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CC - CONSENT ITEM: Approval of an Amendment to an Existing Agreement with Clean Energy Renewables for the Provision of Renewable Natural Gas and Management of Associated Environmental Credits to Extend the Contract Term Through September 30, 2023.
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Meeting Date: June 26, 2023
Contact Person/Dept.: Allison Cohen/Transportation
Phone Number: 310-253-6543
Fiscal Impact: Yes [X] No [ ] General Fund: Yes [ ] No [X]
Attachments: Yes [ ] No [X]
Commission Action Required: Yes [ ] No [X]
Public Notification: (E-Mail) Meetings and Agendas - City Council (06/22/023)
Department Approval: Diana Chang, Chief Transportation Officer (06/14/2023)
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RECOMMENDATION
Staff recommends the City Council approve an amendment to the existing agreement with Clean Energy Renewables for the provision of renewable natural gas and the management of associated environmental credits to extend the contract term through September 30, 2023.
BACKGROUND/DISCUSSION
The California Air Resources Board (CARB) developed the Low Carbon Fuel (LCFS) program in compliance with AB 32 (the Global Warming Solutions Act of 2006) to reduce the carbon intensity of transportation fuels used in California thereby reducing greenhouse gas (GHG) emissions in California’s transportation sector. Under this program, each metric ton of CO2 reduced generates one LCFS credit. In July 2016, City Council approved an agreement with Clean Energy for the purchase and delivery of Clean Energy Redeem 100% Renewable Natural Gas (RNG) and consulting services for the management of the City’s participation in the Low Carbon Fuel Standard Program for a five-year term. Clean Energy and the City of Culver City executed a natural gas commodity and Renewable Natural Gas supply agreement on May 17, 2018 for a Delivery Period defined as June 1, 2018 through June 1, 2023. Per the contract, the Delivery Period may be extended upon the mutual written agreement of both parties.
On April 6, 2023, the City released RFP 2324 for the provision of renewable natural gas (RNG) for use as a vehicle fuel and the management of associated Renewable Identification number (RIN) and Low Carbon Fuel Standard (LCFS) credits associated with the supply and consumption of RNG. Proposals were due by April 20, 2023 and a total of five responsive proposals were received. In coordination with the Finance Department, Transportation Department staff met with each proposer to advise of them of the delay in award until July 10, 2023 to provide staff adequate time to make a more informed decision.
The natural gas market and state’s LCFS program are rapidly evolving and proposed legislative changes will have a material effect on the market over the next five years. To make the best, most informed decision that will most greatly benefit the City of Culver City, staff is requesting an additional time to review the five proposals received and conduct interviews as needed. The LCFS program is administered on a quarterly basis which would require Culver City to execute an agreement based on CARB’s quarterly reporting dates (January 1st, April 1st, July 1st or October 1st).
FISCAL ANALYSIS
There is sufficient funding available for the extension and additional costs are within Council authority to extend the existing contract until September 30, 2023. Funding for future year renewable natural gas is included in the Adopted Budget for Fiscal Year 2023-2024 in Account No. 30870400.520000 (Equipment Maintenance - Petroleum Products).
MOTION
That the City Council:
1. Approve an amendment to the existing contract with Clean Energy Renewables for the provision of renewable natural gas and management of associated environmental credits to extend the contract term through September 30, 2023;
2. Authorize the City Attorney to review/prepare the necessary documents; and
3. Authorize the City Manager to execute such documents on behalf of the City.