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Minutes approved by the Board at the January 19, 2000, meeting
FORT COLLINS ELECTRIC BOARD MINUTES
Regular Meeting November 17,1999, at 5 p.m.
Council Liaison: Scott Mason IlStaff Liaison: Heather Hoxen - 221-6700 (W)
Chairperson: Jim Welch Phone: 498-8947 (W/H)
Vice Chair: Richard Smart Phone: 221-4474 (H)
A regular meeting of the Fort Collins Electric Board was held at 5 p.m. on Wednesday, November
17,1999, in the Utilities Training Room at 700 Wood Street, Fort Collins, Colorado.
BOARD PRESENT:
Barbara Rutstein, Bill Brayden, Jim Welch, Joe DiRocco
BOARD ABSENT:
Ginger Purvis, Jeff Eighmy, Richard Smart
STAFF PRESENT:
Bob Kost, Dennis Sumner, Eric Dahlgren, Heather Hoxeng, Mike Smith, Wendy Williams
OBSERVER:
Lu Fisk, League of Women Voters
r;I IF.STS-
John Allum, Platte River Power Authority
APPROVAL OF MINUTES:
Barbara Rutstein made a motion to approve the minutes of the October 20 meeting with amendments.
Joe DiRocco seconded the [notion, and it passed unanimously.
UPDATE ON ELECTRICITY ADVISORY PANEL FINAL REPORT:
John Allum presented a summary of the Electricity Advisory Panel's Final Report and provided copies
for the presentation for the Board. The focus of the Panel was to determine if restructuring of the retail
industry is in the best interest of all electric consumers in Colorado. The final vote was 17 against and 12
for restructuring in Colorado. The vote was short of the 2/3 majority vote required for a recommendation.
Mr. Allum explained that the way an issue was presented to the Panel had a lot to do with how it was
answered. For instance, the issue of "No public funds should be used for non -hydro renewables" was
answered with a majority vote, even though it goes against the public trend toward fewer dams, because
the issue: "Should public funds be used for hydro renewables?" was never brought up. The questions
were also answered based on the opinion of the Panel, not necessarily on factual information.
Each issue was individually voted on by the Panel. Mr. Allum discussed each issue, and whether it
received a 2/3 vote (21 or more votes), a simple majority vote (15-20 votes) or a minority vote (14 votes
or less). The 20 categories of issues and their outcomes are as follows:
♦ Rate Comparisons-2/3 vote on all issues.
♦ Rate Impacts (with deregulation) — 2/3 agreed industrial and large commercial rates will likely
decrease while residential rates will likely increase. Simple majority said general rates will increase
along with small commercial rates, and they didn't feel a mandatory rate decrease was appropriate.
♦ Consumer Safeguards — 2/3 vote on these issues, except for the standard offer of service, which
received a simple majority vote.
♦ Low Income — 2/3 vote for all issues, except the Panel said choice should be given to customers at
the same time, and a cap between the residential rate and industrial rate should be implemented.
These latter two issues received a simple majority vote.
♦ Renewables — 2/3 vote for most of these issues. Simple majority said public funds should not be
used for non -hydro renewables or for renewables at or close to market price. Also, there should not
be a minimum portfolio standard, a system benefit charge for renewables nor a surcharge for
renewables.
♦ Efficiency — Five issues received a 2/3 vote, four received simple majority votes and three received a
minority vote.
♦ Taxes and Fees — All but two of these issues received a 2/3 vote. Simple majority said revenue
shifting should be mitigated and a "soft landing" was needed to spread the impact of deregulation.
♦ Stranded Costs and Benefits — 2/3 voted for most of these issues. Simple majority felt IOUs and
large municipal systems could have stranded benefits, small municipalities and cooperatives may
have stranded costs (the stranded cost recovery period should be 10 years) and all stranded
cost/benefits should be recovered and returned to customers.
♦ Universal Service — 2/3 voted for all of the issues, although simple majority said the incumbent
utility should be the provider of last resort.
♦ Reliability — These issues were split between 2/3 and a simple majority vote. The three issues
receiving a simple majority vote were that competition will decrease reliability, cost shifting is a
problem and legislation will likely be required to preserve affordability.
