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HomeMy WebLinkAboutElectric Board - Minutes - 05/04/2011Electric Board Meeting Minutes May 4, 2011 1 Fort Collins Utilities Electric Board Minutes Wednesday, May 4, 2011 Electric Board Chairperson City Council Liaison Steve Wolley, 288-0317 Lisa Poppaw, 223-4136 Electric Board Vice Chairperson Staff Liaison Edward DeCourcey, 206-9996 Brian Janonis, 221-6702 Roll Call Board Present Chairperson Steve Wolley, Vice Chairperson Ed DeCourcey, Board Members Peggy Plate, John Graham, John Harris, and Steve Yurash Board Absent Board Member Tom Barnish Staff Present Brian Janonis, Steve Catanach, Patty Bigner, Bill Switzer, Jenny Lopez- Filkins, Robin Pierce, and Harriet Davis Guests Scott Burnham and Dave Berg, R.W. Beck Inc.; Rick Coen, Eric Sutherland Meeting Convened Chairperson Wolley called the meeting to order at 5:31 p.m. Public Comment Eric Sutherland expressed concern about the Colorado Open Records Act. He submitted an open records request for materials relating to Smart Metering/Automated Metering Infrastructure (AMI) and stated that public records were withheld from him. He feels that City Council is making erroneous decisions concerning the smart metering program and tiered rate structures, and the City is paying large sums of money to outside consultants who do not understand the issues. He believes information about the program is being withheld from citizens. Approval of April 6, 2011, Minutes Vice Chairperson DeCourcey questioned a statement on Page 2 of the minutes concerning the Platte River Power Authority Draft Integrated Resource Plan: “Purchases will depend on direction from the cities. All cities are buying more renewable resources than they need due to city policies.” After discussion with staff and board members, the statement was clarified and left in the minutes as written. Vice Chairperson DeCourcey questioned a statement on Page 4 of the minutes concerning Rate Design Philosophy and Principles: “Is high reliability based on customers’ or Utilities’ definition?” A sentence will be added stating the consultant verified principles are based on customers’ expectations. Board Member Yurash questioned a statement on page 4 of the minutes concerning Rate Design Philosophy and Principles: “What is the life cycle projection of our initial cable?” Electric Board Meeting Minutes May 4, 2011 2 Board Member Graham suggested the answer read as follows: “Thirty years ago, before the manufacturers had the diagnostics we have today, they estimated the cables would have another 10-15 years of life depending on conditions. However, we now know the cables have a longer life expectancy.” Board Member Yurash and Light and Power Operations Manager Steve Catanach stated that “Sensus” should be changed to “Elster” on page 7 of the minutes (Smart Meter Fort Collins Vendor Selections). Board Member Yurash moved to approve the minutes of the April 6, 2011, minutes as amended. Board Member Graham seconded the motion, and it passed unanimously. Rate Forms (Presentation available upon request) Customer and Employee Relations Manager Patty Bigner introduced Scott Burnham and Dave Berg, R.W. Beck, Inc. Mr. Burnham and Mr. Berg presented information on the financial strategy for electric rate options. Introduction/Purpose: The purpose of the presentation was to present preliminary electric rate options based on Utilities Financial Strategy and Rate Design Philosophy. Utilities Strategy: Financial strategy and rate design philosophy must reflect your existing strategic direction, vision, and values. Philosophy: Core Principles: The core principles were ranked based on meetings with Utilities staff and input from the Electric Board. The top principle is the highest priority. 1. Comply with Council policy. 2. Be founded on sound economic principles. 3. Promote the efficient use of resources. 4. Maintain the high value of utility services. 5. Demonstrate fairness and equitability. 6. Engage stakeholders with honest transparency. 7. Institute change in rate structure through gradualism. 8. In alignment with Plan Fort Collins, growth pays its own way. Board members were asked for their input on the ranking. Core Principles and Rate Options: Mr. Burnham explained the process for applying the core principles to various rate options. Light and Power—Rate Objectives: Mr. Burnham introduced the topic of rate objectives. More detailed information is provided in the presentation handout. Electric Board Meeting Minutes May 4, 2011 3 Objective: Rate design that supports customer options brought about by the changing energy industry while preserving the financial integrity of the Utility. Financial integrity is the top priority behind complying with laws. Risk Types—Fort Collins Rate Options: Mr. Burnham introduced the topic of rate options. More detailed information is provided in the presentation handout. Risk allocation is part of the “balancing” of core principles. Principles and Risk—Discussion: The Executive Management Team will do further work with the consultants on the Principles and Risk matrix to identify impacts for various scenarios. Monthly Coincident Peak (CP) Demand—Total System: There are significant fluctuations between summer and winter demand. Summer and winter peaks are close to the same for the residential class. Seasonal differences are not as significant for non-residential customers. The peaks are “gentler.” Their demands are not as driven by temperature. Monthly CP Demand—Residential: The shape of the monthly peak demand curve for residents is similar to the shape of the entire system. The winter peaks are