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HomeMy WebLinkAboutEnergy Board - Minutes - 02/23/2017Energy Board Minutes February 23, 2017 1 Energy Board Minutes February 23, 2017 Fort Collins Utilities Energy Board Minutes – Special Session Thursday, February 23, 2017 Energy Board Chairperson City Council Liaison Pete O’Neill, 970-223-8703 Ross Cunniff, 970-420-7398 Energy Board Vice Chairperson Staff Liaison Nick Michell, 970-215-9235 Tim McCollough, 970-305-1069 Roll Call Board Present: Chairperson Pete O’Neill, Vice Chairperson Nick Michell, Alan Braslau, Bill Becker, Greg Behm, Stacey Baumgarn Late Arrivals: Margaret Moore Board Absent: Phil Friedman Others Present Staff: Tim McCollough, Christie Fredrickson, Victoria Shaw, Amanda King, Travis Paige PRPA: Paul Davis Members of the Public: Clayton DeLosier, Mark Houdashelt Meeting Convened Chairperson Pete O’Neill called the meeting to order at 5:30 p.m. Electric Capacity Fees Lance Smith, Utilities Strategic Finance Director Justin Fields, Utility Rate Analyst (attachments available upon request) An Electric Capacity Fee (ECF) is a onetime charge that recovers costs of offsite assets needed to provide service. ECFs, also known as a development fee or impact fee are common in the water and wastewater industries, but there is no apparent standard for electric utilities. ECFs are not charged monthly, and they only apply to the distribution system; on-site assets unique to each project are billed separately. The Utility is currently using an outdated planning model that is complex to maintain and administer. It assumes greenfield development, but does not account for mixed-used development or update costs according to capital improvement work. This model is built on four-square-mile plan, and assigns costs to square footage, linear footage abutting public right of way, and demand based on dwelling units or panel size. The proposed new ECF method is similar to a “buy in fee,” and calculates residential and commercial classes with a dollars-per-kilowatt model. This model assigns costs based on demand and assumes new development will have approximately the same cost as previous development. Mr. Fields explained this is a reasonable assumption because the Utility overbuilt the system with the expectation that growth will happen. The customer’s ECF is calculated by the dollars per kW multiplied by their expected kW (pulled from the customer’s actual AMI data). Residential customers will have same $/kW charge because they are a homogenous group; however, commercial customers have larger differences between them, so the Utility developed a sliding scale for those customers. Energy Board Minutes February 23, 2017 2 Energy Board Minutes February 23, 2017 Some benefits of the proposed model include: simplicity (easier to administer and easier to explain), it automatically updates with capital work (utilized value of system), it automatically adapts to changes in development (mixed use and redevelopment will affect utilized system value and class demand), and it utilizes actual data (utilized system value and customer demand). Even though residential customers have the same $/kW value, they have different demands for different groups of customers, such as single family, multifamily, electric heat and panel size. Each specific site will vary, but in general the residential and small commercial classes will see a benefit (reduction) while larger commercial or residential customers may see an increase. Board member Becker asked if the Utility is trying to generate more revenue with this model and Mr. Fields advised the idea is to accurately assign costs, not to drive revenue. Board member Moore suggested getting a focus group or panel of developers to get their thoughts the new ECF model’s understandability. Mr. Smith advised since this is a change in methodology; they wanted to see if Council is supportive of the change and then begin coordinating public outreach. They are scheduled to go to Council on March 7, as part of a larger Development Fee discussion and do not anticipate a lot of pushback since most classes will be decreasing. He also clarified that today, developers don’t really know what their fees will be, but in the new model they will be able to accurately estimate the fee. Board member Moore moved that the Energy Board recommend approval to Council of the new Electric Capacity Fee structure. Chairperson O’Neill seconded the motion. Discussion of the motion: Board Braslau would have liked to see a more comprehensive study of the impact this change would have. Other board members agreed that this structure is likely an improvement over the old method, but many requested specific data to show proof of the accuracy of the new model. Chairperson O’Neill clarified that he believes the Board wants to know how well the Utility is recovering expansion costs in different cases. Mr. Fields asked the Board to think about what the average four square miles looks like in Fort Collins; Old Town is going to look very different than South East Fort Collins, so the four square mile model tries to average that information. The Utility came to the new ECF model because the old method made it very difficult to extrapolate that data accurately. Chairperson O’Neill stated that the purpose of the ECF is to recover development costs, and at this time, he can’t see how it does. Mr. Fields asked what information he would need or how they should demonstrate the cost recovery. Mr. O’Neill suggested displaying the Capital Expansion Cost associated with that project. Mr. Smith advised that data will vary based on the project’s location in town, the previous investment made in that part of town, and when that investment was made; so instead they are trying to illustrate the growth that’s happening that year is adequate to pay for the investment they’re making in the infrastructure that year. Vice Chairperson Michell said he doesn’t believe this