HomeMy WebLinkAbout2004-11-08 City Council (16)TO:HONO1L4BLE CITY COUNCIL
CITY MANAGER DEPARTMENT: UTILITIES
DATE:NOVEMBER 8, 2004 CMR:460:04
SUBJECT:ADOPTION OF "RESOLUTION APPROVING THE
ASSIGNMENT ADMINISTRATION FOR
WESTERN AREA POWER ADMINISTRATION BASE
~SOURCE PERCENTAGE BETWEEN NORTHERN
CALIFOPeNL~ POWER AGENCY AND CITY OF PALO ALTO
RECOMMENDATION
Staff requests Council’s approval of the attached resolution approving the assignment
administration agreement for \Vestem Area Po~er Administranon (\Vestern) base
resource percentage between Northern California Po~ er Agency and City of Palo Alto.
BACKGROUND
For about 20 ),ears, Western has allowed the NCPA pool members, including Palo Alto,
to enjoy the benefits of cooperatively pooling their \Vestern resource to achieve a variety
of cost reductions compared to the costs of meeting loads separately with separate shares
of Western resource. During this time. Palo Alto has been a signato~T to the NCPA
pooling agreement that governed the calculation and allocation of costs and benefits in a
fair and equitable way. The chan~_in_,v, nature of the \ ~ ~-~ ~X est~n power resource will make
much of the pooling agreement obsolete with respect to the \Vestern resource. In order to
maintain resource pooling benefits, Council recently approved an agreement assigning
Palo Alto’s Western Base Resource percentage to Northern Califon¢ia Power Agency
(CMR 366:04).
DISCUSSION
Staff is reconm~ending Council approval of a companion agreement to document the
pooling principles that will be applied in determining and allocating the costs and
CMR:460:04 Page ! of 3
benefits created by pooling the resource. The attached agreement is a bilateral agreement
bet~een each participating member and NCPA. The body of the agreement outlines
principles to be followed in determining benefit calculation and allocation to members.
The schedules accompanying the agreement detail the formulas for the application of
those principles in calculating and allocating costs and benefits to members. The
schedules can only be changed by a unanimous xote of participating NCPA
Commissioners.
At the current time it is expected that ten of the eleven NCPA pool members will
participate in this assignment arrangement. Other non-pool members have expressed
interest in this arrangement and may join at’the inception or at a later date. The estimated
savings depend on the mix of other melnbers joining in to assign their Western resource
to NCPA. Much of the savings depend on the actions of the City of Roseville and the
Turtock Irrigation District. If they cannot be convinced to cooperate for a share of the
savings, staffwill consider tel-minating Palo Alto’s assignment as well.
The agreement will run from 1/1/2005 through I2/31/2024. and is revocable by Palo Alto
upon 60 days prior written notice. The agreement cannot be changed without Council
action. The a~-eement is for execution by Palo Alto and NCPA and will be made
available to Western for its review. A final draft of the agreement is attached. Staff will
receive a substantially identical executable original contract from NCPA.
RESOURCE IMPACT
Approval of the Agreement x~ill maintain the stares quo with respect to duties and
responsibilities split between Palo Alto and NCPA. Approx aI has no impact on Palo Alto
staff resources. Under current assumptions, staff estimates savings resulting from
pooling to be approximately 5650,000 per year for Palo Alto with Roseville participating
and about $150.000 per year without Roseville or Turlock.
POLICY IMPLICATIONS
Executing the Agreement is consistent with PrilnaW Portfolio .Planning Objective 2:
Provide superior financial performance to customers and the Cib" by maintaining a
supply portfolio cost advantage compared to market cost (CMR:425:01).
TIMELINE
NCPA staff produced a first draft agreement on September 8, 2004. In order to have time
to develop and ilnplement associated pooling benefit allocation algorithms and
information management systems, NCPA requests that members interested in assignment
CMR:460:04 Page 2 of 3
secure needed Council approvals by November 15, 2004. The agreement is intended to
be effective on January 1, 2005.
ENVIRONMENTAL REVIEW
Executing the Agreement contract does not constitute a project for the purpose of the
California Enviromnental Quality Act. The Agreement does not impact the volume,
timing or temperature of water flows in rivers. River flow is governed by other
constraints and is managed tlvough releases from regulating reservoirs just downstream
of power generating reservoirs.
ATTACHMENTS
A: Resolution Approxing Assignment Administration Agreement For Western Area
Power Administration Base Resource Percentage between Northern California Pox~ er
Agency and City of Palo Alto
B:Assignment Administration Agreement For Western Area Power Administration Base
Resource Percentage between Northern California Power Agenc) and City of Palo
Alto
C:CMR 366:04 Approval of a Resolution Requesting Assigmnent of Palo Alto’s Base
Resource Percentage to Northern California Power Agency 04-SNR-003x2~X with the
US Department of Energy, \Vestern Area Power Administration
P~PA~D BY:
~OM tC’4,Bf&T "ci
Senior Resource Originator
/
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
.,D’ire/~tor of Utilities
/
EMIL’-Y~~SON
Assistant Ci~,~ Manager
CMR:460:34 Page 3 of 3
RESOLUT!ON NO.
RESOLUTION OF THE COD~CiL OF THE CITY OF PALO
ALTO APPROVING THE ASSIGNMENT ADMiN!ST~TiON
AGREEMENT FOR WESTERN AREA POWER ~H!N!STK~T!ON
BASE RESOURCE PERCENTAGE BETWEEN NORTHERN
CAL!FO~q!A POWER AGENCY ~A~D CITY OF PALO ALTO
~HEREAS, the City of Palo Alto ("City"), a municipal
utility and a chartered city, is a "Preference Customer" of the
Western Area Power A~ministration "WesternH) of the United
States Department of Energy;
~<~IEREAS, the City has a twenty-year contract with
Western for an 11.62% share of Western’s "Base Resource", in
effect from January !, 2005 through December 31, 2024;
~r~EREAS, the City, and some other Western customers with
Western’s consent, have operated a resource and load sharing
pool for the past two decades;
~EREAS, the pooling of resources and loads is expected
to continue to save money for the City in the future;
~THEREAS, the City intends to execute an assignment of
its "Base Resource Percentage" to the pooling entity, the
Northern California Power Agency "NCPA");
WHEREAS, the participating members assigning Base
Resource Percentage to NCPA have drafted an Assignment
Administration Agreement to determine and al!ocate costs and
benefits of the Western resource pooling in a fair method to
participants;
~EREAS, the City wil! continue to abide by Western’s
federa! power marketing policies; and
~,{~EREAS, the City may enter into additional contracts
with Western at any time to. meet its needs, and can terminate
the assignment to NCPA upon 90 days’ prior written notice;
NOW, THEREFORE, the Council of the City of Palo Alto
does RESOLVE as ~ollows:
SECTION !. The Counci! hereby approves the City of Palo
Aito’s execution of the "Assignment A~ministration Agreement for
Western Area Power Administration Base Resource Percentage
between Northern California Power Agency and City of Pa!o Aito"
041025 cl 0072459 1
YET
The City Manager or ~s aes_gnated representative is hereby
authorized to sign the agreement on behalf of the City of Palo
Alto.
SECTION 2. The Counci! finds that this is not a project
under the California Environmental Quality Act and, therefore,
no enviros~ental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
.~BSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
Senior Asst. City Attorney City Manager
Director of Utilities
Director of Administrative
Services
04 i 025 cl 0072459 2
ASSIGNMENT ADMINISTRATION AGREEMENT
FOR
WESTERN AREA POWER ADMINISTRATION BASE RESOURCE PERCENTAGE
between
NORTHERN CALIFORNIA POWER AGENCY
and
Assignor:
ASSIGNMENT ADMINISTRATION AGREEMENT
Section 1:
Section 2:
Section 3:
Section 4:
Section 5:
Section 6:
Section 7:
Section 8:
Section 9:
Section 10:
Section 11:
Section 12:
Section 13:
Section 14:
Section 15:
Section 16:
Section 17:
Section 18:
Section 19:
Section 20
Section 21
Section 22
Section 23:
Section 24:
Section 25:
TABLE OF CONTENTS
Recitals
Definitions.
