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HomeMy WebLinkAboutElectric Board - Minutes - 05/20/1998A regular meeting of the Fort Collins Electric Board was held at 5 p.m. on Wednesday, May 20, 1998 in the Utilities Training Room at 700 Wood Street, Fort Collins, Colorado, BOARD PRESENT: Bill Brayden, Jeff Eighmy, Mark Fidrych, Barbara Rutstein, Richard Smart and Jim Welch BOARD ABSENT: Len Loomans STAFF PRESENT: Dave Agee, Ellen Alward, Eric Dahlgren, Suzanne Jarboe -Simpson, Bob Kost, Mike Smith, Shannon Turner, Steve VanderMeer and Wendy Williams AGENDA: 1. APPROVAL OF MINUTES: Board Member Welch made a motion to approve the minutes. Board Member Rutstein seconded the motion. The motion passed unanimously, and the minutes from the April 15, 1998 meeting were approved. 2. JUNE MEETING: The June Electric Board meeting was rescheduled to Wednesday, June 24, 1998 as several Staff and Board Members will be attending the APPA Annual Conference June 15 through June 17. 3. ELECTRIC BOARD INFORMATON AND AGENDA PACKET DISTRIBUTION: Mike Smith suggested changing Electric Board packet distribution to one packet per month versus two packets per month. Board Members briefly discussed options for packet distribution and agreed it was easier to read and digest the information when it is received in two packets. Staff will continue to provide an agenda packet prior to the Board meeting and an information packet following the Board meeting. 4. BOARD REPORTS — THE FUTURE OF LIGHT AND POWER: Board Members discussed how the utility merger would affect the future of Light and Power. There was a concern about eliminating the Light and Power name and logo because of the need for a clear identity in a deregulated environment. Staff shared with Board Members how individual logos have been a sensitive issue, the City wants a logo that represents the City as a whole. Fort Collins Utilities has chosen the City of Fort Collins logo with the text "Utilities" underneath. The Utilities may develop a mark that represents the Utilities as a whole. Board Members briefly discussed reasons for the Utility to remain proactive in matters regarding deregulation. There were strong feelings around continuing marketing efforts. Staff discussed the proposed joint marketing effort between the Utility and Platte River Power Authority. Staff from PRPA will work in conjunction with Utility staff on future marketing strategies. Board Members discussed the need for the Utility to also market as individuals separate from PRPA. There was some concern as to why PRPA and the Utilities are planning a joint marketing effort because Utilities also provide water services and could also bundle other services for customers. Staff cautioned that ignoring generation issues could be detrimental to the Utility since we own a portion of PRPA. The key focus of the joint marketing effort would be to focus on key customer accounts. The Utility will also pursue efforts separate from PRPA. Board Members supported the idea of the Utility pursuing services other than electricity in order to provide additional revenues and customer value should deregulation affect us. The Utility needs to pursue new products and services and bill them under one identity, the City of Fort Collins. It was suggested gas aggregation continue to be a focus of the Utilities new products and services plan. Board Members supported the Utility in continuing to provide wind power and felt it is a very important project. All of the new products and services the Utility is pursuing make us much more than an wires company. The Utility will continue to support wind and SurgeSafe!, and explore gas aggregation and other new products and services. Staff will be investigating SurgeSafe! And uninterrupted power supply (UPS) services. There was a brief discussion about American Public Power Association's Home Town Connections which was developed to pursue joint marketing efforts with publicly owned utilities. Steve VanderMeer related Home Town Connections is relatively new, and their main focus is on market research and new product development. There are a variety of REAs and IOUs that are forming alliances with companies similar to Home Town Connections to prepare for deregulation. Staff agreed to further research the concept of forming alliances or joint marketing efforts. Board Members discussed the possibility of having an outside consultant evaluate the reorganization and provide recommendations to staff. Several possible consultants were suggested, including R.W. Beck or a representative from American Public Power Association. -2- Reasons for outside consultation included concerns that merging the Utilities would negatively impact Light and Power's ability to compete. Since Light and Power has a long history of excellent service there was concern that letting go of the identity would have a negative