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HomeMy WebLinkAbout2009 - Electric Board - Annual Report- 1 - Fort Collins Electric Board 2009 Annual Report The following is a summary of the 2009 activities of the Fort Collins Electric Board. Electric Board Members John Morris – Chair Steve Yurash – Vice Chair Tom Barnish Dan Bihn John Graham John Harris Steve Wolley 2003 Energy Supply Policy In 2008, the Board continued to focus on implementation activities associated with the Energy Supply Policy adopted by City Council in 2003. Discussions related to the Energy Supply Policy included: • Electrical Equipment and Electric System Reliability – It is clear that staff has a true commitment to equipment reliability and employee safety. Again, as in previous years, the overall reliability of the electric systems remains high with the average availability index (ASAI) at about 99.9981% (a historic high) and the average interruption frequency index (SAIFI) at under 0.27 interruptions per customer. These indices exceed the goals of 99.9886% or higher availability and less than 1.0 interruption per customer per year. The average customer outage duration index (CAIDI) duration was 10 minutes, exceeding the goal of less than 60 minutes. The Board recommends continuing with the services, monitoring and funding necessary to provide these levels of system reliability. • Electric Utilities Employee Safety Manual – Electric Distribution Safety and Training Supervisor, Wayne Sterler, and Electric Standards Engineering Manager, Kraig Bader, presented the Electric Utilities Employee Safety Manual. Adoption of this manual is a requirement of the American Public Power Association’s Reliable Public Power Provider (RP3) certification awarded to the City of Fort Collins Light and Power Utility. The RP3 program grants recognition to APPA member institutions that document their utility practices in four areas: training, safety, system improvement, and reliability. The version of the Safety Manual submitted for approval was the result of a two year process to update the existing version. The Electric Board approved a motion to adopt the revised Safety Manual and commends the staff for their dedication to safety. This dedication contributes to the well being of the Utilities’ staff and contributes to the overall electric system reliability. • Energy Supply Policy Update – Staff presented an update on the Electric Energy Supply Policy. As noted above the electric system reliability (overall reliability of 99.9981%) - 2 - exceeds the minimum targets and Utilities staff take pride in the programs designed to keep the electric system operating with a high degree of reliability, security and safety. There was an average 2.8 percent rate increase in 2008. According to the comparison between Xcel and Fort Collins Utilities, Fort Collins is between fourth and seventh lowest in all benchmark categories. The energy efficiency and load management results for 2008 show annual electricity savings from efficiency programs of over 11,400 MW hours or 0.8 percent of the community’s electricity use. The efficiency programs saved energy at a cost of 1.3 cents per kWh, which is dramatically lower than the 3.9 cents per kWh average wholesale cost from PRPA. Load management programs avoided over 3.5 MW of peak demand in 2008. The load management programs include air conditioning and hot water heater load control options for commercial and industrial customers. Since 1992 the population of Fort Collins has continued to increase. The Energy Supply Policy has goals for a 10% per capita reduction in energy use by 2012 (2002 baseline), a per capita demand reduction of 15% by 2012 and a 15% increase in renewable energy by 2017. 2008 per capita electric consumption was 0.9% lower than the 2002 baseline, and per capita peak electric demand was 2.9% higher than the 2002 baseline. The City will need to continue to give high priority to energy conservation and demand reduction programs in order to meet the goals set out in the Energy Supply Policy. The Board discussed whether these goals are still realistic and feel that with continued focus the goals can be achieved. Renewable energy comprised 6.3 percent of total electrical energy purchases in 2008. Renewable energy purchases were 93,000 MWh; the Green Energy Program facilitated the purchase of over 36,000 megawatt-hours of electricity, comprising 39 percent of overall renewable energy purchases; and rate based purchases of renewable energy totaled over 56,000 MWh of electricity, comprising 61% of overall renewable energy purchases. The Residential Parallel Generation Pilot Program continued in 2008 with steps taken to transition this program to a permanent offering and align with Colorado HB1160 (passed in March 2008). The program, also known as the Net Metering Program, offers residential and small commercial electric customers full retail buy-back provisions for electricity generated by solar photovoltaic (PV) systems connected to the electric grid. As of December 2008, the program had 16 