Portland - Regional Water Sales Agreement (10 Year) Regional Water Sales Agreement (10 Year)
April 3,2006
Page 1
THIS AGREEMENT is entered into by and between City of
Tigard , herein called "Purchaser,"and the CITY OF PORTLAND, a
municipal corporation of the State of Oregon, herein called "City.
The parties recite:
A. Purchaser is a municipal corporation of the State of Oregon and is authorized by its
charter or by state law or both to operate a municipal water system. .
B. City is a municipal corporation of the State of Oregon and is authorized by Chapters 2
and 11 of the Charter of the City of Portland to maintain water works for the furnishing of water
to the city, its property, its inhabitants, and to non-inhabitants. The Council of the City is further
authorized to enter into contracts for the supply of water by the city and to sell water to persons,
public and private,outside the city, on terms and conditions the Council finds appropriate.
C. City is further authorized by Section 2-105(a)4 of its Charter to enter into agreements,
without limitation as to term, as the Council finds appropriate for cooperation,,consolidation.and
maintenance of services with any other public corporation or unit of government.
D. ORS 190.003 to 190.110 authorize units of local government to.enter into
intergovernmental agreements for the performance of their duties or for the exercise of powers
conferred upon them.
E. The service and commodity provided by City pursuant to this Agreement are a special
contract service and are,not.provided by City as a common utility service.
Regional Water Sales Agreement (10 Year)
April 3 2006
Page 2
SECTION 1 —NATURE OF SERVICE
A. Subject to the terms and conditions contained herein, City agrees to furnish and sell,and
Purchaser,agrees to purchase a firm supply of potable water on an annual basis for the life
of this Agreement. The City further agrees to furnish and sell an interruptible supply of
water to be made available for purchase at the City's discretion subject to terms of this
agreement.
B. Water is to be delivered to the purchaser at the place or places, at such pressure or
pressures, and at such'flow rate or flow rates as are set forth on Exhibit'l. Provided that
the City is not obligated to meet Purchaser's demands for water during any period of time
that Purchaser operates its system not incompliance with operational rules established
pursuant to Section 4.1).1.
C. The City shall deliver water to the purchaser from the same source or sources of water
that City delivers to City inhabitants. The City shall meet all applicable drinking water
regulatory requirements up to,the purchaser's point of delivery.
D. Purchaser's supply of water shall be reduced or terminated only in accordance with the
terms.of this agreement.
E. Purchaser recognizes and agrees that no liability for damages shall attach to the City on
account of any failure of supply or changes in pressure, flow rate, or water quality due to
circumstances beyond the reasonable control of the City acting in accordance with
standards of care common and usual in the municipal water supply industry. Examples of
such circumstances include, but are not limited to, natural events such as earthquakes,
landslides and floods, and human-caused events such as terrorism, malevolent acts,
contamination of the water supply, and acts of war.
F. The parties agree and acknowledge that the City of Portland is the owner and operator of
the water supply, storage, transmission, and treatment system, and all facilities and
infrastructure associated with the storage, treatment, transmission, and distribution
systems used in its utility operations. The purchase of water or any other commodity or
service under this agreement shall not constitute purchase of ownership rights to water or
any portion of the water system owned and operated by the City, except as may be
specified herein or may be established by separate agreement. Nothing in this agreement
shall preclude the parties from entering separate agreements involving joint ownership or
joint operation of system elements.
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Regional Water Sales Agreement (10 Year)
April 3 2006
Page 3
SECTION 2—WATER REGULATIONS
A. Purchaser hereby agrees to abide by and be bound by the terms and provisions of Chapter
21.28 of the Code of the City of Portland, Oregon, as it presently exists or as may be
amended to comply with federal and state law, during the life of this agreement,to the
extent to which such terms and provisions do not conflict with any material provisions of
this agreement.
• Regional Water Sa. Agreement(10 Year)
April 3 2006
Page 4
SECTION 3—DURATION OF AGREEMENT AND RENEWAL
A. Initial Term
This agreement shall become effective on.July 1.of 2006 and shall continue in effect thereafter
under the terms of this section, unless terminated as provided herein. Each"contract year"shall
run from.July 1 through June 30.
B. Initial Five Year Non-Renewal Notice
At any time during the five-year period from July 1, 2011, through June 30, 2016, either party
may give a written notice of non-renewal. If such notice is issued, the contract will terminate on
the next June 30 at least five years but not more than six years from the date of the notice.
C. First Renewal in 2016
If neither party gives notice of non-renewal on-or after July 1,2011, and prior to July 1, 2016, the
contract shall continue for another ten years,through June 30, 2026.
D. Subsequent Renewals After June 30,2026
If this contract is renewed pursuant to Subsection 3.C. above, then the contract shall also be
repeatedly renewed for ten year intervals after June 30,2026,and every ten years thereafter,
unless one of the parties gives a notice of non-renewal under the terms of Subsection.E below.
E. Five-Year Non-Renewal Notice
Either party may provide a written non-renewal notice any time during the second five years of
each ten-year renewal period. If either party gives a notice of non-renewal during the non-
renewal notice period, the contract will terminate on the next June 30 at least five years but not
more than six years from the date of the notice.
For example, if this contract is renewed through June 30, 2026, pursuant to Subsection C above,
then the non-renewal notice period during that term of the contract shall run from July 1, 2021,
through June 30,2026. If either party gives written notice of non-renewal during that period of
time, the contract shall terminate on the next June 30 five years or more but less than six years
from the date of the notice. If no party gives notice of non-renewal during that period, the
contract will be automatically extended through June 30,2036. If the contract is extended to
June 30, 2036, the next non-renewal notice period would then run from July 1, 2031, through'
June 30, 2036.
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 5
SECTION 3—(Continued)
F. Effect of Renewals on Cost Cap and Supply Reliability
The five-year period used to judge the City's compliance with the cost cap established by
Subsection 7.I. shall be restarted at each renewal of this contract. The ten-year period used in
calculating the City compliance with its reliability obligations described in Section 5.F.2 shall be
restarted at each renewal of this contract.
Regional Water Sa._._ Agreement (10 Fear)
April 3 2006
Page 6
SECTION 4—WATER MANAGERS ADVISORY BOARD
A. General
A Water Managers Advisory Board (WMAB)shall be established no later than thirty (30)days
after five or more Purchasers have approved a Water Sales Agreement with'the City that includes
this provision, and will continue during the term of this agreement. Purchaser is eligible for.
participation in the WMAB. The WMAB shall consist of two representatives of the City Bureau
of Water Works, to be named by the Administrator,and one representative of each participating
entity that has signed a contract to purchase water from the City containing a provision allowing
its participation on the WMAB. The City of Portland Water Bureau will provide staff support to
the WMAB and will be responsible for keeping the official records.
B. Meetings and Bylaws
The WMAB shall meet regularly to communicate with and make recommendations to the
Administrator regarding matters relating to the City's sale of water to participating purchasers.
The W1%4AB may adopt such bylaws concerning its organization and governance as a majority of
the membership shall see.fit. The role of this Board is advisory in nature and, except as specified
herein, no rule, bylaw,or action of the WMAB may alter any term of this agreement.
C. Committees
The WMAB shall be responsible for establishing committees as needed to address ongoing
needs, which may include:
1. Water Resource Conservation—Possible responsibilities for such a committee are
outlined in Section 13 —Water Resource Conservation;
2. Operations Coordination—Possible responsibilities for such a committee may
include coordinating supply system routine and emergency operations among the
City and its wholesale Purchaser with the goal of providing efficient and cost-
effective system operations; and
3. Other committees, as identified by the WMAB.
D. Creation of Operating and Information Standards
1. The WMAB shall recommend to the Administrator standard water system
operating practices necessary or advisable to enhance the efficiency, reliability,
and cost-effectiveness of the supply, transmission, and storage of water provided
under this agreement. These standard operating practices will address issues such
as, but not necessarily limited to, forecasting seasonal demands, forecasting peak
demands, managing the system to minimize the impact of peak demand periods,
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Regional Water Sales Agreement (10 Year)
April 3,2006
Page 7
SECTION 4—(Continued)
security and emergency management, use of storage, and timing of deliveries of
water. Pending recommendations from the WMAB,the Administrator shall adopt
interim operating practices and upon receipt of the recommendations,the
Administrator shall adopt.the recommendations,with such alterations as he or she
deems necessary or advisable. The Purchaser agrees to operate its system in a
manner consistent with such established operating practices and in keeping with
responsible use.of the City's water supply system.
2. The WMAB shall recommend to the Administrator what information and data he
or she shall require each participating Purchaser to provide, in order to allow
efficient, reliable, and cost-effective provision of water under this Agreement.
The Administrator shall adopt these recommended information requirements, with
such alterations as he or she deems necessary or advisable. Such information may
include,but is not necessarily limited to:
(a) ' System maps with mains, pump stations,tanks, and supply conriec ions;
(b) Connections and usage from other supply sources;
(c) Total existing and new service connections by category;
(d) Key benchmarks to be identified by the Operations Group such as but not
limited to standards for operational norms,notification deadlines,
protocols for communication;
(e) Water quality data;
(f) Purchaser facilities' standards for operation to minimize peak and
emergency events;and
(g) Emergency contact information for each provider and any agreements that
have been signed by individual providers to address emergency response.
3. The WMAB shall periodically evaluate Purchasers' compliance with the.
information requirements and standard operating procedures and shall provide the
Water Bureau Administrator with findings and recommendations to assure
ongoing compliance.
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Regional Water Sa agreement (10 Year)
April 3, 2006
Page 8
SEC'T'ION 4—(Continued)
E. Rate Review
In order to provide timely notification to Purchaser of proposed changes in rates, charges, and
rate design and an opportunityfor Purchaser to evaluate such proposals and be heard before the
City Council, City agrees that the following steps shall be taken annually.
1. Capital Improvement Program.
(a) On an annual basis, Purchaser, through the WMAB, shall be invited to
participate in development of that portion of the Water Bureau's Capital
Improvement Plan addressing capital improvements used to serve
Purchaser or other participating Purchasers;
(b) Capital planning will take place in a manner sufficiently timely to ensure
Purchaser effective participation in the City's capital budget deliberations
each year;
(c) City,and WMAB will identify criteria to be considered in prioritizing
capital improvement projects. City will also hare its proposed ranking of
projects for funding and completion and its proposed schedule for such
capital improvements. Purchaser will be provided reasonable opportunity
to present suggestions and recommendations for changes to the proposed
Capital Improvement Plan, specific capital projects, and for improvements
in the capital planning and financing process;
(d) At a minimum, the City will host at least one meeting a year to discuss the
Water Bureau's Capital Improvement Plan on a schedule sufficient to
allow`Purchaser participation in the City's capital budget deliberations
each year.
2. Operation& Maintenance Budget
(a) On an annual basis, Purchaser, through the WMAB, shall participate in
review of the Water Bureau's Operations and Maintenance budget for the
water supply system used to serve Purchaser or other participating
Purchasers;
(b) Water:Bureau O & M budget development and review will take place in a
.manner sufficiently timely to ensure Purchaser effective participation in
the budget deliberations each year;
(c) The WMAB will be.provided the opportunity to participate in the budget
development and review process,including steps such as:
Regional Water Sales Agreement (10 Fear)
April 3, 2006
Page 9
SECTION 4—(Continued)
(i)The Administrator will report to WMAB at the commencement of annual
financial plan and budget preparation, and report each monthto the WMAB on
progress in the budget preparation and any particular budgetary issues or concerns
related to that paruof the water supply system used to serve the Purchaser and
other members of the WMAB. Reports may be in writing or at WMAB meetings.
(ii)A reasonable time, but no less than two weeks, prior to submission of the
Water Bureau budget to the Mayor,the Administrator shall report to'the WMAB
on the current state of budget and financial plan preparation and provide his or her
best estimate of the final budget for submission to the Mayor related to that part of
the water supply system used to serve the Purchaser and other members of the
WMAB and shall consult with the WMAB about the budget to be proposed to the
Mayor.
