1 STAFF REPORT
DATE:
December 5, 2023
TO: Justin Hess, City Manager
FROM: Dawn Roth Lindell, General Manager, Burbank Water and Power BY: Mandip Samra, Assistant General Manager, Power Supply
SUBJECT: Approval of the 2024 Burbank Water and Power Integrated Resource Plan
RECOMMENDATION
Approve the 2024 Burbank Water and Power (BWP) Integrated Resource Plan (IRP) that was prepared in accordance with California Senate Bills (SB) 350, SB 100, and SB 1020.
BACKGROUND
Burbank adopted its last IRP, the 2019 IRP, in December 2018. This was the first IRP mandated by SB 350, which requires that publicly owned utilities with a retail load larger than 700 gigawatt hours (GWh) produce an IRP every five years. Since the 2019 IRP, the California utility industry and BWP have gone through significant changes, which include:
• The passage of SB 1020, which sets a goal for utilities to have 90% of their energy from zero-carbon resources by 2035, increasing to 95% by 2040 • The construction of the Intermountain Power Project (IPP) Renewal Project, which converts the IPP coal plant to a natural gas/hydrogen plant, starting in 2025 • An increase in the cost to construct the IPP Renewal Project from $2 billion to over $4 billion
• COVID-19 pandemic -related supply chain issues caused by the shutdown of manufacturing plants that produce parts for construction of renewable resources, transmission lines, etc.
• An increase in demand and prices for renewable resources due to states and companies that have enhanced sustainability mandates and community choice aggregators
• High inflation, resulting in an increase in the costs of goods that are used to build transmission lines, distribution lines, and renewable energy, to name a few
The IRP is a long-term planning document designed to provide policy guidance for BWP’s electric supply to its customers over the next twenty years. However, BWP’s vendor for the IRP modeling, Black and Veatch, has provided the analysis from 2023-2047. The IRP must address the goal of meeting SB 100. SB 100 sets a goal of obtaining 100% of the
WATER AND
POWER
2 energy supplied to retail customers from eligible renewable and zero- carbon resources by 2045. Burbank has a goal of meeting 100% of the energy supplied to retail customers from zero-carbon resources by 2040, five years ahead of SB 100. SB 1020, signed in 2022, sets a goal of obtaining 90% of the energy supplied to retail customers from zero- carbon resources by 2035 and 95% by 2040. The IRP scenarios include a path for SB 100 and SB 1020 compliance. In addition, the IRP aligns with the California Energy Commission (CEC) IRP template.
DISCUSSION
This IRP was completed with a comprehensive community outreach plan and input from the public and the stakeholder technical advisory group (STAG). The STAG is a diverse group of ratepayers that had direct input on the development of the IRP. An IRP survey that produced 952 responses indicated a preference for high reliability and affordable rates.
Below is a list of discussion items at various STAG and community meetings.
STAG meetings:
Meeting Date STAG Discussion
1 12/15/22 IRP 101, IRP survey and roles and responsibilities of the STAG
2 1/26/23 Power Plant 101, Resource Planning 101, Energy Control Center 101, and Burbank Solar and Storage Projects update 3 2/23/23 Natural Gas and Energy Price update, Renewable Portfolio Standard 101 and IPP 101
4 3/23/23 Black and Veatch Update and Power Supply Update 5 4/27/23 Magnolia Power Project (MPP) Tour, Survey Update and Power Supply Update
6 6/21/23 Black and Veatch Base case, Survey Update and Power Supply Update
7 8/7/23 IRP Update and Scenario Discussion
8 8/17/23 Scenario Discussion, Scorecard Development and Survey Update
9 10/12/23 Final Survey Results, Scorecard Results, Scenario over and Preferred Scenario selection
3 Community Stakeholder meetings:
Meeting Date Community Stakeholder Discussion
1 4/20/23 IRP 101, Resource Planning 101, IRP Survey Discussion, and Base Case and Scenario Discussion
2 7/13/23 Resource Planning Update, IRP Survey Results and Black and Veatch Assumptions Update and Base Case Discussion
3 8/10/23 IRP 101 Discussion, Survey Discussion, and Base Case and Scenario Update
4 10/26/23 Final Survey Results, Scorecard Results, Scenario Overview and Preferred Scenario Selection
As a long-term planning document, the IRP is based on significant assumptions about the future, which carries inherent uncertainty, especially with the utility industry undergoing dramatic change. The IRP must make assumptions about a variety of key aspects of BWP’s business for the planning period. This includes the cost of energy and natural gas, the cost and availability of renewable energy, load growth, and the availability of technologies, to name a few. A major assumption made in this IRP is that technologies will exist to get us to a zero- carbon future by 2040. Technologies like carbon capture and sequestration, hydrogen, and renewable natural gas were considered and modeled.
