REPORT TO COUNCIL
SUBJECT
Title
Action to Delegate Authority to the City Manager to Negotiate a Multi-Year Emergency Load Reduction Program
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
On May 6, 2022, the State’s energy regulators and managers announced a potential energy shortfall of 1,700 MWs this summer or the equivalent of nearly 12 Donald Von Raesfeld (DVR) power plants. The State has also identified shortfalls in the summer months through at least 2025. The shortfall could grow to 4,000 to 5,000 MWs in an extreme weather and fire risk scenario. In the same week, the California Energy Commission (CEC) reached out to ask Silicon Valley Power’s (SVP) assistance in facilitating enrollment of Santa Clara Customers in a potential State-designed emergency load reduction program.
Last summer, on June 22, 2021, the City Council acted to Delegate Authority to the City Manager to Adopt a Pilot Emergency Load Reduction Program and Negotiate Compensation for Program Participants. This action allowed SVP to negotiate with various State and local stakeholders to establish an Emergency Load Reduction Program (ELRP) with our customers. Under the ELRP, Customers would have been paid for their participation by the California Independent System Operator (CAISO). Current discussions are for a similar program with a similar outcome but a different payment mechanism, thus a new agreement, and is not yet named.
Given climate uncertainty, the potential extreme heat events combined with the low levels of water in hydroelectric reservoirs, supply chain issues, and delayed generation construction, California could be at risk for another potential energy shortfall this summer, like the 2020 heat waves. There were rotating outages in August and September 2020 during extreme west-wide heat storms, but rotating outages were avoided in a cooler summer of 2021. On August 16, 2020, the Governor signed a Proclamation State of Emergency for the Extreme Heat Events allowing the use of stationary backup generation. During the 2020 heat events, SVP customers were able to provide approximately 675 Megawatt-hours (MW-hr) of load relief on the system by switching to back up generators in a controlled manner.
While SVP is fully resourced, it can be subject to grid-wide emergencies and can be called upon by the CAISO to enact rotating outages or firm load shed events. SVP is in the process of updating operational load shed plans and preparing the customer base that may be impacted by firm load shed events as SVP has done annually for the past several years.
DISCUSSION
On May 20, 2022, the CEC held a Staff Workshop on Summer and Midterm Reliability which emphasized the need for continued emergency load curtailment strategies over the next several summers. In early May, the CEC had reached out to SVP to start the conversation with our customers to target interest in load reduction programs similar to the 2021 California State Emergency Program or programs similar to the Emergency Load Reduction Programs put in place by several utilities.
SVP will need to continue to work with stakeholders, the State of California, the CEC, CAISO, others, and Customers that are listed on the current emergency rotating blocks to develop a multi-year program that could enable SVP customer participation. SVP’s role will be to facilitate Customers enrollment and to coordinate with the State agencies. As a load following entity, SVP must centrally coordinate any type of emergency load reduction within Santa Clara in order for the program to have the intended impact for the greater grid and to ensure our Customers receive the benefit of participation.
SVP is seeking that the City Council delegate authority to the City Manager to negotiate with Customers and other stakeholders to create and enact an emergency load reduction program annually or potentially multi-year.
It is expected that staff will have limited notice between setting of the compensation criteria and possible implementation. Authorizing the City Manager to negotiate with customers and other stakeholders will allow staff to act swiftly and minimize possible issues within Santa Clara. As part of a future SVP quarterly update, staff will present on any outcomes from this program.
ENVIRONMENTAL REVIEW
This action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(4) in that it is a fiscal activity that does not involve commitment to any specific project which may result in a potentially significant impact on the environment.
FISCAL IMPACT
SVP intends to negotiate with customers to develop a program compensation that would essentially pass through any compensation from the program creators, likely State agencies, to participating customers. Thus, there is no expected financial impact, other than staff time, on other SVP customers or SVP rates. Other SVP customers would benefit from not being part of a rotating outage should the CAISO call an Energy Emergency Alert 3 and request SVP to shed firm load.
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
Delegate Authority to the City Manager to develop and approve a Multi-Year Emergency Load Reduction Program, including negotiating and approving agreements with SVP Customers, state agencies, and other potential stakeholders.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Rajeev Batra, City Manager
ATTACHMENTS
1. California Energy Commission - Presentation - 2022 Summer Supply Stack Analysis TN# 243173
2. California Independent System Operator - Presentation Reliability Workshop Summer Analysis TN# 243174