City Council Regular Meeting
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Old Business   Item #: B.
Asset Purchase Agreement and Purchase Power Agreement with Northbrook Energy for the Pinnacles Hydro Complex
Business Meeting: 06/16/2020
Northbrook Energy has proposed to the City of Danville, to purchase the 10 megawatt Pinnacles facility in Patrick County, Virginia for $8,200,000 and to sell the energy, capacity and renewable energy credits back to the City for $58.31/megawatt-hour with a 2% annual escalation. Since this is "behind the meter," there is no transmission or capacity charge. Also, the contract allows for the City to sell renewable energy credits on this asset, which will further reduce costs for rate payers. Northbrook Energy recently purchased five hydroelectric facilities from Duke Energy in North Carolina and South Carolina, and looks to incorporate this facility into their fleet of assets pending City Council's approval. If approved by City Council, the sale of Pinnacles will require approval from the Federal Energy Regulatory Commission, since this is behind the meter.
The Pinnacles Hydro Complex is located in Patrick County, Virginia and consists of approximately 3,600 acres of City owned property. The City manages two 120 foot dams that store water for power generation. The Talbott Dam consists of a 1.4 mile penstock that brings water to a 10 megawatt power house. The facilities were constructed in 1938 in order to supply 100% of Danville electric needs. Today, the facility is used as a peaking resource during periods of high demand and provides approximately 2.5% of the City's electric needs.
Staff recommends that Danville City Council approve selling the Pinnacles Hydroelectric complex to Northbrook Energy for $8,200,000, and purchasing the energy, capacity, and renewable energy credits from the facility at $58.31/megawatt-hour with a 2% annual escalation.
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