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HomeMy WebLinkAboutElectric Board - Minutes - 05/19/1993Minutes to be Approved by the Board at the June 16, 1993 Meeting. FORT COLLINS ELECTRIC BOARD MEETING MINUTES May 19, 1993, 5:00 - 6:30 P.M. BOARD MEMBERS PRESENT: John Allum, Mark Fidrych, William Orendorff, Barbara Rutstein, Richard Smart and Larry Walsh. BOARD MEMBERS ABSENT: Dane Brandt. STAFF PRESENT: Ellen Alward, Don Botteron, Allen Boushee, Delynn Coldiron, John DeHaes, Ron King, Bob Kost, Bob Nastan, Tim Sagen, Rich Shannon, Dennis Sumner and Bill Switzer. OTHERS PRESENT: Alan Apt. BOARD LIAISONS: Council Liaison -- Alan Apt Staff Liaison - Don Botteron 1. APPROVAL OF MINUTES: There were no additions or corrections to the April 21, 1993 Minutes. Board Member Walsh made a motion that the Minutes be approved. Board Member Orendorff seconded the Motion. The Motion carried unanimously and the Minutes from the April 21, 1993 meeting were approved. 2. PLATTE RIVER POWER AUTHORITY REPRESENTATION DISCUSSION: John Allum excused himself from this portion of the meeting due to potential conflict of interest. Chairperson Rutstein reviewed the current organizational structure of the Platte River Board -- one staff person (usually the Utilities Director) and the mayor, or his/her designate, from each City, and mentioned that Ft. Collins is considering changing their representation to the Mayor and one Council Member. Rich Shannon provided Board Members with background information on this issue. Council Member Apt shared that some members of Council feel that the Community would like to have stronger citizen representation on the Platte River Board. He mentioned that there have been perceptions for some time that there is a lack of citizen participation on the Platte River Board and that there is a need, in particular, for better financial/fiscal accountability. Some members of Council feel that changing the representation to two council members, and relying on staff expertise, would better represent the citizens of Ft. Collins and give the Board enough technical expertise to rely upon to make sure that the Board remained technically competent in their representation. All four cities involved with Platte River have the same representation as Fort Collins. Board Members were not aware of public concern on this issue and were interested in what comments had been shared with Council. Council Member Apt mentioned that most citizen comments have been directed to the Council Members with the most experience, Bob Winokur, Gerry Horak, etc. He mentioned that he, personally, through the years has heard comments from citizens regarding this issue; however, he has not heard anything recently -- no public outcry, just general grumbling. He mentioned that the majority of citizens are oblivious to what Platte River is or does. There is a more educated percent of the population that is aware of big picture issues who are and have been concerned about how the City is represented on this Board. He mentioned that Platte River is considered a gold plated organization with little accountability and that there have been several incidents over the years that have been somewhat controversial (installing a several thousand dollar sound system in their board room, taking spouses to meetings, salary of the Platte River Power Authority Director, Rawhide, etc.) Board Member Fidrych mentioned that the hospital board consists of all elected officials and the salary for the administrator is well above what is paid to the administrator of Platte River Power, so he has some difficulty seeing how having elected officials has helped the financial accountability issue. He feels that there is a lot more that would be lost, than gained, by changing current representation. Rich Shannon mentioned that the strength of the Platte River Board is the spirit of cooperation which formed Platte River and that everyone involved maintains a four -city, system -wide perspective on issues. There are very few issues which revolve around any one of the involved cities. There is some perception that the two people on the Board from Ft. Collins have a significant amount of influence on the Board. The other three member cities have been very good about concentrating on the issues that are important to Ft. Collins, whether they are issues for their cities or not. Time commitments were discussed. Rich chairperson and as vice -chair before one full day per week. Shannon mentioned that currently as that, his time commitment is about In response to a question, Rich Shannon mentioned that continuity is extremely valuable and important to the success of the Board. He gave several examples. Experience has shown that it takes the better part of a year to bring a new Council Member up to speed on electric system concepts. This is dependent upon the Council Member, their interest, and the amount of time they will commit to learning these concepts. It takes the better part of three years before most of the main issues the Board deals with have cycled through once or twice and things start becoming familiar. Issues come up maybe once every six months or so that require multi -million dollar decisions. Continuity allows the Board to make good strategic decisions and has saved Ft. Collins customers several millions of dollars. Board Member Smart suggested that there might be other ways which exist that would allow citizens to provide input. Rich Shannon mentioned that citizens have available to them the typical methods used to communicate with City Council, write, call, show up at the meetings, etc. Board Member Smart added that there is merit in the balance in representation and technical expertise that is provided by the existing Board arrangement and in the commitment that each of the four cities have for the successful operation of Platte River. He felt that the issue which needed to be addressed is public outreach, not representation of the Board. There has not been a lot of public outreach done to let people know that they can take advantage of these methods to communicate with the Board. A lot more public outreach is needed to make citizens aware that they can participate. Bond ratings were discussed and whether or not the current composition of the Platte River Board is one of the reasons the Utility gets a good bond rating. Rich answered that the composition of the Platte River Board, the balance on this Board, has been highlighted in each of the bond issues that have been done. Citizens can point out a few issues here and there where Platte River spending looks unjustified or controversial, but these amount to "thousands of dollars." It is the Aa rating that saves citizens "millions of dollars." Platte River is run very well from a financial management standpoint -- the Aa rating reflects this and doesn't come easily. Colorado Ute made some very poor decisions. The PUC and auditors who have looked over decisions made by Colorado Ute, have