City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: December 8, 2025
Report #:2507-5002
TITLE
Adopt a resolution authorizing execution of the Professional Services Agreement between the Northern California Power Agency and the Cities of Palo Alto and Santa Clara for Electric Transmission, Generation and Regulatory Consulting Services in a Not to Exceed Amount of $657,500 over a five-year contract term ending December 31, 2030; CEQA Status: Not a Project.
RECOMMENDATION
Staff recommends that Council adopt a resolution authorizing the City Manager, or their designee, to execute the professional services agreement between the Northern California Power Agency and the Cities of Palo Alto and Santa Clara for electric transmission, generation and regulatory consulting services for a five-year contract term ending December 31, 2030. The City’s share of the cost of the contract will not exceed $657,500 over the five-year term.
EXECUTIVE SUMMARY
Northern California Power Agency (NCPA) has a separate contract with Flynn Resource Consultants, Inc. (Flynn RCI) to provide electric transmission consulting services to Palo Alto and Santa Clara expiring December 31, 2025. Approval of this agreement will enable a five-year contract ending in December 2030 for these services after a public procurement selection process (RFP) in an amount not to exceed $657,500 over the five years for Palo Alto.
NCPA provides contract management services to the Cities of Palo Alto and Santa Clara for consulting services related to electric transmission issues affecting them both. For consulting agreements executed by NCPA on behalf of one, or a subset of NCPA members, and to which the members are not a party, NCPA requires that those members enter into a professional services agreement with NCPA. The approval of this agreement with NCPA (Exhibit 2 to the Attachment A) is the subject of this report. In May 2025 NCPA issued an RFP and in June selected Flynn RCI for a five-year contract (the Flynn RCI contract) through December 2030 for a not-to-exceed total of $3,250,000 (attached for reference as Exhibit 1 to Attachment A). Palo Alto’s 20% cost share
of the five-year Flynn RCI contract plus NCPA’s contract management fees is $657,500 over five years or $131,500 per year.
BACKGROUND
NCPA is a joint powers agency whose members are publicly owned electric utilities, including Palo Alto (City). NCPA arranges for delivery of the City’s electric power on the electric transmission system to the point of interconnection with the City’s distribution system and manages electric resources that the City jointly owns with other NCPA members. Following the 2000/2001 California electricity market crisis, the California Independent System Operator (CAISO) initiated a major redesign of the state’s electricity markets, in which the City participated with the consulting assistance of Flynn RCI. The Cities of Palo Alto, Alameda, and Santa Clara identified common interests in advocating for certain market design proposals, and formed the group referred to as the Bay Area Municipal Transmission Group, or BAMx.
Recognizing their need for technical and regulatory consulting services, the BAMx members considered ways to reduce costs by sharing professional services. The options considered included forming a new joint powers agency that would then retain a consultant, entering into three separate consulting agreements with one consulting company, or working through NCPA.
At the time the members decided that the best alternative was for NCPA to provide the consulting services, thereby reducing administrative costs and facilitating coordination with other NCPA members with common interests.
Subsequently, in 2003, the BAMx members requested that NCPA provide professional services related to electric transmission, power generation, regulatory issues, and electric market design issues affecting the three cities. The wider NCPA membership was not engaged in the issues of interest to BAMx, so on March 1, 2003 NCPA entered into a consulting agreement with Flynn RCI to provide these services to the BAMx members. In FY 2017 the City of Alameda withdrew from BAMx and so now BAMx consists of the Cities of Palo Alto and Santa Clara.
Since March 2003, Flynn RCI has been representing BAMx in Bay Area electric transmission expansion planning processes, at CAISO proceedings related to electric market design in California, in filings at the Federal Energy Regulatory Commission, and in other regional electric transmission planning venues. Examples of prior successful advocacy include:
Improved reliability of electricity transmission service in and to the Bay Area, Influenced greater stakeholder engagement in CAISO’s electric transmission planning process
Advocated CAISO to take on the responsibility of forecasting the rapidly increasing transmission access charges, and
Participated in the transmission interconnection process, which helped to reduce the anticipated transmission access charge increases.
Recent activities from the ongoing partnership of BAMx that will continue under the new contract include participation in proceedings reviewing the investor-owned utilities high-voltage and low- voltage projected projects and working with the CAISO to refine assumptions built into the planned transmission investments. A few specific examples include:
1.Subscriber-Based Model: BAMx was instrumental in advocating for the subscriber-based model, resulting in $6B in savings across the CAISO transmission system. Now entities which contract with these remote wind resources in Wyoming and New Mexico will pay for the additional transmission required. This translates to roughly $30M in savings to Palo Alto via lower electricity transmission charges.
