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On its website, PFMG Solar describes its operations at this link and lists a number of government entities for whom it now provides solar energy at this link. PFMG Solar's Senior VP of Government Affairs is retired Long Beach City Manager James C. Hankla (PFMG Solar's Executive Team Leadership is listed at this link.)

PFMG Solar's VP of Business Development, Alex Smith, told LBREPORT.com that the proposed transaction involves no out of pocket cost to the City and PFMG will be responsible for designing, building and maintaining the eleven installations under the 25 year contract.

So how much would the electricity PFMG Solar cost the City? Mr. Smith [who sounded as if he was mobile at the time] didn't have the exact figure at his fingertips, but said the starting price would be less per kilowatt hour than SCE at every LB site, would become 3.9% increases per year for 15 years, and less for the last ten years.

So...what happens if in the future SCE rates were to remain flat or go down, or some other firm has a breakthrough and offered a lower rate? In such a case, the City might end up paying a higher price but, Mr. Smith said, SCE's compounded annual rates over a roughly forty year period have gone up a bit over 5%...so if LB begins by paying a rate below SCE [as PFMG proposes] and goes up with a lower annual escalator than SCE has historically gone up, the City could presumably save money over the contract's 25 year term.

So is there some absolute metric or guaranteed insurance that what the City would pay PFMG will be less than it would pay SCE or some other solar operator? No...but Mr. Smith noted that taking no action also entails risk...including the current exposure to unpredictable rate increases sought by SCE [with PUC approval, including a recent 10% rate increase.]

PFMG's Smith also noted that PFMG has a 100% track record of completing its projects on time and uses IBEW labor on its projects.

Sponsor

Sponsor

City staff's agendizing memo by Public Works Director Craig Beck states the following regarding Fiscal Impact:

The proposed PPA first-year rates are anticipated to be below Southern California Edison's current rate by $5,547. Therefore, the agreement is anticipated to have an immediate positive fiscal impact to the City. Total savings are anticipated to grow over time and are estimated by the Public Works Department (PW) to have a present value of approximately $4.5 million over the 25-year period of the agreement. Final savings will depend on a variety of factors, including actual solar production and the growth in costs for utility-provided power over time. The amount of savings will be credited to the fund paying the electricity bill for the respective facilities. Approval of this recommendation anticipates a positive impact on the local economy.

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Sponsor: Computer Repair Long Beach

The Council hearing on the proposed transaction is mandatory under CA Gov't Code section 4217.12 that requires the City Council to find "(1) That the anticipated cost to the public agency for thermal or electrical energy or conservation services provided by the energy conservation facility under the contract will be less than the anticipated marginal cost to the public agency of thermal, electrical, or other energy that would have been consumed by the public agency in the absence of those purchases" and "(2) That the difference, if any, between the fair rental value for the real property subject to the facility ground lease and the agreed rent, is anticipated to be offset by below-market energy purchases or other benefits provided under the energy service contract."

The agendizing memo states that city staff "is able to make findings that 1) the anticipated cost to the City provided by PFMG Solar will be less than the anticipated marginal cost for the same energy that would have been consumed by the City in the absence of a PPA; and 2) the difference, if any, between fair market value of the property involved and the actual cost to PFMG is offset by the benefit received by the City. The anticipated benefits of entering into this PPA include a projected present value savings of approximately $4.5 million ($9.5 million cumulative over 25 years)" [See Exhibit A to city staff's memo]

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Sponsor

The agendizing memo says city staff "evaluated the proposals and determined PFMG is best qualified and offers the best value in providing PV systems for parking lots at the following 11 potential City sites: Airport Garage (Lot B), Aquarium Parking Structure, City Place Lot A, City Place Lot B, City Place Lot C, Emergency Communications and Operations Center, East Division Police Substation, Main Health Building, Long Beach Gas and Oil Headquarters, Pike Parking Structure, and the Public Works Yard. This determination is based on the documentation submitted by proposers."

As has been LB City Hall's practice for many years, city staff doesn't ordinarily provide the text of the proposed contracts for Council or taxpayer review until after the deal is signed. "The terms will be finalized prior to the execution of the PPA," says city staff's agendizing memo. [LBREPORT.com has previously objected editorially to LB City Hall's current practice and called for providing the text of major contracts for public review before Council approval.]

City staff's agendizing memo summarizes the proposed agreements key provisions as follows: