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HomeMy WebLinkAboutElectric Board - Minutes - 11/20/1996E Council Liaison: Alan Apt Staff Liaison: Delynn Coldiron Chairperson: Mark Fidrych Phone: 490-7240 (W) 223-7140 (IT) Vice Chair: Jim Welch Phone: 491-5784 (W) 223-9487 (H) A regular meeting of the Fort Collins Electric Board was held on Wednesday, November 20, 1996, in the Light and Power Training Room, at 700 Wood Street, Ft. Collins. BOARD MEMBERS PRESENT: Bill Brayden, Jeff Eighmy, Mark Fidrych, Len Loomans, Barbara Rutstein, Richard Smart and Jim Welch None STAFF PRESENT: Ellen Alward, Delynn Coldiron, Eric Dahlgren, Suzanne Jarboe -Simpson, Bob Kost, Tom Rock, Rich Shannon, Dennis Sumner, and Steve VanderMeer. OTHERS PRESENT: John Bleem and Bob Emmert BOARD LIAISONS: Council Liaison -- Alan Apt Staff Liaison -- Delynn Coldiron 1. MINUTES: The following changes were suggested: On page 1, at top of page, Vice Chair needs to be changed from Jeff Eighmy to Jim Welch. On page 6, 2nd paragraph under Item 4, ".08 cent" should be changed to 8 cent or $.08. On page 7, 2nd paragraph under Item 5, there was some confusion on dates. These Charter Review Committee meetings happened in October, not November. On page 7, 1 st paragraph under Item 6, the Council meeting was held on November 19th. A Motion was made by Board Member Welch to approve the Minutes as amended. Board Member Loomans seconded the Motion. The Motion passed unanimously and the Minutes from the October 16, 1996 meeting were approved as amended. 2. GREEN RESOURCES UPDATE: Steve VanderMeer provided Board Members with an update on personnel changes within Energy Services. Carol Dollard, from the City of Longmont, was hired as the new Energy Services Engineer to fill the vacancy that resulted when Jon McHugh moved to Platte River. She will be starting on December 9th. Also, Jon McHugh is on the move again. Earlier this month he resigned from his position at Platte River to take advantage of a career opportunity in New Zealand. Steve mentioned that as of 5:25 p.m., on November 20th, the Utility had received 412 subscriptions for wind power. We are rapidly approaching enough subscriptions for a second turbine. Staff intends to extend the signup deadline through the end of the year to allow the flow of subscriptions continue. There was lot of great coverage for this project through a variety of newspaper articles in The Coloradoan and The Denver Post and through news spots on Channel 7 and Channel 9 morning and noon news programs. These have resulted in a tremendous amount of program recognition within the Community. Several environmental groups of have shown some interest in getting involved in this project. The Sierra Club has been actively promoting the wind power program and will have a Community booth in the mall this coming Sunday to further their promotion efforts. Also, Poudre River Trust and the Land and Water Fund have asked if they can help. Staff will be meeting with environmental groups in the coming week to see if there are additional citizen outreach efforts that can be done. Staff will be following up with a number of businesses regarding the wind power option. Offering commercial customers the option to buy wind power blocks at $20 per 1,000 kWh has sparked some interest. A few of these customers have signed up. Staff is hoping that more will follow. There was a question posed as to whether or not the $20 per 1,000 kWh block will be offered to residential customers. Staff will give this some consideration. There was some discussion on why staff chose to have people sign up and pay extra for this option, rather than simply integrating these charges into the base rate. Staff answered that one of the biggest reasons was to determine if the market supports renewable energy. Doing this also reflects where we are headed as an organization; avoiding subsidizations, unbundling, and offering customers more choices. Allowing customers to choose the -2- E wind option also eliminated the potential of getting bogged down in a polarized environmental debate. It was mentioned that the Audubon Society is very concerned with the potential bird kill resulting from the wind generators. Steve will follow up on this. There was brief discussion on how quickly this project came together, and on the possibility of providing a fourth turbine if customer interest warranted this. Staff does not intend to contract for any more than three turbines during the pilot phase of this program. We need to use the pilot to gain experience and to verify our assumptions related to pricing, etc., before the project is expanded. Staff encouraged Board Members to continue getting the word out to the Community. Steve recognized Deb Harris, Lori Clements -Grote and Sandy McMillen for all of their extra efforts in this project. Next, Rich reviewed the Preliminary Summary of Results for the Wind Power Pilot Program that was included in Board Member packets. Platte River received six proposals in response to their Request for Information. Five of those proposals were for equipment (assuming that Platte River would build the turbine), and one proposal was for a purchase power contract (assuming that the developer would build the turbine). A comparison was done between the five manufacturers who submitted proposals for the purchase of equipment. Based