NCPA Duties
Assignor Duties
Allocations
Resource Planning
Resource Sale and Purchase
O&M Funding and Restoration
Central Dispatch and Scheduling Services
Accounting
Metering
Billing
Administrative Cost Allocation
Other Agreements
Western Systems Coordinating Council
Term of Agreement
Notices
Waiver of Defaults
Uncontrollable Forces
Liability
Reports and Records
Assignment of Agreement
Settlement of Disputes and Arbitration
Amendments
Severability
Governing Law.
ASSIGNMENT ADMINISTRATION AGREEMENT
This Assignment Administration Agreement, hereinafter
"Agreement", is made and entered into by and between the
Northern California Power Agency.
referred to as the
and the
WITNESSETH:
WHEREAS, the Northern California Power Agency, hereinafter referred to as
"NCPA", has heretofore been duly established as a public agency pursuant to the Joint
Exercise of Powers Act of the Government Code of the State of California and, among
other things, is authorized to acquire, construct, finance, and operate buildings, works,
facilities and improvements for the generation and transmission of electric capacity and
energy for resale; and
WHEREAS,, hereinafter referred to as "Assignor" is a member in
good standing of the Northern California Power Agency; and
WHEREAS, as a member of NCPA, Assignor entered into Contract -SNR-
(Assignment Contract), dated ,2004, whereby Assignor assigned its Base
Resource Percentage under this contract to NCPA in order for NCPA to create a power
resource portfolio for the mutual benefit of participating NCPA members beginning
January 1, 2005.
WHEREAS, NCPA has agreed to accept assignment of Assignor’s Base
Resource Percentage, and will administer the Assignment Contract for the benefit of
Assignor according to the terms of this Assignment Administration Agreement; and
WHEREAS, it is intended that the Assignor will receive an economic benefit from
assigning its Western Area Power Administration Base Resource Percentage to NCPA
with such benefit being greater than or equal to the benefit that Assignor would have
derived had Assignor’s Base Resource Energy been scheduled solely for use on its
own load; and
WHEREAS, NCPA anticipates taking assignment of additional Western Area
Power Administration Base Resource Percentages from other Assignors to likewise
provide economic benefits from joint assignment administration greater than or equal to
those benefits that individual Assignors would have derived had their Base Resource
Energy been scheduled solely for their own uses; and
WHEREAS, NCPA members and other qualified entities assigning their
respective Base Resource Percentages to NCPA expect to avoid certain costs
associated with Base Resource Energy delivery that would otherwise accrue if each
Assignor’s Base Resource Energy been scheduled separately and solely for each
Assignor’s own load; and
WHEREAS, NCPA seeks to equitably allocate a portion of the common savings
to Assignor by the terms of this Agreement.
NOW, THEREFORE, in consideration of the covenants, it is agreed hereby as
follows:
SECTION 1
Definitions
Whenever used in this Agreement, in either the singular or plural, the following terms
shall have the following respective meanings:
1.1 Administrative Costs are any general or administrative costs NCPA incurs
while performing its duties under this agreement, including but not limited
to consulting fees, legal fees, general overhead, and expenses relaied
thereto.
1.4
1.5
1.6
A.qreement is this contract and attached Schedule(s).
Assi.qnment Contract is the contract between NCPA and the Assignor and
approved by the Western Area Power Administration, providing for the
assignment of Assignor’s Base Resource Percentage to NCPA.
Assi.qnor is a party to an Assignment Contract assigning its Base
Resource Percentage to NCPA. Assignor is also a signatory to this
Assignment Administration Agreement with NCPA.
Base Resource Percentaqe is Assignor’s percentage share of Western
Area Power Administration Base Resource under its Base Resource
Contract -SNR-, prior to assigning the Base Resource Percentage
to NCPA. Base Resource Percentage may be modified by Western from
time to time as contemplated in Base Resource Contract -SNR-
Base Resource Enerqv is the energy and associated ancillary services
made available from the Western Area Power Administration on a daily
basis as a result of Assignor’s Base Resource Percentage. Base
Resource Energy also refers to associated electrical capacity made
available from the Western Area Power Administration on a daily, monthly
or annual basis as a result of Assignor’s Base Resource Percentage.
2.1
SECTION 2
NCPA Duties and Authorities
The NCPA Commission, acting after obtaining the unanimous affirmative vote of
those Commissioners representing each and every Assignor may:
(a)Act on behalf of NCPA in carrying out any action properly taken pursuant
to the provisions of this Agreement. The Commission, or its designee,
shall have the authority on behalf of all NCPA to execute any contract,
lease or other instrument which has been properly authorized pursuant to
this Agreement including: documents supplementing this Agreement,
contracts with Non-Parties, contracts relating the Base Resource such as
physical hydro production hedging contracts for interested Assignors and
related items;
(b)Establish standards, in addition to the authority provided in other sections
of this Agreement, with respect to any aspect of arrangements between
NCPA and the Assignors, which it determines may adversely affect the
administration of. the Base Resource Percentage Assignment, and to
review such arrangements to determine compliance with such standards;
(c)In addition, the Commission shall have such further powers and duties as
are conferred or imposed upon it by other sections of this Agreement.
2.2 The General Manager and the NCPA staff shall have the duties and authorities
as necessary to provide for the day-to-day administration of this Agreement,
which include but are not limited to. actions to:
(a)Carry out directions of the Commission with respect to matters
relatSd to this Agreement;
(b)Coordinate interchange accounting and maintain records pertaining
to the administration of the Base Resource Percentage
assignments, including determination of the volume of power
delivered to each Assignor for each calendar month;
(c)Prepare and submit a proposed budget for assignment-related
expenditures for the ensuing fiscal year to appropriate committees
and the Commission, on such schedule as established by the
Commission or consistent with the NCPA annual budget process;
(d)Furnish such information and reports as are required to keep the
Assignor informed of the outlook for, the functioning of, and results
achieved with regard to the assignments of Base Resource
Percentages;
(e)Implement operating principles, practices and procedures as they
relate to the economy of operation of the Base Resource
Percentage assignments;
(f)Calculate costs for the Base Resource Percentage Assignment
transactions among the Assignors;
(g)Develop a billing system for the Base Resource Per.centage
Assignment for transactions pursuant to this Agreement, including
criteria, rules, and standards thereto;
(h)Issue an invoice to Assignor for Base Resource Percentage
Assignment related costs;
(i)Assist Assignor in making sales and purchases of generation and
transmission capacity related to their assignment of the Base
Resource Percentage;
(J)Initiate and make long and short-range planning studies with respect to
the Western Area Power Administration Base Resource Percentage.
These studies shall be updated annually or at such other times as the
Commission may direct;
(k)Develop any needed generation and transmission resource plans
related to the Base Resource Percentage assignments in consultation
with Assignor’s staff;
2.3 The General Manager and the NCPA staff shall act on behalf of Assignor, as
directed in writing by Assignor, and in accordance with the Assignor’s power
purchasing statutes, regulations, rules, ordinances, and charter, as they apply, to
subscribe to additional Western
Western chooses to market in
Resource Percentage.
products other than Base Resource, that
proportion to each of its customers’ Base
SECTION 3
Assignor Duties
3.1 Assignor shall cooperate with NCPA in providing its relevant load and resource
data to NCPA in a timely fashion to insure that NCPA can maximize the value of
the assigned Base Resource Percentage.
