04-19-2013 BPU RPT 05 - Laserfiche WebLink

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W A T E R E N E R G Y l 6 F { RIVERSIDE PUBLIC UTILITIES am& Board Memorandum PU8LIC UTILITIES BOARD OF PUBLIC UTILITIES DATE: April 19, 2013 ITEM NO: 5 SUBJECT: NORTH AMERICAN ENERGY STANDARDS BOARD CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS BETWEEN BP ENERGY COMPANY AND THE CITY OF RIVERSIDE ISSUE: The issue for Board of Public Utilities consideration is approval of the North American Standards Board ("NAESB") Base Contract between BP Energy Company and the City of Riverside for the sale and purchase of natural gas. RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council; 1. Approve the NAESB Base Contract between BP Energy Company and the City of Riverside for use in procuring natural gas sales and purchases under the terms and conditions stated therein; 2. Authorize the City Manager, or his designee, to execute individual enabling agreements, with additional counterparties meeting Riverside's credit criteria, incorporating the terms and conditions of the 2006 NAESB Base Contract, subject to review and approval by the City Attorney's Office; and 3. Authorize the Public Utilities General Manager, or his designee, to execute subsequent transaction confirmation agreements for sales and purchases of natural gas, subject to the terms and conditions of individual 2008 NAESB enabling agreements and consistent with the City Council approved Energy Risk Management Policy. BACKGROUND: The NAESB Base Contract is a standardized set of business practices and standards that most buyers and sellers have adopted for their natural gas and electricity transactions. On March 7, 2048 and April 8, 2048, respectively, Riverside's Public Utilities Board and City Council approved the proforma 2002 NAESB Base Contract for use in the sale and the purchase of natural gas by Riverside Public Utilities. Since then the 2442 NAESB has been updated with the 2045 NAESB Base Contract ('2006 NAESB"). Riverside has been in extensive negotiations with BP regarding the updated NAESB, including Special Provisions from BP to be included as part of the NAESB Base Contract. The Special Provisions have been reviewed by staff and the City Attorney's Office, and Riverside has agreed to the Special Provisions outlined by BP. Expanding Riverside's pool of potential purchasers and sellers of natural gas will allow staff more flexibility when pursuing favorable natural gas transactions. Also, allowing the Public Utilities General Manager, or his designee, to execute individual NAESB enabling agreements with additional counterparties meeting Riverside's credit criteria, and negotiate transaction confirmations for the purchase and sale of natural gas is necessary in order to take advantage of favorable pricing trends and