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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/19/2009 - FIRST READING OF ORDINANCE NO. 061, 2009, AMENDING ITEM NUMBER: 20 AGENDA ITEM SUMMARY DATE: May 19, 2009 FORT COLLINS CITY COUNCIL STAFF: Steve Catanach 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 The proposed Code change has been drafted to clarify that the 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. The following details the reasons considered in the development of the first goal. In 2007,a customer in the City of Longmont started to 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. After becoming aware of the situation in Longmont, the City of Fort Collins examined its existing service area ordinances. It was discovered that 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 specify the area of the City in which such service is permitted." The current Code makes it unlawful to provide electrical 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 bring the Fort Collins Code into line with Platte River bond holder expectations. Previous bond purchasers had the expectation that no retail competition existed in the areas served by the Platte River member cities.The discovery of the potential for retail competition under the current Code requires disclosure of this information 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 provision it may be possible for a competitive provider to site a generator on the May 19, 2009 -3- Item No. 20 property of a municipal customer and provide retail electric service to that customer provided the facilities ofthe competitive provider do not cross municipal streets and rights-of-way. An amended code provision will be considered by the governing body of Fort Collins in early 2009. " Although this issue did not have a negative impact on Platte River's 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,customers may also install generation for their own use and cross City right-of-way, if approved by City Council through 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. Above 1,000 kW the proposed Code 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 purchase of the energy generated 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 in Lieu of Taxes (PILOTS) from an entity selling energy at the retail level received two different May 19, 2009 -4- Item No. 20 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 Advisory Board recommends the City collect PILOTS for retail energy sales. Collection of PILOTs would protect funds currently collected by the City's General Fund. Staff also recommends that any entity operating as a retail provider within the City pay PILOTS. The impact on General Fund 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. Electric Board ATTACHMENT 1 minutes November 19, 2008 Code Change The language in the existing City Code pertaining to electric service needs to be updated in regard to the transmission facilities and generation of electricity by a third party. Chapter 26 of the City Code requires anyone providing electricity within the City of Fort Collins to have a license to franchise and sell electricity. The goal of the Code change is to ensure the City of Fort Collins Utilities is the only service provider in the Fort Collins service area of and to determine parameters for net metering with renewable technologies. The proposed Code change is to the Service Area section of the Code. The approach to the change bore three goals in mind. The first goal was to establish more clearly defined service area protection. There are currently two customers who can be identified, one of them an extremely large industrial customer potentially served by a neighboring utility. This is because our current Code language only requires another entity to obtain a franchise agreement if they are crossing City Right-Of-Way (ROW). The second customer could be served by another entity without crossing ROW. The second goal was to write the ordinance to provide service territory protection,just like every other electric utility is given under the law, yet providing flexibility in the Code to support the development of renewables within the service territory including those selling electricity to our customers under a retail agreement. The third goal in the ordinance was to write it such that the support of renewable developed third party retail sales did not jeopardize PRPA's bond rating. Above the 10 kW residential and 25 kW commercial thresholds, PRPA will enter into a buy-sell agreement with the third party generator. This is basically establishing a wholesale purchase agreement between PRPA and the generator, and the City will then reach an agreement with the customer to pass the wholesale cost through. The discussion with the Electric Board will continue on December 17, 2008 on how best to handle sales taxes and Payments