Loading...
HomeMy WebLinkAboutElectric Board - Minutes - 02/15/19951 • Minutes to be Approved by the Board at the March 22, 1995 Meeting. FORT COLLINS ELECTRIC BOARD MEETING MINUTES February 15, 1995, 5:00 - 7:30 p.m. BOARD MEMBERS PRESENT: John Allum, Bill Brayden, Jeff Eighmy, Barbara Rutstein, Richard Smart, and Jim Welch. :O:tI ut ul: t Mark Fidrych STAFF PRESENT: Ellen Alward, Al Boushee, Delynn Coldiron, John DeHaes, Ron King, Bob Kost, Jon McHugh, Bob Nastan, Tim Sagen, Rich Shannon and Dennis Sumner OTHERS PRESENT: Mike Dahl and Gail Doxtader BOARD LIAISONS: Council Liaison -- Alan Apt Staff Liaison -- Don Botteron 1. APPROVAL OF MINUTES: A Motion was made by Board Member Rutstein to approve the minutes. Board Member Allum seconded the Motion. The Motion passed unanimously and the Minutes from the January 18, 1995 meeting were approved. 2. REPORT ON YEAR END FINANCIAL POSITION: Ellen reported on the unaudited 1994 Income Statement. Significant changes included: Total Operating Revenue -- $309,000 increase due to growth. KWh Sales Growth for 1994 was 5.4%; 3% was budgeted. - Distribution Operations & Maintenance -- $156,000 decrease due to the increased demands for construction which took precedence over planned maintenance work. -1- Purchase Power -- Higher than budgeted; again, due to growth. Energy Services -- $184,000 decrease due to DSM programs being in the development stages and not needing full funding for implementation. Fund Transfers and Uncollectible Accounts -- $236,000 decrease due to three factors: Finance changed the way PILOT's are figured. Payments made to Utility Billing came in under budget. Uncollectible accounts were less than anticipated. Other Income -- both categories were greater than budgeted by a total of $472,000. 1994 Net Income is estimated at $1.5 million, or $1.2 million over what was budgeted. Ellen next reported on'Changes in Working Capital for 1994. She mentioned that our beginning working capital was almost $3.5 million dollars greater than when we budgeted for 1994 due to the increase that was experienced year end 1993. Other significant changes included: Contributions in Aid to Construction -- Almost $1.3 million increase due to the growth swell that we experienced last year. Subdivision construction showed an increase of approximately $650,000. Systems Additions (capital budget) -- $757,367 decrease. Although the budget for 1994 was $6.6 million, in reality, because we carried over encumbrances and reappropriated funds, the revised budget was actually $7.5 million. Thus, the $757,367 should actually be $1.6 million under budget. Approximately $600,000 of encumbrances will carry over to the 1995 budget. In addition, we have asked Council to reappropriate $300,000 for DSM capital and $99,000 for the purchase of equipment. Ending Working Capital -- $6.7 million dollar increase. Half of this amount reflects the additional beginning working capital that carried over from 1993. The increase of $1.2 million dollars in Net Income, the increase of $1.3 million in Contributions and Aid to Construction, and the decrease expense of $757,000 to System Additions makes up the other half. Ellen also reported on the areas in the 1995 budget that have been revised because of carry over encumbrances: The Revised Total Operating Expense is approximately $100,000 greater than the original appropriation, reflecting the carry over encumbrances in the Operations and Maintenance budget. -2- Investment Earnings will probably be larger than budget because of the increase in reserves. Changes in Working Capital -- Beginning working capital is almost $3 million dollars greater than what we had estimated when doing the '95 budget. System Additions is $1 million dollars greater due to the $300,000 additional DSM appropriation, $106,000 for equipment, and $600,000 carry over encumbrances. Bottom line shows that total reserves will be about $2 million dollars greater for year end 1995 than what was anticipated if revenue and expense projections are accurate. The Purchase Power Reserve is projected at approximately 20% of Revenues year end 1995. Board Members discussed budget issues. Changing the Purchase Power Reserve level target of 10% was also discussed. Raising this target might be appropriate due to the flexibility that will be required in the changing competitive environment. Ellen mentioned that the actual policy that has been adopted by Council does not reference the 10 % target reserve level; only the limit of "up to 25 V is referenced. There was a question on how much the weather impacted budget figures. Analysis done to date shows that weather had a substantial impact on budget figures. Staff will provide additional information on this. UPDATE ON THE DSM QUARTERLY REPORT: Dennis asked if there were any questions or comments concerning the DSM quarterly report. Board Members indicated there were no questions and the report was appreciated. Dennis mentioned that he would like to have a lengthy discussion with the Board on DSM issues during the June or July meeting, giving a more detailed update on DSM program status and soliciting Board input on program direction. Felix Lee plans to attend the March Electric Board meeting to give an update on progress that has been made on energy - related changes to the residential and