HomeMy WebLinkAbout2004-04-20 City CouncilCity of Palo Alto
City Manager’s Report
TO:CITY COUNCIL
ATTENTION: FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT: UTILITIES
DATE:
SUBJECT:
APRIL 20, 2004 CMR: 191:04
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
APPROVING A CUSTOM PRODUCTS CONTRACT WITH THE
WESTERN AREA POWER ADMINISTRATION FOR THE
PROCUREMENT OF ELECTRICITY AND AUTHORIZING THE
CITY MANAGER TO PURCHASE UP TO $10 MILLION OF
CUSTOM PRODUCTS FROM THE WESTERN AREA POWER
ADMINISTRATION
REPORT IN BRIEF
Council has approved a 20 year Base Resource contract with the Western Area Power
Administration (Western) to replace the current contract ending on December 31, 2004.
Western is offering the attached Custom Product Contract as a vehicle to subscribe to
certain market-based services in conjunction with the City’s Base Resource Contract.
These services include day-ahead schedule firming to assure replacement of power when
plant outages or changes to operations occur. The Council has approved the Long-term
Electric Acquisition Plan (LEAP), which sets out how supplies will be purchased;
including the guidelines that among other things, directed staff to maintain the flexibility
to adopt favorable custom products offered by Western. Additionally, the LEAP
implementation plan directed staff to pursue low cost, high value prospects to acquire
supply-related resources. Therefore, staff requests the authority to transact under the
Western Custom Product Contract under certain limitations set forth in the attached
ordinance.
CMR:191:04 Page 1 of 6
RECOMMENDATION
Staff recommends the Finance Committee recommend that the Council adopt the
attached ordinance authorizing the City Manager to execute a Custom Product Contract,
substantially similar to the one attached, with the Western Area Power Administration for
the option to purchase electric power Custom Products with a cost not to exceed
$2,000,000 per year and not to exceed $10,000,000 during the term of the agreement
from January 1, 2005 through September 30, 2010; and to execute electric commodity
day-ahead schedule firming service transactions under the terms of the agreement and
subject to proposed parameters and limitations.
BACKGROUND
City of Palo Alto Utilities’ (CPAU) existing Western Commercial Firm Power contract is
an important resource providing electricity from a share of the Central Valley Project
(CVP) net output and a share of Western’s integration contracts at cost-based prices
through December 31, 2004. Palo Alto has executed a Base Resource Contract with
Western for the years 2005-2024 to provide the City with an initial 11.62% share of CVP
net output. Council approved the Western Base Resource Contract on October 16, 2000
(CMR 378:00). As a signatory of the Base Resource Contract, the City is entitled to
execute the attached Custom Product Contract for additional products and services not
included in the Base Resource. These additional custom products can partially replace
some of the expiring features of the current contract. Western developed the attached
Custom Product Contract as an enabling agreement to allow signatories the flexibility to
subscribe to market purchases procured by Western at signatories’ request. Western set a
June 30, 2004 deadline for customers to execute the Custom Product Contract.
Signatories can later subscribe to the underlying services and products as they see fit.
DISCUSSION
Staff is requesting that Council adopt an ordinance authorizing the City Manager to
execute the Custom Product Contract with the Western Area Power Administration for
power purchases with a cost not to exceed $2,000,000 per year and not to exceed
$10,000,000 during the term of the agreement. Western will provide a signed version of
the attached Custom Product Contract for Palo Alto to execute for the January 1, 2005 -
September 30, 2010 time period. Custom products will likely be available and
economically attractive for part or all of that period. Western offers signed standardized
CMR: 191:04 Page 2 of 6
Custom Product Contracts to all customers. The customization is that different customers
can subscribe to different services and purchases in Exhibit A of the Contract.
Westem proposed two products for subscription under the Western Custom Product
Contract. The first is a day ahead schedule firming service that would allow Western to
purchase energy on the City’s behalf to replace any energy lost due to generator outages
after the schedules were established. The second product available is fixed volume,
fixed market priced forward energy purchase contracts for one to 60 months duration.
