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HomeMy WebLinkAboutD-4. RPS Exchange With the City of ColtonD-4 CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES DATE: OCTOBER 23, 2017 SUBJECT: EXCHANGE OF RENEWABLE PROJECT PARTICIPATION SHARES WITH THE CITY OF COLTON SUMMARY: In an effort to minimize scheduling and administrative costs, Azusa Light & Water (ALW) and the City of Colton (Colton) desire to swap their respective 2 MW shares in two renewable projects - Astoria 2 and DSR2. Accordingly, Staff is asking for authorization to enter into an arrangement to exchange Azusa's 2 megawatt (MW) share in the Astoria 2 solar project for Colton's 2 MW share in the DSR2 solar project. The exchange will result in a projected savings of $600,000 to ALW over the term of these projects due to consolidated scheduling of the projects' output. The proposed action authorizes the Director of Utilities to execute and administer the Astoria 2 and DSR2 Project Share Exchange Agreement with the City of Colton. RECOMMENDATION: Staff recommends the Utility Board approve the following action: 1) Authorize the Director of Utilities to execute and administer the Astoria 2 and DSR2 Project Share Exchange Agreement with the City of Colton, including preparation and execution of related documents, as necessary, in a form acceptable to the City Attorney. DISCUSSION: To comply with state law, ALW and the City of Colton have entered into a number of long tenn power purchase agreements (PPAs) and power sales agreements (PSAs) for off-take of energy from renewable energy projects. As is true with most Southern California municipal utilities, in order to get better pricing Azusa and Colton typically enter into renewable power sales agreements (PSAs) with SCPPA. UB-17 APPROVED UTILITY BOARD 10/23/2017 Colton and ALW Swap of Project Shares October 23, 2017 Page 2 Azusa and Colton have equal 2 MW shares in two SCPPA-originated 20 year agreements which commenced and will terminate at the same time. Both current and projected energy production amounts from the two projects are similar. The proposed exchange of project shares would be achieved by: 1) terminating Colton's DSR2 PSA with SCPPA and increasing Azusa's DSR2 PSA share from 3 MW to 5 MW, and 2) terminating Azusa's Astoria 2 PSA with SCPPA and increasing Colton's Astoria 2 PSA share from 5 MW to 7 MW. The difference in the projects energy pricing would be addressed in a bilateral "contract for differences" between Azusa and Colton, a draft copy of which is attached herein. FISCAL IMPACT: Under the proposed swap, ALW expects to save approximately $600,000 over the remaining term of the projects due to reduced scheduling costs. Prepared by: Reviewed and Approved: Yarek Lehr, P.E. George F. Morrow Assistant Director of Resource Management Director of Utilities Reviewed and Approved: Don Penman Interim City Manager Attachment: 1) Astoria 2 and DSR2 Project Share Exchange Agreement between Colton and Azusa UB-18 Astoria 2 and DSR2 Project Share Exchange Agreement This Astoria 2 and DSR2 Project Share Exchange Agreement {"Agreement") Is entered Into as of November 1,2017, by and between the City of Azusa acting through Its Light & Water Department (ALW), a municipal corporation ("Azusa"), and the City of Coiton, a municipal corporation ("Colton"). Azusa and Colton may be referred to herein Individually as "Party" and collectively as "Parties". RECITALS A. The Parties contract for energy off-take from the Astoria 2 and DSR 2 photovoltaic projects ("Projects") through their respective Power Sales Agreements (PSAs) with Southern California Public Power Authority (SCPPA). B. SCPPA contracts for energy off-take from the DSR2 project through an Antelope DSR2 LLC and SCPPA Power Purchase Agreement (PPA) dated July 16,2015, Azusa and Colton are the only entitles receiving energy shares from the project under their respective PSAs with SCPPA. C. SCPPA contracts for energy off-take from the Astoria 2 project through a RE Astoria 2 LLC (as "Seller") and SCPPA, Power and Water Resources Pooling Authority, City of LodI, City of Corona, City of Moreno Valley, and City of Rancho Cucamonga PPA dated July 23, 2014. Azusa, Banning, Colton, and Vernon receive energy shares from the project under their respective PSAs with SCPPA. D. Parties desire to exchange their respective 2 MW participation shares In the Projects. E. The Projects' Commercial Operation Dates (late 2016) and associated contracts durations (20 years) are similar. F. Projects are located In close geographic