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Home My WebLink AboutResolution - 2018-R0454 - 2018-R0454 2Nd Amendment Power Purchase Agreement With TTU - 12/18/2018Resolution No. 2018-RO454 Item No. 5.2 December 18, 2018 RESOLUTION WHEREAS, Lubbock Power & Light is the municipally owned electric utility of the City of Lubbock ("LP&L"); WHEREAS, on or about April 28, 2005, the City of Lubbock ("City") and Texas Tech University System ("TTUS"), entered that certain Power Purchase Agreement ("PPA"), providing for the sale and purchase of power to serve the TTUS facilities; WHEREAS, on or about March 5, 2018, TTUS and the City entered into that certain First Amendment to Power Purchase Agreement ("Amendment"), amending the PPA to provide clarification related to the price of the power sold thereunder, ownership and responsibility for electric distribution and transmission assets and other real property rights and interests; WHEREAS, the term of the PPA will expire on June 30, 2019, if either party provides notice of termination to the other; WHEREAS, certain issues have arisen regarding the purchase price of the power to be sold and purchased under the PPA, as amended by the Amendment; WHEREAS, neither TTUS nor the City desire to terminate the PPA, so long as the power purchase price may be agreed upon; WHEREAS, TTUS and the City have agreed to amend the PPA in certain respects to resolve power price issues, as more particularly set forth in the Second Amendment to Power Purchase Agreement (the "Second Amendment"), attached hereto; WHEREAS, the City Council finds that entering into the Second Amendment is in the best interest of the rate payers of Lubbock Power & Light; WHEREAS, the City and TTUS now desire to enter into the Second Amendment; NOW, THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: THAT the Mayor of the City of Lubbock BE and is hereby authorized to execute that certain Second Amendment to Power Purchase Agreement, by and between the Texas Tech University System, acting by and through its Board of Regents and the City of Lubbock, acting by and through its City Council, amending that certain Power Purchase Agreement, by and between TTUS and the City, dated April 28, 2005, as amended by that certain First Amendment to Power Purchase Agreement, by and between TTUS and the City, dated March 5, 2018, providing for the sale by LP&L and purchase by TTUS, of power, as more particular described therein, said Second Amendment being attached hereto and incorporated herein as though set forth fully herein in detail, and any documents related thereto. Passed by the City Council this 18th day of December, 2018. L-41 Daniel M. Pope, Mayor ATTEST: ebe ca Garza, City Secre y APPROVED AS TO CONTENT: A.,, &&S4 ,,, c Dr4' David McCalla, Director of Electric Utilities APPROVED AS TO FORM: r Richard Casner, LP&L General Counsel SECOND AMENDMENT to POWER PURCHASE AGREEMENT This Second Amendment to Power Purchase Agreement ("Second Amendment"), is entered into and effective the 3Is' day of December 2018, by and between the City of Lubbock, Texas, a Texas home rule municipal corporation, acting by and through its City Council and the Electric Utility Board of the City of Lubbock (herein collectively referred to as "LP&L"), and the Texas Tech University System, a system of higher education of the State of Texas, acting by and through its Board of Regents ("TTUS"). WITNESSETH WHEREAS, LP&L and TTUS entered into that certain Power Purchase Agreement, dated April 28, 2005 (the "Original Agreement"), wherein TTUS contracted with LP&L to provide power and to define certain other rights related to same; WHEREAS, pursuant to First Amendment to Power Purchase Agreement, dated March 5, 2018, Resolution No. EUB 2018-R0088 (the "First Amendment"), TTUS and LP&L clarified, among other matters more particularly described therein, certain rights related to the price to be paid by TTUS for power, ownership and responsibility for electric distribution and transmission assets and other real property rights and interests; WHEREAS, the term of the Original Agreement will expire on June 30, 2019, if either party provides notice of termination to the other; WHEREAS, to avoid the possibility of such termination, TTUS and LP&L desire to amend the Original Agreement, as amended by the First Amendment, to extend the term of, and Second Amendment to Power Purchase Agreement - LP&L and TTUS Page 1 to provide a price adjustment to, the Original Agreement, as amended by the First Amendment (unless stated otherwise, whenever the term "Agreement" is utilized below, such term shall mean the Original Agreement, as amended by the First Amendment); WHEREAS, TTUS and LP&L now desire to amend the Agreement to address such matters. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, TTUS and LP&L hereby agree as follows: 1. Section 1.3 of the Agreement is hereby deleted in its entirety and replaced with the following: 1.3 Term of Agreement. Subject to the conditions set forth herein, the term of this Agreement shall be effective from July 1, 2004 (the "Effective Date") and shall remain in full force and effect until May 31, 2021 (the "Initial Term"). This Agreement shall continue after the Initial Term for up to twelve (12) successive thirty (30) day periods (all of which comprise the "Extended Term"), unless either party hereto shall provide notice of termination to the other Party at least five (5) days prior to the expiration of the Initial Term or the then effective thirty (30) day period of the Extended Term, as applicable. 2. Section 7.2 (b) of the Agreement is hereby deleted in its entirety, and is replaced with the following: 7.2 (b) Effective July 1, 2019, the Energy Charge shall equal 1.215 cents per kWh. 3. Section 7.3(a) is deleted and restated as follows in order to allow for the Agreement to proceed into an Extended Term: Second Amendment to Power Purchase Agreement - LP&L and TTUS Page 2 (a) Beginning with Texas Tech's fiscal year ending August 31. 2016, the Comparison Rate Class, as referenced in the following paragraphs, is defined as Secondary General Service customers with demand use exceeding 200 kilowatts ("kW") in two (2) or more months during the period coincident with Texas Tech's fiscal year. and excludes LP&L's Primary or Transmission General Service customers. (1) If during the Initial Term, as of the end of a Texas Tech fiscal year, the average price (the "Comparison Rate") that LP&L has charged the Comparison Rate Class for the period coincident with such Texas Tech fiscal year is less than the Price LP&L has charged Texas Tech pursuant to Section 7.2 of this agreement, then Texas Tech shall receive a credit, no later than October 31 immediately following the end of Texas Tech's fiscal year. Texas Tech's fiscal year begins on September 1 and ends the following August 31. The credit shall equal the difference between the amount that Texas Tech actually paid LP&L under this agreement during Texas Tech's most recent fiscal year, and the amount that Texas Tech would have paid LP&L had the Price been equal to the Comparison Rate, but in no event to exceed $1,000,000 per fiscal year. As of Texas Tech's fiscal year ending August 31, 2016, LP&L had 171 customers in the Comparison Rate Class. (2) If during an Extended Term, then at the end of the Extended Term, the average price (the "Comparison Rate") that LP&L has charged the Comparison Rate Class, for the period of the Extended Term is less than the Price LP&L has charged Texas Tech pursuant to Section 7.2 of this Agreement during such term, then Texas Tech shall receive a credit or refund (as applicable) no later than one hundred eighty (180) days immediately following the end of the Extended Term. The credit shall equal the difference between the amount that Texas Tech actually paid LP&L under this Agreement during the Extended Term, and the amount Texas Tech would have paid LP&L during the Extended Term had the Price been equal to the Comparison Rate, but in no event shall the credit exceed the amount that results from the number of successive thirty -day periods contained in the Extended Term multiplied by eighty three thousand three hundred and thirty four (83,334). 4. Except as expressly amended hereby, all terms, provisions and conditions of the Agreement, as amended by the First Amendment, shall remain valid and subsisting as provided. Second Amendment to Power Purchase Agreement - LP&L and TTUS Page 3 IN WITNESS WHEREOF, the parties have executed this Second Amendment by their duly authorized representatives effective as of the date first written above. CITY OF LUBBOCK, acting by and through Electric Utility Board .1 GREG T YLO airman of the Electric Utility Board APPROVED AS TO CONTENT: David McCalla, Director of Electric Utilities APPROVED AS TO FORM: /,- �- C--�� Richard Cas er, General Counsel CITY OF LUBBOCK, acting by and through City Council (/A— DANIEL M. POPE, MayUr of the City of Lubbock Second Amendment to Power Purchase Agreement - LP&L and TTUS Page 4 APPROVED AS TO CONTENT: David McCalla, Director of Electric Utilities APPROVED AS TO FORM: Richard Casner, General Counsel TECT IV SITY SYSTEM: W� Dr. Tedd MitcKdll, APPROVED AS TO FORM: Eric Bentley, General Counsel Second Amendment to Power Purchase Agreement - LP&L and TTUS Page 5