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CITY OF GLENDALE, CALIFORNIA
REPORT TO THE CITY COUNCIL
AGENDA ITEM
Report: Approval of the Form Interconnection Agreement and Public Hearing Approving Fees in Connection with Customer-Owned Non-Net Energy Metering (NEM) Generation.
1. Resolution Approving a Form Interconnection Agreement and Authorizing the Execution of Such Agreements by the City Manager, or his designee.
2. Resolution Amending the City-Wide Fee Schedule and Adopting Fees.
COUNCIL ACTION
Item Type: Hearings
Approved for December 19, 2023 calendar
EXECUTIVE SUMMARY
The City’s electric utility, Glendale Water & Power (GWP) has received requests to interconnect customer owned or managed generation with GWP’s electrical system. As the GWP electric system grows and customer needs increase and become more sophisticated, GWP anticipates additional requests in the future. These requests may occur because of new renewable generation that is not covered by the City’s net metering (NEM) program, from “co-generation,” under which a customer is providing both heat and power to its own facilities, or from batteries or microgrids, among other possibilities. The rapid growth in electric vehicles (EVs) may also cause more customers to consider on-site generation and storage, or to undertake other electrical upgrades.
Interconnection processes can be lengthy and involve several studies and upgrades to the GWP system. A form interconnection agreement (Interconnection Agreement) will facilitate this process, and it is ordinary utility practice to have such an approved agreement in advance of interconnection requests (see Exhibit A). This report requests that the City Council approve a form Interconnection Agreement, approve appropriate fees for the City to recoup its costs in accommodating interconnection requests, and authorize the City Manager, or his designee, to enter into and execute such Interconnection Agreements without further action of the City Council as long as the terms substantially conform to Interconnection Agreement approved by City Council, subject to approval as to form by the City Attorney. In alignment with the foregoing, any modifications to the Council Approved form Interconnection Agreement would be required to preserve the essential aims and objectives of that Agreement. 2{{section.number}}a
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RECOMMENDATION
Approve a Form Interconnection Agreement between City of Glendale and a non-NEM qualified generating facility owner/operator (Customer) for the interconnection of a Customer’s generation facilities with the City’s electrical system and authorize the City Manager, or his designee, to (a) execute the Interconnection Agreement, with any revisions thereto that are in substantial conformance with the Interconnection Agreement, and as may be approved by the City Attorney; and (b) take such actions as are necessary, advisable, or required to implement and administer the Interconnection Agreement and interconnection requests. Staff further recommends that the City Council adopt a Resolution implementing appropriate fees for the interconnection process and amending the Citywide Fee Schedule.
ANALYSIS
On October 11, 2023, the City Manager approved the Interconnection Requirements Section of the Electric Service Requirements Manual, establishing the requirements for Glendale Water and Power commercial customers to install and operate non-NEM generation and energy storage systems on their premises. The Interconnection Requirements must be followed by a customer seeking to interconnect new sources of generation with the GWP system, in addition to the execution of an Interconnection Agreement.
As in existing new agreements, GWP had determined that standardizing the process and the documentation Similar to existing NEM agreements, GWP had determined that standardizing the process and the documentation for other types of generation will also be beneficial to GWP customers and it will simplify the interconnection process. For this reason, GWP seeks approval of an Interconnection Agreement that outlines the responsibilities of the Customer and GWP to ensure continued safe and reliable operation of the City’s electric systems.
This does not impact agreements in place for existing or future customers that seek NEM, which allows customers to provide any excess renewable energy back to the Department and receive a corresponding credit or compensation, consistent with Public Utilities Code Section 2827. It also does not impact customers applying for the Feed-in- Tarif (FiT) program. Both sets of standardized agreements comply with applicable state mandates. Regarding NEM, for customers with solar installations, GWP’s current Electric Service Requirements allow up to a 10kW solar array without regard to customer usage; for proposed solar arrays above 10kW, customers may install an array sized for 110% of energy usage. No additional interconnection agreement is needed for such customers provided GWP’s standard NEM interconnection agreement is utilized, which was previously approved by the City Council. This new form Interconnection Agreement is designed to be utilized with any type of interconnection (whether exporting or non-exporting) that is not covered by the NEM or FiT interconnection agreements, including potential power purchase agreements.
