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HomeMy WebLinkAbout2007 - Electric Board - Annual ReportFort Collins Electric Board 2007 Annual Report The following is a summary of the 2007 activities of the Fort Collins Electric Board. The report focuses on topics from the Board's 2007 Work Plan. Electric Board Members John Morris — Chair Dan Bihn — Vice Chair Tom Barnish John Harris Jeff Lebesch Steve Wolley John Graham In 2007, the Board continued to focus on implementation activities associated with the Energy Supply Policy adopted by City Council in 2003. Discussions related to the Energy Supply Study included: Electrical Equipment and Electric System Reliability — Utility Staff presented a summary of the various components of the electrical distribution system including cables, elbows, terminators, transformers, and switch stations. Data that monitors the equipment failure rate and customer impact was presented which indicates the system remains highly reliable and the staff is practicing proactive maintenance methods and effective capital planning. It is clear that staff has a true commitment to equipment reliability and employee safety. Again, as in previous years, the overall reliability of the electric systems remains high with the average availability index (ASAI) at about 99.995% and the average interruption frequency index (SAIFI) at under 0.60 interruptions per customer. These indices exceed the goals of 99.9886% or higher availability and less than 1.0 interruption per customer per year. The Board recommends continuing with these services and monitoring programs. Substation Performance. Security and Maintenance - Staff presented information on the system substations and the roles and responsibilities of the Supervisory Control and Operations (SCO) group. As stated earlier, it is clear that staff has a true commitment to equipment reliability, system security and employee safety. The Board recommends continuing with these services and monitoring programs. Field Mapping System — Staff presented an update on the utility field mapping program. Mapping and locating utility lines is an important aspect of maintaining a reliable utility system. The software staff has chosen is quite impressive and very cost effective. Energy Supply Policy Update — Staff presented an update on the Electric Energy Supply Policy. As noted above the electric system reliability (overall reliability of 99.995%) exceeds the minimum targets and staff take pride in the programs designed to keep the electric system operating with a high degree of reliability, security and safety. The distribution system undergrounding program is essentially complete and is discussed in more - 1 - detail later in this report. The electric utility rates continue to be competitive and remain well below many other municipalities and investor owned service providers. The demand side management and conservation incentive programs such as the clothes washer rebate program, cooling rebate program, refrigerator and freezer recycling program, the residential lighting program and the electric efficiency program continue to have active use with estimated annual savings in 2006 of over 5,000 MWh; with cumulative energy savings since 2002 of nearly 20,000 MWh and a cumulative demand savings of over 3,500 kW. It is interesting to note that since 1992 the population of Fort Collins has increased by 54%, while energy use is up by 70% and the peak electric demand is up 105%. This supports the need to continue with focus on the energy and environmental goals of the Electric Energy Supply Policy. The Energy Supply Policy has goals for a 10% per capita reduction in energy use by 2012 (2002 baseline), a per capita demand reduction of 15% by 2012 and a 15% increase in renewable energy by 2017. The energy use statistics indicate the annual per capita energy use is down 2.8%, the per capita peak demand has actually increased 1 %, and renewable energy comprises about 6% of the total electrical energy purchases in 2007. The City will need to continue to give high priority to energy conservation and demand reduction programs in order to meet the goals set out in the Energy Supply Policy. The Board discussed whether these goals are still realistic and feel that with continued focus the goals can be achieved. There was significant discussion focused on the renewable energy goals and the use of Renewable Energy Certificates (REC's) as a means of achieving these goals (a summary of this discussion is covered in the following bullet). Overall, in 2006 it is estimated the City avoided over 51,700 tons of carbon dioxide emissions. The Board commends the Utilities staff on their efforts and encourages continued focus on these initiatives. Renewable Energy Certificates (REC's) — The Board reviewed the current use of REC's. The Board agreed that the ultimate goal of this initiative is to reduce the impact of the City's carbon emissions. In 2003 and 2004 the use of REC's was a very attractive option for achieving the renewable energy goals. There are pros and cons for these REC's, however in general: o REC's currently meet renewable energy standards and requirements, o REC's provide title to all environmental attributes and benefits, o The premium cost for REC's is relatively low, i.e. REC premiums are in the range of $4-8 per MWH as opposed to the premiums for wind generation on PRPA's system which ranges from $25 per MWH (existing units) to $40 per MWH (new units). Purchasing all of the City's renewable energy from PRPA wind generation, if available, would significantly increase the unit cost of electricity to the City utility customers. o REC's allow for greater access to renewable sources and greater diversity since transmission is limited throughout the region, o Impacts on electric system operations are reduced, o REC's increase renewable energy development, o PRPA's REC's are Green-e Certified. -2- There are those who oppose the use of REC's and there are some risks in relying upon too much REC's versus actual purchases. The current ratio is about 17/83 actual renewable energy purchases to REC purchases, and PRPA has plans to increase that to 40/60 over the next few years. The Board shares some of these concerns and supports the PRPA ratio increase, but in general feels that REC's continue to play a role in the carbon emission reduction efforts. The Board will continue to review this issue in 2008. Underground Electric Cable Conversion — Council specifically asked the Electric Board to