SUBJECT/RECOMMENDATION:
Title
Approve a Piggyback Dispensing Agreement with Opal Fuels Station Services LLC, for the sale of Renewable Identification Number (RIN) credits associated with the City of Clearwater Compressed natural gas filling station for the term June 1, 2024 through October 19, 2025, with the option of two, one-year renewals pursuant to Clearwater Code of Ordinances Section 2.563(1)(c), Piggyback, and authorize the appropriate officials to execute same. (consent)
Body
SUMMARY:
Authorization is requested to piggyback off the City of St. Petersburg Master Agreement with Opal Fuels. This agreement authorizes Opal Fuels to manage and sell Renewable Identification Number (RIN) credits that are associated with St. Pete’s Compressed natural gas fueling station. The RIN credits are sold on the open market to Obligated Parties (fuel refiners, blenders, importers) that must meet minimum renewable energy standards.
Renewable Identification Numbers (RINs) are credits used for compliance and are the “currency” of the Renewal Fuel Standards (RFS) program. This program was authorized under the Energy Policy Act of 2005 and managed by the United States Environmental Protection Agency (EPA).
Below are the steps to generate and retire RINs:
• Renewable fuel producers generate renewable energy, at a facility/plant. This is where the RIN is generated.
• Market Participants trade RINs (i.e. Opal Fuels or other 3rd party entities).
• Obligated Parties obtain and then ultimately retire RINs for compliance.
• RINs are classified as a transportation fuel, therefore, must be assigned to a natural gas fueling station.
• The number of RINs sold is dependent on monthly & annual gallons dispensed at the fueling station.
• Fueling station operator (CGS) receives % share of the RIN sale price.
St. Petersburg issued a bid (IFB 8717,1) in August 2023 to hire a 3rd party agent to manage and sell RIN credits. In return, St. Pete would receive a percent share of the revenues. Three companies submitted bids and Opal Fuels came in as the highest, with a 5% revenue share.
Using an average cost of $3.40 per RIN (i.e., $5.85 per diesel gallon), our filling station dispenses 360,000 diesel gallon equivalent (DGE) per year. This would equate to $105,300.00 per year in added revenue to CGS.
The City of St. Petersburg Council approved the Master Agreement with Opal Fuels on October 5, 2023, by Resolution 2023-499, with an initial term of two years, with the option of two, one-year renewals. In addition, CGS is requesting the ability to renew the agreement if St. Petersburg exercises their renewal options under section 3 of the Master Agreement.
APPROPRIATION CODE AND AMOUNT:
Revenues will be applied to 423-369901 (Other Gas Revenue)
USE OF RESERVE FUNDS:
STRATEGIC PRIORITY:
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