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CITY COUNCIL AGENDA REPORT
City of Anaheim
PUBLIC UTILITIES DEPARTMENT
DATE: NOVEMBER 13, 2024
FROM: PUBLIC UTILITIES DEPARTMENT
SUBJECT: POWER SALES AGREEMENT FOR SOLAR ENERGY
ATTACHMENT (Y/N): YES ITEM # 09
GOVERNMENT CODE § 84308 APPLIES: YES
RECOMMENDATION:
That the City Council, by Motion:
1) Approve the Grace Orchard Solar Project Power Sales Agreement (Agreement) with Southern California Public Power Authority (SCPPA) by which SCPPA will sell to the City of Anaheim (City) energy and associated renewable attributes generated by the Grace Solar Project (Project), with a twenty-year term, at a not-to- exceed annual cost of $13.3 million; and,
2) Authorize the Public Utilities General Manager, or designees, to (a) execute the Agreement and any associated documents; (b) execute any amendments or restatements to the Agreement that are cost-neutral/reducing or would involve only minor administrative cost increases; (c) execute any documents needed to carry out the transaction as contemplated by the Agreement; and (d) take such necessary or advisable actions to implement and administer the Agreement.
DISCUSSION:
At its meeting on October 23, 2024, the Public Utilities Board recommended that the City Council approve the Agreement with Southern California Public Power Authority.
Anaheim Public Utilities (APU) is on a pathway towards achieving a 60% renewable energy target by 2030 and carbon-free resources by 2045, consistent with state legislation established through Senate Bill (SB) 350 – the Clean Energy and Pollution Reduction Act and affirmed in SB 1020. To meet these ambitious statewide policies, APU is in the process of acquiring new renewable energy resources to serve Anaheim customers.
The Agreement is with SCPPA, a joint powers agency comprised of twelve public power utilities in Southern California, including Anaheim. SCPPA, among other responsibilities, manages power supply needs for its various members to help maximize economies of scale and reduce risk. SCPPA also administers ongoing Requests for Proposals (RFP) for renewable energy resources and energy storage solutions on behalf Power Sales Agreement for Solar Energy
November 13, 2024
of its member utilities. In 2023, SCPPA received 23 renewable project proposals from 14 respondents. The RFP solicited competitive proposals for renewable energy projects or products consistent with the California Renewable Energy Resources Program (Public Resources Code Section 25740, et seq.) and the California Renewables Portfolio Standard Program (Public Utilities Code Section 399.11, et seq.).
As part of the SCPPA RFP procurement process, NextEra Energy Resources Development, LLC, on behalf of Grace Solar, LLC (Grace), submitted a solar energy proposal. The cities of Anaheim, Colton, and Pasadena will collectively participate in this joint Project through SCPPA. The participants jointly evaluated the proposal including the Project’s location and access to transmission lines, ability to use the renewable attributes for complying with the California Energy Commission’s (CEC) Renewable Portfolio Standards (RPS), the developer’s operation and maintenance experience and performance record, and a cost-benefit assessment in consideration of current market prices.
The Grace Project is a 170 Megawatt (MW) solar facility located in Blythe, Riverside County, California. As part of the Agreement, APU will receive 100 MW, including all renewable energy attributes consistent with RPS compliance goals. The 280,000 Megawatt-hours (MWh) of renewable energy produced by this project will serve approximately 46,000 homes in Anaheim annually. The Project has an expected operation date of December 2027.
Due to escalating material costs and ongoing supply chain constraints, the Agreement allows for pricing variability depending on final construction costs. A third-party auditor will validate construction costs, and APU will only pay for the energy and renewable attributes it receives from the Project. The estimated base annual amount is $12.3 million per year with a ceiling of $13.3 million per year.
IMPACT ON BUDGET:
Funds for the Agreement will be proposed in APU’s Fiscal Year 2027/28 restricted Electric Utility Fund budget, with future years subject to City Council approval of budget appropriations.
Respectfully submitted,
Dukku Lee
Public Utilities General Manager
Attachment:
1. Grace Orchard Solar Project Power Sales Agreement