HomeMy WebLinkAbout2011-23 Natural Gas Program AgmtRESOLUTION NO. 2011- 23
RESOLUTION OF CITY OF UKIAH APPROVING
EXECUTION OF THE NATURAL GAS PROGRAM AGREEMENT
WHEREAS, City of Ukiah 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, City of Ukiah is a member of NCPA; and
WHEREAS, City of Ukiah may elect to become a Participant in the Natural Gas
Purchase Program by executing the Natural Gas Program Agreement, under which City of
Ukiah 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, City of Ukiah, 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 City of Ukiah to use financial
transactions to stabilize its natural gas fuel costs, City of Ukiah 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, City of Ukiah, 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 City of Ukiah using industry-
standard forms of agreement for natural gas purchases, including NCPA's standard form
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 City of Ukiah; 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 City of
Ukiah, in accordance with the Natural Gas Program Agreement, c) transaction specific costs
associated with City of Ukiah's natural gas transactions, d) commodity costs specific to City of
Ukiah'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, City of Ukiah, 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 City of Ukiah has or will
subscribe to as estimated by NCPA, prior to entering into any natural gas transactions, and
NOW, THEREFORE BE IT RESOLVED, that the City Council of the City of Ukiah
delegates authority to City Manager and Electric Utility Director to execute the Natural Gas
Program Agreement to provide a means for City of Ukiah 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 forward market purchases of natural gas; thereby assuring greater rate stability for its
customers.
PASSED AND ADOPTED by the City of Ukiah Council on May 4, 2011, by the following roll call
vote:
AYES: Councilmembers Landis, Thomas, Crane, Baldwin, and Mayor Rodin
NOES: None
ABSENT: None
ABSTAIN: None `
Mari Rodin, Mayor
T ST:
J nne M. Currie, City Clerk
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