HomeMy WebLinkAbout2001-09-10 City CouncilCity of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL 6
FROM:CITY MANAGER CMR:341:01
DATE:SEPTEMBER 10, 2001
TITLE:RESOLUTION AUTHORIZING THE CITY TO TRANSACT
WITH BRITISH PETROLEUM ENERGY COMPANY
RECOMMENDATIONS
Staff recommends that Council approve the proposed resolution authorizing the City
Manager to confirm its legal authorization to enter into a contract with British Petroleum
Energy Company .for the purchase and sale of physical natural gas beyond July 2003.
DISCUSSION
The Utilities Department’s natural gas procurement and hedging strategies requires that gas
purchases be made with more than one natural gas supplier in order to diversify credit risk
and achieve competitive pricing. Additionally, the procurement strategy establishes an
approach to buying gas out for three years.
On March 1, 2001 the City and British Petroleum Energy Company signed the GISB Base
Contract. Since execution of the contract, the City has purchased natural gas from British
Petroleum Energy Company for various terms through July 2003 and wishes to continue to
use British Petroleum Energy Company as a counterparty beyond July 2003.
The City Manager has the authority to enter into contracts for commodity purchases and sales
for terms of up to three years. However, British Petroleum Energy Company has requested
that the City demonstrate its legal authorization to enter into a contract for the purchase and
sale of physical natural gas beyond July 2003. The City Attorney has advised that the
required legal authority could be demonstrated with the proposed resolution.
CMR:341:01 Page 1 of 2
RESOURCE IMPACT
Approval of the proposed resolution has no impact on financial or personnel resources.
POLICY IMPLICATIONS
Approval of the proposed resolution memorializes the current legal authority present in the
City’s municipal code and neither creates any new policy nor contradicts with any existing
policy. This recommendation is consistent with the Council-approved Utilities Strategic Plan
to obtain reliable natural gas supplies in a cost effective manner.
ENVIRONMENTAL REVIEW
Approval of the proposed resolution does not constitute a project under the California
Environmental Quality Act and, therefore, is exempt from the environmental assessment
requirement.
ATTACHMENT
Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Execute
the Gas Industry Standards Board Base Contract for Short-term Sale and Purchase of Natural
Gas with British Petroleum Energy Company.
Monic~ Padilla, Resource Planner
DEPARTMENT HEAD APPROVAL:
CITY MANAGER APPROVAL:
JOHN
Director of Utilities
~MI~Y ’HARRISON
Assistant City Manager
CMR:341:01 Page 2 of 2
RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THE CITY OF PALO
ALTO ACKNOWLEDGING THE CITY MANAGER AUTHORITY TO
EXECUTE THE GAS INDUSTRY STANDARDS BOARD BASE
CONTRACT FOR SHORT-TERM SALE AND PURCHASE OF
NATURAL GAS WITH BRITISH PETROLEUM
ENERGY COMPANY
WHEREAS, the City of Palo Alto (~Cit~’) is a municipal
corporation and a chartered city, duly and validly created,
organized and existing under the constitution and laws of the
State of California;
WHEREAS, the City has the full legal right, power and
authority to execute contracts for the purchase of electricity
and natural gas subject to the requirements of California law,
the Charter of the City of Palo Alto and the Palo Alto Municipal
Code;
WHEREAS, the City wishes to procure from and/or sell
natural gas to British Petroleum Energy Company (~BP") for
consumption by its utility customers;
WHEREAS, the term for any single transaction will not
exceed three years;
NOW, THEREFORE, the Council of the City of Palo Alto
does hereby RESOLVE as follows:
SECTION i. The Council hereby acknowledges that the
City Manager, subject to approval as to form by the City
Attorney, had authority to negotiate and execute the Gas
Industry Standards Board Base Contract For Short-Term Sale And
Purchase Of Natural Gas ("Agreement") and related exhibits with
BP, dated March i, 2001 and to undertake all actions necessary,
to exercise its rights and perform its obligations, under the
Agreement.
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SECTION 2. The Council finds that the adoption of this
resolution does not constitute a project under the California
Environmental Quality Act and the~ CEQA Guidelines and,
therefore, no environment assessment is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
City Attorney City Manager
Director of Utilities
Director of Administrative
Services
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