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HomeMy WebLinkAboutEnergy Board - Minutes - 11/03/2016Energy Board Minutes November 3, 2016 Fort Collins Utilities Energy Board Minutes Thursday, November 3, 2016 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, Board Members Alan Braslau, Greg Behm, Margaret Moore, Phil Friedman Late Arrivals: Stacey Baumgarn, Lori Nitzel Board Absent: Mohit Chhabra Others Present Staff: Cyril Vidergar, Tim McCollough, Christie Fredrickson, Dan Hodges (CAMU), Tyler Marr, Ginny Sawyer, Jen Barna, Bob Hover, Lisa Rosintoski PRPA: Paul Davis, Andy Butcher Members of the Public: None Meeting Convened Chairperson Pete O’Neill called the meeting to order at 5:30 p.m. Announcements and Agenda Changes The Board would like to have all memos or future correspondence distributed and posted to the SharePoint. The board would like to discuss the Joint Meeting with the LUC at the end of tonight’s meeting. Public Comment None Approval of October 6, 2016 Board Meeting Minutes Amendments to the October 6, 2016 minutes were made by the Board Members and the minutes were accepted as amended. Staff Reports Colorado Association of Municipal Utilities Membership (CAMU) Dan Hodges, CAMU (attachments available upon request) Mr. Hodges asked the Board to first describe their roles and responsibilities. Vice Chair Michell explained that the Board is an advisory board that makes recommendations to City Council. Board member Moore also advised that the Board discusses renewable energy initiatives. 1 Energy Board Minutes November 3, 2016 Energy Board Minutes November 3, 2016 Mr. Hodges discussed the differences between the three business models for electricity delivery in America. Public power, which is synonymous with municipally owned power, is not for profit and regulated by the City Council or Council-appointed Board. Public Power is unique in that the citizens have a direct path and voice to influence the local utility. Rural Electric Cooperatives are not-for-profit, owned by their members and regulated by a Co-Op Board. Investor Owned utilities are for-profit and owned by their shareholders. The three key features of public power in America are: Public Power is well established, ubiquitous and diverse. The three key benefits are accountability, affordability and dependability. In Colorado, CAMU has 29 distribution systems, three joint action agencies (such as PRPA), and one Statewide Trade Association. He explained there is tremendous diversity amongst the members of CAMU and the populations they serve; including various sizes of communities, geographies and even meteorology. When looking at the distribution of electric customers in Colorado, public power is quite small, only serving 17% of the state’s population. 58% is served by investor owned utilities (IOUs), and Co-Ops serve the remaining 25%. Very few of CAMU’s members have greater than 10,000 customers. Mr. Hodges pointed out that Solar City actually has more customers in the state of Colorado than most of CAMU’s individual electric municipalities. He also reviewed CAMU’s Billing Survey with the Board, which is administered twice a year through the municipal utility. Chairperson O’Neill said that it’s troubling to him that the reported statistics on the average bill does not reflect the customer’s effort to conserve, since the City sells energy services in addition to just energy. He asked if CAMU has thought about how to normalize conservation efforts, and maybe show the median residential bill for comparison? Mr. Hodges said that is not something CAMU has considered before, but he is open to best reflecting what the members and customers are doing. He emphasized that the value of the survey is not to make resource selections or to be a resource planning tool; it’s designed for utilities to compare themselves against each other. Mr. Hodges reviewed different types of public power sales and customer growth (Colorado, Municipal, Investor Owned Utilities and Co-Ops). The chart for municipal showed many spikes in electric sales, which spoke to the variety of customers a municipal utility serves, because municipal customers are much more susceptible or reflective to economic changes. CAMU serves as the exclusive link between municipal electric systems in Colorado. CAMU is contracted through Colorado Springs Utilities for executive director support, and members pay dues to CAMU. He believes that the most important thing CAMU does is bring their members together, particularly through their Annual Conference which facilitates reciprocal relationships and discussion around challenges and opportunities amongst municipal utilities. CAMU also offers other services to their members, including legislative advocacy and “amplification of voices,” because CAMU adds members to the general assembly. 2017 Legislative Policy Review Tyler Marr, Policy & Project Analyst Ginny Sawyer, Policy & Project Manager Dan Hodges, CAMU (attachments available upon request) Ms. Sawyer and Mr. Marr are the staff liaisons of the Council Legislative Review Committee. Ms. Sawyer advised the committee has been working on the City’s Legislative Policy Agenda, which consists 2 Energy Board Minutes November 3, 2016 Energy Board Minutes November 3, 2016 of two main sections: Priorities and Agenda. The agenda section is set up by the BFO Outcome areas, where it is critical to have policy statements, and the utilities section of the Agenda was distributed to the Board for review. The document helps guide and add nimbleness to the City’s ability to respond when legislation is proposed. Overall, the 2017 policy did not see many significant changes, but there were several tweaks. The committee is scheduled to go to City Council for adoption of the 2017 Policy on November 15. Chairperson O’Neill asked to confirm that the committee does not know what Council will propose or approve, and Ms. Sawyer confirmed the agenda statements are intentionally broad, so that they’re in a position to protect our local elections and governments if things do come forward. Chairperson O’Neill