HomeMy WebLinkAbout2007-03-12 Ordinance 4936ORDINANCE NO. 4936
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AUTHORIZING THE CITY MANAGER TO PURCHASE A PORTION
OF THE CITY'S NATURAL GAS REQUIREMENTS FROM
CERTAIN PREQUALIFIED NATURAL GAS SUPPLIERS UNDER
SPECIFIED TERMS AND CONDITIONS DURING CALENDAR
YEARS 2007 THROUGH 2022, 'INCLUSIVE
The Council of the City of Palo Alto does ORDAIN as
follows:
SECTION 1. The City Council finds, as follows:
A. Between August 2003 and August 2004, the Council by
minute orders approved the following: (1) the gas utility long-
term pla.n management objectives and guidelines ("GULP
Guidelines·), noted in staff report CMR:355:03, which requires the
diversification of energy purchases based on factors such as dates
and terms of commitment, suppliers, prices and fuel sources; and
(3) the GULP Implementation Plan, noted in staff report
CMR:335:04, which deals with asset management and acquisition
strategies.
B. In accordance with the GULP Guidelines and
implementation of the City's natural gas purchase laddering
strategy, noted in staff report CMR:167:04, the City must annually
purchase and, incidental to purchases, sell gas to meet the needs
of its gas customers by contracting for terms varying from less
than one month to three years. The City's Energy Risk Management
Policies, noted in staff report CMR:128:06, provide that the City
will purchase only that quantity of gas meeting its load
requirements at the time a transaction is executed.
C. By Ordinance No. 4810, adopted November 10, 2003,
the City has entered into one or more purchase transactions,
costing in the aggregate $34 million, which are scheduled for
delivery in the 2007 -2009 period. These transactions will be
governed by the new, amended, or restated North American Energy
Standards Board, Inc. contracts (each a "NAESB Contract") .
D. In June 2006, the City conducted an RFP process for
natural gas purchases, and BP Energy Company, Coral Energy
Resources, L.P., Sempra Energy Trading Corporation, ConocoPhillips
Company, J. P. Morgan Ventures Energy Corporation, and Powerex
Corporation have been determined to possess the minimum financial
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and legal qualifications and business experience required of
suppliers eligible to do business with the City.
E. The City intends to purchase natural gas from one or
more of these pre-qualified suppliers for delivery during calendar
years 2007 through 2022, inclusive, so long as the supplier with
whom the City negotiates a specific purchase transaction continues
to be qualified and otherwise eligible to transact with the City.
SECTION 2. The Council hereby authorizes the City Manager
to negotiate and sign new, amended, or. restated NAESB contracts
with the suppliers referred to in Section 1.0 above, and further
authorizes the City Manager or his designee, the Director of
Utilities, to negotiate one or more individual transactions,
including, but not limited to, negotiating contracts, addenda,
confirmations and transactions. The authorization shall extend to
individual transactions executed under any number of NAESB
Contracts with the referenced suppliers; provided, however, (a) the
maximum expenditure under any NAESB Contract shall not exceed $65
million in the aggregate and, with respect to outstanding
transactions for $34 million referred to in Section 1.C, the
respective amounts will not be applied against the maximum
expenditure established herein; and (b) the maximum term of any
transaction shall not exceed three years, commencing on the
delivery date of the transaction. The sentence preceding
notwithstanding, the City may enter into a transaction greater than
three years, if the Council grants prior approval to such
transaction.
SECTION 3. No NAESB Contract and any related transaction
entered into with any qualified supplier, executed by the City
Manager or his designated representative and approved as to form by
the City Attorney, under the authority of this ordinance, shall
extend beyond December 31, 2022.
SECTION 4. The Council hereby finds that this ordinance is
exempt from the provisions of the California Environmental Quality
Act pursuant to Section 15061(b) (3) of the California Environmental
Quality Act Guidelines, because it can be seen with certainty that
there is no possibility of significant environmental effects
occurring as a result of the adoption of this ordinance.
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SECTION 5. This ordinance shall be effective on the
thirty-first day after the date of its adoption.
INTRODUCED:
PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
APUJ.:.-T
Senior Asst. Cit
. 070313 syn 0072802
February 26, 2007
March 12, 2007
BARTON, BEECHAM, CORDELb, DREKMEIER, KISHIMOTO,
KLEINBERG, MORTON
KLEIN, MOSSAR
M:
Attorney
tilities
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