ORDER-2023-76 : Authorization for the Mayor of Melrose to execute a Power Purchase & Lease Agreement for Rooftop Solar Installation at Hoover Elementary School

Transcript (~11 min @ 1:45)

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▶ 1:47 Speaker 2: All right hearing no objections public comment is closed and I should.

▶ 1:51 Ryan Williams: Motion to suspend the rules now so that we can hear from the member of the administration. so motion that by again unanimous consent Okay, seeing no objections suspend the rules and if you wouldn't mind Mr. Gobrial to read this order so that we can get

▶ 2:10 Speaker 2: started.

▶ 2:11 Speaker 1: certainly This is order 2023-76 authorization for the mayor of Melrose to execute a power and purchase power purchase and lease agreement for rooftop solar installation at the Hoover Elementary School.

▶ 2:30 Ryan Williams: Thank you very much. And as counselor, I'm sorry president mentioned. We do actually have two orders. This is the first for Hoover.

▶ 2:35 Speaker 2: The next one is for Horace, man.

▶ 2:37 Ryan Williams: Miss Grover welcome to the committee. Would you like to share a little bit of information on the order? That's before us tonight?

▶ 2:47 Speaker 3: You are muted.

▶ 2:52 Speaker 5: Sorry, I was just on the phone with the resident in. Wanted to make sure all right, Martha Grover

▶ 2:57 Speaker 6: here sustainability manager for the city of

▶ 3:04 Speaker 5: Melrose great to see you all. Thank you very much for meeting tonight so we can move these contracts along.

▶ 3:11 Speaker 7: so in an effort to lead by example, obviously and in support of our desire

▶ 3:20 Speaker 5: to reduce carbon pollution as expressed in our Net Zero action plan the cities putting trying to put solar on every available rooftop and we

▶ 3:29 Speaker 6: have it on the roof of the high school the middle school and DPW and

▶ 3:31 Speaker 7: when about a

▶ 3:34 Speaker 6: year ago, when it looked like the Hoover and Horace Mann

▶ 3:39 Speaker 7: roofs would be would likely be replaced. It was

▶ 3:42 Speaker 5: a good time to start the process to look at putting solar on those two roofs.

▶ 3:46 Speaker 6: So select energy is the developer.

▶ 3:49 Speaker 7: They are a

▶ 3:51 Speaker 6: Vendor contractors procured through

▶ 3:56 Speaker 5: power options Melrose is a is a member of this energy buying Consortium, which makes

▶ 4:02 Speaker 6: it really easy for us to procure these types of contracts and services. We also procure all of our

▶ 4:08 Speaker 5: electricity Supply and gas supply through power options. So it's taking

▶ 4:15 Speaker 6: about 14 months to get to this point. I

▶ 4:17 Speaker 7: when you'd undertake a

▶ 4:21 Speaker 6: Solar Development project the components of

▶ 4:27 Speaker 7: developing that project include engineering site visits looking at the local electrical

▶ 4:30 Speaker 6: roof infrastructure reviewing elect historical electric usage patterns going through

▶ 4:36 Speaker 5: some design phases Financial modeling.

▶ 4:43 Speaker 6: Where we take into account incentives federal tax credits

▶ 4:46 Speaker 7: electricity rate.

▶ 4:49 Speaker 5: Prices and projections for the future paying

▶ 4:51 Speaker 7: prevailing wage regulatory changes that took place constantly last last

▶ 4:59 Speaker 5: year with the last big change being the inflation reduction act that was passed in August

▶ 5:04 Speaker 6: that increased the federal tax credit for solar

▶ 5:08 Speaker 5: from 26% to 30% So we saw some some benefit

▶ 5:13 Speaker 7: to us when that happened were doing a roof structural analysis and a new thing under our new treasure is

▶ 5:24 Speaker 6: she's having our bond Council review all of these agreements. I don't fully understand why but it has something to

▶ 5:31 Speaker 7: do with.

▶ 5:34 Speaker 7: making somebody making money on public property that's

▶ 5:39 Speaker 5: tax, exempt so

▶ 5:43 Speaker 7: It's but anyway, it was the agreements for cleared

▶ 5:44 Speaker 6: by Bond Council cleared by our city solicitor.

▶ 5:51 Speaker 6: And so what you have before you in two different orders are a power purchase agreement in a lease agreement for both the Hoover Elementary School in the Horace, man.

▶ 6:04 Speaker 6: Elementary School, and these are fixed rate ppas meaning that the rate that we're paying.

▶ 6:11 Speaker 6: For the power that were that the system produces will not change over the 20 years of the term. So the savings

▶ 6:18 Speaker 7: you can project out are that rate

▶ 6:20 Speaker 5: against whatever will be paying for electricity over the 20 years.

▶ 6:29 Speaker 7: And I'm happy to answer any questions. Oh, the other thing I wanted to say is that these two contracts agreements

▶ 6:36 Speaker 7: and Lease Agreements are identical to PPA and Lease agreements that were

▶ 6:43 Speaker 6: approved by the city council two years ago for Memorial Hall

▶ 6:49 Speaker 7: that though that project didn't end up

▶ 6:51 Speaker 6: happening. We're going to revisit it. Now that the roof is

▶ 6:55 Speaker 7: getting done there and we added additional money to do

▶ 6:57 Speaker 5: some of this, you know to fix some of the structural issues. So we're revisiting that

▶ 7:06 Speaker 7: agreement, but you you've seen these agreements before the mayor

▶ 7:08 Speaker 5: signed these same agreements. So, but I'm happy to answer any of your questions.

