REVISED
Energy Planning & Resources Committee
of the Clean Power Alliance of Southern California
Regular Meeting
Wednesday, April 24, 2024
12:15 p.m.
Visit CPA’s YouTube Channel to watch a Live Stream of the Meeting *There may be a streaming delay of up to 90 seconds. This is a view-only live stream.
Clean Power Alliance
Executive Conference Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Members of the public may also participate in this meeting remotely at the following locations:
Manhattan Beach City Hall
City Manager Conference Room
1400 Highland Avenue
Manhattan Beach, CA 90266
Alhambra City Hall
Conference Room A
111 S. First St.
Alhambra, CA 91801
West Hollywood City Hall
3rd Floor Conference Room
8300 Santa Monica Blvd.
West Hollywood, CA 90069
Sierra Madre City Hall
Council Chambers
232 W. Sierra Madre Blvd.
Sierra Madre, CA 91024
City of Oxnard Service Center 1
East Conference Room
214 South C Street
Oxnard, CA 93030
Los Angeles County Sanitation District
1955 Workman Mill Road
Whittier, California
*Remote Location Added
PUBLIC COMMENT: Members of the public may submit their comments by one of the following options:
• Email Public Comment: Members of the public are encouraged to submit written comments on any agenda item to [email protected] up to four hours before the meeting. Written public comments will be announced at the meeting and become part of the meeting record. Public comments received in writing will not be read aloud at the meeting. • Provide Public Comment During the Meeting: The General Public Comment item is reserved for persons wishing to address the Committee on any Clean Power Alliance-related matters not on today’s agenda. Public comments on matters on today’s Consent Agenda and Regular Agenda shall be heard at the time the matter is called. Comments on items on the Consent Agenda are consolidated into one public comment period. Members of the public who wish to address the Committee at CPA’s Office are requested to complete a comment card and provide it to staff. If you are attending from a remote location, please identify yourself to a CPA representative when your item is called. Each speaker is limited to two (2) minutes (in whole-minute increments) per agenda Agenda Page 1
item with a cumulative total of five 5 minutes to be allocated between the General Public Comment, the entire Consent Agenda, or individual items in the Regular Agenda. Please refer to Policy No. 8 – Public Comment for additional information.
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ACCESSIBILITY: Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least two (2) working days before the meeting at [email protected] or (213) 713- 5995. Notification in advance of the meeting, while not required, will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.
CALL TO ORDER & ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from the February 28, 2024, Energy Committee Meeting
2. Receive and File March 2024 Risk Management Team Report
REGULAR AGENDA
3. Oral Update from the Vice President of Power Supply
4. Authorize CPA Staff to Enter Contract Negotiations with Two Bilateral Offers (Projects A and B) and Two Bilateral Offers (Project C and D) Provided That Projects C and D Meet Certain Valuation Thresholds, as Recommended by the RFO Review Team
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING MAY 22, 2024
Public Records: Public records that relate to any item on the open session agenda for a Committee Meeting are available for public inspection. Those records that are distributed less than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to all, or a majority of, the members of the Committee. Public records are available for inspection at CPA’s Office at 801 S. Grand Ave., Suite 400, Los Angeles, CA 90017, or online at www.cleanpoweralliance.org/agendas.
Agenda Page 2
Staff Report – Agenda Item 1
To: Energy Planning & Resources Committee
Subject: Approve Minutes from the February 28, 2024 Energy Committee Meeting
Date: April 24, 2024
RECOMMENDATION
Approve.
ATTACHMENT
1. Minutes
Agenda Page 3
Energy Planning & Resources Committee Item 1
MINUTES
Energy Planning & Resources Committee
of the Clean Power Alliance of Southern California
Regular Meeting
Wednesday, February 28, 2024, 12:15 p.m.
