HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/18/2010 - ITEMS RELATING TO THE SMART GRID INVESTMENT PROJEC DATE: May 18, 2010 .
STAFF: Steve Catanach, Kraig Bader,
Dennis Sumner
Items Relating to the Smart Grid Investment Project.
A. Second Reading of Ordinance No. 043, 2010, Appropriating Unanticipated Revenue and Electric Revenue
Bond Proceeds for the Smart Grid Investment Grant Project in the Light and Power Fund and for Bond
Issuance Costs.
B. Resolution 2010-030 Authorizing a Grant Agreement with the U.S. Department of Energy and
Intergovernmental Project Agreements with Cities of Longmont, Loveland, and Fountain to Receive Grant
Funds for Installation and Deployment of Smart Grid Technology Through the Smart Grid Investment Grant
program.
EXECUTIVE SUMMARY
Fort Collins Utilities(FCU) has been selected by the Department of Energy(DOE)for a Smart Grid Investment Grant
(SGIG) award. The proposal and award included participation from the Cities of Loveland, Longmont and Fountain
for a total award of$36,202,527. The collaboration with the other cities was done to improve the chances of being
selected by DOE as FCU was advised DOE wanted collaborative projects that included larger geographic areas and
integrated funding.
Ordinance No. 043, 2010, adopted on First Reading on April 20, 2010 by a vote of 6-1 (Nays: Kottwitz)appropriates
$18,101,264 in unanticipated grant revenues and$16,788,863 in proceeds from the sale of Electric Revenue Bonds
proposed to be issued in Ordinance No. 001 of the Board of the Electric Utility Enterprise, for the purpose of funding
the Smart Grid project. Any funds not utilized by the project, will be applied to debt service on the bonds. This
ordinance also appropriates$211,137 for bond issuance costs. These appropriations are all in the Light and Power
Fund.
Resolution 2010-030 authorizes the City Manager to execute the agreementwith the Department of Energy and enter
into intergovernmental agreements with the Cities of Longmont, Loveland and Fountain.The DOE grant provides Fort
Collins Utilities with an opportunity to install an AMI system, accelerate the implementation of its long range IT needs
and to begin the modernization of its electrical distribution system.
BACKGROUND / DISCUSSION
The project applicant and grant administrator is the City of Fort Collins. The City of Fort Collins project focus is in four
primary areas.
• Advanced Metering Infrastructure (AMI) and Meter Data Management System
• Grid Automation
• Cyber Security
• Enhanced Demand Response Programs and Customer Engagement.
The City of Fountain is pursuing a citywide Advanced Metering Infrastructure system;the City of Longmont is installing
upgraded relaying in some of its substations; and the City of Loveland is piloting Advanced Metering.
The intergovernmental agreements establish a cooperative agreement between the Cities that ensures that the other
Cities agree to comply with the requirement detailed with the grant agreement between the City of Fort Collins and the
Department of Energy.
May 18, 2010 -2- ITEM 26
FINANCIAL IMPACT
The total budget for the project is$36,202,528. This resolution authorizes the City Manager to execute the agreement
with the Department of Energy and enter into intergovernmental agreements with Longmont, Loveland and Fountain.
The agreements define how matching funds will be distributed from the DOE funds.
Total project budget: $ 36,202,528
City of Fort Collins Matching Funds: $ 15,741,501
City of Fountain matching funds: $ 2,123,500
City of Loveland matching funds: $ 150,000
City of Longmont matching funds: $ 86,263
Total matching funds: $ 18,101,264
Funds requested from DOE: $ 18,101,264
Matching funds from the City of Fort Collins will be provided through the issuance of bonds.
SUSTAINABILITY: ECONOMIC, ENVIRONMENTAL AND SOCIAL IMPACTS
The Smart Grid Investment Grant supports a future where customers can choose the option of being engaged in the
management of their energy usage and cost. Distributed generation (such as solar panels) is prevalent throughout
the electrical system and customers can choose to contribute to the reduction of the use of fossil fuels in electrical
generation. In addition, a future where Fort Collins' electric grid better supports customers having plug-in hybrid
electric vehicles or electric vehicles can also help further reduce greenhouse gas emissions. More efficient operation
and maintenance of the electric grid, as well as the ability for Utilities to reduce or eliminate the fleet of meter reader
.vehicles through automated meter reading will reduce emissions.
In order to deliver the services and provide the support that Utility customers deserve and will require in the future, it
is vital that Fort Collins Utilities begins modernizing the electrical system. Modernization begins with the
implementation of Advanced Metering Infrastructure.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution and the Ordinance on Second Reading.
BOARD /COMMISSION RECOMMENDATION
At its May 5, 2010, meeting, the Electric Board voted unanimously to recommend that the City Council approve a
resolution authorizing the City to enter into the grant agreement with the DOE and to enter into partner agreements
with the three other municipalities.
PUBLIC OUTREACH
The projectwill include significant customer communication,engagement and education to insure that as information
becomes available to customers they will be able to utilize it to customers make informed financial decisions.
