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HomeMy WebLinkAboutElectric Board - Minutes - 06/18/2008Fort Collins Utilities Electric Board Minutes Wednesday, June 18, 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, John Graham, John Harris, Jeff Lebesch, Steve Wolley Board Absent Tom Barnish Staff Present Brian Janonis, John Phelan, Tom Rock, Norm Weaver, Bob Hover, Terri Bryant, Jenny Lopez Filkins, Ellen Switzer, Eric Dahlgren, Steve Catanach, Patty Bigner, Robin Pierce and Olivia Brown Guests Fred Kirsch with Fort Collins Community for Sustainable Energy and Eric Sutherland Meetine Convened Chairperson John Morris called the meeting to order at 5:35 p.m. Citizen Participation None Minutes of May 21, 2008 Vice Chairperson Dan Bihn motioned to approve the meeting minutes from the May 21, 2008, meeting. Board Member John Harris seconded the motion, and it passed unanimously. Proposed City Council Ordinance for Substation Transformers (Portner and Timberline) Recommendation Steve Catanach, Light and Power Operations Manager, asked the Electric Board for a recommendation regarding an ordinance that will go to Council on July 15 for an appropriations request to purchase transformers for the Timberline and Portner Substations. (Note: After the meeting, the agenda date was changed to July 1.) The request is for an appropriation of $4,017,604 from Light and Power Fund Reserves. The bids for the transformers at Portner were 33 percent higher than budgeted because of a significant increase recently in the cost of many materials such as copper and steel. The vendors are expecting the prices to continue to escalate, so the Utilities also is proposing to purchase the transformers for the Timberline Substation now. The Timberline transformers were not originally planned to be purchased until 2010. Board Member John Graham asked if the transformers start to depreciate when they are purchased or put in service. Ellen Switzer, Utilities Financial Operations Manager, confirmed they will not be depreciated until they are put in service. Chairperson Morris asked what impact this appropriation would have on the Utilities reserves. Mr. Catanach explained that the net impact on the reserves would be a reduction by the amount appropriated and the loss of any interest revenue that amount would have earned. Chairperson Morris asked for the balance of the reserves. Mr. Catanach said the reserves are approximately $50 million. Vice Chairperson Bihn asked if projected growth is the reason the transformers are requested. Bob Hover, Electric System Design and IT Manager with the Utilities, said the Portner substation is needed for the Southeast Annexation load. It also will allow the Utilities to transfer some of the load from the Harmony Substation to the Portner Substation. The Timberline Substation will allow the Utilities to transfer some of the load from the Harmony, Drake and Linden Substations and add capacity. The Timberline Substation also will provide an alternative source to the water treatment plant at Mulberry which would fulfill a federal requirement that such facilities have feeds from two different substations. Vice Chairperson Bihn asked if these transformers can be used at different substations. Mr. Hover said the Utilities have a standard design at all of its substations. If one were to fail, it is possible to move one, but it is very expensive and is not normally done. Vice Chairperson Bihn asked if the transformers are going to be stored for two years. Mr. Hover said the foundations will be put in, and they will be dressed out and energized. The cost for all that is included in the appropriation request. Board Member Lebesch asked if the transformers need to be energized even if they have no load on them. Mr. Catanach explained they must be filled with oil and energized to prevent moisture from entering; otherwise corrosion will break down the insulation in the lining. Mr. Hover also said the vendor will not honor the five-year warranty unless they are dressed out with oil. Board Member Harris moved to recommend the appropriation. Vice Chairperson Bihn seconded the motion. All members voted in favor except Steve Wolley, who abstained because he was not present during the majority of the discussion. Climate Task Force Action Plan Recommendation Brian Janonis, Utilities Executive Director, informed the Electric Board that the Climate Task Force (CTF) Recommendation that was originally scheduled to go to Council on July 26 has been moved to August 12, according to Council's six-month agenda planning calendar. The Electric Board will now have time at the July meeting to take formal action and make a recommendation in time for the August 12 Council session. Mr. Janonis advised