Resolution No. 6301
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RESOLUTION NO. 6301
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION
OF A SUBSTITUTE LETTER AGREEMENT DATED AUGUST 4,
1993, BY AND BETWEEN THE CITY OF VERNON
("VERNON") AND THE SOUTHERN CALIFORNIA EDISON
COMPANY ("EDISON") PROVIDING FOR THE PURCHASE OF
REPLACEMENT CAPACITY BY VERNON FROM EDISON FOR
THE CITY CAPACITY RESOURCES INTEGRATED BY VERNON
(ENTITLEMENTS IN PALO VERDE UNITS 1, 2 AND 3)
DURING 1993
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WHEREAS, Vernon and Edison entered into an Integrated
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Operations Agreement ("IOA") on August 25, 1982, to provide, among
other things, for the integration of Vernon's interests in the
Palo Verde Nuclear Generating station; and
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WHEREAS, the City Council of the City of Vernon approved
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Resolution No. 5695 on December 5, 1989, which approved Vernon
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entering into a November 21, 1989 Letter Agreement with Edison
providing for the purchase of Replacement Capacity in 1990 by
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Vernon from Edison for Vernon City Capacity Resources; and
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WHEREAS, said Letter Agreement terminated as of December
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31, 1990; and
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WHEREAS, the City Council of the City of Vernon, by
Resolution No. 6292 adopted on July 20, 1993, approved a July 8,
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1993 Letter Agreement with Edison to provide for the purchase of
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replacement capacity for the city capacity resources integrated by
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Vernon (entitlements in Palo Verde Units 1, 2 and 3) during 1993;
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and
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,
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WHEREAS, Edison rejected the agreement proposed on July
8, 1993, and has proposed a substitute agreement with a different
pricing structure; and
WHEREAS, Vernon desires to accept Edison's proposal in
the substitute Letter Agreement of August 4, 1993, and desires to
establish the terms and conditions whereby Vernon could purchase
Replacement Capacity from Edison for City Capacity Resources
integrated by Vernon (entitlements in Palo Verde Units 1, 2 and
3) .
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: That the City Council of the City of Vernon
does hereby find and determine that the recitals contained
hereinabove are true and correct.
SECTION 2: The City Council of the City of Vernon hereby
approves the Letter Agreement dated August 4, 1993, by and between
Vernon and Edison providing for the purchase of Replacement
Capacity in 1993 by Vernon from Edison for Vernon City capacity
Resources integrated by Vernon (entitlements in Palo Verde Units
1, 2 and 3), a copy of which has been presented to the City
Council concurrently with this resolution, and the City Council
hereby orders said Letter Agreement to be received and filed by
the City Clerk.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the Mayor and City Clerk to execute said Letter
Agreement for, and on behalf of, the City of Vernon.
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SECTION 4: The City Clerk of the City of Vernon shall
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certify to the passage of this resolution and thereupon and
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thereafter the same shall be in full force and effect.
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APPROVED AND ADOPTED this 3rd day of August, 1993.
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STATE OF CALIFORNIA )
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COUNTY OF LOS ANGELES )
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I, BRUCE V. MALKENHORST, City Clerk of the City of
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Vernon, do hereby certify that the foregoing Resolution, being
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Resolution No. 6301, was duly adopted by the City Council of the
City of Vernon at a regular meeting of the City Council duly held
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on Tuesday, Auqust 3. 1993, and thereafter was duly
BRUCE V. MALKENHORST, City Clerk
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Mayor of the City of Vernon.
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(SEAL)
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Southern California Edison Company
p, 0, BOX 800
2244 WALNUT GROVE AVENUE
ROSEMEAD, CALIFORNIA 91770
VIKRAM 5, BUDHRA.JA
VICE PRESIDENT
TELEPHONE
818-302-9578
August 4, 1993
City of Vernon
City Hall
4305 Santa Fe Avenue
Vernon, CA 90058
Attn: Mr. Bruce V. Malkenhorst, City
Administrator/City Clerk
Subject: Purchase of Replacement Capacity in 1993 by
the City of Vernon from Southern California
Edison Company for Vernon City Capacity Resources
The City of Vernon (Vernon) and the Southern California Edison Company
(Edison) entered into the Integrated Operations Agreement (IDA) on August 25,
1982, to provide, among other things, for the integration of the Resources acquired
by Vernon as City Capacity Resources. Vernon and Edison previously entered into a
November 21, 1989 agreement, the subject of which was "Purchase of Replacement
Capacity in 1990 by the City of Vernon from Southern California Edison Company
for Vernon City Capacity Resources." That agreement terminated as of midnight
December 31, 1990. Vernon and Edison wish to enter into a new agreement for
"Purchase of Replacement Capacity in 1993 by the City of Vernon from Southern
California Edison Company for Vernon City Capacity Resources" (Agreement).
