SR 01-25-2022 3C
City Council Report
City Council Meeting: January 25, 2022
Agenda Item: 3.C
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To: Mayor and City Council
From: Rick Valte, Public Works Director, Public Works, Office of Sustainability & the
Environment
Subject: Authorization to Reinstate Enabling Agreement and Execute a Purchase
Order with 3 Phases Renewables for Direct Access Electricity for Municipal
Facilities
Recommended Action
Staff recommends that the City Council Authorize the Procurement Manager to:
1. Amend the term of the enabling agreement with 3 Phases Renewables to
procure electricity through Direct Access; and
2. Negotiate and execute a purchase agreement with 3 Phases Renewables to
procure power for up to six months, in an amount not to exceed $1.5 million.
Summary
The City of Santa Monica purchases 100% green power for City-owned electricity
accounts through a Direct Access power agreement. Direct Access allows the City to
purchase electricity from a third party while paying Southern California Edison (“SCE”)
for transmitting the electricity to City facilities. Under Direct Access, the City can
negotiate power rates directly with certain service providers. The City has procured
power through direct access agreements since 1999 to transition to renewable energy
and realize savings on electricity costs. The current power pricing for City-owned
accounts will expire on July 1, 2022.
The City negotiated its current pricing through 3 Phases Renewables, a Direct Access
electricity service provider. Staff now seeks to amend the agreement with 3 Phases
Renewables to extend the agreement for an additional six months until January 1, 2023.
This would enable staff to negotiate a short-term supply contract and provide time to
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issue a new request for proposals from additional electricity service providers.
This agreement only negotiates rates for City-owned electricity accounts. Participation
in the Direct Access program has no effect on rates set by Southern California Edison
or Clean Power Alliance customers.
Discussion
The City manages 570 different municipal accounts through the Direct Access power
agreement across all City facilities, including City buildings, parks, streetlights, utilities,
maintenance yards, and other facilities. Since 1999, maintaining enrollment in Direct
Access has enabled the City to save millions of dollars and avoid approximately
118,322 metric tons of carbon dioxide emissions from electricity generation, making it
one of the City’s most impactful sustainability policies.
The City currently has a two-year Direct Access Purchase Agreement with 3 Phases
Renewables for renewable electricity at a flat rate of $0.0692 per kilowatt hour (kWh).
For comparison, the average price of renewable electricity from the Clean Power
Alliance is $0.108 per kWh. Multiply that savings by the quantity of kWhs the City
typically consumes annually via Direct Access (21 million kWh) and the total savings the
City has received over the term of the existing two-year contract is approximately $1.6
million.
Based on energy market conditions and indicative pricing from Electricity Service
Providers, staff anticipates the cost per kWh would be higher in the second half of 2022,
in the range of $0.12 to $0.14 per kWh resulting in an estimated six-month cost of up to
$1.5 million for electricity. The City’s approach is to only procure a six-month contract
until the winter months (Q4 of 2022) when staff can negotiate for 12, 24, or 36-month
terms. An energy contract that starts and ends in winter months is expected to result in
lower rates and a long-term contract hedges against volatility. Savings from Direct
Access cannot be guaranteed due to the volatility of the energy market, but this
approach is expected to mitigate utility rate increases paid by the City over time.
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Vendor Selection
On October 20, 2014, the City published a request for qualifications (RFQ) to furnish
and deliver electricity as a commodity via Direct Access as required by the Office of
Sustainability and the Environment, which is responsible for ensuring the City's
electricity is sourced from 100% renewable energy sources. The RFQ was posted on
the City's online bidding site, and notices were sent directly to State-authorized
electricity service providers in accordance with City Charter and Municipal Code
provisions. A total of 22 vendors were notified and 15 vendors downloaded the bid.
Three statements of qualifications were received and evaluated based on the criteria in
SMMC 2.24.072, including price, previous experience, capacity and skill, ability to
deliver, quality of product, and compliance with City specifications and scope of work.
