Resolution No. 78451
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RESOLUTION NO. 7845
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AND RATIFYING THE EXECUTION OF A
GAS SALES AGREEMENT BY AND BETWEEN THE CITY OF
VERNON AND BP ENERGY COMPANY
WHEREAS, on September 19, 2000, the City Council of the City
of Vernon approved Resolution No. 7636 authorizing the execution of a
Natural Gas Sales Agreement which expired on September 30, 2001; and
WHEREAS, the City of Vernon ("City") desires to purchase
certain quantities of natural gas for its combustion turbines at the
Vernon Power Plant and City staff sought informal bids to obtain
natural gas on favorable terms to the City; and
WHEREAS, City staff and BP Energy Company ("BP Energy") are
in the process of negotiating a Natural Gas Purchase and Sale
Agreement; and
WHEREAS, in order to meet the urgent demand for quantities of
natural gas needed for its combustion turbines at the Vernon Power
Plant effective October 1, 2001, the City Administrator executed a
Transaction Confirmation to Gas Sales Agreement ("Transaction
Confirmation") on September 27, 2001, subject to ratification by the
City Council; and
WHEREAS, pursuant to the Transaction Confirmation, BP Energy
agrees to sell natural gas on favorable terms to the City of Vernon
effective October 1, 2001, the initial term of which shall end on
October 31, 2001 and continue thereafter on a month -to -month basis
through September 30, 2002, with BP Energy having the option to extend
the term through September 30, 2003, upon written notification to the
City of such extension by August 1, 2002; and
1 WHEREAS, the term, price, quantity and point(s) of delivery
2 are set forth in the Transaction Confirmation; and
3 WHEREAS, the Transaction Confirmation will be subject to, a
4 part of and supplement the terms and conditions of the Natural Gas
5 Purchase and Sale Agreement that is being negotiated; and
6 WHEREAS, by letter dated September 27, 2001, Bruce V.
7 Malkenhorst, City Administrator/City Clerk, recommended that the
8 execution of the Transaction Confirmation be ratified; and
9 WHEREAS, the City Council desires to approve and ratify the
10 Transaction Confirmation as executed by the City Administrator; and
11 WHEREAS, the City Council of the City of Vernon has
12 determined that, pursuant to the provisions of Subsection (a) of
13 Section 2.27 of the Vernon City Code, it is in the public interest and
14 necessity to enter into an agreement with BP Energy.
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 true
19 and correct.
20 SECTION 2: The City Council of the City of Vernon hereby
21 approves and ratifies the Transaction Confirmation to Gas Sales
22 Agreement with BP Energy, a copy of which is attached hereto as Exhibit
23 "A" and made a part hereof.
24 SECTION 3: The City Council of the City of Vernon hereby
25 ratifies the execution of the Transaction Confirmation by the City
26 Administrator on behalf of the City of Vernon.
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SECTION 4: The City Clerk of the City of Vernon shall
certify to the passage of this resolution, and thereupon and thereafter'',
the same shall be in full force and effect.
APPROVED AND ADOPTED this 3rd day of October, 2001.
ATTEST:
BRUCE V. MALKENHORST, City Clerk
HOMAS A. YBAR , Mayor Pro Tem
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1 STATE OF CALIFORNIA )
2 ) ss
COUNTY OF LOS ANGELES )
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4 I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do
5 hereby certify that the foregoing Resolution, being Resolution No.
6 7845, was duly adopted by the City Council of the City of Vernon at a
7 regular meeting of the City Council duly held on Wednesday, October 3,
8 2001, and thereafter was duly signed by the Mayor Pro Tem of the City
9 of Vernon.
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BRUCE V. MALKENHORST, City Clerk
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13 (SEAL)
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EXHIBIT
0
09/27/01 10:58 0949 225 0226
0020/01 ' THU 14: 41_AX 323 $28 1425,
BP ENERGY
CITY OF V'WON Utilities
[a 002
• � 003
oP Weroy Company 19101 Von Kerrnen Ave. Subs 1940 lMne, CA 92660 Phone: (90) 251-8686 F8x. (90) 251-0290
Seller
SP Energy Company
4590 MacArthur, Ste, 500
Newport Beach, CA 92660
Representative; Joe Alvee
Date;
TRANSACTION CONFIRMATION
TO
GAS SALES AGREEMENT
Agreement No.
October 1. 2001.
Buyer
City of demon
4305 Santa Fe Ave.
City of Vernon, CA 90058
Representative: Jorge Somoano
Term:
October 1, 2001, through October 31, 2001.
Buyer's Facility:
On Southern California Gas Company (SoCalGas) or City of Vernon distribution systems
fear Buyer's combustion turbines or new 140 MW power plant scheduled to be completed
by July 1, 2003.
Point(s) of Delivery;
All Southern California border receipt points into SoCalGas system.
Contract Quantity:
Full requirements gas supply for Buyer's Facilities.
Monthly Quantity - Five (a) business days prior to the upcoming month, Buyer will provide
Seller a monthly nomination for any baselaad quantity.
Deily Quantity - During the month, Buyer may rid additional daily volume from Seller.
Buyer will notify Seller no later than the day before effective flow date by 8:00 AM CST of
its daily nomination. Nominations far Saturday through Monday are due by 9:00 AM CST
on the Friday before effective flow days.
Contract PrICA:
The Monthly Quantity contract price up to 100,000 MMBtu over the annual Term shall be
equal to the applicable monthly index published in Natural Gas lnteNi'gence (NGI), SoCal
Border Avg., minus $0,03 per WSW. Additional quantities above 100.000 MMStu will be
mutually agreed. between Buyer and Seller.
The Daily quantity contract price will be a mutually agreed upon fixed price or market
price published in Gas Daily at the Point(s) of Delivery on the appropriate day of delivery.
Buyer shall have the option to convert index quantities to fixed pricing. For purposes of
Identifying consumed volumes, they shall be, first, fixed price volurnes, next, monthly
index volumes, and last, daily priced volumes.
Nomination Procedure:
Seller shall be designated as Buyer's Contracted MarKeter with SoCalGas and shall be
responsible for all nominating and balancing. Seller shall indemnify Buyer from any
imbalance penatties associated with Seller's performance.
091/27/01 10:58 V949 225 0226 BP ENERGY 121003
08/20/01• TflU 14:41 FAX 323 826 1425. CITY OF VERNON Utilities k6004
if Seller is required to sell any ezress Contract Quantity at a price below the Contract
Price to avoid imbalance penalties, then Buyer shall reimburse Seller for the difference
for the excess volume sold. Should Seller sell the excess Contract Quantity at price
above the Contract Price, the positive difference for the excess volume sold shall accrue
to Buyer.
This Transaction Confirmation is subject to, forms a part of and supplements the TOrMss
and conditions of that certain Natural Gas Purchase and sale Agreement of the 61?
Contract number listed above (the Agreemenr). Defined terms and references used in
this Transaction confirmation but not defined herein shall have the meanings set forth In
the Agreement. Subject to final negotletions of the Natural Gas Sales Agreement by
Buyer and Seller .this Transaction Confirmation will be extended through the period
September 2002, with the Seller having the option to extend the Term one (1) year
through September 30, 2003, upon written notification to Buyer of such extension by
August 1, 2002.
ACCEPTED and AGREED:
Seller,
BP Erier ompany
Name: GQ,%Aa sw.I . V*-A aUL
Title: V tee P��t�z'�' ORl�t�1+4'Rb�l
B_ uver:
City of Vernon f/
Name: Bruce V. Malkenhorst
-rue; City Administrator