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Resolution No. 09812
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 NO. 9812 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A CONSULTING SERVICES AGREEMENT BY AND BETWEEN THE CITY OF VERNON AND BLACK & VEATCH CORPORATION REGARDING THE ONYX RANCH WIND FARM WHEREAS, the City of Vernon ("City") is a chartered �Imunicipal corporation of the State of California that owns and Iloperates a system for the generation, purchase, transmission, distribution and sale of electric capacity and energy; and WHEREAS, the City desires to retain the services of a consultant to assist with the development of renewable resources, including but not limited to, the Onyx Ranch Wind Farm Project (collectively, the "Projects"); and WHEREAS, the Director of Light and Power has determined that Black &Veatch Corporation ("B & V") is qualified and capable of furnishing the labor, materials,.and expertise necessary to perform the services that the City requires for the Projects; and WHEREAS, the City and B & V desire to enter into a Consulting Services Agreement setting forth the terms and conditions under which B & V shall perform the work; and WHEREAS, the City Council of the City of Vernon has determined that, pursuant to the provisions of subsection (a) of Section 2.27 of the Vernon City Code, it is in the best interest and necessity to enter into an agreement with B & V; and NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the recitals contained herein above are 1 2 31 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 true and correct. SECTION 2: The City Council of the City of Vernon hereby approves the Consulting Services Agreement with Black and Veatch Corporation, in substantially the same form as the copy which is attached hereto as Exhibit A and incorporated by reference. SECTION 3: The City Council of the City of Vernon hereby authorizes the Mayor or Mayor Pro-Tem to execute said Agreement for, and on behalf of, the City of Vernon and the City Clerk is hereby authorized to attest thereto. SECTION 4: The City, Council of the City of Vernon hereby authorizes the City Administrator, 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 Vernon hereby directs the City Clerk, or her designee, to transmit one fully executed Agreement to: Black & Veatch Corporation Attention: Roger Schiffman 1215 K Street, 17th Floor Sacramento, CA 95814 SECTION 6: The City Council of the City of Vernon hereby authorizes the City Administrator, or his designee, to take any action deemed necessary to carry out or to perform such other acts and deeds as may be convenient to effect the purposes of this Resolution and the transactions herein authorized. - 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 City Clerk of the City of Vernon 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 12th day of January, 2009. ATT T: MANU LA GIRON, City Clerk � l Name: Dennis C Malhurg Title: Mayor / Xa-you-.P--r-Q-- -Qm- - 3 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 2.4 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. 9812 was duly adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Monday, January 12, 2009, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. (SEAL) MANUELA GIRON, City Clerk - 4 - EXHIBIT A CONSULTING SERVICES AGIREEMENT This Agreement, effective December 3, 008, is between The City of Vernon, Calitomia ("Client") and 8LACK 9 VEATCH CORPORATION {'Consultant"), Consubm shall perform Services in accordance with written Bequests for Services (Bequest-) Issued by Client and agreed to by CIonsultant during the term of this Agreement, which she be attached as separate Exhibits A. Consultant shall accept or decline a Request as promptly as practicable under the circumstances. 1. Consultant Will perform the Services in accordance with the standards of care and diligence normally practiced by recognizedconsulting companies in performing services of a similar nature. If, during the six-month period following the- earlier of termination or completion of the Services under the applicable Request for Service, it is shown there is an error In the Services caused solely by Consultant's failure to meet sucti standards; and Client has promptly notified Consultant try writing of any such error within that period, Consultant shall perform, at Consultant's cost, such corrective consulting services within the original Request for Service as may be necessary to remedy such error. EXCEPT AS PROVIDED IN THIS ARTICLE, GC}NSUaANT I++}AKE,S No OTHER WARRANTIES OR GUARANTEES, EXPRESS .DR IMPLIED, RELATING TO CONSULTANT'S SERVICES AND CONSULTANT DISCLAIMS ANY IMPLIED WARRANTIES OR WARRANTIES IMPOSED BY LAW INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR It PARTICULAR PURPOSE. This Ariicfe governs, modifies, and supersedes any tither terms in this Agreement which may be construed to address warranties or guarantees or the quatity of the Services. Reports and. other documents which Consultant prepares and delivers to Client pursuant to this Agreement shall become the property of Client when Consultant has been compensated for Services rendered. Nothing contained in this Section shallbe construed as Iimlting or depriving Consultant of its rights to use its basic knowledge and skills to design or carry out either projects or, work for itself or others, whether or not such other projects or work are similar to the work to be performed pursuant to this Agreement. Consultant shall have the right to retain and use copies of drawings, documents, and other data famished or to be furnished by Consultant and any non - confidential information contained therein. Rights to intellectual property developed, utilized, or modified in the performance of the Services shall remain the property of Consultant. Client shall not acquire any rights to any of Consultant's, Its subcontractors' or vendors' proprietary computer software that may be used in connection with the Services except as expressly provided in the Request or as may be separately agreed. Files delivered in electronic medium may not work on systems and software different then those with which they were originally produced. Consultant makes no warranty as to the compatibility of these files with any other system or software. Because of the potential degradation of electronic medium over time, In the event of a conflict between any specifications, reports, or either documents and electronic files, the original will govern: 3. Documents, including, but not limited to, drawings, specifications, reports, electronic tiles, and computer software prepared by Consultant pursuant to this Agreement,, are Instruments of service in respect to the project. They are not intended or represented to be suitable for reuse by Client or others on extensions of the project or on any other project. Any reuse without prior written approval, and verification or adaptation by Consultant for the specific purpose intended will be at Client's sale risk and'Without liability or legal exposure to Consultant. Client shall defend, Indemnify, and hold harmless Consultant against all claims, losses, damages, Injuries, and expenses, including attorneys' fees, arising out of or resulting from such reuse. Any approval, and verification or adaptation of documents will entitle Consultant to additional compensation at, rates customarily charged by Consultant for such services. No documents or any information contained therein, or otherwise supplied by Consultant in connection with the Services, shall be released or used by Client In connection with any proxy, proxy statement, proxy soliciting material, prospectus, official statement, offering memorandum, Securities Registration Statement, or any sales or due diligence or similar document without the express written approval of Consultant, except as may be required by few, Consultant may Include its standard commercial third -party disclaimers in its Report. Any Information shared with the Client prior to the release of the Report is superseded by the Report. As such; Client may not rely on, or distribute to third -parties; any emails, drafts, or oral statements made prior to the issuance of the Report. Ciienl's distribution of :the Report to a third party shall be at its own rit.k, and Client agrees to indemnity and hold Consultant harmless against any and all claims Consultant receives from any such third party based upon its access to or reliance upon, Consultant's Report. !. Consultant shall maintain in force, during the period that Services are performed. workers' compensation insurance In accordance with the laws of the states having jurisdiction over Consultant's employees who are engaged in the l3Jack & VoatGh Corporation < i 213 1t stme1, ]?"Floor, Sacramento, CA 95814 USA 7'ekp.ho)= Sl&503.J697 Page 2 Services and employer's liability insurance with a limit of $100,000 each occurrence and in the aggregate. Consultant also shall maintain commercial general liability insurance with a limit of $l.o00;U(i0 per occurrence and in the aggregate; automobile liability insurance with combined single limit of $1,.OK000; and professional liability insurance with per occurrence and aggregate limits of $1,DDO,000. 