(iii)The Administrator will provide WMAB a presentation concerning,the^Water
Bureau budget request to the Mayor and the Water Bureau financial plan for the
following fiscal year and provide copies of the budget request.and financial plan
for review and comment. The budget request and the financial plan will be made
available to WMAB on or as soon as reasonably possible after the date they are
submitted to the Mayor.
(iv)The City will advise Purchaser in writing of significant changes in the
proposed Water Bureau Budget after its submission to the Mayor.
(v) When the City Bureau of Water Works files its annual rate ordinance with the
City Council Clerk, a copy of said ordinance will be forwarded to Purchaser,
accompanied by a letter giving the dates on which the City Council is scheduled to
consider rates.
3. Purchaser,through the WMAB,may offer comments on the annual rate ordinance
in writing or in personal testimony before the City Council.
F. Protection of Confidential Information
Information submitted to or produced by the WMAB or otherwise exchanged by the
parties to this Agreement and similar wholesale water agreements may include documents related
to the vulnerability or security of water supply systems. The parties agree that if either receives a
public document request for such information,the party receiving that request shall, prior to
release of any documents, expeditiously notify the entity about whose system information is
sought and shall,in addition, assert all applicable exemptions to release of the documents
available under the Oregon Public Records Law.
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Regional Water Sa., Agreement(10 Year-) -
April 3, 2006
Page 10
SECTION 5—GUARANTEED PURCHASE WATER QUANTITIES
A. General Guaranteed Purchase Payment Obligations
Unless excused by some other provision of this Contract,Purchaser agrees to pay City each year
a sum of money(its"guaranteed purchase payment')equal to the annual water rate applicable to
Purchaser for that year times the Purchaser's"guaranteed purchase"quantity of water. Payments
shall be made as provided in Section 15, Billing and Payment.
B. Guaranteed Purchase Quantities And Peaking Factors
1. Guaranteed Purchase Quantity. For purposes of calculating annual rates and
determining Purchaser's minimum payment, Purchaser's guaranteed purchase
quantity (expressed in annual average daily demand and in total monthly
demands) shall be the quantity identified in Exhibit 1 to this contract, unless
changed pursuant to the terms of this contract.
2. Seasonal Peaking Factor.
A. Except as otherwise provided in this agreement; for purposes of calculating
monthly demands and annual rates and determining Purchaser's minimum
payment, Purchaser's "seasonal peaking factor"shall be the seasonal peaking
factor identified in Exhibit 1 to this contract unless changed pursuant to the terms
of this contract. "Seasonal peaking factor"is the ratio of the Purchaser's
guaranteed purchase average daily demand:placed on the City system during the
"peak season"to the Purchaser's guaranteed purchase annual average daily
demand. For this calculation"peak season" is the period of time from July 1
through September 30. For purposes of ratemaking and calculating monthly
demands, the seasonal peaking factor excludes purchases of interruptible water.
b. For purposes of Section 5 of this agreement,the Purchaser's "actual seasonal
peaking factor"shall be the ratio of the Purchaser's actual average daily demand
placed on the City system during the peak season (as determined from City water
supply data)to the Purchaser's guaranteed purchase annual average daily demand.
3. Daily Peaking Factor.
a. Except as otherwise provided in this agreement, for purposes of calculating
annual rates and'determining Purchaser's minimum payment, Purchaser's "daily
peaking factor"shall be the daily peaking factor identified in Exhibit 1 to this .
contract unless changed pursuant to the terms of this contract. "Daily peaking
factor" is the ratio of the daily average derived from the Purchaser's highest three
consecutive days of purchases to its annual average daily demand for the contract
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 11
SECTION 5—(Continued)
year. For purposes of ratemaking and calculating monthly demands, the daily
peaking factor excludes purchases of interruptible water.
b. For purposes of Section 5 of this agreement, the Purchaser's"actual daily
peaking factor"shall be ratio of the daily average:derived from.the Purchaser's
actual highest three consecutive days of purchases (based on City data)to its
guaranteed purchase annual average daily demand for the contract year.
C. Changes In Guaranteed Purchase Quantities
1. Reductions In Guaranteed Purchase Quantities
Except as specifically provided for in this contract, Purchaser's guaranteed purchase quantity
may not be reduced during the term of this contract except by a contract amendment.
2. Increases in Guaranteed Purchase Quantities
On any March 15 during the term of this contract, Purchaser may request that.its guaranteed
purchase quantity be increased. The Administrator may accept or reject such request, in whole or
in part. The Administrator shall respond to any request for an increase in guaranteed purchase by
May 1 of the same year the request is made. Unless otherwise agreed by Purchaser and the City,
any increases in guaranteed purchase agreed to under this provision shall be effective for the
remaining term of the contract.
If on any March 15,more than one Purchaser under a similar wholesale water agreement requests
an increase in guaranteed purchase and the Administrator determines that he or she can prudently
approve some increase in guaranteed purchases,but cannot approve all pending requests in total,
then the Administrator may grant such overall increase in guaranteed purchase as he or she
deems prudent, provided that when granting partial approvals of more than one request,the
Administrator shall grant such approvals in proportion to the then existingguaranteed purchase
quantity of each requesting Purchaser compared to the total of then existing guaranteed purchase
quantities of all requesting Purchasers. If the Administrator cannot grant Purchaser's original
request in total,the Purchaser may elect to withdraw its requested increase in guaranteed
purchase quantity. All increases,in guaranteed purchase quantities shall be confirmed in writing
and signed by both parties.
3. Transfers of Guaranteed.Purchase Quantities
With approval of the Administrator, which shall not be unreasonably withheld, Purchaser may
alter its guaranteed purchase quantity(and its guaranteed purchase obligation) by transferring all
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Regional Water Sa Agreement (10 Year)
April 3, 2006
Page 12
SECTION 5—(Continued)
or some of its guaranteed purchase quantity to another municipal entity with a valid similar
wholesale water agreement with the City. Withholding approval shall be deemed reasonable in
the following circumstances only:.the Administrator determines that the transfer would require
changes in the City water system infrastructure or-reduce the reliability of the water supply
system. In these two circumstances,nonetheless, the Administrator shall endeavor to approve
transfers with such conditions as he or she deems necessary or advisable to.avoid the need to
make changes in the City water system infrastructure or reduction in the reliability of the water
supply system.
4. Sale of Guaranteed Purchase Water
Purchaser may sell water purchased from the City as part of its guaranteed purchase quantity to
other water suppliers, upon approval of the Administrator,which will not be unreasonably
withheld. Withholding approval shall be deemed reasonable in the following circumstances
only: the Administrator determines that the transfer would require changes in the City water
system infrastructure,or reduce the reliability of the water supply system. In these_two
circumstances,nonetheless,the Administrator shall endeavor to approve sales of water with such
conditions as he or she deems necessary or advisable to avoid the need to make changes in the
City water system infrastructure,or reduction in the reliability of the water supply system.
D. Changes in Seasonal Peaking Factor
1. Requested Changes to Seasonal Peaking Factor
Subject to limitations of Section 5.D.2(a)below, at any time prior to December 1 of each year of
the second through fifth year of this contract, Purchaser may request in writing that its seasonal
peaking factor for Years 3 through 6 of this Contract be changed from that identified for Year 1,
as set out in Section 5.B.1(b)above. Purchaser's requested seasonal peaking factor shall be no
less than the average of the Purchaser's actual seasonal peaking factor for the previous years
under this contract.
Prior to December 1 of Contract Year 6 and every year thereafter,Purchaser may request in
writing a change in Purchaser's seasonal peaking factor. Any requested change shall take effect
on the first day of the next contract year and shall continue as Purchaser's seasonal peaking
factor thereafter unless changed pursuant to the terms of this contract. Purchaser's requested
seasonal peaking factor shall be no less than the average of the Purchaser's actual seasonal
peaking factor forthe five previous years under this contract..
Upon receiving such a request,the City shall adjust the Purchaser's seasonal peaking factor.
unless the Administrator determines that to do so would reduce the reliability of the water supply
system.
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 13
SECTION 5—(Continued)
2. Excess Seasonal peaking factors
(a) Except as provided in Section 5.D.2(b)below,if in any,year Purchaser's
actual seasonal peaking factor exceeds by more than 10%the seasonal
peaking factor set by the terms,of this contract for the purposes of
calculating rates in that year,the Administrator shall recalculate'the year's
rates and in the next available contract year shall impose on the Purchaser
a surcharge equal to the difference in the Purchaser's guaranteed purchase
payment under the original rates and the Purchaser's guaranteed purchase
payment under the rates as recalculated using the Purchaser's actual
seasonal peaking factors. When calculating rates for the year in which the
surcharge is to be collected, the City shall treat the surcharge as an offset
to the otherwise estimated annual revenue requirements for all wholesale
and retail customers of the system. The Administrator may also increase
the.Purchaser's seasonal peaking factor to the actual excessive seasonal
peaking,factor for the purpose of calculating rates for a period.ol' t9;years
and the Purchaser shall not be entitled to reduce its,seasonal peaking factor
as described in Section 5.D:1 during this same five year period. Ifahe
Administrator determines that honoring Purchaser's actual excessive
seasonal peaking factor,for the five year period would reduce the reliability
of the system or threaten the water supply of any other wholesale
purchaser of water from.the City,he or she may refuse to honor the
increased seasonal peaking factor and take steps he or she deems necessary
or advisable to protect the system and other Purchasers, as provided in
Section 5.F,Excess Demand.
(b) The provisions of Section 5D.2(a)shall not apply if the excess seasonal
peaking factor resulted from the direct result of Acts of God, malevolent
acts,contamination of the water supply,or events beyond the Purchaser's
control if the consequences of any such circumstance or event could not
have been avoided through the exercise of the standards of care common
and uspal in the municipal water supply industry.
E. Changes In Daily PeakingFacto
actor '
1. Daily Peaking Factors For Contract Years 2 Through 5
(a) Except as it is changed upon Purchaser's request as provided in Section 5.E.I(b), for
rate-making purposes in the second through fifth contract year, Purchaser's peaking factor shall
be the average of its actual daily peaking factor for all previous contractyears, based on demand
data collected by the City.
Regional Water Sa Agreement (10 Year)
April 3, 2006
Page 14
SECTION 5 (Continued)
(b),At any time prior to December 1 of the first through fourth contract years, Purchaser
may request that.its daily peaking'factor for the next year, as calculated in Section 5.E.1.(a), be
altered up or down by no more than 20 percent. Except as provided in Section 5E.3,for
ratemaking purposes in the next year,the City shall use the daily peaking factor identified by the
Purchaser consistent with this section, unless the Administrator determines that honoring the
requested peaking factor would reduce the reliability of the system or threaten the water supply
of any other wholesale purchaser of water from the City.
2. Daily Peaking Factors For Contract Years 6 And Thereafter
(a)Except as it is changed upon Purchaser's request as provided in Section 5.E.2.(b), for
rate-making purposes in the sixth and subsequent contract years, Purchaser's peaking factor shall
be the average of its actual daily peaking factor for the five preceding years, based on demand
data collected by the City.
(b) By December I of the fifth contract year and each year thereafter,.Purchaser may
request that its.daily peaking factor for the next year,.as calculated in:Section 5.E.2. (a),be
altered up or down by no more than 10 percent. Except as provided in Section 5.E:3.,for
ratemaking purposes in the next year, the City shall use the daily peaking factor identified by the
Purchaser consistent with this section,unless the Administrator determines that honoring the
requested peaking factor would reduce the reliability of the system or threaten the water supply
of any other wholesale purchaser of water from the City.
