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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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Department of Public Works
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DATE:
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December 5, 2007
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BOARD MEETING DATE:
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December 18, 2007
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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James Porter, Director of Public Works
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SUBJECT:
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Hearing to Consider a Facility Ground Lease and Agreement with Northstar Power to Design, Engineer, Construct, Operate, and Maintain a Cogeneration System at the San Mateo County Health Campus and to Purchase Energy Produced by the System
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RECOMMENDATION:
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Hold a public hearing, receive any and all comments, close the hearing and then adopt a resolution authorizing execution of an agreement on behalf of the County with Northstar Power to purchase energy produced by the above referenced project.
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VISION ALIGNMENT:
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Commitment: Responsive, effective, and collaborative government.
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Goal 20: Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain.
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The recommended action furthers the following commitment and goal by providing long-term energy cost savings and reduction of green house gases at the San Mateo County Health Campus.
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BACKGROUND:
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Previous Board Action
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On November 27, 2007, your Board adopted a resolution setting a time and date of a public hearing to consider the above referenced agreement.
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DISCUSSION:
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Government Code Section 4217.12 provides that a public agency may enter into an energy service contract and any necessarily related ground lease on terms that its governing body determines are in the best interests of the public agency. The decision must be made at a regularly scheduled public hearing, public notice of which is given at least two weeks in advance. The agreement will require a finding that the cost for energy under the contract will be less than the anticipated marginal cost of energy that would otherwise have been consumed.
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We believe your Board can make the necessary findings as the proposed agreement guarantees energy produced by the proposed cogeneration system will be sold to the County at rates ten percent (10%) below rates the County would otherwise pay to its regular utility providers. The cogeneration process produces savings by generating electricity on site and converting the heat by-product into useful heating and domestic hot water. Northstar will design, engineer, construct, operate, and maintain the Cogeneration System. Operation of the Cogeneration System could be suspended in the event an increase in fuel cost causes generated power to cost more than power purchased from the utility company. The County may purchase the system at any time after the first year. Upon expiration of the ten-year term of the agreement ownership of the system will be transferred to the County free and clear of all liens and encumbrances.
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We are recommending that an agreement be entered into with Northstar Power as we believe this is the most cost effective way to provide cogeneration at the San Mateo County Health Campus. An energy purchase agreement, such as this, although not a typical County agreement, provides the benefits of clean technology and cost savings and transfers the labor intensive and often times difficult “start up” phase of system operation to the vendor. We feel the benefits to the County and the environment outweigh the risks.
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Resolution and agreement have been approved as to form by County Counsel.
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FISCAL IMPACT;
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There is no impact to the General Fund or any fund by entering into this agreement. Under terms of the agreement the County has the option of purchasing the cogeneration system from Northstar after the first year of operation. At that time, if financial analysis shows the economics are in the County’s favor, we will return to your Board with a financing plan for your review and approval.
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