as high as the summer peaks. Monthly CP Demand—Non-Residential: The same spike is not seen for non-residential services. As noted above, the seasonal difference is not as pronounced as that seen in residential services. For businesses, usage is not driven by the temperature. Monthly CP Demand—Total: The more variation is seen, the more ability the customer has to make adjustments to their usage. Overarching Rate Strategy: Mr. Burnham introduced the topic of overarching rate strategy. More detailed information is provided in the presentation handout. As sales vary, revenue varies. Other than fuel prices, very little is variable. Many fixed costs are involved. Options for residential rate options under consideration were presented. The full energy charge is the sum total of Demand Charge, Distribution Charge, and Energy Charge. The Energy Charge is the same for both Residential and Residential Demand classes. Residential customers are not used to receiving a pricing signal from us on electricity. The goal of staff is to arrive at some type of Time of Use (TOU) pricing. Electric Board Meeting Minutes May 4, 2011 4 Utilities must have communication with customers. The time period of the day is set and there is always a limit set on the number of days. In days ahead of the peak, warnings should be given to customers. Schedule of Events: • Review of Philosophy Document May 4 – Executive Management Team Review (Utilities Risk Strategy Session) May 10 – Council Presentation • Review of Specific Rate Design Options May 4 – Electric Board Presentation June 14 – Council Presentation Board discussion: Do you have a separate rate class for customers with air-conditioning? There is no separate rate class for customers with air-conditioning. What accounts for the winter peak in the non-electric heat residential category? Heating system fans, lighting, and indoor activity account for the winter peak. Are there other breakouts that are useful to see for municipalities? Climate is a major factor, as is the availability of natural gas. There is no “normal”. Electronic usage is also a factor (such as the popularity of plasma televisions). The usage profile is changing due to more electronic equipment in homes. Why is the energy rate the same? There is always a balance in rate design, and there can be competing objectives. Residential rate does not have a peak charge (coincident peak). Is this plan hypothetical? At this point, the phased-in approach is designed to be illustrative of the philosophy and serve only as a proposal. Is there a specific reason why there are five increments? This is part of the gradualism concept. Utilities did not want to jump directly from Phase 1 to Phase 5 without progressive steps between phases. Utilities Executive Director Brian Janonis stated that part of the gradualism approach is based upon an annual rate change with each new budget cycle, so with five phases, it would take five years to arrive. Consultants verified that the five phase chart does not have to be applied annually. It is important to find the right balance to being gradual. The concept of gradualism can be taken to the extreme. This phase represents a balancing act. Is the goal from staff to get to Phase 5? At this time, staff supports time-of-use as a potential end state. This has not been discussed with Council and no public outreach has been conducted. Asking people to remember too many things can be difficult. Some things are easy to remember, such as the concept that electricity is more expensive in the summer and that dishwashers should be run in the evening. The differentials are too small. We will not receive a response. The shorter the peak periods, the higher the rate will be. Electric Board Meeting Minutes May 4, 2011 5 What kind of data can you show us? Many customers have responded to rate changes by going to more efficient appliances. Fort Collins’ rates are relatively inexpensive compared with other municipalities. The analogy of tiered water rates was shared. For example, per capita usage has decreased and consumption has decreased. Can the risk of the rate change be measured? Staff is developing a risk matrix to help with this question. How comfortable is leadership going ahead with rate design changes without the data? We do not have the data on the electric side for our customers right now. Changing rate forms means a cautious approach due to factors such as customer behavior, change in revenue, etc. Light and Power Operations Manager Steve Catanach stated that the fourth step in the phase-in plan would occur after the AMI data is received and a years’ worth of data is gathered. Utilities would like to test sensitivity pricing, and they can do that best with AMI technology. Do you intend to get data from other municipalities? Mr. Catanach stated that there are other cities that have data, and typically, the other cities want Utilities to purchase the data. Currently, 15 minute data can be obtained from Longmont. Load factor must be considered when discussing an “average bill”. You can affect usage too much and affect fixed costs. A lot of utilities have faced similar challenges. This risk management is supported by fixed cost recovery. Board members may not have as much knowledge on rate structure. We would like to see what an average bill is. How much does the distribution charge change in the high months versus the low months? Load factor is a measurement in ratio to the amount of energy use versus demand. This rate structure is intended to impact customer behavior. All rate schedules have an economic message to the customer. Consultants were encouraged