Wherefore the Parties agree as follows:
1. Vernon may be required to purchase Replacement Capacity to replace Rated
Capability unavailable from its City Capacity Resources. Section 16.1.3.2 of the
lOA provides that Vernon may purchase Replacement Capacity from Edison.
Vernon may desire to purchase Replacement Capacity for its City Capacity
Resources from Edison pursuant to the terms and conditions of the lOA.
2. Commencing with the effective date of this Agreement and pursuant to
Section 16.1.3.2 of the IDA, and with the exception provided in Paragraph 4
hereof, Vernon, to the extent it does not purchase Replacement Capacity from
Third Parties in accordance with said Section 16.1.3.2, shall purchase its full
requirements of Replacement Capacity for its City Capacity Resources from
Edison for the period specified in Paragraph 5 hereof. The amount of
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City of Vernon
August 4, 1993
Page 2
Replacement Capacity to be purchased shall be calculated pursuant to
Section 16.1.2 of the IDA.
3. Section 16.1.4 of the IDA provides that the charge per kilowatt per day for
Replacement Capacity may be agreed upon by the Parties. Except as provided
pursuant to Paragraphs 4, 5, 6, 9, 10 and 11 hereof, Edison and Vernon agree
that Edison's charge for Replacement Capacity for Vernon's City Capacity
Resources shall be twenty cents ($0.20) per kilowatt per day for the period
from the effective date of this Agreement through October IS, 1993 and
ten cents ($0.10) per kilowatt per day thereafter. Unless otherwise agreed by
the Parties, this charge shall revert to the charge calculated in accordance with
the formula specified in Section 16.1.4 of the IDA, and this Agreement shall
terminate, upon ten (10) calendar days' written notice by Edison or Vernon. It
is the Parties' intent that such formula charge remain in effect so that a charge
shall be available for Replacement Capacity which cannot be terminated upon
ten (10) calendar days' written notice by either Party. Vernon waives any
challenge to such notice period for the charge for Replacement Capacity
specified herein. Vernon shall not request a suspension or otherwise protest
the termination of this Agreement or the reversion to such formula charge
under Section 205 or 206 of the Federal Power Act.
4. If, pursuant to Section 16.1.7 of the IDA, the then-current reserve situation in
the Control Area requires purchases of capacity from other control areas in
order to maintain or restore the reliability and integrity of the Control Area,
Vernon shall use its best efforts to purchase Replacement Capacity from Third
Parties outside of the Control Area. In the event Vernon is unable to secure
Replacement Capacity from Third Parties, Vernon shall then purchase
Replacement Capacity from Edison at the charge calculated in accordance with
the formula specified in Section 16.1.4 of the IDA.
5. Edison shall make available Replacement Capacity in accordance with this
Agreement upon the effective date of this Agreement pursuant to
Paragraph 8 herein. Unless otherwise agreed and confirmed in writing by the
Parties, and except as provided in Paragraph 3, 4, 6 and 9 hereof, Edison shall
continue to make available Replacement Capacity at the charge specified
pursuant to Paragraph 3 hereof, through December 31, 1993. Unless otherwise
agreed by the Parties, the charge for Replacement Capacity shall terminate and
revert to the charge calculated in accordance with the formula specified in
Section 16.1.4 of the IDA after that date. Vernon waives any challenge to such
termination. Vernon shall not request a suspension or otherwise protest a
reversion to such formula charge under Section 205 or 206 of the Federal
Power Act.
