Sacramento Municipal Utility District Financing Authority

Transcription

1 Sacramento Municipal Utility District Financing Authority Special Meeting Date: December 20, 2018 Time: Immediately following the SMUD Board meeting scheduled at 6:00 p.m. Location: SMUD Customer Service Center, Rubicon Room 6301 S Street, Sacramento, CA Powering forward. Together. * SMUDm

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3 Members of the public wishing to address the Commission are requested to coniplete a sigtiup slip at the lobby information center. Statements shall not exceed three minutes unless the President grants special permission. SACRAMENTO MUNICIPAL UTILITY DISTRICT FINANCING AUTHORITY 6301 S Street Sacramento, California NOTICE OF SPECIAL MEETING AND AGENDA TO: Commissioners Brandon D. Rose, Nancy Bui-Thompson, Genevieve Shiroma, Rob Kerth, Dave Tamayo, and Bill Slaton Pursuant to Section of the California Government Code, a SPECIAL MEETING of the Commissioners of the Sacramento Municipal Utility District Financing Authority (SFA) is called to be held on Thursday, December 20, 2018, at 6:00 p.m., or immediately following adjournment of the regular meeting of the Board of Directors of the Sacramento Municipal Utility District (SMUD), in the Rubicon Room of the SMUD Customer Service Center at 6301 S Street, Sacramento, California, to review, discuss and act upon, as appropriate, the following item& Approve agenda. 2. Approve minutes of November 8, 2018, special meeting. Item 3 was reviewed by the Finance and Audit Committee on November 7, Comments from the public are welcome when this agenda item is called. CONSENT CALENDAR: 3. Approve the proposed 2019 SFA Budget. Finance and Audit Commiftee 11/7. (Frankie McDermott)

4 4. Statements from the public (non-agenda items) 5. Summary of Commission Direction Dated ~ December 14, 2018 Gregg Fish rn i a'n, President Sacramento Municipal Utility District Financing Authority The Rubicon Room is iocated on the first floor of SMUD Customer Service Center, 6301 S Street, Sacramento, CA. Members of the public shall have three (3) minutes to provide public comment on items on the agenda or items not on the agenda, but within the jurisdiction of SFA. The total time allotted to any individual speaker shall not exceed nine (9) minutes. Members of the public wishing to inspect public documents related to agenda items may call to arrange for inspection of the documents at the SMUD Customer Service Center, 6301 S Street, Sacramento, Califomia. NOTE: Accommodations are available for the disabled public. If you need a hearing assistance device or other aid, please call in advance of this Commission Meeting.

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6 DRAFT Sacramento, California November 8, 2018 A special meeting of the Commissioners of the Sacramento Municipal Utility District Financing Authority (SFA) was held in the Rubicon Room of the Sacramento Municipal Utility District (SMUD) Customer Service Center, 6301 S Street, Sacramento, California, at 7:26 p.m. Presiding- Present: President Fishman Commissioners Rose, Bui-Thompson, Shiroma, Kerth, Tamayo (7-31 p.m.) and Slaton Present also were Arlen Orchard, Chief Executive Officer and General Manager-, Laura Lewis, Chief Legal Officer and General Counsel and Secretary -, members of SMUD's executive management -, and SMUD employees and visitors. At the request of President Fishman, Ms. Lewis briefly reviewed the purpose, organization and responsibilities of the SFA which owns and operates the Cosumnes Power Plant ("Project") President Fishman called for approval of the agenda. Commissioner Slaton moved for approval of the agenda, Commissioner Kerth seconded, and the agenda was approved by a vote of 6-0, with Commissioner Tamayo absent. President Fishman called for approval of the minutes of the annual meeting of April 19, Commissioner Slaton moved for approval of the minutes, Commissioner Shiroma seconded, and the minutes were approved by a vote of 6-0, with Commissioner Tamayo absent.

7 President Fishman called for statements from visitors for items on the agenda, but none were forthcoming. President Fishman then addressed the consent calendar, consisting of Item 3. Commissioner Slaton moved for approval, Commissioner Bui-Thompson seconded, and Resolution No. 18-SFA was approved by a vote of 6-0, with Commissioner Tamayo abstaining.

