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HomeMy WebLinkAboutEnergy Board - Minutes - 06/14/2018Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 Fort Collins Utilities Energy Board Minutes Thursday, June 14, 2018 Energy Board Chairperson Nick Michell, 970-215-9235 City Council Liaison Ross Cunniff, 970-420-7398 Energy Board Vice Chairperson Amanda Shores, 408-391-0062 Staff Liaison Tim McCollough, 970-305-1069 Roll Call Board Present: Chairperson Nick Michell, Alan Braslau, Vice Chairperson Amanda Shores, Stacey Baumgarn, Bill Becker, Jeremy Giovando, Greg Behm Late Arrivals: Board Absent: Krishna Karnamadakala, John Fassler Others Present Staff: Tim McCollough, Marisa Olivas, Lance Smith, Lindsay Ex, Ginny Sawyer, Cyril Vidergar, Adam Bromley, Wendy Serour, Alexis Hmielak Platte River Power Authority: Paul Davis Colorado State University: Dan Zimmerle, Jerry Duggan Members of the Public: Arsineh Hecobian, Fred Kirsch, David Gatzke, Nick Francis Meeting Convened Chairperson Michell called the meeting to order at 5:33 p.m. Public Comment None Approval of May 10, 2018 Board Meeting Minutes In preparation for the meeting, board members submitted amendments via email for the May 10, 2018 minutes. The minutes were approved as amended. Announcements and Agenda Changes Staff Reports Quarterly Financial Report Lance Smith, Utility Strategic Finance Director (attachments available upon request) Lance Smith started off by showing a graph of year-over-year revenues to date for Light & Power (L&P). Mr. Smith said revenues are looking good, showing some year over year growth. The revenue growth in 2018 partly reflects the adopted rate increase of 1.8 percent. Mr. Smith shared that industrial charges are at present over budget since the budget and revenue projections were done early on: the projections were done in March of 2016 for 2017 and 2018. In late 2016 there was a commercial customer that reached the Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 point of becoming an industrial customer, affecting the previsions by making commercial slightly under budget and industrial around a million dollars over budget. Mr. Smith noted a couple of points concerning expenses: there was a shift in the way L&P was accounting for system addition replacement as opposed to funding capital projects. L&P has been holding back on capital projects. Mr. Smith also noted that Energy Services had an unusual expense increase. He has not had to opportunity to speak with John Phelan, Senior Manager Mechanical Engineer, to discuss the reason of the increase. Mr. Smith said Operations has had an increase in expenses as well, but is under budget. Mr. Smith said that the few things slightly over budget currently will be managed so that L&P is under budget by end of the year. Purchased power expense are over budget year-to-date by almost a million dollars. Tim McCollough added that energy sales have been strong through the winter months, and in May L&P hit a 40-megawatt (MW) demand peak over the previous year (the 2017 May peak was 206 MW and for 2018 it was 242 MW). Mr. McCollough said essentially Summer hit a day early and people turned on their air conditioners creating a $400,000 impact of a demand charge, which explains what is reflected in the actual expenses. Mr. Smith said community renewables is something he has been keeping an eye on. Chairperson Michell asked if Mr. Smith could explain what is included in the community renewable budget. Mr. McCollough responded that community renewables include Net Metering, Solar Purchas Program (SP3), and Community Solar. Board Member Giovando asked about Mr. Smith’s statement earlier, “with a few things slightly over budget currently, they will be managed so that L&P is under budget by end of the year.” Mr. Giovando wondered if that statement is from a good estimate, or if there is something that will force it to happen. Mr. Smith responded that if L&P believes they are going to be over budget, they will have to go to Council for appropriation. Mr. Smith said they monthly look at various reports of actual versus budgeted. He wants to talk with Mr. Phelan first to discuss being over budget, but Mr. Smith does feel confident that L&P will be under budget by the end of the year. Presentations Budgeting for Outcomes Tim McCollough, Light and Power Operations Manager (attachments available upon request) Mr. McCollough let the Energy Board (Board) know they had received a fixed second round draft budget offer in their Energy Board Meeting Packet, the current state of all the 501 Fund Budget for Outcomes (BFO) offers. Almost all the funds and offers are going to Economic and Environmental Health for L&P Operations and Energy Services, with a few others in Arts and Culture and High Performing Government. Mr. McCollough shared that there has been slight revisions and retractions since the Board last saw the draft offers. Mr. McCollough opened the discussion to address any questions from the Board. Board Member Becker asked if the order of the offers in the 501 Fund BFO PDF is significant. Mr. McCollough said the order is not significant at this point, because it is how the offers are loaded into the budgeting tool. There will be an order of significance that comes out of the second round of the Budget Outcome area teams. In the BFO process, all the offers are separated into seven outcome area teams. The teams are primarily made up of staff and a few public members. Public members review all the offers and their deliverable at the end of the second round is called a Drilling Platform, a sorted order of offer rated from highest to lowest priority. Mr. McCollough said the budget is then loaded into the Drilling Platform to fund everything until the money runs out. After the second round, the seven areas will go in front of the Budget Lead Team (BLT), made up of the Executive Lead Team (ELT) and the Budget Office, who meets in July 2018. Mr. McCollough said what comes out of that meeting is the City Manager’s Recommended Budget. A full Drilling Platform for all the offers will go through Council Work Sessions, working on about three outcome areas a week, starting in late August/early September. This leads up to the adoption into the City Budget (two-year budget: January 1,2019-December 31, 2020). Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 Mr. Becker wondered if something needed, but not in the approved budget, could be switched with an existing budget offer. Mr. McCollough answered that it can happen as an Off-Cycle Appropriation. An Off-Cycle Appropriation can be for something not contemplated in the budget like a new opportunity or challenge, and it can be brought forward at mid-cycle (second year of the budget). Mr. Michell asked how long the second-round lasts and if the Drilling Platform will be out in public view by that time. Mr. McCollough said the second-round lasts through the month of June and he confirmed the drilling platform will be out and, like the current draft budget, it is available to the public at fcgov.com/budget. At each step in the process the public can access the budget at fcgov.com/budget, and assign waiting or desired to specific offers. The Board can participate in this form of public engagement, but there are also key points were the Board can weigh in on specific offers. The Board can share their support, favor, recommendations, or unsupported offers to Mr. McCollough, the Utilities Executive Director Kevin Gertig, or before Council. Board Member Baumgarn asked if there is a sense of what the overall budget looks like and if there is a dollar amount to fund the enhancement offers Mr. McCollough submitted. Mr. McCollough said at this point in the budget L&P is going to recommend a two-time 5 percent/5 percent rate increase in 2019 and 2020, a result of a 10-year-trajectory of intentionally spending down the 501- reserve fund. L&P has been operating revenue neutral for about eight of the last 10 years, funding a large amount of the capital enhancements and energy service enhancements out of reserves. L&P is at a point where the 501 fund is near the recommended minimum and needs to recover from the income negative years with a rate increase. With an approved 5 percent/5 percent rate increase, based on the core offers and some capital work, there would be somewhere around 2- 4 million dollars available for enhancements, but there are 13 million dollars’ worth of enhancement offers in the purposed budget. With not a lot of money to go around, Mr. McCollough said if more would need to be funded, this would require a rate increase above 5 percent/5 percent. Board Member Braslau asked if part of the BFO process to accept these offers somehow entails then accepting a rate increase. Mr. McCollough added it could also entail accepting an exchange for a core service or not doing other offers. Mr. Braslau continued to say that perhaps the Energy Board should address the issues quickly and give recommendations on a rate increase, considering the hierarchy of the offers. Mr. McCollough shared that he has submitted his priorities for offers and he has provided them to the outcome area teams. Mr. Michell mentioned that while he thought offers like the Capital Enhancement of Cable Waste Reduction was detailed in the Draft 501 Fund BFO PDF, other offers like Capital Replacement-Attrition Based LED Streetlight Conversion with, “fix them when they break or go fix them all,” model lacks the financial data needed to compare a better rate of return. Mr. McCollough responded that at a high level both of those financial analysis should be available in the offers. If they are not in the offers, Mr. McCollough offered to provide the analysis on the rate of return for the mentioned offers. Mr. McCollough also recommended clicking the links under the further information section, which provides considerable data beyond the offers. Mr. Giovando asked if there is a pay-back calculated for providing additional service to areas with the offers for feeder capacity as new service or enchantments to existing service. Mr. McCollough answered that many of the feeder projects do not have an immediate rate of return, L&P is building capacity that future customers will buy into when they develop parcels or property there. Mr. Braslau noted that the links for further information only work with Adobe Reader. Mr. McCollough said he will give that feedback to the budget office to see if there is a way to address that issue. Mr. McCollough added that the links also show details of feeder current, and that he tried to put as much detail into the offers and links to show that the investments are necessary. Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 CSU Research Agreement Dan Zimmerle, Director/ Principle Investigator (CSU Energy Institute) Jerry Duggan, Lead Information Technology (CSU Energy Institute) Tim McCollough, Light and Power Operations Manager (attachments available upon request) Mr. McCollough explained that the Utility has an active partnership with Colorado State University (CSU) in joint research. L&P provides data and CSU does the research work. Dan Zimmerle shared that about three years ago the CSU Energy Institute was awarded part of a large fund from the National Science Foundation (NSF) focused on Smart Cities. The purpose of the award was to look at whether distributed infrastructure would make sustainability in cities more cost effective and more effective in general. Part of the study that CSU had was to look at the electric system and what occurs going from centralized to distributed systems. Mr. Zimmerle said to study the electric system a large layered geospatial system was created with a bottom layer of the physical interconnects of the electric distribution system in Fort Collins. On top layer is other acquired data like Advanced Metering Infrastructure (AMI) data, data of socioeconomic factors from the census and property records, and programmatic records for photovoltaic (PV). Mr. Zimmerle said that the general idea is to create problem sets that allow them to drill through the layers to look at the impact of topics occurring at the electrical layer and how it is influenced by things occurring at the socioeconomic layer. When looking at the amount of PV that could be implemented in Fort Collins with