Loading...
HomeMy WebLinkAboutElectric Board - Minutes - 09/19/2007Fort Collins Utilities Electric Board Minutes Wednesday, September 19, 2007 Electric Board Chair John Morris, 377-8221 Electric Board Vice Chair Dan Bihn, 218-1962 City Council Liaison Wade Troxell Staff Liaison DeEtta Carr, 221-6702 Roll Call: Board Present Chairperson John Morris, Tom Barnish, John Graham, John Harris, Jeff Lebesch and Steve Wolley Absent Dan Bihn Visitors Eric Sutherland Staff Present: Patty Bigner, Bill Bray, Terri Bryant, DeEtta Carr, Eric Dahlgren, Joyce Grenz, John Phelan, Tom Rock and Dennis Sumner Meetine Convened Chairperson John Morris called the meeting to order at 5:45 p.m. Citizen Participation Eric Sutherland feels the City of Fort Collins is spending too much on RECs when there are ideas for innovative solutions for energy supply or energy conservation. Mr. Sutherland thinks this community offers a variety of innovative solutions that could receive the support of the rate payers. Minutes of August 20, 2007 Board Member Jeff Lebesch made a motion to approve the minutes as amended from the August 20, 2007, meeting. Board Member John Harris seconded the motion. The motion passed unanimously. Renewable Enerey Certificates (RECs) Fort Collin Utilities Strateev Utilities Customer and Employee Relations Manager Patty Bigner and John Bleem of Platte River Power Authority (PRPA) gave a presentation on future energy strategies. At the last Electric Board Meeting Minutes Wednesday, September 19, 2007 Page 2 Electric Board meeting, Ms. Bigner mentioned PRPA was in the process of updating its renewable energy policy, which defines what qualifies as renewable energy and additional information about how purchases are made. Ms. Bigner discussed how Utilities' Staff will be detailed in describing the renewable energy product revealing to customers how and why the final product is purchased. This will be approached as a team, so all member cities say the same thing. This is challenging because the initial wind program is an important part of the history of Utilities. Utilities recognizes the distance is growing between the turbines at Medicine Bow and what people are now purchasing and needs to bridge the gap so customers understand the program. Chairperson John Morris said that as part of the Energy Supply Policy, the Electric Board wants to reduce consumption and control demand, while increasing the renewable energy portfolio. The goal is to do all three. Platte River Power Authority Approach Mr. Bleem reviewed the goals of the Energy Policy. The goals, at the time they met with the prior Electric Board, clearly articulated that the primary issue was carbon. Renewable energy certificates (RECs) allowed carbon mitigation at the lowest cost. As Fort Collins asked for more renewable energy, RECs were the agreed upon solution. Why use RECs Why are RECs cheaper than energy delivery? When PRPA built Medicine Bow wind turbines the predicted cost was $38 per megawatt -hour (MWh) (3.8 cents per kWh). Mr. Bleem just received quotes from approximately 15 wind suppliers, and prices are now in the $60 per MWh range (6 cents per kWh). You also have to add transmission and other services that were not an issue 10 years ago. Because wind is intermittent, you must have resources to back it up. Medicine Bow is now running about $48 per MWh (4.8 cents per kWh), due to increased transmission and other fees have increased. Delivered energy from wind generators costs much more than RECs. PRPA recently received quotes for long-term REC supply in the $10 per MWh range (lcent per kWh) from projects located in areas where natural gas is generally the marginal resource. The value of wind energy is also related to what resource backs off when the wind blows. If it is coal, the savings are very small. If it's natural gas, the savings can be significant. The cost of wind energy depends on the resources backing up the wind turbines, transmission costs and wind resource capital costs. All three have pushed wind prices higher than they were. So, you to compare RECs at $10 per MWh and delivered wind energy at $60 per MWh. If the entire portfolio were to be switched to delivered energy supply, there would be a dramatic increase in premiums, estimated at 3-5 cents, as compared to 1 cent now. PRPA reviewed this issue with the Electric Board five years ago when the energy policy was being developed. PRPA's Board of Directors has also recently discussed this issue. PRPA -2- Electric Board Meeting Minutes Wednesday, September 19, 2007 Page 3 Staff s concern was that if a new carbon rule comes out and does not allow offsets, then RECs may not provide any financial benefits. There is a potential high risk of owning offsets such as RECs in future carbon markets. The suggestion to the PRPA Board was to balance the portfolio. PRPA has now adopted a renewable energy policy with direction to move from a roughly 80/20 RECs to energy mix, to a 60/40 position in 2011 and ultimately a 30/70 position in by 2020. Energy Services Engineer John Phelan said the purchase of energy has been a blend since the new policy has been in effect. The idea is that PRPA is splitting apart the energy and the attributes at the source and recombining them to selling as renewable energy which is what the City sells to its customers. Mr. Bleem stated it was solely wind source (energy and RECs) that the customer was buying until last year. The renewable energy supply policy at Platte River, unanimously approved by all members including Fort Collins, expanded from wind to include solar, biomass, landfill gas and other resources that are qualified