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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/02/2009 - SECOND READING OF ORDINANCE NO. 062, 2009, AMENDIN ITEM NUMBER: 15 AGENDA ITEM SUMMARY DATE: June 2, 2009 FORT COLLINS CITY COUNCIL STAFF: Steve Catanach Brian Janonis SUBJECT Second Reading of Ordinance No. 062, 2009, Amending Chapter 26, Article VI of the City Code Relating to Net Metered 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, amends Chapter 26, Article VI the City Code to define the net metering requirements for qualifying renewable generation facilities. In light of recent technological and legislative developments,the City intends to formalize its net metering program. Pursuant to a pilot program,the City has offered net metering services to its customers since 2005 through special services contracts. The intent of this amendment to the City Code is to codify the net metering rate in the Utility's existing rates. ATTACHMENTS 1. Copy of First Reading Agenda Item Summary - May 19, 2009. (w/o original attachments) ATTACHMENT 1 ITEM NUMBER: 21 AGENDA ITEM SUMMARY DATE: May 19, 2009 FORT COLLINS CITY COUNCIL STAFF: Steve Catanach Brian Janonis SUBJECT First Reading of Ordinance No. 062, 2009, Amending Chapter 26, Article VI of the City Code Relating to Net Metered Electric Service. RECOMMENDATION Staff recommends adoption of this Ordinance on First Reading. Both the Electric Board and Natural Resources Advisory Board voted unanimously to approve the recommendations. EXECUTIVE SUMMARY (r�l n"' P V The proposed addition to Chapter 26,Article VI the City Code defines the net metering requirements for qualifying renewable generation facilities. In light of recent technological and legislative developments, the City of Fort Collins intends to formalize its net metering program. Pursuant to a pilot program, the City of Fort Collins has offered net metering services to its customers since 2005 through special services contracts. The intent of this amendment to the City Code is to codify the net metering rate in the Utility's existing rates. BACKGROUND Over the course of several years, staff has developed a net metering program to establish a standard approach to allow customers to generate renewable energy and use that energy to reduce energy purchased from the City. A pilot program was established-in 2005 and the City currently has 32 participating customers. r( � Ft \Net metering is defined as pro, isi Hof-, ice stomer that has a qualifying renewable generation resource where the energy generated by that customer that is delivered to the local electric distribution grid is used to offset energy provided by the electric distribution utility to that customer over a defined period of time. Chart 1 is a graphic representation of a net metering service. May 19, 2009 -2- Item No. 21 5 kW Solar Plant 1 ,00 8 0 0 6 0 0 =mom ' 4 0 0 200 ®® 10 � ® O Ja n Feb M ar A p r�t'fi ay Ju n Ju 1 A u g S ep O ct N ov D ec (200 ) M o n t h ® e k W h U s e kW h G e n era t e d N e t U s a Chart 1. — Sample net metering service for--a-residential-customer with a 5 kW qualifying system The solid line in the graph representsoa resldenhal_customer saannual electrical consumption. The dashed line represents generation from a 5 kilowatt solar array and the dashed-dotted line represents the net energy delivered to the customer or back to the utility over the course of the year. Under a net metering service rate.the customer's generation would directly offset their usage between monthly billing cycles. Any excess generation delivered back to the utility will be credited to the customer and applied towards subsequent bills. For example,the customer above generated excess energy in March, April, May, June and October. The excess energy generated will be credited towards the usage amount shown on the customer's bills in subsequent months,effectively reducing subsequent utility bills. At the end of the year, should the customer have generated more energy than they received, the utility will buy back the excess energy. May 19, 2009 -3- Item No. 21 Table 1. - Sample net metering service for a residential customer with 5 kW qualifying system Month Bill kWh Use kWh Gen Net New Bill Jan $ 52;53 /i7481\ 562"� 1(_ 1;86 $ 16.01 Feb $ 55!59 (795 J'j 561_ J/ \\/234 $ 19.14 Mar $ 45�43 E'(639 jJ656 Ill (17) $ 3.91 Apr $ 40�- 7 a/ '`558e 643- l;l (85) $ 3.91 May $ 37.95 524 669 145) $ 3.91 Jun $ 43.79 614 666 52) $ 3.91 Jul $ 55.69 797 672 - $ 3.91 Aug $ 59.00 848 685 - $ 3.91 Se $ 52.08 741 649 81 $ 9.17 Oct $ 40.22 559 640 (81) $ 3.91 Nov $ 42.82 599 508 10 $ &H5 Dec $ 53.01 756 531 225 $Totals $ 578.27 8,177 7,442 735 $ Table 1 is an example of how the customer with a 5 kilowatt system would have been billed during the year. As noted, the customer was a net generator between March and June which offset purchases during July and August. In October, the customer generated 81 kilowatts-hours which offset all but 10 kilowatt-hours in November. The$3.91 charge shown during months where energy was either negative