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HomeMy WebLinkAboutCity Council Resolution 95-49 Resolution No. 95-49 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA AUTHORIZING PARTICIPATION IN THE ABAG POWER PURCHASING PROGRAM WHEREAS, the City of Saratoga is currently purchasing natural gas and related transportation and distribution services from Pacific Gas & Electric Company (PG&E); and WHEREAS, energy rates in the Bay area are among the highest in the nation, particularly for natural gas and electricity; and WHEREAS, deregulation of the natural gas industry in 1986 and deregulation of the electric services industry currently under consideration by the California Public Utilities Commission and the State legislature is creating new opportunities for local governments to lower their energy costs through collective action; and WHEREAS, there are no existing power purchasing pools for Bay Area local governments interested in lower energy costs; and WHEREAS, bulk purchasing of natural gas has proven itself to be a legal and cost-effective means to achieve reduction in energy costs through the use of a competitive bid program; and WHEREAS, it would greatly benefit the City of Saratoga to be prepared to take advantage of any coming changes in the regulation of the electric market; and WHEREAS, the City of Saratoga is a member/associate member of the Association of Bay Area Governments (ABAG); and WHEREAS, ABAG, in conjunction with New Energy Ventures, Inc. (NEV), proposes to form a Power Purchasing Pool Program to aggregate natural gas needs of interested ABAG members and associate members, to collectively negotiate a purchase of natural gas and transportation services through a competitive request for proposals, and to negotiate an agreement with PG&E for distribution of natural gas. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Saratoga hereby authorizes the participation of the City of Saratoga in the ABAG Power Purchasing Pool to undertake a bulk purchasing program for natural gas and electricity on behalf of the City of Saratoga and other ABAG members or cooperating members. BE IT FURTHER RESOLVED, that the City Manager, or his designee, is authorized to enter into a Subscription Agreement with ABAG, in substantially the form set forth in the attached Exhibit "A" appointing ABAG as the agent for the City of Saratoga in negetiating a distribution agreement with PG&E, issuing a Request for Proposal for the purchase and transportation of natural gas and negotiation of a contract with the responsive, responsible proposer proposing the lowest costs. FINALLY, BE IT ALSO RESOLVED, that the City Manager is authorized to execute and deliver the contracts negotiated by ABAG on behalf of the City of Saratoga and is appointed the City of Saratoga's representative on ABAG's Power Purchasing Committee to oversee the operation of Power Purchasing Pool program. PASSED AND ADOPTED this 1st of .~oy.~m. ber , 1995 AYES: Councilmembers Burger, Moran, Tucker, Wolfe and Mayor Jacobs NOES: None ABSENT: None ABSTAIN: None ATTEST: ~' <(~ Deputy City POWER PURCHASING PROGRAM SUBSCRIPTION AGREEMENT No. 95.01 This Agreement made effective the day of , 1995, between the Association of Bay Area Governments (ABAG), a joint powers entity created pursuant to California Government Code Sections 6500 et. seq., and (Public Agency), a California RECITALS A. The Public Agency currently purchases natural gas, and natural gas transportation and distribution from [Pacific Gas & Electric (PG&E)/(or fill in name of current natural gas supplier)]. B. ABAG, with the assistance of New Energy Ventures, Inc. (NEV), has organized a program for the bulk purchase of natural gas and for natural gas transportation and distribution services on behalf of interested members of ABAG (Power Purchasing Program). C. ABAG's Power Purchasing Program has the potential to generate cost savings in the Public Agency's use of natural gas. Therefore, in consideration of the mutual promises contained in this Agreement, the parties agree to perform as follows: AND CONDrrlONS ' 1. Scope of Services. (a) The Public Agency hereby appoints ABAG its exclusive agent from the effective date of this Agreement until the Expiration Date as defined in Section 2 ~i"imtil this Agreement is - 1 - SIJB-AOMT.Pa terminated in accordance with its terms, with all powers reasonably necessary to accomplish the following: (1) Negotiate an agreement with PG&E for the distribution of natural gas to some or all of ttCe locations at which PG&E currently distributes natural gas to the Public Agency (PG&E Agreement). (2) Issue a Request for Proposal CRFP) for the purchase and delivery of natural gas to the PG&E distribution system. (3) Negotiate a contract with the responsive, responsible entity proposing the lowest cost for furnishing and transporting natural gas (Natural Gas Purchase Contract). Co) Public Agency acknowledges that ABAG will be aggregating some or all of the natural gas requirements of the PubIic Agency and other members and associate