HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/02/2009 - SECOND READING OF ORDINANCE NO. 061, 2009, AMENDIN ITEM NUMBER: 14
AGENDA ITEM SUMMARY DATE: June 2, 2009
FORT COLLINS CITY COUNCIL STAFF: Steve Catanach
Brian Janonis
SUBJECT
Second Reading of Ordinance No. 061, 2009, Amending Chapter 26 Article VI of the City Code
Relating to the Provision of Electric Service.
RECOMMENDATION
Staff recommends adoption of this Ordinance on Second Reading.
EXECUTIVE SUMMARY
This Ordinance, unanimously adopted on First Reading on May 19, 2009, clarifies that the City is
the sole provider of retail electric service with the City. The revised Code has the goal of addressing
three key issues. The first is the establishment of service territory protections similar to those
afforded investor owned utilities,rural electric associations and other municipal utilities throughout
the State. The second,goal is to align service area definitions with bond holder expectations. The
third goal is to support the development of renewable generation projects,including those owned by
third-party entrepreneurs selling electricity at retail within City limits, provided certain conditions
are met.
For Second Reading,the definition of high voltage transmission has been revised to read"shall mean
the transmission of electric energy at voltages greater than thirty-five thousand (35,00) volts."
Section 10 of the Ordinance(page 3)has been revised to remove the word"impulses"from"...high
voltage transmission of electric current..."
ATTACHMENTS
1. Copy of First Reading Agenda Item Summary - May 19, 2009.
(w/o original attachments)
ATTACHMENT
ITEM NUMBER: 20
AGENDA ITEM SUMMARY DATE: May 19, 2009
FORT COLLINS CITY COUNCIL STAFF: Steve Catanach
l 1 ' ll l l TM- Brian Janonis
� `�
SUBJECT
First Reading of Ordinance No. 061, 2009, Amending Chapter 26 Article VI of the City Code
Relating to the Provision of Electric Service.
RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
The Electric Board and Natural Resources Advisory Board voted unanimously to approve the
recommendations.
EXECUTIVE SUMMARY / 7n)' 7 7
The proposed Code change ha�been`drafted�t" cl Iris that tHde-City is the sole provider of retail
electric service with the City. The revised Code has been drafted with the goal of addressing three
key issues. The first is the establishment of service territory protections similar to those afforded
investor owned utilities,rural electric associations and other municipal utilities throughout the State.
The second goal is to align service area definitions with bond holder expectations. The third goal
is to support the development of renewable generation projects, including those owned by third-
party entrepreneurs selling electricity at retail within City limits,provided certain conditions are met.
BACKGROUND
Staff had three specific goals in the development of the proposed code change. The first was to
provide the same level of service area protection as that provided to utilities regulated by the
Colorado Public Utilities Commission. T,he following details-the reasons considered in the
development of the first goal. (o(Longmoht
� �In 2007,a customer in the City tarted o evaluate a potential arrangement with a third
party solar developer. Under the proposed business model the developer would install and own the
solar generation plant and would sell the energy to the customer at a negotiated rate. Upon review
it was revealed that the City of Longmont's service territory code did not clearly prohibit this type
of arrangement, although Colorado statutes would have prohibited this arrangement if it had been
proposed in the service territory of an investor-owned utility or rural electric association.
Subsequently, the City of Longmont City Code was amended to provide protections identical to
those in Colorado statute.
May 19, 2009 -2- Item No. 20
Rather than oppose the solar development, Platte River and the City of Longmont offered to enter
into a buy-sell agreement with the developer in order to support the customer. The development did
not advance for unrelated economic-reasons� �Zort
After becoming aware of the situation in Longmon,,the City o Collins examined its existing
service area ordinances. It was discoveredYthat the_existing.City Code did not expressly prohibit
"behind the fence"competitors from selling electric service to customers if there is no need to cross
over City right-of-way or other City property. The potential loss of large customers could adversely
affect both Platte River and the City. The knowledge that this risk exists required that the risk be
reported to bond holders.