the size of people’s roofs and orientation of tree cover, the problem set produces a number. Mr. Zimmerle explained what people actually do it is very different then the produced number. For example, it may show that a house could put on 14 kilowatts (kW) of PV but the house only has 3 kW. From the City side there is interest in how the adoption of PV works and what influences that. From the electrical system side this type of analysis was not available before, so in the past they would use a, “throw against the wall model.” The Energy Institute hypothesizes that several of the limits set for how much PV could be put on a system could be too high for some circuits and too low for other circuits. The second part of the study is finding out when the danger is of hitting that limit. The idea behind the multiple-layered models is to condition the questions asked about the electrical system with socioeconomic layers, and then condition what is wanted out of incentive programs compared to what can be tolerated at the physical layer. Mr. Zimmerle showed a picture of one of the feeders to give the Board an idea of the data they have. The picture showed the Substations, the feeder layout over an aerial view of Fort Collins, and transformer locations. Mr. Zimmerle and his team primarily work at the transformer level. They are interested in the amount of square footage of PV attached to a transformer, so there is no interest in the household side of transformers but instead the distribution side. Mr. Zimmerle broke down the different types of data. With AMI data they are looking at load offset potential, with Electrical System data they can identify “choke points” on the system, with PV potential and adoption data they are looking at where people adopt PV and how much PV they adopt, and with public data like property records/census they are looking to find realistic PV adoption levels and how that would impact the system. From this research came four subprojects/questions. The first is Distribution Impacts of voltage stability. For example if PV is put on a system and it is a cool day, creating a low load and high PV production, a cloud overhead will cause the rapid drop of production of PV and in turn create voltage variation. Board Member Braslau asked how much voltage stability the invertors automatically control. Mr. Zimmerle answered they control very little, the invertors available are completely following the devices but do not have control over the transformer to make it “behave nicely.” An inverter’s objective is to put the maximum amount of solar radiation hitting the roof into a house, so if levels hit the grid there is not any adjustment. Mr. Zimmerle said speaking on bigger units (10s of 100s of kW) such inverters are smarter and can be commanded to do various things. Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 Mr. Zimmerle said they are approaching the subprojects with tool kits that can simulate the system fairly effectively. A main point they are after, from a research perspective, is the development of a grading algorithm for the feeders to show if there is a feeder to be concerned about when putting a lot of solar on it, or a feeder that can handle larger amounts of solar. Mr. Zimmerle said they have a theory about a grading algorithm, but there is not an algorithm developed yet. Mr. Zimmerle said another subproject is regarding transformers and the way they age. A transformer ages when the amount of heat generated by use of the transformer raises the temperature of insulation in the transformer causing it to decay. The decaying is accelerated by remaining hot longer. A transformer can also be damaged by being overloaded. Mr. Zimmerle shared that adding PV will not reduce peak load. However, Mr. Zimmerle said that if PVs are put on the system during the day as it accumulates heat for normal running, it will reduce the amount of heat being generated from the transformers and could reduce the aging. The socioeconomic subproject, limits of adoption in distribution networks, looks at how much PV is likely to be in a certain area and how the implementation will cluster. Mr. Zimmerle said they are looking to see the pattern of adoption among homes close to other homes with PV. Mr. Zimmerle said clustering is an interesting problem, because peoples’ behavior does not cluster by geographic proximity but through personal networking. Mr. Zimmerle said it is hypothesized that if there is a PV system installed on one roof that one could predict the behavior that might follow. Jerry Duggan and John Gleam, a community volunteer, have worked on tuning up the models so that the actual array size and orientation cold be input to produce reliable figures between the predicted solar output and the actual solar output. Mr. Braslau asked what the difference was between the graphs for Irradiance vs. PV Output being displayed on the screen. Mr. Duggan answered that the left graphs represented a clear day and the graphs to the right represented a cloudy day. The difference between the top and the bottom graphs was irradiance vs. output both showing the difference between predicted (blue line) and actual (orange line). Mr. Zimmerle said another thing they are aiming to understand is feeder load vs. transformer load. Mr. Zimmerle showed a graph that overlapped the AMI data with the feeder load and the amount given to the transformer. Mr. Zimmerle explained that the left graph showed that the load in that particular transformer followed the feeder load. The graph to the right showed another transformer that did not follow feeder load at all. This is important, because all the models are contingent upon local energy flow. Mr. Zimmerle is hoping this to be the first topic area they produce a paper on. Mr. Zimmerle presented an aerial view of the City with the transformers labeled with colored points of the time delay the transformers would experience from the passage of a cloud. If the theoretical cloud front on the map swept over the plot and if solar was on every one of the transformers in that area, one would see the power production from the solar panels roll off with the dropping of