Since the IRP data requires a snapshot in time to initiate the process and development of the assumptions, some of the data has changed from the early assumptions. The costs presented via the IRP scenario modeling are now 7- 10% higher than at the time of the original modeling. Major changes to the assumptions include the following:
Item Changes to Assumptions
Load Higher expected energy load than anticipated (potentially 30% higher than the forecast)
Renewable
Energy Credits
(RECs)
RECs were modeled at $44/REC for portfolio content category 1 resources. They are now trading at $80/REC (this increases costs by over $60 million by 2030)
IPP IPP was modeled at a total cost of $4.286 billion. Recent estimates show an increase of $400 million, bringing the cost to $4.686 billion (this increases BWP’s annual debt service s hare by $587,000 a year)
Seven different scenarios were selected to model. Ultimately, based on the scorecard (developed by the STAG), there were two scenarios selected to meet the state compliance mandates, which provide a path for BWP to meet state and city -adopted compliance goals, namely, how to meet a 100% zero-carbon resource portfolio by 2040.
4 The preferred scenarios selected as part of the modeling process yielded a number of major implications for Burbank’s energy future:
• BWP should pursue cost -effective energy efficiency and demand response programs to fulfill State requirements and place additional emphasis on peak demand reduction
• IPP will be 100% hydrogen capable by 2040
• MPP and the Lake One unit will be 100% hydrogen capable by 2040 • BWP will need to negotiate with the Los Angeles Department of Water and Power (LADWP) to secure additional Transmission Service Agreements (TSA) for building new transmission lines to bring in renewables
• To maintain a reliable resource portfolio, it is recommended to secure a contr act for a small modular reactor (SMR) by 2030
• Renewables will be available in the amount BWP needs for future compliance • In accordance with SB100, procurement of additional renewable energy resources to increase BWP’s current RPS to 60% is needed • Additional quantities of fast-ramping energy storage and other resources would be needed to address the intermittency of renewable resources • BWP’s greenhouse gas emissions should be dramatically reduced by about 87% over the planning period, consistent with California Air Quality Board targets • While IRP results depend on the future outcomes of many currently uncertain assumptions, BWP costs will increase as a result of state mandates (anywhere from three to four times the current costs by 2047)
On November 2, 2023, the BWP Board voted 5 – 0 to recommend that the Burbank City Council adopt the 2024 BWP Integrated Resource Plan that was prepared in accordance with California Senate Bill (SB) 350, SB 100, and SB 1020.
ENVIRONMENTAL REVIEW
The IRP meets statutory requirements of reaching 60% renewable resources by 2030 and a zero-carbon resource portfolio by 2040.
This activity has no potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment, and as such, is not a “project” subject to the requirements of the California Environmental Quality Act (CEQA) 14 Cal. Code Regs § 15378.
The IRP does contemplate the execution of future contracts that may constitute projects.
Prior to the commencement of any “project”, staff will determine if it has the potential for resulting in a direct or indirect physical change to the environment and if it is subject to the requirements of the California Environmental Quality Act (CEQA). Furthermore, any such “project” would be subject to future applicable laws that may be in place.
5 FISCAL IMPACT
This is a regulatory document, and there is no fiscal impact. Any long- term procurement commitments resulting from this document will be presented individually to the BWP Board and City Council for review and/or approval.
CONCLUSION
The attached IRP meets the requirements set forth by the CEC. In addition, it provides a path forward for BWP to meet the goal of a zero-carbon resource portfolio by 2040.
ATTACHMENTS
Attachment 1 – 2024 BWP Integrated Resource Plan