HomeMy WebLinkAboutAgenda Report - November 5, 2003 I-05l
t
CITY OF LODI
COUNCIL COMMUNICATION
AGENDA TITLE: Adopt resolution authorizing the City Manager to execute a new contract between Cottage
Bakery and the City of Lodi (EUD) that will transition this customer to a standard rate over a
three-year period (I=UD)
MEETING DATE: November 5, 2003
PREPARED BY: Electric Utility Director
RECOMMENDED ACTION: Adopt a resolution authorizing the City Manager to execute a new contract
between Cottage Bakery and the City of Lodi (EUD) that will transition this
customer to a standard rate over a three-year period.
BACKGROUND INFORMATION: Before the energy crisis of 2001, contracts were undertaken with large
industrial customers, including Cottage Bakery, at a time when power
costs were substantially below today's costs. Also, when these
contracts were undertaken, a non -permanent economic development incentive was part of the contract
structure. Some of these contracts were at retail rates on the order of 5 cents a kilowatt-hour and have not
changed for over 5 years. These rates are substantially below our cost of power currently, 7 to 8 cents a
kilowatt-hour. Other customers have seen substantial bill change in the last two years.
The contract with Cottage Bakery has now expired. The Electric Utility Department (EUD) proposes to transition this
customer to a regular EUD rate over a three-year period, (that the customer is eligible for) given their level of
consumption. This contract will transition to 1-1. The 1-1 rate is highly competitive, and is the rate that General Mills is
under. The three-year transition period should allow this customer to adjust.
Electric Utility staff has conducted several meetings with representatives of Cottage Bakery in recent weeks to discuss
the proposed transition rate contract. This contract was removed from the October 1, 2003 City Council agenda,
when five other transition rate contracts were approved, because the president of Cottage Bakery was out of the
country on business. Electric Utility staff respectfully recommends approval of this proposed transition rate contract
as submitted.
(Note: the contract methodology that specifies the transition is the same across all contracts. The Cottage Bakery
contract is attached).
FUNDING: None
Alan N. Vallow
Electric Utility Director
PREPARED BY: Rob Lechner, Manager of Customer Service and Programs
ANVIRUIst
C: City Attorney
Finance Director
APPROVED: Zf"LE
on Flynn - City Manager
RATE AGREEMENT
BETWEEN
COTTAGE BAKERY
AND
THE CITY OF LODI
This Agreement is made by and between Cottage Bakery ("Customer") and the CITY OF LODI ("City"),
collectively called "the Parties" and individually as "Party". This Agreement supersedes the City's mandatory Rate
Schedule assignment for this Customer.
WITNESSETH:
WHEREAS, City operates an electric utility system supplying electric power to City customers; and
WHEREAS, Customer is a customer whose rate agreement contract between the City has expired; and
WHEREAS, City desires to transition the Customer to their eligible rate schedule over a four year period so as to
mitigate the immediate effects of coming under the eligible rate; and
NOW, THEREFORE, the Parties hereto agree as follows:
Section 1. Definitions. Whenever used in this Agreement, in either the singular or plural number, the following
terms shall have the following respective meanings
1.1 "Agreement" is this contract.
1.2 "City" is the City of Lodi, a California Municipal Corporation.
1.3 "Customer" is "Facility" is the Customer's facility receiving service as defined in Exhibit A.
1.4 "Account" is defined in Exhibit A for the Customer.
1.6 "Parties" are collectively Customer and City.
1/8
1.7 "kWh" is a kilowatt-hour, an energy charge -billing unit
1.8 "billing cycle" is the monthly bill.
1.9 "Force Majeure", as used herein, means unforeseeable causes beyond the reasonable control of and
without the fault or negligence of the Party claiming force maj eure. Such an occurrence may include,
but is not limited to, acts of God, labor disputes, sudden actions of the elements, actions or inactions
by federal, state and municipal agencies, and actions or inactions of legislative, judicial, or regulatory
agencies.
1.10 "eligible rate" is the scheduled rate at which the Customer would qualify given historical consumption
as per accounts totalized in Exhibit A.
1.11 "totalization" is the aggregation of individual meter data so as to create a single billed account under a
single rate schedule.
