z 2024-01-16 CC Staff Report - Power Grids & Electrical Substation UpgradesFISCAL YEARS 2023/2024 THROUGH 2028/2029; AND APPROVE DISPOSAL
OF SURPLUS EQUIPMENT
8. APPROVE AGREEMENT FOR CONTRACT SERVICES WITH CARAHSOFT
TECHNOLOGY CORP FOR THE PURCHASE AND IMPLEMENTATION OF
OPENGOV ENTERPRISE ASSET MANAGEMENT SOFTWARE SYSTEM
9. AUTHORIZE SPENDING AUTHORITY FOR STAFF TO PURCHASE
INFORMATION TECHNOLOGY EQUIPMENT AND SOFTWARE THROUGH
CDWG, CARAHSOFT, NEWEGG, AND DELL
10. EXCUSE ABSENCE OF COMMISSIONER CALDWELL FROM THE JANUARY
9, 2024, PLANNING COMMISSION MEETING
11. AUTHORIZE OVERNIGHT TRAVEL FOR MARKETING MANAGER TO
ATTEND TOURISM OUTREACH ACTIVATION IN SAN DIEGO, CALIFORNIA,
FEBRUARY 16-18, 2024
12. APPROVE DEMAND REGISTERS DATED DECEMBER 15, AND DECEMBER
22, 2023, AND JANUARY 5, 2024
13. APPROVE DEMAND REGISTERS FOR SOUTHERN CALIFORNIA GAS
COMPANY DATED OCTOBER 6, NOVEMBER 10, AND DECEMBER 8, 2023
MOTION — A motion was made and seconded by Councilmembers Fitzpatrick/Sanchez
to approve Consent Calendar Item Nos. 1-12 as recommended. Motion passed: ayes —
4, noes — 0, absent — 1 (Pena), abstain — 0.
CONSENT CALENDAR ITEM NO. 13
COUNCILMEMBER McGARREY RECUSED HERSELF, AND SAID SHE WILL
ABSTAIN FROM THE DISCUSSION AND VOTE ON CONSENT CALENDAR
ITEM NO. 13 DUE TO A POTENTIAL CONFLICT OF INTEREST STEMMING
FROM A BUSINESS RELATIONSHIP WITH HER EMPLOYER SOUTHERN
CALIFORNIA GAS COMPANY
MOTION — A motion was made and seconded by Councilmembers Fitzpatrick/Sanchez
to approve Consent Calendar Item No. 13 as recommended. Motion passed: ayes — 3,
noes — 0, absent — 1 (Pena), abstain — 1 (McGarrey).
STUDY SESSION
1. DISCUSS COST -SHARE OPTIONS FOR ELECTRICAL SUBSTATION
UPGRADES
City Manager McMillen presented the staff report, which is on file in the Clerk's Office.
CITY COUNCIL MINUTES
Page 5 of 13 JANUARY 16, 2024
Council discussed that approximately 3,000 additional homes can be serviced through
the Avenue 58 substation upgrade; the area boundary that the substation upgrade will
cover; the start time for the 20-year power capacity guarantee being negotiable with IID;
the 20-year capacity guarantee with IID being the length of time IID would hold the
allocated pre -paid power at the substation, rather than the lifespan of the equipment; IID's
responsibility to ensure that sufficient power is routed to a substation when pre -paid for
by investors/developers; the need for a guarantee from IID that it would maintain the
equipment should developers pay for new substations; and IID's ability to ensure energy
transmission if new substations are built or substation upgrades are completed
throughout the Coachella Valley.
PUBLIC SPEAKER: Mark Rogers, Principal with TRG Land, Inc. (Travertine, La Quinta)
— said he is interested in understanding how this will work from a cost -share standpoint;
and happy to see the progress and looks forward to continued discussions.
PUBLIC SPEAKER: John Gamlin, President with CM Wave Development — said he
supports cost -sharing; thanked the City for initiating this effort; looking forward to working
through the agreement with IID; the 20-year guarantee is critical; noted there is additional
cost to developers to get power from a substation to a project; and expressed interest in
learning more about the reimbursement component.
PUBLIC SPEAKER: Randall Bone, CEO with Sunrise Company (Andalusia Country Club,
La Quinta) — said Andalusia is still constructing phases of the development, thus ensuring
power capacity is critical; supports the City's efforts in working with IID; and noted that
Sunrise Company is committed to doing its part to ensure this moves forward.
IID REPRESENTATIVE: Cameron Bucher, outside legal counsel for IID — clarified that
the Power Rates Charge provision from the 1934 Agreement of Compromise (a 99-year
agreement between IID and Coachella Valley Water District, where IID will provide
electrical service for the Eastern Coachella Valley) states that IID can charge no more for
service in the Coachella Valley than the cost of getting the power to the Coachella Valley
over and above what it would cost in Imperial County; IID charges the same rate structure
to all its customers within the County; said that IID is currently working on a cost -share
structure for an agreement template; and stated that IID is encouraged by the direction
the conversations for new infrastructure are going, and is motivated to find a solution that
works for everyone.
IID REPRESENTATIVE: Mario Escalera, Operations and Infrastructure Manager, IID
Energy Department — provided a brief summary of his professional background; gave his
guarantee that a solution will be found, and it will get done; answered questions regarding
transmission lines; confirmed that IID will be able to handle the increased capacity, and if
there is a need to upgrade transmission lines, it will be done at the time of the substation
upgrade; noted IID's transmission system is in the process of being upgraded; stated the
operation and maintenance of new substations is IID's responsibility; noted that IID now
has a dedicated team to address this matter; explained how to approach purchasing the
CITY COUNCIL MINUTES
Page 6 of 13 JANUARY 16, 2024
necessary components for a substation, in conjunction with the cost -sharing agreement,
which is still in development.
