HomeMy WebLinkAbout11 NCPA Western Geo Agenda Item # 11
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Public Utility District
ACTION
To: Board of Directors
From: Stephen Hollabaugh
Date: September 02, 2009
Subject: Consideration of an Amendment to the NCPA Western Geo
Agreement
1. WHY THIS MATTER IS BEFORE THE BOARD
Only the Board can amend this agreement.
Mission Statement Objective:
2. Provide an adequate, reliable and high quality electric supply and distribution
system to meet current and future needs.
5. Manage the District in an environmentally sound manner.
Goals:
2.5 Procure and contract for low cost electric power supplies to reliably meet
current and future loads.
5.1 District will seek power supply from an energy resource mix that satisfies its
Renewable Portfolio Standard (RPS).
2. HISTORY
On February 6, 2008, consideration of a Third Phase Agreement with NCPA for the
Western GeoPower Incorporated Geothermal Power Plant was brought before the
Board. Action was taken to approve the NCPA Third Phase Agreement for an amount
of 1.5% to 3.0% of the output of the WesternGeo power plant; and authorize the
Board President to sign and make any and all non-substantive changes as deemed
necessary per the advice of the General Counsel.
The final agreement (Attachment 1) revised Truckee Donner PUD's share to 2.23%
which equated to 0.57MW at a plant capacity of 25.5 MW. The basic terms of the
Third Phase Agreement are: (1) a take-and-pay form of contract for 20 years; (2)
Participants will purchase the project output at a price of($98.00) per megawatt hour.
3. NEW INFORMATION
NCPA has informed its members within the Western Geo Project of changes to the
Purchase Power Agreement and has sent a letter (Attachment 2) describing the
"Process for Handling Approval of the Western Geo Third Phase Agreement". The
highlights are listed below.
Western Geo has requested modifications to the Power Purchase Agreement (PPA)
executed May 2008 in order to secure additional financing to finish the project. The
modifications contemplate and increase the price from $98 per MWH to $117 per
MWH. The NCPA Commission has provided direction the NCPA General Manager
and General Counsel to modify the Project documents to accommodate this change in
price. The proposed changes to the PPA also require amendments to the existing
Third Phase Agreement (TPA) corresponding to this Project.
Amendments to the Third Phase Agreement (TPA) allow Truckee Donner PUD the
following options:
1) Elect to withdraw from the project;
2) Maintain the same level of participation;
3) Change the level of participation
For any of the actions above, Truckee Donner PUD must take the following steps:
• By September 15, 2009 (suggested date), agendize the item for the Board action;
• By no later than September 20, 2009, arrange for the Board President to execute
the TPA;
• By no later than September 25, 2009, arrange for the executed TPA to be
delivered to NCPA's General Manager, Jim Pope, for execution.
Truckee Donner PUD staff has reviewed the new TPA and believes that the cost is too
high. In reviewing District Goals 2.5 and 5.1, staff believes that renewable resources
may be obtained at a lower price and still satisfy the Renewable Portfolio Standard.
For these reasons, staff will recommend to withdraw from the Western Geo Project.
4. FISCAL IMPACT
If this new Third Phase Agreement (TPA) for the Western Geo Project is approved, it
may cost the District as much as $30 MWH more than a comparable renewable
resource within the NV Energy transmission area. This represents an increase of
approximately $140,000 annual increase. If the District withdraws from the Western
Geo Project, there will be no fiscal impact to the District.
5. RECOMMENDATION
1.) Withdraw from the Western Geo Project and notify NCPA of this decision.
2.) Authorize the Board President to execute the TPA withdrawal from the Western
GeoPower Project.
Atephen Hollabaugh is ael D. Holley
Assistant General Manager General Manager
Attachment 2
Benjamin T. Reyes, II
m e y e r s n a v e riback silver & wilson Attorney at Law
professional law corporation 510.808.2000
MEMORANDUM
VIA E-MAIL
DATE: August 13, 2009
TO: Western Geo Project Participants
FROM: Benjamin T. Reyes, II, NCPA Assistant General Counsel
COPY: James H. Pope, NCPA General Manager
Michael F. Dean, NCPA General Counsel
Ken Speer, NCPA Assistant General Manager
Hari Modi, NCPA Director of Engineering Services
RE: Process for Handling Approval of the Western Geo Power Third Phase Agreement
Introduction
This Memorandum provides you with information and proposed process by which to approve the Amended
and Restated Third Phase Agreement('TPA"). NCPA believed that it would be helpful to provide a brief
explanation of the process and to outline what NCPA requires of your governing bodies.
Background
As you are already aware,Western GeoPower has requested modifications to the Power Purchase
Agreement(PPA)executed in May 2008, in order to secure additional financing to finish the project. The
modifications contemplate an increase of price from$98 per MWH to$117 per MWH. At the last NCPA
Commission meeting,the Commission provided direction to the NCPA General Manager and General
Counsel to modify the Project documents to accommodate this change in price. The proposed changes to
the PPA also require amendments to the existing TPA corresponding to this Project
NCPA Staff and the NCPA General Counsel's office have prepared proposed modifications to the TPA and
the PPA. Each of you had an opportunity to provide comments to the Agreement. For the most part,your
Agency's comments have been incorporated into the attached Amended and Restated Third Phase
Agreement.
We request that you take the following action in order to ensure that the TPA is approved.
Process
Western GeoPower is still reviewing the Amended and Restated PPA. As soon as those negotiations are
concluded,we will provide you with an updated PPA,which is Attachment A to the 3rd Phase Agreement.
55512th Street,Suite 1500 1 Oakland,California 94607 1 tel 510.808.2000 1 tax 510.444.1108 1 www.meyersnave.com
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To: Western Geo Project Participants
From: Benjamin T.Reyes,II,NCPA Assistant General Counsel
Re: Process for Handling Approval of the Western Geo Power Third Phase Agreement
Date: August 13,2009
Page: 2
Western GeoPower has indicated that it will need an approved PPA by no later than September 9, 2009, in
order to pursue deadlines for its current financing plan. If Western GeoPower does not meet its deadline,
then its financing for this Project may be in jeopardy.
As you may already know,the amendments to the TPA allow your agency the following options: (1)You
may elect to withdraw from the project, (2)maintain the same level of participation or(3)change the level of
participation. For any of the actions above,you need to take the following steps:
• By September 15, 2009(suggested date), agendize the item for your Board action with associated
staff reports etc. We suggest that you have your Board authorize your City Manager or General
Manager to execute the Amended and Restated Third Phase Agreement for Western GeoPower
Renewable Power Purchase Agreement. We anticipate that minor modifications may be made to
the Amendment and Restated Agreement. Accordingly,we request that your agency resolution
delegate authority to your City Manager or General Manager and City Attorney/General Counsel
to approve non-substantive changes to the Agreement.
• By no later than September 20, 2009, please arrange for your City Manager/General Manager
and City Attorney/General Counsel to execute the TPA;
• By no later than September 25, 2009, please arrange for the executed TPA to be delivered to
NCPA's General Manager, Jim Pope,for execution.
NCPA requires your quick review and approval of these documents from your governing authority(City
Council, Board of Directors)within the timelines provided. Ken Speer, Hari Modi and I are available to
discuss any issues you may have pertaining to the TPA.
Thank you for your continued cooperation.
BTR/vd
Attachments:
1. Amended and Restated Third Phase Agreement for Western GeoPower Renewable Power
Purchase Agreement
2. Amended and Restated Power Purchase Agreement(DRAFT)
1278696.1
Attachment 1
Western GeoPower Project
Final Agreement