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HomeMy WebLinkAboutElectric Board - Minutes - 06/11/1997A regular meeting of the Fort Collins Electric Board was held on Wednesday, June 11, 1997, in the Light and Power Training Room, at 700 Wood Street, Ft. Collins. BOARD MEMBERS PRESENT: Jeff Eighmy, Len Loomans, Barbara Rutstein, Richard Smart, and Jim Welch BOARD MEMBERS ABSENT: Bill Brayden and Mark Fidrych STAFF PRESENT: Ellen Alward, Delynn Coldiron, Eric Dahlgren, Suzanne Jarboe -Simpson, Bob Kost, Tim Sagen, Rich Shannon, Gwyn Strand, Bill Switzer, and Patti Teracka OTHERS PRESENT: None. AGENDA: 1. APPROVE MINUTES Board Member Rutstein made a motion to approve the May 21, 1997 Electric Board minutes as submitted. Board Member Eighmy seconded the motion. The motion passed unanimously, and the Minutes from the May Electric Board meeting were approved. 2. BUDGET: Ellen Alward presented the 1998-1999 Biennial Budget. She mentioned that the City has shifted to a biennial budget process to reduce time and resources required to prepare and approve budgets, to align the budget to City Council's policy agenda, and so that City staff can utilize "off' years for more city-wide long range strategic planning. Ellen reviewed the assumptions that were used to prepare the biennial budget. These included megawatt -hour growth, inflation and the number of new residential housing units. Megawatt -hour growth is projected to .decline; year-to-date figures are substantiating this. New residential units are also projected to decline; year-to-date figures are substantiating this. The proposed 1998 budget is anticipated to increase over the actual 1997 budget by 2.46%. An almost 1% decrease is expected for the 1999 budget. These modest changes can be attributed to the fact that the capital budget is decreasing. No purchase power rate increases are being projected for this period. Increases in the purchase power budget reflect system growth and are estimated to be 5.5% in 1998 and 3.3% in 1999. There are no significant changes being projected for the operations and maintenance budget. Reflected increases in this budget are due growth and inflation and are estimated to be 2.2% in 1998 and 5.6% in 1999. The systems additions (capital) budget is projected to decline in both 1998 and 1999. New projects that will be undertaken during this two year period include the addition of a third transformer to the Harmony substation and Utility telecommunications activities. Ongoing capital projects include the undergrounding program, duct banks, and subdivision construction. Utility rates are projected to increase by 2% in 1999, which would bring current rates approximately equal to what they were in 1983. This is a reduction from the rate increases that were being projected during last year's budget process (2% in 1998, and 1% in 2000). The 1998 increase was delayed a year, and the 2000 increase eliminated. Staff is hopeful that the projected 2% increase will continue to be delayed. Ellen reviewed other revenues, resources and financial objectives. Revenue realized by the Utility from investments is declining due to the reduction of reserves. Net income is projected to remain positive through 2002. All prescribed reserve levels will be maintained through 2002; Revenue Reserve = 8% of the annual O&M budget less purchase power, and Capital Reserve = 1/5 of the 5 year system additions budget. The Purchase Power Reserve is projected to continue to decline which reflects the diminished threat of large wholesale rate increases. By year end 2002, this Reserve is projected to equal 5% of operating revenue. Board Members discussed the information that was presented. In response to a question on the telecommunications budget, staff mentioned that consultant's fees; purchase of electronics gear and fiber, design modifications, and construction are examples of expenditures planned for this activity over the next couple of years. In response to a question regarding the increase in the customer services budget, staff mentioned that this was due to the addition of the Customer Services division to Light and Power. Customer Services was previously part of the General Fund. In response to another question, staff mentioned that DSM funds were included as part of the Energy Services budget. A -2- breakdown of the Energy Services budget was requested. There was also some interest in receiving information on trends, and on ratios that show how we compare with other utilities (particularly among public power entities). Time will be reserved on September's Electric Board agenda for further presentation and discussion on budget issues. 