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HomeMy WebLinkAboutElectric Board - Minutes - 06/24/1998A f r4 �`�, •� j A regular meeting of the Fort Collins Electric Board was held at 5 p.m. on Wednesday, June 24, 1998, in the Utilities Training Room at 700 Wood Street, Fort Collins, Colorado, BOARD PRESENT: Bill Brayden, Mark Fidrych, Len Loomans, Barbara Rutstein, Richard Smart and Jim Welch BOARD ABSENT: Jeff Eighmy STAFF PRESENT: Dave Agee, Eric Dahlgren, Suzanne Jarboe -Simpson, Bob Kost, Mike Smith, Doug Swartz, Shannon Turner and Wendy Williams AGENDA: 1, APPROVAL OF MINUTES: A change to the May 20, 1998 minutes was suggested. Board Member Rutstein made a motion to approve the minutes as amended. Board Member Brayden seconded the motion. The motion passed unanimously, and the minutes from the May 20, 1998 meeting were approved. 2. UTILITY DESIGN AND ASSISTANCE PROGRAM: Doug Swartz provided Board Members with a revised copy of the draft Agenda Item. On July 7, City Council will consider a resolution authorizing the Utility to fund a building design assistance program. Doug requested Board support of the agenda item. Doug provided some history. In the past, Board Members have actively supported demand side management and requested increased demand side management funding. Council responded favorably to the request and appropriated $500,000 in 1994 for demand side management. Also in 1994, Value Plastics approached the Utility for design assistance. The result was a very innovative building. Since then, we have been involved in several projects in which we have experimented with various ways that the Utility could constructively intervene to improve building design. The Utility's primary roles have been as an advocate and to bring in additional design expertise to capture energy savings opportunities often lost in conventional design and construction. The Utility sometimes gets a seat at the design meetings and can provide input, but is not the decision maker. To date the approach has been ad hoc and opportunistic, keeping our ears open for promising projects and motivated clients. A major goal has been for the Utility to gain knowledge and experience in design assistance. There have been a lot of valuable "lessons learned." The Utility has not found it easy, because the conventional building design process is so established. The most successful large project the Utility has been involved in to date has been the Harmony Library. When it approved the intergovernmental agreement that allowed the library project to move ahead, City Council actively encouraged the city library and Front Range Community College to take advantage of Light and Power's energy efficient design assistance. As the result of a successful design process, the library is projected to use 40 percent less energy than the conventional new building that would have been built, while providing very attractive space and costing no more to build. As a public building with facilities to handle groups, we have already used the Harmony Library to host three seminars on integrated design and energy efficient design and construction (for city and county facilities staff, school district energy managers, and design professionals). The Utility is completing a contract with the state Office of Energy Conservation to create a web site on the Harmony Library project. The Office of Energy Conservation has also given the Utility a follow-up commitment for funding to monitor the Harmony Library. Staff also plans to research experience from other new construction programs around the country. This information, coupled with what we have learned locally, will help the Utility formalize the program. In the meantime it is important to get Council authorization to spend utility funds on design assistance now, because of two large projects that are in the works: the Larimer County Justice Center and the new City Administration building. These are very important, very visible public projects that will set the theme for the upcoming construction in the downtown civic center area. The Utility has been meeting with officials of both projects for several years and has encouraged them to think about energy efficient building design. The county used some of the criteria we suggested in hiring the design team for the Justice Center building, and preliminary design decisions seem to be on a positive track. City facilities staff has also expressed interest in incorporating ideas we have proposed. Doug briefly reviewed the agenda item summary. The Utility will pay part of the design fees in a cost share arrangement with the client. We use very little ratepayer dollars to leverage a large amount of the client's funds. The Utility does not contribute money toward construction. We only provide design assistance funds. There are a variety of potential benefits, including peak electrical demand reduction, less utility staff time required for customer service for well -designed buildings, development of local examples, educational opportunities, and economic benefits. The Utility has found integrated design more complicated, requires additional money and extra time — i.e. you pay more up front to get a better result for the long term. Because of this we do -2- not expect to see numerous projects requesting design assistance. In the past, most of the projects the Utility has been involved with have been at our urging. In the case of the Larimer County Justice Center and the City Administration building, we have been successful in laying groundwork, and they have requested our assistance. Our observation is that the biggest role for the design assistance program in the near future will be in the public sector. Public entities have more responsibility to take a longer term perspective in designing their buildings. The private sector generally works on a much shorter time horizon and does not feel it has the time to add any other complications to the design process because of tight time constraints. There was some discussion regarding the Utility's experience with various building projects in Fort Collins. There was also a suggestion that Council push the effort as a requirement in new building. Staff related it may take several City projects to get developers to take notice of the program and its benefits. Board Members briefly discussed the possibility of having the design assistance program look at all energy aspects of operating a building. Staff noted the Utility generally uses an overall environmental and energy theme when approaching building designers. The