201 S. Anaheim Blvd.
Suite #1101
Anaheim, CA 92805
Tel: (714) 765-5173
www.anaheim.net
CITY COUNCIL AGENDA REPORT
City of Anaheim
PUBLIC UTILITIES DEPARTMENT
DATE: APRIL 18, 2023
FROM: PUBLIC UTILITIES DEPARTMENT
SUBJECT: APPROVAL OF FIRST AMENDMENT TO RENEWABLE WIND
POWER PURCHASE AND SALES AGREEMENT
ATTACHMENT (Y/N): YES ITEM # 14
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion:
1) Approve the First Amendment to Renewable Power Purchase and Sales Agreement (First Amendment) between San Gorgonio Farms, Inc. (San Gorgonio) and the City of Anaheim (City) to reduce the contract amount by $1.2 million annually which results in an overall approximate savings of $24 million over the agreement term, and include an option for the City to purchase future energy storage services with the first right of acceptance of all additional capacity and Project attributes; and 2) Authorize the Public Utilities General Manager or designees, on behalf of the City, to execute and deliver the First Amendment, other related agreements, and any other related documents; to accept energy storage product options; incorporate amended Exhibit B to the Renewable Power Purchase and Sales Agreement as a matter of administration; and take all actions as are necessary or advisable to implement and administer the First Amendment.
DISCUSSION:
At their meeting of March 22, 2023, the Public Utilities Board (PUB) recommended that the City Council approve these actions.
On October 22, 2013, City Council approved a Renewable Power Purchase and Sale Agreement with San Gorgonio for a 31 Megawatt (MW) renewable wind project near Palm Springs in Whitewater, California for a 10-year initial term with two 10-year optional renewal extensions. This wind resource contributes to Anaheim Public Utilities’ (APU) overall renewable portfolio in compliance with state mandates, most recently affirmed in Senate Bill (SB) 1020 that requires utilities to provide 100% of its power supplies from renewable and carbon-free resources by 2045.
The proposed First Amendment with San Gorgonio includes an annual cost reduction from $3.0 million to $1.8 million, which is approximately $1.2 million or 43% lower than the original financial term and is in-line with renewable market pricing. In return for the Approval of First Amendment to Renewable Wind Power Purchase and Sales Agreement April 18, 2023
reduction in pricing, APU would exercise its options to extend the agreement term providing San Gorgonio with revenue security and ability to invest in wind turbine upgrades to more efficient systems. There are no minimum payments for the energy; APU only pays for the renewable energy delivered. The resulting output from the generating facility is expected to produce 80,000 Megawatt-hours (MWh) every year, which is enough renewable energy to power over 13,000 Anaheim homes.
A new agreement provision in the First Amendment is a consideration that a battery energy storage project (Project) may be added in the future. The mutual benefit of the Project is to capture and store wind energy for dispatching when needed by APU, especially during periods of peak demand. APU will have the first right of acceptance of all Project attributes. If the Project’s associated pricing and related terms are determined to be cost-effective, a future amendment to the agreement will be presented to PUB and City Council for consideration.
IMPACT ON BUDGET:
The Power Purchase and Sales Agreement First Amendment will require expenditures of approximately $1.8M annually over 20 years. There are no impacts to APU’s current budget and funds will be included in future restricted Electric Utility Fund budgets, subject to City Council approval of budget appropriations.
Respectfully submitted,
Dukku Lee
Public Utilities General Manager
Attachments:
1. First Amendment to Renewable Power Purchase and Sales Agreement between San Gorgonio Farms, Inc. and the City of Anaheim
2. Exhibit - Renewable Power Purchase and Sales Agreement between San Gorgonio Farms, Inc. and the City of Anaheim