HomeMy WebLinkAbout0540.093october 14, 1993
Honorable City Council
Palo Alto, California
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Resolution of the Commission of the Northern California fower
'ganCV transfgrring the Natural Gas Procurement Program to
Combustion turbine Project Number Two
HeJlbers ot the council:
Report in Brief
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This staEf report presents the above entitled Resolution,
approved by the HCPA Commission at its September 22, 1993
meeting, and requests that council ratify this Resolution and
authorize the Mayor to sign it on behalf of the City of Palo
Alto. By such ratification the City of Palo Alto will no longer
be a partici~t in the NCPA Natural Gas Procuretaent Project.
Background
In April 1991, Council approved the utilities' particiation in an
~qreement with NCPA concerning NCPA's natural gas procurement
program. Such action was approved in order that NCPA could
successfully bid in a timely fashion for gas transmission line
capacity between Canada and california. NCPA lacked sufficient
time to draft the agreement and a statement of operating
principles, whi~~ would serve as the foundation for the creation
of a qas supply arm within NCPA~ Authority ror the qas
procureaent program was acquired through the powers vested in
NCPA members participatinq in the Combustion Turbine Project No.
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One~ A Member service Agreement was developed and Palo Alto
participated at that point (CKR;24~~91}, even thou9h the City had
not made $ tormal determination to fully participate in the
cOlIbusticn Turbine Pr~ject No ~ Two.
HCPA intended to formulate a natural gas project via ~ Third
Phase Aqreement4 The city pa~ticipated in negoti~tions and
siqned th-e Third Phase Agreement in No· ... ember. 1991 !~:~!~:~!}"
M"'.tI!'" ~'=.?..1'~ :.::::::;!;. ..... o ol.LU not tOlloW" through and participate as
parties to the Third Phase Agreement. In the interi=, .orking
yith the utilities Advisory Co~issiont staff completed the first
electric system Integrated Resource Plan, (IRP) vhich indicated
that the Combustion 'tUrbine Project No. Two (S'l'IG) was not timely
nor consistent with Palo Alto's needs as developed within the
IRP. Staff subsequently notified NCPA that th~ City would not
participate in combustion TUrbine Proje~t No. TWo ana that the
City's percentaqe of the N~tural Gas Project would be zero.
OVer the interveninq sonths, NerA, staff, NCFA legal counsel and
the project members determined that the optimal solution required
the transfer of all rights and responsibilities of the Natural
Gas Project to Combustion TUrbine Project No. TWo, inclusion of
the TUrlock Irrigation District and reli~vin9 Palo Alto of its
commitment. The City has a contract for gas supply that is more
favcrable for its system needs and, therefore, there is now no
need for the City to proc~re its gas supply through NCPA.
financial Impact
This transfer will foraally relieve Palo Alto of any
responsibility for pipeline capacity payments in the amount of
$193;000 per year, Which would have commencea in November, 19~3~
The City is further relieved of the obligation to sell or further
assign any unu$ed or unusable capacity.
utjlities Advisory COmmission Acti20
staff brought this NCPA Resolution to the Uti1ities Adviscry
co~ission on September 1, 1993. Afte~ discussinq the issue, the
Commission voted unanimously to support staff's recommendation~
Tbe sttached gas servic~ schedule is for information only and
requires no action.
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Btcopmtfmdation
staft reCOllDlends that council approve the attached Resolution of
the commission or the Northern California Power Aqency
Transferring the Natural Gas Procurement Program to Combustion
Turbine Project Number TWo, ana authorize ~~e Mayor to si9n the
Resolution on behalf of the city~
Respectrully submitted,
~4.<~
IUCHARD L. YOUNG -/
Deputy Director of Utilities
f.,1rJJ:L~ EOWJ;; 3. -Iz~1C
Director of Utilities
~'M,~
BERNARD II. STROJNY
Assistant city Manaqer
Attachloents: NC'PA Resolution
Gas service Schedule
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RESOLUTION NO.
