Prepaid Natural Gas

Year Acquired: 2007      

SCPPA Participants: Anaheim,  Burbank,  Colton,  Glendale,  Pasadena

The Agreements for Prepaid Gas

In 2007, SCPPA made a one-time payment to acquire the right to receive approximately 135 billion cubic feet of natural gas from J. Aron & Company to be delivered over a 30-year term. In 2009, the agreements were restructured to reduce risk and provide an acceleration of a portion of the long-term savings. As a result of the restructuring, the contracts will now expire in 2035.

SCPPA entered into a financial hedge, leveraging favorable cost of capital to secure a portion of future natural gas needs at attractive pricing. This product complements SCPPA's physical gas hedges as another effective tool at mitigating exposure to market volatility and future price increases.