HomeMy WebLinkAbout2005-10-11 City Council Agendas
10/11/05 1
Agenda posted according to PAMC Section 2.04.070. A binder containing supporting materials is available in the Council Chambers on the Friday preceding the meeting.
October 11, 2005
Special Meeting
6:00 p.m.
* * * * Council Conference Room * * * *
ROLL CALL
STUDY SESSION
1. Joint Meeting with City Council and Planning and Transportation
Commission (P&TC)
• Zoning Ordinance Update
• PTC Roles and Responsibilities
• Housing Conversion, Retail and Hotel Retention and Attraction
• Status of Charleston/Arastradero Project
• Pre-screening Process
7:00 p.m.
* * * * Council Chambers * * * *
SPECIAL ORDERS OF THE DAY
2. Vote and Appointment of Candidates to the Architectural Review Board
(ARB)
3. Vote and Appointment of Candidates to the Utilities Advisory
Commission (UAC)
ORAL COMMUNICATIONS
Members of the public may speak to any item not on the agenda; three minutes per speaker. Council reserves the
right to limit the Oral Communications period to 30 minutes
APPROVAL OF MINUTES
September 12, 2005
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CONSENT CALENDAR
Items will be voted on in one motion unless removed from the calendar by two Council Members.
LEGISLATIVE
4. (CMR:386:05) Adoption of a Resolution Approving the Long-Term
Power Purchase Agreement (Shiloh Wind Power Project) with Shiloh
Wind Project, L.L.C. for the Purchase of Electricity Generated by a
Wind Electric Generating Facility for a Term of 15 years and a Contract
Amount of $75 Million
5. 2nd Reading - Ordinance Establishing the Charleston-Arastradero
Corridor Pedestrian and Bicyclist Impact Fee and Amending the Palo Alto Municipal Code Title 16 (Building Regulations) by Adding Chapter 16.59 -- Charleston Arastradero Corridor Pedestrian and Bicyclist Impact Fee (1st Reading 09/26/2005, Passed 7-0, Kleinberg absent, Cordell not participating)
6. 2nd Reading - Ordinance Updating the R-1 Zone District
Regulations of Title 18 [Zoning] of the Palo Alto Municipal Code
by Amending Section 18.04.030 of Chapter 18.04 [Definitions]
and Table 3 (Summary of Gross Floor Area for Low Density
Residential Districts) of Chapter 18.12 [R-1 Single-Family
Residence District Regulations] (1st Reading 09/26/2005, 7-1, Passed Cordell no,
Kleinberg absent)
ADMINISTRATIVE
7. Report of Williamson Act Contracts Within the City of Palo Alto
8. (CMR:392:05) Approval of a Contract with Del Conte’s Landscaping,
Inc. in the Amount of $232,865 for Construction of El Camino Median
Island Improvements Phase II – Capital Improvement Program Project
PE-01013
COUNCIL COMMITTEE RECOMMENDATION
AGENDA CHANGES, ADDITIONS, AND DELETIONS
HEARINGS REQUIRED BY LAW: Applicants and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the
public have spoken.
OTHER AGENDA ITEMS: Public comments or testimony on agenda items other than Oral Communications shall be limited to a maximum of five minutes per speaker unless additional time is granted by the presiding officer. The
presiding officer may reduce the allowed time to less than five minutes if necessary to accommodate a larger
number of speakers.
UNFINISHED BUSINESS
PUBLIC HEARINGS
9. (CMR:391:05) Public Hearing: Consideration of a Zoning Ordinance
Update:
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Adoption of Portions of a New Chapter 18.20 of the Zoning Ordinance
to Provide Regulations for the Medical Office and Medical Research
District [MOR], Research Park [RP] and Research Sub-district [RP(5)],
and Related Definitions in Chapter 18.04; Modifications to Section
5.20.120 of the Municipal Code Regarding Recycling; Modifications to
Chapter 18.08 Regarding Zoning Districts; and Deletion of Current
Chapters 18.37, 18.55, 18.57, 18.60, and 18.63 of the Zoning
Ordinance (Title 18). ATTACH 1 ATTACH 2
10. (CMR:312:05) Public Hearing: Consideration of a Zoning Ordinance
Update:
Adoption of Portions of a New Chapter 18.20 of the Zoning Ordinance
to Provide Regulations for the Research Office and Limited
Manufacturing District [ROLM], the Research Office and Limited
Manufacturing Sub-district-Embarcadero [ROLM-E], and the General
Manufacturing District [GM], and Related Definitions in Chapter 18.04.