human performance aspect was discussed by Board Members. Staff related that studies have shown that when looking at the total cost of designing, owning and operating a building over its life cycle, the largest cost is staff. If the builder can impact human performance in terms of less absenteeism and higher productivity, even by small percentages, the economic benefit can be much larger than the economic benefit of energy savings. Fortunately, in a well -designed building, energy savings and human performance improvements can go hand -in -hand. When providing design assistance, the Utility encourages the customer to look closely at daylighting and quality electric lighting design as items that may boost human performance. These are themes that have attracted interest in both the Justice Center and the City Administration building projects. There was some discussion regarding ways to address possible costs to change the building design to be more energy efficient. There is often a wall between capital construction costs and operation/maintenance budgets, so that future energy savings cannot be used to increase the construction budget, even for quick payback items. Staff related the design assistance program's focus is to design better buildings without increasing the construction budget significantly. Spending more effort on design can often identify cost tradeoff opportunities. The Harmony library is an example of this. More money was spent on the shell of the building and less money was spent on the lighting and the cooling systems. These tradeoffs meant the construction budget did not increase, while the result was a better building that is projected to have significant operation and maintenance cost savings. Board Members discussed changing the name to Integrated Energy Design Assistance Program. 992 Doug requested a motion to support the Integrated Energy Design Assistance Program. Board member Smart made a motion to support the Integrated Energy Design Assistance Program. Board member Rutstein seconded motion. The motion passed unanimously. 3. STAFF REPORTS: REQUEST FOR PROPOSAL Mike Smith provided Board Members with an update on the request for proposals for the Utilities Strategic Planning Initiative. There was some discussion of the items on the RFP and changes were recommended. Board Member Smart provided input on the RFP. The insert in the second part of the executive summary in the RFP should read: Make sure we are effectively organized, have a strategic plan, and we are positioned to respond to a deregulated electric industry and we are positioned to respond to proposals to privatize the operations with the Water Utility. Need to find out if we are organized properly, if we have a strategic plan to effectively compete in a deregulated environment and effectively respond to privatization offers for the Water Utility. There was some discussion of the time period and procedure for selecting the consultant. Staff related the City has a standard consultant selection process. A committee comprised of a representative from the Purchasing Department, a representative from outside the organization, Staff, and one or two Board Members. Mike requested one or two representatives from the Electric Board to participate on the committee. The time commitment depends on the number of proposals we receive. There could be as many as 20 proposals or as few as five. Each committee member must read the proposals, rank them using the City's standard form and finally pick the top three. We will interview the top three consultants. Those interviews could take one to two hours. We expect to begin the ranking and interviewing process in August. After choosing the consulting firm we will expect the final product within nine to 12 months. Board Members discussed items they would like to receive from the consulting firm. They felt it was important to know which individuals would be working on the account. Staff assured the Board they would obtain this information and would require the same individuals begin and end the project. The Board also wants to avoid getting a boiler plate. Staff mentioned the Utility will require up front that we do not get a boiler plate and will have the consulting firm prove this. Mike requested volunteers from the Board to be on project team. The time commitment would be approximately eight hours to go over the proposals, a two hour meeting to select the three finalists and four hours to interview. Richard Smart volunteered to participate. Mark Fidrych and Jim Welch will be the first choices for alternates, and Barbara Rutstein will be the second choice for alternate. TELECOMMUNICATIONS UPDATE 13 Eric Dahlgren provided the Board with an update on telecommunications. The organic contract is on the consent agenda. It goes to council for the first reading on July 1, and the second reading is July 21. The changes to the organic contract have already been approved by the Loveland and Longmont City Councils, and it goes to Estes Park's Board next week. There was a lot of discussion on the issue of extending the organic contract to the year 2040. Mike Smith explained the basic reason for the 40 year extension is PRPA may issue some debt in the future. There was some discussion on the extension at the PRPA Board meeting. The other cities explained they do support the extension. Loveland City Council has passed the first reading of the change. PRPA's attorney did not want to change the extension. Board Members expressed some concern that some cities in the United States are not happy with their organic contract, and they want to get out of it. Board Members felt more comfortable having the contract extend to 2020 versus 2040. If the contract is extended for 20 years there is some concern that we do not have an idea what the future utility market will look like. There was some feeling that we are obligating the City of Fort Collins and the rate payers to something we are unsure of. There was some feeling that once the 40 year extension is in place it will be hard to change it in the future. Staff mentioned we did put in writing in the ordinance "the board is not convinced that it is necessary to extend the term of the organic contract at this time." The City of Fort Collins is the only city disagreeing to the extension of the contract. There was some discussion around the telecommunications time table. We need to get the Telecommunications Agenda Item Summary to Council as soon as possible since it takes two readings to pass. PRPA and the Utilities are in negotiations with telecom vendors but