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HomeMy WebLinkAboutElectric Board - Minutes - 01/21/1998A regular meeting of the Fort Collins Electric Board was held on Wednesday, January 21, 1998, in the Light and Power Training Room, at 700 Wood Street, Ft. Collins. BOARD PRESENT: Jeff Eighmy, Mark Fidrych, Len Loomans, Barbara Rutstein, and Richard Smart BOARD ABSENT: Bill Brayden and Jim Welch STAFF PRESENT: Ellen Alward, Eric Dahlgren, Suzanne Jarboe -Simpson, Bob Kost, Tom Rock, Tim Sagen, Rich Shannon, Gwyn Strand, Dennis Sumner, Shannon Turner, and Steve VanderMeer, OTHERS PRESENT: John Fischbach and Philip Friedman AGENDA: 1. APPROVE MINUTES Board Member Smart made a motion to approve the Minutes. Board Member Loomans seconded the Motion. The Motion passed unanimously, and the Minutes from the December 17, 1997 meeting were approved. 2. RICH SHANNON'S RESIGNATION: Rich was presented with a plaque while Board Member Jeff Eighmy read a statement prepared for Rich from the Board. "Rich Shannon, The Electric Board would like to commend you for your strong and innovative leadership of Fort Collins Light and Power. You accepted the challenge of getting this Board underway and kept us focused on our responsibilities. We respect your insistence that our Board study and understand the issues pertaining to the deregulation of the electric industry. Your vision in leading the Utility in new ventures such as wind generation, fiberoptics and related demand side management projects has positioned us in the forefront of the electric power industry. We know that the charter review and related governance issues were not resolved as we all would have liked, but we believe that the process was necessary and that the Board came out strengthened by our efforts. Your strong emphasis and leadership in preparing the Utility for competition makes Fort Collins Light and Power one of the finest public power utilities in the nation. We greatly appreciate all you have done for our Board and the Utility and know that your career in Clark County will add to your success as a Utility manager. We wish you the best in your new adventure." Rich Shannon expressed his appreciation to the Board for their service to the Utility. He encouraged the Board to continue to be active. Rich thanked them for their recognition and stated that it had been a pleasure working with the Board. Board Members discussed role changes and transition within the Utility. Bob Kost noted that Steve VanderMeer will play a lead role with the Electric Board, will serve as the contact person and will be staff lead at meetings. Suzanne Jarboe -Simpson will continue to provide assistance as needed as in the past. John Fischbach will attend Board Meetings as time permits. Steve VanderMeer assured Board Members that Rich's departure would not hinder pursuit of our goals. The Board expressed interest in the replacement of Rich Shannon's position. John Fischbach relayed that he met with Thaine Michie, Platte River Power Authority General Manager, regarding a contractual relationship to take over management of Light and Power. This idea has been discarded. Thaine Michie does not think it is a good idea at this point in time and John agrees with him. John stated that the City will handle the recruitment in house rather than getting an executive search firm. John stated that he will get the Board a copy of the recruitment brochure, probably within a week or two, and the City will perform a national search. John said he wanted to keep in close touch with Jeff Eighmy to make sure the Electric Board is involved in the search. John confirmed the Board could be involved in an interview process, and said "I can do whatever you want basically, I think." John expects to have the Board involved in the following processes: reaction to the brochure and make changes in the qualifications, -2- involvement in the process of looking at resumes, and participation as a panel in the interview process. Board Members discussed with John Fischbach the idea of advertising the position in the American Public Power Weekly newsletter. They want to know if the criteria for the candidate would be someone who had been involved in public power. John related to the Board that a candidate with a public power background would be preferred, and we would list that as a preference. John said we would advertise in the American Public Power Weekly newsletter and felt it would be a good recruitment tool. He also guessed we would advertise in the Wall Street Journal and some other industry type newslettersJoumals. John briefly discussed how the salary and benefits for the position are competitive from a City stand point, but we may need to look at this also. Board Members were curious as to why the City did not want to use a search firm. John stated it was just the $28,000, and we have the Human Resource employees that can do the same search as those firms. The issue of confidentiality was raised in relationship to having the City perform the search rather than employ an executive search firm. John felt that the City could keep it as confidential as the State law allows, and State law keeps it confidential to the point of the final three people. Board Members asked for an idea of what the time frame would be for hiring. John stated the time frame for hiring a new director is four to six months. Board Members wanted clarification on how they would fit into the hiring process, and could they invite themselves into the process at any or all of the stages. John stated that once the City has the process set up the Board will have a major role in part of the process. There would be an Executive Lead Team and the Electric Board would be the public voice during the interviewing. The Board can be a part of all or any of the hiring process. John mentioned there would be staff from the Utility on the team and the City may bring a utility director or two from the outside to participate in the interviews. Board Members expressed concern about getting resumes from applicants with investor owned backgrounds. They feel that investor owned utility managers would have a whole different way of doing business and would have a whole different direction for the Utility. John felt that we definitely need a director with some public power background, but it would be