HomeMy WebLinkAboutStaff Report 3409
City of Palo Alto (ID # 3409)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 1/28/2013
City of Palo Alto Page 1
Summary Title: Amendment to TANC Project Agreement 5
Title: Adoption of a Resolution Approving Amendment No. 1 to the Amended
and Restated Project Agreement No. 5 Between and Among the Transmission
Agency of Northern California and its Participating Members
From: City Manager
Lead Department: Utilities
Recommendation
Staff recommends that Council adopt the attached resolution approving Amendment No. 1 to
the Amended and Restated Project Agreement No. 5 Between and Among the Transmission
Agency of Northern California and its Participating Members, and granting the City Manager the
authority to approve future operational amendments to the agreement.
Executive Summary
The Transmission Agency of Northern California (TANC), of which the City of Palo Alto is a
member, is requesting that the City execute an amendment to TANC’s Project Agreement No. 5
for participation in an organized system for reserving space on the transmission system. The
minor amendment will allow an annual transmission product to be provided through TANC’s
system. The TANC Commission approved the amendment at its November 28, 2012 meeting
and the TANC Commission memo and resolution is provided in attachment C. Although the
City assigned its interests in TANC to other members in 2009 for a fifteen year term, the City, as
a party to the original agreement, must execute any amendment to the agreement for it to take
effect. Once the assignment period has ended, the amended Project Agreement No. 5 will once
again apply to the City’s transmission transactions with TANC and its members.
Background
The City of Palo Alto is a member of TANC, a California Joint Powers Agency that currently owns
about 87 percent of the California-Oregon Transmission Project (COTP), a 1600 megawatt
(MW), 340-mile long electric transmission line from the California-Oregon Border to the 500
kilovolt Tracy Substation in Northern California. The City has an approximately 50 MW share of
the COTP. In January, 2009 (Resolution No. 8900) the City entered into an agreement for a
fifteen-year assignment of the City’s share of the COTP to three other TANC members, the
City of Palo Alto Page 2
Modesto Irrigation District (MID), the Turlock Irrigation District (TID) and the Sacramento
Municipal Utility District (SMUD).
In 2004, the City entered into TANC’s Project Agreement No. 5 (PA-5) for participation in an
Open Access Same Time Information System (OASIS)1 (Resolution No. 8467). The purpose of
participation in the OASIS was to enhance transmission availability in California by making
unused transmission capacity on COTP available for use by other entities in an open and
efficient manner.
Discussion
At its December 28, 2012 meeting, the TANC Commission approved a minor amendment to PA-
5 that will allow an annual transmission product to be provided through TANC’s OASIS. PA-5
currently requires that PA-5 signatories waive their rights of first refusal to purchase
transmission capacity offered by certain other COTP owners, provided that the capacity product
offered is for a period of “less than twelve (12) months”. The proposed amendment will change
this right of first refusal language to align PA-5’s terms with TANC’s recent implementation of
an annual transmission product offering. The amended language will permit PA-5 participants
to sell annual transmission products to other entities through the OASIS, because the waiver of
the right of first refusal is amended to apply to capacity products offered for a period of “up to
twelve (12) months”. Although the City has assigned its share of the COTP to TID, MID and
SMUD, it is still a signatory to PA-5 and therefore must execute the amendment to the
agreement for it to take effect.
The resolution also grants the City Manager the authority to approve future operational
amendments to PA-5, during the remainder of the fifteen-year assignment period, through
January 31, 2024. Such authority will be limited to amendments requested by MID, TID, and
SMUD that do not change the City’s post-layoff period standing or contractual rights.
Resource Impact
There is no immediate resource impact from this action. When the City takes back its share of
the COTP in 2024 at the end of the term of the assignment, this amendment to PA-5 will
provide the City’s electric utility more options for selling and capturing the value of any unused
transmission capacity on the COTP.
Policy Implications
This recommendation is consistent with the Council-approved Utilities Strategic Plan with
regard to maximizing the value of assets and promoting efficient use of resources.