could not finalize agreements without approval of the organic contract from the four city councils. Loveland and Estes Park are taking the same approach as Fort Collins, while Longmont actually owns their system. Longmont is taking an entrepreneurial approach to the project. They want to be involved with the marketing of the products and customer service. Fort Collins is building the infrastructure and will keep PRPA as the owner. ICG of Denver is installing cable from Longmont to the Fort Collins' CSU campus by the end of August. ICG is asking for a fiber swap of 24 fibers on PRPA's overhead poles, which go to Longmont in exchange for 24 of ICG's fibers coming up the railroad tracks. If the fiber swap occurs, PRPA may be able to reduce the cost of building the back haul system. We may also be able to lease some dark fiber to ICG and receive revenues. PRPA and City staff are working on rates for the leasing of the fiber. Board Members discussed the PRPA Board process in which the term of the organic contract is extended every ten years in increments of ten years. The contract was not extended ten years ago. Board Members requested this be explained by a member of the PRPA Board. There was some discussion regarding addressing the Board's concerns of the PRPA organic contract with Scott Mason. Board Member Welch agreed to talk to Scott about some of these issues, and he will have Scott take these concerns to Council. Board Members were interested in having two individuals from the PRPA Board come to the next Electric Board meeting to address questions and concerns. -5- The threat of deregulation in terms of extending the organic contract was discussed. There was some concern that we may have opened the door to allow outside competitors come in by changing the organic contract. The change will allow PRPA to engage in telecommunications or other business activities and to sell at retail to the City's customers. Staff related the contract change helps to position PRPA for competition in a deregulated environment and allows PRPA to negotiate directly with Fort Collins customers on the same basis as other deregulated energy providers. Board Members requested information on the merger of AT&T and TCI. Eric Dahlgren related AT&T has announced they will purchase TCI. AT&T has been trying to get into the local phone market for years, and purchasing TCI is a way for them to get in. Buying a cable company gives AT&T a connection to the residential market. TCI's system in Fort Collins requires substantial upgrading since they do not have fiber in the backbone. One vendor has proposed building a new cable TV system in Fort Collins. They would use the City's system as the backbone, and then will build into the neighborhoods. Since the proposed system would be constructed from the ground up there would be many advantages. 4. OTHER BUSINESS: Board members suggested the Utility give Tom Rock an Atta Person for attending so many late night Board Meetings. Board Members requested an update on the wind power project in Medicine Bow. Staff noted NAE did not secure long term financing. The Utility will reimburse PRPA the $1.2 million for their expenses. Platte River will own the wind rights. The Utilities will get the power from the turbines at no charge and pay the operations and maintenance costs. There were questions regarding who would own the carbon offsets and the renewable portfolio standards. Board Members requested a history on the value of all of the items PRPA received in this deal and a financial history of the project. There was interest in having John Bleem give an overview of the project at an upcoming Board meeting. There was interest in how the Board could help the City of Berthoud in their struggle to become a municipal utility. Mike Smith will call PRPA and ask how the Board could assist the City of Berthoud. Mike will report back to Board member Smart. CANCELLATION OF ONE SUMMER MEETING: We will cancel the July meeting. The next meeting will be August 19. 5. APPA CONFERENCE UPDATE: on The APPA conference focused on policy and management issues. The participants were extremely valuable resources. It was apparent after the conference that all electric energy providers are struggling with the issue of deregulation. There was a variety of discussions on generation issues. The information on customer service was helpful, and there was discussion on how to keep better contacts with customers. The session pointed out the issues of having a good CIS system. Board Members who attended the APPA Conference discussed the issues of valuing your utility and what you should get for the utility should you decide to sell it. One of the speakers gave advice to those thinking of selling their local utility to make sure to include the inevitable rate increase in the selling price and to think of the value of your customer base. There was strong sentiment among the conference attendees to keep their local utility. The consumer research advocate from the Consumer Federation of America discussed what deregulation will do to the consumer. The speaker projected there will be three to five large companies in the future. According to the speaker there is a real opportunity for us to become a broker in a deregulated environment. There was discussion about aggregating with the Water Utility because of the need to add additional services to the customers. There was some discussion whether commercial industrial customers will start generating their own power. It seems there are a lot of industrial customer purchasing UPS systems and some are looking at generators. Staff noted for reliability purposes customers will have to rely on the grid not a generator. Prices of gas are going up, which makes owning a generator less attractive. Reliability would also be a concern to some industries. There was some discussion regarding hydro power. During a discussion session at the APPA Conference, lead by Board Member Smart, the subject of the hydro plant at Yosemite National Park was discussed. Yosemite National Park had a hydro plant in services for over 60 years that was taken out of service. The hydro plant supplied enough power the park was able to sell power during the winter. The park sold the hydro plant, and their rates went up substantially. There was a suggestion that APPA pass a resolution to take a more pro -active approach with small hydro power. FUTURE AGENDA ITEMS: Financial picture of wind program - Update on offsets Update on the gas program Update on the SurgeSafe! Program Adjourned: 9 p.m. Shannon L. Turner, Board Liaison -7-