residential customers and three commercial customers whose PV systems have been inspected and are operational. The total peak capacity of these systems is 47 kilowatts. From 2005 to 2007, interval recording meters and PV system data loggers were installed on 12 installations to capture detailed data on the net power demand of these homes. The combination of the two meters has allowed Utilities to understand typical electric production and usage patterns for this type of customer. The Board commends the Utility staff on their efforts and encourages continued focus on these initiatives. - 3 - • Environmental Benefits – The DSM efforts are estimated to have avoided over 9,245 tons of CO2 in 2008, with a total avoidance of over 25,051 tons of CO2 since 2002. The total 2007 avoided emissions, including renewable energy, are estimated at over 108,695 equivalent tons of CO2. • FCU Energy Services Staffing Relative to Program Savings – The Board briefly reviewed the increases in staffing levels for the Energy Services program relative to the return in energy and demand reductions. The Board feels that the staffing increases are reasonable and justified. 2009 Energy Policy In January, City Council adopted a revised Energy Policy. The purpose of the revised policy is to provide strategic planning guidance for Fort Collins Utilities’ Light and Power Service Unit, the Energy Services group and the entire City government. The vision of the new policy is: “To ensure for the Fort Collins community highly reliable, competitive, carbon neutral electricity supplies, managed in a sustainable, innovative, responsible and efficient manner.” The policy describes a mid-century vision and four goals with associated objectives and metrics. These four goals are: • Provide highly reliable electric service; • Support the community’s carbon emissions goal of reducing the City’s carbon footprint 20% below 2005 levels by 2020 and 80% by 2050; • Enhance local economic health; and • Continue collaboration with Platte River Power Authority and member Cities. Expected outcomes and benefits include: • Continued high electric system reliability; • Modernization of electric metering system; • Long-term asset management of electric distribution system; • Reduction of greenhouse gas emissions from efficiency, conservation and renewable energy; • Affordable electric bills, through competitive rates, efficiency and conservation; • Local economic benefits of a healthy municipal utility, high reliability, affordability and investments in efficiency and renewable energy; and • Prioritized decision making to target energy efficiency, local investments and electric system reliability. • Energy Policy Implementation Plan – Employee and Customer Relations Manager, Patty Bigner, Customer and Employee Relations Manager, and John Phelan, updated the Board on the Energy Policy Implementation plan. The priorities focus on efficiency and conservation, modernization with technology upgrades, enhancement of our community outreach, and - 4 - renewable energy additions. The 2010 Electric Board Work Plan will continue to focus on implementation plans for the 2009 Energy Policy. • Smart Grid and Advanced Metering Infrastructure (AMI) - Light and Power General Manager, Steve Catanach, and R.W. Beck Consultant, Jessyka Platt, provided a presentation on AMI technology and a cost benefit analysis. The function of AMI places an emphasis on going green with renewable energies and raising customer awareness through the use of in- home displays, direct load control with Smart Thermostats, price response and home control. Functions also align with conservation, energy management options and eventually plug-in vehicles. AMI is at the core of smart grid technologies due to its improved communication technology. The Board was pleased to hear that the City of Fort Collins Utilities was awarded a $15.4 million matching funds grant from the Department of Energy as part of the Federal Recovery Act. This funding will accelerate plans to implement Smart Grid technologies, including AMI, throughout the electric distribution system that serves the community. Monitoring the implementation plan and reviewing matching funding options is a part of the Board’s 2010 Work Plan. • FortZED – The Electric Board reviewed the FortZED 50 Economic Stimulus Package Proposal. The smart grid enabled 50MW zero energy district will be a unique “ready to go” 21st Century clean energy infrastructure project. The FortZED 50 project directly supports the goals identified in the 2009 Energy Policy in that it supports the community’s carbon emissions goals while enhancing the local economic health. The Board met with Nathan Howard with Spirae, Inc., a local renewable energy company, to discuss the RDSI (Renewable Distributed System Integration)/FortZED project. The primary objective of the RDSI project is to implement renewable generation, distributed generation and demand response within the study area to reduce peak load by 20 to 30 percent. Partners include the City of Fort Collins, New Belgium Brewing, Colorado State University, Larimer County and InteGrid. The partners have resources on site such as solar photovoltaic systems, fuel cells, vehicle to grid, thermal storage, cogeneration (process methane) and demand response, among other types of resources. The Electric Board encourages continued support for this program. Climate Action Plan Senior Environmental Planner for Natural Resources, Lucinda Smith, updated the Board on the Climate Action Plan. Discussion items included: • Waste Reduction via programs such as the Construction and Demolition Debris Deposit strategy and the Integrated Waste Optimization/Recovery strategy; • Energy issues such as the 2009 Energy Policy and FortZED; • Transportation including incentives for Low Emissions Vehicles and anticipated changes in the Vehicle Fuel Economy for the fleet in Fort Collins; and • Green Building Initiatives including updates to the residential building code, land use code and commercial construction codes. - 5 - The Board supports the goals defined in the Climate Action Plan and encourages improving the metrics that will determine the success of the various strategies. The Board also participated in the discussion of the following topics: • Bylaws and Role of the Electric Board – The Electric Board reviewed and approved changes to the Electric Board Bylaws in order to ensure they were up-to-date. As a refresher, the Electric Board also reviewed the role of the Electric Board and responsibilities of the Board members. • Privacy and Identity Theft Protection Plan – Utilities Finance and Budget Manager, Terri Bryant, reported on the privacy and identity theft protection plan. Utilities’ customer account and billing information is protected by the Fair and Accurate Credit Transaction (FACT) Act of 2003. In 2007, Red Flag Rules were added, which holds businesses accountable for identity thefts incidents. The City of Fort Collins Utilities will comply with similar security standards as a bank. A Privacy Committee has been formed, with various roles such as the Privacy Officer, who will review incidents. The Electric Board is confident that this program and Utilities staff efforts will insure account customer privacy. • PRPA Organic Contract – The Electric Board met with representatives from Platte River Power Authority (PRPA) to review the Organic Contract. The Organic Contract is a contract between PRPA and the member cities of Estes Park, Fort Collins, Longmont and Loveland, and fundamentally describes the operating structure, roles of the various members and the bylaws under which PRPA operates. The current revisions provide language that allows PRPA to add to the services provided to Fort Collins by noting that PRPA will assist Fort Collins in meeting its renewable energy requirements. Other revisions detail how PRPA will improve its efficiency of generation, transmission and use of electrical services; allow for Board meetings via teleconferencing; authority to appoint an interim PRPA General Manager; and extends the terms of the agreement from 2040 to 2050. • PRPA Energy Supply Contract – The Electric Board also met with representatives from Platte River Power Authority (PRPA) to review the PRPA Energy Supply Contract. The revisions to this contract address the amount of generation the City can develop for its own use. To insure the strength of PRPA’s bond rating (AA), the member cities designated PRPA as their sole electric service provider, which limited the amount of generation could develop on their own. After consultation with bond counsel, PRPA believes that allowing the municipalities to generate up to 1% of their peak demand will have minimal affect on the total generating capacity of PRPA and thus no impact to the PRAP bond holders. This determination will allow the City of Fort Collins to generate up to 3,000 kilowatts. The total load of the City owned facilities is close to 5,000 kilowatts, so more than half of this could be provided with municipal generation (renewable or other resources). The Electric Board supported the proposed revisions and felt it would provide additional flexibility in addressing Governor Ritter’s and the City’s carbon emission reduction goals. - 6 - • PRPA Climate Action Plan – The Electric Board also reviewed the PRPA Climate Action Plan. PRPA is the only electric power supplier in the state to maintain 100 percent environmental compliance in all operations since inception. A timeline of environmental activities from 1998-2008 was shared, representing an investment in environmental projects of over $60 million. The PRPA Board set an environmental policy and is proactive in dealing with potential issues. The Rawhide power plant is best in class and one of the cleanest plants in the country. The current resource plan calls for investments in wind or gas, while making no new investment in coal. It uses renewable energy, demand side management (DSM) and low use gas units. On the demand side, PRPA has used mitigation options which encompass aggressive energy efficiency, distributed photovoltaic (PV) solar and reserve energy sale reduction. As cities use less energy, less coal is used at the Craig station. On the supply side, more wind could be added, although it becomes difficult to regulate beyond 50MW. The goal of 20 percent reduction by 2020 appears possible by combining the three approaches of reserve sales reduction, energy efficiency and wind, netting about 700,000 tons reduction in carbon emissions. These are the lowest cost options to meet the 2020 goal. The Board is pleased to hear that PRPA plans to increase its mix of generated renewable energy and purchased Renewable Energy Credits (REC) from 17%/83% today to 70%/30% by 2015 and 100% by 2024. • Interconnection Standards for Generating Facilities Connected to the Fort Collins Electrical Distribution System – Light and Power General Manager, Steve Catanach, led extensive discussions relating to the FCU Interconnection Standards. The requirements of the FCU Interconnection Standards apply to all generation sources connected to the FCU distribution system 5MW and below at any one location. Any and all connections to the FCU distribution system and any aspect of such connection are subject to FCU review and such connections shall not be permitted if FCU does not approve them. The operation and design of any generating facility (GF) must meet all of the requirements contained in the standards, as well as, any applicable requirements contained in Chapter 26 of the Fort Collins Municipal Code and Fort Collins Utilities Electric Service Rules and Regulations. Any location where the aggregate total generation exceeds 5MW may require additional study by FCU. This study will consider the specific feeder where the GF is proposed to be connected. If the addition of any GF causes the total amount of generation by all sources on that feeder to exceed 50% of the minimum load on that feeder, additional study by FCU is required. The intent as these standards and net metering is to position the City for installation of the maximum allowable amount of renewable resources in the community. These standards insure that the electrical system is operating safely and that the system provides for the maximum allowable generation. As the implementation of smart grid technology commences, and better, more intelligent information on operating the system becomes - 7 - available, the ability to manage a higher level of renewable energy sources on the system is enhanced. After extensive review the Board feels that the standards being developed by staff accurately identifies the operational requirements unique to the Fort Collins system and provides adequate system protection while encouraging the use of alternative generation such as wind or solar generation. • Revision to City Code for Net Metered Electric Service - Light and Power General Manager, Steve Catanach, led extensive discussions relating to the net metering Code language. The Board supports the existing FCU net metering program, and discussed local thresholds along with the purchase price offered for excess generation. The Board has a desire to promote and encourage opportunities for projects such as solar photovoltaic technology and other renewable energy projects. Therefore, the Board recommends a threshold of 10 kW for residential customers and 1 MW for commercial customers. There was some disagreement if the cap should be at 120% or 125% of their demand or the name plate capacity of the service entrance, not to exceed one megawatt; however the Board approved a 120% cap and unanimously supports the need for an updated net metering code. • Revision to City Code for Excess Circuit Capacity - Electric Systems Engineering Manager, Bob Micek, presented information regarding a Code change to facilitate excess circuit capacity needs for GS50 and GS750 customers. A special services agreement with each customer allows Utilities to properly bill for the excess circuit capacity requested. The charges for this service are based on the costs of the facilities needed to provide immediate switching capabilities. There are current tariffs which include a charge to recover capital, and operations and maintenance expenses for reserved capacity. The immediate switching of the load from one source to another increases feeder infrastructure costs. Ordinance No. 057 requires that all special services agreements that modify rates, fees or charges go before Council for approval. Codification of the excess circuit capacity would avoid this time consuming process. The Board approved the concept of a Code change to facilitate excess capacity circuit needs of GS50 and GS750 customers, which would expedite customer requests for this service. • Revision to City Code to Address Billing Errors – Staff presented a draft ordinance that codifies action related to customer billing errors. For overpayments, a credit or refund shall be issued, without interest, if overpayment occurred six years or less preceding the date of discovery. For undercharges, the customer shall be billed for the undercharges unless the undercharges