HomeMy WebLinkAbout2003-11-24 City CouncilCity of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
13
FROM:CITY MANAGER DEPARTMENT: UTILITIES
DATE:
SUBJECT:
NOVEMBER 24, 2003 CMR:482:03
FINANCE COMMITTEE RECOMMENDATION OF ADOPTION
OF ORDINANCE OF THE COUNCIL OF THE CITY OF PALO
ALTO APPROVING NATURAL GAS MASTER AGREEMENTS
WITH BP ENERGY COMPANY, CONOCOPHILLIPS INC.,
CORAL ENERGY RESOURCES L.P., DUKE ENERGY
MARKETING AMERICA LLC, AND SEMPRA ENERGY
TRADING CORPORATION FOR PROCUREMENT OF NATURAL
GAS AND AUTHORIZING THE CITY MANAGER TO TRANSACT
UP TO $50 MILLION WITH EACH SUPPLIER UNDER THESE
AGREEMENTS
RECOMMENDATION
The Finance Committee recommends that Council take the following actions:
1. Approve and. authorize the Mayor to execute the attached Master Agreements with
the following suppliers who have been deemed qualified to do business with the
City with respect to gas purchases and sales for the period January 2004 through
December 2009:
a. BP Energy Company;
b. ConocoPhillips, Inc.;
c. Coral Energy Resources, L.P.;
d. Duke Energy Marketing America, LLC; and
e. Sempra Energy Trading Corporation.
The Master Agreements are intended to govern gas purchases for a term of six (6)
years, starting January 1, 2004 and ending December 31, 2009. Each Master
Agreement may be terminated at an earlier time as per its terms and conditions.
2.Authorize the City Manager or his designee to manage these Master Agreements,
and to execute one or more gas commodity transactions in accordance with the
CMR:482:03 Page 1 of 2
terms of the contract. This includes authorizing the City Manager or his designee
to execute multiple transactions under the Master Agreements with one or more of
the above suppliers to procure natural gas supplies sufficient to meet the City’s
forecasted natural gas load, with the date for delivery of the gas for each
transaction not to exceed 36 months from the date the transaction is executed. In
addition, the date for delivery of the gas for any transaction will not extend beyond
the term of the Master Agreements specified in the attached ordinance. The
maximum aggregate transaction limit under each Master Agreement shall be $50
million.
COMMITTEE REVIEW AND RECOMMENDATIONS
At its October 28, 2003 meeting, the Finance Committee voted unanimously to accept
staffs recommendation. In response to questions raised by Finance Committee
members, the Chair of the Utilities Advisory Commission and the Director of the
Administrative Services Department clarified that when staffmakes a commitment to buy
gas at a fixed price for delivery at a future date, the gas is not paid for until the time of
delivery. Thus, the Council maintains an additional control since staff may not spend
more than the budget allows.
Additionally, the City Auditor indicated her support for the recommendation that Council
approve the proposed Gas Master Agreements and that the controls she recommended are
sufficiently in place to protect the City and appropriately limit staff authority.
ATTACHMENTS
A: CMR:407:03
B:
Adoption of Ordinance of the Council of the City of Palo Alto
Approving Natural Gas Master Agreements With BP Energy Company,
Conocophillips Inc., Coral Energy Resources L.P., Duke Energy Marketing
America LLC, and Sempra Energy Trading Corporation for Procurement of
Natural Gas and Authorizing the City Manager to Transact Up To $50 Million
With Each Supplier Under These Agreements
Minutes of the October 28, 2003 Finance Committee meeting
PREPARED BY:
DEPARTMENT APPROVAL:
CITY MANAGER APPROVAL:
Karl E. Knapp, Senior Resource Planner
Jane Ratchye, Senior R~e~urce PlannerKarl Van~l?/~,~Risk Manager ~
-EMILtg rIAR SON \.
Assistant City Manager
CMR:482:03 Page 2 of 2
TO:HONORABLE CITY COUNCIL
ATTN:FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT: UTILITIES
DATE:OCTOBER 21, 2003 CMR:407:03
SUBJECT:ADOPTION OF ORDINANCE OF THE COUNCIL OF THE CITY
OF PALO ALTO APPROVING NATURAL GAS MASTER
AGREEMENTS WITH BP ENERGY COMPANY,
CONOCOPHILLIPS INC., CORAL ENERGY RESOURCES L.P.,
DUKE ENERGY MARKETING AMERICA LLC, AND SEMPRA
ENERGY TRADING CORPORATION FOR PROCUREMENT OF
NATURAL GAS AND AUTHORIZING THE CITY MANAGER TO
TRANSACT UP TO $50 MILLION WITH EACH SUPPLIER
UNDER THESE AGREEMENTS
REPORT IN BRIEF
In order to purchase gas to meet the natural gas needs of all Palo Alto customers, staff
needs the authority to transact under Master Agreements with pre-qualified suppliers.
