RES-2008-086RESOLUTION NO. 2008- 086
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM
AUTHORIZING AND DIRECTING THAT CONCURRENCE BE
PROVIDED FOR SOUTHERN CALIFORNIA PUBLIC POWER
AUTHORITY TO NEGOTIATE, CONSUMATE, EXECUTE AND
DELIVER SUCH AGREEMENTS AS MAY BE NECESSARY OR
APPORPRIATE TO PROCURE AND PAY FOR GAS TURBINE
GENERATOR BLOCKS FOR THE DEVELOPMENT OF THE CANYON
POWER PROJECT.
WHEREAS, the Southern California Public Power Authority "SCPPA was
created pursuant to provisions contained in the Joint Exercise of Powers Act found in Chapter 5
of Division 7 of Title 1, of the Government Code of California, as amended from time to time
(the "Act by its members, which are municipalities and an irrigation district that supply
electricity in the State of California, for the purpose of jointly and cooperatively undertaking
planning, development, financing, acquisition, construction, reconstruction, improvement,
enlargement, betterment, operation and maintenance of projects for the generation or
transmission of electric energy in accordance with the Act; and
WHEREAS, pursuant to the Act, and pursuant to the Joint Powers Agreement
between SCPPA and its members dated as of November 1, 1980, as amended, SCPPA was
created and formed as a separate and distinct public entity apart from its members; and
WHEREAS, pursuant to the terms of the Act, and the Joint Powers Agreement
constituting SCPPA's formative instrument, SCPPA has the power to plan, develop, finance,
own, acquire, design, construct, operate, maintain and repair electric generation or transmission
projects or cause such projects to be planned, developed, financed, designed, constructed,
operated, maintained and repaired, and to provide by agreement to perform such activities; and
WHEREAS, the City of Anaheim "Anaheim is a municipal corporation and
charter city which provides electric energy to its citizens through its municipally owned electric
system. Anaheim is a party to the SCPPA Joint Powers Agreement and is one of the founding
member municipalities which formed SCPPA. Anaheim's electric system serves the entire
electric service area within the Anaheim city limits entailing approximately 50 square miles; and
WHEREAS, SCPPA and Anaheim desire to investigate, plan, and develop and
provide for the procurement, acquisition, construction and operation of a generating facility
consisting of a peaking power plant contemplated for a proposed site within Anaheim referred to
herein as the Canyon Power Project "Project including the necessary and appurtenant
facilities thereto, and the applicable portion of any common facilities, interconnection facilities
and related facilities; and
WHEREAS, SCPPA and Anaheim originally denominated the Project as the
Anaheim Municipal Power Station Project "AMPS Project and on or about October 23, 2007
entered into a Planning and Development Agreement to carry forth the development objectives
of the Project. The Project was later named the Canyon Power Project; and
WHEREAS, Section 5 of the Planning and Development Agreement for the
Project provides that the parties appoint, designate and authorize Anaheim to be the Project
Manager to carry out as agent for and on behalf of the parties and as principal on its own behalf,
the Planning and Development Agreement;
WHEREAS, Section 9 of the Planning and Development Agreement for the
Project provides for the delegation of authority to SCPPA's Executive Director to carry forth
those measures pursuant to the recommendation of the Project Manager which are in the
judgment of the Project Manager necessary to the furtherance of the Project; and
WHEREAS, as described more fully in the Planning and Development
Agreement, the parties contemplate, among other things, to carry forth those actions necessary
and appropriate for the consummation of the transactions that carry out the objectives of the
Project; and
WHEREAS, SCPPA and Anaheim desire to carry forth those actions necessary
for, among other things, the consummation of the transactions for procurement of gas turbine
generators necessary to further the current progress of the Project, as set forth herein; and
WHEREAS, SCPPA in its Resolution No. 2008 -12 delegated to its Executive
Director, the right, power and authority, subject to and upon the concurrence of Anaheim's
Project Manager, to negotiate, consummate, execute and deliver such agreements as may be
necessary for the procurement of the gas turbine generators, as in the best judgment of the
Executive Director and the Project Manager shall best carry forth the respective interests and
goals of Anaheim and SCPPA with respect to the Canyon Power Project.
WHEREAS, after careful economic evaluation comparing the technologies
available for gas turbine generators, the parties selected the General Electric LM6000 gas turbine
generator "Turbine for the Project which is manufactured and delivered by GE Packaged
Power, Inc. "GE The requirements of the Project necessitate that four gas Turbines and
emission control equipment "Turbine Blocks be manufactured for delivery in approximately the
last quarter of 2009. GE will not guarantee delivery of the Turbines until a purchase agreement
between GE and SCPPA has been executed.
WHEREAS, pursuant to the purchase agreement terms the four Turbine Blocks
will cost approximately $92 million with a ten percent (10 down payment due within ten (10)
days of execution of the purchase agreement by SCPPA and monthly progress payments of
approximately $1.8 million per Turbine Block beginning on or about January, 2009. In addition
to the purchase agreement there are associated shipping, transportation, and technical support for
testing costs as well as applicable taxes in the approximated sum of $14 million. The purchase
agreement allows SCPPA to terminate the agreement prior to delivery of the Turbines should the
Project not go forward, but the termination costs become increasingly more expensive the longer
the purchase agreement is in existence. As with any project of this nature, there are significant
financial risks associated with the purchase of the Turbines prior to final licensing and permitting
approval of the Project by the California Energy Commission and the South Coast Air Quality
Management District.
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WHEREAS, in the collective best judgment of SCPPA and the Public Utilities
Department in collaboration with the various retained consultants after weighing the financial
risks associated with delaying the Project against the likelihood that the Project will be permitted
and licensed by the appropriated agencies, execution and delivery of such agreements by SCPPA
as may be necessary for the procurement of the Turbine Blocks and, more specifically, the
purchase agreement with GE carry forth the respective interests and goals of Anaheim and
SCPPA with respect to the Canyon Power Project.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ANAHEIM
DOES HEREBY RESOLVE AS FOLLOWS:
The City Council of the City of Anaheim authorizes and directs the Public
Utilities General Manager or her designee to provide concurrence for Southern California Public
Power Authority to negotiate, consummate, execute and deliver such agreements in an amount
not to exceed $92 million as may be necessary or appropriate to procure and pay for the gas
turbine generators and emission control equipment required for the development of the Canyon
Power Project as well as such associated shipping, transportation, and technical support for
testing costs as well as applicable taxes in an additional sum not to exceed $14 million.
This resolution shall become effective and operative on the date of its adoption.
THE FOREGOING RESOLUTION is approved and adopted by the City Council
of the City of Anaheim this 24th day of June, 2008, by the following roll -call vote:
AYES:
Mayor Pringle, Council Members Hernandez, Sidhu, Galloway, Kring
NOES: NONE
ABSTAIN: NONE
ABSENT: NONE
ATTEST:
CITY CLERK OF THE CITY OF ANAHEIM
69323.3
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CITY OF 9NAHEIM
MAYOR OF THE CITY OF ANAHEIM