1 STAFF REPORT
______
________________________________________________________________ DATE
: August 23, 2022
TO:
Justin Hess, City Manager
FR
OM: Dawn Roth Lindell, General Manager, Burbank Water and Power BY: Mandip Kaur Samra, Assistant General Manager, Power Supply SUBJ
ECT: Approval of a Contract with Powerex for the Purchase of Renewable Energy _____________________________________________________________________________
RECOMMENDATION
Approve and authorize the General M anager of B urbank Water and Power (BWP) , as designee of the City Manager, to enter a contract with Powerex (Powerex Corporation) for the purchase of r enewable energy in an amount not to exceed $4 m illion over ten years and to execute such ancillary documents.
BACKGROUND
Senate Bill ( SB) 100 requires l oad serving entities, such as B WP, to meet 6 0% of the retail energy needs with renewable energy by 2030. On December 14, 2021, the Burbank City Co uncil adopted versi on 3 of t he “BWP R enewable Portfolio Standard (RPS) Procurement P lan and Enforcement P rogram,” which lays ou t the RPS r ules a nd requirements and how B WP will comply. This document identifies the requirements for compliance with the RPS program in California. Specifically, BWP not only needs to meet the 60% R PS requirement and interim c ompliance period targets, but i t also needs t o meet the portfolio content category (PCC) requirements, and the long-term requirement, which requires that 65% of all renewable contracts used to meet the RPS are at least 10 years or longer in duration. This Powerex contract helps BWP meet the RPS, long-term requirement, and PCC 1 requirement, which is described in detail below.
DISCUSSION
The RPS is the amount of eligible renewable energy as a percentage of r etail sales that BWP will have to meet by t he compliance period, with interim t argets as outlined in the California Public Ut ilities Co de (PUC) . In additio n to the compliance period, each renewable contract i s di vided into a P CC. Ther e are f our o f t hese categories w hich represent t he Renewable Energy C redit ( REC), gener ated from t he resource. T he requirement for each PCC is listed below:
• P
CC 0 - Grandfathered Contracts: These are renewable contracts signed before June 1, 2010. Since these types of contracts pre-date the RPS program, they do not fall into any category and are subtracted from the RPS requirement.
WATER AND
POWER
2 • PCC 1 - Directly Scheduled (Bundled): A REC associated with a certified renewable resource and the energy from the same resource, bundled together and procured, at the same time, in real-time. Electricity products must be generated by an eligible renewable energy resource that has its first point of interconnection within the metered boundaries of a California balancing authority area or electricity products must be generated by an eligible renewable energy resource that has its first point of interconnection outside the metered boundaries of a California balancing authority must be scheduled into a California balancing authority without substituting electricity from another source.
• PCC 2 - Firmed and Shaped: A REC associated with the energy from a certified renewable resource, that was generated in the past, and is bundled together with the energy from a different resource.
• PCC 3 - Unbundled RECs: A REC associated with the energy produced from a certified renewable energy resource, that was generated in the past, and does not include energy.
The specific details for the PCC limitations and requirements as well as the RPS percentage are listed below.
Burbank Water and Power
California Energy Commission RPS Procurement Requirements by Calendar Year
California RPS
Mandatory
Procurement
Requirement
Compliance
Period 4
Compliance
Period 5
Compliance
Period 6
Compliance Period
7+
1/1/2021-
12/31/2024
1/1/2025-
12/31/2027
1/1/2028-
12/31/2030
3 calendar year
blocks
44% RPS by
12/31/2024
52% by
12/31/2027
60% RPS by
12/31/2030
60% RPS
PCC 1 Minimum ≥ 75% of Net Procurement Requirement
PCC 2 Maximum ≤ 25% of Net Procurement Requirement
PCC 3 Maximum ≤ 10% of Net Procurement Requirement
LTR At least 65% of all RPS contracts must be long-term in duration (at least 10 years in duration)
Starting in 2024, BWP will need to procure additional RPS and PCC 1 contracts , and starting in 2026, BWP will need to secure additional long- term contracts to meet the requirements set by law. The Powerex contract meets the RPS, PCC 1, and long-term requirements as set forth in the PUC. The California Energy Commission ( CEC) allows us to carry over any excess renewables to count towards the compliance for future years for up to 36 months following production. The Powerex contract delivers the energy to the California Independent System Operator. Though the energy is not delivered to Burbank due to transmission limitations , the regulations only require that renewable energy is delivered to California. The resources under the Powerex contract will be delivered to a California balancing authority without substituting electricity from another source which meets the PCC1 requirements listed above. In addition, the resources assigned to the Powerex contract have already been identified as a PCC 1 by the CEC. 3 The Powerex contract will deliver a total of 220,000 megawatt hours (MWh) of energy and REC s to California over ten years. The term starts October 1, 2022 and ends September 30, 2032. The total cost will not exceed $4 million total for ten years.
Ideally, BWP would like to secure both RECs and energy that can be directly delivered to the Burbank load. Supply chain issues and our limitations with transmission have led BWP to find creative solutions . Historically, it has taken BWP two years to develop contracts. With the constrained timing, we need to secure RPS, PCC 1 , and long- term contracts for our compliance needs by 2024. This contract bridges the gap with RPS compliance for a short time and assists us with RPS, PCC 1 , and the long-t erm requirement while we work on securing additional renewable resources.
Concurrently, BWP is working with the Southern California Public Power Authority (SCPPA), a joint power authority, where we team up with other southern California utilities to secure renewable resources. We are actively negotiating several contracts with SCPPA which will deliver energy and RECS post 2025. However, many of these contracts have increased in price over the last several months due to supply chain issues and labor constraints. The Powerex contract is a fixed price for ten years and the renewable resources associated with the Powerex contract are existing resources where supply chain issues do not play a large role.
FISCAL IMPACT
The total co st of this contract for ten years i s estimated not t o exceed $ 4 million. This contract has been included in the BWP budget for fiscal year 2022-2023.
CONCLUSION
In order to continue to meet the RPS requirement, staff recommends that the City Council authorize the General Manager of BWP
, as designee of the City Manager, to enter
a contract with Powerex for the purchase of renewable energy in an amount not to exceed $4 million over ten years and to execute such ancillary doc uments.
ATTACHMENTS
Attachment 1 – Powerex Contract