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Resolution No. 6117 1 RESOLUTION NO. 6117 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF AN INTERCHANGE AGREEMENT BETWEEN TUCSON ELECTRIC POWER COMPANY AND THE CITY OF VERNON 3 4 5 WHEREAS, Resolution No. 5560 approved by the City Council 6 of the City of Vernon on October 4, 1988 authorized the execution 7 of an Interchange Agreement by and between the City of Vernon and 8 Tucson Electric Power Company (TEP); and 9 WHEREAS, the City of Vernon entered into new negotiations 10 with TEP for the purchase and sale of economy energy; and 11 WHEREAS, an Interchange Agreement has been negotiated 12 with TEP which, pursuant to Service Schedule A, provides the City 13 of Vernon with the ability to purchase and sell economy energy with 14 TEP. 15 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE 16 CITY OF VERNON AS FOLLOWS: 17 SECTION 1: The City Council of the City of Vernon hereby 18 finds and determines that the recitals contained hereinabove are 19 true and correct. 20 SECTION 2: The City Council of the City of Vernon hereby 21 approves the Interchange Agreement between the Tucson Electric 22 Power Company and City of Vernon, a copy of which has been 23 presented to the City Council concurrently with this resolution, 24 and the City Council hereby orders said Agreement to be received 25 and filed by the City Clerk. 26 SECTION 3: The City Council of the City of Vernon hereby 27 authorizes the Mayor and the City Clerk to execute said Agreement 28 for, and on behalf of, the City of Vernon. 1 2 certify to the passage of this resolution, and thereupon and SECTION 4: The City Clerk of the city of Vernon shall 3 thereafter the same shall be in full force and effect. 4 5 6 7 ATTE~: 8 /~ 9 BRUCE V. 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 APPROVED AND ADOPTED this 16th day of June, 1992. ~~~~~~ . ... \ LEONIS C. MAL ". G. May r '---- /~~ MALKENHORST, City Clerk -2- ~ 1 STATE OF CALIFORNIA ) )ss 2 COUNTY OF LOS ANGELES ) 3 I, BRUCE V. MALKENHORST, city Clerk of the ci ty of 4 Vernon, do hereby certify that the foregoing Resolution, being 5 Resolution No. 6117, was duly adopted by the City Council of the 6 City of Vernon at a regular meeting of the city Council duly held 7 on Tuesday, June 16, 1992, and thereafter was duly signed by the 8 Mayor of the City of Vernon. 9 10 11 -~ ~ BRUCE V. MALKENHORST, city Clerk ( SEAL) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3- " ~ ~1/7 "'- . INTERCHANGE AGREEMENT BETWEEN TUCSON ELECTRIC POWER COMPANY AND- CITY OF VERNON " TABLE OF CONTENTS SERVICE SCHEDULES Service Schedule A Economy Energy Interchange INTERCHANGE AGREEMENT BETWEEN TUCSON ELECTRIC POWER COMPANY AND CITY OF VERNON THIS INTERCHANGE AGREEMENT, entered into this ./lQtda.ay of ~LIUU ,1992, hereinafter referred to as the "Agree..ent," by and between TUCSON ELECTRIC POWER COMPANY, an Arizona corpora- tion, hereinafter referred to as "Tucson," and CITY OF VERNO}t, a municipal corporation of the State of California, hereinafter referred to as "Vernon"; collectively "Parties" and individually "Party." WHEREAS, Tucson is engaged in the generation, transmission and distribution of electric power and energy in the State of Arizona and WHEREAS, Vernon is engaged in the generation, and distribu- tion of electric power and energy in the State of Californi~, and WHEREAS, Tucson and Vernon are interconnected through third parties' systems with each other and with other power systems operating in the Southwest; and WHEREAS, Tucson and Vernon maintain gen~rating capacity for use in their respective systems and believe that the purchase and interchange of power between them will provide substantial bene- fits to the customers served, including more efficient use of generating capacities, more efficient scheduling of energy deliv- eries, and general economies gained through interchange of energy; NOW, THEREFORE, it is hereby agreed as follows: -1- ARTICLE I PURPOSE 1.1 The purpose of the Parties in entering intO this Agree- ment is to provide for the interchange of power and energy and to establish the terms and conditions of such exchanges. ARTICLE II TERM 2.1 This Agreement shall become effective as set forth in Section 9.7 and shall remain in force unless terminated by either party.a.t any time, with or without cause, upon thirty (30) days' .;.;~- - advance written notice to the other Party. ARTICLE III POINTS OF DELIVERY 3.1 The Points of Delivery hereunder shall include but not be limited to the Palo Verde switchyard, the Four Corners Switch- yard, the Moenkopi switching station and the Mead Substation. 