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AGENDA STATEMENT
CITY COUNCIL MEETING DATE: August 21, 2001
Consideration of Energy Feasibility Study
Report Prepared by: Christopher L. Foss
Economic Development Director
SUBJECT:
ATTACHMENTS:
1.
2.
3.
Letter from Sybase Corporation
United Native Depository Corporation presentation
United Energy Technology presentation
RECOMMENDATION:
1. Review the issues described in the staff report and provide
direction with respect to the following:
~
2.
3.
A. Is the City Council interested in exploring the financial
and logistical issues associated with a range of
opportunities in the provision of municipal energy
services?
B. Is so, is the City Council specifically interested in
evaluating the potential/desirability of soliciting
proposals to locate a 49.5 MW generation facility in
Dublin or elsewhere to meet the City's current and future
energy needs?
C. Are there any other energy-related issues the City
Council would be interested in exploring?
Ifthe City Council is interested in 1 A, 1 B and / or 1 C
above, authorize Staff to prepare an RFP to hire an
independent energy consultant to assist City Staff in
developing an RFP to evaluate the financial and logistical
issues associated with those options.
Appoint a City Council Committee to assist staff in
interviewing consultants.
FINANCIAL STATEMENT:
Costs are dependent upon City Council direction and are yet to be
determined.
DESCRIPTION: Over the past several months, the State of California has faced an
energy crisis of unexpected proportions. During the early months of 2001, the State of California suffered
from several "rolling blackouts" that interrupted electrical services to businesses and residents alike. The
COPIES TO:
H/cc-forms/agdastmt.doc
ITEM NO. M-
energy crisis has adversely affected the business environment, and has placed into jeopardy the continued
economic viability of the State of California. Current and future Dublin businesses have also expressed
concern about the dependability and availability of supply of energy in the Tri-Valley area (see
Attachment 1).
The State of California has taken several steps to help remedy this cnSlS, including the expedited
processing of permits for energy production facilities. In addition, several new power plants have come
on line throughout the state, including the Calpine plant in Pittsburg, that will add thousands of additional
megawatts (MW) to the state's energy supply. These steps, combined with the personal and business
conservations measures and a temperate summer, have allowed the State of California to. weather the
summer without the predicted blackouts.
At a recent meeting of the Tri-Valley Council, a presentation was made by representatives of the United
Native Depository Corporation outlining their proposal to partner with any City to build a self-contained,
49.5MW power plant that would allow a City to have a dedicated power supply for residents and business.
The Tri-Valley Business Council's Economic Vitality Committee has been meeting for months in an on-
going effort to create a regional power management plan and both UNDC and United Energy Technology
(another energy producer) made presentations to build a 49.5 MW plant at that meeting.
At the August 7,2001 City Council meeting, Mayor Houston requested that Staffagendize an opportunity
for the City Council to discuss the City's projected role (if any) in meeting the energy needs of the
community. From Staff's perspective, the goals of any energy policy should be to: (1) Identify and meet
the City's present and future energy needs; and (2) Secure a consistent, reliable, and affordable source of
power. These goals might be met through a number of means, including the potential construction of a
49.5 MW power generation facility.
Due to the complex nature of the electric power industry, Staff recognizes that it does not have the
expertise to provide the City Council with the information necessary to make sound and reasoned
decisions in this area. If the City Council is supportive of the goals outlined above, Staff would
recommend that the City Council provide Staff with the following direction:
1. Is the City Council interested in exploring the financial and logistical issues associated with a
range of opportunities in the provision of municipal energy services?
2. If so, is the City Council specifically interested in evaluating the potential/desirability of
soliciting proposals to locate a 49.5 MW generation facility in the City of Dublin or elsewhere
to serve the City's current and future energy needs?
3. Are there any other energy issues which the City Council would be interested in having staff
explore?
If the City Council is interested in exploring the City's energy alternatives identified above, Staff would
recommend the City secure the services of an independent energy consultant that would help the City
identify the myriad of issues involving electricity production. Staff would further recommend that the
consultant assist staff in the preparation of a Request for Proposal (RFP) to be sent to power producers,
including but not limited to, UNDC and United Energy to determine the level of interest and the potential
for such a venture. Staff anticipates that the RFP for the energy consultant could be completed and placed
on the City Council agenda by early October, 2001.
Staff would further recommend that the City Council appoint a Council committee to assist staff in
interviewing the consultants.
-:;.-
J ~ ;1.5
Corporate Real Estate & Facilities
Richard 1. Palomba
Sr. Director Worldwide Corporate Real Estate and FaciUties
Telephone:51O-922-8641 .
Fax: 510-922-4495
6475 Christie Avenue
Emeryville, CA 94608
Email: rpalombtt.Wsvbase.com
August 7, 2001
Honorable Guy Houston
Mayor
City of Dublin
100 City Plaza
PO Box 2340
Dublin. CA 94568
Dear Mayor Houston:
Thank you for your offer inviting me to address the Trivalley Infrastructure Committee in its discussion
concerning the need for independent energy production for the future. Prior commitments preclude me
from being with you in person, but I welcome the opportunity to share some ideas and opinions with you
All Californians have been awakened this year to the realities of our lack of energy supply within our State.
Most people simply assumed that this was a problem for PG & E and the Public Utilities Commission to
deal with. Now we all have a vested concern and interest in the energy supply and distribution issues of
today.