presentation has demonstrated that. Mr. McCollough advised he is confident that Mr. Fields value model is very accurate, though it’s simplified, especially in conjunction with advanced metering data. He reiterated that anything that’s actually on the property of a facility, such as a transformer, is going to have a separate onsite facility charge. The ECF builds the distribution network to get to the property. The ECF pays for the entire shared infrastructure that’s in the roadway throughout the whole system and benefits all customers, and it benefits them based the percentage of their load that they put on the system. Energy Board Minutes February 23, 2017 3 Energy Board Minutes February 23, 2017 Mr. McCollough added that this is a fair way to charge the actual electric impact and more accurately reflects the future of the community. Vote on the Motion: It passed unanimously, 7-0, with 1 absent. Road to 2020 Lindsay Ex, Environmental Program Manager Amanda King, Community/Public Involvement Director Victoria Shaw, Senior Financial Analyst Travis Paige, Community Engagement Manager (attachments available upon request) Council adopted the Climate Action Plan goals in 2015, but in 2016 Council believed the title, Climate Action Plan, wasn’t connecting with everyone, so it was rebranded as Road to 2020: Forging Our Efficient Future. Now, in 2017, the City is focusing on implementation and emphasizing that underneath all the work, the Climate Action Plan goals are still the primary focus. The City is almost half way through the climate action goals. The City hopes to be 20% below the 2005 levels of community greenhouse gas emissions by 2020, and as of today, the City is 9% below. At this rate, if nothing more were done, the City would be at 7% below by 2020. However, Council made additional investments in well-vetted and cost effective programs, so these initiatives help project the City to be at 17% by 2020. In order to close the gap, the CAP team will continue to search for and vet new and impactful initiatives. Ms. King advised staff was asked to help businesses and citizens understand the why and how of the CAP goals, and inspire them to see themselves in the plan and act by identifying a unifying value. They believe that Fortify Fort Collins can represent that unifying value because Fortify means to strengthen, or enhance, and as a verb it signifies a call to action. It also contains the root, Fort, which brings a local connection. Tag lines are being tested as the messaging is still being developed, but ultimately the goal is to connect Fortify Fort Collins to the Climate Action Plan. Ms. King reiterated that the Climate Action Plan is the framework, goals, reporting and metrics, while Fortify Fort Collins is specific to messaging, connecting and inspiring action. Ms. Ex asked the Board if they support a new brand for the Climate Action Plan implementation that appeals to a broad audience, and if so, what do they think of Fortify Fort Collins as that potential new brand? Chairperson O’Neill said he believes average citizens are having trouble understanding what they can do. He recognizes that different populations will be motivated by different things and thinks Fortify Fort Collins has good tagline options, but the actual title should be more explicitly related to energy. Ms. King said the reason why staff is drawn to Fortify is because it’s about investing in, strengthening and enhancing your community. Board Behm thinks the City might be searching for an indirectly titled unifying theme in order to avoid scaring away those who don’t believe in, or aren’t interested in climate change. Mr. Phelan commented that they are trying to help everyone understand that it can be both, these items are not mutually exclusive, and that eventually Fortify Fort Collins will have it’s own connotation to the Climate Action Plan. Board members commented that many other City Initiatives have titles that directly relate to their cause, such as Climate Wise or Efficiency Works. Ms. Ex pointed out that many brands aren’t explicitly labeled, Energy Board Minutes February 23, 2017 4 Energy Board Minutes February 23, 2017 such as Apple or Swiffer, and the brand becomes synonymous with the product. Board member Baumgarn expressed that the Board may suffer from their own curse of knowledge, he encouraged them to remain open because he doesn’t want to win the battle but lose the war. Board member Braslau thinks rebranding the Climate Action Plan is counterproductive and potentially alienating the audience they are trying to reach the most. Mr. Phelan reiterated that the City is not getting rid of the Climate Action Plan, CAP is the framework for all the City’s goals, but Fortify is supposed to be flexible and catchy. Chairperson O’Neill asked if staff needs the Board to vote on a resolution, and Ms. Ex clarified that their item is a Council Work Session agenda item, so there is no request from staff for a resolution, but understood that the Board may want to provide one. Vice Chairperson Michell advised he does not have a resolution to propose, and Board members agreed that their feedback to staff is sufficient. Board members also agreed that the branding should be more self-evident. Review Energy Board Work Plan Memo to Council Peter O’Neill, Energy Board Chairperson (attachments available upon request) Board members suggested several small changes and worked together to shorten the document. Board member O’Neill moved to approve the 2017 Energy Board work plan follow up letter as amended during discussion, and to authorize the board chairman to submit it to the City Council liaison on behalf of the Energy Board. Board member Braslau seconded the motion. Vote on the Motion: It passed unanimously, 7-0, with 1 absent. Adjournment The meeting adjourned at 7:52 p.m. Approved by the Energy Board on March 9, 2017 ________________________________ ______________ Board Secretary, Christie Fredrickson Date 3/17/2017