impact on future success. Mike Smith stated he would support hiring an outside entity to evaluate the internal utility organizational structure with the given that the utilities would remain combined. He felt our best strategy for a successful future is to be effective and efficient in doing our job, and a consultant could help organize in a manner to accomplish that. Board Members requested they be involved in the selection of the consultant and Mike agreed. Staff will try to put together an RFP before the next Board meeting. There was some discussion as to why the Utilities merged. Mike Smith explained the decision to merge was made by John Fischbach. By combining the Utilities we can merge administrative functions and reduce redundencies. The merger will not affect crew members since their duties are separate. Mike Smith stated that under the Utilities banner there are four services provided to customers. He asked Board Members for input regarding changing the service name from Light and Power to Electric. Board Members briefly discussed the pros and cons and agreed the name should remain Light and Power. There is a lot of positive local and national recognition with the name Fort Collins Light and Power, and it has sixty plus years of history. 5. STAFF REPORTS: PRPA ORGANIC CONTRACT Mike Smith provided Board Members with an update on the proposed changes to the Platte River Power Authority organic contract. The PRPA Board approved the modifications to the organic contract on April 23, 1998. The contract changes must now be approved by all four member City Councils. The changes to the organic contract would allow PRPA to engage in telecommunications or other business activities and to sell at retail to the City's customers. Another change to the contract would extend the term of the contract by twenty years to the year 2040. Current PRPA debt will be paid off in the year 2018. Extending the contract to 2040 would permit PRPA to issue new 30 year debt for capital projects in the future. Board Members requested information as to why an extension is needed. They were not comfortable supporting the extension without a sound justification for doing so. Mike will contact Thaine Michie and get back to Board Members prior to taking this item to Council. CIS UPDATE Mike Smith provided the board with an update on the CIS purchase. Wendy Williams will be working with Gwyn Strand and will take the lead in the project. Staff participated in a one week demonstration of the CIS system. Staff identified modifications to the system and provided their requests to the consultant. Approximately $900,000 worth of potential modifications have been identified. Darin Atteberry, Assistant City Manager, will be meeting with PRPA and Longmont -3- on May 22, to discuss the next step. Longmont may back out of the project due to financial concerns. If Longmont does not proceed with the investment, Fort Collins will go ahead with the purchase. There was some discussion regarding Fort Collins offering to sell CIS services to Longmont, if they do drop out of the project. WIND POWER UPDATE Steve VanderMeer presented the board with a wind power update. Steve reported NAE has not yet secured long term financing. We will know by May 26 whether we have a long term power agreement or whether we will own the turbines. There is not a down side to either option and the Utility is prepared to purchase the turbines. There are a few options the Utility has if NAE does not obtain financing. We can purchase the rights to the site, a lease of the substation and some of the related equipment. The land continues to remain in private ownership. Mike Smith asked the Board for input regarding whether the Utility should purchase the rights to the site or allow Platte River Power Authority to purchase these rights. There was some discussion on the pros and cons of purchasing the rights. The all -requirements contract does not allow the Utility to deliver power to ourselves. The wind power would be generated by the Utility then sold to PRPA, who would in turn sell the wind power back to the Utility. If the Utility decides to purchase the turbines the Utility would have to pay PRPA $1.2 million, and then we would receive the wind power at no cost. PRPA would be paid an annual operations and maintenance fee to maintain the turbines. There are two options for the Utility. One is to pay the $1.2 million to PRPA in exchange for all the power for twenty years, and the second option is to pay $200,000 for the rights to the site and allow PRPA to own the turbines. There was general consensus among Board Members for the Utility to purchase the wind rights. Steve reported the wind open house on May 5 was a success, and there were about 75 attendees. The Utility has just received a grant from the State Office of Energy Conservation in the amount of $33,000 to perform a