Loading...
HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/20/2014 - SECOND READING OF ORDINANCE NO. 067, 2014, MAKINGAgenda Item 4 Item # 4 Page 1 AGENDA ITEM SUMMARY May 20, 2014 City Council STAFF Lance Smith, Strategic Financial Planning Manager SUBJECT Second Reading of Ordinance No. 067, 2014, Making Certain Amendments to Chapter 26 of the City Code Pertaining to Electric Rates, Fees and Charges Associated with the Provision of Net-Metered Service. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on May 6, 2014, allows for certain operational efficiencies to be realized by Utilities for the residential net-metering program without negatively impacting the financial benefits of the program for participants. The current accounting process for net-metering customers is manually-intensive. With the deployment of the advanced metering infrastructure for all residential customers, it is now possible to provide these customers with monthly information on their energy production and to implement an automated monthly settlement process rather than the current annually settled process. In order to ensure that no additional financial burden is placed on existing net-metering customers, it is necessary to make the current implicit credit for distribution facilities charges explicit in the City Code through the current rate Ordinance being presented. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, May 6, 2014 (w/o attachments) (PDF) 2. Ordinance No. 067, 2014 (PDF) Agenda Item 10 Item # 10 Page 1 AGENDA ITEM SUMMARY May 6, 2014 City Council STAFF Lance Smith, Strategic Financial Planning Manager SUBJECT First Reading of Ordinance No. 067, 2014, Making Certain Amendments to Chapter 26 of the City Code Pertaining to Electric Rates, Fees and Charges Associated with the Provision of Net-Metered Service. EXECUTIVE SUMMARY The purpose of this item is to allow for certain operational efficiencies to be realized by Utilities for the residential net-metering program without negatively impacting the financial benefits of the program for participants. The current accounting process for net-metering customers is manually-intensive. With the deployment of the advanced metering infrastructure for all residential customers, it is now possible to provide these customers with monthly information on their energy production and to implement an automated monthly settlement process rather than the current annually settled process. In order to ensure that no additional financial burden is placed on existing net-metering customers, it is necessary to make the current implicit credit for distribution facilities charges explicit in the City Code through the current rate Ordinance being presented. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION Currently each month, the meter readings for net-metering customers, also called customer-generators who operate solar energy collection equipment on their properties, are manually reviewed to determine if the amount of energy produced by these customers exceeds the amount of energy from the distribution system consumed by these customers. If the amount of energy produced exceeds the amount of energy consumed from the distribution system in a given month, the amount appearing on the customer’s monthly bill is set to zero and the net energy production is tracked in a spreadsheet as a credit to be applied toward the next month’s bill. In addition to this monthly manual review and adjustment to the customer bill, there is an annual settlement process which is also manually performed. The annual settlement results in a credit appearing on the net- metering customer’s next bill after it is manually entered into the billing system. This is administratively burdensome and inefficient, and it is beneficial to the Utility to eliminate these manual processes, if possible. With the ability from the advanced metering infrastructure to track net energy consumption and net energy production on a 15-minute interval basis, it is now possible to eliminate the annual settlement and the monthly manual processes associated with net-metering; corrections can now be automatically made monthly instead. All programmatic changes required to the billing software to accommodate this automation have already been completed and tested. Net-metering customers will see more timely credit for their net energy production with the proposed change. They will also receive information on their monthly utility bill about their net energy production. As described above, the Utility also benefits from this change through the elimination of several manual processes. As such, this change results in no negative financial impact to the net-metering customers. ATTACHMENT 1 Agenda Item 10 Item # 10 Page 2 However, because there are some limitations as to how the billing system could be modified, it is not possible to precisely replicate the annual settlement process through a monthly process. In particular, it is not possible to have negative values entered into the billing system as would be the case for net energy production that is greater than net energy consumption. Nor is it possible to meter separately the actual energy production and actual energy consumption with a single meter. Although in any given moment the net-metering customer is either producing more energy than they are consuming or consuming more energy than they are producing, the data extracted from the meter are done so on a 15-minute interval basis. The net energy consumed and net energy produced during each 15-minute interval are tracked separately. The result of tracking the net energy consumed and produced is that, in order to not adversely impact the net- metering customers financially, it is necessary to make explicit the distribution facilities charge credit for these customer-generators, which is currently being given implicitly through the monthly carryover process. The distribution facilities charge in an incremental fee paid by all electric utilities customers to compensate the Utility for ongoing system facilities expenses. The amount of this charge is currently credited back to net metering customers to recognize the lack of impact they have made on the City’s electric system by generating their own power. FINANCIAL / ECONOMIC IMPACTS A small incremental benefit would be seen by net-metering customers through this Ordinance. This issue may need to be revisited in the future as more and more net-metering customers connect to the system and erode the distribution facilities revenue to the Utility. BOARD / COMMISSION RECOMMENDATION At its April 3, 2014 meeting, the Energy Board unanimously recommended adoption of this Ordinance. PUBLIC OUTREACH Notice of the proposed electric rate changes was published in the Coloradoan on April 13, 2014, a mailing was sent to all city electric customers residing outside of the city limits in accordance with state requirements, and was posted to the City Clerk’s website under public notices. ATTACHMENTS 1. Energy Board minutes, April 3, 2014 (draft) (PDF) - 1 - ORDINANCE NO. 067, 2014 OF THE COUNCIL OF THE CITY OF FORT COLLINS MAKING CERTAIN