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HomeMy WebLinkAboutEnergy Board - Minutes - 01/11/2018Energy Board Minutes January 11, 2018 1 Energy Board Minutes January 11, 2018 Fort Collins Utilities Energy Board Minutes Thursday, January 11, 2018 Energy Board Chairperson VACANT City Council Liaison Ross Cunniff, 970-420-7398 Energy Board Vice Chairperson Nick Michell, 970-215-9235 Staff Liaison Tim McCollough, 970-305-1069 Roll Call Board Present: Vice Chairperson Nick Michell, Alan Braslau, Bill Becker, Stacey Baumgarn, Greg Behm, John Fassler Late Arrivals: none Board Absent: none Others Present Staff: Tim McCollough, Christie Fredrickson, Kevin Gertig, Lance Smith, Lindsay Ex, Emily Wilmsen, Russ Hovland, Cyril Vidergar, Brad Smith, John Phelan PRPA: Paul Davis Members of the Public: Marge Moore, Krishna Karnamadakala, Amanda Shores Meeting Convened Vice Chairperson Michell called the meeting to order at 5:30 p.m. Announcements and Agenda Changes Public Comment None Approval of December 14, 2017 Board Meeting Minutes In preparation for the meeting, board members submitted amendments via email to the December 14, 2017 minutes. The minutes were approved as amended. Staff Reports Executive Director Update Kevin Gertig, Utilities Executive Director Mr. Gertig highlighted the 2018 Utilities priorities: continuing to lead a Culture of Safety, Asset Management, Renewable Energy/Advanced Meter Infrastructure, Climate Action Plan, Broadband, Development Review, and Water Future. The Utility tracks the progress of many budget offers from the previous cycle, and Mr. Gertig updated the board with key results from offer measures and initiatives through the end of quarter three. Under Energy Board Minutes January 11, 2018 2 Energy Board Minutes January 11, 2018 Economic Health (Maintain electric utility systems, services, infrastructure integrity and stable, competitive rates) overall, Light and Power is on track to fulfill the goals of the offers. Light and Power had many great accomplishments in 2017. Electric reliability is the highest it’s been in three years, system asset inspections are over 60% complete with a 95% success rate. L&P completed the North College Undergrounding project, completed phase II of the Harmony Duct Bank project, and set 21 concrete vaults in 2017 (the most L&P has set in one year). Looking toward the next 90 days, the utility will focus on developing the 2018 work plan, initiating the budgeting for offers process, and implementing Time of Use rates. Board member Baumgarn asked what the 95% success rate means, as it pertains to the asset inspections. Mr. McCollough explained the vaults L&P is inspecting are often very old, and sometimes it is difficult to read and collect the data (such as year, make, and manufacturer of the cable), and in about 5% of the cases, the data cannot be reliably determined. Mr. Becker asked if there is any high-level metric for renewable energy, current versus target. Mr. Phelan explained the energy policy’s goal for distribution renewables is 2% of the 20% goal by 2020 (in the Climate Action Plan). Currently, the utility is about halfway to that goal at 10MW and this data is reported to the Energy Board in the monthly dashboard packet. Board member Braslau asked if it would be possible to get a future presentation on hydroelectric potential and pumped storage potential. Quarterly Financial Report, Light & Power Capital Improvement Plan Lance Smith, Utility Strategic Finance Director In August, the budget was adjusted upward to compensate for the uptick in energy sales, but the unusually mild weather slowed the sale of energy, and so Light and Power ended up below budget by the end of December. Mr. Smith said financially, he expects 2017 will work out better than what was budgeted because revenues were higher than anticipated and expenses were under budget. The Utilities Planning Process has several steps, broken down into three groups: Master Planning, Capital Improvement Planning, and Strategic Financial Planning. Within this planning process, Mr. Smith considered a few objectives: Maintain adequate reserve balances (meet minimum reserves policy, and reserves and revenues are adequate to cover near term-capital requirements), maintain current credit ratings for each enterprise fund at the City, and avoid rate spikes by limiting rate increases to no more than 5% annually. Initially, the Light and Power Capital Improvement plan in 2016 was primarily focused on new capacity, and in 2017 they also added in the maintenance of the existing infrastructure, such as cable and transformer replacements (doubling L&P’s capital needs). The operating revenue in 2016 not used for purchased power expenses was $36M; this is important because L&P’s capital needs are not the same as Platte River’s needs, and typically, the utility needs $16 million a year for capital improvements. Operating revenue is anticipated to surpass operating expense in approximately 2020, and the financial plan includes 5% rate increases in 2019 and 2020 to help achieve a positive operating income. Additional modest rate increases will still be necessary in the years to follow. Mr. Smith also forecasts a necessary $20 million debt issuance in 2023 (to build two new substations to accommodate population growth), but Energy Board Minutes January 11, 2018 3 Energy Board Minutes January 11, 2018 fully anticipates that this will not be a problem, as a part of the broadband debt service is to be paid back prior to 2023 with its own generated revenue. Board member Baumgarn commented that it will be important to effectively and clearly communicate the difference between the debt issuance of broadband and the electric utility rate increases, so that the community doesn’t think they are experiencing a rate increase because of broadband. Mr. McCollough agreed and said a similar confusion could