beneficial to hire someone who has been in both sectors. There was discussion regarding the process of looking at a large group of applicants, narrowing the field, gathering information from survivors and then downsizing the group even further. It was questioned as the whether the Electric Board could be involved from the beginning such as looking at the entire pool, looking at the group that has been narrowed down and/or be involved in the whole process. Suzanne stated the need to be clear about the criteria of what elements you are looking for to assist in the development of the announcement. The resumes should then be screened against that criteria. The Board may be able to offer assistance in the development of the screening criteria. The Board felt it would be important for the director to be familiar with the issues on Light and Power's work plan. The director must know about conversions, competition, renewable energy and community outreach. They felt the job announcement is everything. An additional Board -3- Meeting is scheduled for next week on Wednesday, January 28, 1998 to have a work session to develop criteria for the job description. John Fischbach stated there might be a draft of the job description by the end of next week. City Council will not ultimately approve the new hire. John Fischbach will be the hiring authority. John sees the Electric Board's role as being extremely critical to the whole process, and in affect the Electric Board can be the substitute for the City Council. The benefit package for the position was discussed. John Fischbach noted he did not think the City would have to revisit the benefit package as part of the recruitment process. If it does come back as a problem, the City will look at it. The job description will state the salary of the last director, but may not list a salary range. 3. WIND PROGRAM: DISCUSSION OF NOVEMBER BILL FLYER: Guest, Philip Friedman (citizen and Natural Resources Advisory Board Member), expressed concerns regarding the December Light and Power Wind Power Newsletter. Mr. Friedman clarified he was speaking as a citizen and supporter of wind power, not as a Natural Resources Advisory Board Member. Philip stated that prior to receiving the newsletter he assumed everything was running on time. He then learned the contractor was running behind from hearsay and not from Light and Power. The concern is that those who subscribed to this project should be made aware of the delays. It is critical that those people who have subscribed should be notified of what is happening in the process, and the newsletter does not address this issue. He stated that the newsletter needed to be specific about the details of this project, and he did not believe current subscribers will drop the project just because it is behind schedule. Light and Power needs to keep the trust of the community and keep the subscribers happy. Steve VanderMeer explained that NAE has been providing wind power to Light and Power from another turbine since November 1, 1997; however, the amount of power we are getting is minimal. Steve stated that nothing we said in the flyer at the time it was published was intended to be misleading. We were under the belief that we were going to be generating power at the first of the year. Our vendor, NAE, has not been completely forthright in the problems they were encountering. At the time the flyer was published Light and Power fully believed that statements in the newsletter were true. Light and Power is clearly on track now for April or May of 1998. It was noted that PSCO's program is also delayed. They were supposed to have one turbine on line by Christmas. The next newsletter is due out in February, and Light and Power will be clear on what is happening with the project. UPDATE ON WIND POWER: Steve VanderMeer provided an update on the wind project. Council passed a resolution authorizing the General Manager to submit a revised letter of commitment to Platte River which notes the new conditions regarding financing. Platte River has met with Vestas, the new turbine -4- • 0 manufacturer, and they were impressed. Towers and turbines have been ordered, and we expect no delays. The foundation work is scheduled to begin the week of February 9, 1998, and we are on schedule for an early April commissioning of the project. All the construction work of the turbine will be overseen by Vestas. We will still be offering the wind at two cents per kWh. Vestas is not more expensive. The smaller turbines are more efficient in that they are able to get more kilowatt hours per kW rating of the turbine. We will be able to serve the same number of customers. PRPA has received a couple of penalty checks from NAE. The penalty clause will be in place until the commercial operation of the turbines is on line. The penalty clause has not been changed as a result of the last agreement. Vestas is doing the construction financing, and NAE has the burden to obtain permanent financing. The new contract states that should NAE not be able to assume the permanent financing, they will give up their rights to the site to PRPA. There was some discussion regarding PSCO's wind power project. 4. ANNUAL REPORT: The Board discussed the draft Annual Report. Board Member Loomans requested an item be added concerning the rate design discussions conducted by the Board. Board Member Rutstein suggested some editorial changes. The addition and editorial changes will be made before the final report is submitted to Council. 