HomeMy WebLinkAboutRESO 9627160916 jb 6053828 1
Resolution No. 9627
Resolution of the Council of the City of Palo Alto Authorizing the City Manager to
Approve a Base Contract for Sale and Purchase of Natural Gas with Sequent
Energy Management, LP and to
Requirements from Sequent Energy Management, LP Under Specified Terms and
Conditions during Calendar Years 2016 through 2022, Inclusive
RECITALS
A. On April 23, 2012, the Council adopted Resolution 9244 amending the Gas
Utility LongTerm Plan (GULP) Objectives, Strategies, and Implementation Plan to discontinue
the laddering purchase strategy and implement gas supply rates that change monthly
according to market prices
B. In accordance with GULP, the City must 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 one month. The City's Energy Risk Management Policies provide that the City
will purchase only that quantity of gas meeting its load requirements at the time a transaction
is executed.
C. By an ordinance adopted August 15, 2016, Council approved changes to the
Municipal Code specifically streamlining the purchase and sale of wholesale utility
commodities and services and explicitly allowing for standard form master agreements.
D. The natural gas standard form master agreement is based on the North
American Energy Standards Board, Inc. (NAESB) Base Contract for Sale and Purchase of Natural
Gas 2006 version and includes Special Provisions and a Credit Support Addendum (Master
Agreement).
E. By Resolution 9586 adopted May 16, 2016, Council authorized the City
natural gas suppliers under specified terms and conditions during calendar years 2016 through
2025, inclusive.
F. The City intends to purchase natural gas from one or more prequalified
suppliers for delivery during calendar years 2016 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.
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E. Sequent Energy Management, LP (Sequent) desires to execute a Master
Agreement with the City (Sequent Master Agreement) in order to be a supplier for delivery
during calendar years, 2016 through 2022, inclusive, so long as Sequent continues to be
qualified and otherwise eligible to transact with the City. Sequent is not publically rated and is
a subsidiary of Southern Gas Company, an investment grade company.
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The Council hereby approves the Sequent Master Agreement.
SECTION 2. The Council hereby authorizes the City Manager or his designee, the
Energy Management, LP by negotiating one or more individual transactions under the Sequent
Master Agreement, including, but not limited to, contracts, addenda, confirmations, and
transactions, subject to Section 3.
SECTION 3. The purchases negotiated under the Sequent Master Agreement shall
conform to the following requirements:
a. The maximum expenditures shall be $100 million;
b. The maximum term of any individual 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; and
c. No transaction shall extend beyond December 31, 2022.
SECTION 4. The Council waives the application of the investmentgrade credit
rating requirement of section 2.30.340(c) of the Palo Alto Municipal Code, which applies to
energy companies that do business with the City.
SECTION 5. The Council delegates to the City Manager, or his designee, the
authority to execute on behalf of the City the Sequent Master Agreement.
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SECTION 6. The Council hereby finds and determines that the adoption of this
Resolution does not meet the definition of a project for the purposes of the California
Environmental Quality Act, under Public Resources Code Section 21065 and CEQA Guidelines
Section 15378(b)(5), because it is an administrative governmental activity which will not cause
a direct or indirect physical change in the environment.
INTRODUCED AND PASSED: October 4, 2016
AYES: BERMAN, BURT, DUBOIS, FILSETH, HOLMAN, KNISS, SCHARFF, SCHMID,
WOLBACH
NOES:
ABSTENTIONS:
ABSENT:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
Senior Asst. City Attorney City Manager
Director of Administrative Services
Director of Utilities
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