8a
CITY OF GLENDALE, CALIFORNIA
REPORT TO THE CITY COUNCIL
AGENDA ITEM
Report: Solar Energy Power Sales Agreement: 30-Year Power Sales Agreement (PSA) with Southern California Public Power Authority (SCPPA) for Purchase of 25 MW from Milford Solar II Project.
1. Resolution authorizing a 30-year Power Sales Agreement (PSA) with Southern California Public Power Authority (SCPPA) for the purchase of 25 MW (or equivalently, an 8.3% entitlement share of the 300 MW contract capacity) of renewable solar energy and environmental attributes from the Milford Solar II Project, and finding that the project is exempt from the requirements of the California Environmental Quality Act (CEQA).
COUNCIL ACTION
Item Type: Action
Approved for June 24, 2025 calendar
EXECUTIVE SUMMARY
GWP continuously seeks opportunities to expand its clean energy portfolio, and through its participation with SCPPA, ensures access to utility scale renewable energy projects that are competitively priced, and cost effective. On January 30, 2025, SCPPA approved a Power Purchase Agreement (PPA) with Milford Solar Phase II LLC (MS2), a special purpose entity, for the Milford Solar Phase II Project (Milford Solar II or Project) for 30 years. The Project developer, Long Road Energy Holdings, LLC was selected through SCPPA’s competitive procurement process through a Request for Proposal (RFP) for Renewables and Energy Storage for utility-scale projects. Milford Solar II is a 300 MW powerplant of solar photovoltaic generation, located in Beaver County, Utah, with a commercial operation date (COD) expected by December 31, 2026.
This long-term agreement offers significant price stability with a competitive fixed rate of $37.75 per megawatt-hour (MWh), with no annual escalation. The participants of this project includes the Cities of Glendale and Burbank through their Utility Departments and Los Angeles Department of Water and Power (LADWP). Energy will be delivered at the Intermountain Power Project (IPP) switchyard, facilitating integration with existing transmission infrastructure for participating members. GWP’s entitlement share in this Project is 25 MW (8.3% share of the 300 MW capacity).
The Milford Solar II project aligns with City of Glendale’s 2024 Integrated Resource Plan and GWP’s strategic goals to engage in opportunities that secure long term, low-cost, reliable, and sustainable energy supplied to our customers. 28a
6 0
3 1
RECOMMENDATION
Adopt a Resolution authorizing the City Manager to execute a 30-year PSA with SCPPA for the purchase of solar energy and environmental attributes from the Milford Solar II Project and finding that the project is exempt from the requirements of CEQA.
ANALYSIS
On December 12, 2023, the City of Glendale adopted Scenario 4 of the 2024 Integrated Resource Plan (IRP), which was accepted by California Energy Commission (CEC) on April 29, 2024. This plan commits Glendale to achieving 100% clean energy by 2035, ten years ahead of the statewide target set by the CEC. The decision to join Milford Solar II underscores City of Glendale's commitment to sustainability and environmental leadership, establishing a clear trajectory toward a cleaner, greener future.
Glendale's most recent Power Content Label (PCL) for 2023 reporting year contains
35.3% of energy sourced from renewables, with 16.8% of its energy supplied through solar power. The proposed agreement with SCPPA for the Milford Solar II is expected to boost solar energy to an estimated 30%, increasing the total renewable energy to an estimated 49%, and overall clean energy to 68%. By integrating this utility-scale solar project into Glendale’s energy mix, the City not only increases its commitment to clean energy but also continues to diversify its energy portfolio.
SCPPA’s Renewable Energy Procurement Process
To assist Members in complying with the state of California’s renewable energy mandates, and to address the renewable energy needs of its members, SCPPA fosters an open, competitive procurement process that continuously accepts and evaluates renewable energy project proposals, including solar, wind, biomass, landfill gas, and geothermal technologies. Developers are invited to submit and refresh proposals with updated prices and terms.
In 2023, SCPPA launched a RFP for Renewable Energy Resources and Energy Storage Solutions, soliciting competitive proposals for renewable energy projects or products consistent to the California Renewable Energy Resources Program (Public Resources Code sec. 25740 et seq.) and the California Renewable Portfolio Standard Program (Public Utilities Code sec. 399.11 et seq.), including amendments enacted by passage of SB 100 (DeLeon 2018). Long Road Energy Holdings, LLC’s proposal for Milford Solar Phase II was selected through SCPPA’s competitive procurement process.
After rigorous negotiations between SCPPA, Long Road Energy Holdings, LLC and the participating members, including LADWP, City of Burbank and City of Glendale, on January 30, 2025, SCPPA authorized execution, and delivery of a PPA and option Agreement with MS2. It further authorizes SCPPA to enter into PSAs with each of the participating members.
