City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Utilities
Meeting Date: August 17, 2026
Report #:2606-6452
TITLE
Adoption of a Resolution Authorizing the City Manager or Their Designee to Transact for Electric Supplies to Meet the City’s Electrical Needs under Electric Master Agreements; CEQA Status: Not a project, CEQA Guidelines 15378(b)(5)
RECOMMENDATION
Staff recommends that Council adopt a Resolution (Attachment A):
Authorizing the City Manager or their designee to execute one or more transactions under Electric Master Agreements with one or more pre-approved suppliers to purchase and/or sell electricity supplies and related services to meet the City’s forecasted electricity load and regulatory requirements, subject to the following conditions:
1. The date for delivery of the electricity supplies for each transaction shall not exceed 36 months from the date the transaction is executed;
2. The delivery date of any transaction shall not extend beyond December 2040;
3. The maximum aggregate transaction limit under each Master Agreement shall be $125 million;
4. All transactions shall be subject to the Palo Alto Municipal Code; and
5. All transactions shall be subject to the Energy Risk Management Policy (Attachment B).
6. The transactions shall be undertaken with suppliers that have executed Master Agreements with the City; to date those suppliers are:
a. Avangrid Renewables, LLC;
b. BP Energy Company;
c. Cargill Power Markets, LLC;
d. Constellation Energy Generation, LLC;
e. DRW Energy Trading LLC;
f. Dynasty Power Inc.;
g. NextEra Energy Marketing, LLC;
h. NRG Business Marketing LLC;
i. PacifiCorp;
j. Powerex Corp;
k. Shell Energy North America (US), L.P.;
l. Silicon Valley Clean Energy Authority (SVCE); and
m. Turlock Irrigation District.
EXECUTIVE SUMMARY
Transacting with an active set of creditworthy counterparties is essential to ensure that the City meets its electric supply portfolio planning objectives, internal risk management controls, and external operational and regulatory requirements in a cost-effective and time-efficient manner.
Authorizing the City Manager or their designee to execute transactions under the City’s electric Master Agreements with pre-approved suppliers will enable the purchase and/or sale of electricity supplies and related services to meet the City’s forecasted electricity load.
In December 2024 City Council approved a similar resolution authorizing the City Manager or their designee to transact with specified suppliers for the calendar years 2025 through 2039 period, with an aggregate transaction limit of $75 million (Resolution 102041). The authorization being sought now is to shift this 15-year authorization period by one year, to calendar years 2026 through 2040 (with any given transaction term not to exceed 36 months from the date the transaction is executed), and to increase the aggregate transaction limit to $125 million.
BACKGROUND & ANALYSIS
The City procures long-term renewable electricity supplies from solar, wind, landfill gas, geothermal, and hydroelectric resources, for contract terms that span up to 35 years. In addition, City staff utilize electric Master Agreements with pre-approved suppliers to balance electric loads and supplies in the short- and medium-term, from one month to 36 months out. These transactions are carried out in compliance with the City’s Energy Risk Management Policy, which was last modified in June 2024 (Resolution 101662).
The City’s Municipal Code also governs these procurements, permitting the City to award contracts for wholesale utility commodities and services to counterparties which have executed a Council-approved master agreement and are otherwise eligible to bid, and allowing Council to authorize the City Manager to award and sign contracts with eligible counterparties under certain specified limits 3. City Council periodically approves new Master Agreements with suppliers to maintain a diverse set of suppliers for the City to competitively procure electricity supplies.4 1 Resolution 10204:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=62085&dbid=0&repo=PaloAlto&cr=1. 2 Resolution 10166: https://portal.laserfiche.com/Portal/DocView.aspx?id=73765&repo=r- 704298fc&searchid=8dd38e5a-e018-4318-9027-4a24829093de
3 Palo Alto Municipal Code sections 2.30.340(a) and (b). 4 In December 2016 Council approved a standard form electric master agreement (Resolution 9652), based on the year 2000 version of the Edison Electric Institute (EEI) Master Power Purchase and Sale Agreement. This standard form agreement has been made available to any wholesale utility supplier on the City’s website since that time; Currently the City has 13 suppliers, including three new suppliers approved by Council in March 2026 (Staff Report: 2508-5117 9). In October 2019 City Council also approved a standard form resource adequacy (RA) confirmation letter to the Western States Power Pool (WSPP) master agreement, and authorized staff to utilize that agreement for carrying out RA transactions (Resolution 986010).11
In March 2013 City Council approved a resolution authorizing the City Manager or their designee to transact under electric Master Agreements with nine specified suppliers for the calendar years 2013 through 2027 period, with an aggregate transaction limit of $50 million per agreement (Resolution 932412). Since that March 2013 Council authorization, staff have undertaken over 220 transactions during the subsequent 13 years, totaling $171.4 million, as outlined in Table 1 below.
Table 1: Transaction Volumes under Approved Electric Master Agreements As shown above, over the past 13 years, the transaction volumes with two of these suppliers have exceeded $50 million and are approaching the $75 million aggregate authority limit established by Resolution 10204. Staff anticipates the volume of transactions in the next 10 to 15 years could be higher due to higher volumes and prices (particularly for resource adequacy (RA) capacity and renewable energy credits (RECs), both of which have experienced large price spikes during the past few years). To address these price escalators, staff recommends the transaction caps applicable to each Master Agreement be increased from $75 million to $125 million.
9 Staff Report 2508-5117:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=86830&dbid=0&repo=PaloAlto 10 Resolution 9860: https://www.paloalto.gov/files/assets/public/v/1/city-clerk/resolutions/reso- 9860.pdf?t=52748.06
however, execution of and delegation of authority to transact under standard form master agreements with specific suppliers remains subject to Council approval before any transactions may be completed. https://www.cityofpaloalto.org/files/assets/public/v/1/city-clerk/resolutions/reso-9652.pdf 12 Resolution 9324: https://www.paloalto.gov/files/assets/public/v/1/city-clerk/resolutions/reso-9324.pdf Supplier Purchases ($) Sales ($) Total Transactions ($) BP Energy Company 2,020,420 600,300 2,620,720
Powerex 11,489,765 792,328 12,282,093
Shell Energy North America 35,788,992 21,721,729 57,510,721 Avangrid Renewables LLC 56,455 50 56,505
Turlock Irrigation District 709,344 1,628,250 2,337,594 NextEra Energy Marketing, LLC 48,472,511 21,103,693 69,576,204 Cargill Power Markets, LLC 6,329,143 - 6,329,143
Constellation Energy Generation, LLC 13,895,651 6,783,935 20,679,586 Pacificorp Energy - - -
Silicon Valley Clean Energy Authority - 10,000 10,000
TOTAL 118,762,281 52,640,284 171,402,565
As an additional risk mitigation measure, as part of the Utilities Risk Oversight and Coordinating Committee (UROCC)16, staff will be required to notify and obtain UROCC approval prior to any given supplier exceeding the existing ($75 million) authorized transaction limit. The UROCC will be enabled to advise staff on whether to authorize the additional headroom for that supplier, ensure current analysis such as credit worthiness are reviewed, and manage inherent risk associate with any over reliance on concentrated providers.
FISCAL/RESOURCE IMPACT
Authorizing the City Manager or their designee to transact under the electric Master Agreements for a term of up to 36 months does not by itself result in any resource impact. However, this authorization will facilitate an efficient process to competitively procure electric supplies, potentially reducing the City’s electric supply costs. Annual budgets approved by Council provide for the purchase cost and sales revenue associated with these transactions.
STAKEHOLDER ENGAGEMENT
Utilities staff coordinates with the City Attorney’s Office in negotiating Master Agreements and with the Administrative Services Department to transact within the Risk Management Policy (Attachment B) and associated Guidelines and Procedures. Utilities staff presented the recommendation to increase the aggregate transaction limit for all prequalified suppliers to $125 million to the UROCC at their July 30, 2026 meeting. UROCC members supported the recommendation and requested that staff notify the UROCC whenever a given supplier approaches the existing ($75 million) transaction limit, at which point the UROCC will advise staff on whether to authorize the additional headroom for that supplier, up to the Council-approved limits proposed here. This recommendation has been incorporated into the above proposal.
ENVIRONMENTAL REVIEW
Authorizing the City Manager or their designee to transact for electric supplies to meet the City’s electrical loads under electric Master Agreements will not result in any direct or indirect physical change in the environment, and therefore does not constitute a project requiring environmental assessment for the purposes of the California Environmental Quality Act, pursuant to CEQA Guidelines section 15378(b)(5).
ATTACHMENTS
Attachment A: Resolution
Attachment B: Energy Risk Management Policy
APPROVED BY: Alan Kurotori, Director of Utilities
16 The UROCC, which consists of the Directors of Utilities, Public Works, and Administrative Services, as well as a representative from the City Manager’s Office, ensures proper risk management controls are in place with respect to the City’s energy procurement, and ensures compliance with the Council-approved Energy Risk Management Policy.