HomeMy WebLinkAboutAgenda Report - July 7, 2010 D-12AGENDA ITEM 6-I Z
A% CITY OF LODI
,. COUNCIL COMMUNICATION
AGENDA TITLE: Adopt Resolution Authorizing the City Manageror Electric Utility Directorto Close
Energy Positions in Accordance with the City of Lodi Energy Risk Management
Policies and Approval of the Energy Risk Oversight Committee (EUD)
MEETING DATE: July 7, 2010
PREPARED BY: Electric Utility Director
RECOMMENDED ACTION: Adopt a resolution authorizing the City Manager or Electric Utility
Directorto close energy positions in accordance with the City of Lodi
Energy Risk Management Policies (ERMP) and approval of the
Energy Risk Oversight Committee (EROC).
BACKGROUND INFORMATION: For any open position (energy and capacity not fully procured or
hedged in advance), EUD faces risk, since prices move in the
wholesale energy markets and, at times, move rapidly and
unexpectedly. To reduce price risk, EUD's open position can be reduced by transactions that fix costs. By
Resolutions 2007-234 and 2008-155, the City Council authorized certain purchases to reduce the EUD
open position through June 2011 and March 2012, respectively.
Risk is managed further by filling the needs in stages over time, in different energy market environments.
The EROC sets Laddering Guidelines, pursuant to the ERMP adopted by the City Council on January 18,
2006. Attachment 1 shows the Laddering Guidelines now in use. As outlined in the ERMP, the EROC
reviews proposed transactions and purchasing strategies and ensures that proposed transactions
conform to the accepted types of transactions detailed in the ERMP. EROC is responsible to ensure that
business is conducted in accordance with the ERMP and established risk limits. Purchases are made
with the advice and assistance of the Northern California PowerAgency.
The Risk Management Laddering Guidelines call for electricity and fuel purchases that are beyond the
scope of the previous authorizations cited above.
FISCAL IMPACT: Indeterminate. If authorization is not given for advance purchases, such purchases
will be made in spot markets, and the cost difference cannot be predicted.
FUNDING: Included in Electric Fund Account 160642, in the fiscal year of energy delivery
Jordan Ayers
Deputy City Manager/Internal Services Director
I' ab
ethh A. Kirkley -
Electric Utility Director
PREPARED BY: Ken Weisel, Assistant Electric Utility Director
EAK/KAW/Ist
APPROVED:
onradt Bartlam, Interim City Manager
In use as of July 7, 2010
ATTACHMENT 1
CITY OF LODI ELECTRIC UTILITY DEPARTMENT
ENERGY RISK MANAGEMENT
LADDERING GUIDELINES
Fiscal Year
Maximum Open Position
Current
10%
1" Following
25%
2nd Following
50%
RESOLUTION NO. 2010-115
A RESOLUTION OF THE LODI CITY COUNCILAUTHORIZING
THE CITY MANAGER OR ELECTRIC UTILITY DIRECTORTO
CLOSE ENERGY POSITIONS IN ACCORDANCE WITH THE
CITY OF LODI ENERGY RISK MANAGEMENT POLICIES AND
APPROVAL OF THE ENERGY RISK OVERSIGHT COMMITTEE
WHEREAS, the City of Lodi must buy electricity and fuel to meet its customers' needs
for electricity; and
WHEREAS, it is expected that Lodi's purchases under this Resolution could occur in
various amounts and timeframes; and
WHEREAS, Lodi's purchases under this Resolution will conform to the accepted
transaction types and other provisions of the City of Lodi Energy Risk Management Policies,
adopted on January 18,2006, by City Council Resolution No. 2006-19.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
authorize the City Manager or the Electric Utility Director to enter into contractual arrangements
for electric energy and capacity and fuel and related services to reduce Lodi Electric Utility's
open position to meet its service obligations in accordance with the City of Lodi Energy Risk
Management Policies and the approval of the City of Lodi Energy Risk Oversight Committee;
and
BE IT FURTHER RESOLVED that the Lodi City Council does hereby authorize the
Electric Utility Director or her designee to administer any such contract.
Dated: July 7, 2010
I hereby certify that Resolution No. 2010-115 was passed and adopted by the Lodi City
Council in a regular meeting held July 7, 2010, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN
COUNCIL MEMBERS— Hansen, Johnson, Mounce, and
Mayor Katzakian
COUNCIL MEMBERS — None
COUNCIL MEMBERS — Hitchcock
COUNCIL MEMBERS — None
2010-115
DI JOHL
City Clerk