commercial codes. Jon McHugh and Doug Swartz have been working with Felix on these code changes. Work done on the commercial code has been relatively non -controversial, and a number of substantive improvements are being made. Work done on the residential code has been, and probably will continue to be, more controversial. There was discussion on the fact that some DSM programs may reduce electric peak demand through the use of customer power generating equipment. This was contrasted with other programs that may shift the time of electric loads and others that may reduce or eliminate electric loads. It was also noted that a side benefit of DSM activities is customer good -will, which is always desirable, and especially so in a deregulated environment. -3- REPORT ON THE COLORADO HEALTH EFFECTS CONFERENCE: Board Members Rutstein and Smart, who attended this conference, reported that "we have seen the smoke; haven't found the fire." Presentations given included information obtained by re-examining and massaging the gross epidemiological data and studies that have been done to date. An interesting analysis of the Denver study showed that effects from EMF may have very little to do with the proximity to power lines, but, in fact, may have a lot to do with proximity to traffic pollution in heavily congested corridors. Benzene, which is found in auto exhaust, is associated with leukemia. There is some feeling that Benzene might be the initiator of the disease and EMF might be the promoter. It was also noted that major power lines tend to parallel major arterials. Another study did suggest that there may be some relationship of EMF to lung cancer. Professor Barnes from CU, who has done a lot of study on various types of EMF, was asked about this, and questions where the risk factor of EMF fields would be placed on a broader scale of risks including dying from food additives, smoking, drinking, being hit by a car, falling out of an airplane, etc. He feels that users of cellular phones are much more at risk for health problems. A representative from CSU who is studying melatonin reported that melatonin, they think, inhibits the development of tumors and helps fight disease. EMF may inhibit the production of melatonin. Dennis mentioned that this is the study that Light and Power will be participating in. There was also discussion on the different socio-economic status neighborhoods, how they are strategically located with respect to the power lines, the age of the neighborhood, how densely populated the neighborhood is, rentals, etc. The rental status and neighborhood type was more significant than the magnetic field. It points to the density of vehicular traffic. Current scientific attention is on magnetic fields, not electric fields. Extensive testing has been done on electric fields. If magnetic fields truly are the problem fields, people are exposed to higher magnetic fields from household appliances, than from power lines. Board Members reported that data from these studies remains inconclusive. The conference was interesting and worthwhile. i0 5. BOARD DISCUSSION ON "WHY SHOULD LIGHT AND POWER CONTINUE TO EXIST?" Rich facilitated this brain -storming session on the question of "Why should Light and Power continue to exist?" Another way to phrase the question is "What must Light and Power do as an electric utility in order to continue having the privilege of serving the City?" "What would your neighbors say, in 30 seconds or less, that if you can't do these things, I don't know if I want you around?" Rich mentioned that it is important, before a crisis should occur, that Council reaffirm their opinion about why Light and Power exists, and know what criteria/standards they would measure the Utility against when determining whether or not it is a good business decision for the community for Light and Power to continue to provide electric service. The Board listed the following "musts": - Deliver power efficiently - No such thing as a free lunch - Response to turn offs/ons - Where does power come from? Clean? New vs. need to rebuild? - Do I want to do business with someone who is an "outsider?" - Reliability - Customer service - Avoid the phone company situation - Low rates/how long? Aesthetics Public control - Quality - Distribution -- natural monopoly, don't want multiple lines in town - Local jobs - Concern for environment - Return to the community ($ return) Community benefit vs. "fat and happy" Currently 2 1/2 times the Public Service Company franchise - Economic benefit to community vs. shareholders "A real, local, person you can talk to" about energy issues - Response to outages and other problems - Lose leverage and flexibility to make local decisions when tied to 20 year contracts on franchise - Long term planning - Integrated construction, operation, and maintenance - Be aware of lost opportunities - Better to get good at businesses that don't compete against local companies - Economy is only a part. Many people buy many products based on "other than low price" - When you lose local control, strange things happen, including a sense of control over their lives - Does it make us more economically viable? -5- "Vision" in the resolution Intrinsic merit of providing this service via local control, reflecting local values - Sense of "loss in the