City af Vernan
August 4, 1993
Page 3
6. Either Edisan ar Vernan may terminate Replacement Capacity purchases and
sales at the charge af twenty cents ($0.20) ar ten cents ($0.10) per kilawatt per
day, as specified in Paragraph 3 hereaf, by submitting written natice to. the
ather Party via certified mail return receipt requested, no. later than ten (10)
calendar days priar to. the requested terminatian date.
7. All written natices given herein shall be in accardance with Sectian 38 af the
IDA.
8. Edisan and Vernan agree that this Agreement is in implementatian af and
entered into. pursuant to. the IDA. This Agreement shall became effective an
the date fallawing executian by bath Parties and acceptance far filing by the
Federal Energy Regulatary Cammissian (FERC) withaut suspensian;
pravided, hawever, if upan such filing the FERC enters into. a hearing to.
determine whether this Agreement is just and reasanable, it shall nat became
effective until the date when an arder no. langer subject to. judicial review has
been issued by the FERC determining this Agreement to. be just and
reasanable withaut changes ar new canditians unacceptable to. either Party.
Vernan shall pay all fees imposed by the FERC associated with this
Agreement.
9. Edisan shall request that the FERC deem the effective date af this. Agreement
to. be the date af filing, and if the FERC accepts this request, the charge af
twenty cents ($0.20) ar ten cents ($0.10) per kilawatt per day specified pursuant
to. paragraph 3 hereaf shall, upan the effective date af this agreement, be
applied retraactively to. the date this Agreement is filed with the FERC to. any
Replacement Capacity purchased from Edisan during such periad in
accardance with Sectian 16.1.3.2 af the IDA. If the FERC does nat allaw the
Agreement to. became effective as af the date af filing, then, far the periad
fram the date af filing this Agreement to. the effective date assigned by the
FERC, Edison shall c~arge Vernan far any Replacement Capacity purchased
by Vernan fram Edisan at the rate determined in accardance with
Sectian 16.1.4 of the IDA.
10. In the event the FERC daes nat accept this Agreement, in accardance with
paragraph 8 hereaf, it is the intent af the Parties that Edison shall charge
Vernan far any Replacement Capacity saId by Edisan at a rate determined in
accardance with Sectian 16.1.4 af the IDA and Vernan shall pay far such
Replacement Capacity at such rate.
11. Nathing cantained herein shall be cans trued as ,affecting in any way the right
af (i) Edisan, in making available service hereunder, to. unilaterally make
applicatian to. FERC far a change in rates, charges, classificatian, ar service, ar
any rule, regulatian, ar cantract relating thereto. under Sectian 205 of the
City of Vernon
August 4, 1993
Page 4
Federal Power Act and pursuant to the rules and regulations promulgated by
FERC thereunder and have such change become effective pursuant to
Section 205 of the Federal Power Act or (ii) the right of Vernon to oppose such
changes, under Section 205 of the Federal Power Act. No provision of this
Agreement shall ,be deemed a waiver by either Party of any position with
regard to any rights or duties under the IDA.
12. Except for the definition of this "Agreement," all terms used herein with
initial capitalization (whether in the singular or plural) shall have the
meanings specified in the IDA. Replacement Capacity arrangements specified
herein are in implementation of the IDA, and shall neither alter nor amend
the IDA. Nothing contained herein shall be construed so as to impair
Edison's future right to charge Vernon the charge calculated in accordance
with the formula specified in Section 16.1.4 of the IDA for Replacement
Capacity immediately upon termination of this Agreement.
13. The Parties agree that the November 21, 1989 Agreement terminated as of
midnight December 31, 1990, and this Agreement supersedes it except for any
outstanding payment obligations referred to therein.
14. Unless terminated earlier in accordance with Paragraph 3 hereof, this
arrangement shall terminate at midnight on December 31, 1993.
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City of Vernon
August 4, 1993
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If Vernon finds the aforementioned acceptable, please so indicate by signing both
originals of this letter and returning one of them to Edison.
APPROVED :
BRYANT C. DANNER
Senior Vice President
and General Counsel
By ~ 9. .~
Attorney
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SOUTHERN CALIFORNIA EDISON
COMPANY
By:
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Vice President
CITY OF VERNON
By:
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Attest:
City Clerk
AP. PROVED AS TO F~.,.. .
BY_\.) I ~I ~A '
D.WID B. BREARLEY
CITY A'fTOHHEY ~j
Aua - 4 1993