HomeMy WebLinkAboutReso 2007-177 - Natural Gas Contract
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RESOLUTION NO. 2007 - 177
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING
AUTHORIZING THE ELECTRIC UTILITY DIRECTOR OR HIS
DESIGNEES TO NEGOTIATE A 28-30 YEAR T AKE-AND-P A Y NATURAL
GAS CONTRACT, NEGOTIATE A 28-30 YEAR NATURAL GAS
STORAGE CONTRACT WITH NORTHWEST NATURAL GAS
COMPANY, OR ITS AFFILIATE, AND EXPAND THE REDDING
ELECTRIC UTILITY'S AUTHORIZATION TO PURCHASE NATURAL
GAS FROM $16 MILLION TO $25 MILLION UP TO 12 YEARS
WHEREAS, the City Council has taken prior steps to ensure that the citizens of Redding have
access to stable and competitive electric prices through forward market purchases of natural gas and
associated services; and
WHEREAS, the City Council further recognizes that the Redding Electric Utility will have
increased reliance on natural gas in the years to come; and
WHEREAS, the City Council has concluded that the passage of recent federal legislation has
created additional opportunities to reduce the cost of natural gas for use in Redding Electric Utility's
generation units; and
WHEREAS, the City Council desires to authorize the Electric Utility Director to engage in
negotiations, either on behalf of the City or as the City's representative on the Board of the Modesto-
Santa Clara-Redding (M-S-R)joint powers agency, to negotiate a "take-and-pay" natural gas contract
in order to avail the City of the opportunities provided by this recent federal legislation; and
WHEREAS, the City Council has concluded that it is in the best interest of Redding Electric
Utility's customers to purchase natural gas at a fixed price in advance of actual use; and
WHEREAS, the City Council has further concluded that additional natural gas storage is a
beneficial tool with which Redding Electric Utility can better manage its natural gas portfolio; and
WHEREAS, Northwest Natural Gas Company, or its affiliate, has acquired the rights to construct
a natural gas storage facility, and there is a potential to acquire storage rights in this proposed
facility.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Redding that the
Electric Utility Director, or his designee, may:
I.
Acquire up to $25 million of natural gas per year in the forward markets up to 12 years
forward.
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2. In his role as Electric Utility Director on behalf of the City or in his role as the City's
authorized representative on the Board ofM-S-R, negotiate a 30-year, non-recourse take-and-
pay natural gas contract (subject to final Council approval), for an average quantity over the
contract life not to exceed 9,000 Dthlday(with an initial quantityof3,OOO Dthldayincreasing
to 14,000 Dthldayby 2037 to match REU's forecasted growth in load).
3. Negotiate a 28-30 year natural gas storage agreement, including the possibility of a one-time,
up-front payment in lieu of annual payments with Northwest Natural Gas Company, or its
affiliate, for a quantity of approximately 1 BCF, in its proposed natural gas storage facility
near Fresno, California, subject to final Council approval.
I HEREBY CERTIFY that the foregoing Resolution was introduced, read, and adopted at a special
meeting of the City Council on the 15th day of August, 2007, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
COUNCIL MEMBERS:
COUNCIL MEMBERS:
COUNCIL MEMBERS:
COUNCIL MEMBERS:
Bosetti, Jones, Murray, Stegall, and Dickerson
None
None
None
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DICK DICKERSON, Mayor
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Attest: .
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Form Approved:
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RICHARD A. DUVERNAY, . Attorney
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