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HomeMy WebLinkAboutReso 2009-1419 RESOLUTION NO. 2009 - ~ A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF SUNNY ISLES BEACH, FLORIDA, AUTHORIZING THE PAYMENT OF TWELVE THOUSAND DOLLARS ($12,000.00) PURSUANT TO THE INTERLOCAL AGREEMENT BETWEEN THE CITY AND THE MUNICIPAL UNDERGROUNDING UTILITIES CONSORTIUM (MUUC) FOR THE CITY'S SHARE OF LEGAL FEES TO REPRESENT LOCAL GOVERNMENTS BEFORE THE PUBLIC SERVICE COMMISSION, A TT ACHED HERETO AS EXHIBIT "A"j AUTHORIZING THE CITY MANAGER TO DO ALL THINGS NECESSARY TO EFFECTUATE THIS RESOLUTIONj PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, Section 163.01, Florida Statutes, authorizes local governing bodies to enter into agreements for the mutual benefit of governmental units; and WHEREAS, the Municipal Underground Utilities Consortium (MUUC) consists of over fifty (50) cities in Florida with over thirty (30) being dues paying members, to gather and share information on all things pertaining to underground utilities jointly funding the study of underground utility service, and to provide a vehicle for the purpose of participating in relevant proceedings before the Florida Public Service Commission, the Florida Legislature, or any other relevant agency or branch of government; and WHEREAS, there is a great deal of activity on undergrounding and hardening of facilities at the Public Service Commission which MUUC participants actively and formally participate in which the current focus of MUUC has been to initiate a study of the FPL tariff that proposed a 25% credit for local government underground conversion projects; and WHEREAS, on February 15, 2007, the City Commission entered into an Interlocal Agreement with the Municipal Undergrounding Utilities Consortium via Resolution No. 2007- 1054, in the amount of Five Thousand Three Hundred Thirty-Eight Dollars ($5,338.00) for the City's Participation in said Consortium to cost share that study to have a sound basis for evaluating all relevant costs and benefits, on a complete, life-cycle cost basis, of converting existing overhead electric distribution facilities, and other utility facilities to underground service facilities; and WHEREAS, on January 15, 2009, the City Commission joined the participating cities in the MUUC in approving the First Amendment to the Interlocal Agreement, via Resolution No. 2009-1371, extending the agreement through December 31, 2010; and WHEREAS, MUUC has submitted to the City the third invoice/assessment in the amount of Twelve Thousand Dollars ($12,000.00) for the City of Sunny Isles Beach's share of the legal fees to represent local governments before the Public Service Commission; and. R2009- MUUR Payment for Litigation re Undergrounding of Utility Facilities Page I of2 WHEREAS, the City Commission now wishes to authorize the payment in the amount of Twelve Thousand Dollars ($12,000.00) to MUUC for the City of Sunny Isles Beach's share of the legal fees. NOW THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF SUNNY ISLES BEACH, FLORIDA, AS FOLLOWS: Section 1. Authorization of Payment. The City Commission hereby authorizes the payment of Twelve Thousand Dollars ($12,000.00) pursuant to the Interlocal Agreement between the City of Sunny Isles Beach and Municipal Undergrounding Utilities Consortium (MUUC) for the City's share of the legal fees to represent local governments before the Public Service Commission, attached hereto as Exhibit "A". Section 2. Authorization of City Manager. The City Manager is hereby authorized to do all things necessary to effectuate this Resolution. Section 3. Effective Date. This Resolution will become effective upon adoption. PASSED AND ADOPTED this 21st day of May 2009. J ~ // fJ/;Pa. #. .- orman S. Edelcup, Mayor ATTEST: ~; &~,~ . Jane A. Hines, CMC, City Clerk APPROVED AS TO FORM AND E UFFICIENCY: Moved by: YlCt2. ffi~.... T~~~ C'~~ ~R~.;2..,tV Vote: 5-b Seconded by: Mayor Edelcup Vice Mayor Thaler Commissioner Brezin Commissioner Goodman Commissioner Scholl v/(Y es) ---v (Yes) 17(Yes) ~/(Yes) _(Yes) _(No) _(No) _(No) _(No) _(No) R2009- MUUR Payment for Litigation re Undergrounding of Utility Facilities Page 2 of2 FEB - 4 2009 Municipal '. Underground Utilities Consortium ~ Memo To: MUUC Members From: Thomas G. Bradford, Deputy Town Manager, Town of Palm Beach Date: 1/29/2009 Re: Request for Additional Funding As you may already know, there is a need for additional funds within the present Consortium financial structure if we are to complete our last efforts before the PSC pertaining to FPL. I have attached another memorandum to the enclosed invoice explaining the need for funds. Please feel free to use this attachment, or any part thereof, in drafting an explanation of the need should the