HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 09/02/2014 - SECOND READING OF ORDINANCE NO. 108, 2014, AMENDINAgenda Item 3
Item # 3 Page 1
AGENDA ITEM SUMMARY September 2, 2014
City Council
STAFF
Lance Smith, Strategic Financial Planning Manager
Norm Weaver, Senior Energy Services Engineer
SUBJECT
Second Reading of Ordinance No. 108, 2014, Amending Chapter 26 of the City Code to Revise Electric Rates,
Fees and Charges and Provide Rates for Customers Enrolled in the Fort Collins Community Solar Project.
EXECUTIVE SUMMARY
This Ordinance, unanimously adopted on First Reading on August 19, 2014 approves establishing a
reimbursement rate for the energy that will be produced through the Fort Collins Community Solar Project
(solar farm). The proposed reimbursement rate is consistent with recent changes in the rooftop net-metering
reimbursement rate, adopted in Ordinance No. 067, 2014. Like the rooftop net-metering customers,
participants in the solar farm, who purchase an interest in the solar farm, will be reimbursed for every kilowatt-
hour of energy produced at a rate of $0.0714 per kWh (the combination of the Summer Tier 1 rate of $0.0583
per kWh and one half the facilities charge rate - $0.0131 per kWh). The difference between the two rates is
that, because participants in the Fort Collins Community Solar Project will need to fully utilize the distribution
infrastructure to deliver all of their household energy, the additional payment the facilities charge portion of the
rate is proposed to be only half of that being given to rooftop net-metering customers.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on Second Reading.
ATTACHMENTS
1. Copy of First Reading Agenda Item Summary, August 19, 2014 (w/o attachments) (PDF)
2. Community Solar Project Rate.ord (PDF)
Agenda Item 9
Item # 9 Page 1
AGENDA ITEM SUMMARY August 19, 2014
City Council
STAFF
Lance Smith, Strategic Financial Planning Manager
Norm Weaver, Senior Energy Services Engineer
SUBJECT
First Reading of Ordinance No. 108, 2014, Amending Chapter 26 of the City Code to Revise Electric Rates,
Fees and Charges and Provide Rates for Customers Enrolled in the Fort Collins Community Solar Project.
EXECUTIVE SUMMARY
The purpose of this item is to establish a reimbursement rate for the energy that will be produced through the
Fort Collins Community Solar Project (solar farm). The proposed reimbursement rate is consistent with recent
changes in the rooftop net-metering reimbursement rate, adopted in Ordinance No. 067, 2014. Like the
rooftop net-metering customers, participants in the solar farm, who purchase an interest in the solar farm, will
be reimbursed for every kilowatt-hour of energy produced at a rate of $0.0714 per kWh (the combination of the
Summer Tier 1 rate of $0.0583 per kWh and one half the facilities charge rate - $0.0131 per kWh). The
difference between the two rates is that, because participants in the Fort Collins Community Solar Project will
need to fully utilize the distribution infrastructure to deliver all of their household energy, the additional payment
the facilities charge portion of the rate is proposed to be only half of that being given to rooftop net-metering
customers.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance on First Reading.
BACKGROUND / DISCUSSION
The community solar garden, formally known as the Fort Collins Community Solar Project (solar farm), is
moving into the final phases before actual construction begins. The intent of this project is to expand small-
scale renewable options for the benefit of Fort Collins Utility customers who do not have favorable sites for
their own roof-top or ground mounted solar energy systems. Community members participate in the solar farm
by purchasing interests in the panels installed for the project (i.e. subscribing), through Clean Energy
Collective (CEC)-- the successful respondent to the City RFP for the project --and receiving monthly on-bill
credits on their Fort Collins Utilities electric bill.
A Power Purchase Agreement was executed by the City Director of Purchasing on May 2, 2014, commencing
a 25 year agreement with CEC for the City’s purchase of power generated by the customer-owned panels in
the solar farm and issuance of on-bill credits to participating utility customers. Approval of the lease
agreement for the site is before City Council under a separate item.
The proposed site of the solar garden is at the northeast corner of East Mulberry Street and Riverside Avenue-
- formerly the site of the Dreher pickle plant. The lot is owned by the City of Fort Collins. CEC is proposing to
lease, build, operate, and maintain a community solar farm on the lot, consisting of up to 600 kilowatts of
ground mounted solar modules. The solar modules will harvest solar energy to supplement the Fort Collins
Utilities energy grid. In addition, CEC will work with the City’s Art in Public Places Program to investigate how
Agenda Item 9
Item # 9 Page 2
the development of a solar energy facility might be integrated into the Mulberry corridor community gateway
project.
