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HomeMy WebLinkAboutENERGY BOARD - MINUTES - 10/24/2024 ENERGY BOARD October 24, 2024 – 5:30 pm 222 Laporte Ave – Colorado Room ROLL CALL Board Members Present: Alan Braslau, Frederick Wegert, Wendell Stainsby, Scott Canonico (remote), Brian Smith, Marge Moore (remote), Jeremy Giovando Board Members Absent: Thomas Loran OTHERS PRESENT Staff Members Present: Christie Fredrickson, Brian Tholl, Randy Reuscher (remote), Phil Ladd, Michael Authier (remote) Members of the Public: Alecia (remote), Reid Fellner (remote), Ella Smith (remote) MEETING CALLED TO ORDER Interim Chairperson Smith 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 September 12, 2024, minutes. The minutes were approved as amended. STAFF REPORTS Energy Services Operational Updates Brian Tholl, Senior Manager, Mechanical Engineer The City of Fort Collins and Utilities have several methods, or “levers”, for making community progress with electrification. Managing a diverse portfolio of methods can optimize cost effectiveness, meeting customer service needs, Our Climate Future goal achievement, and reliable, affordable, environmentally responsible electricity. Board member Braslau commented that in many cases, one of the barriers to adoption is that many of the existing houses can’t support electrification efforts without fairly costly renovations and electrical system upgrades. Mr. Tholl said staff recognizes that, and in early 2025 a new efficiency works incentive rebate will be introduced for new panel upgrade. The requirements that will align with the requirements that staff foresees coming through the state as well. Staff also recognize that a balanced approach across all of these strategies is needed. This goes across all parts of the community when we're talking about the built environment, be it commercial, single family, multi family, it also applies to resources, the distribution grid, transportation, electrification, and even small engines (such as lawn equipment). There are three different areas of electrification related to the grid that we've been focused on historically ENERGY BOARD REGULAR MEETING and are outlined here. Collaborating with Platte River on resource planning efforts; some of the asset management plans and capital improvement plans have been informed and modified due to electrification. Staff is also doing studies and looking at a lot of the data that's coming from the advanced metering infrastructure (AMI) and creating bookends. For example, how are the worst or the most poorly heated homes (like baseboard electric heat) performing compared to the some of the highest performing homes, and outlining the actual electric use required in a wide variety of electrically heated homes. Staff is looking to put a finer point on how to plan for future growth of the distribution grid as well as how to modify, update, and incentivize upgrades to the existing homes, businesses, and the built environment. Board member Giovando asked if there are capital projects that may be impacted by this analysis. Mr. Tholl said in the past, capital projects are planned independently of these planning studies, so there is a bit of a disconnect between what is put in the ground versus what the trends are showing. Now, City Staff is making a consorted effort with Platte River to puta substantial amount of detail in their planning processes for electrification and DER forecasting, but there is still a lot of work to be done to move out of the reactive to the proactive. Building Performance Standards Memo Update (Packet Item Only) Brian Tholl, Senior Manager, Mechanical Engineer Board members reviewed the materials ahead of the meeting and asked a few clarifying questions. Board member Smith asked what the average payback is per project on the City-owned buildings. Mr. Tholl said he is unsure how Operations Services weighs the upgrades, it’s not necessarily an ROI-based decision, which also holds true throughout the community. Board member Braslau noticed there are several City buildings, but not all are included such as Mulberry Pool, and EPIC. Mr. Tholl said some buildings are subject to state requirements (50k square feet and above), so those buildings were removed. Staff is trying to keep the conversation focused on our smaller local buildings. Riverside Community Solar Garden Update (Packet Item Only) Brian Tholl, Senior Manager, Mechanical Engineer Board members reviewed the materials ahead of the meeting and asked a few clarifying questions. Mr. Tholl added that the City has been hosting a Panel Owners meeting every 6 weeks. He also clarified that the City is not pursuing a warranty claim after Schneider Electric denied the claim based on “unauthorized contractor” work prior to the City taking ownership. Board member Canonico asked if the City will pursue community solar projects in the future. Mr. Tholl said the City is leery based on their experience with this project, but many valuable lessons have been learned along the way. It hasn’t stopped staff from continuing to explore that kind of project, but it’s not high on the budgetary priority list right now. Board member Giovando noted that much of the discussion around building upgrades, electrification, and new renewables has been heavily framed around the cost. He encouraged staff to consider reframing their discussion around the community benefits that come with this work (such as employment opportunities). 2025 UTILITY RATES & FEES ENERGY BOARD REGULAR MEETING Randy Reuscher, Lead Analyst, Utility Rates Phil Ladd, Manager, Financial Planning & Assets Mr. Reuscher provided a quick recap of Light & Power’s (L&P) total expenses in 2023, which was just short of $160 million. Roughly two-thirds of those expenses are attributed to Platte River’s for wholesale purchased power. Another 10% of the expenses are for capital projects, 7% for L&P Operations, 6% for PILOTs (payment in lieu of taxes). Other expenses include Energy Services, transfers, admin services, etc. For 2025, staff is proposing a 6.5% increase in electric rates. The increase is composed of a 6.3% increase in wholesale power from Platte River, which accounts for roughly 4.25% of the 6.5% retail rate increase. The remaining ~2.25% is for distribution upgrades, overhead, capital improvements, etc. Staff is also proposing a 9.3% increase to Plant Investment Fees (known as Electric Capacity Fee on the electric side). Mr. Reuscher explained that in 2024 staff proposed a 14.8% increase, but after working through the process with City Council, only 7.4% increase was approved. Staff is trying to catch up to the increase needed for 2025, including a small inflationary adjustment. Much of the increase is driven by transformer cost increases, as well general inflation on various goods and services. The other three utilities also proposing 6-7% rate increases. At last month’s Board meeting, Mr. Reuscher briefly touched on