in Lieu of Taxes (PILOTs). Citizen Comment: With the economic times as they are right now, Steve Yurash could see a large company putting a large photovoltaic (PV) unit, and then a year later file for bankruptcy with the large PV unit not generating or no consumption. He would also like to hear more discussion regarding splitting the difference on the buy/sell agreement with PRPA and retail rate in regard to wholesale and retail rates. Mr. Yurash feels he rate should be in absolute dollars because it would not fluctuate with time as costs increase. Mr. Catanach will return in December with a finalized proposal to take to Council for approval on the change to Code language. Energy Board Utilities Executive Director Brian Janonis attended the last Council work session on October 28, 2008, and Councilmember Kelly Ohlson recommended to City Manager Darin Atteberry the City of Fort Collins replace the Electric Board with an Energy Board. The intent is to broaden the look at the overall energy policies with reviews of transportation policies and coordination of planning throughout the City. Councilmember Ohlson has concerns about the overall structure of the Electric Board and the structure of Utilities as a whole. The intent is to have a Board to oversee all the processes and be all encompassing. 4 Fort Collins Utilities Electric Board Minutes Wednesday, December 17,2008 Electric Board Chairperson City Council Liaison John Morris, 377-8221 Wade Troxell, 219-8940 Electric Board Vice Chairperson Staff Liaison Dan Bihn, 218-1962 Robin Pierce, 221-6702 Roll Call Board Present Chairperson John Morris, Vice Chairperson DZebers John Grah John Harris, Steve Wolley and Jeff Lebesch Board Absent Board Member Tom Barnish Staff Present Steve Catanach, Norm Weaver, Kraig Bader, pez-Filkins, BillSwitzer, Ellen Switzer, Tom Rock, Scott Dahlian Janonis, PattyBigner and Meagan Peil Guests Bevan Noack, Steve Yurash and Ric oen Meeting Convened Chairperson Morris calle a meeting to order at 5:32 p.m. Public Comme None A val of November 19 2008 Minutes ce Chairperson Bihn motioned to approve the minutes from the November 19, 2008, meeting. Board Member Harris seconded the motion, and it passed unanimously. Net Metering and Code Changes Light and Power Operations Manager Steve Catanach would like to continue the discussion from the previous meetings on proposed changes to the City Code related to net metering. During those previous discussions, the Board desired to see a provision in the Code for a net metering limit of 1 MW (megawatt) per system and a requirement that each system be reviewed either within a specific time frame or when the system has issues which become a concern. A draft of the new code language will be provided at the next meeting for t the Board to review and recommend changes. Question: Should the City of Fort Collins Code language remain as "provides for the recovery of all direct and indirect costs of the City and Platte River Power Authority 1 (PRPA) and such additional amount as may be determined by the City"? This would include costs such as PILOTs (Payments In Lieu of Taxes), taxes, insurance costs and the impact on the system. The example of this impact would be if we were to implement PILOTs with a 5 kW system. The loss to the City with PILOTS would be roughly $27and the loss in sales tax would be $14. We would still collect sales tax on this, because the customer was still purchasing energy from us. Another example would be a customer with a 7 kW system. The loss of PILOTS would be roughly $32 and sales tax of$15, and we would be purchasing approximately 1700 kWh at the retail rate. Total impact on the General Fund would be $46. With the larger customer like the GS-50 rate customer with a 750 kW system, this would be fairly large and has a peak demand of 158 kW. This in turn is energy consumption close to zero. Looking at the demand of this type of system with no infrastructure and no installation of transformer to handle this, who is going to be responsible for the cost? Electric Utilities looks at the size of the transformer, the wiring needed and service section going to the customer, and applies certain factors like looking at the building with practical knowledge and knowing not everything will be on at the same time. The National Electric Code dictates how the building is designed and requires each area have their own standards. We do not size our equipment to those standards, but we size the equipment to their equipment with our practical knowledge over time. On occasion, we do need to upgrade a transformer for a customer, but with the net metering system and the interconnection, who is responsible for the additional cost? Another example is with a 1 MW system. Only 10 to12 of our current customers would be capable of having a large system like this. With the 1 MW systems, we would be looking at the loss of