RESOLUTION OF THE COUNCIL OF THECi'n OF PALO ALTO
APPROVING THE ASSIGNMENT OF THE RIGHTS OF THE CITY
OF PALO ALTO AS A PARTY TO THE NATURAL GAS
PROCURE:MENT PROGRJ>.N THIRD PHASE AGREEXENT AND
RELATED SERVICE SCHEDULE TO THE NORTHERN
CALIFORNIA POWER AGENCY
WHEREAS, in April 1991, the Council approved the City of
Palo Alto"s participation as a Norchern California Power Agency
("NePAli) member with certain ether NCPA members in the NCPA's
Combustion Turbine Project No. One; and
WHEREAS, tbe NCPA acquired gas t~ansportation capacity
and a gas supply for the benefit of the NCPA's Combustion Turbine
Project No. TwO through the authorization of certain N'CPA
participants in the combustion Turbine Project No. Onej and
WHEREAS, the City has determined that, under its
Integrated Resource Plan, it is not in the City's in:.erests to
continue its participation in the NCPA's Natural Gas Procurement
Program under the Third Phase AgI-eement or in the NCPA' s Cornbusd on
Turbine project No. Two; and
WHEREAS, the City has :jetermined to withdraW' from the
Third Phase Agreement and assign its rights. title. and interest in
the service Schedule to the Third Phase Agreement to the NCPA and
certain members of NePA. and the NCPA and such members have agreed
to accept the City's rights. title .. and interest and obligations
therein;
NOW .. THEREFORE, the Council of the City of Palo Alto does
.!tBSOLVE as follows:
.s..gcr;:QtLl. The Council here-.by approves the wi thdrawal of
the City of Palo Alto as a party ta the Natural Gas Procurement
Progr~. Third Phase Agreement and che Ser~ice Schedule thereto with
the Nortbern California Power Agency. a:Id further approves the
assignment of all rights, title and interest of the City of Palo
Alto in such Third Phase Agreement and the Service Schedule thereto
to the Northern California Power AgeD_cy and certain members
thereof +
~~~. The Mayor is authorized to execute on behalf
of the City of Palo .Alto the Resohltion No. 93-16 of the Commission
of the Northern California Power Agency entitled "Resolution of the
Commission of the Northern California Power Agency Transferring the
Natural Gas Procurement Program to Combustion Turbine Proj eet
Number Two + •
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SECTION 3. The Counci 1
approved does not constitute a
Environmental Quality Act.
rNTRODUC.o Ah~ PASSED,
A'!l!S:
NOES,
ABSENT
ABSTENTIONS,
ATl'EST:
City Clerk
APPROVED AS TO FORM,
City .Manager
Senior Asst~ City Attorney
Director of Utilities
Director of Finance
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9:)1013 '1D 0010411
finds that the action hereby
project under the California
APPROVED:
Mayor
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RESOlU710N NO. 93·.ll.
RESOLUTION OF THE COMMISSION
OF THE NORTHERN CALIFORNIA POWER AGENCY
TRANSFERRING THE NATURAL GAS PROCUREMENT PROGRAM
TO COMBUSTION TURBINE PROJECT NUMBER TWO
WHEREAS. on March 28.1991 the NCPA Commission adopted Resolution No.
91-09,apprcving me Natural Gas Procurement Program Service Schedure (Service
Schec!Ul9); and
WHEREAS. in accordance with the Service Schedule. NCPA has aCQurred for the
Ci1ies of Alameda. Lodi, Lompoc and Roseville (Participants), and the Turlock
Irrigation District (Turlock). an entitlement Ln and obligation for the rights. title, and
Interest of NCPA in the NOVA, ANG. and PGT Expansion Projects capable of
d"""OIing up to 5.486 MMBru per day at Mann, Oregon. and the corresponding
PG&E Expansion receipt and de.;very capacity (correctively, the Expansion) and
WHEREAS. pursuant to the Service Schedule. NCPA has also acquired for the
Participants and Turtock various contractS. information. opportunities. and rights
associated with the Expansion, including consultant reports. NCPA staff contacts
with persons and entitfes involved in natural gas transactions, and contracts related
to the expansion of NOVA facilities to serve the PGT Expansron Project. the Firm
Transportation Service Agreement dated as of October 22. 1991. the Firm
Transportation Service Agreement dated as of April 25. 1991, the Assignment and
Indemnity ..Agreement between NCPA and Pacific Gas Transmission Company to
facilitate design and construction activities~ and me Service Agreement with ."'Iberta
Natural Gas Company ltd .. dated as of June 12. 1991; and.
