HomeMy WebLinkAboutMinutes - June 26, 2012 SSLODI CITY COUNCIL
SHIRTSLEEVE SESSION
CARNEGIE FORUM, 305 WEST PINE STREET
TUESDAY, JUNE 26, 2012
A. Roll Call by City Clerk
An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held
Tuesday, June 26, 2012, commencing at 7:00 a.m.
Present: Council Member Johnson, Council Member Katzakian, and Mayor Mounce
Absent: Council Member Hansen, and Mayor Pro Tempore Nakanishi
Also Present: Deputy City Manager Ayers, Deputy City Attorney Magdich, and City Clerk Johl
B. Topic(s)
B-1 Renewable Portfolio Standard Update (EUD)
Electric Utility Director Elizabeth Kirkley provided a PowerPoint presentation regarding the
Renewable Portfolio Standards (RPS) update. Specific topics of discussion included legislative
background, new legislative requirements, revised goals, portfolio content, oversight by California
Energy Commission (CEC), steps taken by Lodi to date, Lodi's current portfolio, RPS
implementation, and next steps.
In response to Mayor Mounce, Consultant Matthew Foskett and Ms. Kirkley confirmed that there
are approximately five other balancing authorities throughout the State of California and in the
western area.
In response to Council Member Johnson, Mr. Foskett stated the Air Resources Board is involved
because green house gases are considered airborne.
In response to Mayor Mounce, Mr. Foskett stated credits are sold based on developing market
prices using mega watt hours and can be sold in smaller blocks. He stated the bucket one price
is approximately $50 per mega watt hour and bucket three averages at $15 per mega watt hour.
In response to Council Member Katzakian, Mr. Foskett stated legislation has been introduced in
favor and against hydro electric and the City will not be affected greatly if it is eliminated because
the City's portfolio is diverse.
In response to Mayor Mounce, Ms. Kirkley stated the City is continuing to look at options for
diversifying its portfolio into the future and is considering biomethane. Ms. Kirkley stated staff is
also continuing to review options for a future solar project near the 1-5 property, which is currently
being used for Lodi Energy Center purposes.
In response to Council Member Johnson, Ms. Kirkley stated geothermal is affected by declining
steam fields and Northern California Power Agency has made additional improvements to its
plant to mitigate the impact.
In response to Council Member Hansen, Ms. Kirkley stated the City should not be affected in the
next five years with the RPS because it can sell bucket ones and purchase bucket threes and the
biggest unknown continues to be enforcement and penalties for the future.
In response to Myrna Wetzel, Ms. Kirkley stated there are no penalties for the CEC's inability to
clearly define the requirements and penalties by a certain date.
Continued June 26, 2012
In response to Ed Miller, Mr. Foskett stated there is no financial impact for the consumer up to
2019 because the costs stay below $1 million and impacts thereafter will be reviewed in the next
steps as outlined in the presentation.
C. Comments by Public on Non -Agenda Items
None.
D. Adjournment
No action was taken by the City Council. The meeting was adjourned at 7:25 a.m.
ATTEST:
Randi Johl
City Clerk
N
AGENDA ITEM 13 10
CITY OF LODI
COUNCIL COMMUNICATION
TM
AGENDA TITLE: Renewable Portfolio Standard Update
MEETING DATE: June 26, 2012
PREPARED BY: Electric Utility Director
RECOMMENDED ACTION: Renewable Portfolio Standard update.
BACKGROUND INFORMATION: The State of California has a Renewable Portfolio Standard (RPS)
requirement that is intended to increase the amount of electricity
generated each year from eligible renewable energy resources.
The first bill, in 2002, required investor-owned utilities such as PG&E to generate at least 20 percent of
their power from eligible renewable energy resources by 2017. In 2006, the target date was accelerated
to 2010. While both of these laws applied specifically to investor-owned utilities, they directed local
publicly -owned utilities, such as the City of Lodi, to implement and enforce a similar RPS. Local utilities,
however, were granted significant discretion to establish the resource eligibility criteria, target levels, and
timeframes for their RPS programs.
In April 2011, California's Governor Brown signed Senate Bill 2 of the First Extraordinary Session
(SBX1-2), known as the California Renewable Energy Resources Act, extending California's RPS
mandate to 33 percent by 2020. In addition, this new measure expanded the RPS mandate to include all
electricity retailers. All utilities in California are now required to meet the new state RPS goals that
electricity provided by eligible renewable energy resources equal at least 20 percent of retail electricity
sales by 2013, at least 25 percent by December 31, 2016, and at least 33 percent by December 31, 2020
(and continuing every year thereafter).
Lodi's Current RPS Policy
In April 2003, the City Council adopted Lodi's current RPS (Resolution 2003-71) to meet the intent of SB
1078 to encourage renewable resources. This resolution:
• Defined qualified RPS resources as non-fossil fueled electric generating resources, which
included large hydroelectric resources.
• Required that Lodi's power mix will have a minimum of 20 percent of renewable resources.
• Required Lodi Electric Utility report to its electric customers, in the annual power content label, the
resource mix by fuel type including renewable resources.
APPROVED:
konradt Bartlam, City Manager
Renewable Portfolio Standards Program
June 26, 2012
Page 2 of 2
SBX1-2 Impact
One of the key differences between SBX1-2 and the two previous state RPS laws is that the new law
explicitly gives state regulators the authority to enforce the mandate on public utilities. Under the 2002
and 2006 laws, the California Energy Commission (CEC) was responsible only for certifying renewable
facilities as eligible for the RPS and for developing a tracking and verification system to prevent the
double -counting of renewable energy output. SBX1-2 increases the CEC's role in RPS implementation,
giving it the authority to develop enforcement regulations for public utilities. In this role, if the CEC
determines that a public utility has failed to comply with RPS regulations, it must refer the case to the
California Air Resources Board, which has the authority to impose penalties. SBX1-2 still allows public
utilities' governing boards to establish certain rules and provisions for their RPS, provided that these rules
satisfy the general requirements of the law. With respect to the enforcement of the law, SBX1-2 states,
"[t]he governing board of the local publicly owned electric utility shall adopt a program for the
enforcement of this article on or before January 1, 2012." Lodi approved its RPS Enforcement Program
on December 21, 2011 in Resolution 2011-195.