PILOTS around $8,000. However, they would be paying taxes and that would add approximately three percent. The recommendation is we do not see PILOTS values as a significant cost to the General Fund and are not worried about PILOTS. Another recommendation is to review the language in the interconnection agreement to ensure an appropriate level of insurance for the system. In addition, if we should have to upgrade our facilities to support the generation, then the customer would be responsible for those costs. Discussion: If I purchased a system and installed that in 2009, is the language of the agreement going to cover that? There is a way to write in a clause and be grandfathered in to cover the interconnection agreement for the smaller systems. Can we change it in a couple of years? The agreement can be written as a long term agreement with periodic reviews. Mr. Catanach will be bringing the proposed language to the Electric Board at the January meeting before taking it to Council for approval. 2 Fort Collins Utilities Electric Board Minutes Special Meeting Tuesday,January 20, 2009 Electric Board Chairperson City Council Liaison John Morris, 377-8221 Wade Troxell, 219-8940 Electric Board Vice Chairperson Staff Liaison Dan Bihn, 218-1962 Robin Pierce, 221-6702 Roll Call Board Present Board Chairperson John Morris, Vice Chairperson Dan Bihn, Board Members *Tom Bamish, Steven Wolley, *John Harris and Steve Yurash (*See notation below in PRPA Agreements section where Board members recused themselves) Board Absent Board Member John Graham Staff Present Meagan Peil, Steve Catanach, Robin Pierce and Jenny opez-Filkins Guests Joe Wilson and John Bleem, PRPA; Eric Su; erland Meeting Convened Chairperson John Morris called t meeting to order at 5:32 p.m. Public Comment Citizen Eric Sutherl expressed a desire to respond to a question asked of him at the last City Counc' eeting as to whether he had read the Energy Policy, and he has read the Policy. o, Mr. Sutherland presented his view that the City of Fort Collins Electric Board i t immediately concerned about the citizens of Fort Collins. He feels it is irre nsible of City Council to have to sit through more of these issues without the sideration of the Electric Board, and the PRPA contracts are not an exception. He feels the Board is not aware of issues with possible violation to service area protection. Net Metering and Service Code Change - Formal Recommendations Light and Power Operations Manager Steve Catanach asked the Board for a formal recommendation on the net metering and code change agenda items. These items have been before the Board for discussion for the last few months. Council recently asked staff to present Board recommendations earlier in the process of consideration (for discussion at work sessions). Key discussion points for net metering are the purchase of annual excess energy from our customers for the retail rate and establishing the net metering maximum as 1 MW; how 1 the tariff rate will be used after the 1 MW level of generation. The service code language states clearly Platte River Power Authority (PRPA) and the City would recover all costs directly or indirectly. As discussion continued, there was interest in breaking out the identifiable costs, i.e. PILOTS (Payments in Lieu of Taxes), insurance and infrastructure. City Manager Darin Atteberry has recommended adopting a waiver of the PILOTS for three years due to the possible impact on the General Fund and also re-examining the codes and PILOTS in three to five years. Board members discussed their concerns about mandating insurance; if a customer's facility could impact other customers negatively, the customer would be required to carry insurance. The Board recommended the Sunset provision, insurance, and the impact on our infrastructure and the costs to us for that. Should the payment be from the customer or utilities if there is an impact on our infrastructure? For example, if there are twelve homes on a transformer with 5 kW solar units on each home, and the combined impact reaches maximum generation, it would overload our transformer. In that scenario, who is responsible for the transformer upgrade? The recommendation from Council is to accept a certain limit. We would pay for costs and then when the customer upgrade hits a limit, they would absorb the costs. Also, on the commercial side, we would ask the commercial customer to absorb the cost of the equipment. What is the standard for the State coverage or with Xcel Energy regarding insurance coverage? Xcel Energy did not have any mention of insurance on their website, but Austin Energy (think this reference needs further defined) did have a requirement for insurance. Do companies like State Farm even have insurance coverage for this? City staff will look into this and are not sure what kind of insurance coverage would be involved. If an incident were to