Amendment to the agreement with the City of Tacoma Department of Public Utilities, Light Division BEFORE THE BOARD OF COUNTY COMMISSIONERS
LEWIS COUNTY, WASHINGTON
IN THE MATTER OF: RESOLUTION NO. 19-293
APPROVING AN AMENDMENT TO THE
AGREEMENT BETWEEN LEWIS COUNTY AND THE
CITY OF TACOMA, DEPARTMENT OF PUBLIC
UTILITIES, LIGHT DIVISION, ALSO KNOWN AS
TACOMA POWER
WHEREAS, by Resolution the Lewis County Board of County Commissioners approved
Resolution No. 00-122 on March 23, 2000 an Agreement between Lewis County and
Tacoma Power, and
WHEREAS, the Agreement between Lewis County and Tacoma Power established
payments to be made by the City of Tacoma to the County under RCW 35.21.425 et
seq. ("Mitigation Payments"), and to set forth other obligations of the Parties related to
Tacoma Power's Cowlitz River Hydroelectric Project, and
WHEREAS, the Portland-Salem CPI-U Consumer Price Index for determining the
escalation rate of payments identified in Section 15 of the Agreement was discontinued
in January 2018 by the US Bureau of Labor and Statistics; and
WHEREAS, Tacoma and the County have analyzed the Consumer Price Index
performance trends from 2009-2017 in the Region; and
WHEREAS, Tacoma has proposed the West Size Class A CPI-U as a replacement
Consumer Price Index for determining the escalation rate of payments identified in the
Agreement, and
WHEREAS, Tacoma will reconcile the payments due under the Agreement with the
West Class A CPI and to use this CPI for future payment calculations throughout the
remaining term of the Agreement, and
WHEREAS, the Parties have agreed to the proposed replacement Consumer Price Index
for determining the escalation rate of payments identified in the Agreement.
NOW THEREFORE BE IT RESOLVED , in consideration of the mutual promises and
obligations hereinafter set forth, the parties agree as follows.
1. The first sentence of the third paragraph of Section fifteen which reads.
"The escalation index shall be the Portland-Salem CPI-U."
Is hereby deleted and replaced with the following:
"The escalation index shall be the West Class A CPI-U (CPI) "
This change shall apply retroactively to January 2018
1. All other terms of the Agreement, are hereby ratified and shall remain in full force
and effect, unaltered by this Amendment.
NOW THEREFORE BE IT FURTHER RESOLVED by the Board of County
Commissioners the proposed amendment and replacement Consumer Price Index for
determining the escalation rate of payments identified in the Agreement be approved.
DONE IN OPEN SESSION this 14th day of October, 2019.
APPROVED AS TO FORM. BOARD OF COUNTY COMMISSIONERS
Jonathan Meyer, Prosecuting Attorney LEWIS COUNTY, WASHINGTON
Cullen Gatten Absent
By Cullen Gatten, Robert C Jackson, Chair
Deputy Prosecuting Attorney 5• `"TY "
sIG••
ATTEST. OC6 °• Gary Stamper
1%45 ,��a :Gary Stamper, Vice Chair
•••�q /YCOt � Co••
Rieva Lester •.StiJU��ror�` Edna J . Fund
Rieva Lester, Edna J Fund, Commissioner
Clerk of the Lewis County Board of
County Commissioners
T 3628 South 35th Street
Tacoma,Washington 98409-3192
TACOMA POWER TACOMA PUBLIC UTILITIES
TACOMA •USLIC UTILITIES
September 11, 2019
Erik Martin
Lewis County Administration Rm 210
351 N W North Street
Chehalis, WA 98532
SUBJECT: Settlement Agreement Amendment for Mitigation Payments
Dear Mr Martin.
Please see the enclosed two (2) signed original copies of the amendment to the March 22, 2000
Mitigation Payment Agreement between the City of Tacoma and Lewis County
Please route both copies of the amendment for original signature and return one of the signed
original copies to me for our records
If you have questions, please contact me at (253) 502-8196, or Travis Nelson, at (253) 502-
8861.
