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HomeMy WebLinkAboutEnergy Board - Minutes - 09/10/2020 ENERGY BOARD REGULAR MEETING September 10, 2020 – 5:30 pm Remote – Zoom Meeting | ROLL CALL Board Members Present: Amanda Shores, Jeremy Giovando, Bill Becker, Dan Gould, Alan Braslau, Marge Moore, Steve Tenbrink, Sue McFaddin Board Members Absent: John Fassler (Sue McFaddin departed the meeting early) OTHERS PRESENT Staff Members Present: John Phelan, Christie Fredrickson, Cyril Vidergar, Tim McCollough, Lance Smith, Randy Reuscher, Jamie Gaskill, Cyril Vidergar, Rhonda Gatzke Platte River Power Authority: Trista Fugate Members of the Public: Rich Stave MEETING CALLED TO ORDER Chairperson Shores called the meeting to order at 5:30 pm PUBLIC COMMENT Rich Stave stated that the last Energy Board agenda was posted late, and one of the dates on today’s agenda is incorrect. Mr. Phelan said he appreciated the feedback and holding Staff accountable, and we have taken steps to ensure that this does not happen again. APPROVAL OF MINUTES In preparation for the meeting, board members submitted amendments via email for the August 13, 2020 minutes. The minutes were approved as amended. ANNOUNCEMENTS & AGENDA CHANGES Due to the similar nature of their content, Staff will be combining the presentations for the Green Energy Program and the 2021 Rates & Fees Update. STAFF REPORTS Northside Aztlan Resilience Hub & DOLA Grant Appropriation A resilience hub can help support residents and create resource distribution before, during, and after a natural hazard event. This offer package would appropriate $200,000 of Light & Power reserves to the Energy Services 2020 budget, which would be repaid by the DOLA Grant (Department of Local Affairs). The package also includes $25,000 from the general fund for permitting fees (which cannot be paid by the grant). It is currently pending City Council’s approval. Board member Braslau wondered if the Northside Aztlan Center would be able to operate in an islanding mode after the install. Mr. Phelan said the intention is yes; the facility will have enhanced operations under normal conditions (e.g. “blue sky mode”), and the facility would be able to function at a reduced capacity even during grid outages. Board member Becker asked if there will be an option for interactivity ENERGY BOARD REGULAR MEETING and grid services with Platte River Power Authority. Mr. Phelan said yes, it will have that capability. Board & Commission Temporary Appointment Extensions Mr. Phelan said he is hoping to provide an update as soon as possible. If there is an opportunity to reapply, the applications will already be on file so current board members will not need to reapply but they will need to reinterview. 2021 BUDGET & FINANCIAL FORECAST John Phelan, Energy Services Senior Manager Tim McCollough, Deputy Director, Utilities Light & Power Lance Smith, Director, Financial Planning & Assets Mr. Smith said the Utility saw almost $2 million more than expected in residential electric sales in 2019, but also saw about $2 million less than anticipated in industrial sales. 2019 operations also had about a $9 million underspend relative to the budget. Mr. Smith displayed a graph comparing Light & Power’s end of year available reserves. The historical 2013 end reserve increase was due to a debt issuance, followed by the investment in the bond proceeds into the Advanced Metering Infrastructure. The new Customer Service building (at 222 Laporte) investment followed before reserves began to increase in 2018 and 2019. There was an appropriation from reserves in January 2020 of $3.7 million for capital investments in reliability, and an additional $1.5 million appropriated for the Supervisory Control Operations remodel as well as the billing system upgrade in 2020. The 2019 budget expected there to be $0.3 million coming out of reserves, rather than the addition of $2.1 million. The 2020 Budget forecasts an addition of $0.3 million to reserves before the $5.3 million of appropriations already in 2020, and we are anticipating significant capital underspend. Though there was less immediate pressure on Utilities’ revenue due to the COVID-19 pandemic, prolonged commercial and industrial shutdowns will affect revenues quickly. Utilities, along with the rest of the City, had two rounds of mid-year budget reductions. In the first round, Light and Power cut $504,500 in consulting, conferences, travel, food, and hourly labor and Energy Services cut $422,500 from internal expenses and customer programs. In round two, warehouse supplies, fuel, conference & travel, and vehicle repair funds were also reduced, totaling $306,376. While working on the 2020 Budget revisions, staff also began working on a one-year budget for 2021. Typically, budgets are done in two-year planning cycles, but due to the pandemic