ATTACHMENTS
1. Copy of First Reading Agenda Item Summary-April 20, 2010 (w/o attachments)
2. Excerpt from Electric Board meeting minutes from May 5, 2010 meeting
ATTACHMENT 1
DATE: April 20, 2010
STAFF: Steve Catanach, Kraig Bader, _
Dennis Sumner
T COLLINS CITY C UNCIL
First Reading of Ordinance No.043,2010,Appropriating Unanticipated Revenue and Electric Revenue Bond Proceeds
for the Smart Grid Investment Grant Project in the Light and Power Fund and for Bond Issuance Costs.
EXECUTIVE SUMMARY
/55 `
Fort Collins Utilities(FCU)has been selected,by/the Department of Energy(DOE)for a Smart Grid Investment Grant
(SGIG)award. The proposal and award included participationfrom�the Cities of Loveland, Longmont and Fountain
for a total award of$36,202,527. TQt collaborat'onn witWthelOther cities was done to improve the chances of being
selected by DOE— FCU was advised DOE—wanted•collaborative projects that included larger geographic areas and
integrated funding.
FCU projects proposed to the DOE totaled$31,483,001. The DOE has offered to fund 50%of the proposed projects
($15,741,500). The largest of the proposed projects was for the installation of an Advanced Metering Infrastructure
(AMI) system. In addition to the AMI project, components of the Utilities Information Technology (IT) Long Range
Strategic Plan related to the implementation of AMI and smart grid technology were included in the proposal.
Expansion of the FCU fiber optic system and grid automation equipment was also included in the proposed projects.
The Ordinance appropriates$18,101,264 in unanticipated grant revenues and$15,741,501 in proceeds from the sale
of Electric Revenue Bonds proposed o'b ie s�eA I Ordnance No�0�017bf the�Board of the Electric Utility Enterprise,
for the purpose of funding the Smart Grid project. It,,appropriates $258499 for bond issuance costs. These
appropriations are all in the Light and�Pow�er Funid,.
If this Ordinance is approved on First Reading, staff"will bring g a resolution to the Council on Second Reading,
authorizing the City Manager to execute the contract with the DOE related to the SGIG and authorizing the City
Manager to enter into partner agreements with each of the project partners: the Cities of Loveland, Longmont and
Fountain, Colorado.
BACKGROUND / DISCUSSION
The DOE grant provides Fort Collins Utilities with an opportunity to install an AMI system, accelerate the
implementation of its long range IT needs-and to begin the modernization of its electrical distribution system.
Construction, design and operation of the electrical system aree fundamentally the same as they were 50 years ago.
Today though,the electric industry,the coun try and the world�are faced witksignificant issues that are the direct result
of the use and production of energy:\,,Measures to address these issues are creating momentum for change.
Specifically, in relation to the electric utility industry,the issues of greenhouse gases produced through the production
of electricity,the changing expectations of customers and the need to address and insure both the physical and cyber
security of the electrical infrastructure must be addressed. Each of these elements-customer expectations, use of
energy, security and the ability to reduce greenhouse gases-are elements of a smart grid as defined by DOE.
The Department of Energy(DOE)has defined seven principal characteristics as focal points for the modernization of
the existing electrical grid. These key elements are becoming recognized as the definition of a smart grid. The
characteristics are:
1. Anticipates and responds to-system disturbances
2. Enables active con sumer/participation��\
3. Operates resiliently against attack aId natural disaster VU
4. Provides power quality Gr the digital economy
5. Accommodates all generation;and storage opts Ins
6. Enables new products, services and markets
7. Optimizes asset utilization and operates efficiently
April 6, 2010 -2- ITEM 21
The paragraphs below discuss each of these smart grid elements as defined by DOE. Descriptions of"Today's Grid"
and the ideal"Modern Grid" are defined by the National Energy Technology Laboratory, a section of the DOE. Light
&Power(L&P)staff is providing two additional descriptions: a third descriptive element that presents the current status
of"Today's Fort Collins Grid"and a descriptive element that elaborates on"What the SGIG will do for FCU". The intent
is to describe how the Smart Grid Investment Grant will help Fort Collins move towards each of the defined elements
of a smart grid.
1. Anticipates and responds to system disturbances
Today's Grid: Responds to prevent further damage. Focus is on protection of assets following system faults.
Modern Grid: It will self heal by performing continuous self_assessmentVo detect and analyze issues, take
corrective action to mitigate them and, if needed, rapidly restore grid components or network sections. It will also
handle problems too large or too fas'tlmoving for,human intervention. 1'r
Today's Fort Collins Grid: FCU's-electrical system has an outstanding record of reliability. The almost all
underground system is the envy of other utilities. However, as infrastructure ages, it will become more important to
be able to monitor the health of the system components and predict failures before they happen. Investment in
technology that predicts future failure and reconfigures the grid will need to be made in the future.