▶ 7:17 Ryan Williams: Thank you so much. Miss Grover. Are there any questions from the members of the committee?

▶ 7:23 Speaker 2: Going once twice. Okay. I have a couple of questions.

▶ 7:29 Speaker 3: You mentioned that it's a fixed rate contract.

▶ 7:31 Ryan Williams: Do you can you tell us share with us what the rate is?

▶ 7:36 Speaker 3: That's fixed in this contract. Yeah, 13 cents

▶ 7:38 Speaker 6: for the Hoover and 12.7 cents for

▶ 7:42 Speaker 5: the Horace man.

▶ 7:44 Ryan Williams: And how does that compare to Kernel electricity

▶ 7:46 Speaker 2: rates?

▶ 7:49 Speaker 7: well there are it compares to what we're paying today in

▶ 7:55 Speaker 6: the components of the transmission and delivery

▶ 8:00 Speaker 7: charges of about I think 14 or 15 cents that we're paying today, but I can tell As we've been looking tracking our contracts for

▶ 8:13 Speaker 5: electricity Supply.

▶ 8:16 Speaker 7: are expired at the end of this year and we've been I've been tracking the markets and

▶ 8:21 Speaker 5: indicative pricing and

▶ 8:23 Speaker 7: It's not looking good. So we we have this

▶ 8:28 Speaker 6: we are paying historically low rates right now. We got

▶ 8:30 Speaker 7: very lucky and went into the market in I think it was.

▶ 8:38 Speaker 7: May of

▶ 8:42 Speaker 5: 2019 we entered into a long-term contract and then extended it.

▶ 8:46 Speaker 7: And we're paying eight and a half cents and that's

▶ 8:49 Speaker 5: with additional 10% of renewable energy credits. I

▶ 8:55 Speaker 6: suspect that our next contract is

▶ 8:57 Speaker 5: going to be somewhere in the range of 14 cents.

▶ 9:02 Speaker 7: So that's there's a little

▶ 9:04 Speaker 6: hand ringing going on here at City Hall about

▶ 9:07 Speaker 7: million dollar line item going up by maybe 50%

▶ 9:17 Speaker 5: or 100% that is

▶ 9:21 Speaker 5: But in any case so what solar does is kind of Hedge?

▶ 9:27 Speaker 5: You know offers a hedge against those future electricity cost increases.

▶ 9:32 Speaker 3: And I can't imagine trying to predict.

▶ 9:33 Ryan Williams: electricity costs in 20 years

▶ 9:37 Speaker 7: yeah, I mean like the there are you know,

▶ 9:41 Speaker 5: there's a federal agency that does it and it's generally they tend to increase at about

▶ 9:47 Speaker 5: two to three percent annually, but you see, you know, bigger jumps and swings through throughout.

▶ 9:55 Ryan Williams: So for for members of the of the committee, I want to let y'all know that I actually ran the ppas past three folks who I know who work in the Solar industry including a Melrose resident who works in the renewable energy industry and they found these contracts to be highly favorable to the city in terms of the fixed cost

▶ 10:12 Speaker 2: in terms of the cost over time in terms of

▶ 10:15 Ryan Williams: the lack of exemptions where they can change the rate and future time. So,

▶ 10:20 Speaker 2: So these these contracts are very good and Martha, I

▶ 10:26 Ryan Williams: appreciate the work that you're putting into the city of Melrose because it really truly is making it making it a better place. One other thing I wanted to flag two things for those for the counselors here. Number one. I think this is a great opportunity for an educational component.

▶ 10:44 Ryan Williams: To have a display in the schools that

▶ 10:46 Speaker 2: shows the remote monitoring that

▶ 10:48 Ryan Williams: this comes with to show them how much their school is getting energy from the Sun on any at any given time and second thing is that we've learned a lot about utility projects resulting in tax increases, but these projects are exempt typically

▶ 11:02 Speaker 2: in the contract from those tax increases. They're not allowable.

▶ 11:05 Ryan Williams: The contracts have a clause

▶ 11:09 Speaker 2: that makes them exempt from the personal commercial

▶ 11:11 Speaker 3: property tax that we apply to

▶ 11:12 Speaker 2: other

▶ 11:14 Ryan Williams: to other utility projects

▶ 11:18 Speaker 3: so

▶ 11:19 Ryan Williams: with that I would like Mr. Gobrial to call

▶ 11:23 Speaker 2: the roll.

▶ 11:26 Speaker 2: Wait a counselor at Burger. Anna says a question. We need

▶ 11:28 Speaker 4: a motion in a second to call. Sorry. Yeah. Sorry. Sorry to make a motion directly. I'll just

▶ 11:34 Speaker 7: say one other thing. One of my questions was why does

▶ 11:40 Speaker 6: the city council have to approve these contracts? And I thought it was because it was the term it was 20 years and apparently what triggers your your review

▶ 11:52 Speaker 5: is actually because there's no money in these contracts and then you know the mayor can sign contracts but it's the fact that they're it's the least component is what triggers your review.

▶ 12:02 Speaker 2: So we have a motion do more on the floor. Do we have a second? Counselor Eckles with a second Mr. Gobrial now. Please call the roll. Sorry.

▶ 12:15 Speaker 1: counselor sonella Yes. Answer Echols. Yes. counselor jamaladin Yes. President googleitus. Yes. And chair Williams. Yes. That is five. Yes.

▶ 12:35 Ryan Williams: Wonderful and Mr. Gabriel. If you could please note in the record. I

▶ 12:40 Speaker 2: know that this should be go should go without saying but