HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/24/2009 - ITEMS RELATING TO AN AMENDED AND RESTATED ORGANIC ITEM NUMBER: 9 A-B
AGENDA ITEM SUMMARY DATE: March 24, 2009
FORT COLLINS CITY COUNCIL STAFF: Steve Catanach
Brian Janonis
SUBJECT
Items Relating to an Amended and Restated Organic Contract and Contract for the Supply of Electric
Power and Energy.
RECOMMENDATION
Staff recommends adoption of these Ordinances on Second Reading.
EXECUTIVE SUMMARY
A. Second Reading of Ordinance No. 026, 2009, Authorizing an Amended and Restated
Organic Contract for Platte River Power Authority.
B. Second Reading of Ordinance No. 027, 2009, Authorizing an Amended and Restated
Contract With Platte River Power Authority For the Supply of Electric Power and Energy.
The Organic Contract between the four member cities of Estes Park, Fort Collins, Longmont and
Loveland was originally signed in 1975 and last amended in 1998. The Organic Contract forms
Platte River Power Authority. A change to the Organic Contract requires the approval of all four
member municipalities. Most of the changes to the Organic Contract are in the nature of updates
intended to reflect current organizational practices.
In addition, staff and Platte River have negotiated changes to update the Contract for the Supply of
Electric Power and Energy and termination of the Transmission Facilities Agreement. Changes to
the Contract for the Supply of Electric Power and Energy incorporate relevant terms from the
Transmission Facilities Agreement. The most significant change to the Contract is a provision which
allows the City to develop generation resources up to 3,000 kilowatts to supply City facilities; this
is approximately 60%of City facilities demand. The agreement does not limit the size or ability of
customers to install generation resources for their own use, nor for third party developers to install
generation at a customer's site.
Both Ordinances were unanimously adopted on First Reading on March 3, 2009.
ATTACHMENTS
1. Copy of First Reading Agenda Item Summary-March 3, 2009. (w/o original attachments)
ATTACHMENT
ITEM NUMBER: 17 A-B
AGENDA ITEM SUMMARY DATE: March 3, Zoos
FORT COLLINS C1,TX%jCO3UN,CIL ST,-AFF: Steve Catanach
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p
7 Brian Janonis
SUBJECT
Items Relating to an Amended and Restated Organic Contract and Contract for the Supply of
Electric Power and Energy.
RECOMMENDATION
Staff recommends adoption of the Ordinances on First Reading.
On January 20, 2009, Electric Board voted unanimously to recommend the approval of the
Contracts. John Graham was absent from the meeting. Tom Barnish and John Harris recused
themselves from the discussion��Vote,b ause 'of their association with Platte River Power
is 1 `
Authority. The final vote was 4j 0 in favorendmg�approval of the Contracts.
L
EXECUTIVE SUMMARY
A. First Reading of Ordinance No. 026, 2009,Authorizing an Amended and Restated Organic
Contract for Platte River Power Authority.
B. First Reading of Ordinance No. 027,2009,Authorizing an Amended and Restated Contract
With Platte River Power Authority For the Supply of Electric Power and Energy.
The Organic Contract between the four member cities of Estes Park, Fort Collins, Longmont and
Loveland was originally signed in 1975 and last amended in 1998. The Organic Contract forms
Platte River Power Authority. A change to the Organic Contract requires the approval of all four
member municipalities. Most of the changes to the Organic Contract are in the nature of updates
intended to reflect current organizational practilces, asJ)detailed more fully below.
In addition, staff and Platte River have n'eg otiated chtinges to update the Contract for the Supply of
Electric Power and Energy and termination=of�the Transmission-Facilities Agreement. Changes to
the Contract for the Supply of Electric Power and Energy incorporate relevant terms from the
Transmission Facilities Agreement. The most significant change to the Contract is a provision
which allows the City to develop generation resources up to 3,000 kilowatts to supply City facilities;
this is approximately 60%of City facilities demand.The agreement does not limit the size or ability
of customers to install generation resources for their own use,nor for third party developers to install
generation at a customer's site.