6. Consultant shall indemnify Client against any and all claims, demands and causes of action fear bodily Injury to or death of persons or for damage to or destruction of property (other than properly of Client or construction work in progress, for which Clien# shall have responsibility) resulting solely from any and all negligent physical acts of Consultant while at Client's facility. The parties waive all claims for property damage, and shall require their insurers to value subrogation rights against Me other party under any applicable poiicy of property insurance. In performance of the Services, It is acknowledged that Consultant may be supplied with certain information and/or data by Client and/or others, and that Consultant will rely on such information. Therefore, the accuracy of such information is not within Consultant's control and Consultant shall not be liable for its accuracy, not for its verification unless otherwise provided In the Request, Since Consultant has no control over the cost of labor, materials, or equipment furnished by others, or over the resources provided by otherss (including Client) to meet project schedules; Consultant's opinion of probable costs and of project schedules shall be made on the basis of experience and qualifications as a professional consultant. Consultant : does not.guarantee that proposals, bids, revenues, costs, and other cash requirements, or actual operating and project costs will not vary from Consultant's estimates or that actual schedules will not vary from Consultant's projected schedules; 7. Client may, with or without cause, terminate the Services at any time upon 10 working days written notice to Consultant. in such case, Consultant shall be paid costs Incurred and fees earned to the date of termination and through demobilization and neither party shall be entitled to any other compensation or damages from the other. At all times, each party shall retain all of its rights In its drawing details, designs, specifications, databases, computer software, copyrigfits, trade and service marks; patents, trade secrets, and any other proprietary property. it. Client may audit and Inspect Consultant's records and accounts covering fees and reimbursable costs for a period of six months following the completion of Consultant's Services, The purpose of any such audit shall be only for verification of such costs. Consultant shall not be required to keep records of or provide access to those of its costs expressed as axed rates, a Jump sum, of as a percentage of othercossts, S. Neither party shall be liable to the other party for loss of profits or revenue; loss of use; loss of opportunity; loss of goodwill; cost of substitute facilities, goods or services; cost of capital; cost of replacement power; governmental and regulatory sanctions; and claims of customers for such damages; or for any special, consequential, incidental, indirect or exemplary damages whether a claim for any such loss arises out of breach of contract, warranty, tort _(including negligence), strict liability, indemnity,or another theory, Except for an obligation to make payments, neither party shall be In default to the extent any nonperformance is caused by a circumstance beyond such parry's reasonable control. The warranties, obligations, liabilities and remedies of the parties, as provided herein, are exclusive and in lieu of any others available at law or in equity. Consultant's total aggregate liability under this Agreement shall riot exceed the compensation received by Consultant under the applicable Request for Services. To the fullest extent allowed by law, releases from, end limitations of liability shalt apply notwithstanding the breach of contract, tort including negligence, strict liability or other theory of legal liability of the party released or whose liability is limited. Consultant may subcontract portions of the Services to Its related entities. 10. During the term of this Agreement, and for a period of six months following any termination or expiration hereof, Client agrees that it Will not, hire, or solicit any employee of Consultant who performed services hereunder, to become employees or independent contractors of Client or such other person or entity, excluding employees who are responding to a general solicitation for employment. advertised by Client, if Client does dire a Consultant employee as prohibited herein, Client shall be liable to Consultant for 00% of such employee's first -year salary (including any signing bonuses or reimbursable relocation costs). Client shall be obligated to disclose such amounts to Consultant and Consultant shall immediately invoice Client for such amount to be paid by Client within 10 business days of receipt of Consultant's invoice. Failure to pay such amount when due shall be considered a breach of this Agreement by Client and entitle Consultant to any and all remedies available under this contract, at law or in equity, Page, 3 This Agreement and the attached Exhibits constitute the entire Agreement. No other representations of any kind, oral or otherwise,, shall have any effect, This Agreement shall be governed by,the laws of the state of Missouri, notwithstandjng the operation of any conflict or choice of law statutes or decisional law to the contfary, ACCEPTED: BLACK & VEATCH CORPORATION 1215 K Street 17M Floor Sacramento, CA 95814 Authorized Signature: APPROVED AS To FORM: Jeff A. Harrison, City Attomey CITY: CITY OF VERNON Name Title: Manor / Mayor Pro -Tern Date: ATTEST, Manuela Giron, City Clerk Approved by Legal on 12/31/2008 j-0/ (7 Page 4 EXHISIT A REQUEST FOR SERVICES CONSULTING SERVICES AGREEMENT Between City of Vernon, California (*Client") And Black & Veatch Corporation ('Consultant*) Pursuant to the terms and conditions of the Consulting Services Agreement executed and made effective as of the 3r4 day of December, 2008, between City of Vernon, California („Client" or "City of Vernon') and Black & Veatch Corporation {"Consultant" or'Blaok & Veatch"), Client hereby requests Consultant ;perlorm-and Consultantagrees to perform the following Servlces: Effective mate; This Exhibit A will be effective on December 3, 2008 A. Rgguested Services: Black & Veatch will provide the City of Ver non with analytical support in its due diligence and project development efforts related to the Onyx Ranch Wind farm. In providing that analytical supporl Black. & Veatch envisions file following general taO, areas. Task 1: Develop ReflnedlDetalled Project Scope and Workplan Under Task 1, Black & Veatch will work with the City of Vernon to develop a detailed project scope, schedule, and budget for its support of the City In developing the Onyx Ranch wind farm. 'pas) 2: Develop Detailed Project Economics al Different Project Sizes Linder Task 2, Black & Veatch will develop a set of detailed projections of the wind project's expected energy production, sales revenue, and operating and capital costs at varying plant size configurations, Black & Veatch expects. that this analysis will assist the City of Vernon in determining the most optimal project size for the wind project. Black .& Veatch's efforts under this task, will include the following basic steps'. Develop_a set of expected capacity factors for theWindproject at different: plant sizes. using the individual wind turbine expected production levels estimated by the Long -Term Mean Annual 80-m Wind Resource Estimates. Expected capacity factor levels will be developed at an aggregate plant size of 100 MW, and In additional 50 MW increments up to 500 MW. Using this data, the overall average capacity factor for the project will decline as the project size Is increased, as additional wind turbines are sited in locations with lower quality wind regimes, The analysis will reflect that trend. r Develop a set of expected energy market revenues at each set of expected wind production levels, using forecast en0 y'market prices and expected energy sales at each plant size Using the Callibmia Energy Commission Cost of Generation model, develop. projected capital and operating costs for the wind project at each target size, varying from 100 MW end increasing in 50 MW increments up to 500'MW. Preparegro;s profit margin analyses at the project sizes described above to assist the City of Vernon In determining optimal project size for the Onyx Ranch wind projects Task 3. Develop Detailed Energy fdarXet Simulation Projections Linder Task 3, Black & Veatch will perform detailed energy market simulations to develop more refined energy market sales revenue and wind generation projections. black &. Veatch will 'utio the PRCMOO 1V market simulation model in developing the detalled nrarketsimulations. Black & Veatch will Initially use its WECC integrated Market Model price projections in developing bass case results, and will work with the City's project team to develop appropriate sensitivity cases. Vvhen such data become available, Black & Veatch will also incorporate transmission system Page 5 delivery limitations, if the transmission analysis suggests that some curtailments are likely due to transmission system congestion, Specific steps that Black & Veatch expects under this task include: • Develop WECC base case zonal power price forecast using PRC)MOD IV • Develop sensitivity cases focusing on changes to key input variables that could have a significant impact upon the overall project econorrtics of the wind project. Important variables would include natural gas prices, available transmission capacity, and the impacts of potential greenhouse gas emissions regulations • Develop a forecast of Renewable Energy Credit (REC) prices and associated revenue to the project from renewable energy credits Task 4: Prepare Financial Pro Forma Projections Under Task 4, Black & Veatch will prepare a set of financial pro forma projections to provide detailed cost and revenue _projections to be used in the project development and due diligence analysis for the wind project. Black & Veatch will work in conjunction With the City of Vernon's engineering consultant in developing pro forma operating and capital cost projections for the project. Black & Veatch will also work with other members of the project team in developing pro forma financial projections that include merchant plant wind energy sales, and that reflect likely or negotiated power sales contract terms and revenue streams. Specific items included in the pro forma financial statements will include; • Monthly and annual sales revenue for the project from energy market sales, renewable energy credits, capacity market sates, adjusted as appropriate for any applicable PPA contract terms • Monthly and annual projected operating and maintenance costs for the project • Monthly and annual financing costs, depreciation, taxes, capital expenditures, etc, Black & Veatch will work with other members of the project team in coordinating and using engineering and financial cost estimates for the; project • Monthly and annual transmission costs • Administrative and generat overhead cost.estimates • Net Income, cash flow, and NPV and Internal Rate of Return measures of financial performance Task 6, other Project Support as Needed Under Task 5, Black & Veatch wltl provide such project support as necessary, under the direction of the City of Vernon, Black & Veatch anticipates that sub -tasks in this area