8 RESOLUTION NO. 18-SFA WHEREAS, the Sacramento Municipal Utility District Financing Authority (SFA) has an opportunity to help facilitate entry into a flexible commodity prepay transaction that can lock in annual commodity savings of $2-$4 million over 30 years-, and WHEREAS, to achieve the savings, the transaction calls for an issuance of tax exempt debt to finance an upfront payment to a supplier for the future deliveries; and WHEREAS, it would be in the best interests of the Sacramento Municipal Utility District (SMUD) and SFA for tax exempt bonds to be issued to finance the prepayment; and WHEREAS, creating a separate joint powers authority to issue the bonds would enable the debt to be carried on a separate agency's accounting and the joint powers authority would have the added flexibility to finance, acquire and build renewable electrical and storage facilities and electrical distribution and transmission facilities should conditions warrant-, NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSIONERS OF SACRAMENTO MUNICIPAL UTILITY DISTRICT FINANCING AUTHORITY: That this Commission approves the Northern California Energy Authority (NCEA) Joint Powers Agreement between Sacramento Municipal Utility District (SMUD) and Sacramento Municipal Utility District Financing

9 Authority (SFA) for the purpose of creating NCEA to issue natural gas/electricity prepay bonds, and exercise other specified powers. Adopted - November 8, 2018 INTRODUCED BY COMMISSIONER SLATON SECONDED BY COMMiSSIONER BUI-THOMPSON COMMISSIONER AYE NO ABSTAIN ABSENT FISHMAN ROSE BUI-THOMPSON SHIROMA KERTH x x x x x TAMAYO x SLATON x

10 Attachment A JOINT POWERS AGREEMENT NORTHERN CALIFORNIA ENERGY AUTHORITY 1. Authority. This agreement (this "Agreement") creates an agency by which the Sacramento Municipal Utility District ("SMUD") and the Sacramento Municipal Utility District Financing Authority ("SFA") jointly exercise certain herein specified powers they have in common for their common benefit, pursuant to the Joint Exercise of Powers Act (California Government Code Section 6500 and following), as amended from time to time (the "Act") 2. Name and Status. The name of the agency shall be the Northern California Energy Authority (the "Authority"). The Authority is a public entity separate from its members and its members are not liable for the debts, liabilities or obligations of the Authority, except to the extent that SMUD may have contracted with the Authority to be liable therefore. 3. Purpose, Powers and Restrictions. The purpose of the Authority is, and the Authority, in its own name, shall have the power, to take all action necessary or convenient to assist SMUD in the acquisition, construction, maintenance and operations of natural gas and/or biogas facilities and natural gas and/or biogas transportation facilities and capacity (including, without limitation, gas extraction, gathering, storage, pipeline transportation or other gas facilities), the acquisition, construction, maintenance and operations of electricity generation facilities, electricity distribution facilities and electricity transmission facilities and capacity (including, without limitation, renewable electricity facilities, electricity storage facilities and other electricity facilities), the purchase and sale of natural gas and/or biogas (including, without

11 limitation, gas reserves, sales, brokering, exchanges (including gas for power), storage and transportation of gas), the purchase and sale of electricity (including, without limitation, electricity from renewable sources and energy storage sources) and capacity and/or the purchase and sale of any other commodity necessary or convenient to SMUD in the generation, transmission and/or distribution of electricity, to the extent deemed necessary or advisable by SMUD and the Authority. Without limiting the generality of the foregoing, the Authority, in its own name, shall have the power (1) to incur indebtedness (including, without limitation, through the issuance of bonds, notes, commercial paper or other evidence of indebtedness (which shall not constitute debts, liabilities, or obligations of SFA, the Modesto Irrigation District ("MID"), or SMUD), (2) to enter into interest rate, commodity, basis and similar hedging contracts intended to hedge payment, rate, cost or similar exposure, (3) to acquire, hold or dispose of property, and to enter into contracts for the purchase or sale of property, including, without limitation, natural gas, biogas, electricity (including, without limitation, electricity from renewable sources) and/or other commodities and to enter into other contracts to accomplish the purposes of this Agreement -, (4) to sue and be sued in its own name; and (5) to take any other action permifted by law to accomplish the purposes of this Agreement. Any of the facilities or contracts which are financed, constructed and acquired by the Authority shall be operated and/or administered by SMUD or the Authority for and on behalf of the Authority, either directly by SMUD personnel or by contract between the Authority and developers/operators designated by 2