The day ahead schedule firming service would only be utilized when an event such as a
sudden generator outage caused a shortage of deliverable energy compared to schedules
already committed up to 72 hours ahead. In that event, Western would procure short
term replacement energy from the market to keep schedules intact and delivered. For
utilities that do not subscribe to the day ahead firming service, Western would simply
inform them of the sudden change to their scheduled energy delivered and leave it to the
utility to handle the shortfall (presumably by buying from the market or increasing the
output of the utility’s other generation units). Using Western to make the short term
purchases will free up other generation resources that otherwise may have to be held back
as replacement reserves. Additionally, using this day ahead firming service is expected
to reduce NCPA real-time dispatch administrative costs.
The forward market fixed price and volume purchases may be used to make purchases
that are free of California Independent System Operator charges and that may enjoy
lower transmission costs. They may also be able to be used to shift the timing of delivery
of part of Palo Alto’s share of CVP hydro energy to higher-value daytime hours. Staff is
not proposing to take advantage of the fixed forward purchase opportunities at this time.
Staff may return to request Council authority for making fixed price forward purchases
after various risk management issues have been resolved. On December 15, 2003 (CMR:
465:03) Council authorized the mayor to execute five Electric Master Agreements.
Council also authorized the City Manager or designee to manage Electric Master
Agreements (EMAs) with the five energy marketing companies. The EMAs are not
intended to provide, nor would be a cost effective vehicle to provide, the day ahead
firming service.
Day ahead firming purchases produces very little risk exposure because the volumes are
small, the durations are short and there is minimal uncertainty in credit quality for
counter parties in the front 3 days. Additionally, the City may terminate this agreement
on 60 days notice.
CMR: 191:04 Page 3 of 6
Limits of Authorization
Staff is proposing limits and parameters for Council’s authorization to the City Manager:
Authority to be delegated to the City Manager to subscribe to Western’s Day
ahead firming service where Western would buy electricity to meet day ahead
firming requirements as needed.
2.All transactions must be consistent with Council-approved Energy Risk
Management Policies [CMR:400:02].
o All transactions in excess of $65,000 to be reported on a quarterly basis to Council
as part of regular reporting (per the Energy Risk Management Policies and
Guidelines).
4.The maximum annual dollar limit on Western custom Product purchases is $2
million per year.
The maximum total dollar amount of aggregated electricity transactions for the
Western custom products is $10 million for the entire 5.75 year period. This limit
gives staff needed flexibility in case electricity costs increase above expectations
or there are variations in hydrologic conditions.
All transactions that lie outside the authority delegated to the City Manager require
Council approval.
Staff would recommend subscription to custom products and services when cost saving
opportunities would benefit utilities rate payers. Purchases made through the Custom
Product Contract would be paid for 90 days ahead of the start of delivery. Palo Alto can
terminate arrangements under the contract with 60 days notice.
ALTERNATIVES
The aggregate cost of all transactions to be executed under the Western Custom Products
over the term of the agreement is expected to be between $1 million and $10 million.
Therefore, the request for City Manager authority of a maximum of $10 million may
appear much larger than necessary. Unfortunately, the actual quantities and costs for the
electricity required to meet load are not known at this time. If electricity costs do not
deviate greatly from expectations, and the hydrologic years over the term of the
CMR: 191:04 Page 4 of 6
agreements are neither dry nor wet, and generator reliability is normal, the City could
transact for less than $10 million of Western custom products.
However, the total volume and cost of transactions in a wet year or a dry year can be
higher than in a normal hydrologic year. Market costs for electricity could also increase
significantly. Finally, generator reliability could be different from its long-term average.
As an alternative to approving an ordinance allowing purchase of up to $10 million of
custom products from Western, Council could further limit the dollar amount, volume
amount or the type of purchases that can be entered into, with the likely effect of
decreasing the efficiencies and savings that can be achieved by using Western Custom
product to fill a niche in the Palo Alto electric portfolio.
RESOURCE IM PACT
Net savings to CPAL" from its participation in the Custom Product Contract are estimated
at about $500,000 per year for the term of the agreement and could range between $0 and
$1 million per year. As discussed, net savings depend on many variables including
Federal CVP hydrology, generator outages and CVP pumping load variations.
Entering into the agreement has no fixed cost. Subscription to services and products
under the contract will have market-based costs passed on to the City.
