sr-062210-1jCity Council Meeting: June 22, 2010_
Agenda Item: ~'-'J
To: Mayor and City Council
From: Dean Kubani, Director Office of Sustainability and the Environment
Subject: Modification of Commerce Energy Agreement for the Purchase of
Renewable Electricity for City Electric Accounts
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a modification to:
1. Contract 8604 (CCS) with Commerce Energy for the purchase of renewable
electricity for City facilities to extend the term through September 30, 2010; and
2. negotiate and execute a one year agreement with Commerce Energy for the
electric accounts transferred to direct access under SB 695.
Executive Summary
On July 28, 2009, the City renewed its contract with Commerce Energy for 100%
renewable energy for all City electrical accounts at a fixed price of $0.07275 per kilowatt
hour through June 30, 2010. The three month extension through September 30, 201.0
will allow sufficient time to complete a solicitation process and execute a new contract
for renewable electricity. The fixed price for the three month extension is $0.07085 per
kilowatt hour.
The enactment of SB 695 reopened the retail electricity direct access market for
nonresidential customers for the first time since direct access was stopped in 2001. On
April 16, 2010, the direct access market was reopened and City electrical accounts
established since 2001 were transferred to Commerce Energy effective June 1, 2010.
Commerce will provide 100% renewable energy for these accounts for a one year
period at a fixed price of $0.07165 per kilowatt hour. The change to this new rate will
result in savings to the City of approximately $14,000 over the course of the three
month extension period.
®iscussion
The City has purchased renewable energy for its electrical accounts since 2001 as a
direct access customer. The current contract with Commerce Energy for the purchase
of renewable electricity ends June 30, 2010. Staff and an energy consultant are in the
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midst of a solicitation process to identify potential renewable energy service providers
available in the current direct access market. The three month extension through
September 30, 2010 will provide sufficient time to complete the contract negotiation and
execution process. Staff will return to Council for approval of the new contract in July.
On October 11, 2009, SB 695 was signed into law allowing a partial re-opening of the
direct access market. The bill represents a compromise between utilities, consumer
groups and business interests by offering the potential for industrial and commercial
customers to lock in favorable electricity rates from non-utility suppliers. The City has
been purchasing renewable energy certificates for the electrical accounts opened since
2001 when the direct access market was stopped under the Commerce Energy
contract. On April 16, 2010, the direct access market briefly reopened and Commerce
Energy successfully transferred the remaining 120 accounts. Commerce Energy will
provide 100% renewable energy for these accounts effective June 1, 2010 through May
31, 2011 at a fixed price of $0.07165 per kilowatt hour. At that time, these accounts will
be phased into the contract with the energy service provider currently being selected
through a solicitation process.
Financial Impacts & Budget Actions
Funds for the purchase of electricity during FY 09-10 and FY 10-11 are available in
various departmental accounts.
Prepared by: Susan Munves, Energy and Green Building Programs Administrator
Approved:
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Dean Kubani
Director, Office of Sustainability and the
Environment
Forwarded to Council:
_~--~
Rod Gould
City Manager
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Reference Contract No.
9231 (CCS) & Amended
Contract No. 8604 (CCS).