PURPOSE:

To increase the City of Burbank�s Renewable Portfolio Standard (RPS) from 20% by 2017 to 33% by 2020 by recognizing and supporting the goals of renewable energy procurement consistent with the Burbank Water and Power (BWP) Integrated Resource Plan (IRP).

BACKGROUND:

In 2002, the Legislature approved Senate Bill (SB) 1078 (Sher) which creates California's Renewables Portfolio Standard (RPS). Under the RPS, all investor owned utilities (IOUs) and retail sellers of electricity are required to increase their renewable procurement each year so that 20 percent of their sales are from renewable energy sources by December 31, 2017. The California Public Utilities Commission (CPUC) sets the standards and policy for IOUs.

On the other hand, local publicly owned utilities are not required to meet the exact same RPS, but instead their governing bodies are required to implement and enforce their own RPS program that recognizes the intent of the Legislature to encourage renewable resources. At the November 25, 2003 City Council Meeting, the City of Burbank formally adopted a RPS Policy to comply with SB1078, attached as Appendix A.

RPS intended for unmet long-term resource needs:

SB 1078 directs CPUC to establish a RPS for the IOUs to fulfill unmet long-term resource needs subject to meeting certain tests such as the need for additional resources and impact on customer rates.  The requirements of SB 1078 are to be interpreted similarly for municipal utilities.  Therefore, BWP has adopted a strategy that relies on first seeking additional efficiency and conservation improvements and then additional renewable energy to meet the unmet needs identified in BWP�s Integrated Resource Plan (IRP), which lays out our long-term resource procurement strategy.

BWP�s resource acquisition strategy:

While BWP has been adequately resourced, it has gradually added renewable local projects such as photovoltaic, micro-hydro, micro-turbines fueled by landfill gas and most recently wind.  These actions are consistent with our IRP that emphasizes a bias for equity, or ownership-like rights, in renewable projects. The outcome of these actions and our customer�s substantial conservation efforts has resulted in BWP being adequately resourced with competitively priced resources. Burbank�s RPS strategy also takes into consideration our resource acquisition strategy of adding renewables to fulfill unmet needs and not materially increasing system-wide electric rates beyond those approved by the Burbank City Council.

Environmental stewardship in Burbank:

BWP supports wise use of resources that effectively enhance environmental stewardship.  Our environmental stewardship includes encouraging customers to use energy efficiently, as well as providing renewable generation resources through as many options as reasonable and economical.  When given a choice between purchasing and/or developing energy supply options, we give emphasis to options that enhance environmental stewardship.  This includes providing programs for customers to save energy, as well as options for customers to opt-in for the purchase of renewable energy. 

Energy efficiency and conservation programs:

In promoting an ethic of environmental stewardship, avoiding waste of resources is vital.  In the electric utility, energy efficiency and conservation are clearly the most cost-effective methods to achieve this goal.  The cost of avoiding a kilowatt of energy is significantly less than the cost of producing new, renewable resources.  Therefore, we first make every effort to implement cost-effective programs to encourage the wise use of energy by all our customers.

ANALYSIS:

The "Energy Action Plan" adopted by the California Public Utilities Commission and the California Energy Commission pledges that the IOUs will accelerate RPS implementation to meet the 20 percent goal by 2010, instead of 2017.  The Governor has also endorsed "20% by 2010" and proposed an even more robust goal of 33 percent by 2020. And, with the start of the 2007-2008 Legislative Session, there is legislation to increase the state�s RPS to 33% by 2020. Assembly Bill (AB) 94 (Levine), as introduced increases the RPS to 33% by 2020 for IOUs.

In March, a number of local publicly owned utilities (POUs) were asked to appear before the Assembly Utilities and Commerce Committee, where Chairman Levine called into question why POUs are not at 20% by 2010. (LADWP and SMUD have adopted a 20% by 2010 policy.) In addition, Chairman Levine has introduced legislation calling for 33% by 2020. Also, the new Chair of the Senate Energy Committee, Senator Kehoe, indicated that if POUs did not adopt the new target, legislation will be forthcoming in this legislative session to force it upon the POUs.

Generally speaking no utility can add renewable resources and the related transmission required for the delivery of qualifying renewable energy by 2010.  Such development requires typically five or more years to secure the licensing, right of ways, environment compliance, and public hearings and related regulatory approvals and reviews.  The renewable plants in operation have already sold the output.  Renewable projects are not built without output sales contracts in place prior to the construction of such projects.

It is not feasible for Burbank to be able to accelerate our 20% commitment to 2010.  In accordance with the approved IRP Burbank will continue conservation and energy efficiency as the first and best alternatives to additional resources, while also adding renewables resources.

Staff believes that a greater than 20% goal is in fact realistic and good energy policy given the requisite time to prudently plan, develop and implement the goal. BWP staff proposes the City consider adopting a City of Burbank Renewables Resolution that updates the RPS and increases Burbank�s percentage of renewable energy to 33% by 2020.  

A draft version of Burbank�s updated RPS is attached as Appendix B. The Renewables Resolution, if approved by the Burbank City Council, also takes into consideration the effect of the increase as it relates to rates, reliability, meeting unmet need after first achieving all cost-effective energy efficiency and conservation, and least-cost, best-fit renewable resources on a total cost basis including transmission investments. By passing this Renewables Resolution and updating the RPS, Burbank is affirming and increasing its commitment to purchase renewables resources in a responsible manner. Please see the following schedule of planned implementation of renewable resources.