POLICY IMPLICATIONS
The proposed agreement complies with CPAU’s Portfolio Planning Objectives 1 and 2
approved by Council on November 13, 2001 [CMR: 425:01] 1: Ensure low and stable
supply rates for customers; and 2: Provide superior financial performance to customers
and the City by maintaining a supply cost advantage compared to the market cost and the
retail supply rate advantage compared to PG&E.
The proposed agreement complies with the Council approved Long-term Electric
Acquisition Plan (LEAP) Guideline 1: Electric Portfolio Dependence on Western: While
maintaining the flexibility to adopt favorable ’custom products’ offered by Western,
manage a supply portfolio independent of Western beyond the Base Resource Contract."
The proposed agreement complies with, and is subject to, continuing adherence to the
CPAU’s Energy Risk Management Policies, Guidelines, and Procedures. Furthermore,
all transactions undertaken by the City to manage this agreement are subject to review
and approval in conformance with internal risk management policies and procedures.
CMR:191:04 Page 5 of 6
This recommendation is also consistent with the Council-approved Utilities Strategic
Plan [CMR 418:00 and 432:02] Strategy 2: Preserve a supply cost advantage compared to
the market price; and Strategy 3: Streamline and manage business process to allow the
City of Palo Alto Utilities to work efficiently and cost-effectively.
In terms of the City’s Sustainability Policy, neither CPAU’s participation in, nor the
existence of the Custom Product Contracts affect the physical operation of the Central
Valley Project with respect to river releases. CVP reservoir management and river
releases are made for the five higher purposes of flood control, navigation, water
delivery, recreation, and fish and wildlife restoration and enhancement. Power
generation is only a byproduct of reservoir and river operation for the five higher
purposes. Power generation is not a driver of reservoir and river operation.
ENVIRONMENTAL REVIEW
Execution of the Custom Product Contract purchase agreement does not constitute a
project for the purposes of the California Environmental Quality act.
ATTACHMENTS
A:Ordinance authorizing the City Manager to execute the attached Custom Product
Contract
B:Western Custom Product Contract 04-SNR-00656 January 1, 2005- September 30,
2010’
C: Form 410: Certification of Nondiscrimination
PREPARED BY:
Originator
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
of Utilities
Assistant City Manager
CMR:191:04 Page 6 of 6
*** NOT YET APPROVED ***
19104 Attachment A
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AUTHORIZING THE NEGOTIATION AND EXECUTION OF THE
WESTERN AREA POWER ADMINISTRATION CUSTOM PRODUCTS
CONTRACT AND TO SUBSCRIBE TO THE DAY-AHEAD FIRMING
SERVICE PRODUCT UNDER SPECIFIED TERMS AND
CONDITIONS DURING THE PERIOD JANUARY i,2005
THROUGH SEPTEMBER 30, 2010, INCLUSIVE
The Council of the City of Palo Alto does ORDAIN as
follows:
SECTION i. Findings. The City Council finds as follows:
A. On October 16, 2000, the City entered into a Contract
No. O0-SNR-0033 ("Base Resource Contract") with the Western Area
Power Administration ("Western"). Under this contract, the City
will receive less electric capacity and energy than is currently
made available under the existing contract with Western. The Base
Resource Contract will begin on January i, 2005 and will expire on
December 31, 2024.
B. 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.
C. 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"). LEAP
Guideline 1 regarding Electric Portfolio Dependence on Western
states: While maintaining the flexibility to adopt favorable
’custom products’ offered by Western, manage a supply portfolio
independent of Western beyond the Base Resource Contract.
D. On August 4, 2003, the Council by minute order approved
the LEAP Implementation Plan and it also adopted Ordinance No.
4801, authorizing the purchase of energy and capacity during the
2005-2007 period. One element of the implementation plan is to
pursue any low-cost high value prospects to acquire supply-related
resources that may arise from time to time.
E. In accordance with the City’s LEAP Guidelines and
Implementation Plan, the City must annually purchase and,
incidental to purchases, sell electricity to meet the needs of its
electric customers by entering into one or more contracts with
varying terms. The City’s Energy Risk Management Policies provide
that the City will purchase only as much electricity as is needed
040414 cl 0072380
*** NOT YET APPROVED ***
to meet its load requirements established at the time a transaction
is executed.