Whatthe SGIG will do for FCU: The transition to a self-healing grid will take years. Technology is currently under
development that will provide the necessary physical control along with the analysis software necessary to solve how
the system should be reconfigured safely and quickly during an event. The SGIG will allow FCU to install
approximately 10 remotely controlled switches on the distribution system. The switches will have the capability to be
controlled from the Light and Power Systems Control and Operations Center(SCO). Control will be manual by system
operators. This will give staff the opportunity to/ga`i`experie"n e in7the use of remote switching and eventually
automated controls that reconfigure the systemiautomaticallyll Prior to the`award of the grant, L&P placed $125,000
per year in both the 2010 and 2011 budgets for remote switch ihj'7— grant will add an additional$125,000 of funding
to the project(DOE:$125,000, FCU: $250,000). 'Additionallyl the grant application included$31,800(DOE: $15,900,
FCU: $15,900)for integration of outage municati s from the AMI meters into the existing Outage Management
System(OMS). The project proposal also included funding for additional fault detection equipment on the system to
help identify event locations. (DOE: $50,000, FCU: $50,000)
2. Enables active consumer participation
Today's Grid: Consumers are uninformed and non-participative with the power system.
Modern Grid: The smart grid will give consumers information, control, and options that enable them to engage in
new"electricity markets." Grid operators-will ireat willing consumers as`resos ices in the day-to-day operation of the
grid. Well-informed consumers will mdify co onsumption based Lonthe bNbn ing of their demands and resources with
the electric system's capability to meet those/demands.
Today's Fort Collins Grid: FCU hasJ.a•robust•customereducatiori program. Additionally, the implementation of
the Opower program provides significant information to customers that allows them to better manage their electrical
usage if they choose to do so. FCU also provides several demand response programs for customers to choose to
use. Automated hot water heater control and air conditioning control are offered. A peak demand signal is also
provided to customers to help them choose to control costs.
Whatthe SGIG will do for FCU: In addition to the AMI system,which will provide the foundational technology for
providing information to customers, the SGIG proposal includes two elements that will provide significant support for
the provision of additional information to customers and more demand response program choices for customers.
The grant application included the implementation fon a�Meter--Data Management System (MDMS). A MDMS is a
r; V.3 rr �� .�
software package that is designed to help manage and analyze the data collected by smart meters. During the original
cost benefit analysis performed on the AMI system the size of-the FCU system and the total cost of a MDMS made
it impractical. However, the funding throu�the�SGIG along with the implementation of smaller lower cost MDMS
systems makes installation more attractive. The total amount included in the application for MDMS was$3,000,000
(DOE: $1,500,000, FCU: $1,500,000).
April 6, 2010 -3- ITEM 21
The SGIG also includes a budgeted amount of$5,314,830 (DOE: $2,657,415, FCU: $2,657,415) for an enhanced
demand response program. The long range IT plan identified the need to upgrade or replace the demand response
software currently used by FCU to send the signal to participating customers'water heaters and air conditioners. In
the near future, FCU's existing software will no longer be supported and the devices used to signal and cycle the water
heater and air conditioning units for customers will become obsolete. The project includes the upgrade of the software
along with an additional 21,000 control devices. However, as staff has worked to refine the projects associated with
the SGIG it has become evident that recruiting new participants in programs with the installation of an additional
21,000 devices over a three year period will be a challenge. The overall intent of the enhanced demand response
programs is to meet the demand response goal of a 5% reduction in peak demand by 2015 and 10% by 2020 as
detailed in the 2009 Energy Policy. Staff is currently reviewing other technologies and customer options to help
achieve the demand reduction goal. Technologies under consideration are thermal storage and system voltage
reduction utilizing the AMI technology for-feedback-on, s yster m-perfo;mancp7 Staff estimates that through peak
reduction gained with demand response programs peak demand charges from Platte River to FCU will be reduced
by approximately$1,260,000 per year. (11(
)),
I \�(
Recently, several citizens expressed concern in reference to-the data Utilities will be gathering with the AMI system
and Utilities control of devices through customers participating in the enhanced demand response programs. FCU
recognizes the importance of customer confidentiality and the level of trust customers expect when providing
information to secure their utility service. Customer records are protected by the FCU Customer Records Policy and
FCU takes measures to ensure its compliance with federal and state regulatory standards. The Customer Records
Policy is attached. The information FCU will be gathering though the AMI system is similar to the data currently
collected for billing purposes. The primary difference is the frequency of the collection. Rather than monthly,the utility
will be capable of reading meters every few minutes. The intent is to have the data available for the customer to help
them better monitor their costs and usage and to enable customers to make better decisions about their usage. The
existing demand response system has been in place since 1982 for electric water heater control and since 2007 for
air conditioner control and has only been.inst<alled fd ustomers-who have volunteered for the program. Load control
through the enhanced demand response programs in the SGIG wJl be voluntary programs just as they are today. It
is expected that air conditioner control will be accomplished through an in-home thermostat(IHT) that will allow the
customer to cancel a load-control requeesst,sould.they j sh to do so. u
AMI meters will also lay the path to allow consideration of dynamic rate structures such as Time-of-Use(TOU),Critical
Peak Pricing (CPP)and other rates. A cost of service study is currently underway in Light and Power. Once the cost
of service study is completed, the utility will begin rate conversations with Council, the Electric Board and the
community. Any changes in rate design will include a transition period appropriate for the change being considered.
