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HomeMy WebLinkAboutElectric Board - Minutes - 05/15/1996Council Liaison: Alan Apt Staff Liaison: Delynn Coldiron Chairperson: Mark Fidrych Phone: 490-7240 (W) 223-7140 (H) Vice Chair: Jeff Ei hm Phone: 491-5784 223-9487 A regular meeting of the Fort Collins Electric Board was held on Wednesday, May 15, 1996, in the Light and Power Training Room, at 700 Wood Street, Ft. Collins. BOARD MEMBERS PRESENT: Jeff Eighmy, Mark Fidrych, Len Loomans, Barbara Rutstein, Richard Smart and Jim Welch BOARD MEMBERS ABSENT: Bill Brayden STAFF PRESENT: Ellen Alward, Delynn Coldiron, Eric Dahlgren, John DeHaes, Suzanne Jarboe -Simpson, Bob Kost, Tom Rock, Tim Sagen, Rich Shannon, Dennis Sumner, and Steve VanderMeer, OTHERS PRESENT: John Bleem, Paul Eckman, and John Fischbach BOARD LIAISONS: Council Liaison -- Alan Apt Staff Liaison -- Delynn Coldiron 1. APPROVAL OF MINUTES: A Motion was made by Board Member Rutstein to approve the Minutes. Board Member Smart seconded the Motion. The Motion passed unanimously and the Minutes from the April 17, 1996 meeting were approved. -1- 2. GOVERNANCE: Rich opened discussion on the governance information that was included in Board Member packets. He asked for feedback on whether or not the information was clear and provided adequate detail, and whether or not the information properly reflected the Board's position. He also asked Board Members for input on the approach they wanted to use to present this information to City Council and the Charter Review Committee. Board Members were appreciative of staffs efforts in putting together a concise and understandable package. Board Members offered some rewording suggestions, and wanted to see page numbers added. It was suggested that a reference to term limits be added, and that any issues not directly related to governance, be set out in a separate memorandum. They also suggested that additional language be included that clearly establishes the reasons why a change in governance is necessary, i.e., the need for flexibility and quicker response time, the need for a more entrepreneurial approach, etc. There was some concern that the sample issues included in Attachment A were not the true issues behind the need for a change in governance, and were not convincing enough on their own to suggest that an alternate governance structure was necessary at this time. Board Members continued discussion on the necessity of changing Light and Power's current form of governance and on the issues that are driving this change. There was some feeling that the Utility could effectively handle the issues that have been raised without making any change to its current governance structure. There was also some feeling, however, that once deregulation becomes a reality, and the Utility is forced into a competitive environment, this might not continue to be the case. It is imperative that the Utility remain proactive and put in place the necessary structure that will enable it to continue to provide competitively priced power for its customers, to provide responsiveness to local community values, and to provide a reasonable financial return to the City. Some of the advantages of having an independent electric board were discussed. An independent governing board would be focused solely on utility issues and would be informed on rules, regulations, and other changes/issues of the new deregulated environment. They would be familiar with the collective strategies and options surrounding each issue, and quick and informed decisions could be made to assure that the Utility maintained its competitive edge. This responsiveness could create flexibility to become much more entrepreneurial and to take reasonable risks. Since City Council would appoint board members and have the authority to remove them at will, and would have veto authority over actions of the board pertaining to budget and the issuance of long term debt, responsibility to the electorate would be preserved. There is concern that our current environment would not allow some of these things to happen. City Council may not have the time needed to learn everything they would need to know about the Utility business, deregulation issues, etc., to make critical decisions within short timeframes. Although the current Electric Board could work on these issues and make recommendations to Council, it is unlikely that the issues could be scheduled on a Council Agenda within the necessary timeframe for the Utility to succeed in a competitive -2- environment. Council has been called on only three times over the past fifteen years to offer judgement decisions on major issues. It is anticipated that in this new environment, there may be utility issues at every Council meeting. There was some feeling that the industry is not changing so fast that we would not be able to respond in our current governance structure. However, it was mentioned that the FERC issued an order dealing with open access on April 24, which was published on May 10. It is expected that this order will be implemented 60 days thereafter. When the FERC addresses retail wheeling, it is anticipated that we will see things happen within the same short timeframe. They will deal with the issue for a year or so, and then implementation will happen very quickly. This new retail