Based on these criteria, 3 Phases Renewables was the only responsive vendor that
executed an enabling agreement with the City. The Enabling Agreements do not contain
any pricing or cost but allow the City to proceed in completing a purchase agreement
that establishes power costs for participating City electricity accounts. The Enabling
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Agreement with 3 Phases Renewables expired on September 1, 2020 after the City
secured power rates through July 1, 2022.
With Council approval, the City would extend the term of the Enabling Agreement with 3
Phases Renewables until January 1, 2023. This would enable staff to seek the best
possible price for Direct Access electricity generated from renewable sources for the six
month period between July 1, 2022 and January 1, 2023. Concurrently, staff would
publish a new RFQ to select a short-list of prequalified Direct Access Electricity Service
Providers to seek new pricing in Q4 of 2022 for a 12, 24, or 36-month term.
Past Council Actions
Meeting Date Description
02/24/2015 City Council authorized the City Manager to approve
enabling agreements with a pre-qualified list of electricity
service providers and to negotiate and execute power
purchase agreements for municipal facilities.
Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from various funds to increase the
amount of the agreement with 3 Phases Renewables. Future year funding is contingent
on Council budget approval.
Agreement Modification Request
Agreement #
Current Authorized
Amount Not to
Exceed
FY 2021-22 Budget
Modified Request
Amount
Dept/CIP Account # Total Revised
Contract Amount
10157 $15 million $1.5 million Various $16.5 million
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Prepared By: Drew Johnstone, Sr. Sustainability Analyst
Approved
Forwarded to Council
Attachments:
A. February 24, 2015 Staff Report
B. 3PR Oaks Initiative Form
C. 3Phases Enabling Agreement-Santa Monica 070115-executed
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10/18/21, 2:13 PM Procure Electricity through Direct Access - City of Santa Monica
https://www.smgov.net/departments/council/agendas/2015/20150224/s2015022403-H.htm 1/5
City Council Report
City Council Meeting: February 24, 2015
Agenda Item: 3-H
To: Mayor and City Council
From: Dean Kubani, Sustainability Manager
Subject: Execute enabling agreements to procure electricity through Direct
Access
Recommended Action
Staff recommends that the City Council authorize the City Manager to:
1. Approve enabling agreements with 3 Phases Renewables, a California-based
company; Constellation NewEnergy Inc, a California-based company; and Shell
Energy North America, a California-based company, to be a part of the pre-
qualified list of vendors to procure electricity through Direct Access.
2. Select the best bidder from the pre-qualified list on an annual basis and negotiate
and execute a purchase agreement with that vendor in order to procure power for
that year, based on the best bid. This could be the same vendor each year, or
another pre-qualified vendor, depending on the bids received.
3. Negotiate and execute a purchase agreement with one of the vendors on the pre-
qualified list on an annual basis: 3 Phases Renewables, a California-based
company; Constellation NewEnergy Inc, a California-based company; or Shell
Energy North America, a California-based company, in an amount not to exceed
$3 million for one year, with four additional one-year renewal options in the amount
of $3 million, for a total amount not to exceed $15 million over a five-year period
with future year funding contingent on Council budget approval.
Executive Summary
Consumption of electricity generates pollution and greenhouse gases from the
burning of fossil fuels, whereas energy from renewable resources like solar, wind,
small hydroelectric, geothermal and biomass, generates significantly less by
comparison. Conventional grid-tied electricity from Southern California Edison (SCE)
provides an energy portfolio with a limited percentage of electricity generated from
renewable resources. In 2013, a majority of SCE’s power was sourced from natural
gas, nuclear, coal and large hydroelectric, with 22% coming from eligible renewable
sources. Procurement of electricity via Direct Access has allowed the City to source
100% of its electricity from renewable sources. At the direction of City Council, and
consistent with the goals established in the Sustainable City Plan, Santa Monica has
been purchasing 100% green power since 1999.
