CITY OF GLENDALE, CALIFORNIA
REPORT TO THE:
Joint
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City Council
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Housing Authority
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Successor Agency
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Oversight Board
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November 4, 2014
AGENDA ITEM
Report: Assignment of Three Energy Transactions from Skylar Energy L.P. (as Buyer) to
Macquarie Energy LLC
1. Motion approving and authorizing the City Manager, or his designee, to execute an
Assignment, Assumption, and Consent Agreement to change the counterparty from
Skylar Energy L.P. to Macquarie Energy LLC for Three Energy Sales by Glendale
Water & Power (GWP)
COUNCIL ACTION
Public Hearing
Approved for
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Ordinance
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No-1- ~1 "lDl'f
Consent Calendar 1ZJ
Action Item
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Report Only
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calendar
ADMINSTRATIVE ACTION
Submitted by:
Stephen M. Zurn, General Manager - GWP
Prepared by:
Ramon Z. Abueg, Chief Assistant General Manager
Lon L. Peters, Integrated Resources Planning Administrator
Approved by:
Scott Ochoa, City Manager
Reviewed by:
Yasmin K. Beers, Assistant City Manager
Michael J. Garcia, City Attorney
Robert P. Elliot, Director of Finance
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1
RECOMMENDATION
It is recommended that the City Council approve and authorize the City Manager, or his
designee, to execute a confirmation and an "Assignment, Assumption and Consent Agreemenr
authorizing a change in counterparty (buyer) from Skylar Energy L.P. to Macquarie Energy LLC.
BACKGROUND/ANALYSIS
In February, April and May of this year, the City of Glendale entered into three energy
transactions (~Confirmations") under the Western Systems Power Pool ("WSPP") standard form
energy agreement with Skylar Energy L.P. Glendale, as seller, agreed to sell energy to Skylar
Energy L.P., as buyer, for the followtng terms:
1. May 1, 2014through December31, 2016;
2. January 1, 2017 through December 31, 2020; and
3. January 1, 2021 through December 31, 2023.
Skylar proposes to assign its rights and obligations under the above confirmations to Macquarie
Energy LLC, and has requested the City of Glendale's approval to do so. Because the energy
delivered under the final confirmation will not be delivered until 2021, City Council approval is
required by the Energy Risk Management Policy.
The above confirmations for the sale of energy by Glendale, and proposed assignment of
the confirmations from Skylar to Macquarie, are separate and distinct from the City of Glendale's
25-year solar energy purchase from Skylar that was approved by the City Council on September
23, 2014. Assignment of the above confirmations will not affect the 25-year solar energy
transaction. Skylar Energy LLC will continue to be the counterparty for Glendale's 25-year solar
energy purchase.
The Energy Risk Management Committee has met and considered the proposed assignment
and recommends approval of the assignment to Macquarie Energy LLC. Macquarie Energy LLC
is a subsidiary of Macquarie Bank Ltd., an A (S&P) and A2 rated bank (Moody's). Macquarie
Bank has over $8 billion in tangible net worth, and is known for its "strict and sound risk
management culture", according to ClearPath Company Insights (6/16/14).
Under the terms of the Assignment, Assumption and Consent Agreement, Macquarie would "step
into the shoes~ of Skylar and take on all of Skylar's obligations to purchase and pay for the
energy supplied by Glendale during the term of the confirmations. In lieu of posting cash
collateral, as is required by the Confirmations with Skylar, Macquarie would supply Glendale with
a parental guarantee in the amount of $25,000,000, to ensure that Macquarie will fulfill its
obligations under the Agreement.
FISCAL IMPACT
GWP is currently holding a $2. 72 million dollar refundable deposit from Skylar and is due to
receive a $9 million deposit on December 1, 2014, and a $3 million deposit on December 31,
2016. These deposits are currently required to be refunded to Skylar, without interest, on
January 1, 2017, January 1, 2021, and January 1, 2024. With the Assignment, Macquarie
Energy would supply a parental guarantee in the amount of $25 million instead of posting
deposits, and the initial deposit ($2. 72 million) would be returned to Skylar. However, the net
present value of the simple interest that GWP would not earn due to the Assignment is
estimated to be $759,327 over the life of the contracts through 2023.
In order to compensate GWP for the lost interest on the deposits, Skylar has agreed that GWP
will retain that amount ($759,327) and return $1,960,663.
