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Home My WebLink About14 Wholesale Power Agenda Item w wi Memorandum To: Board of Directors From: Peter Holzmeister Date: April 10, 2003 Subject: Policy regulating purchase of wholesale power 1. Why this matter is before the board This item recommends that the board amend the District Code of Policies related to purchase of wholesale power. Only the Board can amend the District Code of Policies. 2. History When the District first entered into a contract with Idaho Power Company, we were buying wholesale power on a market rate tied to the monthly average price of the Mid- Columbia Index. We recognized that there would be times when it would be advantageous to lock in a contract at a fixed price, and the board adopted a policy allowing the Power Supply Engineer to enter into power contracts under certain conditions and following certain procedures. A copy of that policy is attached for your review. 3. New information The contract with Idaho Power Company is terminated. The new contract with Constellation Power Services is so different than the Idaho contract that the policy is now out of date and inappropriate for today's circumstances. Now we have a contract that delivers blocks of power to us at a fixed price. To make our contract completely load following we need to buy and sell on the market in any single day small quantities of power. To enable us to do that we are suggesting the board modify the policy. The change is not large. Basically, we suggest that the Power Supply Engineer, following the same procedures as have been in the policy for years, be authorized to buy and sell the small daily quantities of power needed to match our load. The revised policy is attached for your review and consideration. 4. Recommendation I recommend that the board adopt the resolution amending Chapter 3.06 of the District Code of Policies establishing procedures for the a R solution No . 2003- XXX Amending District policy regarding the purchase of wholesale power WHEREAS the District has entered into a contract with Constellation Power Source, Inc for the purchase of wholesale power to be redistributed to District customers; and WHEREAS the contract with Constellation is for the District to purchase various blocks of power; and WHEREAS to allow the purchase of power under said contract to match District load various small amounts of power need to be sold and/or purchased by the District on the market each day; and WHEREAS the board wishes to establish a policy authorizing District staff to perform that function and to provide procedures for staff to follow; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors as follows: The Chapter 3.06 of the District Code of Policies is amended to read CHAPTER 3.06 PURCHASED POWER Sections: 3.06.010 Contracts Regarding the Purchase of Wholesale Power 3.06.010 The District has entered into a contract with Constellation Power Source, Inc.that includes a monthly shaped block purchase designed to meet the Districts average projected load for each month and for a put/call portion. The monthly shaped block purchase is at a fixed price, while the put/call option is based on an index. The purchase of power and energy on an index places a price risk on the District which can be managed by purchasing financial instruments and or physical instruments. 3.06.010.1 The Power Supply Engineer of the District, in consultation with staff of Northern California Power Agency and with the approval of the District General Manager, is authorized to execute financial and or physical contracts which manage the price risk of the power and energy purchased from the market subject to the following terms and conditions. 3.06.010.1(A)A minimum of two telephone quotes shall be secured from the market. Such quotes shall be recorded on the transaction memorandum which shall be prepared to document the actions leading up to purchase of the contract. 3.06.010.1(B) The Power Supply Engineer shall consult with the appropriate staff of the Northern California Power Agency regarding the desirability to seek quotes and shall again so consult after receipt of the two quotes. These consultations shall be documented in the transaction memorandum. 3.06.010.1(C) In no event shall any single contract entered into under authority of this policy extend for a period of greater than three months. 3.06.010.1(D) Prior to executing the contract, the Power Supply Engineer shall submit his recommendation to the General Manager of the District. After securing approval from the General Manager, the Power Supply Engineer is authorized to execute the contract. PASSED AND ADOPTED by the Board of Directors at a meeting duly called and held within the District on the sixteenth day of April, 2003 by the following roll call vote: AYES: NOES: ABSENT: TRUCKEE DONNER PUBLIC UTILITY DISTRICT J. Ron Hemig, President ATTEST: Peter L. Holzmeister, District Clerk ... ....... . ... CHAPTER 3.06 PRICE-OF-PURCHASED POWER Sections: 3.06.010 Contracts Re ard'sr o the Purchase oftholesale Pov�er E°E° 3.06.010 The District has entered into a contract with Constellation Povver Source Inc,that includes a monthly shaped hlo .Durchase desgned to meet the Districts averane oroiected load for each oath and for a ou call artion. to E d . ', .b.the monthly shaped block purchase is ai a f'xed price while+he outical!option is cased on an `sndex. The purchase of power and energy on an index places a price risk on the District which can be managed by purchasing financial instruments and or physical instruments. 3.06.010.1 The Power Supply Engineer of the District, in consultation with staff of Northern California Power Agency and with the approval of the District General Manager, is authorized to execute financial and or physical contracts which manage the price risk of the power and energy purchased from Wa4 _LhLe market subject to the following terms and conditions. 3.06.010.ILA ) A minimum of two telephone quotes shall be secured from the market. et. Such quotes shall be recorded on the transaction memorandum which shall be prepared to document the actions leading up to purchase of the contract. 3.06.010.1( C) The Power Supply Engineer shall consult with the appropriate staff of the Northern California Power Agency regarding the desirability to seek quotes and shall again so consult after receipt of the two quotes. These consultations shall be documented in the transaction memorandum. 3.06.010ALCV-) In no event shall any single contract entered into under authority of this policy extend for a period of greater than three months. 3.06.010.1(DE-) Prior to executing the contract, the Power Supply Engineer shall submit his recommendation to the General Manager of the District. After securing approval from the General Manager, the Power Supply Engineer is authorized to execute the contract. 99P944- (Reso 9720)