CITY COMMISSION AGENDA ITEM

Department:	City Manager’s Office		Commission Meeting Date:  Jan 14, 2019
Staff Contact:	Brandon McGuire, Assistant to the City Manager
Recommendations/Options/Action Requested:
Receive presentation on review of Westar Energy wind energy agreement.
Executive Summary:		During the December 18, 2018 and January 8, 2019 Commission meetings, comments were made by two members of the public regarding a Direct Renewable Participation Service Agreement offered by Westar Energy (Agreement). These commenters inaccurately stated that City Manager, Tom Markus, had unilaterally rejected an offer from Westar to enter the Agreement. These comments apparently resulted from a misunderstanding that occurred during general discussion at the December 12, 2018 Sustainability Advisory Board meeting. Please see the draft minutes of that meeting attached to this memo for the context of that discussion. City staff has worked, at the City Manager’s direction, since September to evaluate Westar’s offer and prepare an informed recommendation for the Commission’s consideration. This report and attachments is provided to update the Commission on this issue. The Agreement stems from the Kansas Corporation Commission’s approval of Westar’s renewable energy tariff in July 2018. The Agreement would allow large demand customers to purchase blocks of renewable energy (200 MW available) generated from the planned Soldier Creek Wind Farm at a fixed fuel charge of $0.018 per kWh for a 20-year term, beginning in 2020 when the wind farm is operational. The Agreement was offered on a first come, first served basis. Staff is unclear whether the sale of this wind energy will result in a reduction in energy production from Westar’s other power production sources, such as coal-fired power plants. The City is a major electricity consumer and operates numerous, complex facilities and systems that are critical to public health, safety and welfare. Westar’s proposed 20-year, fixed rate agreement could have a potentially significant cost impact, either positive or negative. Customers under the Agreement waive all rights to any billing adjustments arising from a claim that the customer’s service would be or would have been at a lower cost had it not participated in the Agreement. The proposed agreement also provides customers with no right to cancel the Agreement, with the exception that the Kansas Corporation Commission or some other agency increases the fixed charge (referred to as the Renewable Participation Charge).  Thorough review of legal/contractual considerations was conducted by the City Attorney’s Office and outside legal counsel in September. Additionally, staff engaged Black & Veatch to conduct a cost-benefit analysis of the proposed contract in addition to an energy assessment that was already underway with the consultant. Staff planned to present the proposed Agreement for the City Commission’s review upon completion of the analysis in order to inform the Commission’s decision. Westar officials previously informed staff that customers had until October 12, 2018 to enter the Agreement, but later communicated that not all of the capacity had been allocated. Staff just learned on January 11^th that Westar had finally allocated the full capacity of its purchased wind energy, so the City is unable to enter the proposed Agreement at this time. The analysis will continue until completion so that the City is able to make well-informed decisions about future similar opportunities, as energy technology is rapidly advancing.
Strategic Plan Critical Success Factor		Effective Governance/Professional Administration Sound Fiscal Stewardship
Fiscal Impact (Amount/Source):		There is no action item
Attachments:		Issue Timeline Westar Green Tariff Contract December 12, 2018 Sustainability Advisory Board Meeting Draft Minutes

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