the feeder. The initial results have not found anything with particularly large variation. Mr. Duggan said since they had AMI data per premise and they knew which transformers were associated with them, they added up all the numbers and compared those numbers to the transformer rating. Mr. Duggan said they also flagged any 15-minute intervals where the numbers were exceeded and broke them into three event categories. The first set were high events, believed to be fundamental problems in the data (i.e. incorrect transformer ratings). The second set, “happy medium events,” were looked at for an indication of transformer feeder overloading and the effect on the system. The third set of low events were, “simply not interesting.” Mr. McCollough said essentially this research has helped L&P to clean up their electric model. L&P has not tried to use this type of electric model in this way in the past, so there were inherent flaws that were identified systematically. Mr. McCollough said that eventually L&P will get to real issues that need to be fixed. Mr. Zimmerle said the preliminary results for standard transformer aging were from one year of data. The graphs on the left showed feeder load and simulated temperature inside the transformer (one during the Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 summer and one during the winter). When it is summer and the loads are higher the transformers tend to be hotter, and in the winter the ambient temperature allows the transformer to cool more quickly. Mr. Zimmerle said that transformers are designed, during the summer peak, to rely on a temperature dip in the evening to cool down. Mr. Zimmerle shared that one concern with electric vehicles (EV) or Time of Day (TOD) rates is that the load will be shifted in the evening not allowing transformers to cool down as much. The graph to the right had two plots of solar scaling behavior, showing that as the amount of PV goes up the transformer aging goes down until it reaches a certain point that it exports power and starts to heat in the morning. This displays that different transformers have different aging impacts, one key finding that will be pointed out when the paper develops. Mr. Michell asked what actual solar scaling values are on the City’s systems currently and what sort of values Mr. Zimmerle thought the City could get to realistically. Mr. Zimmerle responded that it was a trivial percentage level currently, even at peak load. Mr. Zimmerle said that type of analysis has not been ran, but they have the data to do so. Mr. Zimmerle said that the size of PV implementation is driven largely by policy not physics. Mr. McCollough added economics as a major influence of implementation as well. Mr. Michell then asked how much transformer reduced aging is worth in terms of money. Mr. McCollough responded that it could be valuable, especially if a future impact of solar penetration will have a more degrading effect on the City’s infrastructure. Mr. Zimmerle ended by explaining that if one were to look at houses with PV systems, say on Google Maps, what they would find is that people put PV systems in what is meant to be attractive areas (of their roofs) as opposed to what is most efficient. Mr. Zimmerle said often the PV panels are facing the wrong way (not South or not on the right pitch of roof). The Energy Institute has looked at the adoption bit of the puzzle, but would also like to know how the PV is preforming. Mr. Zimmerle said unfortunately meters do not show how much the PV is producing, they only show the net. To figure out how much PV it is producing, they would have to somehow guess how much the load is, creating a complex problem. 100% Renewable Electricity Goal Analysis Lindsay Ex, Senior Manager Environmental Sustainability Tim McCollough, Light and Power Operations Manager (attachments available upon request) Lindsay Ex passed around the “Take Two” pledge to the Board and all meeting attendees. The Take Two pledge and campaign is taking place through July of 2018 to engage residents in small actions that can make a big difference toward Fort Collins’ first milestone in its climate action goals (20 percent reduction in carbon emissions by 2020) (fcgov.com). The two actions: 1. Switch out your home’s four most used incandescent or CFL bulbs to energy-saving LEDs (a $193 savings per household per year) 2. Make one trip a week car-free (a $238 savings per household per year). When making the pledge residents received a bag containing four LED lightbulbs and a coupon to the online efficiency store. The goal was to get 7,500 residents to sign the pledge. At the Taste of Fort Collins 3,000 pledges were received. Members of the Board and meeting attendees signed the Take Two pledge. Before the presentation started it was noted by Ms. Ex that a Graphic Recording would take place during the discussion. Ms. Ex reminded the Board that a large group of citizens asked Council to set a goal of 100% renewable electricity (100RE) by 2030. Council then directed staff to conduct an initial analysis. The presentation outlined different initial considerations, put together by City staff and Platte River. In an earlier meeting the considerations were presented at the Climate Action Plan (CAP) Community Advisory Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 Committee meeting. There was also a graphic recording of that discussion. Ms. Ex mentioned a few questions to consider: • Do other communities set a goal first and develop a plan or vice versa (reviewing14 cities (six in Colorado) and the state of Hawaii)? • How would the 2030 goal of 100RE relate to the existing CAP plans goal of 80% reduction of carbon emissions by 2030? • What levels of technology, storage, renewables, and energy markets are needed to achieve this goal? • What are the rate impacts and projected costs? Mr. McCollough shared areas of initial consideration which included terminology, alignment with Platte River, reliability, flexibility, equitable and cost-effectiveness, partnerships, and engagement. Mr. McCollough said there are three major questions that the Utility would like to receive feedback on from the Board: 1. Considering the various elements outlined, are there other key elements you feel are missing? 