Pasadena Water and Power APPROVE A PROJECT CONTINGENCY AMOUNT OF $2,500,000 FOR EXISTING CONTRACTS RELATED TO THE LOCAL GENERATION REPOWERING PROJECT - PHASE II; INCREASE THE BUDGET BY $5,000,000; AND APPROVE AN ADDITIONAL APPROPRIATION OF $10,000,000 City Council September 29, 2014

Pasadena Water and Power 2 Site Pictures - GT-5 Repowering Project August 4 – 8, 2014

Pasadena Water and Power 3 Site Pictures - GT-5 Repowering Project Last Friday, Sept. 26 th, 2014

Pasadena Water and Power Site Pictures - GT-5 Repowering Project 4 Last Friday, Sept. 26 th, 2014

Pasadena Water and Power Recommendations For GT5 Repowering Project 1.Approve a project contingency of $2.5 million for six existing contracts.  City Manager to authorize expenditures 2.Increase budget by $5 million from ~$132 to ~$137 million 3.Increase FY2015 appropriation by $10 million … Increase $88 million (approval up to FY2015) to $98 million i.$ 5 million by new appropriation; and ii.$ 5 million by transferring amounts from the currently budgeted and appropriated capital projects related to the local power plant 5 Financing Interim - planned LOC Long term – Electric Revenue Bonds

Pasadena Water and Power Budget, Appropriation, Workplan, Funding and Financing Project Budget: The estimated cost of the project …. Can not be spent without Appropriation approved by the City Council. Appropriation: The funds that can be expended on the project. Workplan: Projected annual cash flow (payments) against expenses Fund: Pasadena Light and Power Fund maintained exclusively for the electric utility operations and capital projects in accordance with the City of Pasadena Charter Financing: Source of funds i.e. equity and/or Electric Revenue Bonds issued by the Light and Power Fund 6

Pasadena Water and Power Project Contingency of $2.5 million 7 ContractorsWork DescriptionBase ContractContingency Total Contract (not to exceed) Power Engineers Owner's engineer$3,000,000$0$3,000,000 Worley Parsons Air permitting$310,500$20,000$330,500 PCR Services Corp. CEQA study and EIR$211,997$21,110$233,107 GE Package Power Power Island Equipment$60,494,529$1,376,000$61,870,529 Process Unlimited International Project and construction I management $3,004,000$300,000$3,304,000 ARB, Inc. Balance of Plant design I t and construction $55,661,973$0$55,661,973 Total$122,682,999$1,717,110$124,400, Individual contract contingency amount will be used prior to using Project Contingency for that contract. 2. City Manager authorized to expend the Project Contingency. 3. Monthly report to MSC about the expenditure status of Project Contingency.

Pasadena Water and Power Increase Budget by $ 5 million 8

Pasadena Water and Power Proposed Funding For GT-5 Project 9 Proposed Funding for the Repowering ProjectCurrent ProjectionProposed Projection Equity Fund$20,000,000 Debt (Electric Revenue Bond Issuance) a. 2013A Bonds $55,000,000 b. Planned Letter of Credit and subsequent Electric Revenue Bond issuance $56,904,183$61,904,183 Total$131,904,183$136,904,183

Pasadena Water and Power Increase FY2015 Appropriation by $ 10 million 10

Pasadena Water and Power Financing for $10 million Appropriation 1.$ 5 million by new appropriation; and 2.$ 5 million by transferring amounts from the following local power plant capital projects 11

Pasadena Water and Power Back Up Slides 12

Pasadena Water and Power Future Administrative and Misc.. Costs 13 Misc. Contracts, Purchase Order and Admin Cost Estimated CostRemarks Geotech $25,000 Legal Fees $100,000 CalARP Program Revision $25,000 PWP Labor and Material Cost $566,242 PSLF Model $10,000 Post Completion Noise Survey $50,000 Distribution /Transmission System Upgrades $500,000 Potentially required by Southern California Edison Polisher Rental $50,000 Local Hire/Buy Local Misc. Exp. $5,375 Air Permitting Consultant $25,000 Acceptance Testing Consultant $25,000 Public Outreach $25,000 PCR Outstanding Claim $100,000 Sub Total $1,506,977 Breakdown for Miscellaneous Contracts, Purchase Order and Administrative Costs

Pasadena Water and Power Currently Approved Contracts 14 Currently Approved Budget$131,904,183 Approved Major Contracts and Committed Expenditures Contractors/expensesBase ContractContingencyTotal Contract Power Engineers$3,000,000- Worley Parsons$310,500$20,000$330,500 PCR Services Corp.$211,997$21,110$233,107 GE Package Power$60,494,529$1,376,000$61,870,529 Process Unlimited International$3,004,000$300,000$3,304,000 ARB, Inc.$55,661,973- Other Contracts, P.O’s and Art Funding (1% construction) $1,321,217 PWP Labor and Material Cost$1,892,400 Local Hire Consultant$83,479 Sub Total$125,980,095$1,717,110$127,697,205 Uncommitted remaining balance ($131,904,183 - $127,697,205) = $4,206,978

Pasadena Water and Power $5 million Transfer 15 Table 1: DETAIL OF PROPOSED FY 2015 CIP BUDGET AMENDMENTS CIP#Description Appropriations Available for FY 2015 Planned expenditure through FY 2015 Remaining appropriations through FY 2015 FY 2015 Proposed Amendment Adjusted Appropriations Through FY 2015 Impact on the Project AdditionsReductions 3194Local Generation Repowering Project - Phase II$88,052,430 $5,000,000 $93,052, Power Production Facility Improvements$870,243$120,000$750,243 ($48,042)$822,201No material impact 3149B-3 SCR Catalyst Replacement$550,000 ($550,000)$0 Recent testing showed satisfactory performance of the SCR catalyst which may not require replacement prior to B-3 retirement in FY GT-3 and GT-4 Renewals, Replacements, and Improvements $715,807$90,000$625,807 ($625,807)$90,000No material impact 3182 GT-1 & GT-2 Renewals, Replacement, & Improvements $3,926,151$150,000$3,776,151 ($3,776,151)$150,000 Major upgrade will be deferred to FY 2016/17 depending on the decision to repair GT2. Sub Total$94,114,631 $5,000,000($5,000,000)$94,114,631 Zero net change Zero Net Change in appropriations through FY 2015

Pasadena Water and Power Increase FY2015 Appropriation by $ 10 million 16

Pasadena Water and Power Possible Scenario For schedule Interruption 17 Examples of needs for services that could jeopardize project schedule if there is no unused contingency in the approved budget DatesCity Council ApprovalAmount Remaining Uncommitted Funds in the approved $132 million budget Need City Council approval for Budget increase Does project stop for lack of Budget approval 9/23/2014 Already approved, $132 million budget $4,206,978No 9/29/2014 Project Contingency (pool of contingency for 6 existing approved contracts) $2,500,000$1,706,978No 10/29/2014, expected Gas meter/pipe upgrade contract $2,000,000-$293,022Yes, by 293,022No 11/1/2015, hypothetical but possible Geotech consultation (sudden need due to soil condition encountered during excavation) $5,000-$5,000Yes, by $5,000 Yes, could be avoided by issuing a Purchase Order by staff provided there were sufficient funds in the unused contingency 11/11/2015, hypothetical but possible Outside attorney fee to prepare response to Court in CEQA lawsuit $25,000-$25,000Yes, by $25,000 Yes, could be avoided by issuing a Purchase Order by staff provided there were sufficient funds in the unused contingency