HomeMy WebLinkAbout0241.091• ~,
.. . ..<, • • ~ .: ',,",
April 18, 1991
THE HONOFABLE CITY COUNCIL
Palo Alto~ California
/
Natural Gas Procurement Progum Service Sc:hedul e Kember Service
Agreement -Northern CJlitoroia Poyer Agency
Members of the. Council:
Report. in Brie f
This report recommends Council approval of a Natural Gas
Procurement Program with Northern California Power Agency (NCPA}.
The Northern California Power Aqency has in ope~ation and plans to
construct .acklitional natural qas fueled qeneration facilities which
Palo Alto may purchase power Eram. This Agreement is the first
phase in developing a source of fuel supply for these facilities at
lover costs than av~ilable frOD the present supplier. This staff
report presents a service SChedule to be added to the existing NCPA
Kember service Agreement which provides the mechanism for Palo Alto
to participate in NCPA's gas procurement activities as they relate
to gas fueled projects the city participates in. staff requests
Council approval and authorization tor the Mayor to eXec'.lte the
Aqreeaent. Payments (estimated at $19J,~OO per year) will not be
required until 1993 as discussed below.
DiscU!?§ i on
'I'be chanqes that have taken place in the qas marketplace have
or...curred at a pace that has not allowed time to fully develop
agreements providing for the members of NCPA to participate in a
gas procurement project. Therefore,. in order to keep pace with the
aarket activity# NCPA members who are participants (Palo Alto is
not) in the existinq NCPA Combustion Turbine Project agreed to
initially support the first phase of the qas procurement project.
The first phase consists o£ NCPA's tentative bid for 7000 HMbtu/day
"0;-
o
ot pipeline capacity in Pacific Gas Transport IS (PGT} pipeline
expansion project I!Iccessinq Canadian gas ~uppliers. A go/no <10
decision must be made with reqard to th·e success (or partial
success) of NCPA1s bid by April 25, 1991 affirming the Agency's
willingness to enter into a contract. rhe a~tached Member Service
A9reemen~ schedule was developed in order to allow those members
who are not in the Combustion ~~rbine 9roject to participate and to
fir. up the support for the project. Prospective partiCipants in
the qas procurement project must act prior to April 25, 1991.
Next Steps
The Member Service Aqr~ement Service Schedule will ultimately be
replaced by a .formal Third Phase Agreement between NCPA and the
participant _embers with percentage rights adjusted appropriately
to account .for each participant's ultimate tuel need for their
Sh~re o~ qas fired generation. Staff is presently evaluating t~e
nMed for future base load generation that could be provided by a
new STIG project being proposed for develop'ment by NCPA.. This
project is entitled -STIG-which is an acronym for steam injected
gas.. The unit will be part of NCPA's further development of
caabustion turbine qeneration, scheduled for the 1993 tjme frame~
The-service Scbedule will be replaced wit..'t1. fl formal Gas Procurement
Project AqreeJllent (Third Phase Aqreeuent) as soon as it can be
developed. The Service SChedule provides for sale by NCPA on the
open aarket of any surpluses developed at this staqe. Statffs gas
experience tells us that tbere will be an active market for any
surplus capacity. The Third Phase Aqreement 'Will provide Palo Alto
with an opportunity to evaluate its continued participation or a
cbance to adjust the level of participation in the tinal project.
Staff feels the potential tor generation fue~ cost savings is
significant and the city should support the concept by
participating in the Service Schedule at this time. Actual
expenditures are not scheduled until 1993.
Financial Impact
Palo Alto's proposed 10 percent share of the fixed costs in the
service 8chedule is estimate~ to cost $193 f OOO per year in 1991
dollars, commencing in November 199)~ This cost would be part of
qeneration fuel C06ts, which 'Would be lower under the purchase
scenario as compared to relying solely on the pres ant supplier.
ellll: Z C1 r n
",
RecommeMation
Staff rec01a'ends Council aWr.:Ival of the attached Natural Gas
Procur~ent Proqra. Service Sched~le Member Service Agreement -
Bortbern Cali~ornia Power Agency and requests that the Kayor be
authorized to execute the agreement.