3.C.a
Packet Pg. 31 Attachment: February 24, 2015 Staff Report (4873 : Reinstate Enabling Agreement with 3 Phases Renewables for Direct Access Electricity)
10/18/21, 2:13 PM Procure Electricity through Direct Access - City of Santa Monica
https://www.smgov.net/departments/council/agendas/2015/20150224/s2015022403-H.htm 2/5
Historical procurement requirements limited the City’s ability to maintain long-term
contracts with vendors and procure electricity at time-sensitive rates. The current
contract with Commerce Energy is set to expire May 31, 2015. In anticipation of this,
and to improve the procurement process in the future, staff is seeking to establish a
pre-qualified list of vendors from which pricing can be solicited on an annual basis
over the next five years. By maintaining a contractual relationship with prequalified
vendors and bidding electricity rates annually, the City can save time and money in
the process of procuring green power.
A formal qualification process for Energy Service Providers was completed on
December 12, 2014. This process yielded a short list of Energy Service Providers that
staff recommends Council approve to enable the City to seek the best price for green
power annually from the established list.
Background
Santa Monica has been a Direct Access electricity customer since Council authorized
such an arrangement on February 23, 1999. Direct Access status allows the City to
purchase electricity from a third party while paying Southern California Edison (SCE)
for transmitting the electricity to City facilities. Generation charges make up roughly
half of the total electric bill for City facilities with transmission charges making up the
other half.
Renewable Energy Certificates (RECs) are purchased on behalf of the City and are
certified by Green-e to verify the source of supply. RECs can be purchased for
electricity that is generated via solar, wind, biomass and small hydroelectric plants.
Green power, provided in this manner, is an important component of the City’s
sustainability efforts.
The City currently has a Direct Access contract with Commerce Energy for renewable
electricity. On November 9, 2010, Council awarded Bid # 9292 to Commerce Energy
at a rate of $0.0665 per kilowatt hour (kWh) for accounts contracted October 1, 2010
through September 30, 2012, and $0.0700 (kWh) for new accounts switched to Direct
Access under SB 695, to provide renewable electricity for municipal facilities for a two
year term through May 31, 2013. SB 695 enabled existing Direct Access customers,
including the City of Santa Monica, to enroll accounts that had been activated since
the suspension of Direct Access enrollment in 2001.
On October 2, 2012, Council authorized the first modification of the contract with
Commerce Energy in order to procure power as a Direct Access customer. The
agreement extended the term and reduced the price of power from $0.0665 to
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Packet Pg. 32 Attachment: February 24, 2015 Staff Report (4873 : Reinstate Enabling Agreement with 3 Phases Renewables for Direct Access Electricity)
10/18/21, 2:13 PM Procure Electricity through Direct Access - City of Santa Monica
https://www.smgov.net/departments/council/agendas/2015/20150224/s2015022403-H.htm 3/5
$0.0602 per kWh and from $0.0700 to $0.0661 per kWh for the accounts added in
2012 through May 31, 2014. On May 13, 2014, Council authorized the second
modification of the contract with Commerce Energy in order to again procure power as
a Direct Access customer. The agreement extended the term and established a
single rate across all accounts at $0.0705 per kWh through May 31, 2015.
Staff compared rates paid to Commerce Energy versus the weighted average rate for
SCE for power used in 2013. Table 1 below highlights the rates from each source as
well as the estimated savings achieved through the purchase of energy as a Direct
Access customer.
Table 1. 2013 Energy Rate Comparison
Usage Rates SavingsDirect Access SCE
Approximately
25,000,000
kWh
$0.0602-$0.0661/kWh $0.0887/kWh
Estimated
Annual Cost
(usage x rate)
$1,505,000-$1,652,500 $2,217,500 $565,000-$712,500
As illustrated in Table 1: 2013 Energy Rate Comparison, the City used approximately
25 megawatt hours or 25 million kWh in 2013. The weighted average SCE rate for
that period was $0.0887/kWh and the Direct Access rate ranged between $0.0602
and $0.0661/kWh. Purchasing power using the Direct Access model saved the City
between $565,000 and $712,500 in 2013.
Discussion
Procuring green power via Direct Access helps the City meet its commitment to
sustainability and reducing greenhouse gas emissions related to municipal operations.
Additionally, Direct Access has enabled the City to save money by procuring green
power at rates that are less expensive than conventional electricity provided by SCE.
