Power Purchase Power Purchase AgreementsAgreements

The City of Santa Maria’s The City of Santa Maria’s ExperienceExperience

October 23, 2012October 23, 2012

City of Santa Maria StatisticsCity of Santa Maria StatisticsNorthern Santa Barbara County.Northern Santa Barbara County.Disadvantaged community of 100,000.Disadvantaged community of 100,000.Largely agricultural.Largely agricultural.Secondary trickling filter treatment with Secondary trickling filter treatment with

anaerobic digesters, percolation ponds, anaerobic digesters, percolation ponds, sludge drying beds. sludge drying beds.

Design 13.5 MGD Currently 8.5 MGD.Design 13.5 MGD Currently 8.5 MGD.Creative solutions to maintain affordability.Creative solutions to maintain affordability.

HistoryHistory2004 - US Energy signed agreement with 2004 - US Energy signed agreement with

City for use of digester gas.City for use of digester gas.2006 – Installation and start-up of four 2006 – Installation and start-up of four

Ingersoll Rand microturbines completed. Ingersoll Rand microturbines completed. 2007-2008 – System unreliable. 2007-2008 – System unreliable.

Microturbines did not start up to handle Microturbines did not start up to handle varying demand. varying demand.

2008 – Microturbines replaced with 300 2008 – Microturbines replaced with 300 kW engine. US Energy cost ~$170,000kW engine. US Energy cost ~$170,000

History (continued)History (continued)2008-2010 – Engine success variable. 2008-2010 – Engine success variable. 2011 – CHP Clean Energy takes over 2011 – CHP Clean Energy takes over

system.system.2012 – CHP rehabilitates engine and 2012 – CHP rehabilitates engine and

makes other improvements. Estimated makes other improvements. Estimated cost ~$250,000. Starts back up July 2012.cost ~$250,000. Starts back up July 2012.

2012 Improvements2012 ImprovementsRebuilt engine.Rebuilt engine.Upsized exhaust manifold.Upsized exhaust manifold.Replaced chiller.Replaced chiller.Replaced control system.Replaced control system.Upsized hot water delivery system.Upsized hot water delivery system.New air-fuel ratio sensors.New air-fuel ratio sensors.New blower, cooler pumps and intercooler.New blower, cooler pumps and intercooler.

Elements of PPA AgreementElements of PPA AgreementWe provide them gas.We provide them gas.We buy their power at 8.7 cents per kWh.We buy their power at 8.7 cents per kWh.They pay Departing Load Nonbypassable They pay Departing Load Nonbypassable

charges.charges.They need to run cogen in “efficient and They need to run cogen in “efficient and

effective manner.”effective manner.”Term of contract is 10 years, with buyout Term of contract is 10 years, with buyout

provisions.provisions.

How’s it working out?How’s it working out?Engine still experiences regular outages Engine still experiences regular outages

during partial peak and peak times.during partial peak and peak times.Departing load charges “unanticipated” by Departing load charges “unanticipated” by

CHP. Currently working on waiver.CHP. Currently working on waiver.Very low APCD emissions limits means Very low APCD emissions limits means

high potential for lean fuel misfires.high potential for lean fuel misfires.

Is it paying off?Is it paying off?Since July 2012, Cogen facility has cost Since July 2012, Cogen facility has cost

more than if on PG&E alone.more than if on PG&E alone.100% PG&E:100% PG&E: $24,100$24,100100% Cogen:100% Cogen: $16,100$16,100Currently:Currently:

PG&E: $8,300 demand, $7,900 use.PG&E: $8,300 demand, $7,900 use.Cogen: $8,000Cogen: $8,000Total: $24,200Total: $24,200

What would we do differently?What would we do differently?Performance standards!Performance standards!

Uptime criteria.Uptime criteria.Demand charge responsibility.Demand charge responsibility.

Third party expert review of the design.Third party expert review of the design.Cost evaluation prior to agreement.Cost evaluation prior to agreement.Realistic expectations.Realistic expectations.