The current City code states:
Sec. 26-441. Franchise required.
"Except as otherwise provided herein, it shall be unlawful to furnish or offer to
furnish to any property in the City any electrical service transmitted through wires
installed or maintained in, on, under or over any street, alley, sidewalk, easement or
other public place in the City unless the City Council has, by ordinance, granted a
franchise allowing such service.Any such franchise shall comply with all provisions
of the Charter and shall-speeify the,area of the City in-which such service is
permitted."
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The current Code makes it unlawfulAo provide•electr.�cal service-to any property in the City through
wires or equipment in any public right-of-way without a franchise agreement with the City. The
Code does not specifically address service from another entity,only that service cannot be provided
by facilities on public property.
The existing Code would also allow third party generation developers to install on-site generation
without interaction or coordination with the City,unless they wished to interconnect with the City's
system.
The proposed ordinance clearly states that no other entity can provide electric service to customers
within City limits except under specific conditions that are designed to advance the installation and
development of renewable resources and to ensure continued reliability of the Fort Collins electric
system.
The second stated goal is to bring4he Fort-Collins-C=ode-into line-with Platte River bond holder
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expectations. Previous bond purchasers had the expecta ion that no retail competition existed in the
I.I I 'I ' I 11.. \`&
areas served by the Platte River�member cities. �he discovery of the potential for retail competition
under the current Code requires disclosure•o£this tnformation.to-the bond holders, if not remedied.
The issue was also brought to the attention of the bond rating agencies and potential buyers during
Platte River's recent bond issuance in March of 2009. The Bond Issue Book detailing Platte River's
offering included the following disclosure:
"In 2008 Fort Collins became aware that a possible loophole existed in its service
territory protection code provision. Under the current language of this code
May 19, 2009 -3- Item No. 20
provision it may be possible for a competitive provider to site a generator on the
property ofa municipal customer andprovide retail electric service to that customer
provided the facilities of the competitive provider do not cross municipal streets and
rights-of-way. An amended--code provision•willbe considered by the governing body
of Fort Collins in early'2009.
Although this issue did not havecaydgative impac&on Platte Rivers recent bond issuance, the
concerns expressed during presentations to the City, the Electric Board and the Natural Resource
Advisory Board were legitimate concerns that needed to be disclosed in the discussion.
As noted, the third goal in developing the proposed code change is to provide support for the
development of renewable generation within the City.
Under the proposed Code change,there is no restriction on the ability of a customer to develop any
level of generation for the customer's own use off grid.
Customers may also install generation for their use and tenants' use on their own property. This
scenario may fall under the Public Utilities Commission rules on master metering. The master
metering rules provide protection to consumers that are sub-metered. The rules insure that the
landlord (or master meter operator) does not add additional charges or increase the cost of energy
to the tenant.
With the proposed Code change.'Cmer' ' s may als�all generation for their own use and cross
City right-of-way, if approveAy�Gity Council arough a revocable permit. An example of a
potential situation where this applies is at CSU. CSU is currently developing a new parking
structure on Prospect Avenue. The structure is separated from campus by Lake Street, a public
right-of-way. CSU intends to install a solar array on the roof of this structure. The current Code
would either require CSU to apply for a franchise in order to cross the right-of-way or require the
City to abandon the street and turn it over to CSU. The proposed ordinance will allow Council to
grant a permit to CSU to allow the interconnection of its array with the campus electrical system.
The proposed change will also allow the retail sale of energy to a City customer from a qualifying
renewable resource by a third-party entity provided certain conditions are met. The high initial
capital cost of installing a photovoltaic system can make it difficult for either a homeowner or a
business to install a system. Several companies offer third-party turn key financing and installation
for customers that enter into long term power purchase contracts. The proposed ordinance will
allow third-party generators to install systems up to 10 kW for residential customers and 1,000 kW
for commercial customers. Abo e=1 000 k-W-the proposed-Gode-change requires Platte River, the
City, the third party generator and the customer to,enter into,a,,buy sell agreement within which
Platte River will commit to the,p\rchase o theenergy nerated by the third party for resale to the
City and then to the customer at<the•price agreed-upon between•the third party generator and the
customer. This allows Platte River to stay within the chain of title of the energy and to remain as
the sole provider of energy to the City for levels greater than those established in this ordinance. If
the ordinance is approved on First Reading, staff will bring forward a third party service agreement
for Council consideration on June 2.