ATTACH MAP
REPORTS OF COMMITTEES AND COMMISSIONS
ORDINANCES AND RESOLUTIONS
REPORTS OF OFFICIALS
COUNCIL MATTERS
COUNCIL COMMENTS, QUESTIONS, AND ANNOUNCEMENTS
Members of the public may not speak to the item(s).
CLOSED SESSION
This item may occur during the recess or after the Regular Meeting.
Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker.
ADJOURNMENT
Persons with disabilities who require auxiliary aids or services in using City facilities, services, or programs or who
would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact
650-329-2550 (Voice) or 650-328-1199 (TDD) 24 hours prior to the meeting.
CMR:386:05 Page 1 of 5
TO: HONORABLE CITY COUNCIL
FROM: CITY MANAGER DEPARTMENT: UTILITIES
DATE: OCTOBER 11, 2005 CMR:386:05
SUBJECT: ADOPTION OF A RESOLUTION OF THE COUNCIL OF THE CITY OF
PALO ALTO APPROVING THE LONG-TERM POWER PURCHASE
AGREEMENT WITH SHILOH I WIND PROJECT LLC FOR THE
PURCHASE OF ELECTRICITY GENERATED BY A WIND ELECTRIC
GENERATING FACILITY FOR A TERM OF 15 YEARS AND A
ENTERPRISE FUND CONTRACT IN THE AMOUNT OF $75 MILLION
RECOMMENDATION
Staff recommends Council adopt the attached Resolution approving a Long-Term Power
Purchase Agreement with Shiloh I Wind Project LLC (“Shiloh”) for a 16.66% share of the 100-
150 MW-rated capacity of the proposed wind generating facility to be located in Solano County,
California for a term of 15 years and an estimated total cost of $75 million ($5 million per year).
The Resolution authorizes the City Manager to sign the contract on behalf of the City.
BACKGROUND
On October 21, 2002, the City Council approved the Long-Term Electric Acquisition Plan
(LEAP) Guidelines (CMR:398:02). The Finance Committee reviewed the implementation
parameters of LEAP Guideline #6: Renewable Portfolio Investments on October 1, 2002,
recommending renewable energy targets of 10% of the City’s annual electric load by 2008 and
20% by 2015, and within the system average rate impact limit of ½ ¢/kWh. The Finance
Committee recommendation was approved by Council as part of the overall LEAP Guidelines.
On August 4, 2003, Council approved the LEAP Implementation Plan (CMR:354:03). Task #1 is
to acquire renewable energy resources to meet LEAP Guideline #6.
On January 14, 2004, staff presented the Utilities Renewable Energy Supply Implementation
Plan (Plan) to the Utilities Advisory Commission (UAC). The UAC report, presentation and
surrounding discussion summary were provided to Council as information on March 1, 2004
(CMR:168:04). The Plan has two tiers: (1) power purchase agreements (PPAs) for the near term
(2005-2008) to meet the 10% renewable investment target by 2008, and (2) exploring new
resource development opportunities for the longer term (2009-2015) to meet the 20% renewable
investment goal by 2015.
4
CMR:386:05 Page 2 of 5
On November 8, 2004, Council approved power purchase agreements for a 20 MW share of
wind energy from the PPM High Winds Project in Solano County (CMR:424:04) and a 50%
share of the output from a 3.2 MW Ameresco Santa Cruz landfill gas-to-energy project in
Watsonville (CMR:461:04). On January 18, 2005, Council approved a contract for 50% of the
output from a 6-13 MW Ameresco Half Moon Bay landfill gas-to-energy project (CMR:100:05).
On August 8, 2005, Council approved a contract for 50% of the output from a 2.8-4.1 MW
Ameresco Keller Canyon landfill gas-to-energy project (CMR:350:05). Wind energy deliveries
began in December 2004. The Santa Cruz landfill project is on schedule to begin operation in
December 2005, and the Half Moon Bay and Keller Canyon projects are expected to begin
operation by the end of 2006. Together, these four projects, when operational are expected to
meet 10 to 13% of Palo Alto’s annual electric energy supply. Palo Alto also receives 1% eligible
renewable resources from the small hydroelectric portions of the Calaveras Hydroelectric facility
and the Western Central Valley Project.
