HomeMy WebLinkAboutItem 06 - Emergency Demand Response Agreement 1°TEM ##
MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: BRUNO RUMBELOW, CITY MANAGER ��
MEETING DATE: NOVEMBER 3, 2009
SUBJECT: EMERGENCY DEMAND RESPONSE AGREEMENT WITH
ENERNOC
RECOMMENDATION:
City Council considered approving an agreement between the City of Grapevine and
EnerNoc for participation in ERCOT's (Electricity Reliability Council of Texas)
emergency demand response program, authorize staff to execute said agreement, and
take any necessary action.
BACKGROUND:
ERCOT has a demand response program called Emergency Interruptible Load Service
(EILS) that compensates large electricity users for reducing consumption when demand
for electricity is high and the grid system reliability is at risk. EnerNoc is one of the
companies that administer this program for ERCOT.
The City's water plant and the wastewater plant are large users of electricity and qualify
for this program. Of these finro, the wastewater plant is a better candidate. The
wastewater plant has three separate trains that operate independently with separate
electric meters. One of the trains (Train 3) is equipped with an emergency generator.
Staff is considering adding the meter for this train to the program. If ERCOT calls for a
shut down of this train, power can be switched automatically to the generator without any
impact to the plant operations.
The potential for ERCOT requesting a shut down is low. The plan has only been utilized
twice in 20 years, in December 1989 and April 2006. The average shut down time is
about two hours. As part of the agreement, EnerNoc will also install advanced meters
that will provide minute by minute data on electrical usage. This will allow staff to better
understand our electricity consumption and utilize power more efficiently. In a worst
case scenario, the City still has the option of not complying with ERCOT's request. This
will result in the City forgoing its compensation and risking cancellation of the contract
without any other penalties.
Once the agreement is in place, EnerNoc will submit bids to ERCOT and if the bid is
accepted, EnerNoc will pay the City 50% of the payment received by ERCOT. The
anticipated amount the City will receive is around $6,000/year for participation in the
program. The contract with EnerNoc is for a five year term. Other meters can be added
later if our experience with the program is favorable.
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The program will improve the reliability the electrical grid and reduce brownouts during
.,� peak times. At the same time, the City will be compensated for its participation and
obtain valuable data to manage its power usage without impact to operations.
Staff recommends approval.
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ERCOT Demand Response Sales and Services Agreement
This ERCOT Demand Response Sales and Services Agreement(this"Agreement"),effective as of October 22,2009
("Effective Date")the scope of which is described more fully below, is made by and befinreen EnerNOC, Inc. ("EnerNOC"),
located at 75 Federal Street, Suite 300, Boston, MA 02110,and The City of Grapevine("Customer"),located at 501 Shady
Brook Dr,Grapevine,TX 76051. EnerNOC and Customer are defined herein as the Parties("Parties°)to this Agreement.
1. Internet-Based Metering and Communications Equipment
EnerNOC agrees to equip Customer with the EnerNOC system (the"EnerNOC System"),which includes an EnerNOC Site
Server("ESS°) that enables, as applicable, remote generator start/stop, and/or direct load management, power metering,
data collection, real-time data communication, and Internet-based reporting and analytics.
a. Delivery and Installation. EnerNOC agrees to install, free of charge, in a good and workmanlike manner 1 ESS(s) at
each site address (a "Site Address")as identified in Attachment A hereto. Subsequent to the date hereof, Attachment
A may be updated from time to time by the Parties in writing to reflect additional Site Addresses.
b. Term. The senrices provided herein will commence upon the Effective Date and shall continue until the earlier of
January31, 2015, or upon the termination of EnerNOC's participation in the EILS Program (the "Term"). Specifically,
implementation of the EnerNOC System will begin on the Effective Date and Customer's participation in the EILS
Program will begin after (i) implementation is completed and (ii) Customer is registered with ERCOT for a Contract
Period(as defined below).
c. Compliance. During the Term, EnerNOC will ensure that the ESS meets all technical requirements for Customer to
qualify for payments under the EILS Program,the details of which are described in Attachment B hereto.