1.12 "current actual average rate winter/summer" is the average based on the total energy charges,
demand charges and special discounts totaled divided by total energy (kWh) that apply to the
contract accounts defined in Exhibit A for a typical actual monthly bill in the season designated for
the annual period before the start of the anticipated phase of rate transition.
1.13 "current eligible average rate winter/summer" is the average based on the total energy charges,
demand charges and market cost adjustments and other normal applicable charges totaled divided
by total energy (kWh) that apply to the contract accounts defined in Exhibit A for the eligible rate
utilizing actual billed energy and demand available from the current actual bill average rate
determination by season.
2/8
Section 2. Rate Application.
2.1 The billing cycle charge for the Customer shall transition to the eligible rate for the Facilities and Accounts defined
in Exhibit A over a four year phased transition. Exhibit A also defines what Facilities and Accounts will be totalized
or treated as individual facilities for billing purposes. There shall be four phases to the transition to full billing under
the eligible rate as follows:
oc Phase I October 1, 2003 to September 30th, 2004, Phase Setting = 3
oc Phase II October 1, 2004 to September 30th, 2005, Phase Setting =3
oc Phase III October 1, 2005 to September 30th, 2006, Phase Setting =2
oc Phase IV October 1, 2006 on (the customer would then be on the targeted rate)
The first three phases will provide a transition rate that is at a discount of the current eligible. At the fourth phase the
Customer will be at the eligible rate and the contract will expire with normal rate procedures applying. In the two months
before the commencement of Phases I to III, a determination of the phased rates will be made. The current average
winter rate and average summer rate will be determined. The average eligible winter rate and summer rate will be
determined for the eligible rate schedule. The transition rates will be the eligible rate schedule by season discounted by the
transition percentage. The transition percentage is calculated by season and is determined as follows:
Where "A" equals seasonal average rate;
"E" equals seasonal eligible rate;
"P" equals phase setting from above;
"/" Is a divide operator;
"*" Is a multiply operator;
64^51 Is a to the power operator;
3/8
Transition Percentage = (A*(E/A)^(1/P))/E
The transition percentage holds only for the coming phase. A new transition percentage is determined before the start of
each phase. If the transition percentage exceeds 100%, the eligible rates apply. The City shall provide the Customer a
copy of the determined transition discounted rates before the start of a new transition Phases I to III.
Section 3. Term of Agreement
ement
3.1 Upon signing by all Parties, this Agreement shall be binding for bills rendered on or after October
1st, 2003, and shall remain in effect subject to Paragraphs 3.2 and 3.3 below, for bills rendered
through September 30th, 2006.
3.2 If either parry fails to perform any of the provisions of this Agreement, the other party may, by
written notice given within thirty days of such failure to perform, tenninate this agreement. Customer
may appeal such termination in writing to the Electric Utility Director. This is in addition to any other
legal recourse Customer may have.
3.3 This Agreement cannot be terminated without mutual consent of the Parties.
Section 4. Force Majeure.
4.1 If either Parry because of Force Majeure is rendered wholly or partly unable to perform its
obligations under this Agreement, that Party shall be excused from whatever performance is affected
by the Force Majeure to the extent so affected, provided that:
The non-performing Party, within two weeks after the occurrence of the Force Majeure, shall give
the other party a written report describing the particulars of the occurrence.
The suspension of performance is of no greater scope and of no longer duration than is required by
the Force Majeure.
EM
4.2 No obligations of either Parry which arose before the occurrence causing the suspension of
performance are excused as a result of the occurrence.
4.3 The non-performing Party uses its best efforts to remedy its inability to perform. This sub -paragraph
shall not require the settlement of any strike, walkout, lockout or other labor dispute on terms which,
in the sole judgement of the Party involved in the dispute, are contrary to its interest. It is understood
and agreed that the settlement of strikes, walkouts, lockouts or other labor disputes shall be entirely
within the discretion of the Party having the difficulty.
Section 5. Assi nug rants.
5.1 Neither Party shall voluntarily assign its rights nor delegate its duties under this Agreement without
the written consent of the other Party.
Section 6. Amendments.