also asked if there are any active (as opposed to being reactive) components, like City Council meeting with legislators. The committee does meet with legislators twice a year, but Ms. Sawyer advised that they are generally reactive unless legislature has been brought to the table and then fully vetted by Council. The committee does provide the document to the legislators ahead of the session to say, “if anything comes across your desk and you’re wondering how we feel, you’ll find it in here.” Mr. Hodges added that this is very common practice in municipal utilities. Because the business model is so different (than IOUs or Co-Ops), legislation does not need to be forced, it’s done at the local level. Board Member Braslau asked if any of the changes to the 2017 policy might cause any controversy in council. Ms. Sawyer and Mr. Marr said they don’t anticipate any controversy because the Councilmembers on the committee vet the document first. Additionally, the document is written broadly enough that it should be agreeable. Mr. McCollough added that these energy items in the document are all verbatim from the Energy Policy that Council has already adopted. Board members asked if there are any differences between CAMU and the City of Fort Collins that might cause friction or conflict, or if CAMU would take a position on legislation, such as the Clean Power Plan, or anything restrictive? Mr. Hodges said that CAMU doesn’t usually get involved with their customers’ legislation, but he reiterated that it’s CAMU’s job to empower their communities and members, and additionally they might make suggestions or recommendations. Cyber Security Review Jen Barna, Systems Specialist Bob Hover, Electric System Design & IT Manager (attachments available upon request) Ms. Barna defined cybersecurity for the Board, and advised the focus on cybersecurity is at an all-time high. It’s also not just an IT concern; it’s a business concern, as illustrated in Allianz’s 2015 Risk Survey. Board Members inquired why cybersecurity is new to the Allianz ranking, when cybersecurity has been a concern for some time now. Ms. Barna explained the survey from 2014 either didn’t ask the questions, or it didn’t rank, but the 2015 survey did. Board members also inquired why cybercrimes and IT failures are lumped together in the survey under “Cyber incidents”, and she believes that often times it does not matter why a system went down, it only matters that it went down and it’s unavailable—either way it requires investigation. She also said any cybersecurity incident response plan will start at the same place (investigation) and contain preventative components, but if something does happen it’s important to know what path or action to take next. Mr. McCollough added that cybersecurity is a newer concern for the light and power industry because of technology upgrades and the automation of distribution utilities. Ms. Barna agreed and said because technology is rapidly changing, security breaches are becoming increasingly more complex. 3 Energy Board Minutes November 3, 2016 Energy Board Minutes November 3, 2016 Board Member Behm asked if there is any immediate impact on the service that the utility provides if there was an attack on the Advanced Metering system? Mr. McCollough said one of the significant risks of a cyber-attack is from internal sources, so the city closely monitors access control lists on a routine basis to help limit or prevent an internally sourced attack. Vice Chair Michell asked if the city would know if there was an AMI breach, and Ms. Barna believes they would know because anomaly tracking, especially in notifications and logs, such as too many administrative log-on attempts. Board Member Friedman asked if the penetration test in 2013 is still valid, since it’s now nearly 2017, or will there be repeated penetration tests? Ms. Barna said the best way to handle that with the City’s limited resources and multiple systems is to roll through them, and use the findings from each one to build on the City’s other systems as they go. Ms. Barna reviewed their current and planned cyber security projects and Board members reiterated their concern about resource availability, and if there are governed procedures in place to measure progress. Mr. McCollough added it’s not that the Light and Power doesn’t have a cyber security plan or policy in place, but rather there is not a unified plan in place across Utilities. The goal of these projects is to unify the Utility and put governance in place so that there is standardization across all the functional areas. Senior management is focused protecting the key pieces of the business, and then they will move to the smaller areas that could be perceived as weaker links. Mr. Hover reviewed the physical security status of the Utility’s substations. He advised that an assessment was completed in 2005 and some short comings were found and addressed. Since then, the City has installed many preventative security measures and these changes have proven as effective deterrents for current and future threats. Mr. McCollough summarized that the Board would like to get future updates regarding what standards the Utility uses, and advised that can be provided next year after they complete the new risk assessment. He asked the Board if there is any additional follow up items they would like to hear about. Board member Braslau expressed concern about resource availability again, and Mr. McCollough explained that the risk assessment will assist in the allocation of the resources and help build the expertise in-house. Intro to Energy Markets Andy Butcher, Vice President of Power Delivery, Platte River Power Authority (attachments available upon request) Mr. Butcher described Colorado’s current energy market, which he believes is archaic, and explained that it can be broken down into two markets: a transmission system market and an energy market. Currently, each transmission owner has its own tariff for its system, and transmission customers pay a tariff for each transmission system used to deliver power—this is also