When the lease agreement is signed, construction will begin on the solar farm. Concurrently, marketing will
begin in earnest throughout the community to sell subscriptions in the solar farm to interested customers of the
Electric Utility. Before the marketing materials can be developed and customers can evaluate the potential
return on their investment in the solar farm, it is necessary to establish the rate at which Fort Collins Utilities
will credit customers owning interests in the energy generated by the solar farm.
Just as with on-site solar production, Fort Collins Utilities will compensate solar farm subscribers on a monthly
basis for all energy produced at the summer Tier 1 retail rate of $0.0.0583 per kWh, in addition to an increment
to compensate for the tangible and intangible benefits provided by distributed generation on the distribution
system. In order to ensure that the annual benefit is not reduced by subscribing, it is necessary to make the
distribution facilities credit explicit in the City Code.
While the intent of this project is to allow customers who cannot otherwise participate in solar energy
production to be able to contribute to the community’s renewable energy portfolio, the solar farm is not totally
analogous to on-site net-metering. Subscribers to the solar farm will need to use the distribution infrastructure
to deliver all of their household energy, as opposed to on-site solar generators who pull energy from the
distribution infrastructure only to augment their on-site solar production. As such, Fort Collins Utilities is
proposing to compensate solar farm subscribers at a rate of $0.0131 per kWh for the “facilities charge”
component of the credit, i.e. the tangible and intangible benefits of distributed generation to the distribution
infrastructure.
The total credit extended to residential customer subscribers to the solar farm per kilowatt-hour of energy is
$0.0714 per kWh. An O&M trust fund will be established and funded by a $0.0064 per kWh charge to the
subscribers, which CEC has chosen to fund by setting aside 9% of the solar farm production, rather than
lowering the per kilowatt-hour on-bill credit to each customer. The net effect being that the per kilowatt-hour
credit that residential solar garden customer receive each month will be $0.0714.
Small Individual commercial and industrial customers billed at the “GS” rate may also participate in the solar
farm. The proposed rate of credit rate to GS–rate customers will be at the summer retail energy rate of
$0.0403 per kWh, plus half of the net-metering distribution facilities charge of $0.0187 per kWh, or $0.0094 per
kWh. The total compensation per kilowatt-hour of energy that CS-rate customers will receive is $0.0497 per
kWh. The O&M Trust will be handled the same way for GS-rate customers as for residential subscribers. The
net effect being that the per kilowatt-hour credit that will appear on solar garden subscribing, small
commercial/GS-rate customer’s bill each month will be $0.0497.
FINANCIAL / ECONOMIC IMPACTS
The financial impact of this Ordinance is limited to the cost of the solar energy being purchased by Fort Collins
Utilities. If this energy were not purchased through the solar farm it would be necessary to purchase the
renewable energy from another source in order to meet the community and state renewable energy goals.
ENVIRONMENTAL IMPACTS
This project is one of limited number of options to utilize the 500 Riverside Avenue site. The minimal soil
disturbance intended in constructing the solar array is advantageous for this site with known sodium chloride
contamination from prior pickling operations at this location. A recent environmental assessment was
completed and verified that the soil and groundwater conditions of the site are stable and improving.
Monitoring of the site will be conducted during the construction of the project and follow-up monitoring will be
conducted after construction and periodically over the course of the lease term.
BOARD / COMMISSION RECOMMENDATION
At its July 10, 2014 meeting, the Energy Board unanimously supported this Ordinance.
Agenda Item 9
Item # 9 Page 3
PUBLIC OUTREACH
A neighborhood meeting under the development review process occurred July 8th. Many attending support
the project and CEC is addressing other stated concerns through the development review process.
