Submitted By: Lisa M. Crouthamel
presenter
Presentation By: Chad Lynch
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Department: Electric Utility
STAFF RECOMMENDATION (Motion Ready):
title
Adopt Resolution 2023-27 approving the FMPA All-Requirements Power Supply Project - Solar III Energy Participation Agreement and the three megawatts solar transfer from the Solar I to Solar III Participant Project
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OCALA’S RELEVANT STRATEGIC GOALS:
Quality of Place
PROOF OF PUBLICATION:
N/A
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BACKGROUND:
On December 19, 2017, Council approved a solar generation commitment for 10 megawatts (MW) through an FMPA All-Requirements Projects (ARP) Solar I Participants agreement. 7MW of that commitment from the Harmony facility has been active since Fiscal Year 2021. 3MW of the original commitment from the Poinsett facility was not constructed as planned, and that contract was terminated in December 2022.
On July 16, 2019, Council committed to receiving an additional 20MW of generation from the ARP Solar II Participants agreement, with new solar facilities Rice Creek and Whistling Duck coming online in 2023 and 2024. To compensate for OEU’s loss of 3MW from the Phase I - Poinsett project, OEU was presented the opportunity to redirect the 3MW commitment to the upcoming FMPA ARP-Solar III Participants project. The Phase III project will include a collective 300MW of solar generation from multiple sites geographically dispersed across Florida and is scheduled for implementation in 2025 and 2026. OEU will be able to redirect the 3MW share at the same not-to-exceed target megawatt-hour (MWh) rate as the original Phase 1 Poinsett project.
The Power Purchase Agreement (PPA) for FMPA ARP Solar Participants is a 20-year term, with an option for two five-year extensions and a flat rate throughout the contract term for solar generation. The PPA is between the FMPA ARP and the solar project owner, Origis Energy. The ARP Solar III Energy Participation Agreement is between OEU and FMPA ARP. FMPA administers the PPA on behalf of all ARP participants.
The Solar Phase III participation, including the 3MW redirection of the original Poinsett project and OEU’s proportional share of the overall ARP participation, will bring OEU’s total commitment to Community Solar to 43.7MW by 2026. This represents just under fifteen percent of OEU’s summer peak load needs.
FINDINGS AND CONCLUSIONS:
The 3MW redirection from the Poinsett Solar project to the Origis Energy project will fully restore the original 30MW planned, while maintaining the original PPA price point target.
FISCAL IMPACT:
The Origis Energy project has a not-to-exceed generation price cap of less than $45/MWh. The actual fixed 20-year term rate is anticipated to be lower.
PROCUREMENT REVIEW:
The underlying Agreement has been reviewed in compliance with the City’s Procurement Policy.
LEGAL REVIEW:
This Agreement will be reviewed and approved for form and legality by City Attorney, William E. Sexton.
