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HomeMy WebLinkAboutElectric Board - Minutes - 05/21/2008Fort Collins Utilities Electric Board Minutes Wednesday, May 21, 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, Jeff Lebesch, John Graham, John Harris and Tom Barnish Board Absent Steve Wolley Staff Present Brian Janonis, Norm Weaver, Steve Catanach, Ellen Switzer, Lucinda Smith, Terri Bryant, John Phelan, Sharon Held, Tom Rock, Bill Switzer, Eric Dahlgren, Patty Bigner, Carrie Daggett, Robin Pierce and Olivia Brown Guest John Bleem from Platte River Power Authority Meeting Convened Chairperson John Morris called the meeting to order at 5:35 p.m. Brian Janonis, Utilities Executive Director, introduced Steve Catanach, the new Light and Power Operations Manager. Mr. Catanach spoke briefly about his background in electric utilities in Longmont, Las Cruces and Flagstaff. He is pleased to work for Fort Collins Utilities because it has the reputation of being a well run utility. The statistics on reliability, operations and financial health of the utility are a complement to this utility and the Electric Board. Citizen Participation None Minutes of April 16, 2008 Vice Chairperson Dan Bihn motioned to approve the minutes from the April 16, 2008, meeting. Board Member Jeff Lebesch seconded the motion, and it passed unanimously. Climate Task Force Recommendations Mr. Janonis provided information regarding the Climate Task Force (CTF) recommendations and expectations for the Electric Board. On May 20, City Council approved adoption of the goal to reduce greenhouse gasses 20 percent by 2020 and 80 percent by 2050, with an interim checkpoint in 2012, all in alignment with the state's policy. At the end of May, the CTF recommendations for reaching the goal will be distributed to staff to review before the July 22 Council work session. Staff and board members will have approximately two months to analyze the CTF recommendations related to the Utilities and provide suggestions and comments specifically related to the impact they may have on Utilities. The City Manager, Mayor and City Council expressed the importance of a thorough review and complete comments from the Electric Board for them to consider in the Council package that will be issued the week prior to July 22. Norm Weaver explained that he and John Phelan, both Energy Services Engineers, are representatives of the Utilities on the CTF. Board Members Jeff Lebesch and Steve Wolley also are members, as well as John Bleem who represents PRPA. As Mr. Janonis said, City Council passed a new greenhouse gas goal and developed a schedule for the City to review and begin taking action this fall. Mr. Weaver used a graph to display the 2008 greenhouse gas levels and projections to 2020 based on business as usual or the changes proposed by the CTF. The City will need to produce 500,000 tons less of carbon than the business -as -usual scenario by 2012 to meet the interim goal. The measures the CTF evaluated roughly equal this 500,000 ton value. Between 2012 and 2020, the City will have to reduce carbon emissions by an additional 500,000 tons in order to reach the 2020 goal, so the CTF recommendations as they stand, take us halfway there. The CTF recommendations emphasize waste reduction, recycling, efficiency measures, and renewable energy, including a continued purchase of RECs. The CTF suggested a sequence of events for implementing their recommendations so that unlike the 1999 policy, the City does not find in a few years that they are not on track to meet the goals in the proposed time frame. Mr. Weaver directed the board to look at a table that lists the CTF measures which are most pertinent to the electric board. In the electric arena the focus is going to be on rates, smart metering, some home energy audits, increasing efficiency and Demand Side Management (DSM) programs and increasing the purchase of renewables as well as. the idea of some funding for local renewable projects. The accelerated renewables strategy is 21 percent of the overall suggested package of new measures proposed by the CTF. All of the energy measures together comprise 30 percent of the overall CTF package, so energy is a cornerstone of the CTF strategies. Based on the assessment the CTF undertook, conservation and efficiency related activities continue to be highly cost effective. The CTF also focused on accelerating renewable energy purchases. There will be some overlap with energy policy from the CTF recommendations for various community programs such as Climate Wise. The CTF, Brendle Group and Utilities, have completed a cursory analysis of the cost and potential of the recommendations. The challenge now is to translate the assessments into actions. For example, smart meters entail a range of options and costs, and there also may be some interdependency between rates and metering. There are major implications in the recommendations by the CTF, so a more detailed analysis must occur in order to go forward. Vice Chairperson Bihn said he would like Utilities staff to be allowed the flexibility to achieve the CTF goals while keeping the rates as low as possible. Board Member Graham asked if the Utilities can achieve these measures with current staffing. Mr. Janonis said having sufficient staffing is already a great concern, even without implementing