders and continuing property records and providing assistance to PUB staff in preparing and evaluating vendor proposals to interface a work order system with the financial reporting system. Fixed Assets Inventory Mapping Caribbean Utilities Company, Ltd. (CUC), Grand Cayman, British Virgin Islands As part of our Strategic Alliance with Caribbean Utilities Company (CUC), R. W. Beck provided consulting and engineering services for the upgrade of the Grand Cayman Island electrical transmission, distribution and substation facilities. A portion of these services was dedicated to performing a CPR project which included fixed asset inventory and mapping. The CPR consisted of specifications for data collection, field inventory, global coordinate positioning, pole tagging and treatment, inspection for abnormal conditions, phase identification, system maps, modeling, and data transfer to CPR. In doing so, we prepared standard data dictionaries, collected initial mapping data for beta testing, and developed system maps, feeder and hurricane recovery maps. Based on the completed system maps, a computer model of the distribution system was developed using Milsoft's WindMilo software. Training was also provided to CUC personnel so that the computer model could be maintained in-house, and could be used to resolve future planning and operational issues. Appraisal Studies Since its founding, R. W. Beck has provided appraisal/valuation services to the utility industry. Our clients for this work include lending institutions municipal systems, utility districts, joint action agencies, cooperatives, investor -owned utilities and others. Together, our team works diligently to integrate business and financial acumen that provide our clients with accurate appraisal/valuation results. Included below is a representative listing of appraisal/valuation studies performed in the areas of electric, natural gas, water, wastewater, telecommunications and solid waste. ■ Appraisal Study of Kauai Electric County of Kauai, Hawaii ■ Appraisal of Electric Distribution Facilities — Lafayette Utilities System ■ Appraisal of Trans -Alaska Pipeline System— North Slope Borough, Alaska 3-2 1198 - 0408 - RELEVANT EXPERIENCE ■ Appraisal of Electric Generating Plants — Duquesne Light Company/Pittsburgh, Pennsylvania ■ Appraisal of Domestic Water, Irrigation and Wastewater Systems/City of Bend, Oregon ■ Appraisal of Water System City of Claremont, California ■ Appraisal of Wastewater System City of Palm Springs, California ■ Valuation of Lake Tapps Municipal Water Rights — Cascade Water Alliance/Washington ■ Appraisal of Electric Distribution Facilities City of Lakewood, Washington ■ Appraisal of Martins Creek and Sunbury Power Blocks — Access Leasing Corporation and Cypress Leasing Corporation ■ Appraisal of Electric Generation Plant- Intermountain Power Agency/Utah ■ Appraisal of Electric Distribution Property City of Hermiston, Oregon ■ Appraisal of Electric Distribution System — Kanab City, Utah ■ Appraisal of Gas and Electric Utility Assets — Potomac Electric Power Company/Washington, D.C. ■ Appraisal of Electric Transmission and Distribution Property Clatskanie People's Utility District/Eugene, Oregon ■ Appraisal of Electric Distribution Plant City of Azusa, California ■ Appraisal of Blackstone Station Steam Plant— Cambridge Electric Light Company/Cambridge, Massachusetts ■ Appraisals of Street Light Facilities - Alameda County Street Light Acquisition. Group/California ■ Appraisal of Street Light Facilities — City of Poway, California ■ Appraisal of Electric Distribution Property Eugene Water and Electric Board and Springfield Utility Board/Oregon ■ Appraisal of Electric Distribution Property — Emerald People's Utility District/Eugene, Oregon ■ Appraisal of Electric Distribution Property — Truckee -Donner Public Utility District/California ■ Appraisals of Natural Gas and Electric Utility Property City of Meriden, Connecticut ■ Appraisal of Solid Waste Landfill - Arkansas State Highway Department/Arkansas ■ Appraisal of Water and Sewer Utility Company — St. Tammany Parish, Louisiana ■ Appraisal of Electric Distribution Property— Redding Electric Utility/California ■ Appraisal of Electric Distribution System - South San Joaquin Irrigation District/California ■ Appraisal of Electric and Propane Gas Systems - Kirkwood Meadows Public Utility District/California • Appraisal of Electric Substation Property —Patriot Equities, California ■ Appraisal of Electric Distribution Property — Grays Harbor Public Utility District/Washington ■ Appraisal of Electric Distribution Property Benton County Public Utility District/Washington ■ Appraisal of Electric Distribution Property - Sacramento Municipal Utility District/California R. W. Beck, Inc. 3-3 SECTION 3 Depreciation Studies R. W. Beck is an expert on depreciation issues, having performed depreciation studies for utilities nationwide. We recommend depreciation rates and provide expert testimony for a wide range of utility property including electric, natural gas, water, wastewater, telecommunications and solid waste. A representative listing is provided below. ■ Depreciation Rate Study — Freeport Electric/Freeport, New York • Depreciation Rate Study — Salem Electric/Salem, Oregon ■ Depreciation Rate Study —Department of Water/County of Kauai, Hawaii ■ Expert Testimony, Depreciation - Lloyd, Gosselink, Blevins, Rochelle, Baldwin & Townsend, P.C. representing Texas Cities ■ Expert Testimony, Depreciation — Alaska Electric Generation and Transmission Cooperative, Inc. ■ Depreciation Rate Study, City Electric System — Key West, Florida 3-4 1198 - 0408 SECTION 4 BUDGET ESTIMATE AND SCHEDULE Budget R. W. Beck's proposed fee for services described herein is summarized below. Project Task Est. Fee Project Management $62,487 Phase 1 - Workplan and Assessment $25,895 Phase 2 - Inventory and Valuation $254,061 Phase 3 - Model Update and Map Books $76,701 TOTAL $419,144 Significant assumptions that define the expected level of effort for the asset inventory are summarized below. Asset Units Total TO Poles 3000 $ 82,618 Secondary Poles 1000 $ 23,025 PM Transformers and Switches 75 - $ 13,544 Vaults 150 $ 6,772 Area Lighting 0 $ 13,544 Minisubstations 0 $ 16,930 Primary Substations 8 $ 16,930 Generating Facilities 1 $ 4,062 Total 4,234 $ 177,425 The table below provides a detailed breakout of hours, labor costs and expenses for each task. 1198 0406 4-1 i SECTION 4 Task Total Labor Labor General Travel Subtotal No. Task/Subtask Hours Cost Expenses Expenses Expenses Project Management 308.0 $59,992 $2,344 $152 $2,495 $62,487 1.00 Phase 1 -- Workplan and Assessment 1.10 Task 1.1 Kickoff and Workplan 48.5 $8,069 $527 $2,617 $3,144 $11,213 1.20 Task 1.2 Existing Data Assessment 79.0 $12,779 $631 $1,273 $1,904 $14,683 Phase 1 Subtotal 127.5 $20,848 $1,158 $3,889 $5,047 $25,895 2.00 Phase 2 -- Inventory and Valuation 2.10 Task 2.1 - Asset Inventory and Data Collection 1,048.5 $145,738 $8,556 $23,131 $31,687 $177,425 2.20 Task 2.2 Asset Valuation and CPR 479.5 $73,223 $2,087 $1,326 $3,414 $76,636 Phase 2 Subtotal 1,528.0 $218,960 $10,643 $24,458 $35,101 $254,061 3.00 Phase 3 -- Model Update and Map Books 3.10 Update Windmil Model 264.0 $29,584 $2,869 $4,380 $7,249 $36,833 3.20 Produce Electric System Map Books 352.0 $31,130 $4,358 $4,380 $8,738 $39,868 Phase 3 Subtotal 616;0 $60,714 $7,227 $8,760 $15,987 $76,701 GRAND TOTALS 1 2,579.5 1 $360,514 1 $21,372 1 $37,258 1 $58,631 1 $419,144 The work will be completed on a time and materials not to exceed the stated budget amounts. Labor will be billed at the current R. W. Beck billing rates. All expenses will be subject to a 10 percent administrative mark-up. Billing will be monthly with accounts receivable due with 30 days upon receipt of invoice. Late payments will be subject to interest on past due amounts of 1.5 percent per month. Project Schedule ■ Phase 1 will be complete within 3 weeks of notice to proceed ■ Phase 2 will be complete within 15 weeks of notice to proceed ■ Phase 3 will be complete within 18 weeks of notice to proceed OT VC 4-2 1198 - 0408 IP ■ ■ ■ ■ ■ AMP Asset Management Program CPR Continuing Property Record EDEN Financial Management Software ■ FERC Federal Regulatory Commission ■ GASB Governmental Accounting Standards Board ■ GIS Geographic Information System GPS Global Positioning System SPO Statement of Objectives ■ ■ ■ ■ ■ ■ ■ ■ 1198-APPENDIX A ACRONYMS -BB APPENDIX A ACRONYMS A-1