2. Which of these elements are most important to your stakeholders? Which excite you the most? 3. Which of these elements are more concerning to you stakeholders/people like you? Mr. McCollough touched briefly on each of the terms before opening the conversation to the Board. Mr. McCollough said there are a lot of ways renewable electricity can be described (i.e. clean, renewable, net, or no electrons (sic.) from fossil/carbon based), so defining the terms is an important piece in setting goals and looking forward to outcomes. Mr. McCollough said alignment with Platte River is also key to adopting these potential goals. It is felt there is a high level of reliability of the distribution levels, and considering the impact of these outcomes in terms of reliability is an important part of the analysis. Rather than believing there is only one way to do things, remaining flexible to achieve outcomes is also important. Equitableness looked at (equitable to the four Platte River partner cities, equitable across rate classes of electric customers, and equitable amongst the social economic classes of customers). The Utility is also looking at cost-effectiveness to see if this is a goal that should be done at all cost, at moderate cost, or at no cost increase over the baseline. Partnerships can speak to the partnerships with other Platte River Cities and the public/private partnerships leveraging public/private funds toward outcomes. Mr. McCollough said the final condition of engagement could be seen through the example of the present Board meeting, because of the informed discussion taking place about adopting these goals. Mr. McCollough then opened the conversation to allow questions from the Board. Mr. Becker started the conversation by saying that the viability of the Utility must be sustained. Mr. Becker said perhaps it is implied with the rates that must be generated, but at some point, there is a curve of less customers bringing higher rates and higher rates creating less customers. Mr. Becker said his point is that the Utility cannot go out of business. Mr. Michell agreed with Mr. Becker and shared that while he worked at Hewlett-Packard it was said that David Packard, Co-Founder of Hewlett-Packard, believed the number one job was to stay in business. Mr. Michell said the number one thing is for the Utility is to stay viable financially no matter what model is come up with for the 100 RE goal. Board Member Behm said adding an eighth condition to specifically address viability and the Utility makes sense. Mr. Becker added that to supply the resource plan commitment, Platte River must be viable too. Mr. McCollough reminded the Board that answers were not being sought after immediately, but instead they are seeking to gather feedback to take to Council. Mr. Braslau said what is missing in the points of consideration is affordability. Mr. McCollough asked if there is a consideration that Mr. Braslau would replace with affordability. Mr. Braslau said no because equitableness, affordability, cost-effectiveness, and viability are all needed. Mr. Becker commented that the wording in the memo to the Board, Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 “equitable and cost-effective – how does this ensure rates continue to be competitive and affordable,” comes across clearer than the presentation. Mr. Michell wanted to touch on the first consideration of terminology. Mr. Michell said he did not like the terminology of 100RE. Mr. Michell said he does not know what 100% renewable energy means exactly, and that it comes across as a marketing tool attempting to sound nice. Mr. Michell said from an engineer’s point of view, it feels more like marketing than science. Mr. Braslau jokingly added as physicist the notion of “renewable energy” is absurd. Mr. Braslau then said the goal is to get away from burning fossil fuels to reduce greenhouse gas emissions, so it doesn’t matter if it is called renewable energy through wind generation, solar panels, or anything else. Mr. Behm said he thinks terminology is vital whether you take the absurdist point of view that renewable energy is meaningless or that it is meaningless because it is a marketing term, for most people who don’t fall into those camps there may be confusion about what is being discussed. Mr. Behm said, he understands the “RE” in 100RE to mean renewable electricity, and a lot of people are going to conflate renewable energy with renewable electricity without thinking about the difference between the two. Mr. Behm said whether it is a marketing tool or not he tends to believe 100RE is a goal. Mr. Behm believes nailing down the terminology of what 100RE entails is central to the marketing and the communication. Mr. Michell said if the City says they are going to do 100RE, but people are still driving gas-guzzling vehicles and using natural gas to heat their homes then the City fails. Mr. Michell asked if the CAP goal of 80 percent below greenhouse gas emissions by 2030 was not sexy enough. Mr. Braslau rebutted with the question of, “How will the CAP goal [80 percent below by 2030] be achieved without the 100RE commitment?” Mr. Becker said that economic development should be part of the plan to drive business opportunities and wealth in the Fort Collins community. So the Utility is not mandating exactly what happens and allocating tax payer funds, Mr. Becker suggested that businesses should be given the industry goal and left to figure out their own business models. Mr. Braslau said competitive rates are important on an economic scale for the business, but not necessarily for the customers who want affordability. Mr. Michell said affordability in terms of cost of service is a high priority. Mr. Becker said he differs with that opinion, because there are several things in life people choose to pay more for (i.e. purchasing a more expensive car for safety, taxing for better roads). Mr. Becker hears the argument of affordability repeatedly, but he struggles to believe that people are not willing to pay a little more for something that is