3.2 Assignor shall also indemnify NCPA in regard to assignment administration
services provided by NCPA under this Agreement.
3.3 Assignor shall pay NCPA for all costs and charges incurred under this
Agreement in accordance with Section 11.
SECTION 4
Allocations
4.1,Western Allocations Excluded from this Aqreement
4.1.1. All benefits, costs, and energy schedules associated with the CVP
Corporation’s Energy Exchange Arrangements for Project Use and First
Preference Support program shall not be subject to this Agreement. This
exclusion applies to all Bank Energy and Bank Return Energy schedules
allocated by the CVP Corporation.
4.1.2.Western allocations that are not assigned to NCPA will not be subject to
this Agreement and will be scheduled only for the benefit of the NCPA
member receiving the allocation.
4.2.
4.1.3 An NCPA member who does not assign its Base Resource Percentage to
NCPA shall not be subject to this Agreement.
Determination of Benefits
In order to determine the benefits of assigning each member’s Base Resource
Percentage to NCPA for joint administration, NCPA staff will first estimate the
value of the Base Resource Percentage as if no assignments had been
executed, then compare this value with the value obtained through NCPA’s joint
administration of all assigned Base Resource Percentages. The computational
algorithm for this comparison is contained in Schedule A to this Agreement;
however, such algorithm, as it may be refined from time to time by the NCPA
Commission, shall be consistent with the following policy goals agreed to by
each Assignor, namely: (i) Western Base Resource Energy shall be fully utilized
to the maximum extent possible; (ii) subject to (i) above, Western Base
Resource Energy shall be scheduled during those time periods that maximize its
value; and (iii) consistent with scheduling Western Base Resource Energy to
maximize its overall net value, NCPA will also seek to reasonably minimize
associated transmission-related and other applicable costs. NCPA staff shall
monitor the results of the algorithm contained in Schedule A and recommend
corrective action to be taken if and when the application of this procedure results
in allocations of benefits and costs to Assignor inconsistent with the policy goals
and allocation parameters described in this section 4.
4.3 Allocation of Benefits
4.3.1
4.3.1.1
For each monthly accounting period, all benefits attained through NCPA’s
administration of assigned Base Resource Percentages shall be allocated
to Assignor proportionately to (i) the number of days that its Assignment
Administration Agreement is in force that month, i.e., the fraction of the
month Agreement is in force, and (ii) the amount of Base Resource
Energy attributed to Assignor hereunder.
One-half of any benefits shall be allocated to that group of
Assignors providing Base Resource Energy in excess of their own
4.3.2
load (Group E), and the remaining one-half of benefits shall be
allocated to that group of Assignors whose load exceeds the Base
Resource Energy they have assigned (Group S).
Each individual Assignor within either Group E or Group S shall receive a
share of the group’s benefit proportional to its contribution to the groulS’S
excess energy or excess load respectively.
SECTION 5
Resource Planninq
5.1 NCPA staff, in consultation with Assignor’s staff, shall perform necessary
forecasts, studies and resource planning related to maximizing the overall value
of the integrated Base Resource Percentage assignments. NCPA Staff shall
perform member-specific forecasts, studies and resource plans for the benefit of
the individual Assignor so requesting only upon receiving a detailed written
request from Assignor particularly describing the task requested to be performed
as part of a duly authorized Member Services Agreement between the individual
Assignor arid NCPA.
SECTION 6
Resource Sale and Purchase
6.1
6.2
Sales and Transfers to Non-Parties. Sales or transfers of Base Resource
Energy to entities not assigning a Base Resource Percentage to NCPA under
the authorization of the Western Area Power Administration are strictly prohibited
without the express written consent of the Western Area Power Administration.
Penalties. Any Penalties incurred for violation of section 6.1 shall be solely
responsibility of the Assignor found to be in noncompliance with the above
section.
SECTION 7
O&M Fundinq! and Restoration
7.1 NCPA shall pass through to Assignor on an as-billed basis any bills and credtits
related to Western Area Power Administration O&M Funding and Central Valley
Project Improvement Act Restoration Funding as part of it.s normal billing
p,rocedure described in Section 11 below.
SECTION 8
Central Dispatch and Scheduling Services
8.1
8.2
Central Dispatch. Each Assignor shall, to the fullest extent practicable, subject
its Base Resource Percentage to the central dispatch of the Northern California
Power Agency. The objectives of the Pool central dispatch with respect to the
Base Resource Percentage shall be as follows:
(a) to supply the capacity and energy requirements of the combined
Assignors at the lowest practicable cost;
(b)to accomplish the requirements of (a), above, in a reliable and safe
manner.
Base Resource Schedulinq. NCPA and Assignor shall cooperate to meet each
applicable control area’s scheduling timelines and protocols to maximize the
value of the assigned Base Resource Percentages, and correspondingly
minimize related transmission costs.
SECTION 9
Accountinq
9.1 Records and Accounts. NCPA shall keep accurate records and accounts related
to the Base Resource Percentage assignment, and for each identifiable service
that it supplies to Assignor through this Agreement or through any related
agreement which may be entered into between NCPA and Assignor. Records
and accounts shall be kept in general accordance with the Uniform System of
Accounts Prescribed for Public Utilities and Licensees Subject to the Provisions
of the Federal Power Act (see 18 CFR 101), as prescribed by the Federal
Energy Regulatory Commission and amended from time to time. Such records
and accounts shall be made available to Assignor for inspection at any
reasonable time. All records are subject to audit at the written request of
Assignor provided that such audits shall be conducted at the expense of the
Assignor(s) requesting them.
10.1
SECTION 10
Meterinq
Each Assignor’s duties with respect to metering under this Agreement shall be
performed in accordance with protocols and standards of its respective control
area. Differences in control area standards with respect to metering, if any, shall
be resolved initially though internal discussions between the Assignors; and if the
Assignors are unable to reach an agreement in this regard, then the matter shall
be resolved through the dispute resolution procedures contained in Section 22
below.
SECTION 11
Billinq
11.1 Applicability. Each month NCPA shall invoice Assignor in accordance with this
terms of this Agreement. Invoices amounts for Base Resource related costs will
initially be determined according to Assignor’s actual Base Resource
Percentage, subject to the true-up procedure described below. Bills from NCPA
to Assignor shall be rendered and collected by NCPA pursuant to requirements
and procedures provided in this Agreement as follows. Amounts shown on
invoice are due and payable thirty (30) days after the date of the billing
statement, except that any invoice coming due on a Friday, holiday, or weekend
10
shall be adjusted by NCPA to come due on the closest following workday, as
applicable. Assignor shall timely pay to NCPA all amounts of money shown on
an NPCA invoice or billing statement completely, without setoff, for any service,
product, electrical capacity or energy, any Base Resource Energy, contracts
related to the Base Resource, Administrative Costs, Western Area Power
Administration O&M Funding and Central Valley Project Improvement Act
Restoration Funding, any consulting or legal fee or expense associated with this
Agreement, and any other cost, liability, or expense incurred by NCPA pursuant
to this Agreement.
Any amount due and payable but not paid by the Assignor within thirty (30) days
following the date of the invoice shall bear interest at the per annum prime rate
(or reference rate) of the Bank of America NT & SA then in effect, plus two (2)
percent per annum computed on a daily basis until paid.
NCPA shall mail all invoices within 24hours of the invoice date thereon. NCPA
will alert Assignor’s designated representative via telephone of any payment not
received within 36 hours after the due date. The postmark date on the envelope
containing payment by check shall be used to determine timeliness of payment,
except that payments received later than seven (7) days after the due date shall
be declared late without regard to postmark date.
