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HomeMy WebLinkAboutElectric Board - Minutes - 01/18/1995Minutes to be Approved by the Board at the February 15, 1995 Meeting. FORT COLLINS ELECTRIC BOARD MEETING MINUTES January 18, 1995, 5:00 - 7:30 p.m. BOARD MEMBERS PRESENT: John Allum, Bill Brayden, Barbara Rutstein, Richard Smart, and Jim Welch. BOARD MEMBERS ABSENT: Jeff Eighmy and Mark Fidrych STAFF PRESENT: Ellen Alward, Don Botteron, Al Boushee, Delynn Coldiron, John DeHaes, Bob Kost, Bob Nastan, Tim Sagen, Rich Shannon and Dennis Sumner OTHERS PRESENT: Bob Abiecunas, John Bleem, Mike Dahl, Gail Doxtader and Jon Ruiz BOARD LIAISONS: Council Liaison -- Alan Apt Staff Liaison -- Don Botteron 1. APPROVAL OF MINUTES: A Motion was made by Board Member Allum to approve the Minutes as submitted. Board Member Welch seconded the Motion. The Motion passed unanimously and the Minutes from the November 16, 1994 meeting were approved. 2. PLATTE RIVER POWER AUTHORITY BUSINESS PLAN PRESENTATION: Board Member Allum disclosed that he works for Platte River and has been involved in the development of the Business Plan. Dennis introduced Bob Abiecunas and John Bleem from Platte River Power Authority. Bob started the presentation by reviewing the two main reasons Platte River is developing a Business Plan: 1) Changes occurring in the industry; and 2) Increase in competition. The purpose of the Business Plan is to give Platte River a comprehensive business strategy. -1- r The Business Plan Development Process consists of four phases. Phase 1, which consisted of doing an initial situation analysis of the industry (internal/external of Platte River), has been completed. Phase 2 is in progress and consists of numerous teams working on various projects as part of a detailed situational analysis. The goal of Phase 2 is to develop strategic business objectives which will serve as Platte River's direction over the next 3-5 years. Phase 3 will consist of doing an organizational review to assure that the organization can support the strategic business objectives that were developed. Phase 4 will consist of developing action plans to ensure that the strategic business objectives are accomplished. Industry trends and issues were discussed including changes in legislative and regulatory requirements; the effects of the new era of competition related to generation, transmission and distribution; and the changes companies and organizations are or will experience in order to survive in the changing business environment. Risks facing Platte River include maintaining a competitive generation supply; loss of load; its limited customer base; competition; and its traditional monopoly outlook. Opportunities include improving resource utilization and operation efficiency; market opportunities to serve other entities that might be power shopping; new technology, i.e., energy related services, renewable energy projects, co -generation; transmission to other markets; strategic alliances between the Cities and other entities to increase efficiencies and counter costs; and being proactive in order to embrace the changes that are occurring. John explained the customer needs and risk assessment work that has been done. Key customer assumptions included they will demand more choices; new entrants will offer more choices; markets will open to competition; there will be pressure to reduce prices and provide new products and services; both wholesale and retail markets will be affected; and being proactive is imperative. Potential impacts on Platte River and the Cities were also discussed, including potential rate impacts if large customers were lost. Values of the Platte River Board related to Platte River's current situation and future were summarized. Platte River's strengths and weaknesses were analyzed to evaluate its ability to compete. Under Competitive Status, the primary strength identified was current rates; the primary weakness was a lack of marketing expertise. Under Financial Status, the primary strength identified was the strong historical financial results and balance sheet; the weakness was the high financial liability in Rawhide. Under Physical Resources, the primary strength identified was that the generation plant is relatively new and in good repair; the weakness was the high coal cost at Craig. Under Customers, the primary strength was that the Cities' staff and citizenry are generally pleased with rates and the electric services that are provided; weaknesses included that we have 12 customers that represent 25 % of our load, and the current selling price to Public Service is relatively high. Under Organization/ Governance, the primary strength was Platte River's extensive experience in joint projects and partnering; the weakness was restrictive founding legislation (perceived). -2- No regrets teams were formed to initiate research work that