HomeMy WebLinkAboutRESO 9586160414 jb 6053733 1
Resolution No. 9586
Resolution of the Council of the City of Palo Alto Authorizing the City
from Certain Prequalified Natural Gas Suppliers Under Specified Terms
and Conditions during Calendar Years 2016 through 2022, Inclusive
RECITALS
A. On April 19, 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, as described in Staff Report #2552.
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,
described in Staff Report #5026, provide that the City will purchase only that quantity of gas
meeting its load requirements at the time a transaction is executed.
C. By Ordinance No. 4936, adopted March 12, 2007, Council authorized the
City Manager to negotiate and sign new, amended, or restated North American Energy
) with BP
Energy Company, Coral Energy Resources, L.P., Sempra Energy Trading Corporation,
ConocoPhillips Company, J.P. Morgan Ventures Energy Corporation, and Powerex Corporation,
and further authorized the City Manager or his designee, the Director of Utilities, to negotiate
one or more individual transactions, including, but not limited to, negotiating contracts,
addenda, confirmations and transactions. The authorization extended to individual
transactions executed under any number of NAESB Contracts with the referenced suppliers;
provided, however, (a) the maximum expenditure under any NAESB Contract shall not exceed
$65 million in the aggregate; and (b) the maximum term of any transaction shall not exceed
three years, commencing on the delivery date of the transaction.
D.three approved
counterparties have undergone changes in corporate structure or ownership:
a. On June 1, 2008 Coral Energy Resources, L.P. was merged into parent
company Shell Energy North America (U.S.) L.P.
b. On December 1, 2010 Sempra Energy Trading Corporation was sold to
J.P. Morgan Ventures energy Corporation.
c. In October, 2014 J.P. Morgan Ventures Energy Corporation sold to
Mercuria Energy Gas Trading L.L.C. the portion of its gas trading business
with which the City transacts. On September 21 Council adopted
Resolution 9545 approving an Assignment, Assumption and Consent
DocuSign Envelope ID: 92ED57C3-B5EF-4EC8-8890-4E7EDB44F3C1
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Agreement (Assignment Agreement) and authorizing the City Manager
or his designee to execute the Assignment Agreement, effectively
assigning the NAESB with J.P. Morgan Ventures Energy
Corporation to Mercuria Energy Gas Trading L.L.C.
E. The current list of Councilapproved counterparties includes: BP Energy
Company, ConocoPhillips Company, Mercuria Energy Gas Trading L.L.C., Powerex Corporation,
and Shell Energy North America (U.S.), L.P.
F.
Energy North America U.S. L.P., and Mercuria Energy Gas Trading L.L.C., have been active
based gas purchases, and only $7.5 million of the approved $65
million expenditure limit remains for Mercuria Energy Trading L.L.C. as of February 29, 2016.
An increase in the maximum expenditure limit is needed to continue to purchase natural gas
G. The City intends to purchase natural gas from one or more of these pre
qualified suppliers for delivery during calendar years 2016 through 2025, 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.
H. Increasing the expenditure limit will provide for an estimated five years of
s approval of a resolution rather than
an ordinance, as was done in prior years, will streamli
NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. The Council hereby authorizes the City Manager or his designee, the
Director of Utilities, to natural gas requirements from the
prequalified suppliers by negotiating one or more individual transactions, including, but not
limited to, contracts, addenda, confirmations and transactions. The authorization shall extend
to individual transactions executed under any number of NAESB Contracts or Master
Agreements with the suppliers referenced in Recital F.
SECTION 2. The purchases negotiated under Section 2 shall conform to the
following requirements:
a. The maximum expenditure under any Master Agreement will be $100 million;
b. The maximum term of any 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.
c. No transaction entered into with any of the referenced suppliers shall extend
beyond December 31, 2022.
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SECTION 3. The Council hereby finds and determines that the adoption of this
Resolution does not constitute a project under Public Resources Code Section 21065, thus no
California Environmental Quality Act assessment is required.
INTRODUCED and PASSED: May 16, 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
DocuSign Envelope ID: 92ED57C3-B5EF-4EC8-8890-4E7EDB44F3C1
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