Recently enacted California legislation requires Burbank to develop a Renewable Portfolio Standard (RPS) by the end of the calendar year.  The RPS is intended to serve as a guide for procuring renewable energy by BWP.  This memo discusses where BWP stands with respect to developing a RPS.  As well, it outlines the efforts BWP has undertaken procuring energy from renewable sources in context of the current situation as well as potential future resources. 

SB 1078 And the Requirement to Develop a Renewable Portfolio Standard

SB 1078 was passed last fall by the legislature.  It mandates that all the electric utilities in the State develop and adopt a Renewable Portfolio Standard which sets a target level for what portion of each utility�s energy must be from renewable resources and the time schedule they must meet.  As well, it describes what types of renewable resources are acceptable. 

The RPS requirements for investor owned utilities (IOUs) are specifically outlined in SB 1078. They must increase procurement of electricity from �eligible� renewable resources by at least 1% per year until they reach a target portfolio level of 20% by December 31, 2017 measured by the amount of energy procured in making retail sales of electricity.  As well, acceptable renewable resources are defined. 

The IOU�s have submitted their RPS implementation plans to the California Public Utilities Commission (CPUC) for approval.  In their filings they indicate that their understanding of the legislation is that they will not have to raise rates in order comply.  Their intent is to use a portion of their public benefits funds (17%) to buy down the cost of renewable energy.  And, they would buy only as much renewable energy as the pool of money supported.  Currently, they are waiting for a response from the CPUC.

Under the legislation, municipal electric utilities are given wide latitude in setting their RPS�s.  They are not required to adopt any particular percentage goal for renewables, or given target date, nor are they limited to particular technologies.  Rather, they are only required to adopt and enforce a renewable standard that makes sense for their service territory and customers, and report, on an annual basis, the results achieved by their expenditures and programs.  Currently, staff is unaware of any municipal utility in the State that has adopted a RPS.  They appear to be taking a wait and see attitude hoping to take advantage of what others are doing. 

BWP has been working on Renewable Portfolio Standard for Burbank.  A draft of the proposed standard is attached and the final will be presented to the City Council for approval by December of this year.

BWP�s Current Situation

Based on the resources BWP currently owns, or has under contract, the following table shows how BWP expects to meets its energy requirements. 

The last row of the table shows that BWP�s existing plan has relatively little unmet energy needs for the next several years.  Thus, BWP has no immediate requirements for any further long-term commitments for additional resources.  At the current expected load growth rate that is projected to be around 1% to 1.4% annually, it will take 5, or more, years before there is a need to add additional long-term resources to our portfolio.

Existing Renewables in BWP�s Current Resource Portfolio

There are two significant sources of renewable energy in our existing energy portfolio -  the purchase power agreements for Hoover and Bonneville Power Administration. However, there is debate whether power from large hydroelectric developments such as Hoover and BPA should be considered renewable.  Congress is currently working on a new energy bill that we understand qualifies large hydroelectric power as renewable.  If it becomes law, BWP will have a strong basis for taking credit for Hoover and BPA as renewable and we would be well on track to meet the target�s of SB 1078.

The Hoover project supplies about 2% of our annual energy requirements and the Bonneville (BPA) long-term contract provides as much as 12% when it is in the Sale Mode.  The BPA agreement provides 20MW of power throughout the year and an additional 20MW during the summer when BPA has sufficient capacity to provide such capacity.  But, since the recent energy crisis BPA has not had sufficient capacity to honor this sales portion of its agreement with BWP.  When BPA does not have sufficient capacity to sell BWP power, they convert the contract to the Exchange Mode.  In Exchange Mode, the contract works like a pumped storage scheme where BWP gets energy from BPA during the day and returns the energy to BPA during the night.  The exchange ratio works out so that Burbank pays 2 MWh to BPA for every 1 MWh we get from BPA.  Since the nighttime exchange energy typically comes from fossil fuel projects like the Intermountain Power Project which have low variable operating costs, the effective cost of energy to Burbank in the Exchange Mode is attractive but unfortunately doesn�t qualify as renewable.