wheeling environment will become very hectic, very fast. There was some discussion on various issues that staff and the Board could work on now in preparation for the shift into a competitive environment, i.e., distributed generation, preserving General Fund revenue sources, etc. Board Members are interested in much more discussion on these issues. Staff added that this is a good example of why an independent governing board would be advisable. These issues require ongoing and frequent dialog with a committed, informed, decision -making body. Our ability to do this is somewhat limited by our current structure. Board Members discussed visiting other utilities that have separate governing boards so they could be confident that this type of governance structure provides the benefits that have been discussed. The information that is obtained could be used by Board Members to affirm that a change in the current governance structure is in the best interest for the Utility and the City of Fort Collins. There was discussion on the logistics of this type of trip. Staff had done research on this issue, and found three progressive municipal utilities in Florida that might provide Board Members with the information they are seeking. Due to interest expressed by several Board Members to visit these utilities, staff will begin making arrangements. There was some feeling that it was too premature to try to hammer out the details of the recommendation and that the current draft recommendation should be forwarded to Council for feedback. It is important that we find out what Council's questions are so we can provide them with answers. There was some concern that things should be explained for Council a little more clearly and that we include some examples of the types of issues that will have to be addressed, the timeframe within which they would need to be addressed, etc. It was suggested that instead of forwarding a recommendation to Council, this concept be submitted to them as a work in progress item. We could inform them of what the issues are, what issues the Board has been struggling with, etc. It was mentioned that the Board could hold off on making a recommendation to the Charter Review Committee until things are a little more clear. Since the Charter is considered a "living" document, it could be changed at a later date if another charter committee were appointed to deal with these issues. -3- Board Members decided to continue with their plan of submitting the draft recommendation to Council at the June 25 Council Study Session. Chairperson Fidrych Will work with Rich to modify the draft recommendation in accordance with the Board's suggestions, and to formalize a presentation for Council. Board Member Welch offered to review the revised information once it is available. A majority of Board Members agreed with this plan. PRPA ENERGY SERVICES COMPANY: Rich gave a presentation on the concept of creating an energy services company (ESCO) in conjunction with Platte River Power Authority. Light and Power and Platte River Power Authority would combine efforts to form an ESCO. It would be a division of Platte River. This ESCO would focus on our at -risk customers, i.e., multi -city customers or those large customers with special needs. A draft Charter and a draft list of the Top 5 ESCO programs were included in Board Member packets. Although Light and Power has been very aggressive with energy services to date, these efforts have been somewhat scattered. We have done many things very well, especially with those programs thai have focused on our residential customers. This ESCO company would focus energy services efforts on large/industrial customers and would allow Light and Power to continue and become even more focused on our residential and commercial customers. Light and Power could focus on developing energy services that offer reliability, energy efficiency and green pricing options, and package these in a way that they could serve the mass market. There was some concern raised over the Board's lack of involvement in the decision to create the ESCO. Rich explained that this decision was an effort by Platte River's Board to address the immediate need of finding ways to stay in existence --- one of those ways being holding on to our large and at -risk customers. The purpose of tonight's Electric Board presentation is simply to inform the Board of Platte River's plans, and to show how Light and Power will cooperate with these plans to the benefit of both organizations and, ultimately, to the benefit of all customers. It was mentioned that staff is hopeful that the Electric Board will focus on Light and Power's energy services effort and help determine how aggressive Light and Power should be with residential and commercial energy services, which energy services should have priority, the methods these should be delivered to our customers, etc. There was some discussion on the value of having Platte River take the lead with our large commercial customers. There was some feeling that Platte River is in a better position to deal with especially the multi -city customers. There was also some feeling that Platte River is in a better position than Light and Power to develop a number of energy services aimed at these customers, to enter into contractual arrangements with companies