Utilities currently remit in lieu of taxes and franchise fees 6%of the revenues collected. Discussions
with the Electric Board and Natural Resource Advisory Board related to the collection of Payments
May 19, 2009 -4- Item No. 20
in Lieu of Taxes (PILOTS) from an entity selling energy at the retail level received two different
recommendations. The Electric Board recommends the City waive the collection of PILOTS to
insure that the City is providing the maximum incentive towards the installation of renewable
resources. The Natural Resources-Ad�v�is oryRBoard recommends-the City collect PILOTS for retail
energy sales. Collection of PI 6, Ts would protect hinds currently collected by the City's General
I1 I I I'S•. V/
Fund. Staff also recommends that any1�ntity operating as a retail provider within the City pay
PILOTS. The impact on Gene aL-Eund revenues-for. a residential installation would amount to
approximately$0.004 per kilowatt hour. This would amount to$13.53 per year for a residence with
a 2.5 kW system. It is more difficult to predict what the actual financial impact would be if PILOTS
were waived for commercial installations because of the variables involved in peak demand and
coincident demand billing. Modeling of a 1,000 kW system for one of the City's large industrial
customers indicates that the annual PILOTS lost would be $8,600 per year.
ATTACHMENTS
1. Electric Board Minutes.
2. Memo from the Natural Resources Advisory Board.
3. Natural Resources Advisory Board minutes.
4. Powerpoint presentation.
ORDINANCE NO . 061 , 2009
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING CHAPTER 26 ARTICLE VI OF THE CODE OF THE CITY
OF FORT COLLINS RELATING TO THE PROVISION OF ELECTRIC SERVICE
WHEREAS , the City is a party to an all-requirements power supply agreement (the "Power
Supply Agreement") with the Platte River Power Authority, a Colorado political subdivision formed
by the City in cooperation with the Town of Estes Park and the cities of Longmont and Loveland;
and
WHEREAS , new forms of renewable resource distributed energy generation are appearing
in the energy market; and
WHEREAS , the City wishes to allow the integration of renewable resource distributed
generation technologies when possible to do so within the terms of the Power Supply Agreement;
and
WHEREAS , the City Council has determined that certain provisions in Article VI of the City
Code regarding electric service should be amended to provide more clarity with regard to the
provision of electric service within the City limits ; and
WHEREAS, in view of the fact that the City Council recognizes and places high value on
the viability of the City ' s electric utility and on allowing City property owners to provide electric
service to their own properties under certain conditions , the Council has determined that the
amendments accomplished by this Ordinance are in the best interests of the City; and
WHEREAS , in light of the rapidly evolving renewable energy industry and related
technological advances, periodic review and re-evaluation of City Code provisions related to
renewable energy will be desirable in the future in order to update the amendments accomplished
by this Ordinance.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows :
Section 1 . That the definition of "Parallel generation" contained in Section 26-391 of the
Code of the City of Fort Collins is hereby amended to read as follows :
Parallel generation shall mean the operation of qualifying facilities when
interconnected with the utility system in accordance with the provisions of this
Chapter, the electric utility rules and regulations and the IEEE 1547 .
Section 2 . That the definition "Small power production " contained in Section 26-391
of the Code of the City of Fort Collins is hereby deleted in its entirety as follows :
Section 3 . That the definition "Qualifying facility" contained in Section 26 -391 of the
Code of the City of Fort Collins is hereby amended to read as follows :
Qualifying facility shall mean an electric-generating facility operated in parallel
with the City of Fort Collins electric distribution system that has been inspected for
compliance with the IEEE 1547, has been issued a "Permit to Operate" by the City
and is operated under a valid "Interconnection Agreement" with the City of Fort
Collins .