12 SMUD and approved by the Authority. Neither SMUD, SFA nor MID shall have liability for the breach, negligence or willful misconduct of any such developer/operator. The manner of the Authority's exercise of its powers is subject only to the restrictions upon the manner of exercising those powers that are imposed on SMUD in the exercise of its own powers, as provided in Section 6509 of the Act. The Authority is not being formed for the purpose of providing municipal services within the meaning of Section of the Act. 4. Revenue Bonds and Other Powers. In addition to the other powers conferred on the Authority by this Agreement, the Authority may issue and sell revenue bonds and notes pursuant to the provision of Article 2 of the Act (commencing with Section 6540 of the California Government Code) and Article 4 of the Act (commencing with Section 6584 of the California Government Code), in such amounts and for such purposes as may be specified by the Authority in carrying out its purpose. For any purpose authorized by this Agreement, the Authority may also exercise all additional powers given to a joint powers authority by the Act or any other applicable law. 5. Participation Percentages. SMUD will pay, subject to reimbursement by the Authority as set forth in Section 10, all costs associated with the operation of the Authority and will be entitled to all rights and property of the Authority in the event of termination of this Agreement. SFA shall have no obligation of any kind to make contributions or advances to the Authority for any purpose whatsoever, or to make any payments with respect to the acquisition,

13 financing, construction, maintenance or operation of any facility financed by the Authority. 6. Government. The Authority shall be governed by a Commission which shall consist of the members of the SMUD Board of Directors. The President of the Commission and the Vice President of the Commission shall be the President of the SMUD Board of Directors and the Vice President of the SMUD Board of Directors, respectively. The Commission shall exercise the powers of the Authority, and a majority of the Commission shall constitute a quorum, except that less than a quorum may adjourn meetings from time to time. 7. Meetings of the Commissiom Voting. Each regular meeting date of the SMUD Board of Directors following the execution of this Agreement through the end of the 2018 calendar year and the regular meeting date of the SMUD Board of Directs in April of 2019 shall also be the date of a regular meeting of the Commission -, provided, if no business of the Authority is posted on the agenda for consideration by the Commission on the date of any such regular meeting, then the regular meeting of the Commission scheduled for such date shall deemed to have been cancelled. The Commission may provide for the holding of other regular meetings and special meetings by resolution. The affirmative votes of a majority of the members of the Commission shall be required and shall be sufficient for any action taken by the Commission. 8. Staff and Consultants. It is the intent of the parties that management, technical, financial services, accounting, engineering, legal, operational and other support for the Authority shall be provided by SMUD, its 4

14 employees and agents pursuant to SMUD's standard policies, practices, and delegations of authority. The Authority shall not have an independent staff, but shall act with staff of SMUD with SMUD's consent. SMUD, for and on behalf of the Authority, may employ legal, engineering and other consulting services necessary to carry out the purposes of this Agreement. 9. Officers. The Executive Director of the Authority, its Chief Financial Officer, its Treasurer, its Controller and its Secretary, shall be the Chief Executive Officer and General Manager, Chief Financial Officer, Treasurer, Controller and Secretary, respectively, of SMUD. Each Assistant Treasurer of SMUD shall also be an Assistant Treasurer of the Authority. The Chief Legal Officerand General Counsel of SMUD shall serve as legal counsel to theauthority. The Commission may designate other officers of the Authority and/or authorize officers, employees and agents of SMUD to act on behalf of the Authority by resolution. The Treasurer and the Controller shall comply strictly with the provisions of the statutes relating to their duties found in Chapter 5, Division 7, Title 1 of the Government Code, beginning with Section The Treasurer of the Authority and the Controller of the Authority herein designated as the persons responsible for any moneys of the Authority are hereby also designated as responsible for all other property of the Authority. The Controller and the Treasurer shall each file an official bond in the amount determined from time to time by the Commission. 10. Contributions and Advances. Contributions or advances of public funds and of personnel, equipment or property may be made to the Authority by 5

