PURPOSE

Staff is seeking authority to enter into a Request for Capital Additions to Upgrade Receiving Station E, DWP No. BP 03-008 made under the framework of an existing Interconnection Agreement DWP No. 10132 between the City of Burbank and the City of Los Angeles (Interconnection Agreement).

BACKGROUND

BWP is constructing the Magnolia Power Project (MPP), a 310 megawatt generating facility that will deliver power to the cities of Anaheim, Cerritos, Colton, Glendale and Pasadena, as well as to Burbank customers. MPP power to these other cities will flow through the electrical systems of Burbank Water and Power (BWP) and Los Angeles Department of Water and Power (LADWP), increasing the potential short circuit currents (fault duties) that could occur at LADWP�s Receiving Station E (RSE) and, to a much lesser extent, other LADWP facilities.

BWP and LADWP have been crafting a facilities agreement that would allow MPP power to flow through LADWP�s system in return for BWP paying $3.5 million in mitigation costs.  It is expected that the final agreement will be available before the Council meeting.  The Southern California Public Power Authority (SCPPA) will fully absorb BWP�s $3.5 million share so that BWP will incur no cost.  SCPPA will advance the funds to Burbank, which will then pay LADWP.

Under the Construction Management and Operating Agreement between SCPPA and Burbank, BWP is the operator of MPP on behalf of the SCPPA, the owner of the MPP facility on behalf of all the participants.  The existing Interconnection Agreement between BWP and LADWP, as well as a long-standing history of cooperation between these municipal utilities, made it easier for the facilities agreement to take the form of a Request under this Interconnection Agreement rather than under a new agreement with SCPPA.

ANALYSIS

Early discussions had estimated mitigation costs from MPP as high as 100% of $30 million, but later analysis had reduced the total mitigation cost to $13,760,000 at RSE and about $2.5 million at other LADWP facilities. Other events besides MPP are increasing fault duties in the LADWP system, and so only a percentage of these costs would be attributable to the impact of MPP. Determining this percentage involved a measure of judgment as well as specialized engineering calculation (paid for by MPP), and was the subject of much negotiation between BWP and LADWP.

LADWP intends to mitigate the increase in its fault duties mainly by installing new circuit breakers at RSE that can safely withstand higher short circuit currents, at a firm cost of $13,760,000.  In order to enable the facilities agreement to take the form of the Request, all of the necessary MPP mitigation measures were deemed to take place at RSE.  Initial calculations had MPP�s percentage responsibility at 26% to 28%, but refinements in both the mitigation costs and the calculated fault duties lowered the percentage to less than 26%. BWP and LADWP agreed to a final negotiated cost of $3,500,000, representing a percentage responsibility of 25.436%. (Note: The $3.5 million also covers the case where BWP maintains normally closed ties with Glendale.)

LADWP pledges to complete the work at RSE by March 1, 2005, which ties in well with MPP�s own schedule of testing and operation.  LADWP further pledges that, should it fail to complete its work by this date, BWP will nevertheless �have the right on March 1, 2005 to test and operate the Magnolia Power Project generating units and operate the 69,000-volt ties between Burbank and Glendale in a closed fashion.�

FISCAL IMPACT STATEMENT

Council approval of this Request has no negative fiscal impact on the City.

RECOMMENDATION

Staff recommends that the City Council authorize the General Manager of Burbank Water and Power to execute the Request for Capital Additions to Upgrade Receiving Station E, DWP No. BP 03-008, made in accordance with Interconnection Agreement DWP No. 10132 between the City of Burbank and the City of Los Angeles.

GLS:gls:gm

Facilities agrmt-staff report 4-13-04.doc

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