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Resolution No. 72531 RESOLUTION NO. 7253 2 3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A 4 CONSULTING SERVICES AGREEMENT BY AND BETWEEN THE CITY OF VERNON AND HENWOOD ENERGY SERVICES, INC. FOR 5 THE DEVELOPMENT OF A RESOURCE PROCUREMENT MANAGEMENT POLICY AND IMPLEMENTATION PLAN 6 7 WHEREAS, the Utilities Department of the City of Vernon 8 ("Vernon") on October 27, 1998, submitted an RFQ to various entities 9 to provide consulting services for the development of a Resource 10 Procurement Management Policy and Implementation Plan; and 11 WHEREAS, Vernon needs said consulting services (i) to help 12 Vernon to maintain its competitive advantage, including the use of 13 Power Exchange Corporation ("PX"), futures and OTC transactions; (ii) 14 to allow Vernon to assess the credit risk of any counter -party and to 15 establish collateral standards; (iii) to develop a plan to implement 16 the Resource Procurement Plan and Credit Policy, including training 17 and contracting of certain work; (iv) to develop drafts of necessary 18 paperwork to govern physical and financial transactions in the PX, 19 futures, and OTC markets; and (v) to help identify third parties who 20 may provide detailed services related to the above policies and 21 procedures; and 22 WHEREAS, Vernon desires to retain Henwood Energy Services, 23 Inc. ("Henwood") to provide the assistance and consultation for the 24 development of a Resource Procurement Management Policy and 25 Implementation Plan; and 26 WHEREAS, Henwood is current providing similar services to the 27 City of Riverside and has the expertise to perform such services; and 28 WHEREAS, Vernon and Henwood desire to enter into a Consulting 1 Services Agreement setting forth the terms and conditions of the 2 services to be performed. 3 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE 4 CITY OF VERNON AS FOLLOWS: 5 SECTION 1: The City Council of the City of Vernon does 6 hereby find and determine that the recitals contained hereinabove are 7 true and correct. 8 SECTION 2: The City Council of the City of Vernon hereby 9 approves the Consulting Services Agreement, a copy of which has been 10 presented to the City Council concurrently with this resolution, and 11 the City Council hereby orders said Agreement to be received and filed 12 by the City Clerk. 13 SECTION 3: The City Council of the City of Vernon hereby 14 authorizes the Purchasing Agent to execute said Agreement for, and on 15 behalf of, the City of Vernon. 16 SECTION 4: The City Clerk of the City of Vernon shall 17 certify to the passage of this resolution and thereupon and thereafter 18 the same shall be in full force and effect. 19 APPROVED AND ADOPTED this 15th day of December, 1998. 20 LEONIS C. MALBURG, Mlkyor 21 ATTEST: 22 23 BRUCE V. MA-LKEENHORST, City Clerk 24 25 26 27 28 MOM r 1 STATE OF CALIFORNIA ) ) ss 2 COUNTY OF LOS ANGELES ) 3 I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do 4 hereby certify that the foregoing Resolution, being Resolution No. 5 7253, was duly adopted by the City Council of the City of Vernon at a 6 regular meeting of the City Council duly held on Tuesday, December 15, 7 1998, and thereafter was duly signed by the Mayor of the City of 8 Vernon. 9 10- BRUCE V. MALKENHORST, City Clerk it 12 (SEAL) 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3- THIS AGREEMENT is made, entered into and executed in duplicate originals, either copy of which may be considered and used as the original hereof for all purposes, as of this /¢� day ofpee , 1998, in the City of Vernon, California BY AND BETWEEN THE CITY OF VERNON, (hereinafter "City") 4305 Santa Fe Avenue Vernon,. California, 90058 AND Henwood Energy Services, Inc. (hereinafter "Consultant") 2710 Gateway Oaks Drive, Suite 300 North Sacramento, California 95833 1. Scope of Services. Consultant shall perform services as outlined in the Proposal dated December 9, 1998, which is made a part hereof by reference. Consultant's services shall commence upon signing of this Agreement and shall be completed by January 28, 1999 unless terminated or extended, as �orge— 2. Compensation. The City shall compensate the Consultant in a total sum not to exceed $24,500. Expenses may be billed butF only if given advance approval in writing by the City Administrator. Within thirty (30) days after the last day of any month in which services have been performed or costs incurred hereunder, the Consultant shall submit an invoice to the City stating the amount due. Payment of the invoice shall be made after acceptance and approval by the City within thirty (30) days. 3. Independent Contractor. At all times during the term of this Agreement, the Consultant shall be an independent contractor and shall not be an employee of the City. The City shall have the right to control the consultant only insofar as the results of the Consultant's services rendered pursuant to this Agreement; however, the City shall not have the right to control the means by which the Consultant accomplishes services rendered pursuant to the Agreement except to the extent that such services involve the use of City of Vernon property or Confidential Information. 4. Consultant Not Agent. Except as the City may specify in writing, the consultant shall have no authority, express or implied, to act on behalf of the City in any capacity whatsoever as an agent. The Consultant shall have no authority, expressed or implied, pursuant to this Agreement to bind the City to any obligation whatsoever. 5. Products of Consulting. All products of consulting services with the exception of computer software developed by the Consultant, shall become the property of the City and shall be delivered to the City before the end of the performance of this Agreement. However, computer software shall remain the property of the Consultant, except for the City's continued right to use said software at no extra cost. 6. Indemnification. The Consultant shall indemnify, defend, protect and hold the City and its officers, agents and employees, free and harmless from and against any and all claims, demands, losses, damages, liabilities, fines, charges, penalties, orders, judgments, and all costs and expenses incurred in connection therewith, including reasonable attorneys' fees and costs of defense arising, directly and indirectly, in whole or in part due to death, injury, or property damage only related to the services performed under this Agreement, except to the extent arising from or caused by the sole negligence or willful misconduct of the City, its officers, agents or employees. 7. Insurance. Consultant agrees to provide and maintain insurance in the following amounts and forms (combined single limit acceptable): Coverage and Limits Bodily Injury Property Damage Type Ea. Person Ea. Accident Ea. Accident Automobile Liability Owned Automobiles $ 500,000 $1,000,000 $ 500,000 Hired Automobiles $ 500,000 $1,000,000 $ 500,000 Non -Owned Automobiles $ 500,000 $1,000,000 $ 500,000 Workers' Compensation Employers' Liability General and Professional Liability Premises Operations Elevators (if applicable) Statutory $1,000,000 per employer $1, 000, 000 $1,000,000 $2, 000, 000 $2,000,000 C5R_V%.0— ao kli/c-) $1, 000, 000 $1, 000, 000 J Independent Contractors $1,000,000 $'2, 000, 000 $1,000,000 Products - Completed Operations $1,000,000 $2,000,000 $1,000,000 Contract Liability $1,000,000 $2,000,000 $1,000,000 Professional Liability $2,000,000 $2,000,000 $2,000,000 The general liability policy shall contain the special endorsements which shall be noted on or attached to the standard certificate of insurance, (a) naming the City of Vernon, its officers, and employees as insureds under the policy, and (b) providing coverage for all operations under this Agreement. The Consultant shall submit to the City certificates indicating compliance with these minimum requirements no less than one (1) day prior to the beginning of performance under this Agreement. The certificate shall state that such policies of insurance shall not be materially changed, terminated or allowed to expire except on thirty days' prior written notice to City; and (b) replace such certificates for policies expiring prior to completion of work under