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File #: 18-1847    Version: 1 Name: 11/19/18 Varnum amendment-PURPA case
Type: Resolution Status: Passed
File created: 11/19/2018 In control: City Council
On agenda: 11/19/2018 Final action: 11/19/2018
Enactment date: 11/19/2018 Enactment #: R-18-453
Title: Resolution to Approve Amendment No. 1 to Professional Services Agreement with Varnum LLP, for Legal Services Relative to MPSC Case No. U-18091 ($6,300.00) and to Appropriate Funds ($6,300.00) (8 Votes Required)
Attachments: 1. Varnum Amendment 1
Title
Resolution to Approve Amendment No. 1 to Professional Services Agreement with Varnum LLP, for Legal Services Relative to MPSC Case No. U-18091 ($6,300.00) and to Appropriate Funds ($6,300.00) (8 Votes Required)
Memo
By contracts entered into with The Detroit Edison Company (DTE) in 1984, the City became and is the owner and operator of two hydroelectric plants at Barton and Superior Dams, committed to sell all the net electrical output to DTE, and DTE committed to purchase all net electrical output. The generation of electricity started in 1986, and the contracts run for 50 years, until 2036.

Under the federal Public Utility Regulatory Policy Act (PURPA) both plants are Qualifying Facilities (QFs), defined as qualifying cogeneration facilities or qualifying small power production facilities, that have a right to sell to the electric utility of the City's choosing at a cost that does not exceed "the incremental cost to the electric utility of alternate electric energy." This is also referred to as a "must purchase" obligation on the part of the electric utility. As background, PURPA was enacted to further energy independence at a national level, and to try to solve the country's energy crisis.

In Michigan Public Services Commission (MPSC) Case No. U-18091, DTE filed a proposal seeking, among other things, a change in how its incremental cost is calculated for purpose of its purchases of electricity from QFs, and possibly to avoid its obligation to purchase electricity from QFs such as the City notwithstanding the requirements of PURPA.

The City has made significant investments in the hydroelectric plants at both Barton and Superior Dams, starting with the $3.2 million in hydroelectric bond funds approved to be issued by the voters in early 1983, and continuing since then. Funding for improvements at Bardon Dam not exclusive to power production are split between the Water Supply Fund and the General Fund; improvements solely related to power production a...

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