Approval of 3 Phases Renewables, Constellation NewEnergy Inc, and Shell Energy
North America to be a part of the pre-qualified list of vendors for Direct Access
electricity supply would allow the City to negotiate and execute enabling agreements
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Packet Pg. 33 Attachment: February 24, 2015 Staff Report (4873 : Reinstate Enabling Agreement with 3 Phases Renewables for Direct Access Electricity)
10/18/21, 2:13 PM Procure Electricity through Direct Access - City of Santa Monica
https://www.smgov.net/departments/council/agendas/2015/20150224/s2015022403-H.htm 4/5
with each of the vendors. The enabling agreement does not contain any pricing or
cost, but would allow the City to proceed in completing a purchase agreement.
Staff would annually request pricing for electricity from renewable resources from
these vendors and select the best bid. The annual purchase agreement in the first
year is expected to be less than $2 million. Energy prices fluctuate daily in an open
market, so staff recommends giving the City Manager authority to negotiate and
execute the purchase agreement in an amount not to exceed $3 million to allow for
volatility in market pricing and possible changes in energy use in City facilities. Each
year, staff would negotiate and execute a purchase agreement with the selected
vendor in an amount not to exceed $3 million for one year for a total amount not to
exceed $15 million over a five-year period.
Vendor/Consultant Selection
On October 20, 2014, the City published a Request for Qualifications (RFQ) to furnish
and deliver electricity as a commodity via Direct Access as required by the Office of
Sustainability and the Environment, which is responsible for ensuring the City's
electricity is sourced from 100% renewable energy sources. The RFQ was posted on
the City's on-line bidding site, and notices were sent directly to State-authorized
Energy Service Providers in accordance with City Charter and Municipal Code
provisions. Twenty-two vendors were notified, 15 vendors downloaded the bid. Three
statements of qualifications were received and publicly opened on December 5,
2014. Statements were evaluated based on the criteria in SMMC 2.24.072, including
price, previous experience, capacity and skill, ability to deliver, quality of product, and
compliance with City specifications and scope of work. Based on these criteria, three
vendors - 3 Phases Renewables, Shell Energy and Constellation Energy - are
recommended as best bidders to be on the pre-qualified list to provide electricity via
Direct Access procurement due to their experience in selling the desired products,
flexibility in meeting customers' needs, diversity and strength of energy portfolios,
financial stability and references.
Next Steps
With Council approval, the City would enter into enabling agreements with each of the
three companies on the pre-qualified list of vendors for Direct Access electricity
supply. Before May 31, 2015, staff would seek the best possible price for electricity
generated from renewable resources for one year from the pre-qualified list of
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Packet Pg. 34 Attachment: February 24, 2015 Staff Report (4873 : Reinstate Enabling Agreement with 3 Phases Renewables for Direct Access Electricity)
10/18/21, 2:13 PM Procure Electricity through Direct Access - City of Santa Monica
https://www.smgov.net/departments/council/agendas/2015/20150224/s2015022403-H.htm 5/5
vendors. Staff would select the best bid and proceed to enter into a purchase
agreement with the selected vendor. This process would be repeated each year for
the following four years to identify the best available pricing for energy for the
upcoming year from this list of vendors and establish a new purchase agreement with
that vendor in order to purchase power for that year. This could be the same vendor
each year or another pre-qualified vendor, depending on the proposals received.
Financial Impacts & Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action. The purchase agreement to be executed before May 31, 2015
is expected to be less than $2 million per year. Funds are included in departments’
existing budgets in various accounts for electricity charges. Energy prices fluctuate
daily in an open market, so staff recommends giving the City Manager authority to
negotiate and execute one purchase agreement each year in an amount not to
exceed $3 million to allow for volatility in market pricing and possible changes in
energy use in City facilities. Budget authority for subsequent years will be requested in
each budget cycle for Council approval. Staff will return to Council if specific budget
actions are required in the future.