3.2 Additional or other Points of Delivery may be estab- lished by agreement of the operating Representatives. ARTICLE IV SERVICES TO BE RENDERED 4.1 Inasmuch as the specific services to be rendered will vary during the term of this Agreement, and the terms, condi- tions, arrangements, and rates applicable to such services must necessarily depend upon the conditions existing from time to time, it is intended that such specific services and the terms, conditions, arrangements, and rates applicable thereto will be set forth in Service Schedules from time to time agreed to by the Parties. Such Service Schedules, when approved and executed by -2- the Parties, will become part of this Agreement during the peri- ods established by their respective terms arid any such Service Schedule maybe modified or terminated in accordance with its terms. 4.2 lnitiallythe following Service Schedules are attached hereto and made a part of this A~reement: 4.2.1 Service Schedule A - Economy Energy Interchange. 4.3 No provision of this Agreement shall preclude either Party from entering into other agreements or conducting transac- tions under presently existing agreements with the other Pq.rty or -- third pq.rties. In the event of any conflict between the terms of this Agreement and any Service Schedule hereto executed by the Parties, the Service Schedule shall govern. 4.4 The Parties recognize that from time to time there may be mutual advantages from the sale or interchange of power upon a basis not provided for in any Service Schedule then in effect, and circumstances may be such that arrangements must be made promptly in order to realize such advantage. In such cases, or in cases of emergency or of temporary and unusual operating con- ditions, temporary arrangements for transactions maybe made by the operating Representatives; provided, 110wever, that no such arrangements shall extend for more than thirty (30) days unless approved in writing by the Parties. ARTICLE V OPERATING DATA 5.1 Each Party shall make available to the other Party operating data, to the extent reasonably required by the -3- operating Representatives in the discharge of their respon- sibilities hereunder, or as may be reasonably required in connection with load dispatching and energy accounting for transactions hereunder. ARTICLE VI SETTLEMENTS 6.1 All power transactions hereunder shall be accounted for on the basis of scheduled hourly quantities. All dispatchers or schedulers involved in the transactions shall maintain records of -- hourly load. schedules for accounting and Qperating purposes. 6.2 Except as otherwise provided in a service Schedule, the accounting period for transactions hereunder shall be one calen- dar month. The Party supplying service shall use best efforts to render a bill to the receiving party by the 15th day of the month following a month in which transactions occur hereunder. 6.3 Except as otherwise provided in a Service Schedule, bills for accounts payable for any month shall be due by the 15th day after receipt of such bill. Amounts not paid on or before the due date shall be payable with interest accrued at the rate of one percent (1%) per month, or the maximum rate permitted by law, whichever is less, from due date to date of payment. 6.4 In the event that a portion of any bill be indispute, the undisputed amount shall be paid when due and the disputed amount shall be paid promptly after a determination is made on the merits of the dispute, together with interest accrued at the rate provided in Section 6.3 computed from the original due date. 6.5 Should any dispute arise between the Parties hereto -4- ,concerning the determination of the charges for power trans<:ic- tions and remain unresolved for a period of sixty (60) days, a stat~m~nt of such .dispute shall be forwarded by the operating Repres~ntatives to the Executive Director of Light and Power of Vernon (Director) and the Chief operating Officer of Tucson (COO) who shall meet within thirty (30) days (or such shorter or longer time as agreed upon between the Director and COO) to discuss and attempt to reach a resolution of the dispute. Any resolution mutually agreed upon by the Director and COO of the Parties shall : be binding subject toFERC approval (if required by applicable law or the terms of this Agreement). 6.6 If the Director and COO of the Parties cannot resolve the dispute within thirty (30) days of its submission.to them (or within such longer time as shall be mutually agreed upon by the respective Parti~s) either Party may, pursuant to section 6.7 of this Agreement, submit the dispute to arbitration. Unless other- wise agreed by the Parties, the arbitration shall be governed by the rules and practices of the American Arbitration Association ("MA"). The award of the arbitrators shall be final and binding subject to FERC approval (if required by applicable law or the terms of this Agreement), and the costs and expenses of the arbi- trators shall be shared equally by the Parties participating in the arbitration, unless oth~rwise d~cided by the arbitrators. 