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01-18-2013 BPU RPT 09
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01-18-2013 BPU AGENDA
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W A T E R E N E R G Y <br /> I. <br /> RIVERSIDE PUBLIC UTILITIES <br /> Board Memorandum <br /> PUBLIC UTILITIES <br /> BOARD OF PUBLIC UTILITIES DATE: January 18, 2013 <br /> ITEM NO: 9 <br /> SUBJECT: PUBLIC UTILITIES POWER RESOURCES RISK MANAGEMENT POLICIES <br /> ISSUE: <br /> The issue for Board of Public Utilities consideration is approval of revised Power Resources Risk <br /> Management Policies which include the Energy Risk Management Policy, the Wholesale Counterparty <br /> Risk Management Policy and the Authorized Transactions Policy. <br /> RECOMMENDATION: <br /> That the Board of Public Utilities recommend that the City Council approve the proposed revisions to the <br /> Public Utilities Power Resources Risk Management Policies, including the Energy Risk Management <br /> Policy, the Wholesale Counterparty Risk Management Policy and the Authorized Transactions Policy. <br /> BACKGROUND: <br /> Riverside Public Utilities ("RPU") procures the bulk of its power through long-term contracts. In order to <br /> predict how much power will be needed to serve customer load, the Power Resources Division prepares <br /> long-term forecasts. In general, the long-term procurements are over five years in length, provide a <br /> specified amount of annual power to RPU and are a mix of renewable and non-renewable resources. <br /> However, RPU procures approximately 10 to 15% of its power, as well as the natural gas to power <br /> internal generation, from short-term contracts and individual purchases to cover planned and unplanned <br /> resource outages and additional summer peaking energy needs. These transactions are carried out by <br /> Power Resources staff, subject to the oversight of the City Council, the Board of Public Utilities and the <br /> RPU Risk Management Committee. The oversight is set forth in the Public Utilities Power Resources <br /> Risk Management Policies ("RMP"). <br /> In 1998, the first RMP document was approved. This policy was developed to give guidance to staff <br /> regarding the purchase and sale of energy related products in the newly deregulated energy market. The <br /> RMP prescribes delegations of authority, energy transaction parameters, maximum acceptable risk limits <br /> and procedures to manage wholesale counterparty credit risk. <br /> The RMP has been reviewed on an annual basis and recommended changes were periodically adopted <br /> by the City. In 2010, the RMP was reformatted and revised to (i) streamline the original policy since it <br /> was designed as a comprehensive set of policies geared toward an organization with expansive trading <br /> and risk management activities, and (ii) reflect market changes as a result of 2009 California <br /> Independent System Operator Market Redesign and Technology Upgrade. <br /> The components of the RMP include: <br /> - Energy Risk Management Policy <br /> - Wholesale Counterparty Risk Management Policy <br /> - Authorized Transactions Policy <br />
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