this Agreement. In addition to the standard certificate of insurance, proof of general and professional liability coverage shall be furnished in the form of either (a) a notarized letter from the underwriter or carrier certifying that the coverage and statements in the standard certificate of insurance (attached thereto) are true and �,r Firo correct and that the signatory is an officer authorized to so k certify, or (b) a copy of each policy certified by an officer of LI the underwriter or carrier and notarized. Certification of the ' foregoing proofs by an insurance agent or broker will not be accepted. r¢o4 '8 . Confidential Information v�+ Maw A. Access to Confidential Information. The City of Vernon may provide Consultant with certain information not legally subject to public disclosure concerning the City of Vernon, or businesses located in the City of Vernon. Such information shall be known as "Confidential Information." B. No Disclosure. Consultant shall return any written Confidential Information, and all copies made of such items, to the City upon the City's written request, but in any event not later than the date that the Consultant has performed all services to be performed pursuant to this Agreement. Consultant hereby agrees that such Confidential Information and any -3- documents provided may be used by Consultant only as authorized by the City or the City of Vernon. Consultant shall take reasonable measures to avoid any disclosure of any such Confidential Information to any unauthorized person. C. Court Ordered Disclosure. Consultant shall immediately notify the City of any court order or subpoena requiring disclosure of Confidential Information, and shall cooperate with City's legal counsel in responding to any such order or subpoena. Consultant may only disclose such Confidential Information after legal counsel has exhausted any lawful and timely appeal or challenge. D. Remedies. In addition to any other remedies that it may have at law or in equity, the City shall be entitled to a temporary and permanent injunction by a court of competent jurisdiction against any breach or threatened breach of the Confidential Information provisions of this Agreement. Consultant acknowledges that in case of such breach or threatened breach, the City would have no adequate remedy at law. 9. Assignment Prohibited. No party to this Agreement may assign any right or obligation pursuant to this Agreement except with the express written consent of the other party. Any other attempted or purported assignment of any right or obligation pursuant to this Agreement shall be void and of no effect. 10. Termination. This Agreement may be terminated by the City on thirty (30) days written notice to the Consultant. The Consultant shall be entitled to the compensation earned by it prior to the date of the termination notice, computed pro rata up to and including that date, plus compensation for work performed during the thirty -day notice period and authorized in the termination notice. 11. Governing Law. The validity, interpretation and performance of this Agreement shall be controlled and construed under the laws of the State of California. 12. Attorneys' Fees. In the event that it becomes necessary for either party to this Agreement to enforce any of the provisions of this Agreement, the parties agree that a court of competent jurisdiction may determine and fix reasonable attorneys' fees to be paid to the successful litigant. 13. Notices. Notices to the parties unless otherwise requested in writing shall be sent to the addresses listed on the first page of this Agreement. -IN WITNESS WHEREOF, the City and the Consultant have executed this Agreement as of the date first hereinabove set forth. THE CITY OF VERNON BY: BRUCE V. MALKENHORST, Purchasing Agent - 5 - HENWOOD ENERGY SERVICES, INC. BY: 1/1998 12:17 7148160603 LANGAN PAGE 01 Henwood Energy Services, Inc. 2710 Gateway Oaks Drive, Suite 300 Norte Sacramento, CA 95833 Phone: (916) 569-0985 Fax: (916) 569-0999 December 9, 1998 Mr. George Somoano Assistant Director of Utilities Resource Management City of Vemon 4305 Santa Fe Avenue