HomeMy WebLinkAbout2003-09-08 Ordinance 4801follows:
ORDINANCE NO. 4801
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AUTHORIZING THE CITY MANAGER TO PURCHASE A PORTION
OF THE CITY'S ENERGY REQUIREMENTS DURING THE 2005
-2007 PERIOD [BLOCK 1 PURCHASES], THE 2005 -2006
PERIOD [BLOCK 2 PURCHASES], AND THE 2005 PERIOD
[BLOCK 3 PURCHASES] UNDER SPECIFIED TERMS AND
CONDITIONS
The Council of the City of Palo Alto does ORDAIN as
SECTION 1. The City Council finds, as follows:
A. In 1967, the United States entered into a Contract
No. 14-06-200-2948A with Pacific Gas and Electric Company
("Integration Contract"). Under this contract, the Western Area
Power Administration ("WAPA") provides electric capacity and energy
to the City of Palo Alto ("City") over PG&E's transmission system.
It will expire in December 2004.
B. In 2000, the City entered into a Contract No. 00-
SNR-0033 with WAPA ("Base Resource Contract"). Under this
contract, the City will receive less electric capacity and energy
than is currently made available under the existing power purchase
agreement. It will begin in January 2005 and will expire in
December 2024.
C. 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, and it also adopted Ordinance No. 4724,
authorizing a five-year purchase of energy and capacity during the
2005 -2010 period.
D. 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"). One of the
LEAP guidelines is to diversify energy purchases according to
several factors, including, but not limited to, dates and terms of
commitment, suppliers, prices and fuel sources.
E. The City Manager seeks the authority to purchase
three 25 MW blocks ("Block 1 purchase," "Block 2 purchase" and
"Block 3 purchase") of energy and capacity at fixed market-based
prices and other terms and conditions. The purchases are intended
to fill a portion of an anticipated shortfall in the City's energy
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that will arise after 2004, consistent with the Objectives
and LEAP Guidelines.
F. If energy is not provided pursuant to contracts at
prices, then purchases would be made at variable and
potentially higher spot market s. The public Ith, safety
and welfare require the City to now implement price k management
iples in order that the City may purchase energy in a timely
and cost-effective manner to meet the anticipated energy supply
de cit that will occur after 2004.
G. The City will purchase energy and directly
suppliers, and may indi purchase from suppliers with
the assistance of the Northern Power Agency acting as
the City.
H. The total authorization for the Block 1 purchase
shall be $22,340,000. The total authorization the Block 2
purchase shall be $5,400,000. The total authorization for the
Block 3 purchase s I be $7,980,000.
SECTION 2. The Council authorizes the C Manager
or s designated representat , the Director Utilities, by
appropriate written delegation, to enter into and execute
standardized form energy contracts (EEl or WSPP, or equivalent) to
e the Block 1, ock 2 and Block 3 purchases with qualified
power suppliers, as lows:
BLOCK 1 PURCHASE ral terms and conditions:
(1) Total purchases for on-peak and off-peak
energy contracts negoti and executed by the City
under authorization shall not 25 megawatts
of energy for any hour.
(2) Term.
(3)
Each contract shall not exceed a term of three
and shall not beyond 2007.
(3) Del The delivery of on-peak and off-peak
energy occur at time during a seven-
consecutive-month period, commencing September 1 and
ending March 31, inclus , during the term of any
contract.
(4) Delivery Point. Each contract shall specify COB or NP-
15, or equivalent location, as the delivery point.
(5) Price. Each contract shall establish fixed for
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energy and capacity, and average price of all
contracts entered into and executed by the City shall
not exceed $59 per megawatt-hour.
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BLOCK 2 PURCHASE general terms and conditions:
(1) Total purchases for all on k energy
(2)
(3 )
( 4 )
(5 )
BLOCK
contracts negotiated and executed by ty under
this authorization shall not exceed 25 megawatts of
energy any hour.
Term.
( )
Each contract shall not exceed a term of two
s and shall not extend beyond 2006.
Del The delivery of energy 11 occur
ing a
commencing September
inclus , during the
four-consecutive-month od,
1 and ending 31,
term of any contract.
Del
NP-
Price.
energy and
contracts
not
3 PURCHASE
specify COB or
location) as the delivery point.
contract shall establish fixed
capaci ty, and the average price of all
into and executed by the City 11
megawatt-hour.
1 terms and conditions:
(1) Total purchases for all on-peak energy
contracts negotiated and executed by the y under
this authorization shall not exceed 25 megawatts
energy for any hour.
(2) Term. contract shall not exceed a term of one
and shall not extend beyond 2005. ( 1)
(3) The delivery of energy shall. occur
( 4 )
a twelve-consecutive-month period,
commencing January 1 and ending December 31,
inclusive, during term of any contract.
specify COB or
location) as the delivery po
(5) Price. Each contract shall establish fixed prices for
energy and capac y, and the average price of all
contracts entered into and executed by the City shall
not exceed $65 megawatt-hour.
SECTION 3. No contract for any Block 1 purchase entered
into and executed by the Manager or his designated
representative and approved as to by the City Attorney under
this authority may extend beyond December 31, 2007. No contract
for any Block 2 purchase into and executed by the City
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Manager or his ignated representative and approved as to form by
the City under this authority may extend beyond December
31, 2006. No contract for any Block 3 purchase entered into and
executed by the City Manager or his designated sentative and
approved as to form by the City Attorney under s authority may
extend beyond December 31, 2005.
The Council hereby finds that this ordinance is
exempt sions of the California Environment Quality
Act pursuant to ion 15061(b) (3) of the California ronmental
Quality Act s, because it can be seen with that
there is no possibility of significant environmental effects
occurring as a of the adoption of this ordinance.
thirty-
INTRODUCED:
This ordinance shall be e
the date of its adoption.
r 8, 2003
on the
PASSED: BEECHAM, BURCH, FREEMAN, KISHIMOTO, KLEINBERG, LYTLE,
MORTON, MOSSAR, OJAKIAN
AYES:
NOES:
ABSTENTIONS:
ABSENT:
Mayor
APPROVED AS TO FORM:
~ Senior Asst. City Attorney
APPROVED:
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