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HomeMy WebLinkAboutENERGY BOARD - MINUTES - 01/11/2024 ENERGY BOARD January 11, 2024 – 5:30 pm 222 Laporte Ave – Colorado Room ROLL CALL Board Members Present: Bill Althouse, Marge Moore, Alan Braslau, Stephen Tenbrink (remote), Brian Smith, Bill Becker (remote), Thomas Loran Board Members Absent: Jeremy Giovando OTHERS PRESENT Staff Members Present: Christie Fredrickson, Phillip Amaya, Cyril Vidergar, Brian Tholl (remote), Michael Authier, Leland Keller, Lance Smith, Nick Combs Members of the Public: MEETING CALLED TO ORDER Chairperson Tenbrink called the meeting to order at 5:30 pm. ANNOUNCEMENTS & AGENDA CHANGES None. PUBLIC COMMENT None. APPROVAL OF MINUTES In preparation for the meeting, board members submitted amendments via email for the December 14, 2023, minutes. The minutes were approved as amended. DISCUSS RATE INCREASE COMMUNICATION Lance Smith, Senior Director, Utilities Finance Nick Combs, Communications & Marketing Manager In response to a question raised by Board member Giovando, Board members discussed a recent communication pamphlet that went out in Utility Bills that states: “[Electric rates will have a] 5% average increase due to higher generation costs associated with new, renewable resources and capital projects like transformer and cable replacements.” Board members feel the messaging implies the rates are increasing due to renewable generation, which is not consistent with the messaging they believe they heard from Platte River. Mr. Smith explained there was a 5% increase in purchased power costs this year, which was attributed to the cost of renewables, which is why that language was included on the bill insert. Board member Braslau believes that’s a misrepresentation, the cost stems from the projection of eliminating coal-fired electrical generation and the associated profits from sales of that generation. Mr. Smith said he recognizes that the Board does not agree with Platte River’s plans to add natural gas generation, but that is the position Platte River has taken, and they are doing so with the intent to stabilize their renewable resources. He also said he understands that the Board would have deemed other ENERGY BOARD REGULAR MEETING language (such as “…associated with new renewable and natural gas resources) to be more holistic, and it is something staff can consider in future rate communications, but staff maintains the phrasing is accurate as it was printed. Board member Loran said he does not currently agree with some of the other Board members’ stance on the natural gas turbine, but he pointed out that this is a discussion of capital costs (in renewables) versus a fully depreciated coal plant. There will obviously be a lot of capital costs, but when it comes to variable costs, the marginal cost of producing renewable energy approaches zero, whereas there is a moderate variable cost when producing coal. He believes this is a cost allocation question that he does not have the answer to. Mr. Smith said most of the renewable energy Platte River is acquiring is through PPAs (power purchase agreements), so it is a fixed cost, and it will not approach zero through the life of the contract. Board member Althouse asked if the City’s 48% ownership of Platte River is a liability or an asset before Platte River adds $250 million of debt. Mr. Smith said that it is not relevant to know if the City’s share of Platte River is a liability or an asset. Board member Braslau said this is a complex economic situation where Platte River is transitioning from running a coal plant that is already paid for and profitable (even with operating costs). It doesn’t matter how the power is being generated, the reality is Platte River is projecting price increases because they are going from an unsustainable but profitable situation that has to be shut down by State law and Federal regulations, and that has a cost. Mr. Smith asked the Board how they would have preferred the communication to be worded. Board member Braslau said the increase language should have been prefaced with, “in transitioning away from coal generation…” Mr. Smith said staff wanted to communicate that the community is moving toward renewable generation. If that part had been left out, and only outlined that we were moving away from coal, the public may be left wondering what we were moving toward. Board member Moore said there are two pieces to the message, that we are moving away from coal generation and moving toward renewable energy. Board member Loran pointed out that there is a capacity requirement for Platte River to join a regional market, so the question is in shutting down the coal plant, is Platte River replacing that generation with renewables or natural gas. Chairperson Tenbrink explained that he did not have a specific goal for this conversation, but he thought it was important for Board member Giovando’s comments to be heard and give staff a chance to provide perspective. He added that it may be beneficial for the pamphlet to be updated in future iterations to mention the retirement of coal resources without getting too bogged down in the details. DISCUSS MEMO TO CITY COUNCIL RE: PLATTE RIVER’S PLANS FOR A NATURAL GAS TURBINE Board member Tenbrink explained that the Board had discussed potentially writing a memo to City Council about Platte River’s