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HomeMy WebLinkAboutAgenda Report - April 16, 2003 I-08WCITY OF ODI AGENDA TITLE: Adopt resolution authorizing the City Council to approve a renewable energy portfolio standard for Electric Utility (EUD) MEETING DATE: April 10.2003 PREPARED BY: Electric Utility Director RECOMMENDED ACTION: That the City Council approve the following renewable energy portfolio standard (RPS) for the City of Lodi Electric Utility: Lodi Electric Utility intends to obtain more than 20% of its electrical energy from renewable resources, including large hydroelectric facilities, each year through 2017. BACKGROUND INFORMATION: State Senate Bill 187:was signed into law September 12.2OO2.This law defines qualified renewable energy resources and sets forth the following RPS for retail electric sellers other than municipal utilities, w 20%ofretail sales must hesupplied byrenewable resources by12/31/17, w Retail sellers must increase renewable supply by at least 1 % per year until the 20% target iureached. The public power community, including the California Municipal Utilities Association and the Northern California Power Agency (NCPA), participated actively in crafting the provisions that apply to public power. They were able to maintain local control and flexibility for the governing boards in determining what defines "renewable" for each publicly owned 4saMunicipal electric utility, Lodi Electric Utility is excluded from the bill, however the following requirements are spelled out inS810T0for municipal electric utilities. Each municipal governing board isresponsible for implementing and enforcing alocal RPS that recognizes the Legislature's intent to encourage renewable resources, taking into consideration the effect on rates, reliability, financial resources and the goal of environmental improvement. w Each municipal utility must report annually haits customers: 1) Expenditure of public benefits funds collected for renewable energy resource development: and 2)The resource x)ixbyfuel type including each type ofrenewable resource. * What qualifies as a renewable resource (whether or not to include large hydro projects) and * The percentage ofthe total energy resources that are 8nb*renewable, and � How quickly you plan tomeet that goal. The City of Lodi currently receives approximately 48% of its power from renewable resources. More than 25% comes from the NCPA geothermal plants, which are "eligible" renewable resources as defined in the California Public Utilities Code. Approximately 21%o[Lodi'opower supply comes from '|wrgo"hydroelectric facilities, The large hydroelectric prg°n\n ournbino vvmhar usage and electric power production in an environmentally sound manner. Hydroelectric 0 CITY OF LODI power generation is certainly a renewable resource, and to the extent that environmental impacts are minimized and/or mitigated, Lodi Electric staff believes that this resource should be included as contributing to renewable portfolio. Staff also feels that the 30 MW limitation on hydro adopted by the State of California is arbitrary. For these reasons, it is recommended that Lodi's RPS be established to include large hydroelectric generation. Projections for Lodi'o future power supply indicate that the contribution of renewables will decline unless new renewable resources are added to the mix. This is due in part to the expected decline in the output of NCP/\ geothermal p|mnko, and in part because of forecasted load growth. Taking into account these projected declines, Lodi's renewable portfolio will still exceed the goals established by the State for the IOUs of 20% renewables by 2017, The stated intent of the subject legislation is to "encourage renewable resources". Staff believes that Lodi has already more than met that goal: it has succeeded in the development of renewable resources, supplying approximately 48% ofits power from such resources while retaining competitive rates. Because of the uncertainty associated with the development of new generating sources, staff recommends that the renewable portfolio standard adopted by the Council not be unduly restrictive or aggressive, It is recommended that the renewable portfolio goal be to provide in excess of 20% of Lodi's power supply mix from renewable resources, including large hydroelectric facilities. Ongoing reviews of the RPS will address changes in Lodi's power portfolio including local generation versus market power Purchases and potential changes it) the renewable energy technologies. FUNDING None. The cost of Lodi's renewable resources is already included in the budget and in long-term projections ufpower costs. Alan N.Va|m* Electric Utility Director PREPARED BY: Sondra Huff, Manager, Governmental Affairs City Attorney Finance Director APPROVED: H.Dixon Flynn ^ City Manager 111; 111111111 ii 1121 111111111111111111111111111111111111111 Ar -., t s.. resources, including all hydroelectric resources: FZN �Y- Geothermal + Hydroelectric Lodi's power mix will have a minimum of 20% of + energyresources are defined as non-fossil fueled electric generating resources, including to be distributed to all Lodi Electric Utility customers: * Expenditure of Public Benefit funds collected for renewable resourcexle resources, OVER �2� 13� 4 Mill III! - M11111011 MIAMI I i I 111iii 1 (A) 20% of retail sales must be supplied by renewable resources by December 31, 2017; and (B) Retail sellers must increase renewable supply by at least 1% per year until the 20% target is reached. WHEREAS, as a municipal electric utility, the Lodi Electric Utility is excluded from the Senate Bill, although the following requirements are mandatory: J) Each municipal governing board is responsible for implementing and enforcing a local RIPS that recognizes the Legislature's intent to encourage renewable resources, taking into consideration the effect on rates, reliability, financial resources, and the goal of environmental improvement. 2) Each municipal utility must report annually to its customers: A) Expenditure of public benefits funds collected for renewable energy resource development; and 6) The resource mix by fuel type including each type of renewable resource. WHEREAS, each municipal utility governing board must define the terms of its RPS. This would include determination of: A) What qualities as a renewable resource (whether or not to include large hydro projects); and B) The percentage of the total energy resources that are to be ,renewable; and C%t I How quickly you plan to meet that goal. power - eneratiQn i Qei impacts are minimized and/or mitigated, staff believes that this resource should included as contributing to a renewable portfolio. Staff also feels that the 30 M limitation on hydro adopted by the State of California is arbitrary. For these reasons is recommended that Lodi's RPS be established to include large hydroelect generation; and WHEREAS, the stated intent of the subject legislation is to "encoura renewable resources." Staff believes that Lodi has already more than met that goal: has succeeded in the development of renewable resources, supplying approximat 48% of its power from such resources while retaining competitive rates; and WHEREAS, because of the uncertainty associated with the development of n ike Citify ouncil not be unduly restrictive or aggressive. It is recommended that t renewable resources, including large hydroelectric facilities, NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does here hereto marked Exhibit "A." Dated: April 16, 2003 AYES: COUNCIL MEMBERS — Beckman, Hansen, Howard, Land, and Mayor Hitchcock ABSENT: COUNCIL MEMBERS — None ABSTAIN: COUNCIL MEMBERS — None SUSAN J. BLACt�STON City Clerk RPS Objective: resources, including all hydroelectric resources: * Geothermal * Hydroelectric ffl�� Lodi's power mix will have a minimum of 20% of renewable resources, ReneI resources are defined as non-fossil fueled electric generating resources, including hydroelectric, MUM * Expenditure of Public Benefit funds collected for renewable energy resource development. * The resource mix by fuel type of renewable resources. EEMMM= changes in the renewable energy technologies.