RECEIVED SEP 18 19759 BLATA સયા 15, 1975 Negotiations between nembers of the Washington Metropolitan Area Transit Authority staff and the Potomac Electric Power Company have been conducted through a series of joint meetings extending over a period of about eighteen months to develop contractual documents under which facilities would be installed and electric service would be supplied to the Metro Systen. As the result of these proceedings a contract was prepared which was mutually agreeable to both groups of negotiators. This document was executed on behalf of the Potomac Electric Power Company by Mr. Ellis T. Cox, Executive Vice President, and was transmitted to the Washington Metropolitan Area Transit Authority for approval on July 2, 1975. Although the provisions of the document were agreeable to both negotiating teams, approval of the contract was not given when presented to the Board of the Washington Metropolitan Area Transit Authority. A chronology of actions relative to the agreement is given in the attached letter from Mr. Vernon K. Garrett, Jr., Director of Engineering, dated September 4, 1975. In the course of the joint negotiations during the past year it was recognized by both parties that it would not be feasible to include the specific electric rate schedule for propulsion service in the contract, but rather it would be the result of subsequent action. Since there was immediate need for an agreement relative to construction work being done by the Potomac Electric Power Company for the installation of facilities the agreement nade.only general reference to the rate in order to avoid unnecessary delay in concluding the agree cent.. At the present tine Potomac Electric Power Company representatives and the Washington Metropolitan Area Transit Authority representatives are working on the rate developzent and have made substantial progress toward a final tariff. However, once a specific rate schedule is agreed upon, it must be transmitted through established regulatory proceedings Mr. Jackson Graham POTOMAC ELECTRIC POWER COMPANY September 16, 1975 in seeking approval by the District of Columbia Public Service Commission. This process might take a number of months to complete. Because of the additional time required if the rata schedula were to be incorporated in the present tentative agreement, an approved contract would not be in effect relative to reimbursement of the Potomac Electric Power Company for the construction work performed. In the absence of such a contract it would be necessary to draft a "Letter of Intent” similar to that executed by you on July 7, 1972. - It was our understanding earlier that the Washington Metropolitan Area Transit Authority did not. want to handle the next phase of the project in that manner. We are concerned about the absence of a contractual document at the present time, and urge that the Washington Metropolitan Area Transit Authority Board of Directors reconsider their position in this matter. In the absence of either a signed contract or an additional "Letter of Intent" the only remaining course of action for the Company would be to stop work on the project. We will be glad to meet with you to discuss this matter in more detail if you so desire. Sincerely, Frank S. Walters Vice President Rates and Regulatory Practices ALTER E. VASHINGTON Alternate Directors RUPUS PHILLIPS CHARLES E. BEATLEY, JR. Virginia JAMES E. COATES JERRY A MOORE, JR District of Columbia : CARLTON R. SICKLES PANL CHRISTELLER Maryland Ollizers JACKSON GRAHAM WARREN CUENSTEDT SCHUYLER LOWE DELMER SON M metro Mr. Frank Walters Vice President of Rates Dear Mr. Walters: This is to inform you of the recent developments concern- As you are aware, after many months of negotiations the On August 14, 1975 the Agreement was presented to the On August 19, 1975, a meeting was held between the On August 21, 1975 the Electric Service Agreement was SEP 8-1975 Mr. Frank Walters Page 2. In view of the developments indicated herein and our. ..concern for continuing the electric service installation, it would be appreciated if your response in these matters would. be directed to the Authority's General Manager As always, your cooperation is appreciated. Very truly yours, Vernon K. Garrett, Jr. Office of Engineering At your request, we have undertaken an examination of the proposed agreement between Metro and Pepco for the provision of electric energy and equipment services. This memorandum constitutes our report on that agreement. It is based upon several meetings which we have held with Metro officials, a review of the relevant memoranda and correspondence pertaining to the agreement which the Metro officials provided us and follow-up conversations.' We conclude, for the reasons more fully described in this report, that there remain a number of matters which, at the very least, ought to be clarified and ideally resolved before the agreement is finally approved by the Metro Board. A. History of Negotiations and Summary 1. On July 7, 1972, Pepco and Metro entered into a letter of intent covering the provision of electric service connection facilities during Phase I of Metro. The letter of intent, which is presumably still in force, provides that all work performed by Pepco will be funded initially by "cash advances" made by Metro. It calls for the negotiation and execution of a "separate general agreement" to govern the obligations and liabilities of Metro to Pepco in connection with the service connection facilities. The negotiations looking toward the creation: of that separate general agreement have been conducted intermittently since the execution of the letter of intent and have culminated in the present proposed draft. We have been advised by Metro officials that some time ago a dispute arose as to the cash advances under the letter of intent; and that Metro officials have been instructed by its Board to make no futher payments until a final agreement has been entered into. As a result, Pepco |