concluded that their Board was made up of an all political elected Board without any general managers. The information presented to the Board was limited and skewed. Understanding the financial aspect of what was going on was never presented to the Board. Because of this, the Board made some very poor decisions and the organization went bankrupt. Board Members asked about the type of technical expertise required for a position on the Board. Rich mentioned that it took him the better part of four years to fully understand the technical aspects of the electric utility industry, i.e., understanding kilowatts and kilowatt hours, transmission voltages, substations, alternative energy options, definition of capacity, availability, reliability, power quality, etc., coal supply issues, load and load patterns, finances, etc. Chairperson Rutstein mentioned that she was on the Platte River Board for two years and said that she still did not understand everything. She mentioned that politician's decisions can be only as good as the information provided unless they have the expertise. Board Members asked how many times Council asked either the Mayor or the Utility representative to come to a work session and give a presentation about a Platte River Board meeting. Rich answered that he had never been asked to give a presentation at a work session, but had received phone calls from Council Members regarding Platte River Power Authority issues and a couple of electronic messages after meetings. 7 Board Member Orendorff could find no problem with the current operation. He made a motion that the Board draft an opinion to Council that current representation be left as is, and that avenues be explored to increase citizen awareness. Board Member Smart seconded the Motion. The Motion passed unanimously (5-0). Board Member Fidrych mentioned that things are running very well and that the current balance is very effective. He feels that citizens who are complaining about representation should be making more of an effort to obtain information and provide feedback prior to things reaching an adversity and then wanting change as the solution to the problem. Board Member Walsh stated that there is an old adage that relates: "If it ain't broke, don't fix it." His feeling is that if we change the current situation, we will break it. Chairperson Rutstein will draft an opinion letter from the Board and will attend the Council meeting to read the letter. 3. BUDGET Rich Shannon mentioned that City Council is working on their work plan for the next couple of years and there is clearly an interest in taking a hard look at the Utility's budget. He encouraged Board Members to examine the budget until they felt comfortable with it. A memo included in the Board's May meeting packet highlighted areas of concern of City Council members. Staff will share information with the Board specifically related to those areas of concern. Council Member Apt confirmed that Council will be scrutinizing the Utility's budget, especially now that the Utility is considered an enterprise fund. He mentioned that in addition to looking at ratios/operating efficiencies, Council will be looking at salaries, equipment investment, etc. There was discussion on energy conservation and the point at which too much conservation would/could demand a rate increase. Council Member Apt shared that it is Council's intent to expand conservation efforts and increase accessibility to these programs. In answer to a question posed by the Board, he stated that Council is willing to fund conservation efforts, even if these efforts cost more than available alternatives -- Council is interested in long-term issues, effects and strategies for doing the right thing. Don Botteron reviewed the financial management policies and shared additional budget information with the Board. He also provided an analysis of Utility funds under Amendment 1 restrictions. In reference to the purchase power rate increase of 5.9% which was implemented in 1992, Council Member Apt asked why the Utility's rate increase was greater than the 5.9% increase passed through by Platte River. Don answered that Platte River increased their rates by 5.94% on April 1, 1992. Because Platte River is approximately 75% of the Utility's cost, the 5.9% increase equated to a 4.3% retail rate increase. In addition to this, reserves were in a declining mode after having 10 years of no rate increases while inflation had increased 41% and rates reduced over 9%. The Utility asked Council for a 3.1% retail rate increase to levelize the rates. Rich Shannon added that during that 10 year period, in addition to inflation, Council increased the payment in lieu of taxes by 1% and asked the Utility 4 to pay for the cost of streetlighting ($700,000/year). Both of these items were absorbed by the Utility and not passed through to customers. Don emphasized that current rates are still under actual 1983 levels, even with the implemented rate increase. While discussing the Income Statement, Don pointed out that the negative net income for 1993 which was projected at $430,000 is almost double that amount. The major portion of the extra $500,000 came from an accounting adjustment in depreciation. This amount is a non -cash expense and flows directly back into reserves. There was some budget discussion by Board Members. Staff reported that they are currently in the process of evaluating and testing different IRP programs and hope to have a conclusion prepared on these programs to submit to WAPA by October, 1994. Council Member Apt requested a listing of the IRP programs the Utility has and/or is currently testing. Council Member Apt encouraged staff to inform Council about what the Utility is doing and has been doing, both on the environmental and conservation fronts. After discussion, Board Members thought it might be appropriate for Chairperson Rutstein to send a letter to Council stating that the Board will closely review the items on Council's list and provide comments. Board Members also thought it might be appropriate for Staff to prepare a brief summary report on the environmental "investments" the Utility makes and, if possible, costs associated with these efforts. 4. OTHER BUSINESS: Distribution of Minutes: Board Member Rutstein mentioned that she had talked with someone who had applied for a position on the Electric Board. He had gone to the library to read Electric Board minutes and they weren't there. Delynn checked with the City Clerk's office and reported that there is no requirement that Boards forward their Minutes to the library, but some choose to do so. After discussion, Board Member Allum made a motion that a copy of the Minutes be sent to the Library. Board Member Smart seconded the Motion and the Motion passed unanimously. Delynn will make arrangements and assure this gets done. CRITIQUE MEETING/NEXT MEETING'S AGENDA: Agenda: - Budget - Environmental Report ADJOURNMENT: Meeting adjourned at 8:00 p.m. R. Coldiron,