proximity and their expected performance and efficiencies are similar. G. Prerequisite to this Agreement taking effect are completion of amendments to the corresponding PSAs to reference this transaction. AGREEMENT NOW, THEREFORE, In consideration of the mutual covenants hereinafter contained, and for other good and valuable consideration, the Parties agree as follows: 1. Effective date, term, and termination a. The Effective Date of this Agreement shall be January 1,2018, unless otherwise agreed between the Parties, or the date all required agreements have been executed by all Parties, whichever Is later ("Effective Date"). Page 1 of 3 UB-19 b. The Agreement and Its effective date are contingent upon the execution of the corresponding SCPPA PSAs becoming effective on or before January 1,2018. c. The term of this agreement shall be until the earlier of (I) December 31, 2036 or (11) the date on which either of the two underlying Power Purchase Agreements (PPAs) between SCPPA and the respective project developers terminates under Its own terms and without extension or time allowed by PPA for an energy deficiency makeup. d. In the event one of the underlying PPAs or Power Sales Agreement (PSAs) terminates prior to December 31, 2036, this agreement shall terminate Immediately and a final true up of all costs and monies between the Parties shall be completed within 90 days of the termination. e. Each party shall be responsible for any Invoices related to CAISO settlements for energy and/or scheduling services rendered or received prior to the "Effective Date". f. Notwithstanding any other provision In the Agreement, the termination of this Agreement shall be extended until all required payments hereunder are satisfied. g. This Agreement may be amended upon Parties' mutual written consent. h. This Agreement may be terminated early upon Parties' mutual written consent. 2. Other terms and conditions a. Colton transfers to Azusa Its 2 MW participation share In the DSR 2 photovoltaic project. Accordingly, Azusa shall become a sole DSR2 project off-taker at 5 MW. A new Azusa- SCPPA PSA for DSR 2 shall be drafted accordingly by SCPPA and become effective January 1,2018 reflecting Azusa as a sole SCPPA counterparty at 5 MW. Colton's PSA with SCPPA for DSR2 shall be terminated effective January 1, 2018. b. Azusa transfers to Colton Its 2 MW participation share In the Astoria 2 photovoltaic project. Accordingly, Colton shall Increase Its participation share In the Project from 5 MW to 7 MW and Azusa will no longer participate In the Astoria project. A new Colton- SCPPA PSA for Astoria 2 shall be drafted and become effective January 1,2018 reflecting Colton's participation change to 7 MW. Azusa's Astoria 2 PSA with SCPPA shall be terminated. Azusa's PSA with SCPPA for Astoria 2 shall be terminated effective January 1, 2018. c. Following the Effective Date of this Agreement, Azusa shall have no rights or obligations In Astoria 2 project. d. Following the Effective Date of this Agreement, Colton shall have no rights or obligations In the DSR2 Agreement Page 2 of 3 UB-20 e. Azusa and Colton agree to adjust for the price difference between the two projects as follows: Each year by January 31, or at the time all CAISO project metered data for the previous year is available, whichever is later, Azusa shall pay Colton $9.25 for each MWh of Colton's 2/5 share the total DSR2 production for the preceding calendar year or any portion thereof during the term of this agreement. Example of payment for differences (for reference only): If the total DSR2 energy production In CY 2018 was 14,244 MWh, Azusa would pay Colton by January 31, 2019 the following amount: $9.25* (2/5)*14,244 MWh = $52,702.80 f. In cases of disputes arising from interpretation of this Agreement or either Party's non- performance under the terms of this Agreement, the Parties shall first attempt to resolve such disputes themselves and then, if unable to resolve, seek alternative means of resolution. g. Each Party shall notify as soon as possible the other Party should changes/amendments to their respective PSAs and/or the underlying PPAs have material effect(s) on this agreement or Parties' performance under the terms of this agreement. IN WITNESS WHEREOF, each of the Parties have caused this Agreement to be executed by its respective duly authorized officers. City of Azusa City of Colton William Smith City Manager Attest by:Attest by: City Clerk Approved as to Form: City Clerk Approved as to Form: City Attorney City Attorney Page 3 of 3 UB-21