on this information, the Vestas equipment was the preferred option if Platte River were to build the turbine. Some of the criteria used in making this decision included the installed cost, the annual output (kWh), the cost per kWh installed, the terms of the warranty, the operational experience of the equipment, and the quality assurance processes the product had gone through. A comparison was also done between Platte River building the turbine, Platte River purchasing a contract with public financing and Platte River purchasing a contract with private financing. Rich contrasted information on financing arrangements, on who would be responsible for developingloperating the project, on federal support possibilities, and on pricing between the three options. Staffs preliminary recommendations included: 1) Implementing "green" pricing vs. rate based pricing. The marketplace is demonstrating that at 2 cents/kWh this is a viable project. Customers are responding at this price signal. 2) Executing a purchase contract instead of building a turbine. This option reduces the Utility's risk due to the uncertainty of production incentives, failed hardware, outdated technology, etc. Avoiding risk on our first attempt is imperative if we want to maintain credibility for future projects. -3- 3) Charging the 2 cent adder even if actual cost is somewhat lower. Staff anticipates that there will be some customer turnover during the three year pilot, and we don't have any data that shows how quickly we might be able to get new customers signed up, etc. There is also some potential of cost increases related to capacity and transmission. Having some contingency funds in place would help assure that the project would continue to cover itself, without subsidies. 4) Selecting the private financing option. Acceptable terms are available and this option presents the lowest risk for the Utility. Rich asked for an endorsement from the Board on this issue. Board Members discussed the information that was presented. There was brief discussion on Platte River's involvement in this process and the necessity for approval of this project from the Platte River Board. Dennis mentioned that in informal discussions he has had with NAE, the developer/operator of the wind project if Platte River enters into a purchase power contract, they informed him that if we contract with them to build a wind turbine, they might be inclined to go ahead and build three of them right away and find a market for the uncommitted capacity. It is possible that this would give us the opportunity to contract for a portion of the energy generated by a turbine, and not have to wait until we have 350 subscriptions before another turbine is built, etc. There was some discussion that public funds should be used for this project There is financing information in the industry that shows that debts for these types of projects have been repaid. It is unlikely, based on historic information that this debt would be at risk. What is at risk, is the venture capital. Using public funds might demonstrate that we are committed to the project by using our own resources, that we are interested in diversification, and that we are working towards reducing our costs to put ourselves in a better position to obtain more renewable resources in the future. It could send a good public message. There was some concern, however, that since this is a first attempt at this type of project, the Utility, as a public agency, should move forward with this project in such a way that minimizes risk and ensures that ratepayers' funds are used most responsibly. There was agreement with this as long as the Utility continues to pursue better ways of doing things, including financing options, minimizing expenses, etc. In addition to public funding, it was suggested that venture capital financing by large commercial customers, also be considered as an alternative financing option for future phases of this project. There was some discomfort with the 2 cent adder language. It was suggested that this be replaced with language that more accurately captures how this rate is actually determined. The language should make it clear that the rate for the wind option is an adder to the customer's current costs, and is not subject to changes related to coal, etc. I" Board Members generally agreed with staffs recommendations on this issue. Staff will draft an Agenda Item Summary and Resolution for City Council and will incorporate the changes that have been suggested by Board Members. Once these have been drafted, a copy will be sent to Board Members by electronic mail for reaction. Board Member Rutstein will receive one in the mail. Staff will finalize the Agenda Item Summary and Resolution based on the feedback received from Board Members and will forward it to City Council. Platte River is also drafting a Resolution to send to their Board. This information will be forwarded to Electric Board Members once it is available. Board Member Rutstein made a Motion that staff move forward as planned. Board Member Eighmy seconded the Motion. The Motion passed unanimously. WORK PLAN Chairperson Fidrych opened the floor for discussion on this issue. There was brief discussion on the issue of EMF. There was some interest in looking at the latest studies that have come out on this issue. This