FROM: Robert Thompson, General Manager
Originator: Wally Ritchie, Director of Finance
SUBJECT:
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SALE OF ENERGY CREDITS
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GENERAL MANAGER'S RECOMMENDATION
recommendation
RECOMMENDATION: Recommend to the Board of Directors to:
Authorize the General Manager, or designee, on an ongoing basis to sell, transfer, or otherwise monetize renewable energy credits that are determined to be surplus to Orange County Sanitation District’s operational or regulatory needs, through any method determined to be in Orange County Sanitation District’s best interest, provided that such transactions comply with applicable laws and regulations and provide reasonable market value to the Orange County Sanitation District.
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BACKGROUND
Orange County Sanitation District (OC San) reclamation plants generate renewable energy as part of their operations. This energy generation results in the creation of Renewable Energy Credits (RECs), which represent the environmental attributes associated with renewable energy production.
RECs may be used to demonstrate renewable energy generation or compliance with applicable sustainability and regulatory requirements. As OC San continues to operate its energy-generating facilities, additional RECs are generated on an ongoing basis.
RECs are not necessary to support OC San’s operational, regulatory, and sustainability needs. Excess RECs have market value and can potentially be sold to other entities seeking to meet renewable energy or sustainability objectives. Selling surplus RECs provides an opportunity for OC San to realize value from the credits.
RELEVANT STANDARDS
• Ensure that investment proposals and decisions are based on clearly defined standards
PROBLEM
OC San generates RECs in excess of its needs. Because these credits can decline in value over time, timely sale of surplus RECs is necessary to maximize their value to OC San.
PROPOSED SOLUTION
Authorize the General Manager, or designee, on an ongoing basis to sell RECs that are not needed by OC San. This authority would allow surplus RECs to be sold in a timely manner, using methods that comply with applicable requirements and provide reasonable market value to OC San.
TIMING CONCERNS
RECs generally have the greatest market value during the first quarter of the year following their generation. Their value may decline as they age, making timely sale of surplus credits important to maximizing their value to OC San.
RAMIFICATIONS OF NOT TAKING ACTION
If surplus RECs are not sold in a timely manner, their market value may decline as they age, resulting in lost revenue opportunities for OC San. Continued accumulation of credits that are not needed for operational or regulatory purposes could further reduce the value OC San is able to realize from these assets.
PRIOR COMMITTEE/BOARD ACTIONS
September 2026 - Information item heard at the Operations Committee meeting.
ADDITIONAL INFORMATION
N/A
CEQA
N/A
FINANCIAL CONSIDERATIONS
The sale of surplus RECs provides an opportunity for OC San to generate additional revenue from credits produced through existing operations.
ATTACHMENT
The following attachment(s) may be viewed on-line at the OC San website (www.ocsan.gov) with the complete agenda package:
• Presentation