F. A portion of the City’s electricity demands are
supplied by existing contracts, including the Base Resource
Contract, contract for output derived from partial ownership in the
Calaveras Hydroelectric Plant with the Northern California Power
Agency, an energy exchange contract with Seattle City Light, and a
25 MW purchase of power for five years starting in 2005. The
balance of the City’s electricity needs must be purchased from
suppliers at market-based prices.
G. The balance of electricity the City needs will depend
on the output from the Base Resource Contract and the Calaveras
Hydroelectric Plant, both of which depend on hydrologic conditions.
After 2004, the City will be required to purchase about one-third
of its total electricity needs in an average hydrologic year. In
a dry year, the City must purchase about one-half of its annual
needs. In wet years, the City may have a surplus of electricity
and could afford to sell about one-fifth of its projected annual
needs.
H. To deal with generator unit contingencies that exist
under the Base Resource Contract, the City may execute a
subscription to the Day-Ahead Firming service offered by Western in
accordance with Western’s Custom Products Contract, subject to the
City’s ability to terminate the subscription with 60 days notice.
Under this service Western would procure replacement energy (to be
paid for by subscriber) for short-term interruptions to day-ahead
energy schedules.
I. The City may purchase electricity from Western who may
in turn purchase electricity from suppliers for delivery between
January i, 2005 through September 30, 2010, inclusive.
SECTION 2. The Council hereby approves the negotiation and
execution of the Western Area Power Administration’s Custom
Products Contract, and authorizes the Mayor to sign the Custom
Products Contract. The Council further authorizes the City Manager
or his designated representative, the Director of Utilities, to
negotiate one or more individual transactions thereunder, with the
Western Area Power Administration. The authorization shall extend
to individual transactions executed under the Custom Product
Contract, in accordance with the following key provisions: (a) the
maximum annual expenditure per fiscal year under any and all
separate transactions thereunder shall not exceed two million
dollars ($2,000,000) per year, and (b) the maximum expenditure
under any and all separate transactions thereunder shall not exceed
ten million dollars ($i0,000,000) in the aggregate. The City may
enter into additional transactions that would raise the aggregate
040414 cl 0072380
*** NOT YET APPROVED ***
expenditure above $ i0 million, provided that any such transaction
must receive the prior approval of the Council.
SECTION 3. No standard form contract and any transaction
entered into thereunder with any qualified electricity 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 September 30, 2010.
SECTION 4. The 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 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:
PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST:
City Clerk Mayor
APPROVED AS TO FORM:APPROVED:
Senior Asst. City Attorney City Manager
Director of Utilities
Director of Administrative
Services
040414 cl 0072380
19104 Attachment B
Contract 04-SNR-O0.__.
UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
SIERRA NEVADA REGION
CUSTOM PRODUCT CONTRACT
FOR
VARIABLE RESOURCE SERVICE
WITH
VARIABLE RESOURCE CUSTOMER
Contract 04-SNR-O0
UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
SIERRA NEVADA REGION
CUSTOM PRODUCT CONTRACT
FOR
VARIABLE RESOURCE SERVICE
WITH
VARIABLE RESOURCE CUSTOMER
Section Table of Contents Pa.~e
1.Preamble .................................................................................................................................1
2.Explanatory Recitals ..............................................................................................................1
3.Agreement ..................................................................... ..........................................................2
4.Effective Date and Term of Contract .....................................................................................2
5.Definition of Terms ................................................................................................................3
6.[Final Day-Ahead Base Resource Schedule Firming] ...........................................................4
7.[Supplemental Power Furnished by Westem] ........................................................................4
8.Additional Services Necessary to Provide Custom Product(s) ..............................................5
9.Delivery Arrangements ..........................................................................................................5
10.Scheduling, Metering, and Transmission Organizations .......................................................5
11.Western Rates .........................................................................................................................6
