Excerpts from the agreement between The City and CINERGY SOLUTIONS

Corporate Access Request 05-2314.

Received from City of Toronto Corporate Access and Privacy: “The full text of the agreement that was entered into between the City of Toronto and Vestar/ Cinergy, resulting from RFP 9119-03-7275.” “The Agreement made in quadruplicate effective as of the 8th day of December 2004.”

Selections from the 27-page agreement

p.1 (Article 1.01) Definitions: “Approval Period” means the period of 15 days from receipt by the City of information delivered by CINERGY SOLUTIONS – DEMAND. (Note: formerly called Vestar)

Design

P.4. (Article 2.01) “Before detailed design and construction begin, Cinergy Solutions will develop a Concept Report for each Measure and a summarized report for each Premise, subject to the approval of the City’s Representative….[and, Article 2.02] will present the City’s representative with a report for each of the Measures at the various Premises (“Concept Reports”)….[Article 2.03] Failure to notify Cinergy Solutions of the acceptance or rejection of a Concept Report within the Approval Period shall constitute an automatic acceptance of the Concept report. (p.5)” P.5 “[Article 3.01] Following the approval of the Concept Report, Cinergy Solutions will proceed with the detailed design and specifications of the Measures….[Article 3.02] The City will information Cinergy Solutions in writing of its acceptance, or any questions or concerns arising from the detailed design and specifications…Failure to notify Cinergy Solutions of the City’s acceptance or concerns within the Approval Period shall constitute acceptance by the City.” P.5 [Article 3.02] '“Either party may terminate this Agreement for any reason between the date the Agreement is executed and the Approved Total Project scope is submitted to the City.”' Note: “If the City terminates the Agreement….the City shall reimburse Cinergy Solutions for all costs and commitments incurred by Cinergy Solutions to the date of termination.”

Construction

p.6 [Article 4.05] re construction: when construction of any of the measures is complete Cinergy will notify the City. The City can let the company know of any objections to what was done. “If no such objections are raised within the Approval period, the City shall be deemed to have approved the completion of construction.”

Performance

[Article 7.01] '“…the City will provide Cinergy Solutions with complete data on electricity, gas and water utilities for the performance period for each premise that implemented the Measures.' Cinergy Solutions will quantify costs of energy consumption at the Premises, normalizing annual gas, electricity and water consumption for weather conditions and any changes in use of operations of the facilities as per Schedule “B”. If the total Project Cost… exceeds the product of the Test period [first 12 months after project end] savings multiplied by the Projected payback period, Cinergy Solutions will reimburse the difference to the City at the end of the performance period [24 months].” Note that Cinergy may also take out “energy savings insurance.”

Costs

[Article 9.01] “…costs shall include Cinergy Solutions labour, external resources, overheads, and mark-ups up to a maximum of $10.213 million. Notwithstanding the estimated costs exchanged by the parties or stated in this Agreement, the City is obligated to pay Cinergy Solutions the actual project costs.”

Obligations

[Article 11.04 (11)]“A Performance Bond, for due and proper performance of the Project…” '“Notwithstanding anything to the contrary herein or in the Agreement, the Surety shall not be liable for nor shall this bond respond to any claims by the City with respect to concept development, Concept report(s), design, errors in design, efficiency guarantees, performance guarantees, energy savings guarantees, Energy Cost Savings, or other similar obligations.”'

Note that if the City installs equipment that may lead to more power use, Cinergy’s energy savings guarantees won’t apply. [Article 14.04 (2)]

Calculations

[Article 14.06] “Any objections to the calculations and estimates [presented by Cinergy] will be made by the City in writing within the Approval Period. If no such objections are raised within the Approval period, the City shall be deemed to have approved the calculations and estimates.”

[Schedule “B”] (p.21) “The City and Cinergy Solutions, by mutual consent, may elect to determine Total Energy Cost Savings by calculation rather than by direct comparison with the Base Year.”

We need to examine:

-Base Year numbers for electricity, fuel, and water for each of the 100 city rinks/arenas listed as part of the Energy Retrofit Project.

-Date the Agreement was executed

-Concept Reports for each of the 100 rinks/arenas

-Concept Reports specifically approved by the City representative to date

-Concept reports automatically approved by the City (i.e. because 15 days passed after delivery, without acknowledgment)

-Approved Total Project Scope, if it exists

-Costs incurred by Cinergy to date

-Moneys paid out to Cinergy by the City to date

We need to speak to the City’s representative in charge of this project (the person directly in charge of giving the Concept Report approvals and monitoring)