the Board to postpone action until the July meeting, which will allow time to obtain more information from consultants. It also will allow time for the information to be presented to the City's Senior Management Team, which has not yet seen the final version of the CTF plan. Three Board members will be unable to attend the regularly scheduled meeting on July 16, so it was decided that the Electric Board meeting should be held on July 23 instead. Robin Pierce, Staff Liaison, will ensure that the change will be publicly posted. Patty Bigner, Customer and Employee Relations Manager, said the Utilities will take part in the majority of the recommendations, including the measures to expand Climate Wise, increase energy efficiency programs, change the residential rate structure, implement smart metering, low-cost home energy assessments, increase the purchase of renewables and local carbon offset program. Staff has been asked to look at cost, feasibility, rate impacts and impacts on low- income residents, which is of particular interest to the Board. The Utilities has a consultant who has been providing a third -party impartial review. Vice Chairperson Bihn asked if the consultants will offer policies that mitigate impacts to low-income residents. Ms. Bigner said she attended a national utility affordability conference yesterday in Denver where they discussed the impacts of utility cost increases and different initiatives to address them. She said staff will have more information, including the report from the consultants, at the July 23 meeting. Energy Policy Update Ms. Bigner introduced John Phelan, Energy Services Engineer, who drafted most of the proposed update of the Energy Policy. His presentation included the history and motivations of the current Energy Policy and the revisions that are currently under discussion. He also provided the 2007 Energy Policy update during his presentation, to show the Utilities progress on the Policy's goals in the past year. Finally, Mr. Phelan opened the discussion on the shift to a carbon framework for the Energy Policy. Mr. Phelan provided background about the original request from Council to the Electric Board to develop the Energy Policy in December 2001. Council included some specific expectations, including competitive rates, high system reliability, and emphasis on Demand Side Management (DSM) and wind power. The Policy was adopted in 2003 and staff has presented an annual report since that time on its implementation to the Electric Board. Between 1992 and 2007, the Utilities have seen an unsustainable growth pattern in electrical usage and peak demand. Fort Collins' population has increased 44 percent but energy usage has increased 75 percent and peak demand has increased 115 percent. There are more people, but they are using much more energy in a much more concentrated fashion. Board Member Graham asked why demand and use are growing faster than the population. Mr. Phelan said this trend is seen by utilities across the country. The average size of houses has grown substantially over time, and there are a lot more electronics in homes. In Fort Collins, a much higher saturation of air conditioning has occurred as well, and that affects demand tremendously. The 2007 Electric Board Work Plan included a goal to update the Policy. A subcommittee of the Electric Board has been working directly with staff, holding five formal meetings and numerous informal meetings. The group began by looking at current trends and then developed vision, goals, objectives and metrics for the new Policy. The subcommittee settled on three overall goals: reliability, community environmental footprint and economic vitality. It was a more structured process than the development of the first Policy, and it also represents a much closer collaboration between staff and the Electric Board. Mr. Phelan presented a side -by -side comparison of the current Policy and the proposed Policy as they relate to the visions, goals, objectives and metrics in each area. Woven into the presentation was the 2007 progress update. 