WHEREAS. the Partic"ipants in Combustion Turbine Project No. One. which
originany underwrote the NaL'IJral Gas Procurement Program, were to be reJieved af
re.spcnsrbil;ry for ttle program, and the City of Palo Afte, which had eJCecuted the
Service Schedule and the Natural Gas Procurement Program Third Phase Agreement,
has previously given notice that it no fanger wishes to participate in the program;
and
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WHEREAS, the Participants and Turlock, which are the participants in me
Combustion Turbine Project Number Two -Units One (loC::iJ and Two (Ceres)
respectively, intend to undertake the COl'1tinuation of such elements of the Nah..raJ
Gas Procurement Program as may be necessary or co~venjent to supply " reliable
source of fuel tl) meet the requirements of those projects;
NOW. THEREFORE. 6E IT RESOLVED by the Commission of the Northem
California Power Agency, 8S fanows;
Section 1. The ?articipants in ttl'! Combustion Turbine Project No. One and
the Oty 01 Paio Alto, de hereby assign arr of their right. title and interest in and to
their obligations and entitlements under the Service Schedule to NCPA, for the
Partieipa~ts in tha Combustion Turbine Project Number Two -Unit One (Lodil and
NCPA does hereby accept such obr.gations and entitlements or. behalf of the
Participants.
Section 2" In considerztion of this resolution and Gas SlI!Irvice Schedule A
for Cambus1jon Turbina Project Number Two -Unit Two (Ceres). Turlock does
hllf8bV I9re. to cancel and terminate the Service Schedule.
Section 3. The Service Schedule is hereby ca nceled. terminated. and
$UpIIl$llded by this resolution and bV tho Gas Sorvice Schedule A for Combustion
Turbine Project Number Two -Unit Two (Ceres). attached to and incorporated into
this resoll1tion_
Section 4_ The NCI'A General ManegO' is anti .han be authorized to enter
Into contracts and to toke other actions in the name of NCI'A. for and on behalf of
the Participants and Turlock, as they may approve or authorize by Participant
resolution anti Turlock .ervic. schedule.
Section 5. The expenclitures end activities descnbed in the 1993-1994
NCPA Annuel Budget and Ga. Service Schedule A for Combustion Turbine Proiect
Number Two -Unit Two (Ceresl are hereby authorized and approved by the
Participants and Turlock-
Section 6. The NCPA General Manager is authorized and directed to
conduct inY'8Stigations. studies, negotiations, and other activfties involvmg nan.~ral
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gas supply, transportation and storage {Initial Acti ..... ities} tor the requirements of me
Combustion Turbtne Project N~mber Two Unit One (lodi) and Combustion Turbine
Project Number Two -Unit Two (Ceres) as the Participants authorize by PartTc;pant
resofu'tion and as Turlock "as or will have authorized pursuant to the Combustion
Turbine Project Number Two· Unit Two (Ceres) Gas Servrce Schedule A, and
subsequent service schedules executed by both NCPA and Turlock..
Section 7. The Participants and Turfock shall aumoriz-e Initial Activities bV
adoption of a Participant resolutio:'1 and execution of a service schedule by and
between NCPA and TurJock.. Participant resolutions and Turlock service schedules
shan provkle tor the source~ bmfng~ collection, and dispersement of fUnds for the
Initial Activities. The NCPA Commission shan amend the NCPA annual budget as
may be necessary to reflect such resolutions and service sehedures.
Section a. The Participants and Turrock snail share t.'1e costs and benefiu of
all Initial Activities equany, unless otherwise agreed.
Section 9. Initial Activities shan be prcposed and conducted to permit the
Participants and Turlock to undertake a commitment for any opportunity on the
basis of the Participation Percentages on which coStS were shared for tJ1e initial
Activity which develDped ttle DPPOrtuni1y.
Section 10. To the extant practicable I [ninal Activities shall be designed to
afford the Participants and Turlock the discretion to determine whether to undertake
a commitment for an opportunity as a wf'Ioie or for the Panicipants or Turlock
separately; that is~ either on a pooled basis~ by which one party may dispatch the
merged opportunfty to the other parties. or separately, by ..... "h'ch the Participants
and/or Turlock may each elect to separately utilize the opportunitY r and be
separately responsible for it.
Section 11. The Participants and Tur10ck shan endeavor to estabnsh general
guidelines for investigations and analyses, for the instruction o.f NCPA n&gotiations.
and the preparation of contracts. $0 that prior to the time when commi!ments must
be undertaken fO/' opportunities presented by any Ini"tiaf Activity~ environmental,
economic, and engineering analyses sufficient to supp0P"'[ a decision on the potentiaf
colTllTtitment shall have been completed, and the Participants and/or Turfock shalf be
positioned to exercrse their disc-retion to decide to undertake the commitment, on
contracts or other documents suitable for the furt1"l.er development or acquisition of
the opportunrty on a pooled or separate basis. The Participants and Turlock shan
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cooperate with NCPA in eSTSbfishing deadlines for preriminary decisions to facrrftate
timely action to further the development or acqLiisitfon 01 an opponunity presented
by an Initial Activity. To the extent practicable, NC?A will endeavor to tarfor
potential opportunities and contracts to the needs which the Participants and
Turlock may define.
Section 12. For matters relating to not more than 5,486 MMBtu per day off
of tIlo PGT Expan~n Project (measured at Mann. Oregon I and Initial Activities
approved by tIla adoption of tile relevant NCPA Annual budget. Participant
resolution and Turlock service schedule, unless otherwise agreed. the Participation
Peroentages of the Participants and Turlock. sh aD be as set forth in subsection faJ of
this section~ For an Initial Activrdes subsequent to which Turlock or tf1e
Participants have expressed a written request to be excluded from such Initial
Activities. the Participation Percentages of the Participants or Turlock sharI be as set
forth in subsection (b) or subsection (c' of this sBc'tion. respectively. Any
agreement to change ttle Participation Percentages or tile porcentage of Turlock may
requIre agreements approved by the goveming oodles of the Participants and
Turlock and is subject to tile discharge of a" relatad c>utstanding obligation •.
(al Participa"lion Perconta;j •• wflh Turlock:
Participants and Turlock
Party Percentage
"'_moda 9.50
lodi 19.75
. Lompoc 2.50
Roseville 18.25
Turlock 50.00
Total 100.00
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(b) Participation Percentages without Turl~k:
Participants without Turlor.k
Party Percentage
Atameda 19.00
Ladl 39.50
lompoc 5.00
Roseville 36.50
Tota! 100.00
(c) Participation Percentages wt'C11 only Turtock.:
Turlock Alone
Party Percentage
Turlock 100.00
Section 13. NCPA shan comply with alilawfuf directions of the Participants
and Turtoek in accordance with the procedures for direction a!1d voting set out in
section 11 of the Agreement for Construction. Operation and FInancing of
Combustlon Turbine Project Number Two -Unit One (Lodi!. dated as of August 1,
1992.
Section 14. In proportion to their respecti ..... e intarests. but not as a general
obngation. and limited to the revenues of their e~-eCtrjc systems. the Participants and
Turlock shan hold harmless the non-participating member. of NCPA and NCPA, and
their respective commissioners. directors. governing body members. officers,
agents. and employees. and defend th em from any riability or cost responsibility for
aC'dons taken or not taken in connection with -me Naturar Gas Procurement Program,
this resolutionl and any Infoai Activity or subsequently undertaken oomrrtitment for
natural gas suppIYI storage, or transportation.
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PASSED AND ADOPTED this __ dav of _____ 1993 by the
following vote on roll can:
City of -Alameda
Biggs
Gridley
Heal<!sburg
Lodl
Lompoc
Palo Alto
Redd"mg
Roseville
Sama Clara
Truckee-Donner
Turlock
Ukiah
Plumas-Sierra
Vote AbSTained Absent
The CITY OF PALO ALTO does hereby agree to cancel and terminate its
execulion of 1118 Natural Gas Procurement Program Third Pha ... Agreement and to
assign aD of its tight. litIe. and inte .. "" in and to 1118 Service Schedu!e to 1I1e
PlIr1i<:Ipams as provided In 1111$ resolution.
By
Its
The TURLOCK IRRIGA nON DISTRlCT does hereby agree to cancal and
terminate the Service Schedule In consideration of. and does hereby approve and
eccept 111. Gas Service Schedule A for CombUS1ion Turbine Project Number Two -
Unit Two (Cete51 as provided In t!lis resolution.
Dated
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GAS SERVJCE SCHEDULE A
FOR
COMBUSTION TuRBINE PROJECT NUMBER TWO -UNIT TWO (CERES)
Section 1. Turlock Irrigation District (Turlock) in consideration of this Gas Service
Schedure A. does hereby covenant. promise and agree. ana accept
and acknowledge this Gas Service Schedule A. as the whole of
Turlock's lights, title. and interest in, and the entire replacement for
Turlock's entitlement under the Natura! Gas Prcx:urement Program
Service Schedule adopted by NCFA Commission Resolution No. 91-09
effective upon its cancellation and termination bV NCPA Commission
Resolution 93-_ Transferr.ng the Natural Gas Procurement Program
to Combustion Turbine Project Number Two (Gas Transfer
Resolutionl.