that can provide power quality and DSM, and to deliver these services to our large commercial customers. me There was some concern that this arrangement forces Light and Power to remain with Platte River. Rich mentioned that Platte River will have to remain the best place to get long-term, low- priced, reliable, and as clean as feasible power in order for Light and Power to stay with them. We may lose a few customers, those who want the cheapest power available, but most of the experts believe that the vast majority of customers do not want to experience again what they have gone through in conjunction with the telephone industry deregulation. There was agreement with the concept of creating an ESCO to service these customers, but some discomfort with the structure that was presented. Some Board Members would have liked to have seen the Utility take the lead with these customers, not Platte River. There was brief discussion on a couple of other scenarios. It was generally agreed that this concept is a very important step and worth an attempt. Staff will provide the Board with updates as available. STAFF REPORTS: Photovoltaic Update: Dennis briefly reviewed his memo that was included in Board packets. It was clarified that the DOE and Light and Power would assume support of one dollar per W (not kW) and the participant cost should be $4 per W not $4 per kW. Our commitment to the UPVG project was to give this project serious consideration once it is implemented and numbers can be evaluated, etc. We are part of the package that Solarex took the lead on putting together referred to as PV-VALUE. The PV-VALUE group was the group that was actually awarded the $500,000 funding from the Utility Photo Voltaic Group. Light and Power is a very minor player in this, but we have kept our foot in the door to keep our options open. 2. Wind Update: Dennis hopes to be able to present more information on some wind projects sometime in the very late summer, or early fall. Dennis has been working with Bob Emmert at Platte River and they have developed some options that seem viable. Board Member Welch offered a suggestion that might assist in the establishment of price sensitivities. He will visit with Dennis about this at a later time. 3. Telecommunications Update: Eric opened discussion on the Telecommunications Policy. A copy of the final policy was included in Board packets. Item number seven pertains to us. Eric mentioned that development of this policy has proven to be very timely. Activity is underway -- US West has asked to construct two new cellular towers in Ft. Collins. The City is just barely ahead of the action. Zoning regulations are the -5- next things that are going to be addressed. There is a chance that telecommunications companies may ask to use our streetlight poles. We don't want to put hindrances in the way, but as a Community, we need to develop guidelines on how these things should look, etc. The policy leaves it wide open for Light and Power to explore many options. Eric briefly reviewed a brainstormed list that was developed during a staff telecommunications meeting. He also reviewed some of the skill sets that need to be acquired. There are a whole host of other issues that have not been addressed, including many legal and regulatory issues. Staff is focusing on two pilot projects: the Poudre Valley Hospital and the Water Department. We have also talked to the Poudre R-1 School District. They have 22 schools that they want to connect throughout the Community. Poudre R-1 indicated that they would allow us to use some space in their buildings as telecommunications rooms if it is available. We are learning a lot about telecommunications technology. Four staff members attended a hands-on fiber course April 16-19 and found out that laying fiber is much different than laying electric cable. With some additional training and experience, we should be able to rapidly gain the skills required to do this. Staff will continue to work on forming a telecommunications team that will include a system designer and some materials vendors. We have some good system designers and vendors identified. Staff will be working with the City Purchasing Department to try to get them on board. Staff will provide Board Members with updates as they become available. 5. INFORMATION REQUESTS: None. 6. OTHER BUSINESS: Suggested Reading: Rich mentioned that he has been using the book the Discipline of Market Leaders as the basis for some of the things we are doing. He recommended this book to anyone who is interested. John DeHaes has prepared some "DeHaes Notes" which is a brief summary of this book. If Board Members are interested, they can have either one. 2. June 5th Meeting: Board Members agreed not to meet on June 5th. Chairperson Fidrych will work with Rich to put together a presentation on the governance package. All Board Members were invited to attend the Council Study Session on June 25th. The Study Session begins at 6:30 p.m. 3. Platte River Electric Vehicle Program: It was mentioned that the Platte River Electric Vehicle Program is ending. Board Members wondered if the City might be entitled to left -over funding. Rich will check into this. 7. AGENDA: Governance Wind -- July DSM in July Budget -- July 8 ADJOURNMENT: The meeting adjourned at 8:45 p.m. Del � Coldiron, Board Secretary -7-