1998 AGN OCT 20 I02 - Laserfiche WebLink

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CITY OF COLTON AGENDA REPORT �-O For the City Council Meeting of October , 1998 TO: Honorable Mayor and City Council APPROVAL: Henry T. Garcia, City Manage FROM: Thomas K. Clarke, Utility Director'4(r� SUBJECT: APPROVE ASSIGNMENT AND AMENDMENT TO SERVICES AGREEMENT WITH ENOVA AND SEMPRA ENERGY TRADING DATE: Tuesday, September 22, 1998 BACKGROUND: The delivery of electricity to the City of Colton requires a continual process of monitoring the City's electric demand and scheduling an adequate supply to meet this demand. The process goes on every minute of the year. The City's electric utility has not yet reached the size at which it can perform this function economically on its own. Historically, the City has contracted with an outside party to provide this service. On April 5, 1995, the City entered into a 5 -year contract with Enova Energy Management for scheduling and related services. Enova was affiliated with San Diego Gas and Electric (SDG&E). The merger of SDG&E and the Southern California Gas Company is bringing about the replacement of Enova with a new organization, Sempra Energy Trading. The proposed action formalizes the assignment of the contract from Enova to Sempra. DISCUSSION/ANALYSIS: The new agreement contains changes necessitated by the restructuring of the electric utility industry. Sempra Energy Trading agrees to assume all responsibilities of a Scheduling Coordinator as required by the California Independent System Operator. To provide for improved budget control, the parties have agreed to reduce the variable savings sharing provisions and establish fixed monthly payments for ongoing services. A shared savings provision remains in place and is tied to the California Power Exchange price of energy for Southern California. Simply put, if Sempra is able to perform its tasks in a manner that provides the City with energy at below market costs, then the savings are split 50/50 between the parties. However, given that the City already has most of its own energy supply, there is little opportunity for Sempra to achieve savings at any time except during the summer. The Electric Utility had budgeted $318,000 for Sempra's fixed costs for the current fiscal year. The contract reduces that amount to $264,000. The annual cost to the City to provide itself these services would be about $850,000. The Electric Utility is exploring is options to prepare for the termination of this agreement on June 30, 2000. ALTERNATIVES: The agreement is an assignment and assumption of an existing agreement to which the City is still bound. FINANCIAL IMPACT: The agreement results in an electric utility budget savings of $54,000 in fixed costs for Scheduling Coordinator Services. RECOMMENDATION: That the City Council approves the Assignment and Assumption Agreement and Amendment to Contract by and among Enova Energy Management, Sempra Energy Trading, and the City of Colton. Attachment: Copy of Assignment and Assumption Agreement and Amendment to Contract Report Prepared by Timothy C. Trewyn, P.E., Assistant Electric Utility Director Page 1 of 1 Item No. 2