evaluate the state of the conversion to underground power distribution, including an evaluation of the appropriateness of any power poles that will remain after the conversion. Staff presented a summary of the existing program which is essentially complete and presented a summary of the remaining overhead lines. The remaining overhead lines include the Xcel line along the Colorado and Southern Railroad from Trilby to Harmony, areas in the South Taft Hill Annexation area, miscellaneous areas to minor service sites, North College Avenue, and the SW Annexation. The annual budget allocation for overhead to underground conversions will be reduced from $2.5M to $250k. Some of the remaining areas will be placed underground as part of other projects and the remaining areas will be incrementally addressed with the annual $250k. The Board supports reducing the annual budget for underground conversions with the majority of the funds being reallocated to the capital system improvements line item. The Board also supports the plan presented by staff to address the remaining overhead lines. The Board also participated in the discussion of the following topics: Utilities Executive Director Update — City Manager, Dann Atteberry, provided an update on the status of the City Manager's staffing plans, including the plan to establish a new Utilities Executive Director position. The Board is supportive of the staffing changes and in turn praised Mike Smith, previous Utilities Director, for his 28 years of outstanding service to the organization and the City of Fort Collins. PRPA Mercury Pollution Update — PRPA provided an update on their mercury reduction and control efforts. The mercury emitted by the Rawhide plant in the process of burning coal is not believed to be a significant health risk, however over the next 10-12 years PRPA will likely spend over $10 million to reduce their mercury emissions from the Rawhide power plant. PRPA is installing monitoring equipment and will analyze the data before making further recommendations. The Electric Board has requested an update on the mercury emissions once data is collected. Climate Protection Plan — Lucinda Smith, Senior Environmental Planner made a presentation to the Board on the goals of the Resolution 2007-015 that established a task force to update the City Climate Protection Plan and to promote renewable energy, energy efficiency, waste reduction and transportation -related technologies, services and practices. The Board recognizes that the use of electricity has a significant impact on the City's environment and approved having two Board representatives on the Climate Protection Task Force who will provide monthly updates to the Board at large. Public Utility Regulatory Policies Act (PURPA) Standards Update — In 2005 PURPA was amended with five new standards that address the following topics: net metering, fuel sources, fossil fuel generation efficiency, time -based metering, and interconnection. Utility -3- staff developed a report that addresses each of the standards. The Board considered the staff report and voted to recommend approval of a resolution to adopt these standards. Colorado State University Research Foundation (CSURF) Proposed Wind Farm — The Board reviewed CSURF's plan for a wind farm at the Maxwell Ranch and encouraged Council to request PRPA to strongly consider giving preference to this project as a part of its integrated resource portfolio. UniverCity Connections and Clean Energy Cluster — Judy Dorsey, principal engineer and owner of the Brendle Group and technical consultant for the Fort Collins Climate Task Force, made a short presentation to the Board about the UniverCity Connections Sustainable Energy Technology Taskforce and the Northern Colorado Clean Energy Cluster (CEC). Both of these groups are actively pursuing energy issues and have to the potential to put Northern Colorado on the map as the "go to" region for smart -grid technologies, renewable energy and energy efficiency, and cleaner and more efficient engine research. The idea is to transform the UniverCity Connections district into a net zero energy user. The name of the district is FortZED. A $5 million Department of Energy grant is possible if the funds are matched by $4 million from the Fort Collins area. The Electric Board recommends support for the UniverCity and Clean Energy Cluster initiatives. Overview of 2008-2009 Budget — Board members participated in the Budgeting for Outcomes review process. The Board was supportive of the process and its outcomes. PRPA plans a 3.0% increase in rates for 2008 and a 3.7% rate increase for 2009. This translates to a planned 2.3% retail increase for 2008 and 2.7% for 2009. Capital projects and system improvements planned for 2008 include the Trilby substation ($4.9M), replace Building C ($4.5M), replace some aging underground infrastructure ($2.5M), the SW Annexation ($0.8M), and major duct bank upgrades ($1.2M). Development fees are projected to increase about 12% for the residential sector and about 20% for commercial; and increases are due primarily to increases in materials and metals. 2% of the revenues are targeted for renewable energy, DSM and conservation efforts identified in the Energy Supply Policy. The Board voted to recommend to City Council that they approve the proposed 2008- 2009 budget and rate increases. Green Building Initiative — Staff provided a short update on the City's Green Building Program. The City launched a project to develop a roadmap for a green building program involving City staff and about 50 community stakeholders. Utilities staff is taking the lead and will be developing the logistics. A report will be finalized and reviewed by senior managers before issuance to the community. Customer Survey— Lynn Adams, with RW Beck, provided an overview of the Market Research and Benchmarking activities completed for the City Utility Department. o Overall, the City Electric Utility customers are pleased with the services being provided and feel that Utilities meets or exceeds expectations on the most important factors. o More specifically, customers expect a minimum of "B" level service and are delighted by "A" level service. Top performers strive for 70% or more "A" ratings and minimal ratings of "C" or below. Of the residential customers surveyed 77% rated their service "A" and another 20% rated their service `B". Of the commercial customers surveyed 65% rated their service "A" and another 32% rated their service `B' ; a remarkable 97% for both