are less than a de minimis amount, or the customer could not have discovered the error with reasonable inquiry. The Board recommended that City Council approve the codification of the billing error policy. • Consideration of the Public Utility Regulatory Policies Act (PURPA) Standards as Amended by the Energy Independence and Security Act of 2007 - Electrical Systems Engineering Manager, Bob Micek, led this discussion. The Energy Independence and Security Act of 2007 required non-regulated utilities to consider four standards defined in the Act by December 19, 2009. The four standards for consideration include: - 8 - • Integrated Resource Planning • Rate Design Modifications to Promote Energy Efficiency Investments • Consideration of Smart Grid Investments • Consideration of Smart Grid Information Fort Collins Utilities is a municipally owned, non-profit organization, and therefore not among the group of utilities mandated to consider these standards. However, FCU has taken measures to address the concerns referenced in the statutory language. The Board recommended that City Council pass a resolution adopting the Utility’s compliance with the standards contained in the Energy Independence and Security Act of 2007. • Purchase of Additional Wind Energy – PRPA had an opportunity to purchase 10 MW of wind generation which would amount to approximately 30,700 MWh. The cost to purchase this energy would be $1.1 million per year. This would result in a 1.3% rate increase over the originally proposed 9.5% rate increase. The Board recommended that the Council politely reject this offer because of the short term nature of the contract, because it is not needed to achieve our medium term REC reduction preference, and because it is onerous at this time due to the recommended rate increase. • Positive Energy Presentation - Customer and Employee Relations Manager, Patty Bigner, and Manager of Business Development, Electric and Gas Utility Customer Solutions with Positive Energy, Inc., Chris Patton, provided an overview of the Positive Energy Program. In January 2009, Council approved the Energy Policy. Promotion of home energy savings is an integral component of the Energy Policy. Positive Energy, Inc. provides homeowners with a home energy report which reflects usage and provides tips for saving energy and money. The first tool used in the customer engagement process is a paper report mailed to the customer, and the second tool is a website with online tools for homeowners to compare information on homes similar to theirs. The overall program goal is to motivate customers, and boost education and customer engagement with energy savings. These reports are customized to the Utility and contain comparative information regarding lot, house, and family size and include useful energy saving information. Fort Collins has a test group of 25,000 residents, and program launch is planned for October 2009. The test pilot program will last 12 months, and the data from energy savings will be analyzed. The Electric Board is very supportive of this program and will monitor its success in 2010. • Green Building Program Initiative - Energy Services Engineer, Doug Swartz, and Green Building Code Project Manager, Felix Lee, provided a presentation on the Green Building Program Initiative. The City’s Roadmap for Coordinated and Enhanced Green Building Services was completed in 2007. The Roadmap development began with an assessment of green-building-related services and programs offered by a variety of City departments. The Roadmap provides recommendations for how Fort Collins can continue on the path towards being a dynamic center for green building by better integrating the City’s services and taking steps in four areas: 1. Mandate minimum performance and remove barriers - 9 - 2. Encourage green building innovation 3. Reward green building success 4. Build internal City capacity to support green building Steps taken along these paths include the development of a green building portal for the City’s web site and the adoption of a new commercial energy code. Because of the importance of the program, Utilities senior energy services staff have been assigned to oversee timely implementation of program strategies. A significant Utilities’ priority for the 2010/2011 Energy Services work plan is implementation of Roadmap recommendations into an integrated approach, ensuring community buildings contribute to the triple-bottom-line goals of a healthy economy and environment for all citizens. New opportunities have emerged that facilitate accelerated progress in achieving a higher standard of green building codes. New national standards are anticipated to serve as the basic templates for local standards and are intended to be readily tailored to the unique conditions and policies of the individual jurisdiction. Codes – intended as minimum standards – are only one piece of the bigger picture. The strength of the Roadmap lies in its comprehensive approach, and it is important that code-related work not become the sole focus of the City’s green building efforts. The Electric Board will continue to monitor the progress of this program during 2010. • FY10-FY11 Budgeting for Outcomes (BFO) – Utilities Financial Operations Manager, Ellen Switzer, and Utilities Finance and Budget Manager, Terri Bryant, led several discussions regarding the FY10-FY11 BFO. Initial discussions focused on an overview of the process, and focused on answering two key questions: 1. Do the seven Outcomes/Result areas still make sense as the priority area through which to organize the BFO process or do they need to be modified? 