♦ Utility Employees — Most issues received a 2/3 vote. Simple majority said legal liability should be
created for failure to maintain an adequate workforce, new buyers should retain employees for two
years if forced to invest, and deregulation could lead to wage increases and worker shortages.
♦ Impact on Rural Customers — 2/3 vote for all but one of these issues. Simple majority said a
system benefits charge should be adopted to cushion the impact of deregulation.
♦ Competitive Advantage — 2/3 vote for all but two of these issues. Simple majority said IOUs would
gain competitive advantage due to differing tax treatment and that utilities needed to be divided into
separate subsidiaries to guard against cross -subsidization.
♦ Licensing — 2/3 vote for all but one issue. Simple majority said licensing should apply to all
suppliers.
♦ Local Choice — 2/3 vote for all issues.
♦ Local Control — 2/3 vote for all but two issues. Simple majority said municipalities and cooperatives
should have the right to establish the rules implementing the "opt -in" decision, and the incumbent
utility should be able to match any bona fide offer.
♦ Market Power — 2/3 vote for all but five issues. Simple majority said that generation should be
separate from transmission and distribution, assets must be divested to multiple non-affiliated
companies, regulators should have authority to apply conditions or limitations on mergers, and other
market structures should be allowed, in addition to POOLCos.
♦ Transition Issues — 2/3 vote for all but two issues. Simple majority said the residential sector should
be first to transition, and pilot projects should be optional, not mandatory.
♦ Other Issues — Distributed Generation: 2/3 of the panel said it is relevant and should be encouraged,
while simple majority said it should be integrated into utility systems and not considered primarily as
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a customer centered matter; Valve-adcled Products and Services: 2/3 vote; Aggregation: 2/3 of the
panel felt aggregation should be accomplished through voluntary buying groups, but simple majority
supported strong community choice for "opt -out."
Timing and Implementation — 2/3 vote for all issues. Eleven members voted for a two to three year
implementation process.
The Panelists opposed to deregulation said rates are low and would likely increase with restructuring.
They said low-income, rural and small customers would be hit the hardest, and that restructuring could
hurt the economy. Of those that attended the six public meetings, 80 percent said they did not want
restructuring and these panelists sided with that public opinion.
Panelists supporting deregulation said the national trend is leaning toward restructuring, and competition
would produce lower rates, attract investments and innovation and support environmental and
conservation programs.
A third opinion (which received seven votes) presented by the environmental community stated Colorado
will need 4,700 megawatts in the next 15 years with or without restructuring. The existing process is
unlikely to produce quick, economical or environmentally attractive resources to remedy the situation.
They said stakeholders need to work together to solve these problems.
Barbara Rutstein asked what the benefit of deregulation would be for Platte River Power Authority and
the four cities. Site stated that she does not see the benefit for the cities or the State. Mr. Allum stated
Platte River may be able to make more money, and the Cities could "shop" for power if their bonds were
paid off. (The bonds are scheduled to be paid off in 2019.)
Ms. Rutstein also asked if Platte River was planning to build more generation capacity. Mr. Allum
responded that a peaker will be added in 2002, with the potential to add another two or three years later.
Jim Welch asked whether there was going to be any legislation directly related to deregulation. Mr.
Allum said bills would be introduced and hearings on deregulation would occur, but he did not anticipate
anything would clear either the House or the Senate this year.
Joe DiRocco asked about the potential for a federal bill to be introduced to mandating that the states act
on deregulation. Mr. Allum said the Parton Bill has gone the farthest by clearing a subcommittee and
moving on to a committee. With elections next year, Mr. Allum did not think the bill would go any
farther.
Ms. Rutstein asked what Platte River ought to be doing regarding restructuring. Mr. Allum said they
should be involved in making sure issues like "opting in" and protecting tax exempt financing are
included in legislation. He said Platte River's obligation is to provide more load resources for the Cities.
Mr. Allum also suggested the Board notify City Council that they have been studying deregulation and
could serve as a resource to Council. The Board agreed a memo should be sent to Council concerning
their stand on deregulation.
Joe DiRocco moved the Electric Board cancel the December 13 meeting and move all business to
January 19, 2000. Bill Brayden seconded, and the motion passed unanimously.
FUTURE AGENDA ITEMS
Memo to Council concerning deregulation
Adjourned at 7:25 p.m.
Heather Hoxeng, Board Liaison