occur, the liability portion of homeowner's insurance might come into play. Example: There is a transformer at the end of a cul de sac. Three homeowners put solar panels on their homes to cover their demand. Would that cause problems to the transformer? On a solar installation, there would be very little effect on the transformer, because they would not have the momentum feeding into the system to affect voltage. However, a small wind turbine could have an effect, because it has the momentum to feed into the system. What about the use of an electric generator? The generators are not a problem in most cases, because the owner has to transfer the power with a transfer switch, and generators do not operate in parallel with us. Example: What about a large industrial arch welder situated next to a computer company? The welder has caused issues with the computer company and their service.- How would we handle that? There are rules and regulations which would require the customer to correct any damage to our system. 2 What ifsomeone doesn't have a reduced voltage starter? There is a provision requiring them to correct it and send the power back to us, typically after the fact. Is there any way to protect against this type of situation? There are expensive treatments that we would ask owners to maintain. We are going with motor generators that run in parallel with our system (what would be a better way to say this?). We are also developing a piece of switch gear that will fundamentally disconnect before something goes wrong. The service code change is geared to third parties with generation over a certain limit. Our goal is to address these issues in the Code. Could we mention in the Code that we have insurance, but lack of insurance will not relieve customers of liability? This would be part of the interconnections standards agreement. Recommendation would be to address the insurance in interconnection agreements. Where is the actual language of the Code? The intent is to go to Council with the recommendation of the*Board and then proceed with the written language. We are not asking for an approval of the language at this meeting, but are asking the Board to give recommendations on how we would put the issues (PILOTS, insurance and third party generators) into the language. Assistant City Attorney Jenny Lopez-Filkins has suggested the topic of PILOTS needs to be addressed in the service code change, because it is a financial issue. Also, PILOTS is mentioned in the interconnection agreement and infrastructure, insurance, and indemnity agreements and will be in the interconnection agreement, but not necessarily in the service code change. This would cover all bases in this type of situation. The Board would like to see more from the insurance side and what is being done throughout the State, not just in Austin, because if a homeowner sees the need for certain insurance, it may impact decisions to pursue a solar unit on their residence. Are (who?) referring to certain Code sections? These recommendations from the Board will go to Council. In turn, Council will make their recommendations, the Code language will then be written, and Council will vote on the Code language. PRPA (Platte River Power Authority) Aureements Organic Contract and the Energy Supply Contract * Board members Tom Barnish and John Har ' se themselves due to their association with PRPA (Platte River w '` uthority) as employees, and they will not hear this discussion o. n the amended contract agreements; both members left the meeti p.m. Remaining Board members for the discussion were Chair ohn Morris, Vice Chairperson Dan Bihn, and Board members Steve s and Steven Wolley. 3 ATTACHMENT MEMORANDUM FROM THE CITY OF FORT COLLINS NATURAL RESOURCES ADVISORY BOARD Date: April 15, 2009 To: Mayor and Council Members From: Liz Pruessner on behalf of the Natural Resources Advisory Board Subject: Net Metering and Electric Service Code Change The Natural Resources Advisory Board considered the proposed changes to the City Electric Service Code at meetings in December 2008,March and April 2009. NRAB unanimously supports the proposed changes and urges the City to make every effort possible to provide incentives that promote residential and commercial solar installations. Specific recommendations regarding Net Metering: • Customers should be reimbursed for their annual excess generation at their current retail energy rate. • The net metering maximum system size should be 1 megawatt. Specific recommendations regarding the proposed electric service Code change: • Remove language in Code requiring recovery of all costs, both direct and indirect, to the City and Platte River and instead address each potential cost specifically in the code. • Address specific concerns about insurance and infrastructure in the interconnection requirements. • Payment in lieu of taxes shall be permitted on