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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 06/03/2014 - RESOLUTION 2014-044 APPROVING AN INTERGOVERNMENTALAgenda Item 16 Item # 16 Page 1 AGENDA ITEM SUMMARY June 3, 2014 City Council STAFF Steven Catanach, Light & Power Operations Manager SUBJECT Resolution 2014-044 Approving an Intergovernmental Agreement Between the City of Fort Collins and Platte River Power Authority for Participation in a Joint Resource Planning Case Study. EXECUTIVE SUMMARY In support of the development of a new Climate Action Plan, Fort Collins Utilities and Platte River Power Authority (Platte River) have developed the attached Intergovernmental Agreement (IGA). The intent of the Agreement is to define the terms for Platte River to provide electric supply network modeling assistance to the City. The models will identify a potential mix of electric resources and the associated costs to help the City achieve a 20% reduction of greenhouse Gases (GHG) below 2005 levels by 2020, 80% reduction by 2030, and 100% reduction by 2050. Overall Climate Action Plan reduction measures include decreases in emissions related to transportation, building energy use, waste management and electricity. The focus of the work detailed in this IGA is to provide modeling to define the necessary changes to the City’s existing electric energy supply that will be required in order to achieve the stated GHG reductions. The modeling done by PRPA will identify the portfolio of resources needed and their associated costs. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION The City has requested modeling assistance from Platte River Power Authority (Platte River) to evaluate electric resource alternatives that will enable the City to meet its climate action planning goals as formalized in Resolution 2014-028 on April 1, 2014. This Resolution defines the following objectives: That the City Manager is hereby directed to nominate for Council approval an ad hoc advisory committee consisting of members selected from City boards and commissions, the environmental community, the social services community, the business community, major institutions, subject matter experts, and City staff, to develop for City Council’s consideration a proposed updated Climate Action Plan that describes the steps the Fort Collins community will need to take to achieve a community-wide greenhouse gas emissions reduction goal of 20% (relative to 2005 levels) by the year 2020, and by 80% (relative to 2005 levels) by 2030. That said Plan shall also describe steps for the Fort Collins community to take to achieve carbon neutrality (a 100% reduction in greenhouse gas emission (relative to 2005 levels) by the year 2050. That said Plan shall be presented to the City Council for consideration and proposed adoption before the end of calendar year 2014. Platte River is currently developing an Integrated Resource Plan (IRP) which will provide an analysis of a portfolio of different generating resources in order to reduce Platte River’s greenhouse gas emissions by 20% Agenda Item 16 Item # 16 Page 2 below 2005 levels by 2020 and 80% below 2005 levels by 2050. The City has requested that Platte River conduct additional analysis to help the City identify the mix of resources required to meet the reduction levels adopted in Resolution 2014-028. For its IRP, Platte River plans to conduct detailed modeling for a set of resource scenarios that include reduced surplus sales, expanded energy efficiency and demand side management programs, increased renewable resources (wind and solar), natural gas combined cycle generation and distributed generation. The period for the detailed modeling/analysis of these resources will be 20 years (2015 to 2034). The resource options were chosen for this analysis because these options are sufficiently developed to allow reliable modeling, are capable of implementation within the period to be studied, and are readily capable of providing GHG emission reductions within the time frame of the detailed analysis. Additional, less detailed analysis will be performed to consider options for GHG reductions to 2050 as part of the IRP effort. Pursuant to this IGA, Platte River will perform modeling and analysis for specific resources to support the City’s more aggressive climate action planning effort at additional cost to the City. The resources that will be included in the modeling scenarios are: Higher penetrations of energy efficiency and demand side management; Non-carbon emitting baseload generation; Higher saturation of wind and solar generation (and associated integration resources); Electric storage technologies; Higher penetration of distributed generation resources. The deliverables to be provided to Fort Collins will include the following metrics for resource scenarios: GHG reduction potential relative to 2005 levels; Annual wholesale rate changes (%) for years 2015-2034 - with and without a carbon charge. Municipal cost changes ($) for years 2015-2034 - with and without a carbon charge. Pursuant to the IGA, Platte River and the City will collectively develop a project scope and charter that clearly defines roles and responsibilities, specific planning tasks risks and mitigation strategies, and a project schedule. Because of the complexity of the modeling, the draft Intergovernmental Agreement (IGA) states that the goal is to have all work that supports Fort Collins’ climate action planning completed and presented by City staff to the Fort Collins City Council by end of January 2015. Platte River anticipates having some preliminary modeling results for 2020 objectives available in September 2014. This schedule will impact the ability to complete a Climate Action Plan update by December 2014 (as called for in Resolution 2014-028) that fully incorporates