Title
Adoption of Resolution Approving Amendment No. 1 to the Transmission Agency of Northern California Project Agreement No. 3 and Authorizing the Alameda Municipal Power General Manager to Execute the Amendment. (Alameda Municipal Power)
Body
To: Honorable Mayor and Members of the City Council
From: Gerry Beaudin, City Manager
EXECUTIVE SUMMARY
Staff is seeking City Council approval of Amendment No. 1 to the Transmission Agency of Northern California (TANC) Project Agreement No. 3 and authorization for the Alameda Municipal Power (AMP) General Manager to execute the amendment.
Project Agreement No. 3 (PA3) governs TANC’s administration of the California-Oregon Transmission Project (COTP) on behalf of participating members, including AMP. Amendment No. 1 would align the agreement with current business practices by clarifying that certain changes to transmission entitlements and transfers among members may be completed without formally amending the agreement, provided the changes are approved by the TANC Commission and consented to by all affected members. The amendment also includes minor technical and administrative revisions and updates the agreement’s appendices to clarify project entitlements.
The proposed amendment is intended to improve administrative efficiency and would not impair existing obligations or impose new or additional burdens on participating members. Because the term of PA 3 exceeds the contracting authority of the Public Utilities Board (Board) under the City Charter, City Council approval is required.
BACKGROUND
TANC is a joint powers agency established in 1984 to develop the COTP on behalf of its members. The COTP is a 340-mile, 500-kilovolt transmission line extending from Southern Oregon to Central California. The project was completed and energized in 1993 and was developed, in part, to provide Alameda and other publicly owned utilities with access to lower-cost power resources from the Pacific Northwest. TANC serves as project manager for the COTP and is responsible for its ongoing administration, operation, maintenance, and planning.
In 2009, the California Independent System Operator (CAISO) implemented its market redesign and technology upgrade, transitioning California's wholesale electricity market from a zonal structure to a nodal market based on locational marginal pricing. The new market design changed how transmission congestion and imported energy were valued and scheduled within California. Following these market changes, the economic value of COTP transmission capacity diminished for AMP and several other TANC members.
In 2014, pursuant to Resolution No. 5033, AMP and the Cities of Healdsburg, Lodi, Lompoc, Santa Clara, and Ukiah, and the Plumas-Sierra Rural Electric Cooperative (collectively, the Layoff Entities) entered into a 25-year Long-Term Layoff Agreement with the Sacramento Municipal Utility District, Modesto Irrigation District, and Turlock Irrigation District (collectively, the Districts). Under the agreement, the Layoff Entities transferred the use and associated rights of their COTP participation shares to the Districts. In return, the Districts assumed the debt service and operating and maintenance costs associated with those shares during the layoff period.
AMP's COTP participation share is approximately 1.23 percent. Although AMP laid off the use of its COTP entitlement, AMP remains a member of TANC and retains its underlying participation interest in the project. At the conclusion of the layoff period, AMP's COTP entitlement and the associated responsibility for project costs revert to AMP, subject to the terms of the Long-Term Layoff Agreement.
The TANC PA3 governs the participating members' rights and obligations associated with the COTP and authorizes TANC to act as project manager on their behalf for activities related to the development, operation, maintenance, and administration of the project.
DISCUSSION
TANC and its members propose Amendment No. 1 to PA3 to update the agreement and align it with current business practices. Recent COTP entitlement transfers and changes in transfer capability have highlighted the need for a more efficient process to update member participation percentages and entitlement allocations without requiring a formal amendment to PA3 each time such a change occurs.
Amendment No. 1 would:
• Allow certain changes to COTP transfer capability and member participation percentages to be reflected without requiring a formal amendment to PA3;
• Require any transfer of a member's participation percentage to receive the required TANC Commission approval and written consent of the affected members;
• Ensure that participation percentages of members not participating in a transfer are not adversely affected;
• Remove the fixed 1,600-megawatt reference from the definition of "Betterment," allowing future changes in rated project transfer capability without requiring an amendment to PA3;
• Update PA3 to reflect current administrative practices, including TANC's fiscal year and the use of electronic notices; and
• Make other technical, typographical, administrative, and non-substantive revisions.
The principal effect of Amendment No. 1 is to streamline the process for reflecting changes in TANC's entitlement to COTP transfer capability and the allocation of that capability among participating members. For example, COTP entitlement transfers occurring in 2024 required updates to PA3's appendices under the existing agreement. Amendment No. 1 establishes a process for similar future changes to be implemented without executing an additional amendment to PA3, provided the applicable approval and member-consent requirements are satisfied.
The amendment does not authorize TANC to unilaterally modify a member's participation percentage. Transfers would continue to require TANC Commission approval and the written consent of the members directly affected by the transfer, and the participation percentages of non-transferring members would remain unaffected.
On September 28, 2026, the Board adopted Resolution No. 5254 recommending City Council approve Amendment No. 1 to the TANC PA3 and authorize the AMP General Manager to execute the amendment.
ALTERNATIVES
All other municipal utility project participants are going through similar approval timelines. It is likely not feasible to propose any modifications to the Agreements at this time. Should Alameda not enter into this agreement, more efficient business practices would not be implemented, requiring additional amendments for entitlement transfers.
FINANCIAL IMPACT
There is no financial impact on the General Fund. Cost savings associated with the development and approval of Amendment No. 1 will result in slight reductions to the AMP budget.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Article XII Section 12-2 (A) of the Charter of the City of Alameda requires City Council approval for any contract for the purchase of electrical energy or such other public utility service or commodity necessary for the operation of the public utility which exceeds 15 years.
This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
The Board’s recommendation to approve Amendment No. 1 to PA3 and authorize the General Manager to execute the amendment is not a project subject to the California Environmental Quality Act (CEQA). Amendment No. 1 consists of administrative and procedural changes to PA3 and does not authorize construction or other physical modifications to the COTP. Therefore, the action is not a “project” for purposes of CEQA pursuant to CEQA Guidelines Section 15378(b)(5).
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Approve Amendment Number 1 to the Transmission Agency of Northern California Project Agreement Number 3 and authorizing the Alameda Municipal Power General Manager to execute the amendment
Respectfully submitted,
Tim Haines, AMP General Manager
By,
Midson Hay, Energy Resources Analyst
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibits:
1. TANC Project Agreement No. 3
2. TANC Project Agreement No. 3 Amendment No. 1
3. Public Utilities Board Resolution No. 5254