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HomeMy WebLinkAboutElectric Board - Minutes - 09/17/2008Fort Collins Utilities Electric Board Minutes Wednesday, September 17, 2008 Electric Board Chairperson City Council Liaison John Morris, 377-8221 Wade Troxell, 219-8940 Electric Board Vice Chairperson Staff Liaison Dan Bihn, 218-1962 Robin Pierce, 221-6702 Roll Call Board Present Chairperson John Morris, Vice Chairperson Dan Bihn, Board Members John Graham, Jeff Lebesch and Steve Wolley Board Absent Board Members Tom Bamish and John Harris Staff Present Steve Catanach, Tom Rock, Patty Bigner, Ellen Switzer, Brad Burke, Kevin Genig, Bob Micek, Bill Switzer, Bob Hover, Jenny Lopez-Filkins and Robin Pierce Guests Rick Coen, Bella Energy; Bevan Noack Meeting Convened Chairperson John Morris called the meeting to order at 5:33 p.m. Recorded Voting Procedure Chairperson Morris will call for votes by raising hands and will speak the result on unanimous votes for the recording. If there are dissenting votes, Board members will record individual "yes" or "no" votes, stating name and reason for the dissenting vote in accordance with voting procedures outlined in the Boards and Commissions Manual. Approval of August 20, 2008, Minutes Vice Chairperson Bihn motioned to approve the minutes from the August 20, 2008, meeting. Board Member Graham seconded the motion, and it passed with one abstention by Board Member Wolley (4 for, 0 against, 1 abstention). Public Comment None Conflict of Interest Assistant City Attorney Jenny Lopez-Filkins addressed recent questions received about potential conflicts of interest. In lieu of conducting a detailed discussion with the Board, Board members were encouraged to access training materials available through Karla Smith in the City Clerk's office. The training provides the framework to define a conflict of interest and questions to ask when assessing a potential conflict of interest. It is the responsibility of each Board member to apply the facts of the individual situation to the conflict of interest guidelines and determine if a potential conflict exists. If a Board member has concerns, they may contact Carrie Daggett or Ms. Lopez-Filkins in the City Attorney's Office or Council member Wade Troxell, the Board's Council Liaison. For specific guidance, a request can be made to the Ethics Review Board for an advisory opinion through our Council Liaison. Chairperson Morris noted potential conflict of interest discussions were held when deciding about PRPA employees participating with the Board. He encouraged those Board members to follow up on this training and make sure they feel confident there is no conflict of interest with a topic of discussion. Since the two Board members employed by PRPA were not in attendance at this meeting, Ms. Lopez-Filkins will contact them to share this information. Ms. Lopez-Filkins noted Board members may sense an immediate conflict of interest with an agenda item, or a conflict of interest may not become apparent until discussion is well underway at a meeting. In either case, as soon as a Board member discovers a conflict of interest, it is appropriate and recommended the Board member immediately notify the Chair and ask to be excused from participation. 2009 Buduet Update Utilities Financial Operations Manager Ellen Switzer provided a presentation on the 2009 budget. The 2008-2009 budgets were developed and approved through the Budgeting for Outcomes project in fall 2007. Council appropriated funds for the first year of the budget, and the 2009 appropriation ordinance will go before Council on October 7 and 28. The original 2009 budget was $95,419,446. Exceptions totaling $372,648 (0.4 percent increase) from last year's proposed budget include: • Two new positions in Energy Services (Note: These do not include new positions necessary to support new Climate Change or Energy Policy goals); • Additional fuel expenses; and • Building security improvements. Highlights include: • Purchase power represents the largest share ($61.9 million) of the Light and Power budget and will see a 3.8 percent wholesale rate increase. • System additions account for reduced growth projections, increased material costs and replacement or upgrade of aging underground infrastructure. • Capital projects include substation improvements, service center and customer service facility improvements, a City-wide pilot WiFi system and additions to the Southwest Annexation project. • Operating revenues are estimated at $87 million. When combined with additional non -operating revenues, development fees and interest income, total revenue of $92.8 million is projected. The difference between the projected budget, including exceptions and projected revenue, will come from reserves. • A 2.8 percent rate increase request will go before City Council. Impact to customers will vary by rate class. An increase to development fees also will be requested due