matter require the approval of another person within your organization or the governing board of your community. The total funding required is $215,600. The specific amount requested from each MUUC participant has been calculated and allocated based on the previously established Interlocal Agreement formula. The exact amount for your community is shown on the attached invoice. As we have arranged in previous financial requests - Please make the check payable to: "Young van Assenderp, P. A. Trust Account" However, please mail your check to: Robert S. Wright, Esq. Young van Assenderp, P.A. 225 South Adams Street Suite 200 Tallahassee, Florida 32301 On behalf of the Consortium, and with a positive outlook, thank you for your continued efforts and financial participation. Please refer all questions, comments or concerns regarding this funding request to: Thomas G. Bradford Deputy Town Manager Town of Palm Beach 360 S. County Road Palm Beach, FL 33480 561-838-541 0 (office) 561-838-5411 (fax) tbradford@townofpalmbeach.com Exhibit "A" MUNICIPAL UNDERGROUND UTILITIES CONSORTIUM INVOICE January 30, 2009 Invoice For: City of Sunny Isles Beach Funding Amount Requested $12,000 Please refer to the previous page for mailing and endorsement instructions. . Page 2 MEMORANDUM January 30, 2009 FROM: MUNICIPAL UNDERGROUND UTILITIES CONSORTIUM THOMAS G. BRADFORD, DEPUTY TOWN MANAGER ~H-7 P ~ ~~ TOWN OF PALM BEACH /-- TO: SUBJECT: FPL UNDERGROUNDING PROCEEDINGS & ESTIMATED COSTS As discussed in our conference call on January 22, this memo provides an overview of what we've accomplished so far, issues that remain to be addressed in the three pending dockets at the Florida PSC, and estimated costs to pursue those issues through to conclusion. Per our recent discussions and news reports today that Florida may be receiving something like $2 billion in federal stimulus funding for infrastructure projects, I also mention below the issue of trying to get FPL to amend its tariff (or to get the PSC to amend FPL's tariff) so that we would not lose the GAF credit if federal support were in fact to come through. Accomplishments 1. The 25% GAF credit was approved by the PSC. Even though FPL had proposed it, there was substantial skepticism on the part of the Commission Staff and one or more Commissioners, and many of us believe that the efforts of our elected officials and city/town management carried the day in getting the PSC to approve the GAF credit, albeit as a pilot project. 2. Following negotiations with FPL, the PSC extended the availability of the GAF credit by a year, to agreements signed before October 30, 2009. 3. Following negotiations with FPL, FPL agreed and the PSC approved some less stringent eligibility criteria for the GAF credit. FPL has also proposed 3 tiers of credits now - no size minimum, 1 to 3 miles converted, and 3 or more miles converted to UG - although we still have issues with the strict application of the FPL-defined breakpoints. 4. FPL agreed to use local government rights of way for UG facilities, whereas their initial position was "No way, we've never done that, and we have to have easements." Mayor Falcone of Jupiter Island gets a lot of the credit for this success. 5. After the MUUC and Coconut Creek protested FPL's lack of GAF-type credits for new UG construction, FPL implemented such credits. 6. In the face of ambiguity within the PSC's rule, we successfully negotiated with FPL, and got the PSC to agree, in a declaratory statement, that where a city or town does the UG work itself, it will receive an appropriate payment from FPL based on the cost of the UG facilities constructed, plus applicable credits and less applicable debits. 7. After much correspondence and wrangling, FPL has thus far agreed to a 12% reduction in the "Direct Engineering, Supervision and Support" ("DESS") costs that it previously proposed to charge to municipalities where they do the UG work with their own or city-contracted forces. (We believe that we are entitled to another 40% reduction in this charge.) 1 Remaininq Issues The issues that remain to be litigated are as follows: 1. the appropriate credit for O&M cost savings provided by UG facilities, e.g., reduced tree- trimming costs - FPL's position is that O&M costs of UG facilities, other than storm restoration costs, are greater than for OH facilities, vs. our position that O&M cost savings should produce a saving of an additional 25% off the otherwise applicable CIAC charges; 2. FPL's proposal to divide the credits for Avoided Storm Restoration Costs into 3 "tiers" with credits of 5%, 10%, and 25% based on size of the project - this could be worth an additional credit up to 20% or 15% of the CIAC charge for a UG project that was just under the minimum size threshold to