business case study on the wind power program. The business case study includes a significant piece on market research on our subscriber and non -subscriber customers. There was some discussion around the publicity related to wind power. Channel 9 aired a segment on wind power and claimed Public Service was the first wind power provider in Colorado. Since Public Service Company's turbine is in Colorado this is technically true, but Fort Collins was the first to deliver wind power to our customers. Fort Collins has had positive publicity of our wind power program from Channel 4, Channel 7, Channel 9, Rocky Mountain News and the Denver Post. Mike Smith noted the Water Utility was approached last year by a company called Sea West wanting to buy wind rights at the Meadow Springs Ranch north of Rawhide. The Utility was not interested in this proposal. There was some discussion of wind developers looking at the Maxwell Ranch for purchasing wind rights. Chairperson Eighmy requested information on the Rocky Mountain Wind Issues Forum. After following up on Chairperson Eighmy's request Steve VanderMeer provided the following -4- 0 background information. The National Wind Coordinating Committee will be holding their Plenary Meeting # 17 and Rocky Mountain Wind Issues Forum on October 26 — 28 in Fort Collins. The forum will include a public workshop on wind -avian interaction. Steve has left word with the organizers offering the Utilities' help where possible. The NWCC was formed in 1994 to identify issues that affect the use of wind power, establish dialogue among key stakeholders, and catalyze appropriate activities to support the development of an environmentally, economically and politically sustainable commercial market for wind power. NWCC members include representatives from electric utilities and support organizations, state legislatures, state utility commissions, consumer advocacy offices, wind equipment suppliers and developers, green power marketers, environmental organizations, and state and federal agencies. The National Wind Coordinating Committee consists of representatives from the utility, wind industry, environmental, consumer, regulatory, power marketer, and state and federal government sectors. These groups are interested in encouraging the prudent acceleration of wind power deployment in the United States. The NWCC's broad objectives are to provide a forum for identifying issues that impact the use of wind power, to serve as a catalyst for dialogue, and debate and build consensus among various stakeholders. NWCC's activities are designed to address: 1.) Environmental and siting issues related to wind power, including avian mortality and land use considerations. 2.) Wind energy transmission and utility system integration issues. 3.) Opportunities for self-sustaining wind generation within the regulatory, legislative, power marketing and agricultural communities. 4.) Wind resource assessment needs to identify and validate promising wind regimes. 5.) Market barriers and obstacles to determine a sustained orderly development path for the wind industry. NWCC aims to optimize this opportunity for the benefit of our society as a whole through participation from all sectors with a stake in the outcome. While encompassing many viewpoints the NWCC's single vision is a self-sustaining commercial market for wind power — environmentally, economically and politically sustainable. 6. OTHER BUSINESS: Board Members discussed the Council Technology Committee meeting. Scott Mason would like the Electric Board to be represented on the committee. Chairperson Eighmy requested Board Member Fidrych to represent the Electric Board at the meeting at 7 a.m. on June 8 at the Senior Center. There was some discussion regarding gas aggregation. The Utility is working on gas aggregation with Arvada, Lakewood and Wheatridge. We are looking at hiring a consultant to help acquire additional information on feasibility. The work will probably take three to four months, and we hope to have some information in the fall. The other PRPA cities have not expressed an interest in gas aggregation. The gas aggregation business is risky because profits are weather dependent. -5- The gas is purchased in advance, and if the weather is warm in the winter the gas may be sold at a rate lower than the purchase price. If it is too cold, additional supplies must be purchased at higher costs to meet customer needs. To be successful in gas aggregation you would need to have excellent projections. It is necessary to balance the risk with the savings in order to be successful and provide value to customers. Board Members requested minutes from the Council Technology Committee meetings and were interested in having a Board representative at the meetings. FUTURE AGENDA ITEMS: RFP for outside consultant. Adjourned: 8 p.m. Shannon L. Turner, Board Liaison Eel