any of the CTF measures. Mr. Weaver said operation and maintenance costs for the CTF recommendations were included in the preliminary assessment of costs, but there are some rate impacts implied with many of these proposals. Board Member Barnish said the Utilities could opt to raise rates to fund their measures, but many of the CTF recommendations are not related to electrical energy. He thinks all funding sources for this initiative should be tied together through one funding mechanism, like a tax. That would allow citizens more of a say in funding these measures than simply raising utility rates. He expressed concern that utility rates would be raised to fund other non -utility measures proposed by the CTF. Mr. Janonis said the City Manager expects a complete rate impact analysis of these items so Council is fully informed of the impact on rates. Board Member Lebesch explained much of the investment is in efficiency and that reduces consumption, even as rates may go up. It is expected that while rates will go up, most customers' bills will not. Mr. Weaver said when the tiered rates analysis was completed, it was revenue neutral. Consumers on the high end of consumption would feel the impact of a tiered rate increase. Mr. Janonis said the rate analysis is complicated because depending on the implementation of some of these measures, costs may shift from residential to commercial customers or vice versa. Board Member Graham said it would be interesting if the rate analysis determines Fort Collins Utilities' rates get near the price of Xcel rates. Board Member Bamish said Xcel rates are higher because Xcel's system is completely different than a municipal utility. They have rural, agricultural, suburban and urban customers, so their rates are higher than ours. He said he does believe they will be able to integrate renewables far cheaper than Fort Collins will. As Fort Collins approaches 15 percent renewable energy, our rates will get closer to Xcel's. Chairperson Morris said maybe staying under Xcel's rates should not be one of our constraints. Council has approved adoption of this goal, and it will be difficult to achieve the goal without increasing rates. Board Member Barnish said the CTF recommendations coincide greatly with the Energy Policy and proposed that, with some work, the Utilities would automatically achieve some of these measures. Mr. Janonis said alignment between the CTF and the Energy Policy has been one of his concerns, and the City Manager and Mayor expect the two to align closely. Patty Bigner, Utilities Customer Service and Employee Relations Manager, provided copies of the draft Energy Policy update. She said the policy has some fairly significant changes in the update, specifically shifting the language from energy consumption to a carbon framework. Vice Chairperson Bihn said he believes the policy is very consistent with the greenhouse gas goal that Council has adopted. However, he appreciates the language in the policy related to local economic vitality and reducing base -load generation, which are broader issues than just carbon reduction. He likes the CTF measures that invest in efficiency rather than renewable energy, because they reduce the need for PRPA to increase base load, are more cost effective and support local economic vitality. Board Member Lebesch agreed that investing in efficiency is great for the community, but the CTF was tasked with reducing carbon by a certain date, which is reflected in the overall recommendation package. Board Member Barnish said if Fort Collins gets a new plant the size of Anheuser-Busch, that it would seriously affect the ability to achieve these goals. Board Member Lebesch said the community has adopted this goal, and there are no exceptions built in to accommodate growth. Chairperson Morris said it will be a matter of balancing growth, which helps local economic vitality, and reducing energy consumption in new building through various incentives. Board Member Barnish said the Electric Board will discuss issues affecting the electric supply if the CTF measures are implemented, for example, reliability standards for electricity that have federal implications. If a lot of renewables that are intermittent in nature are put on the system, it does affect the reliability of the system. A certain percentage of those renewables must be dispatchable. Board Member Lebesch said he, personally, was in favor of more RECs and less actual wind to meet the carbon goal. RECs do not impact rates as severely as actual wind energy, and they will allow the Utilities more room to find funding to work on energy efficiency that will prevent the need for increased base load and keep money in the community. Board Member Barnish said a REC actually becomes a dispatchable unit because it is just an attribute that can be applied to a dispatchable unit. Vice Chairperson Bihn said he believes the Utilities should start looking at carbon offsets that meet international standards for accounting rather than RECs. He believes they would be cheaper and the additionality issue that has come up in the community would be better addressed. Board Member Lebesch said he is not opposed to the idea of carbon credits rather than renewable energy credits. The CTF is recommending 15 percent renewable energy by 2011, which would be 60 percent RECs