REPORT TO COUNCIL
SUBJECT
Title
Action on a Substation Agreement with Vantage Data Centers CA31, LLC for Bowers Avenue Junction Substation and Related Budget Amendment
Report
COUNCIL PILLAR
Deliver and Enhance High Quality Efficient Services and Infrastructure
BACKGROUND
Vantage Data Centers CA31, LLC (Vantage) is currently constructing a new data center at 2590 Walsh Ave. Vantage anticipates that the maximum energy demand for its data center will be 99 megavolt-amps (MVA) and has requested the City’s Electric Utility, Silicon Valley Power (SVP), to provide the required 60kV electric service to the site through a 60kV single customer substation (Bowers Avenue Junction).
DISCUSSION
Under the proposed Bowers Avenue Junction Substation Agreement (Agreement), Vantage will construct, at its own expense, the Bowers Avenue Junction Substation with a capacity of 99 megavolt-amps (MVA) to serve its data center. Costs incurred by SVP related to the design, procurement, construction, inspection, and testing associated with Bowers Avenue Junction will be paid in full by Vantage as outlined in the Agreement. Once completed, the Bowers Avenue Junction will be owned, operated, and maintained by SVP.
The new data center facility will be served by SVP from Bowers Avenue Junction under the terms of the Agreement. SVP will design the control building and related 60kV protection and communication equipment. Vantage will procure and construct all substation equipment necessary and required pursuant to SVP’s specifications to provide electric service to the data center facility. SVP will design and construct the 60kV transmission line interconnection to Bowers Avenue Junction in accordance with the City’s design and procurement standards. SVP will perform testing and commissioning activities on the completed 60kV substation.
ENVIRONMENTAL REVIEW
The California Energy Commission (CEC) prepared and adopted an Environmental Impact Report (EIR) for the Vantage Data Centers CA31, LLC (Bowers Avenue Junction Substation) data center project in accordance with the California Environmental Quality Act (CEQA). On August 17, 2022, the City of Santa Clara Development Review Committee accepted the EIR, adopted the mitigation monitoring and reporting program, and approved the architectural review.
FISCAL IMPACT
Vantage will be responsible for paying all actual costs related to the design, procurement, installation, construction, fabrication, inspection, and testing of the associated substation. Vantage will make deposit payments with three payment milestones as detailed in Exhibit D of the Agreement. The cost to be paid by Vantage to the City is estimated at $28,320,405. This includes estimated substation design and commissioning costs of $3,891,105 and estimated Load Development Fees of $24,429,300. Payment milestone number one in the amount of $8,162,026 includes $1,182,226 for the costs of activities and Load Development Fees of $6,979,800. Of the $3,891,105, for substation costs, $1,250,000 was budgeted and received in FY 2021/22 through a deposit agreement, leaving a remaining balance of $2,641,105 to fund this fiscal year.
The following budget adjustments are required in FY 22/23 budget for the Bowers Avenue Junction Substation Project.
Budget
FY 2022/2023
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Electric Utility Capital Fund (591) |
|
Revenues |
|
|
|
|
Developer Contributions (Bowers Avenue Junction Project) |
$0 |
$2,641,105 |
$2,641,105 |
|
Expenditures |
|
|
|
|
Bowers Avenue Junction Project |
$328,895 |
$2,641,105 |
$2,970,000 |
Budget for expenses and revenues in future fiscal years will be factored into the biennial budget process.
In addition to reimbursing SVP the actual costs associated with construction of the junction, the customer will also be charged the applicable Load Development Fee listed in the most current Municipal Fee Schedule at the time the fee is paid. The Load Development Fee recovers the portion of the Bulk Electric System reinforcement work that SVP will need to do as a result of the additional load.
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. Approve the Substation Agreement (Agreement) with Vantage Data Centers CA31, LLC to allow SVP to design, procure equipment, and construct 60kV facilities to serve the Bowers Avenue Junction Substation for electric service to 2590 Walsh Avenue, subject to the appropriation of funds;
2. Authorize the City Manager to execute the Agreement and related documents and to take such actions as reasonable or necessary to implement and administer the Agreement;
3. Authorize the City Manager to make minor modifications to the attached Agreement subject to approval by City Attorney as to form; and
4. Approve the following FY 2022/23 budget amendment in the Electric Utility Capital Fund to recognize developer contributions of $2,641,105, and increase the Bowers Avenue Junction Project appropriation by $2,641,105 (five affirmative Council votes required to appropriate additional revenue).
Staff
Reviewed by: Manuel Pineda, Chief Electric Utility Officer
Approved by: Rajeev Batra, City Manager
ATTACHMENTS
1. Substation Agreement