the City will do one-year budgets for 2021 and 2022, resuming the normal process for 2023. This process mimics the cadence of City Council elections, so that one Council doesn’t obligate a future Council to certain budgetary situations. The reductions made in 2020 became the baseline for the 2021 budget, as well as not budgeting in salary adjustments, new employees (unless approved through the exception process), and limiting conference, travel, and training expenses. The 2021 revenue forecast assumes a 3% retail rate increase (previously advised Council of 2% increase), and revised revenue projections for 2020. Mr. Smith said the rate increases are necessary so the Utility can maintain operations and invest in infrastructure. Debt issuances in 2023 and 2026 have already been factored into the long-term financial plan. Overall, staff is recommending a 2021 operational budget that is 3.8% less than the 2020 budget. Board member Becker asked if utility account defaults are considered, or if that has been minimal? Mr. Smith said it’s not been a minimal concern, and given the economic situation and non-disconnect mandates, the Utility is seeing an increase in projected so-called bad debt. CARES Act funding can be ENERGY BOARD REGULAR MEETING provided to utility customers to pay their past-due bills, as well as the option for customers to utilize the payment assistance fund. Staff has been doing outreach to help make customers aware of these options. Board member Becker wondered if Platte River’s fixed costs are still covered with a decrease in wholesale purchases. Mr. Smith said Platte River did a rate study a few years ago and made some changes to stabilize their revenues. Board member McFaddin noted that Platte River recently came into an additional revenue stream with an off-system energy sale to California and asked if this might be returned to ratepayers. Mr. McCollough noted there was no increase from Platte River in 2020 which was a rate relief, but the off-system sale benefits all four owner-communities inherently. Platte River’s 1.5% 2021 rate increase is nominal in lieu of the 3% increase in their 10-year Strategic Plan. Board member McFaddin expressed disappointment that there is no line item allocated to Distributed Energy Resources in 2021. Mr. Phelan reminded the Board about the 2020 appropriation of funds for several DER projects that will be carried forward into the 2021 budget. Mr. McCollough added though there are no line items, staff is looking for innovative ways to leverage DER research and is inherently built into the work they do on a daily basis. 2021 RATES & FEES UPDATE Randy Reuscher, Lead Analyst, Utility Rates John Phelan, Energy Services Senior Manager Staff is proposing a 3% increase in the Electric Fund, which is composed of 0.3% carryover from the prior year’s rate smoothing, 0.3% wholesale cost increase for 2021, and 2.4% due to negative operating income and future capital project needs. The electric rate impact across class shows the residential class at a 2.6% increase, some of which is due to the Time of Day rate structure and a reduction of the Utility’s demand costs. Since no other services are increasing in 2021, the average residential utility customer who receives all four services can expect an increase of 1.3% per bill, per month as compared to 2020. Mr. Reuscher said staff also monitors surrounding utility rate increases, and though they do not drive decisions it is useful to benchmark. Staff is also proposing a 3% increase in Electric Capacity Fees (ECFs). These fees are presented every two years (along with other City-wide fee adjustments) along with model updates, and in the alternating year an inflationary factor is applied. 2021 is a year to apply the inflationary factor and these increases apply to all residential and commercial developments equally. Subscribing to the Green Energy program with the City means that a customer can claim their home or business is powered from renewable energy. In the current Green Energy program, the additional charge is paying for the price premium through a renewable energy tariff with Platte River Power Authority. In 2021, staff is proposing a price premium of 1.5 cents per kWh, which is a 20% decrease from 2020’s 1.9 cents per kWh. Currently, the product offered to subscribed customers is 100% wind, but moving forward it will be composed of 13% local solar (from the Solar Power Purchase Program), and the remaining will come from Platte River’s intermittent energy product. This should ultimately total 23% solar energy and 77% wind energy. Mr. Phelan said there are plans to rebrand this program, potentially in naming and outreach, as staff capacity becomes available. The price premium change was prompted by the new Roundhouse wind project and the Rawhide Prairie solar project both coming