AGENDA ITEM NO.: 4.G.1
MEETING DATE: 11/13/2023
ADMINISTRATIVE REPORT NO.: 2024-24
ACTION: BY RESOLUTION
To: Hon
orable Public Utilities Board Submitted by: __________________ Chris Ferrara
AGM – Energy Resources Planning
Fro
m: Alan Harbottle Approved by: ___________________
Supervisor Energy Resources Nicolas Procos
General Manager
Su
bject: By Resolution, Approve and Further Recommend City Council Approve an Assignment Agreement with Ameresco Half Moon Bay, LLC, and Their Lender for the Ox Mountain Landfill Power Plant, and Delegate Authority to the General Manager to Sign
RECOMMENDATION
By
resolution, approve and further recommend City Council approve an assignment agreement with Ameresco Half Moon Bay, LLC, and their lender for the Ox Mountain Landfill Power Plant, and delegate authority to the General Manager to sign.
BACKGROUND
On
January 24, 2005, the Public Utilities Board (Board) adopted Resolution No. 4656 approving an agreement between Ameresco Half Moon Bay, LLC (Ameresco) and Alameda Municipal Power (AMP), formerly Alameda Power and Telecom, for the purchase of renewable energy from a proposed landfill gas generating project located at the Ox Mountain landfill in Half Moon Bay, CA. The agreement was subsequently approved by the City Council on February 1, 2005, as the agreement had a term of 20 years, and the City Council must approve agreements with terms longer than 15 years. The power purchase agreement (PPA) was officially executed on February 2, 2005.
Th
e Ox Mountain landfill gas generator has an installed gross capacity of 10.4 megawatts (MW) operating as a baseload energy facility. AMP’s 50 percent project participation share is
5.2 MW of power. The Ox Mountain landfill gas generator became commercially operational in 2009, and will terminate in 2028.
AM
P and the City of Palo Alto (Palo Alto) are the two buyers of the full electricity output from the Ox Mountain landfill gas generator with power production shared equally under the terms of two separate, but identical, PPAs with Ameresco. Both AMP and Palo Alto maintain rights that require approval of any assignment of the agreement with written consent, although such consent is not to be unreasonably withheld or delayed.
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Exhibit 3
AGENDA ITEM NO.: 4.G.2
MEETING DATE: 11/13/2023
ADMINISTRATIVE REPORT NO.: 2024-24
DISCUSSION
On
August 3, 2023, Ameresco informed AMP staff of their request to assign this agreement to their lender, HA RNG 1 LENDER LLC, for use as collateral on a loan for Ameresco’s new business activities. The loan is unrelated to the potential expansion of the Ox Mountain power plant. The form of the assignment is a separate assignment agreement, attached in Exhibit A.
The power plant will revert to the lender only in the case of a default on the loan.
A
ccording to Section 10.1 of AMP’s PPA with Ameresco, attached in Exhibit B, “The rights and obligations of this Agreement may not be assigned by either Party without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed.” A
s part of the review of the proposed assignment agreement by AMP’s legal counsel, multiple sections were identified that could potentially limit AMP’s rights and remedies contained within the PPA. AMP’s counsel proposed new language that strengthened all such sections, ensuring AMP’s rights and remedies, as well as Assignee’s obligations, would remain with the assignment of the contract. Importantly, AMP also retains the ability to reasonably determine that the Assignee has the technical and financial capability to perform the obligations of the PPA prior to the transfer. The final assignment agreement is the result of negotiations between AMP, Palo Alto, HA RNG 1 LENDER LLC, and Ameresco.
FINANCIAL IMPACT
T
here is no financial impact.
EXHIBITS
A. A
ssignment Agreement
B. Power Purchase Agreement
C. Resolution Recommending City Council Approval of Assignment Agreement and Delegation to the General Manager to Execute Said Assignment Agreement AGENDA ITEM NO.: 4.G
MEETING DATE: 11/13/2023
EXHIBIT C: Page 1 of 1
CITY OF ALAMEDA
PUBLIC UTILITIES BOARD
RE
SOLUTION NO. ____
RECO
MMEND CITY COUNCIL APPROVE AN ASSIGNMENT AGREEMENT
WITH AMERESCO HALF MOON BAY, LLC, AND THEIR LENDER FOR THE OX
MOUNTAIN LANDFILL POWER PLANT, AND DELEGATE AUTHORITY TO
THE GENERAL MANAGER TO EXECUTE SAID ASSIGNMENT AGREEMENT __________________________________________________________________________ WH
EREAS, the Public Utilities Board (Board) recommended City Council ratification of the Board’s action to authorize the execution of a power purchase agreement (PPA) with Ameresco Half Moon Bay, LLC (Ameresco) for delivery of power from landfill gas generation on January 24, 2005, pursuant to Resolution No. 4656; and WHE
REAS, City Council approved the PPA with Ameresco on February 1, 2005; and
WHE
REAS, Ameresco notified Alameda Municipal Power (AMP) of their request to assign this agreement to their lender, HA RNG 1 LENDER LLC, for use as collateral on a loan for Ameresco’s new business activities; and
WHE
REAS, Section 10.1 of the PPA requires AMP’s written consent of the assignment, although such consent “shall not be unreasonably withheld or delayed”; and WHE
REAS, Ameresco’s lender proposed a separate assignment agreement, which AMP’s legal counsel has reviewed and negotiated modifications to maintain AMP’s rights and remedies as well as Assignee’s obligations as written in the PPA; and WHE
REAS, the City of Palo Alto, an equal member of the project, has also reviewed the assignment agreement and plans to move forward with its City Council’s approval; NO
W, THEREFORE, BE IT RESOLVED that the Public Utilities Board of the City of Alameda approves and further recommends City Council approve the assignment agreement with Ameresco Half Moon Bay, LLC, and their lender for the Ox Mountain Landfill Power Plant, and delegate authority to the General Manager to execute said assignment agreement.
Appr
oved as to Form
By:
_______________________
Lonnie Eldridge
Special Counsel
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