12.General Power Contract Provisions .......................................................................................6
13.[Reimbursable Financing and skip to 14] OR [Creditwortttiness ..................................[6][7]
14.Advance Funding .................................................................................................................7]
15.Default Provisions ................................................................................................................10
16.Enforceability .......................................................................................................................10
17.[Exhibits Made Part of Contract .........................................................................................11]
Certificate/Resolution
General Power Contract Provisions (July 10, 1998)
[Exhibit A (Variable Resource - Supplemental Power)]
Contract 04-SNR-O0
UNITED STATES
DEPARTMENT OF ENERGY
WESTERN AREA POWER ADMINISTRATION
SIERRA- NEVADA REGION
CUSTOM PRODUCT CONTRACT
FOR
VARIABLE RESOURCE SERVICE
VARIABLE RESOURCE CUSTOMER
1.PREAMBLE:
This Contract is made this __ day of ,2004, pursuant to the Acts of Congress
approved June 17, 1902, (32 Star. 388); August 26, 1937, (50 Stat. 844); August 4, 1939, (53
Stat. 1187); and August 4, 1977, (91 Star. 565); and Acts amendatory or supplementary to the
foregoing Acts; between the UNITED STATES OF AMERICA, acting by and through the
Administrator, WESTERN AREA POWER ADMINISTRATION, Department of Energy,
hereinafter called Western, represented by the officer executing this Contract, or a duly
appointed successor, also sometimes hereinafter called the Contracting Officer; and the
VARIABLE RESOURCE CUSTOMER, hereinaflgr referred to as VRC or Contractor, a type of
entity, its successors or assigns; also hereinafter referred to individually as Party and together as
Parties.
o EXPLANATORY RECITALS:
2.1 The Parties entered into Base Resource Contract 00-SNR-003 on
2000. The Base Resource Contract provides the terms and conditions whereby Western
will provide Base Resource Electric Service to VRC.
2.2 Western’s final 2004 Power Marketing Plan, published in the Federal Register on
June 25, 1999 (64 FRN 34417), provides for Western to develop Custom Products for
customers who request them. Section [8.7] of the Base Resource Contract allows for
Western to develop a Custom Product for VRC.
[2.3 In addition to its Base Resource, VRC requests to purchase Supplemental Power
from Western to serve its load.]
[2.4 VRC [also] requests Western to provide other sources of power, if necessary, to
ensure Final Day-Ahead Base Resource Schedules are firm.]
2.5 Western is willing to provide the Custom Products in accordance with VRC’s
request[s] in Section[s] [2.3] [and] [2.4] above.
3. AGREEMENT:
The Parties agree to the terms and conditions set forth herein.
o EFFECTIVE DATE AND TERM OF CONTRACT:
4.1 This Contract shah become effective upon execution by the Parties and shall
remain in effect until September 30, 2010.
4.2 Service under this Contract shall begin on or after January 1, 2005.
Western may suspend or terminate service under this Contract pursuant to Section
4.4 All obligations incurred under this Contract shall be preserved until satisfied.
Contract 04-SNR-OOm R~,~ 2
5.DEFINITION OF TERMS:
As used herein, the following terms whether singular or plural, or used with or without initial
capitalization, shall have the following meanings:
5.1 "Base Resource" means CVP and Washoe Project power output, as determined by
Western to be available for marketing, af~ (1) meeting the requirements of Project Use
and First Preference Customers, and (2) any other adjustments required for maintenance,
regulation, reserves, transformation losses, and ancillary services.
5.2 "Custom Product" means a combination of products and services, excluding
provisions for load growth, which may be made available by Western per customer
request, using the customer’s Base Resource and supplemental purchases made by
Western.
5.3 "Final Day-Ahead Base Resource Schedule" means that amount of Base Resource
that Western declares to V’RC for each hour of a 24-hour period under VRC’s Base
Resource Contract. The Final Day-Ahead Base Resource Schedule will be provided prior
to the active day. Scheduling procedures are more fully described in Exhibit C of VRC’s
Base Resource Contmct.]
5.4 "Firming" means to ensure that the amount of power to be provided in accordance
with a schedule is available by obtaining another resource when necessary.]
5.5 "Supplemental Power" means firm capacity and energy provided by Western that a
customer needs in addition to its Base Resource to meet its load.]
5.6 "Variable Resource Customer" means a customer who is responsible for managing
its own power portfolio and will purchase Final Day-Ahead Base Resource Schedule
Contract 04-SNR-O0.___Flc~,~ 3
Firming and/or Supplemental Power from Western in addition to its Base Resource
percentage.