Platte River’s modeling results. Preliminary analyses can be completed in the interim and there are two Work Sessions scheduled with City Council to review progress and seek Council guidance (August 12 and October 28). It is anticipated that the updated Climate Action Plan can be completed and brought for City Council consideration no later than the first quarter of 2015. FINANCIAL / ECONOMIC IMPACTS The cost for doing the additional modeling requested specifically for Fort Collins is anticipated not to exceed $75,000. Funding for this work will be provided by the Utilities Energy Services Division which is responsible for achieving the electric efficiency, conservation and GHG reductions as detailed in the City’s Energy Policy. ENVIRONMENTAL IMPACTS Reduction of GHG emissions is a critical step towards reducing the severity of climate change. While the global impact from one cities reduction may be small, providing leadership and replicable examples can have a much larger affect. The ambitious planning goals established by City Council for the upcoming Climate Action Plan Update can provide information that will help other communities plan and implement similar initiatives. Agenda Item 16 Item # 16 Page 3 Achieving progress on these community greenhouse gas reduction goals has already provided Fort Collins with additional environmental benefits such as reduced air pollution emissions and waste sent to the landfill. Continued progress on aspirational goals can continue to deliver additional environmental co-benefits to the community. BOARD / COMMISSION RECOMMENDATION Representatives from the Energy Board, Air Quality Advisory Board, Economic Advisory Commission, Natural Resources Advisory Board and the Transportation Board have been asked to participate as part of the Citizen Advisory Committee. PUBLIC OUTREACH As part of the planning effort public outreach will be done throughout the planning process, including work with the Citizen Advisory Committee, public forums, and periodic Council work sessions. - 1 - RESOLUTION 2014-044 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROVING AN INTERGOVERNMENTAL AGREEMENT BETWEEN THE CITY OF FORT COLLINS AND PLATTE RIVER POWER AUTHORITY, FOR PARTICIPATION IN A JOINT RESOURCE PLANNING CASE STUDY WHEREAS, Platte River Power Authority ("PRPA") was formed by contract among the City of Fort Collins, the Town of Estes Park, the City of Longmont, and the City of Loveland to provide electric generation and transmission services and other related functions to benefit the founding municipalities, pursuant to C.R.S. Section 29-1-204; and WHEREAS, as one of the founding municipalities, Fort Collins operates an electric distribution system providing retail utility service to customers within the City’s municipal boundaries and service territory; and WHEREAS, on April 1, 2014, City Council adopted Resolution 2014-028, establishing specific climate action objectives for City operations, to be memorialized in an updated Climate Action Plan by December 31, 2014; and WHEREAS, the updated City Climate Action Plan describes the steps necessary for the Fort Collins community to achieve a community-wide greenhouse gas emission reduction goal of 20% (relative to 2005 levels) by the year 2020, and 80% reduction by the year 2030; and WHEREAS, the updated City Climate Action Plan also describes the steps necessary for the Fort Collins community to achieve carbon neutrality (a 100% reduction in greenhouse gas emissions, relative to 2005 levels, by the year 2050); and WHEREAS, PRPA is currently developing an Integrated Resource Plan (“IRP”) to analyze available generating resources with the goal of reducing PRPA’s system-wide greenhouse gas emissions by 20% below 2005 levels by 2020, and below 80% by 2050; and WHEREAS, the IRP development will include detailed modeling for a set of resource scenarios through 2034, which scenarios duplicate a portion of the studies needed by the City to update its Climate Action Plan; and WHEREAS, PRPA is willing to expand the IRP modeling and analysis to include specific resources to support the City’s more aggressive climate action planning efforts; and WHEREAS, PRPA is willing to retain a third party consultant and to coordinate the resource planning study for the benefit of PRPA and the City, provided PRPA is reimbursed for that portion of the study costs directly attributable to the additional research requested by the City; and WHEREAS, there are economies of scale in conducting a single comprehensive system resource study to identify the portfolio of resources and associated costs needed for PRPA and the City to coordinate planning for regional greenhouse gas reduction by 2050; and - 2 - WHEREAS, Article II, Section 16 of the City Charter of the City empowers the City Council, by ordinance or resolution, to enter into contracts with other governmental bodies to furnish governmental services and make charges for such services or enter into cooperative or joint activities with other governmental bodies. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the Mayor is hereby authorized to execute an Intergovernmental Agreement for the Funding and Coordinating of a Joint Resource Study between PRPA and the City in substantially the form attached hereto as Exhibit "A", with such additional terms and conditions as the City Manager, in consultation with the City Attorney, determines to be necessary and appropriate to protect the interests of the City or effectuate the purpose of this Resolution. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 3rd day of June, A.D. 2014. _________________________________ Mayor ATTEST: _____________________________ City Clerk INTERGOVERNMENTAL AGREEMENT FOR THE FUNDING AND COORDINATION OF A JOINT RESOURCE PLANNING CASE ANALYSIS This agreement is made and entered on the _______ day of _______, 2014, by and between Platte River Power Authority, a Colorado political subdivision (Platte River), and the City of Fort Collins, a municipal corporation (Fort Collins). RECITALS WHEREAS, Platte River was formed by contract among four Municipalities, including Fort Collins, pursuant to C.R.S. § 29-1-204 to provide electric generation and transmission services and other related functions of benefit to the Municipalities. Platte River provides wholesale power and transmission service to the Municipalities through power supply agreements, the terms of which run through December 31, 2050; and WHEREAS, Fort Collins operates an electric distribution system providing retail utility service to customers within its municipal boundaries and service territory; and WHEREAS, as outlined in its 2014 Strategic Plan, Platte River is conducting an analysis of alternatives for decreasing system level greenhouse gas (GHG) emissions including an identification of the associated cost implications using Colorado’s Climate Action Plan as a guide (20% below 2005 levels by 2020 and 80% below 2005 levels by 2050). A more detailed analysis will be conducted for the 2020 target. Alternatives will be presented to the Platte River Board of Directors for their consideration as part of Platte River’s 2014 Integrated Resource Plan (IRP); and WHEREAS, Platte River has selected and installed electric system modeling software (EPIS/Aurora) and has retained consultants to assist in the analysis associated with its 2014 IRP; analytical work using the new model began in April, 2014. It is anticipated that preliminary modeling results concerning the scenarios associated with achieving 20% GHG reduction (relative to 2005 levels) by the year 2020 will be available by September 2014; and WHEREAS, consultants selected will assist in developing modeling assumptions/forecasts for fuel prices, electric market prices, operating costs for generation technologies, development and installation costs for proposed generation resources, saturation and potential for conservation and distributed generation programs, and future carbon charges; and EXHIBIT A Intergovernmental Agreement for the Funding and Coordination of a Joint Resource Planning Case Analysis Page 2 of 7 WHEREAS, through resolution 2014-028, Fort Collins’ City Council has directed that a proposed updated Climate Action Plan (CAP) be developed that describes the steps the Fort Collins community must undertake to achieve a community-wide greenhouse gas emissions reduction goal of 20% (relative to 2005 levels) by the year 2020, 80% (relative to 2005 levels) by the year 2030 and to achieve carbon neutrality (a 100% reduction in greenhouse gas emissions relative to 2005 levels) by the year 2050; and WHEREAS, Fort Collins’ community-wide greenhouse gas emission reduction study will include all sectors, including natural gas, transportation, solid waste generation and electricity supply (currently the largest source, accounting for just over 50% of community GHG emissions according to the City’s accounting procedures). Preliminary analyses conducted by Fort Collins suggest that to achieve the 80% reduction by 2030 across all sectors, a 100% reduction in GHG associated with electrical production will be required; and WHEREAS, Fort Collins has requested that Platte River provide assistance in developing electric resource planning case analysis for the City using the same models and consultants that Platte River has retained for developing its 2014 IRP; and WHEREAS, for its IRP, Platte River plans to conduct detailed modeling for a set of resource scenarios that includes reduced surplus sales, expanded energy efficiency and demand side management programs, increased renewable resources (wind and solar), natural gas combined cycle generation and distributed generation. The period for the detailed modeling/analysis of these resources will be 20 years (2015 to 2034). These resource options were chosen for this analysis because these options are sufficiently developed to allow reliable modeling, are capable of implementation within the timeframe to be studied, and are readily capable of providing GHG emission reductions within the time frame of the detailed analysis. Additional, less detailed analysis will be performed to consider options for GHG reductions to 2050 as part of the IRP effort; and WHEREAS, more aggressive penetration levels for the options studied by Platte River and new resource options will be required to meet an 80% reduction by 2030 desired by Fort Collins, requiring additional modeling/analysis. Nevertheless, there is significant common ground for joint modeling and other analysis that will provide information regarding resource options and associated costs to inform planning activities of both organizations. A collaborative approach would also provide for economies of scale in the analysis efforts; and Intergovernmental Agreement for the Funding and Coordination of a Joint Resource Planning Case Analysis Page 3 of 7 WHEREAS, Platte River is willing to expand the modeling/analysis effort outlined in its Strategic Plan (and IRP process) for the benefit of Fort Collins, provided it is reimbursed for the proportion of study costs attributable to Fort Collins’ request. AGREEMENT 1) Platte River agrees to perform modeling and analysis for a specific set of resource scenarios to support Fort Collins’ Climate Action Plan. These scenarios are defined as follows: a. Higher penetrations of energy efficiency and demand side management; b. Non-carbon emitting base load generation; c. Higher saturation of wind and solar generation (and associated integration resources); d. Electric storage technologies; e. Higher penetration of distributed generation resources. 2) All modeling will be performed at the system level, with all municipal loads, surplus sales and resources combined. 