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HomeMy WebLinkAboutElectric Board - Minutes - 02/17/1999A regular meeting of the Fort Collins Electric Board was held at 5 p.m. on Wednesday, February 17, 1999 in the Utilities Training Room at 700 Wood Street, Fort Collins, Colorado. BOARD PRESENT: Jeff Eighmy, Len Loomans, Barbara Rutstein, Richard Smart and Jim Welch BOARD ABSENT: Bill Brayden and Mark Fidrych STAFF PRESENT: Lori Clements -Grote, Eric Dahlgren, Tom Rock, Mike Smith, Bill Switzer and Shannon Turner OBSERVER: Lu Fisk of the League of Women Voters AGENDA: 1. APPROVAL OF MINUTES: Changes to the January 20, 1999 minutes were proposed. Board Member Rutstein made a motion to approve the minutes as amended. Board Member Smart seconded the motion. The motion passed unanimously, and the minutes from the January 20, 1999 meeting were approved. 2. WIND PROGRAM UPDATE. Bill Switzer gave Board Members a presentation on the wind rate impact analysis. Bill reviewed three cost analysis charts related to wind generation and CO, reduction. An additional six turbines could be funded at a discount by PRPA. If a seventh turbine were added, discount funding is no longer available, and financing will be at 10 percent, with WAPA curtailments on the line increasing by five percent. A $1 million substation transformer would be required to handle the additional load of 15 new turbines. At this point curtailments would increase by five percent. An additional five mile transmission line would be required if 45 turbines were added. This would address the issue of curtailments, A new 30 male 115 kV line will need to be installed if 77 turbines were added. Adding 88 turbines would cause rates to increase by more than 16 percent. There was some discussion regarding selling carbon credits. Bill noted that the rate increase could potentially be less if the Utility were to sell carbon credits. The rate for the purchase of carbon credits is indicated on the graph as $17 per ton of CO,. There was a question regarding whether the Utilities could sell the wind power to other utilities. Mike Smith explained while there are no transmission problems in this scenario, a firm contract with a purchaser would be necessary. Some Board Members felt this idea would not be beneficial to our citizens, and the Utilities should not be in the business of generating wind power for sale to others. Selling wind power from the Medicine Bow Site should be a PRPA function, not a Utilities function. The issue of trading wind power to displace coal power was briefly discussed. John Fooks is looking at the issue of trading wind energy credit with Hayden. There may be constraints on the transmission line. Board Members explored the idea of selling residential wind power in blocks. While the Utilities is interested in selling wind in blocks, it would be a difficult task with the current CIS system. The new CIS system is expected to be able to easily process wind blocks, and the new system should be on line by February 2000. In the pilot program, commercial customers had a choice of purchasing power in blocks. This opting will again be offered to commercial customers. Mike announced PRPA has ordered three turbines, one for New Belgium, one for Tri-State and one to be split with 50 percent shared between Loveland, Longmont and 50 percent of the energy to Fort Collins. The new turbines are scheduled to be delivered in September or October. The Wind Power Pilot Program is oversubscribed, meaning we have more subscribers using more power than we are producing. The power from the 1h turbine will be applied toward the oversubscribed pilot program. The Utilities will pay PRPA 24 mills for the power from the new turbines. PRPA expects the Board will pass a ten year tariff to set the price of wind at 24 mills. Mike explained that because of higher costs, any additional power will be sold at for at least 2.4 cents per kWh versus the 2.0 cents of the Pilot Program. Board Members requested that Fort Collins retain rights to all of the carbon offsets for the new wind turbines. Mike asked Board Members for direction regarding a commitment to purchase power from an additional wind turbine. The Utilities have until March 1999 to add additional turbines to the existing order. An additional turbine would have to be marketed, and the Utilities would need to sign up the equivalent of about 250 residential subscribers. If the Utilities do not get enough subscriptions, we will take a loss. Board Member Eighmy made a motion that the Utilities purchase an additional turbine. The motion was seconded by Board Member Rutstein. The motion passed unanimously. There was some discussion regarding marketing the additional turbine. The programs in Longmont and Loveland, and the New Belgium announcement should help with marketing an -2- additional turbine. Lori Clements -Grote noted the Utilities will market a portion of the additional turbine to commercial customers, which will reduce the amount of residential subscriptions required. Block rates will be offered to commercial customers in 1,000 kWh block increments. Some Board Members requested the Utilities help with publicity for the New Belgium Brewing Company turbine, and use this opportunity to announce the purchase of an additional wind turbine. There was also a suggestion that the Cities for Climate Protection Program be mentioned as part of the wind power marketing promotion. There was some discussion regarding the possibility of having a City department subscribe to wind power. Staff related that at the beginning of the wind power program it was decided the program should stand on its own. Board Members were interested in obtaining information on the kWh usage for all City departments. Staff will put this information together and forward it to Board Members. 