Staff requests Council’s approval to execute such Master Agreements with five suppliers
that meet all the City’s rigorous qualification requirements. These suppliers were
selected as a result of a Request For Proposals process that was open to gas suppliers who
sought to do business with the City. Staff further requests that Council authorize staff to
transact under these Master Agreements so that it can purchase gas on a competitive basis
under certain limitations set forth in the attached ordinance.
RECOMMENDATION
Staff recommends that Council approve the following:
Approve and authorize the Mayor to execute the attached Master Agreements with
the following suppliers who have been deemed qualified to do business with the
CMR:407:03 Page 1 of 8
City with respect to gas purchases and sales for the period January 2004 through
December 2009:
a. BP Energy Company;
b. ConocoPhillips, Inc.;
c. Coral Energy Resources, L.P.;
d. Duke Energy Marketing America, LLC; and
e. Sempra Energy Trading Corporation.
The Master Agreements are intended to govern gas purchases for a term of six (6)
years, starting January 1, 2004 and ending December 31, 2009. Each Master
Agreement may be terminated at an earlier time as per its terms and conditions.
Authorize the City Manager or his designee to manage these Master Agreements,
and to execute one or more gas commodity transactions in accordance with the
terms of the contract. This includes authorizing the City Manager or his designee
to execute multiple transactions under the Master Agreements with one or more of
the above suppliers to procure natural gas supplies sufficient to meet the City’s
forecasted natural gas load, with the date for delivery of the gas for each
transaction not to exceed 36 months from the date the transaction is executed. In
addition, the date for delivery of the gas for any transaction will not extend beyond
the term of the Master Agreements specified in the attached ordinance. The
maximum aggregate transaction limit under each Master Agreement shall be $50
million.
BACKGROUND
Prior to July 2001, the City contracted with a single supplier who had exclusive rights to
supply the entire natural gas load of the City over the period of the agreement. This
approach had the merits of operational ease and lower overhead for the City. However,
the City had only one supplier with whom to fix the price of a portion of the gas supply.
This gas purchasing approach did not provide the incentive to the sole supplier, once
selected, to provide the best prices for gas supplies that the City wanted to buy at a fixed
price. In addition, the sole supplier approach did not provide the City any credit risk
diversity.
The City’s Natural Gas Procurement Plan to meet Palo Alto’s gas loads at low and stable
retail rates calls for procuring gas supplies in a diversified, systematic fashion over a
rolling 3-year period [CMR:196:01]. To implement the "laddering strategy" and to
facilitate obtaining price quotes from each supplier every time the City decided to
procure gas, the City sought to establish Master Agreements with multiple suppliers,
awarding each specific transaction to the qualified supplier offering the best price. This
approach was implemented to meet the City’s credit diversification and cost stabilization
risk management strategies. The City currently procures natural gas supplies from two
CMR:407:03 Page 2 of 8
suppliers (BP Energy and Sempra) under Master Agreements that were ratified by
Council in 2001 [CMR:341:01 & CMR:420:01].
The July 2002 Assessment of Utility Risk Management Procedures by the City Auditor
made recommendations to improve the City of Palo Alto Utilities’ (CPAU) energy
procurement process. The Auditor’s report recommended that all Master Agreements
with suppliers be approved by the Council with clearly defined dollar, volume and
duration limits (recommendation #4) and with clear definition of the types of transactions
staff is authorized to execute under the agreements. The Auditor’s report also
recommended that the process of securing Master Agreements be undertaken in a more
open and competitive manner (recommendation #6).
The gas industry has also evolved, and a newer form of the standard natural gas contract
is more clear and complete in both form and substance. This evolving environment
provides the City the opportunity to more clearly define contractual terms that are needed
to strengthen the City’s position in light of risks inherent in the industry. The two
existing Master Agreements are based on a 1999 Gas Industry Standards Board, Inc.