to present this information to Council in graphical format to clearly show typical customers versus a range of customers. What do “outlier” customers look like and how much is their bill going to change? Council needs to know this information. What are the options for rate structure types? There has been no discussion on types of rate structures. Is the board looking for different rate forms with their advantages and disadvantages? The board has a responsibility to assist the Council with different choices of rates. What are the goals and recommendations? Are there any presentations on tiered rates and the pros and cons? Do they meet philosophical objectives? Is the goal on fixed cost recovery or to go to a flat fixed cost? These questions will be addressed in future presentations. Electric Board Meeting Minutes May 4, 2011 6 It would be beneficial to give Council detail on the structure of our process going forward on May 10, along with the rate design philosophy and principles coverage. We need to talk to Council about postponing the presentation on June 14, 2011. The material should be presented again to the June 1 Electric Board meeting. Would it be beneficial to have subcommittees to discuss the rate options? Utilities missed the target tonight. We expected to see each rate option with the pros and cons. Appropriation Request for Relocation of Utilities in Mason Corridor Mr. Catanach presented this information. The proposed ordinance appropriates capital project funding for the Utilities to relocate existing electric facilities to accommodate the BRT (Bus Rapid Transit)/Mason Corridor Project. Light and Power will also supply power to the stations. Since Light and Power will be upgrading and enlarging the existing facilities in addition to relocating the duct bank, only fifty percent of these costs will be reimbursed by Federal funds. The remaining costs have been budgeted in the existing 2011 lapsing appropriation. The ordinance transfers $400,000 of the existing budget into the new BRT electric relocation capital project. Board discussion: Is duct bank work contracted out? No, Light and Power staff will be installing the duct bank. How much duct bank is being relocated? The area between Drake Road and Prospect Road is being relocated. Minor Amendments to the Electric Article of the City Code and Interconnection Standards Mr. Catanach presented this information. The Fort Collins Utilities Light and Power Department (L&P) is proposing minor updates to the Electric Article of the City code. These revisions are primarily definitional in nature, reference items 1 and 2 below. 1. Title revision and appointment: General Manager of Utility Services or General Manager shall mean Utilities Executive Director or appointed designee of such Executive Director. Sec 26-391. “Definitions.” 2. Clarifying that “Net metering service” is available exclusively for a qualifying facility “using a qualifying renewable technology.” Sections 26: 391, 465, 466, 467, 468. The proposed changes to the code include providing clear definition that, where referenced, the General Manager shall be recognized as the Utilities Executive Director or his designee. The intent is to help clarify some confusion with the code. Motion: Board Member Yurash moved that the Electric Board recommend that the City Council approve the proposed appropriation ordinance to fund electric additions and relocations in the BRT/Mason Corridor. Vice Chairperson DeCourcey seconded the motion. It passed unanimously. Electric Board Meeting Minutes May 4, 2011 7 The other proposed change provides clarification that a qualifying resource, where used in the net metering rate code, is in reference to qualifying renewable technologies. This insures that the intent of the net metering code is clearly defined. Board discussion: Because of the Renewable and Distributed Systems Integration (RDSI) project, Colorado State University (CSU) is generating so much electricity that their equipment creates a spike. Someone else claims damage from the spike and they would in turn attempt litigation against the City of Fort Collins Utilities. The agreement was written to make CSU responsible for any damage caused by the spike. Mr. Catanach stated that CSU is protected by the state constitution and cannot provide indemnification to other entities. To address the concerns, the interconnection requirements and the system protections installed by Utilities are designed to protect Utilities from any type of damage such as spikes. Should those protections fail, Utilities would work cooperatively with CSU. If a cooperative solution could not be found, the next step would be litigation. What did you have in place before? There was an Interconnection Agreement that was adopted previously. Utilities fell back on the old agreement to move the project forward with CSU. The existing agreement does not require CSU to indemnify the City. Board Member Yurash stated that he initiated the discussion because he is trying to understand the proposed changes and was curious where the risk was pointed to now. Routine Updates PRPA (Utilities Executive Director Brian Janonis): Mr. Janonis gave an update on the Integrated Resource Plan. The majority of the last board meeting consisted of the formal public hearing on the plan. The only citizen comment was from Eric Sutherland addressing on-bill financing and some other individual city issues that Utilities is already working on. At the April Council meeting, thirty citizens spoke about on-bill financing. Has Utilities received any input from Council? There was a bill in the state legislature, HB11-1132, legalizing