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W A T E R I E N E R 5 Y , L I F E RIVERSIDE PUBLIC UTILITIES Board Memorandum P U B L I C U T I L I T I E S BOARD OF PUBLIC UTILITIES DATE: May 21, 2010 ITEM NO: 6 SUBJECT: PROFESSIONAL CONSULTANT SERVICES AGREEMENT BETWEEN PROENERGY SERVICES, LLC, AND CITY OF RIVERSIDE ISSUE: Board approval is requested to approve the proposed Professional Consultant Services Agreement between ProEnergy Services, LLC ("ProEnergy"), and the City of Riverside. RECOMMENDATION: That the Board of Public Utilities approve the Professional Consultant Services Agreement with ProEnergy Services, LLC in an amount not to exceed $500,000. BACKGROUND: On February 5, 2010, the Board of Public Utilities recommended that the City Council approve the proposed Clearwater Power Plant Asset Purchase and Sale Agreement (the "Purchase Agreement"). On February 23, 2010, the City Council approved the Purchase Agreement. Execution of the Purchase Agreement on March 3, 2010 initiated the "Transition Period" during which Corona and Riverside will work to transfer all rights, title and interests in the Clearwater Power Plant ("Clearwater") from Corona to Riverside. The Transition Period ends on the "Closing Date", the date when all such transfers have been completed and Riverside gains ownership of the Clearwater Power Plant. The targeted Closing Date is July 1, 2010. Although staff additions have been authorized in order to operate and maintain Clearwater, those positions will only be filled after the Closing Date to ensure that personnel are not hired until Riverside owns Clearwater. Nevertheless, Riverside will be responsible for operating Clearwater as of the Closing Date even though the necessary additional staff have not been hired or trained. Therefore, as described in the Board and Council memoranda related to the Purchase Agreement, staff proposes to acquire the services of an outside vendor approximately one month prior to the anticipated Closing Date to operate and maintain Clearwater commencing on the Closing Date and continuing until Riverside personnel are acquired and qualified to operate and maintain the facility. Prior to and during the Transition Period, the City of Corona has used ProEnergy to operate Clearwater. As such, ProEnergy personnel are already fully trained, experienced and capable of operating and maintaining the Clearwater facility while Riverside procures and trains the necessary staff. Because of the greater time and cost associated with training a different vendor to operate the Clearwater facility, it is recommended that ProEnergy be selected to operate the plant on an interim basis. Over the last several months, numerous outside vendors have been contacted regarding operation of the Clearwater facility on an interim basis. Each vendor required different levels of compensation; including management fees, longer contract durations than anticipated requirements and high management markup and mobilization fees.