Title
Resolution - Approval of the Power Supply and Commodity Risk Policy and Rescission of Power Supply and Energy Management Policy - R Kruger
Other Info
Submitted By: Randy Kruger
Department: Chief Financial Officer
Financial Impact and Cost/Benefit Considerations: As discussed in Executive Session.
Discussion
The Cooperative manages the purchase of electric energy for its Members. To date, Board approval has been required for almost all power supply purchase transactions. However, because of day-to-day variability in energy pricing and constantly changing market demand, the delay associated with obtaining Board approval for energy purchase transactions can impair the Cooperative’s ability to take advantage of time-sensitive energy pricing and offerings. This can result in the Cooperative incurring higher than necessary energy costs. This concern has become particularly acute in recent years as the ERCOT energy market has significantly changed following Winter Storm Uri.
Through the Power Supply and Commodity Risk Policy (“Policy”), the Board delegates the authority over the Cooperative’s power supply purchases to a newly created Power Supply Committee (“PSC”). The PSC is charged with oversight of the day-to-day management of the Cooperative’s energy purchases, subject to the transaction limits and risk tolerance guidelines established by the Board in the Policy and confidential Appendix to the Policy. The PSC will regularly report to the Board regarding the status of its activity, as set forth in the Policy.
The Policy will serve to guide the Cooperative as to its power supply purchases to serve the needs of its Members and supersedes the Power Supply and Energy Management Policy adopted in December 2019.
Body
now, therefore, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF PEDERNALES ELECTRIC COOPERATIVE, INC. that the Cooperative adopt the Power Supply and Commodity Risk Policy, and adopt the confidential Appendix to the Power Supply and Commodity Risk Policy, that was presented to and discussed by the Board this day, with such changes thereto, if any, as were discussed and approved by the Board; and
BE IT FURTHER RESOLVED that the Cooperative may implement the requirements of the Power Supply and Commodity Risk Policy using a phased approach to achieve full compliance with the requirements of the Power Supply and Commodity Risk Policy and confidential Appendix within twelve months of the date of this resolution, and that the Cooperative shall regularly report to the Board on the progress of the phased implementation; and
BE IT FURTHER RESOLVED that the adoption of the Power Supply and Commodity Risk Policy and confidential Appendix to the Power Supply and Commodity Risk Policy supersedes the Power Supply and Energy Management Policy and such resolutions of the Cooperative and fulfills such other requirements instituted by policies of the Cooperative as described herein; and
BE IT FURTHER RESOLVED BY THE BOARD OF DIRECTORS OF THE COOPERATIVE, that the CEO, or designee, is authorized to take all such other actions necessary to implement this resolution.