BWP also buys a considerable amount of �spot� or �economy� power from the Pacific Northwest.  Although the origin of this power is difficult to track, the majority of it is hydro based adding another 6 to 10% of renewable energy to our resource mix. 

To summarize, as much as 22% of the energy that BWP currently supplies to its retail customers comes from renewables when the BPA contract is in the Sale Mode and about 10% when BPA is in the Exchange Mode.

Public Benefits Related Renewable Accomplishments

During the past several years, Burbank has undertaken a number of initiatives to add additional renewable resources to its power supply portfolio. 

In May 1998, Burbank installed a 4 kW photovoltaic solar demonstration project.  Since then, this facility has been operating reliably producing power about 25% of the time.

In July 2001, Burbank began producing power using landfill gases (methane) that were previously flared.  This was accomplished by installing ten 30 kW Capstone micro-turbines at the City�s landfill, producing an output of 300 kW, or enough power to support 250 to 300 homes.  The project gave BWP the distinction of being the world�s first operator of a landfill power project using micro-turbine technology.  The units are operating about 80% of the time.

In July 2002, Burbank placed into service two small hydroelectric generators that collectively produce approximately 400 kW.  This project exploits a required pressure reduction where the City�s water facilities interface with the Metropolitan Water District at the Valley pumping plant.

The Clean Green Support Program which began late 2001 offers Burbank residents the opportunity to support green energy production.  Since the program�s inception, BWP has purchased 20,231 MWh of California Green Tickets.  These Green Tickets support the production of electricity from small hydro, wind, biomass, and geothermal sources.

BWP is currently reviewing solar photovoltaic installation options within the City of Burbank.  We have conducted site evaluations and staff will soon report its recommendations on preferred solar projects.

The main advantage of these Public Benefits related renewable activities is that they are local and BWP doesn�t have to concern itself with the issue of how to get the power to Burbank.

Potential Large Scale Renewable Developments Under Investigation In Conjunction with SCPPA

BWP has been working in concert with other Southern California municipalities exploring the feasibility of wind, solar, biomass, or geothermal generation projects ranging in size up to 50 or 100 MWs.  The parties have been coordinating their efforts through the Southern California Public Power Authority (SCPPA).

The most attractive resources SCPPA has considered are wind and geothermal.  Wind projects near Tehachapi, Daggett, the San Gorgonio Pass near Banning, and Prim on the California/Nevada border have been examined, as well as geothermal sites near Reno, Nevada, and the Salton Sea.

As a result of SCPPA�s efforts, several members recently entered into 20 year agreements for energy from a wind project located in Solona County.  Here�s how that transaction works  The owner of the plant is Florida Light and Power (FL&P) which provides 45 MW of wind produced by plant on an �as the wind blows� basis.  FL&P sells the output to Pacific Corp Power Marketing which firms up the power to a 15 MW flat product (7x24) and delivers it to the SCPPA participants in SP-15.  (SP-15 is the California ISO zone for southern California.)  From there, the participants deliver to their systems.  The price is $53.50/MWh for the term of the contract and deliveries commence this July 1^st.

Transmission Access Limits BWP Ability to Import Renewable Power

BWP doesn�t have transmission access to the potential developments being investigated by SCPPA, so bringing such power to Burbank from theses sources poses a challenge.  There are several potential ways to overcome this:

• New transmission facilities could be built to the developments.  But doing this economically and environmentally is questionable.                                                                           

• We could attempt to use ISO or LADWP transmission.  Both of these have associated problems.  ISO transmission is difficult to obtain and requires competitive bidding for rights.  Transmission service from LADWP have been prohibitively expensive.  It is estimated that �wheeling� the power over LADWP facilities would raise the cost of power by 25 to 35%. 

• Another possibility is making energy exchanges with other SCPPA participants.  BWP is currently working on a transmission displacement arrangement with Pasadena whereby we will re-deliver their Magnolia Power Project to them.  As part of that agreement, Pasadena would deliver power to us from a renewable resource located within the ISO�s transmission system.                                                                                                                                          

• Finally we could get started at least on a larger renewable portfolio by simply subsidizing the higher costs from our required Public Benefits expenditures.

