The City Council approved the utility's plan that 10 percent of the utility's generation portfolio come from renewable energy by 2008, most all of which will be funded through the rate base. According to that plan, the utility can pay a price premium of not more than 5¢ per kilowatt-hour for the renewable energy generation, which would not raise the rate-base above $.05 (one-half cent) per kWh. The 10 percent goal was derived from surveys of utility customers' willingness to pay for renewable energy.
Currently, Palo Alto's power mix includes 4 percent non-hydro renewable energy in its portfolio and is anticipating issuing a request for proposal in the near future for purchase contracts or asset ownership to meet its future capacity goals. Palo Alto would consider financing projects itself, but project development and operations would likely be contracted out.
The utility will have a preference for proposals with lower cost of power but will also consider other factors in its final decision, such as power reliability, the plant's proximity to transmission, and the financial standing of power merchants. The utility will consider the Renewable Energy Production Incentive as a line item in a proposal but a proposal's power prices need to be viable without it. Palo Alto will also consider accepting multiple proposals for smaller amounts of capacity.
Contact:
Karl E. Knapp, Ph.D.
Senior Resource Planner, Resource Management Division
City of Palo Alto Utilities
Palo Alto, California
Telephone: 650-329-2309