Re5pect~lly submitted,
Rc.,~«: tP :;£4,d
RONALD P. BELVAL
Manager, Energy Planning
4..e. A. "!.4~ ~ICtww L .• ouW ..I
Director ot utilities
~ _ "-1/
·-t-~u L\._ .,7Ll.,n .. On;('
J • -
JUNE PLIOClNG
Assistant City Manager
CllRU41.'1
-,
o
RESOLUTION NO. _____ __
RESOLUTION OF THE COUNCIL OF TIlE CITY OF PALO ALTO
APPROVING AND AUTHORIZING EXECUTION OF TIlE NA1'URAL
GAS PROCUREMEII'r PROGRA.'1 SERVICE SCHEDULE TO THE
MEMBER SERVICE AGREEMENT OF TIlE NORTHERN CALIFOR
NIA POWER AGENCY
WHEREAS" the Northern California Power Agency ,-NCPA-J has
develope~ the -Natural Gas Procureaent Proq~am Service Schedule to
the Meabfl:r Service Agreement of the Northern california Power
Agency and its Members-{-Service Schedule-) setting forth its
participating Hellbers I rights and obligations with reqard to a
project for the procurement of contract and other rights to the
transportation, storaqe, and supply of natural gas for use as fuel
for the Combustion Turbine Project, the Combined Cycle (STIG)
Project, and the needs at Members which execute tbe Service
SChedule; and
WHEREAS, the NePA COlmlliission approved that Agreement on
March 28, 1991; and
~, the Servic~ Schedule requires Palo Alto, which is
not A Projeet Participant in the Combustion Turbine Project, to
evidence its agreement to participate by resolution specifying its
participation percentage and executed on or before the earlier o~
presentation of the Natural Gas Procurement Proqraa Third PhlSse
Ag?eement or April 24, 1991:
NOW, THEREFORE, the Council of the City of Palo Alto does
hereby RESOLVE as follows:
SgCTION 1. The -Natural Cas Procurement Program service
SchedUle to the Member Service Agreement of the Northern California
PoWer Aqency and its Members· is hereby approved, with Palo Alto's
participation percentage speCified at ten percent CIO~O'). ,
SECTION 2. The Mayor is authorized. and directed to execute
an eIecution copy of the Aqreement on or before April 2'~ 1991~
SECTION )~ The council finds that there is no possibility
that the provisions of the Aqreement will cause a significant
effect on the environment~ and upon that basis and the bases set
forth in the Service Schedule, find the project exempt from the
provisions of the California Environmental QUality Act.
INTRODOCEO AND PASSED:
AYES:
NOES:
ABSENT:
1
ABSTENTIONS:
ATTEST: APPROVED:
city Clerk Kayor
lU'PROVEt> AS TO FOIDI: APPROVED:
city Attorney City Manager
Director ot utilities
" ,
! .
!
o
NATURAL GAS PROCUREMENl PROGRAM
SERVICE SCHEDULE
. MEMBER SERVICE AGREEMENT
NORTHERN CALIFORNIA POWER AGENCY
Appr"ved by Commission Resolution No. 91-{)9
March 28, 1991
Section 1. Recitals. (0) This is !:he Natural Gas Procurement Program Service
Schedule (Service Schedule) to the Member Service Agreement of
the Northern California Power Agency (NCPA) aI1C its Members,
. dated as of February 12. 1981 (Member Service Agreement).
(b) NCPA and a.rtain of its Members have determined that
procuring contract and other rights to the transport.tion, storage,
and supply of natu:ral gas for use as ruel fO<' the Combustion
Turbine Project. the Combined Cycle (STIG) Project, and the needs
of MelI\bers which execute this Service Schedule, is in the best
interests of NCP A and its Members.
(c) NCP A hereby determines that this Service Schedule is an action
ur.derlal<en by • public agency !elating to thermal power plants
(STIG), including the expenditure, obligation, or encumbrance of
funds foc the conditional purchase of fuel, which thermal plants
are subject of an ElR, and therefore, pursuant 10 H CCR §15271,
CEQA does not apply. Further, the Combustion Turbine Project has
been constructed follo"'ing environmental review and the supply
of fuel provided by this Service Schedule is an obvious
consequence of approval of sur.ll project, without any substantial
change, and without significant environmental i"'pacts.
•
/
•
(d) NCPA and its Members intend 10 prepare a Third Pha;"
Agreement, as denned in Member Service Agreemenl, into which
the terms and conditions of this Senice Schedule shall transfer
upon approval of the Members and NCPA.
(e) NCPA hereby declares the Natural Gas Procurement Program to
be an NCP A Project.
Sectior. 2. Combusnon Turbine Prokct Participants. The Project Partiapants
in the Combustion Turbine Project shall support, as operating
expenses of the project, the obligations of NCP A, and receive the
entitlements to, the beneflts of the contracts or other rights (as third
party beneficiaries), obtained by NCPA pursuant to this Service
Schedule, in proportion to fr,eir respective Project Entitlement
Percentages. The Project Entitlement Percentages of the Project
Participants In the Combusnon Turbine Project,. with respect to the
obligations and entitlements of Lllls Service Schedule, shalJ be
adjusted. proportion.tely 10 reflect execution and delivery of this
Service Schedule by Members who are not Project Participants in
the Combustion Turbine Project, pursuant to sections 3 and 7 of
this Service Schedule (Adjusted Percentages). The Adjusted
Percenli!ges, if L"" CHy of Palo AlIO and Turlock Irrig.non District
execute and deliver this Service Schedule, shall be as shown in the
column entitled "'l{, Need PGT-ExJ' Bid" on Table 4(a) if Palo Alto
determines 10 take 600 MMbtu/day and an additiona11000
MMbtuI day, or Table 4(b) if Palo Alto determines to take 700
MMbtu/day. Tables 4(a) and 4(b) are aHached to and Incorporated
into this Service Schedule.