March 3, 2009 -2- Item No. 17 A-B
BACKGROUND
February 3, 2009 Council MeetingM (ahat
; � ;'J��
On February 3, 2009, Council requestedaff and Platte Pver Power Authority revise the
suggested changes to the "whe�er� clause`ss annd th purpose statement contained in the Organic
Contract. The statements have been revised to directly state Platte River's commitment to
environmental stewardship. The requested changes to the Organic Contract are below:
WHEREAS, the Municipalities are committed to the delivery of electricity
that is generated in a manner that reflects good stewardship of the environment; and
WHEREAS, it is the intent of the Municipalities that the Authority
demonstrate its commitment to environmental stewardship through practices
incorporated into its fundamental operations; and
WHEREAS,the Authority's Board of Directors adopted Resolution number
25-08 in 2008 directing the Authority's General Manager to develop a plan outlining
how the Authority proposes to achieve the goals of the Colorado Climate Action
Plan and to work toward achieving them; and
WHEREAS in December 2002 the Authority's Board of Directors
implemented an updated�Ennviro dal Policy and Principles document which
requires the Authority to consider environmental factors as an integral part of
planning, design, construction and operations decisions; and
WHEREAS,the Municipalities acting in concert through the Authority wish
to continue their commitment to provide electric power and energy with cost--
effective energy resource options in a manner that reflects good stewardship of the
environment; and
WHEREAS,the Municipalities acting in concert through the Authority wish
to continue their commitment to provide electric power and energy with
environmentally responsible resource options that enhance the sustainability of the
Northern Colorado region; and
The additional language added to Section 2.1.(i , 2.2.(i) and 2.2_
2.1 PURPOSES ��/J(vi)is underlined below.
The purposes of the Authority are to conduct its business and affairs for the benefit of the
Municipalities and their inhabitants
(i) to provide the electric power and energy requirements of the Municipalities and the
retail customers within the Municipalities in a reliable and cost effective manner that
reflects high standards of environmental stewardship and sustainability;
March 3, 2009 -3- Item No. 17 A-B
2.2 FUNCTIONS, SERVICES, OR FACILITIES
(i) acquiring,constructing,owning,reconstructing,improving,rehabilitating,repairing,
operating and maintainingyelectric generating plants, transmission systems and
related facilities, or interests therein,for the purpose of producing, transmitting and
delivering to tHeMun ipalitiesl,,eleetric power and energy to the extent of their
requirements,including renewable energy requirements and demand side resources;
(vi) developing products and services to improve the efficiency of generation,
transmission and use of electrical energy and to minimize the associated
environmental impacts:
In response to direction given at the February 3, 2009 Council meeting, language was added to the
Power Supply Agreement_as detailed below:
Article 3: Covenants of Platte River
(c) Platte River shall consider the environmental impacts of the planning, design,
construction, and operating decisions associated with the performance of its
obligations under this
gAgreement.
October 28, 2008 work session
During the October 28,2008 work:sessionnCouncil'discussVd.bothe the Amended Energy and Power
Supply Contract between the City of Fort Collins and Platte River Power Authority, and the
Amended and Restated Organic Contract between the Cities of Fort Collins, Longmont, Loveland
and Estes Park.
Discussion in reference to the Energy Supply Contract centered on new language that allows the
City to develop and own generation to serve the electric energy demands of its own facilities. The
previous Energy Supply Contract limited the City's ability to self generate to zero. The revised
contract proposes a limit of one percent of the peak load within Fort Collins, which amounts to
approximately 3,000 kW of generation (about 60% of the load for all city facilities). Council
expressed concern over the 1% cap and asked why it couldn't be 2%, 3% or even greater. Joe
Wilson, Platte River General Counsel, provided a detailed explanation. Previous bonds sold by
Platte River were sold with a commitment to the buyers that Platte River would be the sole provider
to the four cities. Platte River has been aware of the cities' desire to support,provide, and develop
renewable resources. Discussions%with Play to=Riv er's=Bond Counsel resulted in an agreement that
the 1%cap could be consideredde mimmis. At the request of the !tilities Executive Director,Platte
River requested information from its Bond Counsel on the,potential to increase the limit on
generation for City facilities up tot-.0 0. \A�copy ofithe response-is attached.