Preferred Pa’cment Method
Payment via wire transfer is the preferred method of making payments to NCPA.
For wire transfers, the transaction date shall be used to determine the timeliness
of payments.
NCPA Credit Memoranda issued to any Assignor do not bear interest during the
period such credits remain outstanding but unapplied. It is each Assignor’s
responsibility to apply the credits to subsequent NCPA billings on a timely basis.
A. Disputes.
If An Assignor does not dispute the correctness of any billing statement in
writing, within the time provided, the billing statement shall be deemed to be
correct. If Assignor disputes the correctness of any billing statement by NCPA, it
shall pay the amount claimed when due. If the bill is determined to be incorrect,
NCPA will issue a corrected bill and refund any amount which may be due
Assignor (including any interest paid by Assignor).
If NCPA and Assignor fail to agree on the correctness of a bill within thirty
(30) days after the Assignor has submitted a written request for
explanation, the General Manager shall promptly submit the dispute to the
NCPA Commission for resolution. If the Commission and Assignor fail to
agree on the correctness of a bill within thirty (30) days, the dispute shall
then be resolved under the procedures set forth in Section 22 of this
Agreement.
B.Invoices and Invoice True-Up
NCPA invoices for all costs will be adjQsted or trued-up as provided below.
True-up of invoices will be performed throughout the year, as practicable;
but, not less than quarterly. At the end of each fiscal year, as soon as the
annual audit is complete and actual data is available, NCPA shall true-up
all invoices based on actual cost data and actual billing determinants.
True-up amounts will be invoiced or credited to the Assignor, as
applicable. True-up amounts for Base Resource related costs wilt be
based upon an adjusted Base Resource Percentage attributable to
Assignor in accordance with Schedule A. Credit amounts will be
deposited in the appropriate member’s individual account in the General
Operating Reserve.
12
11.2 Appeals. In the event of extenuating circumstances, should Assignor make a
late payment including interest, it may then make a written appeal to the
Commission for relief from such interest for reasonable cause.
11.3 Audit Riqhts. Assignor shall have the right to audit any data created or
maintained by NCPA pursuant to this Agreement on thirty (30) days written
notice unless otherwise agreed by such Assignor and NCPA.
11.4 Assignor Covenants: Each Assignor covenants and agrees (a) to establish and
collect rates and charges for the services and commodities provided by its
Electric System sufficient to provide Revenues adequate to meet its obligations
under this Agreemerit and to pay all other amounts payable from, and all lawful
charges against or liens upon, the Revenues; (b) to make payments under this
Agreement from the Revenues of, and as an operating expense of, its electric
system; (c) to make payments under this Agreement whether or not there is an
interruption in, interference with, or reduction or suspension of services ~rovided
under this Agreement (such payments are not subject to any reduction whether
by offset or otherwise, and regardless of whether any dispute exists); and (d) to
operate its electric system and the business in connection therewith in an
efficient manner and at reasonable cost and to maintain its electric system in
good repair, working order, and condition.
SECTION 12
Administrative Cost Allocation
1.2.1 A proportionate share of administrative costs incurred by NCPA under this
Agreement shall be allocated and invoiced to Assignor. The allocation of these
costs will be based on two determinants: Assignor’s Base Resource Percentage
and the benefits received by Assignor hereunder. An annual true-up shall be
performed to finally settle on administrative cost allocations to each Assignor for
the prior year.
SECTION 13
Other Aqreements
13.1 Joint Powers Aqreement. This Agreement complements the Joint Powers
Agreement. tt extends the responsibilities and authc~rities assigned, to the
Commission and to the General Manager under terms of the Joint Powers
Agreement.
13.2 Poolinq A.qreement. This Agreement supersedes the Pooling Agreement, and
takes precedence with respect with respect to issues addressed in this
Agreement relating to the receipt, delivery, scheduling, accounting and billing for
all Western Area Power Administration Base Resource Energy to which Assignor
is entitled for as long as this Agreement is in effect.
13.3 Other Aqreements. With the exception of Third Phase Agreements and Project
Indentures of Trust, this Agreement shall upon its effective date, take
precedence with respect to issues addressed in this Agreement and also
addressed in any other agreement between Assignor and NCPA. With respect
to issues common to Third Phase Agreements and this Agreement, Third Phase
Agreements shall take precedence over this Agreement.
SECTION 14
Western Electricity Coordinatinq Council
14.1 Consistency with Western Electricity Coordinatinq Council Standards. Criteria
and Rules. The standards, criteria and rules adopted by NCPA committees and
]4
by NCPA under this Agreement shall be consistent with those adopted by the
Western Electricity Coordinating Council (WECC).
SECTION 15
Term of Aqreement
15.1 Effective Date. This Agreement shall become effective on the date on which it
has been duly executed and delivered to NCPA by Assignor.
15.2 Termination. Of necessity, the term of this Agreement must coincide with term of
the underlying Assignment Contract. More specifically, this Agreement shall
terminate automatically upon the termination of the Assignment Contract.
Notwithstanding termination of this Agreement, any financial obligations incurred
by Assignor hereunder shall survive until satisfied.
Assignor shall not be obligated to compensate NCPA, or any other Assignors, for
loss of any benefits that would have accrued to NCPA, or other Assignors, if
Assignor had not terminated this Agreement. Nor shall NCPA, or any other Base
Resource Percentage Assignor, be obligated to compensate Assignor for any
benefits that accrue to the remaining Assignors because of the termination.
Reallocation of the costs and benefits of the Base Resource Percentage
assignment after Assignor has withdrawn shall not give rise to any claim against
Assignor by NCPA or other Assignors. Nor shall NCPA or any of the remaining
Assignors be obligated to compensate Assignor for any benefits that accrue to
the remaining Assignors because of such a reallocation of costs and benefits.
SECTION 16
Notices
16.1 Notice. Any notice, demand or request required or authorized by this Agreement
shall be in writing and shall either be personally delivered or transmitted to the
Assignor at the address shown on the signature pages hereof.
SECTION 17
Waiver of Defaults
17.1 Waiver. No waiver of the performance by Assignor of any obligation under this
Agreement with respect to any .default or any other matter arising in connection
with this Agreement shall be effective unless agreed to by both Assignor and
NCPA in writing. Any such waiver in any particular instance shall not be deemed
a waiver with respect to any subsequent performance, default or matter.
SECTION 18
Uncontrollable Forces
18.1 Uncontrollable Forces. An Assignor shall not be considered to be in default in
respect of any obligation hereunder if prevented from fulfilling such obligation by
reason of uncontrollable forces. The term "uncontrollable forces" shall be
deemed for the purposes hereof to mean storm, flood, lightning, earthquake,
tsunami, fire, explosion, failure of facilities not due to-lack of proper care or
maintenance, civil disturbance, labor dispute, sabotage, war, national
emergency, restraint by court or public authority, or other causes beyond the
control of the affected Assignor which such Assignor could not reasonably have
been expected to avoid by exercise of due diligence and foresight. Any Assignor
affected by an uncontrollable force shall use due diligence to place itself in a
position to fulfill its obligations hereunder and if unable to fulfill any obligation by
reason of an uncontrollable force, such Assignor shall exercise due diligence to
remove such disability with reasonable dispatch. Nothing in this Agreement shall
require an Assignor to settle or compromise a labor dispute.
SECTION 19
Liability
19.1 Liability. All of the privileges and immunities from liabilities, exemptions from
laws, ordinances and rules, all pension, relief, disability, workers’ compensation,
and other benefits which apply to the activity of officers, agents or employees of
any public agency which is an Assignor to this Agreement, while engaged in the
performance of any of their functions or duties, shall apply to them in the same
degree and extent when performing their respective public duties in connection
with this Agreement.
