HomeMy WebLinkAbout2004-06-07 Ordinance 4829follows:
ORDINANCE NO. 4829
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AUTHORIZING THE NEGOTIATION AND EXECUTION OF THE
WESTERN AREA POWER ADMINISTRATION CUSTOM PRODUCTS
CONTRACT AND TO SUBSCRIBE TO THE DAY-AHEAD FIRMING
SERVICE PRODUCT UNDER SPECIFIED TERMS AND
CONDITIONS DURING THE PERIOD JANUARY 1, 2005
THROUGH SEPTEMBER 30, 2010, INCLUSIVE
The Council of· the City of Palo Alto does ORDAIN as
SECTION 1. Findings. The City Council finds as follows:
A. On October 16, 2000, the City entered into a Contract
No. OO-SNR-0033 ("Base Resource Contract") with the Western Area
Power Administration ("Western"). Under this contract, the City
will receive less electric capacity and energy than is currently
made available under the existing contract with Western. The Base
Resource Contract will begin on January 1, 2005 and will expire on
December 31, 2024.
B. On November 13, 2001, the Council by minute order
approved four primary energy portfolio objectives ("Objectives"),
including the objective to ensure low and stable electric supply
rates for customers.
C. On October 21, 2002, the Council by minute order
approved seven electric portfolio planning and management
guidelines to guide staff in developing and managing the City's
long-term electric acquisition plan ("LEAP Guidelines"). LEAP
Guideline 1 regarding Electric Portfolio Dependence on Western
states: While maintaining the flexibility to adopt favorable
'custom products' offered by Western, manage a supply portfolio
independent of Western beyond the Base Resource Contract.
D. On August 4, 2003, the Council by minute order approved
the LEAP Implementation Plan and it also adopted Ordinance No.
4801, authorizing the purchase of energy and capacity during the
2005-2007 period. One element of the implementation plan is to
pursue any low-cost high value prospects to acquire supply-related
resources that may arise from time to time.
E. In accordance with the City's LEAP Guidelines and
Implementation Plan, the City must annually purchase and,
incidental to purchases, sell electricity to meet the needs of its
electric customers by entering into one or more contracts with
varying terms. The City's Energy Risk Management Policies provide
that the City will purchase only as much electricity as is needed
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to meet its load requirements established at the time a transaction
is executed.
F. A portion of the City's electricity demands are
supplied by existing contracts, including the Base Resource
Contract, contract for output derived from partial ownership in the
Calaveras Hydroelectric Plant with the Northern California Power
Agency, an energy exchange contract with Seattle City Light, and a
25 MW purchase of power for five years starting in 2005. The
balance of the City's electricity needs must be purchased from
suppliers at market-based prices.
G. The balance of electricity the City needs will depend
on the output from the Base Resource Contract and the Calaveras
Hydroelectric Plant, both of which depend on hydrologic conditions.
After 2004, the City will be required to purchase about one-third
of its total electricity needs in an average hydrologic year. In a
dry year, the City must purchase about one-half of its annual
needs. In wet years, the City may have a surplus of electricity
and could a~ford to sell about one-fifth of its projected annual
needs.
H. To deal with generator unit contingencies that exist
under the Base Resource Contract, the City may execute a
subscription to the Day-Ahead Firming service offered by Western in
accordance with Western's Custom Products Contract, subject to the
City's ability to terminate the subscription with 60 days notice.
Under this service Western would procure replacement energy (to be
paid for by subscriber) for short-term interruptions to day-ahead
energy schedules.
I. The City may purchase electricity from Western who may
in turn purchase electricity from suppliers for delivery between
January I, 2005 through September 30, 2010, inclusive.
SECTION 2. The Council hereby approves the negotiation and
execution of the Western Area Power Administration's Custom
Products Contract, and authorizes the Mayor to sign the Custom
Products Contract. The Council further authorizes the City Manager
or his designated representative, the Director of Utilities, to
negotiate one or more individual transactions thereunder, with the
Western Area Power Administration. The authorization shall extend
to individual transactions executed under the Custom Product
Contract, in accordance with the following key provisions: (a) the
maximum annual expenditure per fiscal year under any and all
separate transactions thereunder shall not exceed two million
dollars ($2,000, 000) per year, and (b) the maximum expenditure
under any and all separate transactions thereunder shall not exceed
ten million dollars ($10,000,000) in the aggregate. The City may
enter into additional transactions that would raise the aggregate
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expenditure above $ 10 million, provided that any such transaction
must receive the prior approval of the Council.
SECTION 3. No standard form contract and any transaction
entered into thereunder with any qualified electricity 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 September 30, 2010.
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.
SECTION 5. This ordinance shall be effective on the
thirty-first day after the date of its adoption.
INTRODUCED: May 10, 2004
PASSED: June 7, 2004
AYES: BEECHAM, BURCH, CORDELL, FREEMAN, KISHIMOTO, KLEINBERG,
MORTON, MOSSAR, OJAKIAN
NOES:
ABSTENTIONS:
ABSENT:
APPROV~
Senior Asst. City Attorney
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Mayor
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