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HomeMy WebLinkAboutElectric Board - Minutes - 01/20/2009Fort Collins Utilities Electric Board Minutes Special Meeting Tuesday, January 20, 2009 Electric Board Chairperson Citv 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 Board Chairperson John Morris, Vice Chairperson Dan Bihn, *Tom Barnish, Steven Wolley, *John Harris and Steve Yurash Board Absent John Graham Staff Present Meagan Peil, Steve Catanach, Robin Pierce and Jenny Lopez-Filkins Guests Joe Wilson, John Bleem and Eric Sutherland Meeting Convened Chairperson John Morris called the meeting to order at 5:32 p.m. Public Comment Citizen Eric Sutherland would like to make a comment related to the last City Council meeting and the question that was asked of him, if he read the Energy policy and he has read the Energy Policy. Also, he has suggested that the City of Fort Collins Electric Board is not immediately concerned about the citizens of Fort Collins. It is irresponsible of City Council to have to sit through more of these issues without the consideration of the Electric Board and the PRPA contracts are not an exception. And the Board is not aware of the fact that our service area protection would be violated because the Council cannot overturn State Laws. Our future and national security are in the balance. Net Metering and Service Code- Formal Recommendations Light and Power Operations Manager Steve Catanach would like the Board to look at the net metering and code change with a formal recommendation. That would be in the form of a letter or memo from the board itself. This will rap up the last four months of our discussion of net metering and code change and Council needs guidance from the Board before work sessions and has asked specifics. These are difficult issues that they will need guidance for. Key discussion points for net metering are the purchase of annual excess energy from our customers for the retail rate and we establishing the net metering maximum as 1 MW; how the tariff rate will be used after the 1 MW generation. The service code language states clearly that PRPA and the City would recover all of its costs directly or indirectly; as we moved on with the discussion wanted to break the identifiable costs out and those are PILOTS (Payments in Lieu of Taxes), insurance and infrastructure. City Manager Darin Attebury has recommended adopting a waiver of the PILOTS for three years due to the possible impact on the general fund. Also, recommended is coming and reexamining the codes and PILOTS in three to five years. The concerns of insurance were that if a customer's facility could impact other customers negatively then the customer would be required insurance. Board recommendations were the Sunset provision, insurance, and the impact on our infrastructure and the costs to us for that. Should the payment be from the customer or utilities if there is an impact on our infrastructure? For example, you have twelve homes on a transformer and all of those customers put on a solar unit and hit maximum generation and that would overload our transformer. Who is responsible for the transformer upgrade? The recommendation from Council is to accept a certain limit we would pay for costs and then when the customer hits the limit then they would absorb the costs. Also, on the commercial side, we would ask the commercial customer to absorb the cost of the equipment. What is the standard for the state coverage or with Xcel regarding insurance coverage? Xcel energy did not have any mention of the insurance on their website but Austin did have a requirement for insurance. Do they even have insurance coverage for this through someone like State Farm? Not sure what kind of insurance coverage it is. We will look into it. Would that be home owner's insurance? Just as far as the liability issue of the unit and if something were to go wrong. The risk for residential is minimal compared the risk for the larger commercial systems could be. We There are houses on a cul de sac with a transformer at the end, three of those houses put solar panels on their houses and covers their demand, would that cause problems to the transformer? On a solar installation there would be very little affect on the transformer because they would not have the momentum feed into the system to affect voltage. However, a small wind turbine could because it has the momentum to feed into the system. What about the use of an electric generator? The generators are not a problem in most cases because the owner has to transfer the power with a transfer switch and generators do not operate in parallel with us. Large industrial arch welder with a computer company right next door and welder has caused issues with the computer company and their service, how do you handle that? There are rules and regulations that would require the customer to correct to any damage to our system. What if someone doesn't have a reduced voltage starter? Provision to require them to correct it and send the power back to us and it is usually after the fact. is there anyway to protect against this type of situation? There are expensive treatments that we would ask home owners to have and maintain. We are going with motor generators that parallel to our system. We are also developing a piece of switch gear that will fundamentally disconnect before something goes wrong. Service code change is geared to the third party generators which would be over a certain amount. Our goal is to address these issues in the code. Could we mention in the code that we have insurance but with lack of insurance will not relieve you of liability? This would be brought with the interconnections standards and the interconnection agreements. Recommendation would be to address the insurance in interconnection agreements. Where is the actual language of the code? We do not have the actual language because the intent was to go to Council for recommendation and then the recommendation of the Board and then proceed with the written language. We are not asking for an approval of the language we are asking you to give recommendations on how we would put the issues into the language and those issues are PILOTS, insurance and third party generators. Assistant City Attorney Jenny Lopez-Filkins has suggested that the PILOTS needs to be addressed in the service code change because of it being a financial issue. Also, PILOTS is mentioned in the interconnection agreement and infrastructure, insurance, and indemnity agreements will be in the interconnection agreement and not necessarily in the service code change. This would cover all bases in this type of situation. The Board would like to see more from the insurance side and what is being done throughout the state not just in Austin because if a homeowner sees the need for certain insurance than no one will put a solar unit on their residence. Are referring to certain code sections? These recommendations from the Board will go to Council, in turn Council will make their recommendations, the code is written and Council will then vote on the way it will be written. * Tom Barnish and John Harris excused themselves due to the association with PRPA (Platte River Power Authority) and will not vote on the