Sincerely,
Keith Underwood
Natural Resources Manager
Enclosures
c. Becky Butler, Lewis County
Lisa Dill, Tacoma Power
Chris Mattson, Tacoma Power
Travis Nelson, Tacoma Power
AMENDMENT TO RESOLUTION U-9523 dated March 22, 2000
Mitigation Payment Agreement City of Tacoma and Lewis County
AMENDMENT NO 1 TO AGREEMENT
This Amendment is made and entered into effective as July , 2019, ("Effective Date") by
and between Lewis County (the `County") and the City of Tacoma, Department of Public
Utilities, Light Division a k a Tacoma Power ("Tacoma"), a municipal utility of the City of
Tacoma, (hereinafter collectively referred to as the "Parties")
WHEREAS effective March 23, 2000, the Parties entered into an Agreement to establish
payments to be made by Tacoma to the County under RCW 35 21 425 et seq and to set forth
other obligations of the Parties relative to Tacoma's Cowlitz River Hydroelectric Project
("Agreement"), and
WHEREAS the Portland-Salem CPI-U Consumer Price Index for determining the escalation rate
of payments identified in Section 15 of the Agreement was discontinued in January 2018 by the
US Bureau of Labor and Statistics, and
WHEREAS Tacoma has analyzed the Consumer Price Index performance trends from 2009-
2017 in the Region, and
WHEREAS Tacoma has proposed the West Size Class A CPI-U as a replacement Consumer
Price Index for determining the escalation rate of payments identified in the Agreement, and
WHEREAS Tacoma proposed reconciling the payments due under the Agreement with the
West Class A CPI and to use this CPI for future payment calculations throughout the remaining
term of the Agreement, and
WHEREAS the Parties have agreed to the proposed replacement Consumer Price Index for
determining the escalation rate of payments identified in the Agreement
NOW, THEREFORE, in consideration of the mutual promises and obligations hereinafter set
forth, the parties agree as follows
1 The first sentence of the third paragraph of Section fifteen which reads
"The escalation index shall be the Portland-Salem CPI-U "
Is hereby deleted and replaced with the following
"The escalation index shall be the West Class A CPI-U (CPI) "
This change shall apply retroactively to January 2018
2 All other terms of the Agreement, are hereby ratified and shall remain in full force and
effect, unaltered by this Amendment
Amendment #1 to Agreement -- Tacoma Power/ Lewis County Page 1 of 2
AMENDMENT TO RESOLUTION U-9523 dated March 22, 2000
Mitigation Payment Agreement. City of Tacoma and Lewis County
IN WITNESS WHEREOF, the Parties hereto have accepted and executed this Amendment, as
of the Effective Date stated above, which shall be Effective Date for bonding purposes as
applicable. The undersigned Party representative, by signature below, represents and warrants
they are duly authorized to execute this legally binding Amendment for and on behalf of Party
LEWIS COUNTY CITY OF TACOMA
Department of Public Utilities
Approved , •
e,/ iiiikatedst
Edna J Fund I Jackie . ers
Commissioner Direct. •f Utilities
Robert C Jackson Chris Mattson
Chair Generati•• ►l- P_.-r
G S per Cs • •re ! u
Vice Cha. F •- ce Director
CeA
Approved as to form and legality Approved as to form:
Attorney Martha Lantz
••'court •• Deputy City Attorney
• 0 \ q. •
J i n SINCE 1-10•
1845 ct z•
•
•
• ION'S t3 ••
••••• •
Amendment#1 to Agreement -- Tacoma Power/ Lewis County Page 2 of 2
T 3628 South 35th Street
Tacoma,Washington 98409-3192
TACOMA POWER TACOMA PUBLIC UTILITIES
TACOMA PUBLIC UTILITIES
April 19, 2019
Erik Martin, County Manager
Lewis County
351 NW North St
Chehalis, WA 98532
SUBJECT: Escalation method for the Mitigation Payments from Tacoma Power
to Lewis County
Dear Mr Martin
This letter is a proposal to you to replace the Portland—Salem CPI-U (Discontinued) Consumer
Price Index (CPI) with the West Size Class A CPI to calculate the escalation rate for our
payments to Lewis Country per our Mitigation Payment Agreement (Agreement) dated March
23, 2000.
