HomeMy WebLinkAboutReso 2015-067 - San Juan AgreementsRESOLUTION NO. 2015-067
RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF REDDING IN SUPPORT OF SAN JUAN PROJECT DIVESTITURE
AGREEMENTS
WHEREAS, the M -S -R Public Power Agency has participated in extensive negotiations
over the past three and one-half years with the eight other owners of the San Juan Generating
Station to restructure the San Juan Project Participation Agreement to allow the retirement of Units
Numbers 2 and 3 and to allow the orderly exit of M -S -R Public Power Agency, Southern California
Power Authority, City of Anaheim, and Tri-State Generation and Transmission Association, Inc.
from the San Juan Generating Station effective December 31, 2017; and
WHEREAS, the goals of the M -S -R Public Power Agency, as directed by its Commission
and constituent members, were to expedite the exit of the M -S -R Public Power Agency from the
San Juan Project and relieve itself and its member agencies from US EPA mandates to immediately
commence installation of uneconomic Clean Air Act Regional Haze station retrofits, to mitigate
onerous California Cap -and -Trade CO2 allowance retirement requirements, to mitigate rapidly
escalating Fuel and O&M costs, and to further comply with requirements of California Law
including SB 1368 and AB 32; and
WHEREAS, the proposed Restructuring Agreements comprised of the San Juan Project
Restructuring Agreement, the Amended and Restated Mine Reclamation and Trust Funds
Agreement, San Juan Decommissioning and Trust Funds Agreement, Restructuring Amendment to
Amended and Restated San Juan Project Participation Agreement, and the San Juan Project
Participation Exit Agreement present the least -cost and lowest -risk alternative for the M -S -R Public
Power Agency's divestiture of its interests in the San Juan Project; and
WHEREAS, the proposed restructuring of the San Juan Project as contemplated by the
Restructuring Agreements, collectively result to the M -S -R Public Power Agency and its member
agencies about $6 million in current restructuring cost savings, avoids $28 million in station retrofit
costs, allows ongoing power cost savings valued at about $200 million over the next twenty years,
minimizes current and future M -S -R Public Power Agency liabilities, and avoids the timing risks
and legal uncertainties associated with litigated or arbitrated exit plans or renegotiation of issues
which have consumed exhaustive negotiation; and
WHEREAS, the advice of the independent consultant hired by M -S -R concludes that the
sale or disposition of the Agency's 28.8 percent undivided interest in Unit 4 of the San Juan
Generating Station effective December 31, 2017 represents the most efficient and economic use of
such assets and does not impair the ability of the M -S -R Public Power Agency to comply with the
Indenture and said report has been reviewed by the Agency's Bond Counsel for adequacy; and
WHEREAS, the Restructuring Agreements facilitate M -S -R Public Power Agency 's
divestiture of its ownership interest in the San Juan Project and primarily serve restructuring and
fiscal functions and do not commit the M -S -R Public Power Agency to a project with potentially
significant impact on the environment. As such, the Restructuring Agreements do not constitute a
"project" pursuant to California Environmental Quality Act (CEQA) and are exempt from CEQA
review pursuant to Sections 15060(c)(3) and 15378(b)(4) of Title 14 of the California Code of
Regulations; and
WHEREAS, The duly appointed commissioner of the MSR is seeking authority from the
City Council, in his capacity as commissioner, to approve the above agreements and all other
necessary agreements to effect the exit of the MSR from the San Juan Generating Station project.
NOW, THEREFORE, IT IS RESOLVED by the City Council that:
1. The recitals set forth above are true, correct and are incorporated herein;
2. Divestiture of the San Juan Project complies with the goals of the people of the State
of California, including those within its member agencies, and as also expressed in
AB32 and SB1368, to reduce dependence on highly carbon -intensive electric
generating resources;
3. After 32 -years of service to the M -S -R Public Power Agency and its member
agencies providing reasonably -priced base load power, including through the
California Energy Crisis, the costs of operating and maintaining the San Juan Project
have begun to accelerate and are no longer competitive with lower-priced and lower -
emitting natural gas-fired or other sources of base load generation;
4. To provide the economic certainty and avoid environmental resource risk it is
appropriate for M -S -R Public Power Agency to divest to the extent possible its
ownership interests in the San Juan Project no later than December 31, 2017;
5. To meet the goals of M -S -R Public Power Agency and its member agencies to effect
the divestiture of the San Juan Project at the lowest reasonable cost and risk, the
Commission of the M -S -R Public Power Agency intends to consider the approval of
the San Juan Project Restructuring Agreement, Amended and Restated Mine
Reclamation and Trust Funds Agreement, San Juan Decommissioning and Trust
Funds Agreement, Restructuring Amendment to Amended and Restated San Juan
Project Participation Agreement, and San Juan Project Participation Agreement Exit
Agreement (collectively the "Restructuring Agreements") in substantially final form
at its next noticed meeting; and
6. To direct its M -S -R Public Power Agency Commissioner to take all actions
necessary to implement the foregoing findings and goals.
0
I HEREBY CERTIFY that the foregoing resolution was adopted at a regular meeting of
the City Council of the City of Redding on the 21" day of July, 2015, by the following vote:
AYES:
COUNCIL MEMBERS:
Cadd, McArthur, Schreder, Weaver, & Sullivan
NOES:
COUNCIL MEMBERS:
None
ABSENT:
COUNCIL MEMBERS:
None
ABSTAIN:
COUNCIL MEMBERS:
None
ATTEST:
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PAMELA MIZE, Ci Clerk
un in 1.1
F �I UL VAN, Mayor
FORM APPROVED:
BARRY E. DeW LT, Ci y Attorney