HomeMy WebLinkAboutAgenda Report - June 7, 2006 E-10AGENDA ITEM Ew I D
CITY OF LOIDI
COUNCIL COMMUNICATION
FSA
AGENDA~ TITLE: Adopt resolution authorizing the Northern California Power Agency to enter into a
sale of a portion of Lodi's rights to combustion turbine capacity In the CTI Project to
the City of Roseville, CA for a four month period beginning July 1, 2006. (EUD)
MEETING DATE: June 7, 2006
PREPARED BY: Electric Utility Director
RECOMMENDED ACTION: That the City Council adopt a resolution authorizing the Northern
California Power Agency (NCPA) to enter into a sale of a portion of
Lodi's rights to combustion turbine capacity in the CT1 Project to the
City of Roseville, CA for a four month period beginning July 1, 2005.
BACKGROUND INFORMATION: The City of Lodi, and certain other NCPA members, have an entitlement in
a total of five 25 megawatt combustion units located in Alameda (2 units),
Roseville (2 units) and Lodi (1 unit). These five generating units
comprise the "CT 1 Project". The City of Roseville has requested to purchase the entire output of one of the two
units located in Roseville from the other NCPA members with entitlement in these units. (Lodi has rights to 34.78%
of each CT1 Project unit.) This request results in part from the fact that the Roseville units are now part of the
Western Area Power Administration sub -control area (as is Roseville's electric network) while all other CT 1 Project
participants are located in the separate CAISO control area.
At its recent May 25 Commission meeting, NCPA received approval of a resolution giving the NCPA General
Manager authority to develop and execute a CT 1 Project sales contract with Roseville on behalf of NCPA members
in the CT 1 Project (see attached draft NCPA memorandum and resolution). In addition to this authorization,
however, NCPA's General Counsel has determined that CT 1 Project participants whose governing body have not
previously delegated general power sales/purchase authority to their utility director or City Manager, such as Lodi,
obtain direct authorization for the proposed transaction.
The Electric Utility Department has reviewed the proposed transaction and determined that the CT1 capacity
proposed to be soli to the City of Roseville from July 1, 2006 to October 30, 2006 is surplus to its needs. The
electrical output of the CT1 project is far more expensive than the bulk power market and EUD has previously
obtained market energy to meet the preponderance of its projected power needs during this period.
The terms of the Roseville combustion turbine sale are still being finalized, however, the proposed transaction is
expected to begin July 1, 2006 and extend for four months. The price for the capacity sold would reflect market
conditions for peaking capacity — presently estimated to be $3.00 per kilowatt -month. Based on Lodi's 34.78%
interest in the CT 1 Project, projected revenue to Lodi for this transaction would total about $90,500 in FY07.
FISCAL IMPACT: Possible revenue of about $90,500 to the electric fund in FY07.
FUNDING AVAILABLE: Not applicab .
y Piste, Interim Finance Director W j
George F. orrow, Electric Utility Director
(0°Y`
APPROVED:
rng, City Manager
RESOLUTION NO. 2006-105
A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE
NORTHERN CALIFORNIA POWER AGENCY (NCPA) TO ENTER INTO A
SALE OF A PORTION OF LODI'S RIGHTS TO COMBUSTION TURBINE
CAPACITY IN THE CT1 PROJECT TO THE CITY OF ROSEVILLE,
CALIFORNIA, FOR A FOUR-MONTH PERIOD BEGINNING JULY 1, 2006
WHEREAS, the City of Lodi, and certain other Northern California Power Agency (NCPA)
members, have an entitlement in a total of five 25 megawatt combustion units located in Alameda (two
units), Roseville (two units), and Lodi (one unit); and
WHEREAS, these five generating units comprise the "CTI Project'; and
WHEREAS, the city of Roseville has requested to purchase the entire output of the two units
located in Roseville from the other NCPA members with entitlement in these units; and
WHEREAS, this request results in part from the fact that the Roseville units are now part of the
Western Area Power Admirfiostration sub -control area (as is Roseville's electric network) while all other
CT1 Project participants are located in the California Independent System Operator control area; and
WHEREAS, at its May 25, 2006, Commission meeting, NCPA received approval of a resolution
giving the NCPA General Manager authority to develop and execute a CTI Project sales contract with
Roseville on behalf of NCPA members in the CT1 Project; and
WHEREAS, NCPA'* General Counsel has determined that CT1 Project participants whose
governing body have not previously delegated general power sales/purchase authority to their Utility
Director or City Manager, such as Lodi, obtain direct authorization for the proposed transaction; and
WHEREAS, the Electric Utility Department has reviewed the proposed transaction and
determined that the CT1 capacity proposed to be sold to the city of Roseville from July 1, 2006 to October
30, 2006 is surplus to its needs; and
WHEREAS, the terms of the Roseville combustion turbine sale are still being finalized, with the
proposed transaction expected to begin July 1, 2006, and extend for four months; and
WHEREAS, the prig for the capacity sold would reflect market conditions for peaking capacity --
presently estimated to be $3.00 per kilowatt -month. Based on Lodi's 34.78% interest in the CTI Project,
projected revenue to Lodi for this transaction would total about $90,500 in fiscal year 2007.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby authorize NCPA
to enter into a sale of a portion of Lodi's rights to combustion turbine capacity in the CT1 Project to the City
of Roseville, California, for a four-month period beginning July 1, 2006.
Dated: June 7, 2006
I hereby certify that Resolution No. 2006-105 was passed and adopted by the City Council of the
City of Lodi in a regular meelling held June 7, 2006, by the following vote:
AYES: COUNCIL MEMBERS — Beckman, Hansen, Johnson, and Mounce
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — Mayor Hitchcock
ABSTAIN: COUNCIL MEMBERS — None
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NIFE M. RR1N
4terity
imCClerk
2006-105