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HomeMy WebLinkAboutElectric Board - Minutes - 10/06/2011Electric Board Meeting Minutes October 6, 2011 1 Fort Collins Utilities Electric Board Minutes Thursday, October 6, 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 John Graham, John Harris, and Steve Yurash Board Absent Board Member Peggy Plate Staff Present Patty Bigner, Steve Catanach, Ellen Switzer, Bill Switzer, John Phelan, Jenny Lopez- Filkins, Robin Pierce, and Harriet Davis Guests Rick Coen and Peter O’Neill Meeting Convened Chairperson Wolley called the meeting to order at 5:31 p.m. Public Comment None Approval of September 7, 2011, Minutes Vice Chairperson DeCourcey questioned how an item from the September meeting (Energy Policy Goals Recommendation) would be presented to the future Energy Board as per the Electric Board’s suggestion. Vice Chairperson DeCourcey suggested the item be an action item for the new board’s review. Board Member Harris moved to approve the minutes of the September 7, 2011, meeting. Board Member Yurash seconded the motion, and it passed unanimously. Update on Electric Rate Options from September 13 Work Session (Presentation available upon request) Customer and Employee Relations Manager Patty Bigner introduced this topic. Utilities presented information on Electric Rate Options to City Council at the September 13 Work Session. Council requested more information on how price elasticity is calculated as well as what system benefits were derived from tiered rates. They were interested in the results of their decision regarding tiered rates. City Council also wanted to know how goals are going to be accomplished and what is the impact going to be on customers. In response to their feedback, Utilities has prepared a new presentation for the October 11, 2011 Work Session. Ms. Bigner stated Utilities is using an industry standard to calculate elasticity. They picked the moderate level as a result of this. (A copy of the Work Session Summaries from September 13 and October 11 are attached). Electric Board Meeting Minutes October 6, 2011 2 Board discussion: Is this consistent with the water rates? Ms. Bigner stated most of the water savings relate to outdoor water use. Light and Power Operations Manager Steve Catanach stated it is much easier to reduce your water usage than electricity usage. Ms. Bigner stated the October 11 presentation will include four options. The presentation was expanded to include more explanation of concepts and definitions. A briefing on energy conservation, including water programs, is also included in the presentation. It is available on www.fcgov.com. Is the Communication Plan also included in the presentation? The Communication Plan for drafting the ordinance is included; however, it needs to be finalized. The Fort Collins Sustainability Group is writing a letter of support. This group emphasized customer assistance, and would like to see provisions for individuals that require medical equipment. Do you have any information on the Home Audit Promotions that were mentioned at the September meeting? Ms. Bigner stated Utilities is currently promoting the home energy efficiency programs and audits with Lowes, Home Depot, and Ace Hardware Stores. Ms. Bigner stated the audit program is doing well this year. A board member questioned when the peak cost is going down and the electric rate going up for the General Services (GS) group? Mr. Catanach stated Platte River Power Authority (PRPA) is reducing their demand charge next summer. The demand charge will be approximately $10, a decrease from $12.42. In the winter, the demand charge will decrease to approximately $7.50. Ms. Bigner encouraged the board members to look at the presentation online. The presentation also gives a history of the programs and how they are implemented. 2011 L&P Budget Exceptions and Rate Recommendations (Presentation available upon request) Utilities Financial Operations Manager Ellen Switzer presented information on this item. She began the presentation by thanking the board members for arranging their schedule to review the information before it is presented to Council. The residential energy rate will not be presented to Council at this time. It will be presented later this year. Electric Rate Increase Staff is recommending an overall 8.3 percent electric rate increase. There are several components to the rate increase. The wholesale electric rates from Platte River Power Authority (PRPA) will increase 6.4 percent, with a 4.8 percent increase at the retail level. There will be higher seasonal rates in June, July, and August. More costs will shift from the demand component to the energy component. There are several key factors relating to the PRPA rate increase, including reduced surplus sales, increased Operation and Maintenance (O&M) costs, increased financing cost and depreciation, and reduced interest income. Reduced interest income is affecting all the Utilities funds. Board discussion: Did anyone question the increase to O&M costs? Mr. Catanach stated he will have to research the answer to this question. Electric Board Meeting Minutes October 6, 2011 3 Ms. Switzer stated the remaining 3.5 percent rate increase is related to internal needs for Light and Power. Utilities is trying to slow the use of reserves for capital projects. Since 2007, expenses have been greater than revenues. Is there a target for reserves? Mr. Catanach stated there is a mandated minimum that Utilities should reserve. He also stated Light &Power operational expenses for 2010-2011 have been reduced. The budget structure was revamped and there was a 2.4 percent reduction for the 2011- 2012 Budget. Is the reserve based on a percent of the revenue? Ms. Switzer stated it is