arise with the implementation of Time of Use followed by the two 5% rate increases. L&P operating expenses have been growing roughly at 5.5% annually, but they need to be closer to 2%. There are several City initiatives and programs putting pressure on electric rates, and when Mr. Smith goes to Council to request a rate increase, they always want to know how Fort Collins compares to its neighboring communities; however, City policies and priorities are different. For example, Fort Collins spent roughly 20% of the 2016 Distribution O&M on renewable and Energy Service expenses, but Loveland, Longmont, and Colorado Springs spent less, closer to 5%. Board member Becker commented many of the investments the Utility is making are designed to improve efficiency and ultimately lower costs. Vice Chairperson Michell said it could also be argued that the Utility underpaid for preventative measures in the past and is now paying the price. With regards to the funding spent on Energy Services, Board member Baumgarn commented that sometimes focusing on only one item like that doesn’t tell a complete story. Mr. Smith confirmed the Utility isn’t overspending on Operations as compared to the other communities, but the money spent on Energy Services is putting pressure on what the Utility can spend on Operations. Vice Chairperson Michell asked as a result what the City’s conservation rate per year is compared to Longmont and Loveland. Mr. Phelan said it is roughly double compared to those two communities. Climate Action Plan Update Lindsay Ex, Senior Environmental Program Manager Emily Wilmsen, Public Relations Coordinator (attachments available upon request) Ms. Ex handed out a flier called A Report to Our Community, which highlighted many of the CAP accomplishments. The City is currently 12% below the 2005 carbon inventory level, 80% of Fort Collins residents say they support the City’s engagement in climate action, and one out of every three Fort Collins businesses are engaged in energy efficiency programs (and realizing $9.5 million dollars in annual savings from those investments!). The CAP dashboard is officially live on the City’s website. Fort Collins came in second place among 50 communities for the Lose-a-Watt energy competition! In 2015/2016 the City reduced electricity/natural gas usage by 5.4%. The City also won an award in the Cities for Action category at the C40 Cities Bloomberg Philanthropies 2017 Awards. Overall projections still show that there is a pathway to the 2020 CAP goal with current and planned initiatives in place. Since Platte River is planning to add wind resources (150MW), the CAP team anticipates a 9.9% carbon inventory impact, including Fort Collins’ part of this new renewable resource, but the timing of when the project goes online is critical from the perspective of the 2020 goal. If existing funded initiatives continue, these initiatives could equate to an additional 6% impact. Board member Behm asked if the City or Platte River accounts for methane impacts of large hydro. Mr. Phelan said this is still an emerging science. Board member Braslau noted that the science is understood, but the problem Energy Board Minutes January 11, 2018 4 Energy Board Minutes January 11, 2018 is that reservoir systems are complex. Mr. McCollough added that Platte River is considering an additional 75MW of wind capacity, but the decision hinges on joining a regional energy market. Vice Chairperson Michell asked if the Energy Policy data would show a discrepancy in our emissions data because of the part ownership in Platte River, since Craig 1 will not retire until 2025. Mr. Phelan said, potentially yes, the discrepancy in the City’s community emissions would grow. Ms. Ex said staff’s next project is to update the CAP projections. In February and March, they will update individual initiatives, moving to inventory and updated projections in April, and then they will take the updates to the Council work session in May. Regarding local messaging and engagement, staff will also work on launching the campaign, and update where the Innovate Fort Collins challenge is heading in 2018. City Plan will kick off in February, and applications just closed for the CAP Community Advisory Committee. Ms. Ex said staff has been focusing on the 80% of Fort Collins residents who want to take action, but maybe don’t know how. So staff has been selecting to communicate behaviors with the greatest impact on the City’s goals, and will focus on no more than ten actions, but perhaps launching with just five to begin. They want to make the “ask” easy, and recognize the need to create partnerships. So far, staff has identified four actions: leave your car in the garage one day a week (31%-57% of population should able to complete), divert yard waste from the landfill (68% able to complete), switch to a smart thermostat (54% able to complete), and switch to 100% LED lighting (54% able to complete). Each action has an impact of 0.1% to 1.1%, adding up to a 2.8% inventory impact. Vice Chairperson Michell asked if staff believed they can measure a 0.1% change by diverting yard waste from the landfill. Ms. Ex said the other actions provide a larger payoff, but they included the yard waste action because people like to have options and 96% of the community already recycles non-organics. Ms. Wilmsen noted that while the community likes to have additional options, yard waste diversion is a newer service offered by local trash providers, and this may be a good way to help build awareness. Board member Baumgarn added that these actions seem very easy and tangible with a relatively low barrier for entry, so he hopes a lot of people will be encouraged to participate. Timing and Frequency of Code Adoption Russel Hovland, Chief Building Official Brad Smith, Energy Code Compliance Specialist Mr. Hovland discussed the future adoption of new building