-2-
,0
5«tion 3. Member Servlce Awwmerl Participants. Members who are not.
Project Participants in the Combustion Turbine Project may execute
this Service Schedule and then they shall support the obligations of
NCPA, and receive the entitlements to, the benefits of the contrCicts
or other rights (as third party beneficiaries), obtained by NCP A
pursuant to this Service Schedule, in Adj-..lSted Percentages up to
65.72 percent of the sum of !he Project Entitlement Percent.ges in
the CombUstion Turbine Project, and the obligations and .
entitlements of the Project P.,-OOp.nts in the Combustion TUTbine
Project. with respect 10 tllls Service Schedule only, shall be reduced
proportionately.
Sec\ion 4. Authorizafion to Contract. (a) The General Manager is hereby
authorized, on behalf of NCP A, to enler into contracts and 10 take
other actions to obtain rights to the transportation. slorage, and
supply of natural gas.
(b) The Firm Transportation Service Agreement proposed between
Paclfk Gas Transportation Company and NCP A is hereby approved
in the form attached to this Service Schedule al the meeting al
which it was presented.
(c) The General Manager shall pcesent e,ch rontract 10 the NCPA
Commission Cor its approval prior \0 the effective date or the date
of rescission of each contract.
Section 5. Third Phase Agr""ment Ncr A shall p<esent 10 the Members a
Natural Gas Procurement Program Third Phase Agreement to pool
-3-
.'
,
,-.'
/
gas transportation, supply, and storage opportunities. Upon
execution and delivery by Members which are .. .lfficient to support
the payment of the obligatlo.-J undertaken. pursuant to this Service
Schedule, the Third Phase Agreement shall supersede this Service
Schedule, and the participants in the Natural Gas Procurement
Program Third Phase Agreement shall su<:ceed to the obliganons
and entitlements of this Service Schedule in accordance with the
participation percent.ges established pur,,,an! to this Service
Schedule. It is the in!<!ntion of L'le Project Participants in the
Combustion Turbine Project and the Membe .... that participation
percentages in the Natural Cas Procurement Program Th!rd Phase
Agreement shaII reflect to,e Adjusted Percentages on Table 4(b) or
Table 4(b), with provisions for pooling the benefits of the program.
as the participants may agree.
Section 6. InCOIpOfation Into Member Service Agreement This Service
Schedule is hereby incorporated in and atlached to the ap:>ropriate
Member Service Agreement
Section 7. Member Execution. Any Member which is not a Project Participant
in the Combustion Turbine Project who desires to benefit from this
Service Schedule shall evidence its agreement to participate in the
obligations and entitlements by resolution of its gOVErning body,
specifying its participation percentage and authorizing exerution
and delivery of this Senice Schedule before the earlier of
pres."Iation of the Natural Gas Procurement Program Third Phase
Agreement or A pril24. 1991.
-+
-. .,.," ..
•
o
Section S. Surplus Rights. NCPA shall be, and h .. eby is, aulhorized to
market any gas transportation, supply, or stDrage rights surplus !o
!he needs of !he Combustion Turbine Project Participants or the
Members which execute this Service Schedule.
Section 9. "binding Contract. As 10 Members whichexecuteor appr~ve this
Service Schedule, it is a binding conirac~u"'condltion~ and'
. .
absolute, whose term. shall extend, and no! be tenr.inable for any
, reason.. until all of the obligations of NCP A under contractS entered
hereuruier, are extinguished or discharged.
NORTIiERN CAUFORNlA PO'NER AGENCY
By
Its General Manager
DATE:
Crri'Of PALO ALTO
By
Its
DATE:
Tl1RLOCi: lRRIGA TION DI5TRJCT
By· ____________________ __
lIS
DATE:
-5-
i
-".-.
, ."