DISCUSSION
Palo Alto issued a Request for Proposals (RFP 114134) on August 3, 2005 for Renewable
Electric Power. Seven firms submitted proposals for 11 different projects, including wind,
geothermal, biomass, solar thermal, and photovoltaic technologies. Proposal price and contract
duration ranged from $63/MWh for 5 years to $300/MWh increasing at 3.5% for 25 years. The
PPM Shiloh wind project was selected as the most viable proposal. According to the American
Wind Energy Association, PPM is the fifth largest owner of wind energy installations and fourth
largest purchaser of wholesale wind power in the U.S.
The contract is similar to the PPM High Winds project agreement approved by Council in
November 2004, except that the energy is provided in monthly firm blocks and the facility will
be owned and operated by PPM Energy. Northern California Power Agency (NCPA) will serve
as the scheduling coordinator, managing the day-to-day balancing activities within the NCPA
pool; verifying deliveries; monitoring supplier compliance with contractual obligations; and
managing invoicing and payment. The remaining output of the Shiloh facility has been sold to
Modesto Irrigation District (33% for 10 years) and PG&E (50% for 15 years).
A copy of the contract is attached and available to the public on file with the City Clerk. The key
terms of the contract are as follows:
• Term: 15 years, with deliveries beginning between December 2005 and January 2007.
• Quantity: 16.66% share of the 100-150 MW rated capacity (16.7-25 MW) of the
proposed Shiloh Wind Power project. CPAU’s share of the expected annual output is
50,000 to 75,000 MWh, or approximately 5-7% of Palo Alto’s annual electric retail load.
CMR:386:05 Page 3 of 5
The contract includes a right to purchase the output from additions to the facility at a
price set at the time, subject to Council approval.
• Product: The agreement includes monthly “firming” of the energy to facilitate more
predictable energy deliveries. The energy is delivered in monthly firm flat blocks, which
means that PPM will guarantee each day for the month ahead the energy deliveries for
each hour, split into on-peak and off-peak hours. This month-ahead firming provides the
ability for CPAU and NCPA to allocate other supply resources cost-effectively.
• Price: $62.95/MWh, for a total contract amount of $75 million ($5 million per year)
based on estimated generation and firming energy requirements. The charges to Palo Alto
will include an adjustment each month tied to the amount of firming energy required and
a market price index to accomplish the firming obligations. The adjustment may be a
charge (wind generated less than expected) or a credit (wind generated more than
expected).
• Credit Guarantees: PacifiCorp Holdings, Inc. (PHI), is providing a corporate credit
guarantee. The Shiloh I Wind Project is a subsidiary of PPM Energy, Inc. a subsidiary of
PHI. PHI is currently rated A- (stable outlook) by Standard and Poor’s, and is a wholly
owned subsidiary of Scottish Power. The contract includes provisions to provide
collateral if needed in order to maintain adequate credit status during the course of the
contract term.
• Construction: The project differs from the PPM High Winds agreement in that PPM will
build, own, and operate the proposed Shiloh project. As the project has not yet been
constructed, the agreement includes construction contingencies. These contingencies
could result in a smaller project, a delayed project, or in some cases, no project at all. If
the project is cancelled by Shiloh, Palo Alto retains a right to purchase the output should
the project be resurrected and built within one year.
• Off-Ramps: Either party may terminate the contract if the other party does not meet its
obligations under the contract, which include performance, payment, and adequate credit
status. Should the contract be terminated due to default, any damages that may be
incurred, such as wind energy replacement cost, are due only to the non-defaulting party.
Palo Alto reserves to right to relinquish its share of the project output if the final installed
capacity of the facility is less than 50 MW.
RESOURCE IMPACT
The estimated $5 million annual cost is included in the current Utilities Department budget, and
will be included in future budget year proposals. Annual costs may fluctuate due to unpredictable
nature of wind availability, but are expected to be within 5% of the estimated cost.