3. Excess Daily Peaking Factors
(a) Beginning in contract year 3, and for each year thereafter,except as
provided in Section 5.E.3(b) below, if in any year Purchaser's actual daily peaking
factor exceeds by more than 20%the daily peaking factor set by the terms of this
contract for purposes of calculating rates in that year, the Administrator shall
recalculate the year's rates and in the next available contract year shall impose on
the Purchaser a surcharge equal to the difference in the Purchaser's guaranteed
purchase payment under the original rates and the Purchaser's guaranteed
purchase payment under the rates as recalculated using the Purchaser's actual
daily peaking factors. When calculating rates for the year in which the surcharge
is to be collected, the City shall treat the surcharge as an offset to the otherwise
estimated annual revenue requirements for all wholesale and retail customers of
the system. In addition, for five years after the year in which the Purchaser's
actual daily peaking factor exceeds by more than 20%the daily peaking factor set
by the terms of this contract for purposes of calculating rates in that year,the
Administrator need not honor any request by Purchaser to alter the Purchaser's
calculated daily peaking factor pursuant to Sections 5.E.I(b)or 5.E.2(b).
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 15
SECTION 5—(Continued)
(b) The provisions of Section 5E.3(a)shall not apply if the excess daily
peaking factor resulted from the direct result of Acts of God; malevolent acts,
contamination of the water supply, or events beyond the Purchaser's control if the
consequences of any,such icircumstance or;event could not have been avoided
through the exercise of the standards of care common and usual in the municipal
water supply industry.
F. Release Of Purchaser From Guaranteed Purchase Obligations
1. Changes in Guaranteed Purchase Quantities In Case Of Short-Term Curtailment
(a) Reduction or Shift of Guaranteed Purchase Quantity
Purchaser's guaranteed purchase quantity(and,as appropriate, its
guaranteed purchase annual payment) shall be altered, at Purchaser's
request, for any year in which the Purchaser acts on a request by he city
to reduce or curtail demand below its established guaranteed,puffli d'`
quantity for more than five consecutive days. Any request must be iriade
in writing to the City within 30 days after the Purchaser is no longer
reducing or curtailing demand upon the City's request. At Purchaser's
option,the quantity of water it did not purchase during a reduction or
curtailment period of more than 5 consecutive days shall either: (a)''be
.excluded from that year's guaranteed purchase.quantity or(b)be shifted to
another time of the year when curtailment is not in effect. Provided,
however,that the Administrator need not honor a request to shift
quantities to other times if he or she determines that to do so would
threaten the reliability of the water system.
(b) Quantification of Reduction or Shift in Guaranteed Purchase Quantity
For purposes of Section 5.F.1, the Administrator shall calculate the
reduction in water used by the Purchaser(and,therefore, the amount of the
guaranteed purchase quantity reduction or shift)by considering,the
difference between the Purchaser's actual water usage during the period of
curtailment or water use reductions and the Purchaser's guaranteed
purchase demand projections for the same period and such other
information available to the Administrator that he or she determines can be
used to assist in making;the calculations.
(c) Seasonal Peaking Factor Effects
• Regional Water Sa. Agreement (10 Year)
April 3, 2006
Page 16
SECTION 5—(Continued)
Reductions or shifts of guaranteed purchase quantities pursuant to Section
5.F.1 shall not alter the Purchaser's seasonal or daily peaking factors for
purposes of future ratemaking.
2. Changes in Guaranteed Purchase Quantities In Case of Failure of Supply
(a) Except as provided in Section 5.F.2(d)below, if the City fails to supply
Purchaser's guaranteed purchase demand for more than 30 consecutive
days more than one time in any period of ten consecutive years, the
Purchaser may declare its intention to reduce its guaranteed purchase
quantity pursuant to this Subsection.
(b) For purposes of Section 5.F.2,.the Administrator shall determine if there
has been a failure to meet guaranteed purchase obligations by considering
the difference between the Purchaser's actual water usage during.the
period of curtailment or reduced water supply and-the Purchaser's
guaranteed purchase demand projections and such other information
available to the Administrator that he or she believes can be used to assist
in making the determination.
(c) Procedure to Reduce Guaranteed.Purchase Quantities
i. To reduce its guaranteed purchase quantity under this Subsection,
Purchaser must give written notice to the City of its intent to do so..
The notice must be given anytime after the 31st day of the failure
of supply, but not more than 60 days after supply has been fully
reestablished.
ii. Having given notice under Subsection 5.F.2(c)i, Purchaser may
thereafter reduce its guaranteed purchase from the City by up to
10% of the guaranteed purchase quantity in effect the day before
the failure of supply each year for the remaining years of the then
current contract term and the next ten year term if the contract is
renewed. To reduce its guaranteed purchase for any contract year,
Purchaser must provide written notice of the reduction to the City
no later than December 31 of the preceding contract year.
Provided that to,continue reducing its minimum quantity after any
contract renewal,Purchaser must give written notice to the City of
its intent on or before the date of renewal.
,
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 17
SECTION 5—(Continued)
iii. If Purchaser elects to reduce its guaranteed purchase quantities
pursuant to the terms of this Subsection, all other terms of the
contract shall continue in effect.
(d) Purchaser shall not have the option to reduce its guaranteed purchase
obligation under this Subsection if the City's failure to supply Purchaser's
guaranteed purchase was caused by Acts of God, malevolent acts,
contamination of the water supply, or events beyond the City's control if
the consequences of any such circumstance or event could not have been
avoided through the exercise of the standards of care common and usual in
the municipal water supply industry.
(e) The ten year period for judging this obligation shall restart.at each renewal
of this contract. (See Section 3.17.)
G. Excess Demands
1. Reduction in Supply
Should Purchaser place demands on the system in excess of that agreed to between City and
Purchaser or not in compliance with the Operating Standards adopted pursuant to Section 4,
WMAB,in a manner that jeopardizes the reliability and safety of the Portland water system or
compromises the City's ability to meet its,obligations to other customers, the Administrator may
take such steps as are necessary or advisable to protect the system. Such actions may include, but
are not limited to reducing the supply of water flowing to the Purchaser. If the water system
infrastructure does not allow the Administrator to make such supply reductions, the
Administrator may construct control devices as may be needed to suitably control Purchaser's
demands. The cost of such improvements shall be fully recovered through a surcharge billed to
Purchaser and added in equal installments to the Purchaser's monthly invoices during the four
months following completion of construction.
2. Calculation of Excess Demands
For purposes of Section 5.G,the Administrator shall determine whether Purchaser has imposed
excess demands on the system using any information available to the Administrator that he or she
determines can be used to assist in making the determination. The Administrator's determination
shall be subject to review and comment by the WMAB.
H. Increased System Capacily To Meet Increased Guaranteed Purchase Quantities
1. If Purchaser requests an increase in its guaranteed purchase quantity pursuant to
Section 5.C.2 that, in the judgment of the.Administrator, cannot prudently be granted
Regional Water Sa. Agreement (10 Fear)
April 3,2006
Page 18
SECTION 5—(Continued)
because it exceeds the capacity of the system to deliver water to Purchaser, the Purchaser
may request that the City undertake a study to determine what, if any, enhancementsor
alterations to the system, would produce sufficient system capacity to meet the increased
guaranteed purchase quantity..
2. Upon Purchaser's written agreement to fund such a study of system enhancements
or alterations, the City shall undertake the study. Provided that the City's obligation shall
be contingent on the negotiation of a mutually satisfactory intergovernmental agreement
between the City and Purchaser establishing the nature,timing,and funding of the study.
3. Upon completion of any system study provided for in this subsection, the
Purchaser funding the study may request the City to undertake system enhancements or
alterations sufficient to meet the increased Purchaser's proposed increased guaranteed
purchase quantity.
4. Upon request for system enhancements or alterations,the City may agree to
undertake the enhancements or alterations requested,under such terms and conditions as
the City and Purchaser(or others) in writing mutually agree. The parties may utilize joint
funding agreements,as provided for under Section 16 of this Agreement, or such other
arrangements as are determined to be mutually beneficial at the time.
1`
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 19
SECTION.6 -INTERRUPTIBLE WATER
A. In General
Purchaser may purchase water over and above its guaranteed purchase quantities under the terms
and conditions set forth herein. Such water shall be termed interruptible water. Except as
provided herein, the City is not obligated to sell interruptible water to Purchaser. Further, City
may cease providing interruptible water at any time under procedures of Section 6.17 below, even
after the Administrator has accepted an offer to purchase interruptible water under procedures of
Sections 6.13, 6.0 and 6.1) below.
B. Winter Interruptible Water
From October I .through May 31, Purchaser may offer to purchase winter interruptible water on
one day's verbal or written notice to the City. The City may provide interruptible water to
Purchaser if the Administrator determines it is prudent to do so and if the Administrator accepts
the Purchaser's offer either verbally or in writing. :
C. Summer Interruptible Water
1. From June 1 through September 30,Purchaser may request to purchase summer
interruptible water using the procedures established in this.Section 6.C.
2. No later than March 15 of each year, Purchaser may submit to the City, in writing,
its offer to purchase summer interruptible water supplies. The offer must identify
the quantities of water to be purchased, by month,for the next June through
September period.
3. No later than April 15,City of each year shall respond in writing to Purchaser's
request for interruptible water, based on the Administrator's prudent estimates of
system capacity and operational requirements. If the Administrator accepts
Purchaser's offer without changes,then the Purchaser is obligated to purchase and
the City is obligated to sell the designated quantity of summer interruptible water
under the terms of this contract.
4. If the Administrator determines that it would not be prudent to agree to meet all
timely requests for summer interruptible water from all Purchasers, he or she shall
offer the total quantity of interruptible water he or she deems to be prudent to all
requesting Purchasers as follows: each Purchaser shall be offered a quantity of
interruptible water proportional to its guaranteed purchase quantity in comparison
to the total of the guaranteed purchase quantities of all requesting Purchasers.
J
Regional Water Sa.- Agreement (10 Year)
April 3, 2006
Page 20
SECTION 6—(Continued)
5. If the Administrator offers to supply Purchaser less than the full amount of
summer interruptible water requested by the Purchaser, Purchaser must,within 15
days of the Administrator's offer, accept or reject the offer. If Purchaser accepts:
the offer,then Purchaser is obligated to purchase and the City is obligated to sell
that quantity of summer interruptible water under the terms of this contract.
D. Additional Sales of Interruptible Water
Notwithstanding the other provisions of Section 6, each contract year after the Administrator has
confirmed sales of summer interruptible water under Subsection 6.C. above, the Purchaser may
buy and the City, acting through the Administrator, may sell additional interruptible water at that
.year's summer season interruptible rate and on such other terms as are mutually agreeable.
E. Confirmed Summer Interruptible Water Pa, merit
1. Purchaser's Obligation to.Make Payment
Once Purchaser and the City have agreed on a quantity of interruptible water
under the terms of this section, and subject to the billing provisions of Section 15
of this Contract,except as provided in Section 6.E. 2 below, the Purchaser shall
pay the City for that quantity of water agreed to at the price established by Section
8 of this Contract. The amount due shall be termed the confirmed interruptible
water payment.
2. Reduction.in Confirmed Interruptible Water Payment
If the City fails to deliver any of the confirmed quantity of interruptible water, the
Purchaser shall be excused from paying a portion of its confirmed interruptible
water payment equal to the quantity of water not delivered times the price of
interruptible water.
F. Reduction or Elimination of.Interruptible Water
In the event of an emergency or other condition under which continued supply of
interruptible water jeopardizes the reliabilityof the water system, the City may cease
providing interruptible water at any time on one day's written or verbal notice to the
Purchaser. Under all other circumstances, the City may cease providing interruptible
water at any time on 21 days written or verbal notice to the Purchaser.
r
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 21
SECTION 7—RATES AND CHARGES FOR GUARANTEED PURCHASE WATER
QUANTITY
A. Rate Making In General
1. The rate,structure for Purchaser's guaranteed purchase quantity of water shall
consist of(a)a fixed monthly charge calculated using the cost of service of typical
non-volumetric services such as, but not limited to, meter reading,billing, meter
purchases,meter maintenance, and relevant overhead and(b) a volume charge
calculated using volumetric rates established as provided herein times the
Purchaser's guaranteed purchase quantity.