called “pancaked rates.” There are five separate companies that have a transmission tariffs in Colorado alone. Mr. Butcher likened the markets to plumbing; the transmission market is similar to the pipes to your home, and water in the pipes is similar to the energy market—someone has to put energy in them. PRPA has its own energy system (or market), but at times it is necessary to use energy from other systems in Colorado or neighboring states. If that happens, the way energy is currently acquired is by picking up the phone and calling someone. Mr. Butcher’s goal is to explain that there could be a better market structure through a regional tariff. An independent transmission service provider manages a tariff for the footprint, which eliminates pancakes. The benefits to PRPA and owner municipalities are: no pancaked rates to deliver energy, reduced 4 Energy Board Minutes November 3, 2016 Energy Board Minutes November 3, 2016 ancillary service fees, and the ability to exchange power to utilities in parts of Wyoming, South Dakota and all of Colorado without additional cost. PRPA could also build or contract for new generation anywhere within the footprint and bring it home under one tariff. Overall, there could be large savings for Platte River under this market structure. Board member Braslau pointed out that PRPA will no longer be paying those charges, but they also will no longer receive that revenue either. Mr. Butcher said that the amount of revenue Platte River receives for third party usage of its transmission is much smaller than the amount it spends on purchasing transmission, so a change to a single transmission tariff is likely to be beneficial to Platte River. Mr. Butcher explained what organized energy markets are, including RTO (Regional Transmission Organization) and ISO (Independent System Operator). Both entities are functionally the same in that they operate and manage the electricity grid over a large region. Under this organized energy market, dispatch systems exist that would allow PRPA to serve their load from any available resource within the footprint. Cheaper resources can now serve the load, and Fort Collins’ cost of serving energy is now reduced. Market studies show that regionally, everyone will save something and those who were losing on the transmission market side are now kept whole. Additionally, there are lower balancing costs. Mr. McCollough asked if there is a cost of carbon in any existing market and Mr. Butcher said that the concept has been discussed, but at this time there’s no need to change anything, but rather just add the cost of carbon to the unit. In the new system, there are four electronically-driven markets: the Day-Ahead Market (next day operations plan), Real-Time Market (5 minute dispatch signals to balance load/generation), Financial Transmission Rights Market (hedging cost of transmission congestion) and Resource Adequacy (year- ahead forward planning reserves). Vice Chair Michell asked about the day-ahead market versus the real- time market forecasting and Mr. Butcher said the Real Time market is typically more volatile because its making up for any missed forecasting from the Day-Ahead market. Mr. Butcher displayed a slide showing a map of the current RTO/ISO markets in North America and pointed out that the west does not have any organized markets with the exception of the California ISO, but they have unique rules. Ultimately, the Mountain West group (including Basin Electric, Black Hills, Colorado Springs, PRPA, PSCo, Tri-State and WAPA) would like select one of the existing entities to help set up its regional market. They’ve spoken to four of them on the map, and hope to announce by the end of the year what direction the group has decided to move in. Board Members wondered if it’s possible to predict the future now, but Mr. Butcher said he’s still bound by confidentiality at this time. Mr. Butcher summarized potential areas of value, including reduced cost of third party transmission, improved reliability and the ability to interconnect new generation resources anywhere within the footprint. In this scenario, there is one question: how will the future cost of new transmission be allocated? He advised that right now they are still working through the nuances of cost allocation. Board member Baumgarn asked what the future looks like as far as energy generation mix, since PRPA is currently very coal heavy (~65%), because his vision would include more wind energy. Mr. Butcher said that’s something PRPA would deal with through resource planning, but a regionalized market is a vehicle to get to that vision. Proposed 2017 Meeting Schedule Mr. McCollough suggested that we submit the Draft version to the board for suggestions and then they could review it at their next planning meeting. 5 Energy Board Minutes November 3, 2016 Energy Board Minutes November 3, 2016 LUC & Energy Board Collaboration Chairperson O’Neill asked for Mr. Vidergar’s opinion on what the board can or cannot do in regional collaboration. He said City Council will review the Board’s work plan, and in the past Council has been very liberal with strikeouts. He is unsure how they will react to the provision request to collaborate outside of the city, because Council created the board with the purpose of advising them, not necessarily with the purpose of creating bridges with other communities. If the provision is approved, the city code will have to be amended. Mr. McCollough said it is unclear what method the board can use to petition Council, whether that is a memo or an actual appearance at Council, etc. Staff and Legal support will support the Board with that vehicle if that work plan provision is approved. Board Member Reports Mr. McCollough reminded the Board about the educational tour of the Rawhide Energy Station on November 7. Future Agenda Review Adjournment The meeting adjourned at 8:39 p.m. Approved by the Energy Board on December 1, 2016 ________________________________ ______________ Board Secretary, Christie Fredrickson Date 6 Energy Board Minutes November 3, 2016 12/5/2016