will include research about the renewables energy market and regulatory poilpy in Califomia, analytical models and analyses to assist with the due diligence~ and tnanctng activities, and other actions to assist the City In developing the wind and solar projects. Prior to beginning any Task 5 activities, Black &'Veatch will provide the City of Vernon with a subtask description and estimated budget. B. Commencemenl pa e: December 8, 200B C. l3lllinp Basis. All services will be provided and billed by Consultant to Client on a time and materials based on the billing rates listed In the table below. i7tie Rate/Hour C,iaricaiiAdminieveM Surgw; $85 Analys! $170 Senior Analyst Wo consi bant $210 m4r.10r r spWaht $2+0 Prinolpel ISr. Specialist 539C3 vir'bov $220 Managing Diraeior $400 AssaciateVito ResitleattV"'President SA90 Senior We President $550 Page 6 Invoices are due upon receipt. Estimated Cost of the Tasks 1 through 4 are expecle W to require 471 hours at an estimated cost of $125,350. E, Estimated Completion Hate_ on or before Match 31, 2009 F. y C1 Monthly Commencing on or about the first day of the calendar month following execution of this Agreement, and monthly thereafter, Consultant siiall furnish Client with an invoice covering the Reimbursable Costs and Fee for services provided during the previous month and any interest due under this Agreement. invoices may be submitted electronically by email. In such event, the electronic copy of the Invoice will be considered the - Notwithstanding affcIal invoice and will not be followed by a hardI. copy invoice, any other provision of the above referenced Agreement, or this Exhibit A, Consultant is under no obligation to submit any deliverable if any invoice is more than 45 days outstanding Method of Payment:. Payments to be made to Consultant under this Agreement shall `be electronically transferred either by ACH specifically in cCD+ or 0TX format, or wire transfer to the bank account and in accordance wife)the bank instructions Identified in Consultant's most recent Invoice in immediately available funds no later than the payment due date. invoice number and project name shall be referenced In the bank wire reference fields of the ACH addenda information. H. Qgut9§: In the event Client disputes any invoice item, Client shall give Consultant written notice of such disputed Item within 10 days after receipt of such invoice and shall pay to Consultant the undisputed portion of the Invoice according to the provisions hereof, If Client falls to pay any invoiced amounts when due, interest will accrue on each unpaid amount at the rate of eighteen percent per r annum, or the maximum amount allowed by law If less, from the date due until paid according to The provisions of this Agreement. Interest shall not be charged on any disputed invoice item Which is finally resolved in Cllenl% favor. Payment of Interest, shall not excuse or cure any defou . R of delay in payment of amounts due. In the event Consultant refers this Agreement to a third party for collection or enforcement of Its terms, Consultant shall be entitled to reimbursement for all costs and expenses Incurred, including a reasonable attorneys! fee. in the event that Client has on unpaid inviolm over 50 days past due, Consultant may; in addition to all other remedies available at law and equity, terminate this Request for Services. This Request for Services and the above -referenced Agreement constitute the complete understanding of the parties wilb respect to the Services specified herein. Terms and conditions contained. in purchase orders, work orders, or other documents Issued by Client with respect to the Services shall be of no force and effect, IN WITNESS WHEREOF, the parties have executed this Request for Services on the date(s) indicated below. ACCEPTED' . BLACK & VEATCH CORPORATION 1215 K Street 17ih Floor Sacramento, CA 95814 Authorized Signature: APPROVED AS TO FORM: Jett A. Harrison, City Attomey Page 7 CITY, CITY OF VERNON Name Title. MMI-1—M-28YO-UP-r-0-J.'em Date: ATTEST; Manuela,Giron,City Clerk jo Approved by Legal on 12/31/2008 BLACK & VEATCH Building a l,+ or d of differenrdl November 14, 2DO8 Mr, Donal O'Callaghan City of Vernon 4305 Santa Fv- Avenue Vernon, CA 90058 Delivered by Email Tear Mr, O'Callaghan: Mack & Veatch Corporation's Enterprise Management Solutions division (B&V or Black &: Veatch) is pleased to have the opportunity to present this estimated scope of work to assist the City of Vernon with. its development of the Onyx Ranch wind project, Black :& Veatch Corpor$Mn MY is a leading global consulting, engineering, and construction company specializing in enterprise management solutions and inftestructurc development in cuergy, eater, irr 'orrrlativn, and government markets. MY was founded in 1915 as a partnership and converted to a corporation in 1999, The Company isheadquartcred in Overland Patti, Yznsas and maintains more than 90 dices worldwide. B&V employs a total stuff of more than 81600 individuals involved in a wide range of management consulting and engineering including regulatory compliance, utility development and operations, finance, economics, planning, envicon entai, civil, electrical, structural, and mechanical engineering; as well as construction, science and architect=. B& V Consulting Services Enterprise Management Solutions is the Mauagement Consulting Division of B&V with more than 250 consultant& We deliver value through the application of first -bond industry expense; exceptional program and project execution, thought leadership, proven methodologies and processes, and eth cal business practices, our proven capability to deliver is local, national, and international. We are a dynamic orgar=rion that .strives to change as our clients' needs evolve. hi a format where deep experience is blended with strong project execution and value focus, our engagements Gan draw on experienced senior executives, economies, senior policy experts and consultants experienced in regulatory matters, engineers and internationally -respected subject matter experts. B&V has recently opened an energy consulting off,rc iu Sacramento, CA., which is focusing on energy market analysis and price f'ormusting. Black& Vast& corporatlan • 1215 K s i,1'7'' i'laoz, SarrntmtuIo, CA.9M4175A i'elephaQoi93G.S .r697 Our consulting focus areas innclude: 4 Strategic planning 4 Economic analysis 4- recision support analysis 4 Transmission and generation asset: valuation Natural gas midstream asset valuation pipelines, storage and LNG terminals Beneljunarldug 4. Market and locational marginalprice analyses 4 Debt -issuance -support 4- Contract negotiations Page 2 lssuclrisk review and analysis Process development, and implementation s Power delivery planning Technical modeling and aualYses IT planning and implementation Tariff design and unbundling 4 Organizational design said culture review Change management and training 4. Stakeholder communications, executive. coaching, and employee training Program and project mamgement Proposed Scope of Work Under this proposed scope of work, Black &'Veatch will provide the Cii), of Vernon with analytical support in its due diligence and project development efforts related to the Onyx latch wind farm, 'I n providing that analytical support, Black &, veat,ch envisions the follovving general task areas. Black & Watch is open to adjust, ref"ttre and Wand tis proposed scope of work upon mutual agreement between the City of Vernon and Black & 'Veatch: Task 1: Develop Ref nediDeWe+d Project Scope and Workpla n Under Task 1, Black & Veatch will work whin the Cityof Vomon to develop a detailed project scope, schedule, and budget its support of the City in developing the Onyx Ranch wind farnn.. Upon completion of Task 1, Duck & Veatch anticipates development of a supplemental agreement Task 2, Develop Detailed Project E-Con©rnics at Different Project Sizes Under Task 2, Black & Veatch will develop a set of detailed projections of the wind project's expected energy production, sales revenue, and operating and capital costs at varying plant size configurations. Black & Veatch expects that this anilysis will assist rite City of Vernon in deteiminiug the most optimal project size for the wind project. Black & Veatch's efforts under this task will .include the following basic steps: Develop a set: of"expected capacity factors for the wind pmjcci at different plant sues, using time individual wind turbine expected production levels estimated by the Long -Term Mean .Annual 80-m Mud Resource Estimates. Expected capacity factor levels will be developed at an aggregate plant size of hilt MW, andinn additional 50 lava increments up to 500 1, NY. Using this data, the overall average capacity fucker for the project will decline as tlme project size. is increased, as additional wind turbines are sited in locations with lower quality wind regiiues. "tile anal}psis will reflect that tread, Berge 3 Develop a set of expected energy market revenues at each set of expected wind production levels, using forecast energy market prices and exWoted energy sakes at each plant size Using the California Energy Commission Cost of Generation model, develop projected capital and operating costs for the wind project at each target size, vaMying from 100 JAW and increasing in 50 MW increments up to 500 MAK prepare:gross profit margin analyses at the project sizes described above to assist the City of Vernon in determining optimal project size for the Onyx Rauch wind .projects Task 3: Develop Detailed Energy Market Simuiatien Projections ],Under Task 3, Black & Veatch will perform. detailed energy market simulations to develop mitre refrned. energy market sales revenue:and wind generation projections: Black Veatch will utilize the PROMOD TV market simulation. model in developing the detailed market simulations. Black & Veatch twill initially use its WECC integrated Market Model price projections in developing base case msuita, and will work with the City's project team to develdP appropriate sctasitivity cases. When such data become available, Black & Veatch will also inoorporaft tra fission systam delivery limitations, if the transmission analysis suggests that Some .c iiutents arc likely clue to. transmission system congestion. Specific steps that Black & Veatch expects under this task include: ■ Develop V=C base case zonal power price forecast using PROMOD IV Develop sensitivity cases focusing on changes to key input variables that could have a significant impact upon the overall project economics of the wind project. Important variables would include natural gas prices, availabletransmission capacity, and the impacts of'potential greenhouse gas emissions regulations Develop a forecast. of Renewable Energy Credit C) prices and associated revenue to the project from renewable energy credits Task4: prepare Nnancia] Pro Form Projections Under leek 9, Bleak ;+ Veatch ill pteparu a set of financial pro forma projections to provide detailed cost and revenue projections to be used in the project development An due diligence analysis for fire wind project; Black &"Veatch will work in conjunction with the City of Vernon's engineering consultant in developing pro forma operating and capital cost projections for the project. Black &• Veatch will also work with other members of the project tccam, an developing pro forma iinalteinl projections that include merchant plant wind energy sales, and that reflect likely "or negotiated power sales to terms and revenue streams. Specific items included in fire pre forma financial statements will include: « Mortttaly and aztrtnal sales re venue for the pxcrject from energy market sales, rtnewable.energy credit~, capacity market sales, adjusted as appropriate- for any applicable PPA. contract terms • Monthly and annual projected operating and maintenance costs for the project « Monthly and annual fn.unai� costs, depreciation, taxes, capital expenditures, etc. Black & 1Teatch v�i1 work with other members of the prcleot learn in coordinating and using engineering and financial cost estimates for the project Monthly and annual transmission costs Administrative and general overhead cost estimates • Net income, cash flow, and NPV and internal. Bate of Return ameasiares of financial porrwman Page A Tasks; Other Project Support as.Needed Under Task S, Black & Veatch will provide such project support as necessary, under the direction of the City of Vernon. Mack & Veatch anticipatesthat sub -tasks in this area will include research about the renewables energy market and regulatory policy in California, analytical models and analyses to assist with the due diligence and financing activilies, and other actions to assist the City in developing the wind and solar projects. Prior to beginning any Task 5 activities, Black &"Veatch will provide tine City of Vernon with, a svbtask descriptitnn and estimated budget. E8V Project Team rt The following, individuals will be paof the Vernon project tesrrs. Tine level of involvement of each. individual will vary depending on the project task and issue. Roger Schiff ran will manage the project and provide Ilse primary analytical support, with oversight from Rican Laud, Black & Veatch will utilize additional persomel, as appropriate. Richard Lsockhari --- Managing Director with Black '&. Veatch. Enterprise Management Solutions division. Mr, Lauckhart has been actively involved in power supply planning; electricity price forecasting and asset valuation for more titan 35 years. For the past 12 years, lie has performned consulting assignments related to power market analyses, price forecasting services, asset market valuation, integrated resource planning, trainsmission line congcsiiozn analysis and management of strategic consulting engagements for many orients in North America. His clients hMT included iravcstOr-owned MW publicly awned utilities, independent powrrr producers, lenders and :others. Before beginning his consulting care", lei'. i auckharl held various positions at Paget Sound Power & Eight (pow Puget Sound Energy) m power supply planning. He culminated his service as Vice President of Power Planning for the last four years of his Icuum R ,ser &clz ff'nnranr — Principal Conniltant with Black & Veatch Enterprise Management Solutions division. W Scbiian has developed a broad range of energy industry experience +covering electricity market evaluation, market assessment and simulation remodeling;, regulatory policy development, ccornomic and financial,analysis contract evaluation, pricing, and utility resource planning. He has worked exacnsively with electric utility staff, power plaint developers, regulatory Personnel, investment bankers and other industry participants in both consulting and regulatory environments. Mr. Schnrll'man has provided rhos City of Vernon with analytical Support in its initial decision to procure land for the wind project, and has provided additional services to the City of Vernon in the last year, relented to its development of the Vemon Power Plant in souilreru California. Prior to joining Black & Veatch, Mr. Schif man was a Vice President of Consulting at Ventyx. sins r7 e - P,�#r, Joe is a lu�..anagex with Black & Veatch 1lntcrprise Matnagemen, SAlutioos, wdtin l0 years of en,•perience in the deregulated electric power industry. He has specialized in the analysis of North American power markets, operating procedures, market design, and compliance regulations. He has worked with vertically integrated utilities, investment boraks, private equity firms, independent power producers; and power marketers. Prior to joining Black & Veatch, Mr. Joe was Manager of Regulatory, and Cal-lSG Affairs at Direct Energy, and before that, was a Project Marrsmger in the consulting business unit at Global Energy Decisions. Page 5 Estimate of Project Timing and Costs ,Black & Veatch estimates the folloNving costs and schedule requirements to complete the scopcof work described above, Table I Estimated I Estimated I Sudget Total Pmed 471 11.8 $125'.350 J xole: Addiaona Effopir under Task 3 will be scoped and budgeted during project exertition Black & Veatch proposes to complete "engagement on a time & materials basis, using its standard billing rates. A schedule of billing rates is included in the atuchi consulting services agreement. The project is exTected to take. 12 weeks total, but actual schodula will depend upon timely review and input from the City of Vernon and other we.mbers of the project team (contractors to CitY Of Vernon). We are available to be& work on this project immediately, Note that The cost estimate does not include travel time and expenses rot meetings with the City Of Vernon and its project toom. Sa V Proposal Terin v B&V proposes that the, scope of work- be completed tender the terns and conditions of the attached consulting senicts agreement. Until the specific agreement terns, which Include the speeifir, project scope and cost estimatoaccepted and executed by both parties, Block & Veatch is not bound to the ., = - deadlines, terms and services specified in this proposal. Page 0 Thank you for the opportunity to propose this soope of work to provide consulting services to the City of Vernon, We, are available to discuss at your earliest convenience, and look forward to working with you and the City of Vernon's staffamd project team. Very truly Yours, BLACK & VEATC14 CORPORATION Scott R. Smith Vice President Cc: Mr. Roger Sohiffmat AttsOment 4305 Santa Fe Avenue, Vernon, California 90058 Telephone (323) 583-8811 January 20, 2009 Black & Veatch Corporation Attn: Roger Schiffman 1215 K Street, 17th Floor Sacramento, CA 95814 Re: Consulting Services Agreement Dear Mr. Schiffman: The insurance requirements have been met. Transmitted herewith is a fully executed agreement, as referenced above, approved by City Council on January 12, 2009, through Resolution No. 9812. If you have any questions regarding this matter, please call Mr. Donal O'Callaghan at 323/583-8811 ext. 834. Very truly yours, e on City Clerk NG:dj c: D. O'Callaghan Purchasing Department Resolution No. 9.812 Agreement File No. 09-007 x,cfusivefy Industriaf ...t.....:...t,... ,.......,.a...,,.w+r.. ,. a.+a 11 "U� 14rvritp[ty. rtotlfit Corsultartt % writing of any such error within that period,; Consultant shall perforrm, at Const}tan#'s rat, such corrective consulting services within the original f equesf for Service as n ay be necessary to remedy, such error. EXCEPT AS PAIOVIDED IN THIS ARTICLE, CONSULTANT li7>tlKES NO OTHER WARRANTIES OR GUARAN'racs, EXPRESS OR IMPLIED, RELATING TO CoNsuL:TAmr'S SERVICES AND tit'?N vLIANT DISCLAIMS ANY IMPLIED WARRANTIES, OR WAR ANTIES IMPOSED D Y LAW INCLUDING WARRANTIES S OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. This Article governs, modiffes, and supersedes any other terms In this Agreement which may be construed to address warranties or guarantees or the quality of the Services; 2. Departs and other documents which Consultant prepares and delivers to Client` pursuant to this Agreement shall become the property of Client when Consultant has been compensated for Services rendered, Nothing contained In this Section shall be construed as limiting or depriving Consultant of its rights to use>its basic knowledge and skills to design or carry out tither projects or worts foe itself or others, whether or not such other projects or wort are similar to the w ark to be :performed pursuant to this Agreement. Consultant shall have the right to retain and use copies of drawings, documents,; and other data furnished or to be furnished by Consultant and any non confidential information contained therein. lights to Intellectual property developed, utilized, or ,modified in the performance of the Services shall remain the ,property of Consultant, Client shall not acquire any rights to any of; Consultant`s, Its subcontractors' or vendors` proprietary computer software that may be used In connection'With> the Services except as expressly provided In the Request or as may be separately agreed. Files delivered in electronic medium May not worts on systems and software different than those with which they were originally;. produced. Consultant makes no warranty as to the compatibility of these files with any other system or software, Because of the potential degradation of electronic medium over time, In the event of a conflict between any specifications, reports, or other documents and electronic files, the original will govern. S. Documents, including, but riot limited to, drawlnos, specifications, reports, electronic file*, and