2016-01-26_PWETC_Minutes - Laserfiche WebLink

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At the request of Member Cihacek, Mr. Culver further confirmed that he had asked that the city's escalator be included in the agreement even if Excel's rates don't change, which Sundial Solar considered not to be problematic and proposing language in the power purchase agreement that the city would never pay more than the Xcel Energy rate. Member Cihacek noted that the only difference or unknown was with the escalator and Xcel rate was as the type of energy changes and the escalator model changes, and if that always stayed comparable to what the city would have had before this agreement. Member Seigler expressed his concerns, admitting he didn't understand the proposed numbers at all and extension of the tax credits. Member Seigler questioned the rush to recommend this agreement, since recent legislation had extended the Made in Minnesota program until 2023. Member Seigler suggested waiting another year, questioning if this is a good deal or only an average deal, and whether the Made in Minnesota grant should be incorporated into this solar plan. Mr. Culver clarified that the city was still pursuing that grant option as well, but noted the differences in that program compared with this, and maximum amount of 40 KWh, with staff pursuing that solar application for potential use on smaller roofs on campus, such as City Hall, the Police and/or Fire Station roofs. Given the size of this system, even with a grant from Made in Minnesota, Mr. Culver opined that it would be difficult for the city to fund on its own and other than through this type of power purchase agreement. Mr. Culver noted that this solar system is considerably larger and provides significant savings. Mr. Culver noted that two proposals had been initially received during the summer of 2015, based on assumptions that tax credits were going to run out, even though they were subsequently extended. Mr. Culver reported that, in talking to Sundial Solar and having held numerous conversations with other developers over the last 1.5 years, he would recommend this as the best deal from staffs perspective, especially since the city didn't have to upfront any down payment or pay toward the system, while getting an immediate return with little if any investment. Discussion ensued regarding blended rates, current Xcel Energy rate, and further review of the spread sheet; the escalator versus static rates; and other financial variables and considerations. Member Cihacek noted that the power purchase agreement provides a positive cash flow and actualized savings for the city in year one; with Mr. Johnson confirming that the City would save approximately $8,000 in energy costs in year one. Member Cihacek opined that this proposal represents the least risk to the city, and for the benefit of Member Seigler, noted the only unknowns were regarding the escalator rate and clarifications currently being concluded by staff. Page 8 of 20