members of ABAG and that the RFP process, negotiations and contracts contemplated under subsection l(a) will be performed on behalf of the Public Agency and other ABAG members. Public Agency will use its best reasonable effort to transmit, or cause to be transmitted to ABAG such information as may be necessary for ABAG to determine the Public Agency's natural gas needs based on past usage patterns and to efficien~y aggregate the Public Agency's natural gas needs with those of other ABAG members participating in the Power Purchasing Program, including utility bills and locations of utility meters. (c) ABAG will act on behalf of the Public Agency and other members of ABAG participating in the Power Purchasing Program as described in subsection 1 (a) of this Agreement. 2. Tenn. This Agreement is effective as the date first set forth above and shall expire on the earlier of [fill in the projected date of the expiration of the firs.!,~Natural Gas Purchase Contract ] or the date the Public Agency fails to execute and deliver the Natural Gas -2 - $UB-AOMT.PI Purchase Contract or the PG&E Agreement pursuant to Section 4(b) (Expiration Dam). This Agreement may t~rminate prior to the expiration date in accordance with the provisions of Section l0 of Exhibit A. 3. Compens~ion. (a) Upon execution and delivery of the Natural Gas Purchase Contract and PG&E Agreement, the Public Agency shall be obligated to pay transaction fees to ABAG to cover ABAG's costs in implementing the Power Purchasing Program. ABAG's transaction fees will not exceed six cents ($.06) per decatherm of natural gas delivered to the Public Agency during the term of the Natural Gas Purchase Contract. (b) The amount or method of determining of ABAG's fees will be identified in the Rate Proposal described in Section 4(a). (e) Subject to Section 3(a), on the first day of each [month/quarter/or exact dates], ABAG will send an invoice for its fees to Public Agency for review. Public Agency will pay the invoice within thirty (30) days of receipt or submit a written statement within that time stating the basis for the Public Agency's disapproval of all or a portion of the invoice. Fee disputes will be resolved by mutual agreement [or submitted to arbitration under Section 13 of Exhibit A]. 4. Participation. (a) Upon completion of ABAG's negotiation of a PG&E Agreement and- a Natural Gas Purchase Contract, such agreements and a Rate Schedule containing (1) the pwposed total unit cost of tintrat gas as transported to identified Public Agency meter locations; (2) the total unit cost of rmmral gas transferred to identified Public Agency locations last year; and (3) ABAG's fees shall be submitted to the individual identified in Section __. (b) The Public Agency shall within ( ) working days of the date of the Rate Schedule deliver to ABAG: ....... -3- SLrB-AOMT.F~ (1) Duly authorized and validly executed originals of the Natural Gas Purchase Contract and PG&E Agreement; or (2) The Public Agency' s rejection of the agreements and/or fees; or (3) The Public Agency Council resolution withdrawing from the Power Purchasing ~rogram. 5. Power Purchasing Pool Committee. Upon execution and delivery of the PG&E Agreement and the Natural Gas Purchase Contract, (Public Agency Representative), shall be the Public Agency's representative to the Power Purchasing Pool Committee. The Power Purchasing Pool Committee shall provide policy direction for the Power Purchasing Program. The Committee's powers shall include admission of new Participants and the extension of the PG&E Agreement and the Natural Gas Purchase Contract, under rules and procedures adopted by the Committee. 6. Approvals. The Public Agency Representative may grant any approval, or give any direction required by this Agreement, in writing or orally. Written approvals or directions may be transmitted physically, by facsimile or electronically. Oral approvals will be confLrmed in Writing by either parry. 7. Written Notices. Written notices shall be transmitted to the following: ABAG: Association of Bay Area Governments P.O. Box 2050 Oakland, CA 94604-2050 Facsimile: EleCtronic. Mail: Public Agency: 8. Attorneys' Fees. In the event either of the parties brings an action or legal proceeding due to an alleged breach of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs as determined by a coU.rt of competent jurisdiction. -4- sUB-AOMT.P1 9. Subcontractors. ABAG may not subcontract any portion of the work under this Agreement Wiffiout ~e Public Agency's prior written consent. The Public Agency hereby consents to ABAG's conWacting with NEV. 10. Ownershii; of F~es, Reports, Photographs, and Related Documents. Upon completion of the work or termination of the Agreement, any and all f~es, reports, photographs, plans, specifications, drawings, data, maps, models and related documents respecang in any way the subject matter of this Agreement, whether prepared by ABAG, the Public Agency or third parties and in whatever media they are stored' shall remain or shall become the property of the