REPORT TO COUNCIL
SUBJECT
Title
Authorize the City Manager to amend and execute the existing Electric Service Agreement with Intel Corporation
Report
BACKGROUND
On October 24, 2017 the City Council approved an Electric Service Agreement (“Agreement” - Attachment 1) with Intel Corporation (“Intel”) for the purchase of electricity on a long-term basis in exchange for certain discounted rates. At that time, Intel had on-site distributed generation which included 1 MW of solar photovoltaics and 1 MW of natural gas fuel cells which operated in parallel with Silicon Valley Power (SVP) generation.
As part of the agreement Intel was permitted to self-generate an additional 5 MW of energy immediately with an additional 5 MW after certain usage thresholds had been met. This generation would operate in parallel to SVP generation and for which SVP provides back-up resources. Intel has installed the first 5 MW using natural gas fuel cells.
The City Council, on May 7, 2019, adopted a resolution amending Silicon Valley Power’s Rule and Regulations to require that new and modified customer-owned self-generation units interconnecting with SVP’s system utilize renewable generation or fuel sources. The amended Rules and Regulations become effective June 1, 2019. The City made a commitment that any existing agreements or applications completed prior to the June 1 date would be grandfathered and thus not subject to the amended Rules and Regulations requiring all customer-owned self-generation units interconnecting with SVP’s system be a renewable electrical generation facility, as defined in California Public Resources Code section 25741.
Staff had initially requested Council to delegate authority to the City Manager to amend the Intel Agreement on May 7, but it was deferred to May 21, 2019 to provide the City Council more information about the action and ensure proper compliance with the Ralph M. Brown Act.
DISCUSSION
Staff has worked with Intel as part of the new requirements and has determined that accommodating the additional installation of self-generation facilities will require additional time and/or modifications to the existing agreement. Staff will continue working with Intel to modify the term or usage requirements to assure successful implementation of the last 5 MW of self-generation that were presumed within the existing Agreement.
ENVIRONMENTAL REVIEW
The action being considered is exempt from the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15061(b)(3) as the activity is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA.
FISCAL IMPACT
No additional expenditures will occur in modifying the terms of the agreement.
COORDINATION
This report has been coordinated with the 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
Authorize the City Manager to amend and execute the existing Electric Service Agreement with Intel Corporation.
Staff
Reviewed by: Manuel Pineda, Interim Chief Electric Utility Officer
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Electric Service Agreement with Intel Corporation