REPORT TO COUNCIL
SUBJECT
Title
Action on Authorizing the City Manager to Negotiate and Execute Amendment No. 1 to the Substation Agreement with 651 Walsh Partners, LLC for Laurelwood Junction Substation
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
On March 22, 2022, the City Council authorized the City Manager to negotiate and execute a Substation Agreement with 651 Walsh Partners, LLC (Walsh Partners) for the Laurelwood Junction Substation (LJ Substation) (RTC 22-1704). Walsh Partners is a Digital Realty Trust data center. Under the “Substation Agreement by and between the City of Santa Clara and 651 Walsh Brothers, LLC” (“Agreement” - Attachment 1) executed on January 6, 2023, Walsh Partners is required to construct, at its own expense, the LJ Substation with a capacity of 99 megavolt-amps (MVA) to serve its data center. Costs incurred by Silicon Valley Power (SVP) related to the design, procurement, construction, inspection, and testing associated with LJ Substation are paid in full by Walsh Partners as required by the Agreement. The construction of LJ Substation is near completion and is scheduled to be energized in Summer 2025.
DISCUSSION
The Agreement included Exhibit E (Available Capacity Schedule). Exhibit E details the load ramp and required payments for activities associated with the LJ Substation. Under Exhibit E of the Agreement, the maximum load is 24 MVA by 2032. Staff meets with Digital Realty staff regularly to discuss many items related to the project. As part of those discussions staff proposed adjusting the schedule for the 24 MVA. The proposed Amendment No. 1 to the Substation Agreement would adjust the schedule for the 24MVA from 2032 to 2027. Staff is supportive of a schedule adjustment as it maintains the total 24 MVA load and does not affect any of the California Independent System Operator (CAISO) transmission modeling and current power commitments in that area.
ENVIRONMENTAL REVIEW
The lead agency for LJ Substation and data center project is the California Energy Commission, which adopted a Mitigated Negative Declaration and granted a Small Power Plant Exemption on August 12, 2020. The City, as a responsible agency, adopted the Mitigated Negative Declaration at a publicly noticed Development Review Hearing on August 16, 2020.
There are no substantial changes to the LJ Substation and associated data center project which will require subsequent or supplemental environmental review under the California Environmental Quality Act (“CEQA”).
FISCAL IMPACT
There are no fiscal changes with the proposed amendment.
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 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 Amendment No. 1 to the Substation Agreement with 651 Walsh Partners, LLC for Laurelwood Junction Substation, to modify the schedule for 24 MVA from 2032 through 2027, 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 Agreement and to negotiate and execute amendments to the Agreement to make any additional modifications that do not result in total capacity exceeding 24 MVA, subject to the review and approval as to form by the City Attorney.
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Substation Agreement with 651 Walsh Partners, LLC