Public Agency and the Public Agency shall acquire title to, and copyright ownership of, all such documents. The Public Agency hereby grants to ABAG an irrevocable license to retain a copy of all records covered by this section for ABAG's files. /// III III II/ 111 /il //I 111 /11 /11 /11 /11 //I 1/i tli I/I //i /11 SUIt-AOM'r.B 11. Other Contract Provisions. This Agreement shall be subject to the other standard provisions which are set forth in the attached Exhibit _, which is incorporated by this reference. IN WITNESS W~-IEREOF, the parties have hereunto set their hands effective the date and year first above wri~P.n. ASSOCIATION OF BAY AREA GOVERNMENTS by: Eugene Y. Leong, Executive Director Appwved as to legal form and content: Kenneth K. Moy, Legal Counsel PUBLIC AGENCY by: Approved as to legal form and content: by: -6- EXHIBIT STANDARD CONTRACT PROVISIONS 1. A,~igl!llt~a[. This Agreement shall not be assigned, transferred, hypothecated, or pledged by either ~any without prior written consent of the other. 2. Amendment. This Agreement may be mended at any time, but only by a writing signed by both paxties. 3. Tim~ of Essence. Time is of the essence in this Agreement. 4. Waiver. The waiver by either party of a breach by the other of any provision of this Agreement shall not constitute a continuing waiver or a waiver of any subsequent breach either of the same or a different provision of this Agreement. 5. tkadillga. The descriptive headings used in this Agreement are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 6. Entire Agreement. This Agreement is entire as to all of the performances to be rendered under it. This Agreement supersedes any and all other contracts either oral or in writing between ABAG and Public Agency with respect to the subject matter hereof and contains all of the covenants and agreements between the parties with respect to such matter. Each party to this Agreement acknowledges that no representations, inducements, promises, or contracts, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other contract, statement, or promise not contained in this Agreement shall be valid or binding. 7. Controllin_~ Law. This Agreement and all matters relating to it shall be governed by the laws of the State of California. 8. Bindine on Successors. Etc. This Agreement shall be binding upon the successors, assigns, or transf~ of ABAG Or Public Agency as the case may be. This provision shall not be consu'ued as an authorization to assign, transfer, hypothecate, or pledge this Agreement other than as provided above. 9. SevePabi!it_v. Should any part of this Agreement be declared unconstitutional, invalid, or beyond the authority of either party to enter into or carry out, such decision shall not affect the validity of the remainder of this Agreement, which shall continue in full force and effect; provided that, the remainder of this Agreement can, absent the excised portion, be reamnably interpreted to give :effect to the intentions of the parties. 10. Termination. If, through any cause, either party fails to fulfill in timely and proper manner its obligations under this Agreement, or if such party violates any of the covenants, conditions, contracts, or stipulations of this Agreement, the other party has the right to terminate this Agreement by giving written notice to the breaching party specifying the effective date of termination. Notice of termination shall be given at least five (5) days before its effective date. This section does not relieve the other party of liability to the other for damages arising out of a breach of this Agreement. 11. Records/Audit. ABAG shall keep complete and accurate books and records of all financial aspects of its relationship with Public Agency in accordance with generally-accepted accounting principles. ABAG shall permit authorized representatives of Public Agency and/or any of Public Agency's governmental grantors to inspect, copy, and audit all data and records of ABAG relating to its performance of services under this Agreement. ABAG shall maintain all such data and records intact for a period of three (3) years after the date that services are completed hereunder or this Agreement is otherwise terminated. -2 - SIJB-AOMT .P3 12. Prohibited Interest. ABA{j'S ott:cers, employeeSOr agents snau ne:mer soact~ nor- ~ accept gratuities, favors or anything of monetary value from contractors, potential contractors, or parties to subcontracts. 