2. The City shall annually establish rates and charges for the Purchaser's fixed
monthly charge and guaranteed purchase quantities that do not exceed charges
calculated using the principles and standards of this Section 7.
(a) Determination of revenue requirements using the.utility basis of revenue
requirements and cost of service principles as described in Manual of
Water Supply Practices—M1. Principles of Water Rates, Fees and
Charges..Fifth Edition. Denver: 2000 published by the American Water
Works Association(hereafter"AWWA Manual M1") or.in such updates
as may occur from time to time,except for such deviations from AWWA
Manual M1 as are described or permitted by this contract. A cost of
service computer model will be used to calculate the revenue
requirements, cost allocations,and resulting rates.
(b) The components.used to determine the revenue requirements under the
utility basis shall be:
1. Operation and Maintenance(hereafter"O & M") costs;
2. Return on Investment; and
3. Depreciation.
(c) Purchaser shall not be charged for the costs incurred by the City that are
incurred for the sole purpose of serving the City's retail customers. For
the costs incurred serving both the Purchaser and the City's retail
customers,Purchaser shall be charged an amount that equals its
proportionate share ofthe-cost,using standard cost-of-service principles,
as generally described in AWWA Manual M1, unless stated otherwise
herein.
(d) The parties understand that the City may enter into similar wholesale water
sale agreements with other water utilities. If the.City does so, the charges
to Purchaser shall continue to be based on the Purchaser's proportionate
f .
• Regional Water Sal Agreement (10 Year) .
April 3, 2006
Page 22
SEC'T'ION 7—(Continued)
share of the cost to serve the Purchaser,based on the Purchaser's
proportionate share of total demand on the system, including demand of
other purchasers under similar wholesale water agreements and the City's
retail customers.
(e) The City shall treat surcharges collected under Section 5.D.2 of this
agreement as an offset to the otherwise estimated annual revenue '
requirements for all wholesale and retail customers of the system.
B. Cost Allocations'
In General
1. Costs shall be allocated to the Purchaser in accordance with generally accepted
ratemaking practices and procedures, as described in AWWA Manual Ml, as it
may be updated from time to time, except to the extent that the procedures
specified herein may deviate from the practices and procedures of AWWA
Manual Ml. In general, unless specified otherwise in the agreement, costs shall
be allocated based on the proportionate share of costs of the assets and other
revenue requirements, as provided in AWWA Manual Ml.
. 2. Cost allocation for purposes of this contract shall be based on the "commodity
demand"methodology, as defined in AWWA Manual MI, unless otherwise
agreed to by Purchaser and the Administrator.
C. O & M Cost Allocation
1. Definition
For purposes of this agreement O & M expenses.include the operations, maintenance,and
associated overhead expenses of the City's water supply system as adopted in the City's annual
budget process for the year for which the rate will be in effect except that costs for water
planning studies that are expensed rather than capitalized shall be included in the O& M
expenses at their actual cost rather than budgeted'or anticipated costs. When use of actual costs
for such studies results in a delay of recovery of costs associated with such studies, Purchaser
shall also be charged interest on the funds expended from the time the costs were incurred by the
City until the start of the following contract year. The interest rate shall be equivalent to the rate
earned on the City's.internal investment pool managed by the City Treasurer.
2. Allocations
The Cityshall allocate O & M costs to cost functions applied in accepted cost of service rate-
making contemplated by AWWA M-1, such as commodity,peak season demand (referred to as
the seasonal peaking factor under this contract), peak three days system-wide demand(referred to
as the daily peaking factor under this contract), customer, and equivalent meter service based on
1 . j
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 23
SEC'T'ION 7—(Continued)
the City's best professional engineering judgment. The City shall then allocate:O& M costs
allocated to,these respective cost functions to the Purchaser based on the Purchaser's
proportionate shareof retail demand.and non-retail guaranteed purchase quantities for annual
average demand,peak season demand, total annual non-retail bills,meters;and size of meters
respectively. Allocations may also be based on:peak day or peak three day demands, but for
those purposes the City may include Purchaser's total demands on the Portland water system,
including guaranteed purchase quantities,and actual purchases of interruptible water. Definitions
of allocation factors are found in Exhibit 2, which is hereby incorporated and made part of this
Agreement.
3. Special Allocation to Avoid Cost Cap
In any year that the Administrator determines that standard allocation of the O &M expenses
contained in the City Budget will cause specified O& M expenses to exceed the O& M cost cap
as defined in Section 71,the Administrator may alter the O &M component of Purchaser's rates
in a manner that avoids that result.
D. Capital Cost Allocations
1. Capital costs are those expenditures that result in the acquisition of or addition of
fixed assets that become part of the rate base.
2. Except as specifically provided herein,capital costs shall be allocated based on
Purchaser's guaranteed purchase quantity in a five-step process using best
professional judgment. First, system assets included in the rate base shall be
allocated to functional asset groups. Second,the resulting system assets by
functional asset group shall be allocated to water service characteristics. Third,
the assets allocated to each water service characteristic shall be allocated to
customer classes based on their'respective percentages of the water demands
related to each water service characteristic. The City shall classify,customer
classes as retail and wholesale and shall treat each wholesale customer that serves
more than 200 service connections as an individual customer class. Fourth, the
asset costs allocated to each customer shall be multiplied by the rate of return to
determine the return on investment for each customer class. Fifth,the working
capital component of the rate base shall be allocated to customer classes in
proportion to the allocation of all other rate base assets.
3. In performing these allocations, items that solely serve the City's retail customers
shall be allocated to retail customers. Items that solely serve the Purchaser and
other wholesale customers shall be allocated to wholesale customers. Items that
serve the City and any wholesale customers shall be allocated proportionately to
Regional Water Sa►._ Agreement (10 Year)
April 3, 2006
Page 24
SECTION 7—(Continued)
the City, based upon its retail water demand,and the respective wholesale
customers, based upon each customer's guaranteed purchase amount.
4. For the purposes of these allocations, functional asset groups are collections of
common water system assets or facilities that are used to provide water service to
customers. The City's functional asset group designations shall be specific..
enough that customer classes are not allocated costs to support assets or facilities
that do not provide service or benefit to them. Definitions of functional asset
groups and their allocations to customers shall be consistent with the findings
contained in a document entitled Functional Asset Groups unless circumstances
change, in which case the allocations will also be changed to reflect the use or
benefit of assets and facilities under normal operating conditions. Any changes in
definitions of functional asset groups shall be presented to the WMAB for review
and comment. The Administrator shall provide a written explanation if WMAB
recommendations are not implemented and consult with WMAB regarding his
determination.
5. For the purposes of these allocations,water service characteristics may include
such things as commodity,peak season demand,peak three days demand,
customer,equivalent meter, and fire. For purposes of peak day and peak three day
analysis,the City may include Purchaser's total demands on the Portland water
system, including guaranteed purchase quantities and Purchaser's actual purchases
of interruptible water. Definitions of these water service characteristics are
provided in Exhibit 2.
6. The allocations of assets to functional asset groups and subsequently to water
service characteristics may vary from time to time as changes to the system and its
operation may occur. The revised allocations, if any such revisions occur, shall be
used in the annual rate setting process, and if no revisions occur, then the
previously adopted allocations shall be used for annual rate setting. The entire set
of these allocations, including the initial allocations and any subsequent changes,
shall be reviewed in the Cost Allocation Audits, as described in Section 7.E.
below.
E. Cost Allocation Audits
1. In Contract Year 5 and every five years thereafter during the term of this contract
and any extensions, an independent third party shall be retained to conduct an
audit of all steps of the then-currently employed process to allocate assets and O
& M to customer classes. The expert shall be instructed, as the result of its audit,
to recommend any changes necessary to ensure the continued accuracy of the cost
allocations consistent with,the terms of this contract and the A W WA M-1 manual.
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 25
SECTION 7—(Continued)
The expert shall be selected by a majority vote of the WMAB and the auditor
expense shall be included in O & M expenses and allocated accordingly. The
.expert's report shall be completed by December 1 of the contract year in which
the expertis hired.
2. Expert recommendations for cost allocations shall be reviewed by the WMAB and
shall be implemented by the Administrator in the contract year following receipt
of the recommendations unless: (1)a majority of the WMAB and the
Administrator concur that the recommendations should not be implemented or(2)
the Administrator determines that it would be imprudent to adopt any or all of the
recommendations. In case the Administrator reaches a determination of
imprudence, he or she shall explain his or her determination in writing to the
WMAB and consult with WMAB concerning his or her determination.
F. Depreciation of Capital Assets
1. Depreciation expense shall be the annual depreciation expense on assets that are
used, in total or in part, to serve the Purchaser, either directly or indirectly.
Depreciation shall be calculated on the original cost of the assets and on a
straight-line basis,using City accounting estimates of the useful lives of the assets
in accordance with Generally Accepted Accounting Principles, which may differ
from the actual useful lives of those assets.
2. The parties understand and agree that the assets being depreciated for these
purposes may include backup facilities and other redundant facilities that may be
idle for long periods of time, but which the City has determined still provide a.
service function to the system and the Purchaser by virtue of their backup and
redundancy functions.
3. Depreciation shall not be charged for assets that are no longer able to provide
service to the Purchaser or whose accounting life has expired, unless otherwise
agreed to by the parties.
G. Return On Investment
Return on investment shall equal the rate of return multiplied by the value of system assets(the
rate base)that serve the Purchaser.
1. Rate of Return
The rate of return for each year shall be the percentage rate of the Bond Buyer Revenue Bond
Index as published by the newspaper The Bond Buyer on the previous December 1 or the City
Water Bureau's embedded cost of debt on the previous December 1, whichever is higher, plus
Regional Water Sala- Agreement (10 Year)
April 3, 2006
Page 26
SIECTI®hi 7—(Continued)
one percentage point(1.0%). If the Bond Buyer Revenue Bond Index ceases to be available, the
Administrator shall notify the Purchaser and consult.with WMAB regarding identif cation of a
substitute index. The substitute index shall be selected by the Administrator, in consultation'with
the WMAB, and.shall be widely available to dealers in municipal securities, and measure the
interest rate of high quality, long.-term, fixed rate municipal securities. If available, an index
measuring the interest rates on high quality,long-term, fixed rate municipal revenue bonds will
be selected.by the Administrator over a comparable general obligation bond index. Upon
identification of a substitute index, the rate of return on this contract shall be the percentage rate
of a substitute index plus one percentage point(1.0%).
2. Rate Base
The rate base shall equal:
(a) Working capital, consisting of an amount.equal to an average of 45 days of
operation and maintenance costs for the water system supply,
transmission,storage and pumping facilities that.are incurred to provide
service directly or indirectly.to non-retail customers.
(b) The remaining un-depreciated value, i.e.,book value, of all assets that
provide service, directly or indirectly, in whole or in part, to the Purchaser,
including water system supply, transmission,storage, and pumping
facilities, equipment,and appurtenances and any other water system assets
that provide service directly or indirectly to the general water supply,and
transmission portion of the water system, thereby providing water supply
to non-retail water customers of the City. These assets may include
backup facilities and other redundant facilities that may be idle for long
periods of time, but which the City has determined still provide a service
to the system and Purchaser. For such assets providing water supply
benefit to both retail and non-retail customers, the assets included in the
rate base shall be allocated proportionately as previously described herein.
(c) The assets initially included in the Rate Base,as of the date of this
agreement, are listed in.Exhibit 3. Each year, the City shall produce a new
Rate Base asset list and provide it to Purchaser during the rate-making
process as provided in Section 4, WMAB.
(d) After the first year of this contract, the assets included in the Rate Base
assets shall be updated each year to include all water system capital assets
listed and valued'in'Water Bureau documents used to produce the City's
most recent Comprehensive Annual Financial Report and its supporting
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 27
SECTION 7—(Continued)
documentation,which may include capitalized interest on some or all of
the relevant assets.
3. Rate Base Exclusions
The Rate Base shall exclude the following items:
(a) Construction work in progress.
