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W A D E R • E N E R G Y E 1 F E RIVERSIDE PUBLIC UTILITIES V-��01� III& PUBLIC UTILITIES Board Memorandum BOARD OF PUBLIC UTILITIES DATE: OCTOBER 17, 2014 ITEM NO: 7 SUBJECT: TERMINATION OF AMENDED AND RESTATED SAN ONOFRE NUCLEAR GENERATING STATION (SONGS) FIRM TRANSMISSION SERVICE AGREEMENT ISSUE: The item for Board of Public Utilities consideration is approval to terminate the Amended and Restated San Onofre Nuclear Generating Station (SONGS) Firm Transmission Service Agreement (TSA) between City of Riverside and Southern California Edison Company (SCE). RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council. Approve the termination of the San Onofre Nuclear Generating Station (SONGS) Firm Transmission Service Agreement (TSA) following the permanent closure of the SONGS; and 2. Authorize the City Manager, or his designee, to provide written notice to Southern California Edison to terminate the TSA pursuant to Section 5.2 of the Agreement. BACKGROUND: On November 1, 1977, Riverside, Anaheim and San Diego Gas & Electric entered into a participation agreement under which Riverside received a 1.79 percent ownership interest in Unit 2 and 3 of the SONGS and the corresponding entitlement in the capacity and energy from the units of approximately 39 Megawatts (MW). Concurrently, SCE and Riverside entered into the TSA under which SCE transmitted the SONGS energy to Riverside. The TSA has been amended and restated several times over the years due to changed business relationship between Riverside and SCE. The latest amendment occurred in 2002 when Riverside provided its notice to the California Independent System Operator ( CAISO), and became a Participating Transmission Owner (PTO) in the CAISO market effective 1/1/2003. Since then, Riverside has been paying SCE under the TSA and receives offsetting revenues associated with the TSA from the CAISO's transmission grid users. On June 7, 2013, SCE announced the permanent closure of the SONGS Unit 2 and 3 and has begun the process of decommissioning the plant. Therefore, the value of retaining the TSA to transmit energy from SONGS to Riverside no longer exists. Pursuant to Section 5.2 of the TSA, it is recommended that Riverside provide the 180 -day written termination notice to SCE. The financial impact to Riverside for terminating the TSA is revenue neutral as Riverside currently pays SCE under the TSA and subsequently receives corresponding revenues from CAISO grid users via Riverside's revenue requirement filed with the Federal Energy Regulatory Commission (FERC). Riverside will update its Transmission Revenue Balancing Account Adjustment filed annually at FERC, to reflect the elimination of the cost, and offsetting revenues, associated with terminating the SONGS TSA.