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HomeMy WebLinkAboutEnergy Board - Minutes - 06/13/2019ENERGY BOARD REGULAR MEETING June 13, 2019 – 5:30 pm 222 Laporte Ave.; Colorado Room ENERGY BOARD MEETING |06/13/2019 ROLL CALL Board Members Present: Chairperson Nick Michell, Vice Chairperson Amanda Shores, Jeremy Giovando, Alan Braslau, Bill Becker, Dan Gould, Krishna Karnamadakala, John Fassler, Stacey Baumgarn Board Members Absent: OTHERS PRESENT Staff Members Present: John Phelan, Christie Fredrickson, Lindsay Ex, Molly Saylor, Lance Smith, Randy Reuscher, Brian Tholl, Cyril Vidergar Platte River Power Authority: Paul Davis, Wade Hancock Members of the Public: Sue McFadden, Nick Francis, Doug Henderson, Neal Girard MEETING CALLED TO ORDER Chairperson Michell called the meeting to order at 5:30 pm PUBLIC COMMENT Nick Francis is representing a coalition of six different environmental groups, called Partners in Climate Action. Partners in Climate Action have been working on standards for metro districts, and they submitted a proposal for the Board’s consideration. The coalition hopes the Energy Board will recommend City Council set minimum standards for building code and energy efficiency components of metro districts. Mr. Francis said they are looking for market-proven solutions, things they know already work in Fort Collins or in the Northern Colorado area. Ms. McFadden is a development consultant for Revive, a community in North Fort Collins built to the Department of Energy’s zero-energy standards. She said metro districts are important right now, there are four already requested and a fifth could be formed soon; metro districts are a great value to the developer because the developer can get low risk and inexpensive money to do all the infrastructure. Ms. McFadden said the developer typically provides social benefits in exchange, and the coalition believes those benefits should be in three areas: affordable housing, energy efficiency, and transportation. There are several communities that led the movement in Denver, like Stapleton and Midtown, and in California and Oregon all new construction homes must be built to the DOE’s net zero standards by 2020. In these communities, homeowners have to pay more money because the property taxes are so much higher; if the energy costs are lower it can help offset some of the other costs of living in a metro district. The coalition wants Energy Board to urge city council to set a minimum energy code across all metro districts. Neil Girard, a certified energy rater, said DOE’s net zero is a no-brainer because it has very little additional building cost associated with the energy code standard. Also having a third-party rater makes a huge difference, and it is important to incentivize passive house standards to create a new baseline for homes. ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 06/13/2019 APPROVAL OF MINUTES In preparation for the meeting, board members submitted amendments via email for the May 9, 2019 minutes. The minutes were approved as amended. ANNOUNCEMENTS & AGENDA CHANGES Mr. Phelan said one priority that came from City Council’s recent retreat is “Reimagining Community Engagement and Boards & Commissions. While that priority is still being defined, the leadership team has decided to temporarily suspend appointments to all Boards & Commissions. Mr. Phelan said there has been some discussion about potentially forming a Utilities Board, as opposed to separate Water and Energy Boards. There are two mandatory Board & Commission member trainings, choose one of the two sessions: June 26 or August 6. STAFF REPORTS Microgrid Symposium (Packet Item Only – No Presentation) Mr. Phelan said Platte River is a sponsor at the symposium, which allowed each City one representative to attend, and his recommendation was Adam Bromley. At the moment it does not appear there will be opportunity for additional attendees, as it is a by-invitation-only event. The Board requested a follow-up staff report after the event. Quarterly Financial Report (Packet Item Only – No Presentation) Chairperson Michell asked why Energy Services is so far below budget. Mr. Phelan explained Energy Services calendarizes their budget, forecasting their expenditures throughout the year. Some of their projects have very long timelines and so the costs do not apply until the project timeline has completed. 2019 Colorado Legislative Summary (Packet Item Only – No Presentation) 2018 ENERGY POLICY RESULTS & CLIMATE INVENTORY UPDATE John Phelan, Energy Services Senior Manager Lindsay Ex, Climate Program Manager (attachments available upon request) Ms. Ex displayed a graphic highlighting many of the City’s plans and how they fit together. Fort Collins City Plan is the City’s long-term plan, and the Strategic Plan is the short- and mid-term plan. Functional Plans, such as the Climate Action Plan, the Energy Policy, and the Road to Zero Waste plan, support the long- and short-term planning efforts through the City’s Budgeting for Outcomes process. Ms. Saylor said the 2018 carbon inventory data is delayed, but the delay is allowing room to make a large update to the City’s transportation data. The transportation data will now use data from the Department of Motor Vehicles, which localizes the data with less reliance on third party calculations and models. The data will also be more consistent back to 2005. Additionally, the DMV data will be a significant asset beyond carbon inventory tracking because it can support things like EV tracking and targeted infrastructure planning. ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 06/13/2019 Waste emissions are down 72% since 2005 down 6% since 2017, and 78% per capita since 2005, which is the lowest waste per capita since 2005. Chairperson Michell asked if the recyclables in our market are actually getting recycled. Ms. Saylor said that is a broad question with a nuanced answer; there have been many changes in the recycling market in recent years and the waste reduction and recycling team is doing a lot of work to ensure transparency. Ms. Saylor said she’d like to follow up with them to see if they have additional messaging to pass along to the Board. Ms. Ex added we have moved into a new era with recycling and can no longer be “wishful recyclers,” it has to be more about quality not quantity and there are a lot of behavioral changes that go along with that. For example, plastic berry clamshells are not recyclable anymore, but the sorting facilities are still able to sort them out. Mr. Phelan highlighted three items from the Energy Policy that staff was particularly proud of: Becoming an APPA flagship utility with Time of Day Rates for all electric residential customers and Income Qualified Assistance Program (IQAP) for all utility services. The 100% renewable electricity by 2030 resolution and building energy and water scoring ordinances, these specific actions by Council lay the groundwork for improving efficiency in the building space as well as the City’s long-term renewable goals. Finally, winning the Bloomberg Philanthropies’ Mayors Challenge and $1 million award which helps fortify the values of health and well-being to our low- and moderate-income residents in particular. Mr. Phelan said 32,800,000 kWh were avoided in the 2018 calendar year, which is 2.1% of community annual electricity use and equivalent to 4,200 homes. The savings target was 2% in 2018, and the savings achieved was amongst one of the best years in Fort Collins history. In 2020, the Energy Policy’s goal is a 2.5% savings, but in Mr. Phelan’s personal and professional opinion that is probably not a sustainable goal year after year. 88% of the savings comes from business efficiency programs and the home energy report program, so businesses and institutions continue to drive energy savings in our community. In 2018, fossil fuels provided 67% of the electricity supply in Fort Collins. Wind and Solar energy usage have increased since 2005; 11% wind, 3% solar in 2018 as opposed to 2% and 0%, respectively. The 100% renewable electricity resolution (100% RE by 2030), redefined RE resources as all non-carbon resources, including hydro. This created a disconnect between the resolution and the Energy Policy, so staff will have to resolve that in the next policy update. Platte River updated their Resource Diversification Policy to help achieve the 100% RE goal, and still plans to close Craig Unit 1 by 2025. The Peak Partners program had a realized reduction of 2 MW during the peak periods of summer 2018. Staff spent a lot of time planning for the Bring Your Own Thermostat rollout within Peak Partners as well as the Renewable Integrations Operations (RIO). The Board is expecting a presentation in the coming months on these Demand Response Programs. The Electric Utility’s reliability was 99.9968% reliable in 2018, with a Customer Average Interruption Duration Index of 45 minutes, and a System Average Interruption Duration Index of 17 minutes. Ms. Saylor recapped 2018’s electricity inventory, which is down 35% per capita since 2005, the lowest use per capita since 1986; however, electricity emissions overall are up 1% since 2017 and that is one of the highest years for absolute usage. Similarly, natural gas absolute inventory is up 13% since 2005 and up 6% since 2017, but down 12% per capita since 2005. The diverging per capita and absolute numbers demonstrate the impact of population growth in the community. Ms. Ex explained how staff has shifted their planning approach from historical (can we?) to current (how can we?); she acknowledged the process is iterative and alignment will happen with time. All three of the ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 06/13/2019 plans will address sequencing, capital infrastructure needs, community engagement, and be explicit about tradeoffs. The phases of the plan updates appear linear in a graphic, but the process will remain iterative and some work will take place concurrently while they compile best practices. Staff wants to understand community priorities, work on formal planning (data collection and