15 SMUD for any of the purposes of this Agreement. Payment of public funds may be made to defray the cost of any such contribution. Any such advance shall be made subject to repayment, and shall be repaid in the manner agreed upon by SMUD and the Authority at the time of making such advance. It is mutually understood and agreed that SMUD is under no obligation to make advances or contributions to the Authority to provide for the costs and expenses of administration of the Authority, even though SMUD in its sole discretion may do so. SMUD may allow the use of personnel, equipment or property in lieu of other contributions or advances to the Authority. After termination of this Agreement pursuant to Section 13, any surplus money or other assets in possession of the Authority shall be returned to SMUD. No contributions or advances shall be made to the Authority by SFA or MID. 11. Insurance. The Authority agrees to maintain, during the term of this Agreement, insurance coverages to afford protection for the Authority and its members as follows: (1) Commercial general liability and auto liability insurance coverage with policy limits of not less than $5,000,000. (2) Workers' compensation (statutory) and employers' liability insurance with limits of not less than $1,000,000 if the Authority ever has employees. Such policies (with the exception of workers' compensation and employers' liability) shall name SMUD, SFA and their officers, employees and agents as additional insureds and wiil be considered primary pursuant I

16 to or incidental to this Agreement. Such policies shall include cross-liability or severability of interest provision. Upon the request of MID, the Authorityshall provide certificates of insurance to MID, certifying that at least the minimum coverage as stated above is in effect and identifying the insurance policies providing such coverage. 12. Indemnification. SMUD agrees to indemnify and hold harmless SFA and MID and their directors, officers, employees and agents, from and against any and all losses, claims, damages, liabilities or expenses arising solely from the carrying out of any of the SMUD or Authority transactions contemplated by this Agreement. Notwithstanding the provisions of Section of the Government Code, SMUD shall have no right of contribution from MID for any judgment for damages caused by a negligent or wrongful act of omiss'ion occurring in performance by SMUD or the Authority of the provisions of this Agreement. 13. Term. This Agreement shall become effective as of the date hereof and shall continue in full force and effect until terminated by a supplemental written agreement of the parties-, provided, that in no event shall this Agreement terminate while any contracts between the Authority and either of the parties or other parties are in effect, or while any bonds, notes or other evidences of indebtedness of the Authority are outstanding. 14. Amendments. This Agreement may be amended only by a written agreement executed by the members. 7

17 15. Successors: Assignment. This Agreement shall be binding upon and shall inure to the benefit of the successors of the parties. Except to the extent expressly provided herein, neither party may assign any right or obligation hereunder without the consent of the other. 16. Counterparts. This Agreement may be executed in any number of counterparts, each of which will be considered an original, but all of which will together constitute the same agreement. Dated this day of SACRAMENTO MUNICIPAL UTILITY DISTRICT SACRAMENTO MUNICIPAL UTILITY DISTRICT FINANCING AUTHORITY is Chief Executive Officer and General Manager 0 Chief Executive Officer and General Manager EM Secretary & Chief Legal Officer and General Counsel IN Secretary & Chief Legal Officer and General Counsel H.,

18 President Fishman called for statements from visitors for items not on the agenda, but none were forthcoming. No further business appearing, the meeting was adjourned at 7-32 p.m. Approved: President. 0~ Secretary

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20 SSS No. SFA SFA COMMISSION AGENDA ITEM Sacramento Municipal Utility District Financing Authority STAFFING SUMMARY SHEET Please use a separate sheet if vou have anv comments TO Commiffee Meeting & Date Finance November 7, 2018 Board Meeting Date December 20, 2018 TO 1 Eric Poff 7. Jennifer Davidson 2. Ross Gould 8. Stephen Clemons 1 Sandra Moorman 9. Gary King 4. Ron Jelicich Russell Mills 11. Legal 6. Frankie McDermott 12. CEO& Gen ral Manager Consent Calendar I x I Yes No If no, schedu le a dry run No (If no, explain in CostIBudgeted Budgeted x presentation. section.) FROM (IPR) FDFE7PARTMENT - MAIL STOP EXT DATE SENT Laurie Johnson Power Generation/Thermal 1 Generation EA /18/18 NARRATIVE: Requested Action: Approve the proposed 2019 Sacramento Municipal Utility District Financing Authority (SFA) Budget Resolution. Summary: Board Policy: (Number & Title) Benefits: Cost/Budgeted: Alternatives: Affected Parties: Presenter: The 2019 SFA Budget covers costs to be incurred by SFA in operating and maintaining the SFA Cosumnes Power Plant and providing for debt service on SFA Bonds. The budget amount is per the attached Resolution and is based on the operations expected during the normal water year for SMUD. SD 2 Competitive Rates, SD 3 Access to Credit Markets, SD 4, Reliability GP-3, Board Job Description - (f) adopt budget on an annual basis. Approval of the SFA Budget Resolution will meet the requirements of the Annual Budget provisions of the SFA Bond Indenture Agreement and will authorize spending within the limits prescribed to maintain operations of the SFA Cosumnes Power Plant and for the payment of the SFA Debt Service. Approval of the Budget Resolution will authorize spending within the limits prescribed. Expenditures authorized under this action should offset expenditures under purchased power. Approval of a budget is required or SFA will not have the authority to make purchases or pay bills. The alternative is to violate the terms of the SFA Bond Indenture Agreement. Budget Office, Accounting, Treasury, Power Generation, and Legal Frankie McDermott Additional Links: SUBJECT: rrem NO. (FOR LEGAL USE ONLY) 2019 SFA BUDGET ez ITEMS SUBMITTED AFrER DEADLINE WILL BE POSTPONED UNTIL NEXT MEETING