Vernon, CA, 90058 Re: Response to RFQ for Development of an Resource Procurement & Credit Risk Management Policy Dear Mr. Somoano: Henwood Energy Services, Inc. (HEST) is pleased to provide the following proposal to assist the City of Vernon in the development of a Resource Procurement & Credit Risk Management Policy. HESI has considerable experience in this area, including development of City of Riverside Public Utility's Risk Management Policy and Implementation Plan. In addition, HESI has developed a state-of-the-art program for energy trading and risk management called ETRMTM For this assignment, HESI will perform the following tasks: • Execute an appropriate Confidentiality Agreement that is acceptable to both parties. • Study the load/resource balance of the City of Vernon and develop an energy risk profile for various load conditions. • Identify the City's potential exposure to credit risk through transactions to manage the load/resource balance. • Prepare an outline of suggested measures to mitigate the energy and credit risks identified above • Present and discuss the outline at a kickoff meeting in Vemon on Thursday, December 17, 1998. • Based on input received at the kickoff meeting, complete a draft Resource Procurement & Credit Risk Management Policy. • Review, edit, and enhance the draft Policy during several working sessions to be held in Vernon over a period of four weeks after the kickoff meeting;. • Finalize Resource Procurement & Credit Risk Management Policy by January 28, 1999. The Policy will include, but not be limited to, discussions on the following: 12'/14�199B 12:17 714B160603 LANGAN PAGE 02 Resource Procurement " A plan to help Vernon maintain its competitive advantage, including the use of PX, futures, and OTC transactions. • Organization structure and reporting requirements to facilitate resource procurement and control risk • The different areas of risk (prrocurement price, counter -party performance & credit, operations) and ways to manage/minimize them. • Authorizations and limits on transaction term, type, and size • Setting goals (e.g. low rates, better rates than competitors, lowest rates in California) and ways to achieve them • Load forecast reliability and its impact on procurement decisions • Sources of information on current market prices, price forecasts, unit outages, weather forecasts, hydroelectric conditions, and fuel prices • The need to establish counter -party credit lines and a futures account to enable transactions in non-traditional markets • Transmission constraints and its affect on market opportunities • Market liquidity Credit Risk Develop a policy to allow Vernon to assess the credit risk of any counter party and to establish collateral standards. • Develop a list of counter -party financial and transactional criteria based on City of Vernon requirements • Discuss the application and administration of letters of credit, required for transactions with counter -parties who do not meet the City's criteria. • Recommend that major transactions (based on ternn and financial size) only be opened with counter -parties who exceed the criteria. (The discussion on credit risk will be "higher level"_ An extensive credit analysis of potential trading counter -parties is beyond the scope of this work.) Implementation Plan Develop a plan to implement the Resource Procurement & Credit Risk, Management Policy, including training and contracting of certain work. Implementation of the Policy will include discussions on: • Establishment of team and/or individual responsibilities (transactions, operations, credit, risk monitoring & measurement, etc.) • Reports (position report, approved counter -parties, audit, accounting, etc.) • Trading rules (e.g. limited speculation in purchases based on a % of total requirements) Draft Agreements Develop drafts of necessary paperwork to govern physical and financial transactions in the PX, futures, and OTC markets. 