HomeMy WebLinkAbout2013/06/11 Item 09CITY COUNCIL
AGENDA STATEMENT
.v
~` ~~ CITY OF
~`CHUTAVISTA
6/11/13, Item
ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROVING CONTINUATION OF
ELECTRICITY COMMODITY PURCHASES FROM SHELL
ENERGY AND AUTHORIZING THE CITY MANAGER TO
EXECUTE ALL DOCUMENTS IN C JUNCTION WITH
THE PURCHASES
SUBMITTED BY: DIRECTOR OF PUBLIC WORKS
ADMINISTRATIV SERVICES M GER
REVIEWED BY: CITY MANAGF.
ASSISTANT CITY MANAGEI2~
4/STHS VOTE: YES ~ NO ~X
SUMMARY
In order to help foster price competiveness, the California Public Utilities Commission in
1998 began allowing certain energy customers to purchase electricity from third-party
providers (instead of their local Investor-Owner Utility), know as Direct Access Service.
The City of Chula Vista purchases electricity for four municipal buildings from Shell
Energy under Direct Access Service. The City is now updating its electricity procurement
rates with Shell Energy, which are similaz to last year's and approximately 40% lower than
historical commodity prices. This approval would allow for continuation of the electricity
commodity purchasees for up to 3-yeazs.
ENVIRONMENTAL REVIEW
The Development Services Director has reviewed the proposed activity for compliance
with the California Environmental Quality Act (CEQA) and has determined that the
activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines
because the proposal consists of a continuing administrative action involving the
purchase of electricity. Therefore, pursuant to Section 15060(c)(3) of the State CEQA
Guidelines the activity is not subject to CEQA review.
RECOMMENDATION
Council adopt the resolution.
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6/11/13, Item
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BOARDS/COMMISSION RECOMMENDATION
Not applicable.
DISCUSSION
In 1998, the California Public Utilities Commission began implementation of Assembly
Bill 1890 (The Electric Utility Industry Restructuring Act) to make the generation of
electricity more competitive in California. One of the key provisions was the creation of
"Direct Access Service" options in which commercial, industrial, and agricultural
customers could select to purchase electricity from athird-party Electric Service
Provider, instead of from the local Investor-Owner Utility (such as San Diego Gas &
Electric). Direct Access allows these customers to potentially negotiate better electricity
commodity rates or higher renewable energy power mixes from the open mazket. The
local utility still provides the transmission and distribution services for Direct Access
customers within their service temtories.
During the energy crisis in 2001, the Department of Water Resources was required to
issue revenue bonds and enter into long-term electric energy purchasing contracts on
behalf of Califona ratepayers. As a result, the California Public Utilities Commission
suspended Direct Access in order to create a stable customer base to help the Department
of Water Resources recover its costs. However, existin¢ Direct Access customers could
continue to purchase their electricity from an Electric Service Provider. The City of
Chula Vista has four electricity accounts that have been "grandfathered" under Direct
Access Service -Civic Center Library, South Library, Public Services South (Building
200), and Discovery Pazk. Over the last 12-months, the electricity commodity purchases
for the four accounts totaled approximately $120,000.
Since 2004, the City has been under contract with Shell Energy (formerly Coral Power)
to purchase electricity for its Direct Access accounts: To minimize utility cost
fluctuations under the contract, the City "locks-in" electricity procurement rates for a
certain time period through a Confirmation Letter with Shell Energy. The'City's current
Confirmation Letter and its associated rates aze expiring at the end of June 2013.
Therefore, staff is requesting that City Council approve continuation of electricity
commodity purchases from Shell Energy and authorize the City Manager to execute an
up to 3-yeaz Confirmation Letter with a rate up to $65.00 per MWh in order to secure
electricity procurement rates. Although rates change daily on the open mazket (based on
nationwide electricity supply and demand price signals), rates aze approximately 40%
lower than historical commodity prices.
DECISION MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found that
Councilmember Ramirez has property holdings within 500 feet of the boundaries of one
of the properties, which is the subject of this action. Although this could create a conflict
for Councilmember Ramirez, pursuant to California Code of Regulations section
18704.2, no conflict exists. Staff is not independently aware, nor has staff been informed
by any City Council member, of any other fact that may constitute a basis for a decision
maker conflict of interest in this matter.
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6/11/13, Item
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CURRENT YEAR FISCAL IMPACT
Because the new Confirmation Letter and its associated electricity procurement rates
would not be effective until July 1, 2013, there would be no impact during the current
Fiscal Year 2013.
ONGOING FISCAL IMPACT
The new electricity procurement rates aze very similaz to current commodity prices, so it
is expected that there will be negligible fiscal impact from the City's new Direct Access
agreement with Shell Energy.
ATTACHMENTS
Attachment A -Shell Energy Confirmation Letter Example
Prepared by: Brendan Reed, Environmental Resource Manager, Public Works -Conservation Section
H: IPUBLIC WORKS- ENGIAGENDAICAS2073106-1 /-13VShelt Energy Direct Access 1013_CAS_FINAL.doc
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SAMPLE, NOT FOR EXECUTION
4 Shell Energy North America (i iS), L.P.
Deal No.:
SHELL ENERGY NORTH AMERICA S , L.P. CITY OF CHULA VISTA
Attn: Commercial Advisor Attn:
Phone:858-320-1500 Phone:619-409-5918
Fax:713-767-5414 Fax: 619-409-5884
June 13, 2012
CONFIIiMATION
This Confirmation confums the ageement reached on June 13, 2012 between CITY OF CHULA VISTA ("Bauer") and SHELL
ENERGY NORTH AMERICA (US), L.P. ("Shell Enerey" or "Seller") pursuant to and in accordance with the Energy Sales
Ageement dated June 16, 2004 ("ESA") between Buyer and Shell Energy. This Confirmation constitutes part of and is subject to all
of the terms and provisions of such ESA. Terms used but not defined herein shall have the meanings ascribed to them in the ESA.