3. Operates resiliently against attack and natural disaster
Today's Grid: Vulnerable to malicious acts of terror or natural disasters.
Modern Grid: The Smart Grid will incorporate a system wide solution that reduces physical and cyber vulnerabilities
and enables a rapid recovery from disruptions. Its resilience will.create animage that intimidates would-be attackers.
It will also be less vulnerable to natural disaster's", _ _ �
Today's Fort Collins Grid: As noted,the reliability of the FCU electrical system is well above national standards.
The high reliability is due to the responsiveness of electrical crews when a problem occurs,the design standards used,
and the Council direction that all lines should be underground.
The other arena where security is of significant concern is cyber security. The control systems and communication
infrastructure that is used throughout the system must be secure from hackers. FCU is not required to comply with
North American Electric Reliability Corporation (NERC)Critical Infrastructure Protection (CIP)standards. However,
FCU's goal is to comply with those design standards. FCU currently does not completely meet all of the NERC-CIP
standards and had planned and budgeted for several projects in the 2010-11 budgetto help move toward compliance.
What the SGIG will do for FCU: fiThe SGIG provides $208,820 towards the implementation of cyber security
enhancements. Security enhancements were budgeted at$385;000 in the 2010-11 budgets. The SGIG will provide
11 / b I t��
funding at 35% ($208, 820) of the total project cost. The'Antent is to bring the Utilities smart grid infrastructure into
compliance with NERC-CIP design standards. Although FCU is not required to comply, it is prudent to adopt the
standards as they apply to a distribution system. FCU is not required to, and will not, report to the NERC,which is the
most onerous component of the CIP standards.
April 6, 2010 -4- ITEM 21
4. Provides power quality for the digital economy
Today's Grid: Focused on outages rather than power quality problems. Slow response in resolving power quality
issues.
Modern Grid: It will monitor, diagnose, and respond to power quality deficiencies resulting in a dramatic reduction
in the business losses currently experienced by consumers due to insufficient power quality.
Today's Fort Collins Grid: FCU currently receives relatively few power quality complaints from customers.
Typically, power quality problems are associated with either internal issues within a facility, or interference from.
adjacent properties.
WhattheSGlGwilldoforFCU: AsFort"Collins moves 1 rward.andlarger numbers of distributed generation units
C�i
are connected to the FCU system, it will become more criiticalito-monitor power quality. The SGIG proposal included
a project to install waveform recording�eguipment\t mo ito 'high speed events on the system and to install meters
capable of recording high speed electrical events at our largest customer-sites. The proposed project is $400,000
(DOE: $200,000, FCU: $200,000)
5. Accommodates all generation and storage options
Today's Grid: Relatively small number of large generating plants. Numerous obstacles exist for interconnecting
Distributed Energy Resources (DER)
Modern Grid: It will seamlessly integrate all types and sizes of electrical generation and storage systems using
simplified interconnection processes and-universalsteroperability standards-o support a "plug-and-play" level of
convenience. Large central power plants including�environment ally fi�iendly`sources,such as wind and solar farms and
advanced nuclear plants, will continue to play aimajor role even-as large numbers of smaller distributed resources,
including Plug-in Electric Vehicles, ar.e d�\eployed:� lJ , 1
Today's Fort Collins Grid: As with most electrical distribution systems theFCU electrical distribution system was
designed to be a one-way power delivery system. Small generation resources such as solar panels and small wind
turbines can feed electricity back into the grid. At current levels these distributed generation resources have not
created any issues. However, as we look to the future and envision solar panels becoming cost competitive or lower
than the cost of energy supplied by the local utilities, it becomes evident that the electrical distribution infrastructure
could serve a role for which it was never designed. The grid could become a two-way channel for electrical delivery
and sales. Additionally, the use of the energy stored in plug-in-hybrid-electric-vehicles to stabilize the intermittent
generation from some resources will also tax the existing system.
What the SGIG will do for FCU: /1nsial a`ion.df-`ttie-AM�.system willl proiiae feedback to the Utility on current
system conditions. This Information.can then bye used to.analyze the system and in some cases help manage how
and when distributed energy resources feed into the system. �With-castomer�consent, plug-in-hybrid-electric-vehicles
could be used as stored energy dev ses. When�the energy stored in a vehicle is needed to supplement the grid or
level the production from intermittent resources, tl`e-utility could contract with customers to purchase the power from
their vehicles.
6. Enables new products and markets
Today's Grid: Limited wholesale markets still working to find the best operating models. Not well integrated with
each other. Transmission congestion separates buyers and sellers.
Modern Grid: The Smart Grid will link buyers and sellers together—from the consumer to the Regional Transmission
Organization(RTO). It will support the creation of new-electricity.markets from the home energy management system
at the consumer's premise to technologies that allow consumers and third parties to bid their energy resources into
h/ ! I ty l I. 1 ! XA /,e
the electricity market. The Smart Grid will be tran'slactive and will.support consistent market operation across regions.
