Authority of the Board of Water and Power Commissioners to Enter into Contracts for Natural Gas and Biogas and Financial Transactions for Natural Gas and the Delegation of Such Authority to the General Manager.

Los Angeles Administrative Code § 10.5.3

in effect

Sec. 10.5.3. Authority of the Board of Water and Power Commissioners to Enter into Contracts for Natural Gas and Biogas and Financial Transactions for Natural Gas and the Delegation of Such Authority to the General Manager. (1) Notwithstanding any other ordinance, rule or law of the City of Los Angeles to the contrary, the Board of Water and Power Commissioners shall have the authority to enter into contracts for natural gas and biogas (including landfill gas, digester gas and like gases) (together, “Gas”) and financial transactions for natural gas subject to all the following limitations: (a) This section shall not apply to contracts for the purchase of natural gas for a period of one year or less. Contracts for the purchase of natural gas for a period of one year or less shall comply with the terms and conditions of Section 10.1.1(b) of the Los Angeles Administrative Code. (b) This section applies only to the purchase of Gas for delivery and to financial transactions relating to natural gas to be used by the Department of Water and Power in its production of electricity to serve its retail customers. (c) Contracts for the purchase of natural gas entered into pursuant to this section shall be for a period of greater than one year, but not to exceed five years from the date of execution. Contracts for the purchase of biogas entered into pursuant to this Section shall be for a period not to exceed ten years from the date of execution. (d) Financial transactions entered into pursuant to this section shall be for a period not to exceed ten years in duration from the date of execution. (e) Financial transactions allowed under this section are described as follows: (i) Variable to Fixed Price Swaps: Fixing the price of natural gas at a specified delivery point. (ii) Delivery Point Swaps: Fixing the price of transporting natural gas from one delivery point to another delivery point. (iii) Price Ceilings: Establishing a maximum price of natural gas by purchasing, but not selling, a ceiling or call option. (iv) Price Collars: Buying a ceiling or call option to establish a maximum price of natural gas, and simultaneously selling a put option to establish a floor price for the same quantity of natural gas. (f) The total purchase price for financial transactions in each fiscal year, including broker’s fees, if any, shall not exceed fifteen million dollars. (g) Prior to entering into any contract or financial transaction, the Board of Water and Power Commissioners by resolution shall do the following: (i) Establish a risk management program to reduce volatility of the net amount payable for Gas used for the production of electricity to serve the Department of Water and Power’s retail customers and to establish risk management controls to protect the Department of Water and Power’s assets; and (ii) Establish an Energy Services Executive Risk Policy Committee. The Committee shall, at a minimum, be composed of five key management personnel including the functional business equivalent of the Chief Operating Officer, Chief Financial Officer, Assistant General Manager-Power Services, Director of Planning and Projects, and Director of Power Supply Operations; and (iii) Approve a budget that sets forth the expenditure for and volume of Gas each fiscal year for the production of electricity for the Department of Water and Power’s retail customers. (h) Every contract and financial transaction shall contain the payment, security, default, remedy and other terms and conditions, as authorized by the Board of Water and Power Commissioners. (i) The purchase price for natural gas set forth in every contract and the delivered price of natural gas set forth in a financial transaction shall not exceed $10 per million British Thermal Units including broker’s fees, if any. The purchase price for biogas set forth in every contract shall not exceed $18 per million British Thermal Units including broker's fees, if any. (j) The aggregate volume of Gas for delivery and natural gas subject to financial transactions shall not exceed seventy five percent (75%) of the volume of Gas as set forth in the budget established pursuant to Subsection (1), paragraph (g)(iii) and subject to the following limitations: (i) The aggregate volume of Gas purchased for delivery shall not exceed fifty percent (50%) of the volume of Gas as set forth in the budget established pursuant to Subsection (1), paragraph (g)(iii). (ii) The aggregate volume of natural gas subject to financial transactions shall not exceed seventy five percent (75%) of the volume of Gas as set forth in the budget established pursuant to Subsection (1), paragraph (g)(iii). (2) The Board of Water and Power Commissioners under the authority of Charter Section 604(c) is authorized to delegate to the General Manager of the Department of Water and Power the authority to enter into contracts and financial transactions pursuant to this section with the following limitations: (i) No contract or financial transaction shall be entered into until the Energy Services Executive Risk Policy Committee has met, reviewed, and approved a written recommendation to the General Manager; and (ii) The General Manager’s delegated authority to enter into financial contracts shall not exceed a total purchase price of fifteen million dollars in any fiscal year with an aggregate not to exceed seventy-five million dollars over any five year period. (3) The Department of Water and Power shall retain an outside auditor or a comparable third party approved by the Board of Water and Power Commissioners to annually audit and prepare a report relating to the activities authorized under this section. The audit report shall provide, but is not limited to, an assessment of the adequacy of risk management controls and compliance with the provisions set forth in this section. Within five days after receipt of the audit, the audit shall be distributed by personal delivery or first class mail to the Board of Water and Power Commissioners, the City Council, and the Mayor. SECTION HISTORY Former Section Added by Ord. No. 172,129, Eff. 9-4-98. Former Section Repealed by Ord. No. 173,236, Eff. 6-19-00, Oper. 7-1-00. Added by Ord. No. 174,755, Eff. 9-30-02. Amended by: Subsecs. (1)(d) and (1)(i), Ord. No. 177,405, Eff. 4-17-06; Title and Subsecs. (1), (1)(b), (1)(c), (1)(i) and (1)(j), Ord. No. 181,931, Eff. 12-11-11.

Source: City of Los Angeles, Charter and Codes (American Legal Publishing, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/los_angeles/latest/laac/0-0-0-38042Fetched: 10/24/2026