Power Enhancement Agreement Case Analysis

Good Essays
On May 25, 2016, the Manager met with YCWA General Manager Curt Aikens to discuss finalizing the Power Enhancement Agreement.

Consistent with the previous meeting with the YCWA POD Committee, the Agency does not wish to explore the splitting of Gross Revenue and is citing several factors as the cause. The first is the 1990 Agreement that created the groundwork for the 2016 Agreement. The second, and perhaps most critical to each of our interests, is the growing prospect of other entities challenging YCWA’s, and to some degree, BVID’s exclusivity to power generation. From that perspective, it can be argued that it is in each of our interests to rely on the precedent set by previous Agreements opposed to establishing a new method that could
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The philosophy is that there will be an established history of costs and that each of the current unknowns will become clearer.

BVID’s Maintenance Costs: Similar to how YCWA will include the costs of power generation to determine the Net Revenue Factor, BVID will recover its costs associated with maintaining the District’s water right in a likewise fashion. What this means is that all costs associated with our water right (SWRCB fees, consultant expenses, etc.) will be reimbursed from the Gross Revenue.

Ancillary Services: YCWA receives revenue from the up and down regulation of generation, otherwise known as “ancillary services.” These revenues would not normally apply to BVID’s water because the 47.2 CFS is a constant amount, going through the powerhouses at all times. However, YCWA has agreed to include BVID’s water to be associated with ancillary services, which will be factored into the equation to be split with
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Because of this, and depending on the river flow requirements, there are times that YCWA will not generate any revenue at those facilities. However, YCWA will credit BVID the commensurate amount of our 47.2 CFS as though it was generated by YCWA. This will be accomplished through the accounting of how much acre-feet our water right yields per year (38,682.5 AF total).

Outages: YCWA will continue to credit BVID the commensurate amount the 47.2 CFS would have generated despite any facility outages that span 30 days or less. Again, this will be accomplished through the accounting of how much acre-feet our water right yields per year (38,682.5 AF total).

No Carryover of “Less than Zero” Balance: YCWA will not compel BVID to carryover any costs that result in a revenue of “less than zero” into the next year. There may be times that the costs of the facility exceed the revenue generated (2015 was a good example). When this occurs, BVID will not incur any negative balance and the next year will begin at a zero

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