Buyer and Shell Energy hereby agee to the sale of Energy by Shell Energy to Buyer under the terms and conditions as follows:
Contract Quantity: Per the Block Power Table Below (plus or minus a 25%-hourly bandwidth):
a..~....,.~..., n,-~ y. ,~.,~.....,.;k.._ ....:.._....., s . ~ ~xs;5easonal LoaEShapes.,s.,.~:ur.,,~,.......rs.t...,~a~x,....~;~w.~,x ~aa~,~..,w +u::
1 2 3 4 5 6 7 8 9 10 11 12
HE lan Feb Mar Apr May Jun lul Aug Sep Oc[ Nov Dec
1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
3 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
4 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
5 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
6 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
7 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
8 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.1 0.1 0.1
9 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1
SO 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.2 0.2 0.2
11 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.2 0.2
12 0.2 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 ~ 0.2 0.2
13 0.2 0.3 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.2 0.2
14 0.2 0.3 0.2 0.3 0.3 0.3 0.3 0.4 0.3 0.3 0.3 0.2
15 0.3 0.3 0.2 0.2 0.2 0.3 0.3 0.4 0.3 0.3 0.3 0.2
16 0.3 0.3 0.2 0.2 0.2 0.3 0.3 0.4 0.3 0.3 0.3 0.2
17 0.2 0.3 0.2 0.2 0.2 0.2 0.3 0.4 0.3 0.3 0.3 0.2
18 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.3 0.2
19 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
20 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2
21 0.1 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
22 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
23 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
24 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Total 3.6 3.9 3.6 3.7 3.5 3.8 4.1 4.7 4.5 4.3 3.8 3.4
Days 31 28 31 30 31 30 31 31 30 31 30 31
Total
KWh 111,548 108,541 111,637 110,114 109,850 114,126 126,361 146,622 133,749 134,471 113,841 106,772
TOTAL
46.9
Page 1~f2
SAMPLE, NOT FOR EXECUTION
'elivery Point: SP-15 EZ Gen Hub
Contract Price: $54.00 per MWhr The Contract Price includes an Allowance for hourly shaped bandwidth up to an excess
of 25% over the hourly Contract Quantity or a 25% deficiency below the hourly Contract Quantity.
Product: CAISO Energy
Delivery Term: July 1, 2012 through June 30, 2013
This Confirmation sets forth the terms of the Transaction into which the Parties have entered and together with the ESA shall
constitute the entire agreement between the Parties relating to the contemplated purchase and sale of Energy.
SHELL ENERGY NORTH AMERICA (US , L.P. CITY OF CHULA VISTA
By: SAMPLE, NOT FOR EXECUTION By: SAMPLE, NOT FOR EXECUTION
Name: Name:
Title: Title:
Please return the signed confirmation to Shell Energy at Fax: (713) 767-5414.
Deal Number:
Pa~ ~ gf 2
RESOLUTION NO. 2013-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA APPROVING CONTINUATION OF
ELECTRICITY COMMODITY PURCHASES FROM SHELL
ENERGY AND AUTHORIZING THE CITY MANAGER TO
EXECUTE ALL DOCUMENTS IN CONJUNCTION WITH THE
PURCHASES
WHEREAS, the California Public Utilities Commission began implementation of
Assembly Bill 1890 in 1998 to make the generation of electricity more competitive in California
through the creation of "Direct Access Service;" and
WHEREAS, Direct Access allows commercial, industrial, and agricultural customers to
purchase electricity from athird-party Electric Service Provider, instead of from the local
Investor-Owner Utility; and
WHEREAS, Direct Access allows these customers to potentially negotiate better
electricity commodity rates or higher renewable energy power mixes from the open market; and
WHEREAS, City of Chula Vista has four electricity accounts that are under Direct
Access Service with Shell Energy; and
WHEREAS, under the contract with Shell Energy, the City "locks-in" electricity
procurement rates for certain time periods through a Confirmation Letter to minimize utility cost
fluctuations; and
WHEREAS, the City's current Confirmation Letter and associated rates are expiring; and
.WHEREAS, the new rates aze similar to last year and approximately 40% lower than
historical commodity prices.
NOW, THEREFORE, the City Council of the City of Chula Vista does hereby resolve
that it:
1. Approves continuation of electricity commodity purchases from Shell Energy,
and
2. Authorizes the City Manager, or his designee, to execute an up to 3-year
Confirmation Letter with rates up to $65.00 per Megawatt Hour.
Presented by
Approved as to form by
i
c i
~' ~ 1
~EiYen .Goo n
~'~i Attorney
Richard A. Hopkins
Director of Public Works.
J:\Attorney\FINAL RESOS AND ORDINANCES\2013\06 11 13\Shell Energy Direct Access 2013 Reso DRAFT.doc
6/4/2013 11:46 AM
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