6.1 This Agreement may be amended only by written instrument executed by the Parties or their
successors.
Section 7. Severability.
7.1 In the event that any of the terms, covenants, or conditions of this Agreement shall be held invalid,
the Parties intend that all other terms, covenants, and conditions and their application shall not be
affected thereby, but shall remain in force and effect unless a court holds that such provisions are not
severable from all other provisions of this Agreement.
Section 8. Governing Law
8.1 This Agreement shall be interpreted, governed by, and construed under the laws of the State of
California.
5/8
Section 9. Counterparts.
9.1 This Agreement may be executed in counterparts, all or any of which shall be regarded for all
purposes as one original and shall constitute and be but one and the same instrument.
Section 10. Headings.
10.1 The headings to the articles in this Agreement are intended for convenience only and not for the
purpose of interpreting the provisions of this Agreement.
Section 11. Notices
11.1 Any notice, demand or request required or permitted to be given by either Party to the other and any
instrument required or permitted to be tendered or delivered by either Party to the other may be so
given, tendered or delivered, as the case may be, by depositing the same in any United States Post
Office with postage prepaid, for transmission by certified or registered mail, addressed to the Parry, or
personally delivered to the Parry, at the address designated below. Changes in such designation may be
made by notice similarly given.
11.2 All written notices or questions shall be directed as follows:
To City: ELECTRIC UTILITY DIRECTOR
CITY OF LODI
1331 SOUTH HAM LANE
LODI CA 95242-3995
To Customer: COTTAGE BAKERY
E, 9j ak!111811Ell ;a0soIP]Ili W�l
LODI, CA 95240
Section 12. Non -waiver.
12.1 None of the provisions of the Agreement shall be considered waived by either Parry except when
such waiver is given in writing. The failure of any Parry at any time or times to enforce any right or
obligation with respect to any matter arising in connection with this Agreement shall not constitute a
waiver as to future enforcement of that right or obligation or any right or obligation of the Agreement.
Section 13. Warranty of Authority
13.1 Each of the Parties which has executed and delivered this Agreement represents and warrants that it
has agreed to be bound by all the terms, covenants, and conditions of this Agreement and has acted
with all the requisite capacity and authority and approval of its governing body.
7/8
IN WITNESS THEREOF, the Parties have caused this Agreement to be executed by their
duly authorized officers and their seal to be affixed, as of the day and year herein written.
CITY OF LODI
H. Dixon Flynn
City Manager
Date
APPROVED AS TO FORM:
Randall A. Hays
City Attorney
ATTEST:
Susan J. Blackston
City Clerk
CADocurnents and SetfingEgperrin\Local Settings\Ternporary Internet Files\OLKCQcottage bakery transition rate contract.doc
COTTAGE BAKERY
Terry Knutson
President
Date
Exihibit A
Customer Cottage Bakery
Current Contract Accounts
Rate
Voltage
Meter
Account #
Location Designation
Location Address
C
Secondary
35928
4553-4
40 E. Neuharth Dr.
All meters are
D1
Secondary
29871
4553-4
40 E. Neuharth Dr.
labled according
D2
Secondary
29872
4553-4
40 E. Neuharth Dr.
to letters
D3
Secondary
29873
4553-4
40 E. Neuharth Dr.
B
Secondary
30013
4553-4
40 E. Neuharth Dr.
If eligible rate does not have a secondary rate, the rate will be the primary rate plus 5%
Transition rate discount does not apply to new facility
Rate Irimary/Secondal Meter I Account # I Location Designation I Location Address
1-1 Secondary 35784 49663-8 Inside Facility S. End 1831 S. Stockton
NOW, THEREFORE, BE 1T° RESOLVED that the .Lodi City Councildoes hereby
authorize the C.ity Manager to.execute a contract between the City of Loi anti Cottage
Bakery
transitioning Cottage Bakery to a standard electric utility rate over a three -ye
period.
Dated: November 5, 2.003
I !hereby certify that. Resolution .No. 2003-211 was passed and adopted by the
City Cotrn it of. the City of Lodi in a regular meeting held November 5, 2003, by the
following vote,
MEMBERSAYES: COUNCIL Howard,and
Mayor a
2003-211