1-211.44199E 12:17 714E160603 LANGAN PAGE 03 HESI will draw from an extensive list of industry contacts among electric utilities, power marketers, and traders to develop drafts of the necessary paperwork for different transactions. The drafts will be designed for clarity and conciseness, and be in accordance with industry standards. The agreements will also be designed for the attention of only those individuals within approved counter -parties who are authorized to represent the counter -parties in transactions with the City of Vernon. The project manager for the above scope of work will be Tom Langan (resume attached). Tom recently developed and authored the Energy Risk Management and Implementation Plan for the City of Riverside. The cost estimate for development of the proposed Policy, in conjunction with the City of Vernon staff, is time and materials, not to exceed $24,500. The fee includes travel to Vernon and assumes working meetings are held in Vernon. If the above scope of work is acceptable, please have the authorized person sign where indicated below. HESI looks forward to working with the City of Vernon to develop this important document. Sincerely, A Name Tom Langan Title Senior Project Consultant Date Attachments: Tom Langan Resume Henwood Energy Services 1998 Fee Schedule Henwood Energy Services. Inc. 1998 Fee Schedule Professional Services The hourly fees for professional and related administrative services, which include project accounting, rents, and other normal corporate overhead costs, are: Support Service Charges In addition to payment for professional services, all reasonable and necessary expenses incurred concerning the performance of professional services will be billed at cost plus 10%. Such expenses include, but are not limited to, outside reproduction costs, artwork, airline travel, meals, lodging, postage, freight, telephone, and travel related expenses. Facsimile charges are $2 per outgoing page, no charge for receiving. Internal copying is charged at $0.10 per page. Mileage is charged at the Standard Mileage Rate as determined by the Internal Revenue Service. Materials, Equipment, Subcontractors Charges for the purchase of job parts and materials, specialized equipment rental or purchase, and tool rental or replacement purchase shall be charged at cost plus 15%. Expenditures for hiring of sub - consultants or subcontractors shall be charged at cost plus 15%. To the extent sales, use, or district taxes apply, such taxes shall be charged. Fee Schedule Revision This schedule is effective commencing January 1, 1998 and may be revised periodically by HESI. Insurance Provisions - Where a Client requires that it or other entities be named as additional insureds with regard to company insurance policies, any cost to Henwood Energy Services, Inc. for such provisions shall be billed to the Client. December 10, 1998 TO: Bruce V. Malkenhorst, City Administrator FROM: Kenneth J. DeDario, Director of Utilities SUBJECT: Consulting Services Agreement Please place the following on the City Council agenda: Consideration of a Consulting Services Agreement Between the City of Vernon and Henwood Energy Services, Inc. If you have any questions or comments, please contact me. Thank you for your consideration. KJD:dm CHUBB GROUP OF INSURANCE COMPANIES 6400 South Fiddler's Green Circle, Suite 1600, P.O. Box 6520, Englewood, CO 80155-6520 Phone: (303) 770-8700 December 23, 1998 City of Vernon Attn: Bruce V. Malkenhorst 4305 Santa Fe Avenue Vernon, CA 90058 Re: Henwood Energy Services, Inc. General Liability Policy #: 3710-14-36 Auto Liability Policy #: 7322-37-50 Dear Mr. Bruce V. Malkenhorst: U <J M1N CiTy FrRAT�� . �h/vaM opF/cf This letter is certifying that the coverage and statements in the standard certificate of insurance (attached thereto) are true and correct and that the signatory is authorized to so certify. Regards, e'Nelle Smith Energy Resources Group - Federal Insurance Company Pacific Indemnity Company DEC-23-98 WED 12:22 LUMBERMENS INSURANCE FAX NO. 15-413853231 P.02 .CQ v IA PRODUCER 541 362.2421 LUMBERMENS INSURANCE & FINANCIAL SERVICES DATE (MM/DDIVY) 2/23/98ym THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIPICATE HQLP98._Tj65 PEHTIFiC&TE.DOP-S..AtOT.ArAEIYD. EXT5NM no ... ALTER THE COVERAGE AFFORDED BY THE POLICIES BfioW' PO