3. NET METERING: Bill Switzer presented information on net metering. He and Bob Kost attended a photovoltaic net metering seminar that was sponsored, in part, by Public Service Company. Public Service Company is planning a pilot photovoltaic net metering project. They are planning to install a maximum of 200 units by the year 2000. The customer will actually own and maintain the system. Public Service is considering various payment plans to assist customers with their purchase. The purpose of the pilot program is for research gathering and data. Research and development money will be used to fund the metering, analysis, etc. Public Service has some concern that using net metering as defined under the current rate tariff may not be cost based and may give improper price signals. Public Service is developing a separate photovoltaic net metering tariff that will be presented to the PUC. There was some question as to whether or not Public Service would be subsidizing this program. The answer to this question is unclear at this point. Staff will keep Board Members informed of any developments. Bill reported on related legislation. There was a net metering bill introduced earlier in the year to the legislature by Mark Udall of Boulder. The bill was defeated and, in fact, did not make it past the committee. The Utility did not take a position on this bill. It appeared that CAMU did take a position on the bill; however, what was mistaken as a position on this bill, was strong support for a study bill on deregulation. This study bill was the only bill related to these issues that survived the Senate. The study bill was defeated in the House. Staff anticipates that this subject will resurface in the coming year. Utility staff will recommend a position on the net metering issue once legislation addresses: 1) safety; 2) fixed cost recovery; and 3) energy credits. Board Members discussed the information that was presented, the rate structures, rules, regulations, etc., that are currently in place relating to net metering, and whether or not it made sense to take a position on this issue at this time. Board Members decided it would be advantageous to take a position on this issue and forward it to Council in preparation for upcoming legislation related to this issue. Board Member Eighmy made a motion that the Electric Board advises City Council to support net metering legislation as a way to promote renewable energy if the following items are addressed: 1) Safety -- for the protection of Utility employees and the public the facility must be in accordance with applicable codes and standards. These include National Electrical Code and Utility requirements; 2) Cost recovery -- reasonable fixed costs of transmission, distribution and generation backup are recovered from customers on the program; and 3) Energy credit -- that generated energy from the customer would be credited at the appropriate cost reduction to the Utility. Board Member Loomans seconded the Motion. The Motion passed unanimously. -3- Staff will prepare a memo to City Council outlining the Board's position on net metering. Staff will also stay abreast of developments and will forward related information to Board Members as it becomes available. 4. STAFF REPORTS: A. Utility Enterprise Study Session: Rich Shannon provided an update on the Utility Enterprise Study Session with Council on telecommunications. He mentioned that there was not a lot of discussion, but Council comments were generally favorable. Council asked staff for clarity to assure they were not indirectly supporting a future expense that was not apparent. Staff assured Council that the Platte River Power system, is a stand-alone project that, with some minor modifications, may cost the Utility up to $500,000. Any costs beyond this will be tied to revenues realized from the project. Council Members were appreciative that the business plan for the project included working with the private sector. There was some concern on the Council's behalf that the Utility not get involved in installing fiber up to customers' homes due to the cost. Staff assured Council Members that the Utility is not considering this. Council offered a caution that the Utility should be careful to manage expectations of the project, determine risks, costs, etc., and not over promise to the Community and then under deliver. Overall, however, Council Members seemed to think that the Utility was headed in the right direction and encouraged staff to keep moving forward on. the project. B. Future Utility Enterprise Study Sessions. Another Utility Enterprise Study Session has been scheduled for August. Staff is anticipating submitting some concepts around aggregating natural gas purchases for the Community. There is still a lot of research to be done on this subject. Tied into this subject will be the concept of how the revenue stream of the City government is at risk due to a reduction of PILOT's, and how involvement in the gas arena might help minimize this risk. C. Colorado Municipal League Conference: Colorado Municipal League will be holding its annual conference in a couple of weeks. One of the programs will focus on our wind project. Mayor Azari, Bob Emmert from Platte River, and one of our staff members will attend.. 5. OTHER BUSINESS: None. -4- 11 6. AUGUST AGENDA ITEMS: Election of Officers Natural Gas Aggregation FUTURE AGENDA: Budget (September) PRPA IRP Plan League of Women Voters Cross Current Program Adjourned: 7:10 p.m. Delyrii Coldiron, Staff Liaison -5-