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ALTERNATIVES
Alternative 1: Council may authorize the City Manager, or his designee, to execute the
Assignment, Assumption and Consent Agreement. The result would be that the
City of Glendale would sell energy to Macquarie rather than to Skylar under the
above confirmations.
Alternative 2: Council may decline to authorize the City Manager, or his designee, to execute
the Assignment, Assumption and Consent Agreement, in which case the
Confirmations would not be assigned from Skylar to Macquarie.
Alternative 3: The City Council may consider any other alternative not proposed by staff.
CAMPAIGN DISCLOSURES
In accordance with the City Campaign Finance Ordinance No. 5744, the following are the names
and business addresses of the members of the board of directors, the chairperson, CEO, COO,
CFO, Subcontractors and any person or entity with more than ten percent interest in the
companies proposed for contract in this agenda item report:
Officers of Skvlar Enern'' L.P.:
Full Name
Title
Williama.
President
Perkins Ill
Kayla
CFO
Bruzzese
Gerardo
coo
("Gerald")
Balboa
Stephen
Vice President
Murohv
Full Name
Title
Board of
Directors
N/A
Business Address
3050 Post Oak Blvd.,
Suite 460
3050 Post Oak Blvd.,
Suite 460
3050 Post Oak Blvd.,
Suite 460
City
Houston
State
TX
Zip
77401
Houston
TX
77401
Houston
TX
77401
3050 Post Oak Blvd.,
Suite 460
Business Address
Houston
TX
77401
Citv
State
Zio
State
Zio
77401
0 wners h"10 Interest .1n more than ten oercen t"1n Sk<Var
I Ener...•• LP
. ..
Full Name
Title
Business Address
Citv
William 0.
Perkins Ill
Presid~nt
3050 Post Oak Blvd.,
Suite 460
Houston
TX
Ownership interest of more than ten percent in Skylar Energy L.P .:
William 0. Perkins Ill (100o/o ownership). No others have more than a ten percent ownership
interest.
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Officers of Macauarie Enern~• LLC:
Full Name
Title
Officers
Tim Bourn
Co-President
Nicholas
O'Kane
Co-President, Chief
Executive Officer
David Lauw
Chief Compliance
Officer, -Vice
President
Secretary, Treasurer,
Vice President
Trent Byerley
Joseph Forbes
Assistant Secretary
Matthew
D'Agostino
Vice President
Gavin Case
Head of Financial
Reporting
Full Name
Board of
Directors
Nicholas
O'Kane
Title
Sam McNair
Manager
Tim Bourn
Manager
Manager
·Business Address
City
State
Zip
One Allen Center,
Level 31, 500 Dallas
Street
One Allen Center,
Level 31, 500 Dallas
Street
One Allen Center,
Level 31, 500 Dallas
Street
One Allen Center,
Level 31, 500 Dallas
Street
One Allen Center,
Level 31, 500 Dallas
Street
One Allen Center,
Level 31, 500 Dallas
Street
One Allen Center,
Level 31, 500 Dallas
Street
Business Address
Houston
TX
77002
Houston
TX
77002
Houston
TX
77002
Houston
TX
77002
Houston
TX
77002
Houston
TX
77002
Houston
TX
77002
Chy
State
Zip
Houston
TX
77002
Houston
TX
77002
Houston
TX
77002
State
TX
Zip
One Allen Center,
Level 31, 500 Dallas
Street
One Allen Center,
Level 31, 500 Dallas
Street
One Allen Center,
Level 31, 500 Dallas
Street
Ownership Interest in more than ten percent in Macauarie Ener""' LLC:
City
Full Name
Title
Business Address
Macquarie
N/A
One Allen Center,
Houston
Energy North
Level 31, 500 Dallas
America
Street
Tradina Inc.
77002
Neither of these firms has any applicable subcontractors.
EXHIBIT(S)
Not applicable.
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MOTION
Moved by Council Member _ _ _ _ _ _ _ _ _ _ _ _ _ , seconded by
Council M e m b e r - - - - - - - - - - - - - ' that the City Manager, or his
designee, is hereby authorized to execute an Assignment, Assumption, and Consent
Agreement to change the counterparty from Skylar Energy L.P. lo Mcquarie Energy
LLC for three energy sales by Glendale Water & Power (GWP).
Vote as follows:
Ayes:
Noes:
Absent:
Abstain:
1 A