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HomeMy WebLinkAboutElectric Board - Minutes - 10/16/1996r� Council Liaison: Alan Apt II Staff Liaison: Delynn Coldiron Chairperson: Mark Fidrych Phone: 490-7240 (W) 223-7140 (fI) Vice Chair: Jim Welch Phone: 491-5784 223-9487 A regular meeting of the Fort Collins Electric Board was held on Wednesday, October 16, 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, Richard Smart and Jim Welch BOARD MEMBERS ABSENT: Barbara Rutstein STAFF PRESENT: Ellen Alward, Delynn Coldiron, Eric Dahlgren, Suzanne Jarboe -Simpson, Bob Kost, Rich Shannon, Steve VanderMeer and Dennis Sumner. OTHERS PRESENT: John Bleem BOARD LIAISONS: Council Liaison -- Alan Apt Staff Liaison -- Delynn Coldiron 1. APPROVE MINUTES: A Motion was made by Board Member Smart to approve the Minutes. Board Member Eighmy seconded the Motion. The Motion passed unanimously and the Minutes from the September 18, 1996 meeting were approved. 2. 1997 WORK PLAN: Rich provided an overview of the proposed 1996-97 Utility Work Plan. Energy Services: Staff intends to continue expanding these services in conjunction with the work that is being done with Platte River through the Energy Services Company. Renewable Energy: Staff believes the wind project will require a lot of time and effort in order to do this well. The outreach effort has heightened awareness of the program, but subscriptions have been slow in coming. Marketing Plan: Staff intends to build a plan that matches our skills and expertise more closely with customer needs. Light and Power has been a rather low profile company in the past. Staff would like to increase efforts on name recognition, etc. Fiberoptics: Staff intends to continue with its research on the merits of installing a fiberoptics backbone system for the City of Fort Collins. Natural Gas: Staff intends to explore the opportunities which may exist for becoming an aggregator of gas services for residential and commercial customer in response to deregulation of the gas industry. Distributed Generation: Staff believes that this will play a huge role in the future of the electric industry. Staff intends to track changing technology and develop services that provide distributed, on -site generation should this become a competitive threat. New Customer Information System: Staff will be exploring options for a new customer information/ utility billing system. If we are going to diversify who we are, it is imperative that we have a billing system that can accommodate this. Outsourcing these services will also be explored. Partnering: Staff intends to explore alliances with other companies in telecommunications, gas, and energy services to determine if such alliances can add value in the areas of reliability, low cost and responsiveness. Implementation: Staff intends to implement necessary administrative support systems to accomplish these goals. These issues do not reflect the 80% of the Utility's ongoing basic services which will continue to be a major priority. The Work Plan addresses some of the newer issues where resources will be directed. Rich discussed the strategic drivers of these issues including: Convergence -- gas, electricity and telecommunications coming together as one industry. Customers would be able to get multiple services and only receive one bill. Choice -- we are moving into an arena where customers are demanding more choices in the services that are offered to them. Return on investments -- it is anticipated that the Utility will face increased pressure to keep rates low. Unlike in the past, the Utility must start finding ways to maximize returns on its assets in order to generate added revenue in an effort to maintain low rates. -2- E Importance of retaining ownership of generation assets -- this may be more of an issue for Platte River, but staff feels that the Utility must address this issue as well, since much of what we do is tied to preserving the financial strength of the generation assets we own. Rich mentioned that he has worked closely with the City Manager in the development of this Work Plan. He asked Board Members for feedback on whether or not the Work Plan reflects the policy direction they believe the Utility should follow. Board Members discussed this information and how best to provide feedback to staff. Board Members agreed that the things that were outlined in the Work Plan were worthwhile things to do. However, there was some concern that it might be difficult to do many of these things under the current governance structure because it is too cumbersome. There was some discussion on whether or not the governance issue should be added to the Work Plan. There was some feeling that this item should not be added since the direction from Council is to leave the governance structure as it is for now. There was some concern about information flow from staff to Electric Board members. Board Members would like to have more time to review information. There was some discussion on adding language to reflect this under the paragraph on implementation. However, Board Members agreed instead to add this as an item to the Electric Board Work Plan. Board Members were supportive of the proposed Light and Power 1996-1997 Work Plan. Staff will forward this Work Plan to Council so they are aware of the issues the Utility will be addressing in the coming year. Next, Board Members turned their focus to the Electric Board 1997 Work Plan. The issues that Board Members were interested in addressing included: - Competition - Convergence - Customer Choice - Return on Investment - Fiscal considerations - Budget - Rates - Net metering - Community Outreach - Communications Model - Demand Side Management Renewable energy -3- Staff will work with Board Members through electronic mail to develop the 1997 Electric Board Work Plan. A draft copy will be included in the next agenda packet mailing. Board Members will have a chance to make any necessary revisions at the November Board Meeting. Staff will finalize the Work Plan after the November meeting and will forward the Plan to the City Clerk's office no later than December 2, 1996. 