2007 Reliability Highlights • Electric system reliability was 99.9965 percent (goal 99.9886 percent) • The average outage duration was 26 minutes (goal <60 min.) • On average, individual customers experienced 0.7 interruptions 2007 DSM Highlights • 8,200 megawatt -hours (MWh) annual energy savings from 2007 programs • DSM savings at 1.3 cents per kilowatt-hour (kWh) • 27,700 MWh cumulative annual energy savings (EE results 2002 through 2007) • 4.9 MWh annual peak demand savings (EE results 2002 through 2007) • 2007 per capita electric consumption was 4.8 percent higher than the 2002 baseline • 2007 per capita peak electric demand was 11.8 percent higher than the 2002 baseline 2007 Renewable Energy Purchased • Total Renewable Purchases = 93,000 MWh • Total Energy Purchases = 1,484,957 MWh • Renewable Energy = 6.3 percent of total sales 2007 Rates Highlights • No electric rate increases in 2007 In the lowest 4-16 percentile in the CAMU ranking of cost per 700 kWh Our electric rates are 22-38 percent lower than Xcel Mr. Phelan said one of the biggest changes between the current and proposed policies relates to renewables. The current Policy has a goal of 15 percent renewables by 2017, but the proposed Policy only calls for renewables to reach the City's carbon goal after the effects of efficiency, rates, the Renewable Portfolio Standard and voluntary renewable purchases have been factored. What would a shift to a carbon -based Energy Policy look like? The 2005 baseline was 1,250,000 tons of annual carbon emissions. The goal is to get 20 percent below that, or to 999,199 tons, in 2020. If the electric load was constant, Fort Collins Utilities would need to reduce annual carbon emissions by 250,000 tons in 2020, but if the growth that is currently in the City's load forecast is factored in, that goes up to 650,000 tons. In 2007, 87,810 tons of greenhouse gas emissions were avoided through a combination of the Utilities purchase of renewables, DSM programs and the refrigerator recycling program's destruction of CFC-11. Reaching the renewable energy goal in the current Energy Policy would put us a little less than half way to the City's carbon goal, so the Utilities will need to implement other strategies, such as pricing changes, rate restructuring, smart grid, education and awareness. There were some key times in the history of the Utilities that took some visionary thinking and risks. One was the formation of the municipal utility in 1935; another was the decision to underground all electric service in 1968. Now we have the 2I't Century Utility Initiative and the Electric Energy Policy in 2008 that could be equally visionary. Vice Chairperson Bihn suggested PRPA build a coal-fired boiler and steam generator near the Anheuser-Busch plant similar to a facility near the Coors plant in Golden. That co -generation system has efficiency near 55 percent compared to the 33 percent efficiency that PRPA delivers. Instead of adding a new coal generation plant at Rawhide, PRPA could be set up as a steam utility and sell Budweiser processed steam for half the price of natural gas. Such a project could contribute to the Energy Policy's goal of economic vitality, if the land around the Budweiser plant was developed into an industrial park where businesses would want to locate because of much lower cost energy and much lower carbon intensity. Board Member Graham said bringing in more industry would increase electricity consumption and carbon emissions. Vice Chairperson Bihn agreed, but said from a global perspective and from a system perspective it would be worth it. Mr. Phelan said from an engineering perspective Anheuser-Busch is a good candidate for co -generation because they have a high need of steam and electricity at the same time. There are not many facilities in town matching that profile. Chairperson Morris said the universities in the Rocky Mountain region have a very poor record of steam use because in the summer and during other swing seasons the load profile does not match the co -generation capacity, so again the energy is wasted. Board Member Harris said many co -generation systems have found that they have to keep supplying steam 24 hours a day but there was no market for power at night. Mr. Phelan said it may make sense to increase our electric footprint and reduce our transportation footprint through things like electric vehicles or plug in hybrids that could be charged at night. There is language in the proposed Energy Policy that tries to address these trade offs between sectors, but the methodology still needs to be developed. Board Member Graham said he used an appliance meter and noticed one of the biggest energy users in his home was the dryer. He suggested giving out clotheslines as a cheap way to cut down on energy consumption. He also suggested expansion of the Utilities' CFL lighting program. Mr. Phelan explained the Utilities has shifted from a fall promotion to a year-round promotion to try to increase the number of CFLs sold. Ms. Bigner said there are a couple of constraints on the residential lighting program. The amount of money spent promoting the CFLs track with the Utilities' rate classes, so there is a certain amount assigned to residential, commercial and industrial promotions. A couple years ago the Utilities realized it was difficult to quantify the savings we got from CFL sales because we could not track who was coming