analysis, visioning, scenarios, plan development), and release/adopt the plan in quarter 4 of 2020. Ms. Ex added the City does not need to be the gatekeeper of engagement events, but it is helpful if they are present. Coming up, staff will be working on leading with equity from a process perspective and an outcome perspective by focusing on mitigation, resilience, and equity. Chairperson Michell said sometimes it seems we (as an organization) come up with great ideas, but then staff has to turn around and sell it to the community, which is difficult because often staff is often interacting with the same engaged members of the community at different hosted events. His takeaway from the presentation is that the networks already exist, but we need to do a better job finding those people to find out what their problems are so staff can work to help them, while helping us. Board member Giovando said it seems like the underlying assumption is that there is a basic recognition that the city needs to do something, and he wondered how staff is addressing those members of the community who still don’t believe anything needs to be done? Additionally, there are some nuanced, complicated, and technical things in the works that need to be done, and he wanted to know how those are being communicated. Ms. Ex said about 80% of City of Fort Collins residents are supportive of a Climate Action Plan and the work behind it. When concerns do come up, they are often the same concerns heard around other engagement events, such as, how will this help housing affordability in Fort Collins? She said, the goal is not to go from 80% support to 100%, but to meet people where their values are. Ms. Ex also explained using action-based communications (such as the SHIFT campaign) to communicate culturally relevant and easy actions to create connections to the larger plan. NEW WHOLESALE RATE STRUCTURE & FORECAST Wade Hancock, Platte River Power Authority (attachments available upon request) Platte River is restructuring wholesale rates to provide an enhanced customer experience and to create a rates framework to improve transparency, flexibility and system benefits. This is a critical first step to enable owner communities to meet customer needs and wants through flexible service offerings. The rate strategy and design process was broken into two phases: phase one determines the rate setting philosophy, and phase two is conducting a cost of service study and rate design. This was completed in 2018; looking forward into 2019, Platte River will be presenting the proposed rate design and changes and aiming for the Board of Directors’ approval for adoption in January of 2020. The Board of Directors adopted the following rate setting policy goals: improve value added of Platte River in support of owner communities, offer a desirable portfolio of services and rates that meet owner communities’ needs, better align wholesale pricing signals with cost of service and owner community retail pricing signals, and send pricing signals that result in system benefits (short- long-term marginal cost savings from a wholesale perspective). Mr. Hancock said the cost allocation process is simple; you begin with the revenue requirement and then split it based on the functions that Platte River serves (transmission, production, and bonus services such as demand side management programs), and then you take those unbundled items and go through the cost classification process which determines rate design. Rate design is made up of the owner charge, demand charges (transmission and generation fixed costs), and energy charges (generation fixed costs, ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 06/13/2019 generation variable dispatchable resource costs, and generation variable intermittent resource costs). Tariff 7 is the renewable energy premium at Platte River and the financial and megawatt hour commitments of Tariff 7 will be maintained into 2020. That will mitigate the financial impact of the transition to the new rate structure, but it will also help the owner communities achieve their respective non-carbon goals. Tariff 7 is proposed to be terminated after 2020 due to the large influx of intermittent resources on the horizon. The rate structure change impact to the owner communities in 2020 is a per-percent owner community energy charge. Mr. Hancock explained that a year-round charge indicates there is no seasonality to this component. The new rate design will be revenue neutral to Platte River, and cost recovery methodology changes create differences from how costs were previously collected. The demand charges will be unbundled to be more transparent, there will also be a transmission charge and a generation charge. Demand charges are currently collected based on coincident peak but going forward they will be based on a ratchet (minimum charge). This is designed to address fluctuations in demand by owners and result in more certainty in the monthly bill for each owner, as well as revenue certainty for Platte River. The demand transmission charge is a non-seasonal