19.2 Division of Responsibility. Neither the General Manager, NCPA, an Assignor,
nor an entity acting on behalf of Assignor, shall be responsible for the
transmission, control, use, or application of electric capacity and energy provided
under the this Agreement on the receiving Assignor’s side of such Assignor’s
point of interconnection and shall not, in any event, be liable for d.amage or injury
to any person or property whatsoever, arising, accruing, or resulting from, in any
manner, the receiving, transmission, control, use, application, or distribution by
NCPA, or Assignor, or a corporation acting on behalf of NCPA or Assignor, of
said capacity and energy on the receiving Assignor’s side of such Assignor’s
point of interconnection.
19.3 Indemnity. Each Assignor shall indemnify, defend, hold and save NCPA and the
oth&r Assignors harmless from any and all loss or damage sustained to any
person or property and from any and all liability incurred b’y reason of any act or
performance, or failure to act or perform, on the part of NCPA or the other
Assignors. Such indemnification shall hold harmless the one indemnified, the
members of its governing body, its officers, agents and employees, from and
against any and all liability of whatever nature, including strict liability and any
and all losses and damages, including consequential damages and injuries,
costs, and expenses, including expenses incurred in connection with
investigating any claim or defending any action, and reasonable attorney’s fees.
19.4 Counsel Representation. Pursuant to the provisions of California Civil Code
Section 1717 (a), Assignor and NCPA were represented by counsel in the
negotiation and execution of this Agreement as indicated below. In light of this
representation, l~hose terms of this Agreement which dictate the responsibility for
bearing any attorney’s fees incurred in the litigation or settlement in a manner
inconsistent with the provisions of Section 19.3 were intentionally so drafted by
the Assignor and NCPA.
SECTION 20
Reports and Records
20.1 Reports. Assignor and NCPA shall each prepare and make available to the other
all data necessary for each to (i) perform all duties required under this
Agreement, and (ii) verify the accuracy of all amounts due and payable under
this agreement. Examples of data to be made available by NCPA at Assignor’s
request include, but are not limited to:
All load data relevant to Assignor’s assignment of its Base Resource
Percentage to NCPA.
All ISO cost information relevant to determining the cost savings obtained
by Assignor due to its assignment of its Base Resource Percentage to
NCPA.
Co Such additional reports and records as are reasonably requested in
writing; provided however, that the Assignor so requesting shall reimburse
the other for reports and records not essentially completed or kept in the
ordinary course of business.
20.2 Reports to Other Aqencies. NCPA will submit such reports and records which
are required or may be required by the California Energy Commission, the
Western Area Power Administration, the California Independent System
Operator, the Federal Energy Regulatory Commission or other such local, state
or federal agencies, as such reports and records are required for NCPA to fulfill
its obligations under this Agreement.
SECTION 21
Assiqnment of Aqreement
21.1 Limitations. This Agreement shall inure to the benefit of and shall be binding
upon the respective successors and assignees of the Parties to this Agreement;
provided, however, that, except as provided in the event of a default, and, except
for the assignment by NCPA authorized hereby, neither this Agreement nor any
interest herein shall be transferred or assigned by Assignor hereto except with
the consent in writing of the NCPA provided, however, that such consent shall
not be withheld unreasonably. No assignment or transfer of this Agreement shall
relieve Assignor of any obligation hereunder, except as otherwise so provided
herein.
SECTION 22
Settlement of Disputes and Arbitration
]P
22.1 Settlement of Disputes. NCPA and Assignor agree to make best efforts to settle
all disputes among themselves connected with this Agreement as a matter of
normal business under this Agreement. The procedures set forth in the
remainder of this Section shall apply to all disputes that cannot be settled by
NCPA and Assignor; provided, that the provisions of Section 11.4 shall first apply
to all disputes involving invoice prepared by NCPA. Regarding agenda items
arising from this bilateral Agreement, for which there is a potential legal conflict
of interests between the Assignor and NCPA, the Assignor’s designated
Commission member shall abstain from voting on such items at NCPA
Commission meetings.
22.2 Role of the Commission. All disputes connected with this Agreement that can’not
be resolved informally among the respective staffs shall be submitted to the
Commission upon the written request of one or more Assignors. If the
Commission cannot resolve a dispute within thirty (30) days after the dispute is
submitted to it, Assignor may commence Binding arbitration pursuant to Section
22.3. The Commission may suggest that a mediator with experience in the utility
industry be asked to assist in such negotiations. The arbitration procedure
provided for in 22.3 shall be used only as a last resort in the event that the
dispute cannot be resolved through discussion, negotiations and mediation.
22.3 Arbitration. A dispute that cannot be settled pursuant to Section 22.2 shall be
settled by binding arbitration. Immediately after the conclusion of arbitration,
Assignor and NCPA shall take whatever action is required to comply with the
arbitrator’s decision. Judgment upon the award may be entered in any court
having jurisdiction.
22.4 Expedited Dispute Resolution Procedure. If at any time Assignor or NCPA
believes that the other has breached or may breach this Agreement by some
disputed action, which dispute can not be timely resolved under procedures set
forth in Section 22.2, written notice shall be promptly provided to the General
2O
Manager. Such notice shall provide a detailed explanation of the dispute and the
position(s) of the Parties to the dispute. The notice shall also provide an
explanation of why the dispute cannot be timely resolved under the procedures
set forth in Section 22.2.
Upon receipt of such notice, the General Manager and the Utility Director of
Assignor shall consult to determine what actions are appropriate to effect a
resolution of the dispute. In the event that the General Manager and the Utility
Director cannot effect a resolution of the dispute satisfactory to all Parties within
five (5) working days of receipt of such notice, the General Manager shall
immediately notify the Chairman of the Commission and provide copies of the
notice, together with any comments of the General Manager and the Utility
Director, concerning the dispute.
Upon receipt of such notice, the Chairman of the Commission shall either place
the dispute on the agenda of the next regular meeting of the Commission for the
purpose of having the Commission mediate the dispute or if deemed necessary
by the Chairman, due to the need for timely resolution, call a special meeting of
the Commission for the purpose of having the Commission mediate the dispute.
If the Commission cannot effect a resolution of the dispute at such meetings, the
Parties shall immediately invoke the provisions of Section 22.3.
SECTION 23
Amendments
23.1 Amendments. Unless otherwise set forth in this Section, this Agreement may be
amended only by written instrument executed by Assignor and NCPA with the
same formality as this Agreement; provided however that the Schedule(s) to this
Agreement may be modified through a unanimous vote of the Assignors’ NCPA
Commission members provided that each Assignor’s commission representative
is present and votes for the passage of the amendment.
2!
SECTION 24
Severability
24.1 Severability. In the event that any of the terms, covenants or conditions of this
Agreement or the application of any such term, covenant or condition, shall be
held invalid as to any person or circumstance by any court having jurisdiction, all
other terms, covenants or conditions of this Agreement and their application shall
not be effected thereby, but shall remain in force and affect unless the court
holds that such provisions are not severable from all other provisions of this
Agreement.
SECTION 25
Governinq Law
25.1 Governinq Law. This Agreement shall be interpreted, governed by, and
construed under the laws of the State of California.
NORTHERN CALIFORNIA POWER AGENCY
Approved as to form ’
By:By:
Title:Title:
Address for Notices
22
ASSIGNOR
Approved as to form:
By:By:
Title:Title:
Address for Notices
23
Schedule A
The Allocation Alqorithm
A-I Allocation of Benefits other than Transmission Cost Savinqs
Steps 1-9 determine each Assignor’s monthly percentage allocator that will be used to
distribute benefits of pooling. Step 10 uses that percentage allocator to distribute the
benefits.