third party retail sales. Board recommendations pertinent to both topics: • The net metering rate and Code should have a requirement for re-evaluation every 3 years or sooner, as changes in patterns of electricity usage, pricing, etc. arise. • The city should codify net metering policies as soon as possible per House Bill 08- 1160. Such requirements were legislated by the General Assembly last year. • An ongoing dialogue among city council, the city utility, and the community about the regulatory model for distributed energy(all forms) in Fort Collins should take place. • Customers installing generation would be required to obtain appropriate insurance for their systems. This requirement should be described in the Utility Interconnection Requirements. • If a customer's installation requires an upgrade to the utility electrical infrastructure, the City will cover the cost of residential upgrades necessary to support residential installations. • For commercial customers, typically larger systems over 10 kilowatts, the utility should create a process to offset a certain percentage of these upgrade costs that are charged to the customer so the customer would not be responsible for the entire cost of transformer upgrades and/or other necessary infrastructure upgrades. NRAB is concerned that bearing the entire cost might be a disincentive for commercial customers to invest in solar systems Please feel free to contact me regarding the NRAB's recommendation on this issue. Respectfully Submitted, Liz Pruessner, Chair Natural Resources Advisory Board 970-484-4371 lizpru@colostate.edu cc: Darin Atteberry, City Manager John Armstrong, Staff Liaison John Stokes, Natural Resources Director ATTACHMENT 3 Natural Resources Advisory Board 15 April 2009 - Regular Meeting Meeting Minutes Excerpt Electric Service Code Changes The Natural Resources Board reviewed, discussed and finalized a memo to Council regarding the Electric Service Code changes drafted by Phil Friedman. Steve Catanach (Fort Collins Utilities Light and Power Manager) was present to answer questions. Discussion: • Phil Friedman stressed that the City needs to be sure it is in a 2-way situation between community and the utility. Also, Council should be involved with any type of regulatory changes that promote renewables, efficiency or conservation. He felt we should be flexible to address things as they change. o Phil also stated the real cost of distribution of small PV systems without rebates is about 40 cents per kWh which is significantly higher than what we currently pay. Germany, Spain and Italy have moved forward on PV and are. willing to pay the real cost for that type of electric generation. • Glen asked for clarification regarding limiting sales of PV generating systems to l OkW for residential and 25kW for commercial. Steve answered that the 25kW limit for commercial PV generation has been increased to I megawatt with an agreement between the generator and the customer. For over 1 megawatt generation, Platte River Power Authority requires a contract because that amount of electricity needs to be scheduled by PRPA and creates a risk their bond council requires be protected. • Glen also asked how this compares to what Excel Energy is doing. Steve stated Excel is a different model. There is a Senate bill pending that is, in essence, establishing the same type of structure that we are offering third parties where developers can sell to customers. There will still be financial ties to the utilities. • Steve pointed out the NRAB isn't being asked to move on the ordinance but the follow-through structure. • In answer to a question by Phil who asked if residential generation was greater than IOkW, would they have to have a contract with the.utility, Steve stated he was unclear what arrangement would be necessary, but did say Fort Collins Utilities would not stand in their way to generate that much electricity. Their goal is to incentify PV. • Glen asked Steve Catanach what resources Fort Collins has used to develop its supply policy such as experts, utilities or large providers who have been doing this for several years. His intent is for Fort Collins to be sure it is leading-edge on this. Steve responded it is Fort Collins Utilities' intent to have a model facility built around sustainability. Utilities have historically been very conservative,however, the electric utility industry is currently experiencing a great deal of change and is moving forward towards green energy. • Glen stated Fort Collins needs to have a discussion with its citizens whether or not the city wants to be green or not and if the citizens are willing to pay for being green. Steve pointed out community dialogue is part of the plan. • Liz Pruessner stated the Climate Action Plan addresses the greater costs to achieve its goals. • Steve pointed out utilities is organizing a stakeholder community forum to