Council also commented on a document Brian Moeck distributed before the meeting detailing Platte
River's commitment to environmental concerns and stewardship. Council complimented Platte
River on its efforts, and asked if language could be added to the "whereas" clauses and the
"purpose"section of the Organic Contract reflective of Platte River's commitment to environmental
stewardship.
March 3, 2009 -4- Item No. 17 A-B
Revisions to the Organic Contract
In June of 1975,the municipalities of Fort Collins,Longmont,Loveland and Estes Park established
Platte River Power Authority todevelop both,resource;for-`he production of electric energy and
transmission infrastructure to deliver electric energy;to the iourmember municipalities.
The Organic Contract Establishing-Rlatte River%Power_Authori as a Separate Governmental Entity
dated June 17, 1975, defined the roles of each of the municipalities within the organizational
structure of Platte River,defined membership on the Board of Directors,and established the by-laws
within which the Board operates.
In July of 1998 the Organic Contract was amended to allow Platte River to provide additional
functions, services or facilities to any combination of two or more of the member municipalities.
An example of an expanded service is Platte River's provision and management of the Banner
Customer Information System used by both Longmont and the City of Fort Collins. The
modification also allowed Platte River to enter into telecommunication activities,which it continues
to manage for the City.
The amendments that staff and Platte River are presenting to Council in the Amended and Restated
Organic Contract Establishing Platte River Power Authority as a Separate Governmental Entity(the
"Updated Organic Contract") add-to4e services that=Platte-River may provide to Fort Collins by
noting that Platte River will assist Fort�Collin�inIreachingy*tVs renewable energy requirements.
Language has been added which specifically details that Platte River will provide services and
products that improve the efficiencywof generation;transmission_and use of electrical energy. The
proposed changes also bring current the expiration dates of the terms of the Platte River appointed
directors. Those dates are as follows: December 31, 2011 for Estes Park, December 31, 2008 for
Fort Collins, December 31, 2010 for Longmont and December 31, 2009 for Loveland. Additional
changes allow Board members to participate in Board meetings via teleconferencing. Changes also
provide authority to the Board to appoint an interim Platte River General Manager if and when a
vacancy exists in that office. The previous provision automatically designated the Board
Chairperson. The Updated Organic Contract also extends the term of the Contract from an end date
of 2040 to 2050.
Revisions to the Amended Contract for the Supply of Electric Power and Energy
Fort Collins and Platte River are proposing an Amended Contract for the Supply of Electric Power
and Energy (the "Updated Energy Supply Contract"). The Transmission Facilities Agreement
between Platte River and Fort Coll ins=dated-February 22.1980•wi11-be terminated with the execution
of the Updated Energy Supply ContractA9omA\f its terms are incorporated into the new Contract
while others are addressed in Appendix+13 t, , o the,Up�dated Energy Supply Contract.
The Updated Energy Supply Contract obligates Platte River to sell and deliver and Fort Collins to
purchase and receive all electrical energy which Fort Collins requires. In effect, it is an all-
requirements contract with an exception as described below. The Contract defines the roles and
responsibilities of each of the entities with respect to providing electric energy, the disposition of
excess energy,the responsibility to maintain adequate rates, and required compliance with Western
Area Power Administration requirements for the purchase of federally generated power.
March 3, 2009 -5- Item No. 17 A-B
The above-noted exception to the all-requirements obligation addresses the amount of generation
the City can develop to provide service to City-owned facilities. The contract as it currently stands
limits the amount of generation the cities could develop for their own use. The member cities were
able to keep any generation resources-they,, phior\to the-establishment of Platte River, which
allowed Longmont and Loveland to continue to)own and)opera\e�their small hydro-electric plants.
Fort Collins had no such resources. The amended contract designates municipal generation up to
1% of peak as de-minimus. The:amendment-willlAave a very..positive effect on the City. Fort
Collins will be able to develop approximately 3000 kilowatts of renewable generation.The total load
associated with city facilities is about 5000 kilowatts, so more than half of this could be met with
municipal generation(renewable or other resources).Three thousand kilowatts is enough generation
to power approximately 1,000 to 1,200 homes. Depending on the resource developed, three
thousand kilowatts of generation could reduce carbon dioxide emissions by between 7,000 to 19,000
tons per year. The amended contract does not limit the amount or size of generation customers can
install at their homes or businesses. The option for customers to develop their own generation has
always existed and is not impacted by this amended contract.