Meeting videos are available on CPA's YouTube Channel.
http://www.youtube.com/@CPApublicmeetings
Committee Members participated in this meeting from the following locations:
Manhattan Beach City Hall
City Manager Conference Room
1400 Highland Avenue
Manhattan Beach, CA 90266
Clean Power Alliance Office
Executive Conference Room
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Alhambra City Hall
Conference Room A
111 S. First Street
Alhambra, CA 91802
Carson City Hall
Executive Conference Room
701 East Carson Street
Carson, CA 90745
West Hollywood City Hall
3rd Floor Conference Room
8300 Santa Monica Blvd.
West Hollywood, CA 90069
Sierra Madre City Hall
Council Chambers
232 W. Sierra Madre Blvd.
Sierra Madre, CA 91024
City of Oxnard Service Center 1
East Conference Room
214 South C Street
Oxnard, CA 93030
Thousand Oaks City Hall
Public Works Conference Room
2100 Thousand Oaks Blvd.
Thousand Oaks, CA 91362
CALL TO ORDER & ROLL CALL
Chair Parkhurst called the meeting to order at 12:15 p.m. and, Gabriela Monzon, Board Clerk, conducted roll call.
ROLL CALL
Alhambra Jeff Maloney Committee Member Remote
Carson Reata Kulcsar Committee Member Remote
Manhattan Beach David Lesser Committee Member Remote
Oxnard Kathleen Mallory Committee Member Remote
Sierra Madre Robert Parkhurst Committee Chair Remote
South Pasadena Diana Mahmud Committee Member Absent
Thousand Oaks Helen Cox Committee Member Remote
West Hollywood Chelsea Byers Committee Member Remote
All votes are unanimous, unless otherwise stated.
Agenda Page 4
Energy Planning & Resources Committee Item 1
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from January 24, 2024, Energy Committee Meeting
2. Receive and File January 2024 Risk Management Team Report Motion: Committee Member Byers, West Hollywood
Second: Committee Member Lesser, Manhattan Beach
Vote: The consent agenda was approved by a roll call vote.
REGULAR AGENDA
3. Oral Update from the Vice President of Power Supply
Lindsay Descagnia, Vice President of Power Supply, provided an update to the Committee, including the Sentinel Energy Center contract coming to the Board for approval in March. The proposed 10-year agreement, CPA's first long-term RA-only contract, would start January 2027, producing 211.85 MW of RA from a natural gas plant. There is no impact to CPA's power content label as there's no natural gas showing in the supply because the program is for RA only. The value of RA from facilities like Sentinel will be important in the new slice-of-day framework, and CPA and Sentinel may be able to transition the facility to cleaner operations using hydrogen blending in the future.
In response to Committee Member Cox’s request for details about the plant, staff responded that it is sited next to a large substation and uses combined cycle combustion turbines near Palm Springs. Committee Member Lesser asked about the percentage of RA this project would represent, and Ms. Descagnia said less than 10 percent and that she would bring more information at the Board meeting.
4. Receive Presentation on Renewable Energy and Carbon Free Energy Procurement, including a Market Update, Regulatory Developments, and Potential Changes to the Product Content of CPA Rate Offerings
Ms. Descagnia summarized CPA’s energy content, stating that 68 percent of CPA’s load is on the 100% Green product and the overall energy portfolio in 2023-2024 is expected to contain 75-80% renewable energy. The goal is to secure 95%of CPA’s renewable energy in long-term contracts by 2029.
Procurement prioritizes renewable energy, and CPA is exploring GHG benchmarking that would be met through a combination of renewable and carbon-free resources. Ms. Descagnia described the differences between renewable and carbon-free energy and provided examples of each. Ms.
Descagnia also provided a regulatory overview of laws and deadlines set for clean energy targets in the future. CPA’s current overall renewable portfolio exceeds the state targets by more than 25%. Staff conducted a review of the market which indicated an increase in the cost of renewable energy due to several factors:
higher demand in California, a reduction of supplies from out-of-state sources, delays in new projects coming online, and interconnection issues. Ms.