13. Insurance k~uirements. (a) ABA(3 shall, at its own expense, obtain and maintain in effect at all times during the life of this Agreement the fol|owing insurance: (1) Workers' compensation insurance as required by law. (2) COmprehensive general liability insurance coverage of One Million DoLlars ($1,000,000) in the aggregate for products and/or completed operations and One Million Dollars ($1,000,000) per occurrence for automobiles. (3) Professional liability insurance with minimum liability limits of Two Million Dollars ($2,000,000) in the aggregate. (b) All ABAG's insurance policies shall contain an endorsement providing that written notice shall be given to Public Agency at least thirty (30) days prior to termination, cancellation, or reduction of coverage in the policy or policies, and all policies shall be carried by an insurance company or companies acceptable to Public Agency. (c) In addition, each policy or policies of insurance described in subparagraph (2) above shall contain an endorsement providing for inclusion of Public Agency and its directors, officers, agents, and employees as additional insureds with respect to the work or operations in connection with this Agreement and providing that such insurance is primary insurance and that no insurance of Public Agency will be called upon to contribute to a loss. (d) Promptly upon execution of this Agreement, ABAG shall deliver to Public Agency certificates of insurance evidencing the above insurance coverages. Such certificates shall $ make reference to all provisions or endorsements required herein and shall be signed on behalf of the insurer by an authorized representative thereof. ABAG agrees that at any time upon written request by Public Agency to make available copies of such policies certified by an authorized representative of the insured. -3- SUB-AOMT.P~ (e) The foregoing requirements as to types and limits of insurance coverage to be maintained by ABAG and approval of policies by Public Agency are not intended to, and shall not, in any manner limit or qualify the liabilities and obligations otherwise assumed by ABAG pursuant to this Agreement, including, but not limited to, liability assumed pursuant to ABAG's insurance policies under Subsections (a)(2) of this section. (f) ABAG shall require all subcontractors to comply with the insurance requirements desa'ibed in Section 13(a)-(d), inclusive. [14. Arbitration. Any dispute between ABAG and the Public Agency regarding the interpretation, effects, alleged breach or powers and duties arising out of this Agreement shall ~e submitted to binding a~itration. The arbitrator shall be selected by agreement between the parties by lot .from a list of up to six (6) arbitrators with each party submitting up to three (3) arbitrators.] -4- SAMPLE REPORT TO COUNCIL TRANSMITtING ~ ABAG POWER POOL RESOLUTION SUBSCRIPTION AGREEMENT Date: October 1995 TO: Mayor and City Council FROM: City Manager SUBJECT: Association of Bay Area Govemmems' (ABAG's) Power Purchasing Pool SUMMARy As the first phase of a comprehe~xsive power purchasing program, the Association of Bay Area Governments (ABAG) l'ms created a natural gas purchasing program for Bay Area local governments and special distripOli The program offers potential savings of three to six percent below the rates now charged by the Pacific Gas and Electric Company (PG&E). Actual savings will be determined by a competitive bid process for the purchase and transportation of natural gas to be conducted by ABAG this fill. To participate in the bid process and be eligible to purchase natural gas at the reduced rates, the Council must adopt the Resolution __ and authorize the City Manager to sign the ABAG Subscription ~eemem (att~aci~.~) and si~ the natural gas purchase contract and PG&E distribution agreement negotiated by ABAG on behalf of the City. In May 1996, ABAG staff began. exploring the possibility of generating savings on the electric and gas purchases made by local governments. In July 1995, after a preliminary analysis, the ABAG Executive Board authorized the formation of the ABAG Power Purchasing Pool and authorized the aggregation of participants, energy usage in larger blocks to yield lower costs for participating mereben. ABAG has an established track record of successful affiliate services that have yielded significant savings for participants in workers' compensation, pooled risk management, and pooled financial services. The intent of the ABAG Power Purchasing Pool is to build on this experience and offer a new program extending this same history of service and cost savings to gas and electric purchases by local governments. The first phase of the Power Purchasing Pool will be a pooled purchase of natural gas. In the late 1980's, state and federal laws were modified to introduce competition into the natural gas market, so the legal and regulatory framework for these purchases is much clearer than for electric purchases. '~ i, Competition has,.however, reduced the cost of natural gas significantly since deregulation took effect. ABAG estimates that savings from this purchase may be low (from three to six percent) due to falling prices, but that additional savings will be achievable in natural gas when interstate transportation charges are unbundled from PG&E rates in 1998. In addition to the cost savings, interested local governments have agreed that there is considerable organizational benefit to a natural gas purchase at this time, with the principal benefit being the familiarization of local government staff and officials with the concepts and practices of buying energy in a deregulated energy