community" as other institutions become more distant - How do we develop a great product; then clone it? Things offered before the merger/acquisition, sometimes look differently after the merger/acquisition Public corporation -- expectation of doing as well or better than other similar service providers Board discussed the issue of Light and Power being "fat and happy" vs. providing an economic benefit to the community. There is some perception that Light and Power makes too much money and that rates should be lowered. There was also some feeling that public outreach might be necessary to inform citizens of the $3.5 million dollars per year that are contributed to the General Fund and the competitiveness of our current rates. There was some discussion that the return to the community might be rephrased from just going to the General Fund, to going to targeted funds, i.e., the open space fund, library fund, etc. Would this be more palatable for citizens? In the new competitive environment, uncontrolled pricing allowed by monopolistic situations will no longer be as meaningful. The things which will be meaningful include providing good services, being cost competitive, and being viewed by the community as a leader in making decisions that support public policy. Rich plans on using the information that was generated by the Board as a basis for a Resolution that will go to Council to reaffirm the community benefits of having a publicly owned electric utility, and that will ask Council to permit necessary changes in City administrative and operating policies/procedures to allow the Utility to function more as a business in the new competitive environment. A draft resolution will be provided for Board comment at the March meeting. It is Rich's intent to forward a finalized Resolution to the City Council in April 6. STAFF REPORTS: None. 7. INFORMATIONAL REQUESTS: Board Member Welch asked for information showing how increases in growth relate to the weather we have experienced. Kim E 8. OTHER BUSINESS: A. Air Quality Control Commission Board Members discussed the memo from Blair Leist, that was included in the meeting packet, regarding the Air Quality Control Commission. Council Member Apt requested that this information be forwarded to the Board. Board Member Allum mentioned that Anne Vickery is not a State employee, but rather a member of the Colorado Mountain Club. There was brief discussion on the mis-statement that Platte River has part ownership in the Hayden plant -- Platte River has no ownership in the Hayden units. Platte River owns 18% of the two older units at Craig. These two units have precipitators that remove particulates and wet scrubbers to remove SO2. Unit 3 was built 4-5 years later and it has basically the same technology as Rawhide. There has been some questioning about whether Units 1 and 2 should operate the scrubbers at a higher removal rate than what is required by the State. The plants meet all State requirements, but efforts are being made to get the State to increase the requirements. Hayden is older than the Craig units. It has precipitators on both units that don't work real well, but the plant meets all of the State requirements for a unit that age. There is a $3 1/2 million dollar study being done on this. Platte River is paying 12% of half of this amount. The study should result in a finding of whether or not the units at Hayden and Craig are reasonably attributable causes of visibility problems in the Mount Zirkel Wilderness Area. The acid deposition problem is also something the partners in Hayden and Craig are funding part of. Currently, there are no regulatory mechanisms for deciding how to analyze acid deposition in snow. If the study being done does attribute visibility problems to the units at Hayden and Craig, then a process called BART (Best Available Retrofit Technology) will be done to show what it would cost to deal with the measure of impact they are having. Once this is done, the State and the EPA would make a decision about what the plants need to do to fix the problem. This process is anticipated to go on for quite some time. There are other actions being pursued by the EPA that could short circuit this study. B. Platte River Surplus Sales vs. Net Revenue Rich corrected a mis-statement from last month's meeting. He had mentioned that both Platte River surplus sales and Platte River net revenue have been around $7 million dollars, on average, for the last several years. He erroneously left the impression that all of the surplus spot sales went directly to net income. This is more like half. Out of the surplus sales that are made, half of this goes to offset fixed costs. -7- C. March Meeting Team discussed rescheduling the March meeting since it falls over spring break. There was some concern about rescheduling since Felix Lee is scheduled to attend on the 15th. Due to the number of people that would not be able to attend the meeting on the 15th, Board Members decided to delay the March meeting by one week. The March Electric Board meeting will be held on March 22, 1995. Dennis will talk with Felix to try and reschedule to the 22nd. 9. AGENDA: Draft Community Benefits Resolution for Council Energy Code Presentation (Felix Lee) ADJOURNMENT: Meeting adjourned at 7:27 p.m. . Delynn . Coldiron, Board Secretary