(GISB) Standard 6.3.1. The proposed Master Agreements are based on the 2002 North
American Energy Standards Board, Inc. (NAESB) Standard 6.3.1 dated April 19, 2002.
DISCUSSION
To improve opportunities for competitive pricing, diversify purchases across multiple
creditworthy suppliers, comply with audit recommendations, and take advantage of
improved contracts, a Request for Proposal (RFP) was issued in October 2002 to solicit
interest from additional suppliers to sign Master Agreements with the City to enable
future procurement of natural gas supplies required to meet the City’s natural gas load
needs for up to 10 years. The supplier selection process for the RFP is provided in
Attachment A. The five proposed Master Agreements were negotiated under terms and
conditions acceptable to the City (the Master Agreements are available for review in the
office of the City Clerk).
Description of a Master Agreement
A Master Agreement is similar but not identical to a blanket purchase order. A Master
Agreement details all of the contractual terms that govern transactions that are completed
under the agreements. The Master Agreement consists of a Base Contract, Special
Provisions, and a Credit Support Addendum. Executing a Master Agreement does not
commit the City to any transaction. Each transaction for part of the City’s monthly,
annua!, or multi-year gas requirements is completed through subsequent competitive
bidding, as evidenced by a completed Transaction Confirmation document.
CMR:407:03 Page 3 of 8
Executing a Master Agreement is not a promise of business by the City or by the
supplier. It serves only to qualify suppliers to bid on individual transactions solicited by
the City.
Each Master Agreement may be terminated at any time by either party according to the
terms of the agreement. Termination of the Master Agreement cancels the supplier’s
ability to bid on further transactions during the term contemplated by the RFP. Any
transaction executed under the Master Agreement prior to termination will remain in
place until the final gas delivery date, unless an Event of Default has transpired. In an
Event of Default by a supplier, the City has the option to terminate the remaining
transactions with gas yet-to-be delivered that were executed under the Master Agreement.
The City may suspend solicitation to bid on individual transactions with any supplier due
to counterparty credit limits or transaction limits, a supplier credit downgrade event,
supplier default or suspected default, or where inclusion in the solicitation would not
comply with law or City Policies, Guidelines, Rules or Procedures.
If the number of eligible suppliers dwindles, the City reserves the right to terminate the
contracts as per contract terms and conditions and concurrently conduct an RFP for new
Master Agreements to cover the period after the effective date of termination of the
contracts then in place.
All transactions under the Master Agreements will be executed by staff in accordance
with the Energy Risk Management Policies, Guidelines, and Procedures. These
procedures are monitored by the Energy Risk Manager and the Risk Oversight
Committee, and ensure that risks inherent in the energy industry are managed prudently.
Staff will provide Council an update of all executed transactions under the Master
Agreements on a semi-annual basis as part of energy risk management reporting.
Proiected Costs
Currently, natural gas can be purchased for between $4 and $6 per million British thermal
unit (MMBtu) for deliveries during the next several years. Since the City’s load is about
3.5 million MMBtu per year, this translates to an annual commodity cost of about $17
million. However, prices could increase dramatically as during the 2001 energy crisis,
when prices reached $10/MMBtu for certain months and as high as $50/MMBtu for
certain days. Due to the prevailing high prices at that time, in fiscal year 01-02 the City’s
natural gas needs cost $21.6 million. Since natural gas prices can be volatile, it is
conceivable that the prices could double from current levels over the terms of the Master
Agreements.
CPAU’s historical gas purchase costs and projected costs for the next several years as
well as commitments as of September 11, 2003 with each of the two existing suppliers
are summarized in the table below.
CMR:407:03 Page 4 of 8
Gas Procurement Summary - Cost and Volumes
BP Energy Company
Sempra Energy Trading Corp.
TOTAL
BP Energy Company
Sempra Energy Trading Corp.
TOTAL
Cost ($000)
........ Load (MMBtu)
$ 21,598
3,462,656
$000’s
MMBtu
$14,436
3,245,051
$ 5,164
$ 5,819
$10,883
1,040,820
1,516,061
2,556,882
$15,500
3,565,000
$ 486
$ 5,492
$ 5,978
98,400
1,259,194
1,357,594
$15,000
3,571,000
$1,786
$ 913
$ 2,699
377,500
212,700
589,200
FY 05~06
estimated
$17,400
3,624,000
As shown in the chart, the expected gas commodity cost for the next several years is
between $15 and $18 million/year. The cost estimates are relatively certain for the
current fiscal year since a large fraction of the gas has already been purchased at fixed
prices. Costs for FY 04-05 and FY 05-06 are less certain than for FY 03-04 as less gas
has been purchased in advance and future gas prices could rise above expectations.
