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HomeMy WebLinkAboutEnergy Board - Minutes - 12/12/2019ENERGY BOARD REGULAR MEETING December 12, 2019 – 5:30 pm 222 Laporte Ave.; Colorado Room ENERGY BOARD MEETING |12/12/2019 ROLL CALL Board Members Present: Vice Chairperson Amanda Shores (remote), Bill Becker, Dan Gould, Alan Braslau Jeremy Giovando Board Members Absent: John Fassler OTHERS PRESENT Staff Members Present: Christie Fredrickson, Tim McCollough, John Phelan, Cyril Vidergar, Josh Birks, Lance Smith, Wendell Stainsby Platte River Power Authority: Paul Davis Members of the Public: Eric Sutherland MEETING CALLED TO ORDER Board member Giovando (acting as Chairperson) called the meeting to order at 5:30 pm PUBLIC COMMENT Mr. Sutherland said he disagrees with the City’s time of day rate structure. He also said he recently learned that Connexion broadband only has 46 active subscribers as of November 2019, and the business plan forecast stated that within one year of commencing construction there would be 1,900 subscribers and $900,000 in revenue. Mr. Sutherland said the public deserves an explanation why the new utility hasn’t hit it’s pace. APPROVAL OF MINUTES In preparation for the meeting, board members submitted amendments via email for the November 14, 2019 minutes. The minutes were approved as amended. ANNOUNCEMENTS & AGENDA CHANGES Mr. Phelan advised the Board that Chairperson Nick Michell resigned from the Energy Board in advance of tonight’s meeting. Vice Chairperson Shores explained the resignation came after an incident that occurred at a board planning meeting, and it has since instigated her to push Council and the City Clerk’s office to work harder to recruit and promote diversity among the City’s Boards and Commissions. Board members discussed the best way to show their support of Vice Chairperson Shores, but also the need to promote a respectful work and volunteer environment. Mr. Vidergar reminded the Board that the purpose of a motion is to direct an action, such as making a recommendation to City Council or Staff by composing a memo or appearing at Council, or some other form of communication around a topic that is within the Board’s purview. Board member Braslau, as a show of support for Vice Chairperson Shores, moved the Energy Board discuss, as well as encourage Council to promote, diversity and inclusion at their next ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 12/12/2019 meeting. (The Board will discuss this topic at their January meeting, and they will make a formal action at that time.) Board member Giovando seconded the motion. Discussion: Vice Chairperson Shores noted that ultimately, she doesn’t want the Board to reflect on any one specific incident, because it is more important to focus on the lack of gender and cultural diversity on this Board, as well as many others in the organization, and how the Board can work with staff and Council to change that in the future. Vote on the Motion: It passed, 4-0, with one absent and one abstention STAFF REPORTS OUR CLIMATE FUTURE UPDATE John Phelan, Energy Services Senior (attachments available upon request) Mr. Phelan said staff has been working on a tremendous amount of community outreach and engagement with Our Climate Future; things like community listening sessions, working with plan ambassadors, and correlating the emerging themes from these events. Mr. Phelan plans to come back to the Board to thoroughly discuss many of these things in February 2020. METRO DISTRICTS UPDATE Josh Birks, Director, Economic Sustainability (attachments available upon request) Mr. Birks asked the Board to consider how engaged they would like to remain in the development of Council’s preferred approach. The public benefits of a metro district are environmental sustainability, critical public infrastructure, smart growth management, and strategic priorities. Mr. Birks said he understands most of the Board’s interest lies within environmental sustainability space (greenhouse gas reduction, water and energy conservation, etc.) but it is not limited exclusively to that category. Staff has been working with Urban Land Conservancy, a local group of experts who acquires, preserves, and develops real estate to under-served areas for long-term community benefit. They brought a team together to help identify system design goals under the objective to develop a simple and sustainable process for evaluating metro districts. The group came up with six goals that need to be prioritized and balanced against each other: Predictability, Flexibility, Dynamic, Performance, End Users, and Community Goals. Enhancement options for the goals could be minimum requirements, a scorecard, menu of options (list of specific activities with weighted points), performance guided, or roll back support for residential use. Mr. Birks said staff is currently in the “Brainstorm Options” phase, in January they will receive direction from City Council and begin to work in development and engagement through the Spring. Council will review the final plan and adopt in May of 2020. Mr. Phelan asked Mr. Birks to share the work session packet with the Board when it is ready. ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 12/12/2019 Board member Braslau said minimum standards need to be high in order to meet the City’s climate goals. Mr. Phelan agreed and reminded the Board that staff can assume building code will be advancing concurrently with metro districts. Board member Gould said the key will be the stretch goal. Board members expressed their interest in staying involved throughout the process, as well as the possibility of working as part of a Boards & Commissions steering committee. STRATEGIC FINANCIAL PLAN Lance Smith, Director, Financial Planning & Assets (attachments available upon request) The objective of this item is to provide an update on the Capital Improvement Plan (CIP) and Strategic Financial Plan (SFP) for the Light & Power and Stormwater Enterprise Funds. Staff is looking for a recommend strategic path forward to meet 10 year operational and financial objectives ahead of the 2021-22 budget cycle. The SFP has both financial and operational objectives. Financially, the SFP should help maintain adequate reserve balances to meet the Minimum Reserves Policy. Reserves and revenues should also be adequate to cover near-term capital requirements. Additionally, the Utility should maintain current credit ratings for each Enterprise Fund and the City and avoid rate spikes by limiting rate increases to no more than 5% annually. Operationally, the SFP should provide adequate funds for anticipated capital investments and maintain adequate reserves to meet unanticipated capital investments and any debt service expense. Mr. Smith said the Light & Power CIP was presented to the Energy Board in November and reminded them that two future substations were removed from the 10-year plan. Board member Braslau, who was unable to attend the November meeting, asked why staff decided to eliminate the two substations. Mr. McCollough explained the primary driver was growth assumptions; the current projected growth rates in the next 10 years do not forecast the City to expand through the growth management area, so there isn’t an immediate need to build infrastructure to serve areas that are yet undeveloped. There are some pressures on the Light & Power rates. Historically, expenses have grown slightly faster than revenues, which assumes a historical trend of 4.9% per year. One way to alleviate this pressure is to limit O&M inflation to 2%. The graphic Mr. Smith displayed assumes the Platte River wholesale rate increase of 2%, increased efficiencies, and the CIP. Board member Braslau asked how much salaries weigh into O&M, and Mr. Smith estimated 40%, but he does not have the exact number with him. Vice Chairperson Shores asked if limiting the O&M growth to 2% is achievable and what informed that number. Mr. Smith said it will certainly be a challenge, and the 2% target strikes a good balance without having to dip into reserves for capital work. The 2016 operating loss was $6.7 million, which was equal to 5.4%; when added to the 2% wholesale increase from Platte River puts the Utility well above the 5% threshold. Some smoothing is done by spreading this over 2 years in 2019 and 2020. It is critical that the incremental operating revenue is gained in 2019 and 2020 so that this revenue can be used to renew existing infrastructure. Debt will need to be issued in 2023 even as operating income continues to be positive; this debt issuance will be one of the last before full buildout is seen within the growth management area. CAP MITIGATION & RESILIENCE OFF-CYCLE BUDGET OFFER John Phelan, Energy Services Senior Manager ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 12/12/2019 Tim McCollough, Deputy Director, Utilities Light & Power (attachments available upon request) The CAP Mitigation and Resilience package restores funds removed from the 2019-20 BFO for the CAP opportunity package; it is budget neutral by redeploying the 2019 budget underspend. This package addresses existing and emerging infrastructure needs through data informed investments. If approved, it will support resiliency through grid flexibility programs, as well as Connexion by opening new conduit pathways and new markets. And finally, the package funding will help complete the City’s efforts to underground electrical infrastructure. The items within the package will support a number of elements under the economic health and environmental health budgeting categories, as well as aligning with the City Council priority of undergrounding electric infrastructure, both transmission and distribution. The proposed projects for Energy Services include commercial solar incentives and grid flexibility projects. The 2020 budget already approved $125,000 commercial solar incentives, and this offer is requesting an additional $240,000 for eight to 12 new projects and 1MW capacity. The new funding was being