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HomeMy WebLinkAboutMINUTES - 10242000 - C47 417 Ta: BOARD OF SUPERVISORS FROM: Barton J. Gilbert, Director of General Services Contra Costa DATE: October 24, 2000 County SUBJECT: APPROVE CONTINUATION IN ABAG POWER FOR PURCHASE OF ELECTRICITY THROUGH A FIXED PRICE AGREEMENT FOR GREEN POWER SPECIFIC REQUESTS OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: Approve continuation in the ABAG POWER electricity power pool program through December 31, 2001 for provision of electricity generation which will be through a fixed price contract with Calpine for green power. BACKGROUND AND REASONS FOR RECOMMENDATION: Through six months of uncertainty of how ABAG POWER could continue to fimetion with an electricity market that saw prices skyrocketing and the promise of cheaper rates through deregulation becoming a fairy tale, Calpine offered a fixed price contract. This contract is for purchase of electricity from Calpine, which generates electricity from its geothermal plants in Northern California, at a fixed price of $.081/kwh from September 1, 2000 through December 31, 2001. Previous to the offer from Calpine, ABAG POWER could not obtain a contract with other electricity generators unless its members paid their monthly bills a month ahead at the much higher prices that the summer brought. It appeared that there was no viable solution to continuing with an electricity power pool. The ABAG POWER Executive Committee, of which the Deputy General Services Director is a member, voted in August to suspend operations unless a solution could be found that would protect agencies from the billing in advance and the probable high prices for electricity that are expected next summer, similar to this year. With Calpine's offer of a fixed price contract of$.081/kwh for a 16 month period without the requirement to pay in advance, the Executive Committee voted to accept this contract. Calpine was unwilling to offer a four- month agreement except at a much higher price. It was willing to offer the $.081/kwh price even though it knew that agencies in ABAG POWER.could choose to leave the program at the end of December 2000. CONTINUED ON ATTACHMENT X SIGNATURE: k6w& RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD a October 24 2" APPROVED AS RECOMMENDED XX OTHER VOTE OF SUPERVISORS XY UNANIMOUS{ABSENT ) AYES: NOES: ABSENTS: ABSTAIN: MEDIA CONTACT: CC: General Services Administration I HEREBY CERTIFY THAT THIS IS A TRUE General Services Accounting AND CORRECT COPY OF AN ACTION TAKEN ABAG POWER Program Manager AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. ATTESTED October':24, 2" PHIL BATC ELOR,CLERK OF THE BOARD OF SUPERVIS R AND COUNTY ADMINISTRATOR BY' DEPUTY F:\BOABAG POWERGreenPowerCalpine.doc Page 1 of 2 M382(10/88) PPROVE CONTINUATION IN ABAG POWER FOR PURCHASE OF October 24, 2000 ELECTRICITY THROUGH A FIXED PRICE AGREEMENT The ABAG POWER program manager requested estimates from energy brokers on what electricity prices might be in 2001 to help the Committee evaluate the proposal from Calpine. The brokers' projections forecast that in the late spring to early fall, the heavy usage months, prices will rise to $.12/kwh with a low of$.06/kwh in the other months, when there is lower usage. These estimates are conservative, as the high in June was $.15/kwh. With no significant generation coming on line in 2001 and the weather not expected to be different from 2000, it is more likely that the PX prices will be at the $.15/kwh or even higher. With a fixed price of $.081 from Calpine it appears that ABAG POWER 2000, members should save money with this fixed price contract. ABAG POWER members can protect themselves against the high costs of heavier usage in the third and part of the second and fourth quarters although may pay higher prices than Calpine's during the lower usage months. Overall there should be savings. In addition to the potential to save money on the cost of generation, ABAG POWER members are able to purchase green power, renewable energy, for 90 to 100% of their purchases from Calpine which has geothermal plants in Northern California. ABAG POWER already had a contract for purchase of some green power from Calpine. Alternative providers, including ABAG POWER members can receive a rebate through the State Renewable Energy Program, which for ABAG POWER members for 99/00 was $1,474,636. This green power rebate program is not available to PG&E customers. Agencies have a choice to leave the electricity portion of ABAG POWER for next year if they notify ABAG no later than November 1, 2000 that they want to opt out. If Contra Costa were to opt out, we would revert to PG&E. If we revert to PG&E, then we are unable to obtain green power and the related rebates. It is difficult to compare prices to what we would pay PG&E. PG&E is still under a rate freeze but has requested a $2.9 billion rate increase to cover costs that it says it has encountered because it has to buy power at the high PX prices. We think Calpine offers a better deal. In addition to the costs of generation, there are "pass through" costs for transmission, distribution, nuclear decommissioning, public purpose program, and competitive transition charge all of which must be included from any energy provider, whether PG&E or ABAG POWER. In addition, ABAG POWER has program expenses of$.006/kwh. We think this will be a cost-effective price for next year. Although there is no absolute assurance that we will save money with Calpine, it appears likely that we will and that we also will be using green power generated from Calpine's own geothermal plants, and can receive green power rebates. For these reasons the recommendation is to continue with ABAG POWER through 2001. During the year ABAG POWER member agencies will be evaluating what future options are available past 2001. When PG&E pays off its stranded costs and offers pricing from the open market, it is unknown what will happen. A concern is what happened in San Diego with the doubling of prices and whether that could happen with PG&E prices. Agreements to purchase electricity through multi-year contracts in power pools might offer better pricing structures. FABOABAG POWERGreenPowerCalpine.doc Page 2 of 2 M382(10/88)