is not a priority issue at this point and there was general agreement that it should not be added to the 1997 Work Plan. However, Board Members plan to continue to monitor and review related topics. It was suggested that the language on competition be revised to reflect Board actions instead of questions. Staff will do this. The following language was suggested for the communications model: "Enhance the communication dialog between staff and the Electric Board and the Electric Board and City Council to ensure understanding of the changes taking place in the industry and their potential impacts on Fort Collins." There was some feeling that the Board needs to promote the work that is being done with City Council and to increase communication with the Council Liaison. It was suggested that a Board Member contact the Council Liaison prior to every Electric Board meeting to determine if there are any pressing issues that the Board should be addressing. Right now this is being done by staff. It might be more appropriate if this was done through the Board. Under DSM, it was suggested that "hydro" be added as a renewable energy resource. Staff will revise the 1997 Electric Board Work Plan in accordance with Board Members' suggestions. The revised Work Plan will be sent to Board Members by electronic mail for feedback. Board Member Rutstein will receive a copy in the mail. The Work Plan will be finalized based on additional feedback received from Board Members. The finalized Work Plan will be forwarded to the City Clerk's office by Monday, December 2, 1996. -5- Board Member Rutstein made a Motion to approve the 1997 Electric Board Work Plan as amended. Board Member Smart seconded the Motion. The Motion passed unanimously. 4. STAFF REPORTS: City Charter issues are scheduled to be on Council's agenda next Tuesday, November 26, 1996. Electric Board Members were invited to attend. The meeting starts at 6:30 p.m. 5. OTHER BUSINESS: 1. PRPA DSM efforts: Rich briefly reviewed some of the Demand Side Management activities that the Platte River ESCO has undertaken which were summarized by John Bleem in his Memorandum dated November 20, 1996. These activities included Platte River's Board approving a program providing $10 million to assist large customers with financing for energy related projects, continued energy audit and design review efforts, developing enhanced communication of load data with large customers to allow for load management at the time of system peak, partnering with the Department of Energy as a Motor Challenge Partner to allow Platte River's owner Cities access to several services related to improving motor efficiency, and joining EPRI which will make their resources available to owner Cities and large customers. 2. Strategic Planning Meeting: Rich invited Electric Board Members to attend the December 10, 1996 Strategic Planning Meeting. Dr. Curt Cramer will be speaking. He teaches at the University of Wyoming where they have an Institute on Regulatory Economics that awards Master and Ph.D. degrees to people who want to work in PUCs or the FERC. He spoke with staff approximately a year and a half ago. He has some interesting perspectives on telecommunications, natural gas, electricity, and other regulated areas. 3. League of Women Voters: Board Member Rutstein will be participating in a Cross Currents cable television program in conjunction with the League of Women Voters. Before an election they pick different issues and explore the pros and cons associated with the issue, etc. Board Member Rutstein suggested that the Board consider doing this for the recommended Charter changes that pertain to the electric utility. This might be one way to educate the voters since the program would air at least four times on Channel 27 prior to the election in April. Board Members agreed to discuss this issue as an agenda item for the December meeting. IM 4. Focus Groups: Light and Power sponsored four focus groups. Two groups were residential customers and two groups were commercial customers. The focus groups were done in an effort to collect some benchmark data around who our customers perceive us to be, how they think we are doing, who stands out as an excellent company, their interest in convergence, their understanding of deregulation, and on customer loyalty. Staff intends to follow this up with some telephone surveys. Results from the focus groups will be forwarded to Board Members in December. 5. NREL Wind Research Center in Golden. There was some interest in scheduling a second outing to NREL. Board Member Loomans mentioned that Friday afternoons work out well for staff at NREL. Rich will attempt to schedule an additional time. 6. INFORMATION REQUESTS: Council Member Apt has heard that PRPA is planning to fight the Sierra Club over the Craig plant. He has asked for some information from staff on this issue. Staff will follow up with PRPA and obtain information that is available. This will be added as an agenda item for the December meeting. 7.. AGENDA: League of Women Voters Cross Currents cable program Sierra Club Lawsuit Focus Group Update Green Resource Update Future: PRPA distributed generation Net metering Updated PRPA IRP plan 1996 Annual Report Discussion with the Telecommunications Board Adjournment: The meeting adjourned at 8:00 p.m. Del Coldiron, Board Secretary -7-