[6.FINAL DAY-AHEAD BASE RESOURCE SCI~DULE FIRMING:
6.1 In the event that Western is unable to provide the Base Resource as stated in
VRC’s Final Day-Ahead Base Resource Schedule(s), Western will provide another source
of power to VRC in order to firm VRC’s Final Day-Ahead Base Resource Schedule(s).
6.2 Western will continue to provide Final Day Ahead Base Resource Schedule
Firming to VRC for the duration of VRC’s Final Day-Ahead Base Resource Schedule(s) or
until Base Resource generation is restored to a level necessary to support VRC’s Final
Day-Ahead Base Resource Schedule(s), whichever time period is shorter.
6.3 VRC shall be responsible for all costs associated with Western’s provision of Final
Day-Ahead Base Resource Schedule Firming to VRC.
6.4 Either party may terminate this service upon sixty (60) days advance written notice
to the other party.]
[7.SUPPLEMENTAL POWER FURNISHED BY WESTERN:
7.1 Western may provide Supplemental Power to those Variable Resource Customers
who request Supplemental Power to meet their loads. The minimum term for this service
shall be thirty (30) days.
7.2 VRC will provide Western with the details of its Supplemental Power needs.
Western shall have sole discretion in determining if it is able to provide Supplemental
Power service to VRC as requested by VP~C. If Western determines it is able to provide
the Supplemental Power requested by VRC, Western will enter into a supply contract(s).
Contract 04-SNR-O0~FI~,~ 4
7.3 The specific terms of the Supplemental Power to be provided to VRC will be listed
in Exhibit A, attached hereto. Exhibit A may be revised from time-to-time to meet the
Supplemental Power needs of VRC as agreed to by the Parties.
7.4 VRC shall be responsible for all costs associated with such purchases.]
8. ADDITIONAL SERVICES NECESSARY TO PROVIDE CUSTOM PRODUCT(S):
VRC understands that additional services, including but not limited to, scheduling the resource
and control area services may be necessary to provide the Custom Product(s) requested under
this Contract.
DELIVERY ARRANGEMENTS:
9.1 Day-Ahead Base Resource Schedule Firming will be provided to the point(s) of
delivery specified in Exhibit A of VRC’s Base Resource Contract.]
9.2 Supplemental Power provided by Western will be made available to VRC at the
point(s) of delivery specified in Section 4 of Exhibit A attached hereto.]
10. SCHEDULING~ METERING~ AND TRANSMISSION ORGANIZATIONS:
All services provided by Western to VRC under this Contract will be subject to the same
Scheduling and Metering terms and conditions and Transmission Organization Protocols as
provided under VRC’s Base Resource Contract with Western the same as if they had been
expressly set forth herein.
Contract 04-SNR-00__lqa~,~ 5
11.W~ST~RN RATES:
11.1 VRC shall pay for electric and related services furnished hereunder in accordance
with the rotes, charges, and conditions set forth in the CVP schedules of rotes effective
January 1, 2005, or any superseding rate schedules.
11.2 VRC shall be responsible for all costs incurred by Western to provide the Custom
Product(s) specified in this Contract.
12.GENERAL POWER CONTRACT PROVISIONS:
12.1 The GPCP, effective July 10, 1998, attached hereto, are hereby made a part of this
Contract, the same as if they had been expressly set forth herein [; Provided, That, For the
term of Exhibit A to this Contract, VRC hereby agrees to waive its fights under this
Contract to Article 11 of the GPCP. ONLY APPLIES TO SUPPLEMENTAL POWER
CUSTOMERS]
13.~IMBURSABLE FINANCING: FOR FEDERAL CUSTOMERS ONLY then skip
to Section 15]
13.1 Western may purchase power or provide other services using reimbursable
authority pursuant to the Economy Act, 31 U.S.C. 1535. Reimbursable financing
establishes the budgetary resource to fund Westem’s reimbursable financing program.
Westem’s reimbursable authority shall not exceed the fiscal year (presently October 1st of
the current calendar year through September 30th of the following calendar year) estimated
costs related to power and other services provided by Western. Reimbursable financing
under this Contract is limited to the total value of the Custom Product(s) provided by
Western.