3. ESCO/LIGHT & POWER ROLES: Steve VanderMeer provided a synopsis from an Energy Services perspective on this issue. He mentioned that the creation of the ESCO has made it possible to have specific programming for all of our customer categories. The ESCO has allowed the Utility to refocus staff and resources on the needs of the medium and small commercial customers, who, historically, have not received a lot of attention, as well as to continue to focus on the needs of our residential customers. Formation of the ESCO also allows continued service to our large industrial customers and, based on the charter and philosophies of the ESCO, should enhance the level of service these customers are receiving. The Energy Services Department is working to fill the engineering position that became vacated when Jon McHugh moved to Platte River. It is anticipated that the new employee will focus on the small commercial customers. Steve mentioned that Energy Services is currently revamping its business plan in an attempt to reflect some of the structural changes that have occurred since the formation of the ESCO, and also in an attempt to more clearly define the Utility's organization focus on operational excellence. Staff is rethinking some of the existing services that are being provided, as well as exploring new services to offer to our customers. Staff will share the new business plan with the Board once it has been developed. Rich added that staff will be focusing on energy efficiency programs that can be offered to residential and small commercial customers that can be mass produced for customers without having to spend too many staff resources on each individual customer. Staff will also explore other products and services that may not be directly tied to lower energy consumption, but are of value to our customers, i.e., power quality. There was some discussion on the issue of brand recognition. Historically, there has not been a lot of emphasis around being highly recognizable in the Community. Staff believes that work needs to be done to start reversing this trend. It is important that we start to clarify and enhance our image so that the Community starts to recognize who we are and what our values are. In a system wide survey that was done a few years ago, 1 out of every 10 customers contacted thought that their electric service was provided by Public Service. John Bleem mentioned that Platte River has been doing a small amount of work on image enhancement. They are developing a graphic or mark that is different from the one used in the past. The mark will also identify the ESCO as a somewhat separate entity. This will be forwarded to the Board once it is available. John also mentioned that the information provided in Board Member packets regarding the objectives and goals of the ESCO remain unchanged. The number one motivation for the ESCO is increasing the level of service that is provided to the large industrial customers. There was some discussion on why a separate entity was needed to provide this service. John answered that this would allow us to better meet the needs of many of the large customers that are in multiple cities, and would allow us to offer natural gas as part of a total energy package which is something customers have told us they are strongly interested in. There are instances where many competitors who are providing natural gas services for customers have been successful getting contracts signed to allow them to also provide electricity services for them once deregulation allows for this. Having a separate entity would also allow us to take advantage of some economic opportunities that exist, i.e., selling the energy that is not fully utilized from the Rawhide and Craig Units. Platte River cannot do this due to current constraints. Rich added that having a separate marketing/ESCO entity would give Platte River additional flexibility to provide these customers with the best deal possible to meet their needs, including obtaining generation from vendors other than PRPA, if necessary. This would help position us on the same side as our customers. There was some discussion on the objectives and milestones of the ESCO. The current objectives are "soft" and work is being done to redefine these in order to make them more measurable. Currently, the ESCO is providing power quality services, natural gas aggregation services, energy audits, etc. to each of the four member cities. Ft. Collins is the only city that has reassigned staff to focus on ESCO efforts. Each of the cities has developed key account reps for about 80 customers across the system. Dennis is responsible for approximately 40 large Ft. Collins' accounts. Longmont has 12 account representatives. Regardless of the structure, Platte River and the cities act as partners to deliver services to the customers. Some things the cities handle directly; some things the ESCO provides. There was also discussion on the coordination of green resources and pricing. Key activities for the current wind project were reviewed. Rich responded to questions regarding the Utility Energy Services budget. Light and Power has close to $1 million dollars budgeted that is available for energy services. $500,000, plus staff time, is set aside for energy services efforts for the Platte River member cities. There was discussion on allocation of DSM funding pursuant to Platte River's IRP. Currently, there are no DSM targets for Platte River. The IRP is currently being updated and revised. This information will be provided to the Board once it is available. There was some concern that Platte River DSM funding will continue to be reallocated to ESCO functions and that none of the DSM objectives and goals will be carried out. John mentioned that one of the challenges associated with the IRP was that none of the DSM programs passed cost effectiveness tests. Rich assured Board Members that DSM had not -5- been abandoned. He added that the Utility is involved in many exciting DSM projects, including energy audits for the Poudre R-1 School District. Board Members were interested in developing a communication process that would allow them to receive information on ESCO developments. Staff plans to continue sharing successes and challenges associated with the ESCO. 4. GREEN RESOURCES UPDATE: Steve provided Board Members with a handout that outlined the approach that has been taken to market the wind power project. The approach requires pre -subscription from customers prior to securing the wind resource. We are using 350 subscribers as the threshold based on matching the average energy consumed by residential customers with the energy generated by a 750 kW turbine. The subscription period is to run through November 22. Staff has tried to be very thorough in marketing this project. Marketing efforts have included newspaper articles, newspaper ads, press releases, personal contacts with the media, ads on the radio, utility bill stuffers, a library display, special mailings to customers who have already expressed an interest, and a web site on