computer software prepared by Consultant pursuant to thi$ ,Agreement, are Instruments of service In respect to the project. They are not Intended or represented to be suitable for reuse by Client or others on extensions of the project or on any other protect. Any reuse without prier written approval, and verification or adaptation by Consultant for the specific purpose intended will be of Client's scale risk and without liability or legal exposure to Consultant Client shall defend, indemnify, and hold harmless Consultant against all claims, lasses, damages, Injuries, and expenses, Including attorneys' fees, arising out of or resulting from such reuse, Any approval, and verification or adaptation of documents will entitle Consultant to additional comee sation at rates customarily charged by Consultant for such services. No documents or any information contained therein, or otherwise supplied by Consultant in connection with the Services, shall be released or used by Client In connection with any proxy, proxy statement, proxy soliciting material, prospectus, official statement, offering memorandum, Securities Registration Statement, or any sales or due diligence or similar document without the express written approval of Consultant, except as may be required by law. Consultant may include its standard commercial ihlydTparty;; disclaimers in Its Deport. Any inforrmation shared with the Client prior to the release of the Report Is superseded by the Report. As such, Client may not rely on, or distribute to third -parties, any emalls, drafts, or oral statements' made prier to the issuance of the Report. Client's distribution of the Deport to a third party shall be at its own risk, and Client agrees to indemnify and hold Consultant harmless against any and all claims Consultant receives from any such third party lased upon its access to, or rellance upon, Consultant's Report. ervi also aggti with;I . Cons deatf prr Cons to w fa. ln.pe data>' Inforn unle equip scnoc exper revert Consi xs ej.eu„anvu,nve„a. v — V. vn a,5. +./—PM,\5?1,c 4ViT, e' AdVIK :G,([iOtVF*k%rV 1{ 1G4'. �115A#JL�3QS$!S: S.Iuz, ts, and other cash requirements, or actual operating and project costs will not vary from Orestes or that sctuaf schedules Will not vary from Consultant's projected schedules th or without cause, terminate the Services at any time upon 10 working days written notice to such case, Consultant shall be paid costs incurred and fees earned to the date of termination and ilizzation. and neither party shall be entitled to any other compensation or damages from the Other. At "'age 3 This Agreement and the attached Exhibits constitute the entire Agreement, No other representations of any kind, coral or other is , shall have any effect, This Agreement shall be governed by=the lags of the state of Missouri, notwith tanding the operation of any conflict or choice of law statutes or decisional lax to the contrary, I ACCEPTED: CITY, BLACK & V ATCH CORPORATION CITY OF VERNON 12,15 K Street 1 t' Floor Saefamento, CA 95814 Signature, �/ ��12�-iZ�/�� ��i•L ame Donis C. MA -burg Title: q Crate: Z6 APPROVED AS TO FORM' ATTEST. J ar s Qty Attorney Manu l 0ron, City rk Approved by Legal on 12/3.1/2008'. v EXHIBIT A # art sferred eiihe day C lsped ily" in CC0+ or CTX format i orOra Iran sfar to the bank ;accounI and in accordance with the bank,. instructions identified in Consultants most recent Invoice in immediately available funds no later than the payment due bate. Invoice number and project name shall be referenced in the bank vAre reference fields or the -ACH addenda`infornlatton, y, go m: to the event Client disputes tiny invoice item, Cilent shell dive consultant written notice of such disputed Item within-10 days after receipt of such invoice and shall pay to Consultant the undisputed portion C'1iAnt fAl q to Dav, ar`!vAnvoiced satrlounts Yt'hen due,--.- BLACK VTC Wawa a world of di Orerzed November 14, 2t t3 City of Vernon 4305 Santa Fe Avenue Vernon, CA 90058 Delivered by Email Door ivlr, O' all &M. Black & Veatch CoWxatiojjs EaUgWse Managemeat Solutions division V or Black, &`Veatch) is; pleased to Have the opportunity to present dais estn uated awpe of work to assist the City of Vernon with its dervolopment of the Onyx Rwch wind project. Black & Veatch, Corporation B&V is a leading global consulting engineering, and 00ustmOdOu ec paUY Wecializiugin enterprise management solutions and inftarneture development in energy, -Aater, in ormatiox4 and government markets. B .V wus founded lu 9 $ as a partnmilip and converted to a corporation in 1999, Ihe Company is Headquartered in Overland Park, Kans and maintains more than 90 offices worldwide.. D&V employs a total stab of more than 8,600 individuals involved in a wide range of management consulting and eft& ering including reoatory compliance, utility development and operations, finance, economics, planning, environmental, civil, electrical, structural, and meeban cal ang neernig, as well as construction, sci ce and architecture. 1x k & eel Gorparalla t • t 5 ie Sir t 17 T1oor, Saerart -ta, CA 9581 A MA Tvlcph+z= 91b.503,16W RISK MANAGEMENT OFFICE INTER -DEPARTMENT MEMORANDUM DATE: January 21, 2°009 TO: Debby Juarez Sr. Administrative Assistant FROM: Willard G. Yamaguchi Risk Manager RE: Black & Veatch Corporation Please be advised that the above referenced has provided acceptable insurance coverage, 'Phis concerns insurance coverage for Resolution No, 9812 for Light & Power Department's Consulting Services. Agreement. WY/ab INTEROFFICE Light: Power Depa DATE: December 29, 2008 TO: Eric Fresch City Attorney FROM: Donal O'Callaghan Director of Light and Power APPROVED JAN 12 '09 CITY COUNCIL. CITYADMIN. DISTRIBUTION S us _ 19 0- SUBJECT: BLACK & VEATCH's PROPOSED CONSULTING SERVICES AGREEMENT Attached hereto is Black & Veatch's proposed Consulting Services Agreement to assist the City of Vernon with its development of the Wind/Solar Projects. Also attached is Black & Veatch's Scope of Work. The total project cost is $125,350.00. If you have any questions, please call me on extension 834. DOC:rmt Attachments c: Project Control Document control CONSULTING SERVICES AGREEMENT This Agreement, effective December 3, 2008, is between The City of Vernon, California ("Client") and BLACK & VEATCH CORPORATION ("Consultant"). Consultant shall perform Services in accordance with written Requests for Services (Requests) issued by Client and agreed to by Consultant during the term of this Agreement, which shall be attached as separate Exhibits A. Consultant shall accept or decline a Request as promptly as practicable under the circumstances. 1. Consultant will perform the Services in accordance with the standards of care and diligence normally practiced by recognized consulting companies in performing services of a similar nature. If, during the six-month period following the earlier of termination or completion of the Services under the applicable Request for Service, it is shown there is an error in the Services caused solely by Consultant's failure to meet such standards, and Client has promptly notified Consultant in writing of any such error within that period, Consultant shall perform, at Consultant's cost, such corrective consulting services within the original Request for Service as may be necessary to remedy such error. EXCEPT AS PROVIDED IN THIS ARTICLE, CONSULTANT MAKES NO OTHER WARRANTIES OR GUARANTEES, EXPRESS OR IMPLIED, RELATING TO CONSULTANTS SERVICES AND CONSULTANT DISCLAIMS ANY IMPLIED WARRANTIES OR WARRANTIES IMPOSED BY LAW INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. This Article governs, modifies, and supersedes any other terms in this Agreement which may be construed to address warranties or guarantees or the quality of the Services. Reports and other documents which Consultant prepares and delivers to Client pursuant to this Agreement shall become the property of Client when Consultant has been compensated for Services rendered. Nothing contained in this Section shall be construed as limiting or depriving Consultant of its rights to use its basic knowledge and skills to design or carry out other projects or work for itself or others, whether or not such other projects or work are similar to the work to be performed pursuant to this Agreement. Consultant shall have the right to retain and use copies of drawings, documents, and other data furnished or to be furnished by Consultant and any non - confidential information contained therein. Rights to intellectual property developed, utilized, or modified in the performance of the Services shall remain the property of Consultant. Client shall not acquire any rights to any of Consultant's, its subcontractors' or vendors' proprietary computer software that may be used in connection with the Services except as expressly provided in the Request or as may be separately agreed. Files delivered in electronic medium may not work on systems and software different than those with which they were originally produced. Consultant makes no warranty as to the compatibility of these files with any other system or software. Because of the potential degradation of electronic medium over time, in the event of a conflict between any specifications, reports, or other documents and electronic files, the original will govern. Documents, including, but not limited to, drawings, specifications, reports, electronic files, and computer software prepared by Consultant pursuant to this Agreement, are instruments of service in respect to the project. They are not intended or represented to be suitable for reuse by Client or others on extensions of the project or on any other project. Any reuse without prior written approval, and verification or adaptation by Consultant for the specific purpose intended will be at Client's sole risk and without liability or legal exposure to Consultant. Client shall defend, indemnify, and hold harmless Consultant against all claims, losses, damages, injuries, and expenses, including attorneys' fees, arising out of or resulting from such reuse. Any approval, and verification or adaptation of documents will entitle Consultant to additional compensation at rates customarily charged by Consultant for such services. No documents or any information contained therein, or otherwise supplied by Consultant in connection with the Services, shall be released or used by Client in connection with any proxy, proxy statement, proxy soliciting material, prospectus, official statement, offering memorandum, Securities Registration Statement, or any sales or due diligence or similar document without the express written approval of Consultant, except as may be required by law. Consultant may include its standard commercial third -party disclaimers in its Report. Any information shared with the Client prior to the release of the Report is superseded by the Report. As such, Client may not rely on, or distribute to third -parties, any emails, drafts, or oral statements made prior to the issuance of the Report. Client's distribution of the Report to a third party shall be at its own risk, and Client agrees to indemnify and hold Consultant harmless against any and all claims Consultant receives from any such third party based upon its access to, or reliance upon, Consultant's Report. 