On November 10, 2015, Ordinance No. 2015-1120, City Council awarded the 20-year Power Purchase Agreement (PPA) to Hecate and Reliant. Under the PPA, Hecate will supply Reliant with up to 30 megawatts (MW) of renewable solar energy from a facility in West Texas, near the city of Alpine, for redelivery to the City of Houston. Hecate will deliver the solar energy commencing on or before December 15, 2016. Reliant, in its capacity as the City’s Retail Electric Provider, will make arrangements for transmission of the solar energy from West Texas to the City’s meters. Additionally, on January 13, 2016, Ordinance No. 2016-42, City Council approved an amendment to the PPA making clarifications and adding an option to purchase an additional 20 MW of solar power at the same price by March 1, 2016.
SPECIFIC EXPLANATION:
The Director of the Finance Department recommends that City Council approve an ordinance authorizing an amendment to the Electricity Supply Agreement (ESA) with Reliant Energy Retail Services LLC (Reliant). The amendment makes minor changes to accommodate Reliant sourcing about 6.7% of the City’s electricity supply from Hecate Energy Brewster LLC’s (Hecate) solar power plant.
Amendment:
Under the current ESA, Reliant provides all of the City’s electricity needs. This amendment allows for third-party supply from Hecate under the solar PPA to be redelivered to the City’s meters, integrates the solar power into the rest of the City’s load, makes adjustments for invoicing the City for the cost of solar power as it is delivered to the City’s meters by Reliant, and clarifies what happens if Hecate fails to deliver solar power or defaults under the PPA.
Also, under the current ESA, the City procures electricity for its street lights under Schedule 1 at mostly off-peak market prices, and the rest of its load under Schedule 2 in accordance with a heat rate formula pricing. The proposed Amendment creates a new Schedule 3 that incorporates the PPA price of $0.048 per kilowatt hour (kWh) for the solar power and allows the Director to negotiate a price for non-solar power that is not greater than $0.045 per kWh. The non-solar power is for the City’s needs when solar is not available (e.g. evening hours). The Finance Director has worked with his energy markets consultant Amerex Brokers LLC to identify 13 City meters best suited to receive the 30 MW in solar power. These meters will be assigned to new Schedule 3 when the Hecate solar plant begins deliveries in December 2016. Finally, the Amendment adds an alternative Schedule 2 that allows the City the option of moving from a heat rate formula to a fixed price when exercising either of its two options.
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Kelly Dowe, Chief Business Officer/Director of Finance