HomeMy WebLinkAboutE-2.1. Approval of Updated Energy Risk Management PolicySCHEDULED ITEM E-2
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD
FROM: TIKAN SINGH, GENERAL MANAGER
DATE: FEBRUARY 26, 2024
SUBJECT: ADOPTION OF UPDATED ENERGY RISK MANAGEMENT POLICY
BACKGROUND:
In late 1999 the City Council approved a Risk Management Policy setting specific guidelines for the
Power Resources Division staff to purchase and sell electric power for the City. Subsequent amendments
were made to the Policy as new mandates required staff to undertake the purchase of other products such
as allowances and renewable credits. It is deemed appropriate for the City to adopt an updated risk
management policy establishing purchasing/selling guidelines for current market products.
RECOMMENDATION:
Staff recommends the Utility Board take the following action:
1) Adopt an updated Energy Risk Management Policy.
ANALYSIS:
Since its adoption in 1999, Azusa’s Risk Management Policy (Policy) has been amended various times
(2002, 2011, 2012) to embrace new products, transaction limits, staff function titles, and responsibilities.
Staff saw the need to have its Policy reviewed by a risk management service provider and assess if it was
proper to update the existing amended Policy or draft a new one. ACES Power was hired last year to
provide this review. The recommendation was to draft and approve a new Policy by the Utility Board.
ACES and staff have been working together to draft a new Energy Risk Management Policy and its
accompanying “sub-policies,” those being a Trading Authority Policy, a Hedging Policy, and a Credit
Policy.
The new Policy addresses up-to-date trading authorities for the Utility Board, General Manager, Assistant
General Manager – Resource Management, all staff within the Power Resources Division, and its real-
time agent. The Policy also establishes a committee that will meet at least quarterly to discuss any
significant risks and ensure compliance with the policies.
Approved
Utility Board
02/26/2024
Risk Policy
February 26, 2024
Page 2
Per the new recommended Policy, the Utility Board will be presented with semi-annual reports on Azusa's
resource portfolio, projected costs, and any hedging opportunities outside of policy, such as longer-term
transactions. As needed, the Policy may be amended for products not in existence as of this adoption;
however, it is updated for energy, renewable energy, cap and trade, and resource adequacy products. With
this recommendation, this Energy and Risk Management Policy will replace the dated 1999 Policy and its
related amendments.
FISCAL IMPACT:
There is no fiscal impact regarding the recommended approval of the updated Energy Risk Management
Policy.
Prepared by: Reviewed and Approved:
Richard Torres Danny Smith
Assistant General Manager - Utilities Admin & Finance Manager
Power Resources
Reviewed and Approved: Reviewed and Approved:
Tikan Singh Sergio Gonzalez
General Manager City Manager
Attachments:
1) Azusa Credit Policy 2-21-2024
2) Azusa Energy Risk Management Policy 2-21-24
3) Azusa Hedging Policy dft 2-21-24
4) Azusa Trading Authority Policy draft 2-22-24