believed in. Mr. Braslau commented that some people do not have the choice to pay more, but must submit to their situation. In exaggeration, Mr. Becker answered affordability does not necessarily mean it is always the lowest number, if that was the case the community would be coal spewing, with toxic fumes and acid rain, and pot holes in the road. Mr. Becker said he does not think affordability is the number one priority. Mr. Behm said one reason why the City is discussing making an 100RE goal is the over-arching issue of climate change. Mr. Behm said when cost- effectiveness is discussed some people can afford the monthly bill without thinking about it and for others there is more of a hardship, but the burden ultimately comes down on everyone. Mr. Behm believes that Fort Collins citizens have a general idea that climate change is an issue since the community has adopted CAP, but not everyone has a grasp of the science. Looking at the past several decades of relative inaction combined with the mounting cost of natural disasters due to climate change, Mr. Behm believes everyone pays for the consequences. Mr. Behm said all of this must be considered when the Utility is engaging with the public to explain the Why; people must understand that there is a cost even if it’s not on their bill. Ms. Ex displayed the graphic recording of the conversation that occurred at the CAP Community Advisory Committee Meeting on May 31, 2018. The recording showed that terminology was also discussed for a decent amount of time, along with energy storage as the elephant in the room, the Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 difference between setting a goal and achieving it, and CSU’s commitment to 100RE. Ms. Ex shared that a larger business in the community made an interesting comment of the City setting the goal could provide cover and support for businesses to set a similar goal. Mr. McCollough added that the idea of natural gas as a transition for facilitating reliability as a possible solution and life-cycle assessment of renewable technologies was discussed. The committee also spent a lot of time discussing cost- effectiveness, defining equity, the differences in customer types, and considering partnerships beyond Platte River. Mr. Michell said in his opinion staff needs to do a lot more work on the 100RE goal proposal. Mr. Becker said one thing the Board can do is provide guard rails to staff and help define the goal. Mr. Michell shared that in his opinion the CAP goals are already very aggressive and 100RE is a distraction from them. Mr. Braslau disagreed, he thinks it helps reach the CAP goals. Mr. Behm said he thinks in the next three to five years 100RE goals will be standard in the conversation. Mr. Behm noted there are currently two major candidates for Colorado governor that are calling for 100RE by 2040. Mr. Behm said it is not a distraction, but will become central to achieving CAP. Mr. Baumgarn said he personally thinks it is important to set a goal in order to move the conversation and the outcomes forward. Mr. Braslau commented if the goal is empty, more information is needed from staff on achievability. Mr. Baumgarn said he was confused if the Board’s role is to say yes, no, or maybe to the city setting/adopting a goal of 100RE. Mr. Michell said maybe the Board needs to be more explicit. Mr. Baumgarn said perhaps Council already feels an RE goal is implicit in the CAP Framework. Mr. McCollough reminded the Board that the issues and questions brought up did not need to be solved at this meeting. Art in Public Places Contributions Ginny Sawyer, Senior Project Manager (attachments available upon request) Ginny Sawyer shared that recently Council appropriated money for the Broadband project and the bonds within it, and with the ordinance they appropriated money for Art in Public Places (APP). Council wants staff to look at the appropriation and propose options for Council to consider for a Broadband contribution. Ms. Sawyer said Council also wants proposals for considerations to be applied to all underground project contributions to APP. The City has had an APP program since 1995; it requires 1 percent of all capital projects over $250,000 be dedicated to incorporating art into their project. In 2012 an amendment was made for the Utility contribution of 1 percent capital project up to 0.5 percent operating revenue. Ms. Sawyer said there was also a change for definition of construction to exclude equipment not affixed to public property. The goals of the APP program are to enrich the public environment for both residents and visitors through the visual arts, increase public access to works of art and to promote understanding and awareness of the visual arts in the public environment, promote a variety of artistic expression in the community, to contribute to the community’s civic pride and cultural diversity, and to support visual art. Ms. Sawyer said that the Utilities contributions to-date tend to be incorporated in the capital projects whether that be artistic aspects within the building or by tying into which utility is contributing (i.e. flood markers, a river flow outdoor learning space, and utility boxes.)Ms. Sawyer commented that the utility boxes are popular in Fort Collins, and save money in graffiti removal of potentially $30,000 a year. Ms. Sawyer presented a chart showing Capital projects recommended appropriations and what would be available within that recommendation for the APP program. Ms. Sawyer said that Council thinks that zero may not be the right number for the Broadband contribution, but a six hundred thousand sum number may not be right either. Ms. Sawyer asked for the Board’s thoughts on contributions for both Broadband and other underground projects. Mr. Michell noted there are big numbers coming up in terms of the $140 million for Broadband infrastructure. Mr. Michell said he also doesn’t think the number should be zero, but perhaps a one-time Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 lump sum charge from the initial money for the Broadband project. Mr. Michell said he doesn’t believe 1 percent of $140 million makes sense. Ms. Sawyer