Descagnia presented a potential product content adjustment, moving to carbon-free based targets for Lean and Clean products with a preference for renewable energy for the 2024-2026 period. The cost of those products may be lowered as CPA continues to receive allocations of carbon-free energy from SCE as part of the PCIA. Ms. Descagnia reviewed the rate setting process, as well as Agenda Page 5
Energy Planning & Resources Committee Item 1
actions to procure short-term renewable energy and continue building CPA’s portfolio of energy resources.
In response to Committee Members’ Cox and Kulcsar questions about rooftop solar incentives, the new CPA tariff, and nuclear resources, staff explained the following: CPA is launching a battery incentive program and developing additional customer programs overall to promote rooftop solar for low and moderate income customers in part to counteract the lower finanical beneifts of the new tariff primarily on the SCE side of the bill. Regarding nuclear resources, CPA has not contracted directly for nuclear, but will be reporting 1.5% nuclear in the Lean product in the 2023 Power Content Label, associated with an RA transaction.
Committee Members Lesser and Parkhurst also asked about GHG benchmarking, functionality of battery storage, and CPA’s proactive/reactive approach to market conditions. Staff explained that GHG benchmarking refers to emissions-related accounting. The challenge of meeting the state’s greenhouse gas reduction goals is the competition from other CCAs wanting to purchase clean energy; new production requires environmental review, land-use approvals, and investments in the grid. CPA’s targets require continued effort to build renewables and the agency will need to be more flexible with using carbon-free sources. Regarding battery storage, staff responded that batteries help lower CPA’s peak load, thereby reducing procurement requirements assigned to CPA by the CPUC and Energy Commission. With regards to market conditions, staff noted that the industry is in a significant transition period where commodity prices are rising sharply. Matthew Langer, Chief Operating Officer, added that staff reacts with strategies such as changing the power content, as well as pursuing long-term contracts and development projects.
Committee Member Cox asked about the cost increase for renewable energy and the possibility of CPA becoming a developer. Mr. Bardacke explained that the cost increase is mostly due to supply and demand, and to a lesser degree supply chain issues, cost of raw materials, and labor. Mr. Bardacke also noted that if CPA were to be interested in becoming a developer, that would be a policy decision requiring a new division. Consultants are reviewing the possibility, but as of now that decision doesn’t make good business sense. Committee Member Mallory expressed support for the Power Share program and its partnerships with jurisdictions that secure more renewables and asked for an update on the program.
Ms. Descagnia replied that a number of projects under development are coming online later this year and next, and that customers will be supplied with interim sources while some projects are being built. Mr. Langer added that the Power Share program is fully enrolled, serving 6,500 customers, with funding from the CPUC. Staff has applied for a grant from the California Infrastructure and Economic Development Bank (IBank) to expand Power Share in Los Angeles County and is exploring a similar grant proposal in Ventura County through the EPA Climate Reduction Grant program.
COMMITTEE MEMBER COMMENTS
Chair Parkhurst congratulated Committee Member Kulscar on the solar project in the City of Carson.
ADJOURN
Chair Parkhurst adjourned the meeting at 1:17 p.m.
Agenda Page 6
Staff Report – Agenda Item 2
To: Energy Planning & Resources Committee
From: Lyon Hardgrave, Director, Energy Risk Management
Approved By: Ted Bardacke, Chief Executive Officer
David McNeil, Chief Financial Officer
Subject: Receive and File March 2024 Risk Management Team Report Date: April 24, 2024
March 2024 RMT REPORT
Key Actions
• Reviewed the counterparty credit exposure summary
• Reviewed December 2023 day-ahead load forecast performance • Reviewed February 2024 market performance
• Reviewed energy positions and approved 2024-2028 hedges for monthly RFO • Reviewed positions for Resource Adequacy (RA), RPS and Carbon-Free energy • products (CF)
• Update provided on 2024 Long Term PPA deliveries
• Reviewed the 2025-2027 slice of day RA position
• Reviewed Energy Risk Management Policy (ERMP) compliance for RA, REC, CF, and energy
• Reviewed March 2024 CRR Allocations
• Reviewed and approved the Negative REC Price Strategy Policy Compliance
Policy Deviation Required Action
In December 2023, the
second quarter (April to
June) Energy Hedge
Position increased above
the maximum second
quarter hedge limit
starting in 2027 and
continuing in the second
None.