3) All modeling for capacity expansion and production cost analysis will be completed using the EPIS AURORAxmp strategic planning tool – installed and operating on Platte River’s computer network. Financial analysis (cost and rate impacts) will be developed using Platte River’s rate and financial models. 4) The modeling/analysis will use input assumptions provided by consultants contracted by Platte River, including (but not limited to) fuel prices, electric market prices, operating costs and performance metrics for generation technologies, development and installation costs for proposed generation resources, saturation and potential for conservation and distributed generation programs, and future carbon charges. 5) Prior to the modeling/analysis efforts for Fort Collins, Fort Collins and Platte River staff will hold a joint information review session regarding input assumptions developed and delivered by Platte River’s consultants for the specific set of resource scenarios outlined in item 1 above. 6) Results provided to Fort Collins will include the following metrics for resource scenarios: Intergovernmental Agreement for the Funding and Coordination of a Joint Resource Planning Case Analysis Page 4 of 7 a. GHG reduction potential relative to 2005 levels; b. Annual wholesale rate changes (%) for years 2015-2034 – with and without a carbon charge. c. Municipal cost changes ($) for years 2015-2034 – with and without a carbon charge. 7) Platte River will work with Fort Collins to provide output data from the EPIS/AURORA and rate and financial models in a format that meets Fort Collins’ analysis and presentation needs. Analysis requirements will be coordinated with the Climate Action Plan update process led by City staff and consultants. The goal is to have all work that supports Fort Collins’ CAP completed and presented to the Fort Collins City Council by end of January 2015. Presentation of results for the Fort Collins CAP to City Council and other city stakeholders will be the responsibility of Fort Collins staff. 8) Fort Collins agrees to reimburse Platte River for a proportional share of the reasonable costs of services provided in the joint resource planning case analysis. An estimate of the costs is contained in Exhibit A; however, Fort Collins acknowledges that the actual costs may vary from this estimate. Platte River will bill Fort Collins monthly according to the consultants’ compensation schedules to cover the additional scenarios identified in item 1 above. Payment will be due thirty days after receipt of the billing. 9) Platte River, after consultation with Fort Collins, may terminate the joint resource planning case analysis pursuant to the terms of its agreement with its consultants. In the event that the joint resource planning case analysis is terminated prior to completion, Fort Collins will be billed for the work completed, but in no event more than the amounts set forth in Exhibit A unless otherwise authorized by Fort Collins, and Fort Collins agrees to pay the amounts billed for authorized and received work product. All work products and any intellectual property related to this joint resource planning case analysis shall be provided to, and shall be the joint property of Platte River and Fort Collins. In the event of termination, Platte River will have no further obligations under this Agreement. Intergovernmental Agreement for the Funding and Coordination of a Joint Resource Planning Case Analysis Page 5 of 7 10) This Agreement is the entire agreement between Platte River and Fort Collins concerning the joint resource planning case analysis and shall be modified only by written instrument approved by the governing bodies of Platte River and Fort Collins. 11) All of Fort Collins’ financial obligations under this agreement are contingent upon appropriation, budgeting, and availability of specific funds to discharge those obligations. Nothing in this Agreement constitutes a debt, a direct or indirect multiple fiscal year financial obligation, or a pledge of Fort Collins’ credit. Fort Collins represents that funds sufficient to cover all obligations contained herein have been appropriated and are presently available. 12) Platte River agrees to manage, and require its consultants to carry out, the joint resource planning case analysis in accordance with all applicable legal requirements. 13) Representatives of Platte River and Fort Collins will meet on a regular basis to discuss and resolve any issues associated with implementation of the modeling analysis. These meetings will include a senior manager from each entity; subject matter experts from each of the parties will attend as appropriate. 14) Prior to commencement of any modeling/analysis, a project charter will be developed to clarify operating procedures for the joint effort, including project scope, schedule, assumptions, constraints, success criteria, project participants and sponsors, and the manner in which authorization of model runs and associated costs will be memorialized – provided such procedures do not vary the terms of this IGA. IN WITNESS WHEREOF, the Parties have caused this Agreement, to be executed the day and year first above written. PLATTE RIVER POWER AUTHORITY ATTEST: By: By: General Manager Secretary Intergovernmental Agreement for the Funding and Coordination of a Joint Resource Planning Case Analysis Page 6 of 7 CITY OF FORT COLLINS, COLORADO ATTEST: By: By: Mayor City Clerk APPROVED AS TO FORM By: _________________________ City Attorney Intergovernmental Agreement for the Funding and Coordination of a Joint Resource Planning Case Analysis Page 7 of 7 EXHIBIT A The additional cost for consulting assistance to meet Fort Collins’ specific needs for the Climate Action Plan analysis is estimated as $75,000.