Prepared by: Garrett Wong, Acting Sustainability Analyst
Approved: Forwarded to Council:
Dean Kubani
Sustainability Manager
Elaine Polachek
Interim City Manager
Attachments:
· Direct Access Scoresheet
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Packet Pg. 35 Attachment: February 24, 2015 Staff Report (4873 : Reinstate Enabling Agreement with 3 Phases Renewables for Direct Access Electricity)
CITY OF SANTA MONICA
OAKS INITIATIVE NOTICE
NOTICE TO APPLICANTS, BIDDERS, PROPOSERS
AND OTHERS SEEKING DISCRETIONARY PERMITS, CONTRACTS,
OR OTHER BENEFITS FROM THE CITY OF SANTA MONICA
Santa Monica’s voters adopted a City Charter amendment commonly known as
the Oaks Initiative. The Oaks Initiative requires the City to provide this notice and
information about the Initiative’s requirements. You may obtain a full copy of the Initiative’s
text from the City Clerk.
This information is required by City Charter Article XXII—Taxpayer Protection. It
prohibits a public official from receiving, and a person or entity from conferring, specified
personal benefits or campaign advantages from a person or entity after the official votes,
or otherwise takes official action, to award a “public benefit” to that person or entity. The
prohibition applies within and outside of the geographical boundaries of Santa Monica.
All persons or entities applying or receiving public benefits from the City of Santa
Monica shall provide the names of trustees, directors, partners, and officers, and names
of persons with more than a 10% equity, participation or revenue interest. An exception
exists for persons serving in those capacities as volunteers, without compensation, for
organizations exempt from income taxes under Section 501(c)(3), (4), or (6), of the
Internal Revenue Code. However, this exception does not apply if the organization is a
political committee or controls political committees. Examples of a “public benefit” include
public contracts to provide goods or services worth more than $25,000 or a land use
approval worth more than $25,000 over a 12-month period.
In order to facilitate compliance with the requirements of the Oaks Initiative, the City
compiles and maintains certain information. That information includes the name of any
person or persons who is seeking a “public benefit.” If the “public benefit” is sought by an
entity, rather than an individual person, the information includes the name of every person
who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten percent
interest in the entity. Therefore, if you are seeking a “public benefit” covered by the Oaks
Initiative, you must supply that information on the Oaks Initiative Disclosure Form. This
information must be updated and supplied every 12 months.
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Packet Pg. 36 Attachment: 3PR Oaks Initiative Form (4873 : Reinstate Enabling Agreement with 3 Phases Renewables for Direct Access Electricity)
CITY OF SANTA MONICA
OAKS INITIATIVE DISCLOSURE FORM
In order to facilitate compliance with the requirements of the Oaks Initiative, the City
compiles and maintains certain information. That information includes the name of any
person or persons who is seeking a “public benefit.” If the “public benefit” is sought by
an entity, rather than an individual person, the information includes the name of every
person who is: (a) trustee, (b) director, (c) partner, (d) officer, or has (e) more than a ten
percent interest in the entity.
Public benefits include:
1. Personal services contracts in excess of $25,000 over any 12-month period;
2. Sale of material, equipment or supplies to the City in excess of $25,000 over a 12-
month period;
3. Purchase, sale or lease of real property to or from the City in excess of $25,000
over a 12- month period;
4. Non-competitive franchise awards with gross revenue of $50,000 or more in any
12-month period;
5. Land use variance, special use permit, or other exception to an established land
use plan, where the decision has a value in excess of $25,000;
6. Tax “abatement, exception, or benefit” of a value in excess of $5,000 in any 12-
month period; or
7. Payment of “cash or specie” of a net value to the recipient of $10,000 in any 12-
month period.
Name(s) of persons or entities receiving public benefit:
Name(s) of trustees, directors, partners, and officers:
Name(s) of persons with more than a 10% equity, participation, or revenue interest:
Prepared by: ____________________________Title: __________________________
Signature: ______________________________________ Date: ________________
Email: ____________________________________ Phone: ____________________
FOR CITY USE ONLY:
Bid/PO/Contract # ____________________________ Permit # ___________________________
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Packet Pg. 37 Attachment: 3PR Oaks Initiative Form (4873 : Reinstate Enabling Agreement with 3 Phases Renewables for Direct Access Electricity)
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