reminded that since Broadband is issued under L&P bonds it would be capped at .5 percent of L&P operating revenue. Ms. Sawyer said it should also be considered that currently Broadband has no operating revenue. Ms. Sawyer presented some questions to consider: • Is it to be delayed until Broadband has an operating revenue? • Is it to be a staggered payment based on year by year capital expenditure? • Should there be a shift in the Utility to try pulling together more money for bigger pieces for the benefit of the entire community? (Ms. Sawyer said there is a desire in the community for larger iconic art.) Mr. Giovando said it seems it should be proportional for what is being implemented in the capital cost for a year, because a staggered payment plan would make sense. Mr. Giovando added how that would be capped can be discussed. Ms. Sawyer said that APP committee will go to Council for a Work Session at the end of August, 2018 with some options. Ms. Sawyer’s guess is that Council will speak to which options they prefer and ask for more public outreach to see what people think about those options. Mr. Braslau said there are two aims in the ordinance, one aim is to support visual arts in general, something most people agree with because the City adopted APP. Mr. Braslau said the other aim to be considered is that as far as Broadband is concerned, this new service can benefit competitively, if is the APP contribution is done intelligently. Mr. Behm wondered if rationale for other underground projects was being sought by Council only because Broadband is going to be underground. Ms. Sawyer answered that the underground project question comes up about every six years, and with Broadband happening it was brought up once again. Mr. Becker said it seems that the rational is if infrastructure is not seen it should not have art attached to it. Mr. Becker said when APP came about it was applied to infrastructure that already existed, and that Broadband is different since it is starting from scratch, so the same rules cannot be applied or it would be way too much money. Mr. Becker said it must be dialed back either through an exemption or by staggering cost it over time. Mr. Michell agreed with Mr. Becker, and said that is why he suggested a lump sum and as there are ongoing projects after the buildout then the regular rules can be applied. Mr. Braslau shared that he attended the APP Board meeting and that some of the members felt (facetiously) that art was so important that it could be receiving 99 percent of funding. Mr. Braslau said that art is a community value and he understands where the APP Board is coming from, although he questions what may be the right way to apply it in this particular case given that Broadband will begin without any operating revenue. Ms. Sawyer said the APP Board is open to various options whether it be a delayed payment, staggered payment, or lesser payment. Ms. Sawyer said the goal of APP and the goal for viability of the Utility and Broadband all must be balanced. Vice Chairperson Shores asked if staggered payments would hinder larger art projects that APP may be interested in. Ms. Sawyer answered that APP funds can roll over from year-to-year, so there is opportunity to build up money compared to the Utility funds that are more constrained with rate payer and the enterprise. Mr. Baumgarn said the $600,000 (.5 percent of project) compared to a $140 million budget doesn’t sound too extreme. Mr. Becker said one thing to think about is that Broadband is competing with Comcast, so it cannot be made so onerous that the business model starts to fail. Mr. Giovando said he thinks a delayed payment is not the right solution, because it could constrain while doing the initial build-out any potential synergy that might happen if the funding is not available either initially up-front with a lump sum or annually. Mr. Giovando said the Utility would then have to go back to try retrofitting art after the build-out, thus creating more of a challenge. Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 Mr. Behm said he disagrees with the thought that if it is an underground project it shouldn’t be acknowledged within the APP program. Mr. Behm said there should not be exemptions for underground projects. Ms. Shores said she did not understand why there is a percentage of funds to APP, because it seems like there is a lot of variation of funding from year to year. Ms. Shores wondered if it would be better if there were consistent amount of funds every year. Ms. Sawyer responded that by building art into capital projects all over the City and by saying APP wants incorporation as close as possible with the project geographically it in a sense provides the funding mechanism instead of a line item that is at risk of going away. Mr. Braslau asked how much discussion is happening about the fact that there is zero operating revenue for Broadband. Ms. Sawyer said as of now Broadband is under L&P so the operating revenues will be combined and then whatever capital from either side would be at 1 percent until capped at .5 percent of the combined operating revenue. Mr. McCollough said there is a commitment to keep the financial aspect of both enterprises separate. Mr. Braslau said what happened is that APP was not included in the Broadband business plan in the beginning, and now it is realized that it corresponds (somewhat artificially) to a big chunk of money. Mr. Braslau said the question that is raising a problem is that Broadband must remain competitive. Mr. Michell said Broadband is its own thing so a decision should be made on Broadband, not that it is under L&P. Mr. Baumgarn said maybe there is a fixed dollar amount paid in a single payment that is tolerable, and not necessarily relative to the total cost of the project. Mr. Braslau said thinking that way could be dangerous, because every project would like to reduce what they are required to pay to APP. Mr. Becker recommended in lieu of an upfront payment, perhaps a future revenue based payment. Mr. Baumgarn added that it may help to know what APP would do with $200,00 or $600,000, for example, for an art project. Mr. Baumgarn