6.7 The party submitting the dispute to arbitration shall '\ give written notic~ to the oth~r Party, setting forth in such notice in adequate detail the nature of the dispute, and the. remedy sought by such arbitration proceedings. within the period -5- specified in the rules of the AAA the other Party shall prepare its own statement of the matter at issue and set forth in ade- quate detail additional related matters or issues to be arbitrated. 6.8 Each party reserves the right.to audit at its own expense any costs, payments, settlements, or other supporting information pertaining to this Agreement. Audits shall be con~ ducted during normal business hours and only upon reasonable advance notice to the Party whose records are being audited. The Party performing the audit shall not release the other Party's records or disclose any information contained therein without the express written consent of the Party whoSe records were audited. 6.9 All bills and payments to be made by Vernon to Tucson shall be sent to: Tucson Electric Power Company P. O. Box 711 Tucson, Arizona 85702 Attention: Energy Accounting Tucson may at any time, by written notice to Vernon, change the address to which bills and payments shall be sent. 6.10 All bills and payments to be made by Tucson to Vernon shall be sent to: City of Vernon Light and power Department 4305 Santa Fe Ave. Vernon, California 90058 Attention: Power Resource Production Supervisor Vernon may at any time, by written notice to Tucson, change the address to which bills and payments shall be .sent. -6- ARTICLE VII ADMINISTRATION 7.1 Each Party shall appoint one "Operating Representative" to secure effective cooperation and to enable the Parties to deal on a prompt and orderly basis with the various operating and technical problems which arise in connection with delivery of power, reciprocal services, and coordination of interconnected operations. 7.2 Each Operating Representative shall be authorized on .:- behalf of the Party designating him to act with respect to those matters herein provided to be responsibilities of the operating Representative. Each Party w~ll notify the other Party promptly of the designation of its Operating Representative and of any subsequent changes in such designation. The functions and responsibilities of the Operating Representatives shall be: 7.2.1 To establish procedures and standard practices (consistent with the provisions hereof) for the guidanCe of load dispatchers and other operating employees as to matters affecting interconnected operations of the respective systems, delivery of power, interchange of energy, transmission service, and other similar operating matters; 7.2.2 To establish procedures and practices as to determinations of costs and expenses and energy losses in connec- tion with intersystem transactions hereunder; 7.2.3 To establish detailed arrangements for metering, communication and control facilities; 7.2.4 To do such other things as are provided for -7- herein, provided that the Operating Representative shall have no authority to modify any of the provisions of this Agreement. 7.2.5 The establishment of any procedure or practice and any other action or determination by the Operating Represen- tatives shall be effective when signed by the Operating Represen- tative of each of the Parties. ARTICLE VIII LIABILITY 8.1 Each Party shall indemnify and hold harmless the other -- Party, its directors, officers, agents and employees from and against any claim or action brought by an agent or employee of the indemnifying Party for death, personal injury, or loss or damage to property, whether direct, indirect or consequential, related to the activities undertaken by the indemnified Party within the scope of this Agreement. Additionally, neither party shall be liable to the. other Party for any death of or injury to the other Party's agents or employees or any physical damage to the property of the other Party arising from activities under- taken within the scope of this Agreement. 8.2 The provisions of this section 8 shall not be construed so as to relieve any insurer of its obligation to pay any insur- ance proceeds in accordance with the terms and conditions of any valid insurance policy of either Party. 