AMENDMENTS TO CHAPTER 26 OF THE CODE OF THE CITY OF FORT COLLINS PERTAINING TO ELECTRIC RATES, FEES AND CHARGES ASSOCIATED WITH THE PROVISION OF NET-METERED SERVICE WHEREAS, the City Council is empowered and directed by Article XII, Section 6, of the City Charter to fix, establish, maintain and provide for the collection of such rates, fees or charges for utility services furnished by the City as will produce revenues sufficient to pay the costs, expenses and other obligations of the electric utility, as set forth therein; and WHEREAS, on February 2, 2010, City Council approved Ordinance No. 003, 2010, amending Chapter 26, Article VI of the City Code to allow for the provision of net-metered electric service, and WHEREAS, on September 6, 2011, City Council approved Ordinance No. 079, 2011, amending Chapter 26, Article VI of the City Code to include definitions and details regarding the availability of net metered electric service within the customer rate classes, and WHEREAS, the deployment of advanced metering infrastructure now allows for automated monthly settlement of net-metering residential customers rather than the current manually processed annual settlement; and WHEREAS, such a monthly settlement is not intended to negatively impact the financial benefit received by net-metering customers; and WHEREAS, the Energy Board considered the proposed 2014 electric rates, fees and charges on April 3, 2014, and unanimously recommended approval of the rate changes including a rate adjustment for billings issued for residential net-metering customers; and WHEREAS, the City Manager and staff have recommended to City Council the following electric rate adjustments for all billings issued for residential net-metered customers with meter readings on or after June 1, 2014; and WHEREAS, based on the foregoing, it is the desire of the City Council to amend Chapter 26 of the City Code to revise electric rates, fees and charges with regard to the provision of net- metered service. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That Section 26-464(p) of the Code of the City of Fort Collins is hereby amended to read as follows: - 2 - Sec. 26-464. Residential energy service, schedule R. . . . (p) Net-metering. (1) Net-metering service is available to a customer-generator producing electric energy exclusively with a qualifying facility using a qualifying renewable technology when the generating capacity of the customer-generator's qualifying facility meets the following two (2) criteria: a. the qualifying facility is sized to supply no more than one hundred twenty (120) percent of the customer-generator's average annual electricity consumption at that site, including all contiguous property owned or leased by the customer-generator, without regard to interruptions in contiguity caused by easements, public thoroughfares, transportation rights-of-way or utility rights-of-way; and b. the rated capacity of the qualifying facility does not exceed the customer-generator's service entrance capacity. (2) The energy generated by an on-site qualifying facility and delivered to the utility's electric distribution facility shall be used to offset energy provided by the utility to the customer-generator during the applicable billing period. (3) The customer-generator and electric service arrangements shall be subject to the requirements and conditions described in the City of Fort Collins Utility Services Interconnection Standards for Generating Facilities Connected to the Fort Collins Distribution System. (4) A customer-generator who receives approval from the electric utility to obtain net-metering service shall be subject to the monthly rates described above in this rate schedule section. (5) The customer-generator's consumption of energy from the utility and production of energy that flows into the utility’s distribution system shall be measured on a monthly basis The energy consumed from the utility by the customer-generator shall be billed at the applicable seasonal tiered rate as outlined in Section 26-464(c) or (d). The energy produced by the customer-generator shall be credited to the customer as follows: 1. Distribution facilities charge, per kilowatt-hour: two and sixty-two one-hundredths cents ($0.0262). 2. The energy and demand credit, per kilowatt-hour: five and eighty- three one-hundredths cents ($0.0583). . . . - 3 - Section 2. That Section 26-465 (q) of the Code of the City of Fort Collins is hereby amended to read as follows: Sec. 26-465. Residential demand service, schedule RD . . . (q) Net-metering. (1) Net-metering service is available to a customer-generator producing electric energy exclusively with a qualifying facility using a qualifying renewable technology when the generating capacity of the customer-generator's qualifying facility meets the following two (2) criteria: a. the qualifying facility is sized to supply no more than one hundred twenty (120) percent of the customer-generator's average annual electricity consumption at that site, including all contiguous property owned or leased by the customer-generator, without regard to interruptions in contiguity caused by easements, public thoroughfares, transportation rights-of-way or utility rights-of-way; and b. the rated capacity of the qualifying facility does not exceed the customer-generator's service entrance capacity. (2) The energy generated by an on-site qualifying facility and delivered to the utility's electric distribution facility shall be used to offset energy provided by the utility to the customer-generator during the applicable billing period. (3) The customer-generator and electric service arrangements shall be subject to the requirements and conditions described in the City of Fort Collins Utility Services Interconnection Standards for Generating Facilities Connected to the Fort Collins Distribution System. (4) A customer-generator who receives approval from the electric utility to obtain net-metering service shall be subject to the monthly rates described above in this rate schedule section. (5) The customer-generator's consumption of energy from the utility and production of energy that flows into the utility’s distribution system shall be measured on a monthly basis The energy consumed from the utility by the customer-generator shall be billed as outlined in Section 26-464(c). The energy produced by the customer-generator shall be credited to the customer as follows: 1. Distribution facilities charge, per kilowatt-hour: two and sixty-two one-hundredths cents ($0.0262). - 4 - 2. The energy and demand credit, per kilowatt-hour: five and eighty- three one-hundredths cents ($0.0583). . . . Section 3. That the amendments herein are effective and shall go into effect for all bills issued with meter readings on or after June 1, 2014. Introduced, considered favorably on first reading, and ordered published this 6th day of May, A.D. 2014, and to be presented for final passage on the 20th day of May, A.D. 2014. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 20th day of May, A.D. 2014. __________________________________ Mayor ATTEST: _______________________________ City Clerk