based on two things. There is an operating reserve equal to 8 percent of the operating budget less purchase power. There is also a capital reserve. There was also a fairly large reduction in other revenues not related to rates, including increased development fees. Also, because of lower interest rates, interest income has been reduced. Proposed Electric Rates All electric rates will be seasonal. Rates will be higher during the months of June, July, and August. The residential energy rate is not included in the ordinance. The residential demand rate will be restricted to those customers who do not have natural gas service. Board discussion: A customer will have to be 100 percent electric to participate in the residential demand rate? Currently, it is an option. The General Service (GS) Rate will be split into two classes (General Service <25 kW Energy Only and General Service >25kW Energy and Demand). General Service 50 and 750 (larger commercial and industrial customers) will retain coincident peak pricing with seasonal differential. Ms. Switzer stated the rate schedules are posted on the City Clerk’s webpage at www.fcgov.com. Ms. Switzer explained the graph for the 8.3 percent electric rate increase by customer class for Summer, Non Summer, and Average. The average increase is 6 percent. Board discussion: This chart shows the percentage in rate change? Where does that leave the overall rate? Ms. Switzer stated the actual rate schedules are on the City Clerk’s webpage with the old and new rates listed. The rate changes are based on load factor and load characteristics. What is a typical customer profile for GS<25? Ms. Switzer stated this is typically a small office, such as an attorney or accountant. What customer class do most of the restaurants belong to? Most of the restaurants are as high as GS50. What are the criteria for generating the differential for cost of service versus seasonal rates? Ms. Switzer stated this is purely based on purchase power cost from PRPA. Recommended Electric Rate Clarifications Staff is recommending a new definition for wholesale transactions be included in the City Code. This is subject to requirements for interconnection and is not governed by the electric rate schedules or electric development fees. The code clarification sets the value of the energy. Electric Board Meeting Minutes October 6, 2011 4 Mr. Catanach stated there will be a net metering credit for net excess generation that will be based on the summer season retail energy charge. The value is carried month to month. With the tiered rate structure, the value is impossible to track over a 12 month period. Utilities will purchase the power back at the lowest tiered rate for the season. Board discussion: Is there more incentive in the summer? The majority of the production is in the summer. Mr. Catanach stated the parallel generation credit for energy delivered to the utility will be based on PRPA’s avoided cost rate. The Special Services Agreement states the customer can earn the credit for offsetting the demand. If a customer consistently generates a benefit to the system (for example 10 kW), Utilities will recognize the demand benefit. Since Utilities has to invest in system capacity, it is important to ensure the rate reflects the true value that a generating customer brings to Utilities. Was there a change in the City Code to implement this? No; however, the change in the Special Services Agreement was presented to Council. Electric Development Fees The Electric Development Fees are required to be adjusted by Council every other year. Typically, they are presented to Council every year. The 2011 Electric Development Fees were approved in 2010. The proposed changes for 2012 include a 3.0 percent increase for a typical single family lot and a 0.3 percent decrease for a model commercial development. The changes are based on the current construction estimates. Ms. Switzer explained the graph for the 2011-2012 Electric Development Fee Comparison based on a typical single family lot and a model commercial development. Board discussion: How do these rates compare with other cities? Mr. Catanach stated these rates are comparable with other nearby cities. Miscellaneous Fees These changes will be presented to Council on November 15, 2011. The after-hours service charge will increase to $85.35. It is currently at $55.45. A monthly charge for manual meter reading for those customers who opt out of the Automated Metering Infrastructure (AMI) program needs to be determined. Currently, it is estimated at $10-15 per month. Mr. Catanach stated the rate should not be a punishing rate for individuals who choose to opt out of the AMI program. Board discussion: How long do you expect this rate structure to continue? When is the next phase of the rate change for the other classes? The rate form will remain the same until at least 2014. A board member expressed concern that the timing of the rate changes along with the AMI program implementation should be considered. 