ALTERNATIVE:
• Approve with amendments
• Deny
• Table
RESOLUTION 2023-27
(ALL-REQUIREMENTS POWER SUPPLY PROJECT
SOLAR III ENERGY PARTICIPATION AGREEMENT TRANSFER OF
SOLAR RATE COMMITMENT FROM POINSETT FACILITY)
A RESOLUTION OF THE CITY OF OCALA (I) PROVIDING FOR AUTHORITY; (II) PROVIDING FOR THE INCORPORATION OF CERTAIN FINDINGS, DEFINED TERMS, AND GENERAL PROVISIONS; (III) APPROVING AND AUTHORIZING THE EXECUTION OF A SUBSTITUTE ALL-REQUIREMENTS PROJECT SOLAR PARTICIPATION AGREEMENT BETWEEN FLORIDA MUNICIPAL POWER AGENCY (ALL-REQUIREMENTS POWER SUPPLY PROJECT) AND THE CITY OF OCALA, PROVIDING FOR THE MAKING OF PAYMENTS PURUSANT TO SUCH SUBSTITUTE ALL-REQUIREMENTS PROJECT SOLAR PARTICIPATION AGREEMENT, AND MAKING CERTAIN COVENANTS IN CONJUNCTION WITH SUCH PAYMENTS; (IV) REQUESTING A NUMBER OF MEGAWATTS OF CAPACITY AND ENERGY FROM THE PHASE III SOLAR PPA WHICH WILL SERVE AS THE BASIS FOR THE CALCULATION OF EACH ARP SOLAR PARTICIPANT’S SOLAR RATE COMMITMENT AND AUTHORIZING THE AUTHORIZED OFFICER OF THE CITY OF OCALA TO APPROVE A FINAL SOLAR RATE COMMITMENT; (V) AUTHORIZING THE INCLUSION OF SUCH FINAL SOLAR RATE COMMITMENT IN THE PHASE III SOLAR PPA BETWEEN FLORIDA MUNICIPAL POWER AGENCY (ALL-REQUIREMENTS POWER SUPPLY PROJECT) AND THE SELLER; (VI) PROVIDING FOR THIS RESOLUTION TO CONSTITUTE A CONTRACT; (VII) DESIGNATING AUTHORIZED OFFICERS OF THE CITY OF OCALA, DESIGNATING AUTHORITY OF AUTHORIZED OFFICERS, AND PROVIDING FOR FURTHER ACTIONS; (VIII) TAKING OF OTHER ACTIONS; (IX) PROVIDING FOR SEVERABILITY; AND (X) PROVIDING AN EFFECTIVE DATE.
Whereas, on March 21, 2018, the Florida Municipal Power Agency (“FMPA”) Executive Committee approved two agreements to permit Participants in the FMPA All-Requirements Power Supply Project (each, an “ARP Participant”) to separately commit to take the energy from and pay for renewable solar generation facilities contracted to the FMPA All-Requirements Power Supply Project, to wit: (i) an “ARP Solar Participation Agreement” between Florida Municipal Power Agency (All-Requirements Power Supply Project) and the City of Ocala, Florida and each of the other FMPA ARP Participants that desired to commit to participating in one or more renewable solar generation projects (each, including the City of Ocala, Florida, being referred to hereafter as an “ARP Solar Participant” or, collectively, as the “ARP Solar Participants”); and (ii) a Renewable Energy Power Purchase Agreement between Florida Municipal Power Agency (All-Requirements Power Supply Project) and a seller entity (the “Solar PPA”) that provided for the purchase of all of the capacity and energy output associated with a 17.5 MW undivided share of a 74.9 MW renewable solar generation facility that would be constructed and was anticipated to reach commercial operation by June 30, 2020 (the “Poinsett Facility”).
Whereas, on March 21, 2018, the FMPA Executive Committee also approved revisions to Rate Schedule B-1 to provide for the ARP Solar Participants to pay for the capacity and energy each of the ARP Solar Participants would receive from the renewable solar generation projects pursuant to their Solar Participation Agreements (the “Solar Rate Commitment”).
Whereas, each of the ARP Solar Participant’s Solar Rate Commitment for 17.5 MW of the Poinsett Facility is as follows:
|
Project Participant |
Solar Rate Commitment |
|
City of Jacksonville Beach, doing business as Beaches Energy Services |
4.0% |
|
Fort Pierce Utilities Authority |
1.2% |
|
Utility Board of the City of Key West, Florida, doing business as Keys Energy Services |
2.0% |
|
Kissimmee Utility Authority |
12.1% |
|
City of Ocala |
4.0% |
The remaining 57 MW undivided share of the Poinsett Facility was committed to FMPA’s Solar Project.
Whereas, the City of Ocala, Florida, and the other ARP Solar Participants each have entered into an ARP Solar Participation Agreement with FMPA to take and pay for the capacity and energy associated with its Solar Rate Commitment in the Poinsett Facility. The City of Ocala, Florida, approved its ARP Solar Participation Agreement on March 6, 2018.
Whereas, on January 16, 2020, the FMPA Executive Committee approved an amendment to the Solar Project PPA that amended the guaranteed commercial operation date of the Poinsett Facility from June 30, 2020, to June 30, 2023.