online, which is driving an overall decrease in the cost of the intermittent product, as well as the dissolution of Tariff 7 wholesale surcharge. He added that approximately 5% of the 1.5 cents will be initially dedicated toward accruing funding that will be used ENERGY BOARD REGULAR MEETING for future investment in the distribution system to enhance the City’s ability to host more DERs. Board member Braslau asked how the Green Energy Program drives increased investment in renewable resources, beyond what the City is already doing? Mr. Phelan said beyond the 5% investment allocation of the premium, there are no specific plans to take those funds to build new investments. Board member Braslau asked if it makes sense to retain the 20% decrease and build a fund for infrastructure from that. Mr. Phelan said staff hopes the lower price premium will encourage more subscriptions. Board members expressed concern that people who are buying green energy are buying it because they already believe in it, and there is less weight in the price point. Board member Becker asked if the proposed 3% increase is meant to be equally applied across the board or how it will distribute? Mr. Reuscher explained the 3% is at the fund level, but once the components are built in there are more variables. The wholesale components (roughly 70% of the rate) are direct pass throughs to each rate class. The distribution only portion will either go into the fixed charge or the energy or demand component, which is dependent on the rate class. Board member McFaddin asked what happens for solar rate payers. Mr. Reuscher said the charges will go up 3% depending on their rate class, but the credit rate will remain flat as it did in 2020. Mr. McCollough added if the Board would like to review individual rate components at their October 8 meeting, there should be enough time between the Board meeting and the November 4 Council Meeting material deadline. Board member Becker moved the Energy Board support the proposed changes to 2021 electric utility rates and fees, as presented. Board member Braslau seconded the motion. Discussion: Board members want to discuss the individual rate component and policy implications of the fees with their Council Liaison (Ross Cunniff), ideally at their October meeting. Mr. Phelan asked the Board to provide specific set of principles for Mr. Reuscher to consider, and he can and provide additional feedback and options in October. Mr. McCollough said Mr. Reuscher has a set of driving principles that guide the rate design, so there are no fundamental changes from previous years. If the Board desires a policy level change, that information would be helpful for Mr. Reuscher. Board member Becker feels strongly that the Utility needs to work toward a fixed charge recovery as it continues to encourage customers to use less electricity. Board members Tenbrink and Moore agreed with Mr. Becker’s opinion, and would like to hear more about the rate components in the future. Mr. Becker suggested adding language to his proposed motion: Board member Becker moved to support the proposed changes, but the Board will discuss the allocation of rate components and policy implications at their October meeting. Board member Braslau seconded the motion. Vote on the motion: It passed, 7-0, with two absent. ENERGY BOARD REGULAR MEETING UTILITIES AFFORDABILITY PROGRAMS The Utilities Affordability Programs (UAP) is composed of five programs: The Income Qualified Assistance Program, the Medical Assistance Program, the Payment Assistance Fund, the Larimer County Conservation Corps Water & Energy Program, and Colorado Affordable Residential Energy. In 2019, the UAP reached about 2,000 households, totaling $685,292. Before the COVID-19 pandemic, staff estimated there were about 6,000 more households that could benefit from the UAP. Staff’s goal was to increase participation in the UAP by 25% year over year by using agency partnerships, direct customer engagement, and enacting policy changes. Some of these efforts were delayed due to COVID-19, so Staff created a UAP Roadshow for partner organizations who can help them reach more people. These organizations have included CSU Office of Students Case Management, La Familia, Kiwanis Eyeopeners, Kaiser Permanente, City of Fort Collins Weekly Employee Check In, and the Larimer County Economic and Workforce Development Office. Staff will also be meeting soon with Mi Voz, CARE Housing, and the Larimer County Department of Human Services. Board member Braslau asked if Staff has plans to reach out to the Health District of Colorado or the Food Bank. Ms. Gaskill said they have a large list of partnerships, including those two, but many of the prospective partnerships are very busy due to the pandemic and Staff is trying to be respectful. Mr. Phelan added that the though these are the