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DATE:
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10/7/2013 7:00:00 PM |
SUBJECT: |
Council Consideration of an Effluent Purchase Agreement and Termination Agreement with PacifiCorp and Black Hills Power Company. |
BACKGROUND: |
The Council approved an earlier version of this agreement at the January 22, 2013 City Council meeting. We sent it off to Pacificorp and they reviewed it and when we finally got it back from Pacificorp there were some minor changes to remove references to old water agreements and it was accompanied by a new agreement to formally terminate some very old water agreements that had mostly lapsed, just to avoid confusion in the future. In addition these agreements are also approved by Black Hills which was a party to the original effluent agreement that was amended by this one.
Here is a description of the agreement from the January 23, 2013 Council packet.
Since the early 1970s, Gillette contracted with PP&L for the output of the Wastewater Treatment Plant. Under the terms of the agreements, PP&L has the right to take up to the output of the WWTF up to 2000 gpm for a price composed of two charges, a flat fee and a fee associated with the total O&M for the plant. Although PP&L has the right to take all of the output of the plant, they only take a small percent over an entire year. The City can sell amounts that are not taken but only with the prior permission of PP&L which has the discretion to refuse a request. PP&L operates a pipeline from the WWTF to their facility and a water purification system to clean the effluent it receives to be able to use it in the boiler of their power plant.
The new agreement reduces the amount of reserved effluent from 2000 gpm to 600 gpm, which is less than a third of what is available for PP&L today, but is over twice the highest average amount that has been actually taken in the last 10 years. The extra amount reserved for them gives them room to expand their operation. They will pay $20,000 per year as a Reservation Payment for access to the 600gpm (864,000 gallons per day) and then will pay $1.41 per 1,000 gallons (Purchase Rate) for the effluent they actually take. The Purchase Rate and the Reservation Payment are subject to adjustment based on changes to the Consumer Price Index. This new agreement will replace all of the old agreements between the parties, dating back to the construction of the PP&L plant. The term of this agreement is 35 years with a 10 year renewal. |
SUGGESTED MOTION: |
I move for the Approval of an Effluent Purchase Agreement and Termination Agreement with PacifiCorp and Black Hills Power Company.
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STAFF REFERENCE: |
Kendall Glover, Utilities Director Charlie Anderson, City Attorney |
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