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Home My WebLink About2001-12-03 Ordinance 4724follows: ORDINANCE NO. 4724 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 -2010 PERIOD UNDER SPECIFIED TERMS AND CONDITIONS The Council of the City Palo Al to does ORDAIN as SECTION 1. The City Council finds that: 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 c 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. OO-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. The wholesale price of energy in recent months has declined/ but some market participants, including the City/ believe that the current relatively low market price will not continue indefinitely. D. The City Manager seeks the authority to purchase 25 MW blocks of energy and capacity at current relatively low wholesale prices and under certain other terms and conditions to fill an anticipated shortfall in the City's energy needs that will arise after 2004. E. If energy is not provided pursuant to contracts at specif ic prices, then purchases would be made at variable and relatively higher spot market prices. The public health, safety and welfare requires the City to now implement price risk management principles in order that the City may purchase energy in a timely and cost-effective manner to meet the anticipated energy supply deficit that will occur after 2004. 1 011206 syn 0072117 SECTION 2. The City Council hereby authorizes the City Manager or his designated representative, the Director of Utilities, by appropriate written delegation, to enter into and execute contracts for blocks of energy with qualified power suppliers under the following general terms and conditions: A. Quantity. Total purchases for all contracts negotiated and executed by the City under this authorization shall not exceed 25 megawatts of energy for any hour. B. Term. Each contract shall not exceed a term of five ~years and shall not extend beyond 2010. C. Delivery Period. The delivery of energy shall occur during an eight-consecutive-month period, commencing September 1 and ending April 30, inclusive, during the term of any contract. D. Delivery Point. Each contract shall specify NP-15 or equivalent location as the delivery point. E. Price. Each contract shall establish fixed prices for energy and capacity, and the average price of all contracts entered into and executed by the City shall not exceed $45 per megawatt-hour. SECTION 3. No contract entered into and executed by the City Manager and approved as to form by the City Attorney under this authority may extend beyond December 31, 2010. SECTION 4. The City 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 II II II II II II II II 2 011206 syn 0072117 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: November 13, 2001 PASSED: December 3, 2001 AYES: BEECHAM, BURCH, EAKINS, KLEINBERG, LYTLE, OJAKIAN, WHEELER NOES: ABSTENTIONS: ABSENT: FAZZINO, MOSSAR A~~~ City Clerk APPROVED AS TO FORM: (~ ----.< Senior Asst. City AtbOrney 011206 syn 0072117 3 APPROVED: I. '-~ ~~.- IrIiS DOCUMENT IS CERTl,FIED TO BE AN OROINANCE DULV PASSeD BVTHE COUNCIL OF THE CITY OF PALO ALTO AND . :~ THEREAI' rER POSTeD ~ ')1E aOUNCIL"~ CHAMBERS ON I (0 0 (WITHIN 15 DA\'S 0::: ITS PASSAGE)