Whereas, FMPA, on January 14, 2022, issued its Request for Proposals for Renewable Solar Generation Phase III, to solicit opportunities for FMPA, on behalf of the City of Ocala, Florida and other members of FMPA, to acquire additional capacity and energy from one or more renewable solar generation projects in the State (collectively, the “RFP”).
Whereas, in May 2022, Poinsett Solar LLC, an affiliate of Florida Renewable Partners, LLC (an affiliate of NextEra Energy, Inc.) and FMPA’s contract counterparty to the Solar PPA (“FRP”), notified FMPA of substantial cost, equipment shortages, and other issues FRP was facing in prosecuting the engineering, procurement, and construction activities for the Poinsett Facility to achieve the amended June 30, 2023, guaranteed commercial operation date.
Whereas, FMPA received a number of proposals in response to the RFP and evaluated and ranked those proposals for discussion with the City of Ocala, Florida and other FMPA member utilities that may have an interest in participating in an additional renewable solar generation project, including the City of Ocala, Florida, and the other ARP Solar Participants.
Whereas, over the summer and fall of 2022 FMPA staff engaged in significant discussions with the City of Ocala, Florida, and the other ARP Solar Participants, and FRP, and reached unanimous consent among the All-Requirements Power Supply Project and the ARP Solar Participants, and mutual consent between FMPA and FRP, to terminate the Solar PPA.
Whereas, on December 8, 2022, the FMPA Executive Committee approved entering into a termination and release agreement with FRP to terminate the Solar PPA and provide for the payment of certain termination funds to FMPA, which were received by FMPA and used to pay a portion of the initial costs of the All-Requirements Power Supply Project associated with the ARP Solar Participants’ Solar Rate Commitments as directed by the FMPA Executive Committee’s action on February 16, 2023.
Whereas, the ARP Solar Participation Agreement between FMPA and each of the ARP Solar Participants for the Poinsett Facility was terminated, by its terms, upon the termination of the Solar PPA.
Whereas, FMPA has now chosen a winning proposal from the responsive submissions to the RFP and entered into negotiations of contracts to provide for FMPA’s purchase of capacity and energy from one or more renewable solar generation facilities to be constructed, owned, and operated by Origis Development, LLC or its subsidiary or affiliated companies (collectively, “Origis”).
Whereas, the ARP is planning to commit to purchasing and receiving approximately 62MW of capacity and energy from one or more renewable solar generation facilities owned and operated by Origis for the ARP portfolio of power supply resources (collectively, the “Phase III Solar Resources”), for certain ARP Solar Participants, including the City of Ocala, Florida, that desire to enter into an arrangement with Florida Municipal Power Agency (All-Requirements Power Supply Project) to receive capacity and energy from the Phase III Solar Resources, pursuant to the pricing and terms negotiated between FMPA and Origis, based on the Origis proposal submitted in response to the RFP, as a substitute for the Solar Rate Commitment associated with the Poinsett Facility. As such, each such ARP Solar Participant may substitute its Phase I Solar Rate Commitment with a substantially similar rate commitment for such Phase III Solar Resources (for each such ARP Solar Participant, its “Phase III Solar Rate Commitment”).
Whereas, the staff of FMPA has kept the City of Ocala, Florida and the other ARP Solar Participants informed of the status of its discussions with Origis which have, now, progressed to the point of FMPA requesting a commitment from the City of Ocala, Florida as to its desire to participate in a new renewable solar generation facility, and its request for up to a certain number of megawatts of capacity and energy from the Phase III Solar Resources, pursuant to the terms of this Resolution, so that FMPA may finalize and enter into the necessary contractual arrangements with Origis to provide such capacity and energy from such Phase III Solar Resources to the City of Ocala, Florida and the other ARP Solar Participants, who likewise commit to take and pay for capacity and energy from the Phase III Solar Resources, contracted to the FMPA All-Requirements Power Supply Project, as a replacement to the Solar PPA (the “Phase III Solar PPA”).
