TITLE
Recommendation to receive and file report regarding finalized Natural Gas Supply Agreement with Pacific Summit Energy, LLC. (Citywide)
DISCUSSION
On May 17, 2005, the City Council authorized the City Manager to enter into a one-year
Natural Gas Supply Agreement with either Constellation Energy Commodities Group,
Occidental Energy Marketing, Inc., Pacific Summit Energy, LLC, Coral Energy Resources,
L.P. or Sempra Energy Trading (see attached City Council letter), provided certain financial
parameters were met or exceeded (see chart below).
As a result of negotiations with the five parties on May 23, 2005, a one-year agreement was
awarded to Pacific Summit Energy, LLC, a subsidiary of Sumitomo Corporation of America,
for the delivery of natural gas and a Natural Gas Supply Agreement was signed at that time.
The negotiated terms of the Pacific Summit Energy, LLC agreement favorably exceeded the
parameters previously approved by the City Council. Pacific Summit Energy proposed more
favorable terms for all three major financial considerations requested: the commodity price
itself, the price ceiling, and the price floor. The following Pacific Summit Energy, LLC
agreement comparison is provided:
Council-Approved Parameters Pacific Summit Energy
Term June 1,2005 - May 31,2006 June 1,7005- May 31,2006
Volume 8,800 MMBtu per day 8,800 MMBtu per day
Price SoCal Border plus $0.15 per MMBtu SoCal Border plus $0.005 per MMBtu
Price Ceiling $12.00 per MMBtu $10.00* per MMBtu
Price Floor $6.00 per MMBtu $5.00 per MMBtu
* Winter price ceiling
This matter was reviewed by Deputy City Attorney Richard Anthony on June 7, 2005 and
Budget Management Officer David Wodynski on June 10,2005.
TIMING CONSIDERATIONS
City Council action on this item is requested on June 21, 2005, as deliveries of gas under this
one-year agreement commenced on June 1, 2005.
FISCAL IMPACT
Funds associated with the gas supply agreement are included in the budget of the Long
Beach Energy Department (EN) in the Gas Fund (EF301). Payment during the one-year
agreement is limited to revenues in the Gas Fund.
SUGGESTED ACTION
Approve recommendation.
BODY
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Respectfully Submitted,
[Respectfully Submitted,]