non-coincident peak demand charge with a ratchet. The ratchet is based on the average three most recent year-end maximum annual non-coincident peaks multiplied by 75%. The demand generation charge will maintain the seasonality component, summer and non-summer. There is also a generation ratchet which is based on the average three most recent year- end maximum summer season coincident peak multiplied by 75%. The use of a three-year average will normalize weather-related impacts and still reflect owner community efforts to change the load profile. Platte River staff is also recommending extending the summer season through September (as opposed to June through August). The energy charges recover variable costs and a portion of the fixed costs. There is no seasonality to the energy charge because the observed variance between seasons is minimal. Increased transparency in the energy charge will allow greater pricing flexibility at retail. There is a dispatchable fixed charge which applies to all kWh supplied. Dispatchable variable energy provides the balance of energy requirements not provided by intermittent resources, such as wind and solar. Intermittent variable energy is allocated monthly based on each owner community’s ratio of total owner community monthly sales (excluding any Tariff 7 legacy allocations). Board member Baumgarn asked if the transparency (and the) unbundling was intended to provide flexibility if the each of the four communities were to ask for a unique generation mix, could Platte River price it accordingly? Mr. Hancock said no, the intent of the transparency is so that the retail customer could then price their own programs that they feel are necessary. Chairperson Michell said a community could not decide that since coal is less expensive, that is the resource they would use, and Mr. Hancock confirmed, that is not an option. Some rate pressure has dissipated, so Platte River is not recommending any projected rate changes in 2020, but they will recommend a 2% increase in 2021-25, and an additional 1.7% 2026-30. Mr. Hancock added the rate projection assumptions are not inclusive of the resource diversification policy at this time, when the Integrated Resources Plan is complete the projections will likely change. Platte River is available to support wholesale rate communications to stakeholders as requested by the owner communities, and they will begin publishing wholesale rate information on their website within the next few weeks. Board member Becker asked for clarification on the ratchet; he wondered if that process would kill the ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 06/13/2019 demand side incentive to reduce the peak? Chairperson Michell said he believes that incentive will have a stronger impact through retail rates, and Mr. Becker’s question may be more suited for the next presentation. Mr. Hancock said Longmont or Loveland would likely pay the ratchet 8-9 months a year, but Fort Collins load is a different, and would only be paying the ratchet close to half of the year, so the incentive exists in the fact that the community won’t be paying the ratchet all year long. Mr. Phelan added the City does have a ratchet on some portions of Commercial and Industrial rates, but not on other portions. RETAIL RATE STRUCTURE PLANNING Randy Reuscher, Lead Analyst, Utility Rates Lance Smith, Director, Financial Planning & Assets (attachments available upon request) Mr. Reuscher said the proposed wholesale fixed charge hovers around $5.6 million annually. The options to pass this on retail customers include increasing the fixed charge, roll into the demand charge, or add to the kWh charge. This equates to less than 0.5 cents per kWh when averaged across the entire customer base. Chairperson Michell clarified, the rates are not increasing at the wholesale level, this change would be like “rearranging the furniture.” Mr. Smith said the rates are not increasing at the wholesale level, but staff is requesting the previously discussed 5% increase at the retail level due to distribution needs. In the 2020 rate summary, high load factor customers will benefit from the cost shift to demand changes, but low load factor customers may be negatively impacted. Coincident and non-coincident peaks are generally the same hour and same day, and therefore the same demand, so staff is proposing to combine Platte River generation and transmissions kW charges together for retail rates. There will be a separate distribution kW charge and a coincident kW charge for large commercial and industrial customers. Mr. Reuscher explained the impact of the demand ratchet. Based on Fort Collins’ 4-year average demands, the annual demand cost would increase 4.1%. Chairperson Michell asked if the City lowers its peak, then the ratchet will also be lowered. Staff said yes, after a few years (to account for the average demand), the ratchet will lower if the Utility can shave demand from the peak during the summer months. Mr. Reuscher briefly recapped the 2020 rate changes for the Board: The Utility will extend