and energy codes. Currently, the City has a policy (not a municipal ordinance) to adopt the ICC Building and Energy Conservation Codes within one year of national issuance; building code revision cycles are every three years. The problem with this process is that it is quite labor and time intensive, and the whole process typically takes the City about one year. Staff just finished adopting the 2015 codes, and the 2018 code revisions have just been issued. Mr. Hovland asked for the board’s support in skipping the adoption of the new 2018 codes, and they will resume their adoption process for the 2021 codes. In his review of the 2018 codes, Mr. Hovland said there are minimal differences between the 2015 and 2018 codes. Mr. Smith said staff also reviewed several building projects slated through 2021, and compared these projects against Climate Action Plan initiatives to measure the impact of what not adopting the 2018 energy codes might be. They believe that adopting the 2018 codes will have a minimal impact on the goals of the Climate Action Plan, and will save a total of, at most, 700 metric tons of carbon dioxide, or an average cost of $25-$41 per metric ton reduction (as opposed to an average of $81 Energy Board Minutes January 11, 2018 5 Energy Board Minutes January 11, 2018 under the CAP initiatives). Mr. Smith said the overall takeaway is it’s a relatively low toal carbon savings, compared to other CAP initiatives, but it’s very cost effective. Board member Braslau said he quickly reviewed the 2018 residential codes, and they seemed to primarily include clarifications or simplifications, and he suggested that it would be advantageous for builders to follow some of the updates. Board member Behm said he understood the estimated 1 thousand MWh reduction of electricity use per year is on the high end, and relative to the buildings built in that three-year span, and he asked how those numbers compare to the total city electricity use. Mr. McCollough said total city electricity use in 2017 was 1,500,000 MWh. Mr. Smith also said some of the updates could be added as amendments to the code, especially if they identified something particularly necessary. Mr. Fassler said he believes the main priority should be education and enforcement, and adopting the 2018 codes at this point is like rearraigning the deck chairs on the Titanic, unless there can be a heavy focus on outreach, education, and enforcement. If anything should be included in the amendments, it should be balanced ventilation, because builders continue to build houses that suck, meaning they are consistently depressurized, and that’s not healthful indoor air. Board member Baumgarn asked if there is any difficulty with the response from the building community when code cycles are skipped, and what is the impact of a smoother, more linear adaptation, as opposed to larger spikes due to greater changes. Mr. Hovland said it is possible there will be a bigger jump in future construction costs (2015-2021 codes), but he said the consistent message he gets from builders is they are for skipping code cycles, especially when the changes are minimal. Mr. Fassler said every time there is a code cycle, builders complain, regardless of how incremental it is. Board member Baumgarn asked what the surrounding communities are doing in terms of code adoption frequency. Mr. Hovland said he does not know the other municipalities’ plans, but he said Larimer County is planning to adopt the 2018 codes within a year. Board member Behm asked if Mr. Hovland sees this process as a one-off scenario, or if this would potentially set a precedent that could push the City into consistently longer adoption cycles. Mr. Hovland said this request is strictly supporting a one-time request to skip the next code cycle. Mr. Hovland asked the board if they will support staff’s recommendation to skip the 2018 code cycle adoption, and in turn, adopt the 2021 codes when they are released. Board member Behm moved to support staff’s recommendation to skip the 2018 code cycle adoption. Vice Chairperson Michell seconded the motion. Discussion: Board member Becker asked if the Climate Action team supported skipping this code cycle, and staff agreed that they are not opposed to skipping the 2018 cycle, but would be opposed to moving to a six- year cycle. Ms. Ex also added that the CAP team will need the backing and support of Mr. Hovland’s staff to educate and enforce the current code compliance to help meet the goals of the Climate Action Plan. She supports utilizing their already limited resources to help them succeed in that capacity. Board member Fassler reiterated that he supports skipping this code cycle to use the staff resources to continue to educate and enforce the 2015 code compliance. Energy Board Minutes January 11, 2018 6 Energy Board Minutes January 11, 2018 Vote on the motion: It passed, 5-1. Board member Becker opposed. Approve 2017 Energy Board Annual Report Board member Behm moved to adopt the 2017 Energy Board Annual Report. Board member Braslau seconded the motion. Vote on the motion: It passed unanimously, 6-0. Adopt 2018 Work Plan Board member Behm moved to adopt the 2018 Energy Board Work Plan as submitted to City Council. Vice Chairperson Michell seconded the motion. Vote on the motion: It passed unanimously, 6-0. Board Member Reports None Future Agenda Review Mr. McCollough said the February agenda is light for now, and he will consider adding a BFO primer for new board members, but it will be good process refresher for everyone. Since BFO offers are due roughly the first week of March, board member Baumgarn said it would be nice to hear preliminary offers when possible. Adjournment The meeting adjourned at 8:15 p.m. Approved by the Energy Board on February 8, 2018 ________________________________ ______________ Board Secretary, Christie Fredrickson Date 2/8/2018