HomeMy WebLinkAboutE-4.1 Approval To Purchase Resource Adequacy from City of Palo AltoCONSENT CALENDAR E-4
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: TIKAN SINGH, GENERAL MANAGER
DATE: JUNE 27, 2022
SUBJECT: APPROVAL TO PROCURE A MULTI-YEAR RESOURCE ADEQUACY
PRODUCT FROM CITY OF PALO ALTO
BACKGROUND:
As a load serving entity (LSE) within the California Independent System Operator’s (CAISO)
Balancing Area (BA), Azusa Light and Water (ALW) is subject to several mandatory Western
Electric Coordinating Council (WECC) and CAISO operational requirements. One of such
requirements compels all LSEs to secure specific amounts of generating capacity proportional to
their 1) demand (system resource adequacy) and 2) quantity of procured intermittent renewable
resources. LSE’s are also required to procure specified quantities of generating capacity based on
the LSE’s location within the California grid (local resource adequacy). Although ALW can derive
limited amounts of required capacity from resources under its control, the utility has to procure
most of it from the market.
RECOMMENDATION:
Staff recommends the Utility Board take the following action:
1) Approve the purchase of Resource Adequacy from City of Palo Alto; and
2)Authorize the General Manager to execute the Resource Adequacy Agreement
between Azusa and City of Palo Alto.
ANALYSIS:
Based on CAISO annual engineering studies, Resource Adequacy (RA) capacity has to be derived
from generating resources to meet peak demands. Generating resources interconnected within or
near the Los Angeles Basin meet Azusa’s local requirements while all generating resources with
Approved
Utility Board
06/27/2022
Azusa & Palo Alto Resource Adequacy Agreement
June 27, 2022
Page 2
deliverability potential to the CAISO grid meet utilities’ system requirements. Azusa meets its local
capacity requirement from several contracted renewable projects operating in the vicinity of the Los
Angeles Basin – Garnet Wind, Mesa Wind (expected 2023), MWD Hydro, San Dimas Hydro,
Antelope, Big Sky, Summer Solar, DSR2 solar projects and a mid-term local capacity purchase
from NRG Energy.
Azusa has ongoing capacity needs to meet its monthly peak demands particularly in the warmer
months. While considering the newly expected capacity from its Mesa RP30 wind facility, staff
finds the need to procure additional capacity. The 3-year RA product offered and negotiated with
City of Palo Alto for the May-October period helps Azusa in its endeavor to meet peak capacity
requirements.
Staff recommends the Utility Board approve the purchase of RA capacity from City of Palo Alto at
an annual cost of $574,200 starting May 2023 for three years and authorize the General Manager to
execute the confirmation agreement with City of Palo Alto.
FISCAL IMPACT:
The annual cost for the capacity product is $574,200. The annual costs will be budgeted
accordingly under Power Resources budget account #33-40-775-550-6590.
Prepared by: Reviewed and Approved:
Richard Torres Tikan Singh
Assistant General Manager – Resource Management General Manager
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachment:
1) Resource Adequacy Agreement