8.3 Each Party shall be solely responsible for the payment of claims to its employees for injuries occurring in connection with their employment or arising out of any Worker's compensation Law. -8- ARTICLE IX GENERAL PROVISIONS 9.1 Neither Party shall be considered to be in default in performance of its obligations under this Agreement (other than obligations to make payment for services provided pursuant to this Agreement), when a failure of performance shall be due to an uncontrollable force. The term "uncontrollable forceft means any cause or event beyond the control of the Party unable to perform such obligations, including but not restricted to failure of or -- threat of failure of facilities, flood, earthquake, storm, fire, lightning, epidemic, war, riot, civil disturbance ordisobedi- ence, labor dispute, labor or material shortage, sabotage, restraint by court order or public authority and action or non action by or failure to obtain the necessary authorization or approvals from any governmental agency or authority which by exercise of due diligence such Party could not reasonab~y have been expected to avoid and which by exercise of due diligence it shall be unable to overcoma. No Party shall, however, be re- lieved of liability for failure of performance if such failure is due to causes arising out of its own negligence or due .to remov- able or remediable causes which it fails to remove or remedy with reasonable dispatch. Nothing contained in this Section 9.1 shall be construed to require a Party to settle any strike or labor dispute in which it may be involved. Any Party unable to fulfill any of its obligations under this Agreement by reason of uncon- trollable force shall give prompt written notice of such fact to the other Party and>shall exercise due diligence to remove such -9- inability with all reasonable dispatch. 9.2 A waiver at any time by a Party of its rights with respect. to a default under t.his Agreement, or with respect to any other matter arising in connection with this Agreement, or any Service schedule hereto, shall not be deemed a waiver with respect to any subsequent default or matter. No delay, short of the statutory period of limitations, in asserting or enforcing any right hereunder shall be deemed a waiver of such right. 9.3 Any formal notice, demand, or request provided for in this Agreement, or given or made in connection with this Agree- m~nt, shall be deemed to be properly given or made if personally delivered or t.elegraphed or sent by United states certified mail, postage pre-paid, to the person specified: To or upon TUcson - Secretary Tucson Electric Power Company P. O. Box 711 Tucson, Arizona 85702 To or upon Vernon - City Administrator City of Vernon 4305 Santa Fe Ave. Vernon, California 90058 A Party may, at any time by written notice, change the designa- tion or the address of the person so specified. This paragraph does not apply to notices and requests of a routine character in connection with delivery .or receipt of power or in connection with operation of facilities. Such notices and requests shall be given in such manner as the Operating Representatives from time to time shall arrange. 9.4 Nothing contained in this Agreement and any amendments hereto, including the Service Schedule(s) attached hereto, as -10- -- modified from time to time, shall be construed as affecting in any way the right of the Party furnishing service hereunder to unilaterally make application to the Federal Energy Regulatory Commission for a change in rates, under Section 205 of the Federal Power Act and pursuant to the'commission's.Rules and Regulations thereunder. Nothing contained herein shall affect Vernon's ability to exercise any rights and remedies provided under the Federal Power Act, including the right to oppose an application for change in rates, which Tucson has the unilateral right to file pursuant to this Agreement. 9.5 This .Agreement, including Service Schedule(s) hereun- der, shall be binding upon and inure to the benefit of the respective successors and assigns of the Parties. 9.6 This Agreement and the attached Service Schedule(S) constitute and express the entire agreement between the Parties concerning the subject matter hereof. 9.7 Tucson shall request the Federal Energy Regulatory Com- mission (FERC) to accept this Agreement for filing so that it may be placed into full effect as soon as possible. Vernon shall support Tucson's filing by filing with FERC a letter or other notification of concurrence if requested to do so by either Tucson or FERC. The obligations of the Parties under this Agree- ment to deliver or receive energy shall not take effect until acceptance of this Agreement, including service schedules, by the FERC or its successor. 