All computational steps in this allocation algorithm will be implemented in a manner that
is consistent with NCPA staff’s goal of scheduling the assigned BR to maximize the
economic market value of the BR.
Step 1: Constrained own-load optimal dispatch: NCPA staff shall perform after-the-
fact monthly "own-load" optimal dispatch of each Assignor’s BR to establish the value of
the individual BR allocation to each Assignor pre-assignments. The own-load dispatch
shall be constrained by hourly loads equal to each Assignor’s gross hourly loads
multiplied by a forecast factor of 1.00 such that BR energy schedules cannot exceed
100% of load in any hour. In addition, revenues that the Assignor would have received
from Western through the re-marketing of its "stranded" energy allocations (the portion
of monthly energy allocations that cannot be utilized by the Assignor) will be added to
this value.
Value_OIL(i) = OIL dispatch(i) * MCP + Stranded_Revenue(i)
where:
and,
Value O/L is the BR energy value in the own-load dispatch,
~ represents each Assignor,
O/L dispatch is the hourly own-load schedule of BR,
MCP is the hourly NCPA Pool Market Clearing Price,
Stranded Revenue is the estimated Western energy re-marketing
revenue.
Step 2: Net value of own-load constrained dispatch: All volumetric Western costs
will be deducted from the values computed in Step 1. Fixed monthly BR costs and
other fixed costs are not included in this step.
NetValue_OIL(i) = Value_OIL(i) - VarCost_O/L(i)
where:NetValue O/L is the own-load BR value adjusted fdr variable costs~
and,
VarCost O/L is all variable cost associated with Wester.n BR,
including exchange purchase costs, that each Assignor would have
paid to Western to schedule its individual BR allocation.
Step 3: Unconstrained own-load optimal dispatch: Perform individual optimal
dispatches without load constraints. The difference in net value between this un-
constrained net value and the NetValue_O/L of Step 2 shall be the allocation
determinant for 50% 0f the assignment benefit computed in Step 7.
NetBen_O/L(i) = Unconstrained_Disp(i) * MCP -VarCostPool_OIL(i) -
NetValue_O/L(i)
AIIocator_E(i) = NetBen_OIL(i) I (Sum of NetBen_OIL(i))
where:NetBen O/L is the net value increase when the load constraint is
removed,
Unconstrained Disp is the optimized BR schedule without load constraint,
VarCostPool_O/L is the Variable cost incurred without load limits,
and, Allocator E is the.energy provider BR value allocator used in step 7.
Step 4: Head-room value: Compute the value of load "head-room" provided by each
Assignor during the month. Head-room value is a function of each Assignor’s net load
(net of constrained own-load BR schedules and other energy schedules subject to
federal power marketing restrictions) in each time-step when NCPA’s actual BR
schedule exceeds the sum of the Assignors’ own-load BR energy schedules.
In each hourly time step that NCPA’s actual BR schedule exceeds the sum of
OIL_dispatch in step 1, the HR_Value for each Assignor (i) is computed as:
HR_MW(i) = Max[0, Load(i) - OIL_dispatch(i) - Other_Western(i)]
HR_Value(i) = HR_MW(i) I (sum of HR_MW(i)) *
(NCPA_BR - sum of OIL_dispatch(i)) * MCP
where:HR MW is the net-Western load "head room",
Other Western is the schedule of non-BR Western energy,
HR Value is the proportional allocation of usable head room valuation,
and, NCPA BR is NCPA’s actual schedule of Western BR.
Step 5: Allocators for head-room providers: Compute the allocation determinant for
50% of the pooling benefit computed in step 7 on the basis of HR Value for the month.
Allocator_L(i) = HR_Value(i) / (sum of HR_Value(i))
Where Allocator L is the head-room provider value allocator used in step 7.
Step 6 Net benefit of BR assiqnments: Compute the net benefit of BR assignments
to NCPA as the difference between MCP energy value of NCPA’s actual BR schedule -
minus variable BR costs - minus the sum of NetValue O/L for the month. If the result
is positive, then proceed to step 7. If neqative, proceed to step 8.
Net_Ben = NCPA_BR* MCP + Stranded_NCPA- VC_NCPA- (sum of
NetValue_O/L(i))
where: Net Ben is the increase (or decrease) in BR value due to assignments,
Stranded_NCPA is actual re-marketed energy revenues,
VC NCPA is NCPA’s variable BR costs including exchange energy
purchase costs,
and,Stranded_NCPA is revenues received for energy re-marketed by Western
for NCPA.
Step 7 (Only if Net Ben is positive) Allocate positive Net_Ben: Allocate one-half of
the Net_Ben using AIIocator_E and one-half using AIIocator_L. Proceed to Step 9.
Assignor_Ben(i) = Net_Ben * (AIIocator_E(i) + AIIocator_L(i)) / 2
Where Assiqnor Ben is each Assignor’s share of NCPA’s assignment benefit.
Step 8 (Only if Net Benefit is less than or equals zero) Zero pooling benefit: Set
Assignor_Benefit value to zero for each Assignor. Proceed to Step 9.
Assignor_Ben(i) = O.
Step_ 9 Assiqn constant adjusted BR percentaqe shares for month: Determine
each Assignor’s percentage share of NCPA’s BR by normalizing the. sum of each
Assignor’s Assignor_Ben and NetValue_O/L. Each Assignor’s share of NCPA’s BR
schedules in each time-step during the month shall be equal to the percentage
computed in this step. (For example, if a member’s share in a given month is
calculated as 15% in this step, that member is assigned 15% of actual Western
schedules in each time-step during that month.)
BR_Pct(i) = [Assignor_Ben(i) + NetValue_OIL(i)] /
sum of [Assignor_Ben(i) + NetValue_O/L(i)]
11]
where BR Pct(i) is each Assignor’s share of NCPA BR schedules and
associated benefits (e.g., re-marketed energy revenues).
Step 10: Assiqn BR costs: Assign any difference between the actual NCPA VCost
(NCPA’s actual BR variable costs) and the sum of the VarCost_O/L in the month,
positive or negative, will be distributed to each Assignor using BR_Pct(i). Each
Assignor’s Western BR costs for the month (to be billed by NCPA) will equal the -
respective VarCost_O/L adjusted by this step added to the Assignor’s share of fixed
BR costs.
BR_Cost(i) = VarCost_O/L(i) + FixedCost_OIL(i) -
BR_Pct(i) * [NCPA_Vcost - (sum of VarCost_OIL(i))]
where:BR Cost(i) is each Assignor’s total monthly Base Resource cost,
and, FixedCost O/L(i) is each Assignor’s fixed Western BR cost.
NCPA staff shall regularly monitor the results of this procedure and recommend
corrective action to be taken if and when the application of this procedure results in
counter-intuitive and/or unfair allocations of benefits and costs to the Assignors.
A-2 Transmission Cost Savinqs Allocations
After each month, NCPA staff will compute the difference between NCPA.BR energy
physically scheduled through an Assignor that is directly connected to Western’s
transmission system and that Assignor’s O/L_dispatch value computed as specified in
Step 1. If this difference is positive, the direct-connect Assignor saved transmission
charges and CAISO costs (e.g., GMC, low and high voltage access, etc.), to the extent
that the over-scheduled BR displaced CAISO energy, by physically scheduling another
Assignor’s BR energy. The value of the transmission charge and CAISO cost savings
will be determined and split on a 50/50 basis with the non-direct-connect Assignors
whose BR energy was scheduled to the direct-connect Assignor(s).