2012 Budget Revisions/Exceptions The following changes are recommended to the original 2012 budget: • Purchase Power: $1,724,505 • Payment in Lieu of Taxes (PILOTs): $121,969 Electric Board Meeting Minutes October 6, 2011 5 • Energy Efficiency Financing Program: $300,000 Ms. Switzer stated the $300,000 for the Energy Efficiency Financing Program will cover loans and fees to set-up and administer the program. Council has been asking for this program. Board discussion: Is this in lieu of on-bill financing? Energy Services Manager John Phelan stated there is a range of options with the program. The requested amount would be sufficient to get the program started as a pilot program. Utilities would like the program up and running in the first quarter of 2012. What is the increase from last year’s budget? Last year’s budget was $50,000. Is this an exception or a revision? Ms. Switzer stated that typically these are called exceptions; however, a Councilmember requested they be referred to as revisions in the future. Ms. Switzer stated there may also be a city wide exception for increasing salaries for employees currently paid less than market value. This is a city wide recommendation. Mr. Catanach stated the City has budgeted 2 percent for increases. $800,000 would be dedicated to market increases. The City will also supplement this with a budget exception. How far are some of the Utility employee’s salaries below market value? Mr. Catanach stated some salaries are 15-20 percent below market value; however, some of these positions are entry level or new hire positions. Approximately half of the Light and Power employee’s salaries are 6-7 percent below market value. Vote on the motion: It passed unanimously. * Chairperson Wolley abstained from the vote due to a conflict of interest as a representative of a business. Vote on the motion: It passed unanimously. Discussion on the motion: A board member recommended the line item for the Energy Efficiency Financing Program be removed from the list of exceptions. He would like more explanation on the program. Board Member Yurash moved that the Electric Board recommend that City Council adopt the proposed electric rate increases for all rate classes with the exception of the Residential Energy Rate. Board Member Graham seconded the motion. Board Member Harris moved that the Electric Board recommend that City Council adopt the proposed changes to the 2012 Electric Development Fees and Charges. Vice Chairperson DeCourcey seconded the motion. Vice Chairperson DeCourcey moved that the Electric Board recommend that City Council approve the proposed exceptions to the Light and Power Fund’s 2011-2012 Budget. Board Member Graham seconded the motion. Electric Board Meeting Minutes October 6, 2011 6 A board member asked for clarification on the item. Is it a form of a loan program? Yes. How did Utilities arrive at $300,000 for the program? Mr. Phelan stated this amount is enough to establish a pilot program. When City Council requested an increase to the budget, did they ask for a specific increase for this item? No, Council only asked that the program be implemented. What is the duration of the loan program? Typically, it is 5-10 years. Utilities can design the terms of the loan. Does Utilities have a document that describes the scope of the program? No, not currently. A board member suggested dividing the recommended motion into two segments. Vice Chairperson DeCourcey withdrew the original motion. Board Member Yurash requested a friendly amendment to staff’s recommended motion. Vote on the motion: It passed unanimously. Board discussion: Is this the last chance for Utilities to add this amount to the exception process? Yes, it will be voted on by Council on October 18, 2011. The board members agreed to not modify the recommendation concerning the Energy Efficiency Financing Programs. A board member felt the original recommended motion concerning this was too vague. Routine Updates Platte River Power Authority: No report. Capitol News (Vice Chairperson DeCourcey): No report. Staff Reports Monthly Financial Report Utilities Financial Operations Manager Ellen Switzer provided a monthly Financial Report included in the packet. Board discussion: What is the total cost of the BRT/Mason Corridor Project? Ms. Switzer stated the total cost of the project is $500,000. Utilities will spend approximately $1 million, and they will receive $500,000 back on the project. This is over the life of the project. Other Business Pineridge Natural Area Transmission Line Construction Alternatives Study Mr. Catanach gave an update on the proposed transmission lines in the Pineridge Natural Area. The alternative study was originally planned to be presented to Council on October 18, 2011. It will be presented on October 11, 2011. Staff is seeking Council direction on the issue. The study looks at Amended Motion: Board Member Yurash moved that the Electric Board recommend that City Council approve the recommended budget additions for Purchase Power costs, Payments in Lieu of Taxes (PILOTs), and the creation of an exception for increasing Utility employees’ salaries for market rate adjustments. Vice Chairperson DeCourcey seconded the motion. alternatives including moving the lines, increasing the span length over the open area, and changing the appearance of the proposed lines. Western Authority Power Administration (WAPA) stated they would be cooperative in moving the lines, but would not consider undergrounding the lines. Council will meet with the City Attorney regarding the legal issues at the Executive Session on October 11. 2011. After the Executive Session. Utilities staff will present the draft alternatives study. Review ofPRPA Organic Contract Mr. Catanach stated the Electric Board will review the PRPA Organic Contract for any significant changes. This item will be presented to the board at the November meeting. Proposed changes will need to be communicated to Council. The Organic Contract is an agreement between PRPA and the four cities. It is essentially an operating document. 2011 Annual Report The board members discussed how the annual report will be produced. Vice Chairperson DeCourcey stated he will take the lead for drafting the report. Future Agenda Items N one Open Items Tracking None Adjournment The meeting was adjourned at 7:36 p.m. Submitted by Harriet Davis. Administrative Assistant. Fort Collins Utilities Approved by the Board on SO . 2011 Signed Board Secretary Date Electric Board Meeting Minutes 7 October 6, 2011