to inflation, labor and material cost increases. The increase ranges from 5.1-5.8 percent. Financial policies pertaining to increases in net assets and fully funded reserves will be met. Future capital needs were reviewed. The largest projects include $26 million for the smart metering project and $14 million for replacement of underground infrastructure. Questions from the Board: Why would the WiFi project be in the Utilities rather than the MIS budget? Utilities has our own fiber network, and a portion of this relates to the remote meter reading pilot. What are the Utility Service Center and other building improvements referred to? Funds are available for energy and conservation improvements. In addition, the hope is to move the Customer Service group from 330 S. College (a rented space) to a City -owned space to avert future rent increases. Why is the City not passing through the entire PRPA rate increase of 3.8 percent? Purchase power is only about 70 percent of the budget. Why would development fees not increase more significantly than 5 percent? Some material costs stabilized or decreased in price. Last year's inflation was significantly greater. Are funds put away similar to depreciation for replacement of aging underground infrastructure? Revenues are collected each year. Set rates cover depreciation, but it's not a one for one. Do we consider it a capital project when giving out money for demand side management (DSM) programs? Staff is not certain yet how it would be structured (operating expense versus capital investment.) The Energy Policy related budget expenses will go back to Council. Utilities collected more than we spent on renewable energy for several years. The unspent funds, in addition to yearly collections, will prevent a rate increase if we stay at this level. If funds are set aside in reserves for one purpose, such as DSM, by policy, funds must be spent for that purpose. Why would Utilities not request a rate increase that covers the difference between our budget and projected revenue? Reserve levels are more than sufficient. Why wouldn't we specifically use those funds for improvements or to purchase capital equipment (an excellent opportunity for leverage)? The $95.7 million budget includes $12 million for capital purchases. Financial policies are under review to determine the floor and ceiling for reserves and what the funds will be used for in the future. Utilities budgets very conservatively for system expansions and revenues. The $3 million delta between budget and revenues would be difficult to justify carrying forward toward a rate increase. Recommendation for Motion: Vice Chairperson Bihn moves the Electric Board approve the budget as presented, including the exceptions and additional FrEs. Board Member Lebesch seconded the motion. Discussion on the Motion: During discussion on the motion, Board Member Graham suggested a friendly amendment to the motion. Friendly Amendment to the Motion: Board Member Graham moves the City Council approve appropriations, including exceptions, for Light and Power's recommended 2009 budget and the proposed increases to the electric rates and development fees. Board Member Wolley seconded the friendly amendment. Vote on the Amended Motion: There was no further discussion. The vote was taken, and it passed unanimously (5 for, 0 against.) Solar Rebate Program Community and Employee Relations Manager Patty Bigner presented an update on this program. Twelve applications have been received since the July kickoff, totaling 29.1 kilowatts of photovoltaic solar (PV). A total of $42,000 was reserved for the program, and there are enough funds available to open another round of applications. The Governor's Energy Office (GEO) recently issued an invitation for the second round of rebates. Board members may visit www.fcgov.com/solar-rebates for additional information. Energy Updat Staff made a presentation to Council on energy efficiency at the September 9 work session. Howard Geller with the Southwest Energy Efficiency Project and Lori Bird with the National Renewable Energy Laboratory also were present to make presentations as experts in the field. The Draft Energy Policy will be presented at the September 23 Council work session. The new policy incorporates a carbon reduction framework using the State Renewable Portfolio Standard (RPS). Primary focus is placed on energy efficiency, but additional renewable energy certificates (RECs) also may be necessary to meet the goal. Opportunities for community participation and partnership will continue to grow. The initiation from our home community is encouraging, and we will continue to see a greatly expanded customer awareness campaign and increased incentives for energy efficiency projects in the future. Public outreach on the draft policy will be forthcoming. Edits to the draft policy were made based on comments taken from this Board at the August meeting, and it was shared