Whereas, upon FMPA receiving the appropriate commitments from all ARP Solar Participants for the Poinsett Facility (to the extent such ARP Solar Participants wish to continue as ARP Solar Participants), it is the intent of FMPA staff to request that the Executive Committee of FMPA approve a substitute or amended ARP Solar Participation Agreement (a “Substitute ARP Solar Participation Agreement”) for the City of Ocala, Florida, and the other ARP Solar Participants desiring to commit to the Phase III Solar Rate Commitment, pursuant to the Phase III Solar PPA.
Whereas, the City of Ocala, Florida, hereby expresses its desire to continue to be an ARP Solar Participant for a renewable solar generation facility to replace the Poinsett Facility pursuant to the Phase III Solar PPA, and wishes to provide for the execution and delivery of the Substitute ARP Solar Participation Agreement with FMPA, and provide for its Phase III Solar Rate Commitment, pursuant to the provisions of this Resolution.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OCALA, FLORIDA THAT:
SECTION I. Authority for this Resolution. This Resolution is adopted pursuant to applicable provisions of Florida law, including Part II, Chapter 361, Florida Statutes, as amended; Section 163.01, Florida Statutes, as amended; and Part II, Chapter 166, Florida Statutes, as amended (collectively, the “Act”).
SECTION II. Incorporation of Certain Findings, Defined Terms, and General Provisions. (A) The recitals set forth in the “whereas” clauses above are hereby incorporated into and are a material part of this Resolution. Any capitalized term used in this Resolution and not defined herein shall have the meaning given to such term in the form of the Substitute ARP Solar Participation Agreement, attached to this Resolution in substantial form as Exhibit A. The ARP Solar Participant hereby approves, ratifies, and confirms all actions taken by it and FMPA, as set forth in the “whereas” clauses above and otherwise, to bring the opportunity for the ARP Solar Participant to execute and deliver the Substitute ARP Solar Participation Agreement for its Phase III Solar Rate Commitment. All previously adopted resolutions and actions of the Project Participant, to the extent in conflict with this Resolution, including all documents attached as exhibits hereto, are hereby declared to be and are void. References in this Resolution and in the Substitute ARP Solar Participation Agreement to “MW” or “MWh” are megawatts or megawatt hours, respectively (associated with the capacity or energy of the renewable solar generation project), as measured after conversion from direct current into alternating current by the renewable solar generation facility inverters.
(B) It is hereby found, determined, and declared as follows:
(i) The ARP Solar Participant has heretofore entered into the Interlocal Agreement Creating the Florida Municipal Power Agency, as amended (the “Interlocal Agreement”) pursuant to the Act. The ARP Solar Participant has also entered into the All-Requirements Power Supply Project Contract, as amended, with FMPA (the “ARP Contract”), and whereby the ARP Contract is substantially similar for all Participants (as defined in the ARP Contract), to share in the benefits and provide for its payment of ARP costs as provided in the ARP Contract.
(ii) The ARP Solar Participant is authorized by terms of the Act and other applicable provisions of law to plan, finance, acquire, construct, reconstruct, own, lease, operate, maintain, repair, improve, extend or otherwise participate jointly in any electric project, including the ARP.
(iii) It is necessary and desirable and in the best interests of the ARP Solar Participant and the residents of the State to whom the ARP Solar Participant furnishes, supplies, or distributes electrical energy that the Project Participant, together with the other ARP Participants, share in the costs of the Phase III Solar Rate Commitment in the manner and under the terms and conditions provided in the Substitute ARP Solar Participation Agreement and the ARP Contract.
(iv) The ARP Solar Participant now owns an electric or integrated utility system for the production or distribution, or both, of electric energy within its boundaries and service area.