(b) Assets that are fully depreciated, even though such assets may be still in
service.
H. Prepayment of Capital Cost_Share.
The Purchaser may elect to pay its share of capital cost allocations for new water.system assets in
a lump sum cash payment or other mutually agreed upon payment forms in lieu of paying.-
annualized-
ayingannualized rates for depreciation and rate of return for the new facilities. If Purchaser-niAda
such cash payment,the portion of the asset cost being prepaid by the Purchaser shall be deducted
from the value of the specified assets in the rate base used to calculate the Purchaser's rates. By
making such cash payment, Purchaser does not obtain an ownership interest in the specified
assets unless Purchaser and the City have entered into a supplemental joint ownership agreement
as specified in Section 16, Joint Funding of Capital Improvements:
I. Operations And Maintenance Cost Control
To help ensure stability and predictability of wholesale rates and to permit recovery of costs of
service, increases in specified O & M expenses shall be subject to limitations described below.
These limits do not apply to capital costs, recovery on investment,or O&M expenses that are
not specified O&M expenses.
1. O&M Cost Cap
The O&M Cost cap is the prior year's specified O &M expense any portion of which was
allocated to Purchaser or any other wholesale purchasers under similar water sale agreements
increased by the sum of two percentage points(2%)plus the annual rate of change of the selected
CPI.
(a) Selected CPI shall mean the CPI-Urban, West Urban (ref
CUUR0400SAO) for January 1 of the year new rates are calculated, e.g.,
CPI of January 1, 2006,will be used to assess 0.&M increases in rates for
July 1,2006. If this referenced index ceases to be available, the
Administrator shall,notify the Purchaser and.consult with WMAB
regarding identification of a substitute index.
Regional Water Sale. Agreement(10 Year)
April 3,2006
Page 28
SEC'T'ION 7—(Continued)
(b) Specified O & M expenses are those City O & M expenses defined in
Subsection I.3 below, Specified O&M Expenses and Exclusions.
2. Cost Cap Limitation
The City may not more than once in any consecutive five year period include in the calculation of
Purchaser's rates, specified O.& M expenses that exceed the O&M cost cap. If, however, the
City's actual O&M spending(including,but not limited to specified O&M expenses)is 90%
or less than the City's budgeted O & M expenses for each of the prior,four years,the increase in
the fifth year shall be limited to the formula of 711 above. A new five year period shall
commence at each renewal of this contract.
3. Specified O & M Expenses And Exclusions
Specified O &M expenses shall be those O& M expenses, including associated overhead,
incurred by the City's water system to serve directly or indirectly, in whole or in part,the
Purchaser and other purchasers under similar wholesale water agreements and any portion of
which is properly allocated to Purchaser or any other purchasers under similar wholesale water
agreements under.the terms of their contracts, except for expenses or classes of expenses
excluded by this Section 71 The Administrator shall make a determination of specified O&M
expenses and exclusions in consultation with the WIvIAB each year during the ratemaking
processes.
4. Specified O & M expenses shall not include and shall therefore,exclude, the
following expenses or classes of expenses:
(a) Pass-Through Costs. These are costs that the parties agree are generally
beyond the reasonable control of the City water system to influence. For
purposes of this contract, pass through costs are those listed here.
i. Utilities, including electricity, water,sewer, natural gas, garbage
and telephone.
ii. Equipment rental, such as hoists,excavators, tools and other
miscellaneous equipment not included in the City's fleet.
iii. Operating supplies, such as treatment,chemicals,lubricants:and
consumables related to system operation and maintenance.
iv. Communication Services, including but not limited to telephone,
radio, microwave and fiber-optic transmission of data, voice, video
and related information.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 29
SECTION 7—(Continued)
V. Insurance or the expenses of self--insurance,other than workers
compensation, including but not limited to costs for general
liability,property, casualty and fleet coverage.
vi. Additional costs identified by the Administrator from time to time
that are beyond the control of the City to influence'in a manner
similar to the specific costs listed in this subsection. Provided that
the City may not exempt any such additional costs from the cost
cap without first presenting proposed additions to the WMAB for
review and comment.
(b) The costs of PERS Pension Obligation Bonds(POBs)paid by the City of
Portland Water Bureau.
(c) Costs In Response to Unexpected Events or Circumstances
i. These are costs that arise unexpectedly or as the result of-Acts of
God, malevolent acts,contamination of the water supply, onevents
beyond the City's control,the consequences of which events or
circumstances could not have been avoided through the exercise of
the standards of care common and usual in the municipal water
supply industry. .
ii. The City and Purchaser shall, within 120 days of the onset of such
unexpected costs commence good faith negotiations to determine
what, if any, of the costs of responding to the event or
circumstances,which are otherwise excluded, should be included
within the Specified O & M expense.
(d) Costs Associated With Planning Studies
These are costs to pay for City planning studies related to the
Water Supply System including those studies in the City's Water
Bureau Capital Improvement Program that are expensed rather,
than capitalized.
(e) Costs Associated With New Facilities Or Programs
L These are first time or initial increases to O &M expenses(which
may affect more than one fiscal year) associated with operation and
maintenance of new facilities or the functioning of new programs.
New programs may include such things as responses to new state
or federal mandates or regulations,or activities to improve the
i 1 -
Regional Water Sales Agreement(10 Year)
April 3, 2006
Page 30
SEC'T'ION 7—(Continued)
efficiency; reliability,,security or quality of the water supply. The
WMAB will be consulted regarding initial'O& M costs of new
facilities and new programs. The parties understand and agree that
O &M costs mayincrease in any.given year in order to implement
new programs or to operate or maintain new facilities without
exceeding the cost cap.
ii. Once O& M expenses for new programs or facilities are
established and have become a routine part of the City's water
system budget, however,those of the expenses that are not
otherwise excluded from"specified 0 & M costs,"(pass through
costs, PERS expenses listed in Subsection 2 above,costs in
response to unexpected events or circumstances, or costs
associated with planning studies) shall be included in.fature
calculations of the increase in specified O& M expenses.
iii. As O &M expenses for new facilities or new programs arise,the
Administrator shall consult with WMAB concerning the expenses
and then determine which of those expenses should,be excluded
from cost cap calculations as "new O& M"and which expenses
should be included within the cost cap on what schedule. The
Administrator shall advise Purchaser and WMAB of his
determination.
(f) Costs Incurred on Behalf of the.Purchaser or WMAB
These are costs to be paid by the City by mutual agreement of the
City and Purchaser or the City and the WMAB.
Regional Water Sales Agreement(10 Year..)
April 3,2006
Page 31
SECTION 8-RATES AND CHARGES FOR INTERRUPTIBLE WATER
A. Winter Interruptible Water
The price of winter interruptible water shall.be twenty percent(20%)of the Purchaser's rate for
that year for its guaranteed purchase water quantity,plus any extra delivery costs (such as extra
pumping) incurred by the.City to deliver the water that are not included within the rate for the
guaranteed purchase quantity.
B. Summer Interruptible Water
The price of summer interruptible water shall be forty-five percent (45%) of the Purchaser's rate
for that year for its guaranteed purchase water quantity, plus any extra delivery costs (such as
extra pumping)incurred by the City to deliver the water that are not included within the rate for
the guaranteed purchase,quantity.
Regional Water Sales Agreement (10 Year) -
April 3, 2006
Page 32
SECTION 9-WATER SYSTEM PLANNING AND COOPERATION '
To facilitate regional water planning and resource development, Purchaser and the City agree as
follows:
A. Purchaser Projected Water Usage
1. Each five years, at a minimum, starting on July 1 of Contract Year 5, Purchaser
shall provide to the City estimates of the Purchaser's water demand to be
purchased from the City by year, annual seasonal peaking factor, and daily
peaking factor for a period of ten years including any anticipated increases in
guaranteed purchase quantity.
2. In addition,in any other Contract Year in which unforeseen developments have
significantly altered Purchaser's five year estimates, Purchaser shall provide the
City with.its revised estimates of it preferred use of Portland water for a ten year
period.
3. The estimates provided for in this provision are for planning purposes only and do
not commit the City or the Purchaser to either buy or supply any particular
quantities of water.
4. The City shall provide WMAB a summary of the City's projected demands for all
wholesale and retail demands by no later than May 1 of each year.
B. City Evaluation of Capacity of Portland Water System
I. Whenever it receives revised demand and peaking factor estimates from the
Purchaser, the City shall provide the Purchaser with estimates of the capacity of
the Portland water system to meet all projected system loads over the ten year
planning horizon.
2. If the City determines that the Portland water system cannot meet the projected
demands Purchaser and others have proposed to place on it over the ten year
planning horizon, the City and Purchaser(together with other Purchasers who may
wish to join the discussions)may initiate negotiations to determine if and how the
Portland water system could meet the projected loads, either through reduction in
demand or development of additional water system capacity.
3. In no case, however, does.this contract obligate the City to sell, or Purchaser to
pay for, water beyond the guaranteed purchase quantities established herein.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 33
SECTION 10-RESERVATION OF SYSTEM CAPACITY
At any time during the term of this contract, Purchaser and the City may enter a separate reserve
capacity agreement. A reserve capacity agreement would enable Purchaser to take a specified
amount of additional water from the system at a specified future time. At a time to be specified
in the reserve capacity agreement,the quantity of water reserved will be added to the Purchaser's
guaranteed purchase quantity under this contract and will be used to calculate the.Purchaser's
guaranteed purchase payment thereafter.
Unless specified otherwise in the reserve capacity agreement, costs for reserve capacity shall be
charged at a rate equivalent to the rate of return on the proportionate share of the capital assets
that would be used to make such capacity available, and shall be billed to the Purchaser in equal
monthly installments.
Purchaser will possess no right to use the additional capacity identified in its reserve agreement
until the specified future time. The City may use any or all of the reserve capacity prior to the
specified future time.
Unless specified otherwise in the reserve capacity agreement, Purchaser shall"provide the.City
written notice at least 90 days prior to the specified future time identifying if the Purchaser will
(a)exercise its option to use the additional system capacity after the specified future time, (b)
allow the reserve capacity agreement to expire without further action,or(c)request a new:or
amended reserve capacity agreement with a new specified future time.
If a request for reserve capacity can only be met by adding new assets to the system,the City will
not reserve capacity for the Purchaser until the parties have reached an,agreement on the method
for financing and the schedule for adding the assets to the system.
Regional Water Sales Agreement (10 Year) -
April 3, 2006
Page 34
SECTION 11 -CONNECTIONS AND METERING
A. Meter Ownership and Responsibility
Upon execution of this agreement, all existing water meters used to measure the water
supplied by the City to the Purchaser,and,associated facilities such as vaults, shall become
the property of the City. In addition, when a new meter or meters are required,the City shall
install on Purchaser's main, at a point near the connection with the City's main,a water meter
or meters that will at all times measure the water supplied by City to Purchaser. City shall
maintain the meter or meters in proper working condition, including periodic testing,
calibration,maintenance and replacement of the meter(s)based on generally accepted
industry standards. City agrees to notify Purchaser prior to repairing the meter.
B. Meter Costs
The cost of replacing the meter or meters and their operations,and maintenance shall be
included by the City in calculating Purchaser's rates.
C. Meter Access
The Purchaser shall be allowed reasonable access to meters and facilities for purposes of
installing and maintaining telemetry equipment or other equipment related to the metering
function.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 35
SECTION 12-PURCHASER-SUPPLIED WATER TO CITY RESIDENTS
A. Water Supplies To City Residents
To the extent permitted by law,.Purchaser agrees, when requested by the Administrator, to
provide water supply to City residents in areas.adjacent to Purchaser's water mains subject to
limitations of the available capacity of-Purchaser's water distribution system. Water so
delivered shall be metered by the City at its residents' individual services.