Roadshows staff have been able to complete thus far, it does not mean these are the only existing partnerships. Chairperson Shores asked what will happen to the available funding if program participation increases. Ms. Gaskill said the budget for the UAP comes from many places and the resources are set aside to support the programs, but there is a need to connect the resources to the people. Staff worked with the City Communications Team to produce an information sheet for outreach events that is English on one side and Spanish on the other It provides and at-a-glance snapshot of what someone may qualify for based on income limits and household size. The sheet is an easy way to assist someone quickly without having to peruse several applications for information. Ms. Gaskill noted that LEAP raised their income limits when they switched from 165% of the federal poverty line to 60% State Median Income. Chairperson Shores said she has ongoing concerns about the Income-Qualified Assistance Program being tied to LEAP, because the LEAP qualification timeline can be exclusionary. She wishes there were other services that could be used as qualifiers, such as SNAP or Medicaid. Ms. Gaskill said that is valuable feedback, and the reason the City partners with LEAP is because it streamlines the qualification process. There is work being done to look at additional options. COVID-19 has had a tremendous impact on the UAP. In-home conservation programs were put on hold and service shut offs were suspended in March but will be resuming soon. The Utility began sending letters to approximately 4,000 accounts detailing the resources available, including extended payment plan options. Staff also began a targeted outreach campaign to the community’s most vulnerable members. Additionally, the LEAP enrollment period was extended, which should increase enrollment in the IQAP (currently enrolling). Payment assistance was extended, so qualified customers can receive two payments this season due to CARES Act funding; January 2020 - August 2020 saw $185,950 distributed, which is the biggest year to date distribution in the program’s history. The City’s LEAP vendor agreement is up for renewal for the years 2020-2025, and as the billing team reviewed the agreement the noted that LEAP funding is only allowed to apply to a customer’s electric service bill. Internally, the Utility’s billing software was applying the payment equally across all enrolled ENERGY BOARD REGULAR MEETING services. The City amended Code to allow for payments to be applied only to electric services, which allowed for the City to remain a LEAP vendor. This is important because LEAP and the City have a data sharing agreement, which allows the City to provide LEAP premise data for the previous year, giving them a more accurate calculation of funding needs for the customer. LEAP can also send the funding directly to the Utility to apply to the customer account. Without the premise data, the funding is calculated on a generic formula, and without the vendor agreement all payments are loaded onto an EBT card for the customer, which is not a form of payment accepted by the Utility. An Apex Billing Analysis found that IQAP participants are using about 5% more electricity than before they were enrolled. Staff will do an in-depth survey with participants to understand why customers are using more, and hopefully help them conserve more in the future. Staff should have the survey results by the end of the year. Board member Braslau noted its possible that this customer class might be using more to just reach basic comfort levels; perhaps they were underheating or undercooling and are now living more comfortably with the relief from the program. Ms. Gaskill agreed, this is very powerful information why staff is looking to get to the heart of the issue. BOARD MEMBER REPORTS Board member Gould read an article about a bill introduced at the last state legislative session for a renewable natural gas standard into Utilities. He wondered if the City has an idea of the scale of natural methane production from the landfill and wastewater facility. Board member Braslau said the County Landfill flares the gas, and it is not high enough quality to make more productive use. Mr. Phelan added that the wastewater facility uses the produced methane for internal heat for the building or the process. Also, at the Drake Water Treatment Facility is working to commission and install cogeneration to make power from the gas. FUTURE AGENDA REVIEW Mr. Phelan added 2021 Rates & Fees discussion to the October 8 meeting. Elizabeth Blythe from the City Clerk’s office will attend to give a Boards and Commissions update. The Board will use their October 22 work session for Out Climate Future Big & Next moves preliminary review. ADJOURNMENT The Energy Board adjourned at 8:33 pm.