Today's Fort Collins Grid: Util ties_with n the?sta"te" o I—Colorado dot not currently trade through an RTO or
Independent System Operator(ISO)model for wholesale electricity sales today. The DOE's intent with this smart grid
April 6, 2010 -5- ITEM 21
component is to insure that information from either an RTO or ISO(if developed)is flowing to the retail customer and
that they then have a choice on their cost of wholesale electricity.
What the SGIG will do for FCU: The installation of a communication infrastructure including the optional home
area networks proposed in the FCU AMI system will support the development of new product and service options that
can be delivered via the system to consumers.
7. Optimizes assets and operates efficiently
Today's Grid: Minimal integration of limited operational data with Asset Management processes and technologies.
Siloed business processes. Time basedd maiaintenance.
Modern Grid: Operationally,the Smart Grid will improve load factors,lowedsystem losses,and dramatically improve
outage management performance. The availability of additional.gnd'intelligence will give planners and engineers the
knowledge to build what is needed when its needed extend the life ofl
ge t assets, repair equipment before it fails
unexpectedly,and more effectively manahe workforce.Operational,maintenance and capital costs will be reduced
thereby keeping downward pressure on prices.
Today's Fort Collins Grid: FCU is currently in the process of implementing an Asset Management program.
The intent of the'program is to help inventory utility assets, assess infrastructure condition and plan for maintenance
and replacement through risk-based modeling.
What the SGIG will do for FCU: The AMI system will be a communication system that provides information on
the operation and health of components on the system. The enhanced information will allow FCU to manage and
schedule maintenance of the system more efficiently;and respond-to outages more quickly. Workforce efficiency will
ed
also improve if outages can be avoid an`d,probllems addressed-through s heduled maintenance.
PROJECT EXECUTION PLAN U
U
LJ
During the interim period between the announcement of the intent to award the grant and now,a team of City staff has
been working to refine the tasks proposed in the original grant application. The table below provides a general
summary of the tasks associated with the project.
Staff is currently developing Request-for-Proposal(RFP)documents for a Project Manager/Integrator to assist with
the project. The intent is to hire a consulting agency with experience tying the different components of the project
together in order to insure a seamless integration between our existing systems and the new.
Staff is also in the process of preparing RFP's for the AMI system, the MDMS system and for a Cyber security
evaluation. P
FINANCIAL IMPACT
It is estimated the following annual operational savings can be achieved by Light and Power through the installation
of an'AMI system:
• Labor and operational expenses for meter reading $495,755
• Meter accuracy and registration $347,944
• Theft from manipulation of meters $268,225
• Load control (avoided demand during PRPA peaks) $185,760
• Labor dedicated to move-in/move-out and meter changes $ 28,410
• Purchase of Xcel data for rate desig 35.574
TOTAL:/ $1!361,668
In addition to the annual savings above FCU also sees�a sigl ificant one-time savings related to improved cash flow
achieved by reducing the lag time between meter reads and billing. The one-time benefit is approximately$1,600,000.
1
April 6, 2010 -6- ITEM 21
As noted above, staff did anticipate some additional load control benefit in the original AMI project benefits. However,
in the SGIG grant proposal a considerable expansion of the program is anticipated. The operational savings from the
enhanced demand response projects will reduce utility and customer costs by approximately an additional$1,074,240
annually.
Calculating the payback period using the values above and a 3.5% interest rate the entire$31.5 million investment
has a pay-back of just over 13 years. The pay-back is just over 7 years for the$15.7 M cost to the City.
It is more difficult to apply a cost recovery model to the remaining smart grid elements proposed in the SGIG. Many
of the benefits gained will enhance operational reliability and performance and improve customer interactions with the
utility.
/�� �r�1 n
As detailed above, the total project Bost submitted to DOE was $36,202,52The project cost of the City of Fort
Collins is $31,483,001; Fountain's project cost is[$4,247�600�L--oveland'ssproject cost is $300,000; and Longmont's
project cost is $172,526. The DOE will llprovide 50%funding for each of the projects. In order to process the grant
funds, the DOE matching funds provided:to each o'f-the•other'cities along with the total Fort Collins project cost must
be appropriated by City Council. Staff and the Electric Board are recommending the Council approve an appropriation
for the project totaling$33,842,764. This will be offset with SGIG grant revenue of$18,101,264. A Fort Collins Utilities
match is proposed to be funded through the issuance and sale of Electric Revenue Bonds, which will be considered
on First Reading by the Electric Enterprise Board on April 6, 2010. In addition to the appropriation for the SGIG
project, the proposed appropriation ordinance appropriates$258,500 in the Light and Power Fund for bond issuance
costs.