SECTION III. Approval and Authorization to Execute a Substitute All-Requirements Project Solar Participation Agreement Between Florida Municipal Power Agency (All-Requirements Power Supply Project) and the City of Ocala, Florida, Providing for the Making of Payments Pursuant to such Substitute All-Requirements Project Solar Participation Agreement, and Making Certain Covenants in conjunction with such Payments. Subject to Sections IV and V, the terms of the Substitute ARP Solar Participation Agreement authorized and attached hereto as Exhibit A are expressly approved and the Authorized Officers (as hereinafter defined) of the ARP Solar Participant are hereby authorized, on behalf of the ARP Solar Participant, to execute the Substitute ARP Solar Participation Agreement and deliver the same to FMPA with such changes therein as the Authorized Officers of the ARP Solar Participant may approve as necessary or desirable, such approval to be evidenced conclusively by execution and delivery of the Substitute ARP Solar Participation Agreement. The (i) payment obligations of the ARP Solar Participant as set forth in the Substitute ARP Solar Participation Agreement and the ARP Contract, and the (ii) covenants of the Project Participant in conjunction with such payments, as also provided for therein, respectively, are hereby ratified, confirmed, and approved.
SECTION IV. Requesting a Number of Megawatts of Capacity and Energy from the Phase III Solar PPA which will serve as the Basis for the Calculation of Each ARP Solar Participant’s Phase III Solar Rate Commitment and Authorizing the Authorized Officer of the City of Ocala, Florida to Approve a Final Phase III Solar Rate Commitment. (A) The ARP Solar Participant hereby requests to be assigned a Phase III Solar Rate Commitment which will be equivalent to approximately 3 MW.
(B) After the execution of the Substitute ARP Solar Participation Agreement and delivery thereof to FMPA, Schedule 1 to each of such Substitute ARP Solar Participation Agreements shall be completed by FMPA to set forth the names and addresses of each ARP Solar Participant, committing to make a Phase III Solar Rate Commitment, and the Phase III Solar Rate Commitment of such ARP Solar Participants (which shall aggregate to 100%), and which in the case of the ARP Solar Participant shall be that percentage (rounded to the nearest one-thousandth percentage point) equivalent to approximately 3 MW. Such Phase III Solar Rate Commitments shall be determined by FMPA by assigning to each such ARP Solar Participant an Phase III Solar Rate Commitment equal to the percentage (rounded to the nearest one-thousandth percentage point) determined by (i) dividing the number of MW or capacity and energy requested by each such ARP Solar Participant by the aggregate number of MW of capacity and energy requested by all such ARP Solar Participants and (ii) multiplying the result by 100, with the Phase III Solar Rate Commitments of all such ARP Solar Participants adjusted (as nearly as possible on a pro rata basis) as necessary so that the aggregate of all Phase III Solar Rate Commitments equals 100%. The ARP Solar Participant hereby approves such method of calculation of its Phase III Solar Rate Commitment and those of all such other ARP Solar Participants.
(C) The Phase III Solar Rate Commitments expressed as percentages and the corresponding capacity and energy expressed in MW set forth above will be based upon an assumed capacity and energy of up to four 74.5 MW renewable solar generation facilities of Origis to be associated with the ARP, as determined by the FMPA Executive Committee. The ARP Solar Participant hereby approves such method of calculation of the total capacity and energy of the Phase III Solar Rate Commitments.
SECTION V. Authorizing the Inclusion of such Final Phase III Solar Rate Commitment in the Phase III Solar PPA between Florida Municipal Power Agency (All-Requirements Power Supply Project Project) and Seller. (A) The ARP Solar Participant hereby (i) accepts and approves its Phase III Solar Rate Commitment in the ARP as computed in accordance with Section IV(B) and (ii) approves the method of computation as set forth in Section IV(C) of the total capacity and energy of all Phase III Solar Rate Commitments, and (iii) approves of the changes to Rate Schedule B-1, as may approved by the FMPA Executive Committee, to provide for the payment of all costs of the Phase III Solar Rate Commitments, including insofar as a portion of those costs as expressly made an obligation of the ARP Solar Participant pursuant to the ARP Contract.
