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HomeMy WebLinkAbout03-77 ,..-:>0 ,- ., . RESOLUTION NO. 8-77 A RESOLUTION of the City Council of the City of Port Angeles authorizing and directing the execution of a document authorizing_ the Washington Public Power Supply System to make certain changes in the short- term sales agreement relative to power supplied from nuclear projects Nos. 4 and 5. WHEREAS, the City of Port Angeles has previously executed the assignment agreement regarding participation by the City in nuclear projects 4 and 5 of the Washington Public Power Supply System; and WHEREAS, it is necessary to modify the short-term sales agreement (STSA) as proposed therein in order to resolve legal problems which have arisen relative to assumption of some of the ownership risks by those companies having agreed to purchase ex- cess power under the current STSA; and WHEREAS, it is necessary to modify the STSA in accordance wi'th the above and pursuant to the letter of December 22, 1976, from the Washington Public Power Supply System, a copy of which is attached hereto as Exhibit "I" and which copy is incorporated herein by this reference as though fully set forth; and WHEREAS, such modification as proposed therein appears to be in the public interest in that absent said modification, the City would be excluded as a party to the assignment agreement, thereby seriously jeopardizing the satisfaction of anticipated long-range electric power needs of the City; now, therefore, BE IT RESOLVED BY THE CITY COUNCIL of the City of Port ~ Angeles that the Mayor be and he hereby is authorized and directed to execute the document denominated "ATTACHMENT A" attached to the aforesaid Exhibit 1. PASSED by the Council of the-City of Port Angeles, Washington, and approved by its Mayor at a regular meeting of said City Council held this 19th day of January, 1977. ~=5.~ Mayor . . "" '* Attest: ';;..._.-,..:.' /... 0-..:.......... .."......./ "-.... ........... ........~.. #J2,c~ e.. ~ Cit"y; Clerk- :- :"~~ f~"" ":,, -. ~ ........ --'" ~~"':........ _....-:........,.- " .A" -:~_........ _~.........~,..,: ....".... ~ Approved ~as to form: a'1- c; ~~_.--A City Attorney , .. ~,~1,1": R F C I=' I \'/ t:' ~~ . ~ L... A~ !l.-, ~ [~'t;~J / u...., E r' <) li 1 Q"!,.... V i.. " 'I, ") ..... ...111, Washington Public Power Supply System A JOINT OPERATiNG AGENCY CiTY OF r::9RT ANGELES LIGH I DEPT. P. O. Box 968 3000 GEO. W"S>HNGTON W...., R'CHt....ND. W...SHINGTON U3:l2 PHONE (509) 946.9681 December 221 1976 . To: Participants in WNP 4/5 Subject: Assignment Agreement Gentlemen: Each of you have signed the Assignment Agreement and we have used the composite of your "Exhibit B's" to provide the BPA Direct Service Customers (the Companies) with forecasts of the capability which they would purchase under the Short Term Sales A..9reement (STSA). At this step in our schedule we expected the cornpanleS-Eo sign the STSA after which the Supply System would execute both contracts. Unfortunat~ly the Companies have run into legal problems which they believe prevent them from signing the STSA unless it is modified in certain respects. The Company --2roblems li.~wi th a conf.1ict b~twe~Jl..j;;l)~Jr_ bOlld...j"ng.eI}.j:.h1~e~_ Etnc19-n ass\llTI[Lti.9IL_QL_~_Qm~~Q.t" J:_he~.o"me.rs]1ip .r i.sks_ +w_hJ_g.l}....!J2~j~~/;oul_L~s ~}.lIn~._p.L~_Qr_19~1__J_u~y I 1_9~8_~!1p._S:lr_t:h~_p_~~~~nt;.__foX.:rlL9f'. .the _S.TSA. Their discovery of this serious conflict at this late date is discouraging and upsetting to the Supply System and the Participants; and, the Companies have expressed their sincere apologies for the inconvenience it causes us all. However, there is little to be gained at this time in lamenting how we arrived at this point with an unresolved .problem. All Companies have advised us by wire and telecopy under the authority of their presidents or chief executive officers that 'they fully intend to execute the STSA if it is changed to avo~d their legal ccnflict. We have met with representatives of the Companies and developed new language which solves their problems. The necessary changes would modify the STSA and since the STSA is an exhibit to your ~~s~~~ent~see~en~_w~ must ask you to authorize the change if you wish to continue to be a party to the Assignment Agreement. The nature of the change which the Com~anies request is to .put them in the s.ame _p'osit.io.It througj1out the csm~ras:t~e_:;:~_ that th~-1lQw have bet'N.een._!_~...?_.and 1992. This means they . "EXHIBIT 1" '""T..A.,_ 4 "\ , t, r:.~ J <. (. J. 1.1 .1/ ;/7 " :1 I '. . r ., t To: Participants in WNP 4/5 December 22, 1976 Page Two pay_~_p.r: ic_e _ fEE_ p<?w~_r_, ~a~.~d on.9-_._ c:~_~g.!_.l~a te.g.__~.?_t1.!.~~__P-.+-<.!!1-t b~~is and they _ qnly pay in the _ ~ven t .they r:ecei v~_.pgwe;-..2!:l5t i'!}-P~QP_g_.