Roseville approves $46 million repower of Power Plant 2, enters multi-year agreement with California DWR

The Roseville City Council on April 2 approved a package of agreements and budget changes to repower Roseville Power Plant 2, a locally owned peaking plant north of the city, committing the city to a roughly $46 million project that the city says will increase on‑site capacity, add emissions controls and standardize generation equipment.

City staff recommended and the council voted to create a new capital improvement project for the Roseville Power Plant No. 2 repower; amend and restate site‑use and operations and maintenance agreements with the California Department of Water Resources (DWR); award a design‑build contract to Integrated Engineers and Contractors (IEC) for decommissioning, site redesign and installation; adopt a reimbursement resolution in advance of any future tax‑exempt financing; and adopt an ordinance to amend the FY 2024–25 budget to appropriate $17 million now and request the remainder in future budgets. The roll call vote was 5–0.

The project will remove most on‑site equipment, replace it with four identical, modern generator units and add emissions control systems (an oxidation catalyst and selective catalytic reduction). City staff told the council the current RPP‑2 units were built in 1987, have a combined nameplate of about 48 megawatts and are nearing the end of useful life; the repower will raise the site nameplate to about 67 megawatts while representing only about a 1% increase in the city’s overall system capacity.

Staff emphasized that the project builds on a multi‑year partnership with DWR. Under the agreements, DWR will deliver two generator units now and assist with removal and transport of equipment currently sited in Yuba City; Roseville will manage decommissioning, site work, installation and operation. The city negotiated that the units will be used for Roseville’s needs first during peak days, will remain available to support the broader grid when needed, and that ownership of the equipment transfers to Roseville at the end of the contract term. The stated contract term is April 2025 through November 2029, with Roseville taking ownership in 2029 and a non‑binding discussion about an earlier buyout possible in 2028.

Financial terms presented to council break the $46 million total into components: roughly $33 million for the IEC design‑build contract (base project); about $6 million for optional items (a rebuilt 60 kV switchyard and gas compressors); about $4 million for owner‑procured equipment and internal labor; and a roughly 5% contingency. DWR will contribute $8 million toward construction and the parties agreed to a future end‑of‑term buyout value to DWR of about $9 million. Staff said $17 million of the city’s share would be reallocated from other electric fund capital budgets in the current year, with the remainder requested in future budgets; staff also reserved the right to bond the project later if needed.

City staff identified three permitting/regulatory agencies: the City of Roseville (as lead for CEQA), the California Energy Commission (CEC) and the Placer County Air Pollution Control District (PCAPCD). Staff reported the city determined the repower qualifies for two categorical exemptions under CEQA (Class 2: replacement and reconstruction; and Class 8: actions to enhance or protect the environment) because the work occurs within the existing fence line and adds emissions controls that reduce local air pollutants even as operating hours may increase. The design was submitted to the CEC, which staff said found the project below its 50 MW jurisdictional threshold. Staff also said the PCAPCD currently restricts the existing uncontrolled units to a combined 900 operating hours; with emissions controls the repowered units would run more hours without triggering EPA Title V major source permitting.

Staff said construction is scheduled to begin Oct. 1, with on‑line commercial operation contractually targeted for June 1 (year specified in staff materials). Staff recommended awarding the design‑build contract to IEC after a November 2024 RFP produced two bids; an owner’s engineer will support city design review and construction oversight. Optional site work includes gas compressors to stabilize inlet pressure from PG&E and rebuilding the aged 60 kV switchyard to avoid a separate multi‑month outage later.

Council members asked clarifying questions about permit mailing addresses shown in district materials and about elements of the schematic for emissions controls versus site layout; staff clarified the mailing address and explained the schematic represented the selective catalytic reduction/oxidation catalyst pieces rather than the site layout. There were no public speakers on the item. After questions, the council approved the resolutions and ordinance and authorized change orders under the design‑build contract up to 5 percent, with a unanimous roll call.

The council adopted, by recorded vote, several formal documents staff had listed on the agenda: creation of the Roseville Power Plant No. 2 Repower capital project; execution of amended and restated site‑use and installation and operations and maintenance agreements with the California Department of Water Resources; approval of a design‑build construction agreement with Integrated Engineers & Contractors (IEC) Corporation and authorization for the City Manager to execute it and approve change orders up to 5 percent; a resolution declaring the city’s intent to reimburse expenditures from proceeds of tax‑exempt obligations; and an ordinance amending the FY 2024–25 budget to appropriate $17 million as part of the city’s share of the project. The motions passed 5–0.

City staff said next steps include finalizing design‑build contract documents, awarding the IEC contract, procuring specified owner equipment, completing CEQA notices, and managing the installation and commissioning schedule with DWR and contractors.