2. Managed Services
EnerNOC agrees to manage Customer's participation in the EILS Program during all contract periods, which contract
periods are defined by ERCOT as February—May, June—September, and October—January (each, a "Contract Period"
and collectively, the "Contract Periods"). EnerNOC will complete all necessary permits on Customer's behalf, register �
Customer's curtailable electrical capacity ("Capacity"), execute demand response events ("Demand Response Events"),
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manage Customer's Capacity in the EILS Program, and reconcile all program payments in accordance with all EILS
Program requirements and, if applicable,through remote generator start/stop and/or direct load control. EnerNOC will also
coordinate with host utility to capture kilowatt-hour (kWh) pulses from the Custome�'s primary utility meter to provide
Customer near real-time, Intemet-enabled power monitoring EnerNOC shall make payments under the EILS Program, as
set forth below.
a. Capacity. Customer agrees to generate and/or reduce electrical demand at each Site Address as identified in
Attachment A during Demand Response Events when notified by EnerNOC according to the requirements defined in
Attachment B. Customer and EnerNOC understand that the Capaciry identified in Attachment A("Estimated Capacity")
is their best estimate of performance and the actual kW reduction during event hours ("Actual Capacity") may vary.
Ca aci for a Contract Period will be determined by ERCOT at the end of such Contract Period and will be adjusted
based on Customer's performance and availability to curtail during such Contract Period. In no event shall Customer be
penalized for underperformance or non-perFormance, other than to have future Caaacitv Pavments (as defined below)
reduced to reflect Actual Capacitv.
b. Capacity Payments. EnerNOC will pay Customer 50% of the Capacity payments received from ERCOT ("Capacity
Payments")for EILS Program hour product(s) made available by Customer, as defined in Attachment B (e.g., Business
Hour, Peak Hour 1, Peak Hour 2 and/or Non-Business Hour). Capacity Payments are only available for EILS Program
resource bids that are accepted by ERCOT and may be adjusted based on Customer's performance and availability to
curtail during the Contract Period. In the event that the Customer Capacity bid is not accepted by ERCOT, then
EnerNOC will not be obligated to make any payments to Customer hereunder, nor will Customer be obligated to curtail
during the Contract Period for which the bid was not accepted. An example of a Capacity Payment calculation is as
follows: if Customer made 1 MW of Capacity available for all program hour products(7x24) during the Contract Period
and the hourly payment is $7/MW-hr ($5.12 per kW-month) for the Contract Period resources, then EnerNOC would
owe customer 50%x 7.00 x 1 MW X 2,920 total hours (assumed for the Contract Period), or$10,220 for the Contract
Period.
c. Demand Response Event Payments. EnerNOC will pay Customer$100/MWh for responding to a Demand Response
Event. For example, if Actual Capacity equals 2.0 MW,total Demand Response Event hours for the month equals four
(4) hours, and the price paid for Demand Response Event hours is$100/MWh then the Customer would be paid$100 �
per MWh x 2.0 MW x 4 hours=$800.
d. Payment Timing. EnerNOC shall make payment of all Capacity and Demand Response Event Payments associated
with Customer's participation in the EILS Program to Customer within forty-five (45) days of EnerNOC's receipt of total
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payment from ERCOT. Under the EILS Program rules, it is anticipated that ERCOT will pay EnerNOC within 70 days
following the completion of each contract period as detailed in Attachment B hereto.
e. Capacity Adjustments. Customer and EnerNOC agree upon the estimated Capacity in Attachment A hereto. Customer
and EnerNOC agree to adjust Capacity in the future based on actual performance, changes in facility operations,
program rules, regulations and/or other relevant information.
3. Environmental Permitting and Reporting
a. Obtaining Permits. Promptly upon entering into this Agreement, if Customer participates in the EILS Program using
onsite electrical generation sets, EnerNOC will obtain from the relevant regulatory agency(ies) the necessary permits
for participation in the EILS Program at no expense to Customer.
b. After obtaining any necessary permits, and once EnerNOC establishes the capability to remotely dispatch Customer's
electrical generation set(s), if applicable, EnerNOC shall be responsible for monitoring run-time and other parameters
specified under applicable federal and state regulations which (i) are established as applicable permitting limits for the
electrical generation sets installed at each Site Address as identified in Attachment A, or(ii) are applicable thresholds
for permitting exceptions under which Customer has installed and operates the electrical generation sets without such
permits (said limits or thresholds, the "Regulatory Thresholds"). In no event shall EnerNOC bid or dispatch and load
any individual electrical generation set so that its operation under the EILS Program would reasonably be expected to
exceed 90% of the applicable Regulatory Thresholds for the Site Address, as determined over any measuring period
established under law or regulation. Further, EnerNOC shall file all reports required by relevant regulatory agency(ies)
in an accurate and timely manner.
