HomeMy WebLinkAboutRESO 9324Resolution No. 9324
Resolution of the Council of the City Of Palo Alto Authorizing the City
Manager to Purchase a Portion of the City's Electricity Requirements
from Certain Prequalified Electricity Suppliers Under Specified Terms
and Conditions During Calendar Years 2013 Through 2027, Inclusive
SECTION 1. The City Council finds, asfollows:
A. . By Resolution Number 9152, adopted in March 2011, the Council
approved the Long-term Electric Acquisition Plan (LEAP) with the following objectives noted in
Staff Report Number 9152: (1) three primary energy portfolio objectives ('~Objectives"),
including the objective to manage supply portfolio cost uncertainty to meet rate and reserve
objectives; (2) a strat.egy to manage market price exposure by maintaining and adequate pool
of creditworthy suppliers; and diversifying supply purchases across commitment date, start
date, duration, suppliers and pricing terms in alignment with rate stability objectives and
reserve guidelines; and (3) an implementation task to conduct a request for proposals (RFP) for
new electric master agreement counterparties.
B. In accordance with LEAP, the City must annually purchase and, incidental
to purchases, sell electricity and related services to meet the needs of its electri~ 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 Number 2916, provide that the City will purchase
only that quantity of electricity which meets its load requirements at the time a transaction is
executed.
C. By Ordinance No. 4953, adopted in 2007, the City has one or more
outstanding purchase transactions, costing in the aggregate $12.6 million, which are scheduled
to be delivered in FYs 2013 -2015. These transactions will be subject to new or amended and
restated EEl Master Power Purchase and Sale Agreements (each a "Master Agreement").
D. By Resolution No. 9272, adopted in July 2012, the Council approved the
Energy Risk Management Policies, which provides for the City Manager's oversight and
controls necessary to manage several risks that are inherent in transacting in wholesale
electric commodity products, and which establishes a Council-approved list of electric
commodity products that staff may transact in under the Master Agreements.
E. I.n March 2012, the City conducted an RFP process to establish Master
Agreements for electricity purchases. Electricity suppliers BP Energy Company, Cargill Power
Markets, LLC, Exelon Generation Company, LLC, Iberdrola Renewables, LLC, NextEra Energy
Power Marketing, LLC, PacifiCorp, Powerex Corp., Shell Energy North America (US), L.P., and
the Turlock Irrigation District have been determined to possess the minimum financial and
legal qualifications and business experience required to be eligible to do business with the
City.
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F. The City intends to purchase electricity and related services and products
from one or more of these pre-qualified suppliers for delivery during calendar years 2013
through 2027, inclusive, provided the supplier, with whom the City may negotiate one or more
specific transactions, continues to be qualified and otherwise eligible to do business with the
City.
The Council of the City of Palo Alto does RESOLVE as follows:
SECTION 2. The Council hereby approves of, and authorizes the City Manager
on behalf of the City to negotiate and .sign, new or amended and restated Master Agreements
with the electric suppliers, referred to in Section 1.E, and further authorizes the City Manager
or his designee, the Director of Utilities, to negotiate one or more individual purchase
transactions, sales incidental to purchases, and electricity-related services, including, but not
limited to, negotiating contracts, addenda, confirmations and transactions for resource
adequacy and renewable energy credits. The authorization shall extend to individual
transactions executed under any number of Master Agreements with the referenced suppliers;
provided, however, (a) the maximum expenditure under any Master Agreement shall not
exceed $50 million in the aggregate and, with respect to outstanding transactions for $12.6
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 (3) years, commencing on the date of execution ofthe transaction. The
preceding sentence notwithstanding, the City may enter into a transaction greater than three
(3) years with any referenced supplier, ifthe Council first grants its approval to negotiate such
transaction.
SECTION 3. No Master Agreement 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, 2027.
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SECTION 4. The Council hereby finds that this ordinance is exempt from the
. provisions ofthe California 'Environmental Quality Act pursuant to Section 15061(b)(3) ofthe
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.
INTRODUCED and PASSED: March 18, 2013
AYES: BERMAN, BURT, HOLMAN, KLEIN, KNISS, PRICE, SCHARFF, SCHMID, SHEPHERD
NOES:
ABSTENTIONS:
ABSENT:
. ATTEST:
Mayor
APPROVED AS TO FORM: APPROVED:
Senior Asst. City Attorney
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