WESTERN SYSTEMS POWER POOL

MUNICIPAL UTILITY POWER PURCHASE/SALE AUTHORITY
IN
WASHINGTON, OREGON AND CALIFORNIA

EXECUTIVE SUMMARY

	This memorandum has been prepared to assist participants in the western power markets to deal with the particular legal issues which will arise when a municipal entity is seeking to purchase or sell electric power and energy.  Although municipal entities have been participants in this market for many years, the particular volatility and increasing degree of market risk posed for all participants in the market has raised the need for sensitivity to the unique and different rules under which municipal entity’s participate.  The attached memorandum highlights certain principle issues which are presented by municipal participation in a market transaction and provides a source for starting the legal review necessary to confirm that all aspects of municipal participation are in accord with the constitutional, charter, statutory and other legal requirements for a municipal contract to be binding with the force and effect intended by all parties to the transaction.

	This memorandum should be as a starting point for answering the following questions which a municipal buyer or seller can expect to be asked in the normal course of negotiations regarding a contract to purchase or sell electric power and energy:

	1.	What kind of municipal entity is the participant?  (City, municipal utility department of a city, special district, etc.)

	2.	What is the legal authority under which it is organized?  (Constitution, charter, statute, etc., also referred to as the municipal entity’s “organic” or “authorizing” authority)

	3.	What legal requirements exist relating to the procedures for authorizing the contract?

	4.	Has the governing body (city council, Board of Commissioners, etc.) strictly complied with any applicable legal requirements?

	A municipal participant will also typically be requested to provide the following:

	A.	A copy of the document authorizing the organization of the entity (statute, charter, etc.);

	B.	A copy of the legal authority for entering into contracts for the purchase or sale of electricity (charter, statute, ordinance or resolution);

	C.	A copy of the document delegating authority to negotiate and execute contracts for the purchase or sale of electricity to the officers handling the transaction;

	D.	In certain transactions, an opinion of outside legal counsel to the municipal participant covering certain legal issues of particular concern or unique character to that transaction.

	Municipal participants should anticipate questions regarding the foregoing items.  They are ordinary in the normal course of business and are likely to form a necessary step in formulating future transactions for the purchase or sale of electric power.