residential and commercial customers. Both residential and commercial customers had high ratings for the following categories: reliability of electric service (few outages or interruptions), power quality (few voltage fluctuations or surges), speed of electric service repair and service restoration, and the overall grade for the electric service. There was little change in the ratings for these categories for the 1999, 2003 and 2007 surveys. Of note, both residential and commercial rated the category of `reasonable price' lower than the other categories for all three survey periods. o In the gap analysis, commercial customers indicated that the Utilities' efforts towards infrastructure security and environmental consciousness do not meet their expectations. Both of these perceptions may be related to a lack of communication and knowledge rather than an actual deficiency in service. Competitive price also tends to fall behind customer expectations. Otherwise, the commercial customers indicated a high level of satisfaction in the following categories: reliable service, accurate bills, fast repairs and service restoration, company trust, quality of products delivered, courteous customer service, and programs to help conserve. o Gap analysis for the residential customers indicated very similar results as those of the commercial customers. o It is important to be aware that a disproportionate share of customers think the Utilities is close to attaining or has already exceeded the current goal of 15% renewable energy supply. The perception that the percentage of renewable generation is significantly higher than the actual could present some challenges; especially since the research study indicated that, although fossil fuels are viewed unfavorably, support for renewable energy does not always come with acceptance of higher prices. o About 70% of the commercial and residential customers feel that the level of energy conservation efforts are about right, while almost 25% feel there should be more attention given to conservation efforts. About half of the commercial customers surveyed expressed an interest in programs that encourage conservation through facility designs and equipment incentives. About half of the residential customers who have central air conditioning in their homes expressed interest in subscribing to a load control program offering a $25 incentive. o Key recommendations from the market research study include: ■ Due to the Utilities high performance, the Utilities' challenge is associated with the need to continue to monitor and anticipate customer needs in order to remain proactive, and to implement effective programmatic communications. • The gap in the renewable energy and conservation efforts is worthy of further exploration in the context of the Utilities' stewardship mission. This may include providing more information about the current generation portfolio and to make customers aware of the efforts required to achieve the 15% mandate. o The benchmarking portion of the study indicates that, although there are opportunities for further improvements the Fort Collins Utilities, the City Utilities is able to position itself within a "stretch" group of peer organizations. This in itself is admirable and quite an accomplishment. Some areas for further investigation include: • Introduce internet capabilities such as on-line bill payment, access to account information and energy analysis. • Continue to evaluate the communications program. • Continue to provide customer service training to its employees. -5- ■ Develop a recognition program to reward employees and teams for outstanding performance. The Electric Board feels there is a high correlation between employee satisfaction and customer satisfaction, which is critical to the continued high customer satisfaction ratings. o In summary, the market survey and benchmarking study indicate that the Utilities is performing well in its mission, and identified beneficial input that can be used as the basis for a Tactical Action Plan or as part of a broader Strategic Planning effort. Citizen Participation Mr. John Morley, who has been a wind power program subscriber since the beginning of the program, attended one Board meeting and expressed his concern about REC purchases. He indicated he joined the wind program to show his economic support for wind energy and expects his dollars to go towards more direct wind energy purchases rather than renewable energy certificates. Mr. Eric Sutherland attended a number of Board meetings. He expressed a variety of concerns and opinions, including: Truth in advertising — Mr. Sutherland expressed concerns with what he identified as "green washing" by certain electric utility wind energy customers and requested the Board to consider recommending that all contracts with participants of the wind power program include a qualifier that would preclude any customer from mistakenly concluding that they are "100% wind powered". The Board felt this was not within the Electric Board charter, and by charter the Board is specifically excluded from discussing details of any particular customer account. However, based upon input from Mr. Sutherland staff did update many references to wind power in the Utility website. The Purchasing of Renewable Energy Certificates (REC) as opposed to purchasing actual renewable energy — The Board had a lengthy discussion related to this topic and agreed that the long term goal is to purchase more renewable energy directly, however when the Energy Supply Policy was first adopted the goal was carbon emission reduction and the most economical method of achieving this goal was through the purchase of REC's. Although REC's are a more frequent topic of discussion and some are in disfavor with the current program, the industry is continuing to evolve and the Board feels they continue to play a role in the carbon emission reduction efforts. The Utility sponsorship of the Rocky Mountain Sustainable Living Fair — Mr. Sutherland expressed his concerns related to support of this program. Continued Focus on Conservation — Mr. Sutherland indicated he felt the Fort Collins Utilities is doing a lot of good with their renewable energy programs. However, he feels these efforts will only get us so far towards our goal of reducing our impact on the environment and that the remainder of the effort needs to focus heavily on conservation activities. The Board agrees that continued efforts towards energy conservation need to remain a high priority.