Fort Collins and Platte River jointly occupy all of the substations serving the City. The proposed
changes clarify that each party has license to occupy any substation where the parties jointly use
facilities. The language of the Updated Energy Supply Contract clarifies the planning requirements
and the timelines needed to insure that adequate time is given for the siting,design and construction
of new transmission and substation=facilit ies=�For example;-,it-reduces from four years to two years
the prior notification the City must give rlatte River of th need for a new substation if no new
transmission is required. If new�tr, t transmission is required the City must give Platte River four years
notification.
The Energy Supply Contract term is also extended from 2040 to 2050. This is of critical importance
because the power supply agreements between Platte River and the cities are security for Platte
River bonds and these agreements must have terms beyond the terms of the bonded indebtedness.
Appendix B to the Updated Energy Supply Contract specifies the responsibilities of each entity as
either the owner or joint user of a facility. The responsibilities for site work, foundation
construction, and operation and maintenance tasks are defined in Appendix B.
Platte River purchases energy from the Western Area Power Administration(WAPA) on behalf of
the Cities. The WAPA General Power Contract Provisions have been added as an exhibit to the
Energy Supply Contract.
The amendments to both agreements=give additional-flexibility to-both Platte River and the City in
I 7/ )` I,( \� \\
addressing Governor Ritter's goal to reduce the City'scarbon'
bon'emissions by 20%below 2005 levels
by 2020 and 80% below 2005�'levels by' 12050 Both the City and Platte River have committed
themselves through formal resolutions to reaching-these goalsiaThe development or acquisition of
additional renewable resources along with the implementation of energy efficiency programs and
services by Platte River, and the City's ability to develop renewable resources for its own use,
provide both Platte River and the City new avenues towards this goal. Additionally, the
amendments provide clarity to the roles and responsibilities of each entity.
March 3, 2009 -6- Item No. 17 A-B
ATTACHMENTS
1. Red line copy of the Amended and Restated Organic Contract.
�1 ST -K
2. Red line copy of Amended Contract for,theT8upply of Electrical Power and Energy.
3. Existing Transmission iF�acilities(Agreement i
4. October 28, 2008 Council-work sessi�ontsummary.
5. Follow up info provided to Council after October 28, 2008 work session.
6. Memo detailing cost to develop distribution level renewables.
7. Letter from Sherman & Howard LLC regarding Fort Collins Inquiry concerning Municipal
Generation.
8. Electric Board minutes - January 20, 2009.
9. Letter of Recommendation from Electric Board.
10. Letter from Brian Moeck to Council.
ORDINANCE NO. 026, 2009
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING AN AMENDED AND RESTATED ORGANIC
CONTRACT FOR PLATTE RIVER POWER AUTHORITY
WHEREAS,the City is one of four member municipalities that have entered into an organic
contract establishing Platte River Power Authority ("Platte River"); and
WHEREAS, the first such contract was entered into in 1975, and the contract was last
amended by the execution of an Amended and Restated Organic Contract Establishing Platte River
Power Authority as a Separate Governmental Entity dated July 1, 1998 (the "Existing Organic
Contract"), with a termination date of December 31, 2040; and
WHEREAS, the parties have recently negotiated a proposed, updated agreement entitled
Amended and Restated Organic Contract Establishing Platte River Power Authority as a Separate
Governmental Entity (the "Updated Organic Contract"), a copy of which is on file with the City
Clerk,dated February 24,2009,that includes certain revisions requested by City Council at previous
meetings of the City Council, the purpose of which is to replace and supersede the Existing Organic
Contract; and
WHEREAS, the Updated Organic Contract, if approved by the parties, would amend the
provisions of the Existing Organic Contract so as to: contain preamble statements and purpose
statements reflecting Platte River's commitment to environmental stewardship and sustainability;
reflect the current manner in which the parties conduct business; expand the kinds of services that
Platte River will provide to Fort Collins and obligate Platte River to assist Fort Collins in reaching
its renewable energy requirements to develop products and services to improve the efficiency of
generation, transmission and use of electrical energy; bring current the dates of the terms of the
appointed utilities directors ofthe member municipalities and allow such directors to attend and fully
participate in Platte River meetings by electronic teleconference; and extend the termination date of
the Existing Organic Contract by ten years to December 31, 2050.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. That the City Council hereby finds that it is in the best interests of the City
to enter into the Updated Organic Contract, which agreement will supersede the Existing Organic
Contract.