1 The Open Access Same-Time Information System (OASIS) is an Internet-based system for obtaining services
related to electric power transmission in North America. It is the primary means by which high-voltage
transmission lines are reserved for moving wholesale quantities of electricity.
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Environmental Review
Approval of this amendment does not meet the California Environmental Quality Act’s
definition of a “project” under Public Resources Code Section 21065, thus environmental review
is not required.
Attachments:
Attachment A: RESO TANC Staff Report Approving Amendment to TANC PA5 (PDF)
Attachment B: Amendment No. 1 to PA-5 (PDF)
Attachment C: TANC Commission Report and Resolution (PDF)
Attachment D: PA-5 Effective 5-1-06 (PDF)
*NOT YET APPROVED*
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Resolution No. _________
Resolution of the Council of the City of Palo Alto
Approving Amendment No. 1 to the Amended and
Restated Project Agreement No. 5 Between and Among
the Transmission Agency of Northern California and its
Participating Members
R E C I T A L S
A. The City of Palo Alto (“City”), a municipal utility and a chartered city, is a member
of the Transmission Agency of Northern California (“TANC”), a joint power agency engaged in
interstate transmission of power that currently owns about 87 percent of the California-Oregon
Transmission Project (“COTP”), a 1600 megawatt (“MW”), 340-mile long electric transmission
line from the California-Oregon Border to Northern California.
B. The City has an approximately 50 MW share of the COTP.
C. In 2004, TANC and its Members, the Cities of Alameda, Healdsburg, Lodi,
Lompoc, Palo Alto, Redding, Roseville, Santa Clara, and Ukiah, the Modesto Irrigation District,
the Turlock Irrigation District, and the Plumas-Sierra Rural Electric Cooperative (“Participating
Members”) entered into TANC Project Agreement No. 5 (“PA-5”) for Participation in an Open
Access Same Time Information System (“OASIS”),(City of Palo Alto Resolution No. 8467).
D. PA-5 establishes and describes how unused transmission capacity on COTP will
be made available for sale pursuant to Federal laws and regulations that govern open access to
wholesale transmission capacity.
E. PA-5 exempts certain sales from other Participating Members’ “Right of Refusal”
provisions. These “Right of Refusal” provisions establish a formal process by which other COTP
participants have the first right to purchase (or refuse) transmission products before such
products are offered to non-participants. The maximum waiver of such rights under the current
language of PA-5 is for transmission products of “less than twelve (12) months”, which limits
offerings through the OASIS to monthly, weekly, daily and hourly products.
F. In October 2012, the TANC Commission approved a new annual transmission
product for sale through the OASIS, which requires an amendment to PA-5’s waiver of the
“Right of Refusal” provision.
G. This Amendment No. 1 will change Section 14 of PA-5 to exempt sales of COTP
transmission capacity products of “up to twelve-months” in term from the “Right of Refusal”
provisions.
*NOT YET APPROVED*
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H. In January of 2009 (Resolution No. 8900) the City entered into an agreement for
a fifteen-year assignment of the City’s share of the COTP to the Modesto Irrigation District
(MID), the Turlock Irrigation District (TID) and the Sacramento Municipal Utility District (SMUD).
I. Despite the long term assignment, the City remains a signatory to PA-5 and
must approve any amendments for them to be effective.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. The Council hereby adopts the resolution approving Amendment No. 1 to
the Amended and Restated Project Agreement No. 5 Between and Among the Transmission
Agency of Northern California and its Participating Members. The City Manager is hereby
authorized to sign the agreement on behalf of the City.
SECTION 2. The Council further grants the City Manager the authority to approve
future operational amendments to PA-5, during the remainder of the fifteen-year assignment
period through January 31, 2024. Such authority will be limited to amendments that do not
change the City’s post-layoff period standing or detrimentally impact the City’s contractual
rights.
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*NOT YET APPROVED*
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SECTION 3. The Council finds that the adoption of this resolution does not constitute
a project under Section 21065 of the California Environmental Quality Act (CEQA) and the CEQA
Guidelines, and therefore, no environmental assessment is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ ___________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ ___________________________
Senior Deputy City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative
Services