Tacoma Power (Tacoma) provides annual payments to Lewis County (County) [Tacoma and
County (Parties)] under the Agreement. The current Agreement between the Parties expires at
the end of the second license for the Cowlitz project, April 2037 or no later than December
2041
The Agreement terms and conditions of compensation were established in 1972 and 1987, and
subsequently renegotiated in 2000 The payments are calculated with an escalation index
based on a CPI to account for economic variability within the Oregon/Washington region
(Region)
The payment escalation rate for this Agreement is based upon the Discontinued CPI, which was
canceled in 2018 by the US Bureau of Labor and Statistics (BLS) The BLS maintains the
Consumer Price Index (CPI) indices throughout the country and adjusts indices based on
criteria to ensure representative economic indicators are reflected in each region
Tacoma has analyzed the CPI performance trends from 2009-2017 in the Region These
include the Discontinued CPI, West Size Class A CPI (population of 2.5M or more) and the
West Size Class B/C CPI (population of 2 5M or less) Until 2013, the Discontinued CPI was
aligned relatively well with other indices in the Region Since then, these indices have diverged
slightly, but have outperformed the national CPI for US cities (Figure 1 -see attached)
Based upon the analysis of the CPI trends, Tacoma recommends using West Size Class A as a
replacement to the Discontinued CPI for calculating future escalation rates as it pertains to the
Agreement The West Size Class A CPI has followed a similar trend to the Discontinued CPI
over the past several years and is the closest fit to the historical performance trend of the
Discontinued CPI of the remaining indices in the region
Erik Martin
April 19, 2019
Page 2 of 2
Since January of 2018, Tacoma has applied an adjusted rate identified in the Agreement to
calculate the [2018 and 1st quarter 2019] payments while the analysis of the data and trends
was completed (Table 1 —see attached) The adjusted rates resulted in a net underpayment of
$47,119.21 for this period. Given the analysis is now completed, we propose providing an
adjusted additional payment of$47,119.21 to Lewis County to reconcile the payments with West
Class A CPI, and use this CPI for future payment calculations throughout the remaining term of
the Agreement.
If this proposal is acceptable to Lewis County, Tacoma requests a formal response from Lewis
County within 30 days of this letter Once the Parties have agreed to the terms of this proposal,
Tacoma will draft an amended agreement for signatures by the Parties to memorialize the
change.
If you have questions, please contact me at (253) 502-8196, or Travis Nelson, License
Implementation Coordinator, at (253) 502-8861
Sincerely,
jAt4 /,
Keith Underwood
Natural Resources Manager
Attachment
TN.mcp CPI Recommendation Letter-Lewis County Payments 04 19 19
c' Lewis County Commissioners, Lewis County
Chris Mattson, Tacoma Power
Trina Morris, Tacoma Power
Travis Nelson, Tacoma Power
Terry Ryan, Tacoma Power
Consumer Price Index Analysis Results and Payment Summary
Supporting documentation for April 19, 2019 letter to Lewis County Manager
Figure 1:Comparison of the affected CPI series with CPI series for the U S City Average and West Size Class A regions
Cumulative Percent Increase
20 /Seattle-Tacoma-Bellevue
Portland-Salem
▪U.S.City Average
18 it West-Size Class A
•West-Size Class B/C
16
14
12
B _r.
E
.._.: 2005 1013 2011 2012 _ _. 2014 208 2016 2017 20..0
Source https//www bis gov/regions/west/factsheet/2018cpirevisionwest.pdf
Table 1 Mitigation Payments 2017—Q1/2019
Amounts Paid all Revised Calculation Adjustments to prior Payments
CPI Annual Quarterly Correct Annual Quarterly
applied CPI
2017 2 14%1 $ 1,562,666 69 $ 390 666 67 2 14%I $ 1,562,666.69 $ 390,666 67 $no change 2017
2018 2 00%2 $ 1,598,920 00 $ 398,480 00 4 17%3 $ 1,627,898 40 $ 406,974 60 $ 33 978.40 2018
2019 2 00%2 $ 1,625,798.40 $ 406,450 00 3 10%4 $ 1,678,363 25 $ 419 590.81 $ 13,140 81 Q1-2019
$ 47,119.21 Adjustment
2 14%CPI-U Portland Salem(end of 2016)-applied to 2017 payment
2 2.0%-Estimate applied to 2018 payment as minimum for contract
3 4.2%CPI-U Portland Salem for 2017 adjusted March 2019 and applied to 2018
4-3 1%2018 West Size Class A CPI Applied to 2019(proposed CPI for remainder of agreement)
BOCC AGENDA ITEM SUMMARY
Resolution: BOCC Meeting Date:
Suggested Wording for Agenda Item: Agenda Type: Deliberation
Approving an amendment to the agreement Between Lewis county and the City of
Tacoma, Department of public utilities, light division, Also known as Tacoma Power
Contact: Erik Martin Phone: 740-2697
Department: BOCC - Board of County Commissioners
Description:
Approving an amendment to the agreement Between Lewis county and the City of
Tacoma, Department of public utilities, light division, Also known as Tacoma Power
Approvals: Publication Requirements:
Hearing Date: Oct. 9, 2019
User Status Pubications:
PA's Office Pending
Additional Copies
Rodney Reynolds