ATTACHMENTS
1. Energy Board minutes, July 10, 2014 (draft) (PDF)
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ORDINANCE NO. 108, 2014
OF THE COUNCIL OF THE CITY OF FORT COLLINS
AMENDING CHAPTER 26 OF THE CODE OF THE CITY OF
FORT COLLINS TO REVISE ELECTRIC RATES, FEES AND
CHARGES AND PROVIDE RATES FOR CUSTOMERS ENROLLED
IN THE FORT COLLINS COMMUNITY SOLAR PROJECT
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 May 20, 2014, City Council adopted Ordinance No. 067, 2014,
establishing a bill credit rate for net-metered operations and moving from annual settlement of
excess power generation to a monthly settlement for participating net-metered customers of the
Electric Utility; and
WHEREAS, the bill credit rate established for net-metered customers factors in savings
the Electric Utilities realizes by not needing to transport across its electric distribution network
the power produced and consumed at the site of a roof-top solar energy facility; and
WHEREAS, under the Fort Collins Community Solar Project, the City engaged a third
party to construct and operate a solar farm within the City to allow Electric Utility customers
who cannot otherwise participate in solar energy production to contribute to the City’s renewable
energy portfolio by purchasing an interest in, i.e. subscribing to, a community solar farm facility;
and
WHEREAS, though the Fort Collins Community Solar Project allows more Electric
Utility customers to participate in solar energy production, distribution of the energy produced
by the solar farm does not achieve the same distribution system efficiencies as that of on-site net-
metering; and
WHEREAS, energy produced at the solar farm will still rely on City electric distribution
infrastructure for delivery to customers and thereby create a similar burden on the distribution
infrastructure as that of standard energy distribution; and
WHEREAS, in light of this operational distinction between the two types of solar energy
facilities, the effective provision of electric utility service and application of the rules and
regulations affecting administration of net-metering service credits would be expedited by
amending the City Code to identify a specific bill credit rate for customers who subscribe to a
sanctioned solar farm, distinct from the standard net-metered bill credit rate; and
WHEREAS, the Electric Utility proposes to establish a bill credit rate for customers
participating in the solar farm that balances the tangible and intangible benefits of distributed
generation to the distribution infrastructure through that type of facility, totaling $0.0714 per
kWh of energy generated; and
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WHEREAS, the Electric Utility propose to establish a bill credit rate for customers using
the “General service, schedule GS” rate, i.e. small individual commercial and industrial
customers, participating in the solar farm totaling $0.0497 per kWh of energy generated; and
WHEREAS, the Energy Board considered the proposed electric rates, fees, and charges
for customers enrolled in the Fort Collins Community Solar Project on July 10, 2014, and
unanimously recommended approval of the rate changes and additions; and
WHEREAS, Section 26-465(q)(5) of the City Code, as amended in Section 2 of
Ordinance No. 067, 2014, contained an incorrect internal Code reference, which reference is also
corrected in the proposed revised rates, fees and charges; and
WHEREAS, the City Manager and staff have recommended to the City Council the
following electric rate adjustments for all billings issued with meter readings on or after October
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 the electric rates, fees and charges with regard to the compensation
rate for customers purchasing interests in the Fort Collins Community Solar Project and any
other community solar projects meeting applicable requirements.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That Section 26-391 of the Code of the City of Fort Collins is hereby
amended by the addition of a new definition for “Community solar project” to read as follows:
Sec. 26-391. Definitions.
…
Community solar project shall mean a photovoltaic electric generating installation that is
a qualifying facility using a qualifying renewable technology that offers shared
ownership by Fort Collins Utilities electric service customers and is operated by an entity
that has executed an “Interconnection Agreement” and/or “Power Purchase Agreement”
with Fort Collins Utilities. The physical location of any such facility shall be within the
electric service territory of Fort Collins Utilities and any electric power produced shall be
consumed within the electric service territory of Fort Collins Utilities. All customers that
participate under the “community solar project” rate provisions must hold evidence of
ownership to, a subscription as evidence of beneficial use of, or other entitlement to the
electric generating capacity of the facility.
…
Section 2. That Section 26-464 of the Code of the City of Fort Collins is hereby
amended by the adoption of a new Subsection (r) to read in its entirety as follows:
Sec. 26-464. Residential energy service, schedule R.
…
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(r) Net metering-community solar projects.
(1) Net metering service is available to a customer who holds an exclusive
interest in a portion of the electric energy generated by a community solar project
when the generating capacity of the customer’s interest is sized to supply no more
than one hundred twenty (120) percent of the customer's average annual
electricity consumption at the customer’s point of service, including all
contiguous property owned or leased by the customer, without regard to
interruptions in contiguity caused by easements, public thoroughfares,
transportation rights-of-way or utility rights-of-way.
(2) The community solar project-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.
(3) Both the customer's consumption of energy from Fort Collins Utilities and
interest in the production of energy that flows into Fort Collins Utilities’
distribution system shall be measured on a monthly basis. The energy consumed
from Fort Collins Utilities by the customer shall be billed at the applicable
seasonal tiered rate as outlined in Subsections (c) and (d) of this Section. The
energy produced by the customer’s portion of the qualifying facility shall be
credited to the customer as follows:
1. Distribution facilities charge, per kilowatt-hour: one and thirty-one
one-hundredths cents ($0.0131).
