HomeMy WebLinkAboutReso 2006-060 - Natural Gas
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RESOLUTION NO. 2006 - 60
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING
AUTHORIZING THE REDDING ELECTRIC UTILITY DIRECTOR OR HIS
DESIGNEES TO UTILIZE FINANCIAL TOOLS TO MITIGATE THE PRICE
RISKS ASSOCIATED .WITH THE PURCHASE/SALE OF NATURAL GAS
WITHIN THE APPROVED GUIDELINES
WHEREAS, the City Council has taken prior steps to ensure the continued low cost delivery
of electricity to Redding Electric Utility customers through the use of electric market financial tools;
and
WHEREAS, City Council further recognizes the potential benefits for the use of financial
tools, in its natural gas procurement and sales strategy, for purposes of managing the City's natural
gas commodity requirements; and
WHEREAS, City Council believes the Electric Utility Director shall have authority to
execute natural gas financial tool contracts for reasons of expediency and efficiency; and
WHEREAS, price volatility of the natural gas marketplace can be significantly managed
through the use of such financial tools.
NOW, THEREFORE, JiJE IT JRESOL VED by the City Council of the City of Redding that
the Redding Electric Utility Director or His designees shall acquire and sell natural gas financial
tools under the following guidelines:
1. Any financial tool, including (but not limited to) put and call options, futures contracts
(including exchanges), and basis contracts must be related to an underlying physical natural
gas commodity holding, or future physical natural gas commodity requirements.
2. Financial tools may not be utilized for speculative purposes.
3. Redding Electric Utility will utilize financial tools to minimize the price risk of natural gas
caused by market volatility and maximize the value of its physical natural gas commodity
holdings through structured purchases and sales of such financial tools.
4. Existing commodity purchase/term authorization limits shall not be exceeded.
5.
REU will not purchase and hold more than $200,000 (in aggregate) in option premiums at
anyone time.
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I HEREBY CERTIFY that the foregoing resolution was introduced, read and adopted at
a regular meeting ofthe City Council on the 18th day of April, 2006, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN :
Attes.t:
COUNCIL MEMBERS: Dickerson, Mathena, Pohlmeyer, Stegall, and Murray
COUNCIL MEMBERS: None
COUNCIL MEMBERS: None
COUNCIL MEMBERS: None
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Form Approved:
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RICHARD A. DUVERNA City Attorney
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