Power Purchase Agreement (PPA) between SCPPA and Milford Solar II, LLC The PPA establishes the commercial, operational, and legal terms of the energy procurement from MS2, the seller, to SCPPA, the buyer, for a 30-year term, 38a
6 0
3 1
commencing on the facility's COD, on December 31, 2026. The 300 MW solar facility is located in Beaver County, Utah, and the energy will be delivered at the Intermountain Power Project (IPP) switchyard. Beginning on COD, the price for delivered energy including all associated environmental attributes and capacity rights is fixed at $37.75 per megawatt-hour (MWh), with no escalation over the 30-year term. However, the PPA includes a Change in Law that allows for price adjustment in limited circumstances. For example, as defined in the PPA, if a federal tax credit event (Tax Credit Event) occurs prior to January 3, 2026, the seller may submit a proposed price increase and an independent evaluation for SCPPA and its members consideration, if the impact on seller from the Tax Credit Event is more than $2 Million. SCPPA will have 60 days to notify seller whether the “Tax Credit Event Proposal” will be submitted to the Participating Members for approval by the governing boards of each participant, including Glendale City Council, or rejected. If SCPPA does not provide written notice within 60-day period, then MS2 may terminate the PPA. If the price proposal is approved by the participants, then the Tax Credit Proposal will be submitted to the SCPPA Board for approval. This action may potentially increase the cost per MWh.
The PPA specifically defines Annual Expected Generation and Guaranteed Energy Delivered in MWhs to ensure performance and proscribes penalties if the energy delivery targets are missed.
MS2 will deliver Portfolio Content Category 1 (PCC1) eligible renewable energy, along with associated Renewable Energy Credits (RECs), capacity attributes, and environmental benefits, ensuring compliance with California’s Renewable Portfolio Standard (RPS). The RECs are transferred to SCPPA and allocated to participating members based on their project entitlement share.
Under the PPA, SCPPA will distribute ownership shares of the purchased energy among its participating members via a PSA. The participating Members’ shares are as follows, adding up to 300 MW capacity:
Member MW (AC) of PV Capacity Project Entitlement Share LADWP 235 78.4%
City of Burbank 40 13.3%
City of Glendale 25 8.3%
Total 300 100%
SCPPA members have a purchase option for the facility at designated intervals, allowing for long-term control and ownership opportunities.
Facility Purchase Option
The Milford Solar II project includes a structured purchase option that provides SCPPA with the opportunity to acquire the facility during specific intervals throughout the 30-year term of the PPA. These intervals include the 10th and 15th anniversaries of the project’s COD and every five years thereafter. Additionally, SCPPA may exercise its purchase option in the event of a default by the developer. 48a
6 0
3 1
To initiate the purchase process, SCPPA must provide notice to the developer at least one year before the intended acquisition date. The fair market value of the facility will be determined by an independent appraisal process, and the terms of the transaction will be governed by an Option Agreement executed alongside the PPA. This agreement ensures transparency in pricing and establishes clear parameters for the transfer of ownership. Exercise of the purchase option requires the consent of all participants (LADWP, Burbank and Glendale). The developer also has the right to decline to sell the Project at the developer’s discretion.
Power Sales Agreement Between SCPPA and City of Glendale While the PPA and PSA run in close parallel, each serve distinct but interrelated purpose. The Power Sales Agreement defines the terms under which the participating members receive and bear the Project cost responsibility for their entitlement shares of renewable energy from Milford Solar II. Glendale’s entitlement share of the Project is 25 MW or 8.3% entitlement share of the 300 MW contract capacity.
In addition, the PSA addresses the following:
Identifies the roles, rights, and obligations of SCPPA and participants, such as Project deliverables, project management, annual budgeting, accounting, and reporting.
Establishes a Coordinating Committee to act on behalf of the Project participants, comprised of one representative per project participants, with voting based on project shares.
Establishes LADWP to act as Agent and administer the Project. Establishes payment mechanisms, including payment pledges, charges, billing procedures, and interest payments.
Establishes the rights and obligations of SCPPA and participants to deliver energy, capacity and any environmental attributes.
Encompasses other agreements and obligations, including but not limited to nonperformance and payment defaults, liability conditions to termination or amendments.
Addresses other services such as delivery procedures, transmission, and dynamic scheduling.
Requires the City of Glendale and other Project participants for approval before exercising the purchase option.
Under the terms of the PSA, City of Glendale agrees on the following key points:
Purchase Price:
oFixed pricing of $37.75 per MWh for the entire 30-year term:
oTest energy will be charged at a discounted rate of 50% of the contract price during the pre-commercial operation phase.
Start Dates:
oThe facility is expected to achieve COD by December 31, 2026, and guaranteed commercial operation date (GCOD) by December 31, 2027; 58a
6 0
3 1
oTest energy delivery will begin prior to the full COD. Energy Deliveries:
oTotal Annual Delivery: approximately 813,722 MWh, with Glendale’s
8.3% share equating to roughly 67,539 MWh annually.
Delivery Points:
oThe point of delivery is the Intermountain Power Plant Switchyard in Utah. Billing and Payments:
oPayments to SCPPA are based on monthly invoices reflecting energy charges, direct and indirect Administrative and General cost, and pass through Project Management cost, and any other ancillary charges.