B. Master Metering
The City and Purchaser shall review each situation where such arrangements exist and
attempt to reach agreement on the need and feasibility of installing a master,meter or master
meters to register the volume of water delivered to City residents. The Purchaser agrees the
water delivered to City residents will be from the same source or sources as water that
Purchaser delivers to its customers and shall meet all applicable drinking water regulatory
requirements. The Purchaser may.request the Cityinstall a master meter if the'local
distribution system is shown to have demonstrated leakage or unaccounted--water.losses in
excess of 10% of the average day demand.of the City residents served by system or by mutual
agreement of the parties.. Improvements to the local distribution system shall be made by
mutual agreement of the parties.
C. Charges For Water
1. The Purchaser may charge the City up to one hundred twenty-five percent(125%o)of the
guaranteed purchase wholesale water rate the City charges the Purchaser. The City will
credit this amount to Purchaser. Such water will not be included in the calculation of total
water purchases made by the Purchaser from.the City.
2.Notwithstanding the foregoing, the Purchaser may conduct a cost-of-service study to
determine the cost of serving City residents. If the cost-of-service exceeds the 125% of the
wholesale water rate,Purchaser may adjust the charge to the City accordingly,but not above
the actual cost of service.
Regional Water Sales Agreement(10 Year)
April 3;2006
Page 36
SECTION 13 -WATER RESOURCE CONSERVATION
A. General
1. The obligations in this Section will apply to both the City and Purchaser. Both
parties to this agreement intend that water to which the City holds water rights
shall be used beneficially,efficiently,and without waste.
2. The parties encourage the development of joint conservation programs where such
partnerships are of mutual benefit and produce increased efficiencies in program
costs or water savings. Provided, however,thatTunding for joint conservation
programs will be established by separate agreement between the interested parties.
B. Water Managers Advisory Board
The WMAB will foster and promote efficient use of water and best management practices as
outlined further in this Section. It will also be the role of the WMAB to implement the
provisions of this Section. In doing so, WMAB may assign tasks to a WIVIAB committee or to
staff of participating purchasers' subject in all cases to WMAB review and approval'
C. Water Conservation Obligations and Submission of a Water Conservation Plan
1. The Purchaser must operate water systems that are fully metered at the individual
customer level or have an implementation program to complete installation of
such meters by the end of the fifth contract year.
2. Unless Purchaser serves a population of 1,000 or less, Purchaser shall, on or
before the end of the second contract year, and every five years thereafter, submit
a Water Conservation Plan for its water system to the WMAB.
3. If Purchaser is a participant in the ORS 190 Agreement for the Regional Water
Providers Consortium, it may submit the regional conservation programs as part
of its Conservation Plan, but the Consortium programs, by themselves, do not
constitute a Conservation Plan for the individual Purchaser.
4. Each Conservation Plan submitted must include programs specified in State of
Oregon Water Resource Department Water Management and'Conservation Plan
Rules, as they are from time to time amended.
D. Review of Conservation Plan
1. The WMAB may, if it deems it advisable, adopt guidelines for the submission of
water Conservation Plans.
Regional Water Sales Agreement(10 Year)
April 3, 2006
Page 37
SECTION 13 (Continued)
2. Upon receipt of a Purchaser Conservation Plan,the WMAB will review the plan
pursuant to the standards of this Section. In reviewing a Conservation Plan, the
WMAB shall consider, at a.minimum, the following factors:
(a) Whether the program contains the following mandatory programs
i. Leak detection and repair programs, if required by State Rule, that
meet Oregon Administrative Rule(OAR)690-86-150(4)(e) and, if
applicable, Subsection(6)(a).
ii. Education and outreach programs required under OAR 690-86-
150(4)(f).
iii. Rate structures based on the quantity.of water metered at the
service connection as required by OAR 690-86-:150(4)(d).
iv. A meter testing and maintenance program as required by OAR
690-86-150(4)(c).
V. An.annual water audit as required by OAR 690-86-150(4)(1i).
(b) Whether the Plan includes the following discretionary programs or a
showing that a particular discretionary program is neither feasible nor
appropriate to the Purchaser's service area.
i. Technical and financial assistance programs to encourage and aid
residential, commercial and industrial customers.
ii. Supplier financed retrofitting or replacement of existing inefficient
water using fixtures, including distribution of residential
conservation kits and rebates for customer investments in water
conservation.
iii. Adoption of rate,structures, billing schedules, and other associated
programs that support and encourage water conservation.
iv. Water reuse, recycling, and non-potable water opportunities.
V. Other measures identified by the water supplier that would
improve water use efficiency.
vi. Operation measures to reduce peak event impacts on the Portland
system.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 38,
SECTION 13—(Continued)
3. 'Within 180 days of receipt of the Purchaser's Conservation Plan, the WMAB
shall approve or disapprove the Plan and advise the Purchaser in writing of its
decision.
(a) A Water Management and Conservation Plan approved by and updated as
required by the State of Oregon pursuant to the Department of Water
Resources Water Management and Conservation Plan Rules will in all
cases be deemed sufficient to meet the requirements for a Conservation
Plan under this agreement.
(b) If the WMAB disapproves the Purchaser's Water Conservation Plan, it
shall notify the Purchaser and provide the Purchaser with comments on the
Plan's deficiencies. Within 180 days thereafter, Purchaser shall submit a
revised Plan for review by the WMAB.
E. Periodic Conservation Plan Reporting
I. Purchaser shallreport annually to the WMAB regarding the implementation of
its Conservation Plan.
2. Each five years after approval of its Conservation Plan, Purchaser shall report
to the WMAB the estimated actual water savings from its Conservation Plan:
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 39
SECTION 14—WATER CURTAILMENT AND PROTECTION OF THE WATER
SYSTEM
A. During times when water supplies are not adequate to meet the aggregate of all demands
placed upon the Portland water system,the City and participating Purchasers need to have
a plan in place to reduce.or curtail-demands so that fire, life, safety and other high priority
needs are met. It is to the benefit of all of the users of the Portland water system that
plans for curtailment be agreed upon in advance and that plans for curtailments be
coordinated among water providers.
B. By signing this agreement, Purchaser and City acknowledge that unforeseen or
unavoidable circumstances may limit the amount of water available to City for sale and
distribution, whether temporarily or permanently. Should the available supply fall below
the aggregate of all demands placed on the City system,or should it be reasonably
predicted that supply will fall below demands before other supplies are available, the
Administrator of the Bureau of Water Works may declare that a water shortage is in
effect.
C. WMAB.shall develop and recommend to the Administrator a Curtailment Plan. The
Administrator shall adopt the recommended Curtailment Plan with such alterations as he
or she deems necessary or advisable. The Curtailment Plan shall be designed to
accomplish reductions in demand necessary, in the event of a water shortage, to protect
the system's capacity to supply water for fire, life, safety, and other high priority needs.
The curtailment plan shall establish procedures,as well,whereby two or more
participating Purchasers may coordinate their demand reductions to accomplish,,jointly,
total necessary system demand reductions imposed on them, even if one or more
Purchasers individually do not meet the reductions required of its separate system.
D. Whenever the Administrator has declared a water shortage, any adopted Curtailment Plan
shall be in effect. If there is no adopted Curtailment plan, the Administrator shall require
implementation of measures he or she deems necessary or advisable to reduce all
demands, retail and wholesale, proportionally based on annual.retail usage for the
previous contract year and on annual guaranteed purchase quantities(excluding
interruptible water)furnished under this agreement for the previous contract year.
E. If the Administrator declares a water shortage, Purchaser shallimplement measures
sufficient to meet the requirements of the Curtailment_Plan (or other requirements of the
Administrator for proportional reduction in demand if no Curtailment Plan has been.
adopted). Purchaser may do.this through implementation of measures contained in the
Curtailment Plan, similarly effective measures found in Purchaser's own plan adopted
under OAR Division 86 or required as partof a State declared drought under ORS
536.720-740,or through agreements with other Purchasers of water under similar
wholesale water agreements that result,jointly among the agreeing Purchasers, in a total
1 I•
Regional Water'Sales Agreement (10 Year)
April 1 2006
Page 40i
SECTION.X14—(Continued)
reduction in system.demand equivalent to that required'in the Curtailment Plan or, if there
is no'Plan, the Administrator's order for proportional reductions.
F. The City shall'monitor compliance with Curtailment Plan on a schedule established in the
Plan;or at least every two weeks throughout the duration of the.,declared water shortage.
G. lf, after the Administrator declares a watershortage, Purchaser is.unable individually, or
in cooperation with other purchasers as contemplated by Subsection E. above,to achieve
the required-reductions in the use of water,supplied under this contract,the Administrator
may act to reduce the amount of water supplied to the purchaser so that it does not exceed
that amount specifiedi under curtailment measures.
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 41
SECTION 15—BILLING AND PAYMENT
A. Guaranteed Purchase Payment
1. Monthly Billing
The City shall bill Purchaser its fixed monthly service charge plus a portion of its annual
guaranteed purchase volumetric payment obligation each month. The monthly volumetric charge
shall be the product of the monthly usage estimates,as determined in Sections 15.A.2(a) or(b)
below,times that year's rate per unit of water.
2. Monthly Usage Estimates
(a)No later than March 15 of each year, Purchaser shall submit to the City a projection of
its demands for the next year,by month, which demands must total to the Purchaser's guaranteed
purchase quantity and must be consistent with the Purchaser's seasonal peaking factor. It is
recognized these demand projections will be estimates and actual demands may vary from.
projected demands but such departures from estimates do not relieve the Purchaser from.
obligations such as guaranteed purchase quantity and adherence to seasonal peaking factor, as
specified elsewhere in this agreement.
(b)If the Purchaser has not by March 15 of each year submitted its projected demands for
the next year or if a timely submission is inconsistent with the Purchaser's then current
contractual guaranteed purchase quantity and seasonal peaking factor,the Administrator shall
consult with Purchaser to obtain new or revised projected demands. If thereafter the Purchaser
does not submit projected,demands that are consistent with its then current contractual
guaranteed purchase quantity and seasonal peaking factors, the Administrator may use the
previous year's demand projections or other projections that are consistent with Purchaser's.
contractual guaranteed purchase quantity and seasonal peaking factors, to make rates and to.
operate the system.
B. Summer Interruptible Water
If the Purchaser and City have agreed to the sale of summer interruptible water, the City shall.bill
the Purchaser for the total confirmed interruptible water payment in four equal amounts for the
months of June,July,August, and September. Provided,that if the City fails to deliver
interruptible water requested by the Purchaser, the Purchaser shall be excused from paying the
portion of its confirmed interruptible water payment equal to the quantity of water not delivered
times the price of interruptible water.
Regional Water Sales Agreement (10 Year)
April 3, 2006
Page 42
SECTION 15-(Continued)
C. Billing for Water Purchases Above Guaranteed Purchase Amounts and Above Confirmed
Peak Sdason Interruptible Water Quantities
Within 62 days of the end of each contract year(that�is,by September 1), the City shall review
the Purchaser's meter records for the previous contract year under this agreement. If the
Purchaser has taken water above either its guaranteed.purchase amount or its confirmed peak
season interruptible water quantities,the City shall bill Purchaser for those water deliveries no
later than September 30. Charges shall be calculated as follows:
If the Purchaser has taken at least its annual guaranteed purchase quantity over the full contract
year, then water supplied to Purchaser from October.I to May 31 in excess of its estimated
monthly guaranteed purchase quantity for those same months shall be charged the appropriate
rate for winter interruptible water times the quantity of excess water taken.
If the Purchaser has taken at least its annual:guaranteed purchase quantity over,the full contract
year, then water supplied to Purchaser from July 1 through September 30 and from the
subsequent June 1 through June 30 in excess of the total of its estimated monthly guaranteed
purchase quantity for those same months and its confirmed summer interruptible water quantities
(if any) for those same months shall be charged the appropriate standard rate applicable to its
guaranteed purchase quantity times the quantity of excess water taken.
D. Payment Schedule
Bills are due upon receipt,and subject to a collection fee if not paid on or before the thirtieth day
following the billing date. Collection fees shall be established each year in the annual City
ordinance establishing rates.