or zero is the Eort-Collins°U,tilities%standard fixed-charge,which covers a portion of the costs incurred through meter readmg, customer service and billing functions. The Service I, Charge is levied whether any energy is consumed or not. If the modeled customer had been a net generator over the course of the year as shown in Table 2, which models installation of a 7 kilowatt system for the same customer,then the Utility would have "balanced the books"at the end of the year and paid the customer for the excess energy at a rate per kilowatt hour consistent with the energy rate paid by that customer. Table 2. - Sample net metering service for a residential customer with 7 kW qualifying system Month Bill kWh Use kWh Gen Net New Bill Jan $ 52.53 748 756 8 $ 3.91 Feb $ 55.59 795 715 80 $ 9.13 Mar $ 45.43 639 889 250 $ 3.91 Apr $ 40.17 558 849 291 $ 3.91 May $ 37.95_ . 524 _.,885 _ ___ 361 $ 3.91 Jun $ 43.79 i!/ 61% I883) \\ 269 $ 3.91 Jul $ (55.69 (`�j 797:; l:;898' NY (101) $ 3.91 Aug $ '59.00 i \ 848/ ( 903 (55) $ 3.91 Se $ 52.08 -741 871 130 $ 3.91 Oct $ 40.22 559 848 289 $ 3.91 Nov $ 42.82 599 686 (87) $ 3.91 Dec $ 53.01 756 710 - 1 $ 3.91 Totals $ 578.27 1 8,177 1 9,893 1 (1,716)1 52.14 May 19, 2009 -4- Item No. 21 Under the State's net metering statute,regulated utilities are required to buy back excess generation at the end of the year at the average incremental cost. This is equivalent to the Platte River wholesale rate of$0.0177 per kilowatt-hour. The statute states that municipally owned utilities "shall credit excess generation to%the-customer-generator a manner deemed appropriate by the /r N ri W n N X. \, a y owned utility." and development municipall of renewable ion r o der to ourcespthe Elect irovidee crBooaarong 1d,Natu al Resoncentive to purces Advisory Board facilitate the and staff recommend that the City purchase th6excess.energy generated at the retail energy rate for the specific customer's rate class. In the example above, the customer is billed under the Residential energy rate. The rate has a$3.91 fixed charge and a$0.06498 per kilowatt-hour charge. At the end of the annual billing period the 1,716 kilowatt-hours of excess energy generated by the customer would have been purchased for $111.51. Please note that in the examples above, the more significant savings realized by the customer is through the offset energy not used over the course of the year, not the realized gain at the end of the year. A State statute requires utilities to provide net metering up to 10 kilowatts for residential and 25 kilowatts for commercial/industrial customers. The Electric Board, Natural Resources Advisory Board and staff recommend that the City establish a level of 1 megawatt (1,000 kilowatts) as the adopted maximum. Above 1,000 kilowatts net metering may still apply, but will have to be discussed with the customer in association with Platte River's Tariff 3. Tariff 3 addresses generation above 1,000 kilowatts and the potential need for ancillary services such as back-up capacity, metering, system protection, operationaLcoordination, voltagelsupport and reporting must be addressed. An installation above1,000 kilowattts will not necsssar"ily be excluded from net metering but additional coordination must��bead addressed 1\( The Cities of Longmont and Loveland have both adopted rates that provide net metering up to 50 kilowatts. Longmont purchases the excess generation at the customer's retail rate and Loveland purchases it at its avoided cost of$0.021 per kilowatt-hour. The Town of Estes Park has adopted 10 kW for residential and 25 kW for commercial customers, as established in the State legislation. Estes Park buys back the excess generation at the end of the year for its avoided cost of$0.021 per kilowatt-hour. During the January 13, 2009 work session, Council asked what other utilities are doing in support of renewable generation development including net metering, excess generation purchases,rebates and REC purchases. The attached map (Attachment 1) indicates which states have adopted net metering requirements,which states have voluntary programs and which states have no net metering policy. As seen, 40 states and Washington DC have adopted a net metering policy. The limits established vary widely. The lowest limits shown on the map are those legislated by Colorado for municipalities and cooperatives:�The largest leve s-are thosejstates that have no established r v it �� r maximum. The attached table((Attachment 2) provides additional detail on each of the state programs along with monthly and annual compensation.As shown,the level of reimbursement for excess energy generated varies widely. Some,,4-statesibuy backiat.retail levels, other at the avoided generation costs and others do not purchase excess energy at the end of the year but instead simply reset the level to zero. Attachment 3 is a list of the incentives for renewables and energy efficiency programs offered by utilities, municipalities, and private entities within the State of Colorado. The information was found at