Glendale’s entitlement share is 8.3%.
oThe monthly billing is based on SCPPA’s Project budget, prorated by participant’s entitlement share, and it is trued up to actual cost of energy delivered, which will result in annual over/underbilling adjustments. Liquidated Damages:
oIf the seller, MS2, fails to meet key milestones or guaranteed generation levels, liquidated damages will be applied as outlined in the PPA, and security by the developer of up to an aggregate of $30M pre-COD (development security) and rising to $45M after COD (performance security) is required.
oSCPPA participants, including Glendale, will be compensated for shortfalls through these penalties or replacement energy. Environmental Compliance:
oEnergy and Renewable Energy Credits (RECs) delivered under the PSA will qualify as PCC1 resources, adhering to CEC certification standards.
Milford Solar II is a critical project for the City of Glendale for several economic, strategic, and environmental reasons:
Long-Term Contract Price Stability: The Project offers a competitive price of $37.75 per megawatt-hour (MWh) for the 30-year contract term, providing long- term financial stability. The fixed energy price, including environmental attributes, and capacity rights for the term of the PPA contribute to rate stability. Ideal Location: Located in Beaver County, Utah, the Project benefits from excellent solar insolation, optimizing energy generation. Transmission Access via IPP: Delivery at the IPP switchyard takes advantage of existing transmission infrastructure.
68a
6 0
3 1
Compliance with Renewal Portfolio Standard: Milford Solar II is expected to increase GWP’s renewable energy portfolio content by approximately 7%, advancing Glendale’s clean energy goals. The Project is also strategically important in that it attributes to City of Glendale’s intent to achieve 100% clean, renewable, or non-carbon-emitting energy excluding renewable biofuels not already permitted or approved, by no later than 2035, as set forth in Resolution No. 22-125 adopted by City Council on August 16, 2022.
Timely Implementation: Milford Solar II is expected to achieve COD on December 31, 2026, with test energy being delivered prior to achieving COD.
Having this resource online and fully operational by 2027, aligns with Glendale’s goals for renewable energy expansion.
STAKEHOLDERS/OUTREACH
Not applicable.
FISCAL IMPACT
The total estimated cost for the Milford Solar II project over the 30-year term of the PSA is projected to range between $56,153,000 and $70,192,000. This range is based on the difference between Guaranteed Delivered Energy and the Expected Annual energy, both measured in MWh(s).
Several factors can affect the generation at a solar facility, like Milford Solar II, including weather patterns, maintenance schedules, equipment outages, grid congestion, and curtailments. To account for these issues, the Project has built in a 20% range between the Expected Generation and Guaranteed Delivered Energy (minimum target).
As a prudent budgeting and forecasting approach, staff estimates cost based on Expected Annual Generation while tracking actual expenses based on the annual Guaranteed Delivered Energy.
The Project is set to achieve COD on December 31, 2026, with a GCOD date of December 31, 2027. Based on these milestones, staff will incorporate the first year cost of the project in either Fiscal Year 2026-27 or 2027-28 in GWP’s Power Management Cost Center. Glendale’s first year annual cost is estimated to range between $2,040,000 and $2,550,000.
The amount below is based on the contract price; however, if seller declares a qualifying Tax Credit Event showing an impact of over $2 million, and SCPPA and its members accept the price proposal, the annual amounts will be adjusted accordingly.
Any increase in the price proposal must be approved by participants governing board and SCPPA Board. The first year’s annual funding source and estimated budget are as follows:
Amount Account String Funding Source
$2,550,000 GL: 45510-5820-GWP-4680-P0000 Electric Works Revenue Fund 78a
6 0
3 1
The funding for future contractual years will be requested through annual budgetary process.
ENVIRONMENTAL REVIEW
The Council’s action to approve a power sales agreement to purchase renewable power from SCCPA is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b)(3)(common sense exemption) and Public Resources Code Section 15277 (CEQA not applicable to projects located outside of California) because the Council’s approval is not a “project” as defined by California Public Resources Code, Section 21065, and would not result in a direct or reasonably foreseeable indirect change in the physical environment. The City is a purchaser of power generated by a project located outside of California; the City is not the Project developer or issuer of Project entitlements for development.
Accordingly, the Council action does not have the potential to cause a significant effect on the environment and is thus exempt form CEQA requirements.
CAMPAIGN DISCLOSURE
Not applicable.
ALTERNATIVES TO STAFF RECOMMENDATION
1)Decline to adopt the Resolution approve the Power Sales Agreement, in which case, Glendale will not purchase the renewable solar energy and capacity from Milford Solar II Project. Therefore, GWP, would procure renewable energy from the open market, where prices fluctuate and are typically higher.
2)Consider any other alternative not proposed by staff.
ADMINISTRATIVE ACTION
Submitted by:
Scott K. Mellon, P.E., Acting General Manager - Glendale Water and Power Prepared by:
Ileana Cardenas, Power Planning Manager
Alina Morshidian, Power Contracts Manager
Approved by:
Roubik R. Golanian, P.E., City Manager
EXHIBITS/ATTACHMENTS
Exhibit A: SCPPA Board Resolution 2025-005
Exhibit B: Power Purchase Agreement Between SCPPA & Milford Solar Phase II, LLC Exhibit C: Proposed Power Sales Agreement between SCPPA and the City of Glendale for Milford Solar Phase II Project