REPORT TO COUNCIL
SUBJECT
Title
Action to Authorize the City Manager to Execute the First Amendment to Central Valley Project Corporation Membership Agreement to Extend the Term for Ten Years
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
Promote Sustainability and Environmental Protection
BACKGROUND
In 2003, the City Council approved the Central Valley Project Corporation Membership Agreement (Agreement) and delegated authority to the City Manager to execute exhibits to the Agreement on behalf of the City of Santa Clara in order to participate in specific voluntary programs. Prior to 2003, the Northern California Power Agency (NCPA) and its members, including the City of Santa Clara, did not have a nimble way to respond to funding needs related to the Central Valley Project (CVP). The CVP is a large federal and water management project which generates carbon-free energy (Base Resource) from its hydroelectric projects in addition to other benefits. Santa Clara receives power from this Base Resource. The NCPA Commission, at its September 26, 2002, meeting, directed NCPA staff to establish the Central Valley Project Corporation (CVP Corp) with the goal of protecting, and if possible, enhancing the benefits of CVP power contracts for its constituent members. Today, the CVP Corp has 24 members, including both NCPA and non-NCPA members.
Since 2003, CVP Corp established several programs, including 1) the Restoration Fund Financing, 2) the Energy Exchange Arrangement for Project Use and First Preference Support, and 3) the Base Resource Displacement Program. While the first two programs have since been terminated due to lack of need, CVP Corp’s current sole activity is the Base Resource Displacement Program. This program allows Base Resource customers in the California Independent System Operator (CAISO) balancing area to exchange energy with other Base Resource customers outside of the CAISO grid balancing area in order to avoid energy import charges. This displacement program has resulted in cost-savings to SVP ratepayers.
The Agreement is set to expire on December 31, 2024. However, at its last board meeting, the CVP Corp participants voted to extend the Agreement for an additional 10 years and the Displacement of Base Resource Program for an additional 2 years. To remain a member of the CVP Corp, Santa Clara must execute the First Amendment to the CVP Corp Membership Agreement.
DISCUSSION
Although there is currently only 1 active program, CVP Corp has been exploring other opportunities for CVP Corp members to collaborate in the future to extract the value of the Base Resource power. The cost of operating CVP Corp is approximately $31,000 per year and is collectively shared among all CVP Corp members. These annual costs include General Counsel and Board expenses, accounting services, management services, and insurance. The operating cost of CVP Corp is recovered through an annual administrative fee that is allocated to members based on their percentage share of electrical power from the Base Resource power. The administrative fee for Santa Clara for FY 2024 is $3,409 for the entire year, however, because of CVP Corp’s net asset position, the CVP Corp Board voted to waive the administrative fee for all members for 2024. Generally, Santa Clara’s administration fee has averaged approximately $4,100 per year over the last eight years. Staff recommends the approval of the extension of the Agreement so that Santa Clara can continue its participation in the CVP Corp activities that are beneficial to SVP ratepayers.
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 as it solely extends the term.
FISCAL IMPACT
Staff will incorporate the cost of CVP Corp Membership into its annual budget.
COORDINATION
This report has been coordinated with the Finance Department and 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
1. Authorize the City Manager to execute the First Amendment to Central Valley Project Corporation Membership Agreement to extend the term for ten years in a final form approved by the City Attorney; and
2. Authorize the City Manager, or designee, to take any and all necessary or advisable actions to implement and administer the Agreement as amended.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager
Attachments:
1. Central Valley Project Corporation Membership Agreement
2. First Amendment to the Central Valley Project Corporation Membership Agreement