www.dsireusa.org, which provides an extensive database of federal, state and local May 19, 2009 -5- Item No. 21 incentives for renewables and efficiency. Programs offered both throughout the state and the nation vary widely. The net metering statute also requires-municipalities to adopt-and post interconnection standards that /11 are functionally similar to those adopted by the Public\U�ilrties Commission. The City's Interconnection requirements were developed utilizing the International Electronic and Electrical Engineers (IEEE) standard 1547-approved:ineJune�2003, as a_m�odel. The PUC requirements were also developed utilizing IEEE 1547. Additionally,Utility engineers are currently working with Dr. Keith Malmedal and Dr. P.K. Sen of NEI Inc. to revise the Utilities existing interconnection standards. This work will also include an analysis of the level of risk different sizes and types of installations pose to the operations of neighboring customers and the type of protection that should be provided to insure that there is no negative impact to those customers. Staff, the Electric Board, and the Natural Resources Advisory Board believe that the above recommendations provide a strong incentive for the installation and development of renewable resources within the City. It is also recommend that the net metering rate either have a sunset provision or a requirement that the rate is re-evaluated in the next three years or sooner. If renewable resources installations are widespread throughout the system, then it is prudent to evaluate both the financial and operational impact these systems are having on the City. Additionally,changes in the equipment and technology available,the incentives provided by federal, state and local entities could C ignificantly in=the•next three to five years making review prudent. UIFY ATTACHMENTS 1. Net metering Map. 2. State Net Metering detail. 3. Colorado Incentives for Renewable and Efficiency. 4. Electric Board Minutes. 5. Memo from the Natural Resources Advisory Board. 6. Natural Resources Advisory Board minutes. 7. Powerpoint presentation. ORDINANCE NO. 062, 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 NET METERED ELECTRIC SERVICE WHEREAS, new forms of renewable energy are routinely becoming available to the City's electric utility customers as well as the City; and WHEREAS, in 2005, the City developed a pilot net metering service program designed to allow customers who meet certain requirements to generate renewable energy and to use that energy to reduce the amount of energy they purchase from the City; and WHEREAS, the City currently has 32 approved customers receiving net metering services; and WHEREAS,Colorado Revised Statutes,Section 40-2-124 requires each municipally owned utility in the state of Colorado to allow a customer-generator's retail electricity consumption to be offset by the electricity generated from eligible energy resources on the customer-generator's side of the meter for such generators that are interconnected with the facilities of the municipal utility; and WHEREAS, staff believes that the City should offer net metering service beyond the minimum threshold set by the State statute and offer such service to residential customers with systems that generate up to 10 kilowatts and to commercial or industrial customers with systems that generate up to 1,000 kilowatts; 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. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That Section 26-391 of the Code of the City of Fort Collins is hereby amended by the addition of a new definition"Net metering service" which shall read in its entirety as follows: Nei metering.service shall mean that service available to a customer-generator operating an eligible qualifying facility that is interconnected to the electric utility such that any electric energy generated by the qualifying facility in excess of that used by the qualifying facility is delivered to the electric utility system and used to offset metered energy received by the customer-generator during the billing period. Section 2. That Section 26-4640) of the Code of the City of Fort Collins is hereby amended to read as follows: 0) Parallel generation. Operation or connection of any electric generator in parallel with the utility system is not permitted under this schedule unless authorized by the General Manager. See appropriate schedules for this service. If a customer is receiving net metering service,such customer's service is also governed by the net metering service terms and conditions described below. Section 2. That Section 26-464 is hereby amended by the addition of a new subsection after the final subsection of the Section which shall read in its entirety as follows: (o) Net metering. Net metering service is available to a customer-generator producing electricity exclusively with a qualifying facility and using a qualifying renewable technology up to ten(10)kilowatts. The energy generated by the eligible on-site qualifying facility and delivered to the utility's electric distribution