3. FIBER OPTIC UPDATE: Eric Dahlgren provided Board Members with an update on the telecommunications project. The Utilities began installing fiber in November,1997 and completed the project in November 1998. Forty miles of cable was installed in 31 miles of existing electrical duct to create the Fort Collins fiber loop. PRPA has signed a 20 year contract to lease 24 strands of fiber to ICG Telecommunications of Englewood, Colorado for $278,000 per year. According to the terms of PRPA's franchise with the City, this money is passed directly to the City and is split equally between the Light and Power Fund and the General Fund. ICG is interested in expanding their customer base in Fort Collins. If ICG uses Light and Power ducts to build out from the main backbone, the City will bill them at $6 per foot. As of year end 1998, the City has been reimbursed for $225,000 worth of conduit and $403,000 for labor and equipment. Other potential users of the network include Larimer County, Poudre Valley Hospital and Poudre R-1 Schools. Larimer County is close to signing a contract for bandwidth on the telecommunications system. If the contract is finalized, current plans are for the Utilities to build out four sites for the County. Negotiations are also underway with Poudre Valley Hospital and Poudre R-1 to lease fiber. PRPA is purchasing a video switch which will allow video teleconferencing. Businesses can set up a teleconferencing site, coordinating the audio and video through PRPA's video switch. Larimer County is interested in teleconferencing capabilities through PRPA's switch. Colorado is working on a state multi -use network. The objective is to get all of the county seats in the State connected via fiber optics. Part of the system has been built, with CSU in Fort Collins as a major node on the network. 4. OTHER BUSINESS: Board Members requested an update on the Utilities strategic plan. Mike related that the last meeting with R.W. Beck focused on getting information from staff to draft a final report. The next phase is to begin working on strategies. There was a question as to whether we will begin 511 marketing now or wait until R.W. Beck presents their findings. Mike stated the Utilities will work on marketing issues now, but a complete marketing plan will be developed further as we go through the strategic plan. The focus group for residential customers had nine attendees. Mike noted we may want to do a more in-depth survey with Fort Collins residential customers. The Customer Service group will be involved in a residential survey. Board Members requested information regarding the position recently vacated by Carol Dollard and the position previously held by Steve VanderMeer. We are in the process of replacing Carol Dollard's position, but are waiting for recommendations from R.W. Beck prior to replacing the position previously occupied by Steve VanderMeer. The Board asked whether governance issues were mentioned in the R.W. Beck strategic plan. There was a suggestion by R.W. Beck to combine the two Utility boards. The draft report also touched on issues such as hiring and purchasing. There was some discussion regarding loyalty of large commercial customers. The focus group with key accounts suggests large customers will leave the Utilities for small rate difference. Some Board Members feel the Utilities should focus on how to address large commercial customer issues, and look at options such as branding. Staff related the worst thing we can do is to drop prices for large industrial customers and have Fort Collins citizens pick up the load. Some Board Members feel we need a policy to address these issues. Staff related that the Utilities and PRPA are planning to market our identity as a local provider jointly. Advertisements or marketing efforts are paid for by Fort Collins rate payers and must focus on products and services we provide versus advertising that promotes how "good" we are. Board Members requested an update on the hiring of the PRPA general manager. The PRPA Board have received a list of names from the consultant, and there are five or six internal candidates. The PRPA Board is in the process of reviewing these candidates. FUTURE AGENDA ITEMS: • Cities For Climate Protection Campaign update • Wind Power update • City energy coordinator update • Use of fuel cells at DWRF update • R.W. Beck second phase update Adjourned 7:50 p.m. Shannon L. Turner, Board Liaison K1