(13)AR 050608 Power Sales Agreement

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ITEM #13 CITY OF COLTON AGENDA REPORT FOR CITY COUNCIL MEETING OF MAY 06, 2008 TO: HONORABLE MAYOR AND CITY COUNCIL FROM: Jeannette Olko, Electric Utility General Manager SUBJECT: Request to Approve Power Sales Agreement with the Southern California Public Power Authority DATE: April 29, 2008 BACKGROUND: On October 7, 2003, the City of Colton adopted Resolution No. R-102-03, thus establishing a Renewables Portfolio Standard ("RPS") Policy to comply with Senate Bill 1078. SB 1078 provided specific guidelines to Investor Owned Utilities ("IOU") in developing and implementing a RPS, and ordered municipal electric utilities to devise local standards in light of the legislation's public policy goals while taking into consideration the effect of the standard on rates, reliability, financial resources, and the goal of environmental improvement. In addition, each publicly owned electric utility must report its progress toward attaining the RPS not only to its customers, but also to the California Energy Commission. On March 6, 2007, the city council approved an amendment to Resolution No. R-102-03 to reflect a target portfolio level of 20 percent by December 31, 2010. DISCUSSION/ ANALYSIS: Currently, the energy the City receives from renewable resources equals approximately four percent (4%) of the total electricity sold to our customers. Existing renewable resources include landfill gas, wind, and solar. Through SCPPA, the 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. The Biosoils project will also provide renewable energy for the Electric Utility. All together, these projects will allow the City to meet and most likely exceed the legislative goal of 20 percent by December 31, 2010. This power sales agreement is the culmination of an extended negotiation between the members of SCPPA and the Metropolitan Water District of Southern California to receive power generated by small hydroelectric facilities located in Southern California. The agreement is in substantially final form, subject to minor modifications as each participant obtains approval from their respective city councils. The City of Azusa approved the power sales agreement on April 28, 2008, subject to preparation of the final execution copy. Anaheim Public Utilities will be seeking approval on May 13, 2008. Under terms of the agreement, each participant in the project — the Cities of Anaheim, Azusa, and Colton, will receive the renewable energy, including the associated capacity rights and environmental attributes from four hydroelectric plants with a total nameplate capacity of 17.04 MW over a term of fifteen years and two months. These four plants have historically produced