The expected cost for gas commodity over the recommended six-year term for the Gas
Master Agreements is about $17 million/year, or a total aggregate cost for gas commodity
over six years of over $100 million. However, if gas costs increase so that costs average
$20 million over the 6-year period, the aggregate cost would be $120 million. While the
City has selected five suppliers to sign Master Agreements, it is foreseeable that only a
few suppliers may ultimately provide the most competitive prices, and some may merge
or leave the industry, resulting in most transactions being concentrated among a few
qualified suppliers. Staff recommends a maximum transaction limit of $50 million for the
six-year term of each Master Agreement. This limit gives staff the flexibility it needs in
case gas costs increase above expectations and if some of the suppliers are unable to
continue to do business with the City or do not offer the best prices.
Limits of Authorization
The proposed limits and parameters for Council’s authorization to the City Manager
include the following:
1.Authority to be delegated to the City Manager to buy and sell gas to meet the
City’s retail load requirements within a 3-year period from the date the transaction
is executed.
2.All transactions must be consistent with Council approved Energy Risk
Management Policies (CMR:400:02) and internal energy risk management
guidelines and procedures.
CMR:407:03 Page 5 of 8
o
o
All transactions in excess of $65,000 to be reported to Council as part of regular
reporting (per the Energy Risk Management Policies and Guidelines).
Authorized transactions to be executed under Council-approved Master
Agreements.
The maximum total dollar amount of aggregated gas transactions for any single
Master Agreement is $50 million.
Commodity products allowed for purchase or sale must be "Authorized
Transacting Products" as defined in the Council-approved Energy Risk
Management Policies.
All transactions that lie outside the authority delegated to the City Manager require
Council approval:
¯Any transactions with a term ending beyond 3 years from the date of
transaction;
¯Any transaction with volumes in excess of the limitations listed above; or
¯Any transactions that would cost more than the limits specified above.
Additional limitations on transactions with the suppliers are imposed under the internal
guidelines. These internal guidelines contain counterparty credit limits that limit
transaction term and risk exposure depending upon the creditworthiness of the suppliers.
For example, the guidelines provide transaction limits in terms of annual volume, annual
cost, and transaction term for each supplier. Thus, staff is constrained by these guidelines
regarding transacting with each approved supplier. These guidelines act as an additional
level of control below the higher-level limitations that staff recommends Council impose
under the Master Agreements.
ALTERNATIVES
Council could elect not to approve one or more of the proposed contracts. However,
doing so would limit the ability of staff to competitively diversify gas supplies.
Council could elect to approve the contracts with different contract limits. Lower limits
would reduce the ability of staff to competitively diversify gas supplies or would require
staff to return to Council to increase the limits on certain Master Agreements within the
terms of the Master Agreements. Staff does not recommend higher limits. Should higher
limits be necessary due to unforeseen circumstances, staff feels that there would be
adequate time to request a change in contract limits from Council.
RESOURCE IMPACT
If the City Council approves the recommendation to approve the Master Agreements and
authorize the City Manager to procure natural gas supplies sufficient to meet the City’s
forecasted natural gas loads for up to a rolling 36 months forward, the transactions
executed will commit the City to pay for energy deliveries needed to meet the gas
CMR:407:03 Page 6 of 8
demand of City gas customers up to the limits described in the ordinance, budget
constraints, and risk limits set according to the Council-approved Energy Risk
Management Policies. These costs are a function of gas market prices and the City’s
forecasted and actual volume of gas needs.
Approval of the recommendation will not impact the FY 03-04 budget. Transactions
with deliveries extending beyond the approved budget horizon are binding commitments,
supported by natural gas retail revenues with retail rates determined by Council.
POLICY IMPLICATIONS
Authorizing the City Manager to buy and sell natural gas to meet City load under these
Master Agreements conforms to existing Council-Approved Energy Risk Management
Policies [CMR:400:02], and are required for staff to conform to these Policies.