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Like NEM and FiT renewable agreements, GWP is proposing delegation of signatory approval authority of the Interconnection Agreement to the City Manager, or his designee, to expedite the interconnection process.
Microgrid Readiness
Throughout California and the nation, customers are applying in greater numbers to attach “microgrids” to their local utilities. As set forth in Public Utilities Code Section 8370 (b), “Microgrid” means an interconnected system of loads and energy resources, including, but not limited to, distributed energy resources, energy storage, demand response tools, and other management, forecasting, and analytical tools, appropriately sized to meet customer needs, within a clearly defined electrical boundary.
Within a clearly defined electrical boundary, a Microgrid can act as a single, controllable entity, and connect to, disconnect from, or run in parallel with larger portions of the electrical grid, or can potentially be managed and isolated to withstand larger disturbances and maintain electrical supply to connected critical infrastructure.
The approval of this proposed Interconnection Agreement will position GWP to be ready to accommodate proposed microgrids that wish to interconnect with the GWP system and can be used by GWP for this purpose. This will also satisfy the requirements of Cal. Public Utilities Code Sec. 8372(a) (SB 1339), which requires that a locally owned public utility such as GWP shall develop a standardized process for the interconnection of a customer-supported microgrid.
At the present time, GWP will use the same interconnection process and fees, as set forth in this staff report, for microgrids as well as conventional interconnections, along with batteries and other Energy Storage systems. Should the provision of new services, control or data management of microgrids necessitate other services, rates or fees for such microgrids, City staff will return to City Council, as necessary, in the future for potential approval of those microgrid services.
Energy Storage System and Other Backup Power Solutions
Batteries and other advanced energy storage systems (ESS) are becoming more popular concepts as customers seek to have further options regarding backup power, load shifting and other methods to satisfy increasing electrical energy needs. Because such new energy storage and other devices may affect the operation of the GWP system, they are required to execute an Interconnection Agreement outlining the respective responsibilities of the customer and GWP. For example, depending on the type of battery or other energy storage system, there may be specific operational requirements, such as not discharging onto the GWP distribution system, that need to be outlined and agreed to. For existing backup generation that customers may already have, such as diesel or natural gas generators or new replacements of such generators (including ESS systems or hydrogen), no Interconnection Agreement is necessary unless there are special applications that may backfeed with GWP or otherwise affect GWP operations. It should be noted that even without an Interconnection Agreement, standard utility practice mandates that backup generation be isolated from the GWP 4{{section.number}}a
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system at all times, including in case of an outage. ESS solutions or other energy solutions, including microgrids, that have more complex operations will require an Interconnection Agreement.
Fee Resolution
The City will incur certain costs and expenses associated with reviewing proposed interconnections. In addition, system upgrades may be necessary in some locations within the City in order to accommodate distributed generation. The fees proposed herein would recoup the cost of the interconnection, including any system upgrades.
Any necessary third-party consultant, engineering, construction, or other fees are passed through at actual cost. Fees for City employee time are billed at the then- current approved hourly rate for such employees (see Exhibit B).
If the form Interconnection Agreement is approved, a hearing regarding the proposed fees will take place on that same date. Notice of the hearing was published in accordance with California Government Code 66018.
The proposed interconnection fees are as follows:
Fee Amount Details
Initial Review Fee $1,777.00 per
Application submittal
Payable upon submission of an
Interconnection Application and
upon any resubmittal. Covers the
cost of reviewing the Application
submittal. Non-refundable (see
Exhibit C).
Interconnection Study
Fee
Hourly Rate and Actual
Cost
Payable if the Initial Review
concludes that an Interconnection
Study is required. Covers the cost
of engineering and technical review
of the interconnection, including
system impacts, if any. Any
consultant costs needed by GWP
are an actual-cost pass through.
Fee is refundable until the
Interconnection Study commences.
Fee is calculated at actual staff time
per staff hourly rate. Payment for
the Interconnection Study Fee is
due upon notification to Customer
by GWP that an Interconnection
Study Fee is required. GWP will
estimate the amount necessary for
the Interconnection Study Fee,
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which shall be paid in advance. Fee
calculated at actual staff time per
staff hourly rate. As the
Interconnection Study progresses if
actual staff time significantly
exceeds the estimate, GWP will
request additional funds from
customer. After the actual hourly
costs are known, if the actual costs
are higher, the Customer will
receive a supplemental bill; if the
actual costs are lower, the
Customer will receive a refund. The
term “customer” herein shall apply
to the customer or any
interconnecting party.
