REPORT TO COUNCIL
SUBJECT
Title
Action on Delegation of Authority to the City Manager to Negotiate and Execute a Western Systems Power Pool Renewable Energy Credit Transaction Confirmation with the Northern California Power Agency
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
The Northern California Power Agency (NCPA) is a public Joint Powers Agency formed in 1968 under California’s Joint Exercise of Powers Act (Cal Gov. Code §§ 6500 et. seq.), whose members include the cities of Alameda, Biggs, Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Redding, Roseville, Santa Clara-Silicon Valley Power, Shasta Lake and Ukiah, as well as the Bay Area Rapid Transit District, Port of Oakland, the Truckee Donner Public Utility District, and the Plumas-Sierra Rural Electric Cooperative.
For over five decades, the NCPA has constructed, operated, and maintained a fleet of power plants that provide reliable and affordable electricity to more than 700,000 Californians. The NCPA made a major investment in renewable energy in the early 1980s when it developed two geothermal power plants and a 250MW hydroelectric facility. Forty years later, these resources continue to generate reliable, emission-free electricity for its member communities.
The NCPA’s mix of geothermal, hydroelectric, and natural gas resources are well positioned to help its members achieve California’s policy of a 60% Renewable Portfolio Standard (RPS) by 2030. Even though the NCPA has an extensive portfolio of resources, on occasion individual members of the NCPA fall short of the RPS compliance requirements and seek to shore up these shortfalls through other NCPA members or through the Renewable Energy Credit (REC) marketplace.
The NCPA initiated a request for offers for one (1) megawatt-hour (MWh) of Renewable Portfolio Standard (RPS), Portfolio Content Category 1 RECs (PCC1 RECs) for a term of 10 years for the NCPA members Biggs and Gridley. Silicon Valley Power (SVP) offered to sell its projected surplus of PCC1 RECs, which the NCPA has accepted. Both parties are members of the Western Systems Power Pool (WSPP), which is an organization of electric wholesale market entities that have developed and utilizes a standardized power agreement (WSPP Agreement) to execute trading opportunities. Through the use of standardized contract terms, the WSPP Agreement facilitates transactions to occur without constant renegotiation of standard terms and conditions, thereby promoting liquidity in the market. The proposed Transaction Confirmation provides transaction-specific terms and relies on the WSPP Agreement for base terms and conditions, except as specifically modified in the confirmation.
DISCUSSION
SVP currently has excess RECs available to meet approximately 87,600MWh of RECs over the 10-year contract. SVP is continually adding renewable energy to the resource portfolio with approximately 1,400MW contracted to come online in the next 3 years and another projected 1,400MW of potential resources in the contracting pipeline. SVP will need to procure additional projects to generate both energy and RECs to meet the State’s Renewable Portfolio Standard (RPS) targets in the future. The sale of surplus RECs to entities like the NCPA, during periods of excess supply, provides valuable revenue for SVP. In addition to the sales of surplus RECs at market rates, the sales will also assist two other NCPA members with meeting their regulatory obligations.
SVP recommends that the City Council authorize the sales of RECs to the NCPA over a term period of 10 years through the WSPP Agreement and REC Transaction Confirmation.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to section 15378(b)(5) of Title 14 of the California Code of Regulations in that it is an administrative activity that will not result in direct or indirect physical changes in the environment.
FISCAL IMPACT
SVP estimates that the revenue received from the sales of the RECs will be approximately $306,600 a year. Once the transaction confirmation is executed and the start date for the sales of RECs is determined, the revenue will be included in SVP’s annual revenue budget and 10-year forecast through the regular budget process.
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 or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Authorize the City Manager or designee to negotiate and execute a Transaction Confirmation under the Western System Power Pool Agreement between the Northern California Power Agency and the City of Santa Clara for the sale of Renewable Energy Credits (RECs) over a period of 10 years on the terms presented in this report and is subject to the review and approval as to form by the City Attorney; and
2. Authorize the City Manager or designee to take any actions as necessary to implement and administer the Transaction Confirmation and negotiate and execute future amendments, subject to the appropriation of funds and the review and approval as to form by the City Attorney.
Staff
Reviewed by: Nico Procos, Acting Director of Electric Utility
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. PCC 1 REC Transaction Confirmation