Section 2.. Turlock shall for the entire term cf this Gas Service ScheduIe A,
unless otherwise agreed by subsequent service schedule $xecuted by
NCPA and Turlock. havs i hold. and mafntain a SO percent .ntidement
in and obligation for the rights. ~e. and interest of NCPA In the
NOVA, ANG, PGT Expansion Project, and PG&E Expan.i"" Project gas
transportation contracts. being 50 percent of LJP to 5,486 MMBtv of
natural gas per day measured at Malin, Oregon. and any and an
associated contracts or other material.:: necessary or co.,venient to
Turlock's fun use and enjoyment of such capacrty. incfuding but not
r.mitad t:l, the development and execution of the PanCanadian Gas
Puri:hase Agreement. !tie relevant data, information, and repo"'..s of
the consultants retained prior to the date of this Service Schedule.
the contracts and other documents associated with tf1e expansion of
NOVA and ANG facHities ancillary to the PGT Expansion Project
including but not "mited to the NCPA/PG&E Firm Transportation
Service Agreement dated Octobe' 22, 1991, the NCPAIPGT FLrm
Transportation Service Agreement dated as ot Aprn 25, 1991. the
Assignment and Indemnity Agreerr.-ent between NCPA and Pacific Gas
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Transmission Company to facilitate design and construction activities,
the Service Agr c ~"ent with Alberta Natural Gas Company ltd., dated
June 12. 19.91. 1e Servjc~ ~greement with NOVA Corporation of
Alberta dated September 16. 1.99T. and any and all data. Information.
reports and contracts developed a!; Inrtisr ACtivities 1,9S defined and
a~owed for in Resolution 93-__ • the Gas Transfer Resolution) in
which Turlock. takes part pursuant to the Gas Tr~Msfer Resotution
sUDsequent to tile date of this Gas Service Schedule A.
Section 3. The obligations of Turlock to NCPA in connection with this Gas
Service Schedule A are unconditional and Turtock: does hereby
covenant. promise. and agree, and restate each and every co .... enant.
agreement. and promise of s9ctions 7. 8~ 9~ 1 O~ and 11 of the
A;reement for Sale of Capacity and Energy of Combusticn Turbine
ProJeet Number Two -Unit Two ICeresl. dated as of August 1. 1992.
and such sections are incorporated into this Gas Service Schedule A.
For the purpose of me Gas Transfer Resolution. Turlock does hereby
agree to be governed 3nd bound by arr of 111e pro .... isions of that
resolution. a copy of which is attached to and incorporatad intO this
Gas Service Schedule Ai in partfcular, the procedures for direction and
voting sat out in section 11 of the Agreement for Constructicn,
Opr.ation and Financing of Combustion Turbine Project Number Two -
Unit One (Lodi" dated as of August 1, 1992, .s though Turlock ~ad
executed and denvered that agreement.
Section 4. Turlock does hereby covenant. promise. and a gree, to pay its
petCEmtage share la. defined In the Gas Transfer Resolution) of an
lnitial Activities inciuOong but not romited to investigations. S!Udies.
negotiations. and other activities involving natUral gas supply.
transportation end storage. The Participants or Turlock may withdraw
their participation in any Inltial Activity at any time upon dispatching
an obrogations undeJ1aken as part of that fnitial Aclivlty_
As of the date of this Gas Service Schedule A. Initial Activities
undenaken include, but are not limited to. profe$Sional servic es
provided bV engineers~ attomeys. and gas suppfy consultants. These
services include. for example, the gas consulting services provided by
Henwwood Energy Services. Inc. and Ms. Nancy Moon of 10
Solutions. and the legal services provided by Duncan and Anen and
Mr_ Patrick Power.
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Section 5.
Section 6.
The term ot thIs Gas Service Schedule A shall commence as cf its
execution and terminate 'Upon the cancellation. termination, or
discharge of an obligations undenaken as a part of or associated with
the NOVA, ANG. POT Expansion Projact and the PG&E Expansion
Project Service Agreements and this Gas Service Schedure A. Of as
otherwise agrHd to by NCPA. the Participants. and Turlock.
NCPA shall, if requested by TurlOCK, use aU reasonable efforts to
effect the derovery of natural gas to the Ceres Plant bV way of PG&E's
toea) distribution service flOC) and/or other req:uisite interccnnecting
pipeli'-le!sJ at the expense of Turtock. provided tnat a separate service
schedule for such servicels), satisfactory to NCPA and Turlock shall
be exect1tfla ana danvered.
Section 7. Turlock and NCPA shan cooperate in giving further assurances and
executing such otI'\er documents as may be reasonably requested.
Dated: Dated:
TURlOCK IRRlGATJON DISTRiCT NORTHERN CALIFORNIA POWER AGENCY
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