13.2 Each February 1st, VI~C shall provide written notification to Western of its
budgeted appropriations, or forecasted plan for budget requests for power and other
Contract 04-SNR-O0.___Flc~ 6
services provided by Western, for the upcoming fiscal year. VRC shall inform Western
of any major changes to the forecasted budgeted authority.
13.3 VRC will obligate or otherwise commit the value of the Custom Product(s) to be
provided by Western in a manner that is standard for the agency for the fiscal year.
13.4 Each monthly power bill issued by Western to VRC will identify the portion of
such bill that will be designated as reimbursable.]
[CREDITWORTHINESS: FOR ALL CUSTOMERS EXCEPT FEDERAL CUSTOMERS
For the purpose of determining the ability of VRC to meet its obligations related to service
hereunder, Western may require reasonable credit review procedures. In addition, Western may
require VRC to:
13.1 Provide and keep in effect during the term of this Contract, an unconditional and
irrevocable letter of credit as security to meet its responsibilities and obligations under
this Contract; or,
13.2 Provide an alternate form of security acceptable to Western.
14.ADVANCE FUNDING:
Unless otherwise agreed to by the Parties, the following advance funding language shall apply.
Any alternative method of advance funding shall be set forth in a separate contractual agreement.
14.1 Western shall use advanced funds for [Final Day-Ahead Base Resource
Schedule Firming] [and] [Supplemental Power] costs. Western will bill VRC for
the other services provided under this Contract as necessary.
14.2 Western will estimate the initial amount of funds required, and VRC shall
deposit that amount into a Western trust account. The estimate for the advance
Contract 04-SNR-O0.__FI~ 7
shall be based on the costs that Western anticipates incurring when providing
[Final Day-Ahead Base Resource Schedule Firming for three (3)months] [and]
[the entire cost of any contract Western enters into in order to provide
Supplemental Power] to VRC.
14.3 The amount of advance funding VRC is able to provide, as well as
Westem’s funding authority, will determine the maximum term of any
Supplemental Power provided by Western. The term of any Supplemental
Power purchase will not exceed five (5) years.]
14.4 The advance funding amount determined by Western in accordance with
Section 14.2 shall be due on the date specified on the initial bill for collection.
The initial bill for collection will be issued [by October 1, 2004 for Day-Ahead
Base Resource Schedule Firming] [and] [at least ninety (90) days prior to
Western acquiring the resources necessary to provide Supplemental Power to
VRC].
14.5 [VRC shall be required to maintain a trust account balance of at least
three (3) months of estimated Final Day-Ahead Base Resource Schedule Firming
purchase costs. ]Western shall monitor the trust account balance and, if, at any
time, Western determines that:
14.5.1 There are not sufficient funds in the trust account, Western shall
notify VRC, and VRC shall advance the requested amount of funds to
Western within ten (10) days; or,
14.5.2 If excessive funds accumulate in the trust account, Western, at
Westem’s discretion, will either 1) reduce the following month’s advance
funding amount; or, 2) return the difference to VRC.
Contract 04-SNR-00__~ 8
14.6 Funds that VRC advances to Westem for [Final Day-Ahead Base
Resource Schedule Firming] [and] [Supplemental Power] provided under this
Contract shall be sent via wire transfer in accordance with the information
included on the Western bill for collection or as Western otherwise directs or
agrees.
14.7 Westem will provide VRC with:
14.7.1 A monthly statement of the transactions that were posted to the
trust account, and the end-of-month balance in the account;
14.7.2 A bill for collection for the costs that Western anticipates it will
incur while providing [Final Day-Ahead Base Resource Schedule Firming]
[and] [Supplemental Power] to VRC for the following month, if necessary;
and,
14.7.3 An electdc service bill that may reflect [Final Day-Ahead Base
Resource Schedule Firming] [and] [Supplemental Power] costs and any
associated credits for advanced payments of such costs.
14.8 Western shall be under no obligation to provide service hereunder without
VRC advancing sufficient funds and said funds being available in the Western
trust account described herein.
14.9 Western shall return any funds that VRC advances under this Contract in
excess of Western’s actual total costs incurred, without interest, to VRC within
sixty (60) days of the termination of service hereunder.]