BOX 831 CQMPANIES AFFORDING COVERAGE BEND OR 97709-0831 COMPANY A FEDERAL INSURANCE CO INSURED HENWOOD ENERGY SERVICES INC COMPANY B PACIFIC INDEMNITY INS Co NANCY FALLAT COMPANY 2710 N GA'rEWAY OAKES DR c SACRAMENTO CA 96833 COMPANY D 77777 THIS IS TO CERTIFY THAT HE, POL ' CY P THE OF INSURANCE LISTED ]BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR T I 170171 ""0 . TM, NDTINiTHST ANDiNG ANY REQUIREMENT, TERM OR 'C'4EljR'T'l,mF,,AT, CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS MAY Rr- 1.0 lim r%n LAA FEPITANN, --- AFFORDEL) 8Y THE FOLZgg DESCMRM HWIN i� SUiLIECT TO ALL THE TER I-m- -1. .11-Y I flG INIOU ms, EXCLUSIONS AND CONDITIONS OF'SUCH LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. CO LTR TYPE OF INSURANCE ..POLICIES, POLICY NUMBER POLICY EFFECTIVE DATE IMMIDDIYY) POLICY EXPIRATION DATE (MMIDD/VYI LIMIYS A -GENERAL LIABILITY 37101436 3119198 21/19199 GENERAL Arr.REGATF 2000000 COMMERCIAL 159NERAL LIABILITY CLAIMS MADE El OCCUR I PRODUCTS - COMP/OP AGro 1 1000000 PERSONAL & AOV INJURY 1 1000000 _ EACH OCCUKRENCE_ $ -19Q000 OWNER'S & CONTRACTOR'S PROT FIRE DAMAGE (Any one fire) s 100000 -7 MPQ EXP (Any one p6tion) 0 10000 UTOMOBILE X LIABILITY ANY AUTO BAP73223750 COMBINED SINGLE LIMIT $ 1000000 BODILY INJURY 1 .4.. ALL OWNED AUTOS teer per sonj X X HIRED AUTOS NON -OWNED AUTOS BODILY INJURY lPQr;cold;inu PROPERTY DAMAGE I GARAGE (JADILITY AUTO ONLY - EA ACCIDENT OTHER THAN AUTO ONLYi ANY AUTO EACH ACCIDENT I L q AGGREGATE S EXCESS LIABILITY EACHOCCURRENCE6 AGGREGATE 4 RUMBRELLA FORM 0 OTHER THAN UMBRELLA FORM WORKERS COMPENSATION AND WC OTH- [MPLBYEiiS' LIAMLITY EL EACH ACCIDENT 111 THE PROPRIETOR! INCL PARTNERS/EXECUTIVE RL DISEASE - POLICY LIMIT 6 EL DISEASE• EA EMPLOYES OFFICERS PXCL ARE: OTHER DESCRIPTION_ OF OPERATION91L.DrATIQNSIVEHICLESIBI-ECIAL ITEMS THE CITY OF VERNON, ITS OFFICVRS, AND EMPLOYEES ARE NAMED ADDITIONAL INSUREDS RESPECTS ro OPERATIONS PERFORMED BY THE NAMED INSURED UNDSA CONTRACT, THE POLICY INCLUDES INDEPENDENT CONTRACTORS LIABILITY AS WELL AS CONTRACTUAL LIABILITY, 7� :M .... ik? R 'F'AILkfR9 CITY OF VERNON SHOULD ANY OF THE ABOVE DESCRIBED POLIOILSI BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF,THE ISSUING COMPANY WILL ENDEAVOR TO MAIL ATTN, BRUCE V MALKENHORST _� LO DAYS WRITTEN NOTICE TO THE CERTIFICATE HOLDER NAMED TO THE LOPY, 4305 SANTA FE AVENUE VERNON, CALIFORNIA 90068 BUT T RmAll stl'Cli NOTIC� SHALL !.R.A.PCS-E . ... .9 -_ — H ILIIT Or ANY KIND UPON THE COMPANY, ITS AGENTS OR REPRESENTATIVES, AUTHORIZED REPRESENTATIVE li w';. -8 j CITY COUNCIL LEONIS C. MALBURG Mayor THOMAS A. YBARRA Mayor Pro -Tern Wm. 'BILL" DAVIS Councilman H. "LARRY" GONZALES Councilman W. MICHAEL McCORMICK Councilman BRUCE V. MALKENHORST City Administrator / City Clerk FAX (323) 581-7924 DAVID B. BREARLEY City Attorney FAX: (626) 330-5818 KEVIN WILSON Director of Community Services & Water FAX: (323) 588-2761 KENNETH J. DeDARIO Director of Municipal Utilities FAX: (323) 583-1983 DAVE TELFORD Fire Chief FAX: (323) 581-1385 CITY HALL BRUCE W. OLSON 4305 SANTA FE AVENUE, VERNON, CALIFORNIA 90058 Police Chief TELEPHONE (323) 583-8811 FAX: (323) 583-5236 December 17, 1998 Henwood Energy Services, Inc. 2710 Gateway Oaks Drive Suite 300 North Sacramento, California 95833 Attn: Thomas J. Langan, Senior Project Consultant Dear Mr. Langan: Enclosed herewith is a copy of the Consulting Services Agreement for your records which was approved by the City Council of the City of Vernon on December 15, 1998 through Resolution No. 7253. An original has also been retained by this office. If you have any questions, please do not hesitate to call Mr. Jorge Somoano at Ext. 248. Very truly yours, Gloria J. 0 os o� Chief Depu City Clerk GJO:rcw cc: Jorge Somoano OFFICE OF THE CITY CLERK INTER -OFFICE MEMORANDUM Date: December 16, 1998 I To: Jorge Somoano, Assistant Director of Resource Management FROM: Gloria J. Oro(_C)d'' Chief Deputy City Clerk -RE: Consulting Services Agreement Enclosed, for your files, is a copy of the above referenced agreement along with a copy of Resolution No. 7253 which was approved by the City Council on December-15, 1998.