(B) After execution of the Substitute ARP Solar Participation Agreement and delivery thereof to FMPA, the blanks (if any) in such agreement for the total capacity and energy of the Phase III Solar Rate Commitment shall be completed by FMPA by insertions of the MW of total capacity and energy as determined pursuant to Section IV(C), and the blanks in each of such Substitute ARP Solar Participation Agreement for all ARP Solar Participants, committing to make an Phase III Solar Rate Commitment, for the Phase III Solar Rate Commitments and the total capacity and energy of the Phase III Solar Rate Commitments shall be completed by FMPA inserting the appropriate values as set forth in this Resolution.
SECTION VI. This Resolution shall Constitute a Contract. This Resolution shall be deemed to be and shall constitute a contract between the ARP Solar Participant and FMPA, with respect to the All-Requirements Power Supply Project. The covenants and agreements herein set forth to be performed by the ARP Solar Participant shall be solely for the benefit, protection, and security of FMPA.
SECTION VII. Designating Authorized Officers of the City of Ocala, Florida; Designating the Authority of Such Authorized Officers, and providing for Further Actions. (A) The City Council President and the City Manager of the ARP Solar Participant are each hereby designated as an “Authorized Officer” for the purposes of executing and delivering the Substitute ARP Solar Participation Agreement and other documents or instruments requested by FMPA related to the acquisition of renewable solar capacity and energy, and taking all other actions authorized by this Resolution. Each Authorized Officer may act individually in exercising the authority given to them pursuant to this Resolution, it hereby being expressly intended that both Authorized Officers need not act or execute a contract, document, or instrument to bind the ARP Solar Participant as authorized pursuant hereto.
(B) In addition to the authority provided in Section VII(A) of this Resolution, each Authorized Officer of the ARP Solar Participant is hereby authorized and empowered to execute and deliver, in the name of and on behalf of the ARP Solar Participant, such other documents, certificates, and papers, not specifically referred to in this Resolution, as are required or contemplated by the provisions of the Substitute ARP Solar Participation Agreement and take all such further action as may be necessary or desirable in carrying out the terms and provisions of the Substitute ARP Solar Participation Agreement.
SECTION VIII. Certain Other Actions. Each Authorized Officer designated hereunder is hereby authorized and empowered, individually, to take all further actions as may be necessary or desirable, or as otherwise requested by FMPA, in carrying out the terms and provisions of this Resolution and each of the documents and instruments referred to herein, and in effecting the ARP Solar Participant’s coordination with FMPA for the ARP Solar Participants’ participation in the All-Requirements Power Supply Project, including approving changes or modifications to the substantial form of documents or instruments referred to, or attached in substantial form as Exhibits to, this Resolution; provided, however, that for the purposes of approving subsequent changes or modifications to the documents or instruments substantially in the form of the Exhibits attached hereto each Authorized Officer may only act (1) on or pursuant to the grants of authority under this Resolution, and (2) if in the exercise of such authority the Authorized Officer determines that such subsequent changes or modifications do not present a material adverse change from the substantial form of such documents and instruments attached hereto. For purposes of the foregoing sentence, “material adverse change” means any material adverse change in the terms and conditions of a document or instrument to which the ARP Solar Participant would become a signatory, and which imposes on the ARP Solar Participant some additional, material risk of financial loss, indemnity obligation, covenant, warranty, or restriction of its legal rights in a manner that is not already contemplated, referenced, or within the scope of the documents substantially in the form of the Exhibits attached hereto.
SECTION IX. Severability. If one or more provisions of this Resolution should be determined by a court of competent jurisdiction to be contrary to law, such provisions shall be deemed to be severable from the remaining provisions hereof and shall in no way affect the validity or enforceability of such remaining provisions.
SECTION X. Effective Date. This Resolution shall take effect immediately upon its adoption.
This resolution adopted this ______ day of ______________________, 2023.
ATTEST: CITY OF OCALA
By: By:
Angel B. Jacobs James P. Hilty Sr.
City Clerk President, Ocala City Council
Approved as to form and legality:
By: _________________________________
William E. Sexton
City Attorney