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WATER i E N E R G Y I L I F E RIVERSIDE PUBLIC UTILITIES 69&V-1 Board Memorandum P U B L I C U T I L I T I E S BOARD OF PUBLIC UTILITIES DATE: April 16, 2010 ITEM NO: 5 SUBJECT: APPROVAL TO PURCHASE NOx OFFSET CREDITS FORTHE RIVERSIDE ENERGY RESOURCE CENTER (RERC) UNITS 3 AND 4 GENERATION PROJECT STARTUP AND TESTING ISSUE: Board approval is requested for the purchase of 17,100 pounds of NOx offset credits for the RERC Units 3 and 4 Generation Project startup and testing requirements at a cost of$75,000. RECOMMENDATIONS: That the Board of Public Utilities: 1. Approve the purchase of 17,100 pounds of NOx credits for one year at a cost of$75,000; and 2. Approve an increase in the Riverside Energy Resource Center(RERC) Units 3 and 4 Work Order No. 0703511 by $75,000 —from $99,803,977.54 to $99,878,977.54. BACKGROUND: In January 2007, the Board of Public Utilities approved the project and all pre-project work required for the development of the new generating units. In addition,the Board of Public Utilities approved the release of a Request for Proposals (RFP) to hire a consulting firm to develop the project. On June 1, 2007, the Board of Public Utilities approved RERC Units 3 and 4; approved the Professional Services Agreement with Power Engineers for the environmental permitting, detailed engineering, procurement oversight, and construction oversight for the RERC Units 3 and 4 project. The procurement of the environmental offset credits for PM 10, NOx,VOC and Sox required by both the CEC and the SCAQMD for normal operation have been procured. Riverside Public Utilities (RPU) currently has authorization to purchase environmental offset credits through two independent brokering firms. The Project schedule is to have RERC Units 3 and 4 operational as soon as possible, which is expected to be late summer or early fall 2010. It is anticipated that additional funding will be required for engineering and on-site personnel due to the delays incurred earlier in the bidding process for the construction contract. This additional request will be brought back to the Board within the next few months. FISCAL IMPACT: The total project cost for RERC Units 3 and 4 is estimated at $113,433,946. Funds are available for this purchase in Riverside Energy Resources Center Account No. 6130000-470687.