qualify for the full 25% GAF credit; 3. the "contiguous new and converted UG issue" for qualifying for the full 25% credit - this could also be worth 15% of the otherwise applicable CIAC; 4. the "DESS Costs" issue, i.e., the way that FPL allocates its common engineering and other costs where the Applicant performs the work - this is worth at least 40% of the otherwise applicable CIAC charge for work performed by city/town-hired contractors or internal forces; and 5. potentially the issue of getting FPL' tariff amended so that a municipality would not lose the GAF credit if it were otherwise able to obtain federal economic stimulus funding for a UG conversion project - this could be worth the entire GAF credit. In a memo to the MUUC membership on December 16, Schef Wright estimated the value of each of these issues (except the "federal stimulus funding" issue) and described how we would go about proving our positions in a formal hearing before the PSC. Costs of Further Efforts To pursue all remaining issues, including the "federal stimulus funding" issue mentioned above, including negotiations, if pursued, and litigating all issues, Young van Assenderp has proposed a Not To Exceed price of $140,000 in fees, plus normal out-of-pocket costs, and Power Services offered a Not To Exceed price of $56,000 in fees, plus normal out-of-pocket costs, which I am estimating at 10% of the fee amounts: This produces a grand total for which we are invoicing the MUUC's members of $215,600. I look forward to talking with you in our next conference call at 2:00 P.M. on Wednesday, February 4. 2 0, su"" City of Sunny Isles Beach City Commission Agenda 18070 Collins Avenue, Sunny Isle Beach, FL 33160 (305) 947-0606 Phone (305) 949-3] ] 3 Fax AGENDA BILL REQUESTED ACTION Staff recommends that the City Commission approve the third invoice/assessment from the Municipal Underground Utility consortium (MUUC) in the amount of $12,000 for the City's share of legal fees to represent local governments before the Public Service Commission. The Interlocal Agreement with MUUC was approved on February 15, 2007 with payments to date of $14,297. A transfer of funds from CIP Contingency to 20-600-5656 for the full amount will be required. BACKGROUND MUUC HISTORY: The fol/owing background information was provided by Tom Bradford, Deputy Town Manager, Town of Palm Beach. Mr. Bradford has been spearheading the MUUC organization since inception and instrumental in its success to date. The MUUC is a consortium of municipalities in Florida that have signed an interlocal agreement to memorialize our joint determination and efforts to mutually support the comprehensive evaluation of the life-cycle costs, cost-effectiveness, and efficacy of undergrounding electric utility facilities, and further to support any activities reasonably necessary to promote the our interests in issues relating to undergrounding electric and other utility and utility-type facilities, including, without limitation, participating in (a) utility tariff approval proceedings, rulemaking proceedings, and any other relevant proceedings before the Florida Public Service Commission, (b) legislative activities before the Florida Legislature or before any other legislative or quasi-legislative body in Florida having relevant jurisdiction, and (c) any other relevant proceedings and activities before any court, tribunal, executive agency, or other governmental entity having jurisdiction. Since each member entity is a political subdivision of the State, having police power we are committed to exercising that power in the interests of the public health, safety, and welfare. We believe that reliable, safe, and cost-effective electric distribution infrastructure, and other utility infrastructure, are critical to the public health, safety, and welfare. Funding required for this action: I Yes Transfer Required: I Yes Transfer from account number: I 20-600-5990 For the Commission Meeting of: May 21, 2009 Submitted by: Doug Haag Title: Assistant City Manager/Finance Approved by Finance Director: Doug Haag Approved by Acting City Manager: Rick Conner Source of funds: I 20-600-5656 Amount of Transfer: I To account number: I Initials: ~ $12,000 20-600-5656 Agenda Item Number Initials: ~ Initials: ~ {03 - Page 2 Our citizens know that underground electric distribution facilities experienced fewer and less severe outages during the hurricanes that struck Florida in 2004 and 2005 than did overhead facilities. We are deeply concerned about the reliability of the electric utility infrastructure and other utility infrastructure serving our citizens as provided by FPL. Accordingly, most of us have concluded that converting existing overhead facilities within our respective geographic boundaries to underground