with the Natural Resources Board and Air Quality Board. A couple of concerns were expressed by those Boards: 0 The Natural Resources Board is concerned needs and types of projects have been understated, especially in light of the loss of some anticipated transportation sector projects. The Air Quality Board had a good understanding of renewable energy conversations and is supportive of more emphasis on energy efficiency and community involvement. Questions from the Board: Are we counting recycled energy, i.e. combined heat and power (CHP), toward the State requirement (referring to renewable energy accounting in Amendment 37)? Ms. Bigner will check with PRPA and report back to the Board. Can energy efficiency gains be counted toward renewable energy standards? From the 2003 Energy Supply Policy, our metric was set to reach a percentage of demand reduction from a defined year. Now we are shifting to a reduction in demand by 1 percent every year. We are at 2.9 percent of revenue and 1 percent of energy reductions for 2008, which are best practice levels. When will staff ask for 2009 budget exceptions for the Energy Policy and Climate Action Plan? If Council adopts this policy, staff will develop an implementation plan and take it before Council in January or shortly thereafter along with a rate ordinance. Staff hopes for additional funding for local renewables in the mix. Light and Power Operations Mana eg r Update Mr. Catanach shared an update on a variety of topics. Training: The majority of the Light and Power management team, line crews and foremen received disaster recovery and management training this week from a consulting group affiliated with Texas A&M University. Training covered a range of scenarios from terrorist attacks to natural disasters and included a review of desired planning, mitigation and preparation for maintaining or restoring in a utility system in case of an event. Public Power Policy: An APPA publication, Handbook for Public Power Policymakers, was distributed to all Board members. RMEL Conference: Mr. Catanach attended the recent RMEL Conference in Vail. The conference theme centered on strategies for efficient and sustainable power systems. Board members were asked to identify presentations of interest to review during a Board meeting, followed by group discussion. He recommended three presentations: 1) Unleashing the New Energy Economy, 2) Creating a Secure, Low -Carbon Future, and 3) Environmental Leadership by Richard Kelly, Xcel Energy. Xcel Energy Video: The Board viewed an Xcel Energy marketing video called Smart Grid City. Routine Updates PRPA (Vice Chairperson Bihn): The Windsor tornado impacted financials and destroyed several transmission lines between Rawhide Power Plant and the Ault substation. PRPA is meeting with the Governor's Energy Office (GEO) to discuss 2020 and 2050 targets. Concern was expressed the GEO lacks understanding of the municipal utility business and REAs. Climate Task Force (Board Member Lebesch): Council does not look favorably on the purchase of several million dollars worth of RECs related to the Climate Task Force recommendations. Other planning segments are not as far along as the energy segment. Energy Supply (Vice Chairperson Bihn and Board Member Lebesch): Nothing to report. Capital News (Board Member Wolley): The third reading of the energy economy bill is taking place. The bill addresses the establishment of an energy economy with a list of programs. The 2"d Annual New Energy Economy Conference is set for October 14. Fort Collins applied for energy efficiency program grants in conjunction with Latimer County and Fort Collins Housing Authority. Utilities will pay for any Board members desiring to attend the conference. Other Business Meeting Schedule: The December meeting will be held as scheduled. Fall Lighting Events: Community members will receive a postcard in October promoting compact fluorescent light bulb (CFL) and LED turn -in events. RECs Article: Chairperson Morris distributed an article illustrating the value of RECs in some cases. Board Member Graham emphasized a fluent understanding of the topic is needed so staff can appropriately respond to citizen inquiries about RECs. He would like the intended agenda moved forward by staff. A formal motion was made at last week's Council meeting asking the City Manager to study transitioning the Electric Board to an Energy Board. Future Agenda Items Board members were asked to submit agenda items for the next three meetings to Robin Pierce and Chairperson Morris. Board members also were to review the 2008 Work Plan to use in developing the 2009 Work Plan (on the October meeting agenda). Adiournment The meeting was adjourned at 8:16 p.m., following a motion to adjourn by Vice Chairperson Bihn. Submitted by Robin Pierce, Executive Administrative Assistant Fort Collins Utilities Approved by the Board on Otl_�D IU)f 15 2008 Signed 91.1. 'I. _' I. Robinbate,