from surrounding towns to buy them. It was decided that Fort Collins Utilities would build a partnership with other Platte River cities on CFL promotions so that the energy savings would benefit everyone in PRPA's territory. At the same time, consumers started raising questions about CFL disposal, so staff has been working to educate customers. Mr. Phelan said federal regulations that will come into effect during the time frame of the proposed Energy Policy will start to eliminate some of the incandescent bulb availability, so CFL promotion will be less necessary at that point. Ms. Bigner asked for feedback from the Board about the proposed Policy and its presentation. Vice Chairperson Bihn said he would like to see a more dynamic vision statement that references the climate goal the City has adopted. Board Member Lebesch agreed. Board Member Wolley said he thinks the proposed vision statement is too long already. Vision statements should use short words that everyone can get behind. Board Member Graham asked if affordability is part of the vision or goals. Mr. Phelan said affordability is referenced in the economic vitality section, but it is not at the vision or goal level. Board Member Graham said he anticipates some customers interpreting this new policy as a license to spend freely and implement exotic technology. The Policy needs to convey an understanding that the Utilities has a fiduciary responsibility to use tax payers' money wisely while driving those goals. The Utilities has always been very proud that our rates are in the lower end of the CAMU scale. Chairperson Morris said the Utilities could reduce customers' bills in several ways but that would increase the City's carbon footprint. Board Member Lebesch said the proposed policy emphasizes affordable bills not rates, so using CAMU rates as a benchmark does not accurately measure that goal. Vice Chairperson Bihn said the Utilities' goal should be to reach the City's carbon goal in the most cost effective way. Ms. Bigner said comparing Fort Collins Utilities to its peers is one metric Council always uses to evaluate programs and projects brought forward. Chairperson Morris said another municipal utility with much higher rates could be investing heavily in conservation and reaching their carbon goals. How can we compare ourselves to that peer? Ms. Bigner suggested staff attempt to develop more than just one metric like rates for benchmarking affordability. Mr. Catanach said if energy usage is reduced through conservation and other measures, even though the cost of rates may go up, the bill may go down, so that is where the focus should be. Norm Weaver, Energy Services Engineer, said there are additional metrics than rates when trying to promote economic vitality. There might be a community that is investing heavily in technology and education programs and they may be on the high end of the rate scale, but they could be considered the best in class. Gas could cost $10 a gallon, but with a 200-mile-per-gallon car it would be OK. This is an opportunity to educate customers about broader goals than just cheap gas or electricity. Board Member Wolley said market research has shown our customers want the Utilities to focus on environmental issues. If it is important to our customers, we should establish metrics for the best in class and try to achieve those. Ms. Bigner said a benchmarking group has been established for that purpose. The leading -edge utilities are all going to be working on these issues. Mr. Janonis said the Electric Board is scheduled to make a suggestion to Council on the Energy Policy on September 17. The Energy Policy is on the agenda for the September 23 Council Work Session and Council is scheduled to take action on the Energy Policy on October 7. There will be presentations to other City Boards and public outreach meetings between now and then. Chairperson Morris thanked the subcommittee for their great work on crafting the next evolution of the Energy Policy and thanked the Board and staff for providing great discussion and feedback. Routine Updates PRPA — Dan Bihn There was no June meeting. Capital News — Steve Walley No report. Other Business Ms. Bigner announced Fort Collins was invited to present on our sustainable practices, including the Energy Policy, to the Colorado Municipal League's annual meeting. Norm Weaver will be presenting there before our Council Members and the other members of the Municipal League. Future Agenda Items Mr. Catanach said the PRPA Organic Contract and PRPA Energy Supply Agreement will be on the agenda next month. Adiournment The meeting was adjourned at 7:48 p.m. following a motion to adjourn by Vice Chairperson Bihn. YRAAce -Z" Olivia Brown, Electric Board Secretary