by the State of Colorado. A question was, "What is Xcel's policy?" Mr. Bleem answered that Xcel is Public Service of Colorado, and they are only in Colorado. To his knowledge, Xcel is not buying or selling RECs but is contracting with wind energy facilities, and purchasing both the renewable energy and RECs. This makes sense for Xcel because they have a high percentage of natural gas generation (approximately 48 percent). PRPA has about 1 percent natural gas in its resource mix. Chairperson John Morris acknowledged Mr. Bleem was correct. The goal was to address carbon in a manner that rates would be controlled. Purchasing RECs reduces carbon in an equitable manner to control rates. Chairperson Morris said that's why the Electric Board is having this discussion, possibly revising its current direction and whether or not staff is meeting the policy. Board Member John Graham said one of the benchmarks is cost of electricity purchased from Xcel. Mr. Graham feels that Xcel is a Utilities' competitor, and if we made policy decisions that favored local generation of renewable energy but drove our rate higher than Xcel, there would be a lot of other questions asked. One would be why are we buying from the City of Fort Collins when Xcel is cheaper. When the discussion starts, he thinks people will not ask the next question about which is more reliable. The City of Fort Collins has a higher reliability than Xcel, with the City reducing carbon more than Xcel. Some people may be willing to pay for that, and others won't. A chart to show costs of the renewable energy program now and projected into the future would be helpful. It may give sticker shock to Board Members to see what the cost will be to carry out the plan as projected in the years up to 2020. PRPA has found a potential REC supplier willing to offer a 15-year term, so there would be some price certainty if the contract is signed with them. Unless PRPA is under contract, there is a lot of uncertainty with RECs. Board Member Tom Bamish said the Board has not yet talked about the issue that the more rates are raised for renewables, the less resources can be applied to conservation. It's been proven that one dollar spent on conservation is probably equal to 10 dollars on energy supply. Any kind -3- Electric Board Meeting Minutes Wednesday, September 19, 2007 Page 4 of cost comparison needs to include demand side management to losses if they go that extra increment. The ranges vary widely. Green Building Update Ms. Bigner said one of the more significant messages from the recent market research was there are three areas for improvement with the first being the need to increase online services. The second was that people place a high value on security of the utilities' infrastructure and there seemed to be a perceived gap between what we are doing and how people valued security. Utilities feels this is a communication gap rather than a real gap. The utility department does quite a bit they don't tell people about. The third was in the area of stewardship which was demonstrated by a graph. People did not believe the City to be as green as they thought it should be. Stewardship is such an intrinsic value in all four of the utilities that Ms. Bigner said they need not to just communicate, but also demonstrate stewardship. Ms. Bigner stated that stewardship was how the City manages their natural resources. The operations of the City's utilities probably has the greatest impact on our environment of all City services. It involves electricity, managing our water supply, managing our wastewater treatment, how we build our stormwater system and others areas. The full story has not been told, and we will be working on this with some bold initiatives. Earlier this year Utilities started an initiative to look at what we could do to establish the City`s a green building program. The City has numerous programs related to green building. Utilities launched a project to develop a roadmap for a green building program involving City and about 50 community stakeholders. An important aspect is that different City departments collaborated on this project to make sure they were all on the same page. The logistics need to be figured out and will be driven from Utilities. The report is being finalized and will be reviewed by senior managers before it is shown to the community. Routine Updates PRPA — Dan Bihn: E-mailed the report to Board Members. Climate Task Force — Jeff Lebesch: They have had extra meetings with a goal to make recommendations for a substantial carbon reduction by 2010. Energy Supply Sun -Committee —Dan Bihn & Jeff Lebesch: Ms. Bigner's staff and others brainstormed what they wanted to focus on. Tess Heffernan will come to the next meeting to facilitate a discussion on what structure could be used internally and with the Electric Board subcommittee. Capitol News — Steve Wolley: No new update, as they were not in session. Other Business Undergrounding - The Electric Board recommends to City Council the undergrounding program proceed as planned by staff. Chairperson John Morris said he attended the Budget presentation. It was generally what was presented to the Electric Board last month at the meeting. 10 Electric Board Meeting Minutes Wednesday, September 19, 2007 Page 5 Future Azenda Items Chairperson John Morris sent the 2007 Electric Board Work Plan Schedule to the Board regarding what items have been completed. He would like input from each member on top priorities so the Board can complete these items before the end of the year. Adiournment The meeting was adjourned at 7:30 p.m. J ce renz, Electric BJrd Secretary -5-