HomeMy WebLinkAboutMinutes - June 10, 2014 SSLODI CITY COUNCIL
SHIRTSLEEVE SESSION
CARNEGIE FORUM, 305 WEST PINE STREET
TUESDAY, JUNE 10, 2014
An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held
Tuesday, June 10, 2014, commencing at 7:00 a.m.
Present: Council Member Johnson, Council Member Nakanishi, Mayor Pro Tempore Hansen,
and Mayor Katzakian
Absent: Council Member Mounce
Also Present: City Manager Schwabauer, City Attorney Magdich, and City Clerk/Legislative
Affairs Officer Johl-Olson
Electric Utility Director Elizabeth Kirkley provided a PowerPoint presentation regarding the public
benefits and renewable energy funds. Specific topics of discussion included program history,
eligible expenses, revenues, recent expenditures, expenditure plan, current and future projects,
and Astoria 2 solar project overview including participants, project features, and economics.
Council Member Nakanishi requested information regarding the average cost of energy for
customers.
In response to Council Member Johnson, Ms. Kirkley stated the rebate reduction was put into
place to incentivize solar companies to reduce the cost for solar panels.
In response to Council Member Johnson, Ms. Kirkley stated there is no current mandate
regulating when public benefit funds must be spent.
In response to Council Member Nakanishi, Ms. Kirkley confirmed that the administration cost of
the public benefits program is 3%.
In response to Mayor Pro Tempore Hansen, Ms. Kirkley stated the total cash balance in the
budget does not change because funds move from one fund to another for public benefit projects
but the bottom line remains the same.
In response to Council Member Nakanishi, Mr. Schwabauer confirmed that public benefit fund
expenditures are authorized by Council and he anticipates coming back to the City Council in the
next few meetings.
In response to Council Member Nakanishi, Ms. Kirkley stated the cap and trade program is
administered directly by Electric Utility staff.
In response to Council Member Johnson, Ms. Kirkley stated the effluent project is funded by
everyone in Northern California Power Agency (NCPA) who is a part of the geyser project and
Lodi has been paying into the project as a part of the Electric Utility budget.
In response to Council Member Johnson, Rates and Resources Manager Melissa Price stated
A. Roll Call by City Clerk
B. Topic(s)
B-1 Public Benefits, Renewable Energy Funds, Utilization of Greenhouse Gas Revenue, and
Participation in Solar Energy Project (EU)
the Astoria 2 project was not fully subscribed by Southern California Public Power Authority
members because the members were already involved with other projects.
In response to Council Member Johnson, Ms. Kirkley and City Manager Schwabauer confirmed
that the Renewable Portfolio Standards (RPS) requirement needs to be met, traditional power
source prices are low, power prices will go up with demand, developer tax credits will expire in
2016, and the project will be up and running in 2017.
In response to Council Member Nakanishi, Ms. Kirkley confirmed that the City of Lodi would be
buying energy at 10mw in the Astoria 2 project but will not own any portion of the project.
In response to Mayor Katzakian, Ms. Price discussed the difficulty associated with being a
smaller and medium size in NCPA as it relates to obtaining full subscription for projects.
Mr. Schwabauer confirmed there would be no conflict with NCPA if the City of Lodi were to
participate in the Astoria 2 project.
In response to Council Member Nakanishi, General Counsel for NCPA Mike Dean confirmed that,
if the Astoria 2 project goes under, the City does not have any liability associated with the same
because it is only purchasing the power and does not have ownership in the project.
In response to Mayor Pro Tempore Hansen, Ms. Price and Ms. Kirkley stated it is difficult to
ascertain what the fines and penalties will be if agencies do not meet the RPS by the 2020
deadline because it has not yet happened.
In response to Council Member Johnson, Ms. Price stated NCPA previously had a "Green Pool"
for smaller and medium size members and that, while requests for proposals for projects were
submitted, none of those projects came to fruition due to the high costs associated with them.
In response to Council Member Nakanishi, Mr. Schwabauer stated PG&E has 100mw in the
Astoria 1 project and typically green energy projects are done through private entities.
In response to Council Member Nakanishi, Ms. Price stated the break even time frame for solar
power costs is ten years and staff will continue to look into solar options for the City going into the
future.
In response to Mayor Katzakian, Ms. Price confirmed that the life expectancy of the project is 20
years and it will no longer exist after that time.
Mr. Dean provided a brief overview of project governance for the City of Lodi through the buyers
joint project agreement and power purchase agreement and briefly discussed proportionate
voting abilities for power purchases.
In response to Council Member Nakanishi, Mr. Dean confirmed that the City's primary and
alternate representatives on the purchase committee can be staff or elected officials.
Council Member Johnson requested additional information regarding similar solar projects that
have been tried before, including when they came online and how successful they were.
In response to Council Member Johnson, Mr. Schwabauer stated the Light-Emitting Diode (LED)
street lighting project is a big project and will cost approximately $3 million and the City Hall chiller
project will also be costly. A brief discussion ensued between Mr. Johnson and Mr. Schwabauer
regarding other City projects that may be considered for public benefit funds.
In response to Council Member Nakanishi, Ms. Kirkley confirmed that the greenhouse gas fund
has no other revenue source other than auction funds, and that the solar and public benefit funds
have no other revenue source other than the surcharge.
In response to Mayor Pro Tempore Hansen, Ms. Kirkley stated currently the City is at
approximately 20% and with the proposed Astoria 2 project it will meet its 33% renewable
requirement by 2020.