The recommendation does not deviate from Utilities’ historic practice of securing natural
gas commodity supplies to meet the needs of the City’s gas customers. The City
Auditor’s Assessment of Utility Risk Management Procedures, issued in July 2002,
identified the need to have clarity for the authority to complete the required transactions.
The recommended action is responsive to the City Auditor’s recommendations.
This recommendation is consistent with the Council approved Utilities Strategic Plan to
1) preserve a supply cost advantage compared to the market price; and 2) streamline and
manage business process to allow the City of Palo Alto Utilities to work efficiently and
cost-effectively.
Further, the recommendation supports the Council-approved Utilities’ Natural Gas
Supply Portfolio Planning and Management Objectives and Guidelines for the Gas Utility
Long-term Plan (GULP) [August 2003 CMR:355:03]. These include the following
Objectives and Guidelines relevant to Master Agreements:
Objective 1: Ensure low and stable gas supply rates for pool customers
Objective 2: Provide superior financial performance to customers and to the City by
managing the supply portfolio cost in a competitive manner compared
to market cost and a retail supply rate advantage compared to PG&E.
Guideline 1: Market Risk Management - Manage market risk by adopting a portfolio
strategy for gas supply procurement by:
A. Diversifying energy purchases for the pool across commitment date,
delivery date, duration, suppliers, pricing terms and delivery points;
B. Maintaining a prudent exposure to changing market prices by
leaving some fraction of the forecasted gas pool needs exposed to
near-term market prices; and
C. Avoiding long-term (>10 years) fixed-price commodity contracts.
CMR:407:03 Page 7 of 8
ENVIRONMENTAL REVIEW
Adoption of the ordinances approving Master Agreements and delegating gas
procurement to the City Manager under certain limitations does not constitute a project
for the purposes of the California Environmental Quality Act.
ATTACHMENTS
A: RFP Evaluation Process
B: Ordinance of the Council of the City of Palo Alto Authorizing the City Manager to
Purchase a Portion of the City’s Natural Gas Requirements from Certain Prequalified
Natural Gas Suppliers Under Specified Terms and Conditions During Calendar Years
2004 through 2009, Inclusive
PREPARED BY:
Eo
Senior Resource Planner
JANE RATCHYE G/
Energy Risk Manager
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
of Utilities
EMI~t~ HA---~RRISON
Assistant City Manager
CMR:407:03 Page 8 of 8
CMR:407:03 - ATTACHMENT A
ATTACHMENT A: Gas Master Agreement RFP Selection Process Summary
The City of Palo Alto issued RFP # 148170 on October 2, 2002 to solicit and execute
Master Agreements with multiple suppliers to enable future procurement of natural gas
supplies required to meet the City’s natural gas load needs. Bid packages were mailed to
22 potential suppliers. The nine suppliers responding to the RFP were evaluated by a
team comprising, staff from Utilities, Purchasing, Treasury and the City Attorney’s
Office. The selection was based on supplier ability to competitively and reliably transact
with the City and supplier responsiveness in agreeing to meet City’s contractual
provisions. The responses were evaluated based on four broad criteria categories.
Financial: Financial strength, clarity of financial statements, organizational
transparency of the supplier/entity providing credit support, overall future
outlook, expected longevity in the industry. Ranked by top, middle, and bottom
third (A, B, C).
Credit: Quality, nature, and extent of credit support, ability to meet/exceed City’s
credit guidelines, rating agencies credit ratings, credit contractual provisions,
risk limits based on proposed terms, and magnitude of credit risk. Ranked by
top, middle, and bottom third (A, B, C).
Contract Provisions: Overall contractual provisions, choice of law, venue of dispute
resolution, key concerns, flexibility/ease of negotiation, etc. Ranked by quartile
(A, B, C, D).
Performance/Capabilities: Experience in California, relevant physical assets and
capabilities, and past performance with Palo Alto or other municipal entities.
Ranked by top, middle, and bottom third (A, B, C).
Composite results of the team’s evaluation are summarized in Table 1 below.
