Title
Approval of 2026 Electric Coordination Agreement between the Incorporated County of Los Alamos and the United States Department of Energy National Nuclear Security Administration
Recommended Action
I move that the Board of Public Utilities recommend Council approve the Electric Coordination Agreement between the Incorporated County of Los Alamos and the Department of Energy National Nuclear Security Administration, and forward to Council for approval.
Utilities Manager's Recommendation
The Utilities Manager recommends that Board approve the motion as presented once the final contract terms and conditions are presented at the board meeting or sooner.
Body
THESE ATTACHED DOCUMENTS ARE THE SAME AS THE ONES PRESENTED TO BPU ON JULY 22ND. ONCE REVISED TERMS AND CONDITIONS ARE IN HAND, BPU WILL RECEIVE THE UPDATED VERSION.
The Power Pool was established through the Electric Coordination Agreement (ECA) between Los Alamos County and The Department of Energy in 1985. In 2002 the National Nuclear Security Administration (NNSA) was established as a branch of the Department of Energy and took over responsibility for the ECA. The acronyms DOE, NNSA, and LANL (Los Alamos National Laboratory) may be used interchangeably throughout this discussion. Through the contract, both parties contribute the power from, and costs of, each of the respective "Pool Approved Resources" into the pool, and those costs are then allocated back to the parties pro rata according to each party's usage. The contract has been renewed continuously since 1985 and has met the needs of both NNSA and the County as it has permitted the County to make long-term investments in new projects with NNSA support.
It is now necessary to establish a new ECA to accommodate changes in electricity markets, federal procurement rules and the cost risks of long-term resource commitments such as Foxtail Flats. This new ECA builds on the framework of the current agreement by refining existing Power Pool management and cost allocation practices based on past practice while adding new practices to equitably manage costs and risks of electric market changes and resource procurement. Important points of the new ECA include:
1. A new fixed price with a cost-sharing arrangement which complies with current DOE/NNSA contracting requirements
2. A 10-year contract term starting on August 1, 2026, continuing through July 31, 2036, with an option for a 10-year extension
3. New language addressing contemporary electricity markets and resources
4. New language to address cost risks arising from load and generation forecasting uncertainties and long-term resource procurement commitments
5. Revised cost allocation methods to match current practices and prepare for future market changes
6. Language is being prepared to address the specific handling of the Foxtail Flats contracts in the event that the DOE exercises its right to terminate for convenience.
There are five separate documents that comprise the 2026 ECA. All five documents are included as attachments B through F.
Much effort has gone into making this new ECA into a foundation for a balanced partnership between DOE/NNSA and the County. Starting with over three years of DOE/NNSA and DPU staff work to prepare the initial draft documents, the 2026 ECA has been reviewed and revised multiple times by several groups within the DOE/NNSA and County over the past seven months. Reviewers include:
1. Draft versions of all ECA documents were delivered on December 19, 2026, late May, and early June, to a working sub-committee consisting of Chair Gibson and Board Member Nakhleh. A total of 67 review comments were identified by these reviewers. Every one of the 67 comments has been addressed.
2. Los Alamos County attorney Thomas Wyman reviewed multiple draft versions of the ECA documents and offered substantive legal advice and revisions.
3. Outside counsel was engaged to provide subject matter expert legal review of the ECA documents and make necessary adjustments to the contract language that safeguards the County’s interests. Seth Kirshenberg and Lauren Irish with Kutak Rock LLP have provided this service.
4. Department of Public Utilities staff contributed to the review process throughout, with the Finance and Administration Division, the Electric Production Division, and the Utilities Manager all reviewing multiple versions of the documents and making revisions throughout the documents to ensure that all parts, including the resource cost accounting practices, contract management language, and operating procedures are accurate, up-to-date, balance the interests of both parties, and provide financial risk protections for the County.
5. DOE/NNSA contracting office and field office staff were deeply involved throughout the review process in this coordinated effort with DPU staff. Their effort was essential for working through difficult contracting issues to the satisfaction of both parties.
Alternatives
Board could elect not to accept the proposed 2026 ECA, and the current agreement will end on August 31, 2026, without any contract structure in place for managing the continued operation of the DOE/NNSA and the County's electric resources.
Board could elect to request additional time to review the contract documents. However, Staff has already executed a thirty-one-day extension with DOE/NNSA to extend the ECA term through August 31, 2026.
Fiscal and Staff Impact/Planned Item
There is no immediate staff or fiscal impact.
Attachments
A - 2026 Electric Coordination Agreement Presentation
B - Contract Terms & Conditions
C - Attachment 1 ECA PWS
D - Attachment 2 ECA Operating Procedures
E - Attachment 3 Los Alamos Electric Power Services REPORTING REQUIREMENTS CHECKLIST
F - Attachment 4 LANL Exhibit-G Physical Security Lab-wide_Rev.20240716