Resolution No. 3231-22 Authorize Power Purchase Agreement - Solar 1 RESOLUTION NO.3231-22
2 A RESOLUTION OF THE SOUTH TAHOE PUBLIC UTILITY DISTRICT
TO AUTHORIZE ENTERING INTO A POWER PURCHASE AGREEMENT
3 AND LICENSE AGREEMENT WITH BLUE DRAGON HOLDINGS I, LLC, FOR A
SOLAR PHOTOVOLTAIC PROJECT
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WHEREAS, it is the policy of the State of California and the intent of the
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State Legislature to promote all feasible means of energy conservation and all
6 feasible uses of alternative energy supply sources; and,
7 WHEREAS, the South Tahoe Public Utility District ("District") desires to
8 reduce the steadily rising costs of meeting the energy needs of its facilities; and,
9 WHEREAS, pursuant to Government Code section 4217.16, the District
10 may request proposals for a solar project from qualified persons and, after
evaluating the proposals, the District may award the contract on the basis of the
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experience of the company, the type of technology employed by the company, the
12 cost to the District, and any other relevant considerations; and,
13 WHEREAS, the District, with the assistance of the Sustainable Energy and
14 Economic Development Fund's consultant, Optony, Inc. ("Optony"), requested
15 proposals from qualified companies to design, construct, operate and maintain a
16 solar photovoltaic project at the District's wastewater treatment plant ("Solar
Project") based on the overall proposed energy cost-savings, experience, and
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other relevant considerations; and,
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WHEREAS, after review of proposals submitted by qualified companies, SSI
19 DevCo, LLC, was selected as being the most qualified company based on its
20 proposal that was submitted in response to the requirements of the request for
21 proposals; and,
22 WHEREAS, after many months of negotiations, the District and SSI DevCO,
23 LLC, were unable to reach agreement on the terms of a power purchase
agreement and license agreement for the Solar Project; and,
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WHEREAS, Earlier this year, while continuing to negotiate with SSI DevCo,
25 LLC, Staff began working on a parallel track with a different solar team, Staten
26 Solar Corporation ("Staten"), due to the continued lack of progress with the SSI
27 DevCo, LLC, team. The Staten team had also provided a proposal to the District as
28 part of the SEED Fund solicitation at the same time as SSI DevCo, LLC. Staten
1 updated its proposal to reflect the current market conditions and the requirements
2 of a draft power purchase agreement and draft license agreement templates that
3 had been negotiated with SSI DevCo, LLC; and,
4 WHEREAS, On June 2, 2022, the District's Board of Directors directed
District staff to cease negotiations with SSI DevCo, LLC, for a power purchase
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agreement and license agreement for the Solar Project at the Wastewater
6 Treatment Plant and to continue negotiations with Staten for the Power Purchase
7 Agreement, License Agreement and project details for the Solar Project at the
8 Wastewater Treatment Plant. District staff has now successfully concluded
9 negotiations with Staten; and,
10 WHEREAS, Staten has provided the District with an analysis ("Analysis")
showing the cost savings and other benefits of implementing certain energy
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generation measures through the installation of the Solar Project at the District's
12 wastewater treatment plant; and,
13 WHEREAS, California Government Code section 4217.12 authorizes a
14 public agencies to enter into an energy service contract with respect to an energy
15 conservation facility and facility ground license if its governing body determines, at
16 a regularly scheduled public hearing, public notice of which is given at least two
weeks in advance, that the anticipated cost to the District for the alternative energy
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project will be less than the anticipated marginal cost to the District of electrical
18 energy that would have been consumed by the District in the absence of such
19 energy project and the difference, if any, between the fair rental value for the real
20 property subject to the facility ground license and the agreed rent, is anticipated to
21 be offset by below-market energy purchases or other benefits provided under the
22 power purchase agreement; and,
WHEREAS, Staten has formed a single purpose entity, Blue Dragon
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Holdings I, LLC, to enter into a power purchase agreement and license agreement:
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and,
25 WHEREAS, the District proposes to enter into a power purchase agreement
26 ("Power Purchase Agreement") and facility ground license ("License Agreement")
27 with Blue Dragon Holdings I, LLC, pursuant to which Blue Dragon Holdings I, LLC,
28 will design, construct, install, maintain, and operate the Solar Project on District's
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1 property and arrange with the local utility for interconnection of the Solar Project
2 with the local utility's power grid which will generate energy for the District's
3 wastewater treatment plant; and,
4 WHEREAS, the Analysis includes data showing that the anticipated cost to
the District for the electrical energy provided by the Project will be less than the
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anticipated marginal cost to the District of electrical energy that would have been
6 consumed by the District in the absence of such purchases; and,
7 WHEREAS, the difference, if any, between the fair rental value for the real
8 property subject to the License Agreement and the agreed rent, is anticipated to be
9 offset by below-market energy purchases or other benefits provided under the
10 energy service contract due to the land use restrictions for the District's property
and limited access to the Solar Project site; and,
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WHEREAS, the Board proposes to enter into the Power Purchase
12 Agreement and License Agreement with Blue Dragon Holdings, I, LLC,
13 substantially in the form presented at this Board of Directors meeting, subject to
14 such further changes, insertions or omissions as the District General Manager and
15 legal counsel reasonably deems necessary following the Board of Director's
16 adoption of this Resolution; and,
WHEREAS, pursuant to Government Code section 4217.12, the Board of
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Directors held a public hearing before adoption of this Resolution, public notice of
18 which was given at least two weeks in advance, to receive public comment.
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NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
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1. That based on District staff reports reviewed by the Board of Directors of the
21 District, public comment and the administrative record as a whole, the Board of Directors
22 finds that the terms of the Power Purchase Agreement and License Agreement are in the
23 best interest of the District.
24 2. In accordance with Government Code section 4217.12, and based on data
25 provided by the Analysis, the Board of Directors finds that the anticipated cost to the District
26 for electrical energy provided by the Project under the Power Purchase Agreement will be
27 less than the anticipated marginal cost to the District of electrical energy that would have
28 been consumed by the District in the absence of those purchases.
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1 3. In accordance with Government Code section 4217.12, and based on the land
2 use restrictions for the District's property and limited access to the Solar Project site, the
3 Board of Directors finds that the difference, if any, between the fair rental value for the real
4 property subject to the License Agreement is anticipated to be offset by below-market
5 energy purchases or other benefits provided under the energy service contract.
4. The Board of Directors approves and authorizes the execution of the Power
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Purchase Agreement and License Agreement with Blue Dragon Holdings I, LLC, all of which
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shall be subject to such further changes, insertions or omissions as the District's General
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Manager and legal counsel reasonably deem necessary.
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5. The District's General Manager, or his designee, is further authorized and
10 directed to execute and deliver any and all papers, instruments, opinions, certificates,
11 affidavits and other documents and to do or cause to be done any and all other acts and
12 things necessary or proper for carrying out this Resolution and the terms and conditions of
13 the Power Purchase Agreement and License Agreement.
14 WE, THE UNDERSIGNED, do hereby certify that the above and foregoing Resolution
15 was duly adopted and passed by the Board of Directors of the South Tahoe Public Utility
16 District at a regularly scheduled meeting held on the 20th day of October, 2022, by the
17 following vote:
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AYES: Cefalu, Romsos, Sheehan, Exline
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NOES: None
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22 ABSENT: Peterson
23 Kell heehan, President
South Tahoe Public Utility District
24 _ATTEST:
Melor3;e Guttry, Clerk of t Board
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