In response to Mayor Katzakian, Ms. Kirkley confirmed there is a 25% renewable benchmark for
2016 to ensure agencies are on track.
Myrna Wetzel spoke in regard to her concern about a news story regarding LED lights in the City
of Davis and urged staff to look into the same.
None.
No action was taken by the City Council. The meeting was adjourned at 7:55 a.m.
C. Comments by Public on Non-Agenda Items
D.Adjournment
ATTEST:
Randi Johl-Olson
City Clerk/Legislative Affairs Officer
City Council Meeting June 10, 2014 Your Community Owned Utility Since 1910
History Public Benefits Solar Surcharge Greenhouse Gas (GHG / Cap & Trade) Eligible Expenses Revenues Expenditures GHG Expenditure Plan Current / Future Projects Summary 2
Public Benefits AB 1890 (1996) – Public Goods Charge à2.85% electric utility revenue àNo expiration Lodi implemented 1998 – 2.5% rate increase Solar Surcharge SB 1 (2006) – CA Solar Initiative à$6.1M requirement (2008 – 2017) Lodi implemented 2007 - $0.00125/kWh surcharge Greenhouse Gas AB 32 (2006) àCap & Trade Program began in 2012 àEnforceable compliance obligation effective in 2013 Lodi allowances for consignment (2013 – 2020) 3
Public Benefits Fund Demand-side management Renewable energy resources & technologies Research development & demonstration Low-income services Solar Surcharge Fund Solar incentives customer systems > 1 kW àAnnual 7% rebate reduction àNet energy metering cap 5% peak load or 2017 4
Greenhouse Gas Fund Benefit retail ratepayers consistent with AB 32 goals àRenewable resources àEnergy efficiency àCustomer rebates àIndirect costs associated with Cap and Trade àLow-income programs Similar to Public Benefits Funds 5
Public Benefits Fund Over $20M collected since 1998 ~$1.8M/year Current balance: $4.5M Solar Surcharge Fund ~$3.5M collected since 2008 ~$550k/year Minimal carryover each year Greenhouse Gas Fund Over $2M collected since 2012 $2M/year Current balance: $2.4M 6
7Public Benefits Fund Primarily energy efficiency projects and rebates On average: à20% residential à60% commercial à20% City About 2,000,000 kWh/year in savings 3%4%32%8%53%Annual BudgetAdminRD&DLow IncomeRenewable EnergyEE & Rebates
8Public Benefits Fund (cont’d) EU operating fund incurred $7.1M eligible PB costs since FY 08/09 àOnly $2.3M has been transferred or reimbursed àRemaining $4.8M eligible to reimburse EU operating fund from PB fund àTransfer would not change overall EU cash balance àTransfer would provide additional funding for EU operations, i.e. distribution system maintenance
9Solar Surcharge Fund $3.6M in rebates issued àPrimarily residential Installed capacity ~2.5 MW Annual generation ~3,800,000 kWh Greenhouse Gas Fund Minimal expenditures to date < $50k Indirect costs àCap and Trade àRPS
10Annual report to CA Air Resources Board Value of auction proceeds Disposition of revenue Expenditure compliance with State requirements Staff recommendation: Renewable energy (RPS compliance) Energy efficiency ài.e. LED Streetlights
11Ongoing Demand-side management (EE / Rebates) RD&D Solar rebates Low-income services Geysers Effluent Project Future Astoria 2 Solar Other mandated renewable energy generation LED streetlights City Hall Annex chiller
12Commercial Operation - 12/31/16 LA County Line Astoria 2 75 MW Solar Kern County, CA CAISO SP-15 – Point of Delivery (Whirlwind Substation) $64/MWh 20 year term “Piggy-back” project to PG&E’s 100 MW Astoria 1 Astoria 2 Solar Project Recurrent Energy Astoria 1
13RE Astoria 2 Solar LLC 75MW 10 MW 45 MW Azusa – 2 MW Banning – 8 MW Colton – 5 MW Vernon – 30 MW 10 MW 6 MW 2 MW 2 MW Astoria 2 Participants
Established developer – CA’s 3rd largest Energy guaranteed to meet RPS requirements Fixed price ($64/MWh contract life) Minimum output guaranteed (80%) Milestones for bringing project online Liquidated damages paid on failure Option to purchase project Buyers have first right of refusal Recurrent must sell project to “qualified entity” 14Astoria 2 Project Features
Lodi’s share ~31k MWh/year (7% load) Total cost ~$2M/year Market price comparison $335k > FY 2016/17 (half of FY) $526k > FY 2017/18 Future cost differential declines w/ fixed price & rising market prices ~1% increase in purchased power costs Allowable use of GHG Funds 15Astoria 2 Economics
16RPS With Astoria 2 27% 20% 25% 29% 31% 33% 33% 33% 33% 020,00040,00060,00080,000100,000120,000140,000160,0002015 2016 2017 2018 2019 2020 2021 2022 2023UndeterminedHistoricCarryoverAstoria 2 SolarExisting NCPARPS Eligible(MWh)
Public Benefits Fund Demand-side management – energy efficiency / rebates Research development & demonstration Low-income services Geysers Effluent Project LED streetlights City Hall chiller Reimburse EU Operating Fund Solar Surcharge Fund Solar rebates Greenhouse Gas Revenue Astoria 2 Solar Other renewable energy generation Energy efficiency - LED streetlights 17Summary