Section 4 . That Section 26-391 of the Code of the City of Fort Collins is hereby amended
by the addition of a new definition "Sale or sell" which shall read in its entirety as follows :
Sale or sell shall mean to offer in exchange for money or any service or thing of
value, or other compensation of any kind.
Section 5 . That Section 26-391 of the Code of the City of Fort Collins is hereby amended
by the addition of a new definition "Qualifying renewable technology" which shall read in its
entirety as follows :
Qualifying renewable technology shall mean a qualifying facility that generates
electricity using renewable resources such as solar, fuel cell, wind, geothermal,
combined heat and power or biomass technology.
Section 6 . That Section 26-391 of the Code of the City of Fort Collins is hereby amended
by the addition of a new definition "Customer-generator" which shall read in its entirety as follows :
Customer-generator shall mean an electricity customer of the Utility that
generates electricity on the customer' s side of the meter using a qualifying renewable
technology.
Section 7 . That Section 26-391 of the Code of the City of Fort Collins is hereby amended
by the addition of a new definition "High voltage transmission" which shall read in its entirety as
follows :
High voltage transmission shall mean the transmission of electric energy
impulses at voltages greater than thirty-five thousand (35 ,000) volts .
Section 8 . That Section 26-391 of the Code of the City of Fort Collins is hereby amended
by the addition of a new definition "IEEE 1547" which shall read in its entirety as follows :
IEEE 1547 shall mean the International Electrical and Electronic Engineers
Standard 1547 for Interconnecting Distributed Resources with Electric Power
Systems as approved in June 2003 .
Section 9 . That the title of Division 2 of Article VI of Chapter 26 of the Code of the City
of Fort Collins shall be amended to read as follows :
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DIVISION 2 . HIGH VOLTAGE TRANSMISSION FACILITIES
Section 10 . That Section 26-411 of the Code of the City of Fort Collins is hereby amended
to read as follows :
Sec. 26-411 . Compliance required for high voltage transmission facilities.
No person shall maintain or install any wires, cables or other equipment for the
high voltage transmission of electric current impulsesin, on, under or over any street,
alley, sidewalk, public utility easement or other public right-of-way, or maintain or
install any pole or mast to support or hold such wires or equipment in any such place,
without having fully complied with the provisions of this Division.
Section 11 . That Section 26-412 of the Code of the City of Fort Collins is hereby amended
to read as follows :
Sec. 26-412 . Franchise or other authorization required.
No wire, cable, pole or other equipment necessary for high voltage transmission
facilities shall be installed or maintained over, on or under any such place unless a
franchise has been granted for such installation or maintenance, except that:
( 1 ) High voltage transmission facilities that are in place in a public right-of-
way at the time the underlying property is annexed into the City may
remain in place without a franchise; and
(2) High voltage transmission facilities that are in place over, on or under
property other than a public right-of-way at the time the underlying
property is annexed into the City may, subsequent to annexation, be
relocated into a City street, alley, sidewalk, public utility easement, or
other public right-of-way and maintained therein without a franchise,
subject to all the same requirements that are applicable to the placement
and maintenance of other public utilities in said locations .
Section 12 . That Section 26-416 of the Code of the City of Fort Collins is hereby amended
to read as follows :
Sec. 26416. City electric utility not affected.
The provisions of this Division shall not apply to the electric utility of the City
including Platte River Power Authority and the City utility, and Platte River Power
Authority shall be authorized to install and maintain lines and facilities in accordance
with the Code and the rules and regulations of the electric utility.
Section 13 . That Article IV, Division 3 of the Code of the City of Fort Collins is
hereby amended to read as follows :
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DIVISION 3 . ELECTRIC SERVICE
Sec. 26-441 . Obtaining electric service.
It shall be unlawful for any person to obtain electrical service unless it is
provided in accordance with the terms of this Article.
Sec. 26-442 . Electric service lines and related facilities.