The policy deviations arise from CPA continuing to enter into long term contracts for renewable energy consistent with its objective to reduce exposure to the short-term renewable energy market. The deviations occur during
the second quarter because electricity consumption by
CPA customers is projected to be at its lowest level in this quarter. The deviations are expected to resolve
Agenda Page 7
Finance Committee Item 2
quarter of each year
through the end of the
measurement window in
2033.
themselves as the electricity production period nears and the corresponding policy hedge limit maximums increase
above the level of energy hedges under contract.
During the 2024 ERMP review, staff will consider
proposing an amendment to the ERMP, increasing the
maximum hedge limit in the second quarter of years that are four and more years in the future to eliminate policy deviations caused by load and generation patterns
specific to the second quarter.
ATTACHMENT
None.
Agenda Page 8
Staff Report – Agenda Item 3
To: Energy Planning & Resources Committee
From: Lindsay Descagnia, Vice President, Power Supply
Subject: Oral Update from Vice President, Power Supply
Date: April 24, 2024
The VP will provide an oral report on CPA energy procurement activities, including:
• Denali Energy Storage Agreement
Agenda Page 9
Staff Report – Agenda Item 4
To: Energy Planning & Resources Committee
From: Lindsay Descagnia, Vice President, Power Supply
John McNamara, Director, Structured Contracts
Approved By: Ted Bardacke, Chief Executive Officer
Subject: Receive Presentation on Bilateral Negotiations Authorization Date: April 24, 2024
RECOMMENDATION
Authorize CPA Staff to Enter Contract Negotiations with Two Bilateral Offers (Projects A and B) and Two Bilateral Offers (Project C and D) Provided That Projects C and D Meet Certain Valuation Thresholds, as Recommended by the RFO Review Team.
ATTACHMENTS
1. Bilateral Offers Review
Agenda Page 10
Bilateral Offers Review
Energy Planning and Resource Committee
April 24, 2024
Agenda Page 11
The 2023 Clean Energy and Reliability Request for Offers (RFO) was launched in June 2023 to fill a larger portion of CPA’s portfolio needs with long-term contracts. In September 2023, the Energy Committee approved a shortlist of 10 projects and a waitlist of 17 projects The Board has approved three of these 27 projects: SunZia (Wind), Drifter (Standalone Storage), and Sentinel (RA-Only). Only one project of the remaining 24 shortlist/waitlist projects is viable in the near term.
CPA has a near-term goal of having 95% of its annual renewable energy and 90% of RA needs under long-term contract. The intention was to achieve this target over a four-year period (2024-2027) via annual RFOs.
Even though CPA has met its procurement target for the 2023 RFO with the three contracted projects, given changing market conditions, uncertainty around new project development, and lack of Full Capacity Deliverability Status (FCDS) on Drifter, Staff believes its near-term 95%/90% goals are at risk.
Staff recommends entertaining high-value bilateral project offers with FCDS (or a high likelihood to receive it) to mitigate the risks presented by these market conditions and not wait until the next RFO to consider the offers. Lower risk, viable projects with FCDS may not be available in the next RFO.
CPA has been presented with four bilateral offers that meet these conditions of high-value projects with (or likely to receive) FCDS. At a meeting on April 15, a Review Team made up of the four Energy Committee members who reviewed the 2023 RFO offers recommended entering contract negotiations with two of the bilateral offers and conditionally recommended the other two if they met certain valuation thresholds.
CPA has received final pricing for one of the conditionally recommended offers and the valuation result met the required thresholds.
The final pricing/valuation for the other conditionally recommended project is pending.
