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HomeMy WebLinkAboutElectric Board - Minutes - 09/18/1996Council Liaison: Alan Apt II Staff Liaison: Delynn Coldiron Chairperson: Mark Fidrych Phone: 490-7240 (W) 223-7140 (II) Vice Chair: JeffEi¢hmv Phone: 491-5784 (W) 223-9487 (H) A regular meeting of the Fort Collins Electric Board was held on Wednesday, September 18, 1996, in the Light and Power Training Room, at 700 Wood Street, Ft. Collins. BOARD MEMBERS PRESENT: Bill Brayden, Jeff Eighmy, Len Loomans, Barbara Rutstein, Richard Smart and Jim Welch BOARD MEMBERS ABSENT: Mark Fidrych STAFF PRESENT: A] Boushee, Delynn Coldiron, Eric Dahlgren, Sharon Held, Bob Kost, Rich Shannon, Gwyn Strand, Dennis Sumner, Doug Swartz, Bill Switzer and Steve VanderMeer OTHERS PRESENT: John Bleem BOARD LIAISONS: Council Liaison -- Alan Apt Staff Liaison -- Delynn Coldiron APPROVE MINUTES: A Motion was made by Board Member Smart to approve the Minutes. Board Member Welch seconded the Motion. The Motion passed unanimously and the Minutes from the August 5, 1996 meeting were approved. 2. ELECTION OF OFFICERS: Vice -Chair Eighmy opened the floor for nominations for Chair. Board Member Fidrych was nominated for a second term. There were no other nominations for Chair. Vice - Chair Eighmy made a Motion that Board Member Fidrych be elected for a second term as Chair. Board Member Rutstein seconded the Motion. The Motion passed unanimously. Next, Vice -Chair Eighmy opened nominations for Vice -Chair. Board Member Eighmy was nominated for a second term. Board Member Welch was also nominated. There were no other nominations. Vice -Chair Eighmy withdrew his name and made a motion that Board Member Welch be elected as Vice -Chair. Board Member Rutstein seconded the Motion. The Motion passed unanimously. Staff will forward this information to the City Clerk's office. 3. BUDGET: Rich briefly reviewed the budget information that was provided in Board Member packets. He mentioned that Attachment B was done in response to Council's request for City staff to find benchmark cities that could be used for comparison during the budget process. This information also fulfills Board Member Welch's request from the August Electric Board meeting. Every City department was directed to use the same cities shown on Attachment B. From a Utility standpoint, these benchmarks were mediocre. Some of these cities have investor -owned utilities and there was some reluctance on their part to share pertinent information. There was a question posed on why the proposed 1997 fund transfers reduce so much from what is shown for the revised 1996 budget. Staff answered that this is due to the fact that CIS will now be funded from the Utility's budget. We will no longer transfer an amount to the General Fund for this as has been done in the past. There was a question posed on why the proposed 1997 systems additions increased by approximately $5 million dollars from the revised 1996 budget. Staff mentioned that this increase is due to some upcoming capital improvements including a new CIS computer system and a new SCADA computer system. There was a question posed on how the percentages of the City Manager's and City Attorney's salaries were arrived at that are included as part of the Administrative Transfer. Staff answered that these amounts are set out in the current City Charter. There was a question posed on what the Utility considers normal growth. Staff answered that growth and inflation figures are usually developed by the City's Budget office and the City's Planning Department based on the number of housing units that are expected to be built over the course of the year, historical growth data, and inflation figures that are being projected for the year. Population growth in Ft. Collins has been averaging 3%. Energy growth has been averaging 5-6%. There was a question posed regarding the amount of contractual services that are shown throughout the different budgets. Staff answered that there are many instances where the Utility has needs for short-term or one-time only assistance. In the Energy Services budget, these costs represent contractual help with lighting design reviews, consultants that have been hired to develop a marketing plan, advertising support, support for the newly revised Energy Code, etc. It has proven to be more cost effective for the Utility to -2- use the experts that are needed for the short time we need them, rather than hiring them full-time. In the Customer Services budget, these costs represent contractual help used for the telephone service, postage service, bank service, mailing service and computer maintenance (acquired from the City's computer department), etc. There was some interest in receiving additional data related to Attachment B. It was requested that the cost of power be taken out of the figures used in the comparative studies so that only the distribution charges remained. Staff mentioned that APPA has published this type of information in the past. Any information that can be obtained will be forwarded to the Board. There was some brief discussion on DSM capital and CLIP funds. Staff has been somewhat surprised about the lack of interest in CLIP funds. There are some potential CLIP projects pending. Board Member Rutstein made a motion to adopt the proposed Light and Power 1997 budget. Board Member Smart seconded the Motion. The Motion passed unanimously. 