City Council Agenda Report
Meeting Date: October 17, 2023
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Administrative Analyst
Subject
Vernon Public Utilities 2023 Integrated Resource Plan (IRP) Recommendation
A. Find that approval of the proposed action is exempt from California Environmental Quality Act (CEQA) review, because it is a continuing administrative activity that will not result in direct or indirect physical changes in the environment, and therefore does not constitute a “project” as defined by CEQA Guidelines Section 15378;
B. Approve and adopt the Vernon Public Utilities 2023 IRP; and C. Authorize the General Manager of Public Utilities to take all necessary actions to implement the IRP, consistent with California State law mandates, including but not limited to periodic updates and IRP revisions.
Background
Vernon Public Utilities’ (VPU) 2023 IRP is a comprehensive 20-year strategy that outlines the Utility’s plan for how it will continue to meet its customers’ need for reliable and cost-effective electric service while meeting various regulatory initiatives, generating and procuring clean energy, and the continuous investment in the distribution system infrastructure while addressing system constraints. Senate Bill (SB) 350 requires Publicly Owned Utilities (POUs), like VPU, to develop an IRP at least once every five years. The last IRP was filed in 2018.
The IRP outlines the process for developing a resource acquisition strategy that balances supply and demand. This roadmap aims to help make short-term and long-term decisions on how the utility will comply with several legislative requirements. Specifically, SB 350’s requirement to reduce greenhouse gas emissions by 40% to 1990 levels by 2030 and 100% of retail load with clean energy by 2045, as well as SB 1020, which mandates that 90% of the load be served by clean energy by 2035 and 95% a load with clean energy by 2045.
Over the past five years, the Utility’s Integrated Resource team has worked diligently to transform the power portfolio and can proudly share that VPU has met the goals identified in the 2018 IRP; increased its renewable generation by 43.3% and affirmed that more than 50% of its resources are carbon-free.
It’s important to know that VPU recently signed two Power Purchase Agreements (PPAs) for two large solar projects: Daggett Solar for 60 megawatts (MW) of capacity with an expected commercial operation of December 2023, and Sapphire Solar for 39 MW of capacity with an anticipated commercial operation date of December 2026. As part of these PPAs, VPU will also acquire a total of over 50 MW of four–hour energy storage: 30 MW from Daggett and 19.6 MW from Sapphire. These two solar agreements greatly surpass what was recommended in the 2018 IRP.
VPU’s goal for the 2023 IRP is to continue to procure reliable, affordable, renewable, and zerocarbon energy while addressing the growth of transportation and building electrification, demand for energy efficiency and demand side management initiatives, and the growing advancements with distributed energy technologies.
To assist with this effort, on March 21, 2023, the City Council approved a services agreement with Ascend Analytics (Ascend) to assist VPU staff with developing a comprehensive IRP Strategy. Ascend has assisted many of the neighboring POUs with designing Portfolio Options using their proprietary PowerSIMM modeling software that includes resource mixes, availability in the market, costs, and analyzes them to develop preferred portfolio options.
IRP Process
During the planning process, VPU engaged community stakeholders to seek guidance and direction on key decisions for preferred portfolios of generation, demand, and distributed resources, including cost. VPU spent several months on stakeholder outreach by conducting inperson meetings, circulating a comprehensive survey, informing them about the IRP process, and garnering input for developing Portfolio Options. Part of the outreach was to inform stakeholders of the challenges facing VPU and to obtain valuable insight into the customers’ needs and priorities.
VPU stakeholders included city residents, current and prospective property and business owners, property developers, business employees, the Vernon Business and Industry Commission, the Green Vernon Commission, the Vernon Chamber of Commerce, the City Council, and commissioners, to name a few.
Through the stakeholder meetings and feedback from the survey, Vernon customers made their priorities clear, which was to ensure that the utility continued to provide reliable electric service and maintained low rates. Responses from the survey also provided helpful insight; more than 80% of the respondents were either satisfied or very satisfied with the services provided by VPU, and more than 70% of respondents felt there was a direct correlation with rates increasing if VPU exceeded the state’s Renewable Portfolio Standards (RPS) target.
A total of three stakeholder meetings were held on March 15th, May 11th, and June 21, 2023.
Throughout the process, presentations were made that provided an overview of the survey results, explained the IRP process, summarized legislative requirements, described the scenario modeling process, and provided details regarding the final three scenarios for consideration, along with the associated costs.
VPU communicated information about both the community meetings, as well as a survey through several outreach channels which included advertisements in the paper, use of social media platforms, printed mail seeking participation in the survey and meetings, email updates, newsletters, as well as direct phone calls to customers.
Portfolio Options
IRP modeling is a multi-step process where staff worked with Ascend to gather data on VPU supply resources and load, including historical data, projections for resource updates, and expected changes in customer load. Ascend’s modeling provides several scenarios that vary in system costs, reliability, emissions, and resource operations. The Portfolio Options explored a different mixture of resource options, and renewable generation such as geothermal, solar photovoltaic (PV), wind, and clean energy like hydrogen, Carbon Capture Sequestration, hydroelectric, and nuclear, as well as battery storage for capacity.
Portfolio 1 includes procuring solar PV from northern and southern CA, the most cost-effective wind and four-hour battery storage options, and maintaining operations of the utility’s natural gas power plant, Malburg Generating Station (MGS), until 2035. Portfolio 2 is similar to Portfolio 1 but includes assumptions to procure nearly 70 MW of geothermal. Portfolio 3 does not include geothermal but considers fuel switching the MGS to produce an output of approximately 45 MW of green hydrogen and includes wind and battery storage.
Portfolio 1 was selected as the preferred portfolio primarily because geothermal and hydrogen are estimated to be much more expensive than the four-hour battery storage and the sheer volume of solar resources available in today’s market. The total supply costs for Portfolio 2 and Portfolio 3 are significantly higher than the total supply cost for Portfolio 1. These costs are a function of the expected resource costs 10 to 15 years from now, which include a significant amount of uncertainty and risk. Pursuing Portfolio 1 would achieve the renewable and zerocarbon generation goals, maintain the utility’s ability to provide reliable service and affordable rates, and meet all statutory requirements. VPU’s ongoing goal is to strive for competitive and stable rates and provide high reliability throughout the entire planning period of 2023 through 2045.
If adopted by the City Council (VPU’s governing board), the 2023 IRP will be submitted to the California Energy Commission as required by SB 350. Compliance filing must include the IRP, supporting information, and the four standardized tables.
Fiscal Impact
There is no fiscal impact associated with this report.
Attachments
1. Vernon Public Utilities 2023 Integrated Resource Plan