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W A T E R I E N E R G Y I l I E E RIVERSIDE PUBLIC UTILITIES Board Memorandum P U B L I C U T T l I T I F S BOARD OF PUBLIC UTILITIES DATE: May 7, 2010 ITEM NO: 9 SUBJECT: INCREASE OF ANNUAL PURCHASE ORDER WITH THOMPSON COBURN LLP FOR LEGAL SERVICES RELATED TO POWER SUPPLY ISSUE: Board of Public Utilities approval is requested to increase the annual Purchase Order with Thompson Coburn LLP. RECOMMENDATION: That the Board of Public Utilities approve an increase to annual Purchase Order 100497 by $168,000, for a total of$568,000, for legal services provided by Thompson Coburn LLP (Thompson Coburn) related to power supply operations, Federal Energy Regulatory Commission (FERC) matters and other electric power issues. BACKGROUND: An annual Purchase Order in the amount of $400,000 was issued for wholesale power supply and transmission regulatory and legal services provided by Thompson Coburn for the current fiscal year. The Purchase Order was approved by the Board on June 5, 2009. The cost of services provided by Thompson Coburn has been shared among the cities of Anaheim, Azusa, Banning, Colton, Riverside and Pasadena for many years on issues of common interest, and from time to time, Riverside Public Utilities (RPU) also requires individualized services to meet its specific needs. Following is a breakdown of the major Thompson cost drivers for the current fiscal year: 1. The filing and the successful settlement of RPU's new Transmission Revenue Requirement (TRR) rate case at the FERC. This work resulted in approximately $84,000 of additional costs for legal services. The direct benefit to RPU of this litigation was additional transmission revenue totaling $4.4 million per year, which fully recovers RPU's transmission costs, plus a reasonable return. 2. Riverside continues to challenge the recovery of questionable transmission costs by other transmission owners and developers. During the current fiscal year, the legal fees related to these efforts are expected to total approximately $170,000, while the benefit of one of the cases that was ultimately settled will lower RPU's overall transmission cost by approximately $400,000 per year. 3. The review of the recently approved Clearwater Asset Purchase and Sale Agreement with Corona resulted in legal fees of approximately $60,000. 4. Regulatory and legal coverage on a range of California Independent System Operator (CAISO) market initiatives. This activity has resulted in legal fees of approximately $61,900 to date. The benefit of active participation in the CAISO stakeholder process is to shape CAISO policies to accommodate RPU's unique needs, e.g., a recently concluded CAISO informal dispute resolution related to RPU's BPA contracts, will yield approximately $500,000 per year in avoided CAISO penalties.