Title
Approval to Execute a Power Purchase Agreement in an Amount not to Exceed $4,725,000 Plus Applicable Gross Receipts Tax, to supply power and energy to the Los Alamos Power Pool for the Month of July 2026
Recommended Action
I move that Council approve a Power Purchase Agreement with a yet-to-be determined provider, competitively selected not later than June 26, 2026, in an amount not to exceed FOUR MILLION SEVEN HUNDRED TWENTY FIVE THOUSAND DOLLARS ($4,725,000.00) plus applicable gross receipts tax, for the purpose of supplying power and energy to the Los Alamos Power Pool for the month of July 2026.
Utilities Manager's Recommendation
The Utilities Manager recommends that Council approve the motion as presented.
Board, Commission or Committee Recommendation
The Board of Public Utilities approved this request at their work session on June 3, 2026 and recommends that Council approve the motion as presented.
Body
DPU’s current Power Purchase Agreement (PPA) with Mercuria Energy America, Inc. ends on June 30, 2026. An average of 80 megawatts (MW) of power is needed throughout July to supply the Los Alamos Power Pool's forecasted load.
DPU is seeking the lowest-priced offer for a new PPA to meet this need. At the time of publication of this staff report, indicative pricing is $63 per megawatt-hour (MWh). Staff will solicit offers until the end of the day on June 26, 2026. This pricing is presented as an estimate because the price will change along with market power prices, up until the day that the agreement is fully executed. An approximately 25% contingency of $15.75 per MWh is added to the indicative price to account for a potential market price increase, increasing the price to $78.75 per MWh. Approximately 60,000 MWh of energy will be purchased, and at $78.75 per MWh amounts to $4,725,000 excluding GRT. GRT at 7.0625% is $334,000, for a total amount of $5,059,000.
The selected power supplier will be party to the WSPP AGREEMENT, dated October 31, 2025, and the PPA will be executed pursuant to this WSPP AGREEMENT, with the specific terms and conditions stated in a confirmation letter prepared immediately before execution of the agreement.
The ECA Modification #26 expiration date is July 31, 2026 and this additional month of purchased power is covered under this modification.
Alternatives
If the PPA is not approved, staff will not have time to seek approval of another PPA. Staff will use economy purchases to buy power, which comes with a price risk.
Fiscal and Staff Impact
No immediate fiscal impact because the approved budget for power purchases is sufficient for this proposed PPA. There is no anticipated staff impact since all associated work is a part of normal electric production work functions.