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CITY OF COLTON AGENDA REPORT FOR COUNCIL MEETING OF NOVEMBER 17, 2009 TO: Honorable Mayor and City Council FROM: Jeannette Olko, Electric Utility General Manager ITEM #7 SUBJECT: Approve Memorandum of Understanding on Imperial Valley Geothermal Feasibility and Exploration Among the Cities of Los Angeles, Glendale, Burbank, Pasadena, Colton, the Imperial Irrigation District (IID), and the Southern California Public Power Authority (SCPPA) DATE: October 13, 2009 BACKGROUND: On September 15, 2009, the Governor issued Executive Order S-21-09, which directs the California Air Resources Board (GARB) to adopt regulations increasing California's Renewable Portfolio Standard to 33% by 2020 (applicable to all utilities), and to adopt the regulations by July 31, 2010. The SCPPA member utilities are diligently working to meet this challenge through the pursuit of several renewable energy projects, including wind, solar thermal, biomass, ethanol power, and geothermal, which are all in the early stages of development. One of the geothermal projects under consideration is the potential development and construction of geothermal plants totaling 200 MW in two phases — phase I is a total of 50 MW, and phase II is 150 MW, on land owned by LADWP and IID. The participants in this project include the Cities of Los Angeles, Glendale, Burbank, Pasadena, Colton, and IID. Colton's share of this project is a total of 4 MW, or 2% of the output. DISCUSSION/ANALYSIS : The Memorandum of Understanding (MOU) amongst the parties will determine the feasibility, exploration, and possible development of geothermal energy resources in the Imperial Valley. The tasks for both phases of the project consist of evaluating the property and drilling exploratory geothermal wells. If it is determined that there is sufficient geothermal resources to host a 50 MW power plant, then a development plan for a proposed geothermal plant will be initiated, evaluated, and approved along with pertinent Development Project Agreements. The terms and conditions of the MOU are as follows: • The term of the MOU is for a period of ten years. • In the event that there are not enough geothermal resources capable of sustaining a geothermal power plant, then the MOU will terminate. • Each participant will share the costs of the MOU in accordance with its percentage share of the potential output. • Because LADWP has the resources and also has the largest share of the project, they will serve as the Project Manager.