From the perspective of a leading technology corporation, supply of power to our enterprise is the lifeblood
of our company, from critical research and development activities to the daily issues and events associated
with running a large enterprise like Sybase. Our worldwide data center - which will relocate to Dublin at
the end ofthis year - supports our business activities internation<;tlly. We cannot be placed in a position
where power failures disrupt our business activities without significant business casualties. Most
importantly, we will suffer the loss of our customer's confidence in the stability of our operation. This is
something we cannot let happen without losing our status as a leader in our technology market sectors.
I urge you to consider the value of working to develop your own Tri-Valley power consortium. First, I
know the continued economic development of your communities is a priority. A major selling point in
attracting major businesses to your cities will be significantly enhanced by developing an independent
power consortium for the Tri-Valley. In the cases of Palo Alto and Santa Clara, the success of their private
power company has been chronicled for both its progressiveness and econbmic return to those cities. I
know that at lease three other major technology companies, Cisco Systems, Oracle, and Sun Microsystems,
have stated intentions of expanding into the Tri- Valley area in the next few years. I have been in contact
with some of my counterparts at these companies and they, too, share my concern about the adequacy of
energy production in their future development plans given the present dependencies we now face with PG
& E as our energy supplier.
I realize that this is a complicated issue that will require significant resources and study on your part in the
near future, but I believe this forward step can only help attract and retain economic development in the
future for the towns and cities in the Tri- Valley area.
Thank you for allowing me the opportunity to provide some perspective on this matter of great importance
to companies like ours going forward.
Sincerely,
Richard J. Palomba
Sr. Director, WW Real Estate & Facilities
Sybase, Inc.
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Attachment 1
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Attachment 2
United Native Depository Corporation
Approval
Contract
Strate
ment
Power
Contract
Negotiations
UNDC Develo
Feasibility
Site Analysis
UNDC cost
UNDC
Letter
of
Intent
Approval
Reject
Contract
Revise
Contract
25 MOW
20 MOW
Use
Use
Dublin Power Use
Pleasanton Power
Livermore Power
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(PO&E Mild Temperature)
580 California Street, 5TH Floor. San Francisc(}l, CA 94104 ·
Tel: (415) 283-3237. Fax: (415) 283-3374 · Email: DLA1@aol.com
30 MOW
75 MOW
United Native Depository Corporation Develops,
Builds and Operates the Power Plant(s)
Authorizes UNDC to Build 49.5 MW Power
ve Summary
Executi
The City
Plant(s)
.
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ity
Dedicated and Autonomous Power Supply for C
Surplus Power Available For Sale to the Highly
Profitable Spot Market
.
.
ntroduction
Current Supplier (PG&E) is Bankrupt and May Not be
Credit-Worthy for a Long Time
.
are
ment
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Unscheduled Power Outages and Curta
Rampant and Uncontrollable
.
ty is Available
Existing Sub-station Facili
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(T & D) Available
Gas
bution
Fuel Supplies Available With Nearby Natura
Pipeline
Transmission and Distri
.
.
.
The UNDC Program
Own and Operate Captive Power
UNDC to Build,
Plant
.
UNDC to tie nto Grid (T & D)
Utilize PG&E Transmission System
Maintain Autonomy and ndependence Within
Your Municipality
City to Outsource
UNDC
to
rements
ts Energy Requ
.
.
.
.
City wil be Electncity Off-taker and Power
Purchaser
.
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UNDC to be Energy Manager and Manage the
Entire Value C~hain from Fuel Supply to Capacity
Production, Transmission and Distribution
.
The Program
continued
ty Company
Costs Related To The
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UNDC Will Provide All Turn-key Services
and Operations I Maintenance
UNDC Will Assist With Spot Market
Sales
.
.
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UNDC Will Utilize Ut
Systems
UNDC Will Pay All
Above Investment
.
.
UNDC Financia Proposa
. UNDC Develops and Finances Power Plant on
Non-recourse Basis With No Financial Exposure to
City
. Municipalities Sell Retail For 20-300/0 Profit
. State of California Receives 5 % of Net Profit
. UNDC Sells Wholesale to City
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Time Frame
Analyzing the Location I Feasibility Study
Ordering the Turbines and Balance Of Plant
(BOP) Equipment
.
.
Turn-key EPC
nstallation of the Equipment I
work
Connection
.
on System
but
the Gas Distri
to
(Pipeline)
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to
tch-yard
(Sw
Grid
Commissioning
the Power
Connection to
Su~-statjon)
Power Plant
.
.
On-going Re ationship and
Long Term Benefits
Plant and Home
On-site Project Management
Internet Website Between Power
Base
.
.
Scalable and Expandable
Future Re-powering
Quarterly Meetings
Loca Job Creation and Economic Benefits
.
.
.
.
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Reduce Operating Costs
Dedicated / Captive Electrical Capacity
Improved Efficiency and Reliability
Reduce Environmenta mpact
.
.
.
.
Execute Letter Of ntent (LOI) within 1 week
Execute power purchase agreement (PPA): within
90 days of LOI
Secure all permitting / approval: within 120 days
of PPA (subject to assistance from City)
Execute EPC Contract within 120 days of PPA
within 150 days of
Plan Of Action
Steps /
Next
.
.
.
Execute 0 & M agreement
PPA
.
.
Financial closure (FC) within 9-12months of PPA
Project construction: 12-15 months
.
.
.
...........
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from FC
15-18 months of FC
Commercial operation
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GE CNG Turbine
Typica
Attachment 3
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1Source: Associated Press as quoted in the Palo A
Ito Daily News, July 16, 2001
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. Cost of Power
II Debt Servicing & Retirement
. Operating Expenses
. Income before Taxes
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