OMI - THAMES WATER, INC ANNUAL SETTLEMENT STATEMENT CONTRACT YEAR 3 Municipal Utilities Department January 30, 2007 Agenda Item 6.06

SERVICE CONTRACT Section 13.10 of the Service Contract between the City and OMI-Thames allows for an Annual Settlement Statement Statement summarizes reimbursable costs for work not compensated in the monthly billings This is the Year 3 statement and contains three reimbursement requests

SETTLEMENT REQUEST 1) Underground Account: Encroachment Permits paid by OMI but are City responsibility - $199,241 Kirkby Avenue Water Line failures - $123,220 Sewer Lateral replacements - $280,956 Small Meter replacements - $406,780 2) Siloxane for Co-Gen engines - $45,191 3) PG&E Reimbursement – ($199,487)

1) UNDERGROUND ACCOUNT Underground account initially set at a minimum $650,000 per year and adjusted annually by the Consumer Price Index (CPI) factor (paid as part of Service Contract Fee) To repair underground pipe breaks & repairing or replacing underground pipes susceptible to rupture Expenses over $650,000 are reimbursed through the Annual Settlement Statement OMI’s Underground request is $1,010,197

Major Underground Items Encroachment Permits: $199,241 paid by OMI but responsibility of City per Service Contract Kirkby Avenue Water Lines: $123,220 Sewer Laterals: $280,956 Small Meters: $406,780 (under negotiation between the City and OMI)

UNDERGROUND ACCOUNT SPENDING Expense Category Contract Year 1 Year 2 Year 3 TOTAL Maintenance & Repair $298,740 $763,637 $1,172,887 $2,235,265 Project Costs $0 $470,889 $1,643,776 $2,706,154 Must-Spend Amount $595,833 $660,920 $675,725 $1,932,478 Subtotal Over (Under) ($297,091) $102,717 $968,051 $773,675 Less Small Meters ($131,287) ($183,331) ($87,162) ($406,780) Underground Acct Over (Under) Spending ($428,379) ($85,615) $880,889 $366,895

UNDERGROUND ACCOUNT SPENDING The City Auditors Office audited OMI – Thames accounting procedures for this account Met competitive bidding requirements for obtaining contractors Maintained supporting procurement documents No administrative overhead charges

OTHER SETTLEMENT ITEMS Siloxane Costs for Co-generation facility: $45,192 At contract commencement City remained responsible for testing and maintenance of the siloxane system (generator fuel scrubbing system) This included $45,192 expended on media replacement and laboratory testing of the methane gas OMI – Thames Water assumed responsible for all maintenance and testing on January 2006

OTHER SETTLEMENT ITEMS PG&E Credit to the City for bills paid after implementation of Service Contract: ($210,605)

ANNUAL SETTLEMENT STATEMENT Category OMI Request Staff # 1) Underground Account $1,010,197 366.895 2) Other: Siloxane Costs $45,192 Subtotal $1,055,389 $412,087 3) PG&E Credit ($199,487) ($210,604) GRAND TOTAL $855,902 $201,483

CURRENT UNDERGROUND ACCOUNT STATUS Month Emergency Repairs Projects TOTAL July 06 $147,425 $15,822 $163,247 August 06 $189,466 $7,680 $197,146 September 06 $127,365 $11,063 $138,428 October 07 $191,616 $8,756 $200,372 November 06 $206,138 $12,716 $218,854 December 06 $133,955 21,432 $155,387 $995,965 $63,469 $1,073,434 Year-End Estimate $1,990,000 $127,000 $2,117,000

RECOMMENDATION Adopt a resolution authorizing the City Manager to reimburse OMI-Thames Water Stockton, Inc. $201,483 for costs incurred during the first three years of the Service Contract for operations and maintenance of the utilities.

ANNUAL SETTLEMENT STATEMENT Questions?