Section 2. That the Updated Organic Contract in substantially the form on file in the
office of the City Clerk and dated February 24, 2009, is hereby approved, and the Mayor is hereby
authorized and directed to execute the same on behalf of the City.
Section 3. That the City Council hereby directs the Electric Board to annually review the
terms and conditions of the Updated Organic Contract and suggest any revisions to the City Council
by formal board action.
Introduced, considered favorably on first reading, and ordered published this 3rd day of
March, A.D. 2009, and to be presented for final passag4the day of March, A.D. 2009.
ATTEST:
�LL%-
City Clerk
Passed and adopted on final reading on the 24th day of March, A.D. 2009.
Mayor
ATTEST:
City Clerk
ORDINANCE NO. 027, 2009
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING AN AMENDED AND RESTATED CONTRACT
WITH PLATTE RIVER POWER AUTHORITY
FOR THE SUPPLY OF ELECTRIC POWER AND ENERGY
WHEREAS, on February 22, 1980, the City and Platte River Power Authority ("Platte
River")entered into a Transmission Facilities Agreement(the"Facilities Agreement" ) to establish
the parties' rights and obligations related to their respective electric system facilities and to provide
for shared use or lease of certain specified facilities; and
WHEREAS, on March 31, 1980, the City also entered into a Contract for the Supply of
Electric Power and Energy(the"Existing Supply Contract")with Platte River which establishes the
terms and conditions of the City's purchase of electric power and energy from Platte River; and
WHEREAS, on July 21, 1998, the City Council approved an amendment to the Existing
Supply Contract extending its termination date from December 31, 2020 to December 31,2040;and
WHEREAS, the City and Platte River have recently negotiated an updated "Amended and
Restated Contract for the Supply of Electric Power and Energy" (the "Updated Supply Contract"),
a copy .of which is on file with the City Clerk, dated February 24, 2009, that includes certain
revisions requested by City Council at previous meetings of the City Council, the purpose of which
is to replace and supersede the Facilities Agreement and the Existing Supply Contract; and
WHEREAS,under the proposed Updated Supply Contract, Platte River will continue to sell
and deliver to the City, and the City will continue to purchase and receive from Platte River, all
electric power and energy that the City requires for the operation of its municipal electric systei,L;
however,the City may also generate power and energy for its own use in City facilities from any new
generation resource(s) owned and operated by the City provided that the City's total rated capacity
does not exceed 1,000 kilowatts or one percent of the peak load of the City,whichever is greater;and
WHEREAS, the proposed Updated Supply Contract also: states that each party will be
granted a revocable license to occupy the property of the other party as necessary to deliver and
receive power and energy under the Updated Supply Contract in accordance with specified terms
regarding the use of certain facilities; allocates costs and maintenance responsibility for certain
facilities; outlines the process for the parties to engage in system planning; acknowledges Platte
River's contract with the Western Area Power Administration ( WAPA ); requires, as a condition
of the purchase of federally generated power, that the City comply with WAPA's General Power
Contract Provisions; and amends the term of the Existing Supply Contract so as to extend its
termination date by ten years to December 31, 2050.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. That the City Council hereby finds that it is in the best interests of the City
to replace and supercede the Facilities Agreement and Existing Supply Contract with the Updated
Supply Contract.
Section 2. That the Updated Supply Contract is hereby approved, and the Mayor is
hereby authorized and directed to execute the same on behalf of the City in substantially the form
on file in the office of the City Clerk and dated February 24, 2009.
Section 3. That the City Council hereby directs the Electric Board to annually review the
terms and conditions of the Updated Supply Contract and suggest any revisions to the Council by
formal board action.
Introduced, considered favorably on first reading, and ordered published this 3rd day of
March, A.D. 2009, and to be presented for final passa4ontheday of March, A.D. 2009.
ATTEST:
City Clerk
Passed and adopted on final reading on the 24th day of March, A.D. 2009.
Mayor
ATTEST:
City Clerk