2005 AGN FEB 01 I07 (6/21/05 #7)

Browse Search

CITY OF COLTON AGENDA REPORT FOR COUNCIL MEETING OF February 01, 2005 TO: Honorable Mayor and City Council FROM: Jeannette Olko, Electric Utility General Manager SUBJECT: Approve and Adopt Resolution for Gas Sales Agreement in connection with SCPPA Gas Acquisition Project DATE: January 26, 2005 Item #7 BACKGROUND: On July 6, 2004, Council approved an agreement with Southern California Public Power Authority (SCPPA) for the City's participation in a project to acquire natural gas rights and related facilities. It is the goal of this project to lock in gas availability and stabilize power generation fuel costs. The Cities of Anaheim, Burbank, Glendale, Los Angeles, and Pasadena are also participants in the project, as well as several non-SCPPA members such as the City of Redding, Turlock Irrigation District, and Southern Nevada Water Authority. DISCUSSION/ANALYSIS: Approval of the Gas Sales Agreement is the next milestone in the Project schedule. Under terms of the Gas Sales Agreement, SCPPA will sell 100% of the gas produced by its interest in the acquisitions to its members; i.e., Anaheim, Burbank, Colton, Glendale, and Pasadena. SCPPA will also be required to enter into an operating agreement that will establish the relationship among the gas field owners and provide a means of extracting, processing, and delivering the gas from the property to the inlet of an interstate pipeline. The following are major milestones included in the current Project schedule 11/18/04 SCPPA Approval of Gas Sales Agreements (at SCPPA Board Meeting) 03/04/05 Gas Sales Agreements Signed by Participants 03/04/05 Election to Participate in the Project under the Development Agreement. 03/17/05 SCPPA Approval of Interim Financing 06/01/05 Closing of Acquisition No. l* 01/16/06 Closing of Acquisition No. 2 and 3* 09/18/06 Closing of Acquisition No. 4 and 5* *Estimated dates subject to the quality and availability of potential gas properties. FINANCIAL IMPACT: All Project development expenses will be paid under the Development Agreement that was approved in July, and not under the Gas Sales Agreement; therefore there will be no fiscal or budget impact pursuant to the development work associated with each acquisition.