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HomeMy WebLinkAboutResolution No. 4549 RESOLUTION NO. 4549 A RESOLUTION APPROVING ALTERNATIVE FORMULA FOR CALCULATING SURPLUS EARNINGS PAYMENTS FROM THE EUGENE WATER & ELECTRIC BOARD ON WHOLESALE ELECTRICITY SALES. The City Council of the City of Eugene finds that: A. On June 24, 1996 the City Council adopted Resolution No. 4490 approving a temporary formula for calculating contribution in lieu of tax (Cll T) payments to the City from the Eugene Water & Electric Board (EWEB) on wholesale electricity sales from 601<> of gross revenues to 17% of net revenues for a trial period ending December 31, 1997. B. Based on that trial period, it appears in the best interest of the City, EWEB, and EWEB's customers to continue applying this new formula to wholesale electricity sales until amended by EWEB and the Council. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EUGENE, a Municipal Corporation of the State of Oregon, as follows: Section 1. Based on the above findings, which are hereby adopted, the City Council approves a change in the payments received from EWEB pursuant to Section 44(4) of the Eugene Charter of 1976 as they relate to contracts entered into between EWEB and another power company, for sales for resale. Commencing January 1, 1998, the formula to be applied to all such contracts entered into after the effective date of this Resolution shall be seventeen percent of the net revenues from sales for resale. Payments shall continue to be made at the seventeen percent rate until expiration of the contract. Section 2. The current 6% formula based on a percentage of gross revenues will continue to apply to sales for resale entered into prior to June 24, 1996, to any contracts for services where EWEB is not responsible for supplying power, to all existing contracts, and to all retail sales. Section 3. This Resolution shall become effective after the EWEB Board also approves the change in payments, and the City Manager and EWEB General Manager execute a Memorandum of Understanding consistent with the terms of this Resolution. The foregoing Resolution adopted the 8th day of December, 1997. J1 '-- fr/J' 7' City Recorder AND: The Eugene Water & Electric Board, a municipal utility owned by the City of Eugene (EWEB) ( ~ 6') . r I"t: .L ~ C '" D u.." <k. \ IX CIb~03Lf3) MEMORANDUM OF UNDERSTANDING BETWEEN: The City of Eugene, a municipal corporation of the State of Oregon (City) RECITALS A. The Eugene Water & Electric Board (EWEB) has generated significant revenues through sales for resale which have benefitted the City of Eugene (City) through p~yments pursuant to Section 44(4) of!he E,!gene .Charter of 1976, and E\VEB's custorners through 10\ve1" rates. B. The City of Eugene (City) and the Eugene Water & Electric Board (EWEB) entered into a memorandum of understanding concerning paYments to the city on wholesale sales activities for a period ending December 31, 1997. C. EWEB and the City believe it is in their best interests to continue this new arrangement. Current market conditions continue to make it very difficult for EWEB to make sales to other entities which market or sell power ("Power Entities") for resale which generate sufficient margins to make J-tGpaYments to City and to return benefits to EWEB customers. The six percent formula, when applied to the gross revenues of such a potential sale, is often larger than the entire net revenues from the sale and would cause EWEB to forgo sales for resale opportunities. AGREEMENT 1. EWEB and the City agree that henceforth, paYments to the City for future sales to Power Entities shall be based on a revised formula. This formula shall be: 1.1 Seventeen percent (17%) of the net revenues from sales for resale. 1.2 The net revenues are defined as revenues frOll1 the sales less the cost of power and other services needed to deliver the power. 1.3 The cost of power for the calculation will be the Dow Jones Mid-Columbia index, adjusted for transmission, or some other similarly published index, unless there is a matched purchase and sale arrangement brokered by EWEB. 1.4 Services include wheeling, reserve capacity, storage, etc., which are used to deliver the desired product to the Power Entity. 2. Except as expressly provided in Section 1 of this Agreement, the current paYments based on six percent (6%) of gross revenues shall continue to apply. Other than sales to Power Entities, nothing in this Memorandum is intended to affect any payments to the City, including but not limited to paYments related to retail sales to residential, commercial, and industrial customers. 1998. 2. This Memorandum shall apply to all paYments made for sales subsequent to January 1, WATER & ELECTRIC BOARD --"'" .. ~ ............