facility will be used to offset energy provided by the utility to the customer-generator during the applicable billing period. The customer-generator and electric service arrangement are subject to the requirements and conditions described in the electric utility rules and regulations, the IEEE 1547 and this Chapter. A customer-generator who receives approval from the electric utility to obtain net metering service is subject to the monthly rates described above for this rate schedule. The customer- generator's consumption of energy from the utility will be measured on a monthly basis and in the event that the qualifying facility has produced more electricity than the customer-generator has consumed,the customer-generator will receive a monthly monetary credit for such production. During the second calendar quarter of each year, the customer-generator will receive payment for the net excess generation accrued for the preceding twelve (12) months. Section 3. That Section 26-465(k) of the Code of the City of Fort Collins is hereby amended to read as follows: (k) Parallel generation. Customers may operate all or part of their instantaneous energy or capacity needs by operation of a qualifying facility in parallel with the utility system, provided that electric service is being rendered under the special services provisions of this schedule, and provided further that such facility is constructed, operated and maintained in accordance with the provisions of the electric service rules and regulations.If a customer is receiving net metering service, such customer's service is also governed by the net metering service terms and conditions described below. Section 4. That Section 26-465 is hereby amended by the addition of a new subsection after the final subsection of the Section which shall read in its entirety as follows: -2- (q) Net metering. Net metered service is available to a customer-generator producing electricity exclusively with a qualifying facility and using a qualifying renewable technology up to ten(10)kilowatts. The energy generated by the eligible on-site qualifying facility and delivered to the utility's electric distribution facility will be used to offset energy provided by the utility to the customer-generator during the applicable billing period. The customer-generator and electric service arrangement are subject to the requirements and conditions described in the electric utility rules and regulations,the IEEE 1547 and this Chapter. A customer-generator who receives approval from the electric utility to obtain net metering service is subject to the monthly rates described above for this rate schedule. The customer- generator's consumption of energy from the utility will be measured on a monthly basis and in the event that the qualifying facility has produced more electricity than the customer-generator has consumed,the customer-generator will receive a monthly monetary credit for such production. During the second calendar quarter of each year, the customer-generator will receive payment for the net excess generation accrued for the preceding twelve (12) months. Section 5. That Section 26-466(1) of the Code of the City of Fort Collins is hereby amended to read as follows: (1) Parallel generation. Customers may operate all or part of their instantaneous energy or capacity needs by operation of a qualifying facility in parallel with the utility system, provided that electric service is being rendered under the special services provisions of this schedule, and provided further that such facility is constructed, operated and maintained in accordance with the provisions of the electric service rules and regulations. If a customer is receiving net metering service, such customer's service is also governed by the net metering service terms and conditions described below. Section 6. That Section 26-466 of the Code of the City of Fort Collins is hereby amended by the addition of a new subsection after the final subsection of the Section which shall read in its entirety as follows: (q) Net metering. Net metered service is available to a customer-generator producing electricity exclusively with a qualifying facility and using a qualifying renewable technology up to one megawatt. The energy generated by the eligible on- site qualifying facility and delivered to the utility's electric distribution facility will be used to offset energy provided by the utility to the customer-generator during the applicable billing period. The customer-generator and electric service arrangement are subject to the requirements and conditions described in the electric utility rules and regulations, the IEEE 1547 and this Chapter. A customer-generator who receives approval from the electric utility to obtain net metering service is subject to the monthly rates described above for this rate schedule. The customer-generator's consumption of energy from the utility will be measured on a monthly basis and in the event that the qualifying facility has produced more electricity than the customer- generator has