would be needed regardless of the Business Plan or any other direction Platte River would decide to take. Teams were formed around the subjects of joint partnering, customers, board values, legal issues, wholesale, the Public Service Company contract, financial issues and rates. Alternative Future Scenarios were developed from the products of Phase I. These are plausible outcomes on where the industry could go and the role Platte River should play. Elements of Strategic Direction emerged from this work and provide the framework of the business activities that are being studied in Phase II. These elements include reducing unit cost and risk; diversifying the customer base; increasing focus on customers; forming strategic alliances; and encouraging a high performing organizational culture. Phase II is currently underway. Phase II is being addressed in three pieces: 1) Core business, 2) Future opportunities in electricity, and 3) New business opportunities, non - electricity related. There are approximately 22 teams working on these issues with the goal of developing strategic business objectives and ideas on how to implement these objectives. Rich asked John Bleem to clarify which teams are addressing environmental issues. Environmental research is being done by the Customer Service team (DSM, energy efficiency, environmental -related issues), Rates team (green pricing), Base Load Resources team (renewables), Rawhide teams (scrubbers, emissions), .Marketing team (promote Platte River's environmental sensitivities), and the New Business team (John Fooks, Platte River's Environmental Specialist, is looking at two issues here). Schedule for this project: February 28, 1995: Deadline for initial Phase II team reports to be completed. March/April, 1995: Wrap up work done by the Phase II teams Organizational review Phase III May, 1995: Develop Action Plans Phase IV May 31, 1995: End Project Although there is some sense of urgency to complete this project, if additional time is needed for any Phase, the schedule will be delayed accordingly. Electric Board briefly discussed issues related to the information presented. Discussion included current contracts, retail wheeling time frame, REAs, potential rate scenarios, enabling legislation, current competitiveness of Rawhide, and best/worse case scenarios for Platte River five years from now. -3- Rich suggested that the Board start thinking about why it is important for the City to be in the electric utility business and mentioned that this is the question that must be answered before determining which direction to proceed. Chairperson Smart added that this seems to be a separate issue from Platte River's business plan issues. Either entity could continue without the other on some scenario. The merits and values of either organization continuing in the electric utility business should be further explored. 3. ANNUAL REPORT: Don gave a brief overview of the Annual Report. There were a few changes suggested: Item 1B -- "operative" should be operating Item 1D -- omit "4.6% increase is considered normal" Item lE -- "contributions in aid to" should be replaced with subdivision Item IF -- add at the end of the sentence: , with no rate increase Page 4, 1st paragraph -- "NCR" should be Everett Companies Board Member Allum made a motion to accept the Annual Report, as amended. Board Member Rutstein seconded the motion and the motion passed unanimously. Delynn will incorporate the suggested changes and forward the report to the City Clerk's office by the January 30, 1995 deadline. 4. STAFF REPORTS: A. CLIP Dennis mentioned that we are in contact with some potential CLIP customers, but at this point there is nothing finalized. B. Electric Heat to Gas Conversion Program Delynn reported that we have five customers whose loans have been approved; two have finished their projects and closed their loans. There is a delay in construction by Public Service Company. It is anticipated that construction will not begin until early Spring. C. DSM Don reported that staff has requested that $300,000 be reappropriaated to the 1995 DSM budget. This is currently under Council Review. This would give us a total of $450,000 in the DSM budget for 1995. Don anticipates reappropriating these funds on a yearly basis until the money has been loaned and it becomes a revolving fund as envisioned. D. Commercial Lighting Dennis reported that we are involved in a number of activities here. Jon McHugh has done a lot of analysis that has sparked interest in some customers. M Everett Companies -- 3030 So. College real estate office. The office manager is very interested in seeing, getting some experience with, and demonstrating different kinds of lighting. We have made arrangements with them to change 1/2 of their office to T8s, electronic ballasts, upgraded lighting. The other half will remain the same. Staff plans to have a sign