L&P’s 10-Year CIP (Capital Improvement Plan). This plan is revised on a regular occurrence and has seen substantial growth over the last 10 years. In 2016 the plan budgeted for roughly $140 million in improvements, but the latest revision has increased significantly, up to $340 million. This iteration is inclusive of distribution system additions, substation improvements and expansions, transformer, cable, and duct bank replacements, and technology enhancements and replacements. Mr. Reuscher said staff updates the Cost-of-Service study every two years and was most recently completed in the summer of 2024. model is updated every 2 years. He pointed out that the average 6.5% proposed rate increase and the cost of service by rate class are closely aligned, though there is some slight variation from class to class (ex.: residential vs. medium commercial, etc.). Staff updates for consumption, energy, and demand for each of these rate classes, as well as load factors and the cost drivers within these rate classes all flow into the cost-of-service model. Since this model is updated regularly there is typically not a significant variation between rate classes, which is a good sign. Board member Giovando asked how differential percentages are determined. Mr. Reuscher said there are various allocation methods in that, and it's driven by customer counts, load demands, and percentage of demands, like during a coincident peak that goes on to Platte River. Mr. Reuscher said while they are primarily focused on rates for 2025 tonight, he wanted to provide an outlook for the Board through 2033. He reiterated that the primary driver for our local rate increases is due to the wholesale rate increases forecasted by Platte River. There is some tapering off beginning in 2031 and beyond, but there are still adjustments that will be needed beyond that horizon. Much of that is associated with general inflationary costs and ongoing CIP projects that will not taper off in 2030, so staff has incorporated 3-5% in those out years. This is an iterative process, and it will be updated each and every year. A bill comparison shows that the average Fort Collins Utilities residential customer with all four utility services will see an increase of around $13.00 per month, bringing the average bill to roughly $214.00 per month. Neighboring communities range from $220-250.00 per month, so Fort Collins remains the lowest in total (though not necessarily the lowest in every utility service). Board member Canonico said this ENERGY BOARD REGULAR MEETING comparison chart is really impactful, and he suspects an even broader comparison benchmark would also be powerful. Mr. Reuscher said Light and Power is a participant in CAMU (Colorado Association of Municipal Utilities) who does a statewide rate survey; and by the last completion Fort Collins Utilities was the 7th lowest electric utility in the State. A bill comparison for the 9.3% residential ECF increase (based on an average lot size), shows a modest increase for next year of about $261 including the stormwater plant investment fee change. Mr. Reuscher said there are two programs that will be eliminated at end of 2024: Green Energy Program and the Medical Assistance Program (MAP). The Green Energy Program is an opt-in program that was launched in 1998 which allowed customers to pay 1.6 cents to claim 100% renewable energy. There are a few reasons for the program ending: Platte River ended its Tariff 7 three years ago (which was tied to wind or renewable offerings), and enrollment in the program has been dropping. Additionally, as the City brings more renewables online it becomes less important to maintain the program. The MAP has a low participation rate and current program participants can be rolled onto the City’s Income Qualified Assistance Program (IQAP). Board member Braslau asked how many participants will still qualify for IQAP by LEAP (Colorado’s Low-Income Energy Assistance Program). Mr. Reuscher said most participants will still qualify, and Mr. Tholl added that Utilities staff is working closely with the few folks who may not qualify for LEAP to ensure no one is left behind. Board member Braslau said most of the increase is driven by Platte River, though not all. He believes City Council is complacent in the acceptance of Platte River’s rate increases, particularly their future forecasts, and it is responsibility of City Council to make sure Fort Collins’ rate payers are getting the best rate. He thinks criticism is warranted and the Energy Board is within purview under their #6 duty: “To advise the City Council and staff regarding budgetary, rate-making and operational matters related to the electric utility.” Board member Giovando said the more disconcerting part of the increases is within the long-term projections, he wondered what can be done to mitigate or change trajectory over the next seven-10 years. Board member Wegert said his concern is that all four utilities are asking for roughly the same increase at the same time, which will be a significant financial burden for many utilities customers. Board member Braslau noted that is why this board has been such a strong supporter of the IQAP. Mr. Reuscher added that IQAP participants receive a 25% discount on the rate, therefore these customers would be impacted by roughly 75% of the proposed increase, in terms of total dollars, compared to a customer that is not an IQAP participant. Board member Moore moved the Energy Board support the following proposed changes to the 2025 electric rates and fees. Board member Braslau seconded the motion. Discussion: None. Vote on the Motion: It passed unanimously, 7-0, with two board members absent. DRAFT 2025 WORK PLAN Board members reviewed the draft work plan and will review for edits and additions between now and their November 14 meeting. ENERGY BOARD REGULAR MEETING BOARD MEMBER REPORTS Board member Braslau spoke at the last council meeting, reading their memo during public comment. Board member Braslau also said Platte River gave a presentation about industry studies where they found an independent review of Platte River’s IRP would reach the same conclusions. Dispatchable capacity is an integral part of the portfolio with large amounts of wind and solar and Mr. Braslau thinks it is preposterous that Platte River made that conclusion without actually consulting someone. Board member Giovando said his opinion is that he didn’t feel like Platte River came to have discussion or to listen, but rather to tell. He asked the Board and staff to consider if we are willing to live with a 50- 60% rate increase over the next 10 years and wondered if City Council is willing to live with it. FUTURE AGENDA REVIEW The Board’s November meeting will include a presentation on mobile home efficiency. They will also review a draft memo about future rate increases, as well as vote on their 2025 work plan. ADJOURNMENT The Energy Board adjourned at 8:08 pm.