21 SACRAMENTO MUNICIPAL UTILITY DISTRICT FINANCING AUTHORITY 2019 BUDGET SUMMARY NET CHANGE BUDGET BUDGET PERCENT GENERATION (MWh) 3,561,199 3,452,0~4-3%. FUEL Combined Cycle Pipeline Gas Expenses $96,930,162 $84,518,259-13% Combined Cycle Biogas Expense $26,113,387 $34,846,758 33% Natural Gas Commodity ($/MMBtu) $3.08 $2,86-7% TOTALf-UELEXPENSES $123,043,549 $119,365,01T -3% PLANT OPERATION & MAINTENANCE Station Electdcal Service $252,000 $300,000 19% Operator Fixed Fees $3,777,522 $3,871,956 2% Operator Variable Fees $4,726,600 $4,677,441-11% Operator Bonus $525,313 $538,444 2% JPA Administrative and Other Expenses $484,973 $495,608 2% Overhaul Expenses $11,995,000 $7,600,000-37% TOTAL PLANT OPERATION & MAINTENANCE $21,761,408 $17,483,449-20% ITOTAL O&M COSTS $144,804,957 $136,848,465-5% ADMINISTRATIVE & GENERAL SMUD Labor $390,028 $350,970-10% Outside Services $79,954 $96,754 21% Insurance $1,586,034 $1,796,174 13% ITOTAL ADMINISTRATIVE & GENERAL $2,066,016 $2,243, % INTEREST EXPENSE Interest on SFA Bonds $6,907,800 $6, % DEBT SERVICE PRINCIPAL REPAYMENT SFA Bond Principal Set Aside $12,922,500 $10,207,500-21% ITOTAL PRINCIPAL & INTEREST $19,830,300 $16,539,87-17% CAPITAL EXPENDITURES Capital Overhauls (frorn Overhaul Account) $14,500,000 $14,500,000 0% Capital Im2rovements $400,000 $0-100% ITOTAL CAPITAL EXPENDITURES $14,900,000 $14,500,0-3%

22 DRAFT RESOLUTION NO. BE IT RESOLVED BY THE COMMISSIONERS OF THE SACRAMENTO MUNICIPAL UTILITY DISTRICT FINANCING AUTHORITY: Section 1. This resolution may be referred to as the 2019 SFA budget resolution. Section 2. There is hereby appropriated from the Revenue Fund, Operating Fund, Debt Service Fund, and other funds as appropriate, sufficient monies for the payment of demands against the Authority which relate to obligations incurred for the purposes and within the amount specified for such purposes in the following projection of the Authority's programs for the period January 1, 2019 through December 31,2019. Operation and Maintenance $136,848,465 Administrative & General $ 2,243,898 Principal and Interest $ 16,539,875 Capital Expenditures $ 14,500,000 There shall be deemed added to the O&M line item a +20% increase with no limit to a decrease in the Operations and Maintenance Expense line item, plus an additional $2 million applicable to the overall budget. Section 3. Demands against the Authority may be paid without the prior specific approval of this Commission, if they relate to obligations incurred for the purpose and within the amounts specified in Section 2, provided such demands are approved by the General Manager of the Authority, or his designee. It is the purpose

23 and intent of this paragraph to delegate to the General Manager, or his designee, authority to make purchases, to negotiate and execute contracts, and expend funds in any manner necessary or appropriate to the administration of the business affairs of the Authority, within the amounts and for the purposes set forth above, subject to duly adopted delegations of authority.