said it may help gage if citizens feel the potential projects are an interesting trade off. Mr. Sawyer said when they look for an artist that will join the boring and conduit team she can ask them what their ideas are. Decision 2018 Mid Cycle Appropriation Request Tim McCollough, Light and Power Operations Manager (attachments available upon request) Mr. McCollough said he was speaking on behalf of L&P to seek a mid-year appropriation from reserves to fund three projects. Mr. McCollough pulled up a Story Map link to show a full summary of the mid- year appropriation request items. One project is the Water Treatment Facility (WTF), which was funded in the fiscal year of 2017/2018 from the Water fund in the total of $1.3 million to annex the WTF, buy out the Xcel infrastructure, and bring it into Fort Collins City territory. The WTF annexation was appropriated, what L&P is seeking now is an appropriation out of L&P reserves. Mr. McCollough said basically the money needs to be moved from the Water fund to L&P. Mr. McCollough said it is self- funding, as it is the same money that Council has already appropriated for Water during the 2017/2018 BFO cycle. Mr. McCollough said to build the infrastructure it needs to be a L&P expense, so from an accounting stand point L&P must move the money and this is the action to do so. Ms. Shores asked why it wasn’t appropriated that way initially. Mr. McCollough answered this is a lesson learned for future budgets, and he said it may have been possible to include this all in the same BFO. Since it is not the reality of what happened, the appropriation request is the conclusion that came from meeting with internal staff and the finance committee. Mr. Braslau asked if Mr. McCollough anticipated any difficulties with this change in the budget. Mr. McCollough answered no, that this is seen as a benign issue from a budgeting stand point. Council has already heard this at the Council/Finance committee, so Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 the Energy Board’s consent is being sought as way of courtesy and because it is part of the Energy Board’s role. The second project is related to the East Harmony Industrial Park area. L&P has three major industrial customers in that area and in aggregate they have purchased 57.8 mega volt amp (MVA) of capacity from L&P. Mr. McCollough said currently these customers have loading on the circuits above L&P’s designed rating, and customers in this area are projecting additional load growth requiring two additional circuits. There is funding to install one of the circuits, so L&P is seeking $.48 million out of reserves to fund the second of the two circuits. The duct banks are already in the area, so only the cable is needed to pull the circuits. Customers are asking for the circuits in this fiscal year to cover the future demand growth. The customers have already purchased the capacity, so there is no additional revenue that L&P will take from these customers, that is required capacity was previously financed Ms. Shores asked how it would affect the reserve fund, since Mr. McCollough said L&P was at a point where it shouldn’t go much further below. Mr. McCollough said after subtracting the three projects he is speaking on there will be 3.2 million above minimum reserves, and L&P is seeking in the next budget cycle to not pull any money out of reserves, so there is a little room. The third project is Southwest Residential Area which needs a circuit to Harmony Road and Shields Street due to residential load growth in the area. There are four circuits that are at or above 100% loading at peak. L&P needs to build one additional circuit to pull a load off those four. The project was planned for 2017 but the budget was short creating a funding gap on this circuit. To complete the project L&P needs an additional $230,000. Mr. McCollough indicated he is seeking support from the Energy Board for an off-cycle appropriation to fund the three projects of Water Treatment Facility, East Harmony Industrial Park, and the Southwest Residential Area. Board Member Behm moved for an expression of support from the Energy Board for an off-cycle appropriation to fund the three projects. Chairperson Michell seconded the motion. Vote on the motion: It passed unanimously, 7-0, with two absent. Board Member Reports Mr. Braslau shared with the Board that Meg Dunn, Chair of the Landmark Preservation Commission, lent him a DVD called The Greenest Building, a documentary about sustainability and the built environment. Mr. Braslau thought the showing of the documentary may interest the Board. The theme of the documentary is that cities want to build new energy efficient buildings, but that doesn’t necessarily imply tearing down old buildings as throwing out things can be a lot more wasteful than renovating. Mr. Braslau said he would let the Board know when a showing might be scheduled. Mr. Becker commented about an article done in the Coloradoan newspaper about TOD rates and how to save money. Mr. Becker said he thought it was well done and was good at explaining TOD. Mr. Braslau said one shortcoming was that the article said one could program their thermostats to pre-cool or pre-heat one’s house, which would be ineffective unless the house is well sealed and has a very good thermal inertia. Future Agenda Review Energy Board Minutes June 14, 2018 Energy Board Minutes June 14, 2018 Mr. McCollough announced that June 28, 2018 Work Session would be cancelled, due to the Broadband kick-off event taking place the same night. Mr. McCollough got the Board on the VIP list for the Broadband event. Mr. McCollough said he is seeking to add a few additional topics for the July 2018 meeting, and that Mr. Phelan will sit in for Mr. McCollough at the July 2018 Board meeting. The Board decided to remove Mike Beakstead’s Broadband Update for the July 2018 meeting agenda, since the Broadband event would be taking place in lieu of the June Work Session. Adjournment The Energy Board meeting adjourned at 8:36 p.m. Approved by the Energy Board on July 12, 2018 ________________________________ ______________ Board Secretary, Marisa Olivas Date 7/12/2018