2. The energy and demand credit, per kilowatt-hour: five and eighty-
three one-hundredths cents ($0.0583).
Section 3. That Section 26-465(q)(5) of the Code of the City of Fort Collins is hereby
amended to read as follows:
(q) Net Metering.
. . .
(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) Subsection (c) of this Section. 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).
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2. The energy and demand credit, per kilowatt-hour: five and eighty-
three one-hundredths cents ($0.0583).
Section 4. That Section 26-465 of the Code of the City of Fort Collins is hereby
amended by the addition of a new Subsection (r) which reads in its entirety as follows and the
original Subsection (r) is hereby relettered as Subsection (s):
(r) Net metering-community solar projects.
(1) Net metering service is available to a customer who holds an exclusive
interest in a portion of the electric energy generated by a community solar project
when the generating capacity of the customer’s interest is sized to supply no more
than one hundred twenty (120) percent of the customer's average annual
electricity consumption at the customer’s point of service, including all
contiguous property owned or leased by the customer, without regard to
interruptions in contiguity caused by easements, public thoroughfares,
transportation rights-of-way or utility rights-of-way.
(2) The community solar project-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.
(3) Both the customer's consumption of energy from Fort Collins Utilities and
interest in the production of energy that flows into Fort Collins Utilities’
distribution system shall be measured on a monthly basis. The energy consumed
from Fort Collins Utilities by the customer shall be billed at the applicable
seasonal tiered rate as outlined in Subsection (c) of this Section. The energy
produced by the customer’s portion of the qualifying facility shall be credited to
the customer as follows:
1. Distribution facilities charge, per kilowatt-hour: one and thirty-one
one-hundredths cents ($0.0131).
2. The energy and demand credit, per kilowatt-hour: five and eighty-
three one-hundredths cents ($0.0583).
(rs) Loans. Special services in the form of loans for electric service-related
improvements, conservation measures or efficiency enhancements shall be documented
on forms determined by the Utilities Executive Director and the Financial Officer. Any
such loans shall be made consistent with the applicable program requirements, credit and
risk standards and interest rate provisions as set forth in this Article and in the
administrative rules and regulations adopted by the Financial Officer pursuant to § 26-
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720. The interest rate for such loans shall be no less than the most current U.S. prime
lending rate at the time of loan origination plus two (2) percent and no more than the
most current U.S. prime lending rate at the time of loan origination plus five (5) percent,
per annum, with the interest rate for each loan to be set in accordance with the
administrative rules and regulations of the Financial Officer. Obligations for repayment
of any such loans are subject to the provisions of Article XII of this Chapter.
Section 5. That Section 26-466 of the Code of the City of Fort Collins is hereby
amended by the adoption of a new Subsection (r) to read as follows:
Sec. 26-466. General service, schedule GS.
…
(r) Net metering-community solar projects.
(1) Net metering service is available to a customer who holds an exclusive
interest in a portion of the electric energy generated by a community solar project
when the generating capacity of the customer’s interest is sized to supply no more
than one hundred twenty (120) percent of the customer's average annual
electricity consumption at the customer’s point of service, including all
contiguous property owned or leased by the customer, without regard to
interruptions in contiguity caused by easements, public thoroughfares,
transportation rights-of-way or utility rights-of-way.
(2) The community solar project-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.
(3) Both the customer's consumption of energy from Fort Collins Utilities and
interest in the production of energy that flows into Fort Collins Utilities’
distribution system shall be measured on a monthly basis. The energy consumed
from Fort Collins Utilities by the customer shall be billed at the applicable
seasonal tiered rate as outlined in Subsection (c) of this Section. The energy
produced by the customer’s portion of the qualifying facility shall be credited to
the customer as follows:
1. Distribution facilities charge, per kilowatt-hour: ninety-four one-
thousandths cents ($0.0094).
2. The energy and demand credit, per kilowatt-hour: four and three
one-hundredths cents ($0.0403).
Section 6. That the amendments herein are effective and shall go into effect for all
bills issued with meter readings on or after October 1, 2014.
Introduced, considered favorably on first reading, and ordered published this 19th day of
August, A.D. 2014, and to be presented for final passage on the 2nd day of September, A.D.
2014.
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_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
Passed and adopted on final reading on the 2nd day of September, A.D. 2014.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk