HomeMy WebLinkAboutAgenda Report - June 18, 2008 E-13AGENDA ITEM &
JJM CITY OF LODI
COUNCIL COMMUNICATION
AGENDA TITLE: Adopt Resolution Authorizing the City Managerto Execute NCPA Letter of
Agreement for Long Term Energy Procurement Services ($40,832) (EU D)
MEETING DATE: June 18,2008
PREPARED BY: Electric Utility Director
RECOMMENDED ACTION: Adopt a resolution authorizing the execution of a Letter of Agreement for
Long Term Energy Procurement Services between the Northern California
Power Agency (NCPA) and the City of Lodi.
BACKGROUND INFORMATION: Historicallythe City of Lodi has obtained assistancefrom NCPA for the
procurementof longer term power supplies. Assistance generally ranged
from review of proposed agreementswith counterparties (i.e. energy
suppliers), formal issuanceof Requests for Proposals, evaluation of bids received and input into confirmation letters
with successful bidders. These services were provided by NCPA without separate charges.
Recently, NCPA established a Market Purchase Program (MPP) which provides relatively comprehensive energy
procurement servicesto a number of NCPA members under a cost based compensation arrangement. Lodi and
several other NCPA entities elected nottojoin the formal MPP at this time due to the high annual cost of same and
the requirement for posting of significant collateral (cash) to minimize the risk to NCPA for acquiring energy under
their name for MPP participants.
Lodi and other NCPA members have been acquiring market energy under their own bilateral agreements that make
the provisions of MPP related to the posting of collateral unnecessary. For information, the MPP collateral
requirement is equal to the three highest months of energy purchase costs over the next twelve months. For Lodi.
the amount of cash it would be required to post with NCPA would typically be in the range of $5 million.
Underthe proposed NCPA Letter of Agreement for Long term Energy Procurement Services, Lodi would continue
to obtain energy procurement assistance from NCPA as it has in the past. For equity purposes with MPP members,
NCPA believes it is necessaryto charge for this support and the Letter of Agreement provides that Lodi would pay
$40,832 per year (payable on a monthly basis) to NCPA for these services. The agreement continues in effect
unless terminated by either patty with 90 days notice prior to the end of any annual term.
FISCAL IMPACT: Lodi would pay $40,832 peryear for. energy procurement support.
FUNDING: Ala
f d re available in EUD's Power Supply Operating Budget account
s, Butt r
George F. Ntrrow, Electric Utility hector
APPROVED: /1
r Ing, City Manager
RESOLUTION NO. 2008-1 13
A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING
THE CITY MANAGER TO EXECUTE A LETTER OF AGREEMENT
FOR LONG-TERM ENERGY PROCUREMENT SERVICES WITH
THE NORTHERN CALIFORNIA POWER AGENCY
WHEREAS, the Northern California Power Agency (NCPA) has historically provided
supportto the City of Lodi (Lodi)for procuring energyfrom the wholesale market; and
WHEREAS, NCPA has adopted a policy that future energy procurement services
provided to a member shall be cost -based depending on the level of services provided to such
member: and
WHEREAS, Lodi desires to continue obtaining energy procurement assistance from
NCPA to review proposed agreements with counterparties (i.e. energy suppliers), issue
requests for proposals, evaluate bids received, and provide input into confirmation letters with
successful bidders; and
WHEREAS, the terms and conditions of such energy purchase assistance is contained
in a Letter of Agreement for Long -Term Energy Procurement Services between NCPA and Lodi.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council hereby approves the
Letter of Agreement for Long -Term Energy Procurement Services between NCPA and Lodi and
authorizes the City Manager or his designee to execute the Agreement and authorizes the
Electric Utility Director or his designee to administer the Agreement.
Dated: June 18,2008
hereby certify that Resolution No. 2008-113 was passed and adopted by the Lodi City
Council of the City of Lodi in a regular meeting held June 18, 2008, by the following vote:
AYES: COUNCIL MEMBERS —Hansen, Hitchcock, Johnson, Katzakian, and
Mayor Mounce
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS—None
ABSTAIN: COUNCIL MEMBERS — None
�IFE�-RRIN
Deputy City Clerk
2008-113