educate the public about the future of utilities around the world. Alan Apt moved to send the following finalized memorandum to Fort Collins City Council. Joe Piesman seconded. Motion passed with 7 members voting yes and one member who left the meeting early not voting. The Natural Resources Advisory Board considered the proposed changes to tl:e City Electric Service Code at meetings in December 2008,March and April 2009. NRAB unanimously supports the proposed changes and urges the City to make every effort possible to provide incentives that promote residential and commercial solar installations. Specific recommendations regarding Net Metering: • Customers should be reimbursed for their annual excess generation at their current retail energy rate. • The net metering maximum system size should be I megawatt. Specific recommendations regarding the proposed electric service Code change: • Remove language in Code requiring recovery of all costs, both direct and indirect, to the City and Platte River and instead address each potential cost specifically in the code. • Address specific concerns about insurance and infrastructure in the interconnection requirements. • Payment in lieu of taxes shall be permitted on third party retail sales. Board recommendations pertinent to both topics: • The net metering rate and Code should have a requirement for re- evaluation every 3 years or sooner, as changes in patterns of electricity usage,pricing, etc. arise. • The city should codify net metering policies as soon as possible per House Bill 08-1160. Such requirements were legislated by the General Assembly last year. • An ongoing dialogue among city council, the city utility, and the community about the regulatory model for distributed energy (all forms) in Fort Collins should take place. • Customers installing generation would be required to obtain appropriate insurance for their systems. This requirement should be described in the Utility Interconnection Requirements. • If a customer's installation requires an upgrade to the utility electrical infrastructure, the City will cover the cost of residential upgrades necessary to support residential installations. • For commercial customers, typically larger systems over 10 kilowatts, the utility should create a process to offset a certain percentage of these upgrade costs that are charged to the customer so the customer would not be responsible for the entire cost of transformer upgrades and/or other necessary infrastructure upgrades. NRAB is concerned that bearing the entire cost might be a disincentive jor commercial customers to invest in solar systems Proposed Service Code Change Steve Catanach , PE Light & Power Manager Proposed Code Change Goals • Generally conform with " regulated monopoly" • Bring Fort Collins code in line with bond holder expectations • Recognize and support installation of renewable generation including those owned by third - party ' s Certificated Area • Previous code language allowed other entities to serve if they were granted a franchise agreement from the City . • Franchise was only required if within or crossing public Right-of-Way . ,,mot_fps Bond Holder Expectations ATTACHMENT 4 • Disclosed to purchasers of recent PRPA Bond sale that the possible loophole existed in service territory code . • Did not present a significant issue in the sale . Support for Renewable Development How is a customers ability to install renewable generation affected by this Code Change ? • Off-grid customer — OK • Customer generation for own use — OK • Customer generation for customer and tenant use absent crossing of streets and ROW — OK with PUC implications ( master meter requirements ) Support for Renewable Development • Customer generation for customer and tenant use with ROW crossings — OK but : — Will require City Council approval — Master meter requirements Support for Renewable Development • Third party owners selling electricity at retail — OK but : ATTACHMENT 4 — Allowable from Qualified Renewable Resource — Qualified generation above 10 kW for residential and above 1000 kW ( 1 MW) for commercial will require a buy-sell agreement — City will collect Payment in Lieu of Taxes from Retail sellers . Third Party Retail Sales • Third Party Retail Sales allowed in several States including : — Colorado — California — Oregon Fit_f ■ Rate GSSO 150 kw 1125000 Savings Month kWh Kwo ,CWP Bill kWh Gen kWh $ kWo $ kWp $ 11 Savings , New Bill I Jan 52,769 134 jk&I $ 2,763.16 16,004 $304 ' $611 $1,12511 $2,040 1 723.49 I Feb 55,752 134 EL$ 2,876.27 15,863 $298 ' $613 $1,17911 $2,090 1 786.66 I Mar 49,702 136 NJ$ 2,790.97 21,142 $402 1 $624 $1,198 II $2,223 1 567.68 I Apr 53,760 m1sii!