REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Negotiate, Approve, and Execute a Power Purchase and Sale Agreement With the Tri-Dam Power Authority to Purchase Carbon-Free Energy From the Tri-Dam Project
Report
COUNCIL PILLAR
Deliver and Enhance High-Quality Efficient Services and Infrastructure
Promote Sustainability and Environmental Protection
BACKGROUND
In 2013, Silicon Valley Power (SVP) and the Tri-Dam Power Authority entered into a Power Purchase and Sale Agreement (PPA) to purchase energy from four hydroelectric power plants located on the Middle Fork of the Stanislaus River in Tuolumne County: carbon-free electricity from the 72 MW Donnells Powerhouse; carbon-free and renewable electricity from the 25.7 MW Tulloch Powerhouse, the 11.2 MW Beardsley Powerhouse, and the 16.2 MW Sandbar Powerhouse (Tri-Dam Project). This PPA will terminate on December 31, 2023.
On October 2022, the Tri-Dam Power Authority notified SVP that it had released a Request for Bid (RFB) for the output of the Tri-Dam Project for a five-year period beginning January 1, 2024. After review of the RFB materials, the existing operations of the project and the project attributes, SVP submitted a bid to the Tri-Dam Power Authority. On November 17, 2022, the Tri-Dam Project Board selected SVP’s bid for further negotiation.
DISCUSSION
SVP has a continued need for renewable and carbon-free energy to meet the City’s load growth, the City’s Climate Action Plan, and the State’s Renewable Portfolio Standard (RPS) requirements. The Tri-Dam Project also has capacity attributes to meet the State’s Resource Adequacy Program’s requirements. The Tri-Dam Project is forecasted to generate approximately 416,667 MWh annually based on the past five years of historical generation. This represents approximately 10% of SVP’s 2021 retail sales. The generation will vary based on water availability. SVP staff is requesting that the City Council delegate authorization to the City Manager to complete negotiations and execute a new power purchase agreement with the Tri-Dam Power Authority to continue SVP’s purchase of energy from the Tri-Dam Project.
If City Council authorizes, the parties intend to execute the Power Purchase and Sale Agreement in the first quarter of 2023. SVP will provide Council with updates if needed through the SVP Quarterly Update or by e-mail to Council.
ENVIRONMENTAL REVIEW
The proposed power purchase involves the procurement of carbon-free and renewable energy from four existing hydroelectric generation projects. Environmental review has already been conducted for the Tri- Dam Project. Specifically, the Tri-Dam Power Authority, as lead agency, prepared and adopted a Mitigated Negative Declaration for the Beardsley Powerhouse and Donnell Powerhouse (State Clearinghouse Number 2004102061 <https://ceqanet.opr.ca.gov/2004102061>). The Tri-Dam Power Authority also prepared and adopted a Mitigated Negative Declaration for the Tulloch Project (State Clearinghouse Number 2004102062 <https://ceqanet.opr.ca.gov/2004102062>). The environmental impacts of the Sandbar Powerhouse were reviewed by the Federal Energy Regulatory Commission (Project No. 2975 <https://www.waterboards.ca.gov/water_issues/programs/cannabis/docs/ferc_license/ferc_p2975_sand_bar_water_power.pdf>) during the Federal Energy Regulatory Commission’s (FERC) licensing process.
There are no substantial changes to the existing projects or new information of substantial importance which will require subsequent or supplemental environmental review under the California Environmental Quality Act (“CEQA”).
FISCAL IMPACT
SVP will purchase up to 615,960 megawatt hours (based on highest year output from the last five years) of electricity annually at a cost of up to $52 million in any given year over the term of the agreement which will expire on December 31, 2028. Staff will include this cost in future budget appropriations.
COORDINATION
This report has been coordinated with the Finance Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Authorize the City Manager to negotiate, approve, and execute a Power Purchase and Sale Agreement with the Tri-Dam Power Authority to purchase energy and associated attributes from the Tri-Dam Project; and
2. Authorize the City Manager to execute all related documents, agreements, and administrative amendments, subject to the approval as to form by the City Attorney, including, but not limited to, collateral assignment agreements and security documentation, and take any and all actions as are necessary or advisable to implement and administer the Power Purchase and Sale Agreement.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Rajeev Batra, City Manager