Form revised: July 12, 2011

FISCAL NOTE FOR NON-CAPITAL PROJECTS

Department:	Contact Person/Phone:	CBO Analyst/Phone:
City Light	Robert W. Cromwell, Jr./684-3856	Calvin Chow/206-684-4652

Legislation Title:

AN ORDINANCE relating to the City Light Department; authorizing the execution of two confirmation agreements with Power County Wind Park North, LLC and Power County Wind Park South, LLC for the purchase of environmental attributes in the form of renewable energy certificates that are necessary or convenient for meeting the requirements of the Washington State Energy Independence Act; and further authorizing the execution of other necessary and convenient agreements for the receipt, tracking, transferring, management, and sale of the environmental attributes.

Summary of the Legislation:

This legislation approves the confirmation agreement for the eight-year purchase of renewable energy certificates (“RECs”) to allow the City Light Department (“City Light”) to comply with the Washington State Energy Independence Act also known as Initiative 937 or I-937.  Under these agreements, City Light would pay $12 per REC from 2024 through 2031 for approximately 110,000 RECs per year.

Background: 

This legislation approves the confirmation agreements for the purchase of RECs from Power County Wind Park North, LLC and Power County Wind Park South, LLC, new wind farms located in American Falls, Idaho.  These resources are expected to produce about 110,000 RECs annually.  City Light will receive 100 percent of the RECs associated with the renewable resource starting in 2024 for an eight-year term.  The RECs will be delivered to City Light through the Western Renewable Energy Generation Information System.  City Light intends to use the RECs to partially meet its regulatory requirement under the Energy Independence Act.

__X__ This legislation has financial implications.

Appropriations:

Fund Name and Number	Department	Budget Control Level*	2011 Appropriation	2012 Anticipated Appropriation
TOTAL

*See budget book to obtain the appropriate Budget Control Level for your department.

Appropriations Notes:  Although this legislation does have fiscal implications, these impacts will not be realized until 2024.  There are no appropriation impacts in 2011 and 2012.

Other Implications:

a) Does the legislation have indirect financial implications, or long-term implications?

Yes.  Starting in 2024, the expected annual cost for the eight-year term is $1.32 million.

b) What is the financial cost of not implementing the legislation?  The financial cost of not implementing this legislation would be to purchase RECs or resources that are more expensive or pay the costs related to the penalty in I-937 for not having sufficient RECs.  The penalty cost (for not having obtained sufficient RECs and renewable resources to meet the requirements of I-937) is approximately four times greater than the acquisition cost of the RECs proposed in this legislation.

c) Does this legislation affect any departments besides the originating department? 

No.

d) What are the possible alternatives to the legislation that could achieve the same or similar objectives?  Alternatives include purchasing RECs from other renewable resources and/or energy plus RECs from new renewable resources.  City Light is acquiring and will continue to acquire both to meet its regulatory obligation and its retail customer load requirements.  Renewable resources that include energy, RECs, and delivery cost approximately six times more than this REC purchase.

e) Is a public hearing required for this legislation? 

No.

f) Is publication of notice with The Daily Journal of Commerce and/or The Seattle Times required for this legislation? Not applicable.

g) Does this legislation affect a piece of property? No.

h) Other Issues:

List attachments to the fiscal note below: None.