and 40 percent actual new wind. That 60:40 ratio mirrors PRPA's projection for 2010. Vice Chairperson Bihn said he believes the accounting method used for measuring carbon emissions reduction by RECs is invalid. His concern is additionality that questions whether additional renewable energy generation would have been created if RECs had not been invested in. John Bleem said he believes the accounting for RECs is accurate because every REC bought represents a megawatt hour that has been generated from a renewable source and we know how many tons of carbon were saved. He believes the issue of additionality must be a separate issue or requirement from carbon mitigation. Board Member Graham asked Vice Chairperson Bihn if he would recommend a change to the accounting method of RECs, but Vice Chairperson Bihn said he foresees a change in the way carbon is counted and regulated in the near future. He would prefer to put more money into energy efficiency than RECs at this time. Board Member Lebesch, speaking for the CTF, said they believe PRPA's method of accounting for carbon is accurate, at least in the short term. Carbon accounting and RECs may change in a few years, but we cannot act on that. We have to act on and comment on this proposal. Board Member Graham asked if the CTF considered the issue of additionality with RECs. Mr. Weaver said there was general agreement on the CTF that RECs were legitimate, that additionality was not that critical to them, and that's why this particular recommendation related to increased renewables and RECs went forward. The CTF was initially looking at a very near term goal, 2010, so the overall package of measures includes the emphasis on RECs because they are easier to put into place quickly than many of the other recommendations. Even after the notion of a longer term goal came into the picture, RECs have stayed in the package because efficiency programs, while cost effective, take time to implement. Mr. Phelan said it is quite possible that all these measures will be necessary to reach the carbon goals. The idea that we should do this and not this may not be an option. Many changes will occur rapidly in the next few years. He added that attempts were made to acknowledge the uncertainty in the methodology, specifically in the Energy Policy. If plug-in hydro -electric vehicles become a strong reality in this time frame, for example, there will be trade-offs between the transportation sector and the electric sector. RECs and renewables will have similar issues. Part of the policy will be keeping up-to-date with these methodologies and figuring them out as we go along. Chairperson Morris asked what Utilities staff should prepare for the Electric Board to effectively analyze and comment on the CTF recommendations for the next meeting. Mr. Janonis said staff will try to prepare a preliminary rate impact analysis. Board Member Graham requested staff to report on the impact on reliability these measures may have. Mr. Catanach explained that part of what adds to the cost is maintaining reliability. He said there would likely be an unwillingness to sacrifice reliability. Chairperson Morris said if we are going to be more aggressive to reduce carbon and increase electric rates specifically for incentive programs that reduce our carbon footprint related to electric usage, it stays with Utilities. That increase would help fund energy -efficiency programs and might increase staffing levels. He asked what if we apply a surcharge? And said we should beat everyone to the punch and create a carbon tax in Fort Collins. We could charge a $20 per ton carbon tax or about 2 cents/kWh of electricity. Board Member Graham asked how a carbon tax is different from a rate increase. A carbon tax means each individual or household gets taxed based on the amount of carbon they use. The only thing Utilities can measure is electric use, so therefore it is just a rate increase. Carrie Daggett, Deputy City Attorney, cautioned the board to pay close attention to terminology when talking about a tax verses a rate increase or surcharge. They are very different. A surcharge would be a portion of the rate that you would charge customers, whereas a tax would be a general levy of money collected for a purpose not necessarily related to the people who are paying the tax. Board Member Bamish suggested calling it a carbon penalty so the people who are causing more carbon emissions get more heavily penalized. Chairperson Morris said everyone who lives in the community and uses electricity is contributing to the carbon footprint. Board Member Graham said instead of billing everyone a specific amount, they could be billed according to their usage. Board Member Bamish said he cannot support a rate increase that will penalize average or low-income customers. Board Member Morris said not to eliminate any ideas at this brainstorming stage, not even an across the board rate increase. Vice Chairperson Bihn asked if all these CTF measures must be implemented at the proportions proposed. For example, residential home energy assessments look very cost effective but only account for .5 percent of the new measures. Mr. Phelan explained there are implementation barriers to that program. The Utilities cannot do home improvement on 35,000 homes in three years. Vice Chairperson Bihn said he is