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Colton would return to purchasing natural gas supplies as it does today — at the index price with <br />no discount. <br />At 30 years, the discount to index is projected to be at least $0.75 per MMBtu. The Electric Utility <br />has elected a volume of 503,000 MMBtu per year, or an average of 1,378 MMBtu per day, with <br />the deliveries shaped so that a larger amount of gas is received during the summer months when <br />gas-fired generation is needed more to meet retail load requirements. The minimum savings due <br />to the discount would be approximately $377,250 per year, and would be constant, regardless of <br />the index price. Unless regulatory changes in the California gas market require gas to be <br />delivered to a different delivery point, gas will be delivered to SoCal Border where the Utility <br />currently receives all its gas, so no additional transportation costs will be incurred. The agreement <br />does allow for the delivery point to be changed if necessary. <br />The pre -paid transaction is anticipated to close in September 2007, with gas deliveries to begin <br />October 1, 2007. <br />FINANCIAL IMPACT: <br />Funds are currently budgeted in account numbers 520-8000-8006-2330-0555-900 and 520-8000- <br />8009-2321-0547-000. <br />ENVIRONMENTAL IMPACT: <br />None. <br />CONFLICT OF INTEREST — Gift Disclosure Requirements <br />None <br />RECOMMENDATION: <br />Staff recommends that the City Council approve Resolution approving the City's participation in <br />the SCPPA Prepaid Natural Gas Program, approving the Gas Supply Agreement between the <br />City of Colton and SCPPA, and authorizing specified City Officials to execute and deliver the Gas <br />Supply Agreement. <br />Attachment: Gas Supply Agreement, Council Resolution <br />REVIEW TEAM ONLY <br />City Attorney: ►b,0I lav Finance Director: <br />City Manager: OTHER: <br />2624990\AMORRIS\38965.1 <br />