2.Generator deliverability challenges: BAMx successfully advocated for changes to the interconnection queue, resulting in faster interconnection of resources of highest priority to utilities, as well as savings of $200M- $500M across CAISO, or roughly $1M- $2.5M in savings to Palo Alto.
3.Transmission Planning Process of Renewable Portfolios and Busbar mapping: BAMx is very involved in the resource to the busbar mapping process during CY 2023. This would have far-reaching benefits in terms of transmission cost containment, perhaps $1B-$3B in investments, or roughly $5M- $15M in savings to Palo Alto (if achieved).
ANALYSIS
As the latest contract between NCPA and Flynn RCI will expire on December 31, 2025, NCPA staff is preparing to execute a new agreement to continue the consulting services with Flynn RCI from January 1, 2025 through December 31, 2030, and this agreement is for reference as Exhibit 1 to Attachment A. NCPA requires the two BAMx members to execute a new Professional Services Agreement for the five-year term, which is the subject of this report and the attached Resolution.
The Professional Services Agreement between NCPA and the BAMx members (Exhibit 2 to the attached Resolution) states that NCPA is performing or providing these services at the request of the BAMx members and formalizes NCPA’s role in processing invoices from Flynn RCI and allocating the monthly charges to each BAMx member. The detailed cost allocation to the BAMx members is provided in Table 1.
Table 1: Contract Cost Allocation per Year
% Share Flynn Contract NCPA Admin Fee Total
Palo Alto 20% $130,000 $1,500 $131,500
Santa Clara 80% $520,000 $6,000 $526,000
Total 100% $650,000 $7,500 $657,500
The agreement also contains provisions that limit NCPA’s liability and that of non-participating NCPA members, which NCPA requires in all its agreements.
The value to the City of participating in BAMx is the continued advocacy for fair and equitable electric market rules, beneficial electric transmission solutions, and effective stakeholder participation in electric transmission planning processes. BAMx takes a lead role in advocating for rigorous analyses in the CAISO’s transmission planning proceedings to build new transmission.
To put this in context, in 2011 the total transmission charge for Palo Alto was about $11.70/MWh, today it is $33.24/MWh, and it is projected to be about $48.70/MWh in 2030. This represents about 7.5% per year increase versus the average annual consumer price index of about 2.6% over the same time period. CAISO approves billions of dollars in capital upgrades each year, and since the transmission system is complex it requires sustained engagement, modeling and advocacy to identify oversights and prioritize the most cost-effective solutions. The City’s BAMx membership allows the City to engage effectively in this process of transmission cost-containment.
FISCAL/RESOURCE IMPACT
The City’s share of the Flynn RCI contract is incorporated into the Electric Fund’s Fiscal Year (FY) 2026 budget, and specifies a not-to-exceed contract amount of $650,000 for FY 2026. NCPA will also charge an annual fee of $7,500 for monthly billing and contract preparation and review. The City’s share, outlined in Exhibit B (“Compensation Schedule and Hourly Fees”) of the Flynn RCI contract, is 20% of the total cost, or $131,500 per year. For the subsequent years of the contract the BAMx members will annually set the scope of work and budget up to a maximum of $650,000 per year. Funding of the City’s share of the contract costs for FY 2027 and subsequent years will be contingent upon council approval of the budget.
NCPA’s 2020-2025 contract with Flynn RCI held their rates at the 2020 level for the duration. This contract includes a 3% increase in hourly fees at the start of each fiscal year, while holding the cap of total expenses per year at the 2020 level. In this contract Palo Alto and Santa Clara decided that a 20/80 cost split rather than the previous 25/75 cost split given Santa Clara’s larger relative growth and exposure to transmission charges.
Over the last five years working with Flynn RCI via BAMx has helped to save Palo Alto at least $33M in transmission investments, while also helping to speed up crucial generator interconnections and transmission projects. As transmission costs continue to increase to integrate more renewable generation and lower wildfire risks, staff anticipates that advocating for most cost-effective transmission investments via BAMx will be even more crucial for transmission cost control.
ENVIRONMENTAL REVIEW
The Council’s adoption of a resolution approving and authorizing the City Manager to execute the Professional Services Agreement between the Northern California Power Agency and the Cities of Palo Alto and Santa Clara on behalf of the City of Palo Alto does not require review under the California Environmental Quality Act, because it does not meet the definition of a “project” under section 21065 of the Public Resources Code and section 15378(b)(5) of the CEQA Guidelines, as an administrative governmental activity which will not cause a direct or indirect physical change in the environment.
ATTACHMENTS
Attachment A: Resolution Authorizing Approval of NCPA-BAMx Professional Services Agreement
APPROVED BY:
Alan Kurotori, Director of Utilities
Staff Lead: Lena Perkins, PhD, Senior Resource Planner