E. Charges In Case of Meter Failure
Should any meter fail to measure accurately the water passing through said meter, the charge for
water used during the time the meter is out of service shall be based on the City's estimates of the
volume of water supplied based on usage patterns and statistics for prior periods.
F. Disputes
In the case of disputes over billings for water, Purchaser shall pay the undisputed amount when
due and the disputed amount shall be resolved through.Dispute Resolution. The Purchaser shall
pay interest at a rate equivalent to the rate earned ori the City's internal investment pool managed
by the City Treasurer on any disputed amounts found through dispute resolution or litigation to
be due the City.
Regional Water Sales Agreement (10 Year)
April 3,2006
Page 43
SECTION 16-JOINT FUNDING OF CAPITAL.IMPROVEMENTS
The City and Purchaser or:group of Purchasers may enter into separate agreements for the
purpose of mutually funding capital improvements where such improvements are determined to
be in their mutual interest. The City and Purchasers or others involved in mutually funding
capital improvements may also enter into separate agreements for the conditions and pricing of
sale for water supplies derived from such mutually funded improvements.. Such separate
agreements may include provisions for acquisition of ownership of assets and/or capacity by
Purchaser. If provided in the joint funding agreement, Purchaser may include its proportionate
ownership share of such assets in its calculation of system develop charges and rates.
Regional Water Saieb Agreement (10 Year)
April 3, 2006
Page 44
SECTION 17—DISPUTE RESOLUTION
In case of disputes arising out of this agreement, includingdisputes regarding the interpretation
of any provision of the agreement, subject to the terms of this Section,either party may seek all
remedies available at law or in equity. The parties agree,however, prior to commencement of
any suit, they shall first engage in dispute resolution as provided in the Section.
Step 1. Notice of Dispute
Prior to commencement of litigation of a dispute,either party must first provide the other with a
written notice describing the dispute and submitting the dispute to resolution under this Section.
Such notice shall commence the dispute resolution process.
Step 2. Negotiation
Each party shall designate a person or persons to negotiate the dispute on its behalf, shall make a
good faith effort to exchange information and data related to the dispute, and shall meet to
negotiate a dispute resolution: If the dispute is resolved at this step, the parties will memorialize
the agreement by a written determination of such resolution,signed by the designated
representatives of the parties. "
Step 3. Mediation
If the dispute has not been resolved within 45 days of the date of the notice of dispute,or such
longer time as is mutually agreed by the parties, the parties shall submit the matter to mediation.
The parties shall attempt in good faith to agree on a mediator. If they cannot agree,they shall
request a list of five mediators from an entity or firm providing mediation services. The parties
shall attempt in good faith mutually to agree on a mediator from the list provided, but if they
cannot agree, each party shall select one name. The two selected shall select a third person and
the dispute shall be heard by a panel of three mediators.
Any common costs of mediation, including the cost of mediation, shall be borne equally by the
parties. Each party shall bear its own individual costs therefore. Mediation shall not continue
more than 105 days past the initial notice of dispute unless'mutually agreed by the parties. If the
dispute is resolved at this step, a written determination of such resolution shall be signed by the
designated representatives of the parties.
Step 4. Arbitration
If the dispute has not been resolved through negotiation or mediation with the time set by this ,
agreement, within 15 days of the end of mediation, or such other time as is mutually agreed, the
parties may submit the dispute to arbitration under mutually.agreeable terms. In the absence of
Regional Water Sales Agreement (10 Year)
Apri1.3 2006
Page 45
SECTION 17 (Continued)
such an agreement,the dispute resolution,process under this agreement shall be deemed ended
and the parties shall be free to pursue other remedies.
Any litigation between the parties arising under or.regarding this agreement shall be.conducted in
the Multnomah County Circuit Court of Oregon. 'In.any litigation, each party shall bear its own
costs and attorney's fees.
Regional Water.Sales Agreement,(10 Year)
April 3, 2006
IN WITSS.WHEREOF, Purchaser has, pursuant to official action of its governing body on
the j?3 day of 20A2�L_, duly authorizing the same, caused its proper
officers to execute this instAiment on itsbehalf and its corporate.seal to be affixed!hereto, and
City has caused this instrument to be signed,by its Mayor and Commissioner-in-Charge of the
Bureau of Water Works, all of which is in triplicate.
PURCHASER: G1 o f Cin_d
chaser
By
Approved as to form:
(Title)
Attest
Purch&4 Attorney Ait e)
Dated 6!o
CITY OF PORTLAND:
By ®�
Mayor
Approved as to form:
By
ommi si er-in-Charge
1
City Attorney
Date G(/ ��
Regional Water Sales Agreement
Exhibits
City of Tigard
April 3, 2006
Exhibit 1
Water District Usage Characteristics
City of Tigard,
Guaranteed'Purchase Quantity 4.0.00 MGD
Seasonal Peaking Factor 1.50
,DailX Peaking Factor 2.02
Purchase Quantities by Month by Fiscal Year
Estimated Monthlx demand data - Updated annually by March 15
Ci of Tigard
Daily Average— Month Total — Daily Month
Average- Total —
Month MGD MG Month MGD MG
July 6.000 186.0.0 January 3:000 93.00
August 6.000 186.00 February. 3.000 84.00
September . 6.000 180.00 March 3.000 93.00
October 4.000 124.00 April 3.000 90.00
November 3.000 90.00 May 3.000 93.00
December3.000 93.00 June 4.900 147.00
Peak Season Purchase 6.000 1MGD
Highest Three Consecutive Das 8.0800 IMGD
Existing Meter Connections
Location Meter# Size Pressure Range
NE CORNER SW HALL&OLESON NMI 1373519 1 10 178 1 137
Regional Water Saleb Agreement (10 Year)
April 3,2006
Exhibit 2.
Definitions of allocation factors
Allocation to WaterService.Parameters
The functionalized items shall!be allocated to the water service parameters listed below by the
retail customer,wholesale customer,and specific groups following the Commodity-Demand
method described in the AWWA's Manual MI.:
Commodity Items
Commodity items shall be identified;as described in the AWWA Manual M1. These are items
whose cost varies almost entirely directly with the amount of water supplied.
Peak-Season Demand
Items that are designed to meet the peak-season needs of the system shall be allocated as Peak
Season Demand.
Peak Day or Peak Three-Day Demand
Items that are designed to meet the peak day or peak three-day needs of the system shall�be
allocated as Peak Day or Peak Three-Day Demand.
Customer
Items allocated to customer shall be allocated based on the number of accounts foreach customer class.
Equivalent Meter
Items allocated to equivalent meter shall be allocated based on thezumber of equivalent,meters'
The.equivalent meter ratios used to,relate meters bysize to the number of equivalent meters shall
relate to the City's estimated costs of owning and:maintaining the meters. Whenever possible,the
values listed in the AWWA Manual M1 shall be used.
Fire
Any cost related to fire(either direct fire or indirect fire)shall be allocated to the parameter of fire.
Since fire-related costs are incurred solely for the City,no fire related costs,except for the cost of
water passing through the purchaser's meter,shall be included in the cost of water for the
purchaser.
Regional Water Sales Agreement (10 Year)
April 3,2006
Exhibit 3
Fixed Assets as of June 30,2005
Fixed Asset Cost Pools Rate Base Value Annual Depreciation
Arlington Heights 329,363 22,258
Arnold 1,510,800 52,514
Burlingame 643 1,081,402 72,778
Burlingame Regulated 117,331 9,180
Calvary 278,239 9,125
Council Crest 240,711 16,391
Indirect 7,633,800 1,039,261
Joint 117,679,576 5,555,781
Mt.Tabor 411 3,229,474 229,372
Parkrose 261 912,239 32,239
Pipe 176,262,331 4,893,188
Portland Heights 195,271 10,503
Portland Retail 103,610;826 4,277,385
Sam Jackson PS 107,265 6,679
Washington Park 229 763,432 31,804
Washington Park 299 1,911,795 98,048
Washington Park Common 2,229,103 192,106
Washington Park PS •585,406 57,830
Totals 418,678,362 16,606,439
Regional Water Sale Agreement (10 Year)
April 3,2006
Exhibit 4
Functional asset groups include the following general categories(see also Cost Pool Table below):
• Source of Supply
• Terminal Storage and Conduits
• Treatment
• Treatment Chemicals and Power
• Burlingame 643 Pumping and Storage/Power
• Arnold.Pumping and Storage/Power
• Arlington Heights Pumping and Storage/Power
• Tabor 411 Storage
• Parkrose 261 Storage
• Portland Heights Pumping and Storage/Power
• Washington Park 229 Storage,Pumping,and Treatment/Power&Chemicals
e Council Crest Pumping and Storage/Power
• Calvary Pumping and Storage/Power
• Burlingame Regulated Pumping and Storage/Power
• Washington Park 299 Pumping and Storage/Power
• Joint Equivalent Meters
• Washington County Supply Line—Portland Only .
• Retail Direct and Indirect
• Indirect Storage./Pipe
• Indirect
Regional Water Sa►t;s Agreement (10 Year)
April 3, 2006
Clly of Portland-Wholesale Mate Model " ' '+t ,,
CustChar 7-Percentage of Customer's Demand Through Cost Pools
Mt.
Arlington Burlingame Burlingame Council Tabor
Customer Heights Arnold 643 Regulated Calvary Crest Joint 411
Service Area 1 Water Cos. 1000A
City of Gresham 1000/0
Lusted Water District lop%
Pleasant Home Water
District 100%
Rockwood Water PUD 100% 3%
Palatine Hill Water District 1000/0 1000/0
Burlington Water District 1000/0 1000/0
Lake Grove Water District 100% 100% 1000A 100%
City of Tigard 1000/0 I000A 1110%
Valley View 22% 22% 78% 100% 1000/0
West Slope Water District 100% 100% 1000/0
TVWD 6% 1000/0 6%
Raleigh Water District 20A 100% 20A
City of Tualatin 2% i 000A 2%
City of Portland 3.80% 1% 8% 2% 3% 0°A 1o0°A 95%
Parkrose Portland Portland Sam Jackson Washington Washington Washington
Customer 261 Heights Retail PS Park 229 Park 299 Park PS WCSL
Service Area 1 Water Cos.
City of Gresham 3%
Lusted Water District
Pleasant Home Water
District
Rockwood Water PUD
Palatine Hill Water District 100% 1000A
Burlington Water District 100% 100%
Lake Grove Water District 2%
City of Tigard 2%
Valley View 78% 70% 100% 30%
West Slope Water District 1000A 1000/0
TVWD 96%
Raleigh Water District 100%
City of Tualatin 10001,
City of Portland 3% 1% 49% 4% 10`/0 21% 5% 10/(
ORDINANCE No. 180020
*Authorize the Water Bureau to offer anew water sales agreement to its wholesale customers
for approval: (Ordinance)
The City of Portland ordains:
Section 1. The Council finds:
1. Pursuant to City Code Section 21.28.030"Water Supply to Distributors by
Contract"when an outside distributor desires to purchase water from the Bureau,
the Mayor and the Commissioner-In-Charge of the Bureau may enter into and
execute contracts to supply water in accordance with the rates established by the
Council and subject to all the provisions of the Charter and ordinances, and may
include special terms and provisions found by the Commissioner-In-Charge to be
reasonable and appropriate in the particular circumstances.
2. Portland has provided drinking water to neighboring cities and water districts for
100 years. The revenues the City receives from these water sales reduce the rates
of inwCity retail customers and help pay for the supply infrastructure of the
Portland water system.
3. Most of the current water sales agreements between Portland and the wholesale
customers were negotiated in the 1970s and will expire on June 30,2007.
4. City officials have negotiated two proposed new wholesale water sales agreements
with officials of the City's wholesale customers the City's to replace the existing
expiring contracts.
5. The two new agreements are substantially similar in their basic terms, but one
carries an initial term of 10 years and the other carries an initial term of 20 years.