A table summarizing the appropriations follows:
C
OE GranticipatedSGIG Grant e for:Fort Estimated Bond Appropriation
Projectllins)� U Proceeds Required
Fort Collins $ 31,483,001 $ 15,741,501 $ 15,741,501 $ 31,483,002
Fountain* $ 4,247,000 $ 2,123,500 $ 2,123,500
Loveland* $ 300,000 $ 150,000 $ 150,000
Longmont* $ 172,526 $ 86,263 $ 86,263
Total $ 36,202,527 $ 18,101,264 $ 15,741,501 $ 33,842,765
Estimated Bond
Issuance Costs $ 258,499 $ 258,499
comu
Total Estimated Bond
Proceeds $ 16.000.000
Total Appropriation $ 34.101.264
*The expense and revenue will offset each other for the Loveland, Longmont and Fountain's portions of the grant
project. Since Fort Collins will administer the grant for the three other cities, the funds will flow into and out of the
Light and Power Fund.
April 6, 2010 -7- ITEM 21
SUSTAINABILITY: ECONOMIC, ENVIRONMENTAL AND SOCIAL IMPACTS
The SGIG supports a future where customers can choose the option of being engaged in the management of their
energy usage and cost. Distributed generation(such as solar panels)is prevalent throughout the electrical system and
customers can choose to contribute to the reduction of the use of fossil fuels in electrical generation. In addition, a
future where Fort Collins' electric grid better supports customers having plug-in hybrid electric vehicles or electric
vehicles can also help further reduce greenhouse gas emissions. More efficient operation and maintenance of the
electric grid, as well as the ability for Utilities to reduce or eliminate the fleet of meter reader vehicles through
automated meter reading will reduce emissions.
In order to deliver the services and prov dew a support-that our customers deserve and will require in the future, it is
critical that FCU begin modernizing the,electricaI sy'ste�Moiiern¢ation,begiris with the implementation ofAM1. Prior
to the SGIG, AMI provided a positiverbusiness case because"of-its-inh ere ntXoperational savings in the meter reading
operation. The SGIG funding enhances the scope and scale off the projects Utilities can accomplish as we begin to
implement smart grid technology. K J � U,
One of the primary social impacts, as described in some of the items above, will be the opportunity for Utilities to
improve on its relationship with customers. Many of the primary interactions that customers currently have with
Utilities' staff will be enhanced with information available from, and operating flexibility provided by, the SGIG. A
customer calling in to request electrical service at an existing location can be provided electrical service immediately
(using computerized control of the meter) by the customer service representative receiving the call without the need
to dispatch a technician, saving the customer time and the Utilities labor and transportation expenses.
Since the electrical grid will be able to identify problems as they occur and then dispatch a repair crew if necessary,
a customercalling in to notify Utilities aboufan outage can`be giVen:the's`atus of the problem and an approximate time
for repair. If a customer calls to report an outage in an area that has not+been identified by the system as having a
problem, the customer service representative can "test")the customer's meter remotely in a matter of seconds to
determine if the problem is on the Utilities',syste2ris/aWroblem on the customer's side of the meter. These
enhanced abilities to address customers''I issuesin a more timely fashion should enhance customers' trust in their
Utilities.
Currently, Utilities uses a staff of meter readers and a group of vehicles to collect information necessary to bill
customers for utility service. A significant portion of the savings in this project justification is the reduction in force,
and related support expenses, related to automating the meter readings. The positions affected by this project have
been identified and the individuals in these positions notified that their positions will be affected by the implementation.
Efforts are underway to work with these individuals to find alternative positions in Utilities and/or to retrain these
individuals for other careers. Any vacancies that occur in the affected positions prior to the completion of the project
will only be filled on a contract basis as necessary. ��—� /7
�T [ I �1 � //
This project will not add a significant number of new positions to Utilities staffor directly provide additional employment
in the community. However,as more customers learn about t i eir•options for energy savings, it is anticipated that the
demand for additional weatherization co rgi tors a�-�nergylefficiency consultants may increase.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinances on First Reading.
BOARD/COMMISSION RECOMMENDATION
cam\ �.�`L \\ 4r'
a its February 3, 2010 meeting, the Electric Board. , voted unan sly to commend that City Council approve the
appropriation of funds.
April 6, 2010 -8- ITEM 21
PUBLIC OUTREACH
The proposed project includes extensive customer education and engagement. The intent of the project is to make
information and data available to customers to allow them to make informed decisions related to their energy usage.
Critical to the success of the program is making the customers aware of the information and tools that will be available.
The excerpts below were the elements proposed in the original grant application
"Information Availability to Customers
The Utilities' Smart Grid Web sites will provide the means for customers to track energy usage by
logging onto the "AMI Meter'fWeb!,page.<T:his\information�will Pe inked to tips regarding how to
conserve and information about efficiency programs, rebates and incentives. Customers who
participate in the load management program will be provided withsuseful information through their in
home displays, in-home thIermostats� water heater control (switches, and other preferred
communications media such as-text messages, online accounts or e-mails.
A Fort Collins Smart Grid project Web site will provide for information sharing between all utilities in
Colorado.Online information regarding Fort Collins,Loveland, Longmont and Fountain's projects will
enable others to see the benefits of the Smart Grid.
