REPORT TO COUNCIL
SUBJECT
Title
Action on the First Amendment to the Power Purchase and Sale Agreement for Electricity from Qualifying Renewable Resources by and Between the City of Santa Clara and Ameresco Forward, LLC
Report
BACKGROUND
On May 25, 2010, the City of Santa Clara entered into a Power Purchase and Sale Agreement for Electricity with Ameresco Forward, LLC from the Forward Landfill electric generation facility located in Manteca, California, for a twenty-year term. The facility began operating in the California Independent System Operator (CAISO) balancing authority on February 22, 2014, and has a capacity of 4.2 megawatt (MW). The facility currently generates approximately 31,000 megawatt hours (MWh) of renewable energy annually.
DISCUSSION
On September 12, 2022, Ameresco Forward, LLC (Ameresco) met with SVP staff to discuss a possible termination of the Power Purchase and Sale Agreement. Ameresco stated that they were interested in converting the landfill electric generation facility to a renewable natural gas facility and would no longer be interested in selling the electricity to the City of Santa Clara if their development plans are approved.
Ameresco has proposed to amend the agreement to provide Ameresco an early termination right and allow it to terminate on or before December 31, 2025, if Ameresco gives six-months prior written notice to the City. In addition to this amount, Ameresco shall pay the City $29,167 for each full or partial month that is earlier than December 31, 2025. Ameresco will also have the option to extend the early termination date by one-year increments by paying the City $50,000 for each one-year extension. Ameresco is also required to pay the City $250,000 by the agreed upon early termination date, whether the agreement is terminated by 2025 or later.
The contract price for the Power Purchase and Sale Agreement is currently higher than other available options in today’s energy market, so there would be approximately $9.6 million dollars savings (based on today’s forecast of future energy prices) if the agreement were to terminate on December 31, 2025.
ENVIRONMENTAL REVIEW
A negative declaration dated August 9, 2011, was prepared for the project associated with the power purchase and sale agreement. Since this amendment only provides an early termination right, there are no substantial changes to the project or new information of substantial importance which will require subsequent or supplemental environmental review under the California Environmental Quality Act (“CEQA”).
FISCAL IMPACT
If the Power Purchase and Sale Agreement is terminated, the City of Santa Clara will receive a termination payment of $250,000 in the Electric Utility Fund in addition to approximately $9.6 million dollars in savings for not continuing in the agreement for the balance of the term. The savings would offset power purchases in SVP’s Operating budget for Resources.
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. Approve and authorize the City Manager to execute the First Amendment to the Power Purchase and Sale Agreement for Electricity from Qualifying Renewable Resources with Ameresco Forward LLC in substantially the form attached to this Report to Council; and
2. Authorize the City Manager to approve and execute future modifications to the First Amendment and take any and all actions as necessary or advisable to implement and administer the power purchase and sale agreement.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Office of the City Manager
ATTACHMENTS
1. First Amendment to Power Purchase and Sale Agreement