market. Approximately 60 local governments and special districts have indicated they intend to participate in the first bulk purchase of natural gas. DISCUSSION AND PROPOSED ACTION Under existing state PUC regulations and PG&E tariffs, it is permissible for natural gas customers with accounts using less than 20,800 therms per month (Core Accounts) to aggregate those accounxs with others, to purcha~ gas from a supplier other than PG&E. Such gas purchases are then delivered to the PG&E transportation and distribution system for delivery to the end-user. It is also permissible for na~ral gas customers with accounts using over 20,800 therms per month (Non-Core Accounts) to purchase gas, individually or in aggregation with others, from a supplier other than PG&E and have such gas transported to PG&E for delivery to the end-user. Several larger cities and' counties have already taken advantage of this option on their own. Under ABAG's natural gas purchasing program, the City' s natural gas requirements for all its Core Accounts and any eligible 'Won-Core Accounts for a one year period would be aggregated with the natural gas requirements of other jurisdictions and put out to competitive bid. A contract would be awarded to the lowest responsible and responsive gas supplier. PG&E would transport, distribute, perform routine maintenance and emergency response, and read meters as they currently do for the City ~er a stand~ agreement. Resolution The proposed Resolution would authorize the City' s participation in the program and authorizes the City Manager: 1) to enter into a Subscription Agreement with ABAG (described below), 2) ' to execute the natural gas purchase contract and the PG&E agreement or reject participation in the program upon receipt of ABAG's rates in December 1995, and 3) to participate as the Civy's representative on an ABAG committee overseeing the operation of the program. Subsc~i_ntion Agreement; The ABAG Subscription Agreement articulates the terms of the City' s participation in the program. Under the agreement, the City appoints ABAG as its agent to: 1) issue a request for proposals, evaluate bids, and negotiate a contract for natural gas supply and 2) negotiate an agreement with PG&E for transportation and/or ~stribution of natural gas. The Subscription Agreement will expire: 1) when and if the City rejects the natural gas rates negotiated by ABAG or 2) at the expiration of the natural gas purchase contract and the PG&E agreement. (approximately one year). In addition to agreeing to pay for the natural gas sentice provided under both the contract and the agreement, the City agrees to pay ABAG a fixed fee not to exceed six cents per decatherm of natural gas purchased by the City as compensation for costs incurred in administering the natural gas purchase. This fee is equivalent to approximately one percent of the City' s current cost of gas per decatherm. The total amount of the fee will be included with the rates provided by ABAG in December. Fifty percent (50%) of this fixed fee will go to New Energy Ventures (NEV) is a Pasadena-based energy consulting firm contracted by ABAG to assist them in the analysis of energy data, the preparation of the request for proposals, review and selection of bids, and negotiation of agreements. NEV was selected by ABAG as the most qualified of those firms interviewed by ABAG in May 1995. NEV will receive 50 percent ofthe fixed fee collected by ABAG or approximately three cents per decatherm. The President of NEV is Michael Peevey, formerly the President and Director of the Southem California EdisOn Company and SCECorp. Other NEV principals include Michael C. Burke, formerly Director of Utility Services, Dames & Moore, Regulatory and Environmental Coordinator of the California Public Utilities Commission, and Assistant Executive Director of the California Energy Comission; and Stan Hulett, formerly President of the California Public Utilities Commission. TCrminati0n As discussed above, it is possible to terminate the Subscription Agreement upon receipt of the ABAG rates. However, if the City accepts the rates, it is committed by the terms of the agreement to participate in the program for one year. The consequences of terminating the natural gas purchase contract and the PG&E distribution agreement prior to the expiration of their terms will be described in those agreements. RECOMMENDATION It is recommended that the Council adopt the attached resolution and authorize the City Manager to: 1) sign the ABAG Subscription Agreement 2) execute or reject the natural gas purchase agreement contract and the PG&E distribution agreement negotiated ~bugh the ABAG competitive bid process and 3) participate on the ABAG Power Purchasing Pool Steering Committee. HSCAL IMI'ACT There is no fiscal impact resulting from the adoption of the resolmion or the signing of the Subscription Ag;eement.. Cost savings in the range of three to six percem over current expenditures may be achieved if reduced rates are presented by ABAG and accepted by the City. 4