4. Consultant shall maintain in force, during the period that Services are performed, workers' compensation insurance in accordance with the laws of the states having jurisdiction over Consultant's employees who are engaged in the Black & Veatch Corporation • 1215 K Street, 17'h Floor, Sacramento, CA 95814 USA Telephone: 916.503.1697 Page 2 Services and employer's liability insurance with a limit of $100,000 each occurrence and in the aggregate. Consultant also shall maintain commercial general liability insurance with a limit of $1,000,000 per occurrence and in the aggregate; automobile liability insurance with combined single limit of $1,000,000; and professional liability insurance with per occurrence and aggregate limits of $1,000,000. 5. Consultant shall indemnify Client against any and all claims, demands and causes of action for bodily injury to or death of persons or for damage to or destruction of property (other than property of Client or construction work in progress, for which Client shall have responsibility) resulting solely from any and all negligent physical acts of Consultant while at Client's facility. The parties waive all claims for property damage, and shall require their insurers to waive subrogation rights against the other party under any applicable policy of property insurance. 6. In performance of the Services, it is acknowledged that Consultant may be supplied with certain information and/or data by Client and/or others, and that Consultant will rely on such information. Therefore, the accuracy of such information is not within Consultant's control and Consultant shall not be liable for its accuracy, nor for its verification unless otherwise provided in the Request. Since Consultant has no control over the cost of labor, materials, or equipment furnished by others, or over the resources provided by others (including Client) to meet project schedules, Consultant's opinion of probable costs and of project schedules shall be made on the basis of experience and qualifications as a professional consultant. Consultant does not guarantee that proposals, bids, revenues, costs, and other cash requirements, or actual operating and project costs will not vary from Consultant's estimates or that actual schedules will not vary from Consultant's projected schedules. 7. Client may, with or without cause, terminate the Services at any time upon 10 working days written notice to Consultant. In such case, Consultant shall be paid costs incurred and fees earned to the date of termination and through demobilization and neither party shall be entitled to any other compensation or damages from the other. At all times, each party shall retain all of its rights in its drawing details, designs, specifications, databases, computer software, copyrights, trade and service marks, patents, trade secrets, and any other proprietary property. 8. Client may audit and inspect Consultant's records and accounts covering fees and reimbursable costs for a period of six months following the completion of Consultant's Services. The purpose of any such audit shall be only for verification of such costs. Consultant shall not be required to keep records of or provide access to those of its costs expressed as fixed rates, a lump sum, or as a percentage of other costs. 9. Neither party shall be liable to the other party for loss of profits or revenue; loss of use; loss of opportunity; loss of goodwill; cost of substitute facilities, goods or services; cost of capital; cost of replacement power; governmental and regulatory sanctions; and claims of customers for such damages; or for any special, consequential, incidental, indirect or exemplary damages whether a claim for any such loss arises out of breach of contract, warranty, tort (including negligence), strict liability, indemnity, or another theory. Except for an obligation to make payments, neither party shall be in default to the extent any nonperformance is caused by a circumstance beyond such party's reasonable control. The warranties, obligations, liabilities and remedies of the parties, as provided herein, are exclusive and in lieu of any others available at law or in equity. Consultant's total aggregate liability under this Agreement shall not exceed the compensation received by Consultant under the applicable Request for Services. To the fullest extent allowed by law, releases from, and limitations of liability shall apply notwithstanding the breach of contract, tort including negligence, strict liability or other theory of legal liability of the party released or whose liability is limited. Consultant may subcontract portions of the Services to its related entities. 10. During the term of this Agreement, and for a period of six months following any termination or expiration hereof, Client agrees that it will not, hire, or solicit any employee of Consultant who performed services hereunder, to become employees or independent contractors of Client or such other person or entity, excluding employees who are responding to a general solicitation for employment advertised by Client. If Client does hire a Consultant employee as prohibited herein, Client shall be liable to Consultant for 60% of such employee's first -year salary (including any signing bonuses or reimbursable relocation costs). Client shall be obligated to disclose such amounts to Consultant and Consultant shall immediately invoice Client for such amount to be paid by Client within 10 business days of receipt of Consultant's invoice. Failure to pay such amount when due shall be considered a breach of this Agreement by Client and entitle Consultant to any and all remedies available under this contract, at law or in equity. Page 3 This Agreement and the attached Exhibits constitute the entire Agreement. No other representations of any kind, oral or otherwise, shall have any effect. This Agreement shall be governed by the laws of the state of Missouri, notwithstanding the operation of any conflict or choice of law statutes or decisional law to the contrary. ACCEPTED: BLACK & VEATCH CORPORATION 1215 K Street 17th Floor Sacramento, CA 95814 Authorized Signature: APPROVED AS TO FORM: Jeff A. Harrison, City Attorney CITY: CITY OF VERNON Name Title: Mayor / Mayor Pro-Tem Date: ATTEST: Manuela Giron, City Clerk Page 4 EXHIBIT A REQUEST FOR SERVICES CONSULTING SERVICES AGREEMENT Between City of Vernon, California ("Client") And Black & Veatch Corporation ("Consultant") Pursuant to the terms and conditions of the Consulting Services Agreement executed and made effective as of the 3rd day of December, 2008, between City of Vernon, California ("Client" or "City of Vernon") and Black & Veatch Corporation ("Consultant" or "Black & Veatch"), Client hereby requests Consultant perform and Consultant agrees to perform the following Services: Effective Date: This Exhibit A will be effective on December 3, 2008 A. Requested Services: Black & Veatch will provide the City of Vernon with analytical support in its due diligence and project development efforts related to the Onyx Ranch wind farm. In providing that analytical support, Black & Veatch envisions the following general task areas. Task 1: Develop Refined/Detailed Project Scope and Workplan Under Task 1, Black & Veatch will work with the City of Vernon to develop a detailed project scope, schedule, and budget for its support of the City in developing the Onyx Ranch wind farm. Task 2: Develop Detailed Project Economics at Different Project Sizes Under Task 2, Black & Veatch will develop a set of detailed projections of the wind project's expected energy production, sales revenue, and operating and capital costs at varying plant size configurations. Black & Veatch expects that this analysis will assist the City of Vernon in determining the most optimal project size for the wind project. Black & Veatch's efforts under this task will include the following basic steps: • Develop a set of expected capacity factors for the wind project at different plant sizes, using the individual wind turbine expected production levels estimated by the Long -Term Mean Annual 80-m Wind Resource Estimates. Expected capacity factor levels will be developed at an aggregate plant size of 100 MW, and in additional 50 MW increments up to 500 MW. Using this data, the overall average capacity factor for the project will decline as the project size is increased, as additional wind turbines are sited in locations with lower quality wind regimes. The analysis will reflect that trend. • Develop a set of expected energy market revenues at each set of expected wind production levels, using forecast energy market prices and expected energy sales at each plant size • Using the California Energy Commission Cost of Generation model, develop projected capital and operating costs for the wind project at each target size, varying from 100 MW and increasing in 50 MW increments up to 500 MW. • Prepare gross profit margin analyses at the project sizes described above to assist the City of Vernon in determining optimal project size for the Onyx Ranch wind projects Task 3: Develop Detailed Energy Market Simulation Projections Under Task 3, Black & Veatch will perform detailed energy market simulations to develop more refined energy market sales revenue and wind generation projections. Black & Veatch will utilize the PROMOD IV market simulation model in developing the detailed market simulations. Black & Veatch will initially use its WECC Integrated Market Model price projections in developing base case results, and will work with the City's project team to develop appropriate sensitivity cases. When such data become available, Black & Veatch will also incorporate transmission system Page 5 delivery limitations, if the transmission analysis suggests that some curtailments are likely due to transmission system congestion. Specific steps that Black & Veatch expects under this task include: • Develop WECC base case zonal power price forecast using PROMOD IV • Develop sensitivity cases focusing on changes to key input variables that could have a significant impact upon the overall project economics of the wind project. Important variables would include natural gas prices, available transmission capacity, and the impacts of potential greenhouse gas emissions regulations • Develop a forecast of Renewable Energy Credit (REC) prices and associated revenue to the project from renewable energy credits Task 4: Prepare Financial Pro Forma Projections Under Task 4, Black & Veatch will prepare a set of financial pro forma projections to provide detailed cost and revenue projections to be used in the project development and due diligence analysis for the wind project. Black & Veatch will work in conjunction with the City of Vernon's engineering consultant in developing pro forma operating and capital cost projections for the project. Black & Veatch will also work with other members of the project team in developing pro forma financial projections that include merchant plant wind energy sales, and that reflect likely or negotiated power sales contract terms and revenue streams. Specific items included in the pro forma financial statements will include: • Monthly and annual sales revenue for the project from energy market sales, renewable energy credits, capacity market sales, adjusted as appropriate for any applicable PPA contract terms • Monthly and annual projected operating and maintenance costs for the project • Monthly and annual financing costs, depreciation, taxes, capital expenditures, etc. Black & Veatch will work with other members of the project team in coordinating and using engineering and financial cost estimates for the project • Monthly and annual transmission costs • Administrative and general overhead cost estimates • Net income, cash flow, and NPV and Internal Rate of Return measures of financial performance Task 5: Other Project Support as Needed Under Task 5, Black & Veatch will provide such project support as necessary, under the direction of the City of Vernon. Black & Veatch anticipates that sub -tasks in this area will include research about the renewables energy market and regulatory policy in California, analytical models and analyses to assist with the due diligence and financing activities, and other actions to assist the City in developing the wind and solar projects. Prior to beginning any Task 5 activities, Black & Veatch will provide the City of Vernon with a subtask description and estimated budget. B. Commencement Date: December 8, 2008 C. Billing Basis: All services will be provided and billed by Consultant to Client on a time and materials based on the billing rates listed in the table below. Title Rate/Hour Clerical/Administrative Support $85 Analyst $170 Senior Analyst $190 Consultant $210 Manager / Specialist $270 Principal / Sr. Specialist $290 Director $320 Managing Director $400 Associate Vice President/ Vice President $490 Senior Vice President $550 Page 6 Invoices are due upon receipt. D. Estimated Cost of the Services: Tasks 1 through 4 are expected to require 471 hours at an estimated cost of $125,350. E. Estimated Completion Date: On or before March 31, 2009 Monthly Billing: Commencing on or about the first day of the calendar month following execution of this Agreement, and monthly thereafter, Consultant shall furnish Client with an invoice covering the Reimbursable Costs and Fee for services provided during the previous month and any interest due under this Agreement. Invoices may be submitted electronically by email. In such event, the electronic copy of the invoice will be considered the official invoice and will not be followed by a hard copy invoice. Notwithstanding any other provision of the above -referenced Agreement, or this Exhibit A, Consultant is under no obligation to submit any deliverable if any invoice is more than 45 days outstanding. G. Method of Payment: Payments to be made to Consultant under this Agreement shall be electronically transferred either by ACH, specifically in CCD+ or CTX format, or wire transfer to the bank account and in accordance with the bank instructions identified in Consultant's most recent invoice in immediately available funds no later than the payment due date. Invoice number and project name shall be referenced in the bank wire reference fields or the ACH addenda information. H. Disputes: In the event Client disputes any invoice item, Client shall give Consultant written notice of such disputed item within 10 days after receipt of such invoice and shall pay to Consultant the undisputed portion of the invoice according to the provisions hereof. If Client fails to pay any invoiced amounts when due, interest will accrue on each unpaid amount at the rate of eighteen percent per annum, or the maximum amount allowed by law if less, from the date due until paid according to the provisions of this Agreement. Interest shall not be charged on any disputed invoice item which is finally resolved in Client's favor. Payment of interest shall not excuse or cure any default or delay in payment of amounts due. In the event Consultant refers this Agreement to a third party for collection or enforcement of its terms, Consultant shall be entitled to reimbursement for all costs and expenses incurred, including a reasonable attorneys' fee. In the event that Client has an unpaid invoice over 50 days past due, Consultant may, in addition to all other remedies available at law and equity, terminate this Request for Services. This Request for Services and the above -referenced Agreement constitute the complete understanding of the parties with respect to the Services specified herein. Terms and conditions contained in purchase orders, work orders, or other documents issued by,Client with respect to the Services shall be of no force and effect. IN WITNESS WHEREOF, the parties have executed this Request for Services on the date(s) indicated below. ACCEPTED: BLACK & VEATCH CORPORATION 1215 K Street 17th Floor Sacramento, CA 95814 Authorized Signature: APPROVED AS TO FORM: Jeff A. Harrison, City Attorney CITY: CITY OF VERNON Name Title: Mayor / Mayor Pro -Ter Date: ATTEST: Manuela Giron, City Clerk Page 7 WABLACK & VEATCH , Building a world of difference' November 14, 2008 Mr. Donal O'Callaghan City of Vernon 4305 Santa Fe Avenue Vernon, CA 90058 Delivered by Email Dear Mr. O'Callaghan: Black & Veatch Corporation's Enterprise Management Solutions division (B&V or Black & Veatch) is pleased to have the opportunity to present this estimated scope of work to assist the City of Vernon with its development of the Onyx Ranch wind project. Black & Veatch Corporation B&V is a leading global consulting, engineering, and construction company specializing in enterprise management solutions and infrastructure development in energy, water, information, and government markets. B&V was founded in 1915 as a partnership and converted to a corporation in 1999. The Company is headquartered in Overland Park, Kansas and maintains more than 90 offices worldwide. B&V employs a total staff of more than 8,600 individuals involved in a wide range of management consulting and engineering including regulatory compliance, utility development and operations, finance, economics, planning, environmental, civil, electrical, structural, and mechanical engineering, as well as construction, science and architecture. B&V Consulting Services Enterprise Management Solutions is the Management Consulting Division of B&V with more than 250 consultants. We deliver value through the application of first-hand industry expertise, exceptional program and project execution, thought leadership, proven methodologies and processes, and ethical business practices. Our proven capability to deliver is local, national, and international. We are a dynamic organization that strives to change as our clients' needs evolve. In a format where deep experience is blended with strong project execution and value focus, our engagements can draw on experienced senior executives, economists, senior policy experts and consultants experienced in regulatory matters, engineers and internationally -respected subject matter experts. B&V has recently opened an energy consulting office in Sacramento, CA, which is focusing on energy market analysis and price forecasting. Black & Veatch Corporation • 1215 K Street, 1'i' Floor, Sacramento, CA 95814 USA Telephone: 916.503.1697 Our consulting focus areas include: • Strategic planning • Economic analysis • Decision support analysis • Transmission and generation asset valuation • Natural gas midstream asset valuation — pipelines, storage and LNG terminals • Benchmarking • Market and locational marginal price analyses • Debt issuance support • Contract negotiations Page 2 • Issue/risk review and analysis • Process development and implementation • Power delivery planning • Technical modeling and analyses • IT planning and implementation • Tariff design and unbundling • Organizational design and culture review • Change management and training • Stakeholder communications, executive coaching, and employee training • Program and project management Proposed Scope of work Under this proposed scope of work, Black & Veatch will provide the City of Vernon with analytical support in its due diligence and project development efforts related to the Onyx Ranch wind farm. In providing that analytical support, Black & Veatch envisions the following general task areas. Black & Veatch is open to adjust, refine and expand this proposed scope of work upon mutual agreement between the City of Vernon and Black & Veatch: Task 1: Develop Refined/Detailed