Other differences between Lodi's current RPS policy and the state law require the City to adopt a formal
RPS Procurement Plan, which is separate and in addition to the RPS Enforcement Program.
RPS Procurement Plan
The new state law — specifically California Public Utilities Code sections 399.13, 399.15, 399.16 and
399.30 — includes new compliance period procurement requirements and the creation of new resource
eligibility categories. State law establishes three separate multi-year compliance periods. Furthermore,
the compliance requirement for the first period sets a minimum average RPS level over the whole three-
year period (20 percent for 2011-2013), while the requirements for the latter two compliance periods are
that the regulated entities make "reasonable progress" to ensure that a minimum level of renewable
resources is procured by the end of each period (25 percent by the end of 2016 and 33 percent by the
end of 2020).
The law also establishes three different categories or "buckets" of renewable energy products, and sets
limits on the degree to which utilities can rely on some categories to fulfill their RPS requirements,
whereas Lodi's RPS policy does not make such a distinction. The first product (Bucket 1), the preferred
one, encompasses all renewable energy that is delivered into the California grid as it is generated.
Utilities are required to meet at least 50 percent of their RPS requirement with Bucket 1 resources in the
first compliance period, with this threshold rising to 75 percent by the third compliance period. All of
Lodi's currently operating or contracted resources fall into the Bucket 1 category.
FISCAL IMPACT: Not applicable.
FUNDING AVAILABLE: Not applicable.
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Elizabeth Kirkley
Electric Utility Director
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RPS Update
26 June 2012
City Council Shirtsleeve Session
RPS Update
RPS Legislative Background
New RPS Requirements (SB X1-2)
RPS Steps Taken by Lodi
Lodi"s Current RPS Portfolio
RPS Implementation
Next Steps
-tY5 Leg
3ackgrc
• 56 1078
'As
• Established RPS --> 20% by 2017
• 56 107
• Accelerated RPS --> 20% by 2010
• 56 X1-2
j� • Expanded RPS --> 33% by 2020
New RPS Requirements
(SB X1�2)
Revised RPS Goals
3 Portfolio Content Categories
(PCCs or "buckets")
POU oversight by California
Energy
Commission
Revised RPS Goals
Compliance Periods
• 2011-2013 4 20%
• 2014-2016 4 25%
is 2017-2020 4 33%
Portfolio Content
Categories /Buckets
Bucket 1
•Directly interconnected to CA
Balancing Authority (BA)
Bucket 2
• Firmed and shaped incremental
electricity scheduled in CA BA
Bucket 3
• Renewable Energy Credits (RECs)
POU Oversight by CEC
Regulations & enforcement
procedures (TBD)
Certify & verify eligible renewable
energy resources
Reports non-compliance to CA Air
Resources Board (GARB)
• GARB may impose penalties
POU Oversight by CEC
Reporting & Tracking System
Lodi registered June 13, 2011
NCPA transfers Lodis RPS eligible
resources monthly
RPS Steps Taken by Lodi
April 16, 2003 4 RPS Program; Resolution No. 2003-71
October 20, 2010 4 WSPP Agreement; Resolution No. 2010-179
December 15, 2010 4 NCPA Interim REC Transfer Agreement; Resolution No. 2010-217
August 3, 20114 NCPA MPP Agreement; Resolution No. 2011-122
December 21, 20114 RPS Program Enforcement; Resolution No. 2011-195
June 6, 2012 4 NCPA SMSA Agreement; Resolution No. 2012-78
160,000
s
140,000
120,000
4A
Di
100,000
M
80,000
60,000
Di 40,000
L
Cr 20,000
Di
v
Lodi's Current RPS
Portfolio
2011 2012 2013 2014 2015 2016 2017 2018 2019
2020
Small Hydro
Geothermal
Category 1
Category 2
Category 3
(Note: Includes NCPA Geo Turbine Upgrade and NCPA Beaver Creek Small Hydro Project.)
1 RPS Implementation
35%
30%
25%
20%
15%
10%
5%
0%
SB X1-2 Implementation Periods & PCCs / Buckets
2011-2013 20142016 2017-2020
■ Category 3
Category 2
Category 1
b
b
b
0
0
0
V
V
V
2011-2013 20142016 2017-2020
■ Category 3
Category 2
Category 1
INA.,r RPS Implementation
Generation and RPS Implementation Costs
.-.
100,000
3,500,000.00
4
s
90,000
- 3,000,000.00
80,000
- 2,500,000.00
70,000
2,000,000.00
4�0
2
M
4-0
60,000
1,500,000.00
�
L
50,000
1,000,000-00
ai
Di
40,000
500,000.00
30,000 -
0.00
E
LM
20,000
(500,000.00)
a
L
U
10,000
(1,000,000.00)
0
(1,500,000.00)
2011 2012
2013 2014 2015 2016 2017 2018 2019 2020
� Geothermal (MWh) � NCPA/Western (MWh) Use Existing Resources ($) ,Buy/SelI Resources ($)
Next Steps
Finalize RPS Plan for City Council
approval later this year
• Revised NCPA MPP Agreement
• Bucket mix
• Financial impact
• Reporting / tracking
Customer outreach
RPS Update