GWP Design and
Construction
Hourly Rate and Actual
Cost
Deposit of 10% of Estimated Cost is
due with Customer’s submittal of a
signed Interconnection Agreement
with GWP. Balance of Estimated
Cost due upon GWP’s submission
to the Customer of detailed
interconnection designs and a Final
Cost Estimate. If actual costs
exceed estimate, Customer must
submit the difference. If costs are
less than the estimate, the excess
amount is refunded to Customer. If
the project is terminated, the Design
and Construction costs are
refundable to Customer unless and
to the extent work has been
undertaken.
Fee is calculated at actual staff time
per staff hourly rate. Any consultant
or third-party study, design or
construction work is an actual-cost
pass through. The term “customer”
herein shall apply to the customer or
any interconnecting party.
O&M Costs for the
Interconnection
Hourly Rate and Actual
Cost
Customer shall be billed as O&M is
needed. Customer shall pay the
estimated O&M cost in advance. If
actual costs exceed estimate,
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Customer must submit the
difference. If costs are less than the
estimate, the excess amount is
refunded to Customer. If the project
is terminated, the O&M Costs are
refundable to Customer unless and
to the extent work has been
undertaken. Fee is calculated at
actual staff time per staff hourly rate.
Any consultant or third-party study,
design or construction work is an
actual-cost pass through. The term
“customer” herein shall apply to the
customer or any interconnecting
party.
The proposed fees have been calculated on the basis of the actual costs that the City would incur in connection with reviewing and processing an interconnection application.
Existing GWP Electrical Rates Will Apply
Beyond the fees for Council consideration and potential approval set forth herein, a customer connecting their own generation (including microgrids acting as self- generation without additional advanced services) designed to offset all or substantially all of a customer’s load will be charged the appropriate standby electric rate, which is currently approved by the City Council as the Standby Service Rider: Medium Business Dispatchable and the Standby Service Rider: Large Business Dispatchable.
These rates for service will not change if the City Council approves the Interconnection Agreement and the proposed fees as set forth herein. Those rates will be updated as needed through the City’s rate update process. It is anticipated that nearly all of the parties seeking interconnection with GWP’s electrical system will be customers; in the case (such as a particular stand-alone power purchase agreement, and as may be approved by GWP) of an interconnector not being a customer, the forms and fees will apply to the interconnecting party and GWP staff will modify the forms and process accordingly, with the approval of the City Attorney.
STAKEHOLDERS/OUTREACH
Not applicable.
FISCAL IMPACT
The City will incur certain costs and expenses associated with reviewing proposed interconnections. The fees proposed herein would recoup the cost of the interconnection, including any system upgrades. Any necessary third-party consultant, engineering, construction, or other fees are passed through at actual cost. 7{{section.number}}a
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ENVIRONMENTAL REVIEW (CEQA/NEPA)
The project is Categorically Exempt under the provisions of the California Environmental Quality Act (CEQA) pursuant to the California Code of Regulations, Title 14, Sections 15301 and 15302, concerning repair, maintenance, or minor alterations of existing utility facilities, and replacement or reconstruction of existing utility systems or facilities.
CAMPAIGN DISCLOSURE
This item is exempt from campaign disclosure requirements.
ALTERNATIVES TO STAFF RECOMMENDATION
Alternative 1: Note and File this report, as well as provide further direction to staff relating to same.
Alternative 2: Consider any other alternative not proposed by staff.
ADMINISTRATIVE ACTION
Submitted by:
Mark Young, General Manager - Glendale Water and Power
Prepared by:
Daniel Scorza, P.E., Chief Assistant General Manager - Electric Approved by:
Roubik R. Golanian, P.E., City Manager
EXHIBITS/ATTACHMENTS
Exhibit A: Form Interconnection Agreement for Generation and/or ESS Exhibit B: Fee Schedule
Exhibit C: Memo dated December 6, 2023, regarding Initial Review Fee for Interconnection