amended contract agreements; they left at 7:02 p.m. Remaining members are Chairperson John Morris, Vice Chairperson Dan Bihn, Board Member Steve Yurash and Board Member Steven Wolley. PRPA (Platte River Power Authority) Agreements Organic Contract and the Energy Supply Contract Light and Power Operations Manager Steve Catanach brought the contracts in July 2008 to the Electric Board as an information item and now it has been found that the Board needs to recommend to Council to adopt the amended contracts with PRPA. Organic Contract is fundamentally the bylaw structure of Platte River and how it operates, structure and how they are run. This is a contract between all four cities and PRPA and not just the City of Fort Collins. The original contract was established in 1975 and then amended in 1998 and 1999. This contract must be approved by all four cities and that establishes the governing structure. The Board of Directors of PRPA is made of two members from each of the cities and the mayor is automatically placed in one of the positions and historically, the other position being filled by the Executive Director of Utilities. The amendments in 1998 added some additional functions to PRPA and Fort Collins contracted PRPA to house and maintain our Banner billing system and for Fort Collins to use the phone fiber system and PRPA has the right to contract that out also. The amendments that are proposed now are actually minor and it is adding renewable resources to the type of resources for electric energy that PRPA will provide to the City. This will add the development of products and services in support of efficiency improvements for generation, transmission and use of electrical energy to the list of services, functions and facilities that PRPA can provide to the cities. Also, the contract amendments would clarify the expiration dates of the terms of the appointed directors. There is no multiple term limit it is simply a date that those terms will be taken back to the governing bodies to reseat someone to the Board of Directors. Another amendment in the contract, the ability of the appointed directors to attend the meeting in a teleconference style and it would be considered attendance of the Board meetings. The current contract states the General Manager would be replaced by the Chairperson of the Board of Directors and this in the case of retirement or leaving and the contract would amend to give the Board of Directors the authority to appoint a new General Manager. Another amendment would extend the contract for another ten years and would expire December 31, 2050. The contract is generally brought every ten years and the goal being to keep the contract far enough out that the contract does not expire before the bonds due. The other contract that is in question is the contract for supply of power and energy with PRPA. This contract is confusing but it is the melding of two different contracts in this agreement. The facilities agreement with PRPA that designates responsibility for the substations, grounds keeping and maintenance and is a separate agreement that will now be a part of the contract for supply of power and energy. In addition to this, the contract will state that PRPA will be the sole provider of electrical energy to the City of Fort Collins and we will only purchase from PRPA. We are guaranteed customers of PRPA. In the existing contract it states it will not allow any internal generation but the proposed amendment will allow the City to develop one percent of the peak load. The new contract would give the City the ability to generate electricity to sustain their buildings. The one percent is only for the cities facilities use and is not referring to the generation for residential or citizen use. What if we put a wind generator on this building, is that what we are talking about? We could but we have other opportunities like hydro. What is the intent of developing the City its own renewable energy? It will open the door for us, for example the pickle plant and solar array that is considered art in public places but it will be generating electricity. /s there a way to make it clearer? Council now understands what it means in the contract and that it is a contract between the cities and PRPA not with citizens. As far as the facilities agreement portion, it is stating it will reduce the time period of four years to two years of notification for the replacement of a substation unless transmission is required then we would be required to continue with the four year notification. Also, this would allow each party would have access to the substations and license to occupy the substations. This will also cover that neither party will be in default of their obligations if they can not fulfill their obligations due to uncontrollable forces, i.e. forces of nature like a tornado knocking a line out. The term of the contract will also be extended and the goal of the extension is to have a contract in place to cover a loan. The PRPA are showing the bond persons that they have a source of income. Can the bond go past the termination date? Without the contract it will up the risk to the bond analyst and there should be a customer for the term for the loan. It would be very unlikely for the bond to go past the 2040 date, however, there could be a bond issue in the upcoming years and would the contract would cover that bond issue to 2050. This is the criteria for the bond ratings from the CFO (chief financial officer) of PRPA and what Moody's looks at for the issuance of a bond. There needs to be almost a complete monopoly for providing electricity energy, issue tax exempt, strong link with local government and there needs to be a market position for the bond. What about the parallel generation? What Poudre School District decided to go with Sun Edison and put in a 3 MW system? The contract would not be affected because the contract we are looking at is not about citizen generation but the generation between PRPA and the City. A 3 MW system would be in the service code language above the ] M W system thresholds because it would be third party generation. However, it would affect the infrastructure and would really need to be looked at before putting that kind of system in to play. There would also be a different buy/sell agreement and the costs would affect all the parties. This would also be with the PRPA tariff 3 and other costs with the ancillary costs. We would work with someone with a generator this type of system. How would you collect on a tariff? That would be in the buy/sell agreement and that would be in the retail rate agreement. If they would generate we would purchase at the retail rate. The buy/sell agreement would be covering all the costs. We have no experience with an actual situation but we do have this in place to cover if we do have renewable resources like another generation system. Motion of the Electric Board is to recommend to City Council the adoption of contracts with amendments. Motion passed unanimously. Adjournment The meeting was adjourned at 8:15 pm following a motion to adjourn by Board Member Yurash. Submitted by Meagan Peil, Electric Board Secretary Fort Collins Utilities Approved by the Board on 7 2009 Signed -Q Meagan Peil Date