Project Scope and Workplan Under Task 1, Black & Veatch will work with the City of Vernon to develop a detailed project scope, schedule, and budget for its support of the City in developing the Onyx Ranch wind farm. Upon completion of Task 1, Black & Veatch anticipates development of a supplemental agreement Task 2: Develop Detailed Project Economics at Different Project Sizes Under Task 2, Black & Veatch will develop a set of detailed projections of the wind project's expected energy production, sales revenue, and operating and capital costs at varying plant size configurations. Black & Veatch expects that this analysis will assist the City of Vernon in determining the most optimal project size for the wind project. Black & Veatch's efforts under this task will include the following basic steps: Develop a set of expected capacity factors for the wind project at different plant sizes, using the individual wind turbine expected production levels estimated by the Long -Term Mean Annual 80-m Wind Resource Estimates. Expected capacity factor levels will be developed at an aggregate plant size of 100 MW, and in additional 50 MW increments up to 500 MW. Using this data, the overall average capacity factor for the project will decline as the project size is increased, as additional wind turbines are sited in locations with lower quality wind regimes. The analysis will reflect that trend. Page 3 Develop a set of expected energy market revenues at each set of expected wind production levels, using forecast energy market prices and expected energy sales at each plant size Using the California Energy Commission Cost of Generation model, develop projected capital and operating costs for the wind project at each target size, varying from 100 MW and increasing in 50 MW increments up to 500 MW. Prepare gross profit margin analyses at the project sizes described above to assist the City of Vernon in determining optimal project size for the Onyx Ranch wind projects Task 3: Develop Detailed Energy Market Simulation Projections Under Task 3, Black-& Veatch will perform detailed energy market simulations to develop more refined energy market sales revenue and wind generation projections. Black & Veatch will utilize the PROMOD IV market simulation model in developing the detailed market simulations. Black & Veatch will initially use its WECC Integrated Market Model price projections in developing base case results, and will work with the City's project team to develop appropriate sensitivity cases. When such data become available, Black & Veatch will also incorporate transmission system delivery limitations, if the transmission analysis suggests that some curtailments are likely due to transmission system congestion. Specific steps that Black & Veatch expects under this task include: • Develop WECC base case zonal power price forecast using PROMOD IV • Develop sensitivity cases focusing on changes to key input variables that could have a significant impact upon the overall project economics of the wind project. Important variables would include natural gas prices, available transmission capacity, and the impacts of potential greenhouse gas emissions regulations • Develop a forecast of Renewable Energy Credit (REC) prices and associated revenue to the project from renewable energy credits Task 4: Prepare Financial Pro Forma Projections Under Task 4, Black & Veatch will prepare a set of financial pro forma projections to provide detailed cost and revenue projections to be used in the project development and due diligence analysis for the wind project. Black & Veatch will work in conjunction with the City of Vernon's engineering consultant in developing pro forma operating and capital cost projections for the project. Black & Veatch will also work with other members of the project team in developing pro forma financial projections that include merchant plant wind energy sales, and that reflect likely or negotiated power sales contract terms and revenue streams. Specific items included in the pro forma financial statements will include: • Monthly and annual sales revenue for the project from energy market sales, renewable energy credits, capacity market sales, adjusted as appropriate for any applicable PPA contract terms • Monthly and annual projected operating and maintenance costs for the project • Monthly and annual financing costs, depreciation, taxes, capital expenditures, etc. Black & Veatch will work with other members of the project team in coordinating and using engineering and financial cost estimates for the project • Monthly and annual transmission costs • Administrative and general overhead cost estimates • Net income, cash flow, and NPV and Internal Rate of Return measures of financial performance Page 4 Task 5: Other Project Support as Needed Under Task 5, Black & Veatch will provide such project support as necessary, under the direction of the City of Vernon. Black & Veatch anticipates that sub -tasks in this area will include research about the renewables energy market and regulatory policy in California, analytical models and analyses to assist with the due diligence and financing activities, and other actions to assist the City in developing the wind and solar projects. Prior to beginning any Task 5 activities, Black & Veatch will provide the City of Vernon with a subtask description and estimated budget. B& V Project Team The following individuals will be part of the Vernon project team. The level of involvement of each individual will vary depending on the project task and issue. Roger Schiffinan will manage the project and provide the primary analytical support, with oversight from Rich Lauckhart. Black & Veatch will utilize additional personnel, as appropriate. Richard Lauckhart — Managing Director with Black & Veatch Enterprise Management Solutions division. Mr. Lauckhart has been actively involved in power supply planning, electricity price forecasting and asset valuation for more than 35 years. For the past 12 years, he has performed consulting assignments related to power market analyses, price forecasting services, asset market valuation, integrated resource planning, transmission line congestion analysis and management of strategic consulting engagements for many clients in North America. His clients have included investor -owned and publicly owned utilities, independent power producers, lenders and others. Before beginning his consulting career, Mr. Lauckhart held various positions at Puget Sound Power & Light (now Puget Sound Energy) in power supply planning. He culminated his service as Vice President of Power Planning for the last four years of his tenure Roger Schiffinan — Principal Consultant with Black & Veatch Enterprise Management Solutions division. Mr. Schiffinan has developed a broad range of energy industry experience covering electricity market evaluation, market assessment and simulation modeling, regulatory policy development, economic and financial analysis, contract evaluation, pricing, and utility resource planning. He has worked extensively with electric utility staff, power plant developers, regulatory personnel, investment bankers and other industry participants in both consulting and regulatory environments. Mr. Schiffman has provided the City of Vernon with analytical support in its initial decision to procure land for the wind project, and has provided additional services to the City of Vernon in the last year, related to its development of the Vernon Power Plant in southern California. Prior to joining Black & Veatch, Mr. Schiffinan was a Vice President of Consulting at Ventyx. Benison Joe - Mr. Joe is a Manager with Black & Veatch Enterprise Management Solutions, with 10 years of experience in the deregulated electric power industry. He has specialized in the analysis of North American power markets, operating procedures, market design, and compliance regulations. He has worked with vertically integrated utilities, investment banks, private equity firms, independent power producers, and power marketers. Prior to joining Black & Veatch, Mr. Joe was Manager of Regulatory and Cal -ISO Affairs at Direct Energy, and before that, was a Project Manager in the consulting business unit at Global Energy Decisions. Page 5 Estimate of Project Timing and Costs Black & Veatch estimates the following costs and schedule requirements to complete the scope of work described above. Table 1 Estimated Schedule and Budget Task# Task Description Estimated Hours Estimated Weeks Estimated Budget $ 1 Develop RetnedlDetailed Project Scope and Workplan 6 0.2 $1,960 2 Develop Detailed Project Economics at Different Project Sizes 48 1.2 $12,760 3 Develop Detailed Energy Market Simulation Projections 270 6.8 $68,520 4 Prepare Financial Pro Forma Projections 93 2.3 $27,010 5 Other Project Support as Needed 54 1.4 $15,100 Total Project 471 11.8 $126,350 Note: Additional Efforts under Task 5 will be scoped and budgeted during project execution Black & Veatch proposes to complete this engagement on a time & materials basis, using its standard billing rates. A schedule of billing rates is included in the attache consulting services agreement. The project is expected to take 12 weeks total, but actual schedule will depend upon timely review and input from the City of Vernon and other members of the project team (contractors to City of Vernon). We are available to begin work on this project immediately. Note that the cost estimate does not include travel time and expenses for meetings with the City of Vernon and its project team. B & V Proposal Terms B&V proposes that the scope of work be completed under the terms and conditions of the attached consulting services agreement. Until the specific agreement terms, which include the specific project scope and cost estimate, are accepted and executed by both parties, Black & Veatch is not bound to the deadlines, terms and services specified in this proposal. Page 6 Thank you for the opportunity to propose this scope of work to provide consulting services to the City of Vernon. We are available to discuss at your earliest convenience, and look forward to working with you and the City of Vernon's staff and project team. Very truly yours; BLACK & VEATCH CORPORATION Scott R. Smith Vice President Cc: Mr. Roger Schiffinan Attachment