4. RATES: The information that was included in Board Member packets presents several changes in rate policy. The proposed rate changes retain a cost of service based rate approach to serve different customer classes. Two changes to policy include a shift, whenever possible, toward individual cost based charges within a class, and a move toward considering energy as a commodity pass through. Bill Switzer provided Board Members with several handouts regarding rates. He mentioned that this is the first time that the rate recommendations have been revenue neutral to the Utility. The goal of the Utility is not to make or lose money, but rather to position customers and customer classes in a way that will allow charges to reflect costs and reduce cherry picking potential when retail wheeling happens. The repositioning results from implementing the cost of service philosophy not only between the classes, but also, in the case of our large customers, at an individual customer level. This is new for the Utility. Bill briefly reviewed two retail wheeling issues that have had or may have an impact on the Utility's position in the marketplace: Schaefer's bill is currently being proposed before Congress. His bill calls for implementation of retail wheeling of electric service by December 15, 2000. The Utility received a 26-page feedback questionnaire from the PUC. They are looking at deregulation/re-regulation in response to competition. Bill also reviewed some of the background information staff considered during this process: -3- The Cost of Service Study has been completed. 1995 was used as a test year. Staff is currently addressing the appropriateness of the current rate structure. Staff has identified some situations where average costs within a rate class are not appropriate. These situations leave the Utility vulnerable to cherry -picking from competitors. Staff hopes to minimize impacts on customers by ramping in any necessary rate changes over the next few years. It is anticipated that quick changes will occur in a competitive environment, and staff will frequently look at those changes to determine whether tariff adjustments are necessary. The Utility is considering a change in rates to assure that all customer classes obtain the same benefits from deregulation as others in the electric industry (eliminate cost shifting). Industry experts believe that to be successful in a deregulated environment, a utility must minimize cross -subsidization and unbundle charges. The proposed rate changes attempt to do this for major cost elements. These changes are an issue of equity and make good business sense with or without deregulation. Bill explained the potential of losing at -risk customers if rates continue under an average cost philosophy. Any customers who are being charged the average rate for that customer class, but who actually cost the Utility less to service, are prime candidates for cherry - picking. This problem occurs primarily in commercial rate classes due to their varied use of power. Bill mentioned that the PROS of the proposed rate changes include a reduction in customer exposure to cherry picking, an assurance that all customers obtain the benefits of deregulation, an ability for aggregating customer demands, an accommodation for distributed generation choices, a reduction of electric rates for some customers and rate classes, and an opportunity for the Utility to be proactive and make changes before the market and political pressures lead to confrontation over these issues. The CONS of the proposed rate changes include the anticipation of further adjustments or modifications based on changing market conditions and increased electric costs for some customers and rate classes. Staff believes that it is important to make these changes now to keep rates current and stay ahead of the curve, to receive policy direction from the Electric Board and City Council, to offer customer choices and proper pricing signals, to position the Utility now for the advent of retail competition (as are other utilities), to retain customers and protect low rates, to avoid shifting of costs (cross subsidies) and to minimize the potential loss of general government cash receipts in lieu of taxes. Bill reviewed the recommended rate changes. The recommended changes move large commercial (GS-50) and large industrial (GS-750) customers to coincident peak pricing, reduce Residential Energy Service, General Service, and General Service 750 monthly in rates, increase Residential Demand Service, Special Area Floodlighting and Traffic Signals, define commodity credits for mandated retail wheeling, provide for the sale of renewable energy from wind