concerned with the investment sequence of some of these measures. Board Member Graham said the numbers in the recommendations are not arbitrary. As Mr. Weaver and Mr. Phelan pointed out earlier, all of the recommendations may need to be implemented in order to meet the goal. Vice Chairperson Bihn pointed out that the CTF was originally looking at 2010 and now the interim checkpoint is 2012. Board Member Lebesch said that was discussed by the CTF. The goal is 20 percent reduction of greenhouse gasses by 2020, based on 2005 levels. This goal is in line with the statewide goal, and was chosen by the Governor's Energy Office based on scientific evidence that reduction is needed to turn the corner with climate change. Some entities, particularly the Fort Collins Sustainability Group, do not like the new goal of 20 percent by 2020. So an addendum was passed by Council to reach the original 2010 goal by 2012. Vice Chairperson Bihn asked if we still need to implement all these CTF recommendations to achieve the goal, given the change in time frame. Lucinda Smith, Senior Environmental Planner with Natural Resources, said the measures before the board tonight are based on the original calculations needed to reach the goal by 2010. They are consulting with the Brendle Group, who did the original analysis, to see if any adjustments can be made considering the change to the 2012 timeframe. Mr. Janonis said Utilities and the board should do their review and analysis based on the final version that goes to the City Manager's SIT (Strategic Issues Team). Board Member Bamish said some of the measures proposed, such as smart metering, might take more than a few years to fully implement. Every issue will be considered, but some might not be implemented in the time frame expected. Mr. Janonis agreed, saying that smart meter technology is evolving, but it is coming to Fort Collins. The $6.3 million grant for FortZED will be focused on smart grid and smart metering. Chairperson Morris said smart metering is just one part of the portfolio. It might not be implemented citywide but getting a portion completed for FortZED may allow it to expand. Mr. Janonis said Council may dictate what Utilities must do, for example, smart meters and tiered rates. Council may also dictate the Energy Policy. He thinks it would be in everyone's best interest in reaching those carbon goals to have the flexibility to change as technology changes. Based on the notes he took during the meeting, the Electric Board would like staff to research and report next month on the following: • rate impacts; • reliability; • carbon penalties; • options to reduce carbon based on what we know today; and • technology and investment sequences associated with time frames. Chairperson Morris said the Electric Board may have some suggestions but will not tell staff exactly how to achieve the carbon goals. Maybe the CTF says 22 percent of the measures should be related to efficiency, and staff says they can get the 22 percent efficiency but maybe not with exactly the same measures the CTF proposes. As long as the Utilities staff achieves the goal, he doesn't think the CTF will disagree. Enerey SUDPIy Policy Update Mr. Phelan, who drafted much of the update, offered a suggestion. Considering the agenda for the next two meetings, it is unlikely the board will have time to dedicate to the Energy Policy update. Now that everyone has a draft, they can review it offline and bring targeted questions and comments rather than spend time reviewing it during the meetings. Chairperson Morris agreed that the Energy Policy update should be postponed until the CTF recommendations are resolved. Board Member Barnish commented that the per capita use and demand based on residential, commercial and industrial loads are applied to the population in the draft policy. Essentially the entire load of the system is applied to the population, which is just residential. Instead of a per capita demand increase and per capita energy usage, he suggested they be broken into what is attributable to industrial increases, commercial increases and residential increases, rather than applying it all to population. He suggested showing the increases related by sector not per capita. Also, the rate comparison to Xcel is misleading as they have a different system than we do. Finally, there should be some sort of dispatchable standard with the renewable portfolio so that not all of the 15 percent is intermittent but some of it should be dispatchable to ensure reliability. Routine updates None reported. Other business Ms. Bigner said the Utilities will soon be rolling out a new program for home -improvement rebates, called the Home Performance with ENERGY STAR Program. This program entails a matching grant program with the GEO. Energy Services staff also are completing a contract for an air conditioning tune-up program. Mr. Janonis announced the results of the Utilities Employee Energy Challenge to reduce energy consumption in the building. The goal is 10 percent reduction per month. In April, staff reduced consumption 11.46 percent, and the Water Meter Shop employees reduced their consumption 16.8 percent. Future agenda items Send them to Robin Pierce. Adiourn The meeting was adjourned at 7:34 p.m., following a motion by Vice Chairperson Bihn. Olivia Brown, Electric Board Secretary