15.DEFAULT PROVISIONS:
15.1 The failure of VRC to perform any of its payment obligations under this
Contract shall constitute a default. If Western determines VRC to be in default,
Contract 04-SNR-00 T]c~(~ 9
Westem shall promptly notify VRC in writing. If VRC has not cured the default
within seven (7) days, Western may suspend service under this Contract.
15.2 If VRC is determined to be in default and does not cure such default in a
manner and within the timeframe established or allowed by Western, Western
shall have the right to terminate this Contract, and assess damages, as follows:
15.2.1 If Westem’s aggregate gains exceed its aggregate losses and
costs, Westem, after any set-off, shall make no payment to VRC and,
notwithstanding anything in this Contract to the contrary, the amount by
which such gain exceeds the losses and costs for the purposes of this
Contract shall be zero (0); or,
15.2.2 If Westem’s aggregate gains do not exceed its aggregate losses,
Westem will promptly calculate the damages associated with the default.
As soon as practical, Western will provide notice to VRC of the amount of
the damages. Payment for the damages shall be made by VRC to
Western within ten (10) business days after such notice is received.
16.ENFORCEABILITY:
It is not the intent of the Parties that this Contract confer any rights on third parties to enforce the
provisions of this Contract except as required by law or express provision in this Contract.
Except as provided in this Section, this Contract may be enforced, or caused to be enforced, only
by Western or VRC, or their successors or assigns.
[17.EXHIBITS MADE PART OF CONTRACT:
Exlfibit A (Variable Resource Supplemental Power) existing under this Contract may vary
during the term hereof. Said Exhibit shall become a part of this Contract during the term fixed
by its provisions. Exhibit A is attached hereto and shall be in force and effect in accordance with
Contract 04-SNR-00__._Nc~ 10
its terms until superseded by a subsequent Exhibit, as allowed by the terms of the Ex.b.ibit, or
tenmatedJ
IN WITNESS WtIEREOF, the Parties have caused this Contract to be executed the day
and year first above written.
VARIABLE RESOURCE CUSTOMER
By:
Title:
Address:
WESTERN AREA POWER ADMINISTRATION
By:
Title:
Address:
Power Marketing Manager
114 Parkshore Drive
Folsom, California 95630
Contract 04-SNR-OOD ]-]c~ 11
Variable Resource Customer
Contract 04-SNR-00
Exhibit A
Exhibit A
(Variable Resource - Supplemental Power)
1.This Exhibit A, to be effective under and as a part of Contract 04-SNR-00
(Contract), shall become effective upon execution of the Contract, and shall remain in effect
until the earlier of: 1) the date provided in Section 2.2 below; 2) being superseded by another
Exhibit A; or 3) termination of the Contract.
2. On or after the effective date of this Exhibit A, and upon satisfaction of the conditions set
forth in the Contract, Western will provide Supplemental Power to VRC, as follows:
2.1
2.2
2.3
2.4
2.5
2.6
Delivery beginning:
Delivery ending:(Date)
Amount:__ ~ per hourPeriod:Beginning hour ending ~ through hour ending
Days:(Days of the Week)
Price:dollars per megawatthour
3.Transmission for Supplemental Power provided under this Contract shall be provided
under VRC’s contract with .; and the delivery
point is ]
Contract 04-SNR-O0
CERTIFICATION OF NONDISCRIMINATION
19104 Attachment C
FORM 410
P~’oject: Letter of Agreement 04-SNR-00647 for Palo Alto to purchase Western Excess Capacity.
Certification .of Nondiscrimination: As ~uppliers of goods or services to the City of Palo Aito,.the
firm and individuals listed below certify that they do not discriminate in employment with regards to
age, race, color, religion, sex, national origin, ancestry, disability, or sexual preference; that they are in
compliance with all Federal, state and local directives and executive orders regarding
nondiscrimination in employment.
Firm: Sierra Nevada Customer Service Region of the Western Area Power Administration (Western)
TitleofOfficerS~ig_ning: t~ ~ ; ~ ~ n; Ll~ ~/C.~ ~;~-;~.~
CITY OF PALO ALTO: CERTIFICATION OF NONDISCRIMINATION