Customer Outreach and Operations
Customer outreach and education are two of the utilities' fundamental operational principals. Fort
Collins' outreach program will inform customers of progress toward sustainability goals and offer
transparency for utility decisions Fort Collins wwill\provide-inform\ion and education on Smart Grid
technologies as well as their impacts orn customers anWthekdistribution system. The utilities'
organizational messaging will`emphasize the importance-of the technology to support great service
and the customer's role in demand,side managemeit, load control and energy conservation.
Li
The utilities have robust marketing, communications and education programs in place to support the
success of Smart Grid. All communications, including call center functions are managed in-house,
providing a continuum of customer-facing services. Customer communications can be coordinated
through a variety of tools including:
• Bill inserts
• Web site (including City Web sites)
• Weekly electronic newsletters and city newsletters
• News releases to local.prin\med a_-,� �� /7
• Coordinated residential,commercial and key accounts support
• Targeted communications for specific areas, piogramAmplementation such as meter
installation, deployment of inn-home displays,-,efficiency and renewable energy, etc.
• Well-established education 1pro grams�Q&A sessions/seminars) including fact sheets
distributed at city facilities
Many business process changes will be required prior to the deployment of the Smart Grid. The
following are a few of the key processes the Utilities will review: new cyber security standards and
procedures, service switch procedures, service,restoration, reliability reporting, power system
operational status reporting and posting, customer outage notification methods, real time operation
of the T&D system, asset management strategies with the availability of more accurate and timely
data on the status of the system will all need to be redesigned. The Utilities will establish a change
management plan to drive results in each��depl�oyment�staggee."
ATTACHMENTS I I I I I:.�
1. Customer Records Policy
2. Electric Board minutes, February 3, 2010
3. Powerpoint presentation
ATTACHMENT 2
Excerpt from May 5, 2010 Draft Electric Board minutes
Department of Energy (DOE) Contract and Intergovernmental Agreements (IGAs)
Mr. Catanach introduced this topic and sought a recommendation from the Board.
Through American Public Power Association (APPA), we were able to have some
language added to the Agreement. Our City Attorneys have reviewed this and drafted the
agreement.
Motion: Board Member Wolley moved the Electric Board recommends to City
Council that they authorize the City Manager to sign the Assistance Agreement
between the City of Fort Collins and the DOE, and Intergovernmental/Partner
Agreement with the Cities of Loveland, Longmont and Fountain on terms and
conditions consistent with those in the presented draft forms, along with such
additional terms and conditions as City staff, in consultation with the City Attorney's
Office, deems necessary and appropriate to protect the interest of the City. Board
Member Bihn seconded the motion. -
Vote on the motion: It passed unanimously.
ORDINANCE NO . 043 , 2010
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING UNANTICIPATED REVENUE AND ELECTRIC REVENUE
BOND PROCEEDS FOR THE SMART GRID INVESTMENT GRANT PROJECT
IN THE LIGHT AND POWER FUND AND FOR BOND ISSUANCE COSTS
WHEREAS , the City has been awarded a Smart Grid Investment Grant in the amount of
$ 18, 101 ,264 (the "Grant") from the Department of Energy (DOE) ; and
WHEREAS , the Grant requires matching funds of $ 15 ,741 , 501 ; and
WHEREAS, the Electric Utility Enterprise Board (the "Board") has approved on first reading
Ordinance No . 001 of the Board authorizing the issuance of $f6,000,000 $ 17 ,000,000 in Electric
Utility Enterprise Revenue Bonds ; and
WHEREAS , the proceeds of such bond issuance will be used for the required Grant match
and for bond issuance costs in the approximate amount of $258,499 $211 , 137 ; and
WHEREAS , the Grant provides the City with an opportunity to install an Advanced
Metering Infrastructure (AMI) system and accelerate the implementation of the City' s long range
information technology (IT) needs, and to begin the modernization of its electrical distribution
system; and
WHEREAS , the Cities of Loveland, Longmont and Fountain are also participating in this
project; and
WHEREAS , Article V, Section 9, of the City Charter permits the City Council to make
supplemental appropriations by ordinance at any time during the fiscal year, provided that the total
amount of such supplemental appropriations, in combination with all previous appropriations for
that fiscal year, does not exceed the current estimate of actual and anticipated revenues to be
received during the fiscal year; and
WHEREAS , City staff has determined that the appropriation of the Grant revenue and the
bond proceeds will not cause the total amount appropriated in the Light and Power Fund to exceed
the current estimate of actual and anticipated revenues to be received in that fund during any fiscal
year.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows :
Section 1 . That there is hereby appropriated from unanticipated grant revenue in the
Light and Power Fund the sum of EIGHTEEN MILLION ONE HUNDRED ONE THOUSAND
TWO HUNDRED SIXTY FOUR DOLLARS ($ 18, 101 ,264) for expenditure in the Light and Power
Fund for the Advanced Metering Infrastructure (AMI) and smart grid technology project.