CMR:386:05 Page 4 of 5
The 15-year fixed price of $62.95/MWh is about $3-5/MWh below the current forward price for
base load electricity for the next four years, meaning that there could be a fairly modest short-
term rate reduction of approximately -0.02¢/kWh. Electricity prices more than ten years in the
future range from $65-75/MWh: at a market price of $70/MWh, long-term rates would be lower
by approximately 0.05¢/kWh relative to buying the same quantity of energy from the electric
market. The levelized long-term rate impact is minor, approximately 0.01 ¢/kWh favorable,
based on a first year market price of $60/MWh and increasing at 2.0% per year. The contract
facilitates meeting the Renewable Energy Supply Implementation Plan goals with a rate impact
well below the ½¢/kWh limit recommended by the Finance Committee and approved by
Council.
POLICY IMPLICATIONS
Investor-owned utilities have a legislated goal, referred to as the “RPS” for “Renewable Portfolio
Standard”, of achieving 10% renewables by 2010 and 20% renewables by 2017, with “outs” if
the cost is too high. The California Energy Commission and California Public Utilities
Commission have adopted a more aggressive goal of 20% by 2010 and 33% by 2020, and the
state legislature has made several attempts to adopt these same goals and make them apply to
municipal utilities as well as investor-owned utilities. Although large hydroelectric generation is
a renewable resource, it is not considered “eligible renewable” Approval of this agreement will
accelerate achieving the renewable investment targets from 20% in 2015 closer to 2010, by
bringing the projected total long-term renewable energy supply content to 14-20% by 2007 with
an estimated retail rate impact between –0.1 and +0.2 ¢/kWh.
The proposed contract is a key element of the Utilities Renewable Energy Supply
Implementation Plan (CMR:168:04), and supports the Council-approved Utilities Strategic Plan
(CMR:432:02 and CMR:148:05) and the Utilities Strategic Implementation Plan (CMR:223:01).
Renewable energy supplies are required to meet the targets established by Council in LEAP
Guideline #6 (Renewable Portfolio Investments) and also support LEAP Guideline #2 (Hydro
Risk Management) and #3 (Market Risk Management) by diversifying Palo Alto’s resources and
reduced dependence on supplies from the electricity market. Approval of this agreement will
accelerate achieving the renewable investment targets from 2015 closer to 2010.
• LEAP Guideline #6: Renewable Portfolio Investments: The City shall continue to offer a
renewable resource-based retail rate for all customers who want to voluntarily select an
increased content of renewable energy. In addition to the voluntary program, the City
shall invest in new renewable resources to meet the City’s sustainability goals while
ensuring that the retail rate impact does not exceed 0.5¢/kWh on average. Pursue a target
level of new renewable purchases of 10% of the expected portfolio load by 2008 and
move to a 20% target by 2015, contingent on economic viability. The contracts for
investment in renewable resources are not to exceed 30 years in term.
CMR:386:05 Page 5 of 5
Implementing LEAP Renewable Portfolio Investments also supports City’s Sustainability Policy
Statement, adopted April 2, 2001 (CMR 175:01), the Green Government Pledge, adopted July
19, 1999 (CMR 284:99) and elements of the Comprehensive Plan, specifically:
1. GOAL N-9: A clean, efficient, competitively-priced energy supply that makes use of
cost-effective renewable resources, and Policies
2. POLICY N-44: Maintain Palo Alto’s long-term supply of electricity and natural gas
while addressing environmental and economic concerns.
3. POLICY N-48: Encourage the appropriate use of alternative energy technologies.
ENVIRONMENTAL REVIEW
Execution of the Agreement does not constitute a project for the purposes of the California
Environmental Quality Act (CEQA). Solano County is the lead agency for the Shiloh wind
generation facility, but the City is not a responsible agency, because it currently lacks any
responsibility for carrying out or approving the construction of the facility.
ATTACHMENTS
A: Resolution approving the long-term power purchase agreement (Shiloh Wind Power Project)
with Shiloh I Wind Project LLC for the purchase of electrical power.
B: Long-term power purchase agreement (Shiloh Wind Power Project) made between Shiloh I
Wind Project LLC, as Seller and the City of Palo Alto, as Purchaser. Attachment B is
included as an attachment in Council member packets and available for review by the public
in the City Clerk’s Office.
PREPARED BY: ______________________________
KARL E. KNAPP
Senior Resource Planner
DEPARTMENT HEAD: ______________________________
JOHN ULRICH
Director of Utilities
CITY MANAGER APPROVAL: ______________________________
EMILY HARRISON
Assistant City Manager