held for projects that have since been cancelled. Staff is requesting to redeploy $390,000 for grid flexibility projects, which will fund things like the Bring Your Own Thermostat expansion, a grid-interactive water heater demonstration, a residential battery demonstration, carbon-based incentives framework, and the development of beneficial electrification incentives. The redeployment of the funding is net-neutral due to the offset of increased funding from Platte River Power Authority in 2020. Board member Gould asked if there has been any discussion on introducing customers to inductive cooking with an orientation or class. Mr. Phelan said staff has considered it, but they are more focused on space heating and water heating due to their larger overall impact. Mr. McCollough said Light & Power’s proposed projects represent accelerated funding for projects that would normally be completed in the next budget cycle. Staff is seeking a supplemental $3.1 million for system improvements, (eight cable replacement areas, transformer replacements, and diagnostic equipment), annexations (to extend electric service to annexed areas), and system conversions (complete overhead to underground conversions). Board member Becker asked why there is urgency to complete overhead conversions now, Mr. McCollough said it supports Connexion (no new aerial cable deployments) and it also supports Council’s priority of completing overhead conversions. The original underground program was completed in 2006, but since that time, efforts to place electric lines underground have focused on annexed areas that were served overhead by the previous utility. Mr. McCollough said the 2019 budget forecasted L&P reserves to be at $5.5 million above minimum reserves, but due to underspending, the actual anticipated reserves is closer to $10.5 million. Staff’s request for off-cycle funding from reserves totals $3.73 million. If the package of offers is not approved in 2020, staff will propose again in the next budget cycle, as this is work that does need to be completed either way. Vice Chairperson Shores asked how the projects were selected to be a part of the offer package. Mr. McCollough said the L&P cable replacements were selected by highest reliability risk, the annexations were chosen by what had already annexed, and the overhead conversions were selected by following Council’s new priority. Mr. Phelan said Energy Services staff focused on what could be completed within the budget year, and staff wanted to ensure the funding for the previously cancelled solar projects was redeployed for the purpose they were originally intended for. Mr. McCollough advised the proposed projects were not able to be scored as they are during a regular BFO cycle because they don’t have an ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 12/12/2019 entire budget to benchmark against. Board member Becker moved the Energy Board support the off-cycle budget package, as written, for Council consideration in January 2020. Vice Chairperson Shores seconded the motion. Discussion: Mr. McCollough said he and Mr. Phelan are excited about the package because it is the first time L&P and Energy Services have come forward together with both Energy Services and L&P offers bundled together. It represents both their commitment to CAP mitigation, maintaining historic reliability, and building resiliency in the community. Vote on the motion: It passed unanimously, 5-0, with one absent. DRAFT 2019 ANNUAL REPORT Board members reviewed the draft copy of the 2019 Annual Report. Vice Chairperson Shores requested the Board submit any changes to her by Thursday, January 2, ahead of their next meeting. The Board will approve the final copy at the January 9 meeting. OFFICER ELECTIONS Vice Chairperson Shores expressed interest in the Chairperson role, with the caveat that she recently accepted a new job that will begin in approximately six months. She also indicated that she’d like to nominate board member Giovando as Vice Chairperson. Board member Braslau said he would not like to take on a chair role with his current workload. Board member Braslau moved that Amanda Shores act as Chairperson and Jeremy Giovando act as Vice Chairperson until the next election of officers for the Energy Board. Board member Gould seconded the motion. Discussion: None Vote on the motion: It passed unanimously, 3-0, with two abstentions and one absent BOARD MEMBER REPORTS Board member Gould was in California in October and was driving an electric vehicle in Northern California during the fires, which caused many grid outages and blackouts. Mr. McCollough said he had not previously considered the impact of fires on electric vehicle charging. FUTURE AGENDA REVIEW The Board added a decision item regarding diversity & inclusion for their January meeting. Board members added several topics of interest to their 2020 planning calendar. ENERGY BOARD REGULAR MEETING ENERGY BOARD MEETING | 12/12/2019 ADJOURNMENT The Energy Board adjourned at 8:02 pm.