generators, revise interruptible service and standby service clauses, and require one year contract periods. Next, Bill shared impact analyses on the proposed rate changes. The proposed rate GS- 750 resulted in decreases in rates for six of the nine GS-750 customers referenced. The other three customers saw a slight increase (less than 2%). The change is due to isolating the coincident peak contribution of individual customers. The Platte River/City of Ft. Collins ESCO will share data with each of these customers on predicted load shapes, system peaks, etc., to help customers respond to this proposed coincidental peak rate. The proposed rate GS-50 also resulted in decreases for some of the GS-50 customers, but increases for others. Bill mentioned that the Utility does not currently collect extensive load research data on our GS-50 customers and that the impact projections are only as accurate as the few samples we have. There are 350+ customers currently on this rate. The Utility intends to install new meters for each of these customers and monitor the data obtained for the next year or so. Information will be forwarded to each customer so they can determine what affect the proposed rate changes will have on them. This proposed rate change will not go into effect until March, 1998, so there is adequate time to install and test the meters, get the required computer software package up and running, notify customers, etc. The proposed Residential Demand rate resulted in increases averaging 8.25%, but, the impacts will vary by individual customers based on the season and use patterns. This rate will be implemented in March, 1997. Board Members discussed the information that was presented. Bill clarified some of the specifics of the Residential Demand rate and answered other questions. There was some concern about the signals that will be used for the GS-750 customers to help them with the coincident peak rate. It is staffs intent to communicate very clearly with the GS-750 customers, and make data available to them. Platte River has budgeted funds specifically for this activity. Board Member Rutstein made a motion to adopt the proposed 1997 electric rate changes. Board Member Smart seconded the Motion. The motion passed unanimously. Board Member Brayden abstained from the vote due to potential conflict of interest. ESCO/LIGHT AND POWER ROLES: This item was postponed to October. 6. HARMONY LIBRARY DESIGN: Doug Swartz gave Board Members an update on the Harmony Library. He explained that the Harmony Library is a joint use project between Front Range Community College and the City Library. He reviewed some additional background information, and shared some of the problems/concerns that the project participants have been addressing. -5- He mentioned that the project has gone very well, and efforts have resulted in a well designed building from both a functional and energy standpoint. Construction documents are in the process of being finalized and should be ready for approval within the week. It is anticipated that the project will go out to bid in early October, and construction is estimated to begin in late November or early December of this year. Construction will continue through December of next year. A couple of the goals of this project were to produce a building that was significantly more efficient than standard practice, and to produce a building that was asthetically pleasing and comfortable. Doug mentioned that project participants feel these things have been accomplished. Project participants focused most of their efforts on lighting and cooling issues. The building orientation and shape were changed to take advantage of day lighting. These changes resulted in 85% of the area being lit most of the day by daylight. Efficient electric lighting will be used to complement the day lighting and during evening hours. The changes in building orientation also contributed to reduced cooling loads. This change, coupled with the use of high performance glass, are projected to reduce cooling loads by nearly 50%. Energy savings are estimated at $12,000/year (40%) from that of a similar building built by conventional methods. Doug mentioned that a ground breaking ceremony is scheduled for September 19, 1996, at 3:30 p.m. Anyone who is interested in attending is welcome. Staff will continue to monitor the project and will provide the Board with updates as information becomes available. 7. 1997 WORK PLAN: This items was postponed to October. STAFF REPORTS: None. 9. OTHER BUSINESS: PV-Value Initiative: Board Members asked about the status of this issue. Staff mentioned that because of the wind resource pilot project that has been implemented, the utility is no longer participating in this project. 10. AGENDA: ESCO/Light and Power Roles 1997 Work Plan Green Resource Update Telecommunications Update Future: PRPA Distributed Generation Marketing Plan Update Net Metering Adjournment: The meeting adjourned at 8:05 p.m. Del Coldiron, Secretary Barbara gone next month. Jim might be gone next month. -7-