HomeMy WebLinkAbout20081020 - VIII-A-02VIII-A-2
MEMO
To: Honorable Mayor and City Council
From: Tom Montgomery
Date: 10/16/2008
Re: Hydro Green Agreement and Corps of Engineers Memorandum of Agreement
Hydro Green is manufacturing the turbine units for their hydrokinetic facility to
be moored downstream of the City's hydroelectric plant. They hope to begin installation
on November 1. The installation will consist of one unit installed the fall, with a second
unit to be installed next spring. The units utilize the City's facility to pass their generated
power onto the Xcel Energy grid and to utilize the City's facility power to provide power
to the hydrokinetic facility. Access to the hydrokinetic facility will be accomplished
through the City's facility's footprint, with a dock ramp from the sheet pile storage area.
The City and Hydro Green are also awaiting final FERC approval of the license
amendment that will permit the installation of the hydrokinetic facility. FERC is waiting
on the MPCA's 401 Water Quality Permit requirements to incorporate these within the
license amendment. The MPCA's permit has been drafted and is currently being
reviewed.
At this time, the draft agreement is still being reviewed by the City Attorney and
Hydro Green attorneys. I will pass out a copy of the agreement at Monday's meeting,
and email a copy as soon as I get one. The main points of the agreement follow the
previously approved conceptual power purchase agreement that was approved last year.
• Revenue -the City and Hydro Green will split the hydrokinetic facility's
power generation revenues 50-50.
• Ownership -the hydrokinetic facility will be owned by Hydro Green and
they will be responsible for maintain all insurance coverages for it.
• Operations and Maintenance -Hydro Green has yet to determine who
they will hire to maintain their facility. If City forces are used for minor
daily/weekly operations or facility monitoring, the City will charge Hydro
Green at 50% the Council adopted billing rates for Public Works
personnel. This mirrors the City's 50% share in revenues. However, if
City billings exceed the City's share of revenues, Hydro Green will be
charged 100% of the adopted billing rates for the hourly billings that
exceeded the City's share of revenues.
• The term of the agreement is set up similar to the City's wireless antenna
leases: a 25 year total term, set up as 5 year renewable leases. Opt out
provisions allow the City or Hydro Green to terminate with varying
amounts of notice; 2 years by the City without cause, 6 months by Hydro
Green without cause, immediately by City if required by Corps.
Additional provisions allow the City to require the hydrokinetic facility to
be temporarily removed for maintenance operations, including
dewatering.
• The City will name Hydro Green as an agent of the City as called for
under the existing Memorandum of Agreement with the Corps of
Engineers, to allow Hydro Green access through the Corps' facility to
reach their hydrokinetic facility. The City and Corps will need to adopt a
minor amendment to the existing Memorandum of Understanding to
include the hydrokinetic facility as part of the description of the City's
hydroelectric plant.
COUNCIL ACTION REQUESTED
Council is requested to approve the Agreement with Hydro Green and to approve
the amendment to the Memorandum of Agreement between the City and the Corps of
Engineers.
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