$ 2,813.78 _ 19,851 $377 $624 $1,143II $2,145 1 669.20 I May 51,243 --I$ 3,076.57 '_ $373 $642 $1,436 - $2,451 1 625.64 I Jun 54,703 --I$ 3,132.64 '_ $357 $648 $1,42011 $2,425 1 707.59 I Jul 58,426 Ir 158 ,=I$ 3,574.711_ $358 $724 $1,716 II $2,798 ' 777.20 I Aug 56,696 II 149 ■J$ 3,238.891_ $369 _ $682 $1,455 II $2,506 j 732.79 I Sep 71,123 j 159 EI$ 3,826.55 'ill 9,350 $368 $728 $1,72311 $2,818 1 1,008.14 I Oct 55,854 I' 150 "$ 3,458.40 'U8,864 $358 ' $688 $1,685 $2,731 9 727.68 I Nov 55,296 I' 142 ■J$ 2,915.53 15,754 $299 ' $648 $1,192 $2,139 1 776.18 I IF Dec 52,048 138 $ 2,776.33 15,498 $294J $629 $1,134 $2,057 L719.42 Totals 667,371 M " $37,243.79 21IIIIIIIIIIIIIIIIIIIIIIIJEW, $7,860 $16,405 $28,422 PILOTS Collected $2,108.14 $529 PILOTS Lost : $1,578.86 - �ollins r Rate GS-750 1 morpmmmwmmqw500000 Savings kWh Kwo W Bill jMh Gen kWh $ kWo $ kWP $ Savings New Bill 1,579,833 I, 2,806 IF,158 $67,770.92 j 126,921 ' $2,373 $3,444 $10,187 $16,005 $ 51,766 1,664,117 I, 2,801 12,319 $71 ,464.73 IN 127,138 ' $2,377 $3,444 $10,187 $16,009 $ 55,456 1,516,699 I, 2,828 ' 2,409 $69,988.45 ' 180,410 ' $3,374 $3A44 $10,187 $17,005 $ 52,984 1,690,182 I, 2,992 ' 2,335 $72,746.74 , 180,139 ' $3,369 $3,444 $10,187 $17,000 $ 55,747 1,666,923 I, 3,075 ' 2,874 $79,698.41 , 183,850 ' $3,438 $3,444 $10,187 $17,069 $ 62,629 1,776,194 I, 3,107 02,884 $81 ,963.97 . 177,479 ' $3,319 $3,444 $10,187 $16,950 $ 65.014 1,780,595 I, 3,275 3,011 $84,249.77 . 172,429 $3,224 $3,444 $10,187 $16,856 $ 67,394 2,086,998 I, 3,643 . 3,475 $97,240.57 IN176,056 I`$3,292 $3,444 $10,187 $16,923 $ 80,317 2,140,119 I, 3,729 ' 3,442 $98,054.94 ' 169,382 1$3,167 $3,444 $10,187 $16,799 $ 81 ,256 1,914,308 I, 3,531 ' 3,399 $92,663.71 , 158,154 1$2,957 $3,444 $10,1871 $16,589 $ 76,075 1,894,092 I, 3,321 ' 2,868 $84,613.66 IN 127,667 9$2,387 $3,444 $10,1871 $16,019 $ 68,595 1,753,450 I, 3,188 JIM& $77,408.09 IN122,311 1$2,287 $3,444 $10,1871 $15,918 $ 61,490 21,463,510 I, i $977,863.94 . &1566 $41,329 $122,24=dL$199,141 $ 778,723 IF PILOTS Collected $55,350.79 $46,723.40 PILOTS Lost = $8,627.39 Ci [ins �J 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 renewable 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 these rufcsthis 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 : Sinallpmrerprorh7rfion shall mean fficifities which derive trore than - luding wind, solar and water, to produce electric powcr. Stich fficififies tymst be less than eighty (80) tnegawatts' capacity and must be owned by a person not primarily engaged in the generation or sale of electric energy: 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 eity intereonnection requirements 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 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 : -2- 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 : 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 . CoinpliancUCompliance required for high voltage transmission facilities. it shall be No person shall maintain or install any wires, cables or other equipment for the high voltage transmission of electric current impulses in, 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. 26412. 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 Ttransmission 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 Ttransmission 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 : -3 - Sec. 26-416. City electric utility not affected. The provisions of this Division shall not apply to the efeetriealelectric 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 : DIVISION 3 , ELECTRIC SERVICE Sec. 26-44t . Franchise required Except as otherwise provided herein, it shall be unlawful to furnish or offer to furnish to at i ttic eity any efectricat service tratismitted through wires installcd or maintained in, on, mider or over any street, aficy, sidewalk, casenicnt or franchise allowing such service . Any stich franchise shall comply with all provisiMis pernfittcd . Sec. 26-4421 . Obtaining electric service. Except as otherwisc providcd , ' It shall be unlawful for any person to obtain electrical service -26-441 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 cleetricafelectric utility and that utility shall be authorized to furnish electric service to any property within the City. -4- 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 subj ect 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 (a) through (d) of this Section. ( 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 -5 - 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. 26-4446. Annexations. Properties within any annexation to the City may continue to receive eleetriealelectric 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 electriealelectric service within any annexed area shall be provided in accordance with the provisions of this Division. If the City is unable to provide _'_ _ alelectric 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 . Sec. 26=4457. 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 -6- Passed and adopted on final reading on the 2nd day of June, A . D . 2009 . Mayor ATTEST : City Clerk -7-