$31.9 million savings projected in Roseville gas purchase

Roseville Electric Arranges Substantial Savings Through A Multi-Year Natural Gas Purchase

Roseville, Calif.- The City Council approved a $212.7 million prepayment of-natural gas needed for the Roseville Energy Park that will save the City more than $31.9 million over the next two decades. The City Council approved the purchase on January 3. 

The Roseville Energy Park, a 160-megawatt, natural gas-fired power plant, is expected to be online by the end of this summer and will provide up to 40 percent of Roseville’s electric energy needs. The plant is the City’s largest capital improvement project and Roseville Electric’s first generation facility.

The City Council approved a $212.7 million prepayment of-natural gas needed for the Roseville Energy Park that will save the City more than $31.9 million over the next two decades. The City Council approved the purchase on January 3. 

The Roseville Energy Park, a 160-megawatt, natural gas-fired power plant, is expected to be online by the end of this summer and will provide up to 40 percent of Roseville’s electric energy needs. The plant is the City’s largest capital improvement project and Roseville Electric’s first generation facility. 

Roseville Electric embarked on a plan to operate its own generation facility to keep rates low and stable. Without owning its own electric generation Roseville Electric must purchase all of its energy from the market.  With the plant, the City will save millions of dollars in market power purchases and transmission costs. 

The Roseville Energy Park uses the best available technology to generate electricity using natural gas and combined cycle technology. The plant will use between 12,000 and 15,000 mmBtu of natural gas daily. Through the prepaid purchase agreement, Roseville Electric will buy an average of 6,500 mmBtu daily – or an average of one half of the gas needed to operate the plant. The $212.7 million prepayment contract with Merrill Lynch Commodities, Inc. ensures a low cost natural gas supply through 2026. 

To facilitate the purchase using tax-exempt bonds, the City of Roseville and the Roseville Redevelopment Agency formed the Roseville Natural Gas Financing Authority. The Authority pledges the revenues from the agreement to Merrill Lynch Commodities, Inc. to pay the tax-exempt debt. The approved transaction was carefully structured to impose minimal financial risk to the City.