explaining the upgraded lighting, and will collect surveys to get feedback. Everett Companies is a significant player in the Community and getting samples in their door helps us increase our outreach efforts on efficient lighting. Also, Everett rents a lot of space, and we are hopeful that as customers come in and see the example, changes can be made. Key Bank building -- The majority of this building is private office space. They have an association that runs businesses out of this building. Jon McHugh had a meeting with their Board and explained some lighting upgrades that would be beneficial. They were very receptive to this. We will be meeting with the larger association in the near future. We think there is a potential that we will be able to utilize the CLIP buy -down option for this project. Dennis advised the Board that he would like to provide a more comprehensive DSM activities update in the June or July meeting. The Board was receptive to this. 5. INFORMATIONAL REQUESTS: None. 6. OTHER BUSINESS: A. Ceres Principles Chairperson Smart received this information from Board Member Welch, and mentioned that it was worth reviewing. Board Member Welch mentioned that this was handed to him by a member of the Community. It was suggested that this might be something that various institutions might adopt, i.e., the Electric Board, the City, Light and Power, etc. This is being promoted as a way for institutions to become more connected with environmental values. It requires that a yearly environmental audit be done, based on these 10 Ceres Principles. GM and Arizona Public Service have adopted these Principles. Board Member Welch forwarded a copy of these Principles to Thaine Michie for his review. Board Member Welch suggested that we have someone from the Community who is informed on this issue come in a give a presentation to the Board. He also suggested that we might want to forward this on to the Natural Resources Board or a Board that is more environmentally focused. Rich offered to discuss this issue in greater detail with Jim, and perhaps do a little more one on one research within the Community to determine what this would mean in terns of daily work, etc. -5- B. EMF The Colorado Health Effects Communicators are having a meeting on February 6, 1995, at Red Rocks Community College in Lakewood, Colorado. This group monitors the potential health effects of EMF. The Utility will pay registration fees for any Board Members interested in attending. C. Distribution Automation Demand Side Management (DADSM) Board Member Brayden mentioned that he is attending this. He offered to look for information anyone was interested in. Dennis mentioned that he would be interested in information on peak reduction. Board Member Brayden will get copies of the conference brochure to Dennis and to Gail Doxtader. D. Competitive Marketplace Board Member Welch asked for clarification on whether the Board will only be getting information on this issue or will be playing a role in this issue. Rich answered that it may be months before staff has four or five reasonable scenarios for the Board to review. He suggested that at any Board meeting, the Board could take an hour or so and brainstorm possibilities. This would be helpful for staff. The Utility plans to start working on a Business Plan in February. If Board Members are interested in having this dialog, Rich would like some feedback on the basic question of why the Utility should stay in existence. It was also suggested that the Board discuss issues related to the operation of the Utility in a more competitive environment. It is likely that the competitive electric market will raise local issues, i.e., market pricing (vs. cost -of -service rates), more commercial oriented operation of the Utility, and buy-out options. The Board may be asked to advise City Council on these kinds of issues and needs to be able to respond when and/or if these questions arise. There was some feeling that more information was needed before any discussion on this issue would make sense. Staff s feeling was that we are about three or four months away of having good information for the Board to review, and before staff could orchestrate a focused discussion on this issue. Until then, the Board could discuss some philosophical issues, etc. There was a suggestion that we have a representative from Boulder come to a meeting and share their experiences of being served by Public Service. There has been a lot of internal discussion on whether they should continue with Public Service or whether they should contact Platte River. W 7. AGENDA: Year End Financial Position Report Update on DSM programs (quarterly report) Report on the Colorado Health Effects Communicators Conference Board discussion on "Why should Light and Power continue to exist?" ADJOURNMENT: Meeting adjourned at 7:22 p.m. Delyn . Coldiron, Board Secretary -7-