2002 AGN SEP 04 I07 - Laserfiche WebLink

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Item #7 CITY OF COLTON AGENDA REPORT For the City Council Meeting of September 4, 2001 TO: Honorable Mayor and City Council .,� FROM: Thomas K. Clarke, Utilities Director__C SUBJECT: APPROVAL OF ALLIANCE-COLTON (COLTON POWER LP) INTERCONNECTION AGREEMENT OF POWER GENERATION AT DREWS AND CENTURY SUBSTATIONS DATE: August 23, 2001 In January 2001, the City of Colton leased portions of Drews and Century substation sites to Alliance -Colton, recently renamed Colton Power LP, for fifteen years enabling them to install four turbine -generators at each site. Colton Power LP will be responsible for the operation of their facilities per the applicable rules, regulations, and laws. DISCUSSION / ANALYSIS Colton Power LP needs to interconnect generation output to our electric substation and transmission grid to transport the power through Southern California Edison's (SCE) system to the Independent System Operator grid. Colton Power LP has a ten-year contractual arrangement with the California Department of Water Resources to provide an entire output of eighty megawatts for limited hours in a year and when they need it. The interconnection agreement with the City of Colton would be for fifteen years with an option to renew for another two five-year terms. Staff is in the process of negotiating a power sales agreement to use any excess power they may have to serve our load, isolating or rolling blackout situations on a cost-plus basis or marginally below market rate. This agreement will allow Colton Power LP to use certain equipment at our substations and transmission lines to transport the generated output. The generation at our distribution system will entitle us to get credit for a power loss factor of 1.12% of the generation output. By this agreement, the City of Colton has an obligation to have related substation equipment available, to coordinate any maintenance, and schedule outages. Both the parties will be responsible for protecting each other's systems. ALTERNATIVES The City can deny the request, which will require Colton Power LP to build its own transformation and transmission lines to transport the power to the SCE grid. FISCAL IMPACT Colton Power LP will be responsible for all the cost to interconnect the generations to the City's system. The City will receive some tangible and intangible benefits by having the generation in the City. There is no charge for using the City's system other than 1.12% power loss factor credits. In the future, it is possible that this credit may not be available due to tariff revisions by the Independent System Operator. Page 1 of 2