consumed, the customer-generator will receive a monthly monetary -3- credit for such production. During the second calendar quarter of each year, the customer-generator will receive payment for the net excess generation accrued for the preceding twelve (12) months. Section 7. That Section 26-467(n) of the Code of the City of Fort Collins is hereby amended to read as follows: (n) Parallel generation. Customers may operate all or part of their instantaneous energy or capacity needs by operation of a qualifying facility in parallel with the utility system, provided that electric service is being rendered under the special services provisions of this schedule, and provided further that such facility is constructed, operated and maintained in accordance with the provisions of the electric service rules and regulations. If a customer is receiving net metering service, such customer's service is also governed by the net metering service terms and conditions described below. Section S. That Section 26-467 is hereby amended by the addition of a new subsection after the final subsection of the Section which shall read in its entirety as follows: (s) Net metering. Net metered service is available to a customer-generator producing electricity exclusively with a qualifying facility and using a qualifying renewable technology up to one megawatt. The energy generated by the eligible on- site qualifying facility and delivered to the utility's electric distribution facility will be used to offset energy provided by the utility to the customer-generator during the applicable billing period. The customer-generator and electric service arrangement are subject to the requirements and conditions described in the electric utility rules and regulations, the IEEE 1547 and this Chapter. A customer-generator who receives approval from the electric utility to obtain net metering service is subject to the monthly rates described above for this rate schedule. The customer-generator's consumption of energy from the utility will be measured on a monthly basis and in the event that the qualifying facility has produced more electricity than the customer- generator has consumed, the customer-generator will receive a monthly monetary credit for such production. During the second calendar quarter of each year, the customer-generator will receive payment for the net excess generation accrued for the preceding twelve (12) months. Section 9. That Section 26-468(o) of the Code of the City of Fort Collins is hereby amended to read as follows: (o) Parallel generation. Customers may operate all or part of their instantaneous energy or capacity needs by operation of a qualifying facility in parallel with the utility system, provided that electric service is being rendered under the special services provisions of this schedule, and provided further that such facility is constructed, operated and maintained in .accordance with the provisions of the electric service rules and regulations. If a customer is receiving net metering service, -4- such customer's service is also governed by the net metering service terms and conditions described below. Section 10. That Section 26-468 of the Code of the City of Fort Collins is hereby amended by the addition of a new subsection after the final subsection of the Section which shall read in its entirety as follows:. (t) Net metering. Net metered service is available to a customer-generator producing electricity exclusively with a qualifying facility and using a qualifying renewable technology up to one megawatt. The energy generated by the eligible on- site qualifying facility and delivered to the utility's electric distribution facility will be used to offset energy provided by the utility to the customer-generator during the applicable billing period. The customer-generator and electric service arrangement are subject to the requirements and conditions described in the electric utility rules and regulations, the IEEE 1547 and this Chapter. A customer-generator who receives approval from the electric utility to obtain net metering service is subject to the monthly rates described above for this rate schedule. The customer-generator's consumption of energy from the utility will be measured on a monthly basis and in the event that the qualifying facility has produced more electricity than the customer- generator has consumed, the customer-generator will receive a monthly monetary credit for such production. During the second calendar quarter of each year, the customer-generator will receive payment for the net excess generation accrued for the preceding twelve (12) months. Section 11. That the City Council hereby directs the City Manager to no less frequently than once every three years review the net metering Code language and suggest any revisions to the Council. 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 2 of June, A.D. 200 a 0/ ;' / Mayor ATTEST: /GCS /4-/.a/� Chief Deputy City Clerk -5- Passed and adopted on final reading on the 2nd day of June, A.D. 2009. Mayor ATTEST: City Clerk -6-