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W A T E R E N E R 6 , L I F E RIVERSIDE PUBLIC UTILITIES P U B L I C U T I L I T I E S Board Memorandum BOARD OF PUBLIC UTILITIES DATE: September 16, 2011 ITEM NO: 8 SUBJECT: EDISON ELECTRIC INSTITUTE MASTER POWER PURCHASE AND SALE AGREEMENT ISSUE: That the Board of Public Utilities consider approval of the Edison Electric Institute Master Power Purchase and Sale Agreement ("EEI Agreement"}, RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council: 1. Approve the EEI Agreement for use by Public Utilities in procuring electric power products under the terms and conditions stated therein; 2. Authorize the City Manager, or his designee, to execute individual enabling agreements incorporating the terms and conditions of the EEI Agreement, subject to the 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 electric power products, subject to the terms and conditions of individual EEI enabling agreements. BACKGROUND: Riverside entered into the Western Systems Power Pool (WSPP) Agreement on August 26, 1967, with a subsequent Netting Agreement in 1999 and a modified Amendment in 2009 to address the California Independent System Operator (CAISO) Market Redesign Technology Update (MRTU) paradigm. The WSPP Agreement is currently the only enabling agreement in place for Riverside to transact under for short term, power purchases and sales. Many counterparties transact under the EEI Agreement either because it is their organization's agreement of choice or because they are not members of WSPP. It is appropriate and warranted to have an alternate enabling agreement in place to provide transaction flexibility and to maximize the economic benefits to Riverside for such short term power transactions. Similarities between the WSPP Agreement and EEI Agreement are: (i) both provide a vehicle for physical power transactions; (ii) they are regulated by Federal Energy Regulatory Commission (FERC); and (iii) the non rate terms and conditions in the WSPP and EEI are similar in transaction and settlement mechanics. Slight differences can be found in the treatment of netting and termination payment calculations in the Event of Default. Also, the EEI Agreement carries a collate ralizationlmargining requirement that is to be negotiated between the transaction parties and contains special provisions for governmental entities.