public utilities to provide on-bill financing for energy improvements. There is a question now about legality and the capability of Utilities to provide it. What is on-bill financing? On-bill financing is a loan program that links the loan to the meter instead of to the person. It is similar to the ZILCH (zero-interest) loan program. An individual could finance an improvement and pay it back on their electric bill. The proponents want someone who is a renter to have the ability to borrow the money for improvements even if the owner does not want to make improvements. The renter is concerned about the efficiency in the house, for example, and wants to make improvements. The city of Boulder had a similar program with Xcel Energy. It creates issues when the house is listed for sale. Motion: Board Member Graham moved that the Electric Board recommend that the City Council adopt by ordinance the proposed Minor Amendments to the Electric Article of the City Code and revisions to the Interconnection Standards. Board Member Harris seconded the motion. It passed unanimously. Electric Board Meeting Minutes May 4, 2011 8 Ms. Bigner stated there are the same legal issues as with the ZILCH loan program and Utilities has not looked at all the legal issues involved. Mr. Janonis stated that in the past, the ZILCH loan was secured with a lien on the property. In order to administer the program under new legislation, there must be a broker involved in the process. There is no certified loan officer on the Utilities staff. Utilities is relying on the customer to repay the ZILCH loans that are being executed because there are no liens involved. Assistant City Attorney Jenny Lopez-Filkins stated the requirement that the program be handled by a certified loan officer is a recent change, occurring within the last six months. American Public Power Association (APPA) has passed a resolution to support federal legislation that would get rid of legal obstacles to municipal-owned public utilities. Currently, there are a lot of legal obstacles. Ms. Bigner stated that Utilities supported a grant program put together by the Bank of Colorado and the Office of Housing and Urban Development (HUD) to provide financing in Fort Collins. It will not be Utilities financing on the bill. It is not free money? It would still be loans? Would it still be subsidized? Utilities is still working on the details of the program. Did it generate questions from Council requesting Utilities to look into the issues? Yes, questions were generated and Utilities is going to look into it in more depth. Capitol News (Vice Chairperson DeCourcey): Vice Chairperson DeCourcey reported on HB11-1145 concerning transmission line relocation. They are trying to streamline the process. The issues concerning relocation usually relate to electromagnetic field (EMF) issues. Vice Chairperson DeCourcey stated that California will require all of its utilities to source 30 percent of their overall electricity generation from renewable resources, like solar and wind, by 2015 or 2020. Ms. Bigner stated that Colorado Governor Hickenlooper is restructuring the Colorado Energy Office. Formerly known as the Office for Energy Management and Conservation, the office is being re-tasked for more of an economic development focus. Mr. Catanach gave an update on HB11-1115 concerning public entity construction retainage. This may affect the Automated Metering Infrastructure (AMI) project. Staff Reports Utilities Financial Operations Manager Ellen Switzer provided a monthly Financial Report that was included in the agenda packet. Vice Chairperson DeCourcey suggested that financial data be presented at the July or August board meeting for a six-month report. Vice Chairperson DeCourcey mentioned the variance for the March 2011 Capital Projects (Budget S29K, Actual S927K,,). This was a timing issue relevant to what month the projects would hit. Mr. Catanach stated that there is also significant change in the Percent Losses category. That is also due to a timing issue. Pablo Bauleo. Utilities Energy Services Specialist, is working on the issues. Other Business None Future Agenda Items None Open Items Trackin2 Vice Chairperson DeCourcey recommended moving the Open Items tracking document as a separate page on the agenda and not including it as part of the minutes. When the minutes are approved, then the tracking document is approved as well. For this reason. it should be separated. Utilities Administrative Services Supervisor Robin Pierce stated that the tracking document was originally created as a tool for the board members to populate. She noticed the two items from the content of the minutes and inserted these items into the tracking document for resolution. Vice Chairperson DeCourcey stated that he would like answers to the items on the tracking document if there are in fact open items. Ms. Bigner stated that she would address the items in the Open Items tracking document as applicable. Chairperson Wolley requested that “applications” be changed to “structures” in the first open item description. This item relates to the idea of tiered rate structures. He also proposed that someone from the board may want to list open items as the meetings progress. He feels this may be beneficial because it is the board’s responsibility as the “question askers” to list items needed for more clarification at future meetings. Adjournment The meeting was adjourned at 8:19 p.m. Submitted by Harriet Davis. Administrative Assistant, Fort Collins Utilities Approved by the Board on 2011 Signed Board Secretary Date Electric Board Meeting Minutes 9 May 4. 2011