The direct-connect Assignor directly receives the benefit of avoiding transmission
charges and CAISO costs to the extent that the direct-connect Assignor actually
displaced CAISO energy imports. The direct-connect Assignor will pay half of the
transmission and CAISO savings that is achieved by scheduling other Assignor’s
shares of BR to its load (as determined by NCPA staff) to the non-direct-connect
Assignors. These payments will be allocated to the non-direct-connect Assignors in
proportion to their adjusted BR_Pct (from Step 9).
CMR:460:04 Attachment B
TO:HONOFL,-kBLE CiTY COUNCIL
ATTENTION:FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT: UTILITIES
DATE:AUGUST 3, 2004 CMR:366:04
SUBJECT:APPROVAL OF , RESOLUTION REQUESTING
ASSIGNMENT OF PALO ALTO’S BASE RESOURCE
PERCENTAGE TO NORTHERN CALIFORNIA POWER
AGENCY 04-SNR-00_,~XLX WITH THE UNITED STATES
DEPARTMENT OF ENERGY, WESTERN A’REA POWER
ADMINISTIL4TION
REPORT IN BRIEF
For the past several 3;ears, staff has informed Council of significant changes occurring as
the City’s Western Area Power Administration (\Vestern) contract is renewed for 2005-
2024. Palo Alto~s Western Base Resource will essentially be an I 1.62% share of the
Central Valley Project net output.
In order to maintain the stares quo of being able to produce cost savings through Western
resource pooling, \Vesten~ requires customers to assign their Base Resource Percentage to
fl~eir pooling entity, Northern Califon~ia Power Agency (NCPA) in Palo Alto’s case.
Staff estimates the presem ed savings to be approximately $650,000 per year.
CMR:460:04 Attachment B
~COMMENDATION
Staff requests Council’s approxal of the attached resolution approx;ing a reques-t for
assi~lnent of Pa]o Alto’s base resource percentage to Northern California Power Agency
04-SNR-00_,-XL~XX with the United States Department of ]Energy, Western Area Power
Administration.
B ....,,,GROUND
For about 20 ),’ears Western has allowed the NCPA pool members including Palo Alto to
enjoy the benefits of cooperatively pooling their Westen~ resource to achieve a variety of
cost reductions compared to the costs of meeting loads separately with separate shares of
Western resource. This has saved Pa]o Alto millions of dollars without exposure to risky
positions.
Palo Alto has always conformed, and wit! continue to confon~, to federal power
marketing policies. Starting in 2005, Western is increasing its requirements for proof of
adherence to its longstanding policy of prohibiting customer resale of federal power.
Western’s post-2004 marketing program requires customers who seek to pool their
Western resource to assign their Base Resource percentage shares (BR%) to the pooling
aggregator in a revocable manner.
On July 7, 2004 the Pa!o Alto Utilities Advisory Commission voted 5-0 to recommend
that Council approve staff’s recommendation to assign Palo Alto’s Western post 2004
Base Resource allocation percentage to NCPA for poolingpurposes.
DISCUSSION
.Analysis by staff and NCPA shows a Palo Alto share of savings of approximately
S650,000 per year achievable in the post-2004 period from ]oad dix,ersity and power
delivery.arrangements to certain customers who are directly connected to the \Vesten~
transmission system. This sax.qngs amount can fluctuate with a variety of factors.
including load growth in Palo Alto, in other member cities, particularly in cities like
Roseville which are directly connected to the Western transmission system. The risk to
the volume of savings may be mitigated by working cooperatively with directly
connected members who have loads exceeding their Western allocations and their
internal generation. Those are NCPA members like Roseville, Redding and Turlock.
The savings would notbe impacted by Palo Alto’s own generation acq~.tisitions or
operations. Pool principles hax~e members avoid being economically hammed by pooling
and allow members to share positive savings that result from pooling.
Ch,:[R:366:04 Page 2 of 4
CMR:460:04 Attachment B
The assignment agreement maintains all of Palo Alto’s rights and obligations as they
pertain to an active Base Resource contract with a 0% BR share. This allows Palo Alto to
maintain an active relationship with Western and to participate independently in other
\Vester8 products if approved by Council. The agreement assigns only the BR% share
amount of 11.52% to NCPA to enable the continued realization of pooling savings.
~CPA ~ould continue to handle the daily scheduling of energy associated with Palo
Alto’s 11.52% share of the Base Resource.
The assignment agreement allows NCPA to aggregate the assi~aed allocation percentages
of all its participating members and to have a Base Resource contract of its own with an
allocation equal to the sum of those assigned to it. To enable the orderly unwinding of
agreements, the assigned allocations will be listed by city and percentage share in a table
in NCPA’s Base Resource contract. At the current time it is expected that all ten NCPA
pool members will participate in this assignment arrangement. Other non-pool members
have expressed interest in this arrangement and may participate at a later date.
The assignment a~-eement is revocable by Pa]o Alto upon 90 days prior written notice.
The assigmnent will run from 1/1/2005 tl~’ough 12/31/2024. The assignment agreement
is for execution by Palo Alto and NCPA with an acknowledgement by Western. In order
to have time to develop and implement associated pooling benefit allocation algorithms
a(nd information management systems, NCPA requests that members interested in
assignment secure needed Council approvals by September 30, 2004.
A final draft of the assignment contract prepared for Healdsburg is a~ached. Staff has
requested and wilt receive a substantially identical executable original-contract from
\Vestem.
I~SOURCE IMPACT
Approval of the assignment contract will maintain the status quo with respect to duties
and responsibilities split between Palo Alto and NCPA. Therefore approval has no
impact on Pa]o Alto staff resources. Under current assumptions staff estimates savings to
be approximately Sd50,000 per year.
POLICY IMPLICATIONS
Executing the assignment contract is consistent with Primary Portfolio Plannh~g
Objective 2: Provide superior financial performance to customers and the City by
maintaining a supply portfolio cost advantage compared to market cost (CMR:425:01).
CMR:366:04 Page 3 of 4
CMR:460:04 Attachment B
TIMELINE
UAC approval was secured on July 7,2004. With Finance Committee approval, Staff will
seek Council approval on September 13, 9004 and sign the ~’~’-~a~cement in October for an
eftZctive date of January 1, 2005.
ENVIRONMENTAL I~VIEW
Executing the assignment contract does not constitute a project for the purpose of the
Califonfia Environmental Quality Act. The assignment of Base Resource percentage
allocation to NCPA does not impact the volume, tin-ring or temperature of water flows in
rivers. River .flow is governed by other constraints and is managed through releases from
regulating reservoirs just downstream of power generating reservoirs. The assignment of
Base Resource percentages will on some days improve the release schedule of water from
power generators into regulating reservoirs to be a societally more efficient timiflg of use
of existing generators.
ATTACHMENTS
A: Model Contract 04-SNR-00),L)CK Request for Assignment of Member’s Base
Resource Percentage to No~hern California Power Agency
B: Minutes of July 7, 2004 Utilities Advisory Commission Meeting
C: Resolution Approving A Request for AssiN~nent of Palo Alto’s Base Resource
Percentage to Northern California Power Agency 04-SNR-00)CX_K with the United
States Department of Energy, Western Area Powe~ Administration
P~PAI~D BY:
TOM 17
Seni or Resource~Ofiginator
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
ULRICH
of Utilities
EMIl ,Y HARRISON
Assistant City Manager
CMR:366:04 Page 4 of 4
CMR:460:04 Attachment B CHR:366:04 At:. A
Contract 04-S N R-00>OtX
REQUEST FOR ASSIGNMENT OF
CITY OF HEALDSBURG’S
BASE RESOURCE PERCENTAGE
TO NORTHERN CALIFORNIA POWER AGENCY
BACKGROUND:
1.1 The City of Healdsburg (Heald~burg)is a municipal corporation, organized
and existing under the laws of the State of California.