.. <"j r-> Table 4(al , '-...;,..;'
\ PGT -Natural Gas Pipeline Expansion
NCPA's Open Season bid -7000MMbtujd
(1991 costs)
\ Need Fix
Addtnl Total PGl'-EXP PGT-ExP
Partie • MMbtu/d MMbto/d MMbtu/d Bid $lOOO/yr ------------------------------------------------
AL 11.22% 673 0 613 9.62% 185.7
BI o.oot a 0 0 0.1);)\ 0.0
GR 0.00\ 0 0 0 0.00\ 0.0
HE 1. 78\ 107 0 107 1.52% 29.4
LD 12.11% 727 0 727 10.38% 200.4
LO 2.6H l60 0 160 2.29t H.l
PA 10.00t 600 1000 1600 22.86t Hl.3
PS 0.00\ 0 0 0 o.oot 0.0
lIE O.oot 0 0 0 o.oot 0.0
RO 12.22\ 733 0 733 lO.4U 202.3
sc O.oot 0 a 0 0.00\ 0.0
TO O.oot c a 0 0.00\ 0.0
TID SO.OOt 3000 0 3000 42.86\ 827.5
UK 0.00\ 0 0 0 O.oot 0.0
100.00% 6000.0 1000 7000 100.00\ 1930.8
* +--+------------"---------------+---------------------------1----------+
I Total
Partie Total partie TID
stiq in Bid? Phase II TID in Bid? Stiq Melded
Phase II ~:':¥e5 Partic stiq l~Yes Partie Partie' -------------------------------------------------
AL 22.45t 1 22.45\ O.oot O.oot 11. 22\
B1 O.OOt O.oot O.oot 0.00\ O.oot
GR O.oot O.oot O.oot O.oot 0.00\
HE 3.56% 1 3.5H O.oot 0.00\ 1.7Bl
LD 24.22\ 1 24. 22\ O.oot O.oot 12.11t
LO 5.33% 1 5.3Jt O.oot O.oot 2.67%
PA 20.00% 1 20.00t O.oot 0.00\ 10.00\
PS O.oot O.oot 0.00% O.OC\ 0.00\
RE O.oot 0.00\ 0.00\ o.OOt 0.00\
RO 24.44\ 1 24.44\ 0.00\ 0.00\ n.n\
SC O.oot 0.00\ 0.00\ O.oot 0.00\
TO O.oot O.oot 0.00\ 0.00\ O.oot
TI 0.00\ O.oot 100.00\ 1 100.00\ 50.00t
OK 0.00\ o.oot 0.00' 0.00% O.oot
100.00\ 100.00\ 100.00\ 100.00t lOO.OOt +--+--------------------------+--------------------------+---------+
PGT -Natural Gas pipeline Expansion
HCP~I$ Open Season bid -7000MMbtu/d
(1991 cost.)
t Need
Addtl'll Total PGT-ExP
Yilt
PG'l'-ElcP
PaJ:t.ic: ... l!Ml:>tu/d MHbtu/d .oo:>tu/d Bid $lOOo/yr -------- ------------------------___ w____ __* _____
AL 11.22t 786" 0 'a6 11.22% 216.7
III O.oot 0 0 0 0.001 0.0
GR O.oot I) 0 0 0.00'1 0.1)
m 1.121 lH 0 124 1.7st 34.3
LD 12.1U 848 0 848 12.11'1 233.8
LO 2.67% 181 a 187 2.67'1: 51.5
PA 10.00'1 700 0 700 10.00>' 193.1
PS 0.00'1 0 0 0 O.OOt 0.0
RE O.OOt 0 0 0 0.00\ 0.0
P.O 11.12\ 856 0 aS6 12.22l 236.0
SC O.oot 0 a () o.~\ 0.0
TO 0.00'1 0 a a O.OOt 0.0
TIt> So.oot 3500 a 3500 50.00'1 965.4
tlJ( o.oot a 0 a a.ollt 0.0
lOG. Got 7000 0 7000 100.00t 1930.8
* ~--+--------------------------+--------------------------+---------+
o\L
BI
CR
lI:i
LD
to
PA
PS
lIE
RO
SC
'I'D
1'1
OK
stiq
Phase II
n.4St
O.OOt
o.oot
l.Sn
24.22'1:
5.33\
20.00\
O.OOl
O.oot
24.44\
O.oot
O.oot
0.00\
O.oot
100. oat
Partie
in Bid?
l=-=~es
1
1
1
1
1
:1
Total
Phase II
Partie
Z2.~st
0.00\
O.OO~
3.56\
24.22t
S.33\
20. OO~
o.oot
O.oot
24.4" O.oot
0.00%
o.oot
O.OOf
100.00l
TIO
Sti<]
o.oot
O.OOl
0.001
0.00\
0.00\
0.00\
0.00\
0.00\
o.oot
o.oot
0.00\
O.OOl
100.00\
G. oat
100.00\
Partie:.
in Biel?
l=Yes
1
Total
TID
Stlq
Partie
0.00\
O.GOt
O.oot
O.OOl
0.00'1
0.00\
O.OOl
0.00%
0.00\
0.'10%
0.00\
o.oot
100.00', O.OOl
100.00\
Melded
pa.rtie
11. 22\
O.oot
0.00\
1.75%
12.11\
2.67\
10.00t
O.oot
o.oot
12.22\
0.00\
0.00\
50.00\
C.OOl
lOO.OO~
+--+--.-----------------------+--------------------~-----+---------+
•
I