2002 AGN MAR 26 I07 - Laserfiche WebLink

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Item #7 CITY OF COLTON For the City Council Meeting of March 26, 2002 TO: HONORABLE MAYOR AND CITY COUNCIL APPROVAL: DARYL PARRISH , CITY MANAGER �^ FROM: THOMAS K. CLARKE, UTILITY DIRECTOR �'7 `� � \� t,— SUBJECT: Energy Purchase and Sale Agreement With Colton Power LP DATE: March 11, 2002 Colton Power LP has installed 80 MW peaking generation facilities at two of the Utility's substation sites. Colton Power LP has a contractual arrangement with the California Department of Water Resources (CDWR) to provide the entire output at the generators to them as and when required. The City of Colton has a property lease agreement and interconnection agreement with Colton Power LP at our two substation sites. DISCUSSION/ANALYSIS The City of Colton does not have any entitlement to the Colton Power LP generation output. Staff entered into negotiations with the Colton Power LP for the Energy Purchase and Sale Agreement which would allow the purchase of output from the generators. During emergencies, Colton Power LP will deliver energy limited to 200 hours per year per unit from each of the eight, ten -megawatt units. This output will be subject to South Coast Air Quality Management District, California Independent System Operator, and/or CDWR agreements or restrictions. This agreement will be useful in the event of any situation where Colton may need power. However, it is possible that the City would not be able to utilize this agreement because of economic and or regulatory restrictions. Furthermore, the CDWR contract always supersedes this agreement. The term of this agreement will be the same as the term of the lease agreement which is fifteen years subject to renewal. ALTERNATIVES In an emergency situation, the City has the option to curtail the load. In situations where Colton is in short supply, spot market transactions can be made but the purchase price will be subject to market conditions. FINANCIAL IMPACT This agreement does not have any fixed cost or any obligation for the city to purchase energy. However, the cost of purchasing energy will be fuel price plus 2.5 cents per kilowatt-hour. The city can always exercise other options to purchase energy to serve its load. This expenditure to buy such energy shall be budgeted in Purchased Power Non -Firm Energy Account No. 520-8000-8001-2330-0555-600. Page 1 of _ (w/attachments)