the Internet. Future marketing efforts will include a Soapbox article from Board Member Welch, a direct mail campaign, and personal contacts with small commercial customers that may have an environmental link, i.e., outdoor stores, etc. 223 customers had inquired about the project to date. Subscription forms will accompany a letter will be mailed to these customers to firm up their participation in the project. Steve encouraged Board Members to take an active role in promoting this project within the Community and getting people to sign up. Dennis provided an update on financing specifics. Bob Emmert did some research on the package that was available from Northern Alternative Energy and did some modeling based on using Platte River funding. His results were provided in Board packets. Dennis also consulted with Randy Udall who works for the Colorado Office of Renewable Energy regarding our project, and regarding the lab report that was done by Ryan Weiser of the LBL which researched the advantages of municipal financing. Randy is very involved in wind energy and has a good sense of the marketplace options that are being explored, etc. His reaction to our numbers were that they made sense, and that our proposed eight cent wind option was the best price being offered in the Country for this type of service. There was additional discussion on the numbers shown in the LBL lab report and our numbers. There was some feeling that there were some discrepancies in the numbers and that additional clarification would be helpful. Staff will meet with interested Board Members to work on this. There was discussion on owning the wind turbine. There was some feeling that owning the technology sends the message to our customers that we are serious about providing a renewable resource and committed to the proposed wind project. However, there are obvious price, risk and other issues that would have to be addressed. There was also discussion on the operation and maintenance of wind turbines and production credits. Board Members took a quick vote on the issue of owning a wind turbine. There was general agreement that the Utility should not purchase the first wind turbine. It was suggested that the Utility look into owning the second wind turbine if the initial effort proved successful. It was also suggested that staff look at some alternative financing methods, including allowing small companies and/or investors to participate in the purchase of the wind turbine. Staff will prepare a recommendation for Council and forward it to the Board for review. CITY CHARTER PROPOSAL UPDATE: Rich provided Board Members with additional information on this issue. This information will be forwarded to the Charter Review Committee on October 21 st. Chairperson Fidrych summarized the October 7th Charter Review Committee meeting. There was a good deal of discussion about the proposal that had been given to them regarding Utility governance, and there was some feeling from Charter Review Committee members that the proposal included new concepts. The Charter Review Committee recommended that staff and the Board reconsider the way some of the issues had been packaged. Rich and Paul Eckman were assigned the task of making these revisions. If possible, the revised information will be provided to Board Members prior to the next Charter Review Committee meeting which is scheduled for Monday, October 21st, at 7:00 p.m., in the Police Training Room. This meeting will be fully dedicated to dealing with this issue. All Board Members were invited to attend. 6. TELECOMMUNICATIONS: Eric provided Board Members with an update on telecommunications. Staff is continuing to learn more about this technology and believes that opportunities exist for the Utility to optimize some of its assets by getting involved. Staff will be going to Council on November 19th to get permission to contract with Black & Veatch to do some strategic planning, some business case studies and to work on technical system design. Staff intends to move as quickly as possible with these things due to the relatively short business opportunity window that exists. There was brief discussion on this issue. Staff will continue to keep Board Members informed on developments. STAFF REPORTS: None -7- 8. OTHER BUSINESS: Solar Electric Utility Meeting: Board Member Welch reported that he attended a solar electric utility meeting. The focus of the meeting was primarily on photovoltaics. Based on the conversations he had with other utility representatives, it is his feeling that Light and Power has moved well ahead of other utilities in the area of green pricing with the implementation of the wind project. 2. Legislative Update: Board Member Brayden reported that he attended a joint meeting of the Rocky Mountain Chapter of AEE and the Association of Energy Service Professionals where Congressman Schaefer spoke on his proposed retail wheeling bill. One of the most interesting comments that he made was that he considered his bill to be only a starting point and not necessarily an all -encompassing bill. He also mentioned that he has an open-door policy and welcomes any feedback about this issue. His prepared statements were very well put together in the context of what we are hearing about deregulation. However, he seemed to stumble somewhat when answering questions. His point was that consumer choice is good for America and that everything in the utility industry will work out, just as it has in the airline, trucking and telecommunications industries. Congressman Schaefer believes that his bill will pass sometime this year, and mentioned that the White House is currently drafting related legislation. Board Member Brayden is attempting to get a copy of his speech and a copy of the questions that were posed, together with his responses to those questions. If this information can be obtained, it will be forwarded to Board Members and staff. Board Member Loomans mentioned that there is another chance to hear Congressman Schaefer and Paul Schauer on Monday, October 21st, 7:30 a.m. - 9:30 a.m., in Denver. The cost is $10. Board Member Loomans has additional information if anyone is interested. Feedback on Rates: Staff thanked Board Member Brayden for the feedback he provided on the rate proposal. This information will be taken into consideration when staff begins its work on rates in 1997. 9. AGENDA: Green Resource Update 1997 Elelctric Board Work Plan IN Future: PRPA distributed generation Net metering PRPA IRP plan Light and Power Marketing Plan ADJOURNMENT: The meeting adjourned at 8:25 p.m. DelyngColdiron, Secretary 0