Under the 20-year agreement,the rate of return earned by the City is also lower
than the rate of return earned under the 10-year agreement. In addition, each
contract contains a unique"guaranteed purchase water quantity"for each potential
customer
6. By the terms of the proposed agreements, each wholesale customer will be
charged based on"cost of service"pricing,which is a standard utility pricing
approach. Wholesale customers purchase different amounts of water from
Portland and require different amounts of infrastructure.to receive water. The
wholesale customers also pay,proportionate to their use of the system, a share of
the maintenance and replacement costs for the infrastructure required to serve
them.
1
180, 020
7. Portland has developed a rate model to incorporate the terns of the proposed
agreements and the details of how much infrastructure and maintenance costs each
wholesale customer requires to receive drinking water. The rate model produces
specific rates for each wholesale customer based on the proposed agreements.
8. The proposed.new contracts were developed on the assumption that all or most of
the City's existing,wholesale customers would execute one or the other of the new
contracts so that all customers and the City could benefit from its new provisions.
NOW, THEREFORE, The Council directs:
a. That the Commissioner in Charge of the Water Bureau is hereby authorized to
transmit to the City's existing wholesale customers a letter extending an offer to
enter into one or the other of two water sales agreements substantially similar to
the attached agreements, Exhibits A and B. For each individual customer,the
offer shall include the gu ranteed purchase quantity, seasonal peaking factor,daily
peaking factor, and pressures shown in Exhibit C to this Ordinance.
b. The letter from the Commissioner in Charge shall state that the offer is contingent
upon his determination that a sufficient number of customers have accepted the
contracts; by no later than May 22,2006,to allow the agreements' projected
benefits to flow to the City and the accepting wholesale customers.
C. Upon a determination by the Commissioner in Charge that a sufficient number of
customers have accepted the contracts in a timely fashion, then the Commissioner.
in Charge and the Mayor are further authorized to execute all accepted contracts
on behalf of the City.
Section 2. The Council declares.that an emergency exists because the contracts must be signed
soon in order for them to be implemented starting with the new fiscal year, July 1, 2006.
Therefore this ordinance shall be in full force and effect from and after its passage by the
Council.
Passed by the Council: MAR 2 2 2006 GARY BLACKMER
Commissioner Leonard Auditor of.the City of Portland
Prepared by: Terence L. Thatcher:lgm By
March 16,16, 2006 Deputy
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10/26/2006 CITY OF TIGARD Page 1 of 1
4:06:14PPA ImageFlow Lite Report - Legislative History (Detailed) USerID: CAROL
Doc. Ket. Gode Doc. Date Item Ret. Action Code—Or-i-orDescription Ket.Gode
Cont. Date Exp. Date Name Referred to File Reference # Security Class
Abstract Keywords
GREER GASTON
INTERGOVERNMENTAL AGREEMENT
CITY OF TIGARD
PORTLAND WATER CONTRACT
10 YEAR
WATER SUPPLY
WATER SALES AGREEMENT
CITY OF PORTLAND
PORTLAND WATER BUREAU
-------------------------------------------------
Total Items Printed: 1
jut.1;,g
2008
,526 6 3
Regional Water Sales Agreement
10 Year
Presented to
City of Tigard
April 3, 2006
REGIONAL WATER SALES AGREEMENT
(10 YEAR)
TABLE-OF CONTENTS
Page
SECTION 1 —NATURE OF SERVICE........................:::................................................................. 2
SECTION 2—WATER REGULATIONS......................................................................................... 3
SECTION 3—DURATION OF AGREEMENT AND RENEWAL.................................................4
SECTION 4—WATER MANAGERS ADVISORY BOARD.......................................................... 6
SECTION 5—GUARANTEED PURCHASE WATER QUANTITIES......................................... 10
SECTION 6 - INTERRUPTIBLE WATER.................................................................................... 19
SECTION 7—RATES AND CHARGES FOR GUARANTEED PURCHASE WATER
QUANTITY................................................:............................................................ 20
SECTION 8 - RATES AND CHARGES FOR INTERRUPTIBLE WATER................................. 31
SECTION 9- WATER SYSTEM PLANNING AND COOPERATION....................................... 32
SECTION 10- RESERVATION OF SYSTEM CAPACITY......................................................... 33
SECTION 11 - CONNECTIONS AND METERING..................................................................... 34
SECTION 12 - PURCHASER-SUPPLIED WATER TO CITY RESIDENTS............................... 35
SECTION 13 -WATER RESOURCE CONSERVATION............................................................ 36
SECTION 14—WATER CURTAILMENT AND PROTECTION OF THE WATER SYSTEM.. 39
SECTION 15—BILLING AND PAYMENT.................................................................................. 41
SECTION 16—JOINT FUNDING OF CAPITAL IMPROVEMENTS...........................................43
SECTION 17—DISPUTE RESOLUTION.........::.::....................................................................... 44
EXXHIBITS
EXHIBIT 1 -GUARANTEED PURCHASE QUANTITY, SEASONAL'PEAKING FACTOR,
DAILY PEAKING FACTOR, AND PRESSURES
EXHIBIT 2-DEFINITION OF WATER SERVICE CHARACTERISTICS
EXHIBIT 3-RATE BASE ASSETS
EXHIBIT 4-FUNCTIONAL ASSET GROUPS
SHORT-TERM WATER SALES AGREEMENT
This Short-Term Water Sales Agreement(Agreement) between City of Tigard (Tigard),a
municipal corporation of the State of Oregon, and the City of Portland (Portland), a municipal
corporation of the State of Oregon, is effective this day of , 2016.
The Parties recite:
A. The Parties entered into a 10-Year Regional Water Sales Agreement(10 Year
Agreement) on June 7,2006 by which Portland agreed to furnish and sell and
Tigard agreed to purchase a firm supply of potable water on an annual basis.
B. Pursuant to the terms of the 10 Year Agreement, Tigard has elected not to renew
that agreement and the 10 Year Agreement therefore expires on June 30, 2016.
C. Tigard has developed an alternative water supply and anticipates delivery from its
new water source to all Tigard residents by July 1, 2016.
D. This Short-Term Water Sales Agreement is intended to assure temporary water
service to Tigard's residents if unforeseen events prevent Tigard.from receiving
water from its new water source on time.'
NOW, THEREFORE THE PARTIES AGREE:
SECTION 1. NATURE OF SERVICE
A. Subject to the terms and conditions contained herein,Portland agrees to furnish and sell
and Tigard agrees to purchase a firm supply of potable water on a monthly basis for the
life of this Agreement.
B. Water is'to be delivered,to Tigard at the wholesale meter vault located at the intersection
of SW Hall Blvd.:and SW Oleson Rd,provided that Portland is not obligated to meet
Tigard's demands for water during any period of time that Tigard operates its system not
in compliance with'operational rules established pursuant to Section 4.D.i of the parties'
previous 10 Year Agreement.
C. Portland shall deliver water to Tigard from the same source or sources of water that
Portland delivers to Portland inhabitants. Portland shall meet all applicable drinking
water regulatory requirements up to Tigard's point of delivery.
D. Tigard's supply of water shall be reduced or terminated only in accordance with the terms
of this agreement.
E. Tigard recognizes and agrees that no liability for damages shall attach to Portland on
account of any failure of supply or changes in pressure, flow rate, or water quality due to
circumstances beyond the reasonable control of Portlandacting in accordance with
standards of care common and usual in the municipal water supply industry. Examples
of such circumstances include, but are not limited to,natural events such as earthquakes,
1
landslides and floods,and human-caused events such as terrorism, malevolent acts,
contamination of the water supply, and acts of war.
F. The service and commodity provided by Portland pursuant to this Agreement are special
contract services and are not provided by Portland as a common utility service.
G. Tigard hereby agrees to abide by and be bound by the terms and provisions of Chapter
21.28 of the Code of the City of Portland, Oregon,as it presently exists or as may be
amended to comply with federal and state law,during the life of this agreement,to the
extent to which such terms and provisions do not conflict with any material provisions of
this agreement.
SECTION 2. NOTICE AND PROVISION OF WATER
A. Notice Of Intent To Take Water; Deliveryof Water
1. No later than June 15,2016, Tigard may give written notice that it intends to
purchase a guaranteed quantity of water for the month of July 2016, in a
quantity not less than 4 million gallons a day and no more than 6 million
gallons a day. Portland shall deliver no less than the quantity noticed,
calculated on a monthly basis, or such greater or lesser quantity as Tigard may
draw from Portland during that month.Provided, however,that Portland may
decline to provide more than 6 million gallons on any day or more than 186
million gallons in July if it determines that to do so may threaten its ability
reasonably to supply its other wholesale and retail customers while meeting
all regulatory obligations.
2. No later than the 25th day of each month thereafter, until the termination of
this contract,Tigard may give notice that.it intends to purchase a guaranteed
quantity of water for the month following in a quantity no less than 4 million
gallons a day and no more than,6 million gallons a day. Portland shall deliver .
no less than the quantity noticed,calculated on a monthly basis, or such
greater or lesser quantity as Tigard may draw from Portland,provided
however that Portland may decline to provide more than 6 million.gallons on
any day or more than 186 million gallons in the month if it determines that to
do so may threaten its ability reasonably to supply its other wholesale and
retail customers while meeting all regulatory obligations.
B. Obligation to Pay
For each month that Tigard notices its intent to take any water, it shall pay
Portland no less than the sum of money equal to the daily quantity identified in
the notice times the number of days in the month times the rate or, if the quantity
actually taken and delivered exceeds the monthly quantity noticed, then the actual
quantity taken in a month times the rate. Seven days after the end of each month
for which Tigard takes water, Portland will send a monthly bill to Tigard. Tigard
shall pay the bill within 21 days of its receipt.
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C. Rate
For purposes of calculating Tigard's payment obligations, the rate shall be$2.212
per 100 cubic feet of water.
SECTION 3. WATER CURTAILMENT
By signing this agreement, Tigard and Portland acknowledge that unforeseen or unavoidable
circumstances may limit the amount of water available to Portland for sale and distribution.
Should the available supply fall below the aggregate of all demands placed on Portland system,or
should it be reasonably predicted that supply will fall below demands before other supplies are
available,the Administrator of the Portland Water Bureau may curtail delivery of water to Tigard.
If water deliveries are curtailed, Tigard need not pay for any quantity of water for which it
provided a monthly notice of intent but which was not delivered during the period of curtailment.
SECTION 4. TERM OF AGREEMENT
This agreement shall terminate on the 26'''day of any month that Tigard does not give notice of
intent to take water or December 31,2016, whichever is earlier.
IN WITNESS.WHEREOF, Tigard has, pursuant to official action of its governing body
on the ja%y of 6? , 2016, duly authorizing the same, caused its proper officers to
execute this instrumentfo signed on its behalf, and Portland has caused this instrument to be
signed by its Mayor and the Commissioner-in-Charge of its Portland Water Bureau, pursuant to
Portland City Code 2.1.28.20.
TIGARD: City of Portland
City of Tigard
By: By:
May MavcAr
Attest: By:
City Recorder Commissioner-in-Charge
Date: GI /0 -,a6 Date: oz—
Approved
zApproved as to Fo Approved as to Form:
KuXA,�', 0Y,
Tiga ttorney Portland City Attorney
A&
d
Ce ifie rsuantto City Charter 2-509(b)
Mary Hull Caballero,Auditor
3
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I
City Council Document Transmittal
To: .
From: e V
i
Date:
I'm sending you:
Document Type: ❑ IGA Agreement ❑ Contract
d Other
Between COT &:
Document Name:
r), b)a r,.,,-*7 e',-7_/-
Approved at.the Council Meeting of:
By: 0 Ord. No. ❑ Res. NK" )�C Motion
Number Copies Included:
fYYour*docuxnent(s) have been signed by the Mayor
Your document(s) have been signed by the C' nag
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❑ Your document(s) requires an additional signature(s)
0 Additional instructions:
'When all signatures have been obtained, file an ORIGINAL document with City,of Tigard Records
I.\ADM\CITY RECORDERS\FORMS\City Council Document Tiansmittal.docx