2. Do the existing result statements adequately reflect the community’s needs? After lengthy discussions, the Electric Board agreed that the existing Outcome/Result areas do not adequately reflect the importance of the City utilities as a foundation for a thriving community. A highly reliable, cost effective utility program is necessary to support the other Outcome/Result areas, including Economic Health, Environmental Health, Safe Community, Neighborhood Livability, Cultural and Recreational Opportunities, and a High-Performing Government and as such should be given more prominence in the process. The Electric Board respectfully recommended that the City Council consider revising the “Transportation” Outcome/Result area to “High-Performing Infrastructure” with the following result statement: “Fort Collins provides a highly reliable, integrated, cost effective, environmentally responsible utility infrastructure; and also improves the safety and ease of traveling to, from and throughout the city.” It was also recommended that if City Council was not comfortable combing utilities and transportation into a common infrastructure Outcome/Result area, then the Electric Board respectfully recommended adding an eighth Outcome/Result area specifically for the utility infrastructure. - 10 - Once the final Outcomes/Results were determined, all bids were submitted and the proposed budget was submitted, the Board recommended Council approve the 2010-2011 Light and Power fund budget as presented. The Board recognized that the proposed 2010-2011 Light and Power Fund budget recommended a 9.5% rate increase in 2010 and 8.6% rate increase in 2011. The key drivers of this rate increase included: 1. PRPA projects an average 6.2% rate increase for the Tariff 1 purchased power; i.e. the wholesale rate charged to each of the four partner cities. This equates to a retail increase of 4.79% in 2010 and 4.71% in 2011. This increase is passed directly onto the customers. 2. An increase in the PRPA wholesale premium energy charge for renewable energy. This increase is due primarily to increasing the amount of generation plant compared with purchasing renewable energy credits. 3. An increase in Energy Services to assist with achieving goals and directives of the 2009 Energy Policy. The increases fund additional personnel hired (but not funded) in 2009, conservation programs and customer incentives. A portion of the increase will come from existing reserves in order to ramp in the impact to rates. 4. The advanced metering infrastructure (AMI) project is designed to improve communication between the utility (energy provider) and the customer (energy user). The feedback provided through this partnership will improve the ability for the customer to control their energy use and demand. AMI is an integral part of a smart grid system and proceeding with the AMI program is highly recommended by the Board. The Electric Board also discussed the proposed 9.5% rate increase that was a part of the proposed 2010-2011 Light and Power Fund Budget. The Electric Board recommended that City Council approve the proposed 2010 electric rate and development fee increases. The final 2010-2011 Light and Power Fund Budget was approved without the increase for the AMI project since there was a good possibility of a grant from DOE to implement the AMI program. The final rate accepted rate increase was 7.42%. The Board was pleased to hear that the grant request for the AMI project was ultimately successful, resulting in an award of $15.4 million matching grant. • Energy Board – The Board discussed the concept of replacing the Electric Board with an Energy Board. The discussion was facilitated by Suzanne Jarboe-Simpson, Continuous Improvement Program Administrator with the City of Fort Collins MIS Department. While some Electric Board members saw the value of an Energy Board, others did not. Some thought the Energy Board could be made up of representatives from the existing, more focused boards, such as Transportation, Electric, etc. If an Energy Board was to be formed, it would need to be comprised of big picture, "systems thinkers". In any case, the Electric Board felt strongly that there was still a need for the Electric Board to focus on the specific electric utility issues. The Board generally agreed that, if City Council wants this big picture perspective, they should create an Energy Board. The Electric Board is very willing to assist in the development of a separate Energy Board.