4. Customer Support Requirements
a. Cooperation. Customer agrees to complete and execute any forms or agreements which are necessary, in EnerNOC's
discretion,to allow EnerNOC to complete pulse metering installation.
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b. Acceptance Testing. Customer agrees to collaborate with EnerNOC in testing the ESS at each Site Address in a timely
manner prior to registering Capacity with ERCOT.
�` c. ESS Installation. Within fourteen (14) days of execution of this Agreement, Customer shall provide a static Internet
Protocol address and Local Area Network access that allows for Internet-based communication of Site Address'energy
I consumption and Demand Response Event perFormance. If Local Area Network access is not available, a wireless
cellular modem will be used to provide a connection to the ESS, qrovided and paid for by EnerNOC.
d. Nondisclosure to Third Parties. Customer acknowledges that in its relationship with EnerNOC, it may receive
information including (but without limitation): confidential information, business strategies, financial information,
information relating to the ESS and the EnerNOC System, and information contained in this Agreement, including the
terms of the revenue sharing arrangement described in Section 2 above (all collectively "Program information").
Customer shall not disclose any Program Information to any third party or allow any third party access to such Program
Information.
e. Trade Secret Protection Obligations. Customer shall not alter, reverse engineer, disassemble, decompile or copy the
ESS or any other EnerNOC System components and shall not allow any third party to use, access, or examine the
ESS or any other EnerNOC System components.
f. Use of Confidential Information. Customer acknowledges that EnerNOC may receive confidential information of
Customer, either through data collected by the ESS and the EnerNOC System or otherwise, which may be used by
EnerNOC for any necessary business purpose (so long as it does not disclose any uniquely identifiable confidential
information of Customer).
g. Seivice Provider Limitation. Customer agrees not to contract with any other demand response service provider for the
Term of this Agreement. Should Customer wish to contract with another demand response service provider within one
(1) year from the termination or expiration of this Agreement, Customer hereby entitles EnerNOC to match any written
offer or proposal for demand response services within 30 days of receiving the proposal from Customer. Should
EnerNOC substantially match the terms of such offer or proposal, it shall be awarded the associated contract.
h. Logo Authorization. In connection with this Agreement, Customer hereby consents to EnerNOC's use of Customer's
name and logo in EnerNOC's promotional materials, including, but not limited to, website, presentations and other
printed materials. EnerNOC acknowledges that Customer is the owner of all right, title and interest in and to the
Customer's name and logo and shall not take any action that is inconsistent with such ownership. EnerNOC shall not,
by any act or omission, use Customer's name or logo in any manner that tarnishes, degrades, disparages or reflects
adversely on Customer or its business or reputation.
5. General Terms
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a. Limitation on Liability. EnerNOCs liability hereunder is limited to direct actual damages as the sole and exclusive
remedy,and total damages shall not exceed the lesser of(i)the total amount paid to Customer under this Agreement
during the six-month period immediately preceding the event giving rise to the claim(s)or(ii)$100,000. All other
remedies or damages(at law, in equity,tort,contract,or otherwise)are expressly waived, including any indirect,
punitive,special,consequential, or incidental damages, lost profit,or other business interruption damages.
b. Consent to Venue and Jurisdiction Selection. Each party hereby waives any right it may have to assert the doctrine of
forum non conveniens and stipulates that the State and Federal courts located in the State of Texas shall have in
personam jurisdiction and venue over each of them for the purpose of litigating any dispute,controversy,or proceeding
arising out of or related to this Agreement. Each party hereby authorizes and accepts service of process sufficient for
personal jurisdiction in any action against it as contemplated by this paragraph by registered or certified mail, return
receipt requested, postage prepaid,to its address as set forth in the introductory paragraph of this Agreement.
c. Choice of Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the
State of Texas,without giving effect to choice of law rules.