9.8 In the event that FERC orders any material changes or modifications to this Agreement, either Party shall have the -11- INTERCHANGE AGREEMENT between TUCSON ELECTRIC POWER COMPANY and CITY OF VERNON SERVICE SCHEDULE A ECONOMY ENERGY INTERCHANGE This Service Schedule A is agreed upon and incorporated by reference as a part of the Interchange Agreement (Agreemen.t) entered into between TUCSON ELECTRIC POWER COMPANY (Tucson) .and ~- CITY OF VERNON (Vernon). A.I This Service Schedule shall be in effect concurrently with the Agreement unless modified, superseded, or terminated by the Parties. A.2 Subject to statutory and regulatory requirements, each Party will supply Economy Energy when and as requested by the other Party in amounts up to the capacity of its power sources and transmission interconnections provided that, in the sole judgment of the supplying party, such Economy Energy is available and will not result in impairment of or jeopardy to service in its own system, its customers, or its conunitments to third par- ties. Each Party shall be the sole judge as to the conditions under which it is economical, practicable and desirable for it to deliver Economy Energy hereunder. For the purposes of this Agreement, unless otherwise agreed upon by the Parties, "Economy Energy" is energy, interruptible at any time by either Party upon prior notification, when practicable, which the supplying Party has agreed to deliver and the receiving Party has agreed to A( 1) -- receive. A.3 Insofar as practicable, hourly schedules for Economy Energy transactions shall be arranged between the Parties' dis- patchers or schedulers at least thirty (30) minutes before the hour, subject to later modification if unforeseen circumstances arise. A.4 The points of delivery for power and energy delivered hereunder shall be as specified in the Agreement. A.5 The method of settlement and price for Economy Energy shall be determined in advance of any Economy Energy transaction in accordance with one of the following methods as mutually agreed by the Parties' dispatchers or schedulers. A.5.l By payment made for Economy Energy by the receiving Party to the supplying Party equal to one-half of the sum of the supplying Party's estimated incremental cost and the receiving party's estimated decremental cost (provided, however, that the price floor determined pursuant to this section A.5.l shall be the supplying Party's estimated incremental cost). A.5.2 By payment made by the receiving Party to the supplying Party at a rate mutually acceptable to the Parties' dispatchers or schedulers and mutually beneficial to both Par- ties. When Economy Energy is sold by Tucson to Vernon under this section A.5.2 the payment by Vernon shall not exceed the amount determined in accordance with section A.5.l for that transaction and shall not be less than the supplying Party's incremental cost. A.6 For the purposes of this Agreement the term "estimated A (2) decremental cost" shall be the estimated value to the receiving Party of the incremental fuel cost, incremental operation and maintenance cost, transmission losses, cost of purchased energy and any other costs avoided by purchase of Economy Energy here- under less any estimated cost to the receiving party of transmis- sion losses, and any other costs incurred as a direct result of the purchase of Economy Energy hereunder. A.7 For the purpose of this Agreement the term "estimated incremental cost" shall be the estimated value to the supplying Party of the incremental fuel cost, incremental operational and maintenance cost,. transmission losses, cost of purchased energy and any other costs incurred in supplying Economy Energy. A.8 In determining "estimated decremental cost" and "estimated incremental cost" in accordance with sections A.6 and A.7, applicable start-up costs, transmission service charges by third parties and the t.otal of any and all taxes, fees or charges imposed or required to be paid by federal, state, county, munici- pal or other governmental authorities based upon the services rendered or other right or privilege of rendering the service, shall be excluded. Such costs thus excluded shall be billed in their entirety to the receiving Party provided that the supplying Party has notified the receiving Party of the applicability of such costs prior to the transaction wherein such costs shall be applied. A.9 In the event this Service Schedule is terminated pur- suantto paragraph A.I, the obligations of the Parties with respect to payment shall continue until all payments due under A(3 ) ~.. this Service Schedule have been made. This service Schedule A, Economy Energy Interchange is executed in duplicate as of the day of , 1992. TUCSON ELECTRIC POWER COMPANY By <pa.Q.tl~ vice President CITY OF VERNON By ~/;H".d~Fl"~'. ~ . . Mayor . '--- Attest ~v{J~a;~ city Clerk Approved as to Form BY\)~~(~~ city Attorney A( 4)