5. STAFF REPORTS: TELECOMMUNICATIONS UPDATE Eric Dahlgren provided the Board with an update on the telecommunications project. To date, Light and Power has installed approximately eight miles of fiber. The last section connects the PRPA site with the fiber, which comes overhead from Longmont and Loveland. The initial goal is to create a video conference between Longmont and the PRPA office for the next PRPA Board meeting on February 19, 1998. Light and Power is beginning the engineering and planning work for the next section of fiber, which will connect the PRPA site and the Service Center at 700 Wood Street. Eric discussed two recent developments in the project. The first is the desire to enhance the concept of a "regional approach" to telecom by having PRPA play a lead role in the business development area. At the last meeting of the PRPA Solutions group (the Limited Liability Corporation of PRPA), the Solutions Board Members asked Thaine Michie to prepare a preliminary business plan by February 19, 1998. There was conceptual agreement among the Board Members that a regional approach offered significant advantages and a far greater margin -5- for success. There are differing opinions among the member cities as to the specifics of PRPA's role, and meetings will be held to begin working through the issues. The second major development involves the discussions the utilities have had with telecom vendors. These are companies with which we might form strategic alliances such that they could deliver various telecom services to the communities over our fiber. A recent discussion was held with Teleport Communications Group (TCG) of Denver ,which was recently acquired by AT&T for $12 billion. Earlier discussions with this company had been disappointing since TCG, although considered a good potential partner, was focused on data services to a narTowly-defined commercial segment of the market. However, this recent acquisition by AT&T appears to have changed their marketing plans. They now see Northern Colorado as an "emerging market" for telecom and appear to be quite interested in us. In addition, they offer a wireless "last mile" solution, which has shown a high degree of success in some other areas. The cities will be meeting with TCG in February to review a proposal by TCG to provide a "full compliment" of services to Northern Colorado, including long distance, local telephony and high-speed data. Eric responded to questions about ongoing discussions with TCI's engineering staff. TCI has examined our proposed fiber routes and has indicated there is a good possibility for overlap in our respective plans. They have assigned a planning budget and a project team to work with us. There was also a brief discussion concerning wireless versus wired connections. To a question about the Utility's "negotiated, competitive" process, Eric mentioned it had been used to select Nortel as the electronics vendor and a price comparison with Lucent indicated a savings of $70,000 in the purchase of OC-3 equipment for the substations in Fort Collins and Loveland. There was also a brief discussion about the legal implications of PRPA becoming a competitive local exchange carrier (CLEC). AGENDAITEMS Ellen Alward provided an explanation of the two City Council agenda items, and a draft Agenda Item Summary handout was provided. Light and Power has two financial items going to Council on February 2, 1998. Both are adjustments to our 1998 budget. The first is requesting the Council appropriate $2.7 million for additional work at the Harmony Substation to provide a fourth transformer. This fourth transformer is due to projections of major development in southeast Fort Collins. Included in this request are funds for the construction of a duct bank from the Harmony Substation east to the Hewlett Packard area. We have been working with HP, and they will be contributing approximately $1.6 million in expenses related to the addition. The second agenda item is a request that Council reappropriate unspent funds in the amount of $4.2 million for projects that were budgeted in 1997 but not completed. We will complete them in 1998. The second page of the handout is the list of items we are asking Council to reappropriate. Some are meters, transformers and duct banks. The major budget item that did not get expended last year is for the Customer Information System. We are asking that the money be reappropriated so we can complete the CIS project this year. Another item, approximately $89,000 is for completing the Building C expansion. 10 The Board discussed the need for the additional transformer at Harmony Substation. It was noted that the transformers would have been needed in the future anyway, and there are some economic reasons for purchasing them now. It would complete the full build -out of that substation. The transformers are 50 MV. The four transformers in that substation could serve the whole city but they are not physically located in the right place to do that. They cover the growth capabilities and the ability to transfer load for backup purposes. The Board requested an update on the CIS system. The discussion was whether it would be beneficial to buy a regional system and operate the CIS regionally, or will Light and Power just go forward and purchase their own system. Staff related that we are still exploring the potential of having Platte River purchase the system for all four cities, but if that does not work we will still be in the position to have to replace our system. There is ongoing discussion with Platte River and the four cities at this time. There is a great deal of interest by some of the cities in exploring a regional approach to this, but some of the others that have existing systems that are meeting their needs now are less interested. If PRPA was involved, it would probably cost Light and Power less than the full $3 million. The City of Longmont is very interested in this joint effort and we are currently looking at a customer information system, SCT that traditionally larger companies utilize. We had people from Longmont here and they were impressed by SCT. SCT is going to be doing a demonstration in Longmont the first week in February. There will be several meetings in February with city managers, utility directors and Platte River to further discuss the possibility of a joint CIS project. There has been no attempt for the cities to block this project, but there is not an urgent need on the part of Loveland and Estes Park to have another CIS system at this time. Longmont has a compelling need to replace their system because it is not year 2000 compliant. OTHER BUSINESS: Special meeting on January 28, 1998, to brainstorm and agree on five points for John Fischback's consideration for inclusion in the General Manager recruiting material. The Board would appreciate staff input into our discussion. Suzanne, Bob and Steve will attend. Special meeting in two weeks at 5 p.m. on February 4th to meet with John Fischbach and share all information developed at the earlier special meeting. FUTURE AGENDA: General Manager hiring process Marketing Update Adjourned: 7:20 p.m. Shannon L Turner -7-