Council discussed the lead time for both, a new substation and transmission lines is 2 to
3 years; IID's provision of internal and external (e.g. purchased) power generations; IID
has completed a 15-year plan for infrastructure growth system -wide; the need for better
communication between the City and IID; the history of substation and transmission
shortages; Indio's Joint Powers Agreement with IID to help raise funds through rate
increases for continued service; factoring the potential undergrounding of utilities into the
plans; the need for IID to stay involved; and ways to expedite the long lead times for
equipment purchases.
Council commended City Manager McMillen and other local City Managers for their
efforts in this process; and noted that not only homes, but commercial development needs
power as well.
PUBLIC SPEAKER: Alena Callimanis, La Quinta — spoke of the challenges she has faced
with solar power, as each year the amount of reimbursement she receives continues to
reduce; and as more buildings install solar power, it should relieve and extend the life of
IID equipment.
IID REPRESENTATIVE: Mr. Escalera — explained that solar -generated power is difficult
to store; it is mostly generated during times when there is less energy usage; utility
companies are required to have full capacity energy reserves for homes, even for
customers using solar power, so that during times when solar power cannot be generated,
the home can still access these electricity reserves, thus, solar -powered homes do not
alleviate stress on the electrical grid.
Staff provided clarification that the Avenue 58 substation upgrade will likely not benefit
any of the existing users, and it would only be beneficial for the developers involved,
however, there may be benefits to existing users if other substations are upgraded in the
future; additionally noting that should another substation upgrade be brought forward, it
would be evaluated independently, as every situation is different.
Council reached a consensus and directed staff to continue pursuing the discussion on
how to obtain reimbursement, should the City fund a portion of the cost to complete
necessary upgrades; gain more information on extending the 20-year power capacity
guarantee, knowing that certain development phases may take longer than that to
construct; and explore options for the City to fund any gap in substation upgrade costs to
help facilitate current and future developments.
MAYOR EVANS CALLED FOR A RECESS AT 6:35 P.M.
MAYOR PRO TEM PENA JOINED THE MEETING AT 6:37 P.M. WHILE
COUNCIL WAS AT RECESS
CITY COUNCIL MINUTES
Page 7 of 13 JANUARY 16, 2024
STUDY SESSION ITEM NO. 1
City of La Quinta
CITY COUNCIL MEETING: January 16, 2024
STAFF REPORT
AGENDA TITLE : DISCUSS COST -SHARE OPTIONS FOR ELECTRICAL
SUBSTATION UPGRADES
RECOMMENDATION
Discuss cost -share options for electrical substation upgrades.
EXECUTIVE SUMMARY
• Imperial Irrigation District (IID) power distribution substations in La Quinta are
nearing or have reached capacity and need to be expanded or upgraded for both
existing customers and for new development.
• When there isn't enough electricity for new development projects, IID is requiring
developers to pay for electrical substation upgrades at an estimated cost of $20
million per 50 megavolt ampere (MVA) upgrade.
• Staff has identified the following solutions for Council consideration:
1. Develop a cost -share system between developers, IID, and the City, once the
City's participation threshold is determined; and
2. Develop a reimbursement mechanism from future development to cover
capacity requirements.
FISCAL IMPA%, i — Undetermined at this point.
BACKGROUND/ANALYSIS
In February 1934, the Coachella Valley Water District (CVWD) and IID entered into a 99-
year Agreement of Compromise (Agreement) making IID the electrical service provider
for the Eastern Coachella Valley. That Agreement expires on December 31, 2032.
IID has not planned for the growing needs of the Coachella Valley, which makes up more
than 60% of IID's energy ratepayers. For a project to be built, a developer must receive
a "Will Serve" letter from IID that states there is enough power from the associated
substation to serve additional new ratepayers/customers.
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IID's current policy is to not pay for growth, but for growth and development to pay for
itself. Four of five substations in the City of La Quinta currently need expansions or bank
upgrades to meet the demands of existing customers and for new development to move
forward.
The focus of this study session is to explore opportunities for developers and the City to
work together with IID to create a cost -sharing agreement that would expand substation
capacity. Understanding that a standard 50 MVA upgrade at an existing substation has
the capacity to serve roughly 3,000 homes, costs approximately $20 million and takes 2
to 3 years to construct given lead times on critical components, it is vitally important for
all stakeholders to participate.
The City working closely with IID has brought together about 10-12 various developers
who are dependent on the expansion of the Avenue 58 substation for the viability of their
respective projects. Initial estimates show that if all these developers were to pay their
fair share of capacity estimated to be consumed by their projects it would represent over
80% of the total cost of expansion. The remaining 20%, or roughly $3 million in this case,
could be funded by the City with reimbursement provisions built into an agreement that
would enable the City to be paid back over time as additional developments or projects
come forward.
In consideration of the direct economic impacts that increased electrical capacity has on
our City, it is critical to discuss how to assist in ensuring solutions are forthcoming and
prevent a reputation that will cripple development and growth for decades.
Prepared by:
Approved by:
Sherry Barkas, Communications Specialist
Jon McMillen, City Manager
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