Renewable Resources Costs

The work we have done in conjunction with SCPPA and others indicates that green power producers demand premium prices for their products typically as high as 20 to 30% over the price of comparable conventional sources.  Adding significant quantities of resources from non-City owned projects would likely necessitate raising electric rates.  However, pressure on rates may be mitigated or even avoided if Burbank pursues renewable resources in a diligent and deliberate manner.

A Potential Waste-To-Energy Renewable Development Lead By Burbank

Because of the aforementioned transmission concerns, acquiring renewable resources located outside of the area is problematic.  So staff is focusing on the potential for developing renewables locally.

In 1999 BWP looked into developing green waste-to-energy.  A Los Angeles based company proposed a European gasification approach that converted green waste into a combustible gas that was used to drive an electric generator.  However, we were unable to develop a successful relationship with the developer and instead began focused on developing a combined cycle plant that ultimately led to the Magnolia Power Project.

Staff continues to believe that waste-to-energy technology merits investigation.  Unlike conventional incinerator fire-based waste-to-energy, technologies based on pyrolysis or gasification promise to create almost no air emissions.  Several such plants are operational in Europe but none in North America.  Green waste, such as clipping and tree branches, are the best waste stream for energy conversion.  By limiting the green waste to be processed to materials such as grass clippings and tree branches no heavy metal or complex organic compound waste would be formed.  It would be difficult to site such a facility in Burbank.  However, Burbank can help identify and develop potential sites.

BWP has been involved in discussions with other cities in the LA area regarding the possible development of a waste-to-energy power plant that would use green waste.  Development of projects is always speculative.  However, building a local project is attractive for several reasons.  First, as indicated above, building in or near the greater Los Angeles area isn�t likely to result in transmission being an issue.  Second, a green-waste-to-energy plant would provide a long-term solution to the City of Burbank�s green waste disposal problem while providing a potentially economic renewable resource.

Further work needs to be done in evaluating the idea, gaining a better understanding of the technology, confirming the economics of the project, choosing a site, and securing partners.  If the project pencils out, the likelihood of it becoming a successful development is perceived to be realistic but challenging as the project is local and the potential partners have considerable influence and control in the region including long-term control of the fuel source. BWP considers the potential development of a local green-waste-to-energy plant to be a worthwhile effort and intends to work with others on its development.

Potential Wind Power Developments

BWP will continue to work with SCPPA on the feasibility of developing other large-scale projects.  Wind is particularly promising.  An idea that may have merit is using wind power to displace burning fuel at our local generating facilities thereby reducing pollution locally.  Since wind is erratic and power gets generated only �when and how hard� it blows, it is generally considered a non-firm product by resource planners and operating people who need resources whose output they can predict and plan for.  To fix this problem, wind developers �firm up� their product with other sources to make reliable power available on a 24 hour basis.  This however does cost money.  For utilities who are willing to take power on an �as the wind blows� basis, the price of that product is relatively attractive.  For example, if wind could be acquired at $35/MWh, then anytime the price of natural gas was greater than about $3.50/MMBtu, wind power would be less expensive than running local gas fired generation.  So the challenge is to find a wind resource that has sufficiently attractive economics so that in the long run it beats the expected cost of fuel for gas fired generation.

An untapped source of renewable energy is off shore wind.  This resource is considered to be of better quality and more abundant then the land based resource.  Further, the best land sites have all ready been exploited.  The United States is far behind Europe in developing off shore wind power.  Over the past several years, the Danes alone have installed in excess of 4,000 MW.  Since the resource is relatively close, transmission should be manageable.  BWP staff believes that it is worth investigating this potential off our coast.  If development turns out to look promising, a joint development through SCPPA similar to the Magnolia Power Project is something Burbank will consider taking a lead role in.

Next Steps

Staff will continue to focus on resolving the issues mentioned in this memo in order to ensure that energy from renewable resources remains a significant portion of our power portfolio.  We will continue working on the goal of acquiring and developing renewable resources as aggressively as customer energy demand, opportunity, and circumstances allow to insure that the City�s resource portfolio is not only economic but environmentally responsible.

RED:FCF:BJ:bj

Renewable energy � council 6-24-03.doc

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