Section 2 . That there is hereby appropriated from electric revenue bond proceeds in the
Light and Power Fund the sum of FfF9FEEN hilhBON SEVEN HUNDRED_ _ _ FORTY_ _ ONE
SIXTEEN MILLION SEVEN HUNDRED EIGHTY EIGHT
THOUHSAND EIGHT HUNDRED SIXTY THREE DOLLARS ($ t5 ,741 ,50t $ 16,788 , 863 ) for
expenditure in the Light and Power Fund for the Advanced Metering Infrastructure (AMI) and smart
grid technology project.
Section 3 . That there is hereby appropriated from electric revenue bond proceeds in the
Light and Power Fund the sum of
TWO HUNDRED ELEVEN THOUSAND ONE HUNDRED THIRTY
SEVEN DOLLARS (S $211 , 137) for expenditure in the Light and Power Fund for bond
issuance costs .
Introduced, considered favorably on first reading, and ordered published this 20th day of
April, A.D . 2010, and to be presented for final passage on the 18th day of May, A . D . 2010 ,
Mayor
ATTEST :
City Clerk
Passed and adopted on final reading on the 18th day of May, A . D . 2010 .
Mayor
ATTEST :
City Clerk
RESOLUTION 2010-030
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AUTHORIZING A GRANT AGREEMENT WITH THE U.S. DEPARTMENT OF
ENERGY AND INTERGOVERNMENTAL PROJECT AGREEMENTS WITH THE
CITIES OF LONGMONT, LOVELAND, AND FOUNTAIN TO RECEIVE GRANT
FUNDS FOR INSTALLATION AND DEVELOPMENT OF SMART GRID
TECHNOLOGY THROUGH THE SMART GRID INVESTMENT GRANT
PROGRAM
WHEREAS, the City has applied for and been awarded grant funds from the U.S.
Department of Energy ("DOE") on behalf of the cities of Fort Collins, Longmont, Loveland, and
Fountain (collectively referred to as the "Project Partners"); and
WHEREAS, the purpose of the grant award is for the municipal utilities of each of the
Project Partners to carry out individual projects intended to develop smart grid technology (the
"Project"); and
WHEREAS, because DOE was interested in funding collaborative smart grid projects to
include large geographic areas and integrated funding, the City will act as the project leader in
distributing funds and complying with DOE requirements as described by an Assistance Agreement
(the"Assistance Agreement"),a copy of which is on file in the office of the City Clerk and available
for public inspection; and
WHEREAS,the City's focus in implementing the Project will include the installation of an
Advanced Metering Infrastructure("AMI")System,installation of a meter data management system,
grid automation, improved cyber security and enhanced demand response programs designed to
increase customer engagement; and
WHEREAS, the total cost of the Project is estimated at $36,202,528 with total matching
funds to be provided by DOE to be $18,1101,264; and
WHEREAS,pursuant to the terms of the Assistance Agreement,DOE will fund fifty percent
(50%)of each of the individual projects proposed by each Project Partner for a Project total no more
than that described above, and
WHEREAS,the City's portion of the total cost of the Project is estimated at Fifteen Million
Seven Hundred Forty-One Thousand Five Hundred One Dollars ($15,741,501)and DOE will fund
the other fifty percent (50%) of the City's costs; and
WHEREAS, the City of Fountain's portion of the total Project cost is estimated at
$2,123,500; and
WHEREAS,the City of Loveland's portion of the total Project cost is estimated at$150,000;
and
WHEREAS,the City of Longmont's portion of the total Project cost is estimated at$86,263;
and
WHEREAS, to receive the grant funds, the City must sign the Assistance Agreement with
DOE; and
WHEREAS,to implement the Project,the City must also enter into subrecipient agreements
("Partner Agreements") with each of the Project Partners, incorporating the requirements of the
Assistance Agreement and specifying the agreed upon grant funds, matching contributions, and
reporting requirements, a copy of which is on file in the office of the City Clerk and available for
public inspection; and
WHEREAS, the City is authorized, under Article II, Section 16 of the Charter of the City
of Fort Collins and Section 29-1-203, C.R.S., to enter into intergovernmental agreements such as
the Assistance Agreement and the Partner Agreements, to provide any function, service or facility;
and
WHEREAS, City staff recommends that the City Council authorize the City Manager to
execute the Assistance Agreement and the Partner Agreements as described herein.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. That the City Manager is hereby authorized to enter into an Assistance
Agreement with DOE for the receipt of grant funds, to be used for the installation and deployment
of smart grid technology in Fort Collins, Longmont, Loveland, and Fountain on terms and
conditions consistent with the terms of this Resolution, along with such additional terms and
conditions as the City Manager, in consultation with the City Attorney, deems necessary and
appropriate to protect the interests of the City.
Section 2. That the City Manager is hereby further authorized to enter into Partner
Agreements with each of the Project Partners to describe the grant funding shares, matching
contributions,reporting requirements and to outline each party's responsibilities for carrying out the
Project, as described in the project application submitted to the DOE, on terms and conditions
consistent with the terms of this Resolution,along with such additional terms and conditions as the
City Manager, in consultation with the City Attorney, deems necessary and appropriate to protect
the interests of the City.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 18th
day of May A.D. 2010.
Mayor
ATTEST:
City Clerk