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    7. 1.    
Regular City Council Meeting
Meeting Date: 02/11/2020  

Information
Agenda Item
Budget Amendment Ordinance 1st Reading - Finance: Consider Budget Ordinance Amendment 13, amending the FY 2019-20 Lubbock Power & Light Operating Budget and Capital Program; providing for filing; and providing for a savings clause.
Item Summary
Gas Turbine #2 (GT-2) experienced a major failure that rendered the unit inoperable. Due to the extent of damage, LP&L reviewed all options and decided it was best to purchase a direct replacement expander. An expander, that had been overhauled in 2013 and operated through early 2019, was located. After a site visit and borescope, it was determined that the expander and other parts were suitable to replace the expander. The owner was decommissioning the unit and accepted an offer of $50,000.

The extent of the scope of work requires LP&L to obtain a gas turbine & generator contractor to remove and replace the expander and power turbine, test the gas turbine engine instrumentation and controls, and modify the generator.The project is expected to be completed within the next six months.

This generation unit will help provide capacity for LP&L to serve its native load in the Southwest Power Pool (SPP) and provide a “quick start” asset in the wholesale electric markets of SPP and the Electric Reliability Council of Texas (ERCOT).

The unit is insured with a $250,000 deductible and the repairs are expected to be covered under our policy.  In order to fund the restoration of GT-2, a cash transfer from the Operating Fund to the Capital Fund in the amount of $2.23 million is necessary.
  1. Establish Capital Improvement Project, Cooke Station Gas Turbine #2 (GT-2) Repairs, and appropriate funding in the amount of $2,230,000.  The project will utilize FY 2019-20 cash funding.  The project scope and justification is as follows:  
Project Scope: 
 
This project is to replace the expander on Gas Turbine #2 (GT-2) at Cooke Station.  The project includes costs related to engineering and repairs of the expander, generator, turbine, control system, electrical wiring, and auxiliary equipment. 
 
Project Justification:
 
A catastrophic failure occurred to the expander on GT-2 at Cooke Station and the unit is currently inoperable.  The restoration of GT-2 will offset the need to purchase capacity megawatts to cover LP&L’s system demand. Returning this generation unit to service will also provide capacity for LP&L to serve its native load in the Southwestern Power Pool (SPP) and provide a “quick start” asset in the wholesale electric markets of SPP and Electric Reliability Council of Texas (ERCOT). 
 
FERC Accounts: 343
 
Estimated Useful Life:  10 years 
  1. Amend fund 211, “Electric Operating Fund”, by increasing the Transfer to the Capital Program in the amount of $2,230,000, from $14,915,000 to $17,145,000.
Fiscal Impact
Included in Item Summary
Staff/Board Recommending
D. Blu Kostelich, Chief Financial Officer

Attachments
Budget Amendment 13
LP&L Resolution

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