d. Miscellaneous. Customer may not assign any of its rights or delegate any of its performance obligations hereunder
without the prior written consent of EnerNOC.This Agreement contains the entire agreement between Customer and
EnerNOC and may only be amended in writing signed by each of the Parties. If any of its provisions shall be held invalid
or unenforceable,this Agreement shall be construed as if not containing those provisions and the rights and obligations
of the parties hereto shall be construed and enforced accordingly. This Agreement shall be binding upon the parties
together with their successors and assigns.
e. Force Majeure. The parties shall be excused for any failure or delay in the performance of their obligations hereunder
due to acts of God or any other legitimate cause beyond their reasonable control.
f. Termination. EnerNOC may terminate this Agreement immediately if the EILS Program is materially altered,
suspended or ended.
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EnerNOC,Inc. Customer
Name: Name:
Title: Title:
Signature: Signature:
Date: Date:
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Attachment B
Electric Reliability Council of Texas(ERCO�. ERCOT helps protect the health of Texas'economy and the well-
being of its people by ensuring the constant availability of electricity. ERCOT meets this obligation in three ways: by
ensuring the day-to-day reliable operation of Texas' bulk power generation and transmission system, by overseeing and
ensuring the fair administration of the region's wholesale electricity markets, and by managing comprehensive, regional
planning processes.
Emergency Interruptible Load Service(E/LS). The EILS is a demand response program that compensates large
electricity users for reducing consumption when demand for electricity is high and system reliability is at risk.The EILS
is meant to help alleviate the potential fo�blackouts and brownouts by acting as a"last line of defense,"emergency
program that provides ERCOT with a program to call upon only in a defined emergency situation.
The terms of this agreement will reflect the terms and conditions which may be amended from time to time by ERCOT,
the current terms of which are summarized below. Complete program details can be found at
http://www.ercot.com/services/programs/load/ei Is/.
EILS Parameters.The EILS requires customers to reduce load and/or generate electricity within the following
parameters:
a. Contract Periods. Customer may contract with EnerNOC to provide EILS year-round during the contract
periods defined by ERCOT as February—May, June—September, October—January.
b. Program hours. Customer can elect to participate during any or all of the Business Hour 1 ("BH1"), Business
Hours 2 (BH2), Business Hours 3(BH3)and/or Non-Business Hour("NBH") periods.
a. BH1 resources must be available to respond during non-holiday weekdays from 8:00 a.m.to 1:00 p.m. '�
b. BH2 resources must be available to respond during non-holiday weekdays from 1:00 p.m.to 4:00 p.m. ���
c. BH3 resources must be available to respond during non-holiday weekdays from 4:00 p.m.to 8:00 p.m.
d. NBH resources must be available to respond during all other hours not defined as BH1, BH2 and BH3.
e. BH1, BH1, BH3 and NBH resources must be available to respond during all hours of the year.
The Program Hours might change from time to time pending changes made by ERCOT to the rules
surrounding EILS. EnerNOC will help determine if customers are eligible to qualify as BH and/or NBH
participation.
c. Event Notification and Response. Demand Response Events under the EILS will only be called in the event
of an emergency, as defined by ERCOT. Customers must be able to respond to an EILS event notice within 10
minutes of such notice, provided by EnerNOC.
d. Metering Equipment. Customers must have an ERCOT-approved Interval Data Recorder("IDR") meter
installed to monitor and record performance.
e. Determination of Load Shed and Generation.The determination of the Capacity Value due to customer,for
customer's electric demand reduction or generation,will be calculated in accordance with the ERCOT
approved method as set forth in ERCOT's rules and as measured by the IDR meter.
f. Test Event. ERCOT may conduct a load-shedding test of each resource once a year unless the resource has
met its performance obligations during an EILS deployment during the preceding 12 months.
g. Other Demand Response Programs. Customer shall not provide other ancillary services, including balancing
energy services with the same capacity.
h. EILS Payments. The payments under the EILS will be determined by ERCOT before the start of each contract
period as defined in section (a). Payments in one contract period may vary from payments in another contract
period.
Performance Requirement. ERCOT reserves the right to deny participation, on a going forward basis, any load
not performing in a manner satisfactory to its performance standards, which may change from time to time.
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