Consideration and Approval of Contract:  Arizona Power Authority Hoover Municipal Power Exchange Program.

The City is under contract with the Arizona Power Authority to receive 373 kilowatts (814,103 kilowatt hours) of energy from Hoover Dam at a significantly lower rate than the City currently pays to APS.  This contract was approved by the former City Council in 2016 and is valid until 2067.

The Arizona Power Authority Hoover Municipal Power Exchange Program will allow the City to purchase wholesale power from other Hoover power customers that are not using their total power allocations. By doing so, the City would improve its likelihood of receiving its total annual Hoover allocation of 373 kilowatts and increase fiscal savings.  The reason the City is not receiving the total power allocation is due to drought, maintenance, outages, and other factors at Hoover Dam.

Other municipalities joining this pooling program include Payson, Sedona, Globe, Phoenix, and Sierra Vista.  If the program is approved, Current Insight Inc., is approved by the Arizona Power Authority to represent the purchasing pool, monitor quarterly price per kilowatt, and recommend to the pool when to purchase the electric commodity.  The purchase will be month by month because of fluctuations in the energy pricing market.  For example, price per kilowatt is higher in the summer months due to increased energy demands.  Pricing is lower in the winter months due to decreased energy demands. 
 

By participating in the Arizona Power Authority Hoover Municipal Power Exchange Program, the City will significantly improve its net savings potential from the City's existing Arizona Power Authority contract.  It will also insure against declining power supplies from Hoover Dam as the drought contingency plan is implemented in the coming years.  Projected savings at the City's full allocation is included as an attachment in the agenda packet.

Connection to Council Goal and/or Regional Plan:
Council Goals:
Take meaningful climate change action.
 
Regional Plan:
Goal E.2. Expand production and use of renewable energy.
Goal E&C.1. Proactively improve and maintain the region’s air quality.
Goal E&C.2 Reduce Greenhouse gas emissions.
Goal E&C.3 Strengthen community and natural environment resiliency through climate adaptation efforts.
Goal E&C.4. Integrate the best available science into all policies governing the use and conservation of Flagstaff’s natural resources.

Climate Action and Adaptation Plan:
E-2-A Move forward with City Council target of 100% renewable energy use for the municipality with a plan for achieving that target by 2025.
 

Yes, the Arizona Power Authority Contract was approved and signed by the City of Flagstaff in September 16, 2016.