~_t~_Q.Il... t? _tJ)~ power. rec.e~ v~d~. Under the original' form of STSA the Companies_~9v~_no__dry~h~le e~posure prior to the times the plants start nor after Julv 1, 1988; however,- there is--a'llmi t~.d -exposure under'-cer~taln-' c~nditions between the time the plants go into operation and 1 July, 1988. ~lthough this exposure is judged to be low it is the heart of the conflict with the Companies bond indentures in that this exposure is viewed by their bond counsel primarily as a guarantee of debt with no assurance of any value received. ..t-__ . ~- - ...- h. , .A., The primary advantage of the Assignment Agreement and the STSA is the opportunity for the Participants to readily accommodate any surplus or deficit within the Participants group and then, to the extent there is still a net surplus of project capability, to have a committed market at average project costs for such surplus. The modified STSA will still provide that ready market. There is no change in the responsibility of the Companies to take surplus power. In . the opinion of the consulting engineer who is making the feasibility analysis to support our long term financing, the Assignment Agreements and the STSA are very important factors ~upporting his conclusions since even if the load forecasts of the Participants were to significantly drop the STSA and Assignment Agreements provide a mechanism for protection from the possibility of large cost exposures for, surplus capability. Our financial adviser believes that our bond rating and resultant interest rates are very dependent upon a strong conclusion from the consulting engineer. Thus, the financial adviser firmly supports the execution of the Assignment Agreements incorporating the modified STSA. The Supply System staff has discussed this issue with the Participants' Committee and with the System's Executive Committee and we believe the best interests of the Participants are served by acceptance of the proposed modifications to the STSA. To gain maximum benefit in our first long term financing, now scheduled for early February, we would like to be able to acknowledge the execution of these agreements , ._,~ ;' /. . To: Participants in WNP 4/5 December 22, 1976 Page Three . in our Official Statement which must be completed by the end of January. We have received assurances from the Companies that they will execute their agreements by 15 January. We are aware that many of you meet only once a month and even for those who meet more frequently the Washington PUO's will require a two meeting action. We are also painfully aware that all of this comes at a difficult time of the year; however, we strongly urge you in the best interests of all to immediately take steps to schedule action on this matter so that you may complete the action prior to 1 February, 1977. The acti6n needed is very si~ple. We have enclosed as attachment A two copies of a letter to the Supply System which provides. proper authorization. Please sign both and return one copy. Attachment B is a detailed list of the specific changes which you are authorizing and Attechment C is an explanation of the purpose of each of the changes: In summary, the Supply System recommends your authorization of. the proposed changes so that we may execute your Assign- ment Agreement and the STSA. Further, we strongly urge you to take whatever steps necessary to accomplish this prior to 1 February, 1977. In order to properly authorize the Supply System to make the changes to the Assignme~t Agreement previously authorized and executed by your utility, your utility's legislative body (i.e. commission, city councilor board) must authorize the changes set forth in Attachment B to this letter. As soon as such authorization is given please sign both the enclosed copies of Attachment A to this letter and return one signed copy to the Supply System, keeping the other signed copy in your r.ecords. Later, when available, please send us a certified copy of the minutes of your legislative body's meeting at which such authorization was given. 11..''\'1~ ~a.MI:-- J:o'iofY1-i-a. ~r plt;l6If"'lS~ Please cail at (509) 946-1611 if you have any questions regarding this issue or problems in meeting the schedule. Respectfully yours, , r7R K~~<J~ H. R. Kosmata, Manager, Planning and Analysis --' - /, ,~ / I t / . . ATTCHMENT A Washington Public Power Supply System P. O. Box 968 Richland, WA 99352' Attention: H. R. Kosmata Re: Washington Public Power Supply System Nuclear Projects Nos. 4 and 5 Assignment Agreement Gentlemen: 1 Pursuant to the approval of our utility's legislative body, we hereby authorize the Supply System to make the changes set forth in Attachment B to the Supply System's letter to us dated December 22, 1976, in the Assignment Agreement previously delivered to the Supply System prior to the execution or such agreement by the Supply System. Dated; ~ 11 , 1977. ~ ~ !kr~ (N me f Utility) B~~ ~/1;J ~d?A1L (Title) {/ ,-; .., .1. I' ". . 