What we are doing to �green� our energy portfolio

BWP has added and plans to recommend to Council a significant amount of renewable energy over the coming years. A few of the projects are highlighted below followed by a chart showing our existing and planned renewable resources:

• In 2004, BWP joined with the Southern California Public Power Authority to purchase 1/6 of the output of a 13 megawatt (MW) landfill project. This project is expected to supply 1% of our energy requirements and to go into effect in early 2008.

• In 2006, Burbank began receiving 5 MW of wind power from a wind farm in southwest Wyoming, equating to 1% of our energy needs.

• We plan to enter into another new wind contract from a resource in Utah. This would be for a 10 MW contract to begin in 2008 and supply 2% of our energy requirements.

• BWP is in negotiations for other wind deals from the Pacific Northwest to start sometime in 2008 or 2009.

• What looks likely to be our largest renewable project to date, is a geothermal energy plant under development in the Imperial Valley, CA within an in-service date of 2011.

CONCLUSION:

After thorough review and discussion, the BWP Board unanimously supported the goal to increase the RPS to 33% by 2020. The Board agreed that this RPS policy change is sound energy policy and an achievable goal that is consistent with the Burbank IRP. Furthermore, the addition of more renewable energy could potentially reduce the financial liability of our fossil based resources and lead to a healthier and more sustainable community.

The City of Burbank has set an initial baseline of 20% renewable energy resources by 2017 and will increase our renewable energy resources up to 33% by 2020, to the extent that additional energy resources are needed and load growth is not being met through conservation and energy efficiency.

The attached RPS takes into consideration Burbank�s unique circumstances while meeting the goal of acquiring more renewable resources.

RECOMMENDATION:

Staff recommends that Council, by Resolution, adopt the attached Renewables Resolution which sets a new RPS goal of 33% by 2020 and updates our RPS.

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Attachment

- Appendix A -

Burbank Water and Power

Renewable Power Portfolio Standard

______________________________________________________________________________

Purpose:        This standard represents Burbank�s commitment to renewable resource procurement consistent with the provisions of SB 1078.

Goal:              BWP will increase procurement of electricity from eligible renewable resources until a target portfolio level of 20% is reached by 2017, measured by the amount of energy procured in making retail sales of electricity.

Qualifying Resources:    

Electricity produced from the following technologies constitute �eligible� resources:  biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, hydroelectric generation, digester gas, municipal solid waste, landfill gas, ocean wave, ocean thermal, tidal current, renewable components of sales from other parties (green tickets), or renewable distributed generation on the customer side of the meter.  Facilities can be located anywhere in the interconnected transmission system located in the west.

Timing of Long-Term Resource Additions:          

Renewable resources will be procured to the extent they fulfill unmet needs identified in BWP's long-term resource procurement plan and BWP will not uneconomically terminate, abrogate, or otherwise end any existing long-term contract in order to meet the renewable target portion of its energy portfolio. 

Price Benchmarking:           

In considering the appropriate reasonable prices to be paid for renewable resources, Burbank will consider but not be limited to the price benchmarks set by the CPUC for the State�s investor owned utilities and shall include the costs associated with transmission. 

Limit on Subsidies:

The procurement obligation is contingent upon BWP having sufficient funds available to make �supplemental energy payments� to subsidize the above-market costs of renewable energy.  Any subsidy will come from public benefit expenditures that BWP is required to make pursuant to the provisions of AB 1890.  Renewable energy subsidies from Public Benefits Funds will not come at the expense of conservation programs.  The availability of sufficient Public Benefits Funds will be a de facto limit on the annual renewable purchase obligation and compliance with this Standard will be deemed achieved where noncompliance is caused by the unavailability of PBC expenditures in an amount not to exceed 17% annually.

Rate Impact:

The addition of renewable energy resources should not increase system wide rates.

This RPS policy was adopted by the Burbank City Council on November 25, 2003.

DRAFT

- Appendix B -

Burbank Water and Power

Renewable Portfolio Standard

______________________________________________________________________________

Purpose:                                This standard represents Burbank�s commitment to renewable resource procurement.

Goal:                                      BWP will increase procurement of electricity from eligible renewable resources towards a portfolio level of 33% by 2020, measured by the amount of energy required for retail sales of electricity.

Rate Impact:                         The addition of renewable energy resources should not increase BWP electricity rates beyond that approved by the Burbank City Council.

Qualifying

Resources:                           Electricity produced from the following technologies constitute �eligible� resources:  biomass, solar thermal, photovoltaic, wind, geothermal, fuel cells using renewable fuels, low impact hydroelectric generation, digester gas, municipal solid waste, landfill gas, ocean wave, ocean thermal, tidal current, or renewable distributed generation on the customer side of the meter and other sources deemed eligible by the California Energy Commission.  Facilities can be located anywhere in the interconnected transmission system.  

Timing of

Long-Term

Resource Additions:        Renewable resources will be procured to the extent they fulfill unmet power supply needs identified in BWP�s Integrated Resources Plan (IRP). In accordance with the IRP, BWP will pursue economic conservation, efficiency, and demand management in order to reduce the need for additional power supply.

Transmission and

Exchanges:                           To facilitate the delivery of renewable energy, in order to maximize the use of existing transmission and minimize the need for new transmission, allow exchanges or the sale of related energy of a renewable facility and the retention of the renewable attribute.

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