the summer season to September for commercial customers to match Platte River, but the five-month summer season for Time of Day rates will stay the same, the energy component will no longer be seasonal since there is not a significant change between them, the pricing impact of on-peak rates in Time of Day are approximately 0.5 cents per kWh, renewable energy discussions will continue as they pertain to Tariff 7, and the 5% retail electric rate increase is still budgeted for 2020. Board member Becker asked for clarification—there are no suggested fixed charge increases that the retail customer will see. Mr. Reuscher and Mr. Smith said anything additional than the 2019/2020 budgeted electric rate increase of 5%. STANDARDS FOR METRO DISTRICTS Energy Board Discussion, No Staff Presentation or Materials Chairperson Michell said until recently Fort Collins did not have residential metro districts; Montava, Water’s Edge, Waterfield, and Mulberry are all metro districts that are coming or already here. He asked the Board if they think there should be a minimum energy standard that should apply to all residential metro districts, and if so, what should the standard be? ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 06/13/2019 Board member Braslau said metro districts correspond to much of the future development in Fort Collins, and these projects are a way to drive a higher energy standard in the community, especially because the energy code isn’t far behind. Board member Giovando asked why the Board wouldn’t want to recommend a minimum standard? Vice Chairperson Shores said not imposing a minimum standard a way to tailor each project, or retain some flexibility, although that is not an argument she agrees with. Mr. Phelan added that a minimum standard doesn’t have to apply to only energy; it could apply to water, transportation infrastructure, or Nature in the City. He encouraged the Board to consider the mix of strategic priorities that the City has identified and work to define what “above and beyond” means in any of those categories. Chairperson Michell said in his mind, there isn’t a reason to not set a minimum standard, and Vice Chairperson Shores agreed. Board members discussed setting the context of the standards among the guidelines of the Climate Action Plan; they also agreed that at the very least, the building energy codes should be the minimum standard, but the challenge is ensuring code compliance. To safeguard the process, the Board would like to recommend setting a minimum standard and require utilizing a third-party rating system to ensure compliance to the standard set. Board member Baumgarn said he is curious why the City (and/or this Energy Board) would focus only on metro districts, instead of the building code itself—changes to building code affects all homes in the community, metro districts or otherwise. Then, the spirit of the metro district is preserved and the idea of asking them to go “above and beyond” in a category specific to their locality, be it transportation, flooding, or even, exceeding existing building codes, etc. Chairperson Michell said that metro districts give the developer something extra, such as low-cost financing backed by the City, and in exchange for that the City can ask for something in return. This could mean energy efficiency, so if the City requires the metro districts to be third-party rated then the homeowner will spend less money on utilities and can subsequently afford the property taxes of the home. Mr. Michell said it helps financially balance the area. Board member Braslau added that building codes are cyclical which can be difficult to manage, and Vice Chairperson Shores agreed—it can also be difficult to exercise any leverage with code. Chairperson Michell moved that he write a memo to Council recommending that City Council adopt minimum energy efficiency standards for metropolitan districts, among other Council priorities, and utilize a third-party rating system to verify compliance. The Energy Board would like to continue to learn more about this subject. Vice Chairperson Shores seconded the motion. Discussion: Board member Baumgarn said he wants to leave the door open for further discussion, he absolutely wants higher efficiency standards for Metro Districts, but he does not want there to be any unintended consequences by accidentally leaving something else out by over-focusing on energy efficiency. Vote on the motion: It passed unanimously, 9-0 BOARD MEMBER REPORTS Board members discussed attending other upcoming board and commission meetings, such as Transportation and Air Quality Advisory Boards. Board member Braslau said he attended a Council meeting discussing the electrification of garden equipment. There was also discussion of natural gas firepits, which he hopes does not become an ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 06/13/2019 encouraged alternative to the fire pit ordinance that was recently passed. FUTURE AGENDA REVIEW There is a scheduled work session for June 27. ADJOURNMENT The Energy Board adjourned at 8:56 pm.