No person other than a customer-generator who has fully complied with the
provisions of Section 26-444 shall install any electric facilities in, on, under or over
any street, alley, sidewalk, public utility easement or other public right-of-way
without having fully complied with the provisions of § 23 - 81 of the Code pertaining
to encroachments or, in the case of high voltage transmission lines, the provisions
of Division 2 of this Article.
Sec. 26-443 . City electric utility not affected.
The provisions of this Division shall not apply to the electric utility and that
utility shall be authorized to furnish electric service to any property within the City.
Sec. 26-444. Customer generation of electric service.
A customer-generator may furnish electric service to the customer-generator' s
own property for use by the customer-generator subject to the following restrictions :
( 1 ) No high voltage transmission lines may be used.
(2) If such service is provided through wires or other facilities installed or
maintained in, on, under or over a public place, the installation of any such
facilities shall be allowed only pursuant to the issuance of a revocable
permit approved by the City Council after a determination by resolution
that the provision of such service will not materially alter the viability of
the electric utility system and will benefit the citizens of Fort Collins as
well as the customer-generator.
(3 ) Any interconnection, parallel generation or net metering service
arrangements are subject to the requirements and rates, fees and charges
set forth in the applicable rate schedule in Division 4 of this Article.
Sec. 26-445 . Retail sale of electric service.
No person or entity other than the utility may engage in the sale of electric
service to any property in the City except under one or more of the circumstances
described in paragraphs ( 1 ) through (4) of this Section.
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( 1 ) If the electricity is generated solely using a qualifying renewable
technology and sited exclusively on the customer' s premise, a non-City
provider may offer the electricity for sale to the customer so long as :
(a) the service arrangement is authorized by an interconnection
agreement with the City and by a purchase agreement with the City
and Platte River Power Authority that provides for the recovery of
the costs to the City and Platte River Power Authority and such
additional amount as may be determined by the City; or
(b) the electric generation system has a maximum generation capacity
equal to or less than one thousand ( 1 ,000) kilowatts and the service
arrangement is authorized by an interconnection agreement with the
City and meets the definition of parallel generation contained in this
Article .
(2) A certified master meter operator who purchases electric service in
accordance with this Division may sell that electric service so long as it
does so in full compliance with the Fort Collins Utilities electric service
rules and regulations and Colorado Revised Statute §40- 1 - 103 . 5 and its
implementing regulations found in the Colorado Code of Regulations at
§4 CCR 723 -3 ;
(3 ) Electric service may be provided pursuant to § 26-446 below.
(4) The City Council may authorize an exception to this restriction by
ordinance or by the grant of a franchise.
Sec. 26-446. Annexations.
Properties within any annexation to the City may continue to receive electric
service from any utility previously furnishing such service without complying with
the provisions of this Division until the receipt of written notice from the City of the
City's readiness to provide such service . As of the date upon which the City has
declared itself to be responsible for providing such service, all electric service within
any annexed area shall be provided in accordance with the provisions of this
Division. If the City is unable to provide electric service to annexed property prior
to the expiration of the second year after annexation of that property, then the utility
previously furnishing service may continue to do so if said continued service is
authorized by the City Council through the grant of a revocable permit for that
purpose . Any such revocable permit shall authorize the continued provision of
electric service by the non-City utility to the annexed property until such time as the
City either determines that the City is ready to provide electric service, or notifies
said non-City utility that a franchise shall be required for the continuation of such
service.
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Sec. 26-447. Violations and penalties.
Any violation of any provision of this Division shall be a violation of the Code,
punishable as provided in § 1 - 15 . Each day upon which any violation shall continue
shall constitute a separate offense, punishable as such.
Introduced, considered favorably on first reading, and ordered published this 19th day of
May, A.D . 2009, and to be presented for final passage on the 2nd day of June, A.D . 2009 .
Mayor
ATTEST :
Chief Deputy City Clerk
Passed and adopted on final reading on the 2nd day of June, A.D . 2009 ,
Mayor
ATTEST :
City Clerk
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