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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 T F $ BOARD OF PUBLIC UTILITIES DATE: July 16, 2010 ITEM NO: 17 SUBJECT: PAYMENT SCHEDULE LETTER AGREEMENT FOR THE RIVERSIDE TRANSMISSION RELIABILITY PROJECT ISSUE: Consideration of entering into the Payment Schedule Letter Agreement ("Letter Agreement") with Southern California Edison Company ("Edison") to revise the payment schedule pursuant to the Interconnection Facilities Agreement (IFA) for the Riverside Reliability Transmission Project (RTRP). RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council: 1. Approve the Payment Schedule Letter Agreement (Letter Agreement) between City of Riverside and Southern California Edison Company to revise the payment schedule pursuant to the Interconnection Facilities Agreement (IFA) for the Riverside Reliability Transmission Project (RTRP); and 2. Authorize the City Manager, or his designee, to execute the Letter Agreement and take the necessary actions to implement the Letter Agreement. BACKGROUND: The City of Riverside ("Riverside") entered into the IFA with Edison in March 2009 for the construction of RTRP. Pursuant to the current IFA, Riverside is to make periodic payments to Edison for RTRP project related costs incurred by Edison. The RTRP was originally anticipated to be completed before summer 2012 and thus the payment schedule under the IFA was structured to reflect a summer 2012 completion. However, due to the additional time required to complete the Draft Environmental Impact Report (DEIR), the project completion date has been delayed to a later date, currently anticipated to be the end of 2014. Given the delay in the RTRP project, staff discussed with Edison the restructuring of the IFA payment schedule, to better reflect the delayed funding needs by Edison. An interim agreement was reached in March 2010 to defer the payments due Edison in March 1 and June 1 of this year in the amounts of $1,211,000 and $805,000 respectively until a permanent payment schedule revision is worked out. This Letter Agreement reflects the revision and deferral of funding requirements to better reflect Edison's funding needs in the next several years. The payment schedule has been revised to fund the RTRP project through the end of 2014 instead of through March 1, 2012 as currently structured in the IFA. Further, the estimated RTRP cost projection by Edison has increased from $55,016,419 to $56,989,419. This is an increase of $1,973,000, or 3.6 percent. This is primarily a result of the protracted environmental analysis required to compile the DEIR for this complex project. The DEIR is now scheduled for public review and comment in November 2010. A portion of the increase, $570,000, will be reimbursable to Riverside upon Edison obtaining the Certificate of Public Convenience and Necessity (CPCN) from the California Public Utilities Commission (CPUC). Note that the actual cost to Riverside will be based on the actual costs incurred by Edison. The IFA provides for auditing of Edison financial records by Riverside to allow verification of the accuracy of invoices.