HomeMy WebLinkAboutAgenda Report - October 30, 2001 B-04 SM0
CITY OF LODI COUNCIL COMMUNICATION
AGENDA TITLE: Adopt resolution authorizing the City Manager and the Electric Utility Director to execute
electric energy and natural gas purchase and sale agreements (EUD)
MEETING DATE: October 30, 2001
PREPARED BY: Electric Utility Director
RECOMMENDED ACTION: That the City Council authorize the City Manager and the Electric Utility
Director to execute electric energy and natural gas purchase and sale
agreements for periods up to fifteen (15) years.
BACKGROUND INFORMATION: At the February 20, 2001, City Council Meeting, the City Council authorized
the City Manager and the Electric Utility Director to enter into electric energy
and natural gas purchase and sale contracts on behalf of the City of Lodi for
periods up to ten (10) years.
Electric energy and natural gas markets have moderated considerably since the highly volatile winter and spring of
2001. The volatility exhibited in the energy markets left most utilities adopting new policies of risk avoidance for future
years. Risk Management is a process which must be continuously monitored and adapted to an ever changing
market environment. To that extent, new opportunities exist to restructure both short and long-term electric energy
and natural gas transactions. The most promising opportunities are in energy related products with a term in excess
of ten years.
In order to meet appropriate bid price deadlines, it is imperative that the City be in a position to authorize purchase and
sale transactions within the time frame allowed by the market participants — often less than 24 hours.
All reasonable attempts will be made by City staff to continue to bring term transactions before the Council where time
permits. When doing so would jeopardize a transaction deemed to be in the City's best interest, it is requested that
the City Manager or Electric Utility Director be authorized to approve electric energy and natural gas purchase and
sales transactions for a period up to fifteen (15) years.
FUNDING: Through existing Bulk Power Purchases zi
Alan N. Vallow
Electric Utility Director
ANV/1st
C: City Attorney
Finance Director
APPROVED:
H. Dixon Flynn - City Manager
RESOLUTION NO. 2001-246
A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE CITY
MANAGER AND THE ELECTRIC UTILITY DIRECTOR TO EXECUTE
ELECTRIC ENERGY AND NATURAL GAS PURCHASE AND
SALE AGREEMENTS
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WHEREAS, at the February 20, 2001, City Council meeting, the City Council authorized
the City Manager and the Electric Utility Director to enter into electric energy and natural gas
purchase and sale contracts on behalf of the City of Lodi for periods up to ten (10) years; and
WHEREAS, electric energy and natural gas markets have moderated considerably
since the highly volatile winter and spring of 2001. The volatility exhibited in the energy markets
left most utilities adopting new policies of risk avoidance for future years. Risk Management is
a process, which must be continuously monitored and adapted to an ever-changing market
environment. To that extent, new opportunities exist to restructure both short and long-term
electric energy and natural gas transactions. The most promising opportunities are in energy
related products with a term in excess of ten years; and
WHEREAS, in order to meet appropriate bid price deadlines, it is imperative that the
City be in a position to authorize purchase and sale transactions within the time frame allowed
by the market participants — often less than 24 hours; and
WHEREAS, all reasonable attempts will be made by City staff to continue to bring term
transactions before the Council where time permits. When doing so would jeopardize a
transaction deemed to be in the City's best interest, it is requested that the City Manager or
Electric Utility Director be authorized to approve electric energy and natural gas purchase and
sales transactions for a period up to fifteen (15) years.
NOW, THEREFORE, BE IT RESOLVED, that the Lodi City Council does hereby
authorize the City Manager and the Electric Utility Director to execute electric energy and
natural gas purchase and sale agreements for periods up to fifteen (15) years.
Dated: October 30, 2001
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I hereby certify that Resolution No. 2001-246 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
2001-246