Table 1. Gas Master Agreement RFP Evaluation Summary
BP Energy
Cinergy
ConocoPhillips
Coral Energy Resources
Duke Energy Trading
Morgan Stanley
Pinnacle West
Sempra Energy Trading
UBS AG
Financials
B
C
A
A
A
C
C
g
B
Credit Contract
Provisions
Performance/
Reference
C
A
A
C
A
B
A
C
B
I A-/B+
C
D
C
A÷
D
D
B
B
C
A
C
Average
B+
C-
B+
A-
A-
C+
C-
B+
B
Staff strives to ensure that the City has at least three qualified bidders to obtain
competitive pricing and to diversify suppliers, some counterparties do not offer all natural
gas products that the City needs, and the industry regularly experiences vendors exiting
CMR:407:03 Page 1 of 2
CMR:407:03 - ATTACHMENT A
the business or consolidating. These characteristics dictate securing a set of three to seven
agreements. Managing more than seven contracts becomes unduly burdensome.
Based on these evaluation criteria the following six suppliers were selected to negotiate
natural gas Master Agreements with the City: BP Energy Company, ConocoPhillips. Inc.,
Coral Energy Resources, L.P., Duke Energy Trading and Marketing, L.L.C., Sempra
Energy Trading Corporation, and UBS AG. Of these six, five were able to agree to
negotiate final agreements acceptable to the City.
1.BP Energy Company
2.ConocoPhillips. Inc.
3.Coral Energy Resources, L.P.
4.Duke Energy Trading and Marketing, L.L.C.
5.Sempra Energy Trading Corporation
CMR:407:03 Page 2 of 2
***NOT YET APPROVED***
ORDINANCE NO.
ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO
AUTHORIZING THE CITY MANAGER TO PURCHASE A PORTION
OF THE CITY’S NATURAL GAS REQUIREMENTS FROM
CERTAIN PREQUALIFIED NATURAL GAS SUPPLIERS UNDER
SPECIFIED TERMS AND CONDITIONS DURING CALENDAR
YEARS 2004 THROUGH 2009, INCLUSIVE
The Council of the City of Palo Alto does ORDAIN as
follows:
SECTION i. The City Council finds, as follows:
A.In accordance with the City’s Natural Gas
Procurement Plan, the City annually purchases natural gas to meet
the needs of its gas customers by entering into one or more
contracts with terms varying from one month to three years.
B.The City’s annual budget for natural gas purchases
will vary depending on the price of gas charged by a supplier and
the projected annual gas customer requirements; the gas budget is
anticipated to fall within the range of approximately $16 million
to $22 million per fiscal year under current pricing.
C.In October 2002, the City initiated a Request for
Proposals process in order to prequalify a number of natural gas
suppliers, based on their financial and legal qualifications and
business experience, who are eligible to sell [and purchase
incidental to a sale] natural gas to the City.
D.BP Energy Company, ConocoPhillips, Inc., Coral
Energy Resources, L.P., Duke Energy Marketing America L.L.C., and
Sempra Energy Trading Corporation each possess the minimum
financial and legal qualifications and business experience in order
to be eligible to do business with the City.
E.The City intends to purchase natural gas from one or
more of these prequalified suppliers during calendar years 2004
through 2009, inclusive, so long as the supplier with whom the City
negotiates a specific purchase transaction continues to be
qualified and otherwise eligible to sell to the City.
SECTION 2. The Council hereby authorizes the Mayor to sign
the standard form contract of the North American Energy Standards
Board, Inc., or equivalent, and hereby authorizes the City Manager
or his designated representative, the Director of Utilities, to
negotiate one or more individual transactions thereunder, with BP
Energy Company, ConocoPhillips, Inc., Coral Energy Resources, L.P.,
Duke Energy Marketing America L.L.C., and Sempra Energy Trading
Corporation. The authorization shall extend to individual
transactions executed under the referenced standard form contract,
1
031118 cl 0072317
***NOT YET APPROVED***
provided that (a) the maximum expenditure under any standard form
contract and any and all separate transactions thereunder with any
of the named suppliers shall not exceed $50 million in the
aggregate, (b) the maximum term of any transaction shall not exceed
a term of three (3) years, commencing on the date the transaction
is mutually agreed to by the parties, and (3) the quantity of gas
purchased by the City is limited to its load requirements
established as of the date the transaction is executed by the
parties.
SECTION 3. No standard form contract and any transaction
entered into thereunder with any qualified gas supplier executed by
the City Manager or his designated representative and approved as
to form by the City Attorney under the authority of this ordinance
shall extend beyond December 31, 2009.
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.
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031118 cl 0072317
***NOT YET APPROVED***
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
APPROVED AS TO FORM:
Mayor
APPROVED:
Senior Asst. City Attorney City Manager
Director of Administrative
Services
Director of Utilities
031118 c10072317