The purpose of today’s meeting is to seek Energy Committee’s approval to enter formal contract negotiations with the four bil ateral offers, including the valuation conditions recommended by the Review Team. 2 Executive Summary
Agenda Page 12
Agenda
Market & Shortlist Position
Update
Projects Overview
Action Requested
Agenda Page 13
Market and
Shortlist
Position Update
Agenda Page 14
4 To be eligible to sell Resource Adequacy in addition to energy, a project must apply for and receive Full Capacity Deliverability Status (FCDS) from CAISO.
Generators apply for FCDS through CAISO’s generator interconnection process. The interconnection process has two parts:
1. Approval for a generator to connect to the CAISO-controlled grid to sell electricity
2. In addition to selling energy, approval for a generator to sell RA FCDS is only allocated to certain generators due to deliverability constraints on the grid.
During the interconnection process, CAISO will study the ability of a particular generator to serve load relative to any grid constraints at the project’s location. Grid upgrades might be required for a proposed project to obtain FCDS. The timing and costs of these grid upgrades can impact project viability.
A generator’s chance of receiving an FCDS allocation and/or maintaining their FCDS allocation can be improved if it has entered exclusivity or executed a contract with a Load Serving Entity (LSE).
Two projects under consideration today have FCDS. They two that do not are expected receive notice from CAISO of an allocation at the end of May if they can secure a long-term contract. 5 Full Capacity Deliverability Status (FCDS)
Agenda Page 15
On June 24, 2021, the CPUC issued its Decision Requiring Procurement to Address Mid-Term Reliability (MTR) requiring all LSE's to accelerate their procurement schedules and procure at a massive scale o This resulted in an unprecedented amount of LSE contracting for the same resources in a short period of time o A limited number of viable projects remain on the market and all of them are in high demand o Developers are acutely aware of the value of these remaining projects, especially those with FCDS Additional impacts to near term project development remain including:
o A lack of available interconnection and difficulty obtaining FCDS o Supply chain issues for batteries, solar panels and wind turbine components o Rising financing costs due to increased demand on banks and uncertainty in tax credit values All of this results in tight market conditions
o Resource scarcity, especially projects with FCDS
o Rising prices and increasing seller demands in negotiations o Shorter contracting timelines
o Missed or delayed CODs
6 Tight Market Conditions
Agenda Page 16
RFO Shortlist and Waitlist Summary
Initial RFO Shortlist
Project Type Project
Count NQC Average MWh
RA-Only 1 212 0
Renewable Generation + Storage 4 364 1,970,000
Renewable Generation Only 1 152 1,580,000
Standalone Storage 4 710 0
Total 10 1,438 MW 3,550,000 MWh
Current Viable Shortlist + Executed Contracts from the RFO Project Type Project
Count NQC Average MWh
RA-Only 1 212 0
Renewable Generation + Storage 0 0 0
Renewable Generation Only 1 201 1,815,000
Standalone Storage 2 393 0
Total 4 806 MW 1,815,000 MWh
The RFO had a shortlist target of 3,250,000 MWh
of energy and 1,200 MW of Net Qualifying Capacity
(QC) RA which is approximately 3x the
procurement need to account for projects that drop
out of negotiations or fail to achieve COD
Initially, 10 projects were shortlisted, and 17
projects were waitlisted
There is one viable project remaining on the existing
shortlist, Denali, which is expected to be brought to
the Board soon
The remaining shortlisted/waitlisted projects
withdrew from consideration and/or are no longer
viable in the near term
Agenda Page 17
8 RFO Procurement Summary
Project NQC (MW) MWh FCDS
Sentinel RA-Only 212 Yes
SunZia 201 1,815,000 Yes
Drifter 300 No
Executed 713 1,815,000
Denali 93 Yes
Executed plus In Negotiation 806 1,815,000
Project A 140 No
Project B 190 Yes
Project C 48 150,000 Yes
Project D 37 No
Additional Bilateral Total 415 150,000