1.2 Healdsburg has entered into Contract 00-SNR-00324, dated August 4,
2000, with Western Area Power Administration (Western), wtsich provides
Healdsburg with a percentage of Westem’s Base Resource power beginning
January 2005.
1.3 Tt~e Northern California Power Agency (NCPA) is a joint Powers agency,
organized and existing under the laws of the State of California.
1.4 Healdsburg is a member of NCPA.
1.5 As a member of NCPA, Healdsburg desires to have Western assign
Healdsburg’s Base Resource Percentage under Contract 00-SNR-00324 to
NCPA so that NCPA may create a power resource portfolio for the mutual benefit
of qualified NCPA members.
ASSIGNMENT OF BASE RESOURCE PERCENTAGE:
2.1 Healdsburg hereby requests assignment of its 0.18594 percentage of the
Base Resource under Exhibit A to Contract 00-SNR-00324 to NCPA.
2.2 NCPA is agreeable to taking responsibility for Healdsburg’s 0.18594
percentage of the Base Resource.
2.3 Healdsburg shall retain its Base Resource Contract 00-SNR-000324 with
a 0.000 percent of the Base Resource d6ring the term of assignment to NCPA.
2.4 Any al!ocation changes made pursuant to the 2004 Power Marketing Plan
shall apply to Healdsburg’s Base Resource Percentage, regardless of the
contract under which the allocation is being administered.
2.5 No actionwill be required of Healdsburg under Contract 00-SNR-00324
during the time that NCPA is holding Healdsburg’s Base Resource Percentage
under Contract 04-SNR-00XXX.
CMR:460:04 Attachment B
Contract 04-S N R-00)~£XX
2.6 TtTis Ass~gnmenL shall remain in full force and effect until the earlier of:
2.6.1 December 31,2024; or
2.6.2 Such time that Hea dsburg requests reassignment of its Base
Resource Percentage by providing ninety (90) days ~ ~~J: rlLLen notice to theSierra Nevada Region of Western.
2.7 NCPA and Healdsburg shall jointly and severally indernnify and hold
Western harmless from and against all claims, damages, losses, and expenses,
including attorney’s fees, arising out of or resulting from this Assignment.
AGREEMENT:
All par~ies to this Assignment hereby agree that this Assignment will become
effective on the first day of the first month following the date of approval by the
Administrator of the Western Area Power Administration or a later date if agreed
to by Western and Healdsburg.
CITY OF HEALDSBURG
Attest:
By:
Title:
By:
Title:
Address:
Date:
401 Grove Street
Healdsburq~ CA 95448-4-723
NORTHERN CALIFORNIA POWER AGENCY
By:
Tide.
Address:
Date:
180 Cirby Way
Roseville, CA 95678
R.\Grou <’D. ~,r , Page2of3p~’., \,.~rm, rr~,. ~6200\haas~NCPA\assic~nment tI’,ICPA~ Hnn
CMR:460:04 Attachment B
Contract 04-S N R-0.~X)~,~
]-he above Request for Assignment of City of Healdsburg’s Base Resource Percentage
under Contract 00-SNR-00324 to the Northern California Power Agency is hereby
approved.
Date:
Michael S. Hacskaylo
Administrator
Western Area Power Administration
CMR:460:04 Attachment B
CMR:366:04 Ate. B
UTILT[TiES ADVISORY COMMISSION EXCERPT
July 7, 2004
ITEM NO. 4: Western 2005-2024 Base Resource Percentage Assignment to NCPA
U]rich said staff does not have a fol~alpresentation. Expect the best way to cover this
information is by the Commissioners asking questions. The agreement has the provision
for us to get out with sho~t notice so we can get out at any time to hold the contract the
way We do now. Benefits are rather significant and we appreciate your concutTence.
E4elton asked if initiative is driven by Westem’s i-ules and regulations. We didn’t choose
to do but need to do. \\q~at is the back~ound of~hy this exists.
Kabat said yes, \Vestem has allo~ ed pooling of resources for past 20 years and is now
changing provisions that to qualify to pool resources you must assi~ your base resource
percentage to a resource pooling entity.
Balachandran added that \Vestem
Dawes asked about s.everal years ago when we had the hydro blow-off and CPAU was
selling power to other powers. Is this in any way related to that issue or differel-~t? Could
be sold outside of the Muni-fratemity?
Balachandran - its’ not related.
A commissioner asked if this represents new savings that we do not already achieve.
Kabat- This is to try to maintain the status quo of saving money by poo]ing, about
S650,000 a year going fo~avard. If we don’t pool, we would have to pay more.
Assigning to continue pooling can be viewed as either avoiding a future cost or
continuing current savings.
Motion: Rosenbaum moved to accept staff recommendation. Bechtel second.
B,lotion Approved: 5-0 Unanimous.
UAC ?,4inutes 7/7/2004 Page 1 of I
2,66:04 Art. C
CMR:460:04 Attachment B
RESOLUTION OF r~_.--: CO~%,~CIL OF TRTE CITY CF PALO
=~T~ ~D~ROViNG K REQUEST FOR
CASI POPd~T ~. PGWER AGENCY 04 - SNR- 00XXX
L~qITED ~ ~T,.a DEPARTMENT OF ENR~GV
POWER PS~M!Ni STP~_T!ON
WHEREAS, the City ol Pa!o Alto "City"), a municipal
utility and a chartered city, is a "Preference Customer" of the
Western Area Power Administration "Western") of the United
State9 Deoar:ment of
NHEREAS, the Cit},~ has a zwent};-year contract wit}~
Western for a_n 1 ! ~o°share o~ W=~terr, ’ s "Base ,__ . o_~ ......Resource"in
e{fect from January t,20@= t}~-oug}~ Decem~0er ~’,200~,s!"
I*~n~R~AS,’~!sy, and some ot~er We=tern
Western’s co~sen~,have opera~ ~ a resource _and ~oad sharinc
for mhe past two decades;
WHEREAS, the pooling of resources and loads, is expected
to continue to save money for the City- in the future;
WHEREAS, Western will conninue to allow and encourage
~r,o~c but only if ~a~ ~ar~iciDant executes an .assicnme~t of
i:s "Base Resource Percentage" to the pooling entity, the
Northern California Power Agency "NCPA") ;
WHEREAS the City will cont~;nu= to exercise its rimb~s
and obligations under the .Base Resource contract, thouch it will
have a zero Base Resource volume level and no associated
cusr~omer responsibilities;
WHEREAS, the will coK:tinue to abide, by Nestern’s
feeeraz Dower .,.=rJ<~=ng ~oilcles; and
NOW THmRmPORm, P~e Counc -: ~~s{~=or the tv ~ sago ~ to
£oes~S~’~%Dm~p’T~ as fo!lows:
.mi._to’s =~r=cut~~.~ _~.~: of ~he "Remuest_ for Assics:~m=~ o~ Pa!~ Ai~’s
~ase Resource m ..... ~= +~ Northern Ca!i~o~-<,~a Power Agency
040727 ci 0072:30
*"-’"NOT YET a, ......~ ~-~ ~’~"--* CM-It~:4-~6~:04 Attachment B
SNR-00]£KX with ~he United States of Energ3~-, Nestern
Area Power Administration.The City Hanager is hereby
authorized to the agreement on behalf of the City of Palo
Alto.
.SECTION 2. T}ne Council finds ~hat this is not a Droiect
under the California Environme~ta]~ Quality_ Act ~ne- ~, therefo~=_ ~,
no en:r~ronmenta! impact assessment is necessary.
INTRODUCED _~\YD PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
AT±~:
AnmROVED AS TO FORH:
Senior Asst P~ty Attorney C!ty
Director of Uti!iZies
Director o_ ~.dm ....<trat
040727 cl 0072430 2