service is a step in the right direction in hurricane vulnerable Florida. The MUUC has funded a study to determine the true cost of underground service versus overhead service and this study found that FPL needed to provide a 51% credit to underground service applicants based on then current FPL cost differentials charged to underground service applicants based on documented operations and maintenance savings that accrue to FPL by virtue of underground electric delivery systems versus antiquated overhead systems. We attempted to negotiate a reasonable settlement with FPL on this issue to no avail. Thus, we are currently preparing for a hearing before the Public Service Commission on this and another similar type issue. Millions of dollars of public funds are riding on the outcome of this hearing. In the third quarter on 2009, we anticipate another formal evidentiary hearing before the PSC on outlandish corporate overhead charges that FPL has added to the cost of underground service requests. Naturally, FPL is not pleased with our efforts and has sought to thwart us at every step. Evidentiary hearings are our only recourse to reduce the cost of underground service in the FPL service area and overcome FPL's internal bias in favor of overhead service. The first item the funding request will be used for is formally objecting to the PSC decision to increase the cost of undergrounding instead of providing for a credit for the savings that underground service allows the utility to realize including avoided vegetation maintenance costs, reduced liability expenses by avoiding vehicular accidents with FPL utility poles and, of course, reduced electrocutions from overhead lines. Providing for an O&M credit to the contribution in aid of construction (CIAC)formula. Just as FPL realizes avoided costs associated with storm restoration when the customer is served by underground facilities, they also avoid numerous expenses in their operations and maintenance expenditures. An example of such is that there are virtually no vegetation maintenance expense incurred by FPL when systems are underground. There are no poles to maintain and replace after vehicles crash into them. No oxidation of facilities due to salt corrosion. There are other avoided costs as well. The study conducted by the MUUC consultants found this savings to be about 25%, the same savings realized from avoided storm restoration expenses and Page 3 provided to us via the GAF Tariff. FPL promised the MUUC, and confirmed this to the PSC staff, that they would deliver to the PSC in April 2008, their proposal for savings from O&M. FPL did not deliver a credit, FPL delivered a 1% increase in the cost of underground service. The MUUC objected to the tariff being implemented and now we must proceed with a full evidentiary hearing before the PSC to make the case for greater savings instead of an increase in the cost of underground service. The savings to be realized here is potentially the same that each community currently receives from the GAF Tariff (a 25% savings) that is in effect. The second item this funding request will pay for is extending the 25% credit to the new construction CIAC in circumstances where properties are being retrofitted with underground utility service at the same time as vacant tracts of land. Why should the vacant land portion of the project cost 25% more for underground service in such instances than the cost of converting existing utility facilities at existing properties? Negotiations with FPL were fruitless and amounted to foot dragging in the opinion of MUUC. Extending the 25% credit to the new construction contribution in aid of construction Numerous cities have encountered a situation where they want to do undeveloped areas (raw land about to be developed) with undergrounding at the same time they are converting existing developments to undergrounding, only to encounter a problem from FPL about extending the 25% credit to the areas being newly developed since that is not in the existing tariff. FPL was unwilling to work out this issue with the MUUC. We have one more issue that remains and it will not be taken up until the 4th quarter of 2009 and that is the corporate overhead add-on issue with FPL. Therefore, this is not the final payment request. You can anticipate the final payment request in FY 2010 for $12,000. That hearing should be over by April 2010. The current hearing which is the subject of the current payment request should be over by approximately September 2009. If you have additional questions after reading this email, please feel free to contact me. We need all of the financial help we can get now and in the future to enable local government in the FPL service area to deliver more affordable underground utility service.