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Home My WebLink AboutAgenda Report - October 30, 2001 B-02 SMCITY OF LODI COUNCIL COMMUNICATION A AGENDA TITLE: Adopt resolution authorizing the City Manager to execute Exhibit A of the Master Power Purchase and Sale Agreement between the City of Lodi and the State of California Department of Water Resources (EUD) MEETING DATE: October 30, 2001 PREPARED BY: Electric Utility Director RECOMMENDED ACTION: That the City Council adopt a resolution authorizing the City Manager to execute Exhibit A of the Master Power Purchase and Sale Agreement between the City of Lodi and the State of California Department of Water Resources. BACKGROUND INFORMATION: The State of California Department of Water Resources (DWR) and the City of Lodi Electric Utility Staff have been working for several months to develop the framework for a long-term relationship whereby DWR and the City would have the ability to conduct a variety of mutually benefiting long-term energy related transactions. In this instance, DWR has requested that the City enter into an agreement whereby the City would sell to DWR 15Mw of firm power for a period of fifteen (15) years. City staff believes that such a transaction is consistent with the long- term interests of the City. The terms and conditions of the transactions are well known other than price. As previously noted, energy markets operate on a very short time frame related to pricing provisions. To the extent this agreement is executed by the City Manager, the pricing terms will be demonstrably beneficial to the City. City Staff respectfully Power Purchase and beneficial to the City. FUNDING: ANV/1st City Attorney requests City Council authorization for the City Manager to execute Exhibit A of the Master Sale Agreement between the City of Lodi and DWR providing the agreement is financially Through existing Bulk Power Purchases A //� ae4"__ Alan N. Vallow Electric Utility Director APPROVED: H. D6'IFry'6- City M ager I atl A Exhibit A CONFIDENTIAL MASTER POWER PURCHASE AND SALE AGREEMENT CONFIRMATION LETTER (2001A Transaction -- 15 -Year Firm Power) This confirmation letter shall confu-m the Transaction agreed to on 2001 between the City of Lodi ("Party A") and State of California Department of Water Resources with respect to its responsibilities pursuant to California Water Code Section 80000 et seq. regarding the Department of Water Resources Electric Power Fund separate and apart from its powers and responsibilities with respect to the State Water Resources Development System ("Party B') regarding the sale/purchase of the Product under the terms and conditions as follows: Seller: City of Lodi, Electric Utility Department (Party A) Buyer: State of California Department of Water Resources (Party B) Product: [J Into , Seller's Daily Choice [] Firm (LD) [] Firm (No Force Majeure) [] System Firm (Specify System: ) [] Unit Firm ® Other: CAISO Firm Energy (See Special Condition 2) [] Transmission Contingency (If not marked, no transmission contingency) [] FT -Contract Path Contingency [] Seller [] Buyer [) FT -Delivery Point Contingency [] Seller [] Buyer [] Transmission Contingent [] Seller [] Buyer [J Other transmission contingency (Specify: ) Quantity: 15 MW, to be delivered each Monday through Saturday during the Delivery Period, during Hour Ending 0700 through Hour Ending 2200 ("6x16"). CDWR — Lodi PPA Paize 1 of 3 11:21 AM:10/25/01 Delivery Point: Contract Price: CONFIDENTIAL NP 15, or its successor. for all energy delivered to Buyer at the Delivery Point. Delivery Period: June 1, 2002 through May 31, 2017. Special Conditions: (1) See Cover Sheet to Master Agreement. (2) The Product shall be CAISO Firm Energy with liquidated damages as determined pursuant to Article 4 of the Agreement. "CAISO Firm Energy" means a Product under which the Seller shall sell and the Buyer shall purchase a quantity of energy equal to the hourly quantity without Ancillary Services, such as but not limited to Spinning Reserves, Non - Spinning Reserves, Regulation, and Replacement Reserves. The Product shall be scheduled as a Scheduling Coordinator to Scheduling Coordinator transaction pursuant to the applicable tariff and protocol provisions of the California Independent System Operator ("CAISO") or its successors, for which the only excuse for failure to deliver or receive is an "Uncontrollable Force" as defined in the CAISO Tariff on file at Federal Energy Regulatory Commission ("FERC"). (3) In no event may delivery be curtailed for economic reasons. (4) Notwithstanding anything to the contrary herein, Seller shall arrange and be responsible for transmission service to the Delivery Point, and shall obtain Scheduling Coordinator services necessary to deliver the Product to the Delivery Point. Seller shall be responsible for all charges due to the CAISO, and entitled to receive all payments from the CAISO, related to deviations of Seller's actual delivery of power from Seller's scheduled delivery of power. (5) Notwithstanding anything to the contrary herein, Buyer shall arrange and be responsible for transmission service from the Delivery Point, and shall obtain Scheduling Coordinator services necessary to accept delivery of the Product at the Delivery Point. Buyer shall be responsible for all charges due to the CAISO other than those charges identified in Special Condition 4 above. CDWR — Lodi Agreement Page 2 of 3 11:21 AM:10/25/01 DRAFT CONFIDENTIAL This confirmation letter is being provided pursuant to and in accordance with the Master Power Purchase and Sale Agreement dated 12001 (the "Master Agreement') between Party A and Party B, and constitutes part of and is subject to the terms and provisions of such Master Agreement. Terms used but not defined herein shall have the meanings ascribed to them in the Master Agreement. City of Lodi LIM Name: Title: Phone No: Fax: State of California Department of Water Resources separate and apart from its powers and responsibilities with respect to the State Water Resources Development System By: Name: Thomas M. Hannigan Title: Director Phone No: (916) 653-7007 Fax: (916) 653-0943 CDWR — Lodi Agreement Page 3 of 3 11:21 AM:10/25/01 RESOLUTION NO. 2001-244 A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY MANAGER TO EXECUTE EXHIBIT "A" OF THE MASTER POWER PURCHASE AND SALE AGREEMENT BETWEEN THE CITY OF LODI AND THE STATE OF CALIFORNIA DEPARTMENT OF WATER RESOURCES ---------------------------------------------------------------- ---------------------------------------------------------------- WHEREAS, the State of California Department of Water Resources (DWR) and the City of Lodi Electric Utility Staff have been working for several months to develop the framework for a long-term relationship whereby DWR and the City would have the ability to conduct a variety of mutually benefiting long-term energy related transactions; and WHEREAS, in this instance, DWR has requested that the City enter into an agreement whereby the City would sell to DWR 15Mw of firm power for a period of fifteen (15) years City staff believes that such a transaction is consistent with the long- term interests of the City. The terms and conditions of the transactions are well known other than price. As previously noted, energy markets operate on a very short time frame related to pricing provisions. To the extent this agreement is executed by the City Manager, the pricing terms will be demonstrably beneficial to the City; and WHEREAS, City Staff respectfully requests City Council authorization for the City Manager to execute Exhibit A of the Master Power Purchase and Sale Agreement between the City of Lodi and DWR providing the agreement is financially beneficial to the City. NOW, THEREFORE, BE IT RESOLVED, that the Lodi City Council does hereby authorize the City Manager to execute Exhibit "A" of the Master Power Purchase and Sale Agreement between the City of Lodi and the State of California Department of Water Resources presented here in substantial final form. Dated: October 30, 2001 ------------------------------------------------------------------ ------------------------------------------------------------------ I hereby certify that Resolution No. 2001-244 was passed and adopted by the City Council of the City of Lodi in a special meeting held October 30, 2001 by the following vote: AYES: COUNCIL MEMBERS — Hitchcock, Howard and Mayor Nakanishi NOES: COUNCIL MEMBERS — None ABSENT: COUNCIL MEMBERS — Land ABSTAIN: COUNCIL MEMBERS — Pennino SUSAN J. BLACKSTON City Clerk 2001-244