HomeMy WebLinkAboutResolutions - No. 2011-63RESOLUTION NO. 2011-63
A RESOLUTION OF THE LODI CITY COUNCIL APPROVING
THE NORTHERN CALIFORNIA POWER AGENCY NATURAL GAS
PROGRAM AGREEMENT AND AUTHORIZING EXECUTION BY
THE CITY MANAGER AND ADMINISTRATION BY THE
ELECTRIC UTILITY DIRECTOR
WHEREAS, the City of Lodi ("City") is a project participant in natural gas fired
generation facilities and has a need to procure natural gas through the use of forward
market purchases to assure greater rate stability for its customers; and
WHEREAS, in response to this need, Northern California Power Agency
("NCPA) has developed a Natural Gas Purchase Program that can be used by NCPA
members to purchase natural gas as fuel for electric power generation for the benefit of
their respective customers; and
WHEREAS, the City is a member of NCPA; and
WHEREAS, the City may elect to become a participant in the Natural Gas
Purchase Program by executing the Natural Gas Program Agreement, under which the
City can direct NCPA to purchase natural gas, through the use of forward market
purchases or physical call options, to reduce the portion of its natural gas needs that
would otherwise have to be obtained in a potentially volatile spot market; and
WHEREAS, the City, as a participant in the Natural Gas Purchase Program, may
also elect to have the opportunity to stabilize its long-term natural gas fuel costs and
budgets through the use of financial transactions, and in order for the City to use
financial transactions to stabilize its natural gas fuel costs, the City must execute the
Financial Addendum attached to the Natural Gas Program Agreement, and the election
to use financial transactions is purely voluntary and is not required to participate in the
Natural Gas Purchase Program; and
WHEREAS, the City, as a participant in the Natural Gas Purchase Program, may
direct NCPA to procure natural gas on its behalf from third parties using competitive bids
submitted in response to a NCPA Request for Proposals, or through direct purchases
from the State Department of General Services ("DGS") Gas Program, or its successor
program, so long as the DGS program is available; and
WHEREAS, all procurement of natural gas under the Natural Gas Purchase
Program must meet certain conditions listed in the Natural Gas Program Agreement;
and
WHEREAS, NCPA will procure natural gas on behalf of the City using industry -
standard forms of agreement for natural gas purchases, including NCPA's standard
form North American Energy Standards Board ("NAESB) base contract, and associated
special provisions, and such agreements for natural gas purchases may be modified in
the discretion of the NCPA General Manager and NCPA's General Counsel, after
consultation with the City; and
WHEREAS, NCPA has developed a model credit support addendum, and
associated special provisions to the model credit support addendum, to be used in
conjunction with the NCPA standard form NAESB base contract; and
WHEREAS, costs for participating in the Natural Gas Purchase Program include
a) a monthly fixed charge, b) a variable charge that is allocated to each participant,
including the City, in accordance with the Natural Gas Program Agreement,
c) transaction specific costs associated with the City's natural gas transactions,
d) commodity costs specific to the City's natural gas transactions, and e) initial start-up
costs, including staff costs, legal costs and costs associated with establishing the third
party gas purchase agreements that will be used under the Natural Gas Purchase
Program; and
WHEREAS, the City, as a participant in the Natural Gas Purchase Program, is
required to deposit funds into a Security Account held by NCPA equal to the highest
three (3) months of estimated commodity costs for all natural gas transactions the City
has or will subscribe to as estimated by NCPA, prior to entering into any natural gas
transactions.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby
authorize the City Manager to execute the NCPA Natural Gas Program Agreement to
provide a means for the City cf Lodi to reduce the portion of its natural gas needs that
would otherwise have to be obtained in a potentially volatile spot market, through the
use of transactions provided for under Natural Gas Program Agreement; thereby
assuring greater rate stability for its customers with administration by the Electric Utility
Director.
Dated: April 20, 2011
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hereby certify that Resolution No. 2011-63 was passed and adopted by the City
Council of the City of Lodi in a regular meeting held April 20, 2011, by the following vote:
AYES: COUNCIL MEMBERS— Hansen, Katzakian, Nakanishi, and
Mayor Johnson
NOES: COUNCIL MEMBERS— None
ABSENT: COUNCIL MEMBERS — Mounce
ABSTAIN: COUNCIL MEMBERS— Nwe
HL
City Clerk
2011-63