Total Potential Procurement 1,221 1,965,000
CPA has targeted projects with FCDS for procurement but increasingly must take risks and procure projects that have yet to achieve FCDS
300MW of the 713MW of capacity already executed does not have FCDS – two of the projects for consideration today totaling 238MW have FCDS
There is one mid-size renewable energy project to be discussed today. It offers new renewables at a time of market scarcity with FCDS and is with a prominent developer If every offer in today’s presentation were selected to proceed with negotiations, staff could bring up to three contracts to the May Board meeting, including the already shortlisted 93 MW Denali standalone storage project, along with another one in June
Agenda Page 18
Projects
Overview
Agenda Page 19
9 Project A Standalone Storage
140 MW 4-hour standalone storage project – CPA
contracted for 75 MW of long duration storage from the
same project in April 2023
Product: RA and Energy
Located in Palm Springs, Riverside County
New build project with an April 1, 2027 online date
Term: 20 years
Project does not yet have FCDS. Contract would
terminate if it is not obtained (similar to Drifter)
Rationale
RA value
Project Overview
10 Criteria Rank
Value
2nd Quartile
compared to
2023 RFO
offers
Development Score High
Workforce
Development High
Environmental
Stewardship High
Benefits to DACs Medium
Project Location Medium
Evaluation Summary
Agenda Page 20
Project B Standalone Storage
190 MW 4-hour standalone storage project - CPA
contracted for 75 MW of long duration storage
from the same project, as a backup facility, in April
2023
Product: RA and Energy
Located in Coalinga, Fresno County, California
New build project with an April 1, 2027 online date
Term: 20 years
Project has FCDS but must execute a PPA to retain
it
Rationale
RA value and high likelihood of retaining FCDS
Project Overview
11 Criteria Rank
Value
2nd Quartile
compared to
2023 RFO
offers
Development Score High
Workforce
Development High
Environmental
Stewardship Neutral
Benefits to DACs High
Project Location Medium
Evaluation Summary
Agenda Page 21
Project C RPS Gen + Storage
48 MW Solar PV Generation Paired with 48 MW x 4-
hour Battery Energy Storage
Product: RA and Energy
Located in Rosamond, Kern County, California
New build (expansion to an existing site) project with
a June 1, 2025 online date
Term: 20 years
Project has FCDS
Rationale
RA and REC value (near term online date)
RPS and RA compliance
Potential for additional projects with developer
Project Overview
12 Criteria Rank
Value
2nd Quartile
compared
to 2023 RFO
offers*
Development Score High
Workforce
Development High
Environmental
Stewardship Neutral
Benefits to DACs Neutral
Project Location Medium
Evaluation Summary
* Pricing being refreshed. Approval conditional on
project remaining in 2nd Quartile compared to
2023 RFO offers.
Agenda Page 22
Project D RA-Only Offer
Criteria Rank
Value
2nd Quartile
compared
to 2023 RFO
offers
Development Score High
Workforce
Development High
Environmental
Stewardship High
Benefits to DACs Medium
Project Location High
37 MW standalone storage project with potential to be upsized to 60 MW depending on interconnection results
Product: RA-Only
Located in Unincorporated Los Angeles County (Castaic)
New build project with a June 1, 2027 online date
Term: 10 years
Project does not yet have FCDS and will terminate if it is not obtained
Rationale
RA value
Located in CPA service territory
Evaluation Summary Project Overview
Agenda Page 23
Action Requested
Per the Review Team recommendation, staff is seeking approval from the Energy Committee to enter contract negotiations with Projects A, B and D, and with Project C should it meet certain valuation thresholds Project Technology Contract Capacity Commercial Operation Date Contract Length Process
Project A Standalone Storage 140MW 4/1/2027 20 years Bilateral negotiation Project B Standalone Storage 190MW 4/1/2027 20 years Bilateral negotiation Project C RPS Gen + Storage 48MW/48MW 6/1/2025 20 years Bilateral negotiation Project D Standalone Storage
(RA-Only) 37MW – 60MW 6/1/2027 10 years Bilateral negotiation Agenda Page 24