1 . A'I'TACHMENT B CHANGES TO SHORT TERM SALES AGREEMENT 1. Insert the following ~n lieu of the first pro- viso to Section 8(b)A(i): "provided that any such payment insofar as it is computed with respect to interest and amortization of Bonds shall be computed on the basis of level payments (consisting of the total of principal and interest) which would be required to amortize a principal amount equal to the daily average principal amount of Bonds outstanding during the Contract Year, with an interest rate equal to the weighted daily average interest rate on the Bonds outstanding during the Contract Year, over the period commencing with the earlier to occur of the D~f Cont1nuous Qperation.of either of, the Projects or the date .of th.e first scheduled. .e..r i~~~pal payment to thel101ders of the Bonds and ending July I, 2018;" 2. Insert the following at the end of the first sentence in Section S(c) (1) : "provided further that the portion of such amount for Fixed Costs (as such Fixed Costs are defined in Section 8(b)A) shall in no event exceed the amount computed as provided in Section 8j,'21 (lliiiiL. II 3. Insert the following at the end of the sentence in Section 8 (c) (2) (iii) : "{including the rated net generating capability of the Projects regardless of whether a Project has reached its Date of Continuous Operation or has been terminated pursuant to the Participants' Agreements)." 4. Insert the phrase "(as such Fixed Costs are defined in Section 8 (b)A)" after the vlOrds "Fixed Costs" in Section 8 (c) (2) (ii'i) . 5. Insert the following as a new subsection to Section 5: 1. P.., 2.0 "1 7- z.. ...I~ ,0"'/ ) r ~Y. r' ../ P1 ~.~ Ptt z.-; Of! /p /; / ATTACHNENT B '. . "Cf) The original Exhibit A to this Short Term Sales Agreement, entitled "Annual Determination of Available Capability", was based upon data receiv~d by Supply System from eighty-seven Participants. If less than all or such eighty-seven Participants execute Assignment Agreements consistent with such data and containing an Exhibit A thereto substantially in the form of this Short Term Sales Agreement, Supply System shall make adjustments to Exhibit A to this Agreement (i.e., "Annual Determination of Available Capability") to the extent necessary to reflect the changes in such data; provided that this Short Term Sales Agreement shall terminate if Assignment Agreements . providing for fifty percent (50%) or more of the amount set forth in Item 6 for each Contract Year of the original Exhibit A to this Agreement are not executed by the Particip~nts .and Supply System prior to July 1, 1977; provided further that no such Assignment Agreement shall be executed after July 1, 1977." 6. Insert the following sentence at the end of the last paragraph on p. 31: . Py?> / "For purposes of reference only this Agreement shall be dated as of December 221 1976.11 7. Insert the phrase "or cornme~cing on February 1, 1977, whichever is earlier," after the words "this Agree- ment" in line four of page 11 in Section 5(b). 0911 CHANGES TO ASSIGNMENT AGREEMENT 1. Change the date in the second to last line of p. 1 ~~ I. from "June 23, 1976" to "as.of December 22, 1976". . 2. f [ . j" I / I '. . 12/22/76 ATTACHMENT C EXPLANATION OF CHANGES TO SHORT TE~~ SALES AGREEMENT A. Change 1 divorces the industrial companies' payments with respect t~ principal and interest on the Bonds from actual payments of principal and interest" provides, for a I ,/ level debt amortization basis for such ~ayments and clarifies .I the I -, -. I definition of such amortization. ~--- -' -/.'---- I Change 2 essentially makes the same payment formula . ---- ' B. apply to both the pre-1988 and the post-1988 periods. C. Change 3, by expressly including the capability.of both Projects in the definition of plant factor, clari(i~p__~hat .!.h~~~pi~_~li Z~,?__~<;g_s,!:s__9~~~r(~j_~ct_pr_ior to i,ts opera tioD or after its termiria tion ~..f_~~ot intendJ~.d t9-Pg, in_cludecLJn the c:;::ost to the Companies of power made _~vai}.able 'from an ope_ra.!.~!2g Project. D. Change 4 is a technical change to clarify the references to "Fixed Costs." E. Change 5 is (i) tO,allow the Supply System, the Participants and the Companies to proceed to execute valid agreements even though some of the eighty-severi Participants decide not to, participate as long as a minimum amount of project capability remains available for assignment and (ii) to provide a cut off date to participation 1n the agreements by a Participant. / ~/. i / I .. . - ~ ATTACHMENT C F. Change 6 is a technical change to clarify the references to the agreements. G. Change 7 is to clarify that each Participant has the right to propose an amended Exhibit B for 1977 even though the agreements are not executed until after January 1, 1977. H. Change 1 to the Assignment Agreement is a technical change to clarify the references to the agre~ments. 2 .