BOARD MEETING DATE: June 6, 2003
AGENDA NO. 6

Authorize Executive Officer to Reimburse Microturbine Site Owners for Repair Costs

SYNOPSIS:

The Board previously approved the purchase and installation of microturbines with portions of the AES Settlement Fund, the LADWP Settlement Fund, and the Rule 1309.1 Mitigation Fee Fund at various locations sites within AQMD boundaries. Staff recommends that the Board authorize the Executive Officer to use previously authorized funds to reimburse owners for repair costs of microturbines at sites where warranties expired.

COMMITTEE:

Technology, May 23, 2003, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Executive Officer to use the previously Board-authorized funds from the AES Settlement Fund, the LADWP Settlement Fund, and the Rule 1309.1 Mitigation Fee Fund to reimburse owners for repair costs of microturbines at sites where warranties expired. The maximum amounts authorized are: AES Settlement Fund - $55,000; LADWP Settlement Fund - $70,000; and Rule 1309.1 Mitigation Fee Fund -$100,000, with a maximum amount per microturbine not to exceed $10,000.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

In 2001, the Board authorized the use of portions of the AES Settlement Fund, the LADWP Settlement Fund, and Rule 1309.1 Mitigation Fees to install about 200 low-emission microturbines for distributed power generation throughout AQMD, in order to assist with the energy crisis and help prevent the need to use emergency diesel engines. At the April 2003 meeting, the Board approved the additional use of these funds to have the microturbine manufacturer return uninstalled units to the factory to thoroughly test them, update them to current specifications, and reset the warranties that had expired.

Prior to the decision to reset warranties of the uninstalled units, several facilities installed microturbines provided by AQMD whose warranties had expired or were shortened because time in storage counted toward the warranty time. Many of these facilities have or will have to pay for repair costs that would otherwise have been covered by a warranty.

All three of the previously mentioned funds have some monies left that the Board approved for installation and other defined costs, but are still uncommitted. These uncommitted funds could be used to reimburse host sites for repair costs.

Proposal

Staff requests that the Board authorize the Executive Officer to use uncommitted funds previously approved for microturbine projects to reimburse host sites on an equitable basis for out-of-warranty repair costs that occur due to an expired warranty during the normal warranty period of 12 months from commissioning of the microturbines. The maximum amounts authorized for repair reimbursements would be: AES Settlement Fund - $55,000; LADWP Settlement Fund - $70,000; and Rule 1309.1 Mitigation Fee Fund -$100,000, with a maximum amount per microturbine not to exceed $10,000. However, reimbursements will stop if the uncommitted funds are exhausted.

Resource Impacts

The proposed actions have no impact on the overall funding for microturbines from the AES Settlement Fund, LADWP Settlement Fund or the Rule 1309.1 Mitigation Fees.

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