(7)AR 122110 Renewable Portfolio Standard

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Staff Report to the Mayor and City Council Approval of Amendment to Resolution No. R-33-07 amending the Renewable Portfolio Standard for Colton Electric Utility December 21, 2010 Page 2 On November 17, 2008, Governor Arnold Schwarzenegger signed Executive Order No. S-14-08, which established a Renewable Portfolio Standard target for all California Utilities. "All retail sellers of electricity shall serve 33% of their load with renewable energy by 2020." ISSUES/ANALYSIS Currently, the energy the City receives from renewable resources equals approximately five % (5%) of the total electricity sold to our customers. Existing renewable resources include landfill gas, wind, and solar. Through Southern California Public Power Authority (SCPPA), the Colton Electric Utility is in the midst of a due diligence process on a number of renewable projects, including resources from geothermal, small hydroelectric generation (less than 30 MW in size), solar thermal, and green waste. Many new renewable energy plants are in construction stage. It is anticipated that in the next five to nine years, there will be enough supply of renewable energy available to all utilities; however, there is a supply shortage today. Another very important issue is the cost of procurement of renewable energy. It is projected that the renewable energy will cost 10-15% higher than conventional energy. The goal of the Electric Utility is to continue to provide reliable service at the lowest cost possible while recognizing and supporting the State's commitment to encourage renewable resources and obtain the greatest benefit possible for the environment. The Colton Electric Utility anticipates that they can meet the new goal by 2020. FISCAL IMPACTS Renewable energy is usually more expensive than conventional resources. Therefore, the renewable energy procurement obligation is contingent upon the Electric Utility having sufficient funds available to subsidize the above -market costs of the renewable energy sources. The City Council authorized to increase the public benefits commercial budget to $1,000,000 for Fiscal Year 2010-11 on November 16, 2010 as per Resolution R-72-10. This fund is used for the low income programs (55% of the fund balance) and renewable energy rebate programs (rest of the funds). It is projected that in future years, the procurement cost differential between renewable energy and conventional energy will be less. As the current contracts for conventional energy procurement expire in future years, the City of Colton Electric Utility will enter into new contracts with increasing portfolio of renewable energy sources. It is anticipated that in future years, the cost of energy procurement will be higher than today, whether it is from conventional or renewable energy sources. ENVIRONMENTAL IMPACT None.