HomeMy WebLinkAboutResolutions - No. 2006-20RESOLUTION NO, 2006-20
A RESOLUTION OF THE LODI CITY COUNCIL
AUTHORIZING THE CITY MANAGER AND ELECTRIC
UTILITY DIRECTOR TO PROCURE ENERGY
REQUIREMENTS THROUGH FISCAL YEAR 2007
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WHEREAS, the City of Lodi must procure wholesale energy in order to meet its
load serving obligations to its customers for fiscal year 2007 and beyond, with the
amount of wholesale energy that must be procured ranging from 42% to 94% of Lodi's
total load serving obligation; and
WHEREAS, to begin reducing Lodi's exposure to this market volatility, staff
recommends procurement through Northern California Power Agency (NCPA) of 80% to
90% of Lodi's net open position for the 3rd quarter of 2006 and 65% to 75% of Lodi's net
open position for the 4th quarter of 2006, which will help to address the immediate issue
associated with short-term volatility; and
WHEREAS, staff further recommends that the balance of fiscal year 2007, or ist
and 2nd quarters of 2007, will need to be procured through contracts executed directly by
the City of Lodi, which will be brought before the City Council for approval at a later date;
and
WHEREAS, similarly, additional longer-term resource procurement decisions,
which begin reducing open positions two and three years out, will establish further price
certainty and either allow Lodi to take advantage of decreasing prices in the future on
the balance of Lodi's net open position or reduce Lodi's exposure to rising prices on the
balance of the net open position.
NOW, THEREFORE, BE IT RESOLVED by the Lodi City Council that:
The City Manager and Electric Utility Director are hereby authorized to procure
energy for fiscal year 2007 in the amounts of the net open position and at costs
of up to 150% of costs of procurement of the net open position as estimated and
shown on Exhibit A attached hereto.
• That NCPA is authorized to implement automatic purchases of the net open
position for the 3rd and 4th quarters of 2006 in amounts specified by the City
Manager or Electric Utility Director should prices reach thresholds established by
the City Manager or Electric Utility Director and a net open position for the
quarter remain.
• That the City Manager and the Electric Utility Director are hereby authorized to
direct NCPA to replace any amount of energy at currently prevailing prices in the
event of a failure or disablement of any one of Lodi's owned resources,
O City staff shall report to Council, in accordance with Energy Risk Management
Policies, on the status and cost of purchases for fiscal year 2007.
• City staff, through the Risk Oversight Committee established as part of the
Energy Risk Management Policies, shall continue to develop and refine a long-
term foddering strategy for energy procurement over the next 36 months.
• City Council hereby rescinds any previous procurement authorization granted to
the City Manager and/or Electric Utility Director, including but not limited to
Resolution No, 2001-246, and replaces those authorizations with the authority
granted under this Resolution.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
authorize the City Manager and Electric Utility Director to procure energy required to
meet load -serving obligations of Lodi Electric through fiscal year 2007 in accordance
with the City of Lodi Energy Risk Management Policies (at an amount not to exceed
$39.8 million).
Dated: January 18, 2006
I hereby certify that Resolution No. 2006-20 was passed and adopted by the Lodi
City Council in a regular meeting held January 18, 2006, by the following vote:
AYES: COUNCIL MEMBERS — Beckman, Hansen, Johnson, Mounce,
and Mayor Hitchcock
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS — None
SUSAN J. BLACKSTON
City Clerk
2006-20
Attachment 2 - Cost of Procuring Wholesale Energy at January 5, 2006 Prevailing Prices
Jan, 5, 2006
2006 July
August
September
October
November
December
Lodi Total Lodi HLH
Surp(usf(L) halt)_) Load % of Load SurptusI{0eficit)
(23,022) 50,000 -46.0% (11,075)
(25,019) 51,590 -54.3% (17,244)
{18,857) 44,534 -42.3% (9,420)
(21.547) 38,724 -55.6% (13,083)
(33,293) 37,593 -88.6% (22,643)
(36,412) 38,673 -942% (24,862)
Lodi LLH
Lo % 01 Load Surpitaa!{i3eficit){ Load l% of Load
HLH LLH
$.4(5M-.1 i ${fdWH
31,145 -35.8%, (11:947)`. 18,855 -63.4% $ 95.50 1 72.50
34,620 -49.8% (19,774)- 16,969 -83,5°/ 1 95.50 5 72.50
28,359 -33.2% (9,437) 16,175 -58.3%, 1 95.50 1 72,53
24,852 -52.6% (8,464) 13.872 -61.0% $ 91.75 $ 75.50
23,833 -95.0% (10,850) 13,759 -77.4% $ 91.75 1 75.50
23,641 -104,3% (11,750) 15,032 -78.2%- $ 91,75 1 75,50
2007 January (33,164) 38,621 -85.9% (20,399) 24,749
February (29,008) 34,883. -83.2% (17,334) 22,636
March (31.061) 37,564 -82.5% (21,350) 24,603
April (21,249) 38,029 •55,9% (11,925) 24,093
May (18,024) 40,735 -44.2% (11,612) 26,442
June (16,910) 44,885 -42,1% (11,521) 29,795
FY Total (312,564) 495,933 -63,0% (191,969) 318,683
-61.2% (13,064) 13,873 -942% $ 94.75 S 78.50
-76.6% (11,874)- 12,2.47 -95.3% $ 94.75 5 75.50
-86.8% (9,711) 13,060 -74416 $ 94.75 $ 78.50
49.556 (9,324) 13,930 -66,956 1 87.75 $ 6531
-43 9% (6,411) 14,293 44.9% $ 87.75 5 85.81
-38.8°% (7,389) 15,183 48.7% $ 80.00 $ 60.00
-60.2% (120,595)'' 177,249 -68.0%
Assumptions: Zero STiG and G71 generation.
Average hydro conditions for Calaveras Project, Western Base Resource, and market prices.
Forward electricity prices based on Jan. 5, 2006 TFS Energy Indications.
There are no forward energy transactions tor Lodi during this period,
tNDtCATEt77 COST OF DEFICIT ENERGY BALANCES
Tota{ Cost t11,td Cost LLH cost
2006 Jelly $ (1,923,781) $ (1,057,615) 1 (866,166)
August $ {2,427,955) $ (1,646,808) $ (781,147)
September, $ {1,583,761) $ {899,411) $ (684.150)
October 3 (1,839,434) $ (1,200,399) $ (639,035)
November $ (2,881541) $ (2,077,482) $ (604,069)
December $ (3,149,864) $ {2,262,739) 5 (887,125)
2007 January, $ (2,929,955) $ (1,904,420) $ (1,025,534)
February $ (2,558,835) $ (1,642,429) 3 (916,406)
March $ (2,765,232) $ (2,022,919) 1 (762,313)
April $ (1,660,023) $ {1,046,394) $ {613,829)
May $ (1,440,915) $ (1,018,963) $ (421,938)
June $ (1,365,033) $ {921,695) 1 (443,338)
Total Juty-Juni $ (26,546,343)1 $ (17,701,494) 3 (8,844,849)
SPOT net PURL. COST (est)
&WM (eve-) $ 84.9 Imwh $ 92.2 lmwh $ 73,3 /n wh
5 95,50 $ 72.59
$ 91.75 5 75.50
3 94,75 $ 78.50
$ 85.17 $ 63.38