HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/06/2014 - FIRST READING OF ORDINANCE NO. 067, 2014, MAKING CAgenda 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.
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)
DRAFT
Energy Board Meeting Minutes
April 3, 2014
1
Fort Collins Utilities Energy Board Minutes
Thursday, April 3, 2014
Energy Board Chairperson City Council Liaison
Greg Behm, 226-6161 Ross Cunniff, 420-7398
Energy Board Vice Chairperson Staff Liaison
Peter O’Neill, 288-4562 Steve Catanach, 416-2622
Roll Call
Board Present, Vice Chairperson Peter O’Neill, Board Members Nick Michell, Phil Friedman, John
Graham, Margaret Moore, Stacey Baumgarn, and Michael Doss
Board Absent Chairperson Greg Behm and Board Member Peggy Plate
Staff Present Steve Catanach, Angel Anderson, Dennis Sumner, Robin Pierce, Paul Sizemore, Bill
Switzer, Cyril Vidergar, Lisa Gardner, John Phelan, Lucinda Smith, Randy Reuscher, Lisa Rosintoski,
Guests Fred Kirsch, Michael Pruznick, Paul Davis, and Rick Coen
Meeting Convened
Vice Chairperson O’Neill called the meeting to order at 5:37 p.m.
…
Rooftop Solar Net Metering Rate Ordinance
(Attachment available upon request)
Strategic Financial Planning Manager Lance Smith provided information on a proposed change to City
Code related to the management of net metering. With the deployment of advanced metering
infrastructure to all residential customers, it is now possible to implement an automated monthly
settlement process for customer-generators. In order to ensure that no additional financial burden is
placed on existing net-metering customers, it is necessary to make the credit for distribution facilities
charges explicit in the City Code. This change will also reduce the administrative burden of manual
reviews involved with net metering and provides a more timely credit to the customer-generator. The
customer-generator will see a financial credit on the monthly bill which will be applied to other Utility
charges.
Mr. Smith provided a “right sized” example, i.e. the customer has installed the appropriate amount of
photovoltaic production to meet their annual energy consumption (generally). In any given month, the
customer may produce excess energy or consume additional energy from the distribution system. With
AMI, Utilities can now monitor both excess energy and additional consumption on the distribution
system. On a monthly basis, excess energy is “banked” in a spreadsheet.
Board discussion:
A board member asked for clarification: The buyer of the electricity is paying for the distribution
facilities charge. Mr. Smith confirmed that it could not be separated before in the system.
ATTACHMENT 1
DRAFT
Energy Board Meeting Minutes
April 3, 2014
2
If rates change, does staff have to go back to Council? Yes. Going forward, it becomes part of what
will be updated on the annual rate ordinance.
With consideration of time-of-use rates, could this change again? Yes, in terms of how much we credit
to the customer-generator and how we credit the funds. Our philosophy that we wouldn’t increase the
charge to the customer-generator will remain consistent.
Would a customer be selling and buying at a time-of-use rate? This is something to be discussed, but it
would seem reasonable. Mr. Catanach noted that, as new systems come on board, we’re not paying
customers for our distribution system. The energy is purchased at the retail rate. The intent for
implementing the net metering charges was partially as an incentive, recognizing Council’s values, and
Utilities wanting to help facilitate adoption.
(Scenario: Customer has photovoltaic [solar] on the roof of a single residence). If the City does not
reimburse them for that part of the bill, what does it cost? Mr. Smith noted it would cost about $90
annually. Why would the City not stop reimbursing customer for that fee now? We’re not quite ready
and don’t think Council would support it at this time. We set up the current system and manual
processes based on the meters we had at the time. Now the volume is larger and growing steadily every
year; this is an opportunity to fully automate the process.
How many systems are right-sized? Is there a particular adverse effect if not right-sized? There are
about 15-20 customers who receive nominal checks each year. Yes, there could be an adverse effect,
but we have capped the system size.
Motion: Board Member Moore moved that the Energy Board vote to support the adoption of the
Net Metering Rate Ordinance as presented here and considered by the City Council on May 6
th
, 2014.
Roll call vote:
Baumgarn – Yes
Doss – Yes
Friedman – Yes
Graham – Yes
Michell – Yes
Moore - Yes
O’Neill – Yes
Nays: There were none.
The motion passed unanimously.
…
Adjournment
The meeting was adjourned at 9:09 p.m.
Submitted by Robin Pierce, Utilities Administrative Services Supervisor, Fort Collins Utilities
Approved by the Board on ________________________, 2014
DRAFT
Energy Board Meeting Minutes
April 3, 2014
3
Signed
_______________________________ ______________
Board Secretary Date
- 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 and, in the event that the qualifying facility has
produced more electricity than the customer generator has consumed, the customer
generator shall receive a monthly credit for such production. During the second
calendar quarter of each year, the customer generator shall receive payment for the
net excess generation accrued for the preceding twelve (12) months. The credit
per kilowatt hour for the energy delivered to the electric utility under this
provision shall be provided at the summer season energy charge as specified in
Subparagraph (c)(3)a. The energy consumed from the utility by the customer-
generator shall be billed at the applicable seasonal tiered rate as outlined in
- 3 -
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).
. . .
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
- 4 -
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 shall receive a monthly credit for such production. During the
second calendar quarter of each year, the customer-generator shall receive
payment for the net excess generation accrued for the preceding twelve (12)
months. The credit per kilowatt hour for the energy delivered to the electric utility
under this provision shall be provided at the summer season energy charge as
specified in Subparagraph (c) of this Section. 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).
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
- 5 -
Passed and adopted on final reading on the 20th day of May, A.D. 2014.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk