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W A I € it E N €R G Y L I F E RIVERSIDE PUBLIC UTILITIES Board Memorandum P U B L I C U T I L I 7 I E S BOARD OF PUBLIC UTILITIES DATE: October 21, 2011 ITEM NO: 10 SUBJECT: LA PAZ SOLAR TOWER PROJECT - WITHDRAWAL FROM DEVELOPMENT ACTIVITIES ISSUE: That the Board of Public Utilities consider the withdrawal by Riverside Public Utilities from further development of the proposed La Paz Solar Tower Project ("La Paz Project"). RECOMMENDATIONS: That the Board of Public Utilities recommend that the City Council: 1. Rescind its previous approval of the proposed Power Sales Agreement between the Southern California Public Power Authority and the City of Riverside for the purchase of renewable energy from the La Paz Project; 2. Repealing Ordinance No. 7113 approving the proposed Power Sales Agreement; and 3. Direct the Public Utilities General Manager to formally notify the Southern California Public Power Authority of Riverside's election to withdraw from further development activities related to the proposed La Paz Project. BACKGROUND: The Southern California Public Power Authority ("SCPPA") and its participating member agencies have been negotiating a Power Purchase Agreement ("PPA") between SCPPA and EnviroMission USA, Inc. ("EnviroMission"), the developer of the proposed La Paz Project in La Paz County, Arizona. Upon successful negotiation of the SCPPA-EnviroMission PPA, it was intended that each participating SCPPA member, including Riverside, would enter into a similar agreement with SCPPA for their respective share of the La Paz Project's output. The proposed La Paz Project, if constructed, would consist of a 2,000 foot "chimney with 32 wind turbine-generators distributed around its 300-foot-diameter base. The Project intends to utilize the wind flow that results from the natural upward draft produced by such a structure. On December 3, 2010, the Board of Public Utilities recommended City Council approval of a proposed Power Sales Agreement ("PSA") between the City of Riverside and SCPPA for the purchase of renewable energy from the proposed La Paz Project. At its meeting on January 4, 2011, the Council adopted an Ordinance approving the proposed PSA, as required by SCPPA. To date, EnviroMission and SCPPA have not finalized their negotiation and executed agreements for the development of the La Paz Project. Accordingly, SCPPA has not executed the Power Sales Agreement with Riverside. Based on the lack of progress related to Project financing and identification of sufficient participants, the likelihood of Project completion is doubtful. Therefore, staff recommends that Riverside take those actions necessary to withdraw from further activities related to the La Paz Project and focus on the acquisition of other potential renewable energy projects.