plans to build a natural gas turbine. He also noted that he was disappointed that the City’s representatives on Platte River’s Board of directors did not reach out to the Energy Board for their opinion on this new investment. Board member Loran said he does not necessarily agree with the Board’s objection to the natural gas plants. He does agree with many of their points, but he does not feel comfortable saying there is no need for any gas-powered plant. His question is, operationally, what is the planned frequency of use for the ENERGY BOARD REGULAR MEETING turbine? He believes the plant should be reserved for a “break-the-glass,” 100-hour dark calm (when there are no renewables generating power) type of emergency. He does not want to see it run to send power to the market, be used for “ancillary services”, and would also like to see Platte River add more storage. Board member Braslau said economically, the turbine will run whenever the market, or the conditions call for it. Mr. Authier clarified that though Platte River does have a capacity requirement to join the market, they set the prices for their resources. Board member Althouse said with the technology on the horizon, the last thing that should have been chosen was a gas plant and he believes Platte River knows that gas plants are on their way to obsoletion, but it was identified as a time-critical need, which is why it was written outside of their Integrated Resource Plan. Chairperson Tenbrink explained it was not his goal for the memo to sound like the Board is completely opposed to the gas plant, but more wondering why this process wasn’t communicated better (from a public perspective, and why an Open RFP wasn’t considered. Board members discussed the need for increased transparency from Platte River. They agreed that the memo needs additional work. Board member Loran said he would like to see the memo updated to say the Board has some concerns about the gas plant, including how often it will run, how it will work within the regional market, and how it is in conflict with the City’s climate messaging. REVIEW 2024 PLANNING CALENDAR Board members expressed interest in targeting a few select items to promote and draw attention to for City Council. Chairperson Tenbrink said he would like to spend more time discussing and learning about Virtual Power Plants (VPPs), possibly at a work session. Mr. Vidergar encouraged the Board to figure out how we communicate the current concerns and emerging concerns to the City’s Platte River representatives as well as to City Council. He advised that the Board is often reactive, due to the timing of information delivery, so this could be an avenue that could lead to better results. The Energy Board and City Staff don’t have the power to make Platte River do anything, but their Board of Directors can. Board member Braslau noted that discussions centering around how the City can get away from Platte River are not constructive or useful, he believes there is a lot more to gain by looking at how the City can transform their relationship with Platte River in a way that helps the community reach its goals. Mr. Amaya agreed, Platte River has to change and is currently changing with their imminent entry into the market. Board member Althouse said VPPs are a viable path forward toward the City’s climate goals. He explained it supports rapid electrification, paying participating end-users (also known as prosumers) for balancing demand on the grid locally through distributed energy resources and supporting systems. Board members and staff discussed the implementation of VPPs and how it could potentially be done in a financially and socially equitable way. Board members agreed the topic of VPPs could be on the calendar for a future work session. Board members also discussed utilizing a work session to invite City Council members and Platte River Board of Director members to discuss alignment, as Mr. Vidergar suggested. ENERGY BOARD REGULAR MEETING APPROVE 2023 ANNUAL REPORT Board members reviewed the new comments and edits in their Annual Report. They agreed the report accurately captured the work from the previous year and are prepared to submit it for publication. VICE CHAIRPERSON ELECTION Board member Loran Nominated himself for the position of Energy Board Vice Chairperson. Board member Moore nominated Board member Althouse for Energy Board Vice Chairperson. Board member Becker moved to appoint Board member Loran as Vice Chairperson until the next Energy Board Officer election. Board member Braslau seconded the motion. Discussion: None. Vote on the motion: It passed, unanimously 7-0, with one absent. BOARD MEMBER REPORTS Board member Loran’s ductless mini splits are failing, they are putting out too much heat and becoming difficult to control. He said he will report back in February how the cold snap goes with his heat pump. Board member Braslau went to speak in front of Council